Faull and Nikpay, the EU law of competition [3rd edition.] 9780199665099, 0199665095

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Editors Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Jonathan Faull Ali Nikpay

Assistant Editor Deirdre Taylor

Contributors Nicholas Banasevic Claes Bengtsson Matthew Bennett Attila Borsos José Luis Buendia Sierra Josep Maria Carpi Badia Kevin Coates Antoine Colombani Anthony Dawes Hubert de Broca Miguel de la Mano

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Eddy De Smijter Jonathan Faull David Gabathuler Céline Gauer Francisco Enrique González Diaz Andrei Gurin Massimiliano Kadar Elena Kamilarova Lars Kjølbye Jindrich Kloub Krzysztof Kuik Henning Leupold Eduardo Martinez Rivero Tim Maxian Rusche Claire Micheau Marta Mielecka Riga Harald Mische Pierre Moullet Renato Nazzini Ali Nikpay Luc Peeperkorn Henri Piffaut Stephen Ryan Ewoud Sakkers Dominik Schnichels Ailsa Sinclair Anatoly Subočs Deirdre Taylor Koen Van de Casteele

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Anna Vernet Vincent Verouden Nina Vrana Rita Wezenbeek Donncadh Woods Hans Zenger (p. vi)

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Foreword to the 3rd Edition Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

The first two editions of this book each coincided with major changes in the approach to EU competition law. As Barry Hawk pointed out in his Foreword to the first edition in 1999, the increased role of economic analysis in the Commission’s approach to decision-making and legislation had just been manifested in the block-exemption regulation on vertical restraints. By the time the second edition appeared, the profound restructuring of competition procedures brought about by Regulation 1/2003 was starting to produce its effects, not least in the increasing role for NCAs. It would be a serious mistake, however, to think that this time round there are fewer changes to justify a new edition. We are, rightly, now favoured with separate chapters on Pharmaceuticals, Telecoms and Media, reflecting the increased importance and understanding of these sectors, while motor vehicles lose their previous privileged treatment. And the distinguished team of editors and contributors combines a high level of continuity from earlier editions, while introducing new blood notably from those working for NCAs. But the more significant changes since the last edition have arguably been most visible at the level of the Commission’s enforcement, particularly in the fields of cartel detection and abuse of a dominant position, and in a clearer definition and understanding of the role of the EU Courts. The Commission’s revised Notice on Immunity from fines and reduction of fines in cartel cases in December 2006 has ensured that the flood of leniency applications in major cartel cases has continued unabated, with the result that when these cases now reach the Court the issue is only rarely the existence of the cartel, but instead the responsibility of each participant, the duration of the infringement and the amount (absolute and relative to other participants) of the fine. Interventions in the field of IT have also increased, not least with allegations of abuse of dominant positions increasingly coming from other industry participants, as have those in the financial markets. Price-fixing or manipulation—whether of oil prices, LIBOR, or auction house commissions—are also now headline news in a way they were not even twenty years ago. As for the Court, the decisions

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in the Strasbourg court (Menarini Diagnostics) and the Court of Justice (KME and Chalkor) have now unambiguously confirmed what many of us understood all along, namely that judicial review by the General Court of competition decisions is a ‘full’ review in every sense. No less important—in the broader picture—is the focus now being given to the relationship between public enforcement (by the Commission and NCAs) and private enforcement through damages actions in national courts. In the past, private enforcement was undoubtedly the poor relation in the toolbox of EU competition law enforcement, even if not all the negative comparisons with transatlantic practice were justified. Doubtless, future decisions of the General Court and Court of Justice on the Commission’s ability and willingness to disclose, or not to disclose, to potential civil claimants sensitive documents that are relevant to proving a damages claim, will help shape future developments in this area. But one aspect that will increasingly—and unavoidably—come into focus is the issue of precisely what effects a cartel, or other infringement, has had on prices and other conditions in the relevant market. As is well known, the Commission has until now been understandably reluctant, in (p. viii) its infringement decisions, to seek to quantify the effects of the infringement on the affected market. However, this is a luxury not available to national courts when the precise quantification is central to determining the amount of recoverable damages. In his Foreword to the Second Edition, Giuliano Amato sagely asked ‘Are agreements still declared illegal in Europe for their object alone? Have not we reached the point of assessing every agreement in relation to effects before prohibiting it?’ I, too, wonder whether we may be approaching an era where assessment of the actual, or probable, effects of a competition law infringement is no longer an optional extra, at best relevant only to national courts determining follow-on damages claims, but instead goes to the heart of the appropriate level of sanctions for an infringement, and even of whether the conduct, objectively, gives rise to the ‘prevention, restriction or distortion of competition’. We cannot, of course, simply write the word ‘object’ out of Article 101 TFEU, or pretend that it is not there. And no doubt there is a place for punishing an agreement which failed to produce any effects simply because it was not implemented at all, or because some participants ‘cheated’. But that is not to say that the issue of what effects the agreement actually caused on the target market have no relevance. For all those who, like me, are convinced of the fundamental importance of a focused, economically literate, and purposive application of competition law, which moreover takes full account of the multi-faceted and varied nature of competition in the real world, this Third Edition, like its predecessors, will provide a valuable and reliable guide. The editors and contributors fully deserve the recognition for the quality of analysis, the readability of the text, and the comprehensiveness of the coverage, that they will certainly receive from all those who read and use this work, whether they be practitioners, officials, or judges. Nicholas Forwood Judge of the General Court Court of Justice of the EU Luxembourg, February 2014

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Contents—Summary Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

List of Abbreviations lxxv Tables of Court of Justice and the General Court of the European Union Cases lxxvii Tables of European Commission Decisions cxxxviii Table of National and Other Cases clxxv Table of EU/EC Treaties clxxix Tables of EU/EC Legislation clxxxiii Tables of EU/EC Notices, Guidelines and Other Informal Texts ccxi Table of National Legislation ccxxxi Table of International Treaties ccxxxiii I  General Principles 1. The Economics of Competition 3 Luc Peeperkorn and Vincent Verouden 2. The Enforcement System under Regulation 1/2003 91 Eddy De Smijter and Ailsa Sinclair 3. Article 101 183 Jonathan Faull, Lars Kjølbye, Henning Leupold, and Ali Nikpay 4. Article 102 329 Miguel de la Mano, Renato Nazzini, and Hans Zenger

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5. Mergers 539 Claes Bengtsson, Josep Maria Carpi Badia, and Massimiliano Kadar 6. Article 106—Exclusive or Special Rights and Other Anti-Competitive State Measures 809 José Luis Buendia Sierra II  Specific Practices 7. Horizontal Cooperation Agreements 883 Matthew Bennett, Francisco Enrique González Díaz, Henning Leupold, Anna Vernet, and Donncadh Woods 8. Cartels 1023 Antoine Colombani, Jindrich Kloub, and Ewoud Sakkers 9. Vertical Agreements 1363 Andrei Gurin and Luc Peeperkorn (p. xii) 10. Intellectual Property 1443 Kevin Coates, Lars Kjølbye, and Luc Peeperkorn III  Special Sectors 11. Financial Services 1513 Nicholas Banasevic, Stephen Ryan, and Rita Wezenbeek 12. Energy 1581 Céline Gauer and Lars Kjølbye 13. Communications (Telecoms and Internet) 1647 David Gabathuler and Eduardo Martinez Rivero 14. Media 1709 Krzysztof Kuik and Anthony Dawes 15. Transport 1779 Hubert de Broca, Marta Mielecka Riga, and Anatoly Subočs 16. Pharma 1869 Harald Mische, Elena Kamilarova, and Dominik Schnichels IV  State Aid 17. State Aid 1923 Tim Maxian Rusche, Claire Micheau, Henri Piffaut, and Koen Van de Casteele Index 2033

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Contents Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

List of Abbreviations lxxv Tables of Court of Justice and the General Court of the European Union Cases lxxvii Tables of European Commission Decisions cxxxviii Table of National and Other Cases clxxv Table of EU/EC Treaties clxxix Tables of EU/EC Legislation clxxxiii Tables of EU/EC Notices, Guidelines and Other Informal Texts ccxi Table of National Legislation ccxxxi Table of International Treaties ccxxxiii I  General Principles 1. The Economics of Competition Luc Peeperkorn and Vincent Verouden A. Introduction 1.01 B. Structure, Conduct, Performance 1.06 (1)  Early Developments 1.06 (2)  The Harvard School 1.09 (3)  The Chicago School 1.12 (4)  More Recent Developments 1.16

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C. Static Welfare Analysis of Market Power 1.21 (1)  Introduction 1.21 (2)  Basic Microeconomic Concepts 1.27 (a)  Consumer Surplus 1.28 (b)  Production Costs 1.29 (c)  Short-Run Production Costs 1.31 (d)  Profit Maximization 1.36 (e)  Long-Run Production Costs 1.41 (f)  Economies of Scale and Minimum Efficient Scale 1.43 (g)  Entry Barriers 1.50 (h)  Contestability 1.56 (3)  Perfect Competition 1.58 (a)  The Model 1.58 (b)  The Outcome 1.62 (4)  Monopoly 1.65 (a)  The Model 1.65 (b)  The Outcome 1.68 (5)  Oligopoly 1.78 (a)  Introduction 1.78 (b)  Game Theory 1.83 (c)  The Scope for Collusion Illustrated with the Prisoner’s Dilemma 1.93 (d)  Some Results 1.109 D. Dynamic Welfare Analysis of Market Power 1.120 (1)  Innovation and Welfare 1.120 (p. xiv) (2)  Different Views 1.122 (3)  Some Empirical Results 1.125 (4)  The ‘New Economy’ 1.127 (5)  Some Concluding Remarks 1.133 E. Market Definition 1.134 (1)  Product Market Definition 1.139 (a)  Demand-Side Substitution 1.141 (b)  The SSNIP Test 1.147 (c)  Elasticity Concepts and the Diversion Ratio 1.153 (d)  Supply-Side Substitution 1.160

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(2)  The Relevant Geographic Market 1.169 (a)  Demand-Side Substitution 1.170 (b)  Supply-Side Substitution 1.172 (3)  Specific Issues in the Context of Market Definition 1.175 (a)  Chains of Substitution 1.176 (b)  Price Discrimination 1.178 (c)  Captive Production 1.181 (4)  Further Considerations 1.184 (a)  Market Definition in Practice 1.184 (b)  Defining the Market: Not an End in Itself 1.188 F. Market Power and Dominance 1.190 (1)  Market Power 1.192 (a)  Concept 1.192 (b)  Identification of (Static) Market Power 1.202 (2)  Dominance 1.211 (a)  Single Dominance 1.212 (b)  Collective Dominance 1.219 (3)  Enhancing Market Power 1.225 (a)  Merger with a Competitor: Unilateral vs Coordinated Effects 1.227 (b)  Exclusionary Strategies 1.240 G. Empirical Methods for Market Definition and the Assessment of Market Power 1.249 (1)  Analysis of Prices and Price Movements 1.253 (a)  Price Correlation Analysis 1.254 (b)  Extension: Stationarity/Co-Integration 1.263 (2)  Analysis of Price Elasticities of Demand 1.265 (3)  Critical Loss Analysis 1.289 (4)  UPP 1.295 (5)  Event Analysis 1.302 (6)  Assessment Methods Relating Price to Market Structure 1.306 (a)  Price Concentration Analysis 1.307 (b)  Direct Evaluation of Competitive Constraints 1.313 (7)  Analysis of Bidding Data 1.314 (8)  Merger Simulation 1.325

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2. The Enforcement System under Regulation 1/2003 Eddy De Smijter and Ailsa Sinclair A. Direct Application of Articles 101 and 102 2.01 (1)  Introduction 2.01 (p. xv) (2)  The Aims and Results of the System Change 2.04 (a)  Increased Application of Articles 101 and 102 at Member State Level 2.05 (b)  The Commission’s Focus on Enforcement 2.09 (3)  Self-assessment and Legal Certainty 2.12 (4)  The Direct Effect of Articles 101 and 102 2.20 (5)  Burden and Standard of Proof 2.25 B. The Relationship Between EU Competition Law and National Competition Law 2.30 (1)  Introduction 2.30 (2)  Article 3(1): The Obligation to Apply Articles 101 and 102 2.33 (a)  Scope of Article 3(1) 2.34 (b)  Primary Functions of Article 3(1) 2.40 (3)  The Convergence Rule of Article 3(2) 2.45 (4)  The Legal Consequences of Infringing Article 3(1) and (2) 2.52 (5)  Article 3 and the Primacy Rule 2.55 (6)  Exceptions to Article 3 2.58 (a)  National Competition Laws 2.59 (b)  National Laws Implementing EU Law Directives 2.66 (c)  Member State Measures Covered by Article 106 2.68 (d)  National Merger Control Laws 2.70 (e)  Criminal Sanctions on Natural Persons 2.72 C. Powers and Decisions of National Competition Authorities 2.77 (1)  Introduction 2.77 (2)  The NCA 2.78 (3)  The Decisions of an NCA 2.83 (a)  Article 5: Nothing More, Maybe Less 2.84 (b)  The Decisions Listed in Article 5 2.88 (4)  Triggering a Decision by an NCA 2.91 (a)  The NCA Acts on its Own Initiative or on a Complaint 2.91 (b)  National Notification Systems 2.93

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D. Commission Powers and Decisions 2.96 (1)  Introduction 2.96 (2)  Article 7: Finding and Termination of Infringements 2.99 (a)  The Power to Find Infringements 2.100 (b)  The Power to Impose Remedies 2.103 (i)  General Principles 2.104 (ii)  Structural and Behavioural Remedies 2.107 (iii)  Break-ups 2.110 (c)  Complaints 2.114 (3)  Article 8: Interim Measures 2.116 (4)  Article 9: Commitments 2.118 (a)  Introduction 2.118 (b)  The Nature of Article 9 Decisions 2.121 (c)  The Purpose of Article 9 Decisions 2.126 (d)  The Procedure for Adopting Article 9 Decisions 2.129 (e)  Adoption of the Decision and Reopening of the Proceedings 2.135 (f)  The Scope for Legal Challenges 2.143 (5)  Article 10: Finding of Inapplicability 2.145 (a)  Introduction 2.145 (b)  The Nature and Purpose of Article 10 Decisions 2.146 (p. xvi) (c)  The Legal Effects of Article 10 Decisions 2.150 (i)  The Relationship Between Articles 9 and 10 2.152 E. Cooperation Between Enforcers 2.154 (1)  Introduction 2.154 (2)  Cooperation within the ECN 2.155 (a)  The Sharing of Work Amongst the Competition Authorities 2.156 (b)  An NCA’s Request to Another NCA to Carry Out an Investigation 2.160 (c)  Exchange of Information and Its Use in Evidence 2.163 (i)  Exchange of Information within the ECN 2.165 (i)  Empowering ECN Members to Exchange Information 2.165 (ii)  Allowing ECN Members to Exchange Information 2.167 (iii)  Exchanging Information Voluntarily Submitted by a Leniency Applicant 2.170 (ii)  The Use of the Exchanged Information in Evidence 2.173

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(i)  The Relation Between Article 12 and the National Law Provisions Prohibiting NCAs from Divulging Confidential Information 2.174 (ii)  A Wider Umbrella for the Protection of Confidential Information 2.176 (iii)  The Use in Evidence of the Information Exchanged within the ECN 2.177 (i)  The General Principles of EU Law 2.179 (ii)  Information Exchanged Can Only Be Used in Evidence for the Application of EU Competition Rules 2.182 (iii)  Information Exchanged Can Only Be Used in Evidence in Respect of the Subject Matter for Which it was Collected 2.185 (iv)  The Limitations With Regard to the Use of Information in Evidence to Impose Sanctions on Natural Persons 2.187 (v)  Experience with Article 12 2.191 (d)  The Obligation of Professional Secrecy and the Need to Disclose Information 2.192 (i)  Which Information is Covered by Professional Secrecy? 2.194 (i)  The Wide Coverage of Professional Secrecy 2.194 (ii)  Specific Sub-Category Within the Wider Concept of Professional Secrecy: Business Secrets and Other Confidential Information 2.197 (iii)  Business Secrets 2.198 (iv)  Other Confidential Information 2.201 (ii)  The Disclosure of Information Acquired or Exchanged Pursuant to Regulation 1/2003 2.202 (i)  Disclosure Necessary to Prove an Infringement of Article 101 or 102 2.205 (iii)  Disclosure in granting access to the file 2.207 (i)  Access to the File for the Addressee of a Statement of Objections 2.207 (ii)  Access to Information by Other Parties with Legitimate Interest, in Particular Complainants 2.209 (3)  Coherent Application within the ECN 2.210 (a)  Introduction 2.210 (b)  Information under Article 11(3) 2.213 (c)  The Procedure in Article 11(4) 2.214 (i)  The Scope of the Article 11(4) Procedure 2.216 (ii)  The Article 11(4) Process and its Objective 2.222 (iii)  The Legal Consequences of Failure to Comply with Article 11(4) 2.225

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(p. xvii) (d)  Article 11(6): The Commission’s Power to Withdraw a Case 2.229 (i)  The Legal Nature of Article 11(6) 2.231 (ii)  The Authorities Covered by Article 11(6) 2.234 (iii)  Circumstances in Which Withdrawal may be Envisaged 2.238 (iv)  The Procedure for Applying Article 11(6) 2.248 (4)  Coherent Application by National Courts 2.251 (a)  The Competence of National Courts to Apply EU Competition Rules 2.251 (b)  The Coherent Application of EU Competition Rules by National Courts 2.254 (i)  Commission Initiatives towards Coherent Application of EU Competition Rules 2.258 (i)  The Commission’s Policy Notices and Guidelines 2.259 (ii)  Co-Financing the Training of National Judges in EU Competition Rules 2.261 (iii)  A Database on National Judgments 2.263 (ii)  Consistency in the Case of Parallel or Consecutive Application of EU Competition Rules 2.264 (c)  Cooperation Between the Commission and the National Courts 2.270 (i)  The Opportunity for the National Courts to ask the Commission for Information or for its Opinion 2.274 (i)  The Opportunity to Ask the Commission for Information 2.275 (ii)  The Opportunity to Ask the Commission for Its Opinion 2.284 (ii)  The Submission of Observations 2.285 3. Article 101 Jonathan Faull, Lars Kjølbye, Henning Leupold, and Ali Nikpay A. Introduction 3.01 B. Scope of Article 101 3.02 (1)  Scope 3.02 (2)  Coal and Steel 3.04 (3)  Defence 3.05 (4)  Environment and Culture 3.12 (5)  Sport 3.16 C. Article 101(1) 3.23 (1)  Undertakings 3.27 (a)  Definition 3.27

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(b)  Professions 3.34 (c)  Public Bodies Exception 3.39 (d)  The Single Economic Unit Doctrine (No Intra-Enterprise Conspiracy in EU Law) 3.49 (i)  A Subsidiary Wholly-Owned, or Almost Wholly-Owned, By Its Parent 3.53 (ii)  A Parent Holding a Majority Shareholding in a Subsidiary But Less than 100 Per Cent 3.59 (iii)  Parent Liability in the Context of Joint Control 3.62 (iv)  Companies with Non-Controlling Stakes in Another Company 3.67 (e)  Successor Undertakings 3.68 (2)  Agreements 3.74 (a)  General Definition 3.74 (p. xviii) (b)  Requires At Least Two Undertakings 3.75 (c)  Form Irrelevant 3.76 (d)  Does the Notion of ‘Agreement’ Presuppose that the Parties Jointly Intend to Limit Their Freedom of Action as Regards Future Conduct on the Market? 3.84 (e)  Single Continuous Infringement Doctrine 3.87 (f)  Tacit Acquiescence in Relation to the Particular AntiCompetitive Measure in Question is the Minimum Requirement in Vertical Cases 3.101 (i)  Volkswagen II 3.104 (ii)  What Does Tacit Acquiescence Require? 3.109 (iii)  Care Should be Taken in Applying the Bayer/Volkswagen II Approach 3.114 (g)  Formal Termination May Not be Sufficient 3.118 (h)  Judicial Settlement 3.121 (3)  Decisions by Associations of Undertakings 3.122 (4)  Concerted Practices 3.126 (a)  Definition 3.126 (b)  Can a Concerted Practice be Inferred from Circumstantial Evidence Alone? 3.140 (c)  Vertical Concerted Practices 3.143 (i)  ‘Hub and Spoke’ Agreements 3.147 (5)  Distinction Between Agreements and Concerted Practices 3.150 (6)  State Compulsion 3.155

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(7)  The Notion of Restriction of Competition under EU Competition Law 3.160 (8)  Restriction by Object 3.184 (a)  Concept of Restriction by Object 3.184 (i)  Category 1 3.187 (ii)  Category 2 3.191 (iii)  Category 3 3.201 (i)  Allianz Hungary 3.204 (b)  Restriction by Object and Appreciability 3.209 (i)  The ‘Pre-Expedia’ Case Law 3.210 (ii)  The Commission’s Approach to Appreciability in Object Cases 3.215 (iii)  The Expedia Judgment 3.217 (9)  Restriction by Effect 3.219 (a)  The EU Courts Had Broadly Endorsed the Commission’s Traditional Approach 3.223 (b)  The EU Courts Have Modified the Traditional Approach in a Number of Important Ways 3.230 (c)  Restrictions of Rivalry Must Be Assessed in Their Market Context 3.231 (d)  Ancillary Restraints Doctrine 3.235 (i)  Commercial Ancillarity 3.236 (ii)  Public Interest Ancillarity 3.243 (iii)  The Narrow Scope of the Ancillary Restraints Doctrine 3.248 (i)  Directly Related and Subordinate 3.251 (ii)  Necessary 3.253 (iii)  Objective Necessity for the Implementation of the Main Operation 3.254 (iv)  Proportionality 3.266 (iv)  Concluding Remark: Ancillary Restraints Doctrine Difficult to Apply but Relevant for the Identification of the Relevant Counterfactual in Effects Analysis 3.269 (e)  Exclusivity Necessary for Supply 3.271 (i)  Exclusivity Must be Objectively Necessary 3.273 (ii)  It is Unclear Whether this Doctrine Applies to Agreements Between Competitors 3.274 (iii)  Doctrine Only Likely to Apply in Clear-Cut Cases 3.279 (i)  Exception to General Rule 3.282 (iv)  Does the Approach Apply to ‘Object’ Cases? 3.288

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(v)  Difference Between Exclusivity Necessary for Supply and Ancillary Restraints Doctrines 3.289 (f)  Appreciability 3.294 (p. xix) (g)  Cumulative Effects Doctrine 3.298 (h)  The Purpose of the Market Analysis 3.303 (i)  No Rule of Reason under Article 101(1) 3.303 (ii)  Gøttrup-Klim 3.311 (iii)  Wouters 3.314 (iv)  Metro I and II 3.320 (v)  O2 3.324 (i)  Does O2 Signal a Change in Direction? 3.327 (vi)  Explicit Rejection of the Rule of Reason under Article 101(1) by the General Court 3.337 (i)  Extent of Market Analysis 3.338 (j)  Restrictive Clauses Are Not a Necessary Condition for the Application of Article 101(1) 3.344 (k)  The Commission’s Policy as set out in the Article 101(3) Guidelines 3.347 (i)  Step 1: The Counterfactuals 3.350 (ii)  Step 2: Assessment of the Likely Effect of the Agreement Restraint on Prices, Output, Innovation, or the Variety or Quality of Goods or Services 3.359 (l)  The Current State of Affairs: Developments in the Commission’s Policy and the EU Courts’ Case Law Subsequent to the Article 101(3) Guidelines 3.366 (i)  Horizontal Cooperation Guidelines 3.375 (ii)  Block Exemption Regulations 3.380 (iii)  De Minimis Notice 3.381 D. Jurisdiction 3.385 (1)  General 3.385 (2)  The Concept of Trade Between Member States 3.388 (3)  The Link Between Trade and the Agreement or Practice 3.392 (4)  The Notion of ‘May Affect’ 3.395 (a)  Introduction 3.395 (b)  A Sufficient Degree of Probability 3.397 (c)  An Influence on the Pattern of Trade 3.404 (i)  Direct or Indirect, Actual or Potential 3.406

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(5)  Appreciability 3.413 (a)  General Principles 3.413 (b)  Quantification 3.416 (6)  Assessment of Various Types of Agreement and Practices 3.427 (a)  Introduction 3.427 (b)  Agreements and Practices Concerning Imports and Exports and Agreements and Practices Implemented in Several Member States 3.428 (c)  Agreements and Practices Confined to the Whole or Part of a Member State 3.429 (d)  Agreements and Practices Covering Part of a Member State 3.432 (e)  Agreements and Practices Involving Third Countries 3.435 E. Article 101(2) 3.442 F. The Article 101(3) Exception 3.445 (1)  Introduction 3.445 (2)  The Relationship Between Article 101(1) and Article 101(3) 3.452 (3)  General Principles for the Application of Article 101(3) 3.455 (a)  Introduction 3.455 (b)  The Nature of the Benefits that Can Be Taken into Account 3.458 (p. xx) (c)  The Relevant Market as the Proper Framework for Applying Article 101(3) 3.461 (d)  The Temporal Application of Article 101(3) 3.464 (e)  Block Exemptions 3.467 (4)  The Four Conditions of Article 101(3) 3.472 (a)  Introduction 3.472 (b)  The First Test of Article 101(3): Efficiency Gains 3.473 (i)  Examples of Relevant Types of Efficiencies 3.480 (ii)  The Substantiation of Efficiency Claims 3.483 (c)  The Second Test of Article 101(3): Indispensability 3.489 (d)  The Third Test of Article 101(3): A Fair Share for Consumers 3.495 (e)  The Fourth Test of Article 101(3): No Elimination of Competition in Respect of a Substantial Part of the Products in Question 3.506 4. Article 102

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Miguel de la Mano, Renato Nazzini, and Hans Zenger A. The System of Enforcement of Article 102 4.01 (1)  Introduction 4.01 (a)  Elements of Article 102 4.01 (b)  Relationship Between Article 101 and Article 102 4.08 (c)  Purpose of Article 102: Protection of Competition or Protection of Competitors? 4.10 (d)  Role of Efficiencies in Article 102 Assessment 4.14 (2)  Categorization of Abuses: Exploitative vs Exclusionary 4.16 (a)  Prohibition of Customer Exploitation 4.17 (b)  Prohibition of Exclusionary Practices 4.23 (3)  Consequences of Infringement of Article 102 4.29 (a)  Introduction 4.29 (b)  Guiding Principles 4.31 (c)  Types of Sanctions and Remedies in Article 102 Cases 4.35 (i)  Fines 4.35 (ii)  Cease and Desist Orders 4.45 (iii)  Behavioural Remedies 4.46 (iv)  Structural Remedies 4.48 (v)  Which Remedy is Most Appropriate? 4.51 (d)  Procedural Issues 4.52 (4)  Commitment Decisions (Article 9 of Regulation 1/2003) 4.53 (a)  Basic Principles 4.54 (b)  Importance of Commitment Decisions in Article 102 Cases 4.57 (c)  Concerns Regarding the Use of Commitment Decisions in Article 102 Cases 4.61 (5)  Judicial Review of Article 102 Decisions 4.68 (a)  Review of Facts and Law 4.71 (b)  Review of ‘Complex Economic Matters’ 4.76 B. The Article 102 Enforcement Priorities Guidance 4.83 (1)  The Emergence of the Effects-Based Approach 4.83 (a)  Traditional Approach under EU Law 4.83 (b)  Form- vs Effects-Based Approach 4.86 (c)  Pros and Cons of an Effects-Based Approach 4.89 (d)  The Recent Adoption by the EU Courts of a More Explicitly Effects-Based Approach 4.92

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(p. xxi) (2)  The Commission’s Review of Article 102 Policy 4.93 (a)  Purpose of the Review 4.93 (b)  The Staff Discussion Paper 4.95 (3)  The Article 102 Enforcement Priorities Guidance 4.98 (a)  Adoption of Guidance as opposed to Guidelines 4.98 (b)  Economics-Based Approach to Enforcement 4.99 (c)  Impact of the Guidance on Future Cases 4.103 (d)  Overview of the Guidance 4.106 (e)  Brief Summary of the Approach to Abuse 4.108 (i)  Anti-Competitive Foreclosure 4.112 (ii)  Assessment of the Effect on Consumers 4.114 (iii)  Objective Justifications and Efficiencies 4.119 C. Dominance 4.122 (1)  Concept of Single Dominance 4.123 (a)  Legal Definition of Single Dominance 4.123 (b)  Concerns Regarding the Elements of the Definition of Dominance 4.124 (c)  Approach Taken in the Guidance to the Test Elements 4.127 (d)  Assessment of Market Power 4.130 (e)  How Does the Guidance Approach Fit with the Legal Approach 4.133 (2)  Factors Relevant to Single Dominance 4.139 (a)  Economic Measurement of Market Power 4.140 (b)  Factors Under the Case Law and the Commission’s Guidance 4.143 (i)  The Position of the Undertaking Concerned and Its Competitors 4.144 (i)  Market Definition 4.145 (ii)  Market Shares 4.149 (iii)  Profitability of the Undertaking 4.169 (iv)  Conduct of the Undertaking 4.172 (v)  The Position of Competitors 4.175 (ii)  Barriers to Entry and Expansion 4.180 (i)  Regulatory Barriers to Entry 4.186 (ii)  Capacity Constraints 4.191 (iii)  Economies of Scale and Scope 4.192 (iv)  Network Effects 4.197

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(v)  Switching Costs 4.201 (vi)  Vertical Integration and Exclusive or Preferential Access to Inputs or Customers 4.202 (vii)  Financial Strength 4.205 (viii)  Spare or Excess Capacity 4.207 (ix)  Other Factors 4.211 (iii)  Countervailing Buyer Power 4.216 (3)  Concept of Collective Dominance 4.218 (a)  Definition of Collective Dominance 4.218 (b)  Non-Oligopolistic Collective Dominance 4.221 (c)  Vertical Non-Oligopolistic Collective Dominance 4.229 (d)  Oligopolistic Collective Dominance 4.231 (4)  Abuse of a Collective Dominant Position 4.241 (a)  Joint Abuses 4.242 (b)  Single Abuses 4.243 (5)  Dominance and Abuse in Neighbouring Markets 4.244 (6)  Dominance in New Economy Markets 4.248 (p. xxii) D. Concept of Abuse 4.252 (1)  General Concept of Abuse 4.252 (2)  Definition of Abuse Under the EU Courts’ Case Law 4.254 (3)  The Test for Abuse 4.261 (a)  Exploitative and Discriminatory Abuses 4.262 (b)  Exclusionary Abuses 4.263 (i)  Potential Tests Based on Economic Principles 4.265 (ii)  Approach Taken in the Commission’s Guidance 4.266 (i)  Anti-Competitive Foreclosure: General 4.268 (ii)  Test for Foreclosure in Pricing Cases 4.270 (iii)  When is Foreclosure Enough to be Anti-Competitive? 4.275 (iv)  Likely Harm to Consumers 4.280 (4)  The Special Responsibility of the Dominant Undertaking 4.283 (5)  Objective Justification 4.290 (a)  General 4.290 (b)  Objective Necessity 4.291 (c)  Efficiency Defence 4.292

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E. Predatory Pricing 4.298 (1)  What is Predatory Pricing? 4.298 (a)  Definition 4.298 (b)  Economic Theories of Predatory Pricing 4.299 (c)  Distinguishing Predatory Pricing From Normal Competition 4.300 (2)  Predation Under EU Law: The AKZO Test 4.302 (a)  Whether and How to Assess the Intent of the Dominant Firm 4.306 (b)  What is the Appropriate Cost-Based Benchmark? 4.309 (c)  Is a Below Cost Test Appropriate? 4.315 (i)  Above-Cost Price Cuts as Part of a Wider Exclusionary Strategy 4.321 (ii)  Above-Cost Price Cuts by a Quasi-Monopolist Liable to Exclude its Only Competitor 4.324 (iii)  Above-Cost Price Cuts Restricting Free Trade 4.326 (d)  Difficulties With Relying on Price-Cost Tests 4.328 (i)  Below Cost Pricing May Not Be a Necessary Condition 4.329 (ii)  Below Cost Pricing May Not Be a Sufficient Condition 4.331 (iii)  Below Cost Pricing May Be Pro-Competitive 4.333 (iv)  Below-Cost Pricing Tests Create Measurement Difficulties 4.335 (e)  The Post Danmark Test 4.341 (f)  The Role of Recoupment? 4.343 (3)  The Predation Test in the Article 102 Enforcement Priorities Guidance 4.348 (a)  Profit Sacrifice 4.351 (i)  Advantages and Disadvantages of Using AAC to Measure Profit Sacrifice 4.353 (ii)  Possible Alternative: Comparing Incremental Revenues with Incremental Costs 4.355 (iii)  Assessing Whether There are Other, More Profitable Actions 4.359 (b)  Exclusion of an Equally Efficient Competitor 4.363 (c)  Consumer Harm and Recoupment 4.367 (i)  Entry is Unlikely After the Prey is Excluded or Disciplined 4.372 (ii)  Re-Entry is Unlikely 4.376 (iii)  Assessment of the Competitive Constraint Exercised by the Excluded Rival 4.378 (iv)  Dominance Is Not Evidence of Recoupment 4.379

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(d)  Objective Justification 4.384 (i)  Market-Expanding Efficiencies 4.389 (ii)  To Facilitate Learning and Awareness of a Product Among Consumers 4.392 (iii)  To Improve the Firm’s Positioning as a Low-Price Company 4.393 (p. xxiii) (e)  Meeting Competition Defence 4.395 (f)  Other Loss-Minimizing Strategies 4.396 F. Exclusive Dealing: Exclusivity Obligations and Loyalty Rebates 4.397 (1)  Case Law and Commission Decisional Practice 4.397 (a)  Definition and Types of Exclusivity 4.397 (i)  Legal and De Facto Exclusivity 4.398 (ii)  Requirements Contracts 4.401 (iii)  English Clauses 4.402 (iv)  Imposition of Exclusive Obligations on Suppliers 4.405 (v)  Exclusivity Imposed by Distributors 4.406 (b)  The Abuse Test in Exclusivity Cases 4.407 (c)  Objective Justification 4.411 (d)  Definition and Types of Conditional Rebates 4.413 (e)  Abuse Test in Rebates Cases 4.416 (i)  Rebates That Are Presumptively Lawful (Quantity Rebates) 4.416 (ii)  Rebates That Are Nakedly Exclusionary 4.417 (iii)  Fidelity Rebates 4.418 (iv)  Individualized Target Rebates 4.421 (v)  Standardized Rebates 4.426 (2)  Policy and Effects-Based Approach 4.429 (a)  Commission’s Approach Under the Article 102 Enforcement Priorities Guidance 4.429 (b)  The Logic of the Commission’s Approach Towards Loyalty Rebates and Exclusive Dealing 4.435 (i)  Economic Reasoning for Use of Rebate Schemes 4.437 (ii)  Possible Anti-Competitive Harm From Use of Rebate Schemes 4.443 (c)  Identifying Anti-Competitive Foreclosure Under the Article 102 Enforcement Priorities Guidance Rules 4.446 (i)  Step 1: The As-Efficient Competitor Test 4.447 (ii)  Step 2: Assessment of Anti-Competitive Foreclosure 4.450 (iii)  Countervailing Efficiencies and Objective Justification 4.454

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(d)  The Limits of the Article 102 Enforcement Priorities Guidance Approach 4.460 (e)  The Commission’s Application of the New Approach 4.468 G. Tying and Bundling 4.474 (1)  Introduction 4.474 (a)  Definition of Tying and Bundling 4.474 (b)  Relationship with Article 101 4.477 (2)  Legal Analysis and Case Law on Tying 4.478 (a)  A Dominant Position on the Tying Market 4.480 (b)  The Two-Product Test 4.482 (c)  Coercion 4.488 (d)  Anti-Competitive Effect 4.492 (i)  The Requirement to Prove Foreclosure of As-Efficient Competitors 4.492 (e)  Objective Justification 4.502 (i)  Reduction in Transaction Costs 4.503 (ii)  Preservation of Goodwill, Quality Assurance, and Ensuring Compliance with Safety Requirements 4.510 (iii)  Dynamic Efficiency 4.511 (iv)  Standardization 4.514 (p. xxiv) (3)  Case Law on Mixed Bundling 4.519 (4)  Policy and Effects-Based Approach 4.522 (a)  The Article 102 Enforcement Priorities Guidance Approach Towards Tying and Bundling 4.522 (b)  No Presumption of Anti-Competitive Harm 4.529 (c)  Anti-Competitive Tying and Bundling 4.538 (d)  Price Discrimination and Multi-Product Rebates 4.553 H. Refusal to Supply 4.558 (1)  Concept of Abusive Refusal to Supply 4.558 (2)  Basic Elements 4.561 (a)  Competitive Advantage on Downstream Market 4.561 (b)  Enforcement of Other Abuse 4.563 (c)  Constructive Refusal to Supply 4.565 (d)  De novo Refusals vs Withdrawal of Supply 4.567 (3)  Types of Refusal to Supply 4.569 (a)  Refusal to Supply a Physical Product or Service 4.570

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(b)  Refusal to Provide Access to an Essential Facility 4.571 (c)  Refusal to License IP Rights 4.572 (d)  Refusal to Supply Information Needed for Interoperability 4.575 (4)  Potential Anti-Competitive Effects of Refusals to Supply 4.577 (5)  The Case Law on Refusal to Supply 4.581 (a)  General Framework 4.581 (b)  Indispensability 4.585 (c)  The Foreclosure Effect 4.594 (d)  Raising Rivals’ Costs as Exclusionary Effect? 4.599 (e)  The Foreclosure Effect and the ‘Essential Facilities’ Doctrine in Commission Practice 4.602 (f)  Consumer Harm 4.606 (g)  Interoperability Cases Since Microsoft 4.609 (h)  Refusal to Supply an Existing Customer 4.610 (i)  Defences (Objective Necessity and Objective Justification) 4.613 (6)  The Approach Under the Commission’s Guidance 4.620 (a)  General Approach 4.620 (b)  Necessary Conditions 4.624 (i)  Objective Necessity 4.628 (ii)  Elimination of Effective Competition 4.630 (iii)  Consumer Harm (and Incentives Balancing Test) 4.631 (iv)  Objective Justifications (Efficiencies) 4.634 (7)  Refusal to Supply and Patents 4.636 I. Margin Squeeze 4.638 (1)  Concept of a Margin Squeeze Abuse 4.638 (2)  Legal Analysis of Margin Squeeze 4.642 (a)  The Early Case Law 4.642 (b)  Elements of the Abuse 4.646 (i)  Margin Squeeze is a Stand-Alone Abuse 4.651 (ii)  The Need to Demonstrate an Anti-Competitive Effect 4.652 (iii)  Factors Relevant to Assessing Potential Anti-Competitive Effect 4.657 (iv)  Anti-Competitive Effect is Assessed by Reference to the ‘As-Efficient Competitor’ Test 4.660 (v)  Basis for Calculating Potential Effects is the Cost Data of the Dominant Undertaking 4.662 (vi)  A Margin Squeeze is Capable of Objective Justification 4.664

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(vii)  Level of Dominance Goes to Effect, Not to the Existence of the Abuse 4.665 (p. xxv) (3)  Economic Assessment 4.667 (a)  General 4.667 (b)  The Cost Benchmark 4.671 (c)  Profitability Analysis 4.674 (d)  Assessment of the Spread 4.679 (e)  Specific Considerations in Start-Up Phases 4.682 (4)  Interplay Between Margin Squeeze and Refusal to Deal: Indispensability 4.683 (5)  Interplay Between Margin Squeeze and Regulatory Obligations 4.693 J. Specific Abusive Practices in Relation to IP Rights 4.694 (1)  Introduction 4.694 (a)  Complementary Aims of IP Rights and Antitrust 4.694 (b)  Appropriateness of Antitrust Intervention in the IP Rights Arena 4.696 (c)  Potential Competition Concerns Arising out of IP Rights 4.702 (2)  Supply of Misleading Information to Extend Patent Validity 4.707 (a)  Nature of the Abuse 4.713 (b)  Intent Not Determinative 4.716 (c)  Evidence of Actual Effects 4.720 (3)  Withdrawal of Marketing Authorization to Restrict Entry of Generics 4.722 (4)  Patent Filing Strategies 4.729 (a)  Early Cases on Strategic Use of Patents 4.729 (b)  Defensive Patent Strategies: Blocking Patents 4.731 (c)  Other Strategic Behaviour 4.736 (5)  Patent Settlements With Reverse Payments (Pay for Delay) 4.738 (a)  Overview: Potential Benefits and Harms From Patent Settlements 4.738 (b)  Commission Practice 4.740 (6)  Patent Hold-Up in the Context of Standard Setting 4.746 (a)  Context: Standard Setting and Patent Hold-Up Possibilities 4.746 (b)  Patent Ambush 4.751 (i)  Definition 4.751 (ii)  Anti-Competitive Effects of Patent Ambush 4.752

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(iii)  Conditions for Abuse: The Rambus Decision 4.753 (c)  FRAND Hold-Up 4.763 (i)  Definition of FRAND Hold-Up: The Qualcomm Case 4.763 (ii)  Particular Issues Surrounding Article 102 Enforcement in FRAND Licensing 4.765 (i)  FRAND is Not a Static or Pre-Defined Concept 4.765 (ii)  What Constitutes ‘Fair’ and ‘Reasonable’? 4.771 (iii)  What Constitutes ‘Non-Discriminatory’? 4.781 (iii)  Importance of FRAND 4.784 (7)  Anti-Competitive Litigation in Relation to Standard Essential Patents 4.787 (8)  Issues Applicable Across IP Rights Cases 4.797 (a)  Assessing Dominance in Pharmaceutical IP Rights Cases 4.797 (i)  Inferring Dominance from Level of Rents 4.799 (ii)  Dominance Relative to a Competitive Counterfactual PostLoss of Exclusivity 4.805 (b)  Anti-Competitive Foreclosure and Objective Justification in IP Rights Cases 4.806 (c)  Applicability of Article 102 to ‘Standard’ Strategies/Tactics Available Under IP Rights 4.810 (d)  Intervention under Article 102 vs Enforcement of IP Law 4.814 (p. xxvi) K. Exploitative Abuses 4.821 (1)  Concept of Excessive Pricing 4.821 (2)  The Test for Excessive Pricing Under EU Case Law 4.827 (a)  The United Brands Test 4.827 (b)  Difficulties in the Application of the United Brands Test: Port of Helsingborg 4.833 (c)  Alternative Approaches under the Case Law 4.836 (3)  Imposing Other Unfair Terms 4.844 (4)  Economic Approach to Excessive Pricing 4.850 (a)  Circumstances Suitable for Intervention 4.850 (i)  To Restore Dynamic Competition 4.856 (ii)  Exploitative Prices as a Result of Exclusionary Conduct 4.858 (iii)  Exploitation of Dominance Resulting from NonCompetitive Forces 4.862 (b)  Determining Whether Prices are Abusive 4.863 (i)  The Price-Cost Difference is Excessive 4.864 (ii)  Unfair Price in Itself or Compared to Others 4.867

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(i)  Discrimination-Based Benchmarks 4.875 (ii)  Direct Price-Cost Comparisons 4.879 (5)  Unfairly Low Prices Extracted by Dominant Buyers 4.882 (6)  Limiting Production, Markets, or Technical Development 4.884 L. Price Discrimination 4.889 (1)  Concept of Price Discrimination 4.889 (2)  Competition Concerns Regarding Price Discrimination 4.891 (3)  Case Law and Commission Practice on Article 102(c) Discriminatory Pricing Abuses 4.896 (a)  Discrimination Based on Nationality 4.897 (b)  Geographical Price Discrimination 4.899 (c)  Market-Distorting Price Discrimination 4.907 (i)  Definition 4.907 (ii)  Equivalent Transactions 4.908 (iii)  Dissimilar Conditions 4.911 (iv)  Competitive Disadvantage 4.915 (i)  The Discriminatory Fees Were an ‘Important Part of a Supplier’s Cost Structure’ 4.929 (ii)  A ‘Significant Effect’ Should Be Required 4.930 (4)  Policy and Effects-Based Approach 4.935 (a)  The Commission’s Current Reluctance to Enforce Article 102(c) 4.935 5. Mergers Claes Bengtsson, Josep Maria Carpi Badia, and Massimiliano Kadar A. Introduction 5.01 (1)  Origins and Evolution of EU Merger Control 5.01 (a)  Introduction of an EU Merger Control System 5.01 (b)  The First Decade of Application of EU Merger Control 5.03 (c)  The Judgments in Airtours, Tetra Laval, and Schneider 5.07 (d)  The 2004 Reform 5.09 (e)  Evolution of EU Merger Control Following the 2004 Reform 5.11 (2)  Core Principles of EU Merger Control 5.15 (a)  Compulsory Ex Ante Notification 5.15 (b)  One-Stop Shop 5.17

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(c)  One-Tier Administrative Procedure Subject to Judicial Review 5.20 (d)  Enforcement Objectives 5.22 (3)  Statistics on Enforcement Over Time 5.24 (p. xxvii) B. Jurisdiction 5.31 (1)  Overview 5.31 (a)  Two-Limbed Test to Determine Jurisdiction 5.32 (i)  The Concept of a ‘Concentration’ 5.33 (ii)  The Requirement of an ‘EU Dimension’ 5.35 (b)  Regulatory Framework: The Merger Regulation and the Jurisdictional Notice 5.36 (c)  Discussions with the Commission on Jurisdiction in Individual Cases 5.38 (2)  The Concept of a Concentration: Merger 5.43 (3)  The Concept of a Concentration: Acquisition of Control 5.48 (a)  Overview 5.48 (b)  Control 5.49 (i)  Who Acquires Control? 5.52 (ii)  How Can Control Be Acquired? 5.57 (iii)  The Object of Control 5.62 (iv)  The Lasting Nature of the Change in Control 5.67 (v)  Internal Restructurings and Concentrations Involving State-Owned Undertakings 5.73 (c)  The Acquisition of Sole Control 5.78 (i)  De Jure Sole Control 5.79 (ii)  De Facto Sole Control 5.80 (d)  The Acquisition of Joint Control 5.87 (i)  Equal Voting Rights 5.89 (ii)  Veto Rights 5.90 (iii)  Joint Exercise of Voting Rights 5.93 (e)  Changes in the Structure and/or Quality of Control 5.95 (f)  Non-Controlling Minority Shareholdings (Structural Links) 5.100 (g)  Exceptions Under Article 3(5) of the Merger Regulation 5.106 (4)  Joint Ventures 5.111 (a)  Introduction 5.111 (b)  Concept of joint venture 5.114 (c)  Identification of the Relevant Jurisdictional Test 5.120

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(i)  Creation of a Joint Venture 5.121 (ii)  Joint Acquisitions of an Undertaking or Business 5.122 (iii)  Other Operations Involving Joint Ventures 5.127 (d)  The Requirement of Full-Functionality 5.128 (i)  Overview 5.128 (ii)  Sufficient Resources to Operate Independently on the Market 5.131 (iii)  Relations Between the Joint Venture and its Parent Companies 5.132 (iv)  Operating on a Lasting Basis 5.137 (5)  Interrelated and Staggered Operations 5.139 (a)  Interdependent Transactions 5.141 (b)  Consecutive Transactions Between the Same Parties (Staggered Transactions) 5.149 (6)  Ancillary Restraints 5.152 (7)  The Requirement of an EU Dimension 5.153 (a)  The Purpose of Turnover Thresholds 5.154 (b)  The Principal Threshold under Article 1(2) of the Merger Regulation 5.157 (c)  The Alternative Threshold under Article 1(3) of the Merger Regulation 5.160 (d)  Appraisal of the Operation of the Turnover Thresholds 5.163 (p. xxviii) (8)  The Calculation of Relevant Turnover 5.168 (a)  Step 1: Identifying the Undertakings Concerned 5.169 (i)  General Rule 5.171 (ii)  Specific Scenarios on the Acquiring Side 5.175 (iii)  Specific Scenarios on the Acquired Side 5.180 (b)  Step 2: Methodology for the Calculation of Turnover 5.184 (i)  Concept of Turnover 5.185 (ii)  Attribution of Turnover Between Undertakings in a Group 5.188 (iii)  Treatment of Internal Turnover 5.196 (iv)  Geographic Allocation of Turnover 5.199 (c)  The Relevant Date and Financial Accounts 5.204 C. Interaction with Member States and Third Countries 5.207 (1)  Introduction 5.207

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(2)  Reallocation of Jurisdiction between the Commission and Member States (‘Referrals’) 5.208 (a)  Purpose of the Referral System 5.208 (b)  Use of the Referral System Over Time 5.211 (c)  Guiding Principles Applied when Considering Referral Requests 5.216 (d)  Operation of the Referral System in Practice 5.222 (i)  Referrals from the Commission to One or More NCAs 5.224 (i)  Pre-Notification Referrals Requested by the Parties (Article 4(4)) 5.225 (ii)  Post-Notification Referrals Requested by an NCA (Article 9) 5.239 (ii)  Referrals From One or More NCAs to the Commission 5.255 (i)  Pre-Notification Referrals Requested by the Parties (Article 4(5)) 5.256 (ii)  Post-notification Referrals Requested by an NCA (Article 22) 5.266 (e)  Evaluation and Reform of the Referral System 5.277 (3)  Member State Action on Non-Competition Grounds 5.281 (a)  Introduction 5.281 (b)  Assessment of Legitimate Interests 5.283 (i)  Recognized Interests 5.284 (ii)  Non-Recognized Interests 5.290 (4)  Concentrations in the Defence Sector 5.294 (5)  Cooperation Between the Commission and Member States 5.298 (a)  General Cooperation Obligations 5.299 (b)  Cooperation During Specific Phases of an Investigation 5.303 (i)  During the Referral Process 5.303 (ii)  During Phase I 5.304 (iii)  During Phase II 5.306 (c)  Enhancing Cooperation Between Member States Through the ECN 5.309 (6)  Merger Control in the EEA Context 5.310 (a)  The Scope of the Merger Control System under the EEA 5.310 (b)  Allocation of Jurisdiction Between the Commission and the EFTA Surveillance Authority 5.312 (c)  Cooperation Between the Commission and the EFTA Surveillance Authority 5.316

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(7)  International Cooperation in Merger Control 5.318 (a)  Framework for International Cooperation 5.318 (b)  Practical Aspects of International Cooperation in Merger Cases 5.322 (c)  Statistics on International Cooperation 5.328 (p. xxix) D. Merger Control Procedure 5.331 (1)  Introduction 5.331 (2)  Principal Features of the Procedural Framework 5.332 (a)  Underlying Rationale: Proportionate, Effective Control 5.332 (b)  Binding Procedural Deadlines 5.338 (c)  The Instruments of the Procedural Framework 5.341 (d)  The Different Actors in EU Merger Proceedings 5.342 (i)  The Notifying Parties and Other Involved Parties 5.343 (ii)  The Commission 5.348 (iii)  Third Parties 5.356 (iv)  Member State NCAs 5.357 (v)  Non-EU Agencies 5.358 (vi)  The EU Courts 5.359 (3)  The Main Steps and Timetable for EU Merger Control Proceedings 5.360 (4)  The Pre-Notification Phase 5.362 (a)  Introduction 5.362 (b)  Timing of Pre-Notification Contacts 5.366 (c)  Initial Contact and Request for a Case Team 5.368 (d)  Confidentiality 5.371 (e)  Discussions on Jurisdiction 5.373 (f)  Discussions on Substance, Procedure, and Timing 5.375 (g)  Review of Draft(s) Form CO and Requests for Waivers 5.379 (h)  Submission of Internal Documents 5.381 (i)  Fact Finding: Contacts with Third Parties 5.384 (j)  Green Light for Notification 5.385 (5)  Notification of a Concentration 5.388 (a)  Introduction 5.388 (b)  Obligation to Notify and Standstill Obligation 5.389 (i)  Automatic Exceptions: Public Bids and Series of Transactions in Securities 5.391 (ii)  Ad Hoc Derogations at the Request of the Parties 5.392

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(iii)  Preventing Early Implementation 5.396 (c)  Consequences of Failure to Notify 5.398 (d)  Timing of Notification 5.399 (e)  Notifying Parties 5.403 (f)  Submission of Form CO 5.404 (g)  Incompleteness 5.412 (h)  Publication of the Fact of the Notification 5.415 (6)  Phase I 5.417 (a)  Introduction 5.417 (b)  Timetable and Deadlines 5.418 (c)  Fact-Finding 5.422 (d)  Where Competition Concerns are Identified 5.427 (e)  Decision 5.430 (f)  Notification and Publication 5.431 (i)  Notification To The Parties 5.431 (ii)  Publication 5.433 (7)  Phase II: In-Depth Investigation 5.437 (a)  Introduction 5.437 (b)  Procedural Safeguards in Phase II 5.439 (c)  Timetable and Deadlines 5.440 (p. xxx) (d)  Initial Stage: Review of Key Documents, Reply to the Article 6(1)(c) Decision and State of Play Meeting 5.445 (e)  In-Depth Investigation 5.447 (f)  Where the Competition Concerns are Dispelled 5.450 (g)  Where Competition Concerns Remain 5.451 (h)  The Statement of Objections 5.452 (i)  Purpose and Content 5.452 (ii)  Timing 5.454 (iii)  Scope of the SO 5.455 (iv)  Other Parties 5.457 (i)  Access to File 5.459 (i)  Purpose 5.459 (ii)  Timing 5.461 (iii)  Scope 5.462 (i)  Internal Documents 5.463 (ii)  Business Secrets and Confidential Information 5.466

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(iv)  Protection of Business Secrets and Confidential Information 5.469 (v)  Use of the Information/Access to Documents 5.476 (j)  Reply to the SO and Oral Hearing 5.478 (i)  Reply to the SO 5.478 (ii)  Oral Hearing 5.480 (i)  Attendees 5.480 (ii)  Preparation 5.481 (iii)  Conduct of the Hearing 5.482 (iv)  Post-Hearing Report 5.486 (k)  The Post-SO/Oral Hearing Stage 5.487 (i)  Final State of Play Meetings 5.487 (ii)  Peer Review Panel 5.489 (iii)  Advisory Committee 5.494 (l)  Decision 5.499 (m)  Notification and Publication 5.503 (n)  Post-Decision Remedies Process 5.505 (8)  The Simplified Procedure 5.506 (a)  Overview and Rationale 5.506 (b)  The Commission’s Discretion in Applying the Simplified Procedure 5.509 (c)  Use of the Simplified Procedure in Practice 5.510 (d)  Impact of the Simplified Procedure on Deadlines 5.511 (e)  The Scope of the Simplified Procedure: Categories of Suitable Cases 5.512 (i)  Five Categories of Suitable Cases 5.512 (ii)  Exclusions 5.520 (f)  Procedural Aspects 5.521 (g)  Decision 5.527 (9)  Abandonment of a Concentration, Withdrawal and Resubmission of a Notification, Change of an Authorized Transaction 5.529 (a)  Abandonment 5.529 (b)  Withdrawal of a Notification 5.530 (c)  Change in the Transaction Structure 5.531 (10)  Particular Procedures 5.532 (a)  Interim Measures 5.534 (i)  General 5.534

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(ii)  Conditions Necessary for the Imposition of Interim Measures 5.536 (p. xxxi) (iii)  Scope of Interim Measures 5.538 (iv)  Process 5.541 (b)  Revocation of a Clearance Decision 5.542 (c)  Inspections and Requests for Information by Decision 5.544 (d)  Imposition of Fines and Periodic Penalties 5.548 (i)  Fines 5.548 (ii)  Periodic Penalty Payments 5.554 E. Substantive Assessment 5.556 (1)  Main Elements of the Assessment under Article 2 of the Merger Regulation 5.556 (a)  ‘A concentration’ 5.557 (b)  ‘which would’ 5.559 (c)  ‘impede effective competition’ 5.562 (i)  Intermediate and Ultimate Consumers 5.564 (ii)  Concept of Consumer Welfare 5.565 (d)  ‘significantly’ 5.568 (e)  ‘in the common market or in a substantial part of it,’ 5.577 (f)  ‘in particular as a result of the creation or strengthening of a dominant position.’ 5.581 (2)  Definition of the Relevant Market 5.587 (a)  Relevant Product Market 5.591 (i)  Demand-Side Substitution 5.593 (ii)  Supply-Side Substitution 5.595 (b)  Relevant Geographic Market 5.602 (i)  Defining the Geographic Market on the Basis of Location of Customers or Producers 5.607 (c)  The SSNIP Test and Critical Loss Analysis 5.612 (d)  Price Discrimination Markets 5.618 (e)  Factors Relevant to Market Definition and Types of Evidence Relied On 5.626 (i)  Views on Functionality 5.630 (ii)  Commercial Strategies and Marketing Material 5.635 (iii)  Analysis of Price Levels 5.638 (iv)  Analysis of Price Correlation 5.645 (v)  Event Analysis 5.654

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(f)  Market Definition for Merger Cases and Antitrust Cases are Similar but Distinct 5.657 (g)  Is Market Definition Really Necessary in an Effects-Based Analysis? 5.661 (3)  Analysis of the Effects of a Concentration 5.666 (a)  The Move to a More Effects-Based Approach 5.667 (b)  Gravitation Towards Unilateral Horizontal Effects 5.669 (c)  Increasingly Complex Assessments 5.675 (4)  Horizontal Mergers 5.680 (a)  Non-Coordinated Effects (Unilateral Effects) 5.680 (i)  Market Share Thresholds 5.680 (i)  Which Market Shares are Relevant for the Assessment? 5.682 (ii)  Market Shares Indicating a Lack of Substantive Concern 5.684 (iii)  Market Shares Indicating a Likelihood of Substantive Concerns 5.687 (ii)  Intervention Thresholds: Removal of a Significant Competitive Constraint 5.691 (iii)  Assessment of Effect: Additional Factors 5.700 (p. xxxii) (iv)  Differentiated Product Markets: Closeness of Competition 5.703 (i)  Views of the Market Participants 5.709 (ii)  Internal Documents 5.714 (iii)  Bidding Data 5.715 (iv)  Switching Data 5.720 (v)  Price Analysis 5.722 (vi)  Cross-Price Elasticities 5.724 (vii)  Modelling the Market 5.726 (v)  Homogeneous Product Markets: Capacity 5.730 (vi)  Multi-Sourcing 5.736 (vii)  Ability to Hinder Expansion 5.738 (viii)  Merger with a Potential Competitor 5.746 (ix)  Buyer Power Created by the Merger 5.755 (b)  Coordinated Effects 5.764 (i)  Concept and History 5.764 (i)  Collective Dominance Under the 1989 Merger Regulation 5.767 (ii)  The Airtours Benchmark 5.769 (iii)  The SONY/BMG Jurisprudence 5.771 (ii)  Analytical Framework 5.776

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(i)  The Airtours Criteria 5.777 (ii)  The Approach Under the Horizontal Merger Guidelines 5.778 (iii)  Creating Coordination or Strengthening Existing Coordination 5.782 (i)  Creating Coordination 5.783 (ii)  Strengthening Coordination 5.787 (iv)  The Criteria for Coordination 5.791 (i)  Reaching Terms of Coordination (A Conducive Market Environment) 5.792 (ii)  Monitoring Deviations 5.793 (iii)  Adequate Deterrent Mechanisms 5.800 (iv)  Reactions of Outsiders 5.805 (5)  Non-Horizontal Assessment 5.810 (a)  Non-Coordinated Effects (Unilateral Effects) 5.810 (i)  Theories of Harm 5.813 (i)  Example of Input Foreclosure: UTC/Goodrich 5.817 (ii)  Example of Customer Foreclosure: Mobile Wallet Platform 5.821 (iii)  Example of Conglomerate Effects: Intel/McAfee 5.826 (ii)  Who is Entitled to Protection From the Potential Effects of Non-Horizontal Mergers? 5.830 (iii)  Framework for Analysing Foreclosure 5.836 (i)  Ability to Foreclose 5.839 (ii)  Incentive 5.847 (iii)  Effect 5.852 (iv)  The Diminished Role of Dominance in Non-Horizontal Cases 5.860 (i)  Dominance is Not Necessary 5.861 (ii)  Effects May Come Faster Than Dominance 5.864 (b)  Coordinated Effects 5.867 (i)  Reaching Terms of Coordination 5.868 (ii)  Monitoring Deviations 5.869 (iii)  Deterrent Mechanisms 5.870 (iv)  Reactions From Outsiders 5.871 (p. xxxiii) (6)  Countervailing Factors 5.874 (a)  Buyer Power 5.877 (i)  The Exercise of Buyer Power 5.883 (i)  Immediately Switch Supplier 5.884 (ii)  Vertically Integrate Upstream 5.886

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(iii)  Sponsor Entry 5.889 (iv)  Refuse to Buy Other Products 5.890 (ii)  Buyer Power Must Benefit All Customers 5.893 (b)  Entry 5.898 (i)  Types of Entry Barrier 5.900 (ii)  Link Between Entry Barriers and Market Definition 5.902 (iii)  Conditions for Entry to be Sufficient Countervailing Factor 5.904 (i)  Entry Must Be Likely 5.905 (ii)  Entry Must Be Timely 5.916 (iii)  Entry Must Be Sufficient 5.918 (c)  Efficiencies 5.921 (i)  Historic Treatment of Efficiencies: The ‘Efficiency Offence’? 5.924 (ii)  Recent Practice 5.931 (iii)  Criteria for an Efficiency Defence 5.942 (i)  Efficiencies Must Benefit Consumers 5.942 (ii)  Efficiencies Must Be Merger-Specific 5.952 (iii)  Efficiencies Must Be Verifiable 5.956 (d)  Failing Firm Defence 5.961 (i)  Conditions Necessary for Failing Firm Defence 5.963 (i)  Exit Due to Financial Difficulties 5.968 (ii)  No Less Anti-Competitive Solution 5.969 (iii)  Exit From the Market 5.971 (ii)  Failing Division 5.973 (iii)  Parties Must Provide the Evidence 5.976 F. Remedies 5.980 (1)  Overview 5.980 (2)  General Principles 5.984 (a)  Roles of Notifying Parties and Commission 5.984 (b)  Attachment to Decision as Conditions or Obligations 5.988 (c)  Distinction Between Remedies, ‘Take-Note’ Commitment, and Facts Taken Into Account 5.991 (i)  Take-Note Commitments 5.992 (ii)  Facts Taken Into Account 5.994 (iii)  Potential Remedy for Breach 5.996

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(3)  Conditions That Remedies Must Meet 5.997 (a)  Remedies Must Eliminate the Competition Concerns 5.998 (b)  Remedies Must Be Proportionate 5.1000 (c)  Remedies Must Be Capable of Effective Implementation 5.1005 (i)  Timely Implementation 5.1006 (ii)  Lasting and Workable Solution 5.1010 (iii)  Capable of Adequate Monitoring 5.1012 (d)  Remedies Must Not Lead to New Competition Concerns 5.1014 (4)  Remedies in Phase I and Phase II 5.1015 (a)  Phase I Remedies 5.1016 (i)  Substantive Requirements 5.1016 (ii)  Formal Requirements 5.1018 (p. xxxiv) (iii)  Timing 5.1022 (iv)  Assessment Process 5.1024 (v)  Modifications 5.1029 (vi)  Outcome 5.1032 (b)  Phase II Remedies 5.1034 (i)  Substantive Requirements 5.1034 (ii)  Formal Requirements 5.1037 (iii)  Time Limits 5.1038 (iv)  Assessment Process 5.1042 (v)  Modifications 5.1043 (vi)  Outcome 5.1045 (5)  Types of Remedies 5.1047 (a)  Typology and Terminology 5.1047 (b)  Acceptability of the Various Categories 5.1050 (c)  Divestiture of a Business 5.1055 (i)  Overview 5.1055 (ii)  Purpose 5.1058 (iii)  Divestiture of a Viable and Competitive Stand-Alone Business 5.1060 (iv)  Carve-Out Divestitures 5.1067 (v)  Alternative to Carve-Outs 5.1071 (vi)  Alternative Divestitures: Crown Jewels 5.1072 (vii)  Suitable Purchaser 5.1075 (i)  Standard Requirements 5.1076 (ii)  When a Suitable Purchaser Must Be Identified 5.1078

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(d)  Removal of Links with Competitors 5.1083 (e)  Access Remedies 5.1086 (f)  Commitments to Enter Into, Modify, or Terminate LongTerm Agreements 5.1091 (g)  Conduct Remedies in Conglomerate Cases 5.1095 (h)  Other Conduct Remedies 5.1096 (6)  Implementation and Modification of Remedies Post-Decision 5.1098 (a)  Implementation of Remedies 5.1098 (i)  Timing 5.1098 (ii)  Obligations of the Parties in the Interim Period 5.1100 (iii)  Hold-Separate Manager 5.1102 (iv)  Monitoring Trustee 5.1104 (v)  Proposal for a Suitable Purchaser 5.1107 (vi)  Divestiture Trustee 5.1108 (b)  Modification of Remedies Post-Decision 5.1111 (i)  Extension of First Divestiture Period 5.1112 (ii)  Other Modifications Requested by the Parties 5.1114 (iii)  Other Modifications Requested by the Commission 5.1116 (c)  Breach of Remedies 5.1117 (i)  Breach of Obligations 5.1118 (ii)  Breach of Conditions 5.1120 (iii)  Fines 5.1123 G. Judicial Review 5.1125 (1)  Introduction 5.1125 (2)  Types of Acts That Can Be Reviewed 5.1129 (3)  Legal Standing in Actions for Annulment 5.1137 (a)  Member States, Parliament, and Council 5.1138 (p. xxxv) (b)  Natural and Legal Persons 5.1139 (i)  The Notifying Parties 5.1144 (ii)  Other Parties to the Concentration 5.1145 (iii)  Third Parties 5.1146 (4)  Grounds for Challenge 5.1151 (a)  Lack of Competence 5.1152 (b)  Infringement of an Essential Procedural Requirement 5.1153 (c)  Infringement of the Treaties or of Any Rule of Law Relating to Their Application 5.1162 (d)  Misuse of Powers 5.1163

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(5)  Procedure 5.1164 (a)  General 5.1164 (b)  Interim Measures 5.1170 (c)  Expedited Procedure 5.1175 (d)  Appeals from the General Court to the Court of Justice 5.1178 (6)  The Scope of Review 5.1182 (a)  Introduction 5.1182 (b)  Burden of Proof 5.1184 (c)  Standard of Proof 5.1188 (d)  Standard of Review: The Margin of Appreciation 5.1190 (e)  Full Jurisdiction Over Fines and Periodic Penalty Payments 5.1195 (7)  Consequences of Annulment 5.1197 (a)  Introduction 5.1197 (b)  The New Examination 5.1200 (8)  Actions for Damages 5.1203 (a)  Introduction 5.1203 (b)  Unlawful Conduct 5.1205 (c)  Harm 5.1209 (d)  Causal Link 5.1210 6. Article 106—Exclusive or Special Rights and Other Anti-Competitive State Measures José Luis Buendia Sierra A. Introduction 6.01 (i)  Competition Law Normally Deals Only With the Behaviour of Undertakings 6.01 (ii)  State Defence Doctrine 6.02 (iii)  State Liability Under Competition Law 6.03 B. Application of Articles 4(3) and 3(3) TEU and Articles 101 and 102 TFEU to Anti-Competitive State Measures 6.04 (i)  Initial Position (Broad Interpretation) 6.04 (ii)  Court Narrows Interpretation 6.05 (iii)  Impact of the Lisbon Treaty 6.06 (iv)  Application of Articles 106, 107, and 108 to Anti-Competitive State Measures 6.08

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C. Article 106(1): State Measures in Respect of Public or Privileged Undertakings 6.09 (1)  Addressees and Regulatory Content 6.09 (2)  State Measures 6.10 (i)  Formal Criteria Are Not Decisive in Defining ‘State Measures’ 6.11 (ii)  The Function of the Act is the Decisive Factor in Defining ‘State Measures’ 6.12 (iii)  The Form of the Act Creates a Presumption, But Its Function is the Decisive Criterion in Defining It as a ‘State Measure’ 6.13 (iv)  State Measures May Be Adopted By Any Type of Public Authority 6.14 (3)  Related to Public or Privileged Undertakings 6.15 (p. xxxvi) (a)  ‘Economic Activity’ 6.16 (i)  Article 106(1) Applies to State Regulation of Economic Activities 6.16 (ii)  Definition of ‘Economic Activity’ 6.17 (iii)  Criteria Used By the Court of Justice 6.18 (iv)  ‘Public’ Undertaking 6.26 (v)  Definition of Public Undertaking 6.27 (vi)  A Separate Legal Entity is Not Necessary 6.28 (vii)  Public Undertakings After Privatization 6.29 (viii)  ‘Privileged’ Undertakings 6.30 (b)  Exclusive Rights 6.31 (i)  Notion of ‘Exclusive Right’ 6.31 (ii)  Exclusive Right and Dominant Position are Different Things 6.33 (iii)  Exclusive Rights are Created by State Measures 6.34 (iv)  Need for a Discretionary Decision by the State 6.35 (v)  Special Rights 6.37 (c)  The Connection Between the Measure and the Undertaking 6.42 (i)  Types of Connection Required by Article 106(1) 6.42 (ii)  State Measures Which Benefit the Undertaking 6.44 (iii)  State Measures Which Use the Undertaking as an Instrument 6.45 (iv)  State Measures Granting an Exclusive Right 6.46 (v)  The Dual Role of Exclusive Rights Within Article 106(1) 6.48

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(vi)  General Measures Do Not Fall Under Article 106(1) 6.49 (4)  Contrary to Another Provision of the TFEU 6.50 (5)  Article 106(1) in Combination with the Competition Rules Addressed to Undertakings 6.53 (a)  Article 106(1) in Combination with Article 102 6.54 (i)  Dominant Position 6.55 (ii)  State Measures Leading to Actual Abusive Behaviour of the Undertakings 6.56 (iii)  Different Types of Abuse 6.57 (iv)  Only the State is Responsible for State-Imposed Abuses 6.59 (v)  Both the State and the Undertaking are Liable for StateInduced Abuses 6.60 (vi)  State Inactivity 6.61 (b)  State Measures Affecting the Structure of Competition and Leading to Potential Abusive Behaviour of Undertakings 6.62 (i)  No Requirement for Actual Abuse 6.62 (ii)  The Granting of Regulatory Powers to an Undertaking 6.63 (iii)  The ‘Bundling’ of Regulatory and Commercial Activities 6.64 (iv)  The Granting of an Exclusive Right 6.65 (v)  The Demand Limitation Doctrine 6.66 (vi)  The Conflict of Interest Doctrine 6.67 (vii)  Presumption of Causal Link 6.69 (viii)  Effects Similar to Those of Abusive Behaviour 6.70 (ix)  The Doctrine of the Extension of a Dominant Position 6.71 (x)  The Automatic Abuse Doctrine 6.77 (xi)  The La Crespelle Case 6.82 (xii)  More Recent Cases 6.83 (xiii)  The Current Status Quo 6.86 (xiv)  Effect on Intra-EU Trade 6.91 (p. xxxvii) (c)  Article 106(1) in Combination with Article 101 6.93 (6)  Article 106(1) in Combination with the Treaty Rules Addressed to the Member States 6.98 (a)  The Double Function of Article 106(1) 6.98 (i)  Article 106(1) as a ‘Reminder’ of Prohibitions 6.99 (ii)  ‘Lifting the Veil’ 6.100 (b)  Article 106(1) in Combination with the Rules on Free Movement of Goods: Articles 34 and 37 6.104

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(i)  The General Regime: Measures of Equivalent Effect and Article 34 6.106 (ii)  The Special Regime: State Monopolies and Article 37 6.110 (iii)  ‘State monopolies of a commercial character’ 6.111 (iv)  Obligations Contained in Article 37 6.112 (v)  Obligations During the Transitional Period 6.113 (vi)  Obligations After the Transitional Period 6.117 (vii)  The Borderline Between the General and Special Regimes 6.124 (c)  Article 106(1) in Combination with the Rules on Freedom to Provide Services and on Establishment: Articles 49 and 56 6.126 (i)  Article 106(1) in Combination with Article 56 6.127 (ii)  Article 106(1) in Combination with Article 49 6.129 (iii)  Obligation to Select the Operator of a Public Service Concession Through a Competitive Tender 6.133 (iv)  Need for a Cross-Border Element 6.134 (7)  Direct Effect 6.135 D. Article 106(2): Services of General Economic Interest and Other Public Interest Objectives 6.136 (1)  The Undertakings to which Article 106(2) Relates 6.138 (i)  Undertakings 6.139 (ii)  Undertakings Entrusted With the Operation of Services of General Economic Interest 6.141 (iii)  Services of General Economic Interest 6.144 (iv)  Entrustment 6.155 (v)  Revenue-Producing Monopolies 6.162 (2)  Article 106(2) as an Exception Applicable to the Behaviour of Undertakings and to State Measures 6.163 (3)  Conditions for the Application of Article 106(2) 6.167 (i)  The Necessity of the Measure 6.168 (ii)  The Proportionality Principle 6.169 (iii)  The Old Approach: A Strict Interpretation of the Proportionality Test 6.175 (iv)  The Need for a More Flexible Interpretation 6.176 (v)  Universal Service as a Justification for Exclusive Rights 6.178 (vi)  The Corbeau Case 6.184 (vii)  The Almelo Case 6.188 (viii)  Other Cases 6.193

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(ix)  Case law of the General Court 6.198 (x)  Need for an Economic Analysis 6.207 (xi)  The Dynamic Character of Proportionality 6.208 (xii)  Different Approaches Depending on the Sector 6.209 (xiii)  The Strict Approach and the Flexible Approach 6.210 (p. xxxviii) (xiv)  Universal Services and Other Services of General Economic Interest 6.212 (xv)  Examples of Measures Considered Non-Proportional 6.213 (xvi)  The Interest of the EU 6.214 (4)  Invocation of Article 106(2) and Burden of Proof 6.216 (5)  Relationship between Article 106(2) and Other Exceptions 6.218 (i)  ‘Mandatory Requirements’ Within the Framework of Article 106(2) 6.218 (ii)  Article 101(3) 6.221 (6)  Relationship between Article 106(2) and Article 14 6.222 E. Article 106(3): Procedural Rules Applying to Anti-Competitive State Measures 6.228 (1)  Article 106(3) Decisions 6.229 (i)  General Issues 6.229 (ii)  Analogy With Other Procedures 6.230 (iii)  Discretionary Character of the Procedure Under Article 106(3) 6.231 (iv)  Lodging of Complaints and Ex Officio Cases 6.236 (v)  Dismissal of Complaints 6.237 (a)  The Infringement Procedure 6.242 (i)  Interim Measures 6.242 (ii)  Letter of Formal Notice 6.243 (iii)  The Rights of the Member State and of the Undertaking that Benefits from the Measure 6.244 (iv)  End of the Procedure Without a Formal Decision 6.245 (v)  The Formal Decision and Its Effects 6.246 (vi)  Binding Effects 6.248 (vii)  Action for Annulment Against an Article 106(3) Decision 6.249 (viii)  Action for Failure to Implement an Article 106(3) Decision 6.250 (2)  Article 106(3) Directives 6.252 (i)  Preventive Functions of Article 106(3) Directives 6.252

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(ii)  Article 106(3) Directives as Instruments for Detecting Future Infringements 6.256 (iii)  Article 106(3) Directives as Instruments for ‘Specifying’ the Provisions of the Treaty 6.257 (3)  Legal Regime of Article 106(3) Directives 6.260 (i)  The Exclusive Competence of the Commission 6.260 (ii)  Limits to the Commission’s Competence 6.261 (iii)  Article 106(3) Directives Cannot Deal With the Autonomous Behaviour of Undertakings 6.262 (iv)  Formal Limits to the Commission’s Power under Article 106(3) 6.263 (v)  Binding Effects 6.265 (vi)  Lack of Direct Effect 6.266 (vii)  Relationship Between Directives Under Article 106(3) and Harmonizing Directives 6.267 (viii)  Article 106(3) Overlaps With Other Treaty Provisions 6.268 (ix)  Article 106(3) Overlaps with Article 14 6.269 (x)  The Dissuasive Role of Article 106(3) 6.271 (p. xxxix) II  Specific Practices 7. Horizontal Cooperation Agreements Matthew Bennett, Francisco Enrique González Díaz, Henning Leupold, Anna Vernet, and Donncadh Woods A. Introduction 7.01 (1)  Definition of Horizontal Agreements and Practices 7.01 (2)  Background to Horizontal Agreements and Practices 7.02 B. Assessment of Horizontal Cooperation Agreements under Article 101 7.07 (1)  Purpose and Scope 7.07 (2)  Framework of Analysis 7.18 C. Joint Ventures Involving Joint Control 7.29 (1)  Definition and Constitution of a Joint Venture 7.29 (a)  Definition 7.29 (b)  Constitution of a Joint Venture 7.30 (2)  Distinction Between Cooperative and Concentrative Joint Ventures 7.37 (3)  The Rationale Behind the Difference in Treatment Between FullFunction Concentrative and Full-Function Cooperative Joint Ventures 7.39

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(4)  The Application of Article 101(1) by the Commission to Cooperative Joint Ventures Prior to the Entry into Force of the 1997 Amendment to the First Merger Regulation 7.51 (5)  The Notion and Role of Potential Competition in Assessing the Validity of Joint Ventures under Article 101 7.66 (6)  Conditions Leading to the Incentive to Coordinate (Spillover Effects) 7.78 (a)  Introduction 7.78 (b)  Spillovers on the Same Market As That of the Joint Venture 7.85 (c)  Spillovers on to Other Markets 7.92 (i)  Spillovers on to Downstream Markets 7.93 (ii)  Spillovers on to Adjacent Product Markets 7.95 (iii)  Spillovers on to Adjacent Geographic Markets 7.98 (d)  Network Effects 7.99 (7)  Direct Contractual Restrictions Between Parents 7.103 (8)  Intra-Group Agreements and Joint Ventures 7.105 (9)  Spillovers under the Merger Regulation 7.123 D. Research and Development Agreements 7.143 (1)  Overview 7.143 (2)  Horizontal Cooperation Guidelines 7.145 (a)  Relevant Markets 7.145 (b)  Calculation of Market Shares 7.149 (c)  Competitive Assessment under Article 101(1) 7.154 (d)  Competitive Assessment under Article 101(3) 7.158 (e)  Time of Assessment 7.159 (3)  The R&D BER 7.162 (a)  Background and Overview 7.162 (b)  Key Concepts of the R&D BER 7.168 (i)  Article 1 of the R&D BER: Definitions 7.169 (ii)  Article 2 of the R&D BER: Scope of Application 7.185 (iii)  Article 3 of the R&D BER: Positive Exemption Criteria 7.188 (p. xl) (iv)  Article 4 of the R&D BER: Market Share Threshold and Duration of Exemption 7.197 (v)  Article 5 of the R&D BER: Hardcore Restrictions 7.206 (vi)  Article 6 of the R&D BER: Excluded Restrictions 7.222 (vii)  Article 7 of the R&D BER: Application of the Market Share Threshold 7.227

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E. Production Agreements 7.235 (1)  Introduction 7.235 (2)  Horizontal Cooperation Guidelines 7.238 (a)  Main Changes Compared to the 2001 Text 7.238 (b)  Scope 7.239 (c)  Relevant Markets 7.242 (3)  Competitive Assessment under Article 101(1) 7.244 (a)  Main Competition Concerns 7.244 (b)  Restrictions of Competition by Object 7.246 (c)  Restrictions of Competition by Effect 7.248 (i)  ‘Commonality of costs and collusive outcomes—Example 1’ 7.256 (ii)  ‘Anti-competitive foreclosure on a downstream market— Example 3’ 7.262 (d)  Safe Harbour 7.264 (4)  Competitive Assessment under Article 101(3) 7.266 (5)  The Specialisation BER 7.269 (a)  Background and Overview 7.269 (b)  Key Concepts of the Specialisation BER 7.276 (i)  Article 1: Definitions 7.277 (i)  Specialization Agreement: Article 1(1)(a) 7.278 (ii)  Unilateral Specialization Agreement: Article 1(1)(b) 7.279 (iii)  Reciprocal Specialization Agreement: Article 1(1)(c) 7.281 (iv)  Agreements on Joint Production: Article 1(1)(d) 7.282 (v)  Agreement: Article 1(1)(e) 7.283 (vi)  Product: Article 1(1)(f) 7.284 (vii)  Production: Article 1(1)(g) 7.285 (viii)  The Preparation of Services: Article 1(1)(h) 7.286 (ix)  Relevant Market: Article 1(1)(i) 7.287 (x)  Specialization Product: Article 1(1)(j) 7.288 (xi)  Downstream Products: Article 1(1)(k) 7.289 (xii)  Competing Undertaking: Article 1(1)(l); Actual Competitor: Article 1(1)(m); and Potential Competitor: Article 1(1)(n) 7.290 (xiii)  Exclusive Supply Obligation: Article 1(1)(o) 7.292 (xiv)  Exclusive Purchase Obligation: Article 1(1)(p) 7.293 (xv)  Joint: Article 1(1)(q) 7.294 (xvi)  Distribution: Article 1(1)(r) 7.295

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(xvii)  Undertaking, Parties, and Connected Parties: Article 1(2) 7.296 (ii)  Article 2: The Exemption—Scope of Application 7.298 (i)  Assignment or Licensing of IP Rights 7.301 (iii)  Article 3: Market Share Threshold 7.303 (i)  The Different Market Share Thresholds 7.304 (iv)  Article 4: Hardcore Restrictions 7.308 (i)  Price-Related Restrictions: Article 4(a) 7.310 (ii)  Limitation of Output or Sales: Article 4(b) 7.311 (iii)  The Allocation of Markets and Customers: Article 4(c) 7.315 (v)  Article 5: Application of the Market Share Thresholds 7.316 (p. xli) (i)  The Calculation of Market Shares: Article 5(a), (b), and (c) 7.317 (vi)  Article 6: Transitional Period 7.321 (vii)  Article 7: Period of Validity 7.322 F. Joint Selling Agreements 7.323 (1)  Introduction 7.323 (a)  Definition 7.323 (b)  Potential or Actual Competitors 7.325 (c)  Consortia 7.327 (d)  Main Competition Issues 7.328 (2)  Application of Article 101(1) to Joint Selling Agreements 7.329 (a)  Restrictions of Competition By Object 7.329 (b)  Restrictions of Competition By Effect 7.330 (c)  Safe Harbour 7.333 (3)  Factors Addressed in Commission Decisions and the Guidelines 7.335 (a)  Market Structure; Oligopolistic Markets 7.336 (b)  Market Entry 7.341 (c)  Price Restrictions 7.342 (d)  Output Restrictions 7.344 (e)  Exclusivity Clauses 7.347 (f)  Collusion 7.352 (4)  Application of Article 101(3) to Joint Selling Agreements 7.354 (a)  Efficiencies 7.354 (b)  Specific Circumstances Allowing for an Exemption of Price Fixing 7.359

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G. Joint Purchasing Agreements 7.362 (1)  Introduction 7.362 (a)  Definition 7.362 (b)  Relevant Markets 7.364 (c)  Potential or Actual Competitors 7.367 (d)  Main Competition Issues 7.369 (e)  Buying Power 7.371 (2)  Application of Article 101(1) to Joint Purchasing Agreements 7.375 (a)  Restrictions of Competition By Object 7.375 (b)  Restrictions of Competition By Effect 7.377 (c)  Safe Harbour 7.378 (d)  Collusive Outcome 7.382 (3)  Factors Addressed in Commission’s Guidelines and Decisions 7.384 (a)  The Existence of Downstream Market Power 7.385 (b)  The Existence of Upstream Market Power 7.391 (c)  Measurement of Buyer Power 7.393 (d)  SMEs 7.398 (e)  Countervailing Power of Strong Suppliers 7.399 (f)  Exclusive Purchasing Obligations 7.400 (4)  Application of Article 101(3) to Joint Purchasing Agreements 7.404 H. Information Exchange Agreements 7.407 (1)  Introduction 7.407 (2)  Main Competition Issues 7.412 (a)  Information Exchanges May Facilitate Coordination 7.413 (i)  Information Exchanges to Help Firms to Reach a Focal Point for Coordination 7.414 (ii)  Information Exchanges to Help Firms to Monitor and Punish Deviations From Coordination 7.417 (iii)  Information Exchanges to Enhance External Stability of Coordinated Outcomes 7.420 (b)  Information Exchanges That Exclude Competitors 7.422 (c)  Competition Issues Absent Coordination or Exclusionary Concerns 7.424 (p. xlii) (3)  Potential Benefits 7.427 (a)  Enhanced Consumer Transparency 7.429 (b)  Enhanced Allocative Efficiencies 7.432

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(c)  Reduction in Asymmetric Information Problems 7.435 (d)  Benchmarking 7.437 (4)  Criteria for Assessment 7.438 (a)  Restrictions of Competition By Object 7.439 (b)  Meaning of Future Intentions 7.442 (c)  Frequency as a Determinative Criteria for Object Assessment 7.445 (d)  Cartel Agreements vs Exchange of Information Agreements 7.446 (e)  Concerted Practices 7.448 (5)  Assessment of Likely or Actual Effects 7.455 (a)  Characteristics of Relevant Market 7.457 (i)  Degree of Concentration 7.458 (ii)  Stability of Supply and Demand 7.464 (iii)  Symmetric Costs and Market Structures 7.466 (iv)  Frequency of Firms’ Interactions 7.468 (v)  Barriers to Entry 7.469 (b)  Characteristics of Information Exchanged 7.471 (i)  Coverage of Relevant Market 7.471 (ii)  Strategic Significance of Information 7.474 (iii)  Public vs Non-Public Information 7.478 (iv)  Exchanges Made Publicly vs Exchanges Made NonPublicly 7.482 (v)  Degree of Aggregation 7.484 (vi)  Age of Data 7.491 (vii)  Frequency of Exchange 7.497 I. Standardization Agreements 7.498 (1)  Introduction 7.498 (2)  Recent Investigations in the Area of Standard-Setting Agreements 7.501 (3)  Agreements on Standards under the 2010 Horizontal Cooperation Guidelines 7.510 (a)  Definition 7.510 (b)  Relevant Markets 7.511 (c)  Theories of Harm 7.512 (d)  When Could There Be a Restriction By Object? 7.516 (e)  The Safe Harbour Principles 7.517

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(f)  FRAND Benchmarks 7.526 (g)  Effects-Based Assessment 7.528 (h)  Article 101(3): Efficiencies 7.534 J. Standard Terms 7.538 (1)  Introduction 7.538 (2)  Standard Terms under the 2010 Horizontal Cooperation Guidelines 7.539 (a)  Relevant Markets 7.540 (b)  Theories of Harm 7.541 (c)  Restriction By Object 7.542 (d)  Effects-Based Assessment 7.543 (e)  Efficiency Gains 7.548 (f)  Indispensability 7.549 (g)  Pass-On to Consumers 7.550 (h)  No Elimination of Competition 7.551 (p. xliii) 8. Cartels Antoine Colombani, Jindrich Kloub, and Ewoud Sakkers A. Introduction 8.01 (1)  Definition 8.01 (2)  The Per Se Prohibition of Cartels in EU Competition Law 8.03 (3)  Harm Caused by Cartels 8.05 B. Typology of Cartel Arrangements and Common Features of Collusion 8.07 (1)  Typology of Cartel Arrangements 8.07 (a)  Direct or Indirect Fixing of Purchase or Selling Prices or Any Other Trading Conditions 8.08 (i)  Uniform Prices and Price Formulae 8.09 (ii)  Minimum Prices 8.11 (iii)  ‘Target’ Prices 8.12 (iv)  Recommended Prices 8.13 (v)  Discussion of Prices for Individual Customers/Customer Lists 8.14 (vi)  Agreement on Part of the Price or on Price Supplements 8.15 (vii)  Maximum Rebates 8.16 (viii)  Agreements on Other Trade Conditions 8.17 (ix)  Agreement on the Purchase Price of Raw Materials 8.18 (x)  Coordinated Price Increase ‘Campaigns’ 8.19

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(b)  Limitation or Control of Production, Markets, Technical Development, or Investment 8.22 (i)  Production or Sales Quotas 8.23 (ii)  Other Types of Joint Limitation or Control of Production 8.24 (iii)  The Control or Limitation of Commercial Investment 8.25 (iv)  Collusive Product Specialization 8.26 (v)  Channelling Output/Grant of Reciprocal Selling Rights and Joint Sales Arrangements 8.27 (vi)  Standard Setting 8.28 (vii)  Other Practices Limiting Production or Technological Development 8.29 (c)  Sharing of Markets, Customers, or Sources of Supply 8.30 (i)  Allocation of Market Shares 8.31 (ii)  Allocation of Territories or Distribution Channels 8.32 (iii)  Allocation of Customers and Other Customer-Specific Practices 8.33 (iv)  Bid Rigging 8.36 (v)  Sharing Sources of Supply 8.37 (d)  Coordinated Boycotts, Bans on Imports, Concerted Refusal to Deal 8.39 (i)  Keeping Competitors Away From the Cartel’s Market 8.37 (ii)  Placing Certain Competitors at a Competitive Disadvantage 8.40 (iii)  Boycott of Reluctant Undertakings 8.41 (e)  Exchange of Commercially Sensitive Information/ Unilateral Signalling/Hub-and-Spoke Cartels 8.42 (i)  Exchange of Information: Often a Constituent Part of the ‘Cartel Offence’, But Also a Violation in Its Own Right? 8.42 (ii)  Focusing on the ‘Object’ 8.43 (iii)  The 2010 Horizontal Cooperation Guidelines 8.44 (iv)  Collusion With Only an Indirect Effect on Prices Also Prohibited 8.45 (v)  Form of Collusion is Immaterial if Object is Established 8.46 (vi)  Information Exchanges Illicit Based on Evidence of ‘Effect’? 8.47 (vii)  Conclusion as to Information Exchange 8.48 (p. xliv) (viii)  Unilateral Signalling 8.49 (ix)  ‘Hub-and-Spoke’ Cartels 8.50 (f)  The Problem of ‘Tacit Collusion’ 8.51 (i)  The Theory of Tacit Collusion 8.51

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(ii)  Does Tacit Collusion Amount to Cartel Behaviour? 8.52 (iii)  Conclusion on Tacit Collusion 8.55 (g)  Assessment of Cartels under Article 101(3) 8.56 (2)  Common Features of Collusion 8.57 (a)  Factors Conducive to the Establishment of Cartels 8.58 (i)  Oligopolistic Markets 8.59 (ii)  Collusive Business Values and Established Communication Channels 8.60 (iii)  Exogenous Triggering Events 8.62 (iv)  The Determining Role of Instigators 8.63 (b)  Organizational Aspects of Cartels 8.64 (i)  Regular Meetings 8.65 (i)  From Informal Contacts to Highly Institutionalized Schemes 8.66 (ii)  Multiple Working Levels 8.67 (iii)  ‘Pre-Meetings’ and ‘Ad Hoc Meetings’ 8.68 (ii)  The Role of Trade Associations and Fiduciary Companies and Their Liability 8.70 (i)  Liability of Trade Associations in Earlier Cases 8.71 (ii)  Towards a Discretionary Approach in Trade Association Liability 8.72 (iii)  Addressing the Role Played by Certain Fiduciary Companies in Facilitating Collusion: Earlier Cases 8.73 (iv)  Towards a Systematic Sanctioning of Facilitating Companies as Co-Perpetrators 8.74 (iii)  Concealment Measures 8.75 (i)  Covering the Cartel’s Tracks 8.76 (ii)  Paperless Policy 8.77 (iii)  Storing Cartel Documents in Private Homes 8.78 (iv)  Using Code Names 8.79 (v)  Other Measures 8.80 (c)  Running the Business of Collusion 8.81 (i)  Managing the Elimination of Competition 8.82 (i)  Getting Other Market Operators on Board 8.82 (ii)  Achieving Comparability of the Products 8.83 (iii)  Collection of Data and Circulation of Detailed Implementation Documents 8.84 (iv)  ‘Coordinators’ and ‘Market Leaders’ 8.85 (ii)  Enforcing Cartel Arrangements between the Participants 8.87

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(i)  Monitoring Schemes 8.88 (ii)  Penalties and Compensation Measures 8.89 (iii)  Threats, Boycotts and Coordinated Attacks on Competitors 8.90 (iii)  The Instability of Collusive Schemes 8.91 (i)  Claims for Higher Quotas 8.92 (ii)  Mutual Suspicion of Cheating 8.93 (iii)  Leniency Programmes as an Additional Factor of Instability 8.94 C. Investigating Hardcore Cartels 8.95 (1)  The Initiation of a Case: Information Sources 8.95 (p. xlv) (a)  Market Monitoring and Information From Other Investigations 8.96 (i)  Sector Inquiries 8.99 (b)  Information Received From Other Authorities 8.100 (i)  Pre-Investigation Exchanges of Information within the European Competition Network 8.100 (ii)  Exchange of Information with Third Country Authorities 8.101 (c)  Complaints (Formal and Informal) 8.103 (d)  Informants/Whistleblowers 8.104 (e)  Applications under the Leniency Notice 8.105 (2)  Leniency: Inducing Insiders to Break Rank 8.106 (a)  Rationale and Origins of the EU Leniency Policy 8.106 (i)  The Problem of Detecting and Deterring Cartel Behaviour 8.106 (ii)  Difficulties in Detecting and Proving Cartels 8.107 (iii)  The Rationale for a Leniency Policy: The Prisoner’s Dilemma 8.108 (iv)  Introduction and Development of the Commission’s Leniency Policy 8.109 (v)  Temporal Scope of the Notices 8.110 (vi)  Structure 8.111 (b)  The 2002 and 2006 Leniency Notices and the Reasons for Revision of the 1996 Policy 8.112 (i)  Content and Application of the 1996 Leniency Notice 8.112 (i)  Basic Principles 8.112 (ii)  Section B: 75– 100 Per Cent Reduction (Total Exemption) in the Fine 8.113 (iii)  Section C: 50–75 Per Cent Reduction in the Fine 8.114

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(iv)  Section D: Reductions of 10–50 Per Cent of the Fine 8.115 (v)  Retraction of Non-Contestation 8.119 (vi)  Procedural Aspects (Section E) 8.120 (ii)  Issues Regarding the Effectiveness of the 1996 Leniency Notice 8.121 (iii)  The 2002 Leniency Notice and its 2006 Revision 8.122 (i)  Principles Governing the 2002 Revision of the 1996 Leniency Notice 8.122 (ii)  Changes Introduced in the 2006 Leniency Notice 8.129 (iii)  Content and Implementation of the 2002 and 2006 Leniency Notices 8.131 (iv)  Criteria for immunity under the 2002 and 2006 Leniency Notices 8.133 (i)  Substantive Tests 8.133 (ii)  The Scope of the Leniency Policy: Are Stand-Alone Concerted Practices Covered? 8.139 (iii)  Only One Immunity Per Cartel 8.140 (iv)  Other Conditions Which Must Be Satisfied in Order to Qualify for Immunity 8.141 (v)  Procedural Aspects 8.150 (v)  Reduction in the Fine under the 2002 and 2006 Leniency Notices 8.175 (i)  Substantive Tests 8.176 (ii)  Available Bands of Reduction and Relevant Criteria 8.181 (iii)  Procedural Aspects 8.184 (iv)  Non-Contestation of Facts is Not Rewarded Under the 2006 and 2002 Leniency Notices 8.195 (v)  ‘Significant Added Value’ Test: Commission Practice 8.196 (p. xlvi) (vi)  Judicial Review of the Commission’s Leniency Policy Under the 2002 and 2006 Notices 8.210 (i)  Significant Court Approval of the Commission’s Practice under the 2002 Leniency Notice 8.211 (ii)  Legality of the Leniency Notice 8.212 (iii)  The Commission’s Discretion in the Assessment of Leniency Applications 8.213 (iv)  Limits to the Commission’s Discretion: Manifest Error 8.214 (v)  Leniency and Equal Treatment 8.215 (vi)  Cooperation Under the Leniency Notice Must Be Differentiated from Cooperation as an ‘Attenuating Circumstance’ 8.216

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(vii)  Protection of Information Submitted Under the 2002 and 2006 Leniency Notices and Incentives for Applications 8.217 (i)  A Sensitive Aspect of the Commission’s Leniency Policy 8.217 (ii)  Identity of Immunity Applicants 8.218 (iii)  Limitations in the Conditions of Access to Corporate Statements 8.220 (iv)  Consequences of Violation of the Limitation Imposed in Respect of Access to the File 8.221 (v)  Leniency and Public Access to Documents 8.222 (vi)  Can Leniency Documents be Protected from Public Access? 8.224 (vii)  Communication of Leniency Documents to Other Enforcement Authorities 8.225 (viii)  Disclosure of Leniency Documents in Civil Litigation 8.226 (c)  Leniency and Settlements 8.229 (i)  Leniency and Settlements are Complementary in Nature 8.230 (ii)  The Reductions Granted Under Each Policy are Cumulative 8.231 (iii)  Interactions Between Leniency and Settlements 8.232 (d)  Leniency within the ECN 8.233 (i)  Advantages of the New System and Measures Taken to Tackle Potential Risks 8.234 (ii)  Leniency Applications and Article 11 of Regulation 1/2003 8.237 (iii)  Leniency Applications and Article 12 of Regulation 1/2003 8.238 (iv)  Guarantees to be Provided by the Receiving Authority 8.239 (v)  Guarantees Regarding Information Relating to Individuals 8.240 (vi)  Binding Nature of the Policy Set Out in the Network Notice 8.241 (vii)  Leniency Applications and Transmission of Information to National Courts 8.242 (viii)  Where (Best) to File a Leniency Application within the ECN 8.243 (ix)  Favouring Convergence: The ECN Model Leniency Programme 8.246 (x)  A Significant Tool of Convergence: The ‘Summary Application System’ 8.247

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D. The Commission’s Powers of Investigation: Information Requests, Interviews, Inspections 8.248 (1)  Preliminary Observations 8.248 (a)  Documented Evidence as the Principal Basis for Commission Cartel Decisions 8.251 (b)  Applicability to the Transport Sector 8.252 (c)  Relevance of Interpretation Under Regulation 17 8.253 (d)  Outline for Discussion 8.254 (p. xlvii) (2)  General Aspects of the Commission’s Fact-Finding Powers 8.255 (a)  Principles of Law and Fundamental Rights Applicable to Commission Investigations 8.255 (i)  The Applicability of General Principles of Law and Fundamental Rights 8.255 (ii)  General Principles and Fundamental Rights Particularly Relevant to Cartel Investigations 8.256 (b)  The Rights of Defence 8.257 (i)  The Privilege Against Supplying Self-Incriminating Information 8.258 (i)  An EU Competition Law Version of ‘the Right to Remain Silent’ 8.258 (ii)  Compatibility of the Right Against Self-Incrimination as Established in Orkem with the ECHR and its Case Law 8.262 (iii)  Precise Scope of the Privilege Against Self-Incrimination: The Elements of ‘Compulsion’ and ‘Admission’ 8.263 (iv)  Pre-Existing Documents and Factual Information Must Be Supplied 8.265 (ii)  Legal Professional Privilege 8.269 (i)  The Right to the Protection of Lawyer–Client Correspondence 8.269 (ii)  Scope of LPP under EU Law 8.271 (iii)  Summaries of External Advice Prepared by In-House Counsel May Be Protected 8.275 (iv)  The Commission Is Not Permitted to Read a Document for Which Legal Privilege is Claimed 8.276 (v)  Procedure for Claiming Legal Privilege 8.278 (vi)  ‘Cursory Look’ and Envelope Procedure in Inspections 8.279 (vii)  Role of the Hearing Officer 8.282 (viii)  Abusive Claims for Legal Privilege 8.283 (iii)  The Right to Legal Assistance 8.284

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(iv)  The Right to be Informed on the Subject Matter and Purpose of the Investigation 8.285 (v)  No Right to be Heard Prior to Investigative Measures 8.286 (c)  Other General Features of the Commission’s Investigative Powers 8.287 (i)  Application of the Principle of Proportionality: Practical Implications 8.287 (i)  The Investigative Action Must Be Proportionate to the Goal Pursued 8.287 (ii)  ‘Necessity’ 8.288 (iii)  The Principle of Proportionality and the Quantity of Information Requested/Burden on the Undertaking 8.289 (ii)  The Content and Form of Information/Business Records That May Be Requested 8.290 (i)  Content 8.291 (ii)  Form 8.292 (iii)  The Undertakings From Which Information May Be Sought: Suspected Cartel Participants As Well As Other Parties 8.293 (iv)  The Territorial Scope of the Commission’s Investigation Powers 8.294 (i)  The Jurisdictional Scope of the Commission’s Investigative Powers: Subject Matter Jurisdiction vs Enforcement Jurisdiction 8.296 (ii)  State Sovereignty 8.297 (v)  The Timing of Any Investigative Steps/Application of Limitation Periods 8.300 (p. xlviii) (vi)  The Duty of Active Cooperation and its Implication for Requests for Information and Inspections 8.301 (d)  Requests for Information: Article 18 8.302 (i)  The Use of Requests for Information in Cartel Cases 8.302 (ii)  Two Types of Request for Information: ‘Simple Requests’ and ‘Requests by Decision’ 8.305 (i)  Procedural Requirements: The Duty to State the Legal Basis and Purpose of the Request and to Set a Time Limit 8.306 (ii)  Sanctions for Late, Incomplete, Incorrect, or Misleading Replies 8.307 (iii)  Incomplete or Untruthful Replies are Considered to Obstruct the Investigation 8.310 (iv)  Article 18 Requests, the Duty of Cooperation, and Reductions of Fines for Voluntary Submissions 8.311 (v)  Various Other Aspects of Requests for Information 8.312

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(e)  Interviews (the Power to Take Statements): Article 19 8.316 (i)  Rationale 8.316 (ii)  Legal Basis 8.318 (iii)  Possible Interviewees: Natural and Legal Persons 8.319 (iv)  Procedural Aspects and Rights of the Interviewee 8.321 (f)  Inspections of Business Premises: Article 20 8.322 (i)  The Difference Between ‘Announced’ and ‘Unannounced’ Inspections 8.327 (ii)  General Aspects Common to Inspections by Authorization and Inspections by Decision 8.330 (i)  Commission Inspections and the Principle of the Protection of the Private Sphere of the Undertaking 8.331 (ii)  Determining the Addressee of an Inspection Decision: The Notion of ‘Undertaking’ for the Purpose of Inspections 8.334 (iii)  Notification of the Inspection Decision 8.337 (iv)  The Commission’s On-the-Spot Powers 8.339 (v)  ‘To enter any premises, land and means of transport of undertakings and associations of undertakings’ 8.343 (vi)  ‘Means of transport of undertakings’ 8.346 (vii)  ‘To examine the books and other records related to the business, irrespective of the medium on which they are stored’ 8.347 (viii)  ‘To take or obtain in any form copies of or extracts from such books or records’ 8.354 (ix)  ‘To seal any business premises and books or records for the period and to the extent necessary for the inspection’ 8.358 (x)  ‘To ask any representative or member of staff of the undertaking or association of undertakings for explanations of facts or documents relating to the subject-matter and purpose of the inspection and to record the answer’ 8.362 (iii)  Other Practical Aspects Relating to Inspections 8.375 (i)  Procedure Upon Arrival of the Commission Inspectors 8.375 (ii)  Activity of Inspectors During the Inspection 8.377 (iii)  Right to Legal Assistance 8.379 (iv)  Penalties in the Case of a Refusal to Submit to (or Obstruct) an Inspection by Decision 8.380 (v)  Commission Present During Normal Business Hours 8.381 (p. xlix) (vi)  Protocols Made Up During an Inspection and the Possibilities for Submitting Exculpatory Information 8.382 (vii)  Taking of Copies and Creating a Document Inventory 8.383

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(viii)  Treatment of Business Secrets and Confidential Information 8.384 (ix)  End of the Inspection 8.385 (x)  Post-Inspection Procedure 8.387 (iv)  The Adoption of Inspection Decisions under Article 20(4) 8.388 (i)  Requirements Relating to the Substance of the Inspection Decision 8.388 (ii)  Procedural Formalities Relating to the Adoption of Inspection Decisions 8.394 (v)  Additional Substantive and Procedural Aspects of Inspections by Written Authorization (Announced Inspections) 8.396 (i)  Substantive Elements of the Authorization 8.397 (ii)  Prior Notice To—Not Consultation Of—the Member State Concerned 8.398 (vi)  Opportunities to Challenge the Inspection Decision and/or the Use of the Evidence Collected in Inspections 8.399 (i)  Little Scope in Practice for Preventing the Inspection From Going Forward 8.399 (ii)  Challenging the Admissibility and Use of Evidence Collected 8.400 (vii)  The Role of the Member States in Commission Inspections under Article 20 8.403 (i)  General Duty to Provide Assistance 8.403 (ii)  Role in Case of Opposition 8.404 (iii)  Review by National Courts is Limited to the Arbitrariness and Proportionality of the Coercive Measures 8.405 (iv)  Coercive Measures Can Lead to Sanctions Under National Law—Even Against Private Persons 8.406 (viii)  Inspections Carried Out by the Competition Authorities of the Member States on Behalf of the Commission: Article 22(2) 8.407 (i)  Member States are Obliged to Execute Article 22(2) Inspections When Requested 8.409 (ii)  Inspections Under Article 22 are Executed Under National Law 8.410 (iii)  Commission Officials May Participate in the Inspection Carried Out By the Member State 8.411 (g)  Inspections on Other Premises (Private Homes): Article 21 8.412 (i)  Rationale and Use 8.412 (i)  Meaning of ‘Other Premises’, Land, and Means of Transport 8.413 (ii)  Applicability of Principles of Law and Fundamental Rights 8.414

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(iii)  ‘Reasonable Suspicion’ About Information Being Stored at the Premises 8.415 (iv)  Only To Be Used in Case of ‘Serious Violations’ 8.416 (ii)  Legal Framework 8.417 (i)  A Two-Part Basis Required for Executing an Inspection under Article 21 8.417 (iii)  Procedural Aspects 8.419 (i)  The Commission Decision 8.419 (ii)  Authorization by a National Judicial Authority 8.420 (iii)  Addressee of the Decision 8.421 (iv)  Notification of the Decision and the Judicial Authorization 8.422 (p. l) (v)  On-The-Spot Powers 8.423 (vi)  Assistance by Officials From the National Authorities 8.424 (vii)  Sanctions for Non-Compliance, Pursuant to National Law 8.425 (iv)  Other Aspects 8.426 (i)  Right to Legal Assistance 8.426 (ii)  A Duty of Active Cooperation for the Addressee? 8.427 (h)  European and International Cooperation in Cartel Investigations 8.428 (i)  European Cooperation 8.429 (i)  The ECN 8.429 (ii)  Cooperation with the ESA 8.433 (ii)  International Cooperation, Multilateral and Bilateral 8.434 (i)  Multilateral Cooperation 8.435 (ii)  Bilateral Cooperation 8.441 E. Evidence in Cartel Cases 8.445 (1)  Introduction 8.445 (2)  What Needs to be Proven 8.449 (a)  The Concept of Cartel Offence 8.449 (b)  The EU Courts’ Purposive View of What Constitutes Illegal ‘Cartel’ Behaviour 8.450 (c)  Agreement vs Concerted Practice 8.451 (d)  Cartels are Infringements By Object: No Need to Prove Actual Effects 8.452 (e)  No Market Definition Required 8.453 (f)  No Need to Demonstrate the Precise Mechanism By Which the Restrictive Object was Attained 8.454 (g)  No Requirement to Prove Subjective Intent 8.455

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(h)  Complex Infringement 8.456 (i)  Single and Continuous Infringement 8.457 (i)  Liability for a Single and Continuous Infringement 8.458 (ii)  Consequences of Lack of Awareness of the Overall Conduct 8.459 (iii)  ‘Single’ and ‘Continuous’ 8.460 (iv)  The ‘Single’ Nature of an Infringement 8.461 (v)  The ‘Continuous’ Nature of an Infringement 8.463 (vi)  The ‘Repeated’ Nature of an Infringement 8.464 (vii)  Duration of an Undertaking’s Participation in an Infringement 8.465 (3)  The Burden of Proof 8.466 (a)  The Burden of Proof on the Commission 8.466 (b)  ‘Shifting’ of the Burden of Proof 8.467 (4)  The Standard of Proof 8.469 (a)  The EU Courts’ Reluctance to Use the Term ‘Standard of Proof’ 8.469 (b)  What Matters is the Balance of Evidence as a Whole 8.470 (5)  Admissibility of Evidence 8.471 (a)  Evidence Collected or Used in Contravention of General Principles or Fundamental Rights is Not Admissible 8.473 (i)  Information Covered by Legal Privilege 8.474 (ii)  Self-Incriminating Information 8.475 (iii)  Evidence on Which the Undertakings Have Not Been Heard is Inadmissible 8.476 (b)  Documents Obtained in an Inspection That Turned Out to be Unlawful are Inadmissible 8.477 (c)  Documents Which Do Not Fall Within the Scope of an Inspection Decision are Inadmissible 8.478 (p. li) (d)  Confidential Information is Admissible as Evidence 8.479 (e)  Evidence Provided Orally is Admissible 8.480 (f)  Anonymous Evidence Can Be Admissible 8.481 (g)  Lack of Cross-Examination of Witnesses Does Not Render Their Statements Inadmissible 8.482 (6)  Probative Value of Evidence 8.484 (a)  Whether, On Its Face, the Evidence Appears Sound and Reliable 8.487 (b)  The Time When the Evidence Came Into Being 8.488

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(c)  The Level of Detail of the Evidence 8.489 (d)  The Source of the Information Has Direct Knowledge 8.490 (e)  Evidence Which Goes Against the Interests of the Source Providing it has Greater Probative Value 8.491 (f)  Evidence From an Undertaking That Has Resolved to Cooperate With the Investigation Has High Probative Value 8.493 (g)  Evidence Provided Where There is a Risk of Sanction 8.494 (h)  Evidence Provided After Mature Reflection is More Credible 8.495 (i)  Evidence or Statements Provided by Executives of Companies are of Greater Probative Value 8.496 (j)  Evidence Supplied by One Entity May Be Used Against Another 8.497 (k)  Motives of the Witness 8.499 (l)  Information Provided by Applicants for Immunity or for a Reduction of Fines 8.500 (m)  Anonymous or Unidentified Sources of Evidence 8.501 (7)  Types of Evidence 8.502 (a)  Documentary Evidence 8.504 (b)  Oral Evidence 8.506 (i)  Qualified Obligation to Hear Witnesses 8.506 (ii)  Traditional Reliance on Documentary Evidence: Increased Use of Oral Evidence 8.507 (c)  Direct and Indirect (Circumstantial) Evidence 8.509 (d)  When is Corroboration Necessary? 8.510 (e)  Economic Evidence 8.512 (i)  The Use of Economic Evidence as an Exculpatory Factor 8.514 F. Establishing Liability 8.515 (1)  The ‘Undertaking’ as the Infringing Entity 8.515 (2)  Attribution of Liability to the Undertaking as a Whole: Underlying Reasons 8.519 (3)  Principal Grounds for Liability 8.521 (a)  Parent Company Liability: The Concept of the ‘Actual Exercise of Decisive Influence’ 8.525 (i)  The Parent Company’s Shareholding in the Subsidiary 8.527 (i)  Subsidiary Wholly Owned (or Almost Wholly Owned) by the Parent: Existence of a Rebuttable Presumption 8.528 (ii)  Subsidiary Owned (Significantly) Less Than 100 Per Cent by the Parent 8.530

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(iii)  Joint Ventures 8.531 (ii)  The Articles of Association/Statutes 8.532 (iii)  The Parent Entity Being Active on the Same or Adjacent Markets 8.533 (iv)  The Use of the Same Commercial Name By the Parent and Subsidiary 8.534 (v)  Instructions From a Parent Company to a Subsidiary 8.535 (vi)  Functional Links Through Personnel 8.536 (p. lii) (vii)  The Attitude of the Parent Company During the Administrative Procedure 8.537 (b)  Sister Companies 8.538 (4)  Liability in Cases of Succession 8.539 (a)  Cases of Change of Legal Denomination, Resulting in the Dissolution of the Previous Legal Person 8.541 (b)  Transfer of a Liable Entity, Which Remains in Existence, To Another Undertaking 8.542 (c)  Transfer of Assets/Activities to Another Undertaking, the Entity Previously Operating the Business Remaining in Existence 8.543 (d)  Transfer of a Legal Entity or of Assets/Activities, the Entity Previously Operating the Business Ceasing to Exist 8.544 (e)  Scenarios of Intra-Group Restructuring and Succession 8.545 (5)  Voluntary Acceptance of Liability by the Acquiring Undertaking 8.546 (6)  Determination of Liability and the Application of the Leniency Notice 8.547 G. Cartel Fines 8.548 (1)  Overview 8.548 (2)  The Basic Amount of the Fine 8.551 (a)  Calculation of the Value of Sales 8.552 (i)  General Principles 8.552 (ii)  Sales of Products or Services To Which the Infringement Relates 8.554 (iii)  Sales in the Relevant Geographic Area Within the EEA 8.557 (iv)  Last Full Year Before the End of the Infringement 8.560 (b)  Gravity: The Percentage Applicable to the Value of Sales 8.561 (i)  General Principles 8.561 (ii)  Nature of the Infringement 8.564 (iii)  Geographic Scope 8.567 (iv)  Combined Market Share 8.568

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(v)  Implementation 8.569 (c)  Duration of the Infringement 8.570 (i)  General Principles 8.570 (ii)  Previous Practice 8.572 (iii)  Method for Calculating Duration 8.574 (d)  Additional Amount 8.578 (i)  General Principles 8.578 (e)  Conclusion on the Basic Amount 8.581 (3)  Individualizing ‘Subjective’ Responsibility: Aggravating and Mitigating Circumstances 8.582 (a)  Individual Conduct vs Overall Gravity of the Infringement 8.583 (b)  The Commission is Bound by the Fining Guidelines, But Not By Prior Decisions 8.584 (c)  Method of Calculation When Both Aggravating and Attenuating Circumstances Apply 8.585 (i)  Aggravating Circumstances 8.588 (i)  General Principles 8.588 (ii)  Repeated Infringements of the Same Type by the Same Undertaking 8.590 (iii)  Refusal to Cooperate With or Obstruction of the Commission in Carrying Out its Investigations 8.596 (iv)  Role of Leader in, or Instigator of, the Infringement 8.599 (p. liii) (v)  Steps to Coerce Other Undertakings and/or Retaliatory Measures Against Other Undertakings with a View to Enforcing the Practices Constituting the Infringement 8.610 (vi)  Other Aggravating Circumstances 8.614 (ii)  Mitigating Circumstances 8.617 (i)  Termination of the Infringement As Soon As the Commission Intervenes (Not Applicable to Cartels) 8.618 (ii)  Infringement Committed as a Result of Negligence 8.621 (iii)  Substantially Limited Involvement in the Infringement 8.622 (iv)  Effective Cooperation by the Undertaking Outside the Scope of the Leniency Notice and Beyond Its Legal Obligation To Do So 8.632 (v)  Anti-Competitive Conduct Authorized or Encouraged by Public Authorities or by Legislation 8.638 (vi)  Other Accepted Attenuating Circumstances 8.643 (vii)  Rejected Arguments 8.649

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(4)  Specific Increase for Deterrence 8.661 (a)  Increase for Undertakings With a Large Turnover 8.662 (i)  Concept and Rationale 8.662 (ii)  Commission’s Practice 8.663 (b)  Legality of the Deterrence Multiplying Factor 8.666 (c)  Limited Scope of the Duty to State Reasons 8.669 (d)  Basis for the Assessment and Level of the Deterrence Multiplying Factor 8.670 (e)  Increase to Exceed the Improper Gains 8.673 (5)  Legal Maximum of 10 Per Cent of Annual Group Turnover 8.674 (a)  Upper Limit Set By Article 23(2) 8.674 (b)  10 Per Cent of the Total Turnover 8.675 (c)  Preceding Business Year 8.676 (d)  Application to Each Infringement 8.679 (e)  Joint and Several Liability Within the Same Undertaking 8.680 (f)  The 10 Per Cent Cap is Calculated Before Leniency 8.681 (g)  The 10 Per Cent Cap Applies Only to the Final Amount (Before Leniency) 8.682 (h)  Impact of the Legal Maximum 8.683 (6)  Application of the Leniency Notice 8.684 (7)  Application of the 10 Per Cent Reduction of the Settlement Notice 8.685 (8)  Ability to Pay 8.686 (a)  Inability to Pay Claims Systematically Rejected before 2006 Fining Guidelines 8.687 (b)  Application of Inability to Pay Reductions by the Commission 8.690 (c)  Procedure for Inability to Pay Requests 8.691 (d)  Commission Analysis of Inability to Pay Claims under the 2006 Fining Guidelines 8.692 (e)  Court Review 8.695 (f)  Assessment of the Ability to Pay Policy 8.696 (9)  Other Factors That May Be Taken into Account 8.697 (a)  Ad Hoc Adjustments 8.698 (b)  Poor Financial Situation and Previous Payment of Fines in Other Proceedings 8.700 (c)  Excessive Duration of Administrative Procedure 8.703

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(p. liv) H. Procedural Aspects of the Adoption of Decisions in Cartel Cases and ‘Direct Settlements’ 8.704 (1)  Main Common Aspects of the Adoption of Cartel Decisions 8.704 (a)  The Commission ‘2011 Best Practices’ and Outline of the Procedure Leading to a Decision 8.704 (i)  The Adoption of a Cartel Decision Follows a Model That Is Common For All Commission Decisions 8.704 (ii)  General Outline of the Standard Procedure Followed Between the Fact-Finding Stage and the Final Decision—and the Alternative of the Settlement Procedure 8.705 (iii)  The Commission May Halt an Investigation at Any Stage 8.706 (b)  Particular Aspects Relating to Access to the File in Cartel Cases 8.708 (c)  The Statement of Objections and Indications on the Parameters of the Fine 8.709 (d)  The Oral Hearing and State of Play Meetings 8.710 (2)  Direct Settlements in Cartel Cases 8.712 (a)  The Lead Up to the Adoption of the 2008 System of ‘Direct Settlements’ in Cartel Cases 8.712 (b)  Sequence of the Regular Procedure and Potential Benefits of the Settlement Process 8.713 (c)  The Main Features of the Settlement System 8.714 (i)  Stakes on Both Sides: the Parties and the Commission 8.714 (ii)  Not To Be Mistaken for ‘Commitment’ Decisions 8.715 (iii)  Based on a ‘Common Understanding’ Between the Parties and the Commission, But Not a Negotiation 8.716 (d)  The Settlement Procedure Dissected 8.717 (i)  Based on a Full Investigation 8.717 (ii)  Deciding That a Case is Fit for Settlement/ Initial Contact with the Parties 8.718 (iii)  Start of the Settlement Process 8.719 (iv)  Three Rounds of Meetings 8.720 (v)  Confidentiality of Discussions 8.721 (vi)  Formal Settlement Submission, Statement of Objections, Decision 8.722 (vii)  Interaction with Leniency 8.723 (viii)  Lessons from Settlement Decisions/Hybrid Cases 8.724 (ix)  Miscellaneous Aspects 8.725 9. Vertical Agreements

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Andrei Gurin and Luc Peeperkorn A. Introduction 9.01 (1)  Applicability of Article 101 to Vertical Restraints 9.01 (2)  Early Application of Article 101 to Vertical Restraints 9.05 (3)  Theory of Active/Passive Sales 9.09 (4)  System of Block Exemption Regulations 9.12 (5)  Green Paper on Vertical Restraints 9.15 (6)  Two Council Regulations Enabling the Adoption of the Commission’s Policy 9.18 (7)  A New Type of Block Exemption Regulation and Guidelines 9.28 B. The New Block Exemption Regulation and Guidelines 9.31 (1)  Background 9.31 (p. lv) (2)  The De Minimis Notice 9.38 (3)  Agency Agreements 9.40 (a)  Introduction 9.40 (b)  Agency Agreements in the Vertical Restraints Guidelines 9.44 (c)  Agency Agreements and the Internet 9.57 (4)  Subcontracting Agreements 9.60 (5)  The Underlying Philosophy of the BER and the Vertical Restraints Guidelines 9.61 (6)  The Scope of the BER and Guidelines 9.68 (a)  Definition of Vertical Agreements 9.68 (b)  Vertical Agreements between Competitors 9.72 (c)  Vertical Agreements Concluded by Associations of Retailers 9.77 (d)  Vertical Agreements Containing IP Rights Provisions 9.81 (e)  The Interface Between the BER and Other Block Exemption Regulations 9.87 (7)  Hardcore Restrictions under Article 4 of the BER 9.88 (a)  Vertical Price Fixing Under Article 4(a) 9.94 (b)  Territorial and Customer Sales Restrictions under Article 4(b) 9.112 (c)  Selective Distribution Systems and Sales Restrictions under Article 4 9.126 (d)  Internet Selling and Sales Restrictions Under Article 4 9.133 (e)  The Combination of Selective and Exclusive Distribution 9.139 (f)  Aftermarkets 9.145

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(g)  Individual Assessment of Hardcore Resale Restrictions 9.146 (8)  Excluded Restrictions under Article 5 of the BER 9.153 (a)  Non-Compete Obligations Exceeding Five Years 9.155 (b)  Post-Term Non-Compete Obligations 9.160 (c)  Boycott Under Selective Distribution 9.162 (9)  Transitional Period and Expiry Date of the BER 9.163 (10)  Withdrawal of the benefit of the BER 9.164 (11)  Disapplication of the BER 9.169 (12)  Market Share Thresholds and Market Share Calculation 9.173 (13)  The Framework of Analysis for Individual Assessment 9.188 (a)  Anti-Competitive Effects 9.191 (b)  Efficiencies 9.201 C. Analysis of Different Categories of Vertical Restraints 9.214 (1)  Single Branding 9.214 (a)  Market Position of the Supplier 9.220 (b)  Incidence and Duration of the Single-Branding Obligation 9.221 (c)  Market Position of Competitors 9.225 (d)  Barriers to Entry 9.227 (e)  Countervailing Power 9.228 (f)  Level of Trade 9.229 (g)  Possible Efficiencies 9.234 (2)  Exclusive Distribution 9.235 (a)  Supplier’s Market Position 9.238 (b)  Competitors’ Market Position 9.239 (c)  Buying Power 9.240 (d)  Level of Trade 9.241 (e)  Maturity of the Market 9.242 (f)  Combination with Exclusive Sourcing 9.243 (g)  Possible Efficiencies 9.244 (p. lvi) (3)  Exclusive Customer Allocation 9.245 (4)  Selective Distribution 9.248 (a)  Qualitative vs Quantitative Selective Distribution 9.249 (b)  Quantitative Selective Distribution 9.251 (c)  Supplier’s Market Position 9.257 (d)  Competitors’ Market Position 9.258

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(e)  Barriers to Entry 9.260 (f)  Buying Power 9.261 (g)  Maturity of the Market 9.262 (h)  Possible Efficiencies 9.263 (5)  Franchising 9.264 (6)  Exclusive Supply 9.265 (a)  Buyer’s Market Share 9.266 (b)  Duration of the Agreement 9.269 (c)  Competitors’ Market Position 9.270 (d)  Countervailing Power 9.271 (e)  Level of Trade and Nature of the Product 9.272 (f)  Possible Efficiencies 9.273 (7)  Upfront Access Payments 9.274 (8)  Category Management Agreements 9.279 (9)  Tying 9.283 (10)  Recommended and Maximum Resale Prices 9.291 10. Intellectual Property Kevin Coates, Lars Kjølbye, and Luc Peeperkorn A. Introduction 10.01 (1)  Overview 10.01 (2)  Purpose of IP Rights 10.04 (3)  The Relationship between IP Protection and EU Law 10.09 (a)  IP Protection and the Free Movement Provisions 10.10 (b)  IP Protection and the Competition Rules 10.11 (i)  General Approach 10.12 (ii)  Block Exemptions 10.14 (4)  Form of the Following Analysis 10.15 B. IP Rights and EU Law 10.16 (1)  Introduction 10.16 (2)  Existence vs Exercise and the Specific Subject Matter of an IP Right 10.19 (a)  Existence and Exercise 10.19 (b)  Specific Subject Matter 10.21 (3)  The Specific Subject Matter of IP Rights 10.22 (a)  Patents 10.23

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(b)  Know-How 10.24 (c)  Copyright 10.29 (d)  Trademarks 10.32 (e)  Plant Breeders’ Rights 10.34 (4)  Exhaustion of IP Rights 10.36 (a)  Exhaustion Requires Consent (i)  Centrafarm v Sterling Drug 10.37 (ii)  Consent Does Not Have To Be Explicit 10.39 (b)  For a Sale to Exhaust IP Rights It Is Not Necessary for that Sale to be Made in a Jurisdiction Where It Enjoys IP Right Protection 10.40 (p. lvii) (i)  Merck v Stephar 10.41 (c)  Exhaustion Requires the Consent of the Right Holder Even if the Goods were Lawfully Put on the Market in Another Member State Without That Consent 10.42 (i)  EMI/Patricia 10.43 (ii)  Keurkoop/Nancy Kean Gifts 10.44 (d)  Exhaustion Requires an Actual Sale 10.45 (e)  Exhaustion Depends on the Specific Subject Matter of the Right in Question 10.46 (i)  Warner v Christiansen 10.48 (f)  Exhaustion for the Purposes of EU Law Requires Use in the EEA 10.51 (g)  Exhaustion and Licensing Under the Competition Rules 10.56 (5)  Exhaustion Concept in EU IP Legislation 10.58 C. Technology Transfer Agreements 10.59 (1)  Introduction 10.59 (2)  The Basic Framework and Underlying Philosophy of the TTBER and the Technology Transfer Guidelines 10.62 (3)  The Scope of the TTBER and the Technology Transfer Guidelines 10.68 (a)  Agreements for the Production of Contract Products 10.69 (b)  Technology Transfer Agreements 10.72 (c)  The Interface between the TTBER and Other Block Exemptions 10.78 (4)  Competitors vs Non-Competitors 10.82 (5)  The Hardcore Restrictions 10.92 (a)  Price Fixing 10.97

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(b)  Output Limitations 10.99 (c)  Territorial and Customer Sales Restrictions 10.100 (i)  Territorial and Customer Sales Restrictions between Competitors 10.101 (ii)  Territorial and Customer Sales Restrictions between NonCompetitors 10.108 (d)  Restrictions on the Use of Own Technology or to Carry Out R&D 10.112 (6)  Excluded Restrictions 10.114 (7)  The Safe Harbours 10.119 (8)  Withdrawal and Disapplication 10.124 (9)  Application Outside the Scope of the Block Exemption 10.128 (a)  Introduction 10.128 (b)  Royalty Obligations 10.133 (c)  Exclusive Licences and Sales Restrictions 10.136 (d)  Output Restrictions 10.141 (e)  Field of Use Restrictions 10.144 (f)  Captive Use Restrictions 10.149 (g)  Tying and Bundling 10.151 (h)  Exclusive Dealing 10.155 (i)  Settlements 10.158 (j)  Licensing of Future Developments 10.160 (10)  Technology Pools 10.161 (a)  The Nature of the Pooled Technologies 10.163 (b)  Competition Concerns Relating to the Creation of the Pool 10.166 (c)  Assessment of Individual Restraints 10.169 (p. lviii) D. Trademark Licences 10.172 (1)  Licences and Assignments 10.173 (a)  Territorial Protection (b)  Prohibition on Competing Products 10.179 (c)  No-Challenge Clauses (Ownership) 10.181 (d)  No-Challenge Clauses (Validity) 10.182 (e)  Prohibition on Sub-Licensing or Assignment 10.184 (f)  Quality Control Measures 10.185 (2)  Trademark Delimitation Agreements 10.186 (a)  Market Partitioning 10.187 (b)  Confusion of Marks 10.189

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E. Copyright 10.190 (1)  EU Directives Relating to Copyright 10.190 (2)  Territorial Protection through Exclusive Licences 10.198 (a)  Exclusive Territory Does Not Necessarily Infringe Article 101(1) 10.198 (b)  Collective Refusals to License 10.202 (c)  Specific Subject Matter of Copyright and Article 101(1) 10.205 (3)  Collecting Societies 10.207 (a)  Artists’ Licences to a Collecting Society 10.207 (b)  Licensing Agreements Between Collecting Societies 10.209 (c)  Licences from Collecting Societies to Manufacturers 10.212 F. Article 102 10.214 (1)  Introduction 10.214 (2)  IP and Market Definition 10.216 (3)  IP and Dominance 10.225 (4)  Abuse 10.228 (a)  Refusals to License IP Rights 10.230 (i)  The IBM Undertaking 10.230 (ii)  Volvo/Veng 10.233 (iii)  Magill 10.236 (iv)  IMS Health 10.246 (v)  Microsoft 10.249 (b)  Licensing of IP Rights and Article 102 10.256 (c)  Misuse of Regulatory Process 10.260 (d)  Conclusions on Abuses 10.261 III  Special Sectors 11. Financial Services Nicholas Banasevic, Stephen Ryan, and Rita Wezenbeek A. Introduction 11.01 (1)  General Remarks on Financial Services 11.02 (2)  Developments in the Commission’s Approach 11.04 (3)  The Post-2007 Financial Crisis and Consequences for Competition in the Financial Sector 11.05 (4)  Competition and Regulation in the Financial Sector 11.11 (5)  Social Security 11.15

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(p. lix) B. Banking 11.16 (1)  Preliminary Remarks 11.16 (2)  Payment Systems 11.20 (a)  Introduction to Payment Systems 11.20 (b)  Regulation, Self-Regulation, and Competition Law Enforcement 11.24 (c)  Pricing Issues (Interchange Fees) 11.31 (d)  Issues Relating to Access 11.53 (i)  SWIFT/La Poste 11.54 (ii)  Visa International and Visa Europe 11.57 (iii)  Groupement des Cartes Bancaires 11.58 (iv)  European Payments Council 11.60 (3)  Non-Payment Banking Antitrust Cases 11.61 (4)  Banking Mergers 11.69 (a)  Introduction 11.69 (b)  Turnover Calculation for Credit Institutions and Other Financial Institutions 11.71 (c)  The Approach to Market Definition 11.74 (d)  Significant Cases 11.80 (e)  Nationalization and Recapitalization 11.85 (f)  Looking Forward 11.97 C. Capital Markets 11.103 (1)  Preliminary Remarks 11.103 (a)  Importance of Clearing 11.107 (b)  MiFID II 11.110 (2)  Antitrust Cases 11.113 (a)  Clearstream 11.113 (b)  Recent Enforcement 11.132 (c)  Standard & Poor’s 11.133 (d)  Reuters Instruments Codes (RICs) 11.140 (e)  Credit Default Swaps 11.144 (3)  Deutsche Börse/NYSE Euronext Merger Case 11.146 (a)  Introduction (b)  The Parties and the Deal 11.150 (c)  Market Definition 11.155 (d)  Competitive Assessment 11.164

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(e)  Claimed Efficiencies 11.170 (f)  Remedies 11.175 (g)  Conclusion 11.177 D. Insurance 11.178 (1)  Introductory/Preliminary Remarks 11.178 (a)  Some Characteristics of Insurance 11.178 (b)  Market Definition Issues in the Insurance Sector 11.182 (2)  The Commission’s Antitrust Policy in the Insurance Sector 11.186 (a)  Commission Antitrust Case Law on Insurance 11.186 (b)  Commission Block Exemption Regulation for the Insurance Sector 11.189 (c)  Sector Inquiry in Business Insurance 11.191 (3)  Specific Types of Practices in the Insurance Sector 11.193 (a)  Agreements on Prices 11.193 (b)  Jointly Produced Compilations, Tables, and Studies 11.196 (c)  Standard Policy Clauses 11.200 (p. lx) (d)  Co-Insurance and Co-Reinsurance Pools 11.204 (i)  Pools in the Block Exemption 11.205 (ii)  Commission Decisions and Other Cases on Pools 11.209 (e)  Security Devices 11.214 (f)  Agreements on Settlement of Claims and on Registers of Aggravated Risks 11.216 (g)  Insurance Distribution 11.218 E. Conclusions 11.220 12. Energy Céline Gauer and Lars Kjølbye A. Introduction 12.01 (1)  Liberalization and the Regulatory Framework 12.04 (2)  Regulation and Competition Enforcement 12.10 (3)  Findings of the Commission’s Energy Sector Inquiry 12.12 (a)  Market Concentration 12.13 (b)  Vertical Foreclosure 12.14 (c)  Market Integration 12.15 (d)  Downstream Markets 12.17

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B. Market Definition 12.18 (1)  Product Market 12.19 (a)  Gas Markets 12.19 (b)  Electricity Markets 12.26 (2)  Geographic Markets 12.36 (a)  Exploration, Production, and Sales of Crude Oil and Gas 12.36 (b)  Supply Markets 12.37 (c)  Transport Markets 12.43 (d)  Flexibility of Markets in Gas 12.46 (3)  Conclusion 12.47 C. Obstacles to Market Integration and Discrimination 12.48 (1)  Horizontal Market Partitioning 12.49 (2)  Curtailment of Networks 12.53 (3)  Territorial Restrictions and Destination Clauses in Vertical Agreements 12.57 (4)  Conclusion 12.66 D. Vertical Contractual Restraints 12.67 (1)  Use Restrictions 12.68 (2)  Customer Foreclosure 12.74 (3)  Exclusive Distribution and Volume Reduction Clauses 12.82 (4)  Conclusion 12.87 E. Horizontal Contractual Restraints 12.88 (1)  Non-Compete Clauses 12.89 (2)  Joint Investment and Joint Operation of Production Capacity 12.95 (3)  Network Effects and Minority Shareholdings 12.110 (4)  Joint Purchasing 12.112 (5)  Joint Selling 12.116 (a)  Pure Joint Selling 12.117 (b)  Joint Selling as Part of Supply Chain 12.123 (p. lxi) (6)  Exchange of Information 12.129 (7)  Conclusion 12.137 F. Network Foreclosure 12.138 (1)  Refusal to Supply by Vertically Integrated Undertakings 12.140 (a)  Access to Transport Networks is Indispensable 12.141

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(b)  Refusals to Access Networks in Various Forms 12.143 (c)  Elimination of Effective Competition and Objective Justification 12.155 (2)  Input Foreclosure 12.157 (a)  Long-Term Capacity Reservations: The GDF and E.ON Gas Cases 12.160 (b)  Pre-Emptive Capacity Reservation: The ČEZ Case 12.167 (3)  Remedies 12.168 (a)  The RWE and ENI Cases 12.170 (b)  The GDF and E.ON Gas Foreclosure Cases 12.173 (c)  The ČEZ Case 12.175 (4)  Conclusion 12.179 G. Exploitative Abuses 12.182 (1)  Energy Markets are Prone to Exploitative Conduct 12.183 (2)  The Commission’s Practice 12.188 (a)  E.ON Electricity: The German Electricity Wholesale Market Case 12.189 (b)  E.ON Electricity: The German Electricity Balancing Case 12.198 (3)  Conclusion 12.203 H. State Measures and Article 106 TFEU 12.205 I. Final Remarks 12.216 (1)  The Energy Sector: Five Years After the Energy Sector Inquiry 12.218 (2)  Competition Policy: The Contribution of Energy Cases 12.225 (a)  New Types of Infringements 12.226 (b)  First Structural Remedies 12.229 (c)  Deterrence vs Swift Impact on the Market 12.234 (3)  Conclusion 12.238 13. Communications (Telecoms and Internet) David Gabathuler and Eduardo Martinez Rivero A. Introduction 13.01 B. EU Regulatory Framework for Electronic Communications 13.04 (1)  Introduction 13.04 (2)  Opening the Market to Competition (1990s) 13.07 (a)  Progressive Liberalization (Reliance on Article 106 Directives) 13.08

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(b)  Harmonization Measures 13.13 (3)  The Regulatory Framework 13.16 (a)  The Regulatory Package 13.20 (b)  Functioning of the Regulatory Framework 13.24 (c)  Article 7 consultation mechanism 13.31 (d)  Article 7 Oversight Extended to Regulatory Remedies 13.35 (e)  Functional Separation 13.37 (f)  Body of European Regulators for Electronic Communications (BEREC) 13.40 (p. lxii) (4)  Specific Regulatory Measures 13.44 (a)  International Mobile Roaming 13.44 (b)  Radio Spectrum Policy 13.48 (5)  Completing the Telecoms Single Market: Commission’s ‘Connected Continent’ Proposal 13.55 C. Move from Copper Networks to Next Generation Access Networks 13.60 (1)  The Emergence of Next Generation Access Networks 13.60 (2)  The NGA Recommendation 13.65 (3)  The Recommendation on Non-Discrimination and Costing Methodologies 13.71 D. Interaction Between Ex Post Competition Enforcement and Ex Ante Regulation 13.77 (1)  The Applicability of the Competition Rules to the Electronic Communications Sector 13.77 (2)  A Complementary Approach 13.92 (3)  Resolving Conflicts Between Sector Regulation and Competition Enforcement 13.107 (4)  The Influence of Competition Law Principles on the Regulatory Framework 13.111 (5)  Economic Incentives to Invest 13.117 (6)  No Exemption for Emerging Markets 13.119 (7)  Ex Ante Regulation as a Mitigating Circumstance 13.127 E. Commission’s Antitrust Enforcement in the Electronic Communications Sector 13.133 (1)  Margin Squeeze (Deutsche Telekom, Telefónica, TeliaSonera): An Autonomous Type of Abuse 13.134 (a)  Deutsche Telekom (2003) 13.137 (b)  Telefónica (2007) 13.141

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(c)  TeliaSonera (2011) 13.148 (2)  Predatory Pricing (Wanadoo Interactive): Leveraging of Incumbent Power into an Emerging Market 13.153 (3)  Refusal to Supply (Telekomunikacja Polska): Competition Enforcement in Addition to Regulatory Intervention 13.162 (4)  Market Sharing (Telefónica/Portugal Telecom): First Case in the Electronic Communications Sector where the Commission Found an Article 101 Violation Extending to More Than One Member State 13.167 F. Mergers in the Electronic Communications Sector 13.171 (1)  Introduction 13.171 (2)  Mobile Telecommunications 13.174 (a)  Horizontal Overlap 13.176 (i)  T-Mobile Austria/tele.ring 13.176 (ii)  Hutchison 3G Austria/Orange Austria 13.180 (iii)  T-Mobile/Orange Netherlands 13.187 (iv)  T-Mobile/Orange in the UK 13.189 (b)  Vertical Relationships 13.192 (3)  Fixed-Line Telecommunications 13.195 (4)  Alternative Infrastructure: Cable and Satellite 13.202 (a)  Cable 13.203 (b)  Satellite 13.206 (5)  Some Notable Merger Decisions in Other Markets 13.207 G. Internet 13.209 (1)  Overview 13.209 (2)  Net Neutrality Regulation 13.210 (3)  Proposed Net Neutrality Measures at EU Level 13.211 (4)  Situation at the National Level 13.214 (p. lxiii) (5)  Net Neutrality and Competition Law Enforcement 13.219 (6)  Google: Online Search and Advertising 13.222 H. Other Developments 13.226 (1)  Network Sharing in Mobile Telephony 13.226 (2)  State Aid to Broadband 13.233 (3)  Standard Essential IPR Relating to Mobile Telephony Standards 13.238 14. Media

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Krzysztof Kuik and Anthony Dawes A. Introduction 14.01 (1)  Main Features of the Media Sector 14.02 (i)  Music Industry 14.05 (ii)  Audiovisual Industry 14.08 (iii)  Book Production, Publishing, and Distribution 14.11 (iv)  Advertising Markets 14.13 (2)  Regulatory Framework 14.14 (3)  Issues Arising Across the Media Sector 14.18 (i)  Enforcement at Both EU and National Level 14.19 (ii)  Cultural Diversity 14.21 (iii)  Copyright 14.22 (iv)  Exclusivity 14.23 (v)  Two-Sided Markets 14.25 (4)  Structure 14.27 B. Competition Issues under Article 101 14.29 (1)  Horizontal Agreements 14.31 (a)  Price-Fixing 14.32 (i)  Contractual Systems of Fixed Book Prices 14.33 (ii)  Arrangements Akin to Price Fixing 14.36 (i)  Agreements or Concerted Practices Seeking to Influence the Retail Prices of Physical Recordings 14.37 (ii)  Agreements or Concerted Practices Restricting the Freedom to Grant Rebates 14.38 (iii)  Concerted Practices Leading to an Increase in Retail Prices 14.41 (b)  Customer and Territorial Allocation 14.47 (i)  Restrictions on the Collective Licensing of Content 14.49 (ii)  Restrictions on the Ability of Right Holders to Entrust the Licensing of Content to the Person of Their Choice 14.53 (iii)  Agreements or Concerted Practices Resulting in Territorial Allocation 14.58 (c)  Joint Selling of Television Rights 14.63 (i)  Does Joint Selling of Rights Fall Within Article 101(1)? 14.64 (ii)  Horizontal Aspects of Joint Selling of Rights 14.66 (iii)  Specificity of Sport 14.68 (iv)  Absence of Downstream Exclusivity 14.69

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(d)  Joint Purchasing of Television Rights 14.70 (i)  Appreciable Restriction of Competition 14.72 (ii)  Main Competition Concerns 14.76 (iii)  Joint Purchasing of Sports Rights by Public Broadcasters 14.77 (2)  Vertical Agreements 14.82 (a)  Exclusivity Clauses Over Premium Content 14.84 (p. lxiv) (i)  Commission’s Policy Objective 14.85 (ii)  The Approach in ARD 14.86 (iii)  A More General Framework of Assessment 14.91 (iv)  Possible Limits on the Duration and Scope of Such Agreements 14.93 (v)  The Impact of the FA Premier League and Murphy Cases on the Level of Remuneration a Right Holder can Obtain in Return for Exclusivity 14.96 (b)  Most-Favoured-Nation Clauses 14.97 (i)  Most-Favoured-Supplier Clauses 14.98 (i)  Pay Television Film Output Agreements 14.100 (ii)  Universal/EMI 14.101 (ii)  Most-Favoured-Customer Clauses 14.104 (iii)  Cross-Platform Parity Clauses 14.107 (iv)  Conclusion 14.110 (c)  Territorial Restrictions 14.111 (i)  Territorial Restrictions in Bilateral Reciprocal Agreements Between Collecting Societies 14.112 (ii)  Absolute Territorial Protection Before FA Premier League and Murphy 14.114 (iii)  Absolute Territorial Protection After FA Premier League and Murphy 14.117 (iv)  Territorial Restrictions in the Online World 14.120 C. Competition Issues under Article 102 14.121 (1)  Market Definition 14.122 (2)  Dominance 14.123 (i)  Assessing the Economic Strength of a Content Provider 14.124 (ii)  Assessing the Economic Strength of a Broadcaster 14.125 (3)  Abuse 14.126 (a)  Unfair Trading Conditions 14.127 (b)  Excessive Pricing 14.133 (c)  Discriminatory Pricing 14.135

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(d)  Exclusionary Abuses 14.139 D. The Competition Directive: Market Entry, Special or Exclusive Rights, and Spectrum Assignments 14.143 (1)  Member States Prohibited From Granting Exclusive or Special Rights 14.146 (2)  Member States Required to Assign Spectrum on the Basis of Appropriate Criteria 14.149 E. Mergers in the Media Sector 14.156 (1)  General Remarks 14.158 (i)  Consolidation 14.159 (ii)  Digital Markets 14.160 (iii)  Content 14.161 (iv)  Vertical Issues 14.162 (2)  The Scope of the Competition Assessment under the Merger Regulation 14.163 (3)  Concentrations in Selected Media Industries 14.167 (a)  Concentrations in the Music Industry 14.167 (i)  Music Publishing 14.169 (i)  Relevant Product Markets 14.170 (ii)  Relevant Geographic Markets 14.171 (iii)  The Assessment of Non-Coordinated Effects 14.172 (iv)  The Assessment of Coordinated Effects 14.177 (p. lxv) (ii)  Recorded Music 14.178 (i)  Relevant Product Markets 14.179 (ii)  Relevant Geographic Markets 14.180 (iii)  The Assessment of Non-Coordinated Effects 14.181 (iv)  The Assessment of Coordinated Effects 14.186 (b)  Concentrations in the Audiovisual Industry 14.189 (i)  Relevant Product Markets 14.192 (ii)  Relevant Geographic Markets 14.200 (iii)  The Assessment of Pay-TV Mergers 14.203 (i)  Prohibitions Following the Lack of Satisfactory Remedies 14.204 (ii)  Focus on Vertical Issues (Input Foreclosure) 14.207 (iii)  Vertical Issues Remain in Mergers with Limited Horizontal Overlaps 14.211 (c)  Concentrations in the Book Publishing Industry (Including E-Books) 14.215

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(i)  Relevant Product Markets 14.217 (ii)  Relevant Geographic Markets 14.219 (iii)  The Assessment of Non-Coordinated Effects 14.221 (iv)  The Assessment of Coordinated Effects 14.223 (d)  Concentrations in the Written Press 14.225 (i)  Relevant Product Markets 14.226 (ii)  Relevant Geographic Markets 14.228 (iii)  The Assessment of Non-Coordinated Effects 14.229 (iv)  The Assessment of Coordinated Effects 14.230 (v)  The Assessment of Conglomerate Effects 14.231 (e)  Concentrations in Advertising Markets 14.234 (i)  Product Markets 14.235 (ii)  Relevant Geographic Markets 14.237 (iii)  The Assessment of Coordinated/Non-Coordinated Effects 14.238 (iv)  Vertical Effects 14.242 (4)  Conclusion 14.244 15. Transport Hubert de Broca, Marta Mielecka Riga, and Anatoly Subočs A. The Economic Importance of Transport 15.01 B. Competition Law Framework 15.05 (1)  Historical Evolution 15.07 (2)  Modernization of Competition Rules in the Transport Sector 15.13 C. Air Transport 15.19 (1)  Introduction 15.19 (2)  Legal Framework 15.21 (a)  Liberalization of the EU Aviation Market 15.21 (b)  International Aspects 15.26 (i)  Air Service Agreements with Third Countries 15.26 (ii)  Open Skies Agreement and Other Comprehensive Air Transport Agreements 15.33 (c)  Application of EU Competition Rules in Air Transport 15.41 (3)  Market Definition in Airline Cases 15.42 (a)  Introduction 15.42 (b)  Air Transport of Passengers 15.44 (i)  Supply of Air Transport Services to End Customers 15.44

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(p. lxvi) (i)  Starting Point: Origin-and-Destination (O&D) Approach 15.44 (ii)  Type of Passenger 15.49 (iii)  Airport Substitutability 15.54 (iv)  Non-Stop vs One-Stop Flights 15.58 (v)  Charter Services 15.60 (vi)  Inter-Modal Competition 15.63 (ii)  Supply of Airline Seats to Tour Operators 15.65 (c)  Air Transport of Cargo 15.66 (4)  Competitive Assessment of Airline Alliances and Mergers 15.69 (a)  Introduction 15.69 (b)  Determination of Affected Markets 15.76 (c)  Counterfactual 15.80 (d)  Assessment of Restrictions of Competition 15.85 (i)  Restriction of Competition by Object 15.85 (ii)  Restriction of Competition by Effect 15.87 (e)  Efficiencies 15.94 (i)  Introduction 15.94 (ii)  General Assessment Framework Under Article 101(3) 15.95 (iii)  Efficiency Gains 15.99 (iv)  Pass-on to Consumers 15.101 (v)  Indispensability 15.103 (vi)  No Elimination of Competition 15.106 (f)  Commitments 15.108 (i)  Introduction 15.108 (ii)  Slot Releases 15.113 (iii)  Special Prorate Agreements 15.120 (iv)  Fare Combinability Agreements 15.123 (v)  Frequent Flyer Programmes 15.124 (vi)  Intermodal Agreements 15.125 (vii)  Other Commitments 15.126 (5)  Prohibited Airline Mergers: Ryanair/Aer Lingus and Olympic/ Aegean 15.130 (6)  Hardcore Restrictions 15.136 (a)  Price Fixing 15.136 (b)  Market Sharing 15.139 (7)  Abuses of Dominant Position 15.141

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D. Maritime Transport 15.144 (1)  Introduction 15.144 (2)  The Repeal of the Conference Block Exemption 15.146 (3)  The Exemption of Maritime Consortia 15.150 (a)  Background 15.152 (b)  Objectives of the Latest Review 15.155 (c)  The Scope of the Exemption 15.159 (d)  The Content of the Exemption 15.162 (e)  The Conditions for the Exemption 15.166 (i)  Market Share Threshold 15.167 (ii)  Notice Period 15.172 (4)  The Maritime Guidelines 15.174 (5)  Individual Exemption 15.180 (6)  Market Definition 15.182 (7)  Agreements and Abuses of Dominant Position 15.189 (p. lxvii) E. Inland Transport 15.193 (1)  Road Transport 15.194 (a)  Transport of Goods 15.195 (b)  Transport of Passengers 15.199 (2)  Inland Waterways 15.205 (3)  Rail Transport 15.208 (a)  Transport of Goods by Rail 15.208 (b)  Transport of Passengers by Rail 15.211 (c)  EU Liberalization in the Railway Sector: The Railway Packages 15.214 (i)  First Railway Package 15.215 (ii)  Second Railway Package 15.216 (iii)  Third Railway Package 15.218 (iv)  Rail Recast Directive 15.220 (v)  Fourth Railway Package 15.225 (vi)  Railway Interoperability 15.230 (4)  Controlled Competition for Public Transport: Regulation 1370/2007 15.232 (5)  Antitrust Rules Applicable to Inland Transport 15.242 (a)  Article 2 of Regulation 169/2009: Technical Agreements 15.247

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(b)  Article 3 of Regulation 169/2009: Exemption for Groups of Small and Medium-Sized Companies 15.253 (6)  Market Definition 15.259 (a)  Freight 15.260 (b)  Passenger Transport 15.281 (7)  Prohibited Agreements 15.300 (8)  Abuses of Dominant Position 15.314 F. Transport Infrastructure (and Related Services) 15.349 (1)  Applicability of Competition Rules to Transport Infrastructure (and Related Services) 15.351 (a)  Economic Activity 15.351 (b)  Services of General Economic Interest 15.361 (2)  Airport Infrastructure 15.364 (a)  Market Definition 15.364 (i)  Product Market 15.364 (ii)  Geographic Market 15.366 (b)  Discriminatory Landing Fees 15.370 (c)  Access to Airport Services (Ground-Handling) 15.375 (3)  Maritime Infrastructure 15.378 (a)  Market Definition 15.378 (i)  Product Market 15.378 (ii)  Geographic Market 15.382 (b)  Competition Concerns 15.383 16. Pharma Harald Mische, Elena Kamilarova, and Dominik Schnichels A. Introduction 16.01 B. Overview of the Pharma Sector 16.02 (1)  Pharmaceuticals 16.02 (2)  Market Players 16.05 (i)  Manufacturers 16.05 (p. lxviii) (ii)  Generic Companies 16.06 (iii)  Distribution 16.08 (iv)  Demand 16.09 (3)  Regulatory Framework 16.10 (i)  Patents 16.11

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(ii)  SPC 16.14 (iii)  Marketing Authorization 16.16 (iv)  ‘Data Exclusivity’ and ‘Marketing Exclusivity’ 16.18 (v)  National Pricing and Reimbursement Rules 16.19 (4)  Antitrust Enforcement Priorities before the Sector Inquiry 16.24 (5)  Sector Inquiry and Follow-Up 16.25 (i)  Sector Inquiry 16.25 (ii)  Follow-Up 16.28 C. Market Definition 16.30 (1)  Pharmaceutical Markets in Case Law 16.30 (2)  ATC Classification 16.32 (3)  Medicine Characteristics 16.35 (4)  Galenic Formulation 16.36 (5)  Product Life Cycle 16.37 (6)  Future Markets 16.38 (7)  Distribution Channels 16.39 (8)  Upstream Markets 16.40 (9)  Supply Side 16.43 (10)  Geographic Markets 16.44 (11)  Recent Antitrust Decisions 16.45 D. Dominance in Abusive Conduct Cases 16.47 (1)  Commission Practice 16.47 (i)  AstraZeneca 16.47 (2)  National Cases 16.48 (i)  UK Cases (Reckitt Benckiser and Napp) 16.48 (ii)  The French Sanofi-Aventis Case 16.49 E. Restrictive Practices Between Originators and Generic Companies 16.50 (1)  Main Competition Concerns and the Economic and Legal Context of Generic Competition 16.51 (a)  Main Competition Concerns 16.51 (b)  Dynamics of Competition Between Originator and Generic Companies 16.55 (c)  The Competitive Process Leading to Generic Entry 16.62 (2)  Pay-for-Delay Settlement Agreements 16.67 (i)  Terminology 16.67

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(ii)  Forms of Value Transfer 16.69 (iii)  Overview of US and EU Debate 16.70 (a)  Pay-for-Delay Settlements in the US 16.72 (i)  Hatch–Waxman Act 16.73 (ii)  Potential Scope of the Patent Test 16.76 (iii)  Presumption of Restraint of Trade 16.78 (iv)  US Supreme Court’s ‘Rule of Reason’ Test 16.80 (b)  Pay-for-Delay Patent Settlement Agreements under Article 101 16.85 (i)  Review of Patent Settlements Under the 2008/2009 Sector Inquiry 16.85 (p. lxix) (ii)  Pay-for-Restriction in Settlement Agreements 16.87 (iii)  Commission Decision in Lundbeck 16.88 (iv)  Commission Decision in Fentanyl 16.99 (v)  EU and UK Investigations in Servier and Paroxetine Under Article 101 16.100 (vi)  Relevant Jurisprudence 16.103 (3)  Acquisition of Patent Rights and Exclusive Licensing 16.110 (a)  Acquisition of API Technology 16.111 (b)  Merger Regulation vs Articles 101 and 102 16.112 (c)  Relevant Jurisprudence 16.113 (d)  Exclusive Licensing 16.114 (4)  Exclusive Supply Agreement 16.117 F. Competition Between Manufacturers of Generic Medicines 16.118 (1)  National Pricing Systems and Their Impact on Generic Competition 16.119 (2)  The German Sickness Funds and the Dutch Preference Policy 16.123 G. Case Law under Article 102 and National Law: Abuses by Originators 16.127 (1)  Misleading Representations in Government Procedures and a Misuse of Procedures (AstraZeneca) 16.128 (a)  Misleading Representations in Government Procedures 16.129 (b)  Misuse of Procedures 16.138 (2)  Acquisition of Competing API Technology (Servier Investigation) 16.142 (3)  Pay-for-Delay Settlement Agreements (Servier and Paroxetine Investigations) 16.143 (4)  Exclusionary Pricing Discounts in the Hospital Segment (the OFT’s Napp Case) 16.144

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(5)  Withdrawal and Delisting of a Product (the OFT’s Reckitt Benckiser Case) 16.146 (6)  Denigration (the L’Autorité de la concurrence’s Schering-Plough and Sanofi-Aventis Cases) 16.147 (7)  Abusive Practices Against Competing Originator Companies (Boehringer Case) 16.150 H. Parallel Trade in Pharmaceuticals 16.152 (1)  Rationale 16.153 (a)  The Specificity of the EU Internal Market 16.155 (b)  The Internal Market Objective 16.157 (2)  Restrictions of Parallel Trade and Article 101: Supply Quotas and Dual Pricing 16.160 (a)  Supply Quotas and Article 101 16.163 (i)  EU Case Law 16.163 (ii)  National Case Law 16.166 (b)  Dual Pricing 16.168 (i)  EU Case Law: Restriction by Object 16.168 (ii)  Special Characteristics of the Pharmaceutical Sector 16.172 (iii)  National Case Law 16.178 (3)  Restrictions of Parallel Trade and Article 102: Supply Quotas 16.180 (a)  EU Case Law: Absence of a Per Se Abuse Under Article 102 16.181 (b)  National Case Law 16.191 (i)  The Case Law of the French Competition Authority 16.192 (p. lxx) (ii)  The Case Law of the Spanish Competition Authority 16.196 (iii)  The Case Law of the Belgian Competition Authority 16.203 (iv)  Conclusion 16.205 IV  State Aid 17. State Aid Tim Maxian Rusche, Claire Micheau, Henri Piffaut, and Koen Van de Casteele A. Why State Aid Control? 17.01 (1)  The Origins 17.01 (2)  Constant Conflict of Objectives 17.09 (3)  The 2012–2014 State Aid Modernization 17.13

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B. Notion of State Aid 17.18 (1)  Aid Granted by the State or Through State Resources 17.20 (a)  ‘Or’ is to be Read as ‘and’ 17.20 (b)  State Resources&May Be Private (As Long As They Are Under Control) 17.23 (c)  Imputability: No Need for a Smoking Gun, But For Indications Showing the Unlikelihood of an Absence of State Intervention 17.29 (2)  Advantage 17.35 (a)  Beneficiary of the Advantage 17.36 (i)  Notion of Undertaking 17.36 (ii)  Indirect Beneficiary 17.44 (b)  Notion of Advantage 17.49 (i)  Economic Advantage 17.51 (ii)  The Market Economy Investor Principle/Private Creditor Principle 17.60 (i)  The Private Investor Principle 17.60 (ii)  Private Creditor Principle 17.76 (iii)  Sale of State Property 17.79 (iv)  Extensions 17.85 (v)  Infrastructure Projects 17.88 (iii)  Tax Advantage 17.90 (3)  Selectivity 17.95 (a)  Notion of Selectivity 17.95 (b)  Tax Selectivity 17.100 (i)  Material Selectivity 17.104 (i)  De Jure and De Facto Selectivity 17.104 (ii)  The Test of Tax Selectivity 17.107 (iii)  Discretionary Power 17.113 (iv)  Justification by the Logic of the Tax System 17.115 (ii)  Regional Selectivity 17.121 (4)  Distortion of Competition and Effect on Trade 17.130 (a)  Affectation of Competition and Trade 17.130 (b)  De Minimis Regulation 17.146 (i)  Scope 17.152 (ii)  Recipient 17.155 (iii)  Calculation 17.156

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(iv)  Transparent Aid 17.161 (v)  Application in Time 17.162 (vi)  Further Conditions 17.166 (p. lxxi) (vii)  Monitoring 17.169 (viii)  Cumulation 17.170 (ix)  Controversy on the Nature of the De Minimis Rule 17.172 (c)  New SGEI De Minimis Regulation 17.179 C. Compatibility of State Aid with the Internal Market 17.183 (1)  Refined Economic Approach 17.186 (a)  Well-Defined Objective of Common Interest 17.189 (b)  Well-Designed Instrument 17.193 (c)  Balancing of the Positive and Negative Effects/Overall Positive Balance 17.196 (d)  The Way Forward 17.197 (2)  General Principles of Necessity (Incentive Effect) and Proportionality 17.199 (3)  Compatibility on the Basis of Article 107(2) 17.201 (a)  Aid Having a Social Character Granted to Individual Consumers 17.204 (b)  Aid to Make Good Damage Caused by Natural Disasters or Exceptional Occurrences 17.207 (c)  Aid to Compensate for the Economic Disadvantages Caused by the Division of Germany 17.212 (4)  Compatibility Declared by the Commission on the Basis of Article 107(3) 17.215 (a)  Aid to Promote the Economic Development of Areas where the Standard of Living is Abnormally Low or Where There is Serious Underemployment (Art 107(3)(a)) 17.221 (b)  Aid to Promote the Execution of an Important Project of Common European Interest (Art 107(3)(b) first alternative) 17.235 (c)  Aid to Remedy a Serious Disturbance in the Economy of a Member State (Art 107(3)(b) second alternative) 17.239 (d)  Aid to Promote Culture and Heritage Conservation (Art 107(3)(d)) 17.245 (e)  Aid to Facilitate the Development of Certain Economic Activities or of Certain Economic Areas (Art 107(3)(c)) 17.246 (i)  State Aid for Environmental Protection 17.250 (i)  Investment Aid 17.255 (ii)  Operating Aid 17.262

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(ii)  Aid for R&D 17.263 (i)  Stage of R&D 17.264 (ii)  Incentive Effect of R&D Aid 17.267 (iii)  Eligible Costs 17.270 (iv)  Aid for Rescuing and Restructuring Firms in Difficulty 17.271 (iii)  Other Soft Law of a Horizontal Nature 17.323 (iv)  Soft Law Concerning Only Certain Sectors 17.326 (f)  Other Categories to be Specified by Decision of the Council (Art 107(3)(e)) 17.327 (g)  Aid for the Coordination of Transport 17.328 (5)  Compatibility Declared by the Council: Article 108(2) 17.329 (6)  Services of General Economic Interest 17.338 (a)  Introduction: Definition and Legal Basis 17.338 (b)  Before Altmark: Compensation and State Aid Approach 17.348 (c)  The Altmark Ruling 17.351 (d)  Analysis of Altmark: Positive Effects and Open Questions 17.359 (e)  The SGEI Package 17.364 (i)  The Monti-Kroes Package 17.364 (p. lxxii) (ii)  The New Package 17.368 (i)  Existence of an SGEI 17.370 (ii)  Entrustment Act 17.371 (iii)  Parameters of Compensation 17.372 (iv)  Avoidance of Overcompensation 17.373 (v)  Selection of the Provider 17.374 (vi)  De Minimis Regulation 17.377 (vii)  Block Exemption 17.379 (viii)  Framework 17.380 (7)  The General Block Exemption Regulation 17.387 D. State Aid Procedure 17.394 (1)  Legal Basis and Applicable Texts of Hard and Soft Law 17.395 (2)  Notification and Assessment of New Aid (Chapter II Procedural Regulation) 17.402 (a)  Objective of the Notification and Assessment Procedure 17.404 (b)  Legal Basis and the Principle of Notification Requirement 17.406 (c)  Steps in the Notification and Assessment Procedure 17.410 (i)  Preparation and Filing of Notification 17.411 (ii)  Pre-Notification 17.420

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(iii)  Preliminary Investigation 17.423 (iv)  Formal Investigation Proceedings 17.427 (d)  Internal Commission Decision-Making Procedure 17.430 (e)  Delays and Mistakes in the Notification Procedure and How to Avoid Them 17.435 (f)  Monitoring of Approved and Notification-Exempted State Aid 17.443 (3)  Unlawful Aid (Chapter III of the Procedural Regulation) 17.445 (a)  The Case Law on Unlawful Aid 17.446 (b)  The Codification of the Case Law in the Procedural Regulation 17.448 (c)  Innovation in the Procedural Regulation: The Recovery Injunction 17.449 (d)  Recovery of Unlawful and Incompatible Aid 17.450 (i)  Legal Basis and General Principles of Recovery 17.455 (i)  Legal Basis of Recovery 17.455 (ii)  Immediate and Effective Recovery According to National Laws 17.460 (iii)  Imposition of Compound Interest 17.467 (ii)  Defences Against Recovery 17.471 (i)  Defences That Can Be Invoked by the Member State 17.473 (ii)  Defences That Can Be Invoked by the Beneficiary 17.474 (iii)  Specific Problems and Situations of Recovery 17.479 (i)  Domestic Motivation for Recovery 17.479 (ii)  Recovery and Insolvency Proceedings 17.481 (iii)  The Correct Addressee for the Recovery Claim 17.487 (iv)  Recovery Practice of the Commission 17.493 (4)  Existing Aid (Chapter IV Procedural Regulation) 17.497 (a)  The Distinction Between New and Existing Aid 17.501 (b)  Procedure for Existing Aid 17.511 (c)  The Treatment of Borderline Cases 17.516 (p. lxxiii) (5)  The Rights of Third Parties, in Particular: The State Aid Complaint (Chapter V Procedural Regulation) 17.519 (a)  Rights of Third Parties in General 17.519 (b)  State Aid Complaints 17.524 (c)  Challengeable Acts 17.541 (i)  Existing Aid 17.543 (ii)  Opening Decisions 17.544

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(iii)  Injunctions 17.546 (iv)  Administrative Letters in Response to Complaints 17.548 (6)  Action Seeking the Suspension and Provisional Recovery of State Aid in Front of National Courts 17.553 (7)  The Scope of Judicial Review 17.556 (a)  Judicial Review: Failure to Act 17.559 (b)  Judicial Review: Interim Relief 17.561 (c)  Judicial Review: Action for annulment 17.565 Index 2033 (p. lxxiv)

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List of Abbreviations Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

AAC average avoidable costs ACER Agency for the Cooperation of National Regulators AECT as-efficient competitor test AFC average fixed cost API active pharmaceutical ingredient ASA air service agreement ATC average total cost AVC average variable cost BEREC

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Body of European Regulators for Electronic Communications CA conditional access CAT Competition Appeal Tribunal CET Chief Economist Team CCP central counterparty CJ Court of Justice CSD central securities depository DCF discounted cash flow DRAM dynamic random access memory EAGCP Economic Advisory Group on Competition Policy ECHR European Convention on Human Rights ECN European Competition Network ECPR efficient component pricing rule ECSC European Coal and Steel Community ECtHR European Court of Human Rights EEA European Economic Area EFTA European Free Trade Association

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EMIR European Market Infrastructure Regulation EP European Parliament ERG European Regulators Group ESA EFTA Surveillance Authority ETD exchange-traded derivatives FFP frequent flyer programme FRAND fair, reasonable, and non-discriminatory FTA free-to-air FTC Federal Trade Commission GBER General Block Exemption Regulation (Regulation 800/2008) GC General Court GUPPI Gross Upward Pricing Pressure Index HDD hard disk drive HHI Herfindahl–Hirschman Index ICN International Competition Network ICSD international central securities depositary IP

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intellectual property ISO International Standardization Organization JV joint venture LNG liquefied natural gas LPP legal professional privilege (p. lxxvi) LRAIC long-run average incremental costs MC marginal cost MEIP market economy investor principle MES minimum efficient scale MFC most favoured customer MFN most favoured nation MIF multilateral interchange fee MiFID Markets in Financial Instruments Directive (Directive 2004/39/EC) MTF Multilateral Trading Facilities MR marginal revenue NCA national competition authority NGA next generation access

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NPV net present value NRA national regulatory authority O&D origin and destination OECD Organisation for Economic Co-operation and Development OEM original equipment manufacturer OFT Office of Fair Trading OLS ordinary least squares ONP open network provision OTC over the counter PPI proton pump inhibitor R&D research and development R&D&I research, development, and innovation REMIT Regulation on Energy Market Integration and Transparency (Regulation 1227/2011) RPM resale price maintenance SAV significant added value SBM stretch blow moulding S-C-P

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Structure-Conduct-Performance SEP standard essential patent SGEI service of general economic interest SIEC significant impediment to effective competition SMEs small and medium-sized enterprises SMP significant market power SO statement of objections SOP state of play SPC Supplementary Protection Certificate SSNIP small but significant non-transitory increase in price SSO standard-setting organizations or supplementary statement of objections TEU Treaty on European Union TFEU Treaty on the Functioning of the European Union TSO transmission system operator TTBER Technology Transfer Block Exemption Regulation (Regulation 772/2004) UNCTAD United Nations Conference on Trade and Development UPP upward pricing pressure

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VBER Vertical Block Exemption Regulation (Regulation 330/2010) VOD video-on-demand WHO World Health Organization WTO World Trade Organization

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Table of Cases Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

1. Tables of Court of Justice and the General Court of the European Union Cases A. Alphabetical (Court of Justice and General Court of the European Union Combined) lxxvii B. Numerical Table of Court of Justice Cases cviii C. Numerical Table of General Court Cases cxxv 2. Tables of European Commission Decisions A. Alphabetical (all types of Decision combined) cxxxviii B. Numerical Table of Merger Decisions clix C. Numerical Table of Non-Merger Decisions clxviii D. Numerical Table of Joint Venture Decisions clxxiv 3. Table of National and Other Cases clxxv

1. Tables of Court of Justice and the General Court of the European Union Cases A. Alphabetical (Court of Justice and General Court of the European Union combined) ABB Asea Brown Boveri v Commission (T-31/99) [2002] ECR II-1881 8.117, 8.215, 8.256, 8.615, 8.620, 8.666, 8.667, 8.709

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ABN Amro v Commission (T-319/11), not yet reported 17.244 AC Treuhand v Commission (T-99/04) [2008] ECR II-1501; [2008] 5 CMLR 962 3.85, 3.94, 3.97, 3.148, 3.149, 7.453, 8.74, 8.288, 9.56 ACEA v Commission (T-297/02) [2009] ECR II-1683 17.504 ACF Chemiefarma v Commission (41/69) [1970] ECR 661; [1970] CMLR 43 3.76, 4.36 AEG v Commission (107/82) [1983] ECR 3151; [1984] 3 CMLR 325 3.65, 3.101, 3.106, 3.107, 3.193, 3.238, 3.410, 3.415, 8.525, 8.528, 8.537, 9.249, 9.250 AEM v Commission (T-301/02) [2009] ECR II-1757 17.504 AEPI v Commission (T-392/08 etc), not yet reported 10.208, 14.55, 14.60 AG2R Prévoyance (C-437/09) [2011] ECR I-973 3.27, 6.22, 6.24, 6.66, 6.85, 6.191, 6.192 AGR2 (C-475/09) [2011] ECR I-973 6.33 AITEC v Commission (T-277/94) [1996] ECR II-351 17.450 AKM v Commission (T-432/08), not yet reported 10.208, 14.55, 14.60 AKZO Chemie BV and AKZO Chemie UK Ltd v Commission (53/85) [1986] ECR 1965; [1987] 1 CMLR 231 2.195, 2.201, 2.206 (p. lxxviii) AKZO Chemie BV v Commission (5/85) [1986] ECR 2585; [1987] 3 CMLR 716 8.395 AKZO Chemie BV v Commission (C-62/86) [1991] ECR I-3359; [1993] 5 CMLR 215 4.157, 4.158, 4.159, 4.160, 4.161, 4.162, 4.163, 4.164, 4.302, 4.303, 4.304, 4.305, 4.307, 4.308, 4.309, 4.311, 4.312, 4.314, 4.342, 4.344, 4.352, 4.649, 4.653, 12.122, 13.159 ANAV (C-410/04) [2006] ECR I-3303 6.89, 6.126, 6.133 AOIP v Beryrard (76/29) [1976] OJ L6/8; [1976] 1 CMLR D14 8.515 AOK Bundesverband v Ichthyol-Gesellschaft Cordes, Hermani & Company (Cases C-264/01 etc) [2004] ECR I-2493; [2004] 4 CMLR 1261 3.40, 6.21, 8.515, 17.37, 17.42 ARBED v Commission (C-176/99) [2003] ECR I-10687; [2005] 4 CMLR 530 8.540 ARD v Commission (T-158/00) [2003] ECR II-3825; [2004] 5 CMLR 681 5.560, 5.1029, 5.1089, 5.1146 ASM Brescia (C-347/06) [2008] ECR I-5641 6.89, 6.133 ASM Brescia v Commission (T-189/03) [2009] ECR II-1831 17.504 Aalberts Industries v Commission (Copper Fittings) (T-385/06) [2011] ECR II-1233, [2011] 4 CMLR 1675 8.458, 8.463, 8.680

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Aalborg Portland (C-204/00) [2004] ECR I-123; [2004] 4 CMLR 13 2.26, 3.70, 3.72, 3.73, 3.79, 3.134, 3.187, 3.449, 8.257, 8.259, 8.288, 8.301, 8.455, 8.464, 8.467, 8.482, 8.496, 8.509, 8.543, 8.545, 8.591, 8.708, 13.165 Acciaieria e Tubeficio di Brescia v High Authority (31/59) [1960] ECR 71 8.288, 8.347, 8.388 Acerinox (T-48/98) [2001] ECR II-3859 8.215, 8.660 Adams (145/83) [1985] ECR 3539; [1986] 1 CMLR 506 2.195, 8.103, 8.104 Adria-Wien Pipeline GmbH and Wietersdorfer & Peggauer Zementwerke GmbH v Finanzlandesdirektion für Kärnten (C-143/99) [2001] ECR I-8365; [2002] 1 CMLR 1103 17.101, 17.109, 17.111 Adriatica di Navigazione v Commission (T-61/99) [2003] ECR II-5349; [2005] 5 CMLR 1843 3.79, 8.451 Aer Lingus v Commission (T-411/07) [2010] ECR II-3691; [2008] ECR II-411 5.100, 5.502, 5.1122, 5.1145, 5.1171, 5.1173 Aéroports de Paris v Commission (C-82/01) [2002] ECR I-9297; [2003] 5 CMLR 16 3.27, 3.30, 4.909, 4.910, 4.928, 4.931, 6.22, 12.54, 15.353, 15.354, 15.369, 15.377 Aéroports de Paris v Commission (T-128/98) [2000] ECR II-3929; [2001] 4 CMLR 1376 2.253, 4.605, 4.909, 4.910, 4.928, 4.929, 4.931, 4.933, 6.18, 6.33, 6.167, 15.353, 15.354, 15.356, 15.363, 15.364, 15.369, 15.377 Agrana Zucker und Stärke v Commission (T-187/99) [2001] ECR II-1587 17.199 Agroexpansion v Commission (T-38/05), not yet reported 8.663, 8.680 Åhlstrom v Commission (Wood Pulp I) (89/85) [1988] ECR 5193; [1988] 4 CMLR 901 8.295, 8.298 Ahlström Osakeyhtiö v Commission (Wood Pulp II) (89/85, 104/85, 114/85, 116/85, 117/85 & 125/85-129/85) [1993] ECR I-1307; [1993] 4 CMLR 407 3.141, 3.436, 3.438, 7.443, 7.483, 8.54, 8.97, 8.512, 8.621 Air France v Commission (T-2/93) [1994] ECR II-323 5.631, 15.44 Air France v Commission (T-3/93) [1994] ECR II-121 5.1131, 5.1135, 5.1146 Air France v Commission (T-358/94) [1996] ECR II-2109; [1997] 1 CMLR 492 17.32, 17.68 Air Inter (T-260/94) [1997] ECR II-997; [1997] 5 CMLR 851 6.32, 6.148, 6.152, 6.167, 6.200, 6.202, 6.203, 6.204, 6.205, 6.207, 6.209, 6.217 Air Liquide Industries Belgium (C-393/04 & C-41/05) [2006] ECR I-5293; [2006] 3 CMLR 667 17.94 Airtours v Commission (T-342/99) [2002] ECR II-2585; [2002] 5 CMLR 317 4.218, 4.219, 4.220, 4.240, 5.07, 5.672, 5.806, 5.919, 5.1127, 5.1162, 5.1185, 5.1189, 7.417, 7.456, 10.146, 12.190

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Åklageren v Hans Åkerberg Fransson (C-617/10), judgment of 26 February 2013, not yet reported 2.179 Akzo Nobel Chemicals Ltd and Ackros Chemicals Ltd v Commission (Joined Cases T-125/03 and T-253/03) [2007] ECR II-3523; [2004] 4 CMLR 15 8.272, 8.275, 8.276, 8.277, 8.278, 8.279, 8.280, 8.281, 8.283, 8.401, 8.474 (p. lxxix) Akzo Nobel Chemicals Ltd and Ackros Chemicals Ltd v Commission (Joined Cases T-125/03 R and T-253/03 R) [2003] ECR II-4771; [2004] 4 CMLR 15 8.401 Akzo Nobel Chemicals Ltd and Ackros Chemicals Ltd v Commission (C-550/07 P) [2010] ECR I-8301; [2010] 5 CMLR 1143 8.272 Akzo Nobel NV v Commission (C-97/08 P) [2009] ECR I-8237; [2009] 5 CMLR 2633 3.49, 3.50, 3.51, 3.53, 3.54, 3.55, 7.120, 7.121, 8.525, 8.528 Akzo Nobel NV v Commission (T-175/05) [2009] ECR II-184 8.536 Akzo Nobel NV v Commission (T-330/01) [2006] ECR II-3389 [2007] 4 CMLR 125 8.399, 8.708 Akzo Nobel and Others v Commission (T-112/05) [2007] ECR II-5049; [2008] 4 CMLR 321 3.57, 3.65, 8.680 Alaimo v Préfet du Rhône (68/74) [1975] ECR 109 2.272 Albany International BV v Stichting Bendrijfspensioenfonds Textielindustrie (C-67/96) [1999] ECR I-5751; [2000] 4 CMLR 446 3.30, 3.48, 6.21, 6.63, 6.66, 6.86, 6.152 Alcan I (Commission v Germany) (C-94/87) [1989] ECR 175; [1989] 2 CMLR 425 17.463 Alcan II see Rheinland-Pfalz v Alcan Deutschland (Alcan II) Alfa Romeo see Italy v Commission (Alfa Romeo) (C-305/89) [1991] ECR I-1603 All Weather Sports Benelux BV v Commission (T-38/92) [1994] ECR II-211; [1995] 4 CMLR 43 8.544 Alliance One International (T-25/06) [2011] ECR II-5741 8.526 Alliance One International v Commission (C-668/11 P) (2013), not yet reported 8.663 Alliance One International v Commission (T-24/05) [2010] ECR II-5237 8.536 Alliance One International and Standard Commercial Tobacco v Commission (C-628/10 and C-14/11 P) [2012] OJ C295/6 3.49, 3.51, 3.59, 3.60, 3.63, 8.528 Allianz Hungária Biztosító Zrt v Gazdasági Versenyhivatal (C-32/11), not yet reported 3.203, 3.204, 3.205, 3.206, 3.207, 3.208, 3.444, 12.122 Almamet v Commission (T-410/09) [2010] OJ C179/39; [2010] 5 CMLR 219 8.331, 8.352, 8.390, 8.461, 8.462, 8.472, 8.478 Almelo (C-393/92) [1994] ECR I-1477 4.220, 4.223, 4.224, 6.10, 6.34, 6.111, 6.119, 6.145, 6.149, 6.152, 6.158, 6.163, 6.188, 6.190, 6.192, 6.202, 6.211

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Alpine Investments (C-384/93) [1995] ECR I-1141 2.65 Alrosa v Commission (T-170/06) [2007] ECR II-2601; [2007] 5 CMLR 494 4.55 Alsatel v Novasam (247/86) [1988] ECR 5987; [1990] CMLR 434 4.847 Alstom v Commission (T-164/12), not yet decided 8.242 Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH and Oberbundesanwalt beim Bundesverwaltungsgericht (C-280/00) [2003] ECR I-7747; [2003] 3 CMLR 339 6.165, 6.207, 13.237, 17.90, 17.136, 17.137, 17.351, 17.364 Alzetta v Commission (Joined Cases T-298/97, etc) [2000] ECR II-2319 17.130, 17.139 Amann & Söhne v Commission (T-446/05) [2010] ECR II-1255; [2010] 5 CMLR 789 8.268, 8.461, 8.683 Amministrazione Autonoma dei Monopoli di Stati (AAMS) (T-139/98) [2001] ECR II-3413; [2002] 4 CMLR 302 4.187, 4.848, 12.54 Analir v Commission (C-205/99) [2001] ECR I-1271 17.342 Andersen v Commission (T-87/09) [2009] ECR II-225 17.545 Annibaldi (C-309/96) [1997] ECR I-7493 2.179 Anomar (C-6/01) [2003] ECR I-8621; [2004] 1 CMLR 1357 6.111, 6.127, 6.128 APERMC (C-220/06) [2007] ECR I-12175 6.89, 6.211 Aragonesas Industrias y Energía v Commission (T-348/08) [2011] ECR II-7583 8.469, 8.490, 8.491, 8.495, 8.500, 8.509, 8.628 ArcelorMittal Luxembourg v Commission (C-201/09 P & C-216/09 P) [2011] ECR I-2239; [2011] 4 CMLR 1097 8.515 Archer Daniels Midland v Commission (T-59/02) [2006] ECR II-3627; [2006] 5 CMLR 1528 8.475, 8.483 Archer Daniels Midland v Commission (T-329/01) [2006] ECR II-3255; [2007] 4 CMLR 43 8.669 (p. lxxx) Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission (T-224/00) [2003] ECR II-2597; [2003] 5 CMLR 583 8.473, 8.564, 8.582, 8.583 Arduino (C-35/99) [2002] ECR I-1529; [2002] 4 CMLR 866 3.34, 6.05 Areva and Alstom v Commission (T-117/07 & 121/07) [2011] ECR II-633, [2011] 4 CMLR 1421 8.177, 8.516, 8.520, 8.539, 8.602, 8.606 Arkema v Commission (C-520/09 P) [2011] ECR I-8901 8.528 Arkema v Commission (T-343/08) [2011] ECR II-2287 8.214, 8.591

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Arkema France (T-217/06) [2011] ECR II-2593 8.663, 8.672, 8.680 Arkema France v Commission (T-189/06) [2011] ECR II-5455 8.193, 8.195, 8.519, 8.526 Artisjus Magyar Szerzõi Jogvédõ Iroda Egyesület v Commission (T-411/08) [2008] ECR II-270; [2009] 4 CMLR 353 10.208, 14.60 Asia Motor France II (T-7/92) [1993] ECR II-669; [1994] 4 CMLR 30 3.158 Asia Motor France and Others v Commission (T-387/94) [1996] ECR II-961; [1996] 5 CMLR 537 3.156 Asnef-Equifax and Others v Ausbanc (C-238/05) [2006] ECR I-11125; [2007] 1 CMLR 224 3.367, 3.395, 3.397, 3.462, 3.464, 7.436, 7.455, 8.450 Assicurazioni General and Unicredito v Commission (T-87/96) [1999] ECR II-203; [2000] 4 CMLR 312 5.1131, 5.1162 Associação dos Refinadores de Açúcar Portugueses and Others (C-321/99 P) [2002] ECR I-4287; [2002] 2 CMLR 949 17.92 Association belge des consommateurs test-achats v Commission (T-224/10) [2011] ECR II-7177 5.1132, 5.1146, 5.1149, 5.1150, 5.1154 Associazione italiana del risparmio gestito and Fineco Asset Management v Commission (T-445/05) [2009] ECR II-289 17.131 AstraZeneca v Commission (T-321/05) [2010] ECR II-2805; [2010] 5 CMLR 1575 4.161, 4.176, 4.190, 4.201, 4.205, 4.206, 4.289, 4.712, 4.716, 4.720, 10.260, 12.157, 12.158, 16.12, 16.22, 16.24, 16.30, 16.45, 16.132, 16.133, 16.139, 16.140, 16.141 AstraZeneca and Others v Commission (C-457/10) [2013] OJ C26/2 3.176, 3.177, 4.712, 4.714, 4.717, 4.718, 4.726, 4.727, 4.728, 4.808, 4.812, 4.813, 10.159, 16.24, 16.35, 16.36, 16.45, 16.47, 16.128, 16.134, 16.137, 16.139, 16.140 Athinaïki v Commission (C-521/06 P) [2008] ECR I-5829 17.526, 17.528, 17.531, 17.533, 17.549, 17.551 Athinaïki v Commission (C-362/09 P) [2010] ECR I-13275 17.526, 17.528, 17.549 Atlantic Container Line (T-395/94) [2002] ECR II-875; [1997] 5 CMLR 1008 3.507, 15.183 Atlantic Container Line (TACA) (T-191/98, T-212/98 and T-214/98) [2003] ECR II-3275; [2005] 4 CMLR 1283 3.507, 4.219, 4.227, 4.228, 4.241, 4.242, 7.477, 7.479, 8.476, 12.192, 15.183, 15.184 Atochem SA v Commission (T-3/89) [1991] ECR II-1177 8.497 Atzeni and Others (C-343/03 & C-529/03) [2006] ECR I-1875 17.207 Australian Mining and Smelting Europe (AM&S) v Commission (155/79) [1982] ECR 1575; [1982] 2 CMLR 264 8.270, 8.272, 8.273, 8.274, 8.275, 8.276, 8.291, 8.347, 8.352, 8.474

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Austria v Commission (‘BayernLB’) (T-427/12), not yet reported 17.244 Auto 24 v Jaguar Land Rover France (C-158/11) 9.254 Automec v Commission (T-24/90) [1992] ECR II-2223; [1992] 5 CMLR 431 2.11, 2.105, 2.109, 2.116, 4.33, 4.103 Autortiesību un komunicēšanās konsultāciju aģentūra/Latvijas Autoru apvienība v Commission (T-414/08), not yet reported 10.208, 14.60 Aventis Pharmaceuticals v OHIM (T-142/12), not yet reported 17.454 BASF v Commission (T-15/02) [2006] ECR II-497; [2006] 5 CMLR 27 2.128, 8.119, 8.317, 8.321, 8.462, 8.480, 8.507, 8.590, 8.600, 8.602, 8.603, 8.605, 8.607, 8.608, 8.667, 8.668, 8.669, 8.709 BASF v Commission (T-101/05 & 111/05) [2007] ECR II-4949; [2008] 4 CMLR 347 8.592, 8.658, 8.668 BASF and Others v Commission (T-80/89) [1995] ECR II-729 3.69 (p. lxxxi) BASF Coatings AG v Commission (T-175/95) [1999] ECR II-1581; [2000] 4 CMLR 33 8.708 BAT v Commission (35/83) [1985] ECR 363; [1985] 2 CMLR 470 8.515, 10.187, 16.107 BMW Belgium v Commission (Joined Cases 32/78 and 36 to 82/78) [1979] ECR 2435 3.101, 8.520, 8.526, 9.112 BP Chemicals v Commission (T-11/95) [1998] ECR II-3235; [1998] 3 CMLR 693 17.65 BPB de Eendracht v Commission (T-311/94) [1998] ECR II-1129 8.628 BPB Industries and British Gypsum (British Plasterboard) (C-310/93P) [1995] ECR 865; [1995] 4 CMLR 718 2.201, 4.405, 4.477, 4.905 BPB Industries and British Gypsum v Commission (British Plasterboard) (T-65/89) [1993] ECR II-389; [1993] 5 CMLR 409 2.201, 3.404, 3.414, 4.289, 4.405, 4.905, 8.535 BPB v Commission (T-53/03) [2008] ECR II-1333; [2008] 5 CMLR 1201 8.49, 8.592, 8.650 BUPA v Commission (T-289/03) [2008] ECR II-81; [2009] 2 CMLR 1083 6.142, 6.150, 6.152, 6.155, 6.164, 6.212, 6.226, 17.341 BaByliss v Commission (T-114/02) [2003] ECR II-1279; [2004] 5 CMLR 21 5.688, 5.878, 5.927, 5.930, 5.1000, 5.1016, 5.1029, 5.1146, 5.1159 Bagnasco (Joined Cases C-215/96 and 216/96) [1999] ECR I-135; [1999] 4 CMLR 624 3.388, 3.395, 3.400, 3.431 Ballast Nedam Infra v Commission (2012) (T-362/06), not yet reported 8.529 Banchero (C-387/93) [1995] ECR I-4663; [1996] 1 CMLR 829 6.82, 6.124

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Banco Exterior de España (C-387/92) [1994] ECR I-877; [1994] 3 CMLR 473 17.36 Banco Privado Portugues v Commission (T-487/11), not yet reported 17.244 Banks (C-390/98) [2001] ECR I-6117; [2001] 3 CMLR 51 17.492 Basset v SACEM (402/85) [1987] ECR 1747; [1987] 3 CMLR 173 10.259, 10.261, 14.133 Baustahlgewebe v Commission (C-185/95P) [1998] ECR I-8417; [1999] 4 CMLR 1203 2.28, 8.703 Baustahlgewebe v Commission (T-145/89) [1995] ECR II-991 3.67 Bayer v Commission (T-41/96) [2000] ECR II-3383; [1996] 4 CMLR 126 3.74, 3.84, 3.101, 3.113, 3.116, 3.117, 3.179, 4.558, 16.164 Bayer and Maschinenfabrik Hennecke v Heins Süllhofer (65/86) [1988] ECR 5249; [1990] 4 CMLR 182 3.121, 10.159, 16.105 Bayerische Motorenwerke v ALD (BMW) (C-70/93) [1995] ECR I-3439; [1996] 4 CMLR 478 3.101, 3.106, 3.430, 9.10, 10.122 BayernLB see Austria v Commission (‘BayernLB’) (T-427/12) Beamglow v Parliament and Others (T-383/00) [2005] ECR II-5459 5.1204 Becu (C-22/98) [1999] ECR I-5665; [1999] 1 CMLR 968 6.24 Béguelin Import v SAGL Import Export (22/71) [971] ECR 949; [1972] CMLR 81 3.234, 3.395, 3.398, 3.413 Belasco (SC) and Others v Commission (246/86) [1989] ECR 2117; [1991] 4 CMLR 96 3.81, 3.125, 3.430, 8.25, 8.28, 8.71 Belgische Radio en Televisie (BRT) v SABAM (127/73) [1974] ECR 51; [1974] 2 CMLR 238 2.236, 2.251, 4.22, 4.846, 6.141, 6.147, 6.151, 6.156, 6.167, 14.128 Belgium v Commission (40/85) [1986] ECR 2321; [1988] 2 CMLR 301 17.481 Belgium v Commission (234/84) [1986] ECR 2263; [1988] 2 CMLR 331 17.481 Belgium v Commission (C-457/00) [2003] ECR I-6931 17.44 Belgium v Commission (‘Cockerill’) (C-5/01) [2002] ECR I-11991 17.19, 17.56 Belgium v Commission (‘Maribel’) (C-75/97) [1999] ECR I-3671; [2000] 1 CMLR 791 17.19, 17.401, 17.453, 17.473 Belgium v Commission (‘Tubemeuse’) (C-142/87) [1990] ECR I-959; [1991] 3 CMLR 213 17.62, 17.137, 17.146, 17.446 Benedetti (52/76) [1976] ECR 192 6.147 Bergaderm and Goupil v Commission (C-352/98 P) [2000] ECR I-5291 5.1205

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Bertelsmann and Sony Corporation of America v Independent Music Publishers and Labels Association (Impala) (C-413/06 P) [2008] ECR I-495; [2008] 5 CMLR 1073 4.219, 4.220, 4.235, 4.236, 4.237, 4.238, 4.240, 5.356, 5.455, 5.772, 5.773, 5.780, 5.787, 5.794, 5.798, 5.1134, 5.1140, 5.1155, 5.1157, 5.1158, 5.1162, 5.1180, 5.1184, 5.1189, 5.1191, 7.141, 7.456, 14.37, 14.168 (p. lxxxii) Binon v SA Agence et messageries de la presse (AMP) (243/83) [1985] ECR 2015; [1985] 3 CMLR 800 3.188, 9.98, 9.99, 9.250 Bodson v Pompes Funèbres des Régions Libérées (30/87) [1988] ECR 2479; [1989] 4 CMLR 984 3.41, 4.223, 4.837, 6.12, 6.14, 6.32, 6.33, 6.55, 6.59, 6.91, 6.111, 6.119, 12.182, 14.133 Boehringer Ingelheim v Swingward (C-348/04) [2007] ECR I-3391, [2007] 2 CMLR 1445 16.156 Boehringer Mannheim v Commission (45/69) [1970] ECR 769; [1972] CMLR D121 8.662 Bolloré SA v Commission (T-109/02) [2007] ECR II-947; [2007] 5 CMLR 66 8.528, 8.536, 8.564, 8.602, 8.628, 8.629, 8.650 Bond van Adverteerders (352/85) [1988] ECR 2085; [1989] 3 CMLR 113 3.31, 6.128 Bouygues v Commission (T-475/04) [2007] ECR II-2097 17.536 Bouygues and Bouygues Télécom v Commission (C-399/10 P and C-401/10 P), not yet reported 17.57 Brasserie de Haecht v Consorts Wilkin-Janssen (23/67) [1967] ECR 407; [1968] CMLR 26 3.223, 3.224, 3.232 Brasserie de Haecht (48/72) [1973] ECR 77; [1973] CMLR 287 2.231, 2.268, Brasserie Nationale v Commission (T-49/02 etc) [2005] ECR II-3033; [2006] 4 CMLR 266 8.451, 8.564 Brentjens (Joined Cases C-115/97-C-117/97) [1999] ECR I-6025; [2000] 4 CMLR 566 3.246, 6.21, 11.15 Bristol-Myers Squibb v Paranova (C-427/93, C-429/93 and C-436/93) [1996] ECR I-3457, [1997] 1 CMLR 1151 16.156 Britannia Alloys & Chemicals v Commission (C-76/06) [2007] ECR I-4405; [2007] 5 CMLR 251 8.255, 8.677 Britannia Alloys & Chemicals Ltd v Commission (T-33/02) [2005] ECR II-4973 8.544, 8.677 British Aggregates Association v Commission (C-487/06 P) [2008] ECR I-10515 17.92, 17.112 British Aggregates Association v Commission (T-210/02) [2006] ECR II-2789 17.92, 17.112

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

British Airways v Commission (C-95/04 P) [2007] ECR I-2331 4.03, 4.252, 4.256, 4.282, 4.292, 4.293, 4.294, 4.296, 4.427, 4.428, 4.910, 4.920, 4.923, 4.924, 4.927, 14.135, 15.142 British Airways v Commission (T-219/99) [2003] ECR II-5917; [2004] 4 CMLR 1008 4.176, 4.177, 4.436, 4.438, 4.439, 4.910, 4.918, 4.920 British Airways v Commission (T-371/94 & T-394/94) [1998] ECR II-2405; [1998] 3 CMLR 429 17.41 British Leyland plc v Commission (226/84) [1986] ECR I-3263; [1987] 1 CMLR 185 12.182, 14.133 British Sugar v Commission (C-359/01 P) [2004] ECR I-4933; [2004] 5 CMLR 329 3.411 British-American Tobacco Company and RJ Reynolds Industries v Commission (Joined Cases 142/84 etc) [1987] ECR 4487; [1988] 4 CMLR 24 3.344, 4.70, 5.02, 12.110, 12.231 Bronner (Oscar) v Mediaprint (C-7/97) [1998] ECR I-7791, [1999] 4 CMLR 112 4.558, 4.588, 4.596, 4.601, 6.58, 11.126, 12.141, 12.142, 13.146 Brouwerij Haacht v Commission (T-48/02) [2005] ECR II-5259; [2006] 4 CMLR 13 8.264, 8.305, 8.311, 8.374, 8.475 Buchmann GmbH v Commission (T-295/94) [1998] ECR II-813 3.92, 3.93 Buczek Automotive v Commission (T-1/08) (2011), not yet reported 17.132 Budapesti Erõmû v Commission (T-80/06 & T-182/09) (2012), not yet reported 17.500 Bundesverband der Arzneimittel-Importeure and Commission v Bayer (Joined Cases C-2/01 P and C-3/01) [2004] ECR I-23; [2004] 4 CMLR 653 3.80, 3.103, 3.109, 3.112, 3.113, 3.114, 3.116, 3.154, 16.164 Bureau National Interprofessionel du Cognac (BNIC) v Clair (123/83) [1985] ECR 391; [1985] 2 CMLR 430 3.35, 3.408, 6.04 Buzzi Unicem v Commission (T-297/11), not yet reported 8.289 (p. lxxxiii) CCE de la Société Generale des Grandes Sources et al v Commission (‘Perrier’)(T-96/92) [1996] ECR II-1213 5.1149, 5.1150, 5.1154, 5.1174 CDC Hydrogene Peroxide Cartel Damage Claims v Commission (T-437/08) [2011] ECR II-0000; 8.223, 8.224 CEFL (C-332/98) [2000] ECR I-4833 6.165 CEPSA Estaciones de Servicio SA v LV Tobar e Hijos (C-279/06) [2008] ECR I-6681; [2008] 5 CMLR 1327 9.43, 9.98 CETM v Commission (T-55/99) [2000] ECR II-3207 17.401 CIA International (C-194/94) [1996] ECR I-2201 2.53, 2.226

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

CILFIT v Ministry of Health (283/81) [1982] ECR 3415 2.255 CISAC v Commission (T-442/08 etc), not yet reported 3.141, 10.208, 14.55, 14.60 CMA CGM v Commission (T-213/00) [2003] ECR II-913; [2003] 5 CMLR 268 3.415, 3.426, 3.456, 8.300 CNL Sucal v Hag GF (Hag II) (C-10/89) [1990] ECR I-3711; [1990] 3 CMLR 571 10.175 Cableuropa et al v Commission (T-346/02 & T-347/02) [2003] ECR II-4251; [2004] 5 CMLR 1216; [2004] 5 CMLR 25 5.219, 5.228, 5.241, 5.242, 5.247, 5.1131, 5.1142, 5.1146 Caffaro v Commission (Hydrogen peroxide and perborate) (T-192/06) [2011] ECR II-3063 8.629 Camera Care v Commission (792/79 R) [1980] ECR 119; [1980] 1 CMLR 334 5.1173, 6.242 Campus Oil (72/83) [1984] ECR 2727; [1984] 3 CMLR 544 5.285, 6.163, 6.172, 6.183 Cantieri navale De Poli v Commission (C-167/11), (2012), not yet reported 17.218 Carbone Lorraine v Commission (Carbon and Mechanical Products) (T-73/04) [2008] ECR II-2661; [2010] 5 CMLR 8 8.629 Carni (Ligur) v Unitá Sanitaria Locale NO XV di Genova (C-277, 318 and 319/91) [1993] ECR I-6621 6.109 Cascades v Commission (C-279/98 P) [2000] ECR I-9693 3.69, 8.542, 8.544, 8.669 Cascades v Commission (T-308/94) [1998] ECR II-925 8.532, 8.623, 8.629 Cassa di Risparmio di Firenze (C-222/04) [2006] ECR I-289; [2008] 1 CMLR 705 17.37, 17.40, 17.504 Cassis de Dijon (120/78) [1979] ECR 649; [1979] 3 CMLR 494 6.106, 6.172, 6.218 Caves Neto Costa (C-76/91) [1993] ECR I-117 6.114 Cementbouw Handel & Industrie v Commission (C-202/06 P) [2007] ECR I-12129; [2008] 4 CMLR 17 5.390, 5.1000, 5.1003, 5.1152 Cementbouw Handel & Industrie v Commission (T-282/02) [2006] ECR II-319; [2006] 4 CMLR 156 5.49, 5.140, 5.142, 5.390, 5.529, 5.900, 5.998, 5.1000, 5.1003 Cementos Portland Valderrivas v Commission (T-296/11) [2011] ECR II-246 8.289 Cemex v Commission (T-292/11) [2011] ECR II-243 8.289 Centrafarm v Sterling Drug (15/74) [1974] ECR 1147; [1974] 2 CMLR 480 3.50, 10.23, 10.36, 16.104 Centrafarm v Winthrop (16/74) [1974] ECR 1183; [1974] 2 CMLR 480 10.32

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Centre Belge d’Etudes de Marché-Télémarketing (CBEM) v CLT and IPB (311/84) [1985] ECR I-3261; [1986] 2 CMLR 558 4.291, 4.582, 4.587, 4.595, 4.605, 4.614, 6.33, 6.55, 14.64 Centro Europa 7 v Ministero delle Comunicazioni (C-380/05) [2008] ECR I-349; [2008] 2 CMLR 512 14.148, 14.152 Centro Servizi Spediporto v Spedizioni Marittima del Golfo (C-96/94) [1995] ECR I-2883; [1996] 4 CMLR 613 4.223 Cetersa v Commission (C-181/11 P) (2012), not yet reported 8.683 Chalkor v Commission (C-386/10 P) [2012] 4 CMLR 9 2.80 Chronopost v Ufex (C-83/01 P, C-93/01 P and C-94/01 P) [2003] ECR I-6993; [2003] 3 CMLR 11 17.86 Cimenteries CBR et al v Commission (T-25/95 & T-104/95) [2000] ECR II-491; [2000] 5 CMLR 204 2.208, 3.82, 3.91, 3.93, 3.94, 3.132, 3.134, 3.187, 3.395, 7.449, 8.451, 8.465, 8.475, 8.496, 8.509, 8.510, 8.511, 8.630, 8.677, 8.709 Cinzano (13/70) [1970] ECR 1089; [1971] CMLR 374 6.118 (p. lxxxiv) Cipolla (C-94/04) [2006] ECR II-11421; [2007] 4 CMLR 286 6.05 Cisal di Battistello Venanzio (C-218/00) [2002] ECR I-691; [2002] 4 CMLR 833 6.21, 6.22, 6.23 Cityflyer Express v Commission (T-16/96) [1998] ECR II-757; [1998] 2 CMLR 537 17.62 Clearstream Banking AG and Clearstream International SA v Commission (T-301/04) [2009] ECR II-3155; [2009] 5 CMLR 2677 4.601, 4.608, 4.617, 4.924, 11.112, 11.113– 11.131, 14.135 Coats Holding and J&P Coats v Commission (T-36/05) [2007] ECR II-110; [2008] 4 CMLR 45 2.27 Coats Holdings Ltd v Commission (T-439/07), (2012) not yet reported 8.464, 8.482 Coca-Cola Company and Coca-Cola Enterprises v Commission (T-125/97 and T-127/97) [2000] ECR I-1733; [2000] 5 CMLR 467 5.993, 5.1136 Cockerill see Belgium v Commission (‘Cockerill’) (C-5/01) Coditel v Ciné-Vog Films (Coditel II) (262/81) [1982] ECR 3381; [1983] 1 CMLR 49 3.304, 10.198, 14.115, 14.116 Coe Clerici v Commission (T-52/00) [2003] ECR II-2123 6.233 Cofaz v Commission (169/84) [1986] ECR 391; [1986] 3 CMLR 385 17.566 Colt Télécommunications France v Commission (T-79/10) (2013), not yet reported 13.237 Comap v Commission (C-290/11) [2012] OJ C174/13 8.465

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Comap v Commission (T-377/06) [2011] ECR II-1115; [2011] 4 CMLR 1576 8.520 Comitato ‘Venezia vuole vivere’ v Commission (C-71/09 P, etc) (2011), not yet reported 17.139, 17.141, 17.566 Comité des industries cinématographiques des Communautés européennes (CICCE) v Commission (298/83) [1985] ECR 1105; [1986] 1 CMLR 486 4.883 Commercial Solvents v Commission (6/73 and 7/73) [1974] ECR 223; [1974] 1 CMLR 309 2.103, 2.104, 3.389, 4.46, 4.582, 4.587, 4.595, 4.608, 8.296, 8.526, 10.254, 12.229, 12.231 Commission v Agrofert Holdings (C-477/10), not yet decided 8.224, 17.398 Commission v Aktionsgemeinschaft Recht und Eigentum (ARE) (C-78/03 P) [2005] ECR I-10737; [2006] 2 CMLR 1197 17.566 Commission v Alrosa (C-441/07 P) [2010] ECR I-5949; [2010] 5 CMLR 11 2.132, 2.144, 4.55, 12.169, 12.237, 16.113 Commission v Anic Partecipazioni (C-49/92 P) [1999] ECR I-4125; [2001] 4 CMLR 602 3.69, 3.78, 3.83, 3.85, 3.87, 3.89, 3.91, 3.134, 3.151, 7.449, 8.46, 8.49, 8.450, 8.455, 8.466, 8.539, 8.544, 8.582, 10.93 Commission v Atlantic Container Line (C-149/95 P R) [1995] ECR I-2165; [1997] 5 CMLR 167 5.1173 Commission v Austria (C-555/10) 15.320, 15.324 Commission v Belgium (52/84) [1986] ECR 89; [1987] 1 CMLR 710 4.32, 8.688, 17.473 Commission v Belgium (C-503/99) [2002] ECR I-4809; [2002] 2 CMLR 1265 5.285 Commission v Belgium (C-222/08) [2010] ECR I-9017 6.207 Commission v Bulgaria (C-376/13), not yet decided 14.148 Commission v CMA CGM (C-236/03 P) [2005] 4 CMLR 557 8.650 Commission v Council (C-122/94) [1996] ECR I-881 17.331 Commission v Council (Belgian co-ordination centres) (C-399/03) [2006] ECR I-5629 17.336 Commission v Council (C-110/02) (Portuguese Pigs) [2004] ECR I-6333; [2004] 2 CMLR 1330 17.335 Commission v Council (Latvia) (C-118/10), not yet reported 17.337 Commission v Council (Lithuania) (C-111/10), not yet reported 17.337 Commission v Council (Poland) (C-117/10), not yet reported 17.337 Commission v Czech Republic (C-545/10) 15.320

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Commission v Editions Odile Jacob (C-404/10 P) [2012] OJ C258/3 5.477, 8.224 Commission v Editions Odile Jacob (C-553/10 P & C-554/10 P), not yet reported 5.1104, 5.1133 Commission v Électricité de France and France (C-124/10 P) (2012), not yet reported 17.454 Commission v Enbw Energie Baden-Württemberg (C-365/12), not yet decided 8.224 Commission v France (6/69 and 11/69) [1969] ECR 523; [1970] CMLR 43 17.97, 17.105 Commission v France (96/85) [1986] ECR 1475; [1986] 3 CMLR 57 6.129 (p. lxxxv) Commission v France (C-197/96) [1997] ECR I-1489 14.146 Commission v France (C-483/99) [2002] ECR I-4781 5.285, 6.29 Commission v France (C-625/10) 15.320 Commission v Freistaat Sachsen (C-334/07 P) [2008] ECR I-9465 17.218 Commission v French Republic (92/87 and 93/87) [1989] ECR 405 4.34 Commission v French Republic (French Seamen’s case) (167/73) [1974] ECR 359; [1974] 2 CMLR 216 15.09 Commission v Germany (70/72) [1973] ECR 813; [1973] CMLR 741 17.92, 17.446 Commission v Germany (107/84) [1985] ECR 2655 3.39 Commission v Germany (C-5/89) [1990] ECR I-3437 17.474, 17.476 Commission v Germany (C-424/07) [2009] ECR I-11431 13.126 Commission v Germany (C-160/08) [2010] ECR I-3713 6.34, 6.153, 6.213 Commission v Germany (C-556/10) 15.320, 15.324 Commission v Germany (‘WestLB’) (C-209/00) [2002] ECR I-11695 17.462 Commission v Greece (68/88) [1989] ECR 2965; [1991] 1 CMLR 31 2.86 Commission v Greece (C-183/91) [1993] ECR I-3131 17.476 Commission v Greece (C-528/10) 15.320 Commission v Greece (Olympic Airways) (C-369/07) [2009] ECR I-5703 17.496 Commission v Hungary (C-473/10) 15.320 Commission v Italy (C-118/85) [1987] ECR 2599; [1998] 3 CMLR 255 3.27, 3.39, 6.28 Commission v Italy (C-158/94) (Italian electricity monopoly)see Italian electricity monopoly

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Commission v Italy (C-35/96) [1998] ECR I-3851; [1998] 5 CMLR 889 3.27, 3.34, 3.35, 8.514 Commission v Italy (C-304/09) [2010] ECR I-13903 17.473, 17.480 Commission v Italy (data services) (3/88) [1989] ECR 4035; [1991] 2 CMLR 115 6.128, 6.130, 6.131 Commission v Italy (ENI-Lanerossi I and II) (C-350/93) [1995] ECR I-699 17.450, 17.492 Commission v Italy (trailers) (C-110/05) [2009] ECR I-519 6.107 Commission v Luxembourg (C-412/11) 15.320 Commission v Netherlands (Dutch electricity monopoly) (C-157/94) see Dutch electricity monopoly Commission v Netherlands (Emissions trading scheme) (C-279/08 P) (2011), not yet reported 17.92, 17.139, 17.565 Commission v Poland (C-512/10) 15.320 Commission v Portugal (C-212/09) [2011] ECR I-10889 6.29, 6.213 Commission v Portugal (C-334/03) [2005] ECR I-8911 6.207 Commission v Portugal (C-367/98) [2002] ECR I-4731 6.29 Commission v Portugal (C-557/10) 15.320 Commission v Portugal (Golden Shares) (C-543/08) [2010] ECR I-11241 6.213 Commission v Salzgitter (C-408/04 P) [2008] ECR I-2767 17.474 Commission v Schneider Electric (Schneider III) (C-440/07 P) [2009] ECR I-6413; [2009] 5 CMLR 16 5.672, 5.1209, 5.1210 Commission v Scott (C-290/07 P) [2010] ECR I-7763 17.18, 17.451, 17.556, 17.557 Commission v SGL Carbon (C-301/04 P) [2006] ECR I-5915; [2006] 5 CMLR 877 8.255, 8.262, 8.265, 8.267, 8.307, 8.316, 8.321, 8.374 Commision v SGL Carbon (T-308/04) (2006) [2006] ECR I-5977; [2006] 5 CMLR 922 8.261, 8.310 Commission v Slovakia (C-507/08) [2010] ECR I-13489 17.473 Commission v Slovenia (C-627/10) 15.320 Commission v Solvay (C-287 & C-288/95 P) [2000] ECR I-2391; [2005] 5 CMLR 454 4.916 Commission v Spain (C-160/94) [1997] ECR I-5851; [1998] 2 CMLR 373 12.05 Commission v Spain (C-463/00) [2003] ECR I-4581 5.285, 6.29, 6.213

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Commission v Spain (C-196/07) [2008] ECR I-41 5.292, 5.293, 5.1126 Commission v Spain (C-483/10) 15.320 Commission v Spain (Magefesa II) (C-499/99) [2002] ECR I-6031 4.32, 8.688, 17.473 Commission v Stichting Administratiekantoor Portielje and Gosselin Group not yet reported (C-440/11 P) 3.27, 3.49, 3.51, 3.54, 3.55, 3.56, 8.523, 8.525, 8.528 (p. lxxxvi) Commission v Sweden (C-419/07) [2007] OJ C283/18 14.146 Commission v Technische Glaswerke Ilmenau (TGI) (C-139/07 P) [2010] ECR I-5885 8.224, 17.398 Commission v Tetra Laval (C-12/03 P) [2005] ECR I-987 4.77, 4.80, 5.556, 5.559, 5.623, 5.672, 5.865, 5.1050, 5.1054, 5.1095, 5.1127, 5.1162, 5.1181, 5.1188, 5.1189, 5.1192, 5.1193 Commission v UK (C-98/01) [2003] ECR I-4641 6.29 Commission v United Kingdom (C-466/98) [2002] ECR I-9427; [2003] 1 CMLR 6 15.30 Commission v Verhuizingen Coppens (International Removal Services) (C-441/11 P), [2006] ECR 1429 3.95, 8.457, 8.458, 8.459 Commission v Volkswagen (C-74/04 P) [2006] ECR I-6585; [2007] ICR 217 3.104, 8.451 Compagnie Générale Maritime (T-86/95) [2002] ECR II-1011; [2002] 4 CMLR 1115 3.494 Compagnie Générale pour la Diffusion de la Télévision, Coditel v SA Ciné Vog Films (62/79) [1980] ECR 881; [1981] 2 CMLR 362 10.30, 10.205 Compagnie Maritime Belge (C-395/96 P and C-396/96 P) [2000] ECR I-1365; [2000] 4 CMLR 1076 2.46, 3.508, 4.03, 4.08, 4.219, 4.220, 4.222, 4.226, 4.231, 4.289, 4.325, 4.477, 4.481, 12.190 Compagnie Maritime Belge (T-24/93, etc) [1996] ECR II-1201; [1997] 4 CMLR 273 3.389, 3.440, 4.219, 4.224, 4.226, 4.227, 4.228, 4.242, 4.289, 4.325, 4.723 Compagnie Royale Asturienne des Mines (CRAM) and Rheinzink v Commission (29/83 and 30/83) [1984] ECR 1679; [1985] 1 CMLR 688 3.68, 3.142, 3.439, 8.541, 8.544 Compass-Datenbank v Republik Österreich (C-138/11) [2012] OJ C287/11 3.27, 3.30, 3.39, 3.40, 3.44 Competition Authority v Beef Industry Development Society and Barry Brothers (Carrigmore) Meats (Irish Beef) (C-209/07) [2008] ECR I-8637; [2009] 4 CMLR 310 3.183, 3.184, 3.185, 8.43, 8.47, 15.86 Confederación Española de Empresarios de Estaciones de Servicio (CEES) v Compañia Española de Petróleos SA (C-217/05) [2006] ECR I-11987; [2007] 4 CMLR 181 9.43, 9.49, 9.98

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Confédération européenne des associations d’horlogers-réparateurs (CEAHR) (T-427/08) v Commission [2010] 5 CMLR 1585 2.115 Connect Austria (C-462/99) [2003] ECR I-5197; [2005] 5 CMLR 302 6.75, 12.206 Conseil national de l’Ordre des pharmaciens (CNOP) v Commission (T-23/09) [2010] ECR II-5291 5.1132, 8.331, 8.332 Consiglio Nazionale degli Spedizionieri Doganali (CNSD) v Commission (T-513/93) [2000] ECR II-1807; [2000] 5 CMLR 614 3.155 Consiglio nazionale dei geologi v Autorità garante della concorrenza e del mercate (C-136/12), not yet reported 3.247 Consorzio Industrie Fiammiferi (CIF) (C-198/01) [2003] ECR I-8055; [2003] 5 CMLR 829 2.41, 2.50, 3.155, 3.158, 6.05, 12.119, 12.121 Consorzio Italiano della Componentistica di Ricambio per Autoveicoli v Régie Nationale des Usines Renault (53/87) [1988] ECR 6039; [1990] 4 CMLR 265 5.583 Consten & Grundig v Commission (56 and 58/64) [1966] ECR 299; [1966] CMLR 418; [1966] CMLR 8046 2.29, 3.170, 3.183, 3.184, 3.188, 3.194, 3.354, 3.453, 3.477, 4.76, 4.729, 8.43, 8.452, 9.03, 9.10, 9.117, 10.17, 10.19, 10.174 Continental Can (6/72) [1973] ECR 215; [1973] CMLR 199 2.46, 2.60, 2.70, 4.03, 4.24, 5.01, 8.298, 8.338, 8.422, 12.231 Coöperatieve Stremsel-en Kleurselfabriek v Commission (61/80) [1981] ECR 851; [1982] 1 CMLR 240 3.29, 3.430 Coöperatieve Verkoop- en Productievereniging van Aardappelmeel en Derivaten Avebe BA v Commission (T-314/01) [2006] ECR II-3085 3.65, 7.115, 8.531, 8.532, 8.535 Copad v Christian Dior Couture (C-59/08) [2009] ECR I-3421 9.127 Copper Fittings see Legris Industries v Commission (Copper Fittings) (T-376/06) and Legris Industries v Commission (Copper Fittings) (C-289/11 P) Corbeau v Belgian Post Office (C-320/91) [1993] ECR I-2533; [1995] 4 CMLR 621 6.09, 6.77, 6.78, 6.81, 6.82, 6.84, 6.92, 6.152, 6.184, 6.186, 6.188, 6.196, 6.202, 6.211, 6.219 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di Genoa (C-266/96) [1998] ECR I-3949; [1998] 5 CMLR 402 6.152, 15.355, 17.340 (p. lxxxvii) Corsica Ferries Italia Srl v Corpo dei Piloti del Porto di Genova (C-18/93) [1994] ECR I-1783 4.898, 6.11, 6.33, 6.45, 6.55, 6.57, 12.54, 15.355 Corus UK v Commission (T-48/00) [2004] ECR II-2325; [2005] 4 CMLR 182 8.118, 8.119, 8.195 Costa v ENEL (6/64) [1964] ECR 585; [1964] CMLR 425 6.116, 6.131, 17.554

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Courage v Crehan C-453/99 [2001] ECR I-6297; [2001] 5 CMLR 1058 2.20, 2.252, 3.159, 8.223 Crespelle, La (C-323/93) [1994] ECR I-5077 6.14, 6.32, 6.33, 6.47, 6.51, 6.55, 6.81, 6.82, 6.83, 6.84, 6.109, 6.125 DEI v Commission (C-553/12 P) [2013] OJ C32/10 6.76, 6.85, 6.88 DEI v Commission (T-169/08) [2012] OJ C343/1 6.62, 6.73, 6.76, 6.85, 6.88, 12.207– 12.215 DIP v Comune di Bassano del Grappa (C-140/94, C-141/94 and C-142/94) [1995] ECR I-3257; [1996] 4 CMLR 157 4.223 DMT (C-256/97) [1999] ECR I-3913; [1999] 3 CMLR 1 17.76 Daiichi Pharmaceutical Co Ltd v Commission (T-26/02) [2006] ECR II-713; [2006] 5 CMLR 169 8.623, 8.629 DaimlerChrysler AG v Commission (T-325/01) [2005] ECR II-3319; [2007] 4 CMLR 559 9.43, 9.51, 9.54 Dalmine v Commission (C-407/04 P) [2007] ECR I-829 8.259, 8.263, 8.288, 8.481 Dalmine SpA v Commission (T-50/00) [2004] ECR II-2395 8.472, 8.584, 8.623 Dansk Pelsdyravlerforening v Commission (T-61/89) [1992] ECR II-1931 3.266, 3.404, 8.455 Dansk Rørindustri v Commission (C-189/02 P) [2005] ECR I-5425; [2005] CMLR 17 8.204, 8.311, 8.459, 8.528, 8.597, 8.682, 8.683, 8.691, 8.709 Dansk Rørindustri v Commission (T-21/99) [2002] ECR II-1681 8.215 Dassonville (8/74) [1974] ECR 837; [1974] 2 CMLR 436 6.106 De Agostini (34-36/95) [1997] ECR I-3843 2.65 de Geus v Bosch & van Rijn (Case 13/61) [1962] ECR 45; [1962] CMLR 1 9.01, 9.02 Decoster (C-69/91) [1993] ECR I-5335 6.63, 6.64, 6.266 Degussa v Commission (C-266/06 P) [2008] ECR I-81 8.671 Degussa v Commission (T-279/02) [2005] ECR II-897 8.256, 8.374, 8.463, 8.466, 8.669 Delimitis v Henninger Braü (C-234/89) [1991] ECR I-935; [1992] 5 CMLR 210 2.07, 2.21, 2.60, 2.259, 2.264, 3.224, 3.225, 3.234, 3.290, 3.298, 3.302, 3.339, 3.342, 7.64, 9.168, 10.122, 10.144, 12.74, 12.165, 14.62, 14.91 Deltafina v Commission (C-578/11 P) [2012] OJ C25/37 8.145, 8.165 Deltafina v Commission (Spanish Raw Tobacco) (T-29/05) [2010] ECR II-4077; [2011] 4 CMLR 467 8.606 Deltafina v Commission (T-12/06) [2011] ECR II-5639 8.145, 8.165, 8.635

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Denki Kagaku Kogyo and Denka v Commission (T-83/08), (2012), not yet reported 8.463, 8.468, 8.630 Der Grüne Punkt–Duales System Deutschland v Commission (C-385/07 P) [2009] ECR I-6155 8.703 Deufil v Commission (310/85) [1987] ECR 901; [1988] 1 CMLR 553 17.446 Deutsche Bahn v Commission (T-229/94) [1997] ECR II-1689; [1998] 4 CMLR 220 4.39, 4.908, 4.912, 4.936, 8.650, 15.249, 15.263, 15.267, 15.279, 15.304, 15.312, 15.338, 15.339 Deutsche Bahn v Commission (T-351/02) [2006] ECR II-1047; [2006] 2 CMLR 1343 17.34 Deutsche Bahn v Commission (T-289/11, T-290/11 & T-521/11) (2013), not yet reported 8.288, 8.291, 8.331, 8.332, 8.338, 8.345, 8.347, 8.349, 8.357, 8.379, 8.388, 8.399 Deutsche Grammophon v Metro (78/70) [1971] ECR 487; [1971] CMLR 631 4.190 Deutsche Lufthansa (C-242/12) (2013), not yet reported 17.554 Deutsche Post (C-147/97 & 148/97) [2000] ECR I-825; [2000] 4 CMLR 838 6.83, 6.84, 6.87 Deutsche Telekom v Commission (C-280/08 P) [2010] ECR I-9555; [2010] 5 CMLR 27 3.155, 3.156, 3.157, 3.174, 4.285, 4.651, 4.652, 4.656, 4.658, 4.661, 4.662, 12.11, 13.85, 13.92, 13.97, 13.98, 13.108, 13.109, 13.140, 13.165 Deutsche Telekom v Commission (T-271/03) [2008] ECR II-477, [2008] 5 CMLR 631 4.13, 4.285, 4.494, 4.644, 4.651, 4.652, 4.654, 4.656, 4.660, 4.662, 13.85, 13.98, 13.108, 13.137–13.140, 13.143 (p. lxxxviii) Dieglo Cali & Figli Srl v Servizi ecologica porto di Genova (SEPG) (C-343/95) [1997] ECR I-1547; [1997] 5 CMLR 484 3.39, 3.42, 3.44, 6.22, 15.358 Dijkstra (C-319/93, C-40/94 and C-224/94) [1995] ECR I-4471; [1996] 5 CMLR 178 2.259, 2.268 Dirección General de Defensa de la Competencia v Asociación Española de Banca Privada and others (Spanish Banks) (C-67/91) [1992] ECR I-4785 2.163, 2.182, 2.204, 2.256, 8.100, 8.348, 8.367, 8.478 Distillers Co v Commission (30/78) [1980] ECR 2229; [1980] 3 CMLR 121 3.215 Distribution Casino France SAS and Others (C-266-270/04, C-276/04 and C-324-325/04) [2005] ECR I-9481 17.42, 17.94 Dole Food Company Incorporated and Dole Germany OHG v Commission (T-588/08) [2013] OJ C123/15 7.447, 8.43, 8.46, 8.47, 8.53 Donau Chemie v Commission (C-536/11), not yet decided 8.228 Donner, Criminal proceedings against (C-5/11) (2012), not yet reported 14.22 Dory v Germany (C-186/01) [2003] ECR I-2508 5.285

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Doulamis (C-446/05) [2008] ECR I-1377; [2008] 5 CMLR 376 6.05 Dow Benelux (85/87) [1989] ECR 3137; [1991] 4 CMLR 410 2.182, 8.98, 8.100, 8.171, 8.288, 8.332, 8.348, 8.388, 8.399, 8.473, 8.478 Dow Chemical v Commission (Chloroprene Rubber) (C-179/12 P), not yet reported 3.63, 8.531 Dow Chemical v Commission (Chloroprene Rubber) (T-77/08), not yet reported 3.56, 3.63, 3.64, 3.65, 3.66, 8.206, 8.214, 8.531, 8.532 Dow Chemical v Commission (T-42/07) [2011] ECR II-4531; [2011] 5 CMLR 895 8.670 Dow Chemical Ibérica and others v Commission (97/87, 98/87 and 99/87) [1989] ECR 3165 8.331, 8.388 Dow Chemical Nederland v Commission (87/87) [1987] ECR 4367; [1988] 4 CMLR 439 8.352 Dresdner Bank v Commission (German Banks) (T-44/02) (2004) not yet reported; [2007] 4 CMLR 467 11.64 Dresdner Bank and Others v Commission (German Banks) (T-44/02 OP, T-54/02 OP, T-56/02 OP, T-60/02 OP and T-61/02 OP) [2006] ECR II-3567; [2007] 4 CMLR 467 8.466, 8.476, 8.509, 8.514, 8.706, 11.64 Drijvende Bokken (C-219/97) [1999] ECR I-6121; [2000] 4 CMLR 599 6.21, 11.15 Dunlop Slazenger v Commission (T-43/92) [1994] ECR II-441 8.463, 8.675 DSG Dradenauer Stahlgesellschaft (T-234/95) [2000] ECR II-2603 17.41 Dusseldorp (C-203/96) [1998] ECR I-4075; [1998] 2 CMLR 873 6.32, 6.47, 6.55, 6.83, 6.84, 6.87 Dutch electricity monopoly (Commission v Netherlands) (C-157/94) [1997] ECR I-5699 6.111, 6.121, 6.122, 6.164, 6.193, 6.217, 12.05 Dutch petrol stations see Netherlands v Commission EDP v Commission (T-87/05) [2005] ECR II-3745; [2005] 5 CMLR 1436 5.498, 5.585, 5.752, 5.985, 5.999, 5.1044, 5.1162, 5.1163, 5.1175, 5.1186 EI du Pont de Nemours v Commission (Chloroprene Rubber) (C-172/12 P), not yet reported 3.63 EI du Pont de Nemours v Commission (Chloroprene Rubber) (T-76/08), judgment of 2 February 2012, not yet reported 3.60, 3.63, 3.64, 3.65, 8.206, 8.214 EMI Records Limited v CBS United Kingdom Limited (51/75) [1976] ECR 811; [1976] 2 CMLR 235 3.118, 3.439 EMI Records v CBS United Kingdom, CBS Grammafon and CBS Schallplatten (51, 86 and 96/75) [1976] ECR 913; [1976] 2 CMLR 235 10.52, 10.56 EMI/Patricia (341/87) [1989] ECR 79; [1989] 2 CMLR 413 10.43

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ENi v Commission (C-508/11), not yet reported 3.51, 3.53, 3.54, 8.528 ENI v Commission (T-39/07) [2011] ECR II-4457 8.545, 8.592, 8.670 ENI-I see Italy v Commission (ENI-I) (C-303/88) ENI-Lanerossi I and II (C-350/93) see Commission v Italy E.ON Energie v Commission (T-141/08) [2010] ECR II-5761 8.361 E.ON Ruhrgas AG and E.ON AG v European Commission (T-360/09) [2012] OJ C243/15 3.200, 8.450, 8.465, 8.470, 8.488, 12.51, 12.63, 12.100, 14.73 (p. lxxxix) EPAC v Commission (T-204 and 270/97) [2000] ECR II-2267 6.155 ERT (C-260/89) [1991] ECR I-2925 [1994] 4 CMLR 540 2.179, 6.33, 6.51, 6.67, 6.68, 6.81, 6.128 ETA Fabrique d’Ebauches DK Investment SA (31/85) [1985] ECR 3933; [1986] 2 CMLR 674 3.409 ETI and Others (C-280/06) [2007] ECR I-10893; [2008] 4 CMLR 277 8.528, 8.539, 8.545 easyJet v Commission (T-177/04) [2006] ECR II-1931; [2006] 5 CMLR 663 5.592, 5.631, 5.927, 5.1000, 5.1012, 5.1013, 5.1049, 5.1087, 5.1089, 5.1146, 5.1191, 15.44, 15.119 Échirolles Distribution and Association du Dauphiné and Others (C-9/99) [2000] ECR I-8207 14.35 Eco Swiss China Time Limited v Benetton International NV (C-126/97) [1999] ECR I-3055; [2000] 5 CMLR 816 2.253 Ecotrade v Altiforni e Ferriere di Servola (AFS) (C-200/97) [1998] ECR I-7907; [1999] 2 CMLR 804 17.54, 17.56, 17.90, 17.96, 17.114 Edison v Commission (T-196/06) [2011] ECR II-3149 8.529 Éditions Odile Jacob SAS v Commission (T-452/04) [2010] ECR II-4713 5.1104, 5.1133, 5.1148 Éditions Odile Jacob v Commission (T-237/05) [2010] ECR II-2245 5.477 Eesti Autorite Ühing v Commission (T-416/08), not yet reported 10.208, 14.60 Electrabel v Commission (T-332/09) [2013] OJ C32/15 5.397, 5.551, 5.1196 Électricité de France v Commission (C-551/12 P(R)) (2013), not yet reported 5.1009, 5.1113 Électricité de France v Commission (T-156/04) [2009] ECR II-4503 17.454 Électricité de France v Commission (T-389/12) (2012), not yet reported 5.1009, 5.1113

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Elf Aquitaine v Commission (MCAA) (C-521/09 P) [2011] ECR I-8947 3.51, 3.53, 3.54, 3.57, 8.473, 8.515, 8.528, 8.529 Elf Aquitaine v Commission (T-299/08) (2011), not yet reported 8.668 Elf Aquitaine v Commission (T-174/05) [2009] ECR II-183 8.528 Emissions trading scheme see Commission v Netherlands (Emissions trading scheme) (C-279/08 P) EnBW Energie Baden-Württemberg v Commission (T-344/08), not yet reported 8.222, 8.224, 17.398 Endemol v Commission (T-221/95) [1999] ECR II-1299; [1999] 5 CMLR 611 5.687 Endesa v Commission (T-417/05) [2006] ECR II-2533; [2008] 4 CMLR 1472 5.38, 5.40, 5.41, 5.156, 5.205, 5.206, 5.356, 5.1163, 5.1171, 5.1175 Energetický a průmyslový EP Investment Advisors v Commission (T-272/12) 8.353, 8.380 Energie Baden-Wuerttemberg v Commission (T-387/04) [2007] ECR II-1195 17.530, 17.551 Enichem Anic v Commission (T-6/89) [1991] ECR II-1623 8.591, 8.654 Enichem Base (380/89) [1989] ECR 2491 2.53 Enirisorse v Sotacarbo (C-237/04) [2006] ECR I-2843 17.37, 17.38 Enso Española v Commission (T-348/94) [1998] ECR II-1875 2.80, 8.659, 8.687 Enso-Gutzeit v Commission (T-337/94) [1998] ECR II-1571 8.490, 8.507, 8.510, 8.511, 8.512 Erauw-Jacquery (Louis) v La Hesbignonne SC (27/87) [1988] ECR 1919; [1988] 4 CMLR 476 3.192, 3.194, 3.239, 14.114 Erste Group Bank and Others v Commission (C-125/07 P, etc) [2009] ECR I-8681, [2010] 5 CMLR 443 8.519, 11.66 Eugene Van Calster (C-261/01 and C-262/01) [2003] ECR I-12249; [2004] 1 CMLR 607 17.94 Euromin v Council (T-597/97) [2000] ECR II-2419 17.567 Europa Carton AG v Commission (T-304/94) [1998] ECR II-869 8.650 European Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom (C-106/09 P & C-107/09 P) [2011] ECR I-11113 17.128 European Goldfields v Commission (T-261/11) (2012), not yet reported 17.567 European Night Services v Commission (T-374/94) [1998] ECR II-3141; [1998] 5 CMLR 718 3.172, 3.184, 3.225, 3.275, 3.282, 3.285, 3.287, 3.297, 3.323, 3.371, 3.384,

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3.454, 3.492, 4.605, 7.91, 7.102, 8.03, 15.77, 15.86, 15.281, 15.282, 15.289, 15.311, 15.312 Executif Régional Wallon v Commission (62/72 & 72/87) [1988] ECR 1573; [1989] 2 CMLR 771 17.236 (p. xc) Expedia v Autorité de la concurrence (C-226/11), not yet reported 3.184, 3.209, 3.214, 3.215, 3.217, 8.452 Expert Accountants (C-107/95 P) [1996] ECR I-957; [1997] 5 CMLR 432 6.230, 6.231, 6.239, 6.247, 6.249 Expert Accountants (T-84/94) [1995] ECR II-101 6.231, 6.239 FIFA v Commission (C-204/11 P) (2013), not yet reported 14.15 FIFA v Commission (C-205/11 P) (2013), not yet reported 14.15 FMC Foret v Commission (T-191/06) [2011] ECR II-2959 8.481, 8.494, 8.500, 8.629, 8.680 FNCE (C-354/90) [1991] ECR I-5505 17.554 Falck and Others v Commission (C-74/00 P & C-75/00 P) [2002] ECR I-7869 17.400, 17.401, 17.520 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission (C-205/03P) [2006] ECR I-6295; [2006] 5 CMLR 559 3.33, 3.46, 8.514, 11.15, 16.23 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission (T-319/99) [2003] ECR II-357; [2003] CMLR 34 3.32, 3.33, 3.46, 11.15, 16.23 Fédération Française des Sociétés d’Assurances (FFSA) v Commission (T-106/95) [1997] ECR II-229; [1997] 2 CMLR 78 6.150, 6.152, 6.165, 6.198, 17.36, 17.92, 17.350 Fédération Française des Sociétés d’Assurances (FFSA) v Ministère de l’Agriculture et de la Pêche (C-244/94) [1995] ECR I-4013; [1996] 4 CMLR 536 3.27, 3.28, 3.47, 17.37 Fédération nationale de la coopération bétail et viande (FNCBV) and FNSEA (French Beef) v Commission (T-217/03 and T-245/03) [2006] ECR II-4987; [2008] 5 CMLR 406 3.158, 7.375 Federmineraria v Commission (C-6/92) [1993] ECR I-6357 17.566 Federutility Assogas, Libarna Gas, Collino Commercio Sadori Gas, Assogas, Libarna Gas, Collino Commercio, Sadori Gas, Egea Commerciale, E.On Vendita, Sorgenia v Autorità per l’energia elettrica e il gas (C-265/08) [2010] ECR I-5577 12.184 Fedesa and Others (C-331/88) [1990] ECR I-4023; [1991]1 CMLR 507 5.1163 Ferriere Nord (T-176/01) [2004] ECR II-3931 17.257

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Ferriere Nord v Commission (C-219/95 P) [1997] ECR I-4411; [1997] 5 CMLR 575 8.650 Ferring (C-53/00) [2001] ECR I-9067; [2003] 1 CMLR 34 6.165, 17.90, 17.351 Fiatagri UK and New Holland Ford v Commission (T-34/92) [1994] ECR II-905 2.253, 7.64 Finnboard v Commission (T-338/94) [1998] ECR II-1617 8.204 Firma Leon Van Parys (T-11/99) v Commission [1999] ECR II-1355 5.1169 First and Franex (C-275/00) [2002] ECR I-10943; [2005] 2 CMLR 257 2.169, 2.276, 2.280 First Data Corp v Commission (T-28/02) [2005] ECR II-4119; [2006] 4 CMLR 4 3.364 Fiskeby Board v Commission (T-319/94) [1998] ECR II-1331 8.659, 8.687 Fleuren Compost BV v Commission (T-109/01) [2004] ECR II-127 17.18, 17.461, 17.476, 17.477, 17.556 FLS Plast v Commission (T-64/06), not yet reported 8.173 Flugreisen (Ahmed Saeed) (66/86) [1989] ECR 803; [1990] 4 CMLR 102 2.259, 4.22, 5.631, 6.95, 6.148, 6.152, 15.44 Fluorsid/Minmet v Commission (T-404/08), not yet reported 8.559 Fonderies Roubaix (63/75) [1976] ECR 111; [1976] 1 CMLR 538 2.259 Football Association Premier League (C-403/08 & 429/08) [2011] OJ C347/2; [2012] 1 CMLR 769 10.50, 10.200, 14.22, 14.96, 14.114, 14.117, 14.119 Football Dataco and Others v Sportradar (C-173/11) [2013] 1 CMLR 29 14.22 Ford v Commission (25/84 and 26/84) [1985] ECR 2725; [1985] 3 CMLR 528 3.101, 3.106, 3.108, 3.464 Förde-Reederei v Council and Commission (T-170/00) [2002] ECR II-515 5.1204 Foreningen af dansk Videogramdistribut¢rer, acting for Egmont Film A/S, Buena Vista Home Entertainment, Scanbox Danmark (C-61/97) [1998] ECR I-5171; [1999] 1 CMLR 1297 10.50 (p. xci) Foto Frost (314/85) [1987] ECR-4199; [1988] 3 CMLR 57 2.150, 2.265 France and others v Commission (C-68/94 and C-30/95) [1998] ECR I-1375; [1998] 4 CMLR 829 2.143, 3.219, 5.03, 5.588, 5.605, 5.767, 5.964, 5.1129, 5.1138, 5.1145, 5.1147, 5.1158, 5.1162, 5.1185, 5.1198, 7.64, 12.190 France v Commission (Boussac) (301/87) [1990] ECR I-307 17.215, 17.447 France v Commission (C-251/97) [1999] ECR I-6639 17.19, 17.92

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France v Commission (‘Kimberly-Clark’) (C-241/94) [1996] ECR I-4551 17.19, 17.113, 17.114 France v Commission (Stardust) (C-482/99) [2002] ECR I-4397; [2002] 2 CMLR 1069 6.101, 17.22, 17.26, 17.30, 17.32, 17.33 France v Commission (T-425/04) [2010] ECR II-2099 17.57, 17.78 France v Commission (Terminal equipment for telecommunications) (C-202/88) [1991] ECR I-1223; [1992] 5 CMLR 552 6.37, 6.63, 6.109, 6.125, 6.214, 6.254, 6.257, 6.262, 6.268, 13.10 France v Commission (Transparency Communication) (C-325/91) [1993] ECR I-3283 6.263 France v Commission (Transparency Directive) (188, 189 and 190/80) [1982] ECR 2545; [1982] 3 CMLR 144 6.256, 6.268 France v Ladbroke Racing and Commission (C-83/98) [2000] ECR I-3271; [2000] 3 CMLR 555 17.451, 17.458 France Télécom v Commission (C-202/07 P) [2009] ECR II-2369; [2009] 4 CMLR 1149 4.306, 4.307, 4.308, 4.309, 4.313, 13.159, 13.160, 13.161 France Télécom v Commission (T-339/04) [2007] ECR II-521; [2008] 5 CMLR 502 2.98, 2.158 France Télécom v Commission (T-340/03) [2007] ECR II-107; [2007] 4 CMLR 919 4.179, 4.308, 4.344, 4.347, 13.122, 13.123, 13.159 France Télécom v Commission (T-340/04) [2007] ECR II-573; [2007] 4 CMLR 919 8.331, 8.332, 8.388 Francovich v Italy (C-6 and 9/90) [1991] ECR I-5357; [1993] 2 CMLR 66 6.251 Franzén (189/95) [1997] ECR I-5909; [1998] 1 CMLR 1231 6.122, 6.124 Fred Olsen v Commission (T-17/02) [2005] ECR II-2031 6.150, 6.159, 17.341 Freistaat Sachsen and Land Sachsen-Anhalt v Commission (T-396/08), (2010), not yet reported 17.227 Freistaat Sachsen and Land Sachsen-Anhalt v Commission (T-443 & 455/08) [2011] ECR II-1311 15.351 Freistaat Sachsen and Others v Commission (C-459/10 P) (2011), not yet reported 17.200 Freistaat Sachsen and VW v Commission (C-57/00 P & C-61/00 P) [2003] ECR I-9975 17.212 Freistaat Sachsen and VW v Commission (T-132/96 T-143/96) [1999] ECR II-3663; [2000] 3 CMLR 485 17.212 French Beef see Fédération nationale de la coopération bétail et viande (FNCBV) and FNSEA v Commission (T-217/03 and T-245/03)

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French electricity and gas monopolies (C-159/94) [1997] ECR I-5815; [1998] 2 CMLR 373 6.121, 6.122, 6.156, 6.160, 6.164, 6.193, 6.217 Fresh Del Monte Produce v Commission (T-587/08) [2013] OJ C123/15 7.447, 8.451, 8.458, 8.459, 8.462, 8.476, 8.627, 8.631 Freskot (C-355/00) [2003] ECR I-5263 17.344 Frubo v Commission (71/74) [1975] ECR 563; [1975] 2 CMLR 123 3.404 Frucona Kosice v Commission (T-11/07) [2010] ECR II-5453 17.461 Fuji Electric v Commission (T-132/07) [2011] ECR II-4091 3.64, 3.65, 8.176, 8.177, 8.187, 8.204, 8.214, 8.215, 8.530, 8.531, 8.532, 8.542 GDF v Commission (T-370/09), not yet reported 8.456, 8.486, 8.489, 8.497, 8.514, 12.51, 12.100 GEMA v Commission (125/78) [1979] ECR 3173; [1980] 2 CMLR 177 10.207 GEMA v Commission (T-410/08), not yet reported 10.208, 14.60 GT-Link v De Danske Statsbaner (C-242/95) [1997] ECR I-4449; [1997] 5 CMLR 601 3.434, 6.57, 15.384, 17.340 Galp Energía España and Others v Commission (T-462/07) (2013), not yet published 8.631 Gambetti (C-243/01) [2003] ECR I-13031 6.128, 6.131 (p. xcii) 1. garantovaná v Commission (T-392/09) [2012], not yet reported 8.528, 8.534, 8.678 Gebhard (C-55/94) [1995] ECR I-4165 6.130 Geigy v Commission (52/69) [1972] ECR 787; [1972] CMLR 557 8.526 Gencor Limited v Commission (T-102/96) [1999] ECR II-753; [1999] 5 CMLR 971 4.219, 4.220, 4.231, 4.438, 5.687, 5.801, 5.1050, 5.1140, 5.1144, 5.1162, 8.295, 12.190 General Electric v Commission (T-210/01) [2005] ECR II-5575 4.150, 4.179, 5.460, 5.478, 5.672, 5.687, 5.842, 5.980, 5.984, 5.1059, 5.1127, 5.1156, 5.1162, 5.1185, 5.1189, 5.1191, 5.1199 General Motors v Commission (C-551/03) [2006] ECR I-3173; [2006] 5 CMLR 9 12.48, 12.57 General Motors Continental v Commission (26/75) [1975] ECR 1367; [1976] 1 CMLR 95 4.827, 12.182 General Química v Commission (C-90/09 P) [2011] ECR I-1; [2011] 4 CMLR 669 3.53, 8.515, 8.528 General Química v Commission (T-85/06) [2008] ECR II-338 8.537

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General Technic-Otis v Commission (T-141/07) [2011] ECR II-4977; [2011] 5 CMLR 980 8.179, 8.466, 8.528, 8.668, 8.670 General Technic-Otis v Commission (C-494/11 P), 2012, not yet reported 8.179 Germany and Others v Kronofrance (C-75/05 P C-80/05 P) [2008] ECR I-6619 17.216 Germany v Commission (C-156/98) [2000] ECR I-6857 17.46, 17.47, 17.203, 17.227 Germany v Commission (C-242/00) [2002] ECR I-5603 17.565 Germany v Commission (C-463/10 P & C-475/10 P) [2011] ECR I-9639 17.547 Germany v Commission (C-512/99) [2003] ECR I-845 8.110 Germany v Commission (T-347/09) (2013), not yet reported 17.18 Germany v Commission (Volkswagen) (C-301/96) [2003] ECR I-9919 17.213, 17.242 Gervais (C-17/94) [1995] ECR I-4353 6.111, 6.134 Gesellschaft zur Verwertung von Leistungsschutzrechten mbH (GVL) v Commission (7/82) [1983] ECR 483; [1983] 3 CMLR 645 2.100, 2.101, 3.28, 4.898, 12.54, 14.128 Gestevision Telecinco v Commission (T-95/96) [1998] ECR II-3407; [1998] 3 CMLR 1112 17.559 GlaxoSmithKline Services Unlimited v Commission (C-501/06 P) [2009] ECR I-9291; [2010] 4 CMLR 50 2.27, 3.171, 3.172, 3.179, 3.183, 3.184, 3.185, 3.188, 4.92, 9.05, 9.112, 12.61, 16.173, 16.174 GlaxoSmithKline Services v Commission (T-168/01) [2006] ECR II-2969; [2006] 5 CMLR 29; [2006] 5 CMLR 1623; [2006] 5 CMLR 1589 3.103, 3.113, 3.168, 3.170, 3.171, 3.179, 3.229, 3.333, 3.347, 3.349, 3.448, 3.451, 3.456, 3.457, 3.474, 3.486, 3.488, 4.92, 9.99, 16.170, 16.171, 16.172 Glöckner v Landkreis Südwestpfalz (C-475/99) [2001] ECR I-8089; [2002] 4 CMLR 726 3.30, 3.44, 3.388, 3.434, 6.18, 6.23, 6.40, 6.41, 6.74, 6.87, 6.91, 6.97, 6.152, 6.194, 6.195, 6.196, 6.207, 17.38 Golden Shares see Commission v Portugal (Golden Shares) (C-543/08) Gosselin Group v Commission (T-208/08 and 209/08) [2011] ECR II-3639 8.463, 8.528 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab (C-250/92) [1994] ECR I-5641; [1996] 4 CMLR 191 3.240, 3.304, 3.306, 3.309, 3.311, 3.312, 3.314, 3.319, 3.397, 7.64, 10.159, 11.59 Government of Communauté française and Gouvernement wallon v Gouvernement flamand (C-212/06) [2008] ECR I-1683 6.134 Government of Gibraltar v Commission (T-195/01 & T-207/01) [2002] ECR II-2309; [2002] 2 CMLR 826 17.504 Government of Gibraltar and UK v Commission (T-211/04 & T-215/04) [2008] ECR II-3745 17.108, 17.120, 17.127

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Graphischer Maschinenbau v Commission (T-126/99) [2002] ECR II-2427 17.199 Greece v Commission (T-415/05, etc) [2010] ECR II-4749 17.490 Greek Ferries see Minoan Lines SA v Commission (Greek Ferries) (T-66/99) Greek Insurance (226/87) [1988] ECR 3611; [1989] 3 CMLR 569 6.248, 6.249, 6.250 Greek oil monopoly (C-347/88) [1990] ECR I-4747 6.111, 6.121, 6.125 (p. xciii) Groupe Danone v Commission (C-3/06 P) [2007] ECR I-1331; [2007] 4 CMLR 701 8.473, 8.587 Groupe Danone v Commission (T-38/02) [2005] ECR II-4407; [2006] 4 CMLR 25 8.118, 8.119, 8.195, 8.321, 8.453, 8.469, 8.476, 8.486, 8.501, 8.564, 8.586, 8.591, 8.615, 8.646, 8.708 Groupe Gascogne v Commission (C-58/12 P), not yet reported 8.703 Groupement d’Achat Edouard Leclerc v Commission (T-19/92) [1996] ECR II-1851; [1997] 4 CMLR 995 3.322 Groupement d’Achat Edouard Leclerc v Commission (T-88/92) [1996] ECR II-1961; [1997] 4 CMLR 995 3.322, 9.249 Groupement des cartes bancaires (CB) v Commission (T-266/03) [2007] ECR II-83 8.332, 11.53, 11.58 Groupement des cartes bancaires (CB) v Commission (T-491/07) [2013] OJ C26/39 11.59 Groupement des Cartes Bancaires (CB) and Europay International v Commission (T-39/92 & T-40/92) [1994] ECR II-49; [1995] 5 CMLR 410 11.61 Grüber & Weber v Commission (T-310/94) [1998] ECR II-1043 8.454 Guardian Industries v Commission (T-82/08), [2012] OJ C355/19 8.489, 8.556, 8.592, 8.630 Gütermann and Zwicky v Commission (T-456/05 & 457/05) [2010] ECR II-1443; [2010] 5 CMLR 930 8.677 Gysbrechts (C-205/07) [2008] ECR I-9947 6.108 HFB Holding für Fernwärmetechnik Beteilgungsgesellschaft GmbH & Co KG and others v Commission (Pre-Insulated Pipe Cartel) (T-9/99) [2002] ECR II-1487; 3.77, 3.79, 3.87, 3.89, 3.135, 8.216, 8.311, 8.451, 8.506, 8.523, 8.538, 8.544, 8.545, 8.597, 8.680, 8.688 HSH Investment Holding v Commission (HSH Nordbank) (T-499/12), not yet reported 17.244 Hanner (C-438/02) [2005] ECR I-4551; [2005] 2 CMLR 42 6.119, 6.122, 6.213 Hans & Christophorus Oymanns GbR, Ortopädie Schuhtechnik v AOK Rheinland/ Hamburg (C-300/07) [2009] ECR I-4779 16.125

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Hansen (91/78) [1979] ECR 935; [1980] 1 CMLR 162 6.111, 6.118, 6.119, 6.124 Hasselblad v Commission (86/82) [1984] ECR 883; 3.144, 3.146 Heidelberg Cement v Commission (T-302/11) 8.288, 8.289 Heijmans Infrastructuur v Commission (T-359/06), (2012), not yet reported 8.347, 8.708 Heineken v Inspecteur de Vennootschapbelasting (91/83 & 127/83) [1984] ECR 3435, [1985] 1 CMLR 389 17.504, 17.505 Heineken Netherland and Heineken v Commission (T-240/07, etc) [2011] ECR II-3355 8.301, 8.490, 8.497, 8.510, 8.703 Heiser v Finanzamt Innsbruck (C-172/03) [2005] ECR I-1627; [2005] 2 CMLR 402 17.140 Henkel v Commission (T-607/11) [2012] OJ C80/19 2.168, 8.100, 8.239 Hercules Chemicals (T-7/89) [1991] ECR II-1711; [1992] 4 CMLR 84 2.208, 3.74, 3.84, 3.100, 3.130, 8.347, 8.584, 8.658 Hercules Chemicals v Commission (C-51/92 P) [1999] ECR I-4235; [1999] 5 CMLR 976 8.584 Heubach v Commission (T-64/02) [2005] ECR II-5137; [2006] 4 CMLR 1157 8.564, 8.623 Hijos de Andrés Molinas v Commission (T-152/99) [2002] ECR II-3049 17.76 Hilti v Commission (T-30/89) [1991] ECR II-1439; [1992] 4 CMLR 16 4.160, 4.246, 4.291, 4.323, 4.480, 4.483, 4.489, 4.729, 8.274, 8.275, 9.147 Hilti v Commission (C-53/92P) [1994] ECR I-667; [1994] 4 CMLR 614 4.323 Hitachi v Commission (T-112/07) [2011] 5 CMLR 620 8.514, 8.590 Hoechst (46/87 and 227/88) [1989] ECR 2859; [1991] 4 CMLR 410 2.186, 8.171, 8.284, 8.288, 8.289, 8.314, 8.331, 8.332, 8.336, 8.345, 8.347, 8.349, 8.352, 8.397, 8.399, 8.478 Hoechst v Commission (T-10/89) [1992] ECR II-629 8.390 Hoechst v Commission (T-410/03) [2008] ECR II-881; [2008] 5 CMLR 839 8.667, 8.672, 8.705 Hoechst GmbH v Commission (T-161/05) [2009] ECR II-3555; [2009] 5 CMLR 2728 8.401, 8.403, 8.404, 8.405, 8.539, 8.545, 8.592 Hoek Loos NV v Commission (T-304/02) [2006] ECR II-1887; [2006] 5 CMLR 590 8.255, 8.256, 8.520 (p. xciv) Hoffmann-La Roche & Co AG v Commission (85/76) [1979] ECR 461; [1979] 3 CMLR 211 1.215, 2.192, 3.394, 4.08, 4.85, 4.92, 4.132, 4.133, 4.145, 4.155, 4.156, 4.157, 4.161, 4.174, 4.176, 4.179, 4.196, 4.205, 4.207, 4.210, 4.254, 4.256, 4.397,

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

4.401, 4.403, 4.405, 4.408, 4.409, 4.410, 4.416, 4.419, 4.420, 4.422, 4.430, 4.432, 4.649, 4.653, 4.936, 5.687, 8.257 Höfner and Elser v Macrotron (C-41/90) [1991] ECR I-1979; [1993] 4 CMLR 306 3.27, 3.30, 3.41, 3.388, 4.886, 6.09, 6.18, 6.20, 6.33, 6.51, 6.55, 6.66, 6.81, 6.91, 6.134, 6.152, 8.334, 8.514, 10.243, 10.261, 17.37 Holcim (Deutschland) v Commission (C-282/05 P) [2007] ECR I-2941 5.1205 Holcim v Commission (T-293/11), not yet reported 8.289 Holland Malt BV v Commission (C-464/09 P) [2010] ECR I-12443 17.558 Honeywell v Commission (T-209/01) [2005] ECR II-5527; [2006] 4 CMLR 652 5.585, 5.1145 Hotel Cipriani v Commission (T-254/00, etc) [2008] ECR II-3269 17.504, 17.507 Huawei Technologies v ZTE Corp, ZTE Deutschland GmbH (C-170/13) (2013), not yet decided 4.795, 13.245 Hüls AG v Commission (C-199/92 P) [1999] ECR I-4287; [1999] 5 CMLR 1016 3.79, 3.133, 3.134, 3.135, 7.450, 8.49, 8.450, 8.451, 8.466 Hüls AG v Commission (T-9/89) [1992] ECR II-499 3.154, 8.656 Hulst (51/74) [1975] ECR 99 17.506 Hydrotherm v Compact (170/83) [1984] ECR 2999; [1985] 3 CMLR 224 3.49, 8.515 IBM v Commission (C-60/81) [1981] ECR 2639; [1981] 3 CMLR 635 5.1134, 17.541 IBP and International Building Projects France v Commission (T-386/06) [2011] ECR II-1267 8.520, 8.672 IBP v Commission (Copper Fittings) (T-384/06) [2011] ECR II-1177, [2011] 4 CMLR 1648 8.596 ICI v Commission (T-36/91) [1995] ECR II-1847; [1996] 5 CMLR 57 8.708 ICI v Commission (T-66/01) [2010] ECR II-2631; [2011] 4 CMLR 162 8.592 ICI v Commission (T-214/06), not yet reported 8.204, 8.458, 8.670 ICI v Commission (Dyestuffs) (48/69) [1972] ECR 619; [1972] CMLR 557 3.49, 3.126, 3.127, 3.130, 3.140, 3.143, 7.118, 7.448, 8.295, 8.298, 8.451, 8.525, 8.526, 8.535 IECC v Commission (C-450/98 P) [2001] ECR I-3947; [2001] 5 CMLR 291 2.115 IHT Internationale Heiztechnik and Uwe Danzinger v Ideal Standard (C-9/93) [1994] ECR I-2789; [1994] 3 CMLR 857 10.175, 10.177 IMI plc v Commission (T-18/05) [2010] ECR II-1769, [2010] 5 CMLR 1215 8.464 IMI v Commission (T-378/06) [2011] ECR II-62 8.179

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IMS Health Inc v Commission (T-184/01) [2001] ECR II-3193; [2002] 4 CMLR 1 5.1173, 10.246 IMS Health v NDC Health (C-418/01) [2004] ECR I-5039; [2004] 4 CMLR 1543 4.245, 4.288, 4.582, 4.589, 4.592, 4.597, 4.606, 4.607, 4.616, 4.620, 4.623, 4.625, 10.223, 10.247, 10.261, 12.142, 14.141 INASTI (143/87) [1988] ECR 3877; [1989] 3 CMLR 761 6.129 ITT Promedia NV v Commission (T-111/96) [1998] ECR II-2937; [1998] 5 CMLR 491 4.794, 4.796, 6.231, 16.131 Ianelli & Volpi v Meroni (75/76) [1977] ECR 557, [1977] 2 CMLR 688 17.535 Iliad v Commission (T-325/10) (2013), not yet reported 13.237 Impala see Bertelsmann AG and Sony Corporation of America v Independent Music Publishers and Labels Association (Impala) Impala v Commission (T-464/04) [2006] ECR II-2289; [2006] 5 CMLR 1049 5.356, 5.455, 5.678, 5.772, 5.787, 7.141, 14.37, 14.168 Industrie des Poudres Sphériques SA v Commission (T-5/97) [2000] ECR II-3755; [2001] 4 CMLR 1020 4.640, 4.644, 12.149 Inno v ATAB (13/77) [1977] ECR 2144; [1978] 1 CMLR 283 6.04, 6.35, 6.38 Intel Corporation v Commission (T-286/09) [2009] OJ C220/41 4.29, 4.417 Intel v Commission (T-457/08 R) [2009] ECR II-12 5.1161 International Confederation of Societies of Authors and Composers (CISAC) v Commission (T-442/08) see CISAC Irish Music Rights Organisation v Commission (T-415/08), not yet reported 10.208, 14.60 (p. xcv) Irish Sugar v Commission (C-497/99 P) [2001] ECR I-5333; [2001] 5 CMLR 29 4.326 Irish Sugar v Commission (T-228/97) [1999] ECR II-2969; [1999] 5 CMLR 1300 3.155, 3.397, 3.510, 4.162, 4.169, 4.217, 4.229, 4.241, 4.242, 4.243, 4.326, 4.905, 4.906, 12.192 Italian electricity monopoly (Commission v Italy) (C-158/94) [1997] ECR I-5789 6.111, 6.121, 6.122, 6.164, 6.193, 6.217, 12.05 Italian Republic and SIM 2 Multimedia SpA v Commission (Seleco) (C-328/99 and 399/00) [2003] ECR I-4035; [2005] 2 CMLR 1169 17.309, 17.490 Italian tobacco monopoly (78/82) [1983] ECR 1955 6.118 Italmobiliare v Commission (T-305/11) 8.289 Italy v Commission (C-364/90) [1993] ECR I-2097 17.183

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Italy v Commission (C-310/99) [2002] ECR I-2289 17.450 Italy v Commission (T-424/05) [2009] ECR II-23 17.44, 17.131 Italy v Commission (Aids to the Textile Industry) (173/73) [1974] ECR 709; [1974] 2 CMLR 593 17.19, 17.23, 17.29, 17.92, 17.107, 17.446 Italy v Commission (Alfa Romeo) (C-305/89) [1991] ECR I-1603 17.32, 17.62, 17.446 Italy v Commission (British Telecommunications) (41/83) [1985] ECR 873; [1985] 2 CMLR 368 3.27, 6.12, 6.152, 6.217, 7.142 Italy v Commission (ENI-I) (C-303/88) [1991] ECR I-1433; [1993] 2 CMLR 1 17.32, 17.450, 17.462, 17.492 Italy v Commission (Italgrani) (C-47/91) [1994] ECR I-4635 17.473 Italy v Commission (Tirrenia Group) (C-400/99) [2005] ECR I-3657; [2005] 3 CMLR 611 5.1163, 17.517, 17.518, 17.543, 17.544 Italy v Council and Commission (32/65) [1966] ECR 389; [1969] CMLR 39 7.163, 7.185, 7.271, 7.299, 9.02 Italy v High Authority (2/54) [1954] ECR 37 5.1163 JCB Service v Commission (T-67/01) [2004] ECR II-49; [2004] 4 CMLR 24 9.114, 9.129 JFE Engineering and others (Seamless steel tubes and pipes) (T-67/00, etc) [2004] ECR I-2501; [2005] 4 CMLR 27 2.186, 8.256, 8.317, 8.319, 8.454, 8.466, 8.469, 8.472, 8.476, 8.481, 8.490, 8.491, 8.492, 8.493, 8.494, 8.495, 8.496, 8.497, 8.498, 8.501, 8.510, 8.511, 8.512 Javico International and Javico v Yves Saint Laurent Parfums (YSLP) (C-306/96) [1998] ECR I-1983; [1998] 5 CMLR 172 3.192, 3.210, 3.398, 3.414, 3.441, 7.64, 9.10, 9.92 Jedang v Commission (T-220/00) [2003] ECR II-2473 8.575, 8.583, 8.586, 8.587, 8.622, 8.623, 8.624, 8.628, 8.629, 8.630, 8.675 Job Centre (C-55/96) [1997] ECR I-7119; [1998] 4 CMLR 708 3.27, 3.388 John Deere Ltd v Commission (C-7/95 P) [1998] ECR I-3111; [1998] All ER (EC) 481; [1998] 5 CMLR 311 3.172, 3.182, 3.184, 3.219, 3.344, 3.367, 3.368, 3.371, 3.430, 7.64, 7.421, 7.455, 12.130, 13.159 John Deere Ltd v Commission (T-35/92) [1994] ECR II-957 7.64, 7.460, 7.463 Johnston v Royal Ulster Constabulary (222/84) [1986] ECR 1651; [1986] 3 CMLR 240 8.262 Jungbunzlauer AG v Commission (T-43/02) [2006] ECR II-3435; [2010] 4 CMLR 925 8.462, 8.538, 8.545 KME Germany v Commission (T-25/05) [2010] ECR II-91; [2010] 5 CMLR 1329 8.686, 8.694

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KME v Commission (C-272/09), judgment of 8 December 2011, not yet reported 2.80, 4.78, 4.81, 8.452 KME v Commission (C-389/10 P), not yet reported 8.452 KYDEP v Council and Commission (C-146/91) [1994] ECR I-4199 5.1204 Kachelmann v Lampe (C-322/98) [2000] ECR I-7505 17.350 Kahla/Thüringen Porzellan v Commission (C-537/08 P) [2010] ECR I-12917 17.400, 17.458, 17.478 Kanal 5 and TV 4 v STIM (C-52/07) [2008] ECR I-9275; [2009] 5 CMLR 2175 4.840, 4.841, 4.842, 4.843, 14.133, 14.135 Kattner (C-350/07) [2009] ECR I-1513 6.22, 6.24 (p. xcvi) Kaysersberg v Commission (T-290/94) [1997] ECR II-237; [1998] 4 CMLR 336 5.1044 Keck & Mithouard (C-267 and 268/91) [1993] ECR I-6097; [1995] 1 CMLR 101 6.107 Keller and Keller Meccanica v Commission (T-35/99) [2002] ECR II-261; [2003] 1 CMLR 268 17.216 Kendrion v Commission (C-40/12, C-50/12 and C-58/12) (2013), not yet reported 8.703 Ker-Optika (C-108/09) (2010), not yet reported 9.147 Kerpen & Kerpen (319/82) [1982] ECR 4173; [1985] 1 CMLR 511 3.395, 3.442, 3.489 Kesko v Commission (T-22/97) [1999] ECR II-3775; [2000] 4 CMLR 335 5.757, 5.1144 Keurkoop v Nancy Kean Gifts (144/81) [1982] ECR 2853; [1983] 2 CMLR 47 10.44 Kingdom of Netherlands v Commission (Dutch Bitumen) (T-380/08), not yet decided 8.224, 8.498 Kish Glass v Commission (C-241/00 P) [2001] ECR I-7759; [2002] 4 CMLR 586 4.70 Kish Glass v Commission (T-65/96) [2000] ECR II-1885; [2000] 5 CMLR 229 4.70 Klopp (107/83) [1984] ECR 2971; [1985] 1 CMLR 99 6.129 Knauf Gips v Commission (C-407/08 P) [2010] ECR I-6375; [2010] 5 CMLR 708 8.470, 8.538, 8.708 Knauf Gips KG v Commission (T-52/03) [2008] ECR II-115 8.538 Koda v Commission (T-425/08), not yet reported 10.208, 14.60 Koelman (C-59/96P) [1997] ECR I-4809 6.231 Koelman v Commission (T-575/93) [1996] ECR II-1; [1996] 4 CMLR 636 6.231 Kone v Commission (C-510/11), not yet decided 8.179, 8.195

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Kone v Commission (T-151/07) [2011] ECR II-5313; [2011] 5 CMLR 1065 8.179, 8.195, 8.332 Koninklijke Grolsch v Commission (T-234/07) [2011] ECR II-6169 8.522 Koninklijke KNP BT v Commission (T-309/94) [1998] ECR II-1007 8.522 Koninklijke Wegenbouw Stevin (KWS) v Commission (T-357/06 etc) [2007] OJ C20/24 8.63, 8.379, 8.462, 8.598, 8.602 Konkurrensverket v TeliaSonera Sverige AB (C-52/09) [2011] ECR I-527; [2011] 4 CMLR 982 3.174, 4.03, 4.133, 4.279, 4.650, 4.655, 4.656, 4.657, 4.658, 4.663, 4.664, 4.665, 4.666, 4.681, 4.691, 7.142, 12.140, 12.141, 12.149, 13.91, 13.133, 13.147, 13.148–13.152, 14.141 Konsum Nord v Commission (T-244/08) [2011] ECR II-444 17.83 Kreil v Bundesrepublik Deutschland (C-285/98) [2000] ECR I-69 5.285 Kremzow v Austria (C-299/95) [1997] ECR I-2629; [1997] 3 CMLR 1289 8.255, 8.262 Krombach (C-7/98) [2000] ECR I-1935 2.71 Kruitvat (C-70/97 P) [1998] ECR I-7183; [1999] 4 CMLR 68 2.144 Krupp Thyssen and Acciai speciali Terni v Commission (T-45/98 and T-47/98) [2001] ECR II-3757; [2002] 4 CMLR 521 8.215, 8.314, 8.320, 8.546, 8.582 Kuwait Petroleum v Commission (T-370/06), not yet reported 8.179, 8.204, 8.214 LATGA-A v Commission (T-419/08), not yet reported 10.208, 14.60 LRAF 1998 A/S v Commission (T-23/99) [2002] ECR II-1705; [2002] 5 CMLR 571 4.39, 8.496, 8.582, 8.584, 8.656, 8.658, 8.660, 8.688, 8.709 Läärä (C-124/97) [1999] ECR I-6067 6.127 La Cinq v Commission (T-44/90) [1992] ECR II-1; [1992] 4 CMLR 449 5.1173 Ladbroke I (T-32/93) [1994] ECR II-1015 6.230, 6.231, 6.239 Ladbroke II (T-548/93) [1995] ECR II-2565; [1996] 4 CMLR 549 6.231 Ladbroke Racing (C-359/95 P and C-379/95 P) [1997] ECR I-6265; [1998] 4 CMLR 27 3.157 Ladbroke Racing v Commission (T-67/94) [1998] ECR II-1 17.58, 17.461, 17.477 Lafarge v Commission (C-413/08 P) [2010] ECR I-5361; [2010] 5 CMLR 586 8.467, 8.470, 8.592, 8.670 Lafarge v Commission (Plasterboard) (T-54/03) [2008] ECR II-120 8.629 Lagardère and Canal+ v Commission (T-251/00) [2002] ECR II-4825 5.1162 Lagauche (C-46/90 and 93/91) [1993] ECR I-5267 6.63, 6.266

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L’Air liquide v Commission (T-185/06) [2011] ECR II-2809 8.529, 8.534 Langnese-Iglo GmbH v Commission (T-7/93) [1995] ECR II-1533; [1995] 5 CMLR 602 3.297, 3.302, 3.384 Leclerc v Au Blé Vert (229/83) [1985] ECR 1; [1985] 2 CMLR 286 6.04, 14.35 (p. xcvii) Legris Industries v Commission (Copper Fittings) (C-289/11 P), not yet reported 3.54, 8.340, 8.528 Legris Industries v Commission (Copper Fittings) (T-376/06) [2011] ECR II-61 8.528 Limburgse Vinyl Maatschappij (LVM) v Commission (PVC II) (C-238/99 P, etc) [2002] ECR I-8375; [2003] 4 CMLR 10 7.477, 8.255, 8.256, 8.260, 8.288, 8.311, 8.331, 8.399, 8.414, 8.455, 8.497, 8.705, 8.706 Limburgse Vinyl Maatschappij (LVM) v Commission (PVC II) (T-305/94, etc) [1999] ECR II-931; [1999] 5 CMLR 303 2.186, 3.87, 3.91, 3.92, 3.152, 3.153, 8.255, 8.262, 8.263, 8.266, 8.331, 8.399, 8.456, 8.497, 8.528, 8.539, 8.544, 8.703 Lögstör Rör v Commission (T-16/99) [2002] ECR II-1633 8.644, 8.709 L’Oréal v De Nieuwe AMCK (31/80) [1980] ECR 3775; [1981] 2 CMLR 235 3.371, 9.249, 9.250 Lorenz v Germany (120/73) [1973] ECR 1471 17.423, 17.554 Low & Bonar v Commission (T-59/06) [2011] ECR II-397 8.458 Lucazeau v SACEM (110/88, 241/88 and 242/88) [1989] ECR-2811; [1991] 4 CMLR 248 4.838, 10.209, 12.182, 14.112, 14.133 Luttikhuis (C-399/93) [1995] ECR I-4515; [1996] 5 CMLR 178 7.64, 10.159 MB System v Commission (T-209/11 R) (2011), not yet reported 17.564 MCAA see Elf Aquitaine v Commission (MCAA) (C-521/09 P) MCI v Commission (T-310/00) [2004] ECR II-3253; [2004] 5 CMLR 1274 5.529, 5.1144 MOTOE (Motosykletistiki Omospondia Ellados) (C-49/07) [2008] ECR I-4863; [2008] 5 CMLR 790 3.27, 3.30, 3.39, 6.22, 6.39, 6.55, 6.62, 6.63, 6.85, 6.91, 6.92 Magfesa II see Commission v Spain (Magfesa II) (C-499/99) Magill see RTE and ITP v Commission (Magill) (C-241/91 P and C-242/91 P) Manfredi v Lloyd Adriatico Assicurazioni SpA (C-295/04 to C-298/04) [2006] ECR I-6619; [2006] 5 CMLR 980 2.252, 2.253, 3.397, 3.400, 3.401, 3.430, 8.223, 11.187 Manghera (59/75) [1976] ECR 91; [1976] 1 CMLR 557 6.121 Mannesmann Röhrenwerke v Commission (T-44/00) [2004] ECR II-2223; [2005] 4 CMLR 182 8.115, 8.195, 8.471, 8.501, 8.629

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Mannesmannröhren-Werke AG v Commission (T-112/98) [2001] ECR II-729; [2001] 5 CMLR 54 8.255, 8.261, 8.264, 8.265 Maribel see Belgium v Commission (‘Maribel’) (C-75/97) Marlines SA v Commission (T-56/99) [2003] ECR II-5225; [2005] 5 CMLR 1761 8.490 MasterCard Incorporated v Commission (T-111/08) [2012] OJ C200/11 3.122, 3.123, 3.219, 3.250, 3.251, 3.254, 3.255, 3.257, 3.260, 3.261, 3.263, 3.266, 3.270, 3.310, 3.337, 3.366, 3.367, 3.368, 3.369, 3.370, 3.371, 3.450, 3.451, 3.462, 3.463, 3.464, 3.474, 3.475, 3.477, 3.483, 3.485, 3.490, 3.494, 11.04, 11.12, 11.31, 11.37, 11.44-11.51, 11.52, 12.89, 12.97, 12.124 Masterfoods (C-344/98) [2000] ECR I-11369; [2001] 4 CMLR 449; [2001] All ER (EC) 130 2.57, 2.97, 2.98, 2.115, 2.238, 2.246, 2.264, 2.266, 12.11 Matra v Commission (C-225/91) [1993] ECR I-3203 17.535 Matra-Hachette v Commission (T-17/93) [1994] ECR II-595 2.209, 3.456, 3.459, 8.56 max.mobil (C-141/02 P) [2005] ECR I-1283; [2005] 4 CMLR 735 6.232, 6.233, 6.234, 6.237, 6.240, 6.241 max.mobil v Commission (T-54/99) [2002] ECR II-313 6.232 Mayr-Melnhof v Commission (T-347/94) [1998] ECR II-1751 8.350, 8.532, 8.584 Meca-Medina and Majcen v Commission (C-519/04) [2006] ECR I-6991; [2006] 5 CMLR 1023 3.16, 3.17, 3.18, 3.19, 3.247, 3.264, 3.268, 10.159, 14.68 Mediaset v Commission (C-403/10 P), not yet reported 17.133 Mediaset v Commission (T-177/07) [2010] ECR II-2341 17.44, 17.133 Mediawet (C-353/89) [1991] ECR I-4069 6.127, 6.128 Meng (C-2/91) [1993] ECR I-5797 6.05 Merci convenzionali Porto di Genova (179/90) [1991] ECR 5889; [1994] 4 CMLR 422 3.30, 4.434, 4.886, 6.33, 6.47, 6.51, 6.55, 6.57, 6.69, 6.81, 6.91, 6.96, 6.109, 6.151, 6.215, 15.355, 17.340 Merck v Stephar (187/80) [1981] ECR 2063; [1981] 3 CMLR 463 10.41 (p. xcviii) Methacrylates see Total and Elf Aquitaine v Commission (Methacrylates) (C-421/11 P) Metro SB-Groβmärkte v Commission (Metro I) (26/76) [1977] ECR 1875; [1978] 2 CMLR 1 3.234, 3.238, 3.304, 3.306, 3.320–3.323, 3.458, 3.498, 9.249, 9.250 Metro v Commission (Metro II) (75/84) [1986] ECR 3021; [1987] 1 CMLR 118 3.304, 3.309, 3.320–3.323 Métropole Télévision (M6) v Commission (T-112/99) [2001] ECR II-2459; [1996] 5 CMLR 1236 3.181, 3.227, 3.250, 3.253, 3.254, 3.257, 3.258, 3.261, 3.263, 3.265,

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3.267, 3.269, 3.280, 3.289, 3.290, 3.303, 3.306, 3.310, 3.331, 3.337, 3.338, 3.342, 3.343, 3.347, 3.354, 3.453, 7.20 Métropole Télévision SA (M6) (T-185/00) [2002] ECR II-3805; [2001] 5 CMLR 33 3.456, 14.70, 14.80, 14.95 Métropole Télévision v Commission (T-528/93) [1996] ECR 649; [1996] 5 CMLR 386 6.221, 7.509, 14.80, 14.81 Métropole TV (T-568 and 573/08) [2010] ECR II-3397 6.195, 6.207 Metsä-Serla v Commission (T-339-342/94) [1998] ECR II-1727 8.525, 8.538 Mialocq (271/81) [1983] ECR 2057 6.111 Michelin v Commission (Michelin II) (T-203/01) [2003] ECR II-4071; [2004] 4 CMLR 923 2.57, 2.60, 2.65, 4.201, 4.416, 4.426, 4.432, 4.436, 4.439, 4.449, 4.456, 4.460, 4.601, 8.520, 8.591, 8.592, 12.155 Micro Leader Business v Commission (T-198/98) [1997] ECR II-3989; [2000] 4 CMLR 886 9.92 Microsoft v Commission (Microsoft I) (T-201/04) [2007] ECR II-3601;[2007] 5 CMLR 846 2.28, 4.06, 4.15, 4.30, 4.70, 4.78, 4.246, 4.297, 4.476, 4.480, 4.483, 4.484, 4.485, 4.486, 4.490, 4.494, 4.500, 4.501, 4.503, 4.505, 4.515, 4.516, 4.517, 4.518, 4.582, 4.590, 4.591, 4.598, 4.601, 4.607, 4.619, 4.620, 4.625, 4.627, 9.283, 10.254, 10.261, 11.126, 12.155, 12.165, 14.141 Microsoft Corporation v European Commission (T-167/08) [2012] OJ C243/13 4.44, 4.80, 4.171, 4.297, 4.481 Miller International Schallplatten v Commission (19/77) [1978] ECR 131; [1978] 2 CMLR 334 3.184, 3.188, 3.211, 3.397, 3.415, 3.419, 9.112 Ministère Public v Asjes (Nouvelles Frontières) (209/84) [1986] ECR 1425; [1986] 3 CMLR 173 15.09 Ministère Public v Tournier (395/87) [1989] ECR 2521; [1991] 4 CMLR 248 4.22, 4.843, 10.50, 10.259, 14.112, 14.133 Minoan Lines v Commission (Greek Ferries) (T-66/99) [2003] ECR II-5515; [2003] 5 CMLR 1597 3.157, 8.310, 8.332, 8.390, 8.399, 8.477, 8.478, 8.523, 8.535 Minoikes Grammes ANE (Minoan Lines SA) v Commission (C-121/04 P) [2006] 4 CMLR 1405 8.255, 8.311, 8.331, 8.335, 8.344, 8.399, 8.477, 8.534 Miritz (91/75) [1976] ECR 217; [1976] 2 CMLR 235 6.118 Mitsubishi v Commission (Gas Insulated Switchgear) (T-133/07) [2011] ECR II-4219; [2011] 5 CMLR 678 8.472, 8.500, 8.509, 8.560 Mitteldeutsche Flughafen and Flughafen Leipzig Halle v Commission (C-288/11 P) (2012) 15.351, 15.354 Mo och Domsjö v Commission (T-352/94) [1998] ECR II-1989 8.515

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Mobistar SA v Commune de Fléron (C-545 and 545/03) [2005] ECR I-7723 6.127 Montecatini v Commission (C-235/92 P) [1999] ECR I-4539; [2001] 4 CMLR 691 8.256, 8.466 Montepide SpA v Commission (T-14/89) [1992] ECR II-1155; [1993] 4 CMLR 110 8.03 Musik-Vertried Membran GmbH v GEMA (55 and 57/80) [1981] ECR 147; [1981] 2 CMLR 44 10.30 SA Musique Diffusion Française v Commission (Pioneer) (100/80) [1983] ECR 1825; [1983] 3 CMLR 221 3.144, 3.146, 3.215, 3.415, 3.419, 8.06, 8.552, 8.662, 8.666, 8.668, 8.675, 8.709 MyTravel v Commission (T-212/03) [2008] ECR II-1967; [2008] 5 CMLR 1429 5.1044, 5.1205, 5.1206 NDSHT v Commission (C-322/09 P) [2010] ECR I-11911 17.518, 17.526, 17.531, 17.537, 17.543, 17.551 (p. xcix) NMH Stahlwerke v Commission (T-134/94) [1996] ECR II-537; [1997] 5 CMLR 227 8.539, 8.544, 8.545 NV IAZ International Belgium v Commission (96/82 etc) [1983] ECR 3369; [1984] 3 CMLR 276 3.185, 3.195, 8.659, 8.687, 8.691, 15.86 Namur-les Assurances (C-44/93) [1994] ECR I-3829 17.502, 17.506, 17.507 National Carbonising Company v Commission (109/75) [1977] ECR 1193 4.642 National Panasonic UK Ltd v Commission (136/79) [1980] ECR 2033; [1980] 3 CMLR 169 8.256, 8.284, 8.286, 8.289, 8.300, 8.327, 8.332, 8.397 Nederlandse Baden-Industrie Michelin v Commission (Michelin I) (322/81) [1983] ECR 3461; [1985] 1 CMLR 282 4.03, 4.126, 4.156, 4.169, 4.283, 4.288, 4.416, 4.421, 4.422, 4.423, 4.427, 4.936 Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied (FEG) v Commission (C-105/04 P) [2006] ECR I-8725; [2006] 5 CMLR 1223 8.43, 8.288, 8.468 Nederlandse Vakbond Varkenshouders (NVV), Marius Schep, Nederlandse Bond van Handelaren in Vee (NBHV) v Commission (T-151/05) [2009] ECR II-1219 5.653, 5.760, 5.1166 Netherlands v Commission (C-164/02) [2004] ECR I-1177 17.565 Netherlands v Commission (Dutch Couriers) (C-48/90 and C-66/90) [1992] ECR I-565; [1993] 5 CMLR 316 6.235, 6.243, 6.244, 6.247 Netherlands v Commission (Dutch petrol stations) (C-382/99) [2002] ECR I-5163 17.59, 17.155, 17.174 Netherlands and ING Groep v Commission (C-244/12 P), not yet decided 17.244

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Netherlands and ING Groep v Commission (T-29/10 & T-33/10), (2012), not yet reported 17.244 Netherlands and ING v Commission (ING) (T-252/12 & T-332/12), not yet reported 17.244 Neubrandenburger Wohnungsbaugesellschaft v Commission (T-407/09) (2012), not yet reported 17.479, 17.530, 17.551 Neue Erba Lautex v Commission (T-181/02 R) [2002] ECR II-5081 17.489, 17.564 Neue Maxhütte Stahlwerke v Commission (T-129/95, T-2/96 and T-97/96) [1999] ECR II-17; [1999] 3 CMLR 366 17.75 New Holland Ford Ltd v Commission (C-8/95 P) [1998] ECR I-3175; [1998] 5 CMLR 311 3.344, 7.64, 7.459 Nexans France v Commission (C-37/13), not yet reported 8.288 Nexans France v Commission (T-135/09), not yet reported 5.1132, 8.171, 8.288, 8.331, 8.332, 8.356, 8.388, 8.390, 8.399 Norddeutsches Vieh-und Fleischkontor v BALM (213-215/81) [1982] ECR 3583 17.28 Nouvelles Frontières (209-213/84) [1986] ECR 1425; [1986] 3 CMLR 173 6.04 Nungesser (258/78) [1982] ECR 2015; [1983] 1 CMLR 278 3.192, 3.271, 3.273, 3.280, 3.288, 3.289, 3.290, 3.304, 3.457, 10.140, 10.176, 14.114, 14.116 Nuova Agricast (C-67/09 P) [2010] ECR I-9811 17.461 Nuova Agricast (C-390/06) [2008] ECR I-2577 17.199 Nuova Agricast v Commission (T-362/05 & T-363/05) [2008] ECR II-297 17.461 Nynäs Petroleum and Nynas Belgium v Commission (T-347/06) (2012), not yet reported 8.184, 8.204, 8.214, 8.215, 8.216 Nynäs Petroleum and Nynas Petróleo v Commission (T-482/07), not yet published 8.631 O2 (Germany) v Commission (T-328/03) [2006] ECR II-1231; [2006] 5 CMLR 258 3.219, 3.228, 3.278, 3.283, 3.285, 3.286, 3.287, 3.292, 3.293, 3.306, 3.324–3.336, 3.340, 3.342, 7.20, 13.230, 15.80 OSA v Commission (T-418/08), not yet reported 10.208, 14.60 Ohra (C-245/91) [1993] ECR I-5851 6.05 Oleifici Mediterranei v EEC (26/81) [1982] ECR 3057 5.1204 Olympiaki Aeroporia Ypiresies (T-268/06) [2008] ECR II-1091 17.207 Olympic Airways see Commission v Greece (Olympic Airways) (C-369/07)

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Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC (C-325/08) [2010] ECR I-2177 14.68 Omya v Commission (T-145/06) [2009] ECR II-145; [2009] 4 CMLR 826 5.441, 5.545, 5.1132 Orange v Commission (T-258/10) (2013), not yet reported 13.237 (p. c) Ordem dos Técnicos Oficiais de Contas v Autoridade da Conconrréncia (C-1/12), not yet reported 3.247, 6.212 Orkem v Commission (374/87) [1989] ECR 3283; [1991] 4 CMLR 502 8.257, 8.259, 8.261, 8.265, 8.286, 8.288, 8.301, 8.314, 8.337, 8.347, 8.475 Österreichische Postsparkasse v Commission (T-213/01 and T-214/01) [2006] ECR II-1601; [2007] 4 CMLR 506 3.170, 4.92 Österreichischer Gewerkschaftsbund v Austria (C-195/98) [2000] ECR I-10497 2.256 Otto v Postbank (C-60/92) [1993] ECR I-5683 8.259 Outokumpu v Commission (T-122/04) [2009] ECR II-1135 8.592 Outokumpu Oyj v Commission (T-20/05) [2010] ECR II-89; [2010] 5 CMLR 1276 8.592 P&O European Ferries and others (Vizcaya) v Commission (C-442/03 P and C-471/03 P) [2006] ECR I-4845 17.206 P&O Ferries v Commission (T-116/01 and T-118/01) [2003] ECR II-2957 17.87, 17.206 Paint Graphos (C-78/08 etc), not yet reported 17.110, 17.119 Parker v Commission (T-146/09), not yet reported 8.544, 8.545 Parking Brixen (C-458/03) [2005] ECR I-8585 6.132, 6.133 Pavlov v Stichting Pensioenfonds Medische Specialisten (C-180/98 to 184/98) [2000] ECR I-6451; [2001] 4 CMLR 1 3.32, 3.34, 3.48, 3.211, 3.364, 6.21, 6.23, 6.33, 6.66, 6.86, 17.344 Peak Holding (C-16/03) [2004] ECR I-11313; [2005] 1 CMLR 45 10.39, 10.45, 10.57 Pearle (C-345/02) [2004] ECR I-7139; [2004] 3 CMLR 182 17.29 Pedro IV Services v Total España (C-260/07) [2009] ECR I-2437; [2009] 5 CMLR 1291 9.91, 9.98, 9.159 Peralta (C-379/92) [1994] ECR I-3453 3.412 Performing Right Society v Commission (T-421/08), not yet reported 10.208, 14.60 Peroxidos Organicos v Commission (T-120/04) [2006] ECR II-4441; [2007] 4 CMLR 153 2.27, 8.463, 8.465, 8.500, 8.594 Petrofina SA v Commission (T-2/89) [1991] ECR II-1087 3.393

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Petrolessence v Commission (T-342/00) [2003] ECR II-1161; [2003] 5 CMLR 498 5.1107, 5.1133, 5.1162 Peugeot (T-450/05) [2009] ECR II-2533 12.59 Peureaux I (86/78) [1979] ECR 897; [1980] 3 CMLR 337 6.124 Pfleiderer v Bundeskartellamt (C-360/09) [2011] ECR I-5161; [2011] 5 CMLR 219 2.252, 3.118, 8.228, 8.450 Philip Morris Holland BV v Commission (730/79) [1980] ECR 2671; [1981] 2 CMLR 321 17.134 Phoenix Reisen v Commission (T-58/10) (2012), not yet reported 17.531 Piaggio v Ifitalia (C-295/97) [1999] ECR I-3735; [2003] 3 CMLR 825 17.54, 17.90 Piau v Commission (C-171/05 P) [2006] ECR I-37 4.222 Piau v Commission (T-193/02) [2005] ECR II-209; [2005] 5 CMLR 42 4.218, 4.222, 4.420, 12.190, 17.46 Pierre Fabre Dermo-Cosmetique v Président de l’Autorité de la Concurrence and Others (C-439/09) [2011] ECR I-9419; [2011] 5 CMLR 1158 3.193, 3.288, 3.320, 3.321, 3.328, 9.129, 9.133, 9.136, 9.147, 9.253, 9.254 Plasterboard see Lafarge v Commission (Plasterboard) (T-54/03) Plaumann v Commission (25/62) [1963] ECR 95 5.1142 Polimeri Europa v Commission (T-59/07) [2011] ECR II-4687 8.545, 8.592, 8.670, 8.671 Pollmeier Malchow (T-137/02) [2004] ECR II-3541 17.41 Portugal v Commission (C-42/01) [2004] ECR I-6079; [2004] 5 CMLR 363 5.292 Portugal v Commission (Portuguese Airports) (C-163/99) [2001] ECR I-2613; [2002] 4 CMLR 1319 4.416, 4.910, 6.231, 6.248, 6.257, 12.54, 15.362, 15.363, 15.365, 15.372 Portuguese alcohol monopoly (C-361/90) [1993] ECR I-95 6.114 Portuguese Republic v Commission (Azores) (C-88/03) [2006] ECR I-7115; [2006] 3 CMLR 1233 17.109, 17.122, 17.124 (p. ci) Post Danmark A/S v Konkurrencerådet (C-209/10) [2012] OJ C151/4 3.175, 3.508, 4.13, 4.92, 4.126, 4.256, 4.257, 4.263, 4.281, 4.282, 4.285, 4.290, 4.292, 4.294, 4.341, 4.342, 4.344, 4.346, 4.347, 4.937, 9.212, 12.207, 13.116 Post Italiane (T-53/01R) [2001] ECR II-1479 6.249 Postbank (T-353/94) [1996] ECR II-921; [1997] 4 CMLR 33; [1996] All ER (EC) 817 2.168, 2.169, 2.198, 2.276, 2.277 Poucet and Pistre v AGF etc (C-159/91 & 160/91) [1993] ECR I-637; [1993] 4 CMLR 401 3.45, 3.47, 6.18

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PreussenElektra (C-379/98) [2001] ECR I-2099; [2001] 2 CMLR 36 17.20, 17.21, 17.25 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis (161/84) [1986] ECR 353; [1986] 1 CMLR 414 3.237, 3.249, 3.252, 3.304, 3.307, 10.159, 11.59 Protimonopolny urad Slovenskej republicky v Slovenska sporitel’na (C-68/12), not yet reported 3.183, 3.184, 3.196, 8.465 Prysmian and Others v Commission (T-140/09), not yet reported 8.285, 8.356, 8.390, 8.399 Puerto de Mertert v Müller and Hein (10/71) [1971] ECR 739 6.147, 6.152, 6.156 Puffer v Commission (C-460/07) [2009] ECR 3251 17.34 Putters International NV v Commission (T-211/08) [2011] ECR II-3729 8.683 PVC II see Limburgse Vinyl Maatschappij (PVC II) Quinn Barlo v Commission (Methacrylates) (C-70/12 P), not yet reported 8.465 Quinn Barlo v Commission (Methacrylates) (T-208/06) ECR II-7953 3.96, 3.148, 8.458, 8.500, 8.629 RTE (Magill) (C-241/91 P and C-242/91 P) [1995] ECR I-743; [1995] 4 CMLR 718 2.60, 2.105, 3.410, 4.190, 4.245, 4.582, 4.587, 4.597, 4.606, 4.615, 4.620, 10.236, 10.237, 10.238, 10.239, 10.240, 10.241, 10.247, 10.261, 12.229, 14.141 RTE v Commission (Magill) (T-69/89) [1991] ECR II-485; [1991] 4 CMLR 586 4.587, 10.196, 15.264 RTT v GB-Inno-BM (C-18/88) [1991] ECR I-5941; [1992] 4 CMLR 78 2.111, 6.51, 6.62, 6.63, 6.67, 6.70, 6.72, 6.73, 6.81, 6.149, 6.152, 6.154, 6.175, 6.208, 6.220, 6.230, 12.210, 12.215 Raiffeissen Zentralbank Österreich and others v Commission (Lombard Club) (T-259/02) [2006] ECR II-5169 8.455, 8.462, 8.519, 8.520, 8.539 Ramondin (T-92/00 and T-103/00) [2002] ECR II-1385 17.101 Raso (C-163/96) [1998] ECR I-533; [1998] 4 CMLR 737 2.111, 6.55, 6.62, 6.68, 6.86, 12.206 Région Nord-Pas-de-Calais v Commission (T-267/08 & T-279/08) (2011), not yet reported 17.459 Regione Siciliana v Commission (T-190/00) [2003] ECR II-5015 17.544 Reiff (C-185/91) [1993] ECR I-5801; [1995] 5 CMLR 145 6.05 Remia v Commission (42/84) [1985] ECR 2545; [1987] 1 CMLR 1 3.253, 3.258, 3.307, 4.70, 12.89 Rendo v Commission (C-19/93 P) [1995] ECR I-3319; [1997] 4 CMLR 392 6.215

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Rendo v Commission (T-16/91) [1992] ECR II-2417 6.215 Rewe v Landwirtschaftskammer Saarland (33/76) [1976] ECR 1989; [1977] 1 CMLR 533 2.87 Rewe-Zentrale des Lebensmittel-Groβhandels GmbH v Hauptzollamt Landau and Pfalz (45/75) [1976] ECR 196 6.115, 6.117 Rheinland-Pfalz v Alcan Deutschland (Alcan II) (C-24/95) [1997] ECR I-1591; [1997] 2 CMLR 1061 17.454, 17.474 Rhône Poulenc v Commission (T-1/89) [1991] ECR II-867; [1992] 4 CMLR 84 3.87, 3.90, 3.92, 3.99, 3.154, 8.257, 8.262, 8.485, 8.487, 8.488, 8.489 Riseria Luigi Geddo v Ente Nazionale Risi (2/73) [1973] ECR 865; [1974] 1 CMLR 13 2.168 Riva Fire v Commission (T-83/10) [2011] OJ C98/06 8.111 Romana Tabacchi v Commission (T-11/06) [2011] ECR II-6681 8.628 Roquette Frères v Commission (C-94/00) [2002] ECR I-9011; [2003] 4 CMLR 46 8.171, 8.255, 8.289, 8.291, 8.306, 8.331, 8.332, 8.347, 8.348, 8.352, 8.379, 8.388, 8.390, 8.399, 8.402, 8.403, 8.404, 8.405, 8.420, 8.473 (p. cii) Roquette Frères v Commission (T-322/01) [2006] ECR II-3137 8.514, 9.147 Royal Philips Electronics NV v Commission (T-119/02) [2003] ECR II-1433; [2003] 5 CMLR 53 5.240, 5.247, 5.1014, 5.1016, 5.1029, 5.1131, 5.1146, 5.1148 Ryanair v Commission (T-342/07) [2010] ECR II-3457; [2010] 4 CMLR 245 5.571, 5.594, 5.627, 5.918, 5.930, 5.959, 5.1127, 5.1162, 5.1194, 15.88, 15.132, 15.352 Ryanair v Commission (T-196/04) [2008] ECR II-3643 17.66 Ryanair v Commission (T-123/09) (2012), not yet reported 17.490 SAIL (82/71) [1972] ECR 119; [1972] CMLR 723 6.111, 6.147 SAT Fluggesellschaft v Eurocontrol (C-364/92) [1994] ECR I-43; [1994] 5 CMLR 208 3.39, 3.43, 3.44, 6.22, 15.359 SCA Holding v Commission (C-297/98) [2000] ECR I-10101; [2001] 4 CMLR 13 8.543 SCA Holding v Commission (T-327/94) [1998] ECR II-1373; [1998] 5 CMLR 195 8.629 SCK and FNK (T-213/95 and T-18/96) [1997] ECR II-1739; [1998] 4 CMLR 259 3.390, 3.432, 8.703 SEP v Commission (C-36/92) [1994] ECR I-1911 8.305, 8.313 SEP v Commission (T-39/90) [1991] ECR II-1947; [1992] 5 CMLR 33 8.287 SFEI v La Poste (C-39/94) [1996] ECR I-3547; [1996] 3 CMLR 369 17.54, 17.56, 17.183

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SGAE v Commission (T-456/08) (2009), not yet reported 14.60 SGL Carbon v Commission (C-308/04 P) [2006] ECR I-5977; [2006] 5 CMLR 922 8.321, 8.475, 8.688, 8.691 SGL Carbon v Commission (C-328/05P) [2007] ECR I-3921, [2007] 5 CMLR 16 8.214 SIC (T-46/97) [2000] ECR II-2125 6.165 SIC v Commission (T-297/01 and T-298/01) [2004] ECR II-743 17.350 SIC v Commission (T-442/03) [2008] ECR II-1161 6.150, 6.152, 17.206 SNCF and British Railways Board v Commission (T-79/95 & T-80/95) [1996] ECR II-1491; [1996] 5 CMLR 334 15.308 SNIA v Commission (T-194/06) [2011] ECR II-3119 8.543, 8.544 SNIA v Commission (C-448/11 P), 2013, not yet reported 8.536 SOZA v Commission (T-413/08), not yet reported 10.208, 14.60 SPAR Österreichische Warenhandel v Commission (T-405/08), not yet reported 5.686, 5.688 STEF v Commission (T-428/08), not yet reported 10.208, 14.60 Sacchi (155/73) [1974] ECR 409; [1974] 2 CMLR 177 6.81, 6.111, 6.146, 6.152, 6.217 Salt Union v Commission (T-330/94) [1996] ECR II-1477 17.543 Salzgitter v Commission (C-411/04 P) [2007] ECR I-959; [2007] 4 CMLR 682 8.481 Sandoz Prodotti v Commission (C-277/87) [1990] ECR I-45 3.101, 3.111, 3.116, 16.165 Santa Casa (C-42/07) [2009] ECR I-7633 6.128 Sardegna Lines v Commission (C-15/98 & C-105/99) [2000] ECR I-8859 17.506, 17.566 Sarrió v Commission (C-291/98 P) [2000] ECR I-9991 8.677 Sarrió v Commission (T-334/94) [1998] ECR II-1439; [1998] 5 CMLR 195 8.598 Säveltäjäin Tekijänoikeustoimisto Teosto ry (T-401/08) v Commission, not yet reported 10.208, 14.60, 14.113 Scandinavian Airline System v Commission (T-241/01) [2005] ECR II-2917; [2005] 5 CMLR 922 8.06, 8.650, 15.139 Schindler (C-275/92) [1994] ECR I-1039 6.128 Schindler v Commission (T-138/07) [2011] ECR II-4819 8.212, 8.213, 8.214, 8.658 Schindler Holding Limited v Commission (C-501/11 P), judgment of 18 July 2013, not yet reported 2.80, 3.53, 3.54, 3.57, 8.212, 8.528, 8.658

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Schlüsselverlag JS Moser and others v Commission (C-170/02 P) [2003] ECR I-9889; [2004] 4 CMLR 27 5.41, 5.356, 5.1126 Schneider Electric v Commission (C-188/06 P) [2007] ECR I-35 5.1134, 5.1201, 5.1207 Schneider Electric v Commission (T-310/01) [2002] ECR II-4071; [2003] 4 CMLR 768 5.07, 5.455, 5.672, 5.1127, 5.1157, 5.1159, 5.1162, 5.1175 Schneider Electric v Commission (T-77/02) [2002] ECR II-4201 5.502, 5.672, 5.1122, 5.1132 Schneider Electric v Commission (T-48/03) [2006] ECR II-111 5.1134 (p. ciii) Schneider Electric v Commission (T-351/03) [2007] ECR II-2237, [2008] 4 CMLR 5.672, 5.1201, 5.1205, 5.1206, 5.1207, 5.1209 Scott v Commission (T-366/00) [2003] ECR II-802; 17.450 Scottish Football Association v Commission (T-46/92) [1994] ECR II-1039 8.301, 8.311 Selex Sistemi Integrati v Commission (C-113/07 P) [2009] ECR I-2207; [2009] 4 CMLR 1083 3.40, 7.510, 15.359 Servizi Ausiliari Dottori Commercialisti v Calafori (C-451/03) [2006] ECR I-2941; [2006] 2 CMLR 1135 6.38, 6.128, 6.134, 6.214 Shell v Commission (T-11/89) [1992] ECR II-757 8.515, 8.535 Shell Petroleum v Commission (Synthetic Rubber) (T-38/07) [2011] ECR II-4383 8.592, 8.671 Shell Petroleum v Commission (T-343/06 etc) [2012] OJ C355/14 8.63, 8.319, 8.498, 8.506, 8.507, 8.602, 8.605, 8.709, 8.710 Shell Petroleum v Commission (T-344/06) (2012), not yet reported 8.520, 8.592 Showa Denko v Commission (C-289/04 P) [2006] ECR I-5859; [2006] 5 CMLR 840 8.473, 8.662, 8.668, 8.670, 8.713 Siderurgica Aristrain Madrid SL v Commission (C-196/99 P) [2003] ECR I-11005 8.516, 8.538 Siderurgica Aristrain Madrid SL v Commission (C-231/11 P), not yet decided 8.516, 8.520 Siderurgica Aristrain Madrid SL v Commission (T-156/94) [1994] ECR II-715 2.80, 8.538 Siemens v Commission (T-110/07) [2011] ECR II-477 8.177, 8.194, 8.514, 8.602, 8.606, 8.671 Siemens v Commission (T-459/93) [1995] ECR II-1675 17.227, 17.466, 17.477 Siemens Österreich v Commission (T-122/07) [2011] ECR II-793; [2011] 4 CMLR 1519 8.196, 8.213, 8.516, 8.655

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Siemens v Commission (C-239/11 P), 2013, not yet reported 8.606 Silhouette International v Hartlauer (C-355/96) [1998] ECR I-4799; [1998] 2 CMLR 953 9.92, 10.54 Sirdar v The Army Board and Secretary of State for Defence (C-273/97) [1999] ECR I-7403 5.285 Sirena v Eda and others (40/70) [1971] ECR 69; [1971] CMLR 60 3.120, 4.190, 10.173, 16.113 Sky Italia v Autorità per le Garanzie nelle Comunicazioni (C-234/12) (2013), not yet reported 14.16, 14.140 Sky Österreich GmbH v Österreichischer Rundfunk (C-283/11) (2013), not yet reported 14.16 Slovak Telekom v Commission (T-458/09 and T-171/10), not yet reported 8.291 Sociedade Portuguesa de Autores v Commission (T-417/08), not yet reported 10.208, 14.60 Societá Italiana degli Autori ed Editori (SIAE) v Commission (T-433/08), not yet reported 10.208, 14.60 Società Italiana Vetro, Fabbrica Pisana and PPG Vernante Pennitalia v Commission (Italian Flat Glass) (T-68/89, T-77/89 and T-78/89) [1992] ECR II-1403; [1992] 5 CMLR 302 3.210, 4.217, 4.218, 4.222, 12.190 Société Chimique Prayon-Ruppel v Commission (T-73/98) [2001] ECR II-867 17.426 Société Générale v Commission (T-34/93) [1995] ECR II-545; [1996] 4 CMLR 665 8.261, 8.265, 8.288, 8.291, 8.301, 8.331 Société Technique Minière v Maschinenbau Ulm (56/65) [1966] ECR 235; [1966] CMLR 357 3.183, 3.184, 3.219, 3.271, 3.273, 3.278, 3.279, 3.280, 3.281, 3.289, 3.324, 3.355, 3.358, 3.371, 3.395, 3.489 Sodemare v Regione Lombardia (C-70/95) [1997] ECR I-3395; [1998] 4 CMLR 667 3.48 Solvay v Commission (27/88) [1989] ECR 3355; [1991] 4 CMLR 502 8.314 Solvay v Commission (C-455/11), not yet decided 8.43, 8.45, 8.48, 8.193 Solvay v Commission (Hydrogen peroxide and perborate) (T-186/06) [2011] ECR II-2839; [2011] 5 CMLR 428 8.43, 8.45, 8.193, 8.214 Solvay v Commission (T-12/89) [1992] ECR II-907 8.632 Solvay v Commission (T-57/01) [2009] ECR II-4621; [2011] 4 CMLR 9 4.435, 8.592 Sot Lélos kai Sia v GlaxoSmithKline (Syfait II) (C-468-478/06) [2008] ECR I-7139; [2008] 5 CMLR 1382 3.170, 3.171, 3.172, 3.179, 4.288, 4.610, 4.611, 12.48, 12.73, 16.186, 16.187, 16.188, 16.201, 16.204

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Spain v Commission (C-501/00) [2004] ECR I-6717 17.101 Spain v Commission (C-276/02) [2004] ECR I-8091; [2004] 3 CMLR 1038 17.92 Spain v Commission (C-278/92, etc) [1994] ECR I-4103 17.135, 17.473 (p. civ) Spain v Commission (Magefesa I) (C-480/98) [2000] ECR I-8717 17.19, 17.461, 17.486 Spain v Commission (Renove) (C-351/98) [2002] ECR I-8031 17.174, 17.216 Spain v Commission (Telecommunications Services) (C-271-281 and 289/90) [1992] ECR I-5883; [1993] 4 CMLR 110 6.37, 6.74, 6.81, 6.257, 6.259, 6.262, 6.264, 6.268, 13.10 Spain v Commission (T-65/08 R) [2008] ECR II-69 5.1132 Spanish Raw Tobacco see Deltafina v Commission (Spanish Raw Tobacco) (T-29/05) Spector Photo Group and Chris van Raemdonck v Commissie voor het Bank-Financieen Assurantiewezen (CBFA) (C-45/08) [2009] ECRI-12073 3.53 Stardust Marine see France v Commission (C-482/99) Steenkolenmijnen Limburg v High Authority of the European Coal and Steel Community (30/59) [1961] ECR 19 17.52, 17.53, 17.445 Stefania Adorisia and Others v Commission (T-321/13) (‘SNS REAAL’), not yet reported 17.244 Steinike und Weinlig v Commission (78/76) [1977] ECR 595; [1977] 2 CMLR 688 17.24, 17.36 Stichting Collectieve Antenne Gouda (C-288/89) [1991] ECR I-4007 6.127 Stichting Sigarettenindustrie v Commission (240/82 etc) [1985] ECR 3831; [1987] 3 CMLR 661 3.156, 3.157, 8.628 Stim v Commission (T-451/08) (2013), not yet reported 14.21, 14.60 Stora Kopparbergs Bergslags v Commission (C-286/98 P) [2000] ECR I-9925; [2001] 4 CMLR 370 7.119, 7.121, 8.525, 8.528, 8.533, 8.537, 8.542 Stora Kopparbergs Bergslags v Commission (T-354/94) [1998] ECR II-2111; [2002] 4 CMLR 34 7.477, 8.536 Stowarzyszenie Autorów v Commission (T-398/08), not yet reported 10.208, 14.60 Strintzis Lines (T-65/99) [2003] ECR II-5433; [2005] 5 CMLR 1909 6.59, 6.60, 8.477 Strintzis Lines Shipping v Commission (C-110/04 P) [2006] ECR I-44 8.331, 8.335, 8.344, 8.477 Suiker Unie v Commission (40/73) [1975] ECR I-1663; [1976] 1 CMLR 295 3.29, 3.128, 3.130, 3.143, 3.439, 4.409, 4.418, 5.578, 7.449, 8.32, 8.53, 8.450, 8.490, 8.509, 8.541, 8.582, 9.43

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Sumitomo (T-22/02 and T-23/02) [2005] ECR II-4065; [2006] 4 CMLR 3 2.100, 2.101, 8.300 Sumitomo Metal Industries Ltd and Nippon Steel v Commission (C-403/04 P and C-405/04) [2007] ECR I-729; [2007] 4 CMLR 650 2.28, 8.454, 8.486, 8.511 Sun Chemical Group v Commission (T-282/06) [2007] ECR II-2149; [2007] 5 CMLR 6 5.688, 5.690, 5.879, 5.887, 5.1146, 5.1182 Svenska Journalistförbundet v Council (T-174/95) [1998] ECR II-2289 5.1169 Sweden v Commission and MyTravel Group plc (C-506/08 P) [2011] OJ C269/2; [2011] 5 CMLR 575 5.1044, 17.398 Sydhavnens (C-209/98) [2000] ECR I-3743; [2001] 2 CMLR 936 6.32, 6.84, 6.108, 6.152 Syfait v GSK (C-53/03) [2005] ECR I-4609; [2005] 5 CMLR 1 2.256, 8.461, 16.183, 16.187 Syndicat français de l’Express international (SFEI) v La Poste (C-39/94) [1996] ECR I-3547; [1996] 3 CMLR 369 17.54, 17.56, 17.183 Sytraval v Commission (C-367/95 P) [1998] ECR I-1719 17.399 T-Mobile Netherlands and Others (C-8/08) [2009] ECR I-4529; [2009] 5 CMLR 1701 2.28, 3.122, 3.126, 3.138, 3.183, 3.184, 3.186, 3.197, 3.198, 3.204, 7.375, 7.445, 7.449, 7.450, 7.476, 8.03, 8.43, 8.47, 8.452, 12.131, 12.133 TF 1 v Commission (T-354/05) [2009] ECR II-471 17.518, 17.543 TFI v Commission (T-17/96) [1999] ECR II-1757; [2000] 4 CMLR 678 6.232, 6.239 TWD Textilwerke Degendorf (C-188/92) [1994] ECR I-833; [1995] 2 CMLR 145 2.150 Taillandier (C-92/91) [1993] ECR I-5383 6.63, 6.266 Tate & Lyle, British Sugar and Napier Brown v Commission (T-202/98, T-204/98 and T-207/98) [2001] ECR II-2035; [2001] 5 CMLR 589 3.78, 3.129, 7.449, 8.119, 8.564, 8.582 Team Relocations v Commission (International Removal Services) (T-204/08 and T-212/08) [2011] ECR II-3569; [2011] 5 CMLR 889 3.94, 3.95, 3.148, 8.578, 8.691 Team Relocations v Commission, not yet reported (C-444/11 P) 8.458, 8.549, 8.554, 8.563, 8.565, 8.578, 8.580, 8.582 Technische Glaswerke Ilmenau v Commission (T-378/02) [2003] ECR II-2921 17.400 (p. cv) Technische Unie v Commission (C-113/04 P) [2006] ECR I-8831; [2006] 5 CMLR 1223 8.463 Tele2Polska (C-375/09) [2011] ECR I-3055; [2011] 5 CMLR 48 2.84, 2.146, 2.219 Telefónica SA and Telefónica de España SA v Commission (T-336/07) [2012] OJ C138/13 4.650, 13.88, 13.90, 13.105, 13.106, 13.114, 13.116, 13.130, 13.147

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

TeliaSonera Sverige see Konkurrensverket v TeliaSonera Sverige Tepea BV v Commission (28/77) [1978] ECR 1391; [1978] 3 CMLR 392 [1979] FSR 11 3.76, 3.170, 10.173, 16.113 Territorio Histórico de Álava–Diputación Floral de Álava v Commission (T-127/99, T-129/99 & T-148/99) [2002] ECR II-1275 17.507 Territorio Histórico de Guipúzcoa-Diputación Foral de Guipúzcoa, Territorio Histórico de Álava-Diputación Foral de Álava and Territorio Histórico de Vizcaya-Diputación Foral de Vizcaya v Commission (T-269/99, T-271/99 and T-272/99) [2002] ECR II-4217; [2003] 1 CMLR 10 17.101 Territorio Histórico de Vizcaya – Diputación Foral de Vizcaya v European Commission (C-465/09 P & C-470/09 P) (2009), not yet reported 17.218 Tetra Laval v Commission (II) (C-13/03 P) [2005] ECR I-1113 5.1189 Tetra Laval v Commission (T-5/02) [2002] ECR II-4381; [2002] 5 CMLR 1182; [2003] All ER (EC) 762 2.201, 5.07, 5.623, 5.672, 5.1054, 5.1095, 5.1122, 5.1175, 5.1189 Tetra Laval v Commission (T-80/02) [2002] ECR II-4519; [2002] 5 CMLR 1271 5.502, 5.1132 Tetra Pak International v Commission (Tetra Pak I) (T-51/89) [1990] ECR II-309; [1991] 4 CMLR 334 10.138 Tetra Pak International v Commission (Tetra Pak II) (C-333/94P) [1996] ECR I-5951; [1997] 4 CMLR 662 4.03, 4.246, 4.247, 4.252, 4.289, 4.305, 4.307, 4.308, 4.309, 4.344, 4.476, 4.483, 4.899, 4.902, 4.929, 12.54, 12.157, 13.159 Tetra Pak International v Commission (Tetra Pak II) (T-83/91) [1994] ECR II-755; [1997] 4 CMLR 726 4.40, 4.247, 4.289, 4.304, 4.305, 4.308, 4.476, 4.483, 4.498, 4.501 Textilwerke Deggendorf v Commission (C-355/95 P) [1997] ECR I-2549; [1998] 1 CMLR 234 17.288, 17.416 Thyssen Stahl AG v Commission (C-194/99 P) [2003] ECR I-10821 8.43, 8.48, 8.473, 8.506, 12.131 Thyssen Stahl AG v Commission (T-141/94) [1999] ECR II-347 [1999] 5 CMLR 810 3.78, 8.43, 8.590, 8.592 ThyssenKrupp Liften Ascenseurs v Commission (T-144/07) [2011] ECR II-5129 8.214, 8.520, 8.592 ThyssenKrupp Liften Ascenseurs v Commission (C-506/11 P), 2012, not yet reported. 8.592 ThyssenKrupp Stainless v Commission (C-65/02 P & C-73/02 P) [2005] ECR I-6773; [2005] 5 CMLR 773 8.257 Tiercé-Ladbroke v Commission (T-504/93) [1997] ECR II-923; [1997] 5 CMLR 309 3.183, 3.275, 3.287, 4.591, 4.606, 10.202, 10.204, 10.205, 10.244, 10.261, 14.58

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Tokai Carbon v Commission (T-71/03, etc) [2005] ECR II-10 8.462, 8.515, 8.584, 8.620, 8.623, 8.679, 8.680, 8.688 Tokai Carbon v Commission (T-236/01, etc) [2004] ECR II-1181; [2004] 5 CMLR 1465 8.256, 8.265, 8.301, 8.473, 8.480, 8.507, 8.514, 8.598, 8.628, 8.629, 8.644, 8.655, 8.658, 8.670, 8.671, 8.688, 8.689, 8.701 Tomra Systems (C-549/10) [2012] OJ C165/6; [2012] 4 CMLR 1093 4.425 Tomra Systems v Commission (T-155/06) [2010] ECR II-4365; [2011] 4 CMLR 416 4.277, 4.278, 4.425, 4.435, 4.460, 4.936 Tono v Commission (T-434/08), not yet reported 10.208, 14.60 Toshiba Corporation (C-17/10) [2012] OJ C98/3 2.44, 2.253, 12.10 Toshiba v Commission (T-113/07) [2011] ECR II-3989; [2011] 5 CMLR 678 8.320, 8.490, 8.510, 8.705, 8.710 Total and Elf Aquitaine v Commission (C-421/11 P), not yet reported 8.515, 8.529 Total and Elf Aquitaine v Commission (T-190/06) [2011] ECR II-5513; [2011] OJ C269/40 8.526 Total SA, Elf Aquitaine SA v Commission (C-495/11 P) [2012] OJ C 101/2 8.193 Total Nederland v Commission (T-348/06) (2012), not yet reported 8.537 Total Raffinage Marketing v Commission (T-566/08) (2013), not yet reported 8.575 (p. cvi) Transacciones Maritimes v Commission (T-231/94, T-232/94 and T-234/94) [1994] ECR II-247 17.470 Transcatab v Commission (T-39/06) [2011] ECR II-6831 8.179 Tréfileurope Sales v Commission (T-141/89) [1995] ECR II-791 3.79, 3.87, 3.135, 3.404, 8.26, 8.656 Trelleborg v Commission (T-147/09), 2013, not yet reported 8.460, 8.464 Trioplast Industrier v Commission (T-40/06) [2010] ECR II-4893 8.516 Tubemeuse see Belgium v Commission (Tubemeuse) UEFA v Commission (C-201/11 P) (2013), not yet reported 14.15 UER (Union européenne de radio-télévision) v M6 (C-470/02 P) [2004] OJ C314/2 14.81 UGT Rioja (C-428/06 etc) [2008] ECR I-6747; [2008] 3 CMLR 1397 17.125, 17.126 UPC v Belgium (C-250/06) [2007] ECR I-11135 6.33, 6.55, 6.126 UPM-Kymmene Oyj v Commission (T-53/06), not yet reported 8.458 Ufex v Commission (C-119/97 P) [1999] ECR I-1341; [2000] 4 CMLR 268 12.122, 17.536

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Unilever Bestfoods (Ireland) (Van den Bergh Foods) v Commission (C-552/03 P) [2006] ECR I-9091; [2006] 5 CMLR 1460 4.256, 4.410 Unión de Pequeños Agricultores v Council (C-50/00 P) [2002] ECR I-6677 8.255 Union Pigments v Commission (T-62/02) [2005] ECR II-5057; [2006] 4 CMLR 1005 8.465, 8.628, 8.688 United Brands v Commission (27/76) [1978] ECR 207; [1978] 2 CMLR 1 1.169, 1.212, 4.22, 4.123, 4.132, 4.133, 4.145, 4.182, 4.192, 4.201, 4.203, 4.284, 4.564, 4.610, 4.611, 4.828, 4.830, 4.833, 4.863, 4.864, 4.869, 4.870, 4.899, 4.900, 4.902, 8.469, 11.137, 12.182, 12.194, 14.133 United Kingdom v ECB (T-466/11), not yet reported 11.221 United Kingdom v ECB (T-45/12), not yet reported 11.221 United Kingdom v ECB (T-93/13), not yet reported 11.221 Uralita v Commission (T-349/08) [2011] ECR II-373 8.519, 8.544 Used Oils (172/82) [1983] ECR 567; [1983] 3 CMLR 485 6.183 UsedSoft v Oracle International (C-128/11) [2012] OJ C287/10 10.57, 14.22 VBVB and VBBB v Commission (43/82 and 63/82) [1984] ECR 19; [1985] 1 CMLR 27 3.456, 14.33 VEBIC (C-439/08) [2010] ECR I-12471; [2011] 4 CMLR 635 2.82 VTM (T-266/97) [1999] ECR II-2329; [2000] 4 CMLR 1171 5.1163, 6.231, 6.235, 6.244 Van Ameyde (90/76) [1977] ECR 1091; [1977] 2 CMLR 478 6.131 Van den Bergh Foods (T-65/98) [2003] ECR II-4653; [2004] 4 CMLR 14 3.225, 3.226, 3.234, 3.250, 3.267, 3.280, 3.289, 3.300, 3.303, 3.310, 3.331, 3.337, 3.339, 3.342, 3.453, 3.474, 4.256, 4.399, 4.410, 4.412, 4.432, 4.456, 7.20, 9.220 Van Der Kooy v Commission (67/85, 68/85 and 70/85) [1988] ECR 219; [1989] 2 CMLR 804 17.32, 17.86, 17.566 Van Eycke v ASPA (267/86) [1988] ECR 4769; [1990] 4 CMLR 330 6.04 Van Landewyck (Heintz) SARL and others v Commission (209 to 215 and 218/78) [1980] ECR 3125; [1981] 3 CMLR 134 3.81, 3.157, 3.404, 8.17 Van Schijndel v Stichting Pensioenfonds voor Fysiotherapeuten (C-430/93 and C-431/93) [1995] ECR I-4705; [1996] 1 CMLR 801 2.253 Van Zuylen Frères v Hag AG (Hag I) (193/73) [1974] ECR 731; [1974] 2 CMLR 127 10.175 Ventouris Group Enterprises SA v Commission (T-59/99) [2003] ECR II-5257; [2005] 5 CMLR 1781 8.263, 8.332, 8.455, 8.477, 8.497, 8.509

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Verband der freien Rohrwerke v Commission (T-374/00) [2003] ECR II 2275 5.590, 5.595, 5.610, 5.639, 5.1146 Verband der Sachversicherer eV v Commission (45/85) [1987] ECR 405; [1998] 4 CMLR 264 3.124, 3.430, 11.03, 11.186, 11.189, 11.193, 11.194 Vereeniging van Cementhandelaren v Commission (8/72) [1972] ECR 977; [1973] CMLR 7 8.12 Vereniging van Groothandelaren in Bloemkwerkerijprodukten (T-77/94) v Commission [1997] ECR II-759; [1997] 5 CMLR 812 3.392, 3.393 Vereniging van Samenwerkende Prijsregelende Organisaties in de Bouwnijverheid (SPO) (T-29/92) v Commission [1995] ECR II-289 3.404, 3.430, 3.457, 8.36 Verhuizingen Coppens v Commission (T-210/08) [2011] ECR II-3713; [2011] 5 CMLR 333 3.95 (p. cvii) Versalis v Commission (C-511/11 P) (2013), not yet reported 8.539, 8.592, 8.670, 8.671 Versalis and Eni v Commission (T-103/08) (2012), not yet reported 8.592 Vichy v Commission (T-19/91) [1992] ECR II-415 9.249, 9.250 Victoria Film (C-134/97) [1998] ECR I-7023; [1999] 1 CMLR 279 2.256 Viho v Commission (C-73/95) [1996] ECR I-5457; [1997] 4 CMLR 419 3.50, 7.121, 8.526 Viho v Commission (T-102/92) [1995] ECR II-17; [1997] 4 CMLR 469 8.526 Viking Gas A/S v BP Gas A/S (C-46/10) [2011] ECR I-6161 14.22 Visa Europe Limited and Visa International Service v European Commission (T-461/07) [2011] ECR II-1729; [2011] 5 CMLR 74 3.172, 3.183, 3.219, 3.275, 3.282, 3.290, 3.366, 3.371, 7.26, 7.183, 7.250, 7.291, 8.486, 11.57, 14.73 Vivendi v Commission (T-567/10 & 568/10) [2011] ECR II-317 6.233, 6.241 Vlaamse Gewest v Commission (T-214/95) [1998] ECR II-717 17.141 Vlaamse Reisbureaus (311/85) [1987] ECR 3801; [1989] 4 CMLR 213 6.04, 9.43 Vodafone and Others (C-58/08 R) [2010] ECR I-4999; [2010] 3 CMLR 1189 13.46 Völk v Vervaecke (5/69) [1969] ECR 295; [1969] CMLR 273 3.209, 3.211, 3.216, 3.217, 3.294 Volkswagen (C-266/93) [1995] ECR I-3479 [1996] 4 CMLR 478 2.55, 9.43 Volkswagen I (T-62/98) [2000] ECR II-2707; [2000] 5 CMLR 853 3.106, 3.395, 3.415, 3.426, 3.430, 8.462 Volkswagen v Commission (Volkswagen II) (T-208/01) [2003] ECR II-5141; [2004] 4 CMLR 727; 3.101, 3.103, 3.104, 3.106, 3.108, 3.111, 3.113, 3.114

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Volvo v Erik Veng (238/87) [1988] ECR 6211; [1989] 4 CMLR 122 4.583, 10.233, 10.234, 10.259 Von Colson and Kamann (14/83) [1984] ECR 1891; [1986] 2 CMLR 430 2.86 Wachauf (5/88) [1989] ECR 2609 2.179 Warner Brothers and Metronome Video v Christiansen (158/86) [1988] ECR 2605; [1990] 3 CMLR 684 10.30, 10.48, 10.206 Weig v Commission (T-317/94) [1998] ECR II-1235 8.628 Westdeutsche Landesbank Girozentrale et Altri v Commission (T-228/99 and T-233/99) [2003] ECR II-435; [2004] 1 CMLR 529 17.74 Westfaelisch-Lippischer Sparkassen-und Giroverband v Commission (WestLB) (T-457/09), not yet reported 17.244 Westfalen Gassen Nederland BV (T-303/02) [2006] ECR II-4567; [2007] 4 CMLR 334 8.465 WestLB see Commission v Germany (‘WestLB’) (C-209/00) Wieland Werke v Commission (T-116/04) [2009] ECR II-1087 8.110 Wilhelm v Bundeskartellamt (14/68) [1969] ECR I; [1969] CMLR 100 2.30, 2.32, 2.50, 2.55, 2.57, 8.243 Windsurfing International v Commission (193/83) [1986] ECR 611; [1986] 3 CMLR 489 3.392, 4.637, 10.183, 16.106 Wirtschaftskammer Karnten and Best Connect Ampere Strompool v Commission (T-350/03) [2006] ECR II-68 5.1146 Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (C-309/99) [2002] ECR I-1577; [2002] 4 CMLR 913 3.19, 3.34, 3.36, 3.38, 3.122, 3.244, 3.246, 3.247, 3.264, 3.268, 3.304, 3.306, 3.314, 3.315, 3.388, 3.400, 3.430, 4.431, 6.05 X (C-429/07) [2009] ECR I-4833; [2009] 5 CMLR 1745 2.86, 2.285 Zenatti (C-67/98) [1999] ECR I-7289; [2000] 1 CMLR 201 6.128 Ziegler SA v Commission (C-439/11 P), not yet decided 3.395, 3.397, 8.453, 8.549, 8.562, 8.563 Ziegler SA v Commission (T-199/08) [2011] ECR II-3507; [2011] 5 CMLR 261 3.214, 3.413 Zino Davidoff v A&G Imports Ltd (C-414/99 to C-416/99) [2001] ECR I-8691; [2002] 1 CMLR 1 10.39 Züchner (172/80) [1981] ECR 2021; [1982] 1 CMLR 313 3.388, 3.395, 6.141, 6.156, 11.03 Zuckerfabrik Suederdithmarschen (143/88 & 92/89) [1991] ECR I-415 17.457, 17.563

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Zunis Holdings v Commission (T-83/92) [1993] ECR II-1169; [1994] 5 CMLR 154 5.1149 Zwartveld (2/88) [1990] ECR I-3365; [1990] 3 CMLR 457 2.168, 2.169, 2.276, 2.280

(p. cviii) B. Numerical Table of Court of Justice Cases 2/54 Italy v High Authority [1954] ECR 37 5.1163 30/59Steenkolenmijnen Limbug v High Authority of the European Coal and Steel Community [1961] ECR 19 17.52, 17.53, 17.445 31/59 Acciaieria e Tubeficio di Bresci v High Authority of the European Coal and Steel Community [1960] ECR 71 8.288, 8.347, 8.388 13/61 de Geus v Bosch & van Rijn [1962] ECR 45; [1962] CMLR 1 9.01, 9.02 25/62 Plaumann v Commission [1963] ECR 95 5.1142 6/64 Costa v ENEL [1964] ECR 585; [1964] CMLR 425 6.116, 6.131, 17.554 56/64 and 58/64 Consten & Grundig v Commission [1966] ECR 299; [1966] CMLR 418; [1966] CMLR 8046 2.29, 3.170, 3.183, 3.184, 3.188, 3.194, 3.354, 3.453, 3.477, 4.76, 4.729, 8.43, 8.452, 9.03, 9.10, 9.117, 10.17, 10.19, 10.174, 12.48 32/65 Italy v Council and Commission [1966] ECR 389; [1969] CMLR 39 7.163, 7.185, 7.271, 7.299, 9.02 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235; [1966] CMLR 357 3.183, 3.184, 3.219, 3.231, 3.271, 3.273, 3.278, 3.279, 3.280, 3.281, 3.289, 3.324, 3.355, 3.358, 3.371, 3.395, 3.489 23/67 Brasserie de Haecht v Consorts Wilkin-Janssen [1967] ECR 407; [1968] CMLR 26 3.223, 3.224, 3.232 14/68 Wilhelm v Bundeskartellamt [1969] ECR I; [1969] CMLR 100 2.30, 2.32, 2.50, 2.55, 2.57, 8.243 5/69 Völk v Vervaecke [1969] ECR 295; [1969] CMLR 273 3.209, 3.211, 3.216, 3.217, 3.294, 3.413 6/69 and 11/69 Commission v France [1969] ECR 523; [1970] CMLR 43 17.97, 17.105 41/69 ACF Chemiefarma NV v Commission [1970] ECR 661; [1970] CMLR 43 3.76, 4.36 45/69 Boehringer Mannheim v Commission [1970] ECR 769; [1972] CMLR D121 8.662 48/69 ICI v Commission (Dyestuffs) [1972] ECR 619; [1972] CMLR 557 3.49, 3.126, 3.127, 3.130, 3.140, 3.143, 7.118, 7.448, 8.295, 8.298, 8.451, 8.525, 8.526, 8.535 52/69 Geigy v Commission [1972] ECR 787; [1972] CMLR 557 8.526 13/70 Cinzano [1970] ECR 1089; [1971] CMLR 374 6.118

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40/70 Sirena v Eda and others [1971] ECR 69; [1971] CMLR 60 3.120, 4.190, 10.173, 16.113 78/70 Deutsche Grammophon v Metro [1971] ECR 487; [1971] CMLR 631 4.190 10/71 Puerto de Mertert v Müller and Hein [1971] ECR 739 6.147, 6.152, 6.156 22/71 Béguelin Import v SAGL Import Export [1971] ECR 949; [1972] CMLR 81 3.234, 3.395, 3.398, 3.413 82/71 SAIL [1972] ECR 119; [1972] CMLR 723 6.111, 6.147 6/72 Continental Can [1973] ECR 215; [1973] CMLR 199 2.46, 2.60, 2.70, 4.03, 4.24, 5.01, 8.298, 8.338, 8.422, 12.231 8/72 Vereeniging van Cementhandelaren v Commission [1972] ECR 977; [1973] CMLR 7 8.12 48/72 Brasserie de Haecht [1973] ECR 77; [1973] CMLR 287 2.231, 2.268 70/72 Commission v Germany [1973] ECR 813; [1973] CMLR 741 17.92, 17.446 2/73 Riseria Luigi Geddo v Ente Nazionale Risi [1973] ECR 865;[1974] 1 CMLR 13 2.168 6/73 and 7/73 Commercial Solvents v Commission [1974] ECR 223; [1974] 1 CMLR 309 2.103, 2.104, 3.389, 4.46, 4.582, 4.587, 4.595, 4.608, 8.296, 8.526, 10.254, 12.229, 12.231 40/73 Suiker Unie v Commission [1975] ECR I-1663; [1976] 1 CMLR 295 3.29, 3.128, 3.130, 3.143, 3.439, 4.05, 4.409, 4.418, 5.578, 7.449, 8.32, 8.53, 8.450, 8.490, 8.509, 8.541, 8.582, 9.43 120/73 Lorenz v Germany [1973] ECR 1471 17.423, 17.554 127/73 Belgische Radio en Televisie (BRT) v SABAM [1974] ECR 51; [1974] 2 CMLR 238 2.236, 2.251, 4.22, 4.846, 6.141, 6.147, 6.151, 6.156, 6.167, 14.128 155/73 Sacchi [1974] ECR 409; [1974] 2 CMLR 177 6.81, 6.111, 6.146, 6.152, 6.217 (p. cix) 167/73 Commission v French Republic (French Seamen’s case) [1974] ECR 359; [1974] 2 CMLR 216 15.09 173/73 Italy v Commission (Aids to the Textile Industry) [1974] ECR 709; [1974] 2 CMLR 593 17.19, 17.23, 17.29, 17.92, 17.107, 17.446 193/73 Van Zuylen Frères v Hag AG (Hag I) [1974] ECR 731; [1974] 2 CMLR 127 10.175 8/74 Dassonville [1974] ECR 837; [1974] 2 CMLR 436 6.106 15/74 Centrafarm v Sterling Drug [1974] ECR 1147; [1974] 2 CMLR 480; [1975] FSR 161; [1975] CMR 8246 3.50, 10.23, 10.36, 16.104 16/74 Centrafarm v Winthrop [1974] ECR 1183; [1974] 2 CMLR 480 10.32

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51/74 Hulst [1975] ECR 99 17.506 68/74 Alaimo v Préfet du Rhône (68/74) [1975] ECR 109 2.272 71/74 Frubo v Commission [1975] ECR 563; [1975] 2 CMLR 123 3.404 26/75 General Motors Continental v Commission (26/75) [1975] ECR 1367; [1976] 1 CMLR 95 4.827, 12.182 45/75 Rewe-Zentrale des Lebensmittel-Groβhandels GmbH v Hauptzollamt Landau and Pfalz [1976] ECR 181 6.115, 6.117 51/75 EMI Records Limited v CBS United Kingdom Limited [1976] ECR 811; [1976] 2 CMLR 235 3.118, 3.439 59/75 Manghera [1976] ECR 91; [1976] 1 CMLR 557 6.121 63/75 Fonderies Roubaix [1976] ECR 111; [1976] 1 CMLR 538 2.259 91/75 Miritz [1976] ECR 217; [1976] 2 CMLR 235 6.118 96/75 EMI Records v CBS United Kingdom, CBS Grammafon and CBS Schallplatten [1976] ECR 913; [1976] 2 CMLR 235 10.52, 10.56 109/75 National Carbonising Company v Commission [1977] ECR 1193 4.642 26/76 Metro SB-Groβmärkte v Commission (Metro I) [1977] ECR 1875; [1978] 2 CMLR 1 3.234, 3.238, 3.304, 3.306, 3.309, 3.320–3.323, 3.458, 3.498, 9.249, 9.250 27/76 United Brands v Commission [1978] ECR 207; [1978] 2 CMLR 1 1.169, 1.212, 4.22, 4.123, 4.132, 4.133, 4.145, 4.182, 4.192, 4.201, 4.203, 4.284, 4.564, 4.610, 4.611, 4.828, 4.830, 4.833, 4.863, 4.864, 4.869, 4.870, 4.899, 4.900, 4.902, 8.469, 11.137, 12.182, 12.194, 14.133 33/76 Rewe v Landwirtschaftskammer Saarland [1976] ECR 1989; [1977] 1 CMLR 533 2.87 52/76 Benedetti [1976] ECR 192 6.147 74/76 Ianelli & Volpi v Meroni [1977] ECR 557, [1977] 2 CMLR 688 17.535 78/76 Steinike und Weinlig v Commission [1977] ECR 595; [1977] 2 CMLR 688 17.24, 17.36 85/76 Hoffmann-La Roche & Co AG v Commission [1979] ECR 461; [1979] 3 CMLR 211 1.215, 2.192, 3.394, 4.08, 4.85, 4.92, 4.132, 4.133, 4.145, 4.155, 4.156, 4.157, 4.161, 4.174, 4.176, 4.179, 4.196, 4.205, 4.207, 4.210, 4.254, 4.256, 4.397, 4.401, 4.403, 4.405, 4.408, 4.409, 4.410, 4.416, 4.419, 4.420, 4.422, 4.430, 4.432, 4.649, 4.653, 4.936, 5.687, 8.257 90/76 Van Ameyde [1977] ECR 1091; [1977] 2 CMLR 478 6.131 13/77 Inno v ATAB [1977] ECR 2144; [1978] 1 CMLR 283 6.04, 6.35, 6.38 19/77 Miller International Schallplatten v Commission [1978] ECR 131; [1978] 2 CMLR 334 3.184, 3.188, 3.211, 3.397, 3.415, 3.419, 9.112

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28/77 Tepea BV v Commission [1978] ECR 1391; [1978] 3 CMLR 392 3.76, 3.170, 10.173, 16.113 30/78 Distillers Co v Commission (30/78) [1980] ECR 2229; [1980] 3 CMLR 121 3.215 32/78 & 36/78-82/78 BMW Belgium v Commission (Joined Cases 32/78 and 36/78 to 82/78) [1979] ECR 2435 3.101, 8.520, 8.526, 9.112 86/78 Peureaux I [1979] ECR 897; [1980] 3 CMLR 337 6.124 91/78 Hansen [1979] ECR 935; [1980] 1 CMLR 162; [1980] 1 CMLR 162 6.111, 6.118, 6.119, 6.124 120/78 Cassis de Dijon [1979] ECR 649; [1979] 3 CMLR 494 6.106, 6.172, 6.218 125/78 GEMA v Commission (125/78) [1979] ECR 3173; [1980] 2 CMLR 177 10.207 209/78–215/78 & 218/78 Van Landewyck (Heintz) SARL and others v Commission [1980] ECR 3125; [1981] 3 CMLR 134 3.81, 3.157, 3.404, 8.17 258/78 Nungesser (258/78) [1982] ECR 2015; [1983] 1 CMLR 278 3.192, 3.271, 3.273, 3.280, 3.288, 3.289, 3.290, 3.304, 3.457, 10.140, 10.176, 14.114, 14.116 (p. cx) 62/79 Compagnie Générale pour la Diffusion de la Télévision, Coditel v SA Ciné Vog Films [1980] ECR 881; [1981] 2 CMLR 362 10.30, 10.205 136/79 National Panasonic UK Ltd v Commission [1980] ECR 2033; [1980] 3 CMLR 169 8.256, 8.284, 8.286, 8.289, 8.300, 8.327, 8.332, 8.397 155/79 Australian Mining and Smelting Europe (AM&S) v Commission [1982] ECR 1575; [1982] 2 CMLR 264 8.270, 8.272, 8.273, 8.274, 8.275, 8.276, 8.291, 8.347, 8.352, 8.379, 8.474 730/79 Philip Morris Holland BV v Commission [1980] ECR 2671; [1981] 2 CMLR 321 17.134 792/79 R Camera Care v Commission [1980] ECR 119; [1980] 1 CMLR 334 5.1173, 6.242 5/80 & 57/80 Musik-Vertried Membran GmbH v GEMA [1981] ECR 147; [1981] 2 CMLR 44 10.30 31/80 L’Oréal v De Nieuwe AMCK (31/80) [1980] ECR 3775; [1981] 2 CMLR 235 3.371, 9.249, 9.250 61/80 Coöperatieve Stremsel-en Kleurselfabriek v Commission [1981] ECR 851; [1982] 1 CMLR 240 3.29, 3.430 100/80 SA Musique Diffusion Française v Commission (Pioneer) [1983] ECR 1825; [1983] 3 CMLR 221 3.144, 3.146, 3.215, 3.415, 3.419, 8.06, 8.552, 8.662, 8.666, 8.668, 8.675, 8.709 172/80 Züchner [1981] ECR 2021; [1982] 1 CMLR 313 3.388, 3.395, 6.141, 6.156, 11.03 187/80 Merck v Stephar [1981] ECR 2063; [1981] 3 CMLR 463 10.41

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188, 189 & 190/80 France v Commission (Transparency Directive) [1982] ECR 2545; [1982] 3 CMLR 144 6.256, 6.262, 6.268 26/81 Oleifi ci Mediterranei v EEC [1982] ECR 3057 5.1204 60/81 IBM v Commission [1981] ECR 2639; [1981] 3 CMLR 635 5.1134, 17.541 144/81 Keurkoop v Nancy Kean Gifts [1982] ECR 2853; [1983] 2 CMLR 47 10.44 213-215/81 Norddeutsches Vieh-und Fleischkontor v BALM [1982] ECR 3583 17.28 262/81 Coditel v Ciné-Vog Films (Coditel II) [1982] ECR 3381; [1983] 1 CMLR 49 3.304, 10.198, 14.115, 14.116 271/81 Mialocq [1983] ECR 2057 6.111 283/81 CILFIT v Ministry of Health [1982] ECR 3415 2.255 322/81 Nederlandse Baden-Industrie Michelin v Commission (Michelin I) [1983] ECR 3461; [1985] 1 CMLR 282 4.03, 4.126, 4.156, 4.169, 4.283, 4.288, 4.416, 4.421, 4.422, 4.423, 4.427, 4.936 7/82 Gesellschaft zur Verwertung von Leistungsschutzrechten mbH (GVL) v Commission [1983] ECR 483; [1983] 3 CMLR 645 2.100, 2.101, 3.28, 4.898, 12.54, 14.128 43/82 and 63/82 VBVB and VBBB v Commission [1984] ECR 19; [1985] 1 CMLR 27 3.456, 14.33 78/82 Italian Tobacco Monopoly [1983] ECR 1955 6.118 86/82 Hasselblad v Commission [1984] ECR 883; 3.144, 3.146 96/82, etc NV IAZ International Belgium v Commission [1983] ECR 3369; [1984] 3 CMLR 276 3.185, 3.195, 8.659, 8.687, 8.691, 15.86 107/82 AEG v Commission [1983] ECR 3151; [1984] 3 CMLR 325 3.65, 3.101, 3.106, 3.107, 3.193, 3.238, 3.410, 3.415, 8.525, 8.528, 8.537, 9.249, 9.250 172/82 Used Oils [1983] ECR 567; [1983] 3 CMLR 485 6.183 240/82 etc Stichting Sigarettenindustrie v Commission [1985] ECR 3831; [1987] 3 CMLR 661 3.156, 3.157, 3.395, 8.628 319/82 Kerpen & Kerpen [1982] ECR 4173; [1985] 1 CMLR 511 3.395, 3.442, 3.489 14/83 Von Colson and Kamann [1984] ECR 1891; [1986] 2 CMLR 430 2.86 29/83 Compagnie Royale Asturienne des Mines (CRAM) and Rheinzink v Commission [1984] ECR 1679; [1985] 1 CMLR 688 3.68, 3.142, 3.439, 8.541 29/83 & 30/83 Compagnie Royale Asturienne des Mines SA and Rheinzink GmbH (CRAM) v Commission [1984] ECR 1679; [1985] 1 CMLR 688 3.68, 3.142, 3.439, 8.541, 8.544

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35/83 BAT Cigaretttes-Fabriken GmbH v Commission [1985] ECR 363; [1985] 2 CMLR 470 8.515, 10.187, 16.107 41/83 Italy v Commission [1985] ECR 873; [1985] 2 CMLR 368 3.27, 6.12, 6.152, 6.217, 7.142 72/83 Campus Oil [1984] ECR 2727; [1984] 3 CMLR 544 5.285, 6.163, 6.172, 6.183 (p. cxi) 91/83 & 127/83 Heineken v Inspecteur de Vennootschapbelasting [1984] ECR 3435, [1985] 1 CMLR 389 17.504, 17.505 107/83 Klopp [1984] ECR 2971; [1985] 1 CMLR 99 6.129 123/83 Bureau National Interprofessionel du Cognac (BNIC) v Clair [1985] ECR 391; [1985] 2 CMLR 430 3.35, 3.408, 6.04 145/83 Adams [1985] ECR 3539; [1986] 1 CMLR 506 2.195, 8.103, 8.104 170/83 Hydrotherm v Compact [1984] ECR 2999; [1985] 3 CMLR 224 3.49, 8.515 193/83 Windsurfing International v Commission [1986] ECR 611; [1986] 3 CMLR 489 3.392, 4.637, 10.183, 16.106 229/83 Leclerc v Au Blé Vert [1985] ECR 1; [1985] 2 CMLR 286 6.04, 14.35 243/83 Binon v SA Agence et messageries de la presse (AMP) [1985] ECR 2015; [1985] 3 CMLR 800 3.188, 9.98, 9.99, 9.250 298/83 Comité des industries cinématographiques des Communautés européennes (CICCE) v Commission [1985] ECR 1105; [1986] 1 CMLR 486 4.883 25/84 & 26/84 Ford v Commission [1985] ECR 2725; [1985] 3 CMLR 528 3.101, 3.106, 3.108, 3.464 42/84 Remia v Commission [1985] ECR 2545; [1987] 1 CMLR 1 3.253, 3.258, 3.307, 4.70, 12.89 52/84 Commission v Belgium [1986] ECR 89; [1987] 1 CMLR 710 4.32, 8.688, 17.473 75/84 Metro v Commission (Metro II) [1986] ECR 3021; [1987] 1 CMLR 118 3.304, 3.309, 3.320–3.323 107/84 Commission v Germany [1985] ECR 2655 3.39 142 & 156/84 British-American Tobacco Company and RJ Reynolds Industries v Commission [1987] ECR 4487; [1988] 4 CMLR 24 3.344, 4.70, 5.01, 12.110, 12.231 161/84 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353; [1986] 1 CMLR 414 3.237, 3.249, 3.252, 3.261, 3.304, 3.307, 10.159, 11.59 169/84 Cofaz v Commission [1986] ECR 391; [1986] 3 CMLR 385 17.566 209/84 Ministère Public v Asjes (Nouvelles Frontières) [1986] ECR 1425; [1986] 3 CMLR 173 15.09 209-213/84 Nouvelles Frontières [1986] ECR 1425; [1986] 3 CMLR 173 6.04

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222/84 Johnston v Royal Ulster Constabulary [1986] ECR 1651; [1986] 3 CMLR 240 8.262 226/84 British Leyland plc v Commission [1986] ECR I-3263; [1987] 1 CMLR 185 12.182, 14.133 234/84 Belgium v Commission [1986] ECR 2263; [1988] 2 CMLR 331 17.481 311/84 Centre Belge d’Etudes de Marché-Télémarketing (CBEM) v CLT and IPB [1985] ECR I-3261; [1986] 2 CMLR 558 4.291, 4.582, 4.587, 4.595, 4.605, 4.614, 6.33, 6.55, 14.65 5/85 AKZO Chemie BV v Commission [1986] ECR 2585; [1987] 3 CMLR 716 8.395 9/85, 104/85, 114/85, 116/85, 117/85 & 125/85-129/85 Ahlström Osakeyhtiö v Commission (Wood Pulp II) [1993] ECR I-1307; [1993] 4 CMLR 407; [1993] 4 CMLR 407 3.141, 3.436, 3.438, 7.443, 7.483, 8.54, 8.97, 8.512, 8.621 31/85 ETA Fabrique d’Ebauches DK Investment SA [1985] ECR 3933; [1986] 2 CMLR 674 3.409 40/85 Belgium v Commission [1986] ECR 2321; [1988] 2 CMLR 301 17.481 45/85 Verband der Schversicherer eV v Commission [1987] ECR 405; [1998] 4 CMLR 264 3.124, 3.430, 11.03, 11.186, 11.189, 11.193, 11.194 53/85 AKZO Chemie BV and AKZO Chemie UK Ltd v Commission [1986] ECR 1965; [1987] 1 CMLR 231 2.195, 2.201, 2.206 67/85, 68/85 and 70/85 etc Van Der Kooy v Commission [1988] ECR 219; [1989] 2 CMLR 804 17.32, 17.86, 17.566 89/85 Åhlstrom v Commission (Wood Pulp I) [1988] ECR 5193; [1988] 4 CMLR 901 8.295, 8.298 96/85 Commission v France [1986] ECR 1475; [1986] 3 CMLR 57 6.129 118/85 Commission v Italy [1987] ECR 2599; [1998] 3 CMLR 255 3.27, 3.39, 6.28 310/85 Deufil v Commission [1987] ECR 901; [1988] 1 CMLR 553 17.446 311/85 Vlaamse Reisbureaus [1987] ECR 3801; [1989] 4 CMLR 213 6.04, 9.43 314/85 Foto Frost [1987] ECR-4199; [1988] 3 CMLR 57 2.150, 2.265 352/85 Bond van Adverteerders [1988] ECR 2085; [1989] 3 CMLR 113 3.31, 6.128 402/85 Basset v SACEM (402/85) [1987] ECR 1747; [1987] 3 CMLR 173 10.259, 10.261, 14.133 (p. cxii) 62/86 AKZO Chemie BV v Commission [1991] ECR I-3359; [1993] 5 CMLR 215 4.157, 4.158, 4.159, 4.160, 4.161, 4.162, 4.163, 4.164, 4.302, 4.303, 4.304, 4.305, 4.307, 4.308, 4.309, 4.311, 4.312, 4.314, 4.342, 4.344, 4.352, 4.649, 4.653, 12.122, 13.159

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65/86 Bayer and Maschinenfabrik Hennecke v Heins Süllhofer [1988] ECR 5249; [1990] 4 CMLR 182 3.121, 10.159, 16.105 66/86 Flugreisen (Ahmed Saeed) [1989] ECR 803; [1990] 4 CMLR 102 2.259, 4.22, 5.631, 6.95, 6.148, 6.152, 15.44 158/86 Warner Brothers and Metronome Video v Christiansen [1988] ECR 2605; [1990] 3 CMLR 684 10.30, 10.48, 10.206 246/86 Belasco (SC) and others v Commission [1989] ECR 2117; [1991] 4 CMLR 96 3.81, 3.125, 3.430, 8.25, 8.28, 8.71 247/86 Alsatel v Novasam [1988] ECR 5987; [1990] CMLR 434 4.847 267/86 Van Eycke v ASPA [1988] ECR 4769; [1990] 4 CMLR 330 6.04 27/87 Erauw-Jacquery (Louis) v La Hesbignonne SC [1988] ECR 1919; [1988] 4 CMLR 476 3.192, 3.194, 3.239, 14.114 30/87 Bodson v Pompes Funèbres des Régions Libérées [1988] ECR 2479; [1989] 4 CMLR 984 3.41, 4.223, 4.837, 6.12, 6.14, 6.32, 6.33, 6.55, 6.59, 6.91, 6.111, 6.119, 12.182, 14.133 46/87 and 227/88 Hoechst [1989] ECR 2859; [1991] 4 CMLR 410 2.186, 8.171, 8.284, 8.288, 8.289, 8.314, 8.331, 8.332, 8.336, 8.345, 8.347, 8.349, 8.352, 8.397, 8.399, 8.478 53/87 Consorzio Italiano della Componentistica di Ricambio per Autoveicoli v Régie Nationale des Usines Renault [1988] ECR 6039; [1990] 4 CMLR 265 5.583 62/87 and 72/87 Executif Régional Wallon v Commission [1988] ECR 1573; [1989] 2 CMLR 771 17.236 85/87 Dow Benelux [1989] ECR 3137; [1991] 4 CMLR 410 2.182, 8.98, 8.100, 8.171, 8.288, 8.332, 8.348, 8.388, 8.399, 8.473, 8.478 87/87 Dow Chemical Nederland v Commission [1987] ECR 4367; [1988] 4 CMLR 439 8.352 92/87 and 93/87 Commission v French Republic [1989] ECR 405 4.34 94/87 Alcan I (Commission v Germany) [1989] ECR 175; [1989] 2 CMLR 425 17.463 97/87, 98/87 & 99/87 Dow Chemical Ibérica and others v Commission [1989] ECR 3165 8.331, 8.388 142/87 Belgium v Commission (Tubemeuse) [1990] ECR I-959; [1991] 3 CMLR 213 17.62, 17.137, 17.146, 17.446 143/87 INASTI [1988] ECR 3877; [1989] 3 CMLR 761 6.129 226/87 Greek Insurances [1988] ECR 3611; [1989] 3 CMLR 569 6.248, 6.249, 6.250 238/87 Volvo v Erik Veng [1988] ECR 6211; [1989] 4 CMLR 122 4.583, 10.233, 10.234, 10.259

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277/87 Sandoz Prodotti v Commission [1990] ECR I-45 3.101, 3.111, 3.116, 16.165 301/87 France v Commission (Boussac) [1990] ECR I-307 17.215, 17.447 341/87 EMI/Patricia [1989] ECR 79; [1989] 2 CMLR 413 10.43 374/87 Orkem v Commission [1989] ECR 3283; [1991] 4 CMLR 502 8.257, 8.259, 8.261, 8.265, 8.286, 8.288, 8.301, 8.314, 8.337, 8.347, 8.475 395/87 Ministère Public v Tournier [1989] ECR 2521; [1991] 4 CMLR 248 4.22, 4.843, 10.50, 10.259, 14.112, 14.133 2/88 Zwartveld [1990] ECR I-3365; [1990] 3 CMLR 457 2.168, 2.169, 2.276, 2.280 3/88 Commission v Italy (data services) [1989] ECR 4035; [1991] 2 CMLR 115 6.128, 6.130, 6.131 5/88 Wachauf v Germany [1989] ECR 2609 2.179 18/88 RTT v GB-Inno-BM [1991] ECR I-5941; [1992] 4 CMLR 78 2.111, 6.51, 6.62, 6.63, 6.67, 6.70, 6.72, 6.73, 6.81, 6.149, 6.152, 6.154, 6.175, 6.208, 6.220, 6.230, 12.210, 12.215 27/88 Solvay v Commission [1989] ECR 3355; [1991] 4 CMLR 502 8.314 68/88 Commission v Greece [1989] ECR 2965; [1991] 1 CMLR 31 2.86 110/88, 241/88 and 242/88 Lucazeau v SACEM [1989] ECR-2811; [1991] 4 CMLR 248 4.838, 10.209, 12.182, 14.112, 14.133 143/88 and 92/89 Zuckerfabrik Suederdithmarschen [1991] ECR I-415 17.457, 17.563 (p. cxiii) 202/88 France v Commission (Terminal equipment for telecommunications) [1991] ECR I-1223; [1992] 5 CMLR 552 6.37, 6.63, 6.109, 6.125, 6.214, 6.254, 6.257, 6.262, 6.268, 13.10 303/88 Italy v Commission (ENI-I) [1991] ECR I-1433; [1993] 2 CMLR 1 17.32, 17.450, 17.462, 17.492 331/88 Fedesa and Others [1990] ECR I-4023; [1991]1 CMLR 507 5.1163 347/88 Greek oil monopoly [1990] ECR I-4747 6.111, 6.121, 6.125 C-5/89 Commission v Germany [1990] ECR I-3437 17.474, 17.476 C-10/89 CNL Sucal v Hag GF (Hag II) [1990] ECR I-3711; [1990] 3 CMLR 571 10.175 C-234/89 Delimitis v Henninger Braü [1991] ECR I-935; [1992] 5 CMLR 210 2.07, 2.21, 2.60, 2.259, 2.264, 2.268, 3.224, 3.225, 3.234, 3.290, 3.298, 3.302, 3.339, 3.342, 7.64, 9.168, 10.122, 10.144, 12.74, 12.165, 14.62, 14.91 C-260/89 ERT (C-260/89) [1991] ECR I-2925; [1994] 4 CMLR 540 2.179, 6.33, 6.51, 6.67, 6.68, 6.81, 6.128 C-288/89 Stichting Collectieve Antenne Gouda [1991] ECR I-4007 6.127

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C-305/89 Italy v Commission (Alfa Romeo) [1991] ECR I-1603 17.32, 17.62, 17.446 C-353/89 Mediawet [1991] ECR I-4069 6.127, 6.128 C-380/89 Enichem Base [1989] ECR 2491 2.53 C-6 and 9/90 Francovich v Italy [1991] ECR I-5357; [1993] 2 CMLR 66 6.251 C-41/90 Höfner and Elser v Macrotron [1991] ECR I-1979; [1993] 4 CMLR 306 3.27, 3.30, 3.41, 3.388, 4.886, 6.09, 6.18, 6.20, 6.33, 6.51, 6.55, 6.66, 6.81, 6.91, 6.134, 6.152, 8.334, 8.514, 10.243, 10.261, 17.37 C-46/90 and 93/91 Lagauche [1993] ECR I-5267 6.63, 6.266 C-48/90 & C-66/90 Netherlands v Commission (Dutch Couriers) [1992] ECR I-565; [1993] 5 CMLR 316 6.235, 6.243, 6.244, 6.247 C-179/90 Merci convenzionali Porto di Genova [1991] ECR 5889; [1994] 4 CMLR 422 3.30, 4.434, 4.886, 6.33, 6.47, 6.51, 6.55, 6.57, 6.69, 6.81, 6.91, 6.96, 6.109, 6.151, 6.215, 15.355, 17.340 C-271/90 & C-289/90 Spain v Commission (Telecommunications Services) [1992] ECR I-5883; [1993] 4 CMLR 110 6.37, 6.74, 6.81, 6.257, 6.259, 6.262, 6.264, 6.268, 13.10 C-354/90 FNCE [1991] ECR I-5505 17.554 C-361/90 Portuguese alcohol monopoly [1993] ECR I-95 6.114 C-364/90 Italy v Commission [1993] ECR I-2097 17.183 C-2/91 Meng [1993] ECR I-5751 6.05 C-47/91 Italy v Commission (Italgrani) [1994] ECR I-4635 17.473 C-67/91 Dirección General de Defensa de la Competencia v Asociación Española de Banca Privada and others (Spanish Banks) [1992] ECR I-4785 2.163, 2.182, 2.204, 2.256, 8.100, 8.348, 8.367, 8.478 C-69/91 Decoster [1993] ECR I-5335 6.63, 6.64, 6.266 C-76/91 Caves Neto Costa [1993] ECR I-117 6.114 C-92/91 Taillandier [1993] ECR I-5383 6.63, 6.266 C-146/91 KYDEP v Council and Commission [1994] ECR I-4199 5.1204 C-159/91 & C-160/91 Poucet and Pistre v AGF etc [1993] ECR I-637; [1993] 4 CMLR 401 3.45, 3.47, 6.18 C-183/91 Commission v Greece [1993] ECR I-3131 17.476 C-185/91 Reiff [1993] ECR I-5801; [1995] 5 CMLR 145 6.05 C-225/91 Matra v Commission [1993] ECR I-3203 17.535

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C-241/91 P and C-242/91 P RTE (Magill) [1995] ECR I-743; [1995] 4 CMLR 718 2.60, 2.105, 3.410, 4.190, 4.245, 4.582, 4.587, 4.597, 4.606, 4.615, 4.620, 10.236, 10.237, 10.238, 10.239, 10.240, 10.241, 10.247, 10.261, 12.229, 14.141 C-245/91 Ohra [1993] ECR I-5851 6.05 C-267/91 & C-268/91 Keck & Mithouard [1993] ECR I-6097; [1995] 1 CMLR 101 6.107 C-277/91, C-318/91 and C-319/91 Carni (Ligur) v Unità Sanitaria Locale NO XV di Genova [1993] ECR I-6621 6.109 C-320/91 Corbeau v Belgian Post Office [1993] ECR I-2533; [1995] 4 CMLR 621 6.09, 6.77, 6.78, 6.81, 6.82, 6.84, 6.92, 6.152, 6.184, 6.186, 6.188, 6.196, 6.202, 6.211, 6.219 (p. cxiv) C-325/91 France v Commission (Transparency Communication) [1993] ECR I-3283 6.263 C-6/92 Federmineraria v Commission [1993] ECR I-6357 17.566 C-36/92 SEP v Commission [1994] ECR I-1911 8.305, 8.313 C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125; [2001] 4 CMLR 602 3.69, 3.78, 3.83, 3.85, 3.87, 3.89, 3.91, 3.134, 3.151, 7.449, 8.46, 8.49, 8.450, 8.455, 8.466, 8.539, 8.544, 8.582, 10.93 C-51/92 P Hercules Chemicals v Commission [1999] ECR I-4235; [1999] 5 CMLR 976 8.584 C-53/92 P Hilti v Commission [1994] ECR I-667; [1994] 4 CMLR 614 4.323 C-60/92 Otto v Postbank [1993] ECR I-5683 8.259 C-188/92 TWD Textilwerke Degendorf [1994] ECR I-833; [1995] 2 CMLR 145 2.150 C-199/92 P Hüls AG v Commission [1999] ECR I-4287; [1999] 5 CMLR 1016 3.79, 3.133, 3.134, 3.135, 7.450, 8.49, 8.450, 8.451, 8.466 C-235/92 P Montecatini v Commission [1999] ECR I-4539; [2001] 4 CMLR 691 8.256, 8.466 C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641; [1996] 4 CMLR 191 3.185, 3.240, 3.249, 3.304, 3.306, 3.309, 3.311, 3.312, 3.314, 3.319, 3.397, 7.64, 10.159, 11.59 C-275/92 Schindler [1994] ECR I-1039 6.128 C-278/92 etc Spain v Commission [1994] ECR I-4103 17.135, 17.473 C-364/92 SAT Fluggesellschaft v Eurocontrol [1994] ECR I-43; [1994] 5 CMLR 208 3.39, 3.43, 3.44, 6.22, 15.359 C-379/92 Peralta [1994] ECR I-3453 3.412 C-387/92 Banco Exterior de España [1994] ECR I-877; [1994] 3 CMLR 473 17.36

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-393/92 Almelo [1994] ECR I-1477 4.220, 4.223, 4.224, 6.10, 6.34, 6.111, 6.119, 6.145, 6.149, 6.152, 6.158, 6.163, 6.188, 6.190, 6.192, 6.202, 6.211 C-9/93 IHT Internationale Heiztechnik and Uwe Danzinger v Ideal Standard [1994] ECR I-2789; [1994] 3 CMLR 857 10.175, 10.177 C-18/93 Corsica Ferries Italia Srl v Corpo dei Piloti del Porto di Genova [1994] ECR I-1783 4.898, 6.11, 6.33, 6.45, 6.55, 6.57, 12.54, 15.355 C-19/93 P Rendo [1995] ECR I-3319; [1997] 4 CMLR 392 6.215 C-44/93 Namur-les Assurances [1994] ECR I-3829 17.502, 17.506, 17.507 C-70/93 Bayerische Motorenwerke v ALD (BMW) [1995] ECR I-3439; [1996] 4 CMLR 478 3.101, 3.106, 3.108, 3.430, 9.10, 10.122 C-266/93 Volkswagen [1995] ECR I-3479; [1996] 4 CMLR 478 2.55, 9.43 C-310/93 P BPB Industries and British Gypsum (British Plasterboard) [1995] ECR 865; [1995] 4 CMLR 718 2.201, 4.405, 4.477, 4.905 C-319/93, C-40/94 & C-224/94 Dijkstra [1995] ECR I-4471; [1996] 5 CMLR 178 2.259, 2.268 C-323/93 La Crespelle [1994] ECR I-5077 6.14, 6.32, 6.33, 6.47, 6.51, 6.55, 6.80, 6.81, 6.83, 6.84, 6.109, 6.125 C-350/93 Commission v Italy (ENI-Lanerossi I and II) [1995] ECR I-699 17.450, 17.492 C-360 & 431/93 Van Schijndel v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705; [1996] 1 CMLR 801; [1996] All ER (EC) 259 2.253 C-384/93 Alpine Investments [1995] ECR I-1141 2.65 C-387/93 Banchero [1995] ECR I-4663; [1996] 1 CMLR 829 6.82, 6.124 C-399/93 Luttikhuis [1995] ECR I-4515; [1996] 5 CMLR 178 7.64, 10.159 C-427/93, C-429/93 & C-436/93 Bristol-Myers Squibb v Paranova [1996] ECR I-3457, [1997] 1 CMLR 1151 16.156 C-430/93 and C-431/93 Van Schijndel v Stichting Pensioenfonds voor Fysiotherapeuten [1995] ECR I-4705; [1996] 1 CMLR 801 2.253 C-17/94 Gervais [1995] ECR I-4353 6.111, 6.134 C-39/94 Syndicat français de l’Express international (SFEI) v La Poste [1996] ECR I-3547; [1996] 3 CMLR 369 17.54, 17.56, 17.183 C-55/94 Gebhard [1995] ECR I-4165 6.130 C-68/94 and C-30/95 France and others v Commission [1998] ECR I-1375; [1998] 4 CMLR 829 2.143, 3.219, 5.03, 5.588, 5.605, 5.767, 5.964, 5.1129, 5.1138, 5.1145, 5.1147, 5.1158, 5.1162, 5.1185, 5.1198, 7.64, 12.190

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

(p. cxv) C-96/94 Centro Servizi Spediporto v Spedizioni Marittima del Golfo [1995] ECR I-2883; [1996] 4 CMLR 613 4.223 C-122/94 Commission v Council [1996] ECR I-881 17.331 C-140/94 to C-142/94 DIP v Comune di Bassano del Grappa [1995] ECR I-3257; [1996] 4 CMLR 157 4.223 C-157/94 Dutch electricity monopoly [1997] ECR I-5699 6.111, 6.121, 6.122, 6.164, 6.193, 6.217, 12.05 C-158/94 Italian electricity monopoly (Commission v Italy) [1997] ECR I-5789 6.111, 6.121, 6.122, 6.164, 6.193, 6.217, 12.05 C-159/94 French electricity and gas monopolies (Commission v France) [1997] ECR I-5815; [1998] 2 CMLR 373 6.121, 6.122, 6.156, 6.160, 6.164, 6.193, 6.217 C-160/94 Commission v Spain [1997] ECR I-5851; [1998] 2 CMLR 373 12.05 C-194/94 CIA International [1996] ECR I-2201 2.53, 2.226 C-241/94 France v Commission (‘Kimberly-Clark’) [1996] ECR I-4551 17.19, 17.113, 17.114 C-244/94 Fédération Française des Sociétés d’Assurances (FFSA) v Ministère de l’Agriculture et de la Pêche [1995] ECR I-4013; [1996] 4 CMLR 536 3.27, 3.28, 3.47, 17.37 C-333/94 P Tetra Pak International v Commission (Tetra Pak II) [1996] ECR I-5951; [1997] 4 CMLR 662 4.03, 4.246, 4.247, 4.252, 4.289, 4.305, 4.307, 4.308, 4.309, 4.344, 4.476, 4.483, 4.899, 4.902, 4.929, 12.54, 12.157, 13.159 C-7/95 P John Deere Ltd [1998] ECR I-3111; [1998] All ER (EC) 481; [1998] 5 CMLR 311 3.172, 3.182, 3.184, 3.219, 3.344, 3.367, 3.368, 3.371, 3.430, 7.64, 7.421, 7.455, 12.130, 13.159 C-8/95 New Holland Ford Ltd v Commission [1998] ECR I-3175; [1998] 5 CMLR 311 3.344, 7.64, 7.459 C-24/95 Rheinland-Pfalz v Alcan Deutschland (Alcan II) [1997] ECR I-1591; [1997] 2 CMLR 1061 17.454, 17.474, 17.477 C-34 to 36/95 De Agostini [1997] ECR I-3843 2.65 C-70/95 Sodemare v Regione Lombardia [1997] ECR I-3395; [1998] 4 CMLR 667; [1997] 3 CMLR 591 3.48 C-73/95 Viho Europe v Commission [1996] ECR I-5457; [1997] 4 CMLR 419 3.50, 7.121, 8.526 C-107/95 P Expert Accountants [1996] ECR I-957; [1997] 5 CMLR 432 6.230, 6.231, 6.239, 6.247, 6.249 C-149/95 P (R) Commission v Atlantic Container Line [1995] ECR I-2165; [1997] 5 CMLR 167 5.1173

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417; [1999] 4 CMLR 1203 2.28, 8.703 C-189/95 Franzén [1997] ECR I-5909; [1998] 1 CMLR 1231 6.122, 6.124 C-219/95 P Ferriere Nord v Commission [1997] ECR I-4411; [1997] 5 CMLR 575 8.650 C-242/95 GT-Link v De Danske Statsbaner [1997] ECR I-4449; [1997] 5 CMLR 601 3.434, 6.57, 15.384, 17.340 C-287 & 288/95 P Commission v Solvay [2000] ECR I-2391; [2005] 5 CMLR 454 4.916 C-299/95 Kremzow v Austria [1997] ECR I-2629; [1997] 3 CMLR 1289 8.255, 8.262 C-343/95 Dieglo Cali & Figli Srl v Servizi Ecologica Porto di Genova (SEPG) [1997] ECR I-1547; [1997] 5 CMLR 484 3.39, 3.42, 3.44, 6.22, 15.358 C-355/95 P Textilwerke Deggendorf v Commission [1997] ECR I-2549; [1998] 1 CMLR 234 17.288, 17.416 C-359/95 P and C-379/95 P Ladbroke Racing [1997] ECR I-6265; [1998] 4 CMLR 27 3.157, 13.80 C-367/95 P Sytraval v Commission [1998] ECR I-1719 17.399 C-35/96 Commission v Italy [1998] ECR I-3851; [1998] 5 CMLR 889 3.27, 3.34, 3.35, 8.514 C-55/96 Job Centre [1997] ECR I-7119; [1998] 4 CMLR 708 3.27, 3.388 C-59/96 P Koelman [1997] ECR I-4809 6.231 C-67/96 Albany International BV v Stichting Bendrijfspensioenfonds Textielindustrie [1999] ECR I-5751; [2000] 4 CMLR 446 3.30, 3.48, 6.21, 6.63, 6.66, 6.86, 6.152 C-163/96 Raso [1998] ECR I-533; [1998] 4 CMLR 737 2.111, 6.55, 6.62, 6.68, 6.86, 12.206 C-197/96 Commission v France [1997] ECR I-1489 14.146 C-203/96 Dusseldorp [1998] ECR I-4075; [1998] 3 CMLR 873 6.32, 6.47, 6.55, 6.83, 6.84, 6.87 (p. cxvi) C-215/96 and 216/96 Bagnasco [1999] ECR I-135; [1999] 4 CMLR 624 3.388, 3.395, 3.400, 3.431 C-266/96 Corsica Ferries France v Gruppo Antichi Ormeggiatori del Porto di Genoa [1998] ECR I-3949; [1998] 5 CMLR 402 6.152, 15.355, 17.340 C-301/96 Germany v Commission (Volkswagen) [2003] ECR I-9919 17.213, 17.242 C-306/96 Javico International and Javico v Yves Saint Laurent Parfums (YSLP) [1998] ECR I-1983; [1998] 5 CMLR 172 3.192, 3.210, 3.398, 3.414, 3.441, 7.64, 9.10, 9.92 C-309/96 Annibaldi [1997] ECR I-7493 2.179

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-355/96 Silhouette International v Hartlauer [1998] ECR I-4799; [1998] 2 CMLR 953 9.92, 10.54 C-395/96 P and C-396/96 P Compagnie Maritime Belge [2000] ECR I-1365; [2000] 4 CMLR 1076 2.46, 3.508, 4.03, 4.08, 4.219, 4.220, 4.222, 4.226, 4.231, 4.289, 4.325, 4.477, 4.481, 12.190 C-7/97 Bronner (Oscar) v Mediaprint (C-7/97) [1998] ECR I-7791, [1999] 4 CMLR 112 4.558, 4.588, 4.596, 4.601, 6.58, 11.126, 12.141, 13.146, 14.142 C-61/97 Foreningen af Dansk Videogramdistribut¢rer, acting for Egmont Film A/S, Buena Vista Home Entertainment, Scanbox Danmark [1998] ECR I-5171; [1999] 1 CMLR 1297 10.50 C-70/97 Kruitvat [1998] ECR I-7183; [1999] 4 CMLR 68 2.144 C-75/97 Belgium v Commission (‘Maribel’) [1999] ECR I-3671; [2000] 1 CMLR 791 17.19, 17.401, 17.453, 17.473 C-115/97-C-117/97 Brentjens [1999] ECR I-6025; [2000] 4 CMLR 566 3.246, 6.21, 11.15 C-119/97 P Ufex v Commission [1999] ECR I-1341; [2000] 4 CMLR 268 12.122, 17.536 C-124/97 Läärä [1999] ECR I-6067 6.127 C-126/97 Eco Swiss China Time Limited v Benetton International NV [1999] ECR I-3055; [2000] 5 CMLR 816 2.253 C-134/97 Victoria Film [1998] ECR I-7023; [1999] 1 CMLR 279 2.256 C-147/97 & 148/97 Deutsche Post [2000] ECR I-825; [2000] 4 CMLR 838 6.83, 6.84, 6.87 C-200/97 Ecotrade v Altiforni e Ferriere di Servola SpA (AFS) [1998] ECR I-7907; [1999] 2 CMLR 804 17.54, 17.56, 17.90, 17.96, 17.114 C-219/97 Drijvende Bokken [1999] ECR I-6121; [2000] 4 CMLR 599 6.21, 11.15 C-251/97 France v Commission [1999] ECR I-6639 17.19, 17.92 C-256/97 DMT [1999] ECR I-3913; [1999] 3 CMLR 1 17.76 C-273/97 Sirdar v The Army Board and Secretary of State for Defence [1999] ECR I-7403 5.285 C-295/97 Piaggio v Ifitalia [1999] ECR I-3735; [2003] 3 CMLR 825 17.54, 17.90 C-436/97 P Deutsche Bahn v Commission [1999] ECR I-2387; [1999] 5 CMLR 776 4.908 C-7/98 Krombach [2000] ECR I-1935 2.71 C-22/98 Becu [1999] ECR I-5665; [1999] 1 CMLR 968 6.24

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-67/98 Zenatti [1999] ECR I-7289; [2000] 1 CMLR 201 6.128 C-83/98 France v Ladbroke Racing and Commission [2000] ECR I-3271; [2000] 3 CMLR 555 17.451, 17.458 C-156/98 Germany v Commission [2000] ECR I-6857 17.46, 17.47, 17.203, 17.227 C-180 to 184/98 Pavlov v Stichting Pensioenfonds Medische Specialisten [2000] ECR I-6451; [2001] 4 CMLR 1 3.32, 3.34, 3.48, 3.211, 3.364, 6.21, 6.23, 6.33, 6.66, 6.86, 17.344 C-195/98 Österreichischer Gewerkschaftsbund v Austria [2000] ECR I-10497 2.256 C-209/98 Sydhavnens [2000] ECR I-3743; [2001] 2 CMLR 936 6.32, 6.84, 6.108, 6.152 C-279/98 P Cascades v Commission [2000] ECR I-9693 3.69, 8.542, 8.544, 8.669 C-285/98 Kreil v Bundesrepublik Deutschland [2000] ECR I-69 5.285 C-286/98 P Stora Kopparbergs Bergslags v Commission [2000] ECR I-9925; [2001] 4 CMLR 370 7.119, 7.121, 8.525, 8.528, 8.533, 8.537, 8.542 C-291/98 P Sarrió v Commission [2000] ECR I-9991 8.677 C-297/98 SCA Holding v Commission [2000] ECR I-10101; [2001] 4 CMLR 13 8.543 C-322/98 Kachelmann v Lampe [2000] ECR I-7505 17.350 C-332/98 CEFL [2000] ECR I-4833 6.165 C-344/98 Masterfoods [2000] ECR I-11369; [2001] 4 CMLR 449; [2001] All ER (EC) 130 2.57, 2.97, 2.98, 2.115, 2.238, 2.246, 2.264, 2.266, 12.11 C-351/98 Spain v Commission (Renove) [2002] ECR I-8031 17.174, 17.216 (p. cxvii) C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291 5.1205 C-367/98 Commission v Portugal [2002] ECR I-4731 6.29 C-379/98 PreussenElektra AG [2001] ECR I-2099; [2001] 2 CMLR 36 17.20, 17.21, 17.25 C-390/98 Banks [2001] ECR I-6117; [2001] 3 CMLR 51 17.492 C-450/98 P IECC v Commission [2001] ECR I-3947; [2001] 5 CMLR 291 2.115 C-466/98 Commission v United Kingdom [2002] ECR I-9427; [2003] 1 CMLR 6 15.30 C-480/98 Spain v Commission (Magefesa I) [2000] ECR I-8717 17.19, 17.461, 17.486 C-9/99 Échirolles Distribution and Association du Dauphiné and Others [2000] ECR I-8207 14.35 C-35/99 Arduino [2002] ECR I-1529; [2002] 4 CMLR 866 3.34, 6.05 C-15/98 and C-105/99 Sardegna Lines v Commission [2000] ECR I-8859 17.506, 17.566

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-143/99 Adria-Wien Pipeline GmbH and Wietersdorfer & Peggauer Zementwerke GmbH v Finanzlandesdirektion für Kärnten [2001] ECR I-8365; [2002] 1 CMLR 1103 17.101, 17.109, 17.111 C-163/99 Portugal v Commission (Portuguese Airports) [2001] ECR I-2613; [2002] 4 CMLR 1319 4.416, 4.910, 6.231, 6.248, 6.257, 12.54, 15.365, 15.372 C-176/99 ARBED v Commission [2003] ECR I-10687; [2005] 4 CMLR 530 8.540 C-194/99 P Thyssen Stahl AG v Commission [2003] ECR I-10821 8.43, 8.48, 8.473, 8.506, 12.131 C-196/99 P Siderurgica Aristrain Madrid SL v Commission [2003] ECR I-11005 8.516, 8.538 C-205/99 Analir v Commission [2001] ECR I-1271 17.342 C-238/99 P, etc Limburgse Vinyl Maatschappij (LVM) v Commission (PVC II) [2002] ECR I-8375; [2003] 4 CMLR 10 7.477, 8.255, 8.256, 8.260, 8.288, 8.311, 8.331, 8.399, 8.414, 8.455, 8.497, 8.705, 8.706 C-309/99 Wouters v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577; [2002] 4 CMLR 913 3.19, 3.34, 3.36, 3.38, 3.122, 3.244, 3.246, 3.247, 3.264, 3.268, 3.304, 3.306, 3.314, 3.315, 3.388, 3.400, 3.430, 3.431, 6.05 C-310/99 Italy v Commission [2002] ECR I-2289 17.450 C-321/99 P Associação dos Refinadores de Açúcar Portugueses and Others [2002] ECR I-4287; [2002] 2 CMLR 949 17.92 C-328/99 & C-399/00 Italian Republic and SIM 2 Multimedia SpA v Commission (Seleco) [2003] ECR I-4035; [2005] 2 CMLR 1169 17.309, 17.490 C-382/99 Netherlands v Commission (Dutch petrol stations) [2002] ECR I-5163 17.59, 17.155, 17.174 C-400/99 Italy v Commission (Tirrenia Group) [2005] ECR I-3657; [2005] 3 CMLR 611 5.1163, 17.517, 17.518, 17.543, 17.544 C-414/99 to C-416/99 Zino Davidoff v A&G Imports Ltd [2001] ECR I-8691; [2002] 1 CMLR 1 10.39 C-453/99 Courage v Crehan [2001] ECR I-6297; [2001] 5 CMLR 1058 2.20, 2.252, 3.159, 8.223 C-462/99 Connect Austria [2003] ECR I-5197; [2005] 5 CMLR 302 6.75, 12.206 C-475/99 Glöckner v Landkreis Südwestpfalz [2001] ECR I-8089; [2002] 4 CMLR 726 3.30, 3.44, 3.388, 3.434, 6.18, 6.23, 6.40, 6.41, 6.74, 6.87, 6.91, 6.97, 6.152, 6.194, 6.195, 6.196, 6.207, 17.38 C-482/99 France v Commission (Stardust) [2002] ECR I-4397; [2002] 2 CMLR 1069 6.101, 17.22, 17.26, 17.30, 17.32, 17.33 C-483/99 Commission v France [2002] ECR I-4781 5.285, 6.29

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-497/99P Irish Sugar v Commission [2001] ECR I-5333; [2001] 5 CMLR 29 4.326 C-499/99 Commission v Spain (Magfesa II) [2002] ECR I-6031 4.32, 8.688, 17.473 C-503/99 Commission v Belgium [2002] ECR I-4809; [2002] 2 CMLR 1265 5.285 C-512/99 Germany v Commission [2003] ECR I-845 8.110 C-50/00 P Unión de Pequeños Agricultores v Council [2002] ECR I-6677 8.255 C-53/00 Ferring [2001] ECR I-9067; [2003] 1 CMLR 1001 6.165, 17.90, 17.351 C-57/00 P & C-61/00 P Freistaat Sachsen and VW v Commission [2003] ECR I-9975 17.212 C-74/00 P & C-75/00 P Falck and Others v Commission [2002] ECR I-7869 17.400, 17.401, 17.520 C-94/00 Roquette Frères [2002] ECR I-9011; [2003] 4 CMLR 46 8.171, 8.255, 8.289, 8.291, 8.306, 8.331, 8.332, 8.347, 8.348, 8.352, 8.379, 8.388, 8.390, 8.399, 8.402, 8.403, 8.404, 8.405, 8.420, 8.473 (p. cxviii) C-204/00 Aalborg Portland [2004] ECR I-123; [2004] 4 CMLR 13 2.26, 3.70, 3.72, 3.73, 3.79, 3.134, 3.187, 3.449, 8.257, 8.259, 8.288, 8.301, 8.455, 8.464, 8.467, 8.482, 8.496, 8.509, 8.543, 8.545, 8.591, 8.708, 13.165 C-209/00 Commission v Germany (‘WestLB’) [2002] ECR I-11695 17.462 C-218/00 Cisal di Battistello Venanzio [2002] ECR I-691; [2002] 4 CMLR 833 6.21, 6.22, 6.23 C-241/00 P Kish Glass v Commission [2001] ECR I-7759; [2002] 4 CMLR 586 4.70 C-242/00 Germany v Commission [2002] ECR I-5603 17.565 C-275/00 First and Franex [2002] ECR I-10943; [2005] 2 CMLR 257 2.169, 2.276, 2.280 C-280/00 Altmark Trans GmbH and Regierungspräsidium Magdeburg v Nahverkehrsgesellschaft Altmark GmbH and Oberbundesanwalt beim Bundesverwaltungsgericht [2003] ECR I-7747; [2003] 3 CMLR 339 6.165, 6.207, 13.237, 17.90, 17.136, 17.137, 17.351, 17.364 C-355/00 Freskot [2003] ECR I-5263 17.344 C-457/00 Belgium v Commission [2003] ECR I-6931 17.44 C-463/00 Commission v Spain [2003] ECR I-4581 5.285, 6.29, 6.213 C-501/00 Spain v Commission [2004] ECR I-6717 17.101 C-2/01 P & C-3/01 P Bundesverband der Arzneimittel-Importeure and Commission v Bayer (Joined Cases C-2/01 P and C-3/01) [2004] ECR I-23; [2004] 4 CMLR 653 3.80, 3.103, 3.109, 3.112, 3.113, 3.114, 3.116, 3.154, 16.164 C-5/01 Belgium v Commission (‘Cockerill’) [2002] ECR I-11991 17.19, 17.56

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-6/01 Anomar [2003] ECR I-8621; [2004] 1 CMLR 1357 6.111, 6.127, 6.128 C-42/01 Portugal v Commission [2004] ECR I-6079; [2004] 5 CMLR 363 5.292 C-82/01 Aéroports de Paris v Commission [2002] ECR I-9297; [2003] 5 CMLR 16 3.27, 3.30, 4.909, 4.910, 4.928, 4.931, 6.22, 12.54, 15.353, 15.354, 15.369, 15.377 C-83/01 P, C-93/01 P & C-94/01 P Chronopost v Ufex [2003] ECR I-6993; [2003] 3 CMLR 11 17.86 C-98/01 Commission v UK [2003] ECR I-4641 6.29 C-186/01 Dory v Germany [2003] ECR I-2508 5.285 C-198/01 Consorzio Industrie Fiammiferi (CIF) [2003] ECR I-8055; [2003] 5 CMLR 829 2.41, 2.50, 3.155, 3.158, 6.05, 12.119, 12.121 C-243/01 Gambetti [2003] ECR I-13031 6.128, 6.131 C-261/01 & C-262/01 Eugene Van Calster [2003] ECR I-12249; [2004] 1 CMLR 607 17.94 C-264/01 etc AOK Bundesverband v Ichthyol-Gesellschaft Cordes, Hermani & Company (Cases C-264, 206, 254 and 355/01) [2004] ECR I-2493; [2004] 4 CMLR 1261 3.40, 6.21, 8.515, 17.37, 17.42 C-359/01 P British Sugar v Commission [2004] ECR I-4933; [2004] 5 CMLR 329 3.411 C-418/01 IMS Health v NDC Health [2004] ECR I-5039; [2004] 4 CMLR 1543 4.245, 4.288, 4.582, 4.589, 4.592, 4.597, 4.606, 4.607, 4.616, 4.620, 4.623, 4.625, 10.223, 10.247, 10.261, 12.142, 14.141 C-65/02 P & C-73/02 P ThyssenKrupp Stainless v Commission [2005] ECR I-6773; [2005] 5 CMLR 773 8.257 C-110/02 Commission v Council (Portuguese Pig Producers) [2004] ECR I-6333; [2004] 2 CMLR 1330 17.335 C-141/02 P max.mobil [2005] ECR I-1283; [2005] 4 CMLR 735 6.232, 6.233, 6.234, 6.237, 6.240, 6.241 C-164/02 Netherlands v Commission [2004] ECR I-1177 17.565 C-170/02 P Schlüsselverlag JS Moser and others v Commission [2003] ECR I-9889; [2004] 4 CMLR 27 5.41, 5.356, 5.1126 C-189/02 Dansk Rørindustri v Commission [2005] ECR I-5425; [2005] CMLR 17 8.204, 8.311, 8.459, 8.528, 8.597, 8.682, 8.683, 8.691, 8.709 C-276/02 Spain v Commission [2004] ECR I-8091; [2004] 3 CMLR 1038 17.92 C-345/02 Pearle [2004] ECR I-7139; [2004] 3 CMLR 182 17.29 C-438/02 Hanner [2005] ECR I-4551; [2005] 2 CMLR 42 6.119, 6.122, 6.213 C-470/02 P UER (Union européenne de radio-télévision) v M6 [2004] OJ C314/2 14.81

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-12/03 P Commission v Tetra Laval [2005] ECR I-987 4.77, 4.80, 5.556, 5.559, 5.623, 5.672, 5.865, 5.1050, 5.1054, 5.1095, 5.1127, 5.1162, 5.1181, 5.1188, 5.1189, 5.1192, 5.1193 (p. cxix) C-13/03 P Tetra Laval v Commission (II) [2005] ECR I-1113 5.1189 C-16/03 Peak Holding [2004] ECR I-11313; [2005] 1 CMLR 45 10.39, 10.45, 10.57 C-53/03 Syfait v GSK [2005] ECR I-4609; [2005] 5 CMLR 1 2.256, 8.461, 16.183, 16.187 C-78/03 P Commission vAktionsgemeinschaft Recht und Eigentum (ARE) [2005] ECR I-10737; [2006] 2 CMLR 1197 17.566 C-88/03 Portuguese Republic v Commission (Azores) [2006] ECR I-7115; [2006] 3 CMLR 1233 17.109, 17.122, 17.123, 17.124 C-172/03 Heiser v Finanzamt Innsbruck [2005] ECR I-1627; [2005] 2 CMLR 402 17.140 C-205/03 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission [2006] ECR I-6295 [2006] 5 CMLR 559 3.33, 3.46, 8.514, 11.15, 16.23 C-236/03 Commission v CMA CGM [2005] 4 CMLR 557 8.650 C-334/03 Commission v Portugal [2005] ECR I-8911 6.207 C-346/03 & 529/03 Atzeni and Others [2006] ECR I-1875 17.207 C-399/03 Commission v Council (Belgian co-ordination centres) [2006] ECR I-5629 17.336 C-442/03 P & C-471/03 P P&O European Ferries and others (Vizcaya) v Commission [2006] ECR I-4845 17.206 C-451/03 Servizi Ausiliari Dottori Commercialisti v Calafori [2006] ECR I-2941; [2006] 2 CMLR 1135 6.38, 6.128, 6.134, 6.214 C-458/03 Parking Brixen [2005] ECR I-8585 6.132, 6.133 C-544/03 and 545/03 Mobistar SA v Commune de Fléron [2005] ECR I-7723 6.127 C-551/03 General Motors v Commission [2006] ECR I-3173; [2006] 5 CMLR 9 12.48, 12.57 C-552/03 P Unilver Bestfoods (Ireland) Ltd (formerly Van den Bergh Foods Limited) v Commission [2006] ECR I-9091; [2006] 5 CMLR 1460 4.256, 4.410 C-74/04 P Commission v Volkswagen [2006] ECR I-6585; [2007] ICR 217 3.104, 8.451 C-94/04 Cipolla [2006] ECR II-11421; [2007] 4 CMLR 286 6.05 C-95/04 P British Airways v Commission [2007] ECR I-2331 4.03, 4.252, 4.256, 4.282, 4.292, 4.293, 4.294, 4.296, 4.427, 4.428, 4.910, 4.920, 4.924, 4.927, 14.135, 15.142

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-105/04 P Nederlandse Federatieve Vereniging voor de Groothandel op Elektrotechnisch Gebied (FEG) v Commission [2006] ECR I-8725; [2006] 5 CMLR 1223 8.43, 8.288, 8.468 C-110/04 P Strintzis Lines Shipping v Commission [2006] ECR I-44 8.331, 8.335, 8.344, 8.477 C-113/04 P Technische Unie v Commission [2006] ECR I-8831; [2006] 5 CMLR 1223 8.463 C-121/04 P Minoikes Grammes ANE (Minoan Lines SA) v Commission [2006] 4 CMLR 1405 8.255, 8.311, 8.331, 8.335, 8.344, 8.399, 8.477, 8.534 C-222/04 Cassa di Risparmio di Firenze [2006] ECR I-289; [2008] 1 CMLR 705 17.37, 17.40, 17.504 C-237/04 Enirisorse v Sotacarbo [2006] ECR I-2843 17.37, 17.38 C-266/04 to C-270/04, C-276/04 & C-324/04 to C-325/04 Distribution Casino France SAS and Others [2005] ECR I-9481 17.42, 17.94 C-289/04 P Showa Denko v Commission [2006] ECR I-5859; [2006] 5 CMLR 840 8.473, 8.662, 8.668, 8.670, 8.713 C-295/04 to C-298/04 Manfredi v Lloyd Adriatico Assicurazioni SpA [2006] ECR I-6619; [2006] 5 CMLR 980 2.252, 2.253, 3.397, 3.400, 3.401, 3.430, 8.223, 11.187 C-301/04 P Commission v SGL Carbon [2006] ECR I-5915; [2006] 5 CMLR 877 8.255, 8.262, 8.265, 8.267, 8.307, 8.316, 8.321, 8.374 C-308/04 P SGL Carbon v Commission [2006] ECR I-5977; [2006] 5 CMLR 922 8.321, 8.475, 8.688, 8.691 C-348/04 Boehringer Ingelheim v Swingward [2007] ECR I-3391, [2007] 2 CMLR 1445 16.156 C-393/04 & C-41/05 Air Liquide Industries Belgium [2006] ECR I-5293; [2006] 3 CMLR 667 17.94 C-403/04 P and C-405/04 Sumitomo Metal Industries Ltd and Nippon Steel v Commission [2007] ECR I-729; [2007] 4 CMLR 650 2.28, 8.454, 8.486, 8.511 C-407/04 P Dalmine v Commission [2007] ECR I-829 8.259, 8.263, 8.288, 8.481 C-408/04 P Commission v Salzgitter [2008] ECR I-2767 17.474 C-410/04 ANAV [2006] ECR I-3303 6.89, 6.126, 6.133 (p. cxx) C-411/04 P Salzgitter v Commission [2007] ECR I-959 [2007] 4 CMLR 682 8.481 C-519/04 Meca-Medina and Majcen v Commission [2006] ECR I-6991; [2006] 5 CMLR 1023 3.16, 3.17, 3.18, 3.19, 3.247, 3.264, 3.268, 10.159, 14.68 C-75/05 P & C-80/05 P Germany and Others v Kronofrance [2008] ECR I-6619 17.216

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

C-110/05 Commission v Italy (trailers) [2009] ECR I-519 6.107 C-171/05 P Piau v Commission [2006] ECR I-37 4.222 C-217/05 Confederación Española de Empresarios de Estaciones de Servicio (CEES) v Compañia Española de Petróleos SA [2006] ECR I-11987; [2007] 4 CMLR 181 9.43, 9.49, 9.98 C-238/05 Asnef-Equifax and Others v Ausbanc [2006] ECR I-11125; [2007] 1 CMLR 224 3.367, 3.395, 3.397, 3.462, 3.464, 7.436, 7.455, 8.450 C-282/05 P Holcim (Deutschland) v Commission [2007] ECR I-2941 5.1205 C-328/05 P SGL Carbon v Commission [2007] ECR I-3921, [2007] 5 CMLR 16 8.214 C-380/05 Centro Europa 7 v Ministero delle Comunicazioni [2008] ECR I-349; [2008] 2 CMLR 512 14.148, 14.152 C-393/04 & 41/05 Air Liquide Industries Belgium v Ville de Seraing [2006] ECR I-5293; [2006] 3 CMLR 667 17.94 C-446/05 Doulamis [2008] ECR I-1377; [2008] 5 CMLR 376 6.05 C-3/06 P Groupe Danone v Commission [2007] ECR I-1331; [2007] 4 CMLR 701 8.473, 8.587 C-76/06 Britannia Alloys & Chemicals v Commission [2007] ECR I-4405; [2007] 5 CMLR 251 8.255, 8.677 C-188/06 P Schneider Electric v Commission [2007] ECR I-35 5.1134, 5.1201, 5.1207 C-202/06 P Cementbouw Handel & Industrie v Commission [2007] ECR I-12129; [2008] 4 CMLR 17 5.100, 5.390, 5.1003, 5.1152 C-212/06 Government of Communauté française and Gouvernement wallon v Gouvernement flamand [2008] ECR I-1683 6.134 C-220/06 APERMC [2007] ECR I-12175 6.89, 6.211 C-250/06 UPC v Belgium [2007] ECR I-11135 [2007] ECR I-11135 6.33, 6.55, 6.126 C-266/06 P Degussa v Commission [2008] ECR I-81 8.671 C-279/06 CEPSA Estaciones de Servicio SA v LV Tobar e Hijos [2008] ECR I-6681; [2008] 5 CMLR 1327 9.43, 9.98 C-280/06 ETI and Others [2007] ECR I-10893; [2008] 4 CMLR 277 8.528, 8.539, 8.545 C-347/06 ASM Brescia [2008] ECR I-5641 6.89, 6.133 C-390/06 Nuova Agricast [2008] ECR I-2577 17.199 C-413/06 P Bertelsmann and Sony Corporation of America Independent Music Publishers and Labels Association (Impala) [2008] ECR I-495; [2008] 5 CMLR 1073 4.219, 4.220, 4.235, 4.236, 4.237, 4.238, 4.240, 5.356, 5.455, 5.772, 5.773, 5.780,

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

5.787, 5.794, 5.798, 5.1134, 5.1140, 5.1155, 5.1157, 5.1158, 5.1162, 5.1180, 5.1184, 5.1189, 5.1191, 7.141, 7.456, 14.37, 14.168 C-428/06 etc UGT Rioja [2008] ECR I-6747; [2008] 3 CMLR 1397 17.125, 17.126 C-468/06 to C-478/06 Sot Lélos kai Sia v GlaxoSmithKline (Syfait II) [2008] ECR I-7139; [2008] 5 CMLR 1382 3.170, 3.171, 3.172, 3.179, 4.288, 4.610, 4.611, 12.48, 12.73, 16.186, 16.187, 16.188, 16.201, 16.204 C-487/06 P British Aggregates Association v Commission [2008] ECR I-10515 17.92, 17.112 C-501/06 P GlaxoSmithKline Services Unlimited v Commission [2009] ECR I-9291; [2010] 4 CMLR 50 2.27, 3.171, 3.172, 3.179, 3.183, 3.184, 3.185, 3.188, 4.92, 9.05, 9.112, 12.61, 16.173, 16.174 C-521/06 P Athinaïki v Commission [2008] ECR I-5829 17.526, 17.528, 17.531, 17.533, 17.549, 17.551 C-42/07 Santa Casa [2009] ECR I-7633 6.128 C-49/07 MOTOE [2008] ECR I-4863; [2008] 5 CMLR 790 3.27, 3.30, 3.39, 6.22, 6.39, 6.55, 6.62, 6.63, 6.85, 6.91, 6.92 C-52/07 Kanal 5 and TV 4 v STIM [2008] ECR I-9275; [2009] 5 CMLR 2175 4.840, 4.841, 4.842, 4.843, 14.133, 14.135 C-113/07 P SELEX Sistemi Integrati SpA v Commission [2009] ECR-I 2207; [2009] 4 CMLR 1083 3.40, 7.510, 15.359 (p. cxxi) C-125/07 P, etc Erste Group Bank and Others v Commission [2009] ECR I-8681, [2010] 5 CMLR 443 8.519, 11.66 C-139/07 P Commission v Technische Glaswerke Ilmenau (TGI) [2010] ECR I-5885 8.224, 17.398 C-148/07 Commission v Hungary, not yet reported 14.147 C-196/07 Commission v Spain [2008] ECR I-41 5.292, 5.293, 5.1126 C-202/07 P France Telecom v Commission [2009] ECR II-2369; [2009] 4 CMLR 1149 4.306, 4.307, 4.308, 4.309, 4.313, 13.159, 13.160, 13.161 C-205/07 Gysbrechts [2008] ECR I-9947 6.108 C-209/07 Competition Authority v Beef Industry Development Society/ Barry Brothers (Carrigmore) Meats (Irish Beef) [2008] ECR I-8637; [2009] 4 CMLR 310 3.183, 3.184, 3.185, 8.43, 8.47, 15.86, 16.108 C-260/07 Pedro IV Services v Total España [2009] ECR I-2437; [2009] 5 CMLR 1291 9.91, 9.98, 9.159 C-290/07 P Commission v Scott [2010] ECR I-7763 17.18, 17.451, 17.556, 17.557 C-300/07 Hans & Christophorus Oymanns GbR, Ortopädie Schuhtechnik v AOK Rheinland/Hamburg [2009] ECR I-4779 16.125

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C-334/07 P Commission v Freistaat Sachsen [2008] ECR I-9465 17.218 C-350/07 Kattner [2009] ECR I-1513 6.22, 6.24 C-369/07 Commission v Greece (Olympic Airways) [2009] ECR I-5703 17.496 C-385/07 P Der Grüne Punkt–Duales System Deutschland v Commission [2009] ECR I-6155 8.703 C-419/07 Commission v Sweden [2007] OJ C283/18 14.146 C-424/07 Commission v Germany [2009] ECR I-11431 13.126 C-429/07 X [2009] ECR I-4833; [2009] 5 CMLR 1745 2.86, 2.285 C-440/07 P Commission v Schneider Electric (Schneider III) [2009] ECR I-6413; [2009] 5 CMLR 16 5.672, 5.1209, 5.1210 C-441/07 P Commission v Alrosa [2010] ECR I-5949; [2010] 5 CMLR 11 2.132, 2.144, 4.55, 12.169, 12.237, 16.113 C-460/07 Puffer v Commission [2009] ECR 3251 17.34 C-550/07 P Akzo Nobel Chemicals and Akros Chemicals v Commission [2010] ECR I-8301, [2010] 5 CMLR 1143 8.272 C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529; [2009] 5 CMLR 1701 2.28, 3.122, 3.126, 3.138, 3.183, 3.184, 3.186, 3.197, 3.198, 3.199, 3.204, 7.375, 7.445, 7.449, 7.450, 7.476, 8.03, 8.43, 8.45, 8.47, 8.452, 12.131, 12.133 C-45/08 Spector Photo Group and Chris van Raemdonck v Commissie voor het BankFinancie-en Assurantiewezen (CBFA) [2009] ECRI-12073 3.53 C-58/08 R Vodafone and Others [2010] ECR I-4999; [2010] 3 CMLR 1189 13.46 C-59/08 Copad v Christian Dior Couture [2009] ECR I-3421 9.127 C-78/08 etc Paint Graphos, not yet reported 17.110, 17.119 C-97/08 P Akzo Nobel NV v Commission [2009] ECR I-8237; [2009] 5 CMLR 2633 3.49, 3.50, 3.51, 3.53, 3.54, 3.55, 7.120, 7.121, 8.525, 8.526, 8.528 C-160/08 Commission v Germany [2010] ECR I-3713 6.34, 6.153, 6.213 C-222/08 Commission v Belgium [2010] ECR I-9017 6.207 C-265/08 Federutility Assogas, Libarna Gas, Collino Commercio Sadori Gas, Assogas, Libarna Gas, Collino Commercio, Sadori Gas, Egea Commerciale, E.On Vendita, Sorgenia v Autorità per l’energia elettrica e il gas [2010] ECR I-5577 12.184 C-279/08 P Commission v Netherlands (Emissions trading scheme) (2011), not yet reported 17.92, 17.139, 17.565 C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555; [2010] 5 CMLR 27 3.155, 3.156, 3.157, 3.174, 4.285, 4.651, 4.652, 4.656, 4.658, 4.661, 4.662, 12.11, 13.85, 13.92, 13.97, 13.98, 13.108, 13.109, 13.140, 13.165

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C-325/08 Olympique Lyonnais SASP v Olivier Bernard and Newcastle UFC [2010] ECR I-2177 14.68 C-403/08 & C-429/08 Football Association Premier League [2011] OJ C347/2; [2012] 1 CMLR 769 10.50, 10.200, 14.22, 14.96, 14.114, 14.117, 14.119 (p. cxxii) C-407/08 P Knauf Gips KG v Commission [2010] 5 CMLR 708 8.470, 8.538, 8.708 C-413/08 P Lafarge v Commission [2010] ECR I-5361; [2010] 5 CMLR 586 8.467, 8.470, 8.592, 8.670 C-439/08 VEBIC [2010] ECR I-12471; [2011] 4 CMLR 635 2.82 C-506/08 P Sweden v Commission and MyTravel Group plc [2011] OJ C269/2; [2011] 5 CMLR 575 5.1044, 17.398 C-507/08 Commission v Slovakia [2010] ECR I-13489 17.473 C-537/08 P Kahla/Thüringen Porzellan v Commission [2010] ECR I-12917 17.400, 17.458, 17.478 C-543/08 Commission v Portugal (Golden Shares) [2010] ECR I-11241 6.213 C-52/09 Konkurrensverket v TeliaSonera Sverige AB [2011] ECR I-527; [2011] 4 CMLR 982 3.174, 4.03, 4.133, 4.279, 4.650, 4.655, 4.656, 4.657, 4.658, 4.663, 4.664, 4.665, 4.666, 4.681, 4.691, 7.142, 12.140, 12.141, 12.149, 13.91, 13.133, 13.147, 13.148–13.152, 14.141 C-67/09 P Nuova Agricast [2010] ECR I-9811 17.461 C-71/09 P, etc Comitato ‘Venezia vuole vivere’ v Commission (2011), not yet reported 17.139, 17.141, 17.566 C-90/09 P General Química v Commission [2011] ECR I-1; [2011] 4 CMLR 669 3.53, 8.515, 8.528 C-106/09 P &C-107/09 P) European Commission and Kingdom of Spain v Government of Gibraltar and United Kingdom [2011] ECR I-11113 17.128 C-108/09 Ker-Optika (2010), not yet reported 9.147 C-201/09 P & C-216/09 ArcelorMittal Luxembourg v Commission [2011] ECR I-2239; [2011] 4 CMLR 1097 8.515, 8.528 C-212/09 Commission v Portugal [2011] ECR I-10889 6.29, 6.213 C-272/09 KME v Commission, judgment of 8 December 2011, not yet reported 2.80, 4.78, 4.81, 8.452 C-304/09 Commission v Italy [2010] ECR I-13903 17.473, 17.480 C-322/09 P NDSHT v Commission [2010] ECR I-11911 17.518, 17.526, 17.531, 17.537, 17.543, 17.551

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C-360/09 Pfleiderer AG v Bundeskartellamt [2011] ECR I-5161; [2011] 5 CMLR 219 2.252, 3.118, 8.228, 8.450 C-362/09 P Athinaïki v Commission [2010] ECR I-13275 17.526, 17.528, 17.549 C-375/09 Tele2Polska [2011] ECR I-3055; [2011] 5 CMLR 48 2.84, 2.146, 2.219 C-437/09 AG2R Prevoyance v Beaudout [2011] OJ C130/5; [2011] 4 CMLR 1029 3.27, 6.22, 6.24, 6.66, 6.85, 6.191, 6.192 C-439/09 Pierre Fabre DermoCosmetique v Président de l’Autorité de la Concurrence and Others [2011] ECR I-9419; [2011] 5 CMLR 1158 3.193, 3.238, 3.288, 3.320, 3.321, 9.129, 9.133, 9.136, 9.147, 9.253, 9.254 C-464/09P Holland Malt BV v Commission [2010] ECR I-12443 17.558 C-465/09 P & C-470/09 P Territorio Histórico de Vizcaya - Diputación Foral de Vizcaya v European Commission (2009), not yet reported 17.218 C-475/09 AGR2 [2011] ECR I-973 6.33 C-520/09 P Arkema v Commission [2011] ECR I-8901 8.528 C-521/09 P Elf Aquitaine v Commission [2011] ECR I-8947 3.51, 3.53, 3.54, 3.57, 8.473, 8.515, 8.528, 8.529 C-17/10 Toshiba Corporation [2012] OJ C98/3 2.44, 2.253, 12.10 C-46/10 Viking Gas A/S v GBP Gas A/S [2011] ECR I-6161 14.22 C-111/10 Commission v Council (Lithuania), not yet reported 17.337 C-117/10 Commission v Council (Poland), not yet reported 17.337 C-118/10 Commission v Council (Latvia), not yet reported 17.337 C-121/10 Commission v Council (Hungary), not yet reported 17.337 C-124/10 P Commission v Électricité de France and France (2012), not yet reported 17.454 C-209/10 Post Danmark A/S v Konkurrencerådet [2012] OJ C151/4 3.175, 3.508, 4.13, 4.92, 4.126, 4.256, 4.257, 4.258, 4.263, 4.281, 4.282, 4.285, 4.290, 4.292, 4.294, 4.341, 4.342, 4.344, 4.346, 4.347, 4.937, 9.212, 12.207, 13.116 C-386/10 P Chalkor v Commission [2012] 4 CMLR 9 2.80 C-389/10 P KME v Commission, not yet reported 8.452 (p. cxxiii) C-399/10 P & 401/10 P Bouygues and Bouygues Télécom v Commission, not yet reported 17.57 C-403/10P Mediaset v Commission, not yet reported 17.133 C-404/10 P Commission v Editions Odile Jacob [2012] OJ C258/3 5.477, 8.224

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C-457/10 P AstraZeneca and Others v Commission [2013] OJ C26/2 3.176, 4.712, 4.714, 4.717, 4.718, 4.726, 4.727, 4.728, 4.808, 4.812, 4.813, 10.159, 16.24, 16.35, 16.36, 16.45, 16.47, 16.128, 16.134, 16.137, 16.139, 16.140 C-459/10 P Freistaat Sachsen and Others v Commission (2011), not yet reported 17.200 C-463/10 P & 475/10 P Germany v Commission [2011] ECR I-9639 17.547 C-473/10 Commission v Hungary 15.320 C-477/10 Commission v Agrofert Holdings, not yet decided 8.224, 17.398 C-483/10 Commission v Spain 15.320 C-512/10 Commission v Poland 15.320 C-528/10 Commission v Greece 15.320 C-545/10 Commission v Czech Republic 15.320 C-549/10 P Tomra Systems [2012] OJ C165/6; [2012] 4 CMLR 1093 4.425 C-553/10 P & C-554/10 P Commission v Editions Odile Jacob, not yet reported 5.1104, 5.1133 C-555/10 Commission v Austria 15.320, 15.324 C-556/10 Commission v Germany 15.320, 15.324 C-557/10 Commission v Portugal 15.320 C-617/10 Åklageren v Hans Åkerberg Fransson, judgment of 26 February 2013, not yet reported 2.179 C-625/10 Commission v France 15.320 C-627/10 Commission v Slovenia 15.320 C-628/10 & C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission (Spanish Raw Tobacco) [2012] OJ C295/6 3.49, 3.51, 3.59, 3.60, 3.63, 8.528 C-5/11 Donner, Criminal proceedings against (2012), not yet reported 14.22 C-32/11 Allianz Hungária Biztosító Zrt v Gazdasági Versenyhivatal, not yet reported 3.203, 3.204, 3.205, 3.206, 3.207, 3.208, 3.444, 12.122 C-128/11 UsedSoft v Oracle International [2012] OJ C287/10 10.57, 14.22 C-138/11 Compass-Datenbank v Republik Österreich [2012] OJ C287/11 3.27, 3.30, 3.39, 3.40, 3.44 C-158/11 Auto 24 v Jaguar Land Rover France 9.254 C-167/11 Cantieri navale De Poli v Commission, (2012), not yet reported 17.218

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C-173/11 Football Dataco and Others v Sportradar [2013] 1 CMLR 29 14.22 C-181/11 P Cetersa v Commission (2012), not yet reported 8.683 C-201/11 P UEFA v Commission (2013), not yet reported 14.15 C-204/11 P FIFA v Commission (2013), not yet reported 14.15 C-205/11 P FIFA v Commission (2013), not yet reported 14.15 C-226/11 Expedia v Autorité de la concurrence, not yet reported 3.184, 3.209, 3.214, 3.215, 3.217, 8.452 C-231/11 P Siderurgica Aristrain Madrid SL v Commission, not yet decided 8.516, 8.520 C-239/11 P Siemens v Commission, 2013, not yet reported 8.606 C-283/11 Sky Österreich GmbH v Österreichischer Rundfunk (2013), not yet reported 14.16 C-288/11 P Mitteldeutsche Flughafen and Flughafen Leipzig Halle v Commission (2012) 15.351, 15.354 C-289/11 P Legris Industries v Commission (Copper Fittings), not yet reported 3.54, 8.340, 8.528 C-290/11 Comap v Commission [2012] OJ C174/13 8.465 C-412/11 Commission v Luxembourg 15.320 C-421/11 P Total and Elf Aquitaine v Commission (Methacrylates), not yet reported 8.515, 8.529 C-439/11 P Ziegler SA v Commission, not yet decided 3.395, 3.397, 8.453, 8.549, 8.562, 8.563 C-441/11 P Commission v Verhuizingen Coppens (International Removal Services); [2006] ECR 1429 3.95, 8.457, 8.458, 8.459 C-444/11 P Team Relocations v Commission, not yet reported 8.458, 8.549, 8.554, 8.563, 8.565, 8.578, 8.580, 8.582 C-448/11 P SNIA v Commission, 2013, not yet reported 8.536 (p. cxxiv) C-455/11 Solvay v Commission, not yet decided 8.43, 8.45, 8.48, 8.193 C-494/11 P General Technic-Otis v Commission, 2012, not yet reported 8.179 C-495/11 P Total SA, Elf Aquitaine SA v Commission [2012] OJ C 101/2 8.193 C-501/11 P Schindler Holding Limited v Commission, judgment of 18 July 2013, not yet reported 2.80, 3.53, 3.54, 3.57, 8.212, 8.528, 8.658 C-506/11 P ThyssenKrupp Liften Ascenseurs v Commission, 2012, not yet reported 8.592

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C-508/11 P ENi v Commission, not yet reported 3.51, 3.53, 3.54, 8.528 C-510/11 Kone v Commission, not yet decided 8.179, 8.195 C-511/11 P Versalis v Commission (2013), not yet reported 8.539, 8.592, 8.670, 8.671 C-536/11 Donau Chemie v Commission, not yet decided 8.228 C-578/11 P Deltafina v Commission [2012] OJ C25/37 8.145, 8.165 C-668/11 P Alliance One International v Commission (2013), not yet reported 8.663 C-1/12 Ordem dos Técnicos Oficiais de Contas v Autoridade da Conconrréncia, not yet reported 3.247, 6.212 C-40/12, C-50/12 & C-58/12 Kendrion v Commission (2013), not yet reported 8.703 C-58/12 P Groupe Gascogne v Commission, not yet reported 8.703 C-68/12 Protimonopolny urad Slovenskej republicky v Slovenska sporitel’na, not yet reported 3.183, 3.184, 3.196, 8.465 C-70/12 P Quinn Barlo v Commission (Methacrylates), not yet reported 8.465 C-136/12 Consiglio nazionale dei geologi v Autorità garante della concorrenza e del mercate, not yet reported 3.247 C-172/12 P EI du Pont de Nemours v Commission (Chloroprene Rubber), not yet reported 3.63 C-179/12 P Dow Chemical v Commission (Chloroprene Rubber), not yet reported 3.63, 8.531 C-234/12 Sky Italia v Autorità per le Garanzie nelle Comunicazioni (2013), not yet reported 14.16, 14.140 C-242/12 Deutsche Lufthansa (2013), not yet reported 17.554 C-244/12 P Netherlands and ING Groep v Commission, not yet decided 17.244 C-365/12 Commission v EnBW Energie Baden-Württemberg, not yet decided 8.224 C-551/12 P(R) Électricité de France v Commission (2013), not yet reported 5.1009, 5.1113 C-553/12 P DEI v Commission [2013] OJ C32/10 6.76, 6.85, 6.88 C-586/12 P KWS v Commission, 2013, not yet reported 8.599, 8.602 C-37/13 Nexans France v Commission, not yet reported 8.288 C-170/13 Huawei Technologies v ZTE Corp, ZTE Deutschland GmbH (2013), not yet decided 4.795, 13.245 C-376/13 Commission v Bulgaria, not yet decided 14.148

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(p. cxxv) C. Numerical Table of General Court Cases T-1/89 Rhône Poulenc v Commission [1991] ECR II-867; [1992] 4 CMLR 84 3.87, 3.90, 3.92, 3.99, 3.154, 8.257, 8.262, 8.485, 8.487, 8.488, 8.489 T-2/89 Petrofina SA v Commission [1991] ECR II-1087 3.393 T-3/89 Atochem SA v Commission [1991] ECR II-1177 8.497 T-6/89 Enichem Anic v Commission [1991] ECR II-1623 8.591, 8.654 T-7/89 Hercules Chemicals NV v Commission [1991] ECR II-1711; [1992] 4 CMLR 84 2.208, 3.74, 3.84, 3.100, 3.130, 8.347, 8.584, 8.658 T-9/89 Hüls AG v Commission [1992] ECR II-499 3.154, 8.656 T-10/89 Hoechst v Commission [1992] ECR II-629 8.390 T-11/89 Shell v Commission [1992] ECR II-757 8.515, 8.535 T-12/89 Solvay v Commission [1992] ECR II-907 8.632 T-14/89 Montepide SpA v Commission [1992] ECR II-1155; [1993] 4 CMLR 110 8.03 T-30/89 Hilti v Commission [1991] ECR II-1439; [1992] 4 CMLR 16 4.160, 4.246, 4.291, 4.323, 4.480, 4.483, 4.489, 4.510, 4.729, 8.274, 8.275, 9.147 T-51/89 Tetra Pak v Commission (Tetra Pak I) [1990] ECR II-309; [1991] 4 CMLR 334 10.138 T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931 3.266, 3.404, 8.455 T-65/89 BPB Industries and British Gypsum v Commission (British Plasterboard) [1993] ECR II-389; [1993] 5 CMLR 409 2.201, 3.404, 3.414, 4.289, 4.405, 4.905, 8.535 T-68/89, T-77/89 and T-78/89 Società Italiana Vetro, Fabbrica Pisana and PPG Vernante Pennitalia v Commission (Italian Flat Glass) [1992] ECR II-1403; [1992] 5 CMLR 302 3.210, 4.217, 4.218, 4.222, 12.190 T-69/89 RTE v Commission (Magill) [1991] ECR II-485; [1991] 4 CMLR 586 4.587, 10.196, 15.264 T-80/89 BASF and Others v Commission [1995] ECR II-729 3.69 T-141/89 Trefileurope Sales v Commission [1995] ECR II-791 3.79, 3.87, 3.135, 3.404, 8.26, 8.656 T-145/89 Baustahlgewebe v Commission [1995] ECR II-991 3.67 T-150/89 Martinelli v Commission (Welded Steel Mesh) [1995] ECR II-1165 1.118 T-24/90 Automec v Commission [1992] ECR II-2223; [1992] 5 CMLR 431 2.11, 2.105, 2.109, 2.116, 4.33, 4.103

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T-39/90 SEP v Commission [1991] ECR II-1947; [1992] 5 CMLR 33 8.287 T-44/90 La Cinq v Commission [1992] ECR II-1 [1992] 4 CMLR 449 5.1173 T-16/91 Rendo v Commission [1992] ECR II-2417 6.215 T-19/91 Vichy v Commission [1992] ECR II-415 9.249, 9.250 T-32/91 Solvay v Commission [1995] ECR II-1825; [1996] 5 CMLR 91 4.916 T-36/91 ICI v Commission [1995] ECR II-1847; [1996] 5 CMLR 57 8.708 T-83/91 Tetra Pak v Commission [1994] ECR II-755; [1997] 4 CMLR 726 4.40, 4.247, 4.289, 4.304, 4.305, 4.307, 4.476, 4.483, 4.498, 4.501 T-7/92 Asia Motor France II [1993] ECR II-669; [1994] 4 CMLR 30 3.158 T-19/92 Groupement d’Achat Edouard Leclerc v Commission [1996] ECR II-1851; [1997] 4 CMLR 995 3.322 T-29/92 Vereniging van Samenwerkende Prijsregelende Organisaties in de Bouwnijverheid (SPO) v Commission [1995] ECR II-289 3.404, 3.430, 3.457, 8.36 T-34/92 Fiatagri UK and New Holland Ford v Commission [1994] ECR II-905 2.253, 7.64 T-35/92 John Deere Ltd v Commission [1994] ECR II-957 7.64, 7.460, 7.463 T-38/92 All Weather Sports Benelux BV v Commission [1994] ECR II-211; [1995] 4 CMLR 43 8.544 T-39/92 and 40/92 Groupement des Cartes Bancaires ‘CB’ and Europay International v Commission [1994] ECR II-49; [1995] 5 CMLR 410 11.61 T-43/92 Dunlop Slazenger v Commission [1994] ECR II-441 8.463, 8.675 T-46/92 Scottish Football Association v Commission [1994] ECR II-1039 8.301, 8.311 (p. cxxvi) T-83/92 Zunis Holdings v Commission [1993] ECR II-1169; [1994] 5 CMLR 154 5.1149 T-88/92 Groupement d’Achat Edouard Leclerc v Commission [1996] ECR II-1961; [1997] 4 CMLR 995 3.322, 9.249 T-96/92 CCE de la Société Generale des Grandes Sources et al v Commission (‘Perrier’) [1996] ECR II-1213 5.1149, 5.1150, 5.1154, 5.1174 T-102/92 Viho v Commission [1995] ECR II-17; [1997] 4 CMLR 469 8.526 T-2/93 Air France v Commission [1994] ECR II-323 5.631, 15.44 T-3/93 Air France v Commission [1994] ECR II-121 5.1131, 5.1135, 5.1146 T-7/93 Langnese-Iglo GmbH v Commission (German ice cream) [1995] ECR II-1533; [1995] 5 CMLR 602 3.297, 3.302, 3.384 T-17/93 Matra-Hachette v Commission [1994] ECR II-595 2.209, 3.456, 3.459, 8.56

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T-24-26/93 and T-28/93 Compagnie Maritime Belge [1996] ECR II-1201; [1997] 4 CMLR 273 3.389, 3.440, 4.219, 4.224, 4.226, 4.227, 4.228, 4.242, 4.289, 4.325, 4.723 T-32/93 Ladbroke I [1994] ECR II-1015 6.230, 6.231, 6.239 T-34/93 Société Générale v Commission [1995] ECR II-545; [1996] 4 CMLR 665 8.261, 8.265, 8.288, 8.291, 8.301, 8.331 T-459/93 Siemens v Commission [1995] ECR II-1675 17.227, 17.466, 17.477 T-504/93 Tiercé-Ladbroke v Commission [1997] ECR II-923; [1997] 5 CMLR 309 3.183, 3.275, 3.287, 4.591, 4.606, 10.202, 10.204, 10.205, 10.244, 10.261, 14.58 T-513/93 Consiglio Nazionale degli Spedizionieri Doganali (CNSD) v Commission [2000] ECR II-1807; [2000] 5 CMLR 614 3.155 T-528/93 Métropole Télévision v Commission (Eurovision) [1996] ECR 649; [1996] 5 CMLR 386 6.221, 7.509, 14.80, 14.81 T-548/93 Ladbroke II [1995] ECR II-2565; [1996] 4 CMLR 549 6.231 T-575/93 Koelman v Commission [1996] ECR II-1; [1996] 4 CMLR 636 6.231 T-67/94 Ladbroke Racing v Commission [1998] ECR II-1 17.58, 17.461, 17.477 T-77/94 Vereniging van Groothandelaren in Bloemkwerkerijprodukten (VGB) v Commission [1997] ECR II-759; [1997] 5 CMLR 812; [1997] All ER (EC) 828 3.392, 3.393 T-84/94 Expert Accountants [1995] ECR II-101 6.231, 6.239 T-88/94 R Société Commerciale des Potasses v Commission [1994] ECR II-401 5.1171 T-134/94 NMH Stahlwerke v Commission [1996] ECR II-537; [1997] 5 CMLR 227 8.539, 8.544, 8.545 T-141/94 Thyssen Stahl AG v Commission [1999] ECR II-347; [1999] 5 CMLR 810 3.78, 8.43, 8.590, 8.592 T-156/94 Siderurgica Aristrain Madrid SL v Commission [1994] ECR II-715 2.80, 8.538 T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689; [1998] 4 CMLR 220 4.39, 4.908, 4.912, 4.914, 4.936, 8.650, 15.249, 15.263, 15.267, 15.279, 15.304, 15.314, 15.338, 15.339 T-231/94, T-232/94 & T-234/94 Transacciones Maritimes v Commission [1994] ECR II-247 17.470 T-260/94 Air Inter [1997] ECR II-997; [1997] 5 CMLR 851 6.32, 6.148, 6.152, 6.167, 6.200, 6.202, 6.203, 6.204, 6.205, 6.207, 6.209, 6.217 T-277/94 AITEC v Commission [1996] ECR II-351 17.450 T-290/94 Kaysersberg v Commission [1997] ECR II-237; [1998] 4 CMLR 336 5.1044

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T-295/94 Buchmann GmbH v Commission [1998] ECR II-813 3.92, 3.93 T-304/94 Europa Carton AG v Commission [1998] ECR II-869 8.650 T-305/94, etc Limburgse Vinyl Maatschappij and others (PVC II) [1999] ECR II-931; [1999] 5 CMLR 303 2.186, 3.87, 3.91, 3.92, 3.152, 3.153, 8.255, 8.262, 8.263, 8.266, 8.331, 8.399, 8.456, 8.497, 8.528, 8.539, 8.544, 8.703 T-308/94 Cascades v Commission [1998] ECR II-925 8.532, 8.623, 8.629 T-309/94 Koninklijke KNP BT v Commission [1998] ECR II-1007 8.522 T-310/94 Grüber & Weber v Commission [1998] ECR II-1043 8.454 T-311/94 etc BPB de Eendracht v Commission [1998] ECR II-1129 8.628 T-317/94 Weig v Commission [1998] ECR II-1235 8.628 T-319/94 Fiskeby Board v Commission [1998] ECR II-1331 8.659, 8.687 T-327/94 SCA Holding v Commission [1998] ECR II-1373; [1998] 5 CMLR 195 8.629 T-330/94 Salt Union v Commission [1996] ECR II-1477 17.543 (p. cxxvii) T-334/94 Sarrió v Commission [1998] ECR II-1439; [1998] 5 CMLR 195 8.598 T-337/94 Enso-Gutzeit v Commission [1998] ECR II-1571 8.490, 8.507, 8.510, 8.511, 8.512 T-338/94 Finnboard v Commission [1998] ECR II-1617 8.204 T-339-T-342/94 Metsä-Serla v Commission [1998] ECR II-1727 8.525, 8.538 T-347/94 Mayr-Melnhof v Commission [1998] ECR II-1751 8.350, 8.532, 8.584 T-348/94 Enso Española v Commission [1998] ECR II-1875 2.80, 8.659, 8.687 T-352/94 Mo och Domsjö AB v Commission [1998] ECR II-1989 8.515 T-353/94 Postbank [1996] ECR II-921; [1997] 4 CMLR 33; [1996] All ER (EC) 817 2.168, 2.169, 2.198, 2.276, 2.277 T-354/94 Stora Kopparbergs Bergslags v Commission [1998] ECR II-2111 7.477, 8.536 T-358/94 Air France v Commission [1996] ECR II-2109; [1997] 1 CMLR 492 17.32, 17.68 T-371/94 & 394/94 British Airways v Commission [1998] ECR II-2405; [1998] 3 CMLR 429 17.41 T-374/94 European Night Services v Commission [1998] ECR II-3141; [1998] 5 CMLR 718 3.172, 3.184, 3.225, 3.275, 3.282, 3.285, 3.287, 3.297, 3.304, 3.323, 3.371, 3.384, 3.454, 3.492, 4.605, 7.91, 7.102, 8.03, 15.77, 15.86, 15.281, 15.282, 15.289, 15.311, 15.312

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T-387/94 Asia Motor France and Others v Commission [1996] ECR II-961; [1996] 5 CMLR 537 3.156 T-395/94 Atlantic Container Line [2002] ECR II-875; [1997] 5 CMLR 1008 3.507, 15.183 T-11/95 BP Chemicals v Commission [1998] ECR II-3235; [1998] 3 CMLR 693 17.65 T-25/95 & T-104/95 Cimenteries CBR v Commission [2000] ECR II-491; [2000] 5 CMLR 204 2.208, 3.82, 3.91, 3.93, 3.94, 3.132, 3.134, 3.187, 3.395, 7.449, 8.465, 8.475, 8.496, 8.510, 8.511, 8.630, 8.677, 8.709 T-79/95 & T-80/95 SNCF and British Railways Board v Commission [1996] ECR II-1491; [1996] 5 CMLR 334 15.308 T-86/95 Compagnie Générale Maritime [2002] ECR II-1011; [2002] 4 CMLR 1115 3.494 T-104/95 Cimenteries CBR and Others v Commission [2000] ECR II-491 8.451, 8.509 T-106/95 Fédération Française des Sociétés d’Assurances (FFSA) v Commission [1997] ECR II-229; [1997] 2 CMLR 78 6.150, 6.152, 6.165, 6.198, 17.36, 17.92, 17.350 T-129/95, T-2/96 and T-97/96 Neue Maxhütte Stahlwerke v Commission [1999] ECR II-17; [1999] 3 CMLR 366 17.75 T-174/95 Svenska Journalistförbundet v Council [1998] ECR II-2289 5.1169 T-175/95 BASF Coatings AG v Commission [1999] ECR II-1581; [2000] 4 CMLR 33 8.708 T-214/95 Vlaamse Gewest v Commission [1998] ECR II-717 17.141 T-221/95 Endemol v Commission [1999] ECR II-1299; [1999] 5 CMLR 611 5.687 T-16/96 Cityflyer Express v Commission [1998] ECR II-757; [1998] 2 CMLR 537 17.63 T-17/96 TFI v Commission [1999] ECR II-1757; [2000] 4 CMLR 678 6.232, 6.239 T-213/95 and T-18/96 SCK and FNK [1997] ECR II-1739; [1998] 4 CMLR 259 3.390, 3.432, 8.703 T-41/96 Bayer v Commission [2000] ECR II-3383; [1996] 4 CMLR 126 3.74, 3.84, 3.101, 3.113, 3.116, 3.117, 3.179, 4.558, 16.164 T-65/96 Kish Glass v Commission [2000] ECR II-1885; [2000] 5 CMLR 229 4.70 T-87/96 Assicurazioni Generaland Unicredito v Commission [1999] ECR II-203; [2000] 4 CMLR 312 5.1131, 5.1162 T-95/96 Gestevision Telecinco v Commission [1998] ECR II-3407; [1998] 3 CMLR 1112 17.559 T-102/96 Gencor Limited v Commission [1999] ECR II-753; [1999] 5 CMLR 971 4.219, 4.220, 4.231, 4.438, 5.687, 5.801, 5.1050, 5.1140, 5.1144, 5.1162, 8.295, 12.190

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T-111/96 ITT Promedia NV v Commission [1998] ECR II-2937; [1998] 5 CMLR 491 4.794, 4.796, 6.231, 16.131 T-132/96 & 143/96 Freistaat Sachsen and VW v Commission [1999] ECR II-3663; [2000] 3 CMLR 485 17.212 T-5/97 Industrie des Poudres Sphériques SA v Commission [2000] ECR II-3755; [2001] 4 CMLR 1020 4.640, 4.644, 12.149 T-22/97 Kesko v Commission [1999] ECR II-3775; [2000] 4 CMLR 335 5.757, 5.1144 T-46/97 SIC [2000] ECR II-2125 6.165 (p. cxxviii) T-125/97 and T-127/97 Coca-Cola v Commission [2000] ECR I-1733; [2000] 5 CMLR 467 5.993, 5.1136 T-204 and T-270/97 EPAC v Commission [2000] ECR II-2267 6.155 T-228/97 Irish Sugar v Commission [1999] ECR II-2969; [1999] 5 CMLR 1300 3.155, 3.397, 3.510, 4.162, 4.169, 4.217, 4.229, 4.241, 4.242, 4.243, 4.326, 4.905, 4.906, 12.192 T-266/97 VTM [1999] ECR II-2329; [2000] 4 CMLR 1171 5.1163, 6.231, 6.235, 6.244 T-298/97, etc Alzetta v Commission [2000] ECR II-2319 17.130, 17.139 T-597/97 Euromin v Council [2000] ECR II-2419 17.567 T-45/98 and T-47/98 Krupp Thyssen and Acciai speciali Terni v Commission [2001] ECR II-3757; [2002] 4 CMLR 521 8.215, 8.314, 8.320, 8.546, 8.582 T-48/98 Acerinox [2001] ECR II-3859 8.215, 8.660 T-62/98 Volkswagen I [2000] ECR II-2707; [2000] 5 CMLR 853 3.106, 3.395, 3.415, 3.426, 3.430, 8.462 T-65/98 Van den Bergh Foods [2003] ECR II-4653; [2004] 4 CMLR 14 418 3.225, 3.226, 3.234, 3.250, 3.267, 3.280, 3.289, 3.300, 3.303, 3.310, 3.331, 3.337, 3.339, 3.342, 3.453, 3.474, 4.256, 4.399, 4.412, 4.432, 4.456, 7.20, 9.220 T-73/98 Société Chimique Prayon-Ruppel v Commission [2001] ECR II-867 17.426 T-112/98 Mannesmannröhren-Werke AG v Commission [2001] ECR II-729; [2001] 5 CMLR 54 8.255, 8.261, 8.264, 8.265 T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929; [2001] 4 CMLR 1376 2.253, 4.605, 4.909, 4.910, 4.928, 4.929, 4.931, 4.933, 6.18, 6.33, 6.167, 15.353, 15.354, 15.356, 15.363, 15.364, 15.369, 15.377 T-139/98 Amministrazione Autonoma dei Monopoli di Stati (AAMS) [2001] ECR II-3413; [2002] 4 CMLR 302 4.187, 4.848, 12.54 T-156/98 RJB Mining v Commission [2001] ECR II-337; [2001] 3 CMLR 308 5.1146, 5.1159

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T-191/98, T-212/98 and T-214/98 Atlantic Container Line (TACA) [2003] ECR II-3275; [2005] 4 CMLR 1283 3.507, 4.219, 4.227, 4.228, 4.241, 4.242, 7.477, 7.479, 8.476, 12.192, 15.183, 15.184 T-198/98 Micro Leader Business v Commission [1997] ECR II-3989; [2000] 4 CMLR 886 9.92 T-202/98, T-204/98 and T-207/98 Tate & Lyle plc, British Sugar plc and Napier Brown & Co Ltd v Commission [2001] ECR II-2035; [2001] 5 CMLR 589 3.78, 3.129, 7.449, 8.119, 8.564, 8.582 T-9/99 HFB Holding für Fernwarmetechnik Beteilgungsgesellschaft GmbH & Co KG and others v Commission (Pre-Insulated Pipe Cartel) [2002] ECR II-1487; 3.77, 3.79, 3.87, 3.89, 3.135, 8.216, 8.311, 8.451, 8.506, 8.523, 8.538, 8.544, 8.545, 8.597, 8.680, 8.688 T-11/99 Firma Leon Van Parys v Commission [1999] ECR II-1355 5.1169 T-16/99 Lögstör Rör v Commission [2002] ECR II-1633 8.644, 8.709 T-21/99 Dansk Rørindustri v Commission [2002] ECR II-1681 8.215 T-23/99 LRAF 1998 A/S v Commission [2002] ECR II-1705; [2002] 5 CMLR 571 4.39, 8.496, 8.582, 8.584, 8.656, 8.658, 8.660, 8.688, 8.709 T-31/99 ABB Asea Brown Boveri v Commission [2002] ECR II-1881 8.117, 8.215, 8.256, 8.615, 8.620, 8.666, 8.667, 8.709 T-35/99 Keller and Keller Meccanica v Commission [2002] ECR II-261; [2003] 1 CMLR 268 17.216 T-54/99 max.mobil v Commission [2002] ECR II-313 6.232 T-55/99 CETM v Commission [2000] ECR II-3207 17.401 T-56/99 Marlines SA v Commission [2003] ECR II-5225; [2005] 5 CMLR 1761 8.490 T-59/99 Ventouris Group Enterprises SA v Commission [2003] ECR II-5257; [2005] 5 CMLR 1781 8.263, 8.332, 8.455, 8.477, 8.497, 8.509 T-61/99 Adriatica di Navigazione v Commission [2003] ECR II-5349; [2005] 5 CMLR 1843 3.79, 8.451 T-65/99 Strintzis Lines [2003] ECR II-5433; [2005] 5 CMLR 1909 6.59, 6.60, 8.477 T-66/99 Minoan Lines v Commission (Greek Ferries) [2003] ECR II-5515; [2003] 5 CMLR 1597 3.157, 8.310, 8.332, 8.390, 8.399, 8.477, 8.478, 8.523, 8.535 (p. cxxix) T-112/99 Métropole Télévision (M6) v Commission [2001] ECR II-2459; [1996] 5 CMLR 1236 3.181, 3.227, 3.250, 3.251, 3.253, 3.254, 3.257, 3.258, 3.261, 3.262, 3.263, 3.265, 3.267, 3.269, 3.280, 3.289, 3.290, 3.303, 3.306, 3.310, 3.331, 3.337, 3.338, 3.342, 3.343, 3.347, 3.354, 3.453, 7.20 T-126/99 Graphischer Maschinenbau v Commission [2002] ECR II-2427 17.199

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T-127/99, T-129/99 & T-148/99 Territorio Histórico de Álava–Diputación Foral de Álava and Others v Commission [2002] ECR II-1275 17.507 T-152/99 Hijos de Andrés Molinas v Commission [2002] ECR II-3049 17.76 T-187/99 Agrana Zucker und Starke v Commission [2001] ECR II-1587 17.199 T-219/99 British Airways v Commission [2003] ECR II-5917; [2004] 4 CMLR 1008 4.18, 4.176, 4.177, 4.432, 4.436, 4.439, 4.910, 4.920 T-228/99 and T-233/99 Westdeutsche Landesbank Girozentrale et Altri v Commission [2003] ECR II-435; [2004] 1 CMLR 529 17.74 T-269/99, T-271/99 and T-272/99 Territorio Histórico de Guipúzcoa-Diputaciún Foral de Guipúzcoa, Territorio Histórico de Álava-Diputación Foral de Álava and Territorio Histórico de Vizcaya-Diputación Foral de Vizcaya v Commission [2002] ECR II-4217; [2003] 1 CMLR 10 17.101 T-319/99 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission [2003] ECR II-357 [2003] 5 CMLR 34 3.32, 3.33, 3.46, 11.15, 16.23 T-342/99 Airtours v Commission [2002] ECR II-2585; [2002] 5 CMLR 317 4.218, 4.219, 4.220, 4.240, 5.07, 5.672, 5.806, 5.919, 5.1127, 5.1162, 5.1185, 5.1189, 7.417, 7.456, 10.146, 12.190 T-44/00 Mannesmann Röhrenwerke v Commission [2004] ECR II-2223; [2005] 4 CMLR 182 8.115, 8.195, 8.471, 8.501, 8.629 T-48/00 Corus UK v Commission [2004] ECR II-2325; [2005] 4 CMLR 182 8.118, 8.119, 8.195 T-50/00 Dalmine SpA v Commission [2004] ECR II-2395 8.472, 8.584, 8.623 T-52/00 Coe Clerici v Commission [2003] ECR II-2123 6.233 T-67/00, T-68/00, T-71/00 & T-78/00 JFE Engineering and others v Commission (Seamless steel tubes and pipes) [2004] ECR I-2501; [2005] 4 CMLR 27 2.186, 8.256, 8.317, 8.319, 8.454, 8.466, 8.469, 8.472, 8.476, 8.486, 8.490, 8.491, 8.492, 8.493, 8.494, 8.495, 8.496, 8.497, 8.498, 8.501, 8.510, 8.511, 8.512 T-92/00 & T-103/00 Territorio Histórico de Álava - Diputación Foral de Álava v Commission (Ramondin) [2002] ECR II-1385 17.101 T-158/00 ARD v Commission [2003] ECR II-3825; [2004] 5 CMLR 681 5.560, 5.1029, 5.1089, 5.1146 T-170/00 Förde-Reederei v Council and Commission [2002] ECR II-515 5.1204 T-185/00 Métropole Télévision SA (M6) [2002] ECR II-3805; [2001] 5 CMLR 33 3.456, 14.70, 14.80, 14.95 T-190/00 Regione Siciliana v Commission [2003] ECR II-5015 17.544

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-213/00 CMA CGM v Commission [2003] ECR II-913; [2003] 5 CMLR 268 3.415, 3.426, 3.456, 8.300 T-220/00 Cheil Jedang v Commission [2003] ECR II-2473 8.575, 8.583, 8.586, 8.587, 8.622, 8.623, 8.624, 8.628, 8.629, 8.630, 8.675 T-224/00 Archer Daniels Midland and Archer Daniels Midland Ingredients v Commission [2003] ECR II-2597; [2003] 5 CMLR 583 8.473, 8.564, 8.582, 8.583 T-251/00 Lagardère and Canal+ v Commission [2002] ECR II-4825 5.1162 T-254/00, etc Hotel Cipriani v Commission [2008] ECR II-3269 17.504, 17.507 T-310/00 MCI v Commission [2004] ECR II-3253; [2004] 5 CMLR 1274 5.529, 5.1144 T-342/00 Petrolessence v Commission [2003] ECR II-1161; [2003] 5 CMLR 498 5.1107, 5.1133, 5.1135, 5.1162 T-366/00 Scott v Commission [2003] ECR II-802; 17.450 T-374/00 Verband der freien Rohrwerke and Others v Commission [2003] ECR II 2275 5.590, 5.595, 5.610, 5.639, 5.1146 T-383/00 Beamglow v Parliament and Others [2005] ECR II-5459 5.1204 (p. cxxx) T-53/01 R Post Italiane [2001] ECR II-1479 6.249 T-57/01 Solvay v Commission [2009] ECR II-4621; [2011] 4 CMLR 9 4.435, 8.592 T-66/01 ICI v Commission [2010] ECR II-2631; [2011] 4 CMLR 162 8.592 T-67/01 JCB Service v Commission [2004] ECR II-49; [2004] 4 CMLR 24 9.114, 9.129 T-77/02 Schneider Electric v Commission [2002] ECR II-4201 5.1132 T-109/01 Fleuren Compost BV v Commission [2004] ECR II-127 17.18, 17.461, 17.476, 17.477, 17.556 T-116/01 and T-118/01 P&O Ferries v Commission [2003] ECR II-2957 17.87, 17.206 T-168/01 GlaxoSmithKline Services v Commission [2006] ECR II-2969; [2006] 5 CMLR 29; [2006] 5 CMLR 1623; [2006] 5 CMLR 1589 3.103, 3.113, 3.168, 3.170, 3.171, 3.179, 3.229, 3.333, 3.347, 3.448, 3.449, 3.451, 3.456, 3.457, 3.474, 3.486, 3.488, 4.92, 9.99, 16.170, 16.171, 16.172 T-176/01 Ferriere Nord [2004] ECR II-3931 17.257 T-184/01 IMS Health Inc v Commission [2001] ECR II-3193; [2002] 4 CMLR 1 5.1173, 10.246 T-195/01 & 207/01 Government of Gibraltar v Commission [2002] ECR II-2309; [2002] 2 CMLR 826 17.504 T-203/01 Michelin v Commission (Michelin II) [2003] ECR II-4071; [2004] 4 CMLR 923 2.57, 2.60, 2.65, 4.201, 4.416, 4.426, 4.432, 4.436, 4.439, 4.449, 4.456, 4.460, 4.601, 8.520, 8.591, 8.592, 12.155

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-208/01 Volkswagen II v Commission [2003] ECR II-5141; [2004] 4 CMLR 727; [2004] All ER (EC) 674 3.101, 3.103, 3.104, 3.106, 3.108, 3.111, 3.113, 3.114 T-209/01 Honeywell v Commission [2005] ECR II-5527; [2006] 4 CMLR 652 5.585, 5.1145 T-210/01 General Electric v Commission [2005] ECR II-5575 4.150, 4.179, 5.460, 5.478, 5.672, 5.687, 5.842, 5.980, 5.984, 5.1059, 5.1127, 5.1156, 5.1162, 5.1185, 5.1189, 5.1191, 5.1199 T-213/01 & 214/01 Österreichische Postsparkasse v Commission [2006] ECR II-1601; [2007] 4 CMLR 506 3.170, 3.333, 4.92 T-236/01, etc [2004] ECR II-1181 Tokai Carbon v Commission [2004] ECR II-1181; [2004] 5 CMLR 1465 8.256, 8.265, 8.301, 8.473, 8.480, 8.507, 8.514, 8.598, 8.628, 8.629, 8.644, 8.655, 8.658, 8.670, 8.671, 8.688, 8.689, 8.701 T-241/01 Scandinavian Airline System v Commission [2005] ECR II-2917; [2005] 5 CMLR 922 8.06, 8.650, 15.139 T-297/01 & T-298/01 SIC v Commission [2004] ECR II-743 17.350 T-310/01 Schneider Electric v Commission [2002] ECR II-4071; [2003] 4 CMLR 768 5.07, 5.455, 5.672, 5.1127, 5.1157, 5.1159, 5.1162, 5.1175 T-314/01 Coöperatieve Verkoop- en Productievereniging van Aardappelmeel en Derivaten Avebe BA v Commission [2006] ECR II-3085; [2007] 4 CMLR 9 3.65, 7.115, 8.531, 8.532, 8.535 T-322/01 Roquette Frères v Commission [2006] ECR II-3137 8.514, 9.147 T-325/01 DaimlerChrysler AG v Commission [2005] ECR II-3319; [2007] 4 CMLR 559 9.43, 9.51, 9.54 T-329/01 Archer Daniels Midland v Commission [2006] ECR II-3255; [2007] 4 CMLR 43 8.669 T-330/01 Akzo Nobel NV v Commission [2006] ECR II-3389; [2007] 4 CMLR 125 8.399, 8.708 T-5/02 Tetra Laval [2002] ECR II-4381; [2002] 5 CMLR 1182; [2003] All ER (EC) 762 2.201, 5.07, 5.623, 5.672, 5.1054, 5.1095, 5.1122, 5.1175, 5.1189 T-15/02 BASF v Commission [2006] ECR II-497; [2006] 5 CMLR 27 2.128, 8.119, 8.317, 8.321, 8.462, 8.480, 8.507, 8.590, 8.600, 8.602, 8.603, 8.605, 8.607, 8.608, 8.667, 8.668, 8.669, 8.709 T-17/02 Fred Olsen v Commission [2005] ECR II-2031 6.150, 6.159, 17.341 T-22/02 and 23/02 Sumitomo [2005] ECR II-4065; [2006] 4 CMLR 3 2.100, 2.101, 8.300 T-26/02 Daiichi Pharmaceutical Co Ltd v Commission (T-26/02) [2006] ECR II-713; [2006] 5 CMLR 169 8.623, 8.629

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-28/02 First Data Corp v Commission [2005] ECR II-4119; [2006] 4 CMLR 4 3.364 T-33/02 Britannia Alloys & Chemicals Ltd v Commission [2005] ECR II-4973 8.544, 8.677 T-38/02 Groupe Danone v Commission [2005] ECR II-4407; [2006] 4 CMLR 25 5.486, 8.118, 8.119, 8.195, 8.321, 8.453, 8.469, 8.476, 8.501, 8.564, 8.586, 8.591, 8.615, 8.646, 8.708 (p. cxxxi) T-43/02 Jungbunzlauer AG v Commission [2006] ECR II-3435; [2010] 4 CMLR 925 8.462, 8.538, 8.545 T-44/02 Dresdner Bank v Commission (German Banks) (2004) not yet reported; [2007] 4 CMLR 467 11.64 T-44/02 OP, T-54/02 OP, T-56/02 OP, T-60/02 OP and T-61/02 OP Dresdner Bank and Others v Commission (German Banks) [2006] ECR II-3567; [2007] 4 CMLR 467 8.466, 8.476, 8.509, 8.514, 8.706, 11.64 T-48/02 Brouwerij Haacht v Commission [2005] ECR II-5259; [2006] 4 CMLR 13 8.264, 8.305, 8.311, 8.374, 8.475 T-49/02 etc Brasserie Nationale v Commission [2005] ECR II-3033; [2006] 4 CMLR 266 8.451, 8.564 T-59/02 Archer Daniels Midland v Commission [2006] ECR II-3627; [2006] 5 CMLR 1528 8.475, 8.483 T-62/02 Union Pigments v Commission [2005] ECR II-5057; [2006] 4 CMLR 1005 8.465, 8.628, 8.688 T-64/02 Heubach v Commission [2005] ECR II-5137; [2006] 4 CMLR 1157 8.564, 8.623 T-77/02 Schneider Electric v Commission [2002] ECR II-4201 5.502, 5.672, 5.1122 T-80/02 Tetra Laval v Commission [2002] ECR II-4519; [2002] 5 CMLR 1271 5.502, 5.1132 T-109/02, etc Bolloré SA v Commission [2007] ECR II-947; [2007] 5 CMLR 66 8.528, 8.536, 8.564, 8.602, 8.628, 8.629, 8.650 T-114/02 BaByliss v Commission [2003] ECR II-1279; [2004] 5 CMLR 21 5.688, 5.878, 5.927, 5.930, 5.1000, 5.1016, 5.1146, 5.1159 T-119/02 Royal Philips Electronics NV v Commission [2003] ECR II-1433; [2003] 5 CMLR 53 5.240, 5.247, 5.1014, 5.1016, 5.1029, 5.1131, 5.1146, 5.1148 T-137/02 Pollmeier Malchow [2004] ECR II-3541 17.41 T-181/02 R Neue Erba Lautex v Commission [2002] ECR II-5081 17.489, 17.564 T-193/02 Piau v Commission [2005] ECR II-209; [2005] 5 CMLR 42 4.218, 4.222, 4.240, 12.190, 17.46

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-210/02 British Aggregates Association v Commission [2006] ECR II-2789 17.92, 17.112 T-259/02 Raiffeissen Zentralbank Österreich and others v Commission (Lombard Club) [2006] ECR II-5169 8.455, 8.462, 8.519, 8.520, 8.539 T-279/02 Degussa v Commission [2005] ECR II-897 8.256, 8.374, 8.463, 8.466, 8.669 T-282/02 Cementbouw Handel & Industrie v Commission [2006] ECR II-319; [2006] 4 CMLR 156 5.49, 5.140, 5.142, 5.390, 5.529, 5.900, 5.998, 5.1000, 5.1003 T-297/02 ACEA v Commission [2009] ECR II-1683 17.504 T-301/02 AEM v Commission [2009] ECR II-1757 17.504 T-303/02 Westfalen Gassen Nederland BV [2006] ECR II-4567; [2007] 4 CMLR 334 8.465 T-304/02 Hoek Loos NV v Commission [2006] ECR II-1887; [2006] 5 CMLR 590 8.255, 8.256, 8.520 T-346/02 & T-347/02 Cableuropa SA v Commission [2003] ECR II-4251; [2004] 5 CMLR 1216; [2004] 5 CMLR 25 5.219, 5.228, 5.241, 5.242, 5.247, 5.1131, 5.1142, 5.1146 T-351/02 Deutsche Bahn v Commission [2006] ECR II-1047; [2006] 2 CMLR 1343 17.34 T-378/02 Technische Glaswerke Ilmenau v Commission [2003] ECR II-2921 17.400 T-48/03 Schneider Electric v Commission [2006] ECR II-111 5.1134 T-52/03 Knauf Gips v Commission [2008] ECR II-115 8.538 T-53/03 BPB v Commission [2008] ECR II-1333; [2008] 5 CMLR 1201 8.49, 8.592, 8.650 T-54/03 Lafarge v Commission (Plasterboard) [2008] ECR II-120 8.629 T-71/03, etc Tokai Carbon and others v Commission [2005] ECR II-10 8.462, 8.515, 8.584, 8.620, 8.623, 8.679, 8.680, 8.688 T-125/03 and T-253/03 Akzo Nobel Chemicals Ltd and Ackros Chemicals Ltd v Commission [2007] ECR II-3523; [2004] 4 CMLR 15 8.272, 8.275, 8.276, 8.277, 8.278, 8.279, 8.280, 8.281, 8.283, 8.401, 8.474 T-212/03 R and T-253/03 R Akzo Nobel Chemicals Ltd and Ackros Chemicals Ltd v Commission [2003] ECR II-4771; [2004] 4 CMLR 15 8.401 T-212/03 MyTravel v Commission [2008] ECR II-1967; [2008] 5 CMLR 1429 5.1044, 5.1205, 5.1206 (p. cxxxii) T-217/03 and T-245/03 Fédération nationale de la coopération bétail et viande (FNCBV) and FNSEA (French Beef) v Commission [2006] ECR II-4987; [2008] 5 CMLR 406 3.158, 7.375

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-266/03 Groupement des cartes bancaires (CB) v Commission [2007] ECR II-83 8.332, 11.53, 11.58 T-271/03 Deutsche Telekom v Commission [2008] ECR II-477, [2008] 5 CMLR 631 4.13, 4.285, 4.494, 4.644, 4.651, 4.652, 4.653, 4.654, 4.656, 4.660, 4.662, 8.98, 13.85, 13.98, 13.108, 13.128, 13.137–13.140, 13.143 T-289/03 BUPA v Commission [2008] ECR II-81; [2009] 2 CMLR 1083 6.142, 6.150, 6.152, 6.155, 6.164, 6.212, 6.226, 17.341 T-328/03 O2 (Germany) v Commission [2006] ECR II-1231; [2006] 5 CMLR 258 3.219, 3.228, 3.278, 3.283, 3.285, 3.286, 3.287, 3.292, 3.293, 3.306, 3.324–3.336, 3.340, 3.342, 7.20, 13.230, 15.80 T-340/03 France Télécom v Commission [2007] ECR II-107; [2007] 4 CMLR 919 4.179, 4.308, 4.344, 4.347, 13.122, 13.123, 13.159 T-350/03 Wirtschaftskammer Karnten and Best Connect Ampere Strompool v Commission [2006] ECR II-68 5.1146 T-351/03 Schneider Electric v Commission [2007] ECR VII-2237; [2008] 4 CMLR 1533 5.672, 5.1201, 5.1205, 5.1206, 5.1207, 5.1209 T-410/03 Hoechst v Commission [2008] ECR II-881; [2008] 5 CMLR 839 8.667, 8.672, 8.705 T-442/03 SIC v Commission [2008] ECR II-1161 6.150, 6.152, 17.206 T-73/04 Carbone Lorraine v Commission (Carbon and Mechanical Products) [2008] ECR II-2661; [2010] 5 CMLR 8 8.629 T-99/04 AC Treuhand v Commission [2008] ECR II-1501; [2008] 5 CMLR 962 3.85, 3.94, 3.97, 3.148, 3.149, 7.453, 8.74, 8.288, 9.56 T-116/04 Wieland Werke v Commission [2009] ECR II-1087 8.110 T-120/04 Peroxidos Organicos v Commission [2006] ECR II-4441; [2007] 4 CMLR 153 2.27, 8.463, 8.465, 8.500 T-122/04 Outokumpu v Commission [2009] ECR II-1135 8.592 T-156/04 Électricité de France (EDF) v European Commission [2009] ECR II-4503 17.454 T-167/04 Asklepios Kliniken v Commission [2007] ECR II-2379 17.553 T-177/04 easyJet v Commission [2006] ECR II-1931; [2006] 5 CMLR 663 5.592, 5.631, 5.927, 5.1000, 5.1012, 5.1013, 5.1049, 5.1087, 5.1089, 5.1146, 5.1191, 15.44, 15.91, 15.119 T-196/04 Ryanair v Commission [2008] ECR II-3643 17.66 T-201/04 Microsoft v Commission [2007] ECR II-3601; [2007] 5 CMLR 846 2.28, 4.06, 4.15, 4.30, 4.70, 4.78, 4.246, 4.297, 4.476, 4.480, 4.483, 4.484, 4.485, 4.486, 4.487, 4.490, 4.493, 4.494, 4.500, 4.501, 4.503, 4.505, 4.511, 4.515, 4.516, 4.517, 4.518,

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

4.582, 4.590, 4.591, 4.598, 4.601, 4.607, 4.619, 4.620, 4.625, 4.627, 9.283, 10.254, 10.261, 11.126, 12.155, 12.165, 14.141 T-211/04 & T-215/04 Government of Gibraltar and UK v Commission [2008] ECR II-3745 17.108, 17.120, 17.127 T-301/04 Clearstream Banking AG and Clearstream International SA v Commission [2009] ECR II-3155; [2009] 5 CMLR 2677 4.601, 4.608, 4.617, 4.924, 11.113–11.131, 14.135 T-308/04 Commission v SGL Carbon [2006] ECR I-5977; [2006] 5 CMLR 922 8.261, 8.310 T-339/04 France Télécom v Commission (T-339/04) [2007] ECR II-573; [2008] 5 CMLR 502 2.98, 2.158 T-340/04 France Télécom v Commission [2007] ECR II-573; [2007] 4 CMLR 919 8.331, 8.332, 8.388 T-387/04 Energie Baden-Wuerttemberg v Commission [2007] ECR II-1195 17.530, 17.551 T-425/04 France v Commission [2010] ECR II-2099 17.57, 17.78 T-452/04 Editions Odile Jacob SAS v Commission [2010] ECR II-4713 5.1104, 5.1133, 5.1148 T-464/04 Impala v Commission [2006] ECR II-2289; [2006] 5 CMLR 1049 5.356, 5.455, 5.678, 5.772, 5.787, 7.141, 14.37, 14.168 T-475/04 Bouygues v Commission [2007] ECR II-2097 17.536 T-18/05 IMI plc v Commission [2010] ECR II-1769, [2010] 5 CMLR 1215 8.464 (p. cxxxiii) T-20/05 Outokumpu Oyj v Commission [2010] ECR II-89; [2010] 5 CMLR 1276 8.592 T-24/05 Alliance One International v Commission [2010] ECR II-5237 8.536 T-25/05 KME Germany v Commission [2010] ECR II-91; [2010] 5 CMLR 1329 8.686, 8.694 T-29/05 Deltafina v Commission (Spanish Raw Tobacco) [2010] ECR II-4077; [2011] 4 CMLR 467 8.606 T-36/05 Coats Holding and J&P Coats v Commission [2007] ECR II-110; [2008] 4 CMLR 45 2.27 T-38/05 Agroexpansion v Commission, not yet reported 8.663, 8.680 T-87/05 EDP v Commission [2005] ECR II-3745; [2005] 5 CMLR 1436 5.498, 5.585, 5.752, 5.985, 5.999, 5.1044, 5.1162, 5.1163, 5.1175, 5.1186 T-101/05 & 111/05 BASF v Commission [2007] ECR II-4949; [2008] 4 CMLR 347 8.592, 8.658, 8.668

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

T-112/05 Akzo Nobel and Others v Commission [2007] ECR II-5049; [2008] 4 CMLR 321 3.57, 3.65, 8.680 T-151/05 Nederlandse Vakbond Varkenshouders (NVV), Marius Schep, Nederlandse Bond van Handelaren in Vee (NBHV) v Commission [2009] ECR II-1219 5.653, 5.760, 5.1166 T-161/05 Hoechst GmbH v Commission [2009] ECR II-3555; [2009] 5 CMLR 2728 8.401, 8.403, 8.404, 8.405, 8.539, 8.545, 8.592 T-174/05 Elf Aquitaine SA v Commission [2009] ECR II-183 8.528 T-175/05 Akzo Nobel NV v Commission [2009] ECR II-184 8.536 T-237/05 Editions Odile Jacob v Commission [2010] ECR II-2245 5.477 T-321/05 AstraZeneca v Commission [2010] ECR II-2805; [2010] 5 CMLR 1575 4.161, 4.176, 4.190, 4.201, 4.205, 4.206, 4.289, 4.712, 4.716, 4.720, 10.260, 12.157, 12.158, 16.12, 16.22, 16.24, 16.30, 16.45, 16.128, 16.132, 16.133, 16.134, 16.135, 16.136, 16.139, 16.140, 16.141 T-354/05 TF1 v Commission [2009] ECR II-471 17.518, 17.543 T-362/05 & 363/05 Nuova Agricast v Commission [2008] ECR II-297 17.461 T-415/05, etc Greece v Commission [2010] ECR II-4749 17.490 T-417/05 Endesa v Commission [2006] ECR II-2533; [2008] 4 CMLR 1472 5.38, 5.40, 5.41, 5.156, 5.205, 5.206, 5.356, 5.1163, 5.1171, 5.1175 T-424/05 Italy v Commission [2009] ECR II-23 17.44, 17.131 T-445/05 Associazione italiana del risparmio gestito and Fineco Asset Management v Commission [2009] ECR II-289 17.131 T-446/05 Amann & Söhne v Commission [2010] ECR II-1255; [2010] 5 CMLR 789 8.268, 8.461, 8.683 T-450/05 Peugeot [2009] ECR II-2533 12.59 T-456/05 & 457/05 Gütermann and Zwicky v Commission [2010] ECR II-1443; [2010] 5 CMLR 930 8.677 T-11/06 Romana Tabacchi v Commission [2011] ECR II-6681 8.628 T-12/06 Deltafina v Commission [2011] ECR II-5639 8.145, 8.165, 8.635 T-25/06 Alliance One International [2011] ECR II-5741 8.526 T-39/06 Transcatab v Commission [2011] ECR II-6831 8.179 T-40/06 Trioplast Industrier v Commission [2010] ECR II-4893 8.516 T-53/06 UPM-Kymmene Oyj v Commission, not yet reported 8.458 T-59/06 Low & Bonar v Commission [2011] ECR II-397 8.458

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T-64/06 FLS Plast v Commission, not yet reported 8.173 T-80/06 & T-182/09 Budapesti Erõmû v Commission (2012), not yet reported 17.500 T-85/06 General Química v Commission [2008] ECR II-338 8.537 T-145/06 Omya v Commission [2009] ECR II-145; [2009] 4 CMLR 826 5.441, 5.545, 5.1132 T-155/06 Tomra Systems v Commission [2010] ECR II-4365; [2011] 4 CMLR 416 4.277, 4.278, 4.425, 4.435, 4.460, 4.936 T-170/06 Alrosa v Commission [2007] ECR II-2601; [2007] 5 CMLR 494 4.55 T-185/06 L’Air liquide v Commission [2011] ECR II-2809 8.529, 8.534 T-186/06 Solvay v Commission (Hydrogen peroxide and perborate) [2011] ECR II-2839; [2011] 5 CMLR 428 8.43, 8.45, 8.193, 8.214 T-189/06 Arkema France v Commission [2011] ECR II-5455 8.193, 8.195, 8.519, 8.526 T-190/06 Total and Elf Aquitaine v Commission [2011] ECR II-5513; [2011] OJ C269/40 8.526 (p. cxxxiv) T-191/06 FMC Foret v Commission [2011] ECR II-2959 8.481, 8.494, 8.500, 8.629, 8.680 T-192/06 Caffaro v Commission (Hydrogen peroxide and perborate) [2011] ECR II-3063 8.629 T-194/06 SNIA v Commission [2011] ECR II-3119 8.543, 8.544 T-196/06 Edison v Commission [2011] ECR II-3149 8.529 T-208/06 Quinn Barlo v Commission [ECR II-7953] 3.96, 3.148, 8.458, 8.500, 8.629 T-214/06 ICI v Commission, not yet reported 8.204, 8.458, 8.670 T-217/06 Arkema France [2011] ECR II-2593 8.663, 8.672, 8.680 T-268/06 Olympiaki Aeroporia Ypiresies [2008] ECR II-1091 17.207 T-282/06 Sun Chemical Group v Commission [2007] ECR II-2149; [2007] 5 CMLR 6 5.688, 5.690, 5.879, 5.887, 5.1146, 5.1182 T-343/06 Shell Petroleum v Commission (T-343/06 etc) [2012] OJ C355/14 8.63, 8.319, 8.498, 8.506, 8.507, 8.602, 8.605, 8.709, 8.710 T-344/06 Shell Petroleum v Commission (2012), not yet reported 8.520, 8.592 T-347/06 Nynäs Petroleum and Nynas Belgium v Commission (2012), not yet reported 8.184, 8.204, 8.214, 8.215, 8.216 T-348/06 Total Nederland v Commission (2012), not yet reported 8.537 T-357/06 Koninklijke Wegenbouw Stevin v Commission [2007] OJ C20/24 8.63, 8.379, 8.462, 8.598, 8.602

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T-359/06 Heijmans Infrastructuur v Commission (2012), not yet reported 8.347, 8.708 T-362/06 Ballast Nedam Infra v Commission (2012), not yet reported 8.529 T-370/06 Kuwait Petroleum v Commission, not yet reported 8.179, 8.204, 8.214 T-376/06 Legris Industries v Commission (Copper Fittings) [2011] ECR II-61 8.528 T-377/06 Comap v Commission [2011] ECR II-1115; [2011] 4 CMLR 1576 8.520 T-378/06 IMI v Commission [2011] ECR II-62 8.179 T-384/06 IBP v Commission (Copper Fittings) [2011] ECR II-1177, [2011] 4 CMLR 1648 8.596 T-385/06 Aalberts Industries v Commission (Copper Fittings) [2011] ECR II-1233, [2011] 4 CMLR 1675 8.458, 8.463, 8.680 T-386/06 IBP and International Building Projects France v Commission [2011] ECR II-1267 8.520, 8.672 T-11/07 Frucona Košice v Commission [2010] ECR II-5453 17.461 T-38/07 Shell Petroleum v Commission (Synthetic Rubber) [2011] ECR II-4383 8.592, 8.671 T-39/07 ENI v Commission [2011] ECR II-4457 8.545, 8.592, 8.670 T-42/07 Dow Chemical v Commission [2011] ECR II-4531; [2011] 5 CMLR 895 8.670 T-59/07 Polimeri Europa v Commission [2011] ECR II-4687 8.545, 8.592, 8.670, 8.671 T-110/07 Siemens v Commission [2011] ECR II-477 8.177, 8.194, 8.514, 8.602, 8.606, 8.671 T-112/07 Hitachi v Commission [2011] 5 CMLR 620 8.514, 8.590 T-113/07 Toshiba v Commission [2011] ECR II-3989; [2011] 5 CMLR 678 8.320, 8.490, 8.510, 8.560, 8.705, 8.710 T-117/07 & 121/07 Areva and Alstom v Commission, [2011] ECR II-633, [2011] 4 CMLR 1421 8.177, 8.516, 8.520, 8.539, 8.602, 8.606 T-122/07 Siemens Österreich v Commission [2011] ECR II-793; [2011] 4 CMLR 1519 8.196, 8.213, 8.516, 8.655 T-132/07 Fuji Electric v Commission [2011] ECR II-4091 3.64, 3.65, 8.176, 8.177, 8.187, 8.204, 8.214, 8.215, 8.530, 8.531, 8.532, 8.542 T-133/07 Mitsubishi v Commission (Gas Insulated Switchgear) [2011] ECR II-4219; [2011] 5 CMLR 678 8.472, 8.500, 8.509, 8.560 T-138/07 Schindler v Commission [2011] ECR II-4819 8.212, 8.213, 8.214, 8.658 T-141/07 General Technic-Otis v Commission [2011] ECR II-4977; [2011] 5 CMLR 980 8.179, 8.466, 8.528, 8.668, 8.670

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T-144/07 ThyssenKrupp Liften Ascenseurs v Commission [2011] ECR II-5129 8.213, 8.214, 8.520, 8.592 T-151/07 Kone v Commission [2011] ECR II-5313; [2011] 5 CMLR 1065 8.179, 8.195, 8.332 T-177/07 Mediaset v Commission [2010] ECR II-2341 17.44, 17.133 T-234/07 Koninklijke Grolsch v Commission [2011] ECR II-6169 8.522 T-240/07 Heineken Netherland and Heineken v Commission [2011] ECR II-3355 8.301, 8.490, 8.497, 8.510, 8.703 (p. cxxxv) T-336/07 Telefónica SA and Telefónica de España SA v Commission [2012] OJ C138/13 4.650, 13.88, 13.90, 13.105, 13.106, 13.114, 13.116, 13.130, 13.147 T-342/07 Ryanair v Commission [2010] ECR II-3457; [2010] 4 CMLR 245 5.571, 5.594, 5.627, 5.918, 5.930, 5.959, 5.1011, 5.1127, 5.1162, 5.1194, 15.88, 15.132, 15.352 T-411/07 R Aer Lingus Group v Commission [2010] ECR II-3691; [2008] ECR II-411 5.100, 5.502, 5.1122, 5.1145, 5.1171, 5.1173 T-439/07 Coats Holdings Ltd v Commission, 2012, not yet reported 8.464, 8.482 T-461/07 Visa Europe Limited and Visa International Service v European Commission [2011] ECR II-1729; [2011] 5 CMLR 74 3.172, 3.183, 3.219, 3.275, 3.282, 3.290, 3.366, 3.371, 7.26, 7.183, 7.250, 7.291, 8.486, 11.57, 14.73 T-462/07 Galp Energía España and Others v Commission (2013), not yet published 8.631 T-482/07 Nynäs Petroleum and Nynas Petróleo v Commission, not yet published 8.631 T-491/07 Groupement des cartes bancaires (CB) v Commission [2013] OJ C26/39 11.59 T-1/08 Buczek Automotive v Commission (2011), not yet reported 17.132 T-65/08 R Spain v Commission [2008] ECR II-69 5.1132 T-76/08 EI du Pont de Nemours v Commission (Chloroprene Rubber), judgment of 2 February 2012, not yet reported 3.61, 3.63, 3.64, 3.65, 8.206, 8.214 T-77/08 Dow Chemical v Commission (Chloroprene Rubber), judgment of 2 February 2012, not yet reported 3.56, 3.63, 3.64, 3.65, 3.66, 8.206, 8.214, 8.531, 8.532 T-82/08 Guardian Industries and Guardian Europe v Commission [2012] OJ C355/19 8.489, 8.556, 8.592, 8.630 T-83/08 Denki Kagaku Kogyo and Denka v Commission, 2012, not yet reported 8.463, 8.468, 8.630 T-103/08 Versalis and Eni v Commission (2012), not yet reported 8.592

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T-111/08 MasterCard Incorporated v Commission [2012] OJ C200/11 3.122, 3.123, 3.219, 3.250, 3.251, 3.254, 3.255, 3.257, 3.260, 3.261, 3.263, 3.266, 3.270, 3.310, 3.337, 3.366, 3.367, 3.368, 3.369, 3.370, 3.371, 3.450, 3.451, 3.462, 3.463, 3.464, 3.474, 3.475, 3.477, 3.483, 3.485, 3.490, 3.494, 11.04, 11.12, 11.31, 11.37, 11.44-11.51, 11.52, 12.89, 12.97, 12.124 T-141/08 E.ON Energie v Commission [2010] ECR II-5761 8.361 T-167/08 Microsoft Corporation v European Commission [2012] OJ C243/13 4.44, 4.80, 4.82, 4.171, 4.297, 4.481 T-169/08 DEI v Commission [2012] OJ C343/1 6.62, 6.73, 6.76, 6.85, 6.88, 12.207– 12.215 T-199/08 Ziegler SA v Commission [2011] ECR II-3507; [2011] 5 CMLR 261 3.214, 3.413 T-204/08 & 212/08 Team Relocations v Commission (International Removal Services) [2011] ECR II-3569; [2011] 5 CMLR 889 3.94, 3.95, 3.148, 8.578, 8.691 T-208/08 & 209/08 Gosselin Group v Commission [2011] ECR II-3639 8.463, 8.528 T-210/08 Verhuizingen Coppens v Commission [2011] ECR II-3713; [2011] 5 CMLR 333 3.95 T-211/08 Putters International NV v Commission [2011] ECR II-3729 8.683 T-244/08 Konsum Nord v Commission [2011] ECR II-444 17.83 T-267/08 & T-279/08 Région Nord-Pas-de-Calais v Commission (2011), not yet reported 17.459 T-299/08 Elf Aquitaine v Commission (2011), not yet reported 8.668 T-343/08 Arkema v Commission [2011] OJ C186/20, [2011] ECR II-2287 8.214, 8.591 T-344/08 EnBW Energie Baden- Württemberg v Commission, not yet reported 8.222, 8.224, 8.320, 17.398 T-348/08 Aragonesas Industrias y Energía v Commission [2011] ECR II-7583 8.469, 8.490, 8.491, 8.495, 8.500, 8.509, 8.628 T-349/08 Uralita v Commission [2011] ECR II-373 8.519, 8.544 T-380/08 Kingdom of Netherlands v Commission (Dutch Bitumen), not yet decided 8.224, 8.498 T-392/08 etc AEPI v Commission, not yet reported 10.208, 14.55, 14.60 T-396/08 Freistaat Sachsen and Land Sachsen-Anhalt v Commission, (2010), not yet reported 17.227 T-398/08 etc Stowarzyszenie Autorów v Commission, not yet reported 10.208, 14.60 T-401/08 Säveltäjäin Tekijänoikeustoimisto Teostory v Commission, not yet reported 10.208, 14.60, 14.113

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T-404/08 Fluorsid/Minmet v Commission, not yet reported 8.559 (p. cxxxvi) T-405/08 SPAR Österreichische Warenhandel v Commission, not yet reported 5.686, 5.688 T-410/08 GEMA v Commission, not yet reported 10.208, 14.60 T-411/08 Artisjus Magyar Szerzõi Jogvédõ Iroda Egyesület v Commission [2008] ECR II-270; [2009] 4 CMLR 353 10.208, 14.60 T-413/08 SOZA v Commission, not yet reported 10.208, 14.60 T-414/08 Autortiesību un komunicēšanās konsultāciju aģentūra/Latvijas Autoru apvienība v Commission, not yet reported 10.208, 14.60 T-415/08 Irish Music Rights Organisation v Commission, not yet reported 10.208, 14.60 T-416/08 Eesti Autorite Ühing v Commission, not yet reported 10.208, 14.60 T-417/08 Sociedade Portuguesa de Autores v Commission, not yet reported 10.208, 14.60 T-418/08 OSA v Commission, not yet reported 10.208, 14.60 T-419/08 LATGA-A v Commission, not yet reported 10.208, 14.60 T-421/08 Performing Right Society v Commission, not yet reported 10.208, 14.60 T-425/08 R KODA v Commission, not yet reported 10.208, 14.60 T-427/08 Confédération européenne des associations d’horlogers-réparateurs (CEAHR) v Commission [2010] 5 CMLR 1585 2.115 T-428/08 STEF v Commission, not yet reported 10.208, 14.60 T-432/08 AKM v Commission, not yet reported 10.208, 14.55, 14.60 T-433/08 Societá Italiana degli Autori ed Editori v Commission (SIAE), not yet reported 10.208, 14.60 T-434/08 Tono v Commission, not yet reported 10.208, 14.60 T-437/08 CDC Hydrogene Peroxide Cartel Damage Claims v Commission [2011] ECR II-0000; 8.223, 8.224 T-442/08, etc CISAC v Commission, not yet reported 3.141, 10.208, 14.55, 14.60 T-443 & 455/08 Freistaat Sachsen and Land Sachsen-Anhalt v Commission [2011] ECR II-1311 15.351 T-451/08 Stim v Commission (2013), not yet reported 14.21, 14.60 T-456/08 SGAE v Commission (2009), not yet reported 14.60 T-457/08 R Intel v Commission [2009] ECR II-12 5.1161

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T-566/08 Total Raffinage Marketing v Commission (2013), not yet reported 8.575 T-568 and T-573/08 Métropole TV [2010] ECR II-3397 6.195, 6.207 T-587/08 Fresh Del Monte Produce v Commission [2013] OJ C123/15 7.447, 8.451, 8.458, 8.459, 8.462, 8.476, 8.627, 8.631 T-588/08 Dole Food Company Incorporated and Dole Germany OHG v Commission [2013] OJ C123/15 7.447, 8.43, 8.46, 8.47, 8.53 T-23/09 Conseil national de l’Ordre des pharmaciens (CNOP) v Commission [2010] ECR II-5291 5.1132, 8.331, 8.332 T-87/09 Andersen v Commission [2009] ECR II-225 17.545 T-123/09 Ryanair v Commission (2012), not yet reported 17.490 T-135/09 Nexans France v Commission, not yet reported 5.1132, 8.171, 8.288, 8.331, 8.332, 8.356, 8.388, 8.390, 8.399 T-140/09 Prysmian and Others v Commission (2012), not yet reported 8.285, 8.356, 8.390, 8.399 T-146/09 Parker v Commission, not yet reported 8.544, 8.545 T-147/09 Trelleborg v Commission, 2013, not yet reported 8.460, 8.464 T-286/09 Intel Corporation v Commission [2009] OJ C220/41 4.29, 4.417 T-332/09 Electrabel v Commission [2013] OJ C32/15 5.397, 5.551, 5.1196 T-347/09 Germany v Commission (2013), not yet reported 17.18 T-352/09 R Novácke chemické závody v Commission (2012), not yet reported 8.695 T-360/09 E.ON Ruhrgas AG and E.ON AG v European Commission [2012] OJ C243/15 3.200, 8.450, 8.465, 8.470, 8.488, 12.51, 12.65, 12.100, 14.73 T-370/09 GDF v Commission, not yet reported 8.456, 8.486, 8.489, 8.497, 8.514, 12.51, 12.100 T-392/09 1. garantovaná v Commission [2012], not yet reported 8.528, 8.534, 8.678 T-407/09 Neubrandenburger Wohnungsbaugesellschaft v Commission (2012), not yet reported 17.479, 17.530, 17.551 T-410/09 R Almamet v Commission [2010] OJ C179/39; [2010] 5 CMLR 219 8.331, 8.352, 8.390, 8.461, 8.462, 8.472, 8.478 (p. cxxxvii) T-457/09 Westfaelisch-Lippischer Sparkassen-und Giroverband v Commission (WestLB), not yet reported 17.244 T-458/09 and T-171/10 Slovak Telekom v Commission, not yet reported 8.291 T-29/10 & T-33/10 Netherlands and ING Groep v Commission, (2012), not yet reported 17.244

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T-58/10 Phoenix Reisen v Commission (2012), not yet reported 17.531 T-79/10 Colt Télécommunications France v Commission (2013), not yet reported 13.237 T-83/10 Riva Fire v Commission [2011] OJ C98/06 8.111 T-224/10 Association belge des consommateurs test-achats v Commission [2011] ECR II-7177; [2011] OJ C347/30 5.1132, 5.1146, 5.1149, 5.1150, 5.1154 T-258/10 Orange v Commission (2013), not yet reported 13.237 T-325/10 Iliad v Commission (2013), not yet reported 13.237 T-567/10 & 568/10 Vivendi v Commission [2011] ECR II-317 6.233, 6.241 T-209/11 R MB System v Commission (2011), not yet reported 17.564 T-261/11 European Goldfields v Commission (2012), not yet reported 17.567 T-289/11, T-290/11 and T-521/11 Deutsche Bahn v Commission (2013), not yet reported 8.288, 8.291, 8.331, 8.332, 8.338, 8.340, 8.345, 8.347, 8.349, 8.357, 8.379, 8.388, 8.399 T-292/11 Cemex v Commission [2011] ECR II-243 8.289 T-293/11 Holcim v Commission, not yet reported 8.289 T-296/11 Cementos Portland Valderrivas v Commission [2011] ECR II-246 8.289 T-297/11 Buzzi Unicem v Commission, not yet reported 8.289 T-302/11 Heidelberg Cement v Commission, not yet reported 8.288, 8.289 T-305/11 Italmobiliare v Commission, not yet reported 8.289 T-319/11 ABN Amro v Commission, not yet reported 17.244 T-466/11 United Kingdom v ECB, not yet reported 11.221 T-487/11 Banco Privado Portugues v Commission, not yet reported 17.244 T-607/11 R Henkel v Commission [2012] OJ C80/19 2.168, 8.100, 8.239 T-45/12 United Kingdom v ECB, not yet reported 11.221 T-142/12 Aventis Pharmaceuticals v OHIM, not yet reported 17.454 T-164/12 Alstom v Commission, not yet decided 8.242 T-272/12 Energetický a průmyslový EP Investment Advisors v Commission 8.353, 8.380 T-325/12 & T-332/12 Netherlands and ING v Commission (‘ING’), not yet reported 17.244

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T-389/12 R Électricité de France v Commission (2012), not yet reported 5.1009, 5.1113 T-427/12 Austria v Commission (‘BayernLB’), not yet reported 17.244 T-499/12 HSH Investment Holding v Commission (‘HSH Nordbank’), not yet reported 17.244 T-93/13 United Kingdom v ECB, not yet reported 11.221 T-321/13 Stefania Adorisia and Others v Commission (‘SNS REAAL’), not yet reported 17.244

(p. cxxxviii) 2. Tables of European Commission Decisions A. Alphabetical (all types of Decision combined) @Home Benelux BV (JV.11) [1998] 5 CMLR 661 7.142 3i Group/HIG Capital/Volnay (M.5590) (2009) 5.393 ABF/GBI Business (M.4980) [2009] OJ C145/09 1.116, 5.649, 5.669, 5.674, 5.791, 5.792, 5.799, 5.802, 5.803 ACI (94/594) [1994] OJ L224/28 7.59, 15.252 ACS/Hochtief (M.6020) (2011) 5.79 ADALAT (96/478) [1996] OJ L201/1, [1996] 5 CMLR 416 16.163 AEE/ Lentjes (M.4647) [2009] OJ C101/6 1.318 AEG Telefunken (82/267) [1982] OJ L117/15; [1982] 2 CMLR 386 9.252, 9.253, 9.254 AGRANA/RWA/JV (M.6439) (2012) 5.732 APAX Partners/Telenor Satellite Services (M.4709) (2007) 5.79, 13.206 APMM/Broström (M.5346) (2009) 15.187 ARD/MGM (Film Purchases by German Television Stations) (89/536) [1989] OJ L284/36; [1990] 4 CMLR 841 3.28, 7.401, 7.402, 14.86–14.90, 14.91 AREVA SA/AREVA NP (M.5481) (2009) 12.92 ARM/Giesecke & Devrient/Gemalto/JV (M.6564) (2012) 5.131 AROW/BNIC (82/896) [1982] OJ L379/1; [1983] 2 CMLR 240 3.195, 8.71, 8.644 AXA-UAP/Royal Belge (M.1193) [1998] OJ C239/17; [1997] 4 CMLR 200 11.184 Advent/Maxam (M.6411) (2012) 5.845, 5.846 Advocaat Zwarte Kip (28.374) [1974] OJ L237/12 16.113 Aegean/Olympic (M.6796) 5.271, 5.967, 5.975, 15.63, 15.64, 15.84, 15.127, 15.135, 15.188

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Aerospatiale-Alenia/de Havilland (M.53) [1991] OJ L334/42; [1992] 4 CMLR M2 4.195, 5.03, 5.962 Aérospatiale/MBB (M.17) [1991] OJ C59/13 4.208 Air France/Alitalia (2004/841) [2003] OJ C397/10 3.275, 15.77, 15.86, 15.100, 15.107 Air France/KLM (M.3280) [2004] OJ C60/5; [2000] 4 CMLR IS47 5.631, 5.632, 5.901, 5.927, 15.28, 15.45, 15.46, 15.56, 15.63, 15.64, 15.67, 15.68, 15.117, 15.127 Air France/Sabena (M.157) 5.203 Airfreight (39.258) decision of 9 November 2010 1.118, 8.15, 8.62, 8.323, 8.442, 8.557, 8.595, 8.627, 8.642, 8.698, 15.136 Airtours/First Choice (M.1524) [2000] OJ L93/1; [2000] 5 CMLR 494 4.232, 4.233, 4.234, 4.235, 5.07, 5.669, 5.769, 5.783, 5.795, 5.796, 5.1206 Akzo Chemicals BV (94/735) [1994] OJ L294/31 8.336 Alcan/Pechiney (II) (M.3225) (2003) 5.896, 5.1074 Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (M.3680) (2005) 5.1002, 5.1050, 5.1090 Alitalia/KLM (JV19) [1999] 5 CMLR 759 7.143, 15.74 Alloy Surcharge (98/247) [1998] OJ L100/55; [1998] 4 CMLR 973 8.62, 8.117, 8.600, 8.605, 8.609, 8.644, 8.653, 8.660 Alpha Flight Services/Aéroports de Paris (98/513) [1998] OJ L230/10; [1998] 5 CMLR 611 4.909, 4.910, 4.927, 4.928, 4.930, 4.931, 4.932, 4.933, 4.934, 15.377 Aluminium Fluoride (39.180) [2011] OJ C40/22 1.118, 8.559 Aluminium Imports from Eastern Europe (85/206) [1985] OJ L92/1; [1987] 3 CMLR 813 3.156 Amadeus/Sabre/JV (M.476) (2007) 7.142 American Airlines/US Airways (M.6607) (2013) 5.1089, 15.74, 15.116 American Express/Fortis/Alpha Card (M.5241) (2008) 5.119 Amersham-Buchler (87/742) [1982] OJ L314/34; [1983] 1 CMLR 619 7.66 (p. cxxxix) Amino Acids (2001/418) [2001] OJ L152/24; [2001] 5 CMLR 332 8.61, 8.63, 8.72, 8.88, 8.90, 8.428, 8.583, 8.586, 8.600, 8.604, 8.605, 8.608, 8.619, 8.624, 8.628, 8.651 Amministrazione Autonoma dei Monopoli di Stato (98/538) [1998] OJ L252/47 4.848 Anglo American/ Lafarge/JV (M.6153) 5.218 Anglo-American Corporation/Lonrho (M.754) [1998] OJ L149/21; [1997] 4 CMLR 377 5.55

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Anheuser-Busch-Scottish & Newcastle (34.237) [2000] OJ L49/37; [2000] 5 CMLR 75 3.76 Animal feed phosphates (38.866) [2011] C111/15 1.118, 8.17, 8.23, 8.204, 8.230, 8.567, 8.685, 8.690, 8.724 Ansac (91/301) [1991] OJ L152/54 7.340, 7.345 Antalis/MAP (M.4753) (2007) 5.779 Apax/Travelex (M.3762) (2005) 5.53 Apollo/Akzo Nobel (M.4071) (2006) 5.887 Arcelor/Oyak/Erdemir (M.4085) (2006) 5.79 Arcelor/SNCFL/CFL Cargo (M.4294) 15.268, 15.277, 15.278 Areva/Urenco/ETC/JV (M.3099) [2006] OJ L61/11 1.116, 5.267, 5.1085, 7.142 Arjowiggins/M-real Zanders Reflex (M.4513) [2008] OJ C267/14 1.254, 1.264, 5.600, 5.646, 5.648 Arla Foods/Allgäuland (M.6348) (2011) 5.992 Arsenal/DSP (M.5153) [2009] OJ C227/24 1.254, 1.302, 4.204, 5.646, 5.650, 5.735 Asahi/Saint-Gobain (94/896) [1994] OJ L354/87 7.59 Aseprofar and Fedifar (36.997) 9.112, 16.169 Assurpol (92/96) [1992] OJ L37/16; [1993] 4 CMLR 338 11.212 Aster 2/Flint Ink (M.3886) (2005) 5.809 Astra (93/50) [1993] OJ L2/23; [1997] 4 CMLR 89 7.59 Astra/Zeneca (M.1403) (1999) 16.35, 16.38, 16.44 AstraZeneca (37.507) [2006] OJ L332/24; [2006] 5 CMLR 287 1.302, 4.707–4.712, 4.720, 4.722, 4.723, 10.260, 16.09, 16.14, 16.24, 16.30, 16.33, 16.35, 16.39, 16.45, 16.47, 16.55, 16.127, 16.128, 16.129, 16.130, 16.131 AstraZeneca/Novartis (M.1806) [2004] OJ L110/1 5.73 Astrium Holding/Vizada Group (M.6393) (2011) 13.206 Athens International Airport (38.469) 15.359 Atlas/Phoenix (96/546) [1996] OJ L239/23; [1997] 4 CMLR 89 7.59, 7.75, 7.98 Austrian Airlines/Deutsche Lufthansa (2002/746) [2002] OJ L242/25 15.127, 15.281 Austrian Banks- ‘Lombard Club’ (2004/138) [2004] OJ L56/1 1.118, 3.411, 8.60, 8.66, 8.93, 11.04, 11.63, 11.65, 11.66 Avnet/Abacus (M.5385) 5.797

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Axalto/Gemplus (M.3998) (2006) 5.942 B&I/Sealink—Holyhead (34.174) [1992] 5 CMLR 255 4.603, 15.386 B&W Loudspeakers (37.709) IP/02/916 9.98, 9.130, 9.136 BA/AA (36.089) [1998] OJ C239/10 15.12 BA/AA (37.147) [2001] OJ 2001 C243/2 15.12 BA/AA/IB (British Airways/American Airlines/Iberia) (39.596) OJ 2010 L278 3.454, 7.86, 15.36, 15.44, 15.46, 15.50, 15.59, 15.79, 15.86, 15.88, 15.93, 15.116, 15.118, 15.121, 15.124, 15.367 BAI (37.138) 9.112 Bank charges for currency exchange within the Euro zone (37.919) [2003] OJ L15/1 8.706 BASF/CIBA (M.5355) (2009) 5.1071 BASF/Eurodiol/Petrochim (M.2314) (2001) 5.964 BASF/INEOS/Styrene/JV (M.6093) (2011) 5.129 BEH electricity (39.767) IP/12/1307 (2012) 12.66 BHP Billiton/Rio Tinto [2008], notification withdrawn 1.325 BIEM Barcelona Agreements (38.377) [2002] OJ C132/10 14.52 BIEM/IFPI, Report on Competition Policy (1983) (Vol XIII) 10.213, 14.37 BNP Paribas Fortis/Belgacom Belgian Mobile Wallet (M.6967) (2013) 13.208 BNP Paribas/Fortis (M.5384) (2008) 5.393, 11.69, 11.76, 11.84 (p. cxl) BNP/Dresdner Bank-Austrian JV (M.1340) [1999] OJ C36/16 3.275 BP Amoco/Arco (M.1532) [2001] OJ L18/1; [2001] 4 CMLR 19 12.21, 12.36, 12.111 BP Kemi-DDSF (79/934) [1979] OJ L286/32; [1979] 3 CMLR 684 3.76 BP/Amoco (M.1293) 5.621 BP/Chevron/ Eni/Sonangol/Total/JV (M.6477) (2012) 5.131, 5.136 BPB Industries/British Gypsum (89/22) OJ 1989 L10/50; [1990] 4 CMLR 464 4.194 BSCH/Banco Totta Y CPP/A. Champalimaud (M.1799) 5.293 BSCHA/A.Champalimaud (M.1616) [1999] OJ C306/37 5.285 B SKY B/KIRCH PAY TV (JV.37) [2000] 4 CMLR 818 5.560, 7.142 BT/Air Touch/Grupo Acciona/Airtel (JV.3) [1998] 5 CMLR 294 7.142 BT/AT&T (JV.15), 30 March 1999, not yet reported 5.05, 7.142, 13.206, 13.207

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BT/INFONET (M.3641) (2001) 13.207 BT/MCI (94/579) [1994] OJ L223/36; [1995] 5 CMLR 285 7.59 BUMA (39.152) [2005] OJ C200/11 14.52 Bananas (39.188) [2009] OJ C189/12 1.118, 7.447, 8.43, 8.45, 8.56, 8.66, 8.146, 8.172, 8.451, 8.459, 8.627, 8.631 Banco Santander/Rainbow (M.5948) (2010) 11.69, 11.76, 11.77 Banco Santander/Rainbow (M.6405) (2011) 11.69 Bandengroothandel Frieschebrug BV/NV Nederlandsche Banden-Industrie Michelin (81/969) [1981] OJ L353/33; [1982] 1 CMLR 643 4.421 Banghalter & de Homem Christo v SACEM (Daft Punk) (37.219) 14.57, 14.130, 14.131, 14.132 Bathroom fittings and fixtures (39.092) [2011] OJ C348/12 1.118, 8.11, 8.59, 8.72, 8.577 Bayer Healthcare/Roche (OTC Business) (M.3544) (2004) 5.1074 Bayer/Aventis Crop Science (M.2547) (2002) 16.12 Bayer/Gist Brocades (76/172) [1975] OJ L30/13; [1976] 1 CMLR D98 3.221 Belgacom/ Swisscom/JV (M.3764) (2005) 13.207 Belgian Beers (Kronenbourg/Heineken) (2005/503) [2003] OJ L200/1 1.118, 8.25, 8.42, 8.61, 8.79, 8.117, 8.501, 8.587, 8.592, 8.594, 8.609, 8.613, 8.619, 8.644, 8.646 Belgian Wallpaper (74/431) [1974] OJ L237/3; [1974] 2 CMLR D102 8.71, 8.615 Belgian-German fertilisers, Report on Competition Policy (1976) (Vol VI) 7.343 Bertelsmann/CLT (M.779) [1996] 5 CMLR 525 14.191, 14.237 Bertelsmann/Kirch/Premiere (M.993) [1999] OJ L53/1; [1999] 4 CMLR 700 5.975, 14.198, 14.200, 14.203, 14.205, 14.212 Bertelsmann/Pearson/Penguin Random House (M.6789) (2013) 5.90, 14.217, 14.218, 14.219, 14.220, 14.221, 14.222, 14.223, 14.224 Birla/Columbian Chemicals (M.6191) 5.218, 5.269 Bitumen Netherlands (2007/534) [2007] OJ L196/40 1.118, 7.376, 8.16, 8.18, 8.31, 8.62, 8.68, 8.77, 8.79, 8.85, 8.89, 8.93, 8.184, 8.323, 8.361, 8.598, 8.605 Bitumen Spain (38.870) [2009] OJ C321/15 1.118, 8.11, 8.62, 8.78, 8.85, 8.143, 8.198, 8.207, 8.609, 8.631, 8.713 Blackstone (TBG CareCo)/NHP (M.3669) 5.245 Blackstone/Acetex (M.3625) [2005] L312/60 1.254, 1.264, 1.302

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Blokker/Toys R Us (M.890) [1998] OJ L316/1; [1997] 5 CMLR 148 5.502 Boehringer (39.246) (2011) 16.151 Boeing/Hughes (M.1879) (2000) 5.992 Boeing/McDonnell Douglas (M.877) [1997] OJ L336/16; [1997] 5 CMLR 270 1.318, 5.1050 Bosch/Rexroth (M.2060) [2004] OJ L43/1 5.59 Breeders’ rights-maize seed (78/823) [1978] OJ L286/23; [1978] 3 CMLR 434 10.35, 10.176 British Aerospace/GEC Marconi (M.1438) [1999] OJ C241/8 5.296 British Aerospace/VSEL (M.528) [1994] OJ C348/6 3.08, 5.296 British Airways/Iberia (38.477) [2003] OJ C217/2 15.62 British Airways/SN Brussels Airlines (38.479) (2003) 15.64, 15.100 British Airways/TAT (M.259) 5.203 British Midland Ltd/Deutsche Lufthansa/Scandinavian Airlines System (38.712) 15.100 British Midland/Aer Lingus (92/213) [1992] OJ L96/34; [1993] 4 CMLR 596 4.600 (p. cxli) British Plasterboard (31.900) [1989] L52/42 4.194, 4.905 British Sugar (99/210) [1999] OJ L76/1; [1998] 4 CMLR 1316 8.119, 8.592, 8.600, 8.605, 8.616 British Telecommunications (82/861) [1982] OJ L360/36; [1983] 1 CMLR 457 6.33, 6.55, 6.175 BritishAerospace/Lagardèe (M.820) [1997] OJ C22/6; [1996] 5 CMLR 523 3.08, 5.296 Buhrmann/Samas Office Supplies (M.2286) [2003] OJ C117/5 1.318 Building and Construction Industry in the Netherlands (SPO) (92/204) [1992] OJ L92/1; [1993] 5 CMLR 135 1.118, 8.15, 8.36, 8.60 Buitenfood/Ad Van Geloven Holding/JV (M.6321) (2012) 5.121 CASC JV (M.5154) (2008) 12.30 CDC/Veolia Environment/Transdev/Veolia Transport (M.5741) (2010) 5.254, 15.281, 15.287 CECED (2000/475) [2000] OJ L187/47; [2000] 5 CMLR 635; [2000] 5 CMLR 635 3.14, 3.460 CEPI-Cartonboard (34.936) [1996] OJ C310/3 7.489, 7.495

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ČEZ concerning the Czech electricity market (39.727), OJ 2012 C202/1, Press Release IP/12/766 (10 July 2012) 2.107, 2.132, 4.55, 4.60, 12.41, 12.139, 12.159, 12.167, 12.175–12.178 CEZB/JAVYS/JESS JV (M.5591) (2009) 12.41 CGI/Dassault (M.571) [1995] OJ C100/3; [1995] 4 CMLR 608 3.11 CISAC (38.698) [2009] 4 CMLR 577 3.15, 14.53, 14.56, 14.57, 14.59, 14.113 CNSD (93/438) [1993] OJ L203/27; [1995] 5 CMLR 495 1.118 COAPI (95/188) [1995] OJ L122/37; [1995] 5 CMLR 468 1.118, 3.29 CRT glass bulbs (39.605), [2012] OJ C48/18 1.118, 8.11, 8.204, 8.627, 8.633, 8.685, 8.724 CSM NV (92/500) [1992] OJ L305/16 8.348 CVC/Lenzing (M.2187) [2004] OJ L82/20 1.254, 1.264, 5.669 Calcium carbide (39.396) [2009] OJ C301/18 1.118, 8.60, 8.546, 8.567, 8.595, 8.636, 8.644, 8.678, 8.695 Cameron/ Schlumberger/Onesubsea (M.6854) (2013) 5.90 Campari (78/253) [1978] OJ L70/69; [1978] 2 CMLR 397 10.179, 10.184, 10.185 Canada Life/Irish Life (M.6883) 11.185 Canal+/ITI/TVN/ITI Neovision (M.6476) (2012) 14.210 Candle waxes (39.181) [2009] OJ C295/17; [2009] 5 CMLR 2441 1.118, 8.09, 8.33, 8.79, 8.93, 8.157, 8.167, 8.174, 8.565, 8.567, 8.574, 8.575, 8.577, 8.595, 8.606, 8.609, 8.655, 8.658, 8.665 Cannes Extension Agreement (38.681) [2006] OJ 2006 C122/02 14.37 Canon/IRIS (M.6773) 5.218 Car glass (39.125) [2009] OJ C173/13 1.118, 8.65, 8.95, 8.138, 8.555, 8.595, 8.620, 8.663 Carbonless paper (36.212) [2011] OJ C138/21 1.118 Carbonless paper (2004/337) [2004] OJ L115/1; [2004] 5 CMLR 1303 1.118, 8.59, 8.63, 8.72, 8.88, 8.90, 8.93, 8.117, 8.600, 8.604, 8.688 Carlsberg (84/381) [1984] OJ L207/26; [1985] 1 CMLR 735 3.221, 7.66 Carnival Corporation/P&O Princess (II) (M.3071) [2003] OJ C42/7 5.46 Carphone Warehouse/Tiscali UK (M.5532) (2009) 13.198 Carrefour/Ahold Polska (M.4522) 5.245, 5.580 Carrefour/Promodes (M.1684) [2000] OJ C164/5 5.992

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Cartonboard (94/601) [1994] OJ L243/1; [1994] 5 CMLR 547 8.31, 8.42, 8.59, 8.61, 8.66, 8.67, 8.73, 8.77, 8.109, 8.350, 8.572, 8.599, 8.622 Cast Iron and Steel Rolls (83/546) [1983] OJ L317/1; [1984] 1 CMLR 694 8.79 Caterpillar/MWM (M.6106) (2011) 5.302, 5.450, 5.544 Caterpillar/Perkins Engines (M.1094) [1996] OJ C266/6; [1998] 4 CMLR 496 9.184 Cegetel/Canal+/AOl/Bertelsmann (JV.5) (1998) 7.135, 7.142 Cekacan (90/535) [1990] OJ L299/64; [1992] 4 CMLR 406 7.341, 7.355 Celanese/Degussa/JV (M.3506) 5.992 Celsa/Fundia (M.4225) (2006) 5.79 Cement (94/815) [1994] OJ L343/1; [1995] 4 CMLR 327 8.41, 8.59, 8.61, 8.71, 8.572, 8.599, 8.644 Cendant/Galileo (M.2510) (24 September 2001) 5.47 Centradia, IP/02/943 11.113 (p. cxlii) Centrica/Venture Production (M.5585) (2009) 12.21 Cephalon (39.686) (2013) 4.740, 16.100 Cewal (93/82) [1992] OJ L34/20; [1995] 5 CMLR 198 4.324, 15.186 Cheung Kong Holdings/Cheung Kong Infrastructure Holdings/Power Assets Holdings/ MGN Gas Networks (M.6698) (2012) 5.63 China National Bluestar/Elkem (M.6082) (2011) 5.77 Chloroprene rubber (38.629) [2008] OJ C251/11 1.118, 8.11, 8.142, 8.166, 8.463, 8.563, 8.592, 8.595, 8.630, 8.655, 8.664 Choline Chloride (2005/566) [2005] OJ L190/22 1.118, 8.73, 8.594, 8.595, 8.634, 8.644, 8.655, 8.658, 8.660 Chronopost/Correos (JV.18) [1999] 5 CMLR 19 7.142 Ciba-Geigy/Sandoz (M.737) [1997] OJ L201/1 16.35, 16.38 Cimbel (72/474) [1972] OJ L303/24; [1973] CMLR D167 8.23 Cinven/UPC France (M.4204) (2006) 13.203 Cisco/Tandberg (M.5669) [2010] OJ C36/7 1.318, 5.327, 5.743, 5.1090 Citigroup/Maltby Acquisitions (M.6137) (2011) 5.394 Citric Acid (2002/742) [2002] OJ L239/18; [2002] 5 CMLR 24 1.118, 3.88, 3.98, 8.21, 8.31, 8.61, 8.72, 8.88, 8.89, 8.90, 8.92, 8.93, 8.472, 8.483, 8.600, 8.605, 8.609, 8.650, 8.652, 8.658, 8.680

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Clearstream (38.096) [2005] 5 CMLR 22 4.608, 4.896, 11.112, 11.119 Clima Chappée-Buderas (69/241) [1969] OJ L195/1; [1970] CMLR D7 3.275 Coca Cola (2005/670) [2005] OJ L253/21; [2006] 4 CMLR 1680 4.55, 4.432, 4.456, 4.520, 4.521, 12.231 Coca-Cola Company/Carlsberg A/S (M.833) [1998] OJ L145/41 4.201 Coca-Cola Hellenic Bottling/Lanitis Bros (M.4124) 5.218 Coca-Cola/Amalgamated Beverages (M.794) [1997] OJ L218/15; [1997] 4 CMLR 368 4.201 Coca-Cola/Nestlé/JV (M.2276) (2001) 5.119 Communauté d’inérêts automobiles (CIA) (36.535), Report on Competition Policy (1999) (Vol XXIX) 15.303 Compagnie Nationale de Navigation/SOGELFA (M.1021) 5.218 Concordato Incendio (90/25) [1990] OJ L15/25; [1991] 4 CMLR 199 11.199, 11.201 Concrete Reinforcing Bars (2006/894) [2011] OJ C98/16 1.118, 8.594 Conoco/Phillips Petroleum (M.2681) (2002) 5.45 Consumer detergents (39.579) [2011] OJ C193/14 1.118, 8.09, 8.20, 8.59, 8.61, 8.72, 8.204, 8.230, 8.239, 8.568, 8.685, 8.724 Continental Can (26.811), decn 9 December 1971 4.33, 4.84, 4.92, 4.252, 4.283, 4.608 Continental/Matador (M.4516) (2007) 5.79 Continental/United/Lufthansa/Air Canada (39.595) [2013] OJ C201/8, Press Release IP/13/456 3.463, 15.51, 15.86, 15.98, 15.121, 15.123 Convention Chaufourniers [1969] OJ L122/8 3.275 Copper Concentrate (2003) 8.323, 8.442 Copper Fittings (2007/691) [2007] OJ L283/63 8.10, 8.17, 8.69 Copper Plumbing Tubes (2006/485) [2006] OJ L192/21 1.118, 8.77, 8.456, 8.464, 8.522, 8.538, 8.539, 8.545, 8.592, 8.634, 8.644, 8.656, 8.658, 8.689, 8.702 Coredeal (2001), Report on Competition Policy (2002) 11.113 Corrib, IP/01/578 (2001) 12.126 Crane/MEI Group (M.6857) (2013) 5.1080 Credit Agricole/Cassa di Risparmio della Spezia/Agences Intesa San Paolo (M.5960) (2010) 11.77 DB/Transfesa (M.4786) 15.276, 15.277

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DFDS/C.RO Ports/Älvsborg (M.6305) 15.379, 15.382 DIA/ Schlecker (M.6749) 5.231 DONG/Elsam/Energi E2 (M.3868) [2007] OJ L133/24 5.621, 5.669, 5.752, 5.812, 5.1010, 5.1092, 5.1116, 12.23, 12.24, 12.25, 12.35, 12.39, 12.42, 12.46 DP World/Conti 7/Rickmers/DP World Breakbulk (M.5093) 15.379, 15.380, 15.382 DRAMs (38.511) [2011] OJ C180/15 1.118, 8.43, 8.204, 8.230, 8.567, 8.577, 8.579, 8.627, 8.664, 8.685, 8.724 (p. cxliii) DSM/Sinochem/JV (M.6113) (2011) 5.77, 16.41 DUC/DONG (38.187) XXXIIIrd Report on Competition Policy, 2003 12.70, 12.86, 12.123 Daft Punk see Banghalter & de Homem Christo v SACEM (Daft Punk) (37.219) Danish Crown/Vestjyske Slagterier (M.1313) [2000] OJ L20/1; [2000] 5 CMLR 296 5.762 De Beers (2006/520) [2006] OJ L205/24; [2006] 5 CMLR 1426 4.55 Deep Sea Chemical Shipping (Press release of 19 March 2003, MEMO/03/38)) 8.323, 8.442 Deloitte & Touche/Andersen UK (M.2810) (2002) 5.965, 5.966 Delta Airlines/Pan Am (M.130) [1991] OJ C289/00; [1992] 5 CMLR M56 5.203, 15.74 Delta/ Northwest (M.5181) 15.74, 15.81 Deutsche Bahn (DB)/Arriva (M.5855) (2010) 15.260, 15.265, 15.272, 15.293, 15.294, 15.296, 15.297, 15.298 Deutsche Bahn (DB)/EWS (M.4746) (2007) 5.1013, 5.1096, 15.265, 15.269, 15.272, 15.274, 15.275, 15.276, 15.277, 15.278 Deutsche Bahn (DB)/PCC (M.5480) 15.261, 15.264, 15.266, 15.269, 15.270, 15.271, 15.272, 15.274, 15.277 Deutsche Bahn Energie (39.678) [2013] OJ C237/28 4.936 Deutsche Bahn/Stinnes (M.2905) [2002] 5 CMLR IS133 15.265, 15.272, 15.277 Deutsche Bank/Sal. Oppenheim (M.5726) 11.76 Deutsche Borse/NYSE Euronext (M.6166) 5.617, 5.628, 5.669, 5.907, 5.937, 5.949, 5.957, 5.960, 5.1013, 11.146–11.177 Deutsche Post/DHL (II) (M.2908) 5.517 Deutsche Telekom (2003/707) [2003] OJ L263/9; [2004] 4 CMLR 790 4.647, 13.80– 13.86, 13.99, 13.101, 13.133, 13.137, 13.148

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Deutsche Telekom/BetaResearch (M.1027) [1999] OJ L53/31; [1999] 4 CMLR 700 14.203, 14.204 Deutsche Telekom/OTE (M.5148) (2008) 13.201, 13.207 Deutsche Telekom/Springer/Holtzbrink/Infose (JV.8) [1998] 5 CMLR 878 7.143 Distillers Co Ltd-Victuallers (80/789) [1980] OJ L233/43; [1980] 3 CMLR 244 3.275 Distillers Company Limited (78/163) OJ 1978 L50/16; [1978] 1 CMLR 400 3.166 Distribution of Package Tours during the 1990 World Cup (92/521) [1992] OJ L326/31; [1994] 5 CMLR 253 3.29, 3.62 Distrigas (37.966) [2008] OJ C9/8 4.55, 12.17, 12.71, 12.75, 12.76, 12.77, 12.79, 12.115 Duales System Deutschland (DSD) (2001/837) [2001] OJ L319/1, [2002] 4 CMLR 405 3.14 DuPont/ICI (M.214) [1993] OJ L7/13 4.150 Dutch Banks (89/512) [1989] OJ L253/1; [1990] 4 CMLR 768 3.221 Dutch Banks (Acceptgiro) (99/687) [1999] OJ L271/28; [2000] 4 CMLR 137 11.43 Dutch Courier Services (90/16) [1990] OJ L10/47; [1990] 4 CMLR 947 6.66, 6.246 Dutch Nitrogenous Fertilizers (CSV) (78/732) [1978] OJ L242/15; [1979] 1 CMLR 11 8.27 Dyestuffs (69/243) [1969] OJ L195/11; [1969] CMLR D23 8.512, 8.594 E-books (39.847) [2012] OJ C283/7 8.50, 9.57, 14.41, 14.108, 14.110, 14.215 EADS/SSDL (M.5168) (2009) 5.994 EADS/STA/Elbe Flugzeugwerke JV (M.6554) (2012) 5.126 EAEPC (37.380) [2001] OJ L302/1 9.112, 16.169 EBU/Eurovision (93/403) [1993] OJ L179/23 14.71, 14.76, 14.77, 14.78 ECS/AKZO (85/609) [1985] OJ L374/1 4.157 ECS/IEH (M.2857) 5.64 EDF/AEM/Edison (M.3729) (2005) 12.29 EDF/British Energy (M.5224) [2009] OJ C38/4 1.325 EDF/Segebel (M.5549) (2009) 5.75, 5.218, 5.239, 5.1009, 5.1113, 11.87 EEOG Orphe, Report on Competition Policy (1990) (Vol XX) 7.398, 7.403 EMCC (M.4922) (2008) 5.135, 12.30

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ENEL/FT/DT (JV.2) (1998) 7.141, 7.142 ENI (39.315) [2010] OJ C352/8 2.107, 2.132, 4.55, 4.60, 4.586, 4.593, 12.16, 12.20, 12.24, 12.45, 12.139, 12.142, 12.143, 12.145, 12.150, 12.153, 12.170–12.172 ENI territorial restrictions (37.811) 12.170 ENI/Acegasaps/JV (M.6068) (2011) 5.122 (p. cxliv) ENI/EDP/GDP (M.3440) [2005] OJ L302/69 5.618, 5.750, 5.751, 5.752, 5.1175, 12.24, 12.29, 12.34, 12.44 E.ON breach of seals (39.326) (2008) 12.236 E.ON electricity balancing (39.389) (2009) 2.107, 2.132, 4.55, 4.60, 12.29, 12.35, 12.188, 12.198–12.202 E.ON gas foreclosure (39.317) [2010] C278/9 4.55, 4.60, 4.240, 4.243, 4.888, 12.16, 12.19, 12.23, 12.139, 12.159, 12.160–12.166, 12.172–12.174 E.ON (IP/08/108) 30 January 2008 8.361 E.ON/Endesa (M.4110) (2006) 5.293, 12.46 E.ON/Endesa (M.4197) 5.288 E.ON/GDF (39.401) [2009] OJ C248/5 1.118, 8.32, 12.50, 12.100 E.ON/MOL (M.3696) [2006] OJ L253/20; [2006] 4 CMLR IS29 5.669, 5.1010, 12.20, 12.24, 12.29, 12.30, 12.43, 12.46, 14.197, 14.203, 14.209 EPH (39.793) 12.236 EPI Code of Conduct (36.417) [1999] OJ L106/14; [1999] 5 CMLR 540 3.243, 3.244 EQT/H&R/Dragoco (M.2926) [2003] OJ C80/17; [2002] 5 CMLR IS131 5.146 Eco-Emballages (2001/663) [2001] OJ L233/37; [2001] 5 CMLR 1096 3.30 Edison/Eneco Energia (M.4368) (2006) 5.60 Einzelreverse (35.245 to 35.251) 14.19, 14.34 Electrabel/Compagnie Nationale du Rhône (M.4994) 5.551 Electrical and Mechanical Carbon and Graphite Products (2004/420) [2004] OJ L125/45; [2005] 5 CMLR 20 1.118, 8.25, 8.35, 8.40, 8.61, 8.67, 8.78, 8.80, 8.83, 8.90, 8.592, 8.677, 8.689, 8.701 Electricité de France (2012), not yet reported 17.454 Electricity (39.172) 12.12 Elevators and Escalators (38.823) [2008] OJ C75/19 1.118, 8.14, 8.31, 8.33, 8.36, 8.59, 8.83, 8.88, 8.95, 8.528, 8.636, 8.655, 8.658 Elopak/Metal Box-Odin (90/410) [1990] OJ L209/15 3.242

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EnBW/ENI/GVS (M.2822) [2003] OJ L248/51 5.1093 Enel/Acciona/Endesa (M.4685) [2007] OJ C212/2 5.285, 5.288 Enso/Stora (M.1225) (1996) 5.889, 5.897, 5.992 Ericcson/Nokia/Psion (JV.6) [1998] 5 CMLR 464 7.135, 7.142 Ericcson/Nokia/Psion (JV.12) (1998) 7.135 Eudim (33.815 & 35.842) [1996] OJ C111/8; [1996] 4 CMLR 871 7.460, 7.475 Euro and Yen Interest Rate Derivatives, 2013, IP-13/1208 8.724 Eurocheque: Helsinki Agreement (92/212) [1992] OJ L95/50; [1993] 5 CMLR 323 11.61 Eurofima, Report on Competition Policy (1973) (Vol III) 4.849 Eurofix-Bauco/Hilti (88/138) [1988] OJ L65/19; [1989] 4 CMLR 677 4.321, 4.322, 4.480, 4.496, 4.497, 9.147 Eurogate/APMM (M.5066) 15.379, 15.380, 15.382 European Payments Council, MEMO/13/553 11.53, 11.60 European Rail Shuttle (ERS) + Maersk Intermodal Europe + P&O Nedlloyd (38.086) [2002] OJ C13/5 15.280 European Sugar Industry (73/109) [1973] OJ L140/17; [1973] CMLR D65 8.27, 8.32, 8.36 European Wastepaper Information Service [1987] OJ C339/7 7.489, 7.495 Eurostar (M.1305) [1999] 4 CMLR 175 15.281, 15.282, 15.284 Eurotunnel II (94/894) [1994] OJ L354/66; [1995] 4 CMLR 801 15.282, 15.305, 15.309 Eurovia/Tarmac (M.5803) (2010) 5.254 Eurovision (Métropole) (2000/400) [2000] OJ L151/18; [2000] 5 CMLR 650 3.221, 14.76, 14.77, 14.78 Evraz/Highveld (M.4494) 5.1010 Exotic fruit (Bananas) (39.482), not yet reported 1.118, 8.146, 8.171, 8.172, 8.641 Exxon/Mobil (M.1383) [2004] OJ L103/1; [1999] 5 CMLR 959 5.47, 5.218, 12.21, 12.25, 12.36, 12.46 Exxon/Shell (94/322) [1994] OJ L144/20 7.59, 7.87 ExxonMobil/BEB (M.3294) [2004] OJ C8/7; [2004] 4 CMLR IS8 5.143 (p. cxlv) FA Premier League (37.173) [2008] OJ C7/18 7.351 14.65, 14.94, 14.114, 14.117, 14.119

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FAG–Flughafen Frankfurt/Main (34.801) [1998] OJ L72/30; [1998] 4 CMLR 779 12.147 FEG/TU (2000/117) [2000] OJ L39/1; [2000] 4 CMLR 1208 8.703 FENEX (96/438) [1996] OJ L181/28; [1996] 5 CMLR 332 1.118 FIA Formula One World Championship (36.638) IP/01/1523 14.64 FIA Regulations (35.163) 14.64 FIMAG/Züblin (M.3864) 5.245 FNICF (82/756) [1982] OJ L319/12; [1983] 1 CMLR 575 8.330, 8.347, 8.349 Fabrica Pisana (80/334) [1980] OJ L75/30; [1980] 2 CMLR 354 8.301, 8.349, 8.364 Far East Trade Tariff Charges and Surcharges Agreement (FETTCSA) (2000/627) [2000] OJ L268/1; [2000] 5 CMLR 1011 1.118, 8.16, 8.300, 8.619, 8.703 Far Eastern Freight Conference (FEFC) (94/985) [1994] OJ L378/17 1.118, 15.301 Fasteners [2011] OJ C210/26 (39.168) 8.11, 8.72, 8.463, 8.634, 8.658 Fatty Acids (87/1) [1987] OJ L3/17; [1989] 4 CMLR 445 1.119, 7.409, 7.414, 7.488, 7.495 Faurecia/Plastal (M.5799, M.5977 and M.6537) (2010) 5.86, 5.108, 5.149, 5.181 Fedetab (78/670) [1978] OJ L224/29; [1978] 3 CMLR 524 8.16, 8.71 Fentanyl (39.685) (2013) 16.69, 16.99 Ferrovial/Qatar Holding/CDPQ/Baker Street/BAA (M.6723) (2012) 15.365, 15.367 Ferrovial/Quebec/GIC/ BAA (M.4164) (2006) 15.367, 15.369 Ferry Operators-Currency surcharges (97/84) [1997] OJ L26/23; [1997] 4 CMLR 789 8.15, 8.572, 15.188 Fiat/Chrysler (M.5518) (2009) 5.393, 5.394 Fides [1979] OJ C157/33 8.305 Fine Art Auction Houses (2005/590) [2005] OJ L200/92 1.118, 8.61, 8.323, 8.412, 8.494, 8.688 Finnish Airports (99/198) [1999] OJ L69/24; [1999] 5 CMLR 90 15.366, 15.372 Fire Insurance (85/75) [1985] OJ L35/20; [1985] 3 CMLR 246 11.186, 11.188, 11.193, 11.194 Fittings (2007/691) [2007] OJ L283/63 1.118, 8.615, 8.634, 8.644, 8.658 Flat Glass (39.165) [2008] OJ C127/9 1.118, 8.11, 8.17, 8.19, 8.72, 8.77, 8.83, 8.86, 8.95, 8.179, 8.207, 8.568, 8.580, 8.592, 8.630, 8.636

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Flat Glass Benelux (84/388) [1984] OJ L212/13; [1985] 2 CMLR 350 8.31, 8.34, 8.590, 8.592, 8.594, 8.595 Flextronics International/Certain Assets belonging to Motorola Mobility (M.6853) (2013) 5.63 Flextronics/Xerox (M.2629) (2001) 5.65 Floral (80/182) [1980] OJ L39/51; [1980] 2 CMLR 285 7.357 Flughafen Berlin II (M.2262) 15.370 Flughafen Frankfurt/Main AG (98/190) [1998] OJ L72/30; [1998] 4 CMLR 779 4.593, 15.376 Food Flavour Enhancers (2004/206) [2004] OJ L75/1; [2004] 5 CMLR 11 1.118, 8.12, 8.42, 8.61, 8.69, 8.76, 8.80, 8.93, 8.117, 8.622, 8.658 Ford/Volkswagen (93/49) [1993] OJ L20/14; [1993] 5 CMLR 617 3.459, 7.59, 7.96 Fortis/ABN AMRO Assets (M.4844) 11.76, 11.80 France Telecom/Equant (M.2257) [2001] OJ C187/8; [2001] 4 CMLR 1514 13.207 Freight forwarding, decision 28 March 2012, not yet reported 8.09, 8.15, 8.79 French Beef (2003/600) [2003] OJ L209/12; [2003] 5 CMLR 18 1.118, 8.62, 8.88, 8.605, 8.611, 8.615, 8.624, 8.639 French Beer (2005/503) [2005] OJ L184/57 1.118, 8.32, 8.622, 8.632 French Regulated Tariffs (C17/2007), IP/9/376 (2009) 12.184 French-West African Shipowners’ Committees (92/262) [1992] OJ L134/1; [1993] 5 CMLR 446 8.31, 8.109 Freudenberg & Co/Trelleborg/JV (M.6339) (2012) 5.131 Friesland/Campina (M.5046) [2009] OJ C75/6 1.269, 5.576, 5.646, 5.651, 5.725, 5.729, 5.762, 5.1090 Frieslandcampina/Zijerveld & Veldhuyzen and Den Hollander (M.6722) 5.180, 5.1085 Fujitsu/Siemens (JV.22) (1999) 5.05 (p. cxlvi) GDF Gas Foreclosure (39.316) [2009] OJ C57/13 2.107, 2.132, 4.55, 12.16, 12.19, 12.20, 12.23, 12.24, 12.45, 12.139, 12.142, 12.151, 12.153, 12.159, 12.160– 12.166, 12.173–12.174 GDF Suez/International Power (M.5978) (2011) 12.35, 12.112 GDF/ENEL/ENI (38.662) (2004) 2.103, 12.59 GE/Agfa NDT (M.3136) [2004] OJ C66/4 5.59 GE/Amersham (M.3304) [2004] OJ C74/5; [2004] 4 CMLR IS42 4.521

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GE/Avio (M.6844) 5.297 GE/Instrumentarium (M.3083) [2004] OJ L109/1 1.318, 5.719, 5.1090 GEAE/P & W (Engine Alliance) (2000/182) [2000] OJ L58/16; [2000] 5 CMLR 49 7.76 GEC Marconi/Alenia (M.1258) [1998] OJ C306/12 5.296 GEC Weir Sodium Circulators (77/781) [1977] OJ L327/26 3.345, 7.52, 7.66 GEC/Thomson-CSF (II) (M.724) [1996] OJ C186/2 5.296 GEC/VSEL (M.529) [1994] OJ C368/20 3.08 GEES/Unison (M.2738) [2002] OJ C134/2 5.218, 5.276 GEMA I (71/244) [1971] OJ L134/27 6.147, 14.127, 14.128, 14.129, 14.130, 14.132 GEMA II (72/268) [1972] OJ L166/22 14.127, 14.129, 14.130, 14.132 GEMA III (82/204) [1982] OJ L94/12; [1982] 2 CMLR 482 14.132 GFU IP/02/1084 12.119, 12.120, 12.121, 12.122, 12.123 GIP/Gatwick Airport (M.5652) (2009) 15.367 GISA (72/478) [1972] OJ L303/45; [1973] CMLR D125 7.400 GSM Italy (95/489) [1995] OJ L280/49; [1996] 4 CMLR 700 6.75, 6.216, 6.246 GSM Spain (97/181) [1997] OJ L76/19 6.75, 6.216, 6.246 GTR/FIA (36.776) IP/01/1523 14.64 GVG/FS (2004/33) [2004] OJ L11/17 4.605, 15.281, 15.285, 15.289, 15.291, 15.340, 15.344 GVL (81/1030) [1981] OJ L370/58 6.147, 6.159 Gas (39.173) 12.12 Gas insulated switch gear (GIS) (38.899) [2008] OJ C5/7 1.118, 8.14, 8.23, 8.25, 8.31, 8.32, 8.34, 8.36, 8.41, 8.77, 8.80, 8.83, 8.84, 8.86, 8.88, 8.90, 8.187, 8.200, 8.464, 8.509, 8.606, 8.609, 8.655 Gaz de France/Suez (M.4180) (2006) [2007] OJ L88/47 5.669, 5.812, 5.1089, 11.87, 12.19, 12.23, 12.24, 12.35, 12.39 Gazprom/Sonatrach IP/03/1345 12.59 Gencor/Lohnro (IV/M619) [1997] OJ L11/30; [1999] 4 CMLR 1076 1.116, 1.254, 1.264, 5.768, 5.769 General Electric/Honeywell (M.2220) [2001] OJ L48/1 5.585, 5.816 Generali/INA (M.1712) [2002] OJ C58/6; [2000] 4 CMLR 244 11.184

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Geodis/Giraud (M.5877) 15.272 German Banks (2003/25) [2003] OJ L15/1; [2003] 4 CMLR 18 1.118, 11.62, 11.64 German Bundesliga (2005/396) [2005] OJ L134/46; [2005] 4 CMLR 26 7.350, 14.65, 14.94 German Electricity Balancing Market (39.389) (2008) 2.107, 2.132, 4.55, 4.60, 12.29, 12.35, 12.188, 12.198–12.202 German Electricity Wholesale Market (39.388) (2008) 2.107, 2.132, 4.55, 12.13, 12.29, 12.111, 12.134, 12.178, 12.188, 12.189–12.197 German postal legislation, 20 October 2004 K(2004)4001/3 6.75, 6.246 Gerog Verkhrsorganisation/Ferrovie dello Stato (GVG/FS) (2004/33) [2004] OJ L11/17 4.605, 15.281, 15.285, 15.289, 15.291, 15.340, 15.344 Glass containers (74/292) [1974] OJ L160/1; [1974] 2 CMLR D50 8.10, 8.16, 8.60 Glaxo Wellcome SA (36.957) 9.112, 16.169 Glaxo Wellcome/SmithKline Beecham (M.1846) (2000) 16.34, 16.35, 16.38 Glencore/Xstrata (M.6541) (2012) 5.100, 5.614, 5.1094 Good Energies/NEIF/Newco (M.6112) (2011) 5.122, 5.126 Google (39.740, 39.775 and 39.768) 4.33, 4.66 Google/DoubleClick (M.4731) [2008] OJ C184/4 4.206, 5.812, 14.162, 14.234, 14.235, 14.237, 14.241, 14.243 (p. cxlvii) Google/Motorola Mobility (M.6381), 13th February 2012, not yet reported 4.791, 5.400, 5.851, 5.994, 13.243 Gosme/Martell-DMP (91/335) [1991] OJ L185/23; [1992] 5 CMLR 586 3.62, 7.59, 7.61 Graphite Electrodes (2002/271) [2002] OJ L100/1; [2002] 5 CMLR 17; [2002] 5 CMLR 829 1.118, 8.20, 8.29, 8.31, 8.61, 8.77, 8.78, 8.79, 8.80, 8.86, 8.114, 8.310, 8.428, 8.511, 8.592, 8.597, 8.598, 8.600, 8.605, 8.607, 8.615, 8.624, 8.626, 8.644, 8.658, 8.671, 8.680, 8.687, 8.700, 8.701, 8.713 Greek Ferries (99/272) [1999] OJ L109/24; [1999] 5 CMLR 47 8.09, 8.103, 8.117, 8.263, 8.310, 8.583, 8.597, 8.600, 8.608, 8.609, 8.624, 8.647, 8.677, 15.188 Greek Insurances (85/276) [1985] OJ L152/25 6.129, 6.246 Greek lignite and electricity generation (38.700) 5 March 2008 6.246, 12.209 Groupe Auchan/Real/Real Hypermarket Romania (M.6822) 5.218 Grupo Vilar Mir/Hidroelectrica del Cantabrico/EnBW (M.2434) (2004) 12.170 Guinness/Grand Metropolitan (M.938) [1998] OJ L288/24; [1997] 5 CMLR 760 1.269, 4.201, 7.82

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HOV SVZ/MCN (94/210) [1994] OJ L104/34 3.275, 4.908, 4.911, 4.913, 4.914, 15.267, 15.271, 15.278, 15.304, 15.314, 15.339 Hachette, Annual Competition Report (8th) 4.406 Haniel/Cementbouw/JV (CVK) (M.2650) [2003] OJ C282/1 5.390, 5.912 Hard haberdashery: fasteners (39.168) [2009] OJ C47/8 1.118 Hard haberdashery/needles [2005] 4 CMLR 792 1.118 Heat stabilisers (38.589) [2010] OJ C307/9 1.118, 8.11, 8.74, 8.323, 8.563, 8.569, 8.575, 8.577, 8.595, 8.644, 8.655, 8.660, 8.663, 8.664, 8.690 Heat Stabilisers and Impact Modifiers (2003) 8.442 Hexion/Huntsman (M.4835) (2008) 5.1069 HBO/Ziggo/HBO Nederland (M.6369) (2011). 14.197 Hochtief/Aer Rianta/Düsseldorf Airport (M.1035) (1997) 5.176 Hochtief/Geosea/Beluga Hochtief Offshore JV (M.6315) (2011) 5.131 Hoechst/Rhône-Poulenc (M.1378) [1999] OJ C254/5 5.1115 Hoffmann-La Roche/Boehringer Mannheim (M.950) [1998] OJ L234/14; [2000] 4 CMLR 735 5.1115 Hutchinson 3G Austria/Orange Austria (M.6497) 5.308, 5.669, 5.698, 5.812, 5.901, 5.1080, 13.180–13.186 Hutchinson/ECT (JV.56) (2001) 7.142 Hutchinson/RCPM/ECT (JV.55) [2001] 4.206, 7.142 Hutchison 3G Austria/Orange Austria [2013] OJ 2013 C224/6 1.295 Hutchison 3G UK/Telefónica Ireland (M.6992) (2013) 13.186 Hydrogen Peroxide and Perborate (2006/903) [2006] OJ L353/54 1.118, 8.11, 8.23, 8.24, 8.43, 8.59, 8.61, 8.82, 8.92, 8.193, 8.196, 8.534, 8.625, 8.644, 8.655 IAG/BMI (M.6447) (2012) 15.43, 15.44, 15.48, 15.63, 15.64, 15.66, 15.67, 15.79, 15.84, 15.93, 15.115, 15.116, 15.117, 15.118, 15.121, 15.124 IBM Italia/Business Solutions/JV (M.2478) (2001) 5.130, 5.135 IBM Maintenance Services (39.692) [2012] OJ C18/06 4.60, 4.63, 4.609 IBM System/370, XIVth Report on Competition Policy (1984) 4.536 IBM/Telelogic (M.4747) [2008] OJ C195/05 1.318 IFPI Simulcasting (2003/300) [2003] OJ L107/58; [2003] 5 CMLR 5 9.72, 10.210, 14.50

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INEOS/Kerling (M.4734) [2008] OJ C219/15 1.289, 1.302, 4.210, 5.614, 5.655, 5.895 INEOS/Tessenderlo Group S-PVC Assets (M.6218) (2011) 5.66 IPIC/MAN Ferrostaal (M.5406) (2009) 5.100, 5.674, 5.1085 IRE/Nordion (XXVIIIth Report on Competition Policy, 1998) 16.24 IRI/Nielsen Press Release IP/96/1117 (4 December 1996) 4.405 ITT Promedia/Belgacom (35.268) [1996] 3 CMLR 130 4.792 Iberdrola Renovables/Gamesa (M.5366) (2008) 5.66 Iberia/British Airways (M.5747) (2010) 15.43, 15.44, 15.67, 15.68, 15.81 (p. cxlviii) Identrus (2001/696) [2001] OJ L249/12; [2001] 5 CMLR 1294 3.211, 3.364 Ijsselcentrale and others (91/50) [1991] OJ L28/32; [1992] 5 CMLR 154 3.67, 6.152 Inco/Falconbridge (M.4000) (2006) 5.624, 5.646, 5.1063, 5.1097 Industri Kapital (Nordkem)/Dyno (M.1813) (2000) 5.1074 Industrial Bags (38.354) [2007] OJ L282/41 1.118, 8.09, 8.31, 8.42, 8.59, 8.63, 8.67, 8.72, 8.196, 8.350, 8.361, 8.594, 8.598, 8.644, 8.655, 8.658, 8.713 Industrial Copper Tubes (2004/421) [2004] OJ L125/50 1.118, 8.34, 8.77, 8.79, 8.82, 8.86, 8.88, 8.110, 8.117, 8.592, 8.594, 8.620, 8.634, 8.644, 8.650, 8.657, 8.658, 8.688, 8.701 Industrial and Medical Gases (2003/207) [2003] OJ L84/1; [2003] 5 CMLR 8, amended by [2003] OJ L123/49 1.118, 8.117, 8.546, 8.624 Ingram Micro/Brightpoint (M.6685) (2012) 5.45 Intel (37.990), decn of 13 May 2009, not yet reported 4.29, 4.60, 4.171, 4.182, 4.190, 4.194, 4.417, 4.424, 4.435, 4.437, 4.449, 4.469, 4.470, 4.922, 4.936 Intel/McAfee (M.5984) (2011) 5.674, 5.826, 5.1032, 5.1095 Intercontinental Exchange/NYSE Euronext (M.6873) (2013) 11.106 Intergroup (75/482) [1975] OJ L212/23; [1975] 2 CMLR D14 7.390 International Private Satellite Partners (IPSP) (94/895) [1994] OJ L354/75 7.59 International removal services (38.543) [2009] OJ C188/16 1.118, 8.09, 8.33, 8.173, 8.459, 8.554, 8.565, 8.636, 8.690 Internetbuchhandel (37.906) 14.19, 14.34 Iridium (97/39) [1997] OJ L16/87; [1997] 4 CMLR 1065 3.275 Irish Banks’ Standing Committee (86/507) [1986] OJ L295/28; [1987] 2 CMLR 601 3.211, 3.364

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Irish Sugar (97/624) [1997] OJ L258/1; [1997] 5 CMLR 666 4.229, 4.326, 4.327, 4.905, 4.906 Italian Cast Glass (80/1334) [1980] OJ L383/19; [1982] 2 CMLR 61 8.73, 8.74, 8.88, 8.622 Italian Flat Glass I (81/881) [1981] OJ L326/32; [1982] 3 CMLR 366 8.71, 8.572, 8.595, 8.622 Italian Flat Glass II (89/93) [1989] OJ L33/44; [1990] 4 CMLR 535 8.59 Italian Ports (97/744) [1997] OJ L301/17; [1998] 4 CMLR 73 6.246 Italian Post (2001/176) [2001] OJ L63/59; [2001] 5 CMLR 15 6.246 Italian raw tobacco (2006/901) [2006] OJ L353/45; [2006] 4 CMLR 1766 1.118, 8.17, 8.18, 8.37, 8.72, 8.145, 8.165, 8.186, 8.196, 8.635, 8.644, 8.655 Itema Holding/BarcoVision (M.4874) 5.812, 5.837, 5.843, 5.859 Iveco/Ford (88/469) [1988] OJ L230/39; [1989] 4 CMLR 40 7.69 J&J/Synthes (M.6266) (2012) 5.620, 5.899, 5.903 JCB (2002/190) [2002] OJ L69/1; [2002] 4 CMLR 37; [2002] 4 CMLR 1458 9.98, 9.129, 9.130, 9.140 JCD/RCS/Publitransport/IGP (M.2529) 14.234, 14.237 JCI/FIAMM (M.4381) [2009] OJ C241/12 4.178, 5.622, 5.637, 5.640, 5.645, 5.651, 5.786, 5.972 Joint selling of the commercial rights of the UEFA Champions League (37.398) [2003] OJ L291/25 14.68 KEWA (76/249) [1976] OJ L51/15; [1976] 2 CMLR D15 7.66 KGHM/Tauron Wytwarzanie/JV (M.5979) (2012) 5.89, 12.29 KKR/CAPSUGEL (M.6231) (2011) 16.40 KKR/Permira/Prosiebensat.1 (M.4547) 5.176 KLM/Alitalia (JV.19) [1999] 5 CMLR 759 7.142, 15.74 KLM/Martinair (M.1328) [1999] OJ C408/8 5.517 KLM/Martinair (M.5141) (2008) 15.44, 15.59, 15.62, 15.65, 15.67, 15.84, 15.127 KLM/NorthWest (36.111) [2002] OJ C264/11 15.100 KPNQWEST/EBONE/GTS (M.2648) (2002) 13.207 KWS v Commission (C-586/12 P), 2013, not yet reported 8.599, 8.602 Kali & Salz/MDK/Treuhand (M.308) [1994] OJ L186/38; [1994] 4 CMLR 526 1.116, 4.231 5.767, 5.960, 5.962, 5.1202

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Kazmunaigaz/Rompetrol (M.4934) (2007) 12.21 Kesko/Tuko (M.784) [1997] OJ L110/53; [1997] 4 CMLR 24 5.502, 5.757 (p. cxlix) Kimberley Clark/Scott Paper (M.623) [1996] OJ L183/1; [1996] 4 CMLR 461 1.302, 4.201 Kingfisher/Wegert/ProMarkt (M.1188) [1998] OJ C342/3 5.147 Kinnevik/Billerud/Korsnaes (M.6682) (2012) 5.1068 Kirch/Richemont/Telepiù (M.410) (1994) 14.197 Koninklijke Ahold/Valk Holding (M.6588) [2012] OJ C4300 5.230 Koninklijke Philips/Indal Group (M.6357) (2011) 5.636 Korsnäs/Assidomän Cartonboard (M.4057) (2006) 5.889, 5.931, 5.948, 5.949 Kraft Foods/Cadbury (M.5644) [2010] OJ C29/3 1.325, 5.882, 5.884 Kronenbourg/Heineken (Belgian Beers) (2005/503) [2003] OJ L200/1 1.118, 8.25, 8.42, 8.61, 8.79, 8.117, 8.501, 8.587, 8.592, 8.594, 8.609, 8.613, 8.619, 8.644, 8.646 La Poste v Swift & GUF (36.120) [1997] OJ C335/3 11.53, 11.54, 11.55, 11.56 La Poste/Swiss Post/JV (M.6503) (2012) 5.135 LCD (39.309) [2011] OJ C295/8 8.13, 8.31, 8.43, 8.59, 8.77, 8.79, 8.93, 8.155, 8.194, 8.204, 8.509, 8.531, 8.555, 8.556, 8.558, 8.560, 8.567, 8.658, 8.665 LGI/KBW (M.5900) (2011) 13.202, 13.203 LGI/Telenet (M.4521) (2007) 13.203, 14.200 LH/SAS (35.545) [1996] OJ L54/64 15.100 LINDE/BOC (M.4141) (2006) 5.786, 5.808 Lagardère/Natexis/VUP (M.2978) [2004] OJ L125/54 1.325, 5.741, 14.217, 14.218, 14.219, 14.220 Langenscheidt-Hachette (82/71) [1982] OJ L39/25; [1982] 1 CMLR 181 7.66 LdPE (89/191) [1989] OJ L74/21; [1990] 4 CMLR 382 8.594 Le Roy Merlin/Brico (M.2898) [2003] OJ C187/11 5.218 Lesaffre/GBI UK (M.5020) 5.218 Liberty Global Europe/UnityMedia (M.5734) (2010) 13.203, 14.196 Liberty Global/Virgin Media (M.6880) (2013) 13.204, 14.211 Lidl/Plus Romania/Plus Bulgaria (M.5790) 5.245

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Lithuania–Construction of infrastructure for the passenger and cargo ferries terminal in Klaipeda (SA.30742) (2012) 15.354 Lloyd’s Underwriters’ Association and the Institute of London Underwriters (93/3) [1993] OJ L4/26; [1993] OJ L4/26 11.195 London Stock Exchange Group/LCH Clearnet Group (M.6502) 5.214, 5.221 Long term electricity contracts in France (39.386) [2010] OJ C133/10 4.55, 4.60, 12.17, 12.32, 12.33, 12.42, 12.65, 12.72, 12.73, 12.75, 12.76, 12.77, 12.79, 12.115 Lonza/Teva/JV (M.5479) (2009) 16.16 Lucas/Varity (M.768) [1996] OJ C266/6; [1996] 5 CMLR 255 9.184 Lufthansa/Austrian Airlines (M.5440) [2008] OJ C219/2 5.1097, 15.44, 15.45, 15.48, 15.56, 15.63, 15.64, 15.65, 15.67, 15.78, 15.82, 15.83, 15.115, 15.116, 15.117, 15.124 Lufthansa/British Midland (M.5403) (2009) 15.55, 15.56, 15.58, 15.67, 15.81, 15.82 Lufthansa/Eurowings (M.3940) (2005) 15.64 Lufthansa/SA Airholding [2009] OJ C295/10 1.302 Lufthansa/SAS (96/180) [1996] OJ L 54/28; [1996] 4 CMLR 845 7.59, 15.100 Lufthansa/SAS/United Airlines (36.201, 36.076 and 36.078) [2002] OJ C264/5 15.12, 15.28, 15.100 Lufthansa/SN Airholding (M.5335) (2010) 15.56, 15.59, 15.63, 15.64, 15.77, 15.78, 15.82, 15.83, 15.115 Lufthansa/Swiss (M.3770) (2005) 15.57, 15.58, 15.78, 15.127 Lundbeck (39.226) (2013), not yet reported 3.121, 4.740, 4.743, 10.158, 16.57, 16.69, 16.88, 16.89, 16.90, 16.94, 16.95, 16.96, 16.98, 16.102, 16.109 Luxembourg Breweries (2002/759) [2002] OJ L253/21; [2002] 5 CMLR 30 1.118, 8.33, 8.39, 8.103, 8.648, 8.664 Lyonnaise des Eaux/Northumbrian Water (M.567) [1996] OJ C11/3 5.293 MCAA [2006] OJ L353/12 8.173, 8.323, 8.536, 8.594, 8.637 MCI WorldCom/Sprint (M.1741) [2003] OJ L300/1 5.669, 13.208 (p. cl) MSG Media Service (M.469) [1994] OJ L364/1; [1994] 4 CMLR 499 14.198 MacCormick/CPC/Rabobank/Ostmann (M.330) [1993] 5 CMLR 535 5.338, 5.421, 5.430 McCain Foods Group/Lutosa Business (M.6813) (2013) 5.1004 Maersk Data/Eurogate IT/Global Transportation Solutions (M.3097) (2003) 5.89 Maersk/PONL (M.3829) 15.185

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Magill TV Guide/ITP, BBC and RTE (89/205) [1989] OJ L78/43; [1989] 4 CMLR 757 4.587, 10.222, 10.236 Mannesman/Bell Atlantic/Omnitel (JV.17) [1999] 5 CMLR 15 7.142 Mannesmann/Vallourec/Ilva (M.315) [1994] OJ L102/15; [1994] 4 CMLR 529 4.208 Marine Harvest/Morpol (M.6850) 5.311, 5.391, 5.397, 5.652, 5.683, 5.695, 5.730 Marine hoses (39.406) [2009] OJ C168/6 1.118, 8.32, 8.33, 8.36, 8.74, 8.78, 8.79, 8.86, 8.89, 8.168, 8.240, 8.464, 8.545, 8.558, 8.560, 8.563, 8.565, 8.567, 8.568, 8.569, 8.606, 8.607, 8.609 Matra BAe Dynamics/DASA/LFK (M.945) [1998] OJ C149/4 3.11 Matra Marconi Space/British Aerospace Systems (M.437) [1994] OJ C245/9 3.11 Mecaniver/PPG [1985] OJ L35/54 5.01 Meldoc (86/596) [1986] OJ L348/50; [1989] 4 CMLR 853 3.123, 8.39 Methacrylates (2006/793) [2006] OJ L322/20 1.118, 8.63, 8.79, 8.196, 8.644, 8.655, 8.658, 8.659 Methionine (2003/674) [2003] OJ L255/1; [2004] 4 CMLR 20 1.118, 8.42, 8.117 Methylglucamine (2004/105) [2004] OJ L38/18; [2004] 4 CMLR 30 1.118, 8.42, 8.73 Microsoft (37.792) [2005] 4 CMLR 965 4.44, 4.47, 4.171, 4.200, 4.481, 4.487, 4.490, 4.492, 4.499, 4.535, 4.551, 4.609, 4.618, 10.249, 10.261, 12.231 Microsoft-Tying (Microsoft II) (39.530) decn of 16 December 2009 2.142, 4.44, 4.60, 4.82, 4.246, 4.481, 4.487, 4.488, 4.507, 4.508, 4.509 Microsoft/Yahoo! Search Business (M.5727) (2010) 5.66, 5.68, 5.137, 14.234, 14.236 Milchförderungsfonds (85/76) [1985] OJ L35/35; [1985] 3 CMLR 101 3.123 Mitchell Cotts/Sofiltra (87/100) [1987] OJ L41/31; [1988] 4 CMLR 111 7.61, 7.69 Mitsui/CVRD/Caemi (M.2420) [2004] OJ L92/50; [2002] 5 CMLR 13 5.880 Mittal/Arcelor (M.4137) 5.1016 Monochloroacetic Acid (MCAA) (2006/897) [2006] OJ L353/12 1.118 Monsanto/Pharmacia&Upjohn (M.1835) (2000) 16.35 Moosehead/Whitbread (90/186) [1990] OJ L100/32; [1991] 4 CMLR 391 10.13, 10.76, 10.176, 10.180, 10.181, 10.185 Morgan Stanley/Visa International/Visa Europe (37.860), decn of 3 October 2007 3.172, 11.53, 11.57 Motorola/Enforcement of UMTS standards essential patents (39.985) 4.790 Msref/Crowne Plaza Wiesbaden Hotel (M.5164) (2008) 5.59

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Munksjoe/Ahlstrom (M.6576) (2013) 5.1068, 5.1070 NC/Canal+/CDPQ/BankAmerica (M.1327) [1999] OJ C233/21 5.05, 7.142, 7.143 NCB/National Smokeless Fuels/NCC (National Carbonizing) (76/185) [1976] OJ L35/6; [1976] 1 CMLR D82 4.642 NEVEWA-ANSEAU (82/371) [1982] OJ L167/39; [1982] 2 CMLR 193 3.195, 6.152, 6.155, 6.175 NLNG IP/02/1869 12.59 Napier Brown/British Sugar (88/518) [1988] OJ L284/41; [1990] 4 CMLR 196 4.475, 4.610, 4.640, 4.643, 8.592 Nathan-Bricolux (2001/135) [2001] OJ L 54/1; [2001] 4 CMLR 1122 9.98, 9.117 National Panasonic (82/853) [1982] OJ L354/28; [1983] 1 CMLR 497 8.658 National Sulphuric Acid Association (80/917) [1980] OJ L260/24; [1980] 3 CMLR 429 7.399, 7.401, 7.402, 7.404 Nederlandse Federative Vereniging voor de Groothandel op Elektrotechnisch Gebied and Technische Unie (FEG & TU) (2000/118) [2000] L39/1; [2000] 4 CMLR 1208 1.118, 3.187 Nestlé/Novartis (M.4540) (2007) 5.901 Nestlé/Perrier (M.190) [1992] OJ L356/1; [1993] 4 CMLR M17 1.116, 1.254, 4.201, 5.03, 5.612 Netherlands beer market (37.766) [2008] C122/1 1.118, 8.660, 8.703 Network sharing Germany (38.369) [2004] OJ L75/32; [2004] 5 CMLR 762 9.72, 13.229 (p. cli) News Corp/BSkyB (M.5932) 5.286, 14.75, 14.161, 14.165, 14.189, 14.194, 14.195, 14.196, 14.198, 14.203, 14.211, 14.212, 14.226, 14.231, 14.232, 14.233, 14.234, 14.235, 14.239, 14.242 News Corp/Premiere (M.5121) (2008) 5.85, 5.1090, 14.75, 14.200, 14.203, 14.211, 14.214 Newscorp/Telepiù (M.2876) [2004] OJ L110/73; [2004] 5 CMLR 30 5.975, 5.979, 5.1090, 14.84, 14.94, 14.161, 14.162, 14.197, 14.203, 14.207, 14.208 Night Services (94/663) [1994] OJ L259/20; [1995] 5 CMLR 76 7.58, 7.59, 7.62, 7.91, 7.102, 15.282, 15.310 Nintendo Distribution (2003/675) [2003] OJ L255/33; [2004] 4 CMLR 421 8.310, 8.645, 9.117 Nokia/Navteq (M.4942) [2009] OJ C13/06 5.812, 5.850, 5.858, 5.940 Nokia/Siemens (M.4297) (2006) 5.717

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Nordic Capital/Mölnlycke Clinical/Kolmi (IV/M.1075) [1998] OJ C39/19 1.307 Nordic Satellite Distribution (M.490) [1996] OJ L53/20 14.198, 14.203 Norsk Hydro/Orkla/JV (M.6756) (2013) 5.1068, 5.1077 Northern Rock/Virgin Money (M.6442) (2011) 11.85 Novartis/Hexal (M.3751) (2005) 16.05 Nuovo CEGEAM (84/191) [1984] OJ L99/29; [1984] 2 CMLR 484 3.76, 11.186, 11.193, 11.199 Nynas/Shell/Harburg Refinery (M.6360) (2013) 5.560, 5.938, 5.974 O2 UK/T-Mobile UK (38.370) 13.229 OMYA/Huber PCC (M.3796) [2007] OJ L72/24 5.267, 5.545, 5.624 OPCOM (39.984) (2013) 12.54 Olivetti/Canon (88/88) [1988] OJ L52/51; [1989] 4 CMLR 940 7.69 Olympic/Aegean Airlines (M.5830) (2008) 5.91, 5.271, 5.545, 5.669, 5.966, 5.975, 5.978, 15.44, 15.61, 15.62, 15.63, 15.64, 15.84, 15.127, 15.133, 15.188 Omega-Nintendo (2003/675) [2003] OJ L255/33; [2004] 4 CMLR 421 9.117 Online Travel Portal (38.006) [2001] OJ C323/6 14.106 Optical Fibres (86/405) [1986] OJ L236/30 7.58, 7.69, 7.101 Oracle/Peoplesoft (M.3216) [2005] OJ L218/6; [2004] 4 CMLR IS93 1.318, 1.325, 5.566, 5.728 Oracle/Sun Microsystems (M.5529) [2010] OJ C91/7 1.318, 4.201, 5.996 Organic Peroxides (2005/349) [2005] OJ L110/44; [2005] 5 CMLR 14 1.118, 8.74, 8.77, 8.117, 8.509, 8.573, 8.592, 8.594, 8.595, 8.634, 8.655, 8.660, 8.680 Orkla/Elkem (M.3709) (2005) 5.394 Orkla/Rieber & Son (M.6753) 5.231, 5.311 Osram/Airam, XIth Report on Competition Policy (1981) 4.730 Otto/Primondo Assets (M.5721) (2010) 5.393, 5.1066 Otto/Quelle Schweiz Assets (M.5840) [2010] OJ C200/6 5.64, 5.1066 Outokumpu/Inoxum (M.6471) [2013] OJ C312/6 1.254, 1.325, 5.614, 5.683, 5.734, 5.937, 5.951 P&I Clubs (85/615) [1985] OJ L376/2; [1989] 4 CMLR 178 3.29, 11.04, 11.184, 11.187, 11.209–11.213

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P&I Clubs (99/329) [1999] OJ L125/12; [1999] 5 CMLR 646 3.259, 11.04, 11.184, 11.187, 11.209–11.213 P&I Clubs Pooling Agreement (37.143) [1999] OJ L125/12; [1999] 5 CMLR 646 4.887 P&O Stena Line (99/421) [1999] OJ L163/61; [1999] 5 CMLR 682 7.78, 15.188 PO/iTunes (39.154) 14.120 PVC (31.865) [1989] OJ L74/1; [1990] 4 CMLR 345 3.68, 8.594 PVC II (94/599) [1994] OJ L239/14 8.20, 8.544, 8.599, 8.615 Pabst & Richarz/BNIA (76/684) [1976] OJ L231/24; [1976] 2 CMLR D63 3.123 Panagora/DG Bank (JV.14) [1999] 4 CMLR 24 7.142 Panasonic/Sanyo (M.5421) [2009] OJ C322/3 1.318, 5.911 Parfums Givenchy system of selective distribution (92/428) [1992] OJ L236/11; [1993] 5 CMLR 579 9.130, 9.162, 9.250 Pasteur Merieux/Merck (94/770) [1994] OJ L309/1; [1993] 5 CMLR 206 7.59, 7.153 Pay Television Output Agreements (38.427) IP/04/1314 14.99, 14.100 (p. clii) Pelican/Kyocera, Report on Competition Policy (XXV) 9.184 Penneys (78/193) [1978] OJ L60/19; [1978] 2 CMLR 100 10.189 Pernod Ricard/Allied Domecq (M.3779) OJ 2005 C196/2 5.70, 5.1085 Pernod Ricard/Diageo/Seagram Spirits (M.2268) (2001) 5.1074 Pernod Ricard/V&S OJ 2008 C219/5 1.269 Peroxygen Products (85/74) [1985] OJ L35/1; [1985] 1 CMLR 481 8.73, 8.594 Petrochina/Ineos/JV (M.6151) (2011) 5.130, 5.137 Pfizer/Wyeth (M.5476) (2009) 16.35, 16.38 Philip Morris/Papastratos (M.3191) [2003] OJ C212/4; 1.325 Philips/Agilent (M.2256) [2001] OJ C92/10; [2001] 4 CMLR 1517 1.318 Philips/Osram (94/386) [1994] OJ L 378/37; [1996] 4 CMLR 48 7.59, 7.94 Philips/Thomson/Sagem (M.293) [1993] OJ C22/2 5.135 Philips/VCR OJ 1978 L47/42 7.523, 7.535 Piaggio/Aprilia (M.3570) [2005] OJ C7/5 5.1092 Plasterboard (37.152) [2005] OJ L166/8; [2005] 5 CMLR 155 1.118, 7.477, 8.59, 8.117, 8.538, 8.592, 8.594, 8.620, 8.626 Polaroid/SSI Europe, Report on Competition Policy (XIII) 4.566

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Polypropylene (86/398) [1986] OJ L230/1; [1988] 4 CMLR 347 3.77, 3.87, 3.150, 8.12, 8.20, 8.24, 8.34, 8.68, 8.109, 8.457, 8.590, 8.594 Port of Genoa (97/745) [1997] OJ L301/27; [1998] 4 CMLR 91 6.246, 10.261 Port of Rødby (94/119) [1994] OJ L55/52; [1994] 5 CMLR 457 6.58, 6.246, 12.147, 15.383 Port of Roscoff, Report on Competition Policy [1995] 5 CMLR 177 15.383 Portuguese Airports (35.703) [1999] OJ L69/31; [1999] 5 CMLR 103 4.910, 6.246, 15.351, 15.362, 15.363, 15.372 Power Exchanges (39.952) 12.52 Power transformers (39.129) [2009] OJ C296/21 1.118, 8.32, 8.560, 8.567, 8.595, 8.658, 8.664 Pre-Insulated Pipe Cartel (99/60) [1999] OJ L24/1; [1999] 4 CMLR 402 3.88, 3.119, 3.130, 3.150, 7.516, 8.28, 8.29, 8.31, 8.33, 8.36, 8.41, 8.66, 8.67, 8.85, 8.89, 8.103, 8.311, 8.317, 8.597, 8.600, 8.608, 8.609, 8.612, 8.615, 8.626, 8.631, 8.644, 8.645, 8.656, 8.658, 8.662, 8.681 Prestressing steel (38.344) [2011] OJ C339/7 1.118, 8.09, 8.12, 8.33, 8.67, 8.72, 8.86, 8.88, 8.89, 8.204, 8.544, 8.555, 8.557, 8.563, 8.564, 8.567, 8.577, 8.595, 8.627, 8.633, 8.644, 8.665, 8.680, 8.690, 8.692, 8.693, 8.694 Price Waterhouse/Coopers & Lybrand (M.1016) [1999] OJ L50/27; [1999] 4 CMLR 665 1.318 Procter & Gamble/Gillette (M.3732) (2005) 5.745 Procter & Gamble/Sara Lee Air Care (M.5828) [2012] OJ C23/10 1.325, 5.214, 5.218, 5.266, 5.270, 5.276 Procter & Gamble/Schickedanz (M.430) [1994] L354/33; [1994] 5 CMLR 146 1.254, 1.299, 1.302, 4.201 Procter & Gamble/Teva OTC business (M.6280) (2011) 16.34 Procter & Gamble/Wella (M.3149) (2003) 5.894 Professional Videotapes (38.432) [2008] OJ C57/10 1.118, 8.208, 8.361, 8.568, 8.580, 8.598, 8.636, 8.658, 8.664 Prokent-Tomra (38.113) OJ 2008 C219; [2009] 4 CMLR 101 4.38, 4.40, 4.424 Promatech/Sulzer (M.2698) [2002] 5 CMLR 1594 5.267 ProSiebenSat.1 Media/RTL Interactive/JV (M.5881) (2010) 14.191 Quinine [1969] OJ L192/5; [1969] CMLR D41 8.26, 8.31, 8.32, 8.62 RAG/Degussa (M.2854) [2003] OJ C45/8; [2003] 4 CMLR IS27 5.71 RAI/UNITEL (78/516) [1978] OJ L157/39; [1978] 3 CMLR 306 3.29

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RCA/MAV Cargo (M.5096) (2008) 5.616, 15.265, 15.266, 15.269, 15.271, 15.272, 15.274, 15.275, 15.277 RSB/Tenex/Fuel Logistic (M.904) [1997] OJ C168/5; [1997] 4 CMLR 834 5.129 RTL/Veronica/Endemol (M.553) [1996] L134/32 14.125, 14.200, 14.234, 14.238, 14.239 (p. cliii) RWE Gas Foreclosure (39.402) [2009] 5 CMLR 1667 2.107, 2.132, 4.55, 4.60, 12.14, 12.19, 12.43, 12.139, 12.142, 12.143, 12.145, 12.146, 12.150, 12.156, 12.170– 12.172 RWE/Essent (M.5467) (2009) 12.19, 12.23, 12.33, 12.34 Rambus (38.636) [2010] OJ C30/17, not yet reported 4.60, 4.753–4.762, 4.861, 7.501, 10.133, 10.170, 13.241 Reckitt Benckiser/SSL (M.5953) (2010) 16.42, 16.46, 16.146 Refrigeration compressors (39.600), not yet reported 1.118, 8.11, 8.12, 8.76, 8.204, 8.230, 8.568, 8.627, 8.633, 8.685, 8.690, 8.724 Rennet (80/234) [1980] OJ L51/19; [1980] 2 CMLR 402 3.221, 7.400, 7.404 Renova Industries/Sulzer (M.5469) (2009) 5.85 Repsol (38.348) (2006) 12.81 Republic of Austria/Hypo Group Alpe Adria (2010) (M.5861) 5.76, 11.69, 11.92, 11.94 Reuters Instrument Codes (39.654) (2012), not yet reported 4.60, 11.140–11.143 Revised TACA (2003/68) [2003] OJ L26/53; [2003] 4 CMLR 21 15.181 Rewe/Meinl (M.1221) [1999] OJ L274/1; [2000] 5 CMLR 256 5.758, 5.759, 5.975 Rights Agency/SCAPR (39.636) 14.56, 14.57 Rio Tinto Alcan (39.230) [2013] C89/06 4.60, 4.477 Rockwell-Iveco (83/390) [1983] OJ L224/19; [1983] 3 CMLR 709 7.66 Rolled Zinc Products (82/866) [1982] OJ L362/40 8.572 Roofing Felt Cartel (86/399) [1986] OJ L232/15; [1991] 4 CMLR 130 3.81, 3.125, 8.16, 8.25, 8.29, 8.71, 8.89, 8.90 Rosneft/TNK-BP (M.6801) (2013) 12.36 Rubber Chemicals (2006/902) [2006] OJ C353/50 1.118, 8.173, 8.196, 8.625, 8.658 Ruukki/Capman/Fortaco (M.6737) (2012) 5.137 Ryanair/Aer Lingus I (M.4439) [2008] OJ C47/9 1.254, 1.264, 1.302, 1.307, 1.313, 5.100, 5.161, 5.203, 5.375, 5.447, 5.571, 5.594, 5.626, 5.634, 5.637, 5.646, 5.669,

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5.689, 5.722, 5.740, 5.909, 5.915, 5.930, 5.947, 5.1145, 15.43, 15.44, 15.53, 15.55, 15.61, 15.62, 15.88, 15.89, 15.94, 15.127, 15.131, 15.132 Ryanair/Aer Lingus II (M.5434) 15.133 Ryanair/Aer Lingus III (M.6663) (2013) 5.1063, 5.1082, 15.53, 15.55, 15.56, 15.57, 15.61, 15.77, 15.133 SABAM (39.151) [2005] OJ C200/11 14.52, 14.137 SAFRAN/SNPE Matériaux Energétiques/Regulus (M.6104) (2011) 5.142, 5.143, 5.297 SARIA/Danish Crown/Daka (M.6285) (2012) 5.87 SAS/Maersk Air (2001/716) [2001] OJ L265/15; [2001] 5 CMLR 31 1.118, 8.26, 8.32, 8.77, 8.78, 8.412, 15.139 SC Johnson/Sara Lee (M.5969) 5.271, 5.394, 5.395 SCA/Metsä Tissue (M.2097) [2002] 4 CMLR 38 5.611 SCK/FNK (95/551) [1995] OJ L312/79; [1996] 5 CMLR 416; [1996] 4 CMLR 565 1.118 SEAS, XXIVth Report on Competition Policy, 1994 17.105 SES Astra/Eutelsat/JV (M.4477) (2007) 13.206 SESA/DISA/SAE/JV (M.6525) 5.220, 5.242 SFPI/Dexia (M.6812) (2013) 5.79, 5.393, 11.92, 11.95 SFR/Télé 2 (M.4505) 14.75, 14.196 SFR/Télé2 France (M.4504) [2007] OJ L316/57 4.203, 5.669, 5.812, 5.1096, 14.162, 14.197, 14.211, 14.213 SG Vetri/Zignago Vetro/Ardagh Glass/Ecosud (M.5737) [2010] OJ C2114 5.230 SNCF-P/CDPQ/Keplis/EFFIA (M.5557) (2009) 15.299 SNCF/LCR/Eurostar (M.5655) [2010] OJ C272/2 5.1090, 15.281, 15.282, 15.286 SNCF/Trenitalia/AFA (M.3150) 15.268, 15.277 SNELPD (2002/344) [2002] OJ L120/19 6.246 SSI (82/506) [1982] OJ L232/1; [1982] 3 CMLR 702 3.76, 3.156 SAir Group/AOM (M.1494) 5.203 SAir Group/LTU (M.1354) 5.203 (p. cliv) Sammelrevers (34.657) 14.19, 14.34 Samsung/AST (M.920) [1999] OJ L225/12 5.551 Samsung/Enforcement of UMTS standards essential patents (39/939) 4.790, 4.796

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Sandoz (87/409) [1987] OJ L222/28, [1989] 4 CMLR 628 16.165 Sanofi-Aventis/Genzyme (M.5999) (2011) 16.16, 16.35, 16.38 Sanofi-Aventis/Zentiva (M.5253) (2009) 16.05, 16.21, 16.32, 16.35, 16.36, 16.37 Sanofi-Synthélabo/Aventis (M.3354) (2004) 16.35, 16.38 Sanofi/Synthélabo (M.1397) [2000] OJ C23/4; [1999] 4 CMLR 798 5.543 Sanofi/Synthélabo (M.1542) 5.543 Santander/Alliance and Leicester (M.5293) (2008) 11.69 Santander/Bradford & Bingley Assets (M.5363) (2008) 11.69, 11.85 Santiago Agreement (38.126, 39.150, 39.151 and 39.152), IP/04/586 (2004) 14.52 Saria/Teeuwissen/Jagero II/Quintet/Bioiberica (M.6438) (2012) 5.53 Scandlines Sverige v Port of Helsingborg (36.568) [2006] 4 CMLR 23 4.833, 4.834, 15.378, 15.381, 15.382 Schering-Plough/Organon Biosciences (M.4691) (2007) 16.35 Schneider/Legrand (M.2283) [2004] OJ L101/134 5.502, 5.585, 5.1122 Schuitema/ Super de Boer Assets (M.5677) 5.218 Screensport/EBU (91/130) [1991] OJ L63/32; [1992] 5 CMLR 273 7.368, 14.71 Sea Containers/Stena Sealink (34.689) (1994) 12.141, 12.147 Sea Containers v Stena Sealink (94/19) [1993] OJ L15/8; [1995] 4 CMLR 84 4.586, 4.593, 4.603, 4.604, 4.605 Seagate Technology/HDD Business of Samsung Electronics (M.6214) (2011) 5.386, 5.718, 5.737 Seamless Steel Tubes (2003/383) [2003] OJ L140/1; [2003] 5 CMLR 683 8.27, 8.32, 8.34, 8.42, 8.117, 8.491, 8.644 Servier (39.612) 4.743, 7.740, 16.33, 16.69, 16.100, 16.142, 16.143 Shell/BEB (M.3293) [2004] OJ C1/7; [2004] 4 CMLR IS8 5.143 Ship classification (39.416) [2010] OJ C2/05 4.60, 7.508, 7.531, 7.535 Shrimps, 2013, IP/13/1175 8.683 Siemens/Areva (39.736) [2012] OJ C280/8 7.104, 12.90 Siemens/Fanuc (85/618) [1985] OJ L376/29; [1988] 4 CMLR 945 3.202, 3.439, 8.27 Siemens/VA Tech (M.3653) [2006] OJ L353/19 5.100, 5.558

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Slovakian postal legislation relating to hybrid mail services (39.562) [2008] OJ C322/10 6.75, 6.246 Smart Card Chips (2010) 8.724 Snecma/Messier Dowty (M.1159) [1998] OJ C213/3 3.11 Socemas (68/318) [1968] OJ L201/4; [1968] CMLR D28 7.389 Soda Ash, XIth Report on Competition Policy (1981) 4.411 Soda ash/Solvay (91/299) [1991] OJ L152/21; [1994] 4 CMLR 645 7.345, 7.357, 8.590 Soda Ash–Solvay (33.133) OJ 2003 L10/10 4.411, 4.916, 4.918 Soda-ash/Solvay (91/297) [1991] OJ L152/1; [1994] 4 CMLR 454 3.118, 4.401, 7.345 Sodium Chlorate (38.695) [2009] OJ C137/6 1.118, 8.12, 8.563, 8.568, 8.569, 8.628, 8.664, 8.665 Sodium Gluconate, not yet reported 1.118, 8.31, 8.61, 8.83, 8.86, 8.88, 8.92, 8.93, 8.388, 8.514, 8.531, 8.535, 8.545, 8.600 SoFFin/Hypo Real Estate (M.5508) (2009) 5.76, 11.69, 11.92 Sofinco/Banco Popolare/Ducato/Agos (M.5222) 7.142 Sogecable/Canal Satelite Digital/Vias Digital (M.2845) (2002) 14.195 Solvay/CFK (91/298) [1991] OJ L152/16; [1994] 4 CMLR 482 7.345 Sony/BMG (M.3333) [2005] OJ L62/30; [2004] 5 CMLR IS39 1.116, 5.356, 5.771, 5.772, 5.787, 5.795, 5.797, 7.137, 7.141, 7.143, 14.37, 14.179, 14.180, 14.181, 14.186 Sony/Mubadala Development/EMI Music Publishing (M.6459) (2012) 5.90, 5.92, 14.170, 14.171, 14.172, 14.175, 14.177 Sony/SonyBMG (M.5272) (2008) 14.179, 14.180 Sony/Time Warner/CD Now (JV.25) (1999) 7.142 Sopelem/Vickers (78/251) [1978] OJ L70/47 3.275 (p. clv) Sorbates (2005/493) [2005] OJ L182/20 1.118, 8.117, 8.626 Souris–Topps Brussels (37.980) C(2004) 1910 final 9.117 Sovion/HMG (M.3605) 5.653 Spain Pharma (37.121) 9.112, 16.169 Spanish Airports (2000/521) [2000] OJ L208/36; [2000] 5 CMLR 967 6.246, 15.372 Spanish Courier Services (90/456) [1990] OJ L233/19; [1991] 4 CMLR 560 3.30, 6.246, 6.66

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Spanish Raw Tobacco (2007/236) [2007] OJ L102/14; [2006] 4 CMLR 866 1.118, 8.36, 8.62, 8.606, 8.640, 8.648 Spanish Transport Tariff (Transmediterranean) (87/359) [1987] OJ L194/28 6.102, 6.246 Special rights granted to La Banque Postale Caisses d’Epargne and Credit Mutuel for the distribution of the livret A and livret bleu, decn of 10 May 2007, not reported 6.246 Specialty Graphite (2006/460) [2006] OJ L180/20 1.118, 8.61, 8.66, 8.67, 8.83, 8.592, 8.600, 8.605, 8.620, 8.654, 8.655, 8.688, 8.701, 8.702 Standard & Poor’s (39.592) [2012] OJ C31/08 4.60, 4.63, 11.133–11.139 StatoilHydro/ConocoPhillips (M.4919) (2008) 1.307, 1.313 StatoilHydro/St1/ St1Avifuels (M.5422) (2008) 5.126 Statoil/Norsk Hydro (M.4545) (2007) 12.36, 12.119 Steel Beams (94/215) [1994] OJ L116/1; [1994] 5 CMLR 353 1.118, 8.43, 8.48, 8.62, 8.71, 8.590 Stichting Baksteen (94/296) [1994] OJ L131/15; [1995] 4 CMLR 646 8.56 Strabag/Kirchner (M.5200) 5.245, 5.580 Sun Alliance/Royal Insurance (M.759) (1996) 5.287 Sun Capital/Polestar UK Print (M.6215) (2011) 5.393 Sundbusserne v Port of Helsingborg (36.570) [2006] 4 CMLR 23 4.833, 4.834, 15.378, 15.381, 25.382 Swedish Interconnectors (39.351) [2010] OJ C142/08 4.55, 4.60, 12.16, 12.30, 12.44, 12.53, 12.56 Swissair/Sabena (II) (M.616) 5.203 Sydkraft/Graninge (M.3268) [2003] 5 CMLR 119 5.727, 12.35, 12.42 Synergen IP 02/792 12.107 Syngenta/Monsanto sunflower seed business (M.5675) (2010) 5.267, 5.450, 5.606, 5.669, 5.812 Syniverse and BSG Wireless Business (M.4662) [2008] OJ C101/25 1.318, 5.720 Synthetic Fibres (84/380) [1984] OJ L212/1 [1985] 1 CMLR 787 8.56 Synthetic Rubber (38.628) [2009] OJ C86/7 1.118, 8.545 Synthetic Rubber (38.638) [2008] OJ C7/11 1.118, 8.196, 8.545, 8.636, 8.664 T-Mobile Austria/tele.ring (M.3916) [2007] OJ L88/44 5.1063, 5.1080, 13.176–13.179

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T-Mobile Deutschland/ O2 Germany (38.369) [2004] OJ L75/32; [2004] 5 CMLR 762 8.72, 13.229 T-Mobile/Orange (M.5650) 5.215, 5.239, 5.699, 5.1066, 13.189, 13.231 T-Mobile/Orange Netherlands (M.4748) IP/07/1238 (2007) 13.187, 13.188, 13.194 TEKO (90/22) [1990] OJ L13/34; [1990] 4 CMLR 957 11.212 TLP/Ermewa (M.5579) 15.271, 15.272 TPG/APAX/TIM Hellas (M.3785) (2005) 5.79 TPS (99/242) [1999] OJ L90/6; [1999] 5 CMLR 168 3.227, 3.342, 7.103, 14.85 TUI Group/GTT Holding (M.1898) [2000] OJ C196/10; [2000] 5 CMLR 24 5.92 TV and Computer Monitor Tubes, [2013] OJ C303/13 8.14, 8.24, 8.59, 8.66, 8.67, 8.77, 8.88, 8.531, 8.690 Takeda/Nycomed (M.6278) (2011) 16.41 Talanx International/ Meiji Yasuda Life Insurance/Warta (M.6521) 11.185 Tariff Structures in the Combined Transport of Goods (93/174) [1993] OJ L73/38 15.251, 15.301 Telecinco/ Cuatro (M.5776) 5.218 Télécom Développment (1999/574) [1999] OJ L218/24; [2000] 4 CMLR 124 7.103 Telefónica Deutschland/E-Plus (M.7018) (2013) 13.186 Telefónica UK/Vodafone UK/Everything Everywhere/JV (M.6314) (2012) 5.90, 5.812, 5.821, 5.872, 5.873, 13.208 Telefónica/Caixabank/Banco Santander/JV (M.6956) (2013) 13.208 Telefónica/Cesky Telecom (M.3806) (2005) 13.201 Telefónica/Hansenet (M.5730) (2010) 13.195 (p. clvi) Telefónica/O2 (M.4035) (2006) 5.1085, 13.193 Telefónica/Portugal Telekom (39.839) 13.133, 13.167–13.170 Telefónica/Sogecable/Cablevisión (M.709) (1996) 5.390 Telekomunikacja Polska (39.525) [2011] OJ C324/07 4.60, 4.114, 13.131, 13.133, 13.162–13.166 Telenor/Globus/Germanos (M.6948) (2012) 13.195 Telia/Sonera (M.2803) [2002] OJ C201/19 13.199, 13.200 Telia/Soneral/Lithuanian Telecommunications (JV.7) [1998] 5 CMLR 467 7.142

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Telia/Soneral/Motorola/Omnitel (JV.9) [1998] 5 CMLR 467 7.142 Telia/Telenor (M.1439) [2001] OJ L40/1; [2001] 4 CMLR 36 13.199, 14.209 Telia/Telenor/Schibsted (JV.1) [1999] 4 CMLR 216 7.126, 7.142 Tennet/Elia/Gasunie/APX-Endex (M.5911) (2010) 12.29, 12.30, 12.34 Territorial restrictions Germany (Gazprom) (38.307) IP/05/710 14.106 Tesco/Carrefour (Czech Republic and Slovakia) (M.3905) 5.245 Tetra Pak II (92/163) [1992] OJ L72/1; [1992] 4 CMLR 551 4.498, 4.847 TetraLaval/Sidel (M.2416) [2004] OJ L43/13 1.269, 5.07, 5.502, 5.623, 5.816, 5.1122 Teva/Barr (M.5295) (2008) 16.33, 16.37, 16.41 Teva/Cephalon (M.6258) (2011) 16.05 Teva/Ratiopharm (M.5865) [2011] OJ C7/5 5.1074, 16.16, 16.32, 16.33, 16.34, 16.35, 16.36, 16.37, 16.41, 16.44, 17.39, 17.40 Thales/Finmeccanica/AAS/Telespazio (M.4403) OJ 2009 C34/5 4.210, 5.812 Thermo Fisher Scientific/Life Technologies (M.6944) (2013) 5.327 Thomas Cook/Travel Business of Cooperative Group/Travel Business of Midlands Cooperative Society (M.5996) (2011) 5.242 Thomson/CSF/Finmeccanica/Elettronica (M.767) [1996] OJ C310/9 3.11 Thomson/CSF/Teneo/Indra (M.620) [1995] OJ C264/9 3.11 Thread (38.337) [2008] C21/10 8.42, 8.624, 8.631, 8.644, 8.658, 8.677 Time Warner/CME (M.6866) (2013) 5.85, 14.211, 14.239, 14.242 Timisoara International Airport (31.662) [2011] OJ C270/11 17.449 Toltecs-Dorcet (82/897) [1982] OJ L379/19; [1983] 1 CMLR 412 3.121, 10.183, 10.187 TomTom/Teleatlas (M.4854) [2008] OJ C237/8 1.269, 5.811, 5.812, 5.857, 5.940, 5.941, 5.953 Toshiba/Mitsubishu OJ 2013 C70/12 8.23 Toshiba/Westinghouse (M.4153) (2006) 5.100, 5.1085 Total/Gaz de France (M.3410) [2004] 5 CMLR IS76 12.20, 12.25 Toyota Motor Europe (39.142) [2007] OJ L329/52 12.231 Toyota Tsusho/CFAO (M.6718) (2012) 5.85 Tractebell/Distrigaz (II) (M.493) (1994) 12.20 Trans-Atlantic Agreement (TAA) (94/980) [1994] OJ L376/1 1.118, 15.183

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Trans-Atlantic Conference Agreement (TACA) (99/243) [1999] OJ L95/1; [1999] 4 CMLR 1415 1.118, 15.183 Tyco/Mallinckrodt (M.2074) [2000] OJ C318/6 5.992 UBS/Mister Minute (M.940) [1997] OJ C232/5; [1997] 5 CMLR 147 5.59 UCB/Almirall (XXIVth Report on Competition Policy, 1994) 16.24 UCL 14.68 UEFA Broadcasting Regulations (2001/778) OJ 2001 L171/12; [2001] 5 CMLR 654 3.364 UEFA-Champions League (2003/778) [2003] OJ L291/25; [2004] 4 CMLR 549 7.349, 7.350, 14.64, 14.65, 14.94 UEFA/ENIC (37.806) IP/02/942, 27 June 2002 3.246 UGC/NOOS (M.3411) (2004) 13.203 UK Agricultural Tractor Registration Exchange (92/157) [1992] OJ L68/19; [1993] 4 CMLR 434 1.119, 3.275, 3.344, 7.64, 7.423, 7.460, 7.463, 7.470, 7.473, 7.495 UKWAL (92/237) [1992] OJ L121/45; [1993] 5 CMLR 632 8.406 UPM/Myllykoski and Rhein Papier (M.6101) 5.600, 5.733 UPS/TNT Express (M.6570) (2012) 5.625, 5.669, 5.723, 5.937, 5.943, 5.1082 UPS/TNT, not yet reported (2013) 1.318 (p. clvii) UTC/Goodrich (M.6410) (2012) 5.669, 5.674, 5.812, 5.817, 5.917, 5.1047 Unicredito/HVB (M.3894) (2005) 5.293 Uniform Eurocheques (85/77) [1985] L 35/48; 6.159 Unilever/Sara Lee Body Care (M.5658) OJ 2012 C23/09 1.269, 5.573, 5.575, 5.576, 5.614, 5.664, 5.710, 5.721, 5.729, 5.880, 5.888, 5.891, 5.892, 5.894 Unipapel/Spicers (M.6282) (2011) 5.992 Unisource (97/780) [1997] OJ L318/1; [1998] 4 CMLR 105 7.59 Unisource (2001/143) [2001] OJ L52/30 7.59 United Airlines/US Airways (M.2041) [2001] 4 CMLR 1510 15.59, 15.74 United/Continental (M.5889) [2010] OJ C225/11 15.45, 15.74, 15.81, 15.82 Universal Music Group/BMG Music Publishing (M.4404) [2007] OJ L230/12 14.170, 14.171, 14.172, 14.177 Universal Music Group/EMI Music (M.6458) IP/12/999 14.99, 14.101–14.103, 14.176, 14.179, 14.180, 14.181, 14.182, 14.183, 14.184, 14.185, 14.186

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Universal/NTL/Studio Channel (M.2211) [2001] OJ C363/31; [2001] 4 CMLR 157 14.198 Upstream Gas supplies in Central and Eastern Europe (39.816)IP/12/937 (2012) 12.66 VBBB/VBVB (82/123) 14.33 VIFKA (86/499) [1986] OJ L291/46 3.221 VNU/WPP/JV (M.3512) (2004) 5.804, 5.885 VTM/VT4 (97/606) [1997] OJ L244/18; [1997] 5 CMLR 18 6.246 VWFS/PON Holdings/PON Equipment Rental & Lease (M.6763) (2013) 5.118, 5.176 VW-MAN (83/668) [1983] OJ L376/11; [1984] 1 CMLR 621 7.66 Vacuum Interrupters Ltd (77/160) [1977] OJ L48/32; [1977] 1 CMLR D67 3.221, 3.275, 7.66 Vaessen BV v Moris (79/86) [1979] OJ L19/32; [1979] 1 CMLR 511 4.637 Van den Bergh Foods Limited (98/531) [1998] OJ L246/1; [1998] 5 CMLR 530 3.221, 4.398 Varta/Bosch (M.12) [1991] OJ L320/26; [1992] 5 CMLR M1 9.184 Vattenfall/Elsam and Energi E2 assets (M.3867) (2008) 5.63, 12.29 Vattenfall/Nuon Energy (M.5496) (2009) 5.79 Veba/Viag (M.1673) [2001] OJ L188/1; [2000] 5 CMLR 211 5.45, 5.100, 12.29 Vegetable Parchment (78/252) [1978] OJ L70/54; [1978] 1 CMLR 534 8.27, 8.71 Veolia Transport/Trenitalia/JV (M.6150) (2011) 5.131, 15.281, 15.286, 15.289 Verbund/Energie Allianz (M.2947) [2004] OJ L92/91 12.35, 12.42 Viag/Orange (JV.4) [1998] 5 CMLR 463 7.142 Video Games (2003/675) [2003] OJ L255/33 8.311, 9.117 Viho/Parker Pen (92/426) [1992] OJ L233/27; [1993] 5 CMLR 382 8.315 Virgin/British Airways (2000/75) [2000] OJ L30/1; [2000] 4 CMLR 1208 4.910, 4.918, 4.922, 15.142 Virtual Print Fee Agreements (39.673) IP/11/257 14.105 Visa International, Report on Competition Policy (1996) (Vol XXVI) 4.406 Visa International (Visa I) (2001/782) [2001] OJ L293/24; [2002] 4 CMLR 168 3.211, 3.364 Visa International-Multilateral Exchange Fee (Visa II) (2002/914) [2002] OJ L318/17; [2002] 4 CMLR 8 11.31, 11.37, 11.43

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Vitamins (76/642) [1976] OJ L223/27; [1976] 2 CMLR D25 4.419 Vitamins (2003/2) [2003] OJ L6/1; [2003] 4 CMLR 22 1.118, 8.23, 8.34, 8.63, 8.67, 8.74, 8.78, 8.80, 8.92, 8.317, 8.427, 8.507, 8.594, 8.600, 8.601, 8.603, 8.604, 8.607, 8.624, 8.651, 8.655 Vivendi/Canal+/Seagram (M.2050) [2000] OJ C311/3; [2000] 5 CMLR 1007 14.84 Vodafone Airtouch/Mannesmann (M.1795) OJ 2003 C300/10; [2000] 4 CMLR 1069 5.926 Vodafone/Cable & Wireless Worldwide (M.6584) (2010) 13.195 Vodafone/Kabel Deutschland (M.6990) (2013) 13.205 Vodafone/Tele2 Italy/Tele2 Spain (M.4947) (2007) 13.197 Volbroker, IP/00/896 (2000) 11.113 Volkswagen Financial Services/D’ieteren/Volkswagen D’ieteren Finance JV (M.6436) (2011) 5.131 Volkswagen (Volkswagen II) (2001/711) [2001] OJ L262/14; [2001] 5 CMLR 1309 3.106, 3.404 (p. clviii) Volvo/Scania (M.1672) [2001] OJ L143/74; [2001] 5 CMLR 11 1.325, 5.611, 5.669 Votorantim/Fischer/JV (M.5907) 5.450, 5.645 WPP/TNS [2009] OJ C83/6 1.318 Wallenius Lines AB/Wilhelmsen ASA/Hyundai Merchant Marine (M.2879) [2003] 4 CMLR IS28 15.185 Wanadoo España v Telefónica (38.784) [2008] OJ C83/6 4.677, 4.685, 4.688, 4.689, 4.691, 13.88, 13.100, 13.101, 13.102, 13.103, 13.113, 13.118, 13.127, 13.129, 13.133, 13.139–13.147 Wanadoo Interactive (38.233) [2005] 5 CMLR 120 13.87, 13.119, 13.120, 13.124, 13.125, 13.133, 13.153, 13.155 Warner-Lambert/Gillette (93/252) [1993] OJ L116/21; [1993] 5 CMLR 559 2.107, 8.296, 12.231 Water Management Products [2012] OJ C3 335/4 8.19, 8.685, 8.724 Watson/Actavis (M.6613) (2012) 16.22, 16.33, 16.40, 16.41, 16.42 Wegener/PCM/JV (M.3817) 7.142, 14.226, 14.229, 14.234, 14.235 Welded Steel Mesh (89/515) [1989] OJ L260/1; [1991] 4 CMLR 13 1.118, 8.13, 8.26, 8.39, 8.646 Western Digital Ireland/Viviti Technologies (M.6203) [2013] OJ C241/6 1.318, 5.386, 5.737, 5.1080

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WestLB (2000/392) [2000] OJ L150/1 17.74 Which/iTunes (39.174) 14.120 Wild-Leitz (72/128) [1972] OJ L61/27; [1972] CMLR D36 3.275 Window Mountings [2012] OJ C292/6 8.09, 8.21, 8.61, 8.67, 8.68, 8.72, 8.79, 8.683, 8.690, 8.698 Wingas/EdF Trading (36.559) IP/02/1293 12.85 Wintershall/EnBW/MVV/WV/DED (JV.13) (1998) 7.142 Wire Harnesses (IP/MEMO/10/49) 8.323, 8.442, 8.554, 8.724 Wirtschaftsvereinigung Stahl (98/4) [1998] OJ L1/10; [1998] 4 CMLR 450 1.118, 7.460, 7.495 Wood Pulp II (85/202) [1985] OJ L85/1; [1985] 3 CMLR 474 8.54, 8.109, 8.509, 8.512 WorldCom/MCI (II) (M.1069) [1999] OJ L116/1; [1999] 5 CMLR 876 13.207 X/Open Group (87/69) [1987] OJ L35/36 7.531, 7.535 Yamaha (37.975) 9.98, 9.114, 9.130, 9.136 Yara/Kemira GrowHow (M.4730) (2007) 5.391, 5.397, 5.1071 Zanussi (78/922) [1978] OJ L322/36; [1979] 1 CMLR 81 3.409 Zaventem (95/364) [1995] OJ L216/8; [1996] 4 CMLR 232 6.57, 6.216, 6.246, 15.351, 15.362, 15.363, 15.366, 15.371 Zinc Phosphate (2003/437) [2003] OJ L153/1; [2003] 5 CMLR 14 1.118, 3.69, 8.42, 8.73, 8.297, 8.317, 8.644, 8.650, 8.657, 8.658, 8.660, 8.677, 8.688 Zinc Producer Group (84/405) [1984] OJ L220/27; [1985] 2 CMLR 108 8.18 Zoja-CSC/ICI (26.911) [1972] OJ L299/51; [1973] CMLR D50 16.24 Zweckverband Tierkörperbeseitigung (25.051), not yet reported 17.458

(p. clix) B. Numerical Table of Merger Decisions M.12 Varta/Bosch [1991] OJ L320/26; [1992] 5 CMLR M1 9.184 M.17 Aérospatiale/MBB [1991] OJ C59/13 4.208 M.53 Aerospatiale-Alenia/de Havilland [1991] OJ L334/42; [1992] 4 CMLR M2 4.195, 5.03, 5.962 M.124 DuPont/ICI [1993] OJ L7/13 4.150 M.130 Delta Airlines/Pan Am [1991] OJ C289/00; [1992] 5 CMLR M56 5.203, 15.74 M.157 Air France/Sabena 5.203

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M.190 Nestlé/Perrier [1992] OJ L356/1; [1993] 4 CMLR M17 1.116, 1.254, 4.201, 5.03, 5.612 M.259 British Airways/TAT 5.203 M.274 GEC/Thomson-CSF (II) [1996] OJ C186/2 5.296 M.293 Philips/Thomson/Sagem [1993] OJ C22/2 5.135 M.308 Kali & Salz/MDK/Treuhand [1994] OJ L186/38; [1994] 4 CMLR 526 1.116, 4.231, 5.767, 5.960, 5.962, 5.1202 M.315 Mannesman/Vallourec/Ilva [1994] OJ L102/15; [1994] 4 CMLR 529 4.208 M.330 MacCormick/CPC/Rabobank/Ostmann [1993] 5 CMLR 535 5.338, 5.421, 5.430 M.410 Kirch/Richemont/Telepiù (1994) 14.197 M.430 Procter & Gamble/Schickedanz [1994] L354/33; [1994] 5 CMLR 146 1.254, 1.269, 1.302, 4.201 M.437 Matra Marconi Space/British Aerospace Systems [1994] OJ C245/9 3.11 M.469 MSG Media Service [1994] OJ L364/1; [1994] 4 CMLR 499 14.198 M.476 Amadeus/Sabre/JV (2007) 7.142 M.490 Nordic Satellite Distribution [1996] OJ L53/20 14.198, 14.203 M.493 Tractebell/Distrigaz (II) (M.493) (1994) 12.20 M.528 British Aerospace/VSEL [1994] OJ C348/6 3.08 M.529 GEC/VSEL [1994] OJ C368/20 3.08 M.553 RTL/Veronica/Endemol [1996] L134/32 14.125, 14.200, 14.234, 14.235, 14.238, 14.239 M.567 Lyonnaise des Eaux/Northumbrian Water [1996] OJ C11/3 5.293 M.571 CGI/Dassault [1995] OJ C100/3; [1995] 4 CMLR 608 3.11 M.616 Swissair/Sabena (II) 5.203 M.619 Gencor/Lohnro [1997] OJ L11/30; [1996] 4 CMLR 1076 1.116, 1.254, 1.264, 5.769 M.620 Thomson CSF/Teneo/Indra [1995] OJ C264/9 3.11 M.623 Kimberley-Clark/Scott Paper [1996] OJ L183/1; [1996] 4 CMLR 461 1.302, 4.201 M.709 Telefónica/Sogecable/Cablevisión (1996) 5.390 M.737 Ciba-Geigy/Sandoz [1997] OJ L201/1 16.35, 16.38

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M.754 Anglo-American Corporation/Lonrho [1998] OJ L149/21; [1997] 4 CMLR 377 5.55 M.759 Sun Alliance/Royal Insurance (1996) 5.287 M.767 Thomson/CSF/Finmeccanica/Elettronica [1996] OJ C310/9 3.11 M.768 Lucas/Varity [1996] OJ C266/6; [1996] 5 CMLR 255 9.184 M.779 Bertelsmann/CLT [1996] 5 CMLR 525 14.191, 14.237 M.784 Kesko/Tuko [1997] OJ L110/53; [1997] 4 CMLR 24 5.502, 5.757 M.794 Coca-Cola/Amalgamated Beverages [1997] OJ L218/15; [1997] 4 CMLR 368 4.201 M.820 British Aerospace/Lagardèe [1997] OJ C22/6; [1996] 5 CMLR 523 3.08, 5.296 M.833 Coca-Cola Company/Carslberg A/S [1998] OJ L145/41 4.201 M.857 British Airways/Air Liberté 5.203 M.877 Boeing/McDonnell Douglas [1997] OJ L336/16; [1997] 5 CMLR 270 1.318, 5.1050 M.890 Blokker/Toys R Us [1998] OJ L316/1; [1997] 5 CMLR 148 5.502 M.904 RSB/Tenex/Fuel Logistic [1997] OJ C168/5; [1997] 4 CMLR 834 5.129 M.920 Samsung/AST [1999] OJ L225/12 5.551 M.938 Guinness/Grand Metropolitan [1998] OJ L288/24; [1997] 5 CMLR 760 1.269, 4.201, 7.82 M.940 UBS/Mister Minute [1997] OJ C232/5; [1997] 5 CMLR 147 5.59 M.945 Matra BAe Dynamics/DASA/LFK [1998] OJ C149/4 3.11 (p. clx) M.950 Hoffmann-La Roche/Boehringer Mannheim [1998] OJ L234/14; [2000] 4 CMLR 735 5.1115 M.993 Bertelsmann/Kirch/Premiere [1999] OJ L53/1; [1999] 4 CMLR 700 5.975, 14.198, 14.200, 14.203, 14.205, 14.212 M.1016 Price Waterhouse/Coopers & Lybrand [1999] OJ L50/27; [1999] 4 CMLR 665 1.318 M.1021 Compagnie Nationale de Navigation/SOGELFA 5.218 M.1027 Deutsche Telekom/BetaResearch [1999] OJ L53/31; [1999] 4 CMLR 700 14.203, 14.204 M.1035 Hochtief/Aer Rianta/Düsseldorf Airport (1997) 5.176 M.1069 WorldCom/MCI (II) [1999] OJ L116/1; [1999] 5 CMLR 876 13.207 M.1075 Nordic Capital/Mölnlycke Clinical/Kolmi [1998] OJ C39/19 1.307

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M.1094 Caterpillar/Perkins Engines [1996] OJ C266/6; [1998] 4 CMLR 496 9.184 M.1159 Snecma/Messier Dowty [1998] OJ C213/3 3.11 M.1188 Kingfisher/Wegert/ProMarkt [1998] OJ C342/3 5.147 M.1193 AXA-UAP/Royal Belge [1998] OJ C239/17; [1997] 4 CMLR 200 11.184 M.1221 Rewe/Meinl [1999] OJ L274/1; [2000] 5 CMLR 256 5.758, 5.759, 5.975 M.1225 Enso/Stora (1996) 5.889, 5.897, 5.992 M.1258 GEC Marconi/Alenia [1998] OJ C306/12 5.296 M.1293 BP/Amoco 5.621 M.1305 Eurostar [1999] 4 CMLR 175 15.281, 15.282, 15.284 M.1313 Danish Crown/Vestjyske Slagterier [2000] OJ L20/1; [2000] 5 CMLR 296 5.672 M.1327 NC/Canal+/CDPQ/BankAmerica [1999] OJ C233/21 5.05, 7.142, 7.143 M.1328 KLM/Martinair [1999] OJ C408/8 5.517 M.1340 BNP/Dresdner Bank-Austrian JV [1999] OJ C36/16 3.275 M.1354 SAir Group/LTU 5.203 M.1378 Hoechst/Rhône-Poulenc [1999] OJ C254/5 5.1115 M.1383 Exxon/Mobil [2004] OJ L103/1; [1999] 5 CMLR 959 5.47, 5.218, 12.21, 12.25, 12.36, 12.46 M.1397 Sanofi/Synthélabo [2000] OJ C23/4; [1999] 4 CMLR 798 5.543 M.1403 Astra/Zeneca (1999) 16.35, 16.38, 16.44 M.1438 British Aerospace/GEC Marconi (M.1438) [1999] OJ C241/8 5.296 M.1439 Telia/Telenor [2001] OJ L40/1; [2001] 4 CMLR 36 13.199, 14.209 M.1494 SAir Group/AOM 5.203 M.1524 Airtours/First Choice [2000] OJ L93/1; [2000] 5 CMLR 494 4.232, 4.233, 4.234, 4.235, 5.07, 5.669, 5.769, 5.783, 5.795, 5.796, 5.1206 M.1532 BP Amoco/Arco [2001] OJ L18/1; [2001] 4 CMLR 19 12.21, 12.36, 12.111 M.1542 Sanofi/Synthélabo 5.543 M.1616 BSCHA/A.Champalimaud/ [1999] OJ C306/37 5.285 M.1672 Volvo/Scania [2001] OJ L143/74; [2001] 5 CMLR 11 1.325, 5.611, 5.669 M.1673 Veba/Viag [2001] OJ L188/1; [2000] 5 CMLR 211 5.45, 5.100, 12.29 M.1684 Carrefour/Promodes [2000] OJ C164/5 5.992

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M.1712 Generali/INA [2002] OJ C58/6; [2000] 4 CMLR 244 11.184 M.1741 MCI WorldCom/Sprint [2003] OJ L300/1 5.669, 13.208 M.1795 Vodafone Airtouch/Mannesmann OJ 2003 C300/10; [2000] 4 CMLR 1069 5.926 M.1799 BSCH/Banco Totta Y CPP/A. Champalimaud 5.293 M.1806 Astra-Zeneca/Novartis [2004] OJ L110/1 5.73 M.1813 Industri Kapital (Nordkem)/Dyno (2000) 5.1074 M.1835 Monsanto/Pharmacia&Upjohn (2000) 16.35 M.1846 Glaxo Wellcome/SmithKline Beecham (2000) 16.34, 16.35, 16.38 M.1879 Boeing/Hughes (2000) 5.992 M.1898 TUI Group/GTT Holding [2000] OJ C196/10; [2000] 5 CMLR 24 5.92 M.2041 United Airlines/US Airways [2001] 4 CMLR 1510 15.59, 15.74 M.2050 Vivendi/Canal+/Seagram [2000] OJ C311/3; [2000] 5 CMLR 1007 14.84 M.2060 Bosch/Rexroth [2004] OJ L43/1 5.59 M.2074 Tyco/Mallinckrodt [2000] OJ C318/6 5.992 M.2097 SCA/Metsä Tissue [2002] 4 CMLR 38 5.611 M.2187 CVC/Lenzing [2004] OJ L82/20 1.254, 1.264, 5.669 (p. clxi) M.2211 Universal/NTL/Studio Channel [2001] OJ C363/31; [2001] 4 CMLR 157 14.198 M.2220 General Electric/Honeywell [2001] OJ L48/1 5.585, 5.816 M.2256 Philips/Agilent [2001] OJ C92/10; [2001] 4 CMLR 1517 1.318 M.2257 France Telecom/Equant [2001] OJ C187/8; [2001] 4 CMLR 1514 13.207 M.2262 Flughafen Berlin II 15.370 M.2268 Pernod Ricard/Diageo/Seagram Spirits (2001) 5.1074 M.2276 Coca-Cola/Nestlé/JV (2001) 5.119 M.2283 Schneider/Legrand [2004] OJ L101/134 5.502, 5.585, 5.1122 M.2286 Buhrmann/Samas Office Supplies [2003] OJ C117/5 1.318 M.2314 BASF/Eurodiol/Petrochim (2001) 5.964 M.2416 TetraLaval/Sidel [2004] OJ L43/13 1.269, 5.07, 5.502, 5.623, 5.816, 5.1122 M.2420 Mitsui/CVRD/Caemi [2004] OJ L92/50; [2002] 5 CMLR 13 5.880

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M.2434 Grupo Vilar Mir/Hidroelectrica del Cantabrico/EnBW (2004) 12.170 M.2478 IBM Italia/Business Solutions/JV (2001) 5.130, 5.135 M.2510 Cendant/Galileo (24 September 2001) 5.47 M.2529 JCD/RCS/Publitransport/IGP 14.234, 14.237 M.2547 Bayer/Aventis Crop Science (2002) 16.12 M.2629 Flextronics/Xerox (2001) 5.65 M.2648 KPNQWEST/EBONE/GTS (2002) 13.207 M.2650 Haniel/Cementbouw/JV (CVK) [2003] OJ C282/1 5.390, 5.912 M.2681 Conoco/Phillips Petroleum (2002) 5.45 M.2698 Promatech/Sulzer [2002] 5 CMLR 1594 5.267 M.2738 GEES/Unison [2002] OJ C134/2 5.218, 5.276 M.2803 Telia/Sonera [2002] OJ C201/19 13.199, 13.200 M.2810 Deloitte & Touche/Andersen UK (2002) 5.965, 5.966 M.2822 EnBW/ENI/GVS [2003] OJ L248/51 5.1093 M.2845 Sogecable/Canal Satelite Digital/Vias Digital (2002) 14.195 M.2854 RAG/Degussa [2003] OJ C45/8; [2003] 4 CMLR IS27 5.71 M.2857 ECS/IEH 5.64 M.2876 Newscorp/Telepiù [2004] OJ L110/73; [2004] 5 CMLR 30 5.975, 5.979, 5.1090, 14.84, 14.94, 14.161, 14.162, 14.197, 14.203, 14.207, 14.208 M.2879 Wallenius Lines AB/Wilhelmsen ASA/Hyundai Merchant Marine [2003] 4 CMLR IS28 15.185 M.2898 Le Roy Merlin/Brico [2003] OJ C187/11 5.218 M.2905 Deutsche Bahn/Stinnes [2002] 5 CMLR IS133 15.265, 15.272, 15.277 M.2908 Deutsche Post/DHL (II) 5.517 M.2926 EQT/H&R/Dragoco [2003] OJ C80/17; [2002] 5 CMLR IS131 5.146 M.2947 Verbund/Energie Allianz [2004] OJ L92/91 12.35, 12.42 M.2978 Lagardère/Natexis/VUP (M.2978) [2004] OJ L125/54 1.325, 5.741, 14.217, 14.218, 14.219, 14.220 M.3071 Carnival Corporation/P&O Princess (II) [2003] OJ C42/7 5.46 M.3083 GE/Instrumentarium [2004] OJ L109/1 1.318, 5.719, 5.1090 M.3099 Areva/Urenco/ETC/JV [2006] OJ L61/11 1.116, 5.267, 5.1085, 7.142

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.3136 GE/Agfa NDT [2004] OJ C66/4 5.59 M.3149 Procter & Gamble/Wella (2003) 5.894 M.3150 SNCF/Trenitalia/AFA 15.268, 15.277 M.3191 Philip Morris/Papastratos [2003] OJ C258/4; 1.325 M.3216 Oracle/Peoplesoft [2005] OJ L218/6; [2004] 4 CMLR IS93 1.318, 1.325, 5.566, 5.728 M.3225 Alcan/Pechiney (II) (2003) 5.896, 5.1074 M.3268 Sydkraft/Graninge [2003] 5 CMLR 119 5.727, 12.35, 12.42 M.3280 Air France/KLM [2004] OJ C60/5; [2000] 4 CMLR IS47 5.631, 5.632, 5.901, 5.927, 15.28, 15.45, 15.46, 15.56, 15.63, 15.64, 15.68, 15.117, 15.127 M.3293 Shell/BEB [2004] OJ C1/7; [2004] 4 CMLR IS8 5.143 M.3294 ExxonMobil/BEB [2004] OJ C8/7; [2004] 4 CMLR IS8 5.143 M.3304 GE/Amersham [2004] OJ C74/5; [2004] 4 CMLR IS42 4.521 (p. clxii) M.3333 Sony/BMG [2005] OJ L62/30; [2004] 5 CMLR IS39 1.116, 5.356, 5.771, 5.772, 5.787, 5.797, 7.137, 7.141, 7.143, 14.37, 14.179, 14.180, 14.181, 14.186 M.3354 Sanofi-Synthélabo/Aventis (2004) 16.35, 16.38 M.3410 Total/Gaz de France [2004] 5 CMLR IS76 12.20, 12.25 M.3411 UGC/NOOS (2004) 13.203 M.3440 ENI/EDP/GDP [2005] OJ L302/69 5.618, 5.750, 5.751, 5.752, 5.1175, 12.24, 12.29, 12.35, 12.44 M.3506 Celanese/Degussa/JV 5.992 M.3512 VNU/WPP/JV (2004) 5.804, 5.885 M.3544 Bayer Healthcare/Roche (OTC Business) (2004) 5.1074 M.3570 Piaggio/Aprilia [2005] OJ C7/5 5.1092 M.3605 Sovion/HMG 5.653 M.3625 Blackstone/Acetex [2005] L312/60 1.254, 1.264, 1.302 M.3641 BT/INFONET (2001) 13.207 M.3653 Siemens/VA Tech [2006] OJ L353/19 5.100, 5.558 M.3669 Blackstone (TBG CareCo)/NHP 5.245 M.3680 Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (2005) 5.1002, 5.1050, 5.1090

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.3696 E.ON/MOL [2006] OJ L253/20; [2006] 4 CMLR IS29 5.669, 5.1010, 12.20, 12.24, 12.29, 12.30, 12.43, 12.46, 14.197, 14.203, 14.209 M.3709 Orkla/Elkem (2005) 5.394 M.3729 EDF/AEM/Edison (2005) 12.29 M.3732 Procter & Gamble/Gillette (2005) 5.745 M.3751 Novartis/Hexal (2005) 16.05 M.3762 Apax/Travelex (2005) 5.53 M.3764 Belgacom/ Swisscom/JV (2005) 13.207 M.3770 Lufthansa/Swiss (2005) 15.57, 15.58, 15.78, 15.127 M.3779 Pernod Ricard/Allied Domecq OJ 2005 C196/2 5.70, 5.1085 M.3785 TPG/APAX/TIM Hellas (2005) 5.79 M.3796 OMYA/Huber PCC [2007] OJ L72/24 5.267, 5.545, 5.624 M.3806 Telefónica/Cesky Telecom (2005) 13.201 M.3817 Wegener/PCM/JV 7.142, 14.226, 14.229, 14.234, 14.235 M.3829 Maersk/PONL 15.185 M.3864 FIMAG/Züblin 5.245 M.3867 Vattenfall/Elsam and Energi E2 assets (2008) 5.63, 12.29 M.3868 DONG/Elsam/Energi E2 [2007] OJ L133/24 5.621, 5.669, 5.752, 5.812, 5.1010, 5.1092, 5.1116, 12.23, 12.24, 12.25, 12.35, 12.39, 12.42, 12.46 M.3886 Aster 2/Flint Ink (2005) 5.809 M.3894 Unicredito/HVB (2005) 5.293 M.3905 Tesco/Carrefour (Czech Republic and Slovakia) 5.245 M.3916 T-Mobile Austria/tele.ring [2007] OJ L88/44 5.1063, 5.1080, 13.176–13.179 M.3940 Lufthansa/Eurowings (2005) 15.64 M.3998 Axalto/Gemplus (2006) 5.942 M.4000 Inco/Falconbridge (2006) 5.624, 5.646, 5.1063, 5.1097 M.4035 Telefónica/O2 (2006) 5.1085, 13.193 M.4057 Korsnäs/Assidomän Cartonboard (2006) 5.889, 5.931, 5.948, 5.949 M.4071 Apollo/Akzo Nobel (2006) 5.887 M.4085 Arcelor/Oyak/Erdemir (2006) 5.79

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.4110 E.ON/Endesa (2006) 5.293, 12.46 M.4137 Mittal/Arcelor 5.1016 M.4141 LINDE/BOC (2006) 5.786, 5.808 M.4153 Toshiba/Westinghouse (2006) 5.100, 5.1085 M.4164 Ferrovial/Quebec/GIC/ BAA (2006) 15.367, 15.369 M.4180 Gaz de France/Suez (2006) [2007] OJ L88/47 5.669, 5.812, 5.1089, 11.87, 12.19, 12.23, 12.24, 12.35, 12.39 M.4197 E.ON/Endesa 5.288 M.4204 Cinven/UPC France (2006) 13.203 (p. clxiii) M.4214 Coca-Cola Hellenic Bottling/Lanitis Bros 5.218 M.4225 Celsa/Fundia (2006) 5.79 M.4294 Arcelor/SNCFL/CFL Cargo 15.268, 15.277, 15.278 M.4297 Nokia/Siemens (2006) 5.717 M.4368 Edison/Eneco Energia (2006) 5.60 M.4381 JCI/FIAMM [2009] OJ C241/12 [2009] OJ C241/12 4.178, 5.622, 5.637, 5.640, 5.645, 5.651, 5.786, 5.972 M.4403 Thales/Finmeccanica/AAS/Telespazio (2007) 4.210, 5.812 M.4404 Universal Music Group/BMG Music Publishing [2007] OJ L230/12 14.170, 14.171, 14.172, 14.177 M.4439 Ryanair/Aer Lingus [2008] OJ C47/9 1.254, 1.264, 1.302, 1.307, 1.313, 5.100, 5.161, 5.203, 5.375, 5.447, 5.571, 5.594, 5.626, 5.634, 5.637, 5.646, 5.669, 5.689, 5.722, 5.740, 5.909, 5.915, 5.930, 5.947, 5.1145, 15.43, 15.44, 15.53, 15.55, 15.61, 15.62, 15.88, 15.89, 15.94, 15.127, 15.131, 15.132 M.4494 Evraz/Highveld 5.1010 M.4504 SFR/Télé2 France [2007] OJ L316/57 4.203, 5.669, 5.812, 5.1096, 14.162, 14.197, 14.211, 14.213 M.4505 SFR/Télé 2 14.75, 14.196 M.4513 Arjowiggins/M-real Zanders Reflex [2008] OJ C267/14 1.254, 1.264, 4.648, 5.600, 5.646 M.4516 Continental/Matador (2007) 5.79 M.4521 LGI/Telenet (2007) 13.203, 14.200 M.4522 Carrefour/Ahold Polska 5.245, 5.580 M.4540 Nestlé/Novartis (2007) 5.901

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.4545 Statoil/Norsk Hydro (2007) 12.36, 12.119 M.4547 KKR/Permira/Prosiebensat.1 (M.4547) 5.176 M.4647 AEE/ Lentjes [2009] OJ C101/6 1.318 M.4662 Syniverse and BSG Wireless Business [2008] OJ C101/25 1.318, 5.720 M.4685 Enel/Acciona/Endesa [2007] OJ C212/2 5.285, 5.288 M.4691 Schering-Plough/Organon Biosciences (2007) 16.35 M.4709 APAX Partners/Telenor Satellite Services (2007) 5.79, 13.206 M.4730 Yara/Kemira GrowHow (2007) 4.397, 5.391, 5.1071 M.4731 Google/DoubleClick [2008] OJ C184/4 4.206, 5.812, 14.162, 14.234, 14.235, 14.237, 14.241, 14.243 M.4734 INEOS/Kerling [2008] OJ C219/15 1.289, 1.302, 4.210, 5.614, 5.655, 5.895 M.4746 Deutsche Bahn/EWS (2007) 5.1013, 5.1096, 15.265, 15.269, 15.272, 15.274, 15.276, 15.277, 15.278 M.4747 IBM/Telelogic [2008] OJ C195/05 1.318 M.4748 T-Mobile/Orange Netherlands IP/07/1238 (2007) 13.187, 13.188, 13.194 M.4753 Antalis/MAP (2007) 5.779 M.4786 DB/Transfesa 15.276, 15.277 M.4835 Hexion/Huntsman (2008) 5.1069 M.4844 Fortis/ABN AMRO Assets 11.76, 11.80 M.4854 TomTom/Teleatlas (M.4854) [2008] OJ C237/8 1.269, 5.811, 5.812, 5.857, 5.940, 5.941, 5.953 M.4874 Itema Holding/BarcoVision 5.812, 5.837, 5.843, 5.859 M.4919 Statoil Hydro / ConocoPhilips (2008) 1.307, 1.313 M.4922 EMCC (2008) 5.135, 12.30 M.4934 Kazmunaigaz/Rompetrol (2007) 12.21 M.4942 Nokia/Navteq [2009] OJ C13/06 5.812, 5.850, 5.858, 5.940 M.4947 Vodafone/Tele2 Italy/Tele2 Spain (2007) 13.197 M.4980 ABF/GBI Business [2009] OJ C145/09 1.116, 5.649, 5.669, 5.674, 5.791, 5.792, 5.799, 5.802, 5.803 M.4994 Electrabel/Compagnie Nationale du Rhône 5.551 M.5020 Lesaffre/GBI UK 5.218

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.5046 Friesland/Campina [2009] OJ C75/6 1.269, 5.576, 5.646, 5.651, 5.725, 5.729, 5.762, 5.1090 (p. clxiv) M.5066 Eurogate/APMM 15.379, 15.380, 15.382 M.5093 DP World/Conti 7/Rickmers/DP World Breakbulk 15.379, 15.380, 15.382 M.5096 RCA/MAV Cargo (2008) 5.616, 15.265, 15.266, 15.269, 15.271, 15.272, 15.274, 15.275, 15.277 M.5121 News Corp/Premiere (2008) 5.85, 5.1090, 14.75, 14.200, 14.203, 14.211, 14.214 M.5141 KLM/Martinair (2008) 15.44, 15.59, 15.62, 15.65, 15.67, 15.84, 15.127 M.5148 Deutsche Telekom/OTE (2008) 13.201, 13.207 M.5153 Arsenal/DSP [2009] OJ C227/27 1.254, 1.302, 4.204, 5.646, 5.650, 5.735 M.5154 CASC JV (2008) 12.30 M.5164 Msref/Crowne Plaza Wiesbaden Hotel (2008) 5.59 M.5168 EADS/SSDL (2009) 5.994 M.5181 Delta/ Northwest 15.74, 15.81 M.5200 Strabag/Kirchner 5.245, 5.580 M.5222 Sofinco/Banco Popolare/Ducato/Agos 7.142 M.5224 EDF/British Energy [2009] OJ C38/4 1.325 M.5241 American Express/Fortis/Alpha Card (2008) 5.119 M.5253 Sanofi-Aventis/Zentiva (2009) 16.05, 16.21, 16.33, 16.35, 16.36, 16.37 M.5272 Sony/SonyBMG (2008) 14.179, 14.180 M.5293 Santander/Alliance and Leicester (2008) 11.69 M.5295 Teva/Barr (2008) 16.33, 16.37, 16.41 M.5335 Lufthansa/SN Airholding (2010) 15.56, 15.59, 15.64, 15.77, 15.78, 15.82, 15.83, 15.115 M.5346 APMM/Broström (2009) 15.187 M.5355 BASF/CIBA (2009) 5.1071 M.5363 Santander/Bradford & Bingley Assets (2008) 11.69, 11.85 M.5366 Iberdrola Renovables/Gamesa (2008) 5.66 M.5384 BNP Paribas/Fortis (2008) 5.393, 11.69, 11.76, 11.84 M.5385 Avnet/Abacus 5.797

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.5403 Lufthansa/British Midland (2009) 15.55, 15.56, 15.58, 15.67, 15.81, 15.82 M.5406 IPIC/MAN Ferrostaal (2009) 5.100, 5.674, 5.1085 M.5421 Panasonic/Sanyo [2009] OJ C322/3 1.318, 5.911 M.5422 StatoilHydro/St1/ St1Avifuels (2008) 5.126 M.5434 Ryanair/ Aer Lingus II 15.133 M.5436 APMM/Broström 15.187 M.5440 Lufthansa/Austrian Airlines [2008] OJ C219/2 5.1097, 15.44, 15.45, 15.48, 15.56, 15.63, 15.64, 15.65, 15.67, 15.78, 15.82, 15.83, 15.115, 15.116, 15.117, 15.124 M.5467 RWE/Essent (2009) 12.19, 12.23, 12.33, 12.34 M.5469 Renova Industries/Sulzer (2009) 5.85 M.5476 Pfizer/Wyeth (2009) 16.35, 16.38 M.5479 Lonza/Teva/JV (2009) 16.16 M.5480 Deutsche Bahn (DB)/PCC 15.261, 15.264, 15.266, 15.269, 15.270, 15.271, 15.272, 15.274, 15.277 M.5481 AREVA SA/AREVA NP (2009) 12.92 M.5496 Vattenfall/Nuon Energy (2009) 5.79 M.5508 SoFFin/Hypo Real Estate (2009) 5.76, 11.69, 11.92 M.5518 Fiat/Chrysler (2009) 5.393, 5.394 M.5529 Oracle/Sun Microsystems [2010] OJ C91/7 1.318, 4.201, 5.996 M.5532 Carphone Warehouse/Tiscali UK (2009) 13.198 M.5549 EDF/Segebel (2009) 5.75, 5.218, 5.239, 5.1009, 5.1113, 11.87 M.5557 SNCF-P/CDPQ/Keplis/EFFIA (2009) 15.299 M.5579 TLP/Ermewa 15.271, 15.272 M.5585 Centrica/Venture Production (2009) 12.21 M.5590 3i Group/HIG Capital/Volnay (2009) 5.393 M.5591 CEZB/JAVYS/JESS JV (2009) 12.41 M.5644 Kraft Foods/Cadbury [2010] OJ C29/3 1.325, 5.882, 5.884 M.5650 T-Mobile/Orange 5.215, 5.239, 5.699, 5.1066, 13.189, 13.231 (p. clxv) M.5652 GIP/Gatwick Airport (2009) 15.367 M.5655 SNCF/LCR/Eurostar [2010] OJ C272/2 5.1090, 15.281, 15.282, 15.286

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.5658 Unilever/Sara Lee OJ 2012 C23/09 1.269, 5.573, 5.575, 5.576, 5.614, 5.664, 5.710, 5.721, 5.729, 5.880, 5.888, 5.891, 5.892, 5.894 M.5669 Cisco/Tandberg [2010] OJ C36/7 1.318, 5.327, 5.743, 5.1090 M.5675 Syngenta/Monsanto sunflower seed business (2010) 5.267, 5.450, 5.606, 5.669, 5.812 M.5677 Schuitema/ Super de Boer Assets 5.218 M.5721 Otto/Primondo Assets (2010) 5.393, 5.1066 M.5726 Deutsche Bank/Sal. Oppenheim 11.76 M.5727 Microsoft/Yahoo! Search Business (2010) 5.66, 5.68, 5.137, 14.234, 14.236 M.5730 Telefónica/Hansenet (2010) 13.195 M.5734 Liberty Global Europe/UnityMedia (2010) 13.203, 14.196 M.5737 SG Vetri/Zignago Vetro/Ardagh Glass/Ecosud [2010] OJ C2114 5.230 M.5741 CDC/Veolia Environment/Transdev/Veolia Transport (2010) 5.254, 15.281, 15.287 M.5747 Iberia/British Airways (2010) 15.43, 15.44, 15.67, 15.68, 15.81 M.5776 Telecinco/ Cuatro 5.218 M.5790 Lidl/Plus Romania/Plus Bulgaria 5.245 M.5799, M.5977 and M.6537 Faurecia/Plastal (2010) 5.86, 5.108, 5.149, 5.181 M.5803 Eurovia/Tarmac (M.5803) (2010) 5.254 M.5828 Procter & Gamble/Sara Lee Air Care [2010] OJ C129/10 1.325, 5.214, 5.218, 5.266, 5.270, 5.276 M.5830 Olympic/Aegean Airlines (2008) 5.91, 5.271, 5.545, 5.669, 5.966, 5.975, 5.978, 15.44, 15.61, 15.62, 15.63, 15.64, 15.84, 15.127, 15.133, 15.188 M.5840 Otto/Quelle Schweiz Assets [2010] OJ C200/6 5.64, 5.1066 M.5855 Deutsche Bahn (DB)/Arriva (2010) 15.260, 15.265, 15.272, 15.293, 15.294, 15.295, 15.296, 15.297, 15.298 M.5861 Republic of Austria/Hypo Group Alpe Adria (2010) 5.76, 11.69, 11.92, 11.94 M.5865 Teva/Ratiopharm [2011] OJ C7/5 5.1074, 16.16, 16.32, 16.33, 16.34, 16.35, 16.36, 16.37, 16.41, 16.44, 17.39, 17.40 M.5877 Geodis/Giraud 15.272 M.5881 ProSiebenSat.1 Media/RTL Interactive/JV (2010) 14.191 M.5889 United/Continental [2010] OJ C225/11 15.45, 15.74, 15.81, 15.82

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.5900 LGI/KBW (2011) 13.202, 13.203 M.5907 Votorantim/Fischer/JV 5.450, 5.645 M.5911 Tennet/Elia/Gasunie/APX-Endex (2010) 12.29, 12.30, 12.34 M.5932 News Corp/BSkyB 5.286, 14.75, 14.161, 14.165, 14.189, 14.194, 14.195, 14.196, 14.198, 14.203, 14.211, 14.212, 14.226, 14.231, 14.232, 14.233, 14.235, 14.239, 14.242 M.5948 Banco Santander/Rainbow (2010) 11.69, 11.76, 11.77 M.5953 Reckitt Benckiser/SSL (2010) 16.42, 16.46, 16.146 M.5960 Credit Agricole/Cassa di Risparmio della Spezia/Agences Intesa San Paolo (2010) 11.77 M.5969 SC Johnson/Sara Lee 5.271, 5.394, 5.395 M.5978 GDF Suez/International Power (2011) 12.35, 12.112 M.5979 KGHM/Tauron Wytwarzanie/JV (2012) 5.89, 12.29 M.5984 Intel/McAfee (2011) 5.674, 5.826, 5.1032, 5.1095 M.5996 Thomas Cook/Travel Business of Cooperative Group/Travel Business of Midlands Cooperative Society (M.5996) (2011) 5.242 M.5999 Sanofi Aventis/Genzyme (2011) 16.16, 16.35, 16.38 M.6020 ACS/Hochtief (2011) 5.79 M.6068 ENI/Acegasaps/JV (2011) 5.122 M.6082 China National Bluestar/Elkem (2011) 5.77 M.6093 BASF/INEOS/Styrene JV (2011) 5.129 M.6101 UPM/Myllykoski and Rhein Papier 5.600, 5.733 M.6104 SAFRAN/SNPE Matériaux Energétiques/Regulus (2011) 5.142, 5.143, 5.297 M.6106 Caterpillar/MWM (2011) 5.302, 5.450, 5.544 M.6112 Good Energies/NEIF/Newco (2011) 5.122, 5.126 (p. clxvi) M.6113 DSM/Sinochem/JV (2011) 5.77, 16.41 M.6137 Citigroup/Maltby Acquisitions (2011) 5.394 M.6150 Veolia Transport/Trenitalia/JV (2011) 5.131, 15.281, 15.286, 15.289 M.6151 Petrochina/Ineos/JV (2011) 5.130, 5.137 M.6153 Anglo American/ Lafarge/JV 5.218

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.6166 Deutsche Borse/NYSE Euronext 5.617, 5.628, 5.669, 5.907, 5.937, 5.949, 5.957, 5.960, 5.1013, 11.146–11.177 M.6191 Birla/Columbian Chemicals 5.218, 5.269 M.6203 Western Digital Ireland/Viviti Technologies [2013] OJ C241/6 1.318, 5.386, 5.737, 5.1080 M.6214 Seagate Technology/HDD Business of Samsung Electronics (2011) 5.386, 5.718, 5.737 M.6215 Sun Capital/Polestar UK Print (2011) 5.393 M.6218 INEOS/Tessenderlo Group S-PVC Assets (2011) 5.66 M.6231 KKR/CAPSUGEL (2011) 16.40 M.6258 Teva/Cephalon (2011) 16.05 M.6266 J&J/Synthes (2012) 5.620, 5.899, 5.903 M.6278 Takeda/Nycomed (2011) 16.41 M.6280 Procter & Gamble/Teva OTC business (2011) 16.34 M.6282 Unipapel/Spicers (2011) 5.992 M.6285 SARIA/Danish Crown/Daka (2012) 5.87 M.6305 DFDS/C.RO Ports/Älvsborg 15.379, 15.382 M.6314 Telefónica UK/Vodafone UK/Everything Everywhere/JV (2012) 5.90, 5.812, 5.821, 5.872, 5.873, 13.208 M.6315 Hochtief/Geosea/Beluga Hochtief Offshore JV (2011) 5.131 M.6321 Buitenfood/Ad Van Geloven Holding/JV (2012) 5.121 M.6339 Freudenberg & Co/Trelleborg/JV (2012) 5.131 M.6342 UPM/Myllykoski and Rhein Pepier 5.732 M.6348 Arla Foods/Allgäuland (2011) 5.992 M.6357 Koninklijke Philips/Indal Group (2011) 5.636 M.6360 Nynas/Shell/Harburg Refinery (2013) 5.560, 5.938, 5.974 M.6369 HBO/Ziggo/HBO Nederland (2011) 14.197 M.6381 Google/Motorola Mobility, 13th February 2012, not yet reported 4.791, 5.400, 5.851, 5.994, 13.243 M.6393 Astrium Holding/Vizada Group (2011) 13.206 M.6405 Banco Santander/Rainbow (2011) 11.69

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.6410 UTC/Goodrich (2012) 5.669, 5.674, 5.812, 5.817, 5.917, 5.1047 M.6411 Advent/Maxam (2012) 5.845, 5.846 M.6436 Volkswagen Financial Services/D’ieteren/Volkswagen D’ieteren Finance JV (2011) 5.131 M.6438 Saria/Teeuwissen/Jagero II/Quintet/Bioiberica (2012) 5.53 M.6439 AGRANA/RWA/JV (2012) 5.732 M.6442 Northern Rock/Virgin Money (2011) 11.85 M.6447 IAG/BMI (2012) 15.43, 15.44, 15.48, 15.63, 15.64, 15.66, 15.67, 15.79, 15.84, 15.93, 15.115, 15.116, 15.117, 15.118, 15.121, 15.124 M.6458 Universal Music Group/EMI Music IP/12/999 14.99, 14.101–14.103, 14.176, 14.179, 14.180, 14.181, 14.182, 14.183, 14.184, 14.185, 14.186 M.6459 Sony/Mubadala Development/EMI Music Publishing (2012) 5.90, 5.92, 14.170, 14.171, 14.172, 14.175, 14.177 M.6471 Outokumpu/Inoxum (2012) 5.614, 5.683, 5.734, 5.937, 5.951 M.6476 Canal+/ITI/TVN/ITI Neovision (2012) 14.210 M.6477 BP/Chevron/ Eni/Sonangol/Total/JV (2012) 5.131, 5.136 M.6497 Hutchinson 3G Austria/Orange Austria 5.308, 5.669, 5.698, 5.812, 5.901, 5.1080, 13.180–13.186 M.6502 London Stock Exchange Group/LCH Clearnet Group 5.214, 5.221 M.6503 La Poste/Swiss Post/JV (2012) 5.135 M.6521 Talanx International/ Meiji Yasuda Life Insurance/Warta 11.185 M.6525 SESA/DISA/SAE/JV 5.220, 5.242 M.6541 Glencore/Xstrata (2012) 5.100, 5.614, 5.1094 (p. clxvii) M.6554 EADS/STA/Elbe Flugzeugwerke JV (2012) 5.126 M.6564 ARM/Giesecke & Devrient/Gemalto/JV (2012) 5.131 M.6570 UPS/TNT Express (2012) 5.625, 5.669, 5.723, 5.937, 5.943, 5.1082 M.6576 Munksjoe/Ahlstrom (2013) 5.1068, 5.1070 M.6584 Vodafone/Cable & Wireless Worldwide (2010) 13.195 M.6588 Koninklijke Ahold/Valk Holding [2012] OJ C4300 5.230 M.6607 American Airlines/US Airways (2013) 5.1089, 15.74, 15.116 M.6613 Watson/Actavis (2012) 16.22, 16.33, 16.40, 16.41, 16.42

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.6663 Ryanair/Aer Lingus III (2013) 5.1063, 5.1082, 15.53, 15.55, 15.56, 15.57, 15.61, 15.77, 15.133 M.6682 Kinnevik/Billerud/Korsnaes (2012) 5.1068 M.6685 Ingram Micro/Brightpoint (2012) 5.45 M.6698 Cheung Kong Holdings/Cheung Kong Infrastructure Holdings/Power Assets Holdings/ MGN Gas Networks (2012) 5.63 M.6718 Toyota Tsusho/CFAO (2012) 5.85 M.6722 Frieslandcampina/Zijerveld & Veldhuyzen and Den Hollander 5.180, 5.1085 M.6723 Ferrovial/Qatar Holding/CDPQ/Baker Street/BAA (2012) 15.365, 15.367 M.6737 Ruukki/Capman/Fortaco (2012) 5.137 M.6749 DIA/ Schlecker 5.231 M.6753 Orkla/Rieber & Son 5.231, 5.311 M.6756 Norsk Hydro/Orkla/JV (2013) 5.1068, 5.1077 M.6763 VWFS/PON Holdings/PON Equipment Rental & Lease (2013) 5.118, 5.176 M.6773 Canon/IRIS 5.218 M.6789 Bertelsmann/Pearson/Penguin Random House (2013) 5.90, 14.217, 14.218, 14.219, 14.220, 14.221, 14.222, 14.223, 14.224 M.6796 Aegean/Olympic 5.271, 5.967, 5.975, 15.63, 15.64, 15.84, 15.127, 15.135, 15.188 M.6801 Rosneft/TNK-BP (2013) 12.36 M.6812 SFPI/Dexia (2013) 5.79, 5.393, 11.92, 11.95 M.6813 McCain Foods Group/Lutosa Business (2013) 5.1004 M.6822 Groupe Auchan/Real/Real Hypermarket Romania 5.218 M.6844 GE/Avio 5.297 M.6850 Marine Harvest/Morpol 5.311, 5.391, 5.397, 5.652, 5.683, 5.695, 5.730 M.6853 Flextronics International/Certain Assets belonging to Motorola Mobility (2013) 5.63 M.6854 Cameron/ Schlumberger/Onesubsea (2013) 5.90 M.6857 Crane/MEI Group (2013) 5.1080 M.6866 Time Warner/CME (2013) 5.85, 14.211, 14.239, 14.242 M.6873 Intercontinental Exchange/NYSE Euronext (2013) 11.106

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

M.6880 Liberty Global/Virgin Media (2013) 13.204, 14.211 M.6883 Canada Life/Irish Life 11.185 M.6944 Thermo Fisher Scientific/Life Technologies (2013) 5.327 M.6948 Telenor/Globus/Germanos (2012) 13.195 M.6956 Telefónica/Caixabank/Banco Santander/JV (2013) 13.208 M.6967 BNP Paribas Fortis/Belgacom Belgian Mobile Wallet (2013) 13.208 M.6990 Vodafone/Kabel Deutschland (2013) 13.205 M.6992 Hutchison 3G UK/Telefónica Ireland (2013) 13.186 M.7018 Telefónica Deutschland/E-Plus (2013) 13.186

(p. clxviii) C. Numerical Table of Non-Merger Decisions 68/318 Socemas [1968] OJ L201/4; [1968] CMLR D28 7.389 69/241 Clima Chappée-Buderas (69/241) [1969] OJ L195/1; [1970] CMLR D7 3.275 69/243 Dyestuffs [1969] OJ L195/11; [1969] CMLR D23 8.512, 8.594 71/244 GEMA I [1971] OJ L134/27 6.147, 14.127, 14.128, 14.129, 14.130, 14.132 72/128 Wild-Leitz [1972] OJ L61/27; [1972] CMLR D36 3.275 72/268 GEMA II [1972] OJ L166/22 14.127, 14.129, 14.130, 14.132 72/474 Cimbel [1972] OJ L303/24; [1973] CMLR D167 8.23 72/478 GISA [1972] OJ L303/45; [1973] CMLR D125 7.400 73/109 European Sugar Industry [1973] OJ L140/17; [1973] CMLR D65 8.27, 8.32, 8.36 74/292 Glass Containers [1974] OJ L160/1; [1974] 2 CMLR D50 8.10, 8.16, 8.60 74/431 Belgian Wallpaper [1974] OJ L237/3; [1974] 2 CMLR D102 8.71, 8.615 75/482 Intergroup [1975] OJ L212/23; [1975] 2 CMLR D14 7.390 76/29 AOIP v Beryrard [1976] OJ L6/8; [1976] 1 CMLR D14 8.515 76/172 Bayer/Gist Brocades [1975] OJ L30/13; [1976] 1 CMLR D98 3.221 76/185 NCB/National Smokeless Fuels/NCC (National Carbonizing) [1976] OJ L35/6; [1976] 1 CMLR D82 4.642 76/249 KEWA [1976] OJ L51/15; [1976] 2 CMLR D15 7.66 76/642 Vitamins [1976] OJ L223/27; [1976] 2 CMLR D25 4.419 76/684 Pabst & Richarz/BNIA [1976] OJ L231/24; [1976] 2 CMLR D63 3.123

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

77/160 Vacuum Interrupters Ltd [1977] OJ L48/32; [1977] 1 CMLR D67 3.221, 3.275, 7.66 77/781 GEC Weir Sodium Circulators [1977] OJ L327/26 3.345, 7.52, 7.66 78/193 Penneys [1978] OJ L60/19; [1978] 2 CMLR 100 10.189 78/251 Sopelem/Vickers [1978] OJ L70/47 3.275 78/252 Vegetable Parchment [1978] OJ L70/54; [1978] 1 CMLR 534 8.27, 8.71 78/253 Campari [1978] OJ L70/69; [1978] 2 CMLR 397 10.179, 10.184, 10.185 78/516 RAI/UNITEL [1978] OJ L157/39; [1978] 3 CMLR 306 3.29 78/670 Fedetab [1978] OJ L224/29; [1978] 3 CMLR 524 8.16, 8.71 78/732 CSV (Dutch Nitrogenous Fertilizers) [1978] OJ L242/15; [1979] 1 CMLR 11 8.27 78/823 Breeders’ Rights-maize seed [1978] OJ L286/23; [1978] 3 CMLR 434 10.35, 10.176 78/922 Zanussi [1978] OJ L322/36; [1979] 1 CMLR 81 3.409 79/86 Vaessen BV v Moris [1979] OJ L19/32; [1979] 1 CMLR 511 4.637 79/934 BP Kemi-DDSF [1979] OJ L286/32; [1979] 3 CMLR 684 3.76 80/182 Floral [1980] OJ L39/51; [1980] 2 CMLR 285 7.357 80/234 Rennet [1980] OJ L51/19; [1980] 2 CMLR 402 3.221, 7.400, 7.404 80/334 Fabrica Pisana [1980] OJ L75/30; [1980] 2 CMLR 354 8.301, 8.349, 8.364 80/789 Distillers Co Ltd-Victuallers [1980] OJ L233/43; [1980] 3 CMLR 244 3.275 80/917 National Sulphuric Acid Association [1980] OJ L260/24; [1980] 3 CMLR 429 7.399, 7.401, 7.402, 7.404 80/1334 Italian Cast Glass [1980] OJ L383/19; [1982] 2 CMLR 61 8.73, 8.74, 8.88, 8.622 81/881 Italian Flat Glass I [1981] OJ L326/32; [1982] 3 CMLR 366 8.71, 8.572, 8.595, 8.622 81/969 Bandengroothandel Frieschebrug BV and NV Nederlandsche Banden-Industrie Michelin [1981] OJ L353/33; [1982] 1 CMLR 643 4.421 81/1030 GVL [1981] OJ L370/58 6.147, 6.159 82/123 VBBB/VBVB 14.34 82/204 GEMA III [1982] OJ L94/12; [1982] 2 CMLR 482 14.132 82/267 AEG Telefunken [1982] OJ L117/15; [1982] 2 CMLR 386 9.252, 9.253, 9.254

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

82/371 NEVEWA-ANSEAU [1982] OJ L167/39; [1982] 2 CMLR 193 3.195, 6.152, 6.155, 6.175 82/506 SSI [1982] OJ L232/1; [1982] 3 CMLR 702 3.76, 3.156 82/751 Langenscheidt-Hachette [1982] OJ L39/25; [1982] 1 CMLR 181 7.66 82/756 FNICF [1982] OJ L319/12; [1983] 1 CMLR 575 8.330, 8.347, 8.349 (p. clxix) 82/853 National Panasonic [1982] OJ L354/28; [1983] 1 CMLR 497 8.658 82/861 British Telecommunications [1982] OJ L360/36; [1983] 1 CMLR 457 6.33, 6.55, 6.175 82/866 Rolled Zinc Products [1982] OJ L362/40 8.572 82/896 AROW/BNIC [1982] OJ L379/1; [1983] 2 CMLR 240 3.195, 8.71, 8.644 82/897 Toltecs-Dorcet [1982] OJ L379/19; [1983] 1 CMLR 412 3.121, 10.183, 10.187 83/390 Rockwell-Iveco [1983] OJ L224/19; [1983] 3 CMLR 709 7.66 83/546 Cast Iron and Steel Rolls [1983] OJ L317/1; [1984] 1 CMLR 694 8.79 83/668 VW-MAN [1983] OJ L376/11; [1984] 1 CMLR 621 7.66 84/191 Nuovo CEGEAM [1984] OJ L99/29; [1984] 2 CMLR 484 3.76, 11.186, 11.193, 11.199 84/380 Synthetic Fibres [1984] OJ L212/1 [1985] 1 CMLR 787 8.56 84/381 Carlsberg [1984] OJ L207/26; [1985] 1 CMLR 735 3.221, 7.66 84/388 Flat Glass Benelux [1984] OJ L212/13; [1985] 2 CMLR 350 8.31, 8.34, 8.590, 8.592, 8.594, 8.595 84/405 Zinc Producer Group [1984] OJ L220/27; [1985] 2 CMLR 108 8.18 85/74 Peroxygen Products [1985] OJ L35/1; [1985] 1 CMLR 481 8.73, 8.594 85/75 Fire Insurance [1985] OJ L35/20; [1985] 3 CMLR 246 11.186, 11.188, 11.193, 11.194 85/76 Milchförderungsfonds [1985] OJ L35/35; [1985] 3 CMLR 101 3.123 85/77 Uniform Eurocheques [1985] L 35/48; 6.159 85/202 Wood Pulp II [1985] OJ L85/1; [1985] 3 CMLR 474 8.54, 8.109, 8.509, 8.512 85/206 Aluminium Imports from Eastern Europe [1985] OJ L92/1; [1987] 3 CMLR 813 3.156 85/276 Greek Insurances [1985] OJ L152/25 6.129, 6.246 85/609 ECS/AKZO [1985] OJ L374/1 4.157

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

85/615 P&I Clubs [1985] OJ L376/2; [1989] 4 CMLR 178 3.29, 11.04, 11.184, 11.187, 11.209–11.213 85/618 Siemens/Fanuc [1985] OJ L376/29; [1988] 4 CMLR 945 3.202, 3.439, 8.27 86/398 Polypropylene [1986] OJ L230/1; [1988] 4 CMLR 347 3.77, 3.87, 3.150, 8.12, 8.20, 8.34, 8.68, 8.109, 8.457, 8.590, 8.594 86/399 Roofing Felt Cartel [1986] OJ L232/15; [1991] 4 CMLR 130 3.81, 3.125, 8.16, 8.25, 8.29, 8.71, 8.89, 8.90 86/405 Optical Fibres [1986] OJ L236/30 7.58, 7.69, 7.101 86/499 VIFKA [1986] OJ L291/46 3.221 86/507 Irish Banks’ Standing Committee [1986] OJ L295/28; [1987] 2 CMLR 601 3.211, 3.364 86/596 Meldoc [1986] OJ L348/50; [1989] 4 CMLR 853 3.123, 8.39 87/1 Fatty Acids [1987] OJ L3/17; [1989] 4 CMLR 445 1.119, 7.409, 7.414, 7.488, 7.495 87/69 X/Open Group [1987] OJ L35/36; [1988] 4 CMLR 542 7.531, 7.535 87/100 Mitchell Cotts/Sofiltra [1987] OJ L41/31; [1988] 4 CMLR 111 7.61, 7.69 87/359 Spanish Transport Tariff (Transmediterranean) (87/359) [1987] OJ L194/28 6.102, 6.246 87/409 Sandoz [1987] OJ L222/28, [1989] 4 CMLR 628 16.165 87/742 Amersham-Buchler [1982] OJ L314/34; [1983] 1 CMLR 619 7.66 88/88 Olivetti/Canon [1988] OJ L52/51; [1989] 4 CMLR 940 7.69 88/138 Eurofix-Bauco/Hilti [1988] OJ L65/19; [1989] 4 CMLR 677 4.321, 4.322, 4.480, 9.147 88/469 Iveco/Ford [1988] OJ L230/39; [1989] 4 CMLR 40 7.69 88/518 Napier Brown/British Sugar [1988] OJ L284/41; [1990] 4 CMLR 196 4.475, 4.610, 4.640, 4.643, 8.592 89/22 BPB Industries plc [1989] OJ L10/50 4.194 89/93 Italian Flat Glass II [1989] OJ L33/44; [1990] 4 CMLR 535 8.59 89/191 LdPE [1989] OJ L74/21; [1990] 4 CMLR 382 8.594 89/205 Magill TV Guide/ITP, BBC and RTE [1989] OJ L78/43; [1989] 4 CMLR 757 4.587, 10.222, 10.236 89/512 Dutch Banks [1989] OJ L253/1; [1990] 4 CMLR 768 3.221 89/515 Welded Steel Mesh [1989] OJ L260/1; [1991] 4 CMLR 13 1.118, 8.13, 8.26, 8.39, 8.646

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

89/536 ARD/MGM (Film Purchases by German Television Stations) [1989] OJ L284/36; [1990] 4 CMLR 841 3.28, 7.401, 7.402, 14.86–14.90, 14.91 90/16 Dutch Courier Services [1990] OJ L10/47; [1990] 4 CMLR 947 6.66, 6.246 90/22 TEKO [1990] OJ L13/34; [1990] 4 CMLR 957 11.212 90/25 Concordato Incendio [1990] OJ L15/25; [1991] 4 CMLR 199 11.199, 11.201 (p. clxx) 90/140 Elopak/Metal Box-Odin [1990] OJ L209/15 3.242 90/186 Moosehead/Whitbread [1990] OJ L100/32; [1991] 4 CMLR 391 10.13, 10.76, 10.176, 10.180, 10.181, 10.185 90/456 Spanish Courier Services [1990] OJ L233/19; [1991] 4 CMLR 560 3.30, 6.66, 6.246 90/535 Cekacan [1990] OJ L299/64; [1992] 4 CMLR 406 7.341, 7.355 91/50 Ijsselcentrale and others [1991] OJ L28/32; [1992] 5 CMLR 154 3.67, 6.152 91/130 Screensport/EBU [1991] OJ L63/32; [1992] 5 CMLR 273 7.368, 14.71 91/297 Soda-ash/Solvay [1991] OJ L152/1; [1994] 4 CMLR 454 3.118, 4.401, 7.345 91/298 Solvay/CFK [1991] OJ L152/16; [1994] 4 CMLR 482 7.345 91/299 Soda Ash/Solvay [1991] OJ L152/21; [1994] 4 CMLR 645 7.345, 7.357, 8.590 91/301 Ansac [1991] OJ L152/54 7.340, 7.345 91/335 Gosme/Martell-DMP [1991] OJ L185/23; [1992] 5 CMLR 586 3.62, 7.59, 7.61 92/96 Assurpol [1992] OJ L37/16; [1993] 4 CMLR 338 11.212 92/157 UK Agricultural Tractor Registration Exchange [1992] OJ L68/19; [1993] 4 CMLR 434 1.119, 3.275, 3.344, 7.64, 7.423, 7.460, 7.463, 7.470, 7.473, 7.495 92/163 Tetra Pak II [1992] OJ L72/1; [1992] 4 CMLR 551 4.498, 4.847 92/204 Building and Construction Industry in the Netherlands (SPO) (92/204) [1992] OJ L92/1; [1993] 5 CMLR 135 1.118, 8.15, 8.36, 8.60 92/212 Eurocheque: Helsinki Agreement [1992] OJ L95/50; [1993] 5 CMLR 323 11.61 92/213 British Midland/Aer Lingus [1992] OJ L96/34; [1993] 4 CMLR 596 4.600 92/237 UKWAL [1992] OJ L121/45; [1993] 5 CMLR 632 8.406 92/262 French-West African Shipowners’ Committees [1992] OJ L134/1; [1993] 5 CMLR 446 8.31, 8.109 92/426 Viho/Parker Pen [1992] OJ L233/27; [1993] 5 CMLR 382 8.315 92/428 Parfums Givenchy system of selective distribution [1992] OJ L236/11; [1993] 5 CMLR 579 9.130, 9.162, 9.250

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

92/500 CSM NV [1992] OJ L305/16 8.348 92/521 Distribution of Package Tours during the 1990 World Cup [1992] OJ L326/31; [1994] 5 CMLR 253 3.29, 3.62 93/3 Lloyd’s Underwriters’ Association and the Institute of London Underwriters [1993] OJ L4/26; [1993] OJ L4/26 11.195 93/49 Ford/Volkswagen [1993] OJ L20/14; [1993] 5 CMLR 617 3.459, 7.59, 7.96 93/50 Astra [1993] OJ L2/23; [1997] 4 CMLR 89 7.59 93/82 Cewal [1992] OJ L34/20; [1995] 5 CMLR 198 4.324, 15.186 93/174 Tariff Structures in the Combined Transport of Goods [1993] OJ L73/38 15.251, 15.301 93/252 Warner-Lambert/Gillette [1993] OJ L116/21; [1993] 5 CMLR 559 2.107, 8.296, 12.231 93/403 EBU/Eurovision [1993] OJ L179/23 14.71, 14.76, 14.77, 14.78 93/438 CNSD [1993] OJ L203/27; [1995] 5 CMLR 495 1.118 94/19 Sea Containers v Stena Sealink [1993] OJ L15/8; [1995] 4 CMLR 84 4.586, 4.593, 4.603, 4.604, 4.605 94/119 Port of Rødby [1994] OJ L55/52; [1994] 5 CMLR 457 6.58, 6.246, 12.147, 15.383 94/210 HOV SVZ/MCN [1980] OJ L104/34 3.275, 4.908, 4.911, 4.913, 4.914, 15.267, 15.271, 15.278, 15.304, 15.314, 15.339 94/215 Steel Beams [1994] OJ L116/1; [1994] 5 CMLR 353 1.118, 8.43, 8.48, 8.62, 8.71, 8.590 94/296 Stichting Baksteen [1994] OJ L131/15; [1995] 4 CMLR 646 8.56 94/322 Exxon/Shell [1994] OJ L144/20 7.59, 7.87 94/386 Philips/Osram [1994] OJ L 378/37; [1996] 4 CMLR 48 7.59, 7.94 94/478 ADALAT [1996] OJ L201/1, [1996] 5 CMLR 416 16.163 94/579 BT/MCI [1994] OJ L223/36; [1995] 5 CMLR 285 7.59 94/594 ACI [1994] OJ L224/28 7.59, 15.252 94/599 PVC II [1994] OJ L239/14 8.20, 8.544, 8.590, 8.599, 8.615 94/601 Cartonboard [1994] OJ L243/1; [1994] 5 CMLR 547 8.31, 8.42, 8.59, 8.61, 8.66, 8.67, 8.73, 8.77, 8.109, 8.350, 8.599, 8.622 94/663 European Night Services [1994] OJ L259/20; [1995] 5 CMLR 76 7.58, 7.59, 7.62, 7.91, 7.102, 15.282, 15.310 94/735 Akzo Chemicals BV [1994] OJ L294/31 8.336

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(p. clxxi) 94/770 Pasteur Merieux/Merck [1994] OJ L309/1; [1993] 5 CMLR 206 7.59, 7.153 94/815 Cement [1994] OJ L343/1; [1995] 4 CMLR 327 8.41, 8.59, 8.61, 8.71, 8.572, 8.599, 8.644 94/894 Eurotunnel II [1994] OJ L354/66; [1995] 4 CMLR 801 15.282, 15.305, 15.309 94/895 International Private Satellite Partners (94/895) [1994] OJ L354/75 7.59 94/896 Asahi/Saint-Gobain [1994] OJ L354/87 7.59 94/980 Trans-Atlantic Agreement (TAA) [1994] OJ L376/1 1.118, 15.183 94/985 Far Eastern Freight Conference (FEFC) [1994] OJ L378/17 1.118, 15.301 95/188 COAPI [1995] OJ L122/37; [1995] 5 CMLR 468 1.118, 3.29 95/364 Zaventem [1995] OJ L216/8; [1996] 4 CMLR 232 6.57, 6.216, 6.246, 15.351, 15.362, 15.363, 15.366, 15.371 95/489 GSM Italy [1995] OJ L280/49; [1996] 4 CMLR 700 6.75, 6.216, 6.246 95/551 SCK/FNK [1995] OJ L312/79; [1996] 5 CMLR 416; [1996] 4 CMLR 565 1.118 96/180 Lufthansa/SAS [1996] OJ L 54/28; [1996] 4 CMLR 845 7.59, 15.100 96/438 FENEX [1996] OJ L181/28; [1996] 5 CMLR 332 1.118 96/546 Atlas/Phoenix [1996] OJ L239/23; [1997] 4 CMLR 89 7.59, 7.75, 7.98 97/39 Iridium [1997] OJ L16/87; [1997] 4 CMLR 1065 3.275 97/84 Ferry Operators-Currency surcharges [1997] OJ L26/23; [1997] 4 CMLR 789 8.15, 8.572, 15.188 97/181 GSM Spain [1997] OJ L76/19 6.75, 6.216, 6.246 97/606 VTM/VT4 [1997] OJ L244/18; [1997] 5 CMLR 18 6.246 97/624 Irish Sugar [1997] OJ L258/1; [1997] 5 CMLR 666 4.229, 4.326, 4.327, 4.905, 4.906 97/744 Italian Ports [1997] OJ L301/17; [1998] 4 CMLR 73 6.246 97/745 Port of Genoa [1997] OJ L301/17; [1998] 4 CMLR 91 6.246, 10.261 97/780 Unisource [1997] OJ L318/1; [1998] 4 CMLR 105 7.59 98/4 Wirtschaftsvereinigung Stahl [1998] OJ L1/10; [1998] 4 CMLR 450 1.118, 7.460, 7.495 98/190 Flughafen Frankfurt/Main AG [1998] OJ L72/30; [1998] 4 CMLR 779 4.593, 15.376 98/247 Alloy Surcharge [1998] OJ L100/55; [1998] 4 CMLR 973 8.62, 8.117, 8.600, 8.605, 8.609, 8.644, 8.653, 8.660

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

98/513 Alpha Flight Services/Aéroports de Paris [1998] OJ L230/10; [1998] 5 CMLR 611 4.909, 4.910, 4.927, 4.928, 4.931, 4.932, 4.933, 4.934, 15.377 98/531 Van den Bergh Foods Limited [1998] OJ L246/1; [1998] 5 CMLR 530 3.221, 4.398, 4.410 98/538 Amministrazione Autonoma dei Monopoli di Stato [1998] OJ L252/47 4.848 99/60 Pre-Insulated Pipe Cartel [1999] OJ L24/1; [1999] 4 CMLR 402 3.88, 3.119, 3.130, 3.150, 7.516, 8.28, 8.29, 8.31, 8.33, 8.36, 8.41, 8.66, 8.67, 8.85, 8.89, 8.103, 8.311, 8.317, 8.597, 8.600 99/198 Finnish Airports [1999] OJ L69/24; [1999] 5 CMLR 90 15.366, 15.372 99/199 Portuguese Airports [1999] OJ L69/31; [1999] 5 CMLR 103 4.910, 6.246, 15.351, 15.372 99/210 British Sugar [1999] OJ L76/1; [1998] 4 CMLR 1316 8.119, 8.592, 8.600, 8.605, 8.616 99/242 TPS [1999] OJ L90/6; [1999] 5 CMLR 168 3.227, 3.342, 7.103, 14.85 99/243 Trans-Atlantic Conference Agreement (TACA) [1999] OJ L95/1; [1999] 4 CMLR 1415 1.118, 15.183 99/272 Greek Ferries [1999] OJ L109/24; [1999] 5 CMLR 47 8.09, 8.103, 8.117, 8.310, 8.583, 8.597, 8.600, 8.608, 8.609, 8.624, 8.647, 8.677, 15.188 99/329 P&I Clubs [1999] OJ L125/12; [1999] 5 CMLR 646 3.259, 11.04, 11.184, 11.187, 11.209–11.213 99/421 P&O Stena Line [1999] OJ L163/61; [1999] 5 CMLR 682 7.78, 15.188 99/574 Télécom Développment [1999] OJ L218/24; [2000] 4 CMLR 124 7.103 99/687 Dutch Banks (Acceptgiro) [1999] OJ L271/28; [2000] 4 CMLR 137 11.43 2000/75 Virgin/British Airways [2000] OJ L30/1; [2000] 4 CMLR 1208 4.910, 4.918, 4.922, 15.142 2000/117 FEG/TU [2000] OJ L39/1; [2000] 4 CMLR 1208 8.703 2000/118 Nederlandse Federative Vereniging voor de Groothandel op Elektrotechnisch Gebied and Technische Unie (FEG & TU) [2000] L39/1; [2000] 4 CMLR 1208 1.118, 3.187 2000/182 GEAE/P & W (Engine Alliance) [2000] OJ L58/16; [2000] 5 CMLR 49 7.76 2000/392 WestLB [2000] OJ L150/1 17.74 (p. clxxii) 2000/400 Eurovision (Métropole) [2000] OJ L151/18; [2000] 5 CMLR 650 3.221, 14.76, 14.77, 14.78 2000/475 CECED [2000] OJ L187/47; [2000] 5 CMLR 635; [2000] 5 CMLR 635 3.14, 3.460

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

2000/521 Spanish Airports [2000] OJ L208/36; [2000] 5 CMLR 967 6.246, 15.372 2000/627 Far East Trade Tariff Charges and Surcharges Agreement (FETTCSA) [2000] OJ L268/1; [2000] 5 CMLR 1011 1.118, 8.16, 8.300, 8.619, 8.703 2001/135 Nathan-Bricolux [2001] OJ L 54/1; [2001] 4 CMLR 1122 9.98, 9.117 2001/143 Unisource [2001] OJ L52/30 7.59 2001/176 Italian Post [2001] OJ L63/59; [2001] 5 CMLR 15 6.246 2001/418 Amino Acids [2001] OJ L152/24; [2001] 5 CMLR 332 8.61, 8.63, 8.72, 8.88, 8.90, 8.428, 8.583, 8.586, 8.600, 8.604, 8.605, 8.608, 8.619, 8.624, 8.628, 8.651 2001/478 UEFA Broadcasting Regulations OJ 2001 L171/12; [2001] 5 CMLR 654 3.364 2001/663 Eco-Emballages [2001] OJ L233/37; [2001] 5 CMLR 1096 3.30 2001/696 Identrus [2001] OJ L249/12; [2001] 5 CMLR 1294 3.211, 3.364 2001/711 Volkswagen (Volkswagen II) [2001] OJ L262/14; [2001] 5 CMLR 1309 3.106, 3.404 2001/716 SAS/Maersk Air [2001] OJ L265/15; [2001] 5 CMLR 31 1.118, 8.26, 8.32, 8.77, 8.78, 8.412, 15.139 2001/782 Visa International (Visa I) [2001] OJ L293/24; [2002] 4 CMLR 168 3.211, 3.364 2001/837 Duales System Deutschland (DSD) [2001] OJ L319/1, [2002] 4 CMLR 405 3.14 2002/190 JCB [2002] OJ L69/1; [2002] 4 CMLR 37; [2002] 4 CMLR 1458 9.98, 9.129, 9.130, 9.140 2002/271 Graphite Electrodes [2002] OJ L100/1; [2002] 5 CMLR 17; [2002] 5 CMLR 829 1.118, 8.20, 8.29, 8.31, 8.61, 8.77, 8.78, 8.79, 8.80, 8.86, 8.114, 8.310, 8.428, 8.511, 8.592, 8.597, 8.598, 8.600, 8.605, 8.607, 8.615, 8.624, 8.626, 8.644, 8.658, 8.671, 8.680, 8.687, 8.700, 8.701, 8.713 2002/344 SNELPD [2002] OJ L120/19 6.246 2002/742 Citric Acid [2002] OJ L239/18; [2002] 5 CMLR 24 1.118, 3.88, 3.98, 8.21, 8.31, 8.61, 8.72, 8.88, 8.89, 8.90, 8.92, 8.93, 8.472, 8.483, 8.600, 8.605, 8.609, 8.650, 8.652, 8.658, 8.680 2002/746 Austrian Airlines/Deutsche Lufthansa [2002] OJ L242/25 15.127, 15.281 2002/759 Luxembourg Breweries [2002] OJ L253/21; [2002] 5 CMLR 30 1.118, 8.33, 8.39, 8.103, 8.648, 8.664 2002/914 Visa International-Multilateral Exchange Fee (Visa II) [2002] OJ L318/17; [2002] 4 CMLR 8 11.31, 11.37, 11.38, 11.43

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

2003/2 Vitamins [2003] OJ L6/1; [1976] 2 CMLR D25 1.118, 8.23, 8.34, 8.63, 8.67, 8.74, 8.78, 8.80, 8.92, 8.317, 8.427, 8.507, 8.594, 8.600, 8.601, 8.603, 8.604, 8.607, 8.624, 8.651, 8.655 2003/25 German Banks [2003] OJ L15/1; [2003] 4 CMLR 18 1.118, 11.62, 11.64 2003/68 Revised TACA [2003] OJ L26/53; [2003] 4 CMLR 21 15.181 2003/207 Industrial and Medical Gases [2003] OJ L84/1; [2003] 5 CMLR 8, amended by [2003] OJ L123/49 1.118, 8.117, 8.546, 8.624 2003/300 IFPI Simulcasting [2003] OJ L107/58; [2003] 5 CMLR 5 9.72, 10.210, 14.50 2003/383 Seamless Steel Tubes [2003] OJ L140/1; [2003] 5 CMLR 683 8.27, 8.32, 8.34, 8.42, 8.117, 8.491, 8.507, 8.644 2003/437 Zinc Phosphate [2003] OJ L153/1; [2003] 5 CMLR 14 1.118, 3.69, 8.42, 8.73, 8.297, 8.317, 8.644, 8.650, 8.657, 8.658, 8.660, 8.677, 8.688 2003/600 French Beef [2003] OJ L209/12; [2003] 5 CMLR 18 1.118, 8.62, 8.88, 8.605, 8.611, 8.615, 8.624, 8.639 2003/674 Methionine [2003] OJ L255/1; [2004] 4 CMLR 20 1.118, 8.42, 8.117 2003/675 Nintendo Distribution [2003] OJ L255/33; [2004] 4 CMLR 421 8.311, 8.645, 9.117 2003/707 Deutsche Telekom [2003] OJ L263/9; [2004] 4 CMLR 790 4.647, 13.80– 13.86, 13.99, 13.101, 13.137 2003/778 UEFA-Champions League [2003] OJ L291/25; [2004] 4 CMLR 549 7.349, 7.350, 14.64, 14.65, 14.94 2004/33 Gerog Verkhrsorganisation/Ferrovie dello Stato (GVG/FS) [2004] OJ L11/17 4.605, 15.281, 15.285, 15.289, 15.291, 15.340, 15.344 (p. clxxiii) 2004/105 Methylglucamine [2004] OJ L38/18; [2004] 4 CMLR 30 1.118, 8.42, 8.73 2004/138 Austrian Banks-‘Lombard Club’ [2004] OJ L56/1 1.118, 3.411, 8.60, 8.66, 8.93, 11.04, 11.63, 11.65, 11.66 2004/206 Food Flavour Enhancers [2004] OJ L75/1; [2004] 5 CMLR 11 1.118, 8.42, 8.61, 8.69, 8.76, 8.80, 8.93, 8.117, 8.622, 8.658 2004/207 Network sharing Germany [2004] OJ L75/32; [2004] 5 CMLR 762 9.72, 13.229 2004/337 Carbonless Paper [2004] OJ L115/1; [2004] 5 CMLR 1303 1.118, 8.59, 8.63, 8.72, 8.88, 8.90, 8.93, 8.117, 8.600, 8.604, 8.688 2004/420 Electrical and Mechanical Carbon and Graphite Products [2004] OJ L125/45; [2005] 5 CMLR 20 1.118, 8.25, 8.35, 8.40, 8.61, 8.67, 8.78, 8.80, 8.83, 8.90, 8.592, 8.677, 8.688, 8.689, 8.701

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2004/421 Industrial Copper Tubes [2004] OJ L125/50 1.118, 8.34, 8.77, 8.79, 8.82, 8.86, 8.88, 8.110, 8.117, 8.592, 8.594, 8.634, 8.650, 8.657, 8.658, 8.688, 8.701 2004/841 Air France/Alitalia [2003] OJ C397/10 3.275, 15.77, 15.86, 15.100, 15.107 2005/53 Belgian Beers (Kronenbourg/Heineken) [2005] OJ L184/57 1.118, 8.25, 8.42, 8.61, 8.79, 8.501, 8.587, 8.592, 8.594, 8.609, 8.613, 8.646 2005/349 Organic Peroxides [2005] OJ L110/44; [2005] 5 CMLR 14 1.118, 8.74, 8.77, 8.117, 8.509, 8.573, 8.592, 8.595, 8.634, 8.655, 8.660, 8.680 2005/396 German Bundesliga [2005] L134/46; [2005] 4 CMLR 26 7.350, 14.65, 14.94 2005/493 Sorbates [2005] OJ L182/20 1.118, 8.117, 8.626 2005/503 Belgian Beers [2003] OJ L200/1 1.118, 8.25, 8.42, 8.61, 8.79, 8.117, 8.501, 8.587, 8.592, 8.594, 8.609, 8.613, 8.619, 8.644 2005/503 French Beer [2005] OJ L184/57 1.118, 8.32, 8.622, 8.632 2005/566 Choline Chloride [2005] OJ L190/22 1.118, 8.73, 8.594, 8.595, 8.634, 8.644, 8.655, 8.658, 8.660 2005/590 Fine Art Auction Houses [2005] OJ L200/92 1.118, 8.61, 8.323, 8.412, 8.494, 8.688 2005/670 Coca-Cola [2005] OJ L253/21; [2006] 4 CMLR 1680 4.55, 4.432, 4.456, 4.520, 4.521, 12.231 2006/93 Hydrogen Peroxide and Perborate [2006] OJ L353/54 1.118, 8.10, 8.23, 8.24, 8.43, 8.59, 8.61, 8.82, 8.92, 8.193, 8.534, 8.625, 8.644 2006/460 Specialty Graphite (2006/460) [2006] OJ L180/20 1.118, 8.61, 8.66, 8.67, 8.83, 8.592, 8.600, 8.605, 8.620, 8.654, 8.655, 8.688, 8.701, 8.702 2006/485 Copper Plumbing Tubes [2006] OJ L192/21 1.118, 8.77, 8.456, 8.464, 8.522, 8.538, 8.539, 8.545, 8.592, 8.634, 8.644, 8.656, 8.658, 8.689, 8.702 2006/520 De Beers [2006] OJ L205/24; [2006] 5 CMLR 1426 4.55 2006/793 Methacrylates [2006] OJ L322/20 1.118, 8.63, 8.79, 8.196, 8.644, 8.658, 8.659 2006/894 Concrete Reinforcing Bars [2011] OJ C98/16 1.118, 8.594 2006/897 Monochloroacetic Acid [2006] OJ L353/12 1.118 2006/901 Italian raw tobacco [2006] OJ L353/45; [2006] 4 CMLR 1766 1.118, 8.17, 8.37, 8.72, 8.145, 8.165, 8.186, 8.196, 8.655 2006/902 Rubber Chemicals [2006] C353/50 1.118, 8.196, 8.625, 8.658 2006/903 Hydrogen Peroxide and Perborate [2006] OJ L353/54 1.118, 8.11, 8.23, 8.24, 8.43, 8.59, 8.61, 8.82, 8.92, 8.193, 8.196, 8.534, 8.625, 8.644, 8.655

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2007/236 Spanish Raw Tobacco [2007] OJ L102/14; [2006] 4 CMLR 866 1.118, 8.37, 8.62, 8.606, 8.648 2007/534 Bitumen Netherlands [2007] OJ L196/40 1.118, 7.376, 8.16, 8.18, 8.31, 8.62, 8.68, 8.77, 8.79, 8.85, 8.89, 8.93, 8.184, 8.323, 8.361, 8.598, 8.605 2007/691 Copper Fittings [2007] OJ L283/63 1.118, 8.10, 8.17, 8.69, 8.615, 8.634, 8.644, 8.658

(p. clxxiv) D. Numerical Table of Joint Venture Decisions JV.1 Telia/Telenor/Schibsted [1999] 4 CMLR 216 7.126, 7.142 JV.2 ENEL/FT/DT (1998) 7.142 JV.3 BT/Air Touch/Grupo Acciona/Airtel [1998] 5 CMLR 294 7.142 JV.4 Viag/Orange [1998] 5 CMLR 463 7.142 JV.5 Cegetel/Canal+/AOL/Bertelsmann (1998) 7.135, 7.142 JV.6 Ericcson/Nokia/Psion [1998] 5 CMLR 464 7.135, 7.142 JV.7 Telia/Soneral/Lithuanian Telecommunications [1998] 5 CMLR 467 7.142 JV.8 Deutsche Telekom/Springer/Holtzbrink/Infose [1998] 5 CMLR 878 7.142 JV.9 Telia/Soneral/Motorola/Omnitel [1998] 5 CMLR 467 7.142 JV.11 @Home Benelux BV [1998] 5 CMLR 661 7.142 JV.12 Ericcson/Nokia/Psion (1998) 7.135 JV.13 Wintershall/EnBW/MVV/WV/DED (1998) 7.142 JV.14 Panagora/DG Bank [1999] 4 CMLR 24 7.142 JV.15 BT/AT&T, 30 March 1999, not yet reported 5.05, 7.142, 13.206, 13.207 JV.17 Mannesman/Bell Atlantic/Omnitel [1999] 5 CMLR 15 7.142 JV.18 Chronopost/Correos [1999] 5 CMLR 19 7.142 JV.19 KLM/Alitalia [1999] 5 CMLR 759 7.142, 15.74 JV.22 Fujitsu/Siemens (1999) 5.05 JV.25 Sony/Time Warner/CD Now (1999) 7.142 JV.37 B SKY B/KIRCH PAY TV [2000] 4 CMLR 818 5.560, 7.142 JV.55 Hutchinson/RCPM/ECT [2001] 4.206, 7.142 JV.56 Hutchinson/ECT (2001) 7.142

(p. clxxv) 3. Table of National and Other Cases

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Belgium Raad voor de Mededinging, Auditoraat, beslissing nr 2008-V/M-12-AUD van 26 maart 2008, zaak MEDE-V/M-07/0038: Bofar NV tegen Alcon-couvreur NV, AZ NV, Bayer NV, Biogen Idec Belgium, NV, Boehringer Ingelheim Comm. V., Bristol Myers Squibb, Janssen Cilag Belgium, Pfizer NV en Serono 16.203 Raad voor de Mededinging, beslissing nr 2009-V/M-04 van 2 april 2009, zaak MEDEV/M-07/0038, Beroep van Bofar NV bij de voorzitter van de Raad voor de Mededinging tegen Beslissing nr 2008-V/M-12- AUD van 26 maart 2008 16.204

Denmark Local Banks, Danish Competition Appeal Tribunal decision, 2 October 2007 7.440 Pandora Production (Case U-3-08), Commercial Court 10.98

EFTA Court Bankers’ and Securities Dealers’ Association of Iceland v ESA (E-9/04) [2006] EFTA Ct Rep 42 6.151

European Court of Human Rights A. Menarini Diagnostics SRL v Italy (App 43509/08) 2.80 Camenzind v Switzerland (1999) 28 EHRR 458 8.379 Harju v Finland (2011) (56716/09) 8.331 Heino v Finland (2011) (56715/09) 8.331 Janosevic v Sweden (2004) 38 EHRR 22 2.80 Niemitz v Germany Series A No 251-B (1993) EHRR 97 8.331 Saunders v UK (1997) 23 EHRR 313 8.267 Société Canal Plus v France (2010) (29408/08) 8.331 Société Colas Est v France (37971/97) (2004) 39 EHRR 17 8.331, 8.404 Varga v Romania (2008) (73957/01) 8.331

Finland Exchange of Information in Finnish Grocery Market, DNR 154/61/2007, 19 June 2008 7.461

France Arrow Génériques (07-MC-06) Decision of 11 December 2007 16.26 Avis, decision no 12-A-18 of 20 July 2012 16.195 Canal+/TPS, decision of 23 July 2012 14.210

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Canal+/TPS, decision of 30 August 2006 14.210 Decision 07-D-22 of the Competition Council, 5 July 2007 16.194, 16.195 Decision 07-D-45 and 07-D-46 of the Competition Council, 13 December 2007 16.194 Decision No 11-D-17 8.239 Mobile Telephony, Decision no 05-D-65, 2005 7.473, 7.481 Motor-fuels on the motorway (‘carburants sur autoroute’) judgment of 9 December 2003 7.480, 12.132, 12.133 Paris Luxury Hotels, Decision no 05-D-64, 2005, Conseil de la Concurrence 7.470, 7.473, 7.480 Pharma Lab, Competition Council decision 05-D-72 of 20 December 2005 16.192 Pharma Lab, Paris Court of Appeal, Judgment no 2006/01498 of 23 January 2007 16.192 Sanofi-Aventis, decision of 2009 16.148 Sanofi-Aventis, decision of 2013 16.26, 16.33, 16.46, 16.49, 16.148 (p. clxxvi) Schering-Plough, Decision 07-MC-06 16.147 Serman (SA.34547) 17.490

Germany Alcan II, Decision of 20 January 2004 (BGH), XI ZR 53/03 17.475 Decision of 11 December 1997, KVR 07/96 14.65 E.ON, KVR 67/07 (2009) 12.80 E.ON/Ruhrgas, decision of the Bundeskartellamt (B8-109/01) (2002) 5.167 Fährhafen Puttgarden, Bundeskartellamt, decision of 21 December 1999–B9-199/97 and B9-16/98 12.147 Langfristige Lieferverträge (2006) B8-113/03 (2006) 12.80 RTL/ProSiebenSat.1, Decision of 8 August 2012, Dusseldorf Higher Regional Court 14.191 RTL/ProSiebenSat.1, Decision of 17 March 2011, Bundeskartellamt 14.191

Italy ENI Trans Tunisian Pipeline (A358), decision of 15 February 2006 12.147 RAS-Generali/IAMA Consulting, AGCM, prov 30 September 2004, no 13622, RASGenerali IAMA Consulting, in Boll no 40/2004 7.481 RTI/Sky-Mondiali di Calcio (A429) 14.142

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Netherlands Bofar v Alcon Couvreur and Others Belgian Cases 16.203, 16.204

Poland DDI-59/2001 of 10 November 2001 14.210

Spain Comisión Nacional de la Competencia of 21 May 2009 in Case 2623/05 PFIZER / COFARES 16.179 Elsam A/S or Empresas electricas, Tribunal de Denfensa de la Competencia, 552/02, 7 July 2004 12.204 Gas Natural/Endesa (Case N-05082) 5.167 Pharma Lab, decision 9 June 2010 16.201

United Kingdom Argos Limited and Littlewoods Limited v Office of Fair Trading [2004] CAT 24; [2005] CompAR 588 3.134 Argos and Littlewoods v OFT [2006] EWCA Civ 1318; [2006] UKCLR 1135 7.453 British Horseracing Board v OFT (No 1041/2/1/04) [2005] CAT 29; [2006] CompAR 99 3.182 Genzyme Ltd v OFT (1016/1/1/03) [2005] CAT 32; [2006] CompAR 195 4.475, 4.640 Independent Schools, OFT Decn of 20 November 2006 7.440, 7.445, 7.462 Inntrepreneur Pub Company v Crehan [2006] UKHL 38; [2007] 1 AC 333; [2006] 3 WLR 148; [2006] 4 All ER 465; [2006] UKCLR 1232 2.264 JJB Sports and Allsports v Office of Fair Trading [2004] CAT 17; [2005] CompAR 29 3.146 JJB Sports v OFT [2006] EWCA Civ 1318; [2006] UKCLR 1135 7.453 Loan Products to Professional Services Firms (2011) (CE/8950/08) 7.450 Loans to large professional services firms: Royal Bank of Scotland, OFT Decn No CA98/01/2011 in Case CE/8950/08 (20 January 2011) 8.49 ME Burgess v W Austin & Sons Ltd (1087/2/3/07) [2008] CAT 13; [2008] CompAR 161 4.187 Motor Insurance, September 2011, OFT 1377 7.490, 7.496 Napp Pharmaceutical Holdings Limited and Subsidiaries (No CA98/2/2001) [2001] 4.859, 4.860, 16.46, 16.48

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(p. clxxvii) Napp Pharmaceutical Holdings Ltd v Director General of Fair Trading (1000/1/1/01) [2002] CAT 1; [2002] CompAR 13 4.187, 4.859, 4.874, 16.08, 16.39, 16.46, 16.48, 16.144 National Grid Electricity Transmission plc v ABB Ltd [2009] EWHC 1326; [2009] UKCLR 838 8.228 National Grid Electricity Transmission Plc v ABB Ltd [2012] EWHC 869 (Ch) 8.242 Paroxetine (CE-95311-11) 16.101, 16.143 Price-fixing of Replica Football Kit, Case CP/0871/01, Decision No CA98/06/2003, 1 August 2003 8.50 Reckitt Benckiser, OFT decn CA98/02/2011, 12 April 2011 16.09, 16.48, 16.156 Umbro Holdings Ltd (1019/1/1/03 etc) [2005] CAT 22 (2005/1623) 7.453

United States Air Cargo Shipping Services Antitrust Litigation, Re, MDL No 1775 (EDNY 2011) 8.155, 8.227 Andrx Pharms v Biovail Int’l, In re, 256, F3d 799 (DC Cir 2001) 16.78 Blue Cross & Blue Shield United of Wisconsin v Marshfield Clinic, 980 F Supp 1298 (1997) 14.106 Borden v Federal Trade Commission, 674 F2d 498 (6th Cir 1982) vacated on other grounds; 461 US 940 (1983) 4.309 Braswell v United States, 487 US 99 (1988) 8.258 Broadcom Corporation v Qualcomm Incorporated, 501 F 3d 297 (3d Cir 2007) 7.504 Brooke Group v Brown and Williamson Tobacco, 509 US 209 (1993); 113 S.Ct. 2578 (1993); 125 L.Ed.2d 168 (1993) 4.309 Cardizem CD Antitrust Litig, In re, 332 F3d 896, 908 (6th Cir 2003) 16.78 Ciprofloxacin Hydrochloride Antitrust Litig, In re, 544 F3d 1323 (Fed Cir 2008) 16.76 Concord Boat v Brunswick, 207 F3d 1039 (8th Cir. 2000) 4.445 Cornell University v Hewlett Packard, 609 F Supp 2d 279 (NDNY 2009) 10.133 Dell Computer Corp, In re, 121 FTC 616 (20 May 1996) 7.501 Federal Trade Commission v Actavis, 570 US (2013) 4.739, 16.70, 16.72, 16.80, 16.81, 16.82, 16.83, 16.84, 16.102 Federal Trade Commission v Watson Pharmaceuticals, 677 F3d 1298, 1306 (11th Cir 2012) 16.70, 16.74, 16.76, 16.77, 16.81 Federal Trade Commission v Watson Pharmaceuticals (now Actavis) 570 US (2013) 4.739, 16.70, 16.72, 16.81, 16.82, 16.83, 16.84, 16.102

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Hale v Henke, 201 U.S. 43 (1906) 8.258 IPCom, MEMO/09/549 (10 December 2009) 7.506, 7.525 K-dur Antitrust Litig, In re, 686 F3d 197, 218 (3d Cir 2012) 16.78, 16.79 Leegin Creative Leather Products v PSKS, 551 US 877 (2007) 9.99 MCI Communications v American Telephone and Telegraph, 708 F2d 1081; 1132–3 (7th Cir 1983); cert denied; 464 US 891; 104 S Ct 234 (1983) 4.309 Methionine Antitrust Litigation, Re, No C-99-3491, MDL no 1311 (NDCal 17 June 2002) 8.155, 8.227 Northeastern Telephone v AT & T, 651 F2d 76 (2nd Cir 1981); cert denied 455 US 943; 102 S Ct 1438; 71 L Ed 2d 654 (1982) 4.309 Ocean State Physicians Health Plan v Blue Cross & Blue Shield of Rhode Island, 692 F Supp 52 (DRI 1988) 14.106 Rambus Inc, In the matter of, FTC Docket No 9302 (2002) 7.501 Schering-Plough v FTC, 402 F3d 1056 (11th Cir 2005) 16.76, 16.77 Special Master’s Order Denying Motion of Direct Purchaser Plaintiffs to Compel Hitachi to Produce Foreign Regulatory Documents, No M:07-cv-01827-si (26 April 2011) 8.155, 8.227 Star Alliance Docket DOT-OST-2008-0234, Order 2009-7-10 (10 July 2009) 15.129 Summit Technology and VISX, Federal Trade Commission decision of 23 February 1999 10.158 Tamoxifen Citrate Antitrust Litig, In re, 466 F3d 187, 213 (and 208) (2d Cir 2006) 16.76, 16.77 TFT-LCD (Flat Panel) Antitrust Litigation, Re, No M: 07-1827 (ND Cal 2011) 8.155, 8.227 Union Oil Company of California, In the Matter of, FTC Docket No 9305 (2005) 7.501 United States v AU Optronics et al, case ref CR-09-0110 SI 8.05 (p. clxxviii) United States v Blue Cross & Blue Shield of Michigan 14.106 United States v Delta Dental of Rhode Island, 943 FSupp 172 (DRI 1996) 14.106 United States v Du Pont, 351 US 377 (1956) 5.658 Upjohn Co v United States, 449 US 383 (1981) 8.269 USA v Apple Inc., 12 Civ 2826 (DLC) 14.46 USA v Apple Inc., 12 Civ 3394 (DLC) 14.46 Valley Drug v Geneva Pharms, 344 F3d 1294 (11th Cir 2003) 16.73, 16.76, 16.77

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Verizon Communications INC v Law Offices of Curtis V Trinko LLP, 540 US 398 (2004) 4.658, 4.824, 8.05, 12.238, 13.78 Vitamins Antitrust Litigation, Re, Misc No 99-197, Docket No 3079 (DDC 20 May 2002) 8.155, 8.227 White v United States, 322 US 649 (1944) 8.258

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Table Of Treaties and Legislation Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

1. Table of EU/EC Treaties clxxix 2. Tables of EU/EC Legislation A. Table of Regulations clxxxiii B. Table of Directives cxcix C. Table of Decisions ccv 3. Tables of EU/EC Notices, Guidelines and Other Informal Texts A. Table of Guidelines and Notices (Chronological) ccxi B. Table of Recommendations ccxxvi C. Table of Communications ccxxvii D. Table of Competition Reports ccxxx 4. Table of National Legislation ccxxxi 5. Table of International Treaties ccxxxiii

1. Table of EU/EC Treaties Agreement between the European Communities and the Government of the United States of America regarding the application of their competition laws, decision of the Council and Commission of 10 April 1995 (95/145/EC, ECSC) [1995] OJ L95/47 2.178, 8.101 Art III(3) 8.102

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Art V(2) 8.102 Charter of Fundamental Rights of the European Union 2000 Art 7 8.255, 8.414, 8.415 Art 11 14.16 (2) 14.16 Art 17 17.401 Art 36 6.225 Art 41 5.452, 17.401 (2) 17.401 Art 47 2.80, 3.54, 4.794, 8.255, 8.466, 8.708 Art 48(2) 2.280, 8.255 Art 49 8.255 (1) 2.179, 2.280 (3) 8.255 Art 51 2.179 Art 52(1) 8.708 EEA Agreement 1991 (as amended) [2005] OJ L64/57 and L133/35 Art 8 5.308, 8.101 (3) 5.311, 8.297 Art 53 2.198, 5.459, 8.155, 11.57 (1) 3.336 Art 54 2.198, 5.459, 8.155 Art 57 2.198, 5.312, 5.459, 8.155 (1) 5.310 (2) 5.313 Protocol 21 5.312 Protocol 23 2.204, 8.101, 8.297, 8.433 Protocol 24 5.312, 5.315, 5.316, 5.317 Art 5 5.317 Annex XIV 5.312 EFTA Agreement 1994 17.500

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European Patent Convention Art 83 16.12 Multilateral Agreement between the European Community and its Member States, the Republic of Albania, Bosnia and Herzegovina, the Republic of Bulgaria, the Republic of Croatia, the former Yugoslav, Republic of Macedonia, the Republic of Iceland, the Republic of (p. clxxx) Montenegro, the Kingdom of Norway, Romania, the Republic of Serbia and the United Nations Interim Administration Mission in Kosovo on the Establishment of a European Common Aviation Area [2006] OJ L285/3 15.40 Rules of Procedure Commission Rules of Procedure Art 13 17.436 (1) 8.329, 8.394, 8.417 (3) 8.329, 8.394, 8.417 Art 27 8.329, 8.394 European Court of Justice Rules of Procedure Art 83 5.1172 Arts 83–89 5.1170 Arts 133–136 5.1175 General Court Rules of Procedure Art 44(1) 5.1166 Art 76a 5.1175, 5.1176 Art 104 5.1172, 8.399 Arts 104–110 5.1170 Instruction of the Registrar of the General Court Art 5 5.1169 Art 6 5.1169 Statute of the Court of Justice Art 58 5.1179 Treaty of Amsterdam 1997 6.223 Treaty establishing the European Coal and Steel Community (ECSC Treaty) (1951) 3.04, 5.01, 17.02, 17.497 Art 2 17.09 Art 3 17.09 Arts 3–6 6.06

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Art 4 17.04, 17.05, 17.07, 17.09 Art 60 8.660 Art 65 8.71 (1) 8.03, 8.43, 8.48 Art 95 17.09 Treaty establishing the European Economic Community (EEC Treaty) Art 3(g) 6.04 Art 5 6.04 Art 7 6.102 Art 37 6.110, 6.112, 6.114 (1) 6.110, 6.114 (2) 6.110 (3) 6.110 (4) 6.110 (5) 6.110 (6) 6.110 Art 85 5.01, 6.04 Art 86 5.01, 6.04 Art 90(1) 6.102 Treaty on European Union (Maastricht) 1992 16.10 Art 3 3.02, 3.389, 6.04, 17.250 (3) 6.04, 6.05, 6.07, 6.96 (4) 2.85, 2.86, 2.161, 2.168, 2.169, 2.204, 2.274, 2.275, 2.280, 2.283 Art 4(3) 3.159, 6.04, 6.05, 6.06, 6.07, 6.96, 8.242, 12.214, 14.35, 15.28, 17.462 Art 5(3) 5.217 Art 6 (1) 2.179, 8.708 (2) 2.179 (3) 2.179 Art 11 17.250 Protocol 27 2.60, 3.02, 3.389, 6.04, 12.48

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Treaty on the Functioning of the European Union [2008] OJ C115/47, [2008] OJ C115/1 3.389 Art 3(1)(g) 2.148, 4.01 Art 4(3) 17.517 Art 11 3.12, 3.13, 3.458 Art 12 6.09 Art 14 6.137, 6.222, 6.223, 6.224, 6.269, 6.270, 17.338 Art 18 4.897, 6.50 Art 28 6.101, 6.109, 6.124, 6.125, 6.135 Art 34 6.51, 6.105, 6.106, 6.107, 6.108, 6.163, 6.257, 10.10, 10.17, 10.38, 10.175, 16.155 Art 35 6.108, 10.17, 10.19 Art 36 6.171, 6.172, 6.174, 6.175, 10.17, 10.38, 16.155 Art 37 6.105, 6.109, 6.110, 6.111, 6.112, 6.114, 6.115, 6.117, 6.120, 6.121, 6.122, 6.123, 6.124, 6.125, 6.135, 6.139, 6.140, 6.164, 6.176, 6.257 (1) 6.111, 6.118, 6.119, 12.05 (1)–(3) 6.110 (2) 6.116 Art 39 3.03 Art 42 3.03 Art 43 3.03 (2) 3.03 Art 49 6.123, 6.126, 6.129, 6.131, 6.132, 6.133, 6.134, 6.135, 6.164, 15.30 Art 56 6.51, 6.126, 6.127, 6.128, 6.133, 6.134, 6.135, 6.164, 6.257, 10.50 Art 88 6.229 Art 93 17.328, 17.409 Arts 101–109 6.09, 6.50 Art 101 6.04, 6.05, 6.06 (1)(a) 11.193 Art 102 see generally chapter 4, 3.27, 3.49, 3.174, 3.175, 3.376, 6.04, 6.05, 6.06, 6.257 (a) 4.22, 4.259, 4.844, 14.126, 14.131

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(b) 4.22, 4.259, 4.418, 4.607, 4.935, 4.936, 6.66 (p. clxxxi) (c) 4.12, 4.16, 4.260, 4.262, 4.895, 4.896, 4.900, 4.907, 4.908, 4.915, 4.916, 4.920, 4.921, 4.923, 4.924, 4.926, 4.935, 15.372 Art 103 2.182 (2) (a) 2.76 (b) 2.20 (e) 2.31 Art 105 15.12, 15.179 (1) 2.97 Art 106 see generally Chapter 6, 2.68, 2.111, 12.147, 17.409 (1) 6.02, 6.09, 6.10, 6.11, 6.13, 6.15, 6.16, 6.17, 6.26, 6.29, 6.30, 6.34, 6.36, 6.38, 6.39, 6.42, 6.43, 6.44, 6.45, 6.46, 6.47, 6.48, 6.49, 6.50, 6.51, 6.52, 6.53, 6.54, 6.55, 6.56, 6.57, 6.58, 6.59, 6.60, 6.61, 6.62, 6.63, 6.66, 6.67, 6.70, 6.72, 6.75, 6.76, 6.77, 6.79, 6.80, 6.81, 6.82, 6.84, 6.85, 6.88, 6.89, 6.90, 6.92, 6.94, 6.95, 6.97, 6.98, 6.99, 6.100, 6.103, 6.111, 6.127, 6.133, 6.134, 6.135, 6.136, 6.139, 6.142, 6.151, 6.164, 6.176, 6.194, 6.195, 6.220, 6.228, 6.231, 6.233, 6.234, 6.235, 6.238, 6.241, 6.246, 6.255, 6.257, 6.262, 15.370 (2) 6.22, 6.66, 6.79, 6.84, 6.90, 6.136, 6.137, 6.138, 6.139, 6.140, 6.141, 6.142, 6.144, 6.145, 6.146, 6.149, 6.155, 6.157, 6.158, 6.159, 6.163, 6.164, 6.165, 6.166, 6.167, 6.168, 6.169, 6.170, 6.171, 6.174, 6.175, 6.176, 6.177, 6.182, 6.183, 6.184, 6.190, 6.191, 6.194, 6.195, 6.198, 6.200, 6.202, 6.203, 6.204, 6.205, 6.207, 6.208, 6.209, 6.212, 6.213, 6.214, 6.215, 6.216, 6.217, 6.218, 6.221, 6.223, 6.224, 6.226, 6.227, 6.255, 6.258, 12.05, 15.361, 15.363, 17.338, 17.339, 17.348 (3) 6.99, 6.104, 6.166, 6.211, 6.228, 6.229, 6.230, 6.231, 6.234, 6.235, 6.237, 6.243, 6.244, 6.245, 6.246, 6.247, 6.248, 6.250, 6.252, 6.253, 6.254, 6.255, 6.256, 6.257, 6.258, 6.260, 6.261, 6.262, 6.263, 6.264, 6.265, 6.267, 6.268, 6.269, 6.270, 6.271, 14.155 Art 107 6.08, 6.165, 6.198, 6.229, 17.35, 17.36, 17.49, 17.50, 17.58, 17.121, 17.130, 17.520 (1) 6.44, 6.101, 6.165, 17.01, 17.18, 17.20, 17.29, 17.58, 17.89, 17.95, 17.147, 17.172, 17.173, 17.203, 17.204, 17.245, 17.348, 17.351, 17.353, 17.409 (2) 17.184, 17.201, 17.203, 17.409 (a) 17.204, 17.205 (b) 17.207, 17.208, 17.209 (c) 17.214

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(3) 17.184, 17.215, 17.217, 17.220, 17.224, 17.409 (a) 17.221, 17.223, 17.229, 17.235 (b) 17.235, 17.237, 17.239, 17.242, 17.244 (c) 17.223, 17.229, 17.235, 17.246, 17.248, 17.251, 17.257, 17.326, 17.514 (d) 17.245 (e) 17.327 Art 108 6.08, 6.165, 6.166, 6.258 (1) 17.337, 17.511, 17.517 (2) 17.329, 17.334, 17.335, 17.336, 17.424, 17.450, 17.511, 17.517, 17.522, 17.537, 17.566 (3) 17.348, 17.368, 17.387, 17.401, 17.402, 17.403, 17.409, 17.416, 17.447, 17.475, 17.479, 17.517, 17.519, 17.525, 17.527, 17.554 Art 109 17.173, 17.185 Art 114 6.268, 6.271, 12.05, 13.13, 13.46 Art 165(1) 14.68 Art 167 3.12, 3.15, 3.458, 14.14 (4) 14.21 Art 168 16.10 (7) 16.19 Art 170 13.107 Art 179(1) 17.263 Art 234 2.243, 3.158 Art 249 2.125, 8.421 Art 256 5.1126, 5.1179 Art 258 2.53, 3.07, 5.1126, 6.229, 6.230, 6.234, 6.235, 6.241, 6.250, 12.05, 13.36, 17.448 Art 259 3.07 Art 260 5.1126 Art 261 5.1195

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Art 263 2.144, 2.150, 4.68, 4.78, 5.337, 5.1126, 5.1129, 5.1151, 5.1165, 6.233, 6.239, 6.241, 6.249, 8.399, 8.708, 17.550 (2) 5.1138 (3) 5.1138 (4) 5.1139, 5.1141 Art 265 5.1126, 6.239, 17.532, 17.533, 17.559 Art 267 2.150, 2.151, 2.237, 2.255, 2.256, 2.284, 3.314, 5.1126, 9.01, 10.247 (3) 2.272 Art 268 5.1126 Art 277 5.1126 Art 278 5.1170, 8.393, 8.399, 17.471, 17.561 (p. clxxxii) Art 279 5.1170, 17.561 Art 288 3.467, 6.247, 6.264, 8.417 Art 296 2.136, 5.1155 Art 297 (1) 6.264 (2) 6.247 Art 339 2.173, 2.192, 2.195, 8.102, 8.443 Art 340(2) 5.1203 Art 345 10.09, 10.17, 10.19, 10.60, 17.60 Art 346 3.07, 3.11, 5.294 (1) 3.06 (a) 5.295 (b) 5.296, 5.297 (2) 3.06, 3.08 Art 347 3.07 Art 348 3.07, 3.09, 3.10 Protocol 26 6.137, 6.150, 17.338 Annex II 3.03 Treaty of Lisbon 2009 2.147 Art 6 8.255

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Treaty of Rome (EC Treaty) 4.83, 17.497, 17.500 Art 3 (1) 6.06 (g) 2.60, 6.04, 6.06 Art 10 6.04, 6.06, 8.403 Art 16 6.223 Art 85 15.07 Art 86 15.07 Art 101 6.04 Art 102 6.04

(p. clxxxiii) 2. Tables of EU/EC Legislation A. Table of Regulations Council Regulation 17/62 First Regulation implementing Arts 81 and 82 of the Treaty [1962] OJ 13/204 2.02, 2.03, 2.07, 2.09, 2.30, 2.41, 2.57, 2.116, 2.147, 2.151, 2.261, 3.223, 3.445, 3.473, 4.54, 7.51, 7.123, 8.107, 8.253, 8.353, 8.362, 8.364, 8.412, 9.12, 9.13, 9.19, 12.231, 15.07, 15.10, 16.106, 17.395 Art 2(3) 7.128 Art 3 2.103 Art 4(2) 2.21 Art 9(3) 2.230, 2.231, 2.236, 2.256 Art 10 (1) 2.163 (3) 2.155 Art 11 8.287, 8.288, 8.289, 8.301, 8.303, 8.305, 8.365 (1) 2.155 Art 13 2.160 Art 14 8.252, 8.301, 8.341, 8.389 (1) 8.339 (c) 8.362 (2) 8.330, 8.395 (3) 8.134, 8.388 (5) 2.155

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(6) 8.388 Art 15 (1) (b) 8.309 (c) 8.380, 8.598 (2) 8.677 Art 16(1)(c) 8.308 Art 17 8.100 Art 19(3) 10.219 Art 20(2) 2.195 Council Regulation 26/62/EEC applying certain rules to production of and trade in agricultural products [1962] OJ 30 as amended by Council Regulation of 29 June 1962 [1962] OJ 53 Art 2(1) 3.03 Council Regulation 141/62 exempting transport from the application of Council Regulation 17 [1962] OJ L124/2751 15.07 recital 1 15.07 Council Regulation 19/65/EEC on the application of Art [101(3)] of the Treaty to certain categories of agreements and concerted practices [1965] OJ L36/533; [1965] OJ Spec Ed 35 3.468, 9.14, 9.18, 9.20, 9.22, 9.28, 10.68 Art 1a 9.24 Art 7 9.27 Commission Regulation 67/67/EEC of the Commission of 22 March 1967 on the application of Article [101(3)] of the Treaty to certain categories of exclusive dealing agreements [1967] OJ L57/849; [1967] OJ Spec Ed 10 10.179 recital 8 9.08 Council Regulation 1017/68/EEC of 19 July 1968 [1968] OJ L175/1; [1968] OJ Spec Ed 302 2.81, 15.08, 15.242, 15.243, 15.300 Art 2 15.14, 15.301, 15.302, 15.305 Art 3 15.249 Art 4 15.249 Art 5 15.14 Art 8 15.14, 15.314 Council Regulation 1192/69/EEC of 26 June 1969 [1969] OJ L156/8 17.185

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Council Regulation 2821/71 on the application of Art [101(3)] to categories of agreements and concerted practices [1971] OJ L285/46 3.468, 7.163, 7.269 Council Regulation 2988/74/EEC of 26 November 1974 [1974] OJ L319/1 2.81 Commission Regulation 1983/83/EEC of 22 June 1983 on the application of Article [101(1)] of the Treaty to categories of exclusive distribution agreements [1983] OJ L173/1 9.14 Art 2(2)(c) 9.11 Commission Regulation 1984/83/EEC of 22 June 1983 on the application of Article [101(3)] of the Treaty to categories of exclusive purchasing agreements [1983] OJ L173/5 9.14, 9.159 (p. clxxxiv) Council Regulation 4056/86/EC of 22 December 1986 laying down detailed rules for the application of Articles [101] and [102] of the Treaty to maritime transport [1986] OJ L378 2.81, 15.10, 15.15, 15.146, 15.152 Art 1(3)(b) 4.225 Art 18 8.252 Art 19(2) 8.677 Council Regulation 3975/87/EEC of 14 December [1987] OJ L374/1 2.81, 8.557, 15.11, 15.15, 15.22 Council Regulation 3976/87/EEC on the application of Art [101(3)] to certain categories of agreements and concerted practices in the air transport sector [1987] OJ L374/9 15.16, 15.22 Commission Regulation 2671/88/EEC of 26 July 1988 on the application of Article [101(3)] of the Treaty to certain categories of agreements between undertakings, decisions of associations of undertakings and concerted practices concerning joint planning and coordination of capacity, sharing of revenue and consultations on tariffs on scheduled air services and slot allocation at airports [1988] OJ L239/9 15.16 Commission Regulation 2672/88/EEC on the application of Article [101(3)] of the Treaty to certain categories of agreements between undertakings relating to computer reservation systems for air transport services [1988] OJ L239/13 15.16 Commission Regulation 2673/88/EEC of 26 July 1988 on the application of Article [101(3)] of the Treaty to certain categories of agreements between undertakings, decisions of associations of undertakings and concerted practices concerning ground handling services [1988] OJ L239/17 15.16 Commission Regulation 4087/88/EEC of 30 November 1988 on the application of Article [101(3)] of the Treaty to categories of franchise agreements [1988] OJ L359/46 9.14 Commission Regulation 556/89/EC of 30 November 1988 on the application of Article 101(3) of the Treaty to certain categories of know-how licensing agreements [1989] OJ L61/1 10.27 Art 1 10.24

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Council Regulation 4064/89 on the control of concentrations between undertakings [1989] OJ L395/1 (amended [1990] OJ L257/13) 4.218, 4.219, 5.01, 5.03, 5.05, 5.09, 5.128, 5.160, 5.211, 5.361, 5.761, 5.766, 5.767, 5.812, 5.1201, 7.37, 7.44, 7.114, 7.140 Art 2(4) 5.519 Art 3(2) 7.109 Art 10(6) 5.04 Art 14(1)(b) 5.543 Council Regulation 2342/90/EC of 24 July on fares for scheduled air services [1990] OJ L217/1 15.23 Art 4 15.23 Council Regulation 2343/90/EC of 24 July on access for air carriers to scheduled intraUnion air service routes [1990] OJ L217/8 15.23 Council Regulation 2344/90/EC of 24 July on the application of Article [101(3)] of the Treaty to certain categories of agreements and concerted practices in the air transport sector [1990] OJ L217/15 15.23 Commission Regulation 83/91 of 5 December 1990 on the application of Article [101(3)] of the Treaty to certain categories of Agreements between undertakings relating to computer reservation systems for air transport services [1991] OJ L10/9 15.16 Commission Regulation 84/91/EEC of 5 December 1990 on the application of Article [101(3)] of the Treaty to certain categories of Agreements, Decisions and concerted practices concerning joint planning and coordination of capacity, consultations on passenger and cargo tariffs rates on scheduled air services and slot allocation at airports [1991] OJ L10/14 15.16 Council Regulation 1534/91/EEC of 31 May 1991 on the application of Art [101(3)] to certain categories of agreements, decisions and concerted practices in the insurance sector [1991] OJ L143/1 3.468, 11.189, 11.193, 11.217 Council Regulation 3921/91/EEC of 16 December 1991 laying down the conditions under which non-resident carriers may transport goods or passengers by inland waterway within a Member State [1991] OJ L373/1 15.205 Council Regulation 479/92 on the application of Art [101(3)] to certain (p. clxxxv) categories of agreements, decisions and concerted practices between liner shipping companies (consortia) [1992] OJ L55/3 15.152 Art 2 15.152 Council Regulation 1768/92 of 18 June 1992 concerning the creation of a supplementary protection certificate for medicinal products [1992] OJ L182/2 16.133 Council Regulation 2077/92/EEC of 30 June 1992 concerning inter-branch organisations and agreements in the tobacco sector [1992] OJ L215/80 3.03

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Council Regulation 2407/92/EC of 23 July on licensing of air carriers [1992] OJ L240/1 15.24 Council Regulation 2408/92/EC of 23 July on access for air carriers to intra-Union air routes [1992] OJ L240/8 15.24 Council Regulation 2409/92/EC of 23 July on fares and rates for air services [1992] OJ L240/15 15.24 Art 6 15.24 Council Regulation 2410/92/EC of 23 July laying down the procedure for the application of the rules on competition to undertakings in the air transport sector [1992] OJ L240/18 15.24 Council Regulation 2498/92/EEC concerning the access of (Union) airline companies to intra (Union) routes [1992] OJ L204/8 6.201, 6.204, 6.206 Commission Regulation 3932/92/EC of 21 December 1992 on the application of Art [101(3)] of the Treaty to certain categories of agreements decisions and concerted practices in the insurance sector [1992] OJ L398/7 11.189, 11.202, 11.205, 11.214 Council Regulation 95/93/EC of 21 April 2004 on common rules for the allocation of slots at Community airports [1993] OJ L14/22 15.118 Art 8b 15.118 Commission Regulation 1617/93/EEC of 25 June 1993 on the application of Article [101(3)] of the Treaty to certain categories of agreements and concerted practices concerning joint planning and coordination of schedules, joint operations, consultations on passenger and cargo tariffs on scheduled air services and slot allocation at airports [1993] OJ L155/18 15.16 Commission Regulation 1618/93/EEC of 25 June 1993 amending Regulation (EEC) No 83/91 on the application of Article [101(3)] of the Treaty to certain categories of agreements between undertakings relating to computer reservation systems for air transport services [1993] OJ L155/23 15.16 Commission Regulation 3652/93/EC of 22 December 1993 on the application of Article [101(3)] of the Treaty to certain categories of agreements between undertakings relating to computerized reservation systems for air transport services [1993] OJ L333/37 15.16 Council Regulation 40/94/EC on the Community trade mark [1994] OJ L11/1 10.33 Council Regulation 2100/94/EC of 27 July 1994 on Community plant variety rights [1994] OJ L227/1 10.34 Council Regulation 1356/96/EC of 8 July 1996 on common rules applicable to the transport of goods or passengers by inland waterway between Member States with a view to establishing freedom to provide such transport services [1996] OJ L175/7 15.205

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Council Regulation 1310/97/EC amending Regulation (EEC) 4064/89 on the control of concentrations between undertakings [1997] OJ L180/1 4.218, 5.05, 5.128, 5.160, 7.44, 7.50, 7.125 Commission Regulation 447/98/EC of 1 March 1998 on the notifications, time limits and hearings provided for in Council Regulation 4064/89/EEC on the control of concentrations between undertakings [1998] OJ L61/1 10.03 Art 8(9) 10.03 Council Regulation 994/98/EC of 7 May 1998 on the application of Articles [107] and [108] of the Treaty establishing the European Community to certain categories of horizontal state aid [1998] OJ L142/1 17.148, 17.387 recital 9 17.148 Council Regulation 659/99/EC of 22 March 1999 laying down detailed rules for the application of Art [108 TFEU] [1999] OJ L83/1 17.395, 17.448, 17.450, 17.521, 17.536, 17.546 Chap. III 17.445, 17.448 Chap. IV 17.497, 17.519 Chap. V 17.511 (p. clxxxvi) Art 1 (b)(i) 17.500 (c) 17.508 (h) 17.425 Art 3 17.408 Art 4 17.528, 17.537, 17.550 (2) 17.526 (3) 17.526 (4) 17.526 (5) 17.423 (6) 17.423 Art 5 17.425, 17.524 Art 6 17.427, 17.522, 17.523, 17.544 Art 7(6) 17.429 Art 9 17.442 Art 10(3) 17.448 Art 11(2) 17.449

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Art 13 (1) 17.526 (2) 17.448 Art 14 17.451, 17.455, 17.474 (2) 17.467 (3) 17.459 Art 17 17.511 Art 18 17.512, 17.514, 17.518 Art 19 17.513 Art 20 17.537, 17.540 (1) 17.522, 17.523 (2) 17.524, 17.525, 17.526, 17.527, 17.550 Art 27 17.396, 17.407 Art 250 17.434 Art 258 17.448 Council Regulation 1215/99/EC of 10 June 1999 amending Regulation 19/65/EEC [1999] OJ L148/1 3.468, 9.18, 9.20, 9.68 Art 1 9.21, 9.22 (2) 9.24, 9.26 (3) 9.26 (4) 9.27 Council Regulation 1216/99/EC of 10 June 1999 amending Regulation 17 [1999] OJ L148/5 9.18, 9.19 Commission Regulation 2790/99/EC of 29 December 1999 on the application of Article [101(3)] of the Treaty to categories of vertical agreements and concerted practices [1999] OJ L336/21 9.28, 9.29, 9.30, 9.76, 9.86, 9.88, 9.98, 9.127, 9.129, 9.133, 9.143, 9.159, 9.163, 9.252, 9.253, 9.254 Art 1(c) 9.66 Art 3(2) 9.66 Council Regulation 104/2000/EC on the common organisation of the markets in fishery and aquaculture products [2000] OJ L17/22 17.153

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Commission Regulation 823/2000/EC of 19 April 2000 on the application of Article [101(3)] of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) 15.152 recital 3 15.159 Art 11 15.156 Art 12 15.156 Commission Regulation 2658/2000/EC of 29 November 2000 on the application of Article [101(3)] of the Treaty to categories of specialisation agreements [2000] OJ L304/3 2.12, 7.275, 7.305, 7.321, 10.62, 10.94 Commission Regulation 2659/2000/EC of 29 November 2000 on the application of Article [101(3)] of the Treaty to categories of research and development agreements [2000] OJ L304/7 2.12, 7.167, 10.62, 10.94 Art 5 (g) 7.219 (h) 7.226 European Parliament and the Council Regulation 2887/2000/EC of 18 December 2000 on unbundled access to the local loop [2000] OJ L336/4 13.21 Council Regulation 45/2001/EC of the European Parliament and the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data [2001] OJ L8/1 5.468 Commission Regulation 69/2001/EC of 12 January 2001 on the application of Articles [107 and 108] of the Treaty to de minimis aid [2001] OJ L10/30 17.149, 17.155, 17.165, 17.170, 17.177 European Parliament and the Council Regulation 1049/2001/EC of 30 May 2001 regarding public access to European Parliament, Council and Commission documents [2001] OJ L145/43 5.477, 8.224, 8.708, 17.398, 17.510 recital 4 8.222 (p. clxxxvii) Art 4 8.222 (1) 8.222 (2) 5.478, 8.222, 8.223 (3) 5.478 Council Regulation 2560/2001 of 19 December 2001 on cross-border payments in euros [2001] OJ L344/13 11.25, 11.26 Art 3 11.25 Council Regulation 6/2002/EC of 12 December 2001 on Community designs [2002] OJ L3/1 10.10

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Commission Regulation 1400/2002/EC of 31 July 2002 on the application of Art [101(3)] of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector [2002] OJ L203/30 2.12, 9.254 Art 1(1)(f) 9.254 Council Regulation 1407/2002/EC of 23 July 2002 on state aid to the coal industry [2002] OJ L205/1 17.153 Council Regulation 1/2003/EC on the implementation of the rules on competition laid down in Articles [101] and [102] of the Treaty [2003] OJ L1/1 see generally Chapter 2, 3.458, 4.29, 4.36, 5.31, 6.242, 7.09, 7.38, 7.48, 8.103, 8.225, 8.233, 8.235, 8.250, 8.253, 8.254, 8.316, 8.317, 8.352, 8.353, 8.358, 8.446, 8.482, 8.557, 9.12, 9.19, 11.189, 11.190, 12.230, 14.81, 15.05, 15.14, 15.15, 15.41, 15.156, 15.179, 15.242, 15.243, 15.314, 16.176 Chap III 2.215, 2.229, 2.231, 5.338 Chap IV 2.202, 8.429 Chap VII 8.300 Preamble 8.259, 8.316, 8.446 recital 1 2.146 recital 3 2.92 recital 4 2.92 recital 5 2.25, 2.26, 2.28, 2.29, 8.466 recital 6 2.154 recital 7 2.154 recital 8 2.22, 2.40, 2.45, 2.46, 2.72, 2.73, 2.74, 2.75, 2.76 recital 9 2.46, 2.60, 2.62, 2.63, 2.72, 3.452, 12.63 recital 10 7.272 recital 11 5.362 recital 12 2.110, 2.111, 4.49, 5.454, 12.172, 12.229 recital 13 2.122, 2.127, 2.153, 5.458, 8.715, 12.235 recital 14 2.146, 2.147, 2.151 recital 15 2.154, 2.211 recital 16 2.180 recital 17 2.230, 2.249, 2.277, 5.1029 recital 18 2.11, 2.157, 2.159

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recital 19 5.497 recital 21 2.289 recital 23 8.259, 8.475 recital 24 8.322, 8.403 recital 25 8.316 recital 26 8.412 recital 28 2.160 recital 35 8.360 recital 36 8.252 recital 37 8.255 Art 1 2.23, 2.57, 2.77 (1) 2.22, 2.45, 2.93 (2) 2.03, 2.22, 3.445 (3) 2.22 Art 2 2.26, 2.27, 2.28, 2.252, 3.449, 4.15, 5.403, 5.410, 8.446, 8.466, 10.135, 15.95 (3) 5.403 Art 3 2.31, 2.32, 2.44, 2.52, 2.56, 2.57, 2.59, 2.61, 2.64, 2.65, 2.67, 2.68, 2.69, 2.70, 2.71, 2.72, 2.73, 2.77, 2.87, 2.183, 2.184, 2.230, 2.281, 3.387, 3.391, 5.410, 8.234, 8.243 (1) 2.05, 2.32, 2.33, 2.34, 2.35, 2.36, 2.37, 2.39, 2.40, 2.41, 2.42, 2.44, 2.48, 2.52, 2.53, 2.54, 2.58, 2.70, 2.74, 2.93, 2.94, 2.253, 3.386, 5.523, 8.429, 17.411 (2) 2.32, 2.38, 2.44, 2.45, 2.46, 2.47, 2.48, 2.51, 2.52, 2.53, 2.54, 2.56, 2.57, 2.58, 2.59, 2.70, 2.93, 2.184, 2.281, 3.386, 3.405 (3) 2.57, 2.58, 2.60, 2.62, 2.69, 2.70, 2.71, 2.73, 2.76 Art 4 2.96, 2.156, 17.419, 17.508 (1) 5.404, 8.368 (2) 5.380, 5.403, 8.368 Art 5 2.05, 2.23, 2.24, 2.70, 2.77, 2.78, 2.83, 2.84, 2.85, 2.87, 2.88, 2.89, 2.91, 2.92, 2.94, 2.156, 2.184, 2.187, 2.219, 2.234, 2.235, 2.242, 2.282, 3.468, 5.411 (2) 5.414, 5.526 (3) 5.413

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(4) 2.277 (5) 5.416 Art 6 2.05, 2.23, 2.252 Art 7 2.99, 2.107, 2.114, 2.117, 2.118, 2.122, 2.126, 2.127, 2.128, 2.129, 2.132, 2.134, 2.140, 2.144, 2.218, 3.471, 4.29, 4.48, 4.50, 4.51, 5.437, 8.446, 8.472, 8.592, 8.704, 8.715, 8.722, 12.169, 12.171, 12.229, 12.231, 12.235 (1) 2.100, 2.103, 2.107, 2.108, 2.109, 12.60, 12.175, 12.176, 12.177 (2) 2.114 (p. clxxxviii) Arts 7–10 2.24, 2.96 Art 8 2.116, 2.117, 4.52, 8.296 (1) 2.116 (2) 2.116 (3) 8.297 Art 9 2.107, 2.118, 2.120, 2.121, 2.122, 2.123, 2.124, 2.126, 2.127, 2.128, 2.129, 2.130, 2.132, 2.133, 2.139, 2.140, 2.144, 2.145, 2.152, 2.153, 2.218, 2.268, 3.471, 4.53, 4.54, 4.55, 4.60, 4.61, 4.62, 4.64, 4.66, 4.795, 5.338, 5.340, 5.420, 5.441, 7.351, 8.296, 8.317, 8.715, 11.133, 11.143, 12.169, 12.231, 12.235, 12.236, 15.110 (1) 2.119, 2.122, 2.132, 2.135, 2.143, 4.54 (b) 5.420 (2) 2.137, 2.138, 2.144, 15.112 (a) 2.139 (b) 2.140 Arts 9–11 17.459, 17.467, 17.469 Art 10 2.57, 2.84, 2.145, 2.147, 2.148, 2.149, 2.150, 2.151, 2.152, 2.153, 2.219, 2.268 Art 11 2.43, 2.170, 2.203, 5.47, 5.440, 5.458, 5.480, 8.236, 8.237 (1) 2.161, 2.211 (a) 5.345 (b) 5.347 (c) 5.356 (2) 2.43, 2.157, 2.213, 8.237 (3) 2.43, 2.157, 2.212, 2.213, 2.239, 2.248, 8.237, 8.306

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(4) 2.05, 2.43, 2.53, 2.202, 2.212, 2.214, 2.215, 2.216, 2.218, 2.220, 2.221, 2.222, 2.224, 2.225, 2.226, 2.228, 2.230 (5) 2.219 (6) 2.43, 2.44, 2.53, 2.157, 2.212, 2.215, 2.222, 2.223, 2.229, 2.230, 2.231, 2.232, 2.234, 2.235, 2.236, 2.237, 2.238, 2.240, 2.241, 2.246, 2.248, 2.256, 2.264, 8.234, 8.243, 8.706 Arts 11–14 2.154 Arts 11–16 8.429 Art 12 2.72, 2.160, 2.162, 2.163, 2.165, 2.166, 2.167, 2.168, 2.169, 2.173, 2.174, 2.177, 2.180, 2.181, 2.191, 2.203, 2.204, 2.282, 8.100, 8.238, 8.239, 8.240, 8.259, 8.320, 8.426, 8.430, 8.431, 8.446, 8.483, 12.10 (1) 2.182, 2.184, 2.282, 5.395 (2) 2.42, 2.182, 2.183, 2.184, 2.185, 2.276, 2.278, 2.279, 2.280, 2.281, 8.483 (3) 2.177, 2.187, 2.189, 2.190, 2.191, 2.278, 2.282, 8.240, 8.367, 8.431 Art 13 2.115, 2.128, 2.156, 2.157, 2.158, 2.159, 5.459, 17.469 (1) 2.158 (2) 5.454, 5.457, 5.478 (3) 5.478 Art 14 2.203 (1) 5.480 (2) 5.480, 8.297 (6) 2.202 (7) 2.250 Art 15 2.154, 2.203, 2.252, 2.257, 2.268, 2.272, 2.273, 2.285, 5.480, 5.482, 5.485 (1) 2.151, 2.274, 2.278, 2.280, 2.282, 2.283, 8.235, 8.242, 14.137 (2) 2.263, 2.286 (3) 2.237, 2.285 Art 16 2.57, 2.98, 2.122, 2.126, 2.150, 2.151, 2.153, 2.233, 5.356, 5.458, 5.480 (1) 2.154, 2.264, 2.267, 5.458, 5.478 (2) 2.154 Art 17 2.48, 8.99, 12.12, 16.25 (1) 5.459, 5.461, 8.99

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(3) 5.462 Art 18 5.371, 8.268, 8.286, 8.289, 8.291, 8.298, 8.300, 8.302, 8.303, 8.304, 8.305, 8.306, 8.312, 8.313, 8.314, 8.317, 8.321, 8.365, 8.423 (1) 8.287, 8.288 (2) 5.470, 8.263, 8.305, 8.306, 8.308, 8.309, 8.313, 8.321 (3) 5.470, 8.263, 8.305, 8.306, 8.308, 8.313, 8.315 (4) 8.284, 8.315 (6) 2.162, 2.168 Arts 18–21 2.96, 8.249 Art 19 5.338, 8.104, 8.284, 8.316, 8.317, 8.318, 8.319, 8.320, 8.321, 8.362, 8.499, 8.508 (1) 5.419, 5.1022 (2) 5.438, 5.498, 8.321 (7) 5.503 Art 20 2.170, 8.171, 8.252, 8.268, 8.278, 8.286, 8.301, 8.312, 8.322, 8.334, 8.386, 8.403, 8.411, 8.414, 8.415, 8.418, 8.423 (1) 8.287 (2) 8.291, 8.339, 8.342, 8.351, 8.411 (a) 8.397 (c) 8.397 (d) 8.360 (e) 8.318, 8.362, 8.363, 8.508 (p. clxxxix) (3) 8.324, 8.327, 8.328, 8.330, 8.338, 8.397, 8.398 (4) 8.134, 8.171, 8.250, 8.263, 8.324, 8.327, 8.329, 8.330, 8.331, 8.338, 8.388, 8.391, 8.393, 8.395, 8.397, 8.404, 8.409, 8.419, 8.425 (5) 8.375, 8.398, 8.403, 8.411, 8.424, 8.425 (6) 8.333, 8.343, 8.380, 8.388, 8.404, 8.406, 8.424, 8.425 (7) 8.333, 8.405 (8) 8.331, 8.333, 8.399, 8.405, 8.420 Arts 20–22 8.430

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Art 21 2.170, 8.78, 8.284, 8.286, 8.324, 8.412, 8.413, 8.414, 8.416, 8.417, 8.418, 8.419, 8.421, 8.423, 8.425, 8.426, 8.427 (1) 8.419 (3) 8.417, 8.420, 8.423, 8.424 (4) 8.425 Art 22 2.154, 2.162, 2.170, 2.181, 2.191, 2.202, 5.338, 8.326, 8.407, 8.408, 8.410, 8.424, 8.433 (1) 2.160, 2.161, 2.162, 8.407, 8.409 (2) 2.160, 2.162, 8.325, 8.407, 8.408, 8.409, 8.410, 8.411 Art 23 2.88, 2.104, 2.124, 2.140, 2.187, 4.35, 5.410, 8.298, 8.306, 8.309, 8.310, 8.312, 8.332, 8.343, 8.349, 8.350, 8.374, 8.392, 8.397, 8.425, 8.515, 8.549, 8.710 (1) 8.283, 8.370, 8.392 (a) 8.308, 8.309 (b) 8.308, 8.309 (c) 8.380, 8.406 (d) 8.363, 8.371, 8.373 (e) 8.358, 8.361 (2) 8.308, 8.550, 8.621, 8.674, 8.675, 8.676, 8.682 (a) 2.88, 4.37 (c) 4.54 (3) 8.570 (4) 8.549 (5) 4.36 Art 24 2.88, 2.104, 2.140, 2.187, 5.338, 5.361, 8.298, 8.310, 8.312, 8.332, 8.343, 8.349, 8.350, 8.374, 8.392, 8.397, 8.425 (1) 4.54 (d) 8.308 (e) 8.329, 8.380, 8.394 (2) 8.308 Art 25 8.300 (1) (a) 8.300

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

(b) 8.168, 12.122 (1)–(5) 8.300 (3) 8.300 (5) 8.300 (6) 8.300 Art 26 8.300 Art 27 2.203, 8.286, 8.308, 8.312, 8.476, 8.508, 9.27 (1) 2.209, 8.705 (2) 2.202, 2.205, 2.207, 9.164 (3) 2.144 (4) 2.88, 2.120, 2.133, 2.134, 2.144, 2.145, 2.202, 2.268 Art 28 2.176, 2.193, 8.102, 8.238, 8.291, 8.443 (1) 8.367 (2) 2.176, 2.192, 2.193, 2.195, 2.202, 2.203, 2.204, 2.207 Art 29 2.22, 7.153, 7.165, 7.226, 7.272 (1) 3.471, 9.164 (2) 3.471 Art 30 (2) 2.202 Art 31 4.78 Art 32 8.252 Art 35 (1) 2.23, 2.78, 2.79, 2.86, 2.220, 2.282 (2) 2.79, 2.220 (3) 2.234, 2.235, 2.236, 2.264 (4) 2.234, 2.235, 2.236, 2.264 Arts 36–43 8.254 Annex I 5.404, 5.405, 5.410 Pt 1 17.407 para 1(7) 5.344 Annexes I–IV 5.341

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Annex II 5.410, 5.523 para 1(9) 5.344 Annex III, Section 1(6) 5.344 Annex IV 5.983 Commission Regulation 358/2003/EC of 27 February 2003 Second Insurance block exemption Regulation [2003] OJ L53/8 11.189, 11.191, 11.202, 11.203, 11.205, 11.214 recital 3 11.217 Art 8(g) 11.206 European Parliament and the Council Regulation 1228/2003 of 26 June 2003 on conditions for access to the network for cross-border exchanges in electricity [2003] OJ L176/1 Art 2(1) 12.30 Commission Regulation 1775/2003/EC on conditions for access to the natural gas transmission networks [2005] OJ L289/1 12.07 Council Regulation 139/2004 on the control of concentrations between (p. cxc) undertakings (EU Merger Regulation) [2004] OJ L24/1 1.17, 1.190, 2.198, 3.269, 4.77, 4.218, 5.04, 5.09, 5.90, 5.120, 5.128, 5.196, 5.277, 5.299, 5.334, 5.559, 5.1145, 5.1153, 5.1163, 5.1206, 7.38, 7.46, 7.50, 7.140, 7.324, 8.155, 8.526, 11.08, 11.69, 11.70, 11.86, 11.88, 11.90, 11.204, 12.97, 12.101, 13.180, 14.101, 15.130 recitals 2–6 5.22 recitals 3–5 5.332 recital 8 5.31, 5.37, 5.208 recital 9 5.37, 5.164 recital 10 5.37 recital 12 5.219 recital 17 5.31 recital 18 5.31 recital 20 5.37, 5.67, 5.112, 5.120, 5.124, 5.148 recital 21 5.152 recital 22 5.37, 11.87 recital 24 5.22 recital 25 5.344, 5.583 recital 29 5.928, 15.94 recital 30 5.980, 5.983, 5.986, 5.988, 5.1000, 5.1016, 15.112

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

recital 31 5.983, 5.990 recital 32 5.684 recital 34 5.32, 5.400 recital 40 5.301 recital 42 5.436 Art 1 5.37, 5.153, 5.156, 5.160 (1) 5.498 (2) 5.35, 5.157, 5.158, 5.161, 5.163, 5.165, 5.166, 5.167, 5.312 (3) 5.35, 5.160, 5.161, 5.162, 5.163, 5.164, 5.165, 5.166, 5.167, 5.312, 11.100 (b) 5.203 (c) 5.203 (4) 5.164, 7.254 (5) 5.164 Art 2 5.556, 5.1162, 5.1190 (1)(b) 5.562, 5.929, 15.94 (2) 5.583 (3) 5.502, 5.556, 5.583, 5.585, 5.980, 7.38 (4) 5.105, 5.115, 5.502, 5.516, 7.37, 7.108, 7.109, 7.122, 7.124, 7.126, 7.129, 7.133, 7.142 (5) 5.05, 7.37 Art 3 5.37, 5.139, 5.140, 5.258, 5.269, 7.12, 7.37, 7.108, 7.128, 7.254 (1) 5.33, 5.67, 5.141 (a) 5.37, 5.43, 5.175 (b) 5.43, 5.48, 5.62, 5.126, 5.175, 16.112 (2) 5.37, 5.50, 5.57, 5.128, 5.190, 6.27 (a) 5.59 (3) 5.37, 5.54 (b) 5.53 (4) 2.70, 5.33, 5.37, 5.115, 5.121, 7.37, 7.112, 8.531, 15.74 (5) 5.34, 5.37, 5.106

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Art 4 5.31, 5.32, 5.303, 5.333, 5.337, 5.341 (1) 5.15, 5.204, 5.275, 5.388, 5.389, 5.399, 5.401, 5.402 (2) 5.177, 5.345, 5.403 (3) 5.411, 5.416 (4) 5.163, 5.209, 5.210, 5.214, 5.218, 5.219, 5.220, 5.221, 5.222, 5.224, 5.225, 5.226, 5.230, 5.232, 5.238, 5.242, 5.245, 5.261, 5.276, 5.278, 5.311, 5.334, 5.362, 5.374, 5.526 (5) 5.29, 5.162, 5.163, 5.209, 5.210, 5.214, 5.220, 5.221, 5.222, 5.224, 5.256, 5.257, 5.258, 5.259, 5.260, 5.261, 5.263, 5.265, 5.278, 5.280, 5.374, 5.526, 11.107 Art 5 5.37, 5.184 (1) 5.185, 5.197, 5.202 (2) 5.37, 5.140, 5.149, 5.151, 5.180, 5.181, 5.188, 5.189 (3) 5.186, 11.71 (a) 11.73 (i)–(v) 11.73 (4) 5.186, 5.190, 5.191, 5.192, 5.195 (a) 5.191 (b) 5.191 (i)–(iv) 5.192 (c) 5.191 (d) 5.191 (e) 5.191 (5) (a) 5.198 (b) 5.195 Art 6 5.42, 5.336 (1) 5.1184, 5.1197 (a) 5.40, 5.349, 5.362, 5.373, 5.430, 5.436, 5.1131, 5.1135, 5.1149 (b) 5.40, 5.152, 5.349, 5.362, 5.417, 5.430, 5.436, 5.980, 5.1033, 5.1118, 5.1120, 5.1130 (c) 5.40, 5.249, 5.349, 5.362, 5.417, 5.427, 5.430, 5.434, 5.437, 5.441, 5.445, 5.446, 5.453, 5.529, 5.1016, 5.1033, 5.1038, 5.1039, 5.1045, 5.1118, 5.1134, 7.142

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

(2) 5.349, 5.417, 5.420, 5.430, 5.436, 5.980, 5.983, 5.988, 5.1033, 5.1130, 15.110 (3) 5.338, 5.349, 5.452, 5.543, 5.990, 5.1118 (p. cxci) (a) 5.996 (b) 5.983 (4) 5.119, 5.338, 5.1120 (5) 5.431, 5.432 Arts 6–22 5.341 Art 7 5.274, 5.333, 5.361, 5.396, 5.536 (1) 5.15, 5.389, 5.1196, 11.96 (2) 5.391, 5.392, 5.537 (3) 5.338, 5.349, 5.362, 5.378, 5.392, 5.452, 5.511, 5.539, 5.1132, 11.96 (4) 5.100, 5.396 Arts 7–10 5.338 Art 8 5.336, 5.361, 5.495, 5.499, 5.501, 5.503, 5.504 (1) 5.152, 5.184, 5.349, 5.450, 5.500 (1)–(3) 5.1118, 5.1120, 5.1130 (2) 5.152, 5.349, 5.450, 5.500, 5.502, 5.980, 5.983, 5.988, 5.1045, 5.1118, 5.1120, 5.1121, 12.236, 15.110 (2)–(6) 5.452 (3) 5.349, 5.500, 5.502, 5.1121 (4) 5.14, 5.100, 5.349, 5.396, 5.502, 5.533, 5.1119, 5.1120, 5.1121, 5.1122, 5.1145 (a) 5.990 (b) 5.502, 5.983, 5.990 (5) 5.35, 5.349, 5.396, 5.500, 5.502, 5.534 (b) 5.983 (6) 5.349, 5.500, 5.543, 5.983, 5.1118 (a) 5.996 (b) 5.990, 5.996 (7) 5.338, 5.1119, 5.1120 (a) 5.983

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

(8) 5.503 Art 9 5.31, 5.159, 5.210, 5.214, 5.218, 5.219, 5.220, 5.222, 5.224, 5.239, 5.240, 5.248, 5.249, 5.253, 5.276, 5.278, 5.303, 5.337, 5.362, 5.526, 5.580, 5.1131, 5.1149, 11.78, 13.203 (2) 5.419, 5.420, 5.464, 5.511 (a) 5.224, 5.241, 5.242, 5.243, 5.247, 5.269, 5.580, 5.1148, 9.245 (b) 5.224, 5.242, 5.244, 5.246, 5.315, 5.580, 9.245 (3) 5.580 (6) 5.251 (7) 5.242 (9) 5.253, 5.1132, 5.1170 Art 10 5.336, 5.338, 5.361, 5.960 (1) 5.340, 5.362, 5.414, 5.418, 5.511, 5.983 (2) 5.443, 5.983, 5.1045 (3) 5.340, 5.440, 5.441, 5.983, 5.1038, 5.1120, 5.1159 (4) 5.340, 5.420 (5) 5.1197, 5.1198, 5.1200, 5.1201 (6) 5.338, 5.430, 5.444, 5.1126, 5.1184 Art 11 5.295, 5.425, 5.441, 5.547, 5.985 (3) 5.349, 5.441, 5.545 (6) 5.302 (7) 5.300 Arts 11–13 5.334 Arts 11–15 5.425 Art 12 5.302, 5.337 Art 13 5.302, 5.441, 5.547, 5.1161 (1) 5.541 (4) 5.349 Art 14 5.35, 5.334, 5.349, 5.414, 5.452, 5.545, 5.990, 5.1161, 5.1195 (1) 5.550 (a) 5.550 (b) 5.550

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

(c) 5.550 (d) 5.550 (e) 5.550 (f) 5.550 (2) 5.1123 (a) 5.390, 5.396, 5.549 (b) 5.396, 5.537, 5.549 (c) 5.537, 5.549 (d) 5.537, 5.549 (3) 5.551 Art 15 5.35, 5.334, 5.349, 5.390, 5.452, 5.545, 5.1195 (1) (a) 5.554 (b) 5.554 (c) 5.554 (d) 5.537, 5.554 (2) 5.555 Art 16 5.337, 5.1195 Art 17 5.337, 5.371 Art 18 5.307, 5.336 (1) 5.395, 5.452, 5.461, 5.1156 (2) 5.395, 5.541 (3) 5.439, 5.455, 5.459, 5.461 (4) 5.356, 5.458, 5.480 Art 19 5.303, 5.308, 5.337, 5.357 (1) 5.300, 5.305, 5.1027 (2) 5.250, 5.300, 5.1027 (3) 5.494, 5.541 (5)–(7) 5.497 Art 20 5.337, 5.497 (1) 5.305, 5.503

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Art 21 5.334, 5.337, 5.1126, 5.1132, 5.1138 (1) 5.31, 5.152, 14.163 (2) 5.31, 5.337, 14.163 (p. cxcii) (3) 5.31, 5.208, 5.281, 14.163 (4) 5.22, 5.281, 5.282, 5.283, 5.284, 5.286, 5.288, 5.292, 5.293, 5.297, 5.1126, 11.102, 14.163 Art 22 5.19, 5.31, 5.32, 5.159, 5.209, 5.210, 5.214, 5.218, 5.219, 5.221, 5.222, 5.224, 5.266, 5.267, 5.268, 5.269, 5.271, 5.272, 5.273, 5.276, 5.278, 5.280, 5.315, 5.334, 5.337, 5.526, 5.967, 11.107 (3) 5.214, 5.273 Council Regulation 411/2004/EC of 26 February 2004 repealing Regulation 3975/87/ EEC and amending regulations 3976/87/EEC and 1/2003/EC in connection with air transport between the Community and third countries [2004] OJ L68/1 8.252, 15.15 Commission Regulation 726/2004/EC laying down procedures for the authorisation and supervision of medicinal products for human and veterinary use [2004] OJ L136/1 16.16, 16.18 Commission Regulation 772/2004/EC of 27 April 2004 on the application of Article [101(3)] of the Treaty to categories of technology transfer agreements [2004] OJ L123/11 2.12, 7.186, 8.103, 9.87, 10.71, 10.72, 10.73, 10.74, 10.77, 10.86, 10.87, 10.96, 10.113, 10.136, 10.139, 10.144, 14.83 recital 19 10.78 Art 1(1) (b) 10.76 (j) 10.85, 10.89 (i) 10.87 (ii) 10.88 Art 2(1) 10.68, 10.69 Art 3 3.380, 10.119 (3) 10.120 Art 4 10.92, 10.93, 10.94, 10.95, 10.169 (1) 10.93, 10.94, 10.100 (a) 10.95, 10.97, 10.98 (b) 10.95, 10.99, 10.141 (c) 10.95, 10.106 (i) 10.95, 10.104

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(ii) 10.95, 10.103, 10.104 (iii) 10.95, 10.105 (iv) 10.95, 10.103 (v) 10.95 (vi) 10.95, 10.107, 12.69 (vii) 10.95, 10.107 (d) 10.95, 10.98, 10.104, 10.105, 10.112, 10.118 (2) 10.93, 10.94, 10.100 (a) 10.95, 10.97 (b) 10.95, 10.108, 10.109, 10.111 (i) 10.95, 10.111 (ii) 10.95, 10.111 (iii) 10.94, 10.105, 10.111, 12.69 (iv) 10.95, 10.111 (v) 10.95, 10.106, 10.111 (vi) 10.95, 10.111 (c) 10.95, 10.108, 10.110, 10.111 (3) 10.91, 10.95 Art 5 10.61, 10.92, 10.112, 10.114 (1) 10.115 (a) 10.115, 10.116 (b) 10.115, 10.116 (c) 7.223, 10.115, 10.117 (2) 10.118 Art 6 10.124 (1) (a) 10.125 (b) 10.125, 10.126 (c) 10.125 Art 7 10.127

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Commission Regulation 773/2004/EC relating to the conduct of proceedings by the Commission pursuant to Articles 85 and 86 of the Treaty [2004] OJ L123/18 8.103, 8.250, 8.270, 8.329, 8.358, 8.360, 8.418 Chap IV 8.103 recital 4 8.718 recital 10 8.219 recital 13 2.201 recital 14 2.206 Art 2 (1) 2.130, 8.719 Art 3 8.318, 8.446, 8.472 (1) 8.321 (2) 8.321 (3) 8.321 Art 4 8.292, 8.363, 8.364, 8.367, 8.446, 8.472, 8.718 (3) 8.373 Art 5 2.114, 2.144 Arts 5–9 8.103 Art 6 2.114 Art 8 2.209 (2) 8.708 Art 10 (3) 8.506 Art 10a (1) 8.719 (2) 8.720, 8.722 (p. cxciii) Art 11 (1) 8.710 (2) 8.476, 8.705 Art 12 8.710 Art 13(2) 8.710

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Art 14 (1) 8.710 (6) 8.710 Art 15 8.708 (2) 2.207 (3) 2.205 (4) 8.155, 8.218, 8.219, 8.220, 8.708 Art 16 8.708 (1) 2.207 Commission Regulation 794/2004/EC of 21 April 2004 implementing Council Regulation 659/1999/EC of 22 March 1999 setting out detailed rules for the application of Article 93 (now 88) of the Treaty [2004] OJ L140/1 17.396, 17.525 Commission Regulation 802/2004/EC implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings (Implementing Regulation) [2004] OJ L133/1 5.14, 5.168, 5.299, 5.331, 5.341, 5.408, 5.410, 5.476, 5.983, 5.1023, 15.41 recital 11 5.362 recital 12 5.454, 5.457 recital 13 5.458 recital 17 5.1029 recital 19 5.497 Art 2 2.268, 5.403, 5.410 (3) 5.403 Arts 2–24 5.341 Art 3 (1) 5.409 (2) 5.410 Art 4 (1) 5.404 (2) 5.380, 5.404 Art 3 5.410 (1) 5.523

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Art 5 5.411 (2) 5.414, 5.526 (3) 5.413 (5) 5.416 Art 7 5.361, 5.437 Art 8 5.361 Art 9 5.340, 5.420, 5.441 (1)(b) 5.420 Art 10 5.361 Art 11 5.47, 5.439, 5.458, 5.480 (a) 5.345 (b) 5.347 (c) 5.356 Art 12(1) 5.395 Art 13 5.459 (1) 5.541 (2) 5.454, 5.457, 5.478 (3) 5.478 Art 14 (1) 5.480 (2) 5.480 Art 15 5.480, 5.482, 5.485 (1) 2.207 Art 16 5.346, 5.458, 5.480 (1) 5.458, 5.478 Art 17 (1) 5.459, 5.461 (3) 5.462 Art 18 5.371 (2) 5.470 (3) 5.470

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Art 19 5.338 (1) 5.419 (2) 5.437, 5.498, 5.983 (7) 5.503 Art 20 5.983 (1) 5.305 Art 22 5.338 Art 23 5.410 Art 24 5.338, 5.361 Annex I 5.341, 5.404, 5.405, 5.409, 5.410 para 1(6) 5.344 Annex II 5.341, 5.409, 5.410, 5.523 para 1(8) 5.344 Annex III 5.409, 5.341 section F 5.344 Annex IV 5.409, 5.341, 5.983 European Parliament and the Council Regulation 847/2004/EC on the negotiation and implementation of air service agreements between Member States and third countries [2004] OJ L157/7 15.32 Art 5 15.32 European Parliament and the Council Regulation 881/2004/EC of 29 April 2004 establishing a European railway agency [2004] OJ L164 15.217 Commission Regulation 1860/2004/EC of 6 October 2004 on the application of Articles [107 and 108 TFEU] to ‘de (p. cxciv) minimis’ aid in the agricultural and fisheries sectors [2004] OJ L325 17.154 European Parliament and the Council Regulation 2004/726/EC of 31 March 2004 laying down community procedures for the authorisation and supervision of medicinal products for human and veterinary use [2004] OJ L136/1 16.18 Commission Regulation 611/2005/EC of 20 April 2005 amending Regulation (EC) No 823/2000 on the application of Article [101(3)] of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) [2005] OJ L103/41 15.152

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Council Regulation 1419/06/EC of 25 September 2006 repealing Regulation 4056/86/ EC laying down detailed rules for the application of Articles [101 and 102] of the Treaty to maritime transport, and amending Regulation 1/2003/EC [2006] OJ L269/1 8.252 recital 12 15.15 Commission Regulation 1459/2006/EC of 28 September 2006 [2006] OJ L272/3 15.16 Commission Regulation 1692/2006/EC establishing the second Marco Polo programme for the granting of Community Financial assistance to improve the environmental performance of the freight transport system [2006] OJ L328/1 17.28 Commission Regulation No 1998/2006/EC of 15 December 2006 on the application of Articles [107 and 108] of the Treaty to ‘de minimis’ aid [2006] OJ L379/5 17.150, 17.152, 17.153, 17.154, 17.157, 17.161, 17.165, 17.170, 17.171, 17.172, 17.174, 17.175, 17.177, 17.181, 17.182, 17.377 recital 2 17.150 recital 3 17.153 recital 6 17.153 recital 7 17.153 recital 10 17.163 Art 1(b) 17.153 Art 2(3) 17.158, 17.159 Art 2(4) 17.161 Art 3 (1) 17.166 (3) 17.169 Art 6 17.164 European Parliament and the Council Regulation 717/2007/EC of June 2007 on roaming on public mobile telephony networks within the Union [2007] OJ L171/33 13.46 Commission Regulation 875/2007/EC of 24 July 2007 on the application of Articles [107 and 108 TFEU] to ‘de minimis’ aid in the fisheries sector and amending Regulation (EC) No 1860/2004 [2007] OJ L193 17.154 European Parliament and the Council Regulation 1370/2007/EC of 23 October on public passenger transport services by rail and by road [2007] OJ L315/1 15.204, 15.233, 17.185 Art 1(2) 15.233 Art 8(3)(b) 15.237

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Commission Regulation 1535/2007/EC of 20 December 2007 on the application of Articles [107 and 108 TFEU] to ‘de minimis’ aid in agricultural production [2007] OJ L337 17.154, 17.171 Commission Regulation 622/2008/EC of 30 June 2008 amending Regulation 773/2004/ EC as regards the conduct of settlement procedures in cartel cases [2008] OJ L171/3 8.250, 8.713 Commission Regulation 800/2008/EC declaring certain categories of aid compatible with the internal market in the application of Articles 107 and 108 TFEU 17.387– 17.393 Art 7(3) 17.28, 17.185, 17.389 Regulation 1008/2008/EC on common rules for the operation of air services in the (Union) [2008] OJ L293/3 6.206, 15.24 Commission Regulation 1033/2008/EC of 20 October 2008 [2008] OJ L279/3 5.333, 15.41 Arts 16–18 15.362 European Parliament and the Council Regulation 1335/2008 amending Regulation (EC) No 881/2004 establishing a European Railway Agency (Agency Regulation) [2008] OJ L354/51 15.217 Council Regulation 169/2009/EC of 26 February applying rules of competition to transport by rail, road and inland waterway [2009] OJ L61/1 15.243, 15.244, 15.246 Art 2 15.247, 15.248, 15.249 Art 3 15.249, 15.253, 15.256 (p. cxcv) Council Regulation 246/2009/EC on the application of Article 101(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies [2009] OJ L79/1 15.152 Commission Regulation 2009/469/EC concerning the supplementary protection certificate for medicinal products [2009] OJ L152/1 16.14 European Parliament and the Council Regulation 544/2009/EC of 18 June 2009 amending Regulation 717/2007/EC [2009] OJ L167/12 13.46 Commission Regulation 906/2009/EC of 28 September 2009 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) [2009] OJ L256/31 2.12, 15.153, 15.155, 15.156, 15.161, 15.168, 15.169, 15.171 recital 3 15.172 recital 7 15.167 recital 9 15.167 recital 13 15.171

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Art 3 15.162 Art 4 15.157, 15.162 European Parliament and the Council Regulation 1071/2009/EC of 21 October 2009 establishing common rules concerning the conditions to be complied with to pursue the occupation of road transport operator and repealing Council Directive 96/26/EC [2009] OJ L300/51 15.194 European Parliament and the Council Regulation 1072/2009/EC on common rules for access to the international road haulage market [2009] OJ L300/72 15.197 European Parliament and the Council Regulation 1073/2009/EC of 21 October 2009 [2009] OJ L300/88 15.199 European Parliament and the Council Regulation 1211/2009/EC of 25 November 2009 establishing the Body of European Regulators for Electronic Communications [2009] OJ L337/1 13.22, 13.211 Commission Regulation 267/2010/EU of 24 March 2010 on the application of Article 101(3) of the Treaty to certain categories of agreements, decisions and concerted practices in the insurance sector 7.435, 11.139, 11.191, 11.192, 11.202, 11.205, 11.206, 11.214 Chap.II 11.197 recital 15 11.205 Art 1 (6) 11.205 (a) 11.205 (b) 11.205 Art 3 (2) (a)–(e) 11.197 (c) 11.198 (d) 11.198 (e) 11.198 Art 4 11.197 Art 6 (1) 1.205 (2) 11.206 (5) 11.206 (10) 11.06, 11.206

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Art 7 11.207 Title IV 11.193 Commission Regulation 330/2010/EU of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to Categories of Vertical agreements and concerted practices [2010] OJ L102/1 2.12, 3.380, 4.477, 7.17, 7.241, 7.297, 7.316, 9.11, 9.28, 9.29, 9.30, 9.31, 9.33, 9.64, 9.67, 9.69, 9.70, 9.75, 9.76, 9.98, 9.136, 9.138, 9.158, 9.160, 9.163, 9.164, 9.165, 9.166, 9.172, 9.179, 9.183, 9.185, 9.188, 9.245, 9.251, 9.252, 9.255, 9.256, 9.291, 10.62, 10.64, 10.78, 10.79, 10.94, 14.83 recital 4 9.64 recital 5 9.64 recital 8 9.64 recital 9 9.36 recital 13 9.164 recital 14 9.164 Art 1 (1) (a) 9.68 (b) 9.34 (c) 9.66, 9.73 (d) 9.155, 9.215, 12.74 (e) 9.126, 9.127, 9.248 (f) 9.81 (g) 9.160 (i) 9.119 (p. cxcvi) (2) 9.175 (e) 9.175 Art 1(d) 4.401 Art 2 9.64 (2) 9.72, 9.78 (3) 9.81, 14.83 (4) 7.17, 9.72, 9.74 (5) 9.72, 9.87, 14.83

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Art 3 3.380, 9.65, 9.173 (1) 9.174 (2) 9.66, 9.174 Art 4 9.35, 9.82, 9.88, 9.89, 9.90, 9.93, 9.133 (a) 9.94, 9.97 (b) 9.112, 9.113, 9.114, 9.116, 9.126, 9.127, 9.140, 9.142, 9.143, 10.64, 12.69 (i) 9.117, 9.119, 9.121 (ii) 9.122, 9.123, 9.129 (iii) 9.122, 9.127 (iv) 9.122, 9.124 (c) 9.128, 9.129, 9.131, 9.133, 9.140, 9.236, 9.246, 9.251 (d) 9.128, 9.130, 9.131 (e) 9.115, 9.145 Art 4(b) 12.57 Art 5 9.35, 9.82, 9.153, 9.154, 9.157, 9.215, 9.218 (1) 9.156, 12.78 (a) 9.154, 9.155 (b) 9.154, 9.160 (c) 9.154, 9.162 (2) 9.154, 9.159 (3)(a)–(d) 9.154 Art 6 9.169, 9.170, 9.171 Art 7 9.177 (a) 9.177 (b) 9.177 (c) 9.179 (d)–(f) 9.176, 9.177 (f) 9.176 (g) 9.175 Art 9 9.163

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Commission Regulation 461/2010/EU of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector [2010] OJ L129/52 2.12, 9.87 European Parliament and the Council Regulation 913/2010/EU of 22 September 2010 concerning a European rail network for competitive freight [2010] OJ L276/22 15.210 Commission Regulation 1217/2010/EU of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements [2010] OJ L335/36 2.12, 3.380, 7.10, 7.162–7.234, 7.271, 7.297, 7.315, 10.62, 10.81, 10.94, 11.205 Recital 11 7.167, 7.190, 7.191 Recital 12 7.193 Recital 13 7.163 Recital 15 7.167, 7.214, 7.217, 7.219 Recital 17 7.156 Recital 19 7.165 Art 1 7.169 (1) (a) 7.163, 7.170, 7.185 (iii) 7.179 (a)(iv)–(vi) 7.167 (b) 7.170, 7.172 (c) 7.170, 7.173 (e) 7.164, 7.174, 7.212 (f) 7.164, 7.174, 7.211 (g) 7.167, 7.170, 7.171, 7.175, 7.190 (h) 7.173, 7.189 (i) 7.189 (j) 7.173 (k) 7.173, 7.189 (l) 7.173, 7.189 (m) 7.170, 7.171, 7.172, 7.176, 7.178, 7.180, 7.186, 7.202 (i) 7.196, 7.212, 7.216

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(ii) 7.196, 7.212, 7.216 (iii) 7.167, 7.170, 7.212, 7.216 (n) 7.170, 7.176, 7.177, 7.180, 7.202 (o) 7.167, 7.170, 7.171, 7.172, 7.186, 7.190, 7.194, 7.196, 7.212, 7.214, 7.216 (p) 7.156, 7.157, 7.170, 7.180, 7.202 (q) 7.156, 7.157, 7.170, 7.180, 7.202 (r) 7.181, 7.198 (s) 7.182, 7.198 (t) 7.167, 7.183, 7.198 (u) 7.184 (v) 7.184 (2)(e) 7.230 Art 2 7.185 (1) 7.163, 7.167, 7.185 (2) 7.186, 7.187 Art 3 7.164, 7.185 (p. cxcvii) (2) 7.167, 7.190, 7.191, 7.193 (2)–(5) 7.188 (3) 7.171, 7.179, 7.192, 7.193, 7.194 (4) 7.195 (5) 7.196 Art 4 3.380, 7.184, 7.185, 7.197, 7.227, 7.229 (1) 7.153, 7.157, 7.181, 7.183, 7.197, 7.203, 7.204, 7.231 (2) 7.161, 7.177, 7.181, 7.183, 7.197, 7.200, 7.201, 7.202, 7.203, 7.231 (a) 7.202 (b) 7.180, 7.200, 7.202, 7.204 (3) 7.153, 7.157, 7.200, 7.204, 7.231, 7.232 Art 5 7.164, 7.176, 7.179, 7.185, 7.206, 7.207, 7.209, 7.213, 7.219, 7.222 (a) 7.208

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(b) 7.210, 7.212, 7.213, 7.214, 7.215 (ii) 7.212 (iii) 7.213, 7.214 (iv) 7.215 (c) 7.216 (d) 7.167, 7.217, 7.218 (d)–(f) 7.221 (d)–(g) 7.216, 7.217 (e) 7.167, 7.219 (f) 7.220 (g) 7.221 Art 6 7.167, 7.185, 7.206, 7.222, 7.224, 7.226 (1) (a) 7.167, 7.223 (b) 7.167, 7.225 Art 7 7.200, 7.227, 7.230, 11.208 (a) 7.227 (a)–(c) 7.202 (b) 7.227 (c) 7.227 (d) 7.227, 7.231, 7.232, 7.233, 7.234 (d)–(f) 7.204 (e) 7.227, 7.231, 7.233, 7.234 (f) 7.227, 7.231, 7.233 Commission Regulation 1218/2010/EU of 14 December 2010 on the application of Article 101(3) of the Treaty of the Functioning of the European Union to certain categories of specialisation agreements [2010] OJ L335/43 2.12, 3.379, 3.380, 7.10, 7.241, 7.264, 7.270, 7.271, 7.272, 7.273, 7.274, 7.275, 8.22, 10.62, 10.80, 10.94 Recital 10 7.271, 7.305 Recital 15 7.273

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Art 1 7.277 (1) (a) 7.278, 7.298 (a)–(d) 7.292, 7.293, 7.297, 7.298 (a)–(f) 7.288 (b) 7.275, 7.278, 7.279, 7.282 (c) 7.269, 7.275, 7.278, 7.281, 7.282, 7.294 (d) 7.278, 7.282 (e) 7.283 (f) 7.284, 7.288 (g) 7.282, 7.285, 7.294 (h) 7.285, 7.286 (i) 7.275, 7.287, 7.304, 7.321 (j) 7.279, 7.287, 7.288, 7.290, 7.292, 7.293, 7.300, 7.304 (k) 7.289 (l) 7.290 (l)–(n) 7.292 (m) 7.290, 7.294 (iii) 7.315 (n) 7.275, 7.287, 7.290 (o) 7.290, 7.291, 7.292, 7.300, 7.312, 7.315 (p) 7.293, 7.300 (q) 7.282, 7.290, 7.291, 7.294, 7.300, 7.310, 7.314, 7.315 (r) 7.290, 7.291, 7.295, 7.300, 7.314, 7.315 (2) 7.296, 7.297 (a) 7.296 (b) 7.296 (c) 7.296 (d) 7.296 (e) 7.296, 7.318

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Art 2 7.298 (1) 7.298, 7.315 (2) 7.301, 7.302 (b) 7.279 (3) 7.290, 7.300 (a) 7.281, 7.292, 7.293 (b) 7.281, 7.288, 7.294, 7.315 Art 3 7.270, 7.275, 7.287, 7.289, 7.299, 7.303, 7.304, 7.307, 7.316, 7.319 Art 4 7.278, 7.299, 7.308, 7.309, 12.100 (a) 7.310, 12.117 (b) 7.311, 7.312, 7.314, 12.98, 12.99 (i) 7.312, 7.313 (ii) 7.314 (c) 7.315, 12.49 Art 5 7.316, 7.318 (a) 7.316, 7.317 (a)–(c) 7.303 (b) 7.316, 7.317, 7.319 (c) 7.316, 7.317 (d) 7.316, 7.319, 7.320 (d)–(f) 7.303, 7.319 (p. cxcviii) (e) 7.316, 7.320 (f) 7.316 Art 7 7.322 European Parliament and the Council Regulation 1227/2011/EU of 25 October 2011 on wholesale energy market integrity and transparency [2011] OJ L326/1 12.135 Art 1(2) 12.203 Art 2 12.135 (1) 12.135

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Commission Regulation 360/2012/EU of 25 April 2012 on the application of Articles 107 and 108 TFEU to ‘de minimis’ aid granted to undertakings providing services of general economic interest [2012] OJ L114/8 17.179, 17.182, 17.368 Art 2 17.377 European Parliament and the Council Regulation 531/2012/EU of 13 June 2012 on roaming on public mobile communications networks within the Union [2012] OJ L172/10 13.47 European Parliament and the Council Regulation 648/2012/EU of 4 July 2012 on OTC derivatives, central counterparts and trade repositories [2012] OJ L201 11.109, 11.145 Commission Regulation 1203/2012/EU on the separate sale of regulated retail roaming services within the Union [2012] OJ L347/113.47 European Parliament and the Council Regulation 1257/2012/EU of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection [2012] OJ L361/1 10.16, 16.29 Council Regulation 1260/2012/EU of 17 December 2012 implementing enhanced cooperation in the area of the creation of unitary patent protection with regard to the applicable translation arrangements [2012] OJ L361/89 10.16, 11.29, 16.29 Council Regulation 733/2013/EU of 22 July 2013 on the application of Articles 107 and 108 TFEU to certain categories of horizontal state aid [2013] OJ L204/11 17.392 Council Regulation 734/2013/EU of 22 July 2013 amending Regulation 659/1999/EC laying down detailed rules for the application of Article 108 TFEU [2013] OJ L204/15 17.15, 17.395 Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013 [2013] OJ L336/1 5.331, 5.405, 5.409

(p. cxcix) B. Table of Directives Commission Directive 80/723/EEC concerning the transparency of financial relations between Member States and their public undertakings [1980] OJ L195/35 6.256, 17.366 Council Directive 81/363/EEC the first shipbuilding Directive [1981] OJ L137/39 17.61 Council Directive 83/189/EEC laying down a procedure for the provision of information in the field of technical standards and regulations [1983] OJ L109/8 as amended by Council Directive (EEC) 88/182 [1988] OJ L81/75 2.228 Art 8 2.226, 2.227 (1) 2.226 Art 9 2.226, 2.227 Commission Directive 85/413/EEC amending Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings [1985] OJ L229/20 6.256

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Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17 2.64, 9.42 Council Directive 87/54/EC on the legal protection of semiconductor topographies [1987] OJ L24/36 10.191 Council Directive 87/601/EEC of 14 December 1987 on fares for scheduled air services between Member States [1987] OJ L374/12 15.22 Council Directive 87/602/EEC of 14 December 1987 on the sharing of passenger capacity between air carriers to scheduled air services routes between Member States [1987] OJ L374/19 15.22 Commission Directive 88/301/EEC on competition in the markets for telecommunications terminal equipment [1988] OJ L131/73 6.109, 6.257, 13.09 Council Directive 89/104/EEC of 21 December 1988 to approximate the laws of the Member States relating to trademarks [1989] OJ L40/1 10.10, 10.16, 10.55 Art 7 10.58 (1) 10.175 (2) 10.175 Commission Directive 89/105/EEC of 21 December relating to the transparency of measures regulating the pricing of medicinal products for human use and their inclusion in the scope of national health insurance system [1989] OJ L40/8 16.19, 16.29 Council Directive 89/552/EEC on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the pursuit of television broadcasting activities [1989] OJ L298/23 14.14 Council Directive 90/377/EEC of 29 June 1990 concerning a Community procedure to improve the transparency of gas and electricity prices charged to industrial end-users [1990] OJ L185/16 12.05 Council Directive 90/387/EEC of 28 June 1990 on the establishment of the internal market for telecommunications services through the implementation of open network provision [1990] OJ L192/1 13.14 Art 3 13.14 Commission Directive 90/388/EEC on competition in the markets for telecommunications services [1990] OJ L192/10-16 6.257, 13.09, 14.143 Art 1(2) 13.09 Art 2 13.09 Council Directive 91/250/EC on the legal protection of computer programs [1991] OJ L122/42 10.58, 10.192 Art 1(4)(c) 10.58

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Council Directive 91/296/EEC of 31 May 1991 on the transmission of natural gas through grids [1991] OJ L147/37 12.05 Council Directive 91/440/EEC of 29 July 1991 on the development of the Community’s railways [1991] OJ L237/25 15.214, 15.302, 15.312, 15.340 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora [1992] OJ L206 17.259 (p. cc) Council Directive 92/44/EEC on the application of open network provision to leased lines [1992] OJ L165 13.14 Council Directive 92/100/EEC of 19 November 1992 on rental right and lending right and on certain rights related to copyright in the field of intellectual property [1992] OJ L346/61 10.10, 10.16, 10.193 Council Directive 93/83/EEC of 27 September 1993 on the coordination of certain rules concerning copyright and rights related to copyright applicable to satellite broadcasting and cable retransmission [1993] OJ L248/15 10.10, 10.16, 10.94, 14.16 Commission Directive 93/84/EEC [1993] OJ L254/16 6.256 Council Directive 93/98/EEC of 29 October 1993 harmonizing the term of protection of copyright and certain related rights [1993] OJ L290/9 10.10, 10.16, 10.58, 10.195 Art 9(2) 10.58 Commission Directive 94/46/EC of 13 October 1994 with regard to satellite communications [1994] OJ L268/15 6.38, 6.257, 13.11, 14.143 Commission Directive 95/12/EC of 23 May 1995 implementing Council Directive 92/75/EEC with regard to energy labelling of household washing machines [1995] OJ L136/1 3.14 European Parliament and the Council Directive 95/46/EC of 24 October 1995 on the protection of individuals with regard to the processing of personal data and on the free movement of such data [1995] OJ L281/31 14.16 Commission Directive 95/51/EC amending Directive 90/388/EEC with regard to the abolition of the restrictions on the use of cable television networks for the provision of already liberalized telecommunications services [1995] OJ L256/49-54 6.257, 13.11, 14.143 Commission Directive 96/2/EC amending Directive 90/388/EEC with regard to mobile and personal communications [1996] OJ L20/59-66 6.257, 13.11 European Parliament and the Council Directive 96/9/EEC of 11 March 1996 on the legal protection of databases [1996] OJ L77/20 10.16, 10.196 Commission Directive 96/19/EC on full competition in telecommunications [1996] OJ L74/13 6.208, 6.257, 13.11, 14.143 Council Directive 96/48/EC of 23 July 1996 on the interoperability of the transEuropean high-speed rail system [1996] OJ L235 15.230

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Council Directive 96/67/EC of 15 October 1996 15.375 Commission Directive 96/92/EC on common rules for the internal market in electricity [1997] OJ L27/20 12.06 European Parliament and the Council Directive 97/13/EC of 10 April 1997 on a common framework for authorization and individual licences in the field of telecommunications services [1997] OJ L117/15 13.15 Art 7 13.17, 13.19 European Parliament and the Council Directive 97/33/EC of 30 June 1997 on interconnection in telecommunications with regard to ensuring universal service and interoperability through application of the principles of Open Network Provision [1997] OJ L199/32 13.14 Art 4 13.14 European Parliament and the Council Directive 97/51/EC of 6 October 1997 for the purpose of adaptation to a competitive environment in telecommunications [1997] OJ L295/23 13.14 European Parliament and the Council Directive 97/66/EC of 15 December 1997 concerning the processing of personal data and the protection of privacy in the telecommunications sector [1998] OJ L24/1 13.15 European Parliament and the Council Directive 97/67/EC of 15 December 1997 on common rules for the development of the internal market of postal services and the improvement of quality of service [1998] OJ L15/14 17.341 European Parliament and the Council Directive 98/10/EC of 26 February 1998 on the application of open network provision to voice telephony and on universal service for telecommunications in a competitive environment [1998] OJ L101/24 13.14, 13.15 (p. cci) European Parliament and the Council Directive 98/30/EC of 22 June 1998 concerning common rules for the international market in gas 12.06 European Parliament and the Council Directive 98/71/EC of 13 October 1998 on the legal protection of designs [1999] OJ L289/28 10.10 Commission Directive 99/64/EC amending Directive 90/388/EEC in order to ensure that telecommunications networks and cable TV networks owned by a single operator are separate legal entities [1999] OJ L175/39 6.257, 13.12, 14.143 European Parliament and the Council Directive 2000/12/EC of 20 March 2000 relating to the taking up and pursuit of the business of credit institutions [2000] OJ L126/1 Art 1 (1) 11.72 (5) 11.72 European Parliament and the Council Directive 2000/31/EC of 8 June 2000 on certain legal aspects of information society services in the Internal Market [2000] OJ L178/1 14.16

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European Parliament and the Council Directive 2001/12/EC of 26 February 2001 amending Council Directive 91/440/EEC [2001] OJ L75/1 15.215 European Parliament and the Council Directive 2001/13/EC on the licensing of railway undertakings [2001] OJ L75/26 15.215 European Parliament and the Council Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification [2001] OJ L75/29 15.215, 15.218 European Parliament and the Council Directive 2001/29/EC of 22 May on the harmonisation of certain aspects of copyright and related rights in the information society [2001] OJ L167/10 10.10, 10.197, 14.16 Council Directive 2001/83/EC of 6 November on the community code relating to medicinal products for human use [2001] OJ L311/67 Art 1 16.02, 16.06, 16.35 Art 6 16.16 Art 10(2)(b) 16.06 Art 28 16.16 European Parliament and the Council Directive 2002/19/EC of 7 March 2002 on access to and interconnection of electronic communications (Access Directive) [2002] OJ L108/7 13.22, 14.144 Art 1 13.20 Art 8(3) 13.29, 13.30, 13.38 Arts 9–13 13.29 Art 13 (a) 13.38 (b) 13.38 European Parliament and the Council Directive 2002/20/EC of 7 March 2002 on the authorization of electronic communications networks and services (Authorization Directive) [2002] OJ L108/21 13.22, 13.50, 13.211, 14.144, 14.151 Art 1 13.20 Art 5(2) 14.149 Art 7(3) 14.149 European Parliament and the Council Directive 2002/21/EC of 7 March 2002 on a common regulatory framework for electronic communications networks and services [2002] OJ L108/33 13.20, 13.22, 13.46, 13.50, 13.53, 13.211, 14.144, 14.151 recital 27 13.26 Art 1 13.20

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Art 7 2.67, 13.28, 13.31, 13.32, 13.33, 13.34, 13.35, 13.112 (a) 13.36 (4)(a) 13.28 Art 8(5)(f) 13.111 Art 8a(3) 13.53 Art 9(1) 14.149 Art 14(2) 13.112 Art 15 (1) 13.26, 13.27 (3) 13.112 Annex II 13.27 European Parliament and the Council Directive 2002/22/EC of 7 March 2002 on universal service and users’ rights relating to electronic communications networks and services (Universal Service Directive) [2002] OJ L108/51 13.22, 13.211, 14.144, 17.341 Art 1 13.20 (p. ccii) Art 17 13.30 Art 18 13.30 Art 19 13.30 European Parliament and the Council Directive 2002/58/EC of 12 July 2002 concerning the processing of personal data and the protection of privacy in the electronic communications sector [2002] OJ L201/37 13.17, 13.20, 13.22 Art 1 13.20 Commission Directive 2002/77/EC on competition in the markets for electronic communications networks and services [2002] OJ L249/21 6.38, 6.257, 13.21, 14.17, 14.143, 14.151 recital 7 14.144 Art 1 14.148 (5) 6.34 (6) 6.38 Art 2 (1) 14.145, 14.148 (2) 14.144, 14.145 Art 4(2) 14.144, 14.149, 14.154

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European Parliament and the Council Directive 2002/92/EC Insurance Mediation Directive [2003] OJ L9/3 11.192, 11.219 European Parliament and the Council Directive 2003/54/EC of 26 June 2003 concerning common rules for the internal market in electricity and repealing Directive 96/92/EC [2003] OJ L176/37 12.07 European Parliament and the Council Directive 2003/55/EC of June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/EC Art 28 5.752 European Parliament and the Council Directive 2004/17/EC of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors [2004] OJ L134/114 17.374 European Parliament and the Council Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts [2004] OJ L134/114 17.374 Commission Directive 2004/39/EC Markets in Financial Instruments Directive [2004] OJ L145/1 11.104 European Parliament and the Council Directive 2004/49/EC of 29 April 2004 on safety on the [Union]’s railways and amending Council Directive 95/18/EC on the licensing of railway undertakings and Directive 2001/14/EC on the allocation of railway infrastructure capacity and the levying of charges for the use of railway infrastructure and safety certification (Railway Safety Directive) [2004] OJ L164/44 15.337 Art 13 15.337 European Parliament and the Council Directive 2004/51/EC of 29 April 2004 on the development of the Union’s railways [2004] OJ L220/58 15.216 Commission Directive 2005/81/EC amending Directive 80/723/EEC on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings [2005] OJ L312/47 6.256, 17.366 Commission Directive 2006/111/EC on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings [2006] OJ L318/17 Art 1(2) 6.256 Art 2 (b) 6.27 (f) 6.34 Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax [2006] OJ L347/1 14.16, 17.26 European Parliament and Council Directive 2006/123/EC on services in the internal market [2006] OJ L376/36 6.128

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European Parliament and the Council Directive 2007/58/EC of 23 October on the development of the Union’s railways [2007] OJ L315/44 15.218 Council Directive 2007/64/EC of 13 November 2007 on payment services in the internal market [2007] OJ L319/1 11.25, 11.36 (p. cciii) European Parliament and the Council Directive 2008/57/EC of 17 June on the interoperability of the european high-speed rail system within the Union [2008] OJ L191/1 15.230 Commission Directive 2008/63/EC on competition in the markets in telecommunications terminal equipment [2008] OJ L162/20 6.257 Council Directive 2008/95/EC to approximate the laws of the Member States relating to trademarks [2008] OJ L299/25 10.10 Art 7 16.156 European Parliament and the Council Directive 2009/12/EC introducing a principle of non-discrimination among airport users [2009] OJ L70/11 15.374 Art 3 15.374 Art 4 15.374 Art 5 15.374 Art 6 15.374 Art 7 15.374 Art 10 15.374 Commission Directive 2009/28/EC on the promotion of the use of energy from renewable sources [2009] OJ L140/16 12.56 European Parliament and the Council Directive 2009/72/EC of 13 July 2009 concerning common rules for the internal market in electricity [2009] OJ L211/55 17.341 Art 2(4) 12.17 Art 3 12.184 Art 37 12.10 Commission Directive 2009/73/EC concerning common rules for the internal market in natural gas [1997] OJ L211/94 recital 5 12.08 Art 2(4) 12.16 Art 3 12.14, 12.184 Art 9 (8) 12.171

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Art 32(1) 12.06 Art 33 12.140 Art 36 12.166 (1) 12.109 (9) 12.109 European Parliament and the Council Directive 2009/136/EC amending Directive 2002/22/EC, Directive 2002/58/EC and Regulation (EC) No 2006/2004 13.30 European Parliament and the Council Directive 2009/136/EC amending Directive 2002/22/EC, Directive 2002/58/EC and Regulation (EC) No 2006/2004 13.30 Commission Directive 2009/138/EC on the taking up and pursuit of the business of insurance and reinsurance [2009] OJ L335/1 11.181 European Parliament and the Council Directive 2009/140/EC of 25 November 2009 on a common regulatory framework for electronic communications networks and services, 2002/19/EC on access to, and interconnection of, electronic communications networks and associated facilities, and 2002/20/EC on the authorisation of electronic communications networks and services [2009] OJ L337/37 13.22, 13.111 recital 5 13.111 recital 7 13.93 European Parliament and the Council Directive 2010/13/EU of 10 March 2010 on the coordination of certain provisions laid down by law, regulation or administrative action in Member States concerning the provision of audiovisual media services [2010] OJ L95/1 14.14, 14.121 Art 14 14.15 European Parliament and the Council Directive 2011/83/EU of 25 October 2011 on consumer rights [2011] OJ L304/64 11.36 European Parliament and the Council Directive 2012/23/EU of the Council of 12 September 2012 amending Directive 2009/138/EC (Solvency II) as regards the date for its transposition and the date of its application, and the date of repeal of certain Directives [2012] OJ L249/1 11.181 European Parliament and the Council Directive 2012/34/EU of 21 November establishing a single european railway area [2012] OJ L343/32 15.220, 15.224, 15.324 Art 7 (1) 15.322 (2) 15.323 (5) 15.329 Art 13 15.331, 15.337 (1) 15.332

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(2) 15.333 (p. cciv) (3) 15.333 (4) 15.334 (5) 15.334 (7) 15.334, 15.335 (8) 15.336 Art 31 (3) 15.332, 15.333 (4) 15.329 (8) 15.335, 15.336 Art 32 15.329 Art 33 15.329 Annex II 15.331 point 1 15.332 point 2 15.333 point 3 15.335 point 4 15.336

(p. ccv) C. Table of Decisions Commission Decision (ECSC) 2320/81 Steel Aid Code [1981] OJ L228/14 17.61 Commission Decision 87/195/EEC of 3 December 1986 on a proposal by the Belgian Government to grant aid for investments by a flat-glass producer at Moustier [1987] OJ L77/47 17.236 Commission Decision 88/167/EEC of 7 October 1987 concerning Law 1386/1983 by which the Greek Government grants aid to Greek industry [1988] OJ L76/18 17.241 Commission Decision 92/389/EEC of 25 July 1990 concerning the state aid provided for in Decree-Laws No 174 of 15 May 1989 and No 254 of 13 July 1989 [1992] OJ L207/47 17.104 Commission Decision 94/291/EC concerning proceedings applying Council Regulation (EEC) 2498/92 [1994] OJ L127/32 6.201 Commission Decision 94/662/EC of 27 July 1994 concerning the subscription by CDC participations to bonds issued by Air France [1994] OJ L258/26 17.68

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Commission Decision concerning proceedings applying Art 93 of the EC Treaty – State Aid NN135/92, competition activities of French La Poste [1995] OJ C262/1 16.198 Commission Decision 95/547/EC of 26 July 1995 giving conditional approval to the aid granted by France to the bank Crédit Lyonnais [1995] OJ L308/92 17.68, 17.243 Commission Decision of 13 March 1996 concerning fiscal aid given to German airlines in the form of a depreciation facility [1996] OJ L146 17.92 Commission Decision N299/96, N290/96, N278/96, N289/96 and N795/96 UK BSE Crisis 17.208 Commission Decision 97/114/EC of 27 November 1996 concerning the implementation periods requested by Ireland for the implementation of Commission Directives (EEC) 90/388 and (EC) 96/2 as regards full competition in the telecommunications markets [1997] OJ L41/8 13.11 Commission Decision 97/310/EC of 12 February 1997 concerning the granting of additional implementation periods to the Portuguese Republic for the implementation of Commission Directives 90/388/EEC and 96/2/EC as regards full competition in the telecommunications markets [1997] OJ L133/19 13.11 Commission Decision 97/568/EC of 14 May 1997 on the granting of additional implementation periods to Luxembourg for the implementation of Directive 90/388/ EEC as regards full competition in the telecommunications markets [1997] OJ L234/7 13.11 Commission Decision 97/603/EC of 10 June 1997 concerning the granting of additional implementation periods to Spain for the implementation of Commission Directive 90/388/EEC as regards full competition in the telecommunications markets [1997] OJ L243/48 13.11 Commission Decision 97/607/EC of 18 June 1997 concerning the granting of additional implementation periods to Greece for the implementation of Directive 90/388/EEC as regards full competition in the telecommunications markets [1997] OJ L245/6 13.11 Commission Decision 2903/1997/EC of 16 September 1997 on State aid for Gemeinnützige Abfallverwertung GmbH [1998] OJ L159/58 17.39 Commission Decision of 3 June 1998 N3/98 [1998] OJ C279/4 17.245 Commission Decision N576/98 UK-Channel Tunnel Rail Link 17.237 Council and Commission Decision of 29 April 1999 concerning the conclusion of the Agreement between (p. ccvi) the European Communities and the Government of Canada regarding the application of their competition laws [1999] OJ L175/49 8.101 Commission Decision of 9 June 1999 on the aid scheme implemented by the United Kingdom in favour of pig producers in Northern Ireland [1999] OJ L227/27 17.208 Commission Decision NN87/99, NN89/99, N380/99, N770/99, NN141/99, N83/00 and N386/96 Dioxin contamination in Belgium 17.208

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Commission Decision N20/2000 on the exemption from real estate taxation for cultivation on substrate in the Netherlands [2000] OJ C169/3 17.117 Commission Decision of 21 December 2000 N258/2000 Dorsten Swimming Pool 17.143 Commission Decision of 8 December 1999 N582/99 on aid to Marina di Stabia SpA for a marina development [2000] OJ C40/2 17.138 Commission Decision N41/9 Denmark–Modification of a scheme for flat-rate taxation for experts [2000] OJ C284/4 17.106 Commission Decision 2000/17/EC of 30 March 1999 on the aid for the project ‘Process Integrated Gas Turbine at the Nerefco refinery’ which the Netherlands is planning to implement in favour of Nerefco [2000] OJ L314/26 17.261 Commission Decision 2000/536/EC of 2 June 1999 in Seleco [2000] OJ L227/24 17.481 Commission Decision 2000/567/EC of 11 April 2000 on the state aid implemented by the Federal Republic of Germany for System Microelectronic Innovation GmbH, Frankfurt/Oder (Brandenburg) [2000] OJ L238/50 17.481 Commission Decision 2000/796/EC of 21 June 2000 on state aid granted by Germany to CDA Compact Disc Albrechts GmbH, Thuringia [2000] OJ L318/62 17.481 Commission Decision 2001/247/EC of 29 November 2000 on the aid scheme implemented by Spain in favour of the shipping company Ferries Golfo de Vizcaya [2001] OJ L89/28 17.87 Commission Decision of 13 February 2001 on the aid scheme ‘Viridian Growth Fund’ notified by the United Kingdom C46/2000 [2001] OJ L144/23 17.45 Commission Decision of 6 June 2001 C56/2000 on the aid scheme Regional Venture Capital Funds [2001] OJ L263/28 17.45 Commission Decision of 11 July 2001 on the state aid scheme applied by Spain to certain newly established firms in Guipúzcoa C53/1999 [2002] OJ L174/31 17.101 Commission Decision of 20 December 2001 on a state aid scheme implemented by Spain in 1993 for certain newly established firms in Vizcaya [2003] OJ L40/11 17.101 Commission Decision of 11 December 2001 on the tax measures for banks and banking foundations implemented by Italy C54/2000 [2002] OJ L184/27 17.118 Commission Decision NN90/2001 UK-Airline Insurance 17.208 Commission Decision N702/B/2001 France—MEDEA+ [2002] OJ C292/6 17.238 Commission Decision 2001/829/EC, ECSC of 28 March 2001 on the state aid which Italy is planning to grant to Ferriere Nord SpA [2001] OJ L310/22 17.256 Commisssion Decision N376/01 Aid scheme for cableways – Authorisation of state aid under Articles 87 and 88 of the EC Treaty [2002] OJ C172/2 17.328

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Commission Decision of 27 February 2002 N543/01 on capital allowances to hospitals [2002] OJ C154/4 17.144 Commission Decision of 9 April 2002 N560/01 and NN17/02 Brighton West Pier [2002] OJ C239/3 17.12 17.145 Council Decision of 3 May 2002 on the granting of aid by the French Government for road transport undertakings [2002] OJ L131/15 17.336 Council Decision of 3 May 2002 on the granting of a national aid by the authorities of the Italian Republic in favour of road transport undertakings [2002] OJ L131/14 17.336 Council Decision of 3 May 2002 on the granting of a national aid by the authorities of the Kingdom of the Netherlands in favour of road transport undertakings [2002] OJ L131/12 17.336 (p. ccvii) Commission Decision of 5 June 2002 on state aid granted by Italy in the form of tax exemptions and subsidised loans to public utilities with a majority public capital holding C27/99 [2003] OJ L77/21 17.117 Commission Decision of 22 August 2002 C48/2001 on Coordination centres in Biskaia [2003] OJ L31/26 17.101 Commission Decision on Coordination Centres in Luxembourg C49/2001 [2003] OJ L170/20 17.101 Commission Decision of 27 November 2002 on the aid scheme implemented by Germany: Thuringia consolidation programme [2004] OJ L61 17.165 Commission Decision of 27 November 2002 on the aid scheme implemented by Germany: Thuringia loan programme for small and medium- sized enterprises [2003] OJ L223/32 17.165 Commission Decision of 27 November 2002 on the aid scheme implemented by Germany: Thuringia working capital programme [2003] OJ L157/55 17.165 Commission Decision of 27 November 2002 on Gibraltar Exempt Offshore Companies E7/2002 [2002] OJ C228/9 17.101 Commission Decision of 27 November 2002 NN101/2002 favouring aid to British Energy plc 17.292 Commission Decision C63/2002 BMW Steyr [2003] OJ L229/24 17.269 Commission Decision N217/2002 Netherlands-Explosion firework plant Enschede 17.208 Commission Decision N241/2002 France–Explosion chemical plant Toulouse SA.32936 17.208 Commission Decision N264/2002, UK London Underground Public Private Partnership 17.88

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Council Decision 2002/114/EC of 21 January 2002 authorizing the Government of Portugal to grant aid to Portuguese pig farmers who were beneficiaries of the measures granted in 1994 and 1998 [2002] OJ L14/18 17.333 Commission Decision 2003/512/EC of 5 September 2002 on the aid scheme implemented by Germany for control and coordination centres [2003] OJ L177/17 17.101 Commission Decision 2002/622/EC of 26 July 2002 establishing a Radio Spectrum Policy Group [2002] OJ L198/49 13.50, 13.51, 13.52 Commission Decision 2002/935/EC of 14 May 2002 on the state aid granted to Grupo de Empresas lvarez [2002] OJ L329/1 17.76 Commission Decision of 17 February 2003 on the aid scheme implemented by Belgium for coordination centres established in Belgium C15/2002 [2003] OJ L282/25 17.101 Commission Decision of 17 February 2003 on the state aid implemented by the Netherlands for international financing activities C51/2001 [2003] OJ L180/52 17.118 Commission Decision of 27 May 2003 on Danish scheme on loan loss provisions for credit institutions N482/01 [2003] OJ C154/13 17.117 Council Decision of 16 July 2003 on the granting of aid by the Belgian Government to certain coordination centres established in Belgium [2003] OJ L184/17 17.336 Commission Decision on the aid scheme implemented by the Federal Republic of Germany in connection with the sale and export of products from the Land of Mecklenburg-Western Pomerania [2003] OJ L202/15 17.165 Council Decision of 16 July 2003 on the compatibility with the common market of an aid that the Italian Republic intends to grant to its milk producers [2003] OJ L184/15 17.336 Council Decision of 16 June 2003 concluding the Agreement between the European Community and the Government of Japan concerning cooperation on anti-competitive activities [2003] OJ L183/12 8.101 Council Decision of 16 June 2003 concluding the Agreement between the European Community and the Government of Japan concerning co-operation on anti-competitive activities [2003] OJ L183/12 8.441 Commission Decision of 14 July 2004 concerning certain aid measures applied by France to assist fish farmers and fishermen [2005] OJ L74/49 17.210 Commission Decision 2003/814/EC of 23 July 2003 on the state aid C 61/2002 which the United Kingdom is planning to implement for a newsprint (p. ccviii) reprocessing capacity support under the WRAP programme [2003] OJ L314/26 17.258, 17.261 Commission Decision 2006/621/EC of 2 August 2004 of state aid implemented by France for France Télécom [2006] OJ L257/11 17.78

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Commission Decision of 20 October 2004 K(2004)4001/3 (not published in the OJ) on the German postal legislation relating to mail preparation services in particular the access of self-provision intermediaries and consolidators to the public postal network and related tariff 6.211 Commission Decision C-10/2004 of 1 December 2004 favouring restructuring aid to Bull 17.288 Commission Decision with a comprehensive set of empowerments (PV(2004) 1655, SEC(2004) 520/2) for the Competition Commissioner for the application of the Modernisation Regulation 1/2003 and implementing Commission Regulation 773/2004 8.394, 8.417 Commission Decision N353/2004 on the privatisation of the Czech State involvement in the Unipetrol Group 17.84 Commission Decision of 20 April 2005 in E10/2005 17.510 Commission Decision of 6 September 2005 in NN71/2005 Capital Increase HSH Nordbank AG 17.72 Commission Decision 2005/345/EC of 18 February 2004 on restructuring aid implemented by Germany for Bankgesellschaft Berlin AG [2005] OJ L116/1 17.443 Commission Decision 2005/842/EC on the application of Article 86(2) of the EC Treaty to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [2005] OJ L312/67 6.166, 6.253, 6.258, 17.366 Commission Decision 2005/960/EC, Euratom of 15 November 2005 amending its Rules of Procedure [2005] OJ L347/83 8.329 Commission Decision 2005/2667/EC and 2005/2668/EC of 15 July 2005 15.28 Commission Decision 2005/5736/EC, 2005/5737/EC and 2005/5740/EC of 23 December adopted under Regulation 847/2004/EC on the negotiation and implementation of air service agreements between Member States and third countries [2004] OJ L157/7 15.28 Commission Decision of 20 December 2006 C46/2004 on the aid scheme implemented by France under Article 39 of the General Tax Code [2007] OJ L112 17.92 Commission Decision of 20 December 2006 Case C58/2006 [2007] OJ C74/18 17.510 Commission Decision of 24 April 2007 in Case E3/2005 17.510 Commission Decision of 10 May 2007 C2/06 on state aid which Greece is planning to implement for the early voluntary retirement scheme of OTE [2008] OJ L243/7 17.98 Commission Decision of 10 October 2007 Case C42/2007 17.510 Commission Decision of 10 October 2007 on the state aid implemented by France in connection with the reform of the arrangements for financing the retirement pensions of civil servants working for La Poste [2008] OJ L63/16 17.98

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Commission Decision N13/2007 17.205 Council Decision 2007/339/EC on the signature and provisional application of the Air Transport Agreement between the European Community and its Member States, on the one hand, and the United States of America, on the other hand (Open Skies Air Transport Agreement) [2007] OJ L134/1 15.19, 15.33–15.41, 15.367 recital 1 15.35 Annex II 15.36 Commission Decision 2007/509/EC of 20 December 2006 Case C3/2005 [2007] OJ L187/30 17.287 Commission Decision of 5 March 2008 establishing the specific measures to correct the anti-competitive effects of the infringement identified on the granting or maintaining in force by the Hellenic Republic of rights in favour of public power corporation 12.211 Commission Decision of 7 October 2008 (summary publication) on the Slovakian postal legislation relating to hybrid mail services [2008] OJ C322/10 6.211 Commission Decision of 28 October in Case E2/2008 17.510 (p. ccix) Commission Decision N27/2008 17.205 Commission Decision N32/2008 Slovenia-Compensation of damage due to the storm and floods of 18 September 2007 17.210 Commission Decision N420/08 UK-Restructuring of London & Continental Railways 17.237 Commission Decision N471/2008 17.205 Commission Decision N643/2008 Ireland–Special measures relating to meat products of animal origin from pigs following a dioxin contamination in Ireland 17.208 Commission Decision of 28 January 2009 in Case E4/2007 17.510 Commission Decision 2010/174/EU of 10 March 2009 on state aids [2010] OJ L81/1 17.287 Council Decision of 20 November 2009 on the granting of a state aid by the authorities of the Republic of Poland for the purchase of agricultural land between 1 January 2010 and 31 December 2013 [2010] OJ L4/89 17.337 Commission Decision of 16 December 2009, OJ 2009 L336/50 13.51 Council Decision of 16 December 2009 on the granting of state aid by the authorities of the Republic of Lithuania for the purchase of state-owned agricultural land between 1 January 2010 and 31 December 2013 [2009] OJ L338/93 17.337 Commission Decision of 16 December 2009, OJ 2009 L336/50 13.51

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Council Decision of 16 December 2009 on the granting of state aid by the authorities of the Republic of Latvia for the purchase of agricultural land between 1 January 2010 and 31 December 2013 [2009] OJ L339/34 17.337 Council Decision of 22 December 2009 on the granting of state aid by the authorities of the Republic of Hungary for the purchase of agricultural land between 1 January 2010 and 31 December 2013 [2009] OJ L348/55 17.337 Commission Decision N157/2009 Denmark-Financing of the planning phase of the Fehmarn Belt fixed link 17.237 Commission Decision N179/2009 UK-Homeowners Mortgage Support Scheme 17.205 Commission Decision N358/2009 Hungary- E2/2008 Support Scheme for Housing Loans 17.205 Commission Decision SA.32609 17.205 Commission Decision N235a/2010 Poland-Aid scheme for compensation of damage caused in Poland by the floods of May and June 2010 outside the field of Annex I of the EC Treaty 17.210 Commission Decision of 29 September 2010 N325/2008 on reduction of tax rates in Saint-Martin [2009] OJ C264/3 17.129 Council Decision 10 December 2010 on state aid to facilitate the closure of uncompetitive coal mines [2010] OJ L336/24 17.153, 17.327 Commission Decision France-Aide a caractere social au benefice des residents des iles de la Guadeloupe SA.33966 17.205 Commission Decision Germany-Exemption from air transport tax as regards flights of people domiciled on islands SA.32888 17.205 Commission Decision Hungary—Aid to compensate for damage due to exceptional occurrence 17.208 Council Decision 2011/167/EU of 10 March 2011 authorising enhanced cooperation in the area of the creation of unitary patent protection [2011] OJ L76/53 10.16 Commission Decision 2011/695/EC of 13 October 2011 on the function and terms of reference of the hearing officer in certain competition proceedings [2011] OJ L275/29 5.354 Chap.4 5.459 Art 5 5.458 (2) 2.144 Art 6 5.480 (1) 5.480 Art 7 5.476

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Art 8 5.435, 5.473 (3) 5.503 Art 9 5.478 Art 10 5.485 Art 11 5.481 Art 12 5.481, 5.486 Art 13 5.485 Art 14 5.486 Art 16 5.486 Art 17 5.486 (3) 5.503 Commission Decision C(2011) 5742 of 13 October 2011 on the function and (p. ccx) terms of reference of the hearing officer in certain competition proceedings [2011] OJ L275/29 8.250 Commission Decision of 20 December to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest [2012] OJ L7/3 17.378 Art 2(1)(e) 15.362 Commission Decision of 22 February 2012 in N/2010 Lithuania — Construction of Infrastructure of the Passenger and cargo ferries Terminal in Klaipeda 17.72 Commission Decision 2012/12/EU on the application of Art 106(2) TFEU to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of SGEI [2012] OJ L7/3 6.207, 6.253, 6.258 Commission Decision 2012/21/EU on the application of Article 106(2) TFEU to state aid in the form of public service compensation granted to certain undertakings entrusted with the operation of SGEIs [2012] OJ L7/3 6.166, 6.258, 17.185 European Parliament and the Council Decision 2012/243/EU of 14 March 2012 establishing a multiannual radio spectrum policy programme [2012] OJ L81/7 13.50, 13.53, 14.16 recital 4 13.53 recital 7 13.53 Commission Decision 2012/661/EU of 27 June 2012 on state aid [2012] OJ L301/19 17.287 Commission Decision on the Economic continuity of Sernam SA.34547 17.484 Commission Decision 2013/246/EU of 7 March 2012 N433/2009 on support measures in favour of Oltchim SA Ramnicu Valcea [2012] OJ L148/33 17.78(p. ccxi)

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3. Table of EU/EC Notices, Guidelines and Other Informal Texts A. Table of Guidelines and Notices (Chronological) Commission Notice on Exclusive Dealing Contracts with Commercial Agents [1962] OJ 139/62 9.42, 9.43, 9.46 Pt II 9.41 Commission Notice concerning its assessment of certain subcontracting agreements in relation to Art [101(1) TFEU] [1979] OJ C1/2 3.31, 7.241, 9.60 para 3 9.60, 10.71 Commission Notice on agreements of minor importance which do not fall under Article 85(1) [now Article 81(1)] (first issued [1970] OJ C64/1; amended [1977] OJ C313/3; amended [1994] OJ C368) [1986] OJ C231/2 3.420 Commission Notice on the distinction between concentrative and cooperative joint ventures 7.114 Commission Guidelines on state aid for SMEs [1992] OJ C213/2 para 3.2 17.147 Commission Notice on cooperation with national courts [1993] OJ C39/6 2.271 point 26 2.169 Notice Concerning the Assessment of cooperative joint ventures pursuant to Article 85 [now Article 81] of the EEC Treaty [1993] OJ C43/2 7.95, 7.102, 7.103 Pt V 7.103 para 26 7.63, 7.86 paras 27–31 7.100 para 41 7.95 fn 3 7.124 Notice pursuant to Article 19(3) of Regulation 17 [1993] OJ C94/6 14.64, 14.65 Commission Guidelines on state aid for Rescuing and Restructuring Firms in Difficulty [1994] OJ C368/12 17.279 Commission Notice on the distinction between concentrative and cooperative joint ventures [1994] OJ C385/1 5.128, 7.29, 7.114 para 2 7.29 paras 17–20 7.124 Commission Notice on the ‘de minimis’ rule for state aid [1996] OJ C68 17.174

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Commission Notice on the non-imposition or reduction of fines in cartel cases (1996 Leniency Notice) [1996] OJ C207/4 8.111, 8.112, 8.113, 8.120, 8.121, 8.122, 8.210, 8.573 Section B 8.112, 8.113, 8.114, 8.121 Section C 8.112, 8.114 Section D 8.112, 8.114, 8.115, 8.116, 8.117, 8.120 Section D.2 8.119, 8.195 Section E 8.120 point 4 8.108 Commission Guidelines on state aid for Rescuing and Restructuring Firms in Difficulty [1997] OJ C283/2 17.279 Commission Notice on the Definition of the Relevant Market for the Purposes of Community Competition Law [1997] OJ C372/5 1.136, 2.260, 4.145, 5.589, 5.683, 7.242, 7.365, 7.366, 9.180, 11.182, 15.45, 15.57, 15.182, 15.259, 16.30 para 7 5.591 para 8 1.169, 5.602, 5.610 paras 10–12 16.31 para 12 5.657, 16.31 para 15 5.593 para 19 4.146, 5.660 para 20 1.161, 5.599 para 21 1.164, 5.596 para 22 1.162, 5.599 para 25 4.148, 5.627 para 27 5.590 para 28 5.604 para 29 1.170 (p. ccxii) para 43 5.619, 5.623 para 54 4.150 para 55 4.150 para 56 9.184 para 60 5.610

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Commission Guidelines on the method of setting fines imposed pursuant to Art 15(2) of Regulation No 17 and Art 65(5) of the ECSC Treaty [1998] OJ C9/3 8.416, 8.548, 8.561, 8.562, 8.571, 8.572, 8.573, 8.579, 8.582, 8.585, 8.587, 8.589, 8.590, 8.595, 8.596, 8.599, 8.610, 8.615, 8.618, 8.622, 8.623, 8.627, 8.644, 8.650, 8.662, 8.663, 8.664, 8.672, 8.673, 8.689, 8.690, 9.670 section 1A 8.583, 8.601, 8.604 section 2 8.583 section 3 8.583 point 3 8.584 point 5(b) 8.687 Commission Notice on the application of the Competition Rules to access agreements in the telecommunications sector [1998] OJ C265/02 12.149 para 95 4.566 Commission Notice on the application of the state aid rules to measures relating to direct business taxation [1998] OJ C384/3 17.91, 17.102 point 14 17.106 point 21 17.113 point 23 17.115 point 25 17.117 Commission Notice on calculation of turnover under Council Regulation (EEC) 4064/89 [1998] OJ C66/25 5.36 Commission Notice on the concept of a concentration under Council Regulation (EEC) 4064/89 [1998] OJ C66/5 5.36 Commission Notice on the concept of full-function joint ventures [1998] OJ C66/1 5.36 Notice on the application of the Competition rules to the Postal Sector and on the assessment of certain state measures relating to postal services [1998] OJ C39/2 17.326 Commission Guidelines on state aid for Rescuing and Restructuring Firms in Difficulty [1999] OJ C288/2 17.279 Commission Guidelines on Vertical Restraints [2000] OJ C291/1 2.12, 3.167, 9.28, 9.42, 9.43, 9.99, 9.212, 9.274 para 136 3.499 Commission notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EEC) 4064/89 [2000] OJ C217/32; [2000] 5 CMLR 774 5.06

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Commission Guidelines on the applicability of Article [101 TFEU] to horizontal cooperation agreements [2001] OJ C3/2 2.12, 3.167, 7.18, 7.105, 7.247, 7.498, 7.499, 7.518 para 19 3.347 para 34 3.499 para 129 7.374 Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article [101(1) TFEU] [2001] OJ C368/13 3.215, 3.216, 3.295, 3.374, 3.378, 3.381, 7.63, 8.111, 9.28, 9.37, 9.39, 9.66, 9.226 point 2 3.297, 3.384 point 4 3.295, 3.381 point 7(a) 3.215 point 7(b) 3.215 points 8–11 9.38 point 9 3.295 point 11 3.215, 3.295, 3.381 point 12.2 3.416 Commission Notice on restrictions directly related and necessary to concentrations [2001] OJ C188/5 7.103, 12.92 Commission guidelines on market analysis and the assessment of significant market power under the [Union] regulatory framework for electronic communications networks and services [2002] OJ C165/6 13.23, 13.27, 13.28 para 30 13.27 para 124 13.30 Commission Notice on the determination of the applicable rules for the assessment of unlawful state aid [2002] OJ C119/22 17.219 Commission Notice on immunity from fines and reduction of fines in cartel cases (2002 Leniency Notice) [2002] OJ C 45/3 8.107, 8.122, 8.129, 8.152, 8.160, 8.178, 8.189, 8.195, 8.211, 8.214, 8.321, 8.708 section A 8.132, 8.175 section B 8.132, 8.145, 8.150, 8.175, 8.177, 8.192, 8.203, 8.205, 8.635 Section C 8.150 point 1 8.160 point 4 8.108

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(p. ccxiii) point 8 8.133 (a) 8.133, 8.140, 8.141 (b) 8.133, 8.140, 8.141 point 9 8.141 point 10 8.141 point 11 8.141, 8.165 (a) 8.142, 8.145 (b) 8.146 point 12 8.150 point 13(b) 8.154 point 16 8.154 point 17 8.150 point 18 8.157 point 21 8.196 point 22 8.177, 8.181, 8.188, 8.197, 8.202, 8.203, 8.446 point 23 8.110, 8.176, 8.194, 8.320, 8.446, 8.634 (b) 8.181, 8.183, 8.188, 8.206 point 25 8.185 point 26 8.187, 8.633 point 28 8.110 point 32 8.222 point 33 8.155, 8.218, 8.219, 8.708 point 34 8.708 Commission Guidelines on the Application of Art [101 TFEU] to technology transfer agreements [2004] OJ C101/2 2.12, 3.357, 3.424, 3.478, 3.499, 7.297, 7.301, 7.302, 7.316, 9.66, 10.70, 10.74, 10.75, 10.82, 10.84, 10.86, 10.102, 10.131, 10.165, 10.166, 10.171, 14.83 para 7 10.60 para 8 10.64 para 9 10.64, 10.129 para 11 10.130

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para 12 10.67, 10.130 (b) 10.67, 10.140 para 14 10.93 para 17 10.64 para 18 10.67, 10.93 para 20 3.422 para 22 3.422 para 25 10.85 para 26 10.82, 10.83 para 27 10.84 para 28 10.87, 10.88 para 29 10.88 para 30 10.86 para 31 10.91 para 32 10.89 para 33 10.90 para 37 3.470, 10.63 para 40 10.68 para 41 10.161 para 42 10.69 para 43 10.72 para 45 10.70 para 49 10.77 para 52 10.74 para 58 7.302 para 59 7.187 para 64 10.79 para 65 10.63 para 66 10.86

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para 69 10.122 para 73 10.122 para 75 10.93 para 78 10.96 paras 79–81 10.98 para 82 10.99 para 83 10.99 para 85 10.102 para 88 10.105 para 90 10.104 para 91 10.104 para 94 10.112 para 95 10.105 para 97 10.98 para 98 10.109, 10.143 para 99 10.110 para 100 10.111, 14.83 para 101 3.357, 3.465, 10.66, 10.111, 14.83 para 109 10.116 para 110 10.116 para 112 10.117 para 113 10.117 paras 114–116 10.118 para 130 10.63 para 131 10.123 para 135 16.114 para 156 10.133 para 158 10.135 para 164 10.126, 10.137

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para 165 10.126, 10.138 para 166 10.138 paras 169–174 14.83 para 170 3.465, 10.139 para 172 3.357, 10.140 para 174 10.140 para 175 10.65, 10.141, 10.142 para 178 10.143 para 179 10.144 para 182 10.65, 10.145 para 183 10.146, 10.147 para 184 10.148 para 186 10.149 para 187 10.149 para 189 10.150 para 193 10.153 para 194 10.154 (p. ccxiv) para 195 10.154 para 199 10.156 para 200 10.156 para 201 10.157 para 202 10.157 para 204 10.158 para 207 10.158 para 208 10.160 para 209 10.159 para 210 10.161 para 212 10.161 para 219 10.166

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para 220 10.166 para 221 10.167 para 222 10.168 para 225 10.166, 10.170 para 226 10.169 para 227 10.169 Commission Guidelines on the Application of Art [101(3) TFEU] [2004] OJ C101/97 2.12, 3.15, 3.168, 3.170, 3.230, 3.354, 3.363, 3.366, 3.369, 3.446, 3.460, 3.463, 3.472, 3.497, 3.499, 7.18, 7.234, 8.26, 9.28, 9.201, 14.31, 15.94 para 11.3 3.511 para 13 2.29, 2.65, 3.167, 3.179 para 15 3.346 para 17 3.181 para 18 3.350 (1) 3.334, 3.350, 3.352 (2) 3.274, 3.353, 3.355, 3.356, 3.357, 3.358, 9.147, 12.89 para 21 3.184, 3.185, 3.186, 3.211 para 22 3.186, 3.201 para 23 3.454, 7.21 para 24 2.48, 3.349, 3.454, 3.456 para 24G 3.347 para 25 3.363 para 26 15.93 para 27 3.362 para 29 3.274, 3.355, 3.357 para 30 3.357 para 31 3.357 para 36 2.218 para 42 3.15, 3.458, 3.479 para 43 3.461, 15.96, 15.98 para 44 2.48, 3.465

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para 45 3.466 para 46 3.457, 3.470 para 48 3.473 para 49 3.477 para 53 3.476, 3.485, 15.99 para 54 3.486 para 55 3.487 para 56 3.487 para 57 3.487 para 58 3.487 para 60 3.476 para 61 3.476 para 64 3.481 para 65 3.481 para 69 3.482 para 73 3.491 para 74 3.463, 3.490 para 75 3.463, 3.493 para 76 3.463 para 79 3.494 para 80 3.492 para 84 3.495, 3.496 para 85 3.497, 15.101 para 90 3.449, 3.488, 3.505 para 91 3.505 para 96 3.500 para 97 15.102 para 98 3.483, 3.503, 12.103, 15.102 para 99 3.504, 15.102

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para 102 3.483 para 105 3.506 para 107 3.510 para 108 15.106 para 109 15.107 para 115(v) 3.510 para 235 3.450 Commission Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings [2004] OJ C31/5 1.231, 4.173, 5.11, 5.778, 5.812, 5.879, 5.880, 5.883, 5.889, 5.907, 5.924, 5.942, 5.963, 5.964, 12.101 para 2 5.561 para 8 5.566, 5.831 para 9 5.16, 5.560, 15.80 para 14 5.680 para 18 5.684 para 19 5.684 para 20 5.520, 5.684 para 21 12.101 para 24 5.700 para 25 1.269 para 31 5.736 para 32 5.731 para 33 5.731 para 36 5.738 (p. ccxv) para 39 5.764 para 40 5.779 para 41 1.223 para 42 5.783, 5.784 paras 58–60 5.747 para 61 5.756

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para 62 5.755 para 64 5.878 para 67 5.881 para 68 5.898, 5.904, 15.90 para 69 5.914 para 70 5.907 para 71 5.901 para 74 5.916 para 75 5.920 paras 76–88 15.94 para 78 11.170 para 79 3.461, 5.943 para 82 5.790 para 84 5.935, 5.949, 11.174 para 85 5.952, 5.955 para 86 5.956 para 87 5.957, 5.1187 para 89 15.84 para 90 15.84 para 91 5.976, 5.1187, 15.84 para 297 5.916 paras 454–456 5.978 Commission Guidelines on state aid for Rescuing and Restructuring Firms in Difficulty [2004] OJ C244/89 17.153, 17.279, 17.280 points 9–11 17.281 point 10 17.294 point 10 a/b 17.282 point 10 c 17.282 point 11 17.283 point 12 17.284

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point 13 17.285 point 15 17.289, 17.291 point 16 17.297 point 17 17.296, 17.299 point 18 17.286 point 23 17.288 point 25a 17.291 point 25b 17.289 point 25c 17.292 point 25d 17.293 point 26 17.292 point 30 17.294 point 31 17.302 points 31–71 17.295 points 32–54 17.316 point 35 17.300 point 37 17.300 point 38 17.304 point 39 17.305, 17.306 point 40 17.307 point 41 17.308 point 42 17.305 point 43 17.309 point 46 17.313 point 47 17.314 point 48 17.313 point 49–51 17.315 point 52–54 17.316 point 57 17.308

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points 57–59 17.317 points 60–67 17.318 points 68–71 17.319 points 78–86 17.320 points 87–98 17.321 point 88 17.321 points 91 17.321 point 97 17.321 Annex 1 17.321 Commission notice on cooperation between the Commission and the courts of the EU Member States in the application of Articles [101 and 102] [2004] OJ C101/54 2.154, 2.271, 8.236, 8.242 point 1 2.257 point 12 2.268 point 15 2.280 point 19 2.272, 2.288 point 26 2.276, 8.242 point 35 2.289 points 21–26 2.204 Commission Notice on the effect on trade concept contained in Articles [101 and 102 TFEU] [2004] OJ C101/81 2.114, 2.260, 3.387, 3.416, 3.426, 3.427, 8.453, 9.39 para 3.1 3.427 para 3.2 3.427 para 3.3 3.427 para 14 3.392 para 17 3.394 para 22 3.391 para 28 3.398 para 32 3.403 para 39 3.407 para 40 3.407

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para 43 3.412 para 45 3.414 para 50 3.420 para 52 3.416, 3.417 para 52(a) 3.421 para 52(b) 3.422, 3.423 para 53 3.425 (p. ccxvi) para 56 3.418, 3.424 para 57 3.418 para 81 2.115 para 84 3.429 para 86 3.429 para 89 3.432 para 90 3.433 para 91 3.433 para 92 3.434 para 96 3.433 para 97 3.434 para 100 3.435 para 109 3.441 Commission Notice on the handling of complaints by the Commission under Articles 101 and 102 of the Treaty to categories of technology transfer agreements [2004] OJ C101/65 8.103 para 3 8.103 para 4 8.103 point 81 8.103 Annex 8.473 Commission Notice on informal guidelines relating to novel questions concerning Arts [101 and 102 TFEU] that arise on individual cases (guidance letters) [2004] OJ C101/78 2.13, 2.16, 2.17, 2.19 Commission Notice on remedies acceptable under Council Regulation 139/2004/EC and under Commission Regulation 802/2004/EC 5.983

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Guidelines on state aid for Rescuing and Restructuring Firms in Difficulty [2004] OJ C244/2 17.153, 17.492 para 20 17.201 Notice on cooperation within the Network of Competition Authorities [2004] OJ C101/43 8.236, 8.241, 8.429 recital 40 8.432 recital 41 8.432 section 2.2.3 8.432 para 5 2.156, 2.157 para 6 2.156 para 8 2.157 para 12 2.157 para 14 2.157, 8.100, 8.243, 8.245, 14.19 para 15 2.157 para 16 8.100 para 17 2.157 para 20 2.159 para 21 2.159 para 22 2.158 para 24 2.158, 2.232 para 25 2.158 paras 26–28 8.259, 8.320 para 27 2.181 para 28 (b) 2.179, 2.185 (c) 2.189 para 29 2.162 para 39 2.170, 8.237 para 40 2.170, 2.276, 8.238, 8.483 para 41 2.170, 2.276, 8.238, 8.483 (2) 2.172

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para 42 8.240 para 46 2.223 para 47 2.217 para 52 2.231 para 54 2.240 (b) 2.244 Best Practices on the Conduct of Merger Proceedings 5.1161, 8.257, 17.422 Section 3.1.1.3 8.709 paras 5–255.365 paras 5–49 5.341 para 14 2.11 para 15 8.293, 8.317 para 17 2.231 paras 17–24 2.43 para 18 5.326 para 19 5.326 para 20 2.268, 5.407, 5.412 para 21 5.407 para 23 5.414 para 33 (a) 5.428, 5.1024 (b) 5.446 (c) 5.451, 5.488 (d) 5.488 para 36 5.458 para 37 5.356 para 38 5.356, 5.448, 8.308 para 39 3.356, 5.448, 8.308 para 40 8.308 paras 42–44 5.459

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para 43 5.498 para 45 5.445 para 46 5.445 para 47 17.528 para 48 5.426 para 52 8.278 para 54 8.281 para 57 8.280 para 58 8.283 para 65 8.711 paras 87–89 8.709 para 116 2.128 para 121 2.132 (p. ccxvii) para 126 2.115 para 128 2.132 para 129 2.133 para 135 2.115 para 150 2.115 Commission Notice of 13 December 2005 on the rules for access to the Commission file in cases pursuant to Articles [101 and 102 TFEU], Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) 139/2004 [2005] OJ C325/7 5.1161, 8.250, 8.347, 8.348 section 3.1.1 8.446, 8.473 n 12 8.708 para 2 5.478 para 7 2.207 para 8 8.708 paras 8–10 5.462 para 9 8.347, 8.708 para 10 8.708 para 12 5.463, 8.708

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para 13 5.465, 8.708 para 16 5.464 para 18 2.198, 5.467 para 19 2.201, 5.468 para 20 5.473 para 23 5.473 para 26 5.461 para 27 8.708 para 33 5.462 paras 35–38 5.470 paras 35–49 5.341 paras 40–42 5.473 para 44 5.461, 8.708 para 47 5.475, 8.708 para 48 5.476, 8.218, 8.708 Commission Notice on Case Referral in respect of concentrations [2005] OJ C56/2 5.12, 5.409 n 21 5.227 n 35 5.269 para 2 5.17 para 5 5.19 para 8 5.19 para 17 5.227 para 19 5.230 paras 25–32 5.260 para 35 5.242 para 39 5.245 para 40 5.245 para 43 5.269 para 44 5.269

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para 45 5.271 paras 46–82 5.341 Commission Notice published pursuant to Article 27(4) of Council Regulation (EC) 1/2003 in Cases COMP/C2/ 39152-BUMA and COMNP/C2/ 39151 SABAM (Santiago Agreement- COMP/C2/38126) [2005] OJ C200/11 10.210, 10.211 Commission Notice on restrictions directly related and necessary to concentrations [2005] OJ C56/24; [2001] 5 CMLR 19 5.152 , 12.92 para 5 5.152 para 6 5.152 Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) 139/2004 [2005] OJ C56/32 5.409, 5.507, 5.519 para 5 5.510 (a) 5.513 (b) 5.514, 5.516, 5.521 (c) 5.515, 5.516, 5.521 (d) 5.99, 5.517 para 8 5.520 para 11 5.520 para 12 5.520 para 13 5.520 paras 15–18 5.341 para 15 5.516 para 16 5.517 para 20 5.526 para 21 5.526 Community framework for state aid in the form of public service compensation [2005] OJ C297/4 6.166 Community Guidelines on financing of airports and start-up aid to airlines departing from regional airports [2005] OJ C 312/1 17.326 para 34 6.152 Commission Guidelines on the method of setting fines imposed pursuant to Art 23(2) (a) of Regulation 1/2003 [2006] OJ C210/2 8.44, 8.86, 8.549, 8.561, 8.562, 8.567, 8.579, 8.580, 8.585, 8.589, 8.590, 8.595, 8.596, 8.598, 8.599, 8.618, 8.622, 8.624,

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8.627, 8.631, 8.632, 8.643, 8.650, 8.661, 8.662, 8.663, 8.667, 8.673, 8.683, 8.697, 8.698 section C 8.350, 8.589, 8.684 point 1 4.37 point 6 8.551 point 13 8.552, 8.554, 8.560 point 14 8.552 points 15–17 8.553 point 18 8.559 point 19 8.551 point 20 8.551 (p. ccxviii) point 21 8.561, 8.699 point 22 8.561 point 23 8.319, 8.416, 8.563, 8.564 point 24 8.574 point 25 8.578 point 26 8.581 point 27 8.550, 8.582 point 28 8.588 point 29 6.60, 8.617 point 30 8.661, 8.665 point 31 8.661 point 32 8.674, 8.676 point 33 8.674, 8.685 point 34 8.684 point 35 8.686, 8.690, 8.691, 8.695 point 36 8.699 point 37 8.550, 8.683, 8.690, 8.699 point 82 8.610

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Commission Guidelines on national regional aid for 2007–2013 [2006] OJ C54/13 17.221, 17.225, 17.228, 17.230 Commission Guidelines for state aid in the Agriculture and Forestry Sector 2007–2013 [2006] OJ C319/1 17.207, 17.326 Commission Notice on immunity from fines and reduction of fines in cartel cases (2006 Leniency Notice) [2006] OJ C298/17 8.95, 8.105, 8.111, 8.129, 8.130, 8.131, 8.133, 8.191, 8.196, 8.197, 8.200, 8.201, 8.214, 8.250, 8.251, 8.320, 8.387, 8.416, 8.489, 8.503, 8.562, 8.632, 8.633, 8.636, 8.685 section II 8.132, 8.175 section III 8.132, 8.150, 8.175, 8.177, 8.183, 8.192, 8.203, 8.205 section IV 8.155, 8.708 point 1 8.139 point 3 8.108 point 6 8.218 point 7 8.218 point 8 8.133, 8.139 (a) 8.133, 8.134, 8.138, 8.150, 8.154, 8.158, 8.161, 8.169, 8.170, 8.171, 8.186 (b) 8.133, 8.138, 8.150, 8.154, 8.158, 8.161, 8.169, 8.186 point 9 8.136 (a) 8.137, 8.138, 8.166 point 11 8.138, 8.140 point 12 8.141, 8.142, 8.164, 8.165, 8.181, 8.188, 8.194, 8.221, 8.232, 8.320, 8.321 (a)–(c) 8.183, 8.194 (b) 8.146 (c) 8.147, 8.148, 8.149 point 13 8.141, 8.164 point 14 8.150, 8.152 point 15 8.153 point 16 (b) 8.154 point 17 8.158

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point 19 8.154 point 20 8.150 point 21 8.157 point 24 8.181, 8.188, 8.194, 8.196, 8.320, 8.321 point 25 8.177, 8.178, 8.180, 8.181, 8.188, 8.197, 8.199, 8.202, 8.203, 8.446 point 26 8.140, 8.176, 8.178, 8.179, 8.181, 8.183, 8.188 point 27 8.181, 8.184, 8.221, 8.232, 8.374 point 28 8.185, 8.310 point 29 8.189 point 30(b) 8.206 points 31–35 8.110 point 32 8.156 point 33 8.219, 8.220, 8.708 point 34 8.218, 8.219, 8.708 point 36 8.168 point 37 8.110, 8.156 point 39 8.218 point 40 8.222 Community Framework for state aid in R&D [2006] OJ C323/1 point 3.4 17.238 Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings [2008] OJ C95/1 5.36, 11.71 Pt C 5.153 n 109 5.176 n 116 5.187 para 5 5.32 para 6 5.40 para 7 5.33, 5.37, 5.51 para 8 5.33, 5.37, 5.154 para 9 5.37, 5.44

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para 10 5.37, 5.44, 5.155 paras 11–35 5.37 para 12 5.53 para 13 5.53 para 14 5.56 para 15 5.56 paras 15–20 5.91 para 16 5.48 para 17 5.48 para 18 5.59 (p. ccxix) para 19 5.59 para 20 5.60 para 21 5.61 para 22 5.49 para 23 5.49 para 24 5.65, 5.118, 5.123, 16.112 paras 24–27 5.62 para 28 5.67 paras 29–35 5.69 para 36 5.140 paras 36–50 5.37 para 37 5.140 para 39 5.142 para 41 5.143 para 42 5.143 para 43 5.142 para 44 5.100, 5.143 para 45 5.145 para 46 5.146, 5.147

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para 47 5.147 para 48 5.148 para 50 5.140, 5.151 para 51 5.37, 5.73 para 52 5.75 paras 52–53 5.37 para 53 5.75 para 54 5.78 paras 54–90 5.37 para 57 5.79 para 58 5.79 para 59 5.80 para 60 5.86 para 61 5.78 para 62 5.87, 5.114, 8.532 para 63 5.87, 5.114 paras 65–67 5.90 para 68 5.114 paras 69–72 5.91 para 70 5.92 para 71 5.92 para 73 5.92 paras 74–80 5.93 para 76 5.114 para 78 5.93 para 79 5.93, 5.114 para 81 5.90 para 82 5.94 paras 83–90 5.99

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paras 85–90 5.117 para 91 5.122, 5.124, 5.126 paras 91–109 5.37, 7.254 para 92 5.33, 5.115, 5.121, 5.126, 5.128 para 93 5.129 para 94 5.131 para 95 5.132 para 96 5.132 para 97 5.134 paras 98–100 5.135 para 101 5.136 para 102 5.136 para 103 5.137 para 104 5.137 paras 104–109 5.142 para 105 5.119, 5.138 paras 106–108 5.118 para 109 5.119 paras 110–116 5.37, 5.110 para 113 5.109 paras 117–121 5.529 paras 117–123 5.37 para 122 5.531 para 123 5.531 paras 124–128 5.37 para 128 5.205 para 129 5.168 paras 129–153 5.37 para 131 5.168, 5.205

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para 132 5.169 para 133 5.173 para 134 5.169 para 135 5.169, 5.175 para 136 5.169 para 137 5.169 para 138 5.169 para 139 5.169 para 140 5.169 para 141 5.169, 5.183 paras 142–144 5.169 para 144 5.177 para 145 5.176 paras 145–147 5.169 paras 148–150 5.169, 5.183 para 151 5.169 para 152 5.169 para 153 5.169 paras 154–156 5.204 para 156 5.206 paras 157–160 5.187 paras 157–220 5.37 para 159 5.187 paras 161–163 5.185 para 165 5.185 para 166 5.185 para 167 5.197 para 168 5.198 para 169 5.206

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paras 169–171 5.205 paras 172–174 5.206 para 176 5.205 para 178 5.193 para 179 5.205 paras 179–181 5.192 (p. ccxx) para 181 5.198 para 184 5.190 para 187 5.195 para 188 5.195 paras 189–191 5.195 paras 192–194 5.195 paras 195–203 5.202 para 198 5.202 para 202 5.202 para 204 5.185 para 205 5.185 paras 206–220 5.186 para 207 11.71 para 209 5.206 para 210 5.202 Section II 5.346 Commission Guidelines on the application of Article 101 to maritime transport services [2008] OJ C245/2 15.174, 15.175, 15.177, 15.178 para 8 15.178 Commission Guidelines for the examination of state aid to fisheries and aquaculture [2008] OJ C84/10 17.326 Commission Notice on the Application of Articles [107 and 108 TFEU] on state aid in the form of guarantees [2008] OJ C155/02 17.77 section 3.2 17.77

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: The WB National Univ of Juridical Science; date: 11 January 2021

Commission Notice on Remedies acceptable under the Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004, [2008] OJ C267/1 5.13, 5.409, 5.983, 12.232 para 6 5.985, 5.999 para 7 5.987, 5.1100 para 9 5.1005, 5.1006 paras 9–10 5.1005 para 10 5.1010 para 11 5.1059 para 12 5.220, 5.998 para 13 5.1012, 5.1013 paras 13–14 5.1005 para 14 5.1013 para 15 5.1010, 5.1050 para 17 5.1010, 5.1014, 5.1049, 5.1053, 5.1058, 5.1095 para 18 5.1035, 5.1036 para 20 5.990 para 23 5.1059, 5.1060, 5.1062 para 25 5.1064 para 27 5.1064 para 30 5.1063, 5.1081 para 33 5.1062 para 35 5.1067, 5.1070 para 36 5.1067 para 37 5.1066 para 38 5.1066 para 45 5.1072 para 48 5.1014, 5.1076 para 49 5.1077 para 56 5.1081

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para 57 5.1081 paras 58–60 5.1083 para 59 5.1085 para 60 5.1085 para 61 5.1050, 5.1055 para 63 5.1052, 5.1086 para 64 5.1086, 5.1088 para 65 5.1052 para 66 5.1089 para 69 5.1010, 5.1095 paras 71–76 5.1112 para 72 5.1112 para 73 5.1115 para 74 5.1115 paras 77–94 5.341 para 78 5.1022 para 79 5.1018 para 81 5.1016 para 82 5.1023 para 83 5.1029, 5.1030 para 84 5.992 para 88 5.498 para 89 5.1040 para 91 5.1036, 5.1037 para 94 5.498, 5.1044 paras 97–127 5.341 para 98 5.1008 para 104 5.1076 para 108 5.1100

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paras 111–112 5.1104 para 112 5.1102 paras 117–121 5.1104 para 119 5.1107 para 121 5.1109 para 122 5.1110 para 123 5.1104 paras 123–127 5.1104 Community guidelines on state aid for railway undertakings [2008] OJ C184/13 17.326 Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings (p. ccxxi) [2008] OJ C265/6 1.243, 4.579, 5.13, 5.671, 5.810, 5.838, 5.842, 5.940, 15.94 para 2 5.16 para 10 5.563 paras 11–13 5.810 para 13 5.856 para 16 5.23, 5.564, 5.833, 5.834 para 18 5.814 para 20 5.16 para 23 5.861 para 32 5.836 paras 48–49 5.853 paras 51–57 5.854 para 55 5.855 para 59 5.836 paras 68–71 5.847 paras 79–90 5.867 para 94 5.836 para 108 1.246 para 111 1.246

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paras 111–113 5.853 para 117 5.855 paras 119–121 5.867 Notice on the conduct of settlement procedures in view of the adoption of Decisions pursuant to Articles 7 and 23 of Council Regulation No 1/2003/EC in cartel cases [2008] OJ C167/1 8.250, 8.685, 12.235 point 1 8.723 point 5 8.718, 8.721 point 6 8.718 point 7 8.232, 8.721 points 8–13 8.719 point 9 8.719 point 12 8.725 point 15 8.718 point 16 8.720 point 20 8.722 point 27 8.722 point 29 8.722 point 32 8.665, 8.725 point 33 8.230 point 35 8.721 point 36 8.721 point 41 8.716 Best Practice Code on the Conduct of state aid Control Proceedings [2009] OJ C136/3 17.397, 17.422, 17.425, 17.529, 17.536 Chap 7 17.528 para 47 17.528 para 48 17.528, 17.532, 17.536 Commission Notice on the enforcement of state aid law by national courts [2009] OJ C85/1 17.556 Commission Notice on a simplified procedure for the treatment of certain types of state aid [2009] OJ C136/13 17.397

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Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings [2009] OJ C45/7 4.43, 4.99, 4.101, 4.102, 4.104, 4.129, 4.134, 4.135, 4.266, 4.267, 4.286, 4.367, 4.368, 4.386, 4.412, 4.429, 4.443, 4.445, 4.446, 4.454, 4.458, 4.460, 4.463, 4.467, 4.522, 4.592, 4.605, 4.730, 4.745, 9.28, 9.212, 12.140, 17.86 n 19 4.353 para 5 4.90 para 6 4.745 para 8 4.132 para 10 4.128 paras 10–12 1.214 para 11 4.132, 4.268 para 12 4.143, 4.180 para 13 4.166 para 15 4.166, 4.167 para 16 4.182 para 17 4.185 para 18 1.201, 4.216 para 19 4.101, 4.112, 4.267, 4.268 para 20 4.101, 4.113, 4.269, 4.276, 4.451, 4.548 para 21 4.114 para 23 4.116, 4.270, 4.430, 4.431 para 24 4.116, 4.273 para 26 4.352, 4.364, 17.86 para 27 4.434 para 28 4.290 paras 28–31 3.508, 4.293 para 29 4.291 para 30 4.120, 4.293, 9.213 para 31 4.121 para 33 4.397

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para 34 4.432 para 36 4.433 para 37 4.430, 4.431 para 39 4.433 paras 41–45 4.272 para 46 4.434, 4.456 para 48 4.475 para 49 4.523, 4.529 para 50 4.524 para 51 4.477, 4.483 para 52 4.538 para 53 4.512, 4.525 para 54 4.525 para 55 4.477, 4.525 (p. ccxxii) para 56 4.477, 4.525 para 57 4.525 para 58 4.491 para 59 4.349, 4.350 paras 59–61 4.272 para 60 4.526, 4.555 paras 60–63 4.351 para 61 4.351, 4.527, 4.554 para 62 4.528 para 63 4.348 para 64 4.350, 4.352 paras 64–65 4.350 para 65 4.350 para 69 4.350 para 70 4.347

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para 71 4.347 para 75 4.620, 4.621, 12.226 para 77 4.564 para 79 4.593 para 80 4.274 para 81 4.624 para 82 4.688, 13.136 Commission Guidelines on Vertical Restraints [2010] OJ C130/1 2.12, 3.219, 3.374, 4.412, 5.132, 7.17, 7.241, 9.29, 9.30, 9.31, 9.33, 9.43, 9.54, 9.99, 9.148, 9.158, 9.170, 9.180, 9.193, 9.194, 9.197, 9.201, 9.205, 9.222, 9.225, 9.229, 9.230, 9.231, 9.237, 9.241, 9.251, 9.256, 9.258, 9.259, 9.261, 9.265, 9.272, 9.273, 9.284, 9.289, 9.291, 9.292, 10.78, 14.83 section 2.10 9.100 section III.4 9.146 section VI 9.189 section VI.2 9.214 Chap.9 7.325 para 1 4.477 para 5 9.34 para 6 9.61, 9.188, 9.192 paras 12–21 3.31, 9.44 para 13 9.46 para 14 9.47 para 15 9.48 para 16 9.50 para 17 9.49 para 19 11.218 para 20 9.56 para 22 3.31, 9.82 para 23 9.90

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para 25 (a) 9.96, 9.113 para 27 9.72, 9.73 para 28 9.75 para 29 9.80 para 31 9.81 para 32 9.82 para 39 9.83 paras 40–42 9.84 para 43 9.86 para 44 9.86 para 47 9.90, 9.92, 12.57 para 48 9.95 para 50 9.113, 9.114, 9.118, 12.61 paras 51–56 14.83 para 51 7.219, 9.11, 14.114 para 52 9.133 (c) 9.136 para 55 9.123, 9.127 para 56 9.137 para 57 9.129 para 59 9.145 para 60 3.179 para 61 9.149 para 62 9.150 para 63 9.151 para 64 9.152 para 65 9.153 para 66 4.401, 9.155, 9.157, 12.74, 12.75 para 67 9.159

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para 70 9.91 para 71 9.153 para 73 9.183 paras 74–78 9.167 para 75 9.167 paras 79–80 9.169 para 83 9.172 para 88 9.180 para 89 9.181, 9.182, 9.183 para 90 9.174 para 91 9.184 para 92 9.186 para 96 9.36, 9.90 para 97 9.61, 9.62, 9.188 para 98 9.63, 10.82 para 99 10.82 para 100 1.241, 9.191, 10.82 para 101 10.82 para 102 9.194 para 103 9.199 para 104 9.200 para 105 9.198 paras 106–109 9.202 para 107 (a) 9.209, 9.211 (b) 3.179 (d) 9.210 paras 111–112 9.195 (p. ccxxiii) para 120 9.196

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para 122 9.201 para 125 9.208 para 127 9.212, 9.213 para 129 4.403, 9.214, 12.74, 12.75 para 130 9.217 para 132 9.220 para 133 9.221 para 134 9.226 para 135 9.226 para 137 9.228 para 140 9.232, 12.79 para 141 9.233 para 142 9.223 para 143 9.224 para 144 9.234 para 146 10.156 para 147 9.234 para 151 9.235 paras 151–153 12.83 para 153 9.238, 12.83 para 154 9.239 para 156 9.240, 12.83 para 157 9.240 para 160 9.241 para 162 9.243 para 164 9.244 para 172 9.247 para 175 9.132, 9.249 para 176 9.132, 9.252, 9.255

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para 177 9.257 paras 177–179 9.167 para 179 9.259 para 180 9.260 para 185 9.263 para 190 9.264 para 192 9.265, 16.117 para 194 9.267 para 195 9.266, 9.269 para 196 9.270 para 198 9.271 para 200 9.273 para 201 9.273 para 204 9.276 para 206 9.277 para 207 9.278 para 208 9.278 para 210 9.281 para 211 9.280 para 212 9.281 para 213 9.282 paras 214–222 4.477 para 215 4.477, 4.483, 9.283 para 216 4.477, 10.163 para 217 4.477, 9.285 para 221 9.288 para 222 9.290 paras 223–229 14.83 para 224 9.101

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para 225 9.104 Impact Assessment accompanying the Horizontal Cooperation Guidelines para 3 7.18 para 4 7.03, 7.04 para 31 7.275 Annex 2 7.03 Annex 3 7.18 Impact Assessment accompanying the proposal for a Directive of the European Parliament and of the Council establishing a single European railway area (Recast), (SEC (2010) 1042 final) 15.212, 15.316 Information Note on Inability to pay under paragraph 35 of the Fining Guidelines and payment conditions pre- and post-decision finding an infringement and imposing fines, 12 June 2010 (Information Note) 8.690 point 8 8.694 point 9 8.693, 8.694 Supplementary Guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles [2010] OJ C138/16 2.12 Best Practices for the submission of economic evidence and data collection in cases concerning the application of Articles 101 and 102 TFEU 5.375, 5.449 Commission Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements [2011] OJ C11/1 1.119, 2.12, 3.155, 3.219, 3.366, 3.375, 3.378, 3.499, 4.774, 7.01, 7.10, 7.11, 7.18, 7.20, 7.21, 7.70, 7.145–7.161, 7.234, 7.237, 7.240, 7.241, 7.242, 7.246, 7.247, 7.252, 7.253, 7.278, 7.320, 7.326, 7.327, 7.331, 7.438, 7.457, 7.474, 7.478, 7.487, 7.498, 7.510, 7.512, 7.516, 7.517, 7.527, 7.539, 7.542, 7.545, 7.546, 7.548, 7.549, 7.550, 7.551, 8.02, 8.44, 9.79, 11.202, 12.101, 12.130, 13.232, 14.31 para 28 3.371 Recital 126 7.183 section 7 10.161 Chap.2 7.383 n 9 7.291 para 1 7.01 para 2 7.05 (p. ccxxiv) para 3 7.06, 8.03

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para 6 7.12, 7.17 para 7 7.13, 7.14 para 9 7.22, 8.03 para 10 3.282, 7.16, 7.70, 7.71, 7.183, 7.291 para 11 7.105, 7.122 para 12 7.17, 16.117 para 13 7.427 para 18(a) 12.114, 12.117 para 21 15.75 para 22 3.155, 3.158 para 23 3.183 para 24 3.184, 7.21 para 25 3.155, 3.185, 7.21, 12.126 para 27 3.346, 3.365, 3.367, 7.23 para 28 7.23, 7.24 para 29 3.368, 3.371, 7.25, 7.27, 7.455, 15.80 para 30 7.28, 7.251 para 35 10.146 para 36 12.105 para 39 3.365, 3.373 para 40 3.376 para 42 3.376 para 43 3.377 para 44 3.378 para 47 15.90 para 54 3.158 para 55 8.50 para 57 3.158 para 59 7.409, 8.44

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para 60 3.136, 3.137, 7.448, 7.454, 12.117 para 61 3.137 para 62 3.138, 7.453, 8.44, 8.49 para 63 3.139, 7.451, 8.49 para 65 7.535 para 72 8.03 para 73 7.439, 12.131 para 74 7.443, 7.447, 8.56 para 75 7.439, 7.455 para 76 7.456 para 79 7.459, 7.463 para 84 3.168 para 87 7.472 para 89 7.487 para 90 7.494 para 91 7.497 para 94 7.444 para 107 12.106 para 108 12.106 para 109 12.133 paras 111–149 7.144 para 112 7.146 para 113 15.88 para 114 7.147 para 119 7.148, 7.198 para 122 7.148 para 123 7.150 para 125 7.152, 7.200, 7.204, 7.229 para 126 7.154, 7.198

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para 127 3.372, 7.154 para 129 7.155 para 130 7.155, 7.156 para 131 7.156 para 132 7.155 para 133 7.157 para 141 7.158 para 145 7.161 para 151 7.239 para 152 7.278, 7.282 para 153 7.239, 7.282 para 156 12.118 para 157 3.372 paras 157–159 7.245 para 160 3.454, 12.98, 12.103, 12.124 para 161 12.98 para 162 3.372 para 163 7.249, 7.250 para 167 12.124 para 168 7.248, 12.105 para 169 3.379, 7.278 para 170 7.265 para 171 7.521 para 172 12.110 para 174 7.258, 12.106 para 175 7.78 paras 175–182 7.259 para 179 7.93, 12.105 para 182 12.104

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para 183 7.266 para 187 7.79, 7.256 para 188 7.79 para 189 7.262, 10.169 para 190 10.169 para 191 7.71 para 194 14.71 para 195 7.363 para 198 7.365 para 200 7.369, 12.114 paras 200–204 7.373 para 203 14.76 para 206 7.375 para 208 3.379, 7.378 para 209 7.379, 7.391, 7.395 para 210 7.380, 7.394 para 212 7.367, 14.74 para 213 14.76 (p. ccxxv) para 214 7.382 para 216 7.383 para 217 7.404 para 220 7.406 para 221 7.385 para 222 7.388, 7.405, 14.76 para 225 7.323 para 230 3.372 paras 230–233 7.327 para 234 7.329, 7.342, 12.117 paras 234–236 7.328

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para 235 7.347, 12.117 para 236 7.329 para 237 7.327, 12.118 para 238 7.332 para 240 3.379, 7.333 para 241 7.334 paras 242–245 7.352 para 246 7.355, 7.360 para 247 7.356 para 248 7.356 para 252 2.12, 7.331 para 253 7.361 para 255 8.27 para 257 7.510 para 263 7.499 para 269 7.515, 7.526 para 273 8.28 para 275 7.542 para 276 7.542 para 277 7.519 para 279 7.518 para 281 7.521 para 287 7.532, 13.239 para 293 7.529 para 303 7.544 para 304 7.544 para 308 7.534 para 309 7.534 para 310 7.511

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para 311 7.534 para 321 7.536 paras 1371–1372 7.445 Commission Notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU [2011] OJ C308/6 8.103, 8.250, 8.317, 17.529 point 15 8.317 point 48 8.321 point 88 8.693 points 95–98 5.474 Framework on state aid to shipbuilding [2011] OJ C364/9 17.326 Hearing Officer’s Terms of Reference 2011 5.1161 Art 3 8.708 Arts 4–17 5.341 Art 4(2) (c) 8.289 (d) 8.293 point 10–13 8.710 EU framework for state aid in the form of public service compensation [2012] OJ C8/15 6.166 Best Practice Guidelines on Divestiture 5.983, 5.1018 Commission Guidelines on regional state aid for 2014–2020 [2013] OJ C209/1 17.16, 17.222, 17.230, 17.231, 17.233 Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 adopted on 5 December 2013 [2013] OJ C366/5 5.507, 5.518, 5.519, 5.341 Explanatory note to an authorization to conduct an inspection in execution of a Commission decision under Article 20(4) of Council Regulation 1/2003 (Inspection Note) 8.250, 8.299, 8.383 point 6 8.379 point 7 8.365 point 8 8.365 point 10 8.298 point 11 8.378

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point 12 8.378 point 14 8.356 point 15 8.357 Standard Model Text for Divestiture Commitments 5.983, 5.1018, 5.1020, 5.1064, 5.1065, 5.1111, 5.1112 Standard Model for Trustee Mandate 5.983, 5.1018

(p. ccxxvi) B. Table of Recommendations Commission Recommendation 62/1500 French tobacco monopoly [1962] OJ 48 6.162 Commission Recommendation 62/1502 French matches monopoly [1962] OJ 48 6.163 Commission Recommendation 96/280/EC of 3 April 1996 concerning the definition of small and medium-sized enterprises [1996] OJ L107/4 3.420 Commission Recommendation on interconnection in a liberalised market 13.14 Commission Recommendation of 24 November 1999 on Leased Lines Interconnection Pricing in a liberalised telecommunications market 13.14 Commission Recommendation of 11 February 2003 on relevant product and service markets within the electronic communications sector susceptible to ex-ante regulation in accordance with Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communication networks and services [2003] OJ L114/45 13.23 Commission Recommendation 2003/561/ EC of 23 July 2003 on notifications, time limits and consultations provided for in Art 7 of the Framework Directive [2003] OJ L190/13 3.420 Commission Recommendation of 17 December 2007 on relevant product and service markets [2007] OJ L344/65 13.23, 13.25 Commission Recommendation of 15 October 2008 on notifications, time limits and consultations provided for in Article 7 of Directive 2002/21/EC of the European Parliament and of the Council on a common regulatory framework for electronic communications networks and services [2008] OJ L301/23 13.33 Community guidelines on state aid for railway undertakings [2008] OJ C184/13 17.328 Commission Recommendation of 7 May 2009 on the regulatory treatment of fixed and mobile termination rates in the EU (2009/396/EC) [2009] OJ 2009 L124/67 13.23 Commission recommendation of 20 September 2010 on regulated access to Next Generation Access Networks (NGA) [2010] OJ 2010 L251/35 13.23, 13.61 recital 15 13.68 recital 21 13.66

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recital 25 13.67 recital 28 13.67 recital33 13.69 Art 11 13.60 Art 13 13.68 Art 16 13.69 Art 33 13.69 Arts 39–40 13.70 Annex I 13.66 Commission Recommendation of 11 September 2013 on consistent non-discrimination obligations and costing methodologies to promote competition and enhance the broadband investment environment (OJ 2013 L251/13) 13.23, 13.61, 13.72 Art 6(a) 13.76 Arts 7–8 13.73 Arts 48–50 13.75

(p. ccxxvii) C. Table of Communications Commission Communication on the application of Articles 92 and 93 of the EC Treaty to public authorities holdings Bulletin EC 9 1984 17.73 points 3.2.iii 17.68 Commission Communication on the Application of Articles 92 and 93 of the EC Treaty and Article 61 of the EEA Agreement to state aids in the aviation sector [1994] OJ C350/5 17.326 Commission Communication concerning services of general interest in Europe [1996] OJ C281/3 6.140, 6.212 para 10 6.146 Commission Communication on the sale of state property [1997] OJ C209/3 17.80 Commission Communication on the Application of the EC Competition Rules to Vertical Restraints (COM(98) 544 final) 9.17, 9.19, 9.20 Communication from the Commission on the results of the public consultation on the 1999 communications review and orientations for the new regulatory framework, COM (2000) 239 final, 26 April 2000 13.17 Commission Communication concerning state aid N 376/01 – Aid scheme for cableways – Authorisation of state aid under Articles 87 and 88 of the EC Treaty [2002] C172/2 17.326

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Commission Communication to the Council, European Parliament and the Economic and Social Committee and the Committee of the Regions on certain legal aspects relating to cinematographic and other audiovisual works [2002] OJ C43/6 17.245 Communication from the Commission concerning certain aspects of the treatment of competition cases resulting from the expiry of the ECSC Treaty OJ L222/1 3.04 Commission Communication of 1 December 2003 on professional secrecy in state aid decisions (COM (2003) 4582), [2003] OJ C297/6 point 10 2.198 point 13 2.200 Commission Communication implementing the Community Lisbon programme, Social Services of general interest in the European Union (COM (2006) 177 final) 17.344 Commission Communication on the review of the EU regulatory framework for electronic communications networks and services (COM (2006) 334 final) 13.18 Community guidelines on state aid to promote risk capital investments in small and medium-sized enterprises [2006] C194/2 17.326 Commission report on the outcome of the review of the EU regulatory framework for electronic communications networks and services in accordance with Directive 2002/21/EC and summary of the 2007 proposals (COM (2007) 696 final) 13.18 Commission Communication on the application of state aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis [2008] OJ C270/8 11.07, 17.436 Commission Communication providing guidance on state aid complementary to Community funding for the launching of the motorways of the sea [2008] OJ C317/10 17.326 Commission Communication on the revision of the method for setting reference and discount rates [2008] OJ C14/9 17.77, 17.459, 17.468 section 3.3 17.77 Commission Communication on the application of state aid rules to public service broadcasting [2009] OJ C257/1 17.326, 17.342 para 48 17.342 Commission Communication on community guidelines for the application of state aid rules in relation to rapid deployment of broadband networks [2009] OJ C235/7 13.234 Commission Communication concerning the state aid assessment criteria of (p. ccxxviii) the Commission communication on certain legal aspects relating to cinematographic and other audiovisual works [2009] C31/1 17.326 Commission Communication on Criteria for the analysis of the compatibility of state aid for the employment of disadvantaged and disabled workers subject to individual notification [2009] C188/6 17.326

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Commission Communication on Criteria for the analysis of the compatibility of state aid for training subject to individual notification [2009] C188/1 17.326 Commission Communication providing guidance on state aid to ship management companies [2009] OJ C132/6 17.326 Commission Communication – Temporary Community framework for state aid measures to support access to finance in the current financial and economic crisis [2009] OJ C16/1 17.244 Communication on the functioning of Regulation 1/2003 (COM (2009) 206 final) para 27 2.191 Commission Communication of 11 November 2010 Energy 2020- A strategy for competitive, sustainable and secure energy (COM (2010) 639 final) 12.01, 12.96 Commission Communication of 26 August 2010 to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the regions (COM (2010) 245 final) 13.65 Commission Communication on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector [2010] OJ C82/20 11.189, 11.215 Commission Communication on certain provisions of Directive 2007/58/EC [2010] OJ C353/1 15.218 Commission Communication on market reviews under the EU regulatory framework (COM (2010) 271 final) 13.34 Commission Communication of 1 January 2012 of state aid rules to support measures in favour of banks in the context of the financial crisis [2011] OJ C356 11.07 Commission Communication developing the European Dimension in sport (COM (2011) 12 final) 14.68 Commission Communication – A coherent framework for building trust in the Digital Single Market for e-commerce and online services (COM (2011) 942 final) 14.111 Commission Communication on the application of Articles 107 and 108 of the Treaty on the Functioning of the European Union to short-term export-credit insurance [2012] OJ C392/1 17.326 Commission Communication on the application of the European Union state aid rules to compensation granted for the provision of services of general economic interest [2012] OJ C8/4 6.166, 6.178, 17.368 para 14 17.418 para 17 17.382 para 48 17.370 para 52 17.371

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paras 54–59 17.374 para 67 17.375 para 69 17.376 para 70 17.376 paras 71–77 17.376 Commission Communication on content in the Digital Single Market (COM(2012) 789 final) 14.22 Commission Communication on EU state aid Modernisation (COM(2012) 209 final) 17.12, 17.175 recital 5 17.14 Commission Communication on EU State modernisation (SAM) (COM(2012) 209 final) 17.151, 17.186, 17.198 Commission Communication on the EU’s External Aviation Policy addressing future challenges (COM(2012) 556 final) 15.39, 15.207 Annex para 6 15.40, 15.41 para 13 15.39 Commission Communication on the framework for state aid in the form of public service compensation [2012] OJ C8/15 17.368 Commission Communication on making the internal energy market work (COM(2012) 663 final) 12.02, 12.56 Commission Communication promoting cultural and creative sectors for growth and jobs in the EU (COM(2012) 537 final) 14.01 (p. ccxxix) Commission Communication on promoting the shared use of radio spectrum resources in the internal market (COM (2012) 478 final) 13.54 European Union framework for state aid in the form of public service compensation [2012] OJ C8/15 17.535 Commission Communication of 1 August 2013, Crisis Communication [2013] OJ C216/1 17.244 Commission Communication of 10 July 2013 of state aid rules to support measures in favour of banks in the context of the financial crisis [2013] OJ C216 11.07 Commission Communication on EU guidelines for the application of state aid rules in relation to the rapid deployment of broadband networks [2013] OJ C25/1 13.234, 17.16, 17.326 Commission Communication on the telecommunications single market (COM (2013) 634 final) 13.56, 13.59

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(p. ccxxx) D. Table of Competition Reports First (1971) 17.278 point 45 9.08 point 48 9.12 Second (1972) para 129 6.101 point 55 11.193 point 56 11.193 Sixth (1976) para 97 4.730 Thirteenth (1983) 4.566 para 11 9.250 paras 147–150 10.213, 14.37 Fifteenth (1985) 3.163 Seventeenth (1988) paras 43–46 15.22 Twentieth (1990) para 70 15.23 para 102 7.398, 7.404 Twenty-first (1991) para 334 6.102 Twenty-third (1993) para 212 3.221, 3.222 para 403 17.84 Twenty-fifth (1995) para 87 9.184 para 100 6.260 Twenty-sixth (1996) para 81 14.69 Twenty-seventh (1997) 11.56 para 47 7.01

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Twenty-eighth (1998) paras 114–115 11.184 Thirty-first (2001) para 203 11.213 Thirty-third (2003) 12.85 para 132 15.143 para 208 12.86 Thirty-seventh (2007) para 64 14.81

(p. ccxxxi) 4. Table of National Legislation Austria Act of Accession Art 144 17.500 Art 172 17.500 Cartel Act s 85 2.286

Finland Act of Accession Art 144 17.500 Art 172 17.500

France Competition Law No S/0030/2007 of 25 September 2008 16.196 Law No.86-1067 of 30 September 1986 Art 103 14.153 Law No.2007-309 of 5 March 2007 14.153

Germany Competition Law Art 90(1) 2.286 Art 90a 2.289 (1) 2.286

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Hungary Competition Law Art 91/H 2.286 (2) 2.286

Ireland Superior Courts (Competition Proceedings) 2005, (SI 130/2005) r 22 2.289

Italy Decree-Law No.352/2003 Art 1 14.151 Law No.112/2004 Art 23(5) 14.151 Law No.249/1997 14.151 Art 3(7) 14.151

Latvia Competition Law Art 35 2.286 (2) 2.286

Lithuania Art 50 (2) 2.286 (3) 2.286

Netherlands Civil Code 5.49 Telecommunication Act 2012 Art 7.4a 13.215

Romania Competition Act Art 61(7) 2.286

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Slovakia Civil Procedure Code Art 82a 2.286

Spain Competition Act Art 16 (3) 2.286 (4) 2.286 Competition Law No 2623/05 of 21 May 2009 16.178 Competition Law No S/0176/09 of 9 June 2010 16.201 Law No.29/2006 16.198

Sweden Act of Accession Art 144 17.500 Art 172 17.500

United Kingdom Communications Act 2003 s 64 14.154 (p. ccxxxii) Competition Act 1998 s 18 16.101, 16.144 s 63 8.406 s 65 8.406 Competition Commission Merger Guidelines paras 2.09–2.10 1.152 Enterprise Act 2002 s 182 2.72 s 188 8.431 Office of Fair Trading Merger Guidelines 1.231, 15.30

United States Antitrust Guidelines for the Licensing of Intellectual Property 1995 s 5.7 16.112

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Dodd-Frank Act 11.40 Federal Rules of Criminal Procedure (Title 18A USC) rule 6(e) 8.443 FTC Act s 5 7.507 Guidelines for the Licensing of Intellectual Property s 4.3 10.123 Horizontal Merger Guidelines 1968 n 36 3.461 Horizontal Merger Guidelines 1982 5.612 Horizontal Merger Guidelines 2010 1.168, 1.298, 5.597, 5.610 section 4 1.147, 1.166, 1.310 section 4.1.1 1.148 section 4.1.2 1.152 section 5.1 1.168 section 5.2 1.166 Price Competition and Patent Term Restoration Act 1984, Hatch-Waxman Act, Pub L No.98-417 98 Stat 1585 (1984) 16.73 Sherman Act 1890 5.658 s 1 14.46 US Code s 40102(a)(15) 15.37 s 41102(a) 15.37

(p. ccxxxiii) 5. Table of International Treaties Agreement between the European Communities and the Government of Canada regarding the application of their competition laws [1999] OJ L175/50 8.441 Agreement between the European Communities and the Government of the United States of America on the Application of Positive Comity Principles in the enforcement of their competition laws [1998] OJ L173/2 8.441 Agreement between the European Communities and the Government of the United States of America regarding the application of their competition laws, decision of the Council and Commission of 10 April 1995 (95/145/EC, ECSC) [1995] OJ L95/47 8.441

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Agreement between the European Communities and the Swiss Confederation regarding the application of their competition laws [1999] OJ L175/50 8.444 Art 7 (4) 8.444 (6) 8.444 (7) 8.444 Art 8 8.444 Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) Art 29 16.12 Chicago Convention on International Civil Aviation 1944 Art 1 15.26 Art 6 2.80, 3.53, 3.54, 8.255, 8.399, 8.414, 17.401 (2) 8.255 (8)(c) 8.255 Art 8 8.255, 8.331, 8.414, 8.415 (1) 8.331 (2) 8.331 Protocol 1 Art 1 17.401 European Convention for the Protection of Human Rights and Fundamental Freedoms 1950 2.178, 2.179 WTO Agreement on Subsidies and Countervailing Measures 1994 Art 3 17.153 (p. ccxxxiv)

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Part I General Principles, 1 The Economics of Competition, A Introduction Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Economics — Economic or commercial activity

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A. Introduction 1.01  Nowadays, there is a clear awareness among competition policymakers, competition lawyers, and judges of the importance of economics for their daily work. In the EU, the US, and many other parts of the world, it is normal practice to discuss competition cases in terms of economic concepts such as market power, entry barriers, and sunk costs, and to evaluate cases according to their effects on the market. Competition policy is economic policy concerned with economic structures, economic conduct, and economic effects. It is for this reason that in a book on competition law an introduction to the economics of competition is of importance. 1.02  The growing acceptance and importance of economics in competition policy raises questions regarding the usefulness of economics, both for devising competition rules and for (p. 4) deciding on competition cases. A word of caution is appropriate in this respect. Economic thinking and economic models have proved not to be perfect guides. 1.03  Economic theories and models are built on and around assumptions. This approach has the benefit of making explicit the various elements relied upon in arriving at a particular conclusion or insight. At the same time, these assumptions by definition do not cover (all) real-world situations. In addition, when the assumptions are changed the outcomes of the models may look very different. It is for these reasons that the application of economic theories may not always be able to give a clear and definite answer, for example as to what will happen in a market when companies merge, or when companies try to collude or engage in specific types of conduct. 1.04  The best that the application of economic principles can do in general is to provide a coherent framework of analysis, to provide relevant lines of reasoning, to identify the main issues to be checked in the context of certain theories of competitive harm, and possibly to exclude certain outcomes. The application of empirical methods may further help to test the relevance of theories of harm. In this way, economics helps to tell the most plausible story. In individual cases, it will be necessary first to find the concepts and the model that best fit the actual market conditions of the case and then to proceed with the analysis of the actual or possible competition consequences. Economic insights can also be useful in the formulation of policy rules, indicating under what conditions anti-competitive outcomes are very unlikely, very likely, or rather likely, and helping to devise safe harbours. 1.05  The competition policy practitioner is advised to follow the mainstream of economics in order to avoid too much contradiction and too many untested assumptions. This chapter gives a short introduction to the main insights of industrial economics.1 It has the following structure: •  Section B briefly describes the main historical trends in the field of industrial economics; •  Section C describes the static welfare aspects of market power and introduces a number of (microeconomic) concepts that are commonly used in this context; •  Section D describes the dynamic welfare aspects of market power; •  Section E describes market definition as a method for identifying the extent to which products exert a competitive constraint on each other; •  Section F looks into the concepts of market power and market dominance in further detail and focuses on the ways in which market power may be maintained or enhanced through anti-competitive means; and

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•  Section G presents a number of empirical methods to verify the existence of competitive constraints and market power.

Footnotes: 1

  Industrial economics or industrial organization can be described as applied microeconomics: it uses the models and concepts of microeconomics in an effort to understand the development of real-world markets and company behaviour. For an excellent introduction, see F. M. Scherer and D. Ross, Industrial Market Structure and Economic Performance (3rd edn, Boston: Houghton Mifflin, 1990). More recently, J. Church and R. Ware, Industrial Organization—A Strategic Approach (Boston: McGraw-Hill, 2000); D. W. Carlton and J. M. Perloff, Modern Industrial Organization (4th edn, Addison Wesley, 2004), M. Motta, Competition Policy. Theory and Practice (Cambridge: Cambridge University Press, 2004), and J. Lipczynski, J. O. S. Wilson, and J. Goddard, Industrial Organization: Competition, Strategy, Policy (3rd edn, Harlow: FT Prentice Hall, 2009). More technical and elaborate is M. Armstrong and R. Porter (eds), Handbook of Industrial Organization (Amsterdam: North Holland, 2007) and J. Tirole, The Theory of Industrial Organization (Cambridge, MA: MIT Press, 1988).

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Part I General Principles, 1 The Economics of Competition, B Structure, Conduct, Performance Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Structure-Conduct-Performance paradigm — Economics — Economic or commercial activity

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(p. 5) B. Structure, Conduct, Performance (1)  Early Developments 1.06  Interest in the issues of market power and cartels arose well before the twentieth century. Descriptions of the dangers of monopoly can be found in ancient Greek written sources as well as in the Bible. Adam Smith in his Wealth of Nations (1776) made the famous remark that people of the same trade seldom meet, even for merriment and diversion, without it ending in a conspiracy to raise prices. In general, Smith warned against the negative effects of monopoly, both private monopoly and monopoly sponsored by government. 1.07  In the nineteenth century, neoclassical authors such as Augustin Cournot and Alfred Marshall laid the basis for modern microeconomics with the development of simple models of perfect competition, monopoly, and duopoly. The hallmark of neoclassical economics is the paradigm of rational economic agents maximizing their utility (think of firms maximizing profit or consumers maximizing their welfare). The model of perfect competition was especially useful for developing a theory on general equilibrium for the whole of the economy. However, towards the end of the nineteenth century it became obvious that these models were unable adequately to describe market developments such as market concentration, the emergence of trusts, product differentiation, non-price competition, and advertising. 1.08  Research in the first half of the twentieth century also seemed to indicate that companies were not necessarily producing, as the model of perfect competition would predict, at minimum/lowest average costs.2 Instead, they were sometimes producing on a decreasing cost curve, that is, where there are increasing returns to scale, without, however, becoming much bigger. This phenomenon, known as the Great Cost Controversy, led several authors such as Piero Sraffa, Edwin Chamberlin, and Joan Robinson to write about imperfect and monopolistic competition, that is, those situations in between the two extremes of perfect competition and monopoly which more accurately describe how most markets function. In order to provide a rationale for imperfect and monopolistic competition, they were among the first to explore the role of product differentiation and advertising in their models.

(2)  The Harvard School 1.09  Not satisfied with the limited, rather simple models mentioned in the previous section, at around the time of World War II a number of economists such as John Clark, Edward Mason, and Joe Bain started to look for more empirically supported explanations of market phenomena.3 They tried to develop a type of applied microeconomics. Instead of deduction based on assumptions, they wanted to take account of the richness of the real world. Data were gathered and by induction they tried to develop general insights concerning likely company behaviour, effects on the market, and possibilities for government intervention. 1.10  The main result of this so-called Harvard School, that dominated the industrial economics scene for many years, is the Structure-Conduct-Performance (S-C-P) paradigm. In its simplest form it states that market structure determines companies’ market behaviour which in turn determines market performance. Market structure, being the basis of the explanation, (p. 6) is seen as of paramount importance. In its most mechanistic form, the study of conduct becomes quite irrelevant. It is the structure that is responsible for the final market outcome. Studies were carried out for several industries collecting market structure data such as concentration ratios and the height of entry barriers. These data were linked to performance indicators such as profit levels. The general conclusion of these studies was that concentrated markets with entry barriers showed above average profitability. This

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approach fitted well with the general trend for structuralist theories and explanations developed in the social sciences in the 1940s, 1950s, and 1960s. View full-sized figure Figure 1.1  The simple S-C-P scheme 1.11  The main policy conclusion flowing from the simple S-C-P scheme (see Figure 1.1) has been that competition policy should concentrate on the structure of markets and on structural remedies, ensuring that markets do not become (overly) concentrated or that entry barriers be erected. This was reflected, for example, in the use of market concentration measures in assessing merger cases in the 1968 Horizontal Merger Guidelines issued by the US Department of Justice. Behavioural remedies to a competition problem were seen as ineffective without the necessary structural changes.

(3)  The Chicago School 1.12  A number of economists such as George Stigler, Harold Demsetz, and Yale Brozen questioned the S-C-P framework and its conclusion that market concentration in general leads to monopoly profits. This group of scholars, also known as the Chicago School, argued that competition policy should be less concerned with market structure and should focus more directly on the concept of economic efficiency (welfare) in evaluating business conduct or mergers.4 1.13  The Chicago School criticized the empirical studies underlying the S-C-P paradigm. By applying different techniques to the same data and by using improved or new data, they showed that the relationship between concentration, entry barriers, and monopoly profits was not so stable or strong and, at times, was even non-existent. More important, however, was their theoretical questioning of the S-C-P paradigm. 1.14  The Chicago School argued that the causal link is not between high concentration, on the one hand, and high profits, on the other. Instead, they argued that the causality runs as (p. 7) follows: increased firm size leads to increased firm efficiency, which in turn leads to market concentration and ultimately to possibly higher profits. Central to this reasoning is the role of economies of scale and scope and a general belief that competition forces companies to become superior in terms of efficiency. The companies that succeed in this way will grow faster than others which may even go out of business. This may at times lead to higher concentration levels in the industry but, if this is the product of the market process which seeks and obtains efficiency, this is desirable from a competition policy point of view. It leads to more efficient firms, even when it would also result in profits in excess of the competitive norm. Monopoly profits would not be very likely to arise and certainly would not be durable, as it was argued that entry barriers are rarely very high and can be overcome in time. The more extreme statement of the Chicago School is that the only high and durable entry barriers are those created by the State, thereby telling governments to clean up their own act instead of pursuing vigorous competition policy. 1.15  These attacks of the Chicago School, that started in the 1960s but culminated in the 1970s and 1980s, brought back a greater reliance on the (self-correcting) forces of competition. High concentration is not necessarily bad and only in very particular circumstances is competition policy action called for. This fitted well with the general trend in the 1970s and especially the 1980s of seeing limits to the effectiveness of and scope for government interference.5

(4)  More Recent Developments

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1.16  The Chicago School returned in part to the deductive approach of the microeconomic models, focusing more on the theoretical underpinnings than on empirical testing. It highlighted the main theoretical weaknesses in the arguments of the Harvard School and it forced a reconsideration of the S-C-P framework that, as a consequence, has been extended and refined over the years. It has been recognized that a wide array of other basic conditions, such as consumer preferences and technological developments, influence the market structure and that these basic conditions may themselves change. Just as important, it has been accepted that conduct is not a negligible factor when it comes to explaining performance. In addition, it is recognized that conduct and also performance may help to shape the market structure. In other words, although the main causal link may still run from market structure to market conduct to market performance, feedback mechanisms complicate the picture. In schematic terms, the resulting extended S-C-P framework can be illustrated as in Figure 1.2.6 1.17  This extended S-C-P framework is still important today in industrial economics and in competition policy, not as the perfect explanatory framework but as a good way to organize one’s thoughts. Market structure is still the starting point for competition policy arguments and it is generally accepted that certain market structure conditions are a prerequisite for anti-competitive conduct and performance. However, these necessary conditions may not be sufficient. Conduct such as limit pricing or excess capacity creation to limit or prevent entry into the market, may play its own distinctive role. Structural conditions can be used to describe safe harbours: that is, situations in which anti-competitive behaviour or effects (p. 8) View full-sized figure

Figure 1.2  The extended S-C-P framework are highly unlikely. However, to find anti-competitive situations, usually structural, behavioural, and performance aspects will have to be taken into account. Under Articles 101 and 102 Treaty on the Functioning of the European Union (TFEU) it is in general not enough to show that the market structure enables anti-competitive conduct; also the conduct itself and/or the likely negative effects that may result from this conduct must be shown. The same holds true under the EU Merger Regulation where, to assess the impact of a merger on competition, a purely structural analysis may not suffice. 1.18  The renewed attention to the behaviour of companies can in part be ascribed to a significant development in industrial economics since the mid-1980s, sometimes referred to as New Industrial Economics. The centre of attention has shifted to the possible strategic behaviour of companies in oligopolistic situations, trying to deduce, within the framework of more sophisticated microeconomic models and with the help of game theory, what the most likely company strategies are and whether or not anti-competitive strategies are likely.7 It has cast more light on the (efficiency) rationales behind certain types of company behaviour, such as the use of vertical restraints, without however always leading to particularly robust outcomes. Rather, the models have led to the more general insight that whether or not business strategies are likely to have anti-competitive effects typically depends on the precise circumstances of the case. It has thus lent support to a more moderate, less ideological approach in antitrust where more emphasis has come to lie on the assessment of the facts of the case (case-by-case approach). This in turn has led to the further development, especially since the mid-1990s, of empirical techniques to verify the

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existence of market power and competitive constraints, a field generally referred to as Empirical Industrial Organization.8 1.19  Another even more recent reflection on conduct in economics is provided by what is commonly called ‘behavioural economics’. Building on earlier ideas about the limits of economic agents’ rationality and on insights from psychology, behavioural economics criticizes the neoclassical assumption that economic agents are able and willing in all circumstances to maximize their utility. It is found that in particular consumers have practical limits to process information, may be influenced in their decisions by how choices are presented, may have difficulties in anticipating their future needs, and may care more about losses than (p. 9) about gains. Consumers appear to exhibit a number of systematic biases in the way they access information about offers in the market, in the way they assess these offers, and in the way they subsequently act by purchasing a product or switching between products.9 The main ‘behavioural biases’ concern processing power biases (including making use of rules of thumb), framing biases (including having a preference to choose the default option or the first or last option on a list), time inconsistency biases (including over- or underestimating how much a product will be used), and loss aversion biases (including the endowment effect of valuing a product more once it is owned than before it is owned).10 1.20  Firms may try to exacerbate and exploit these behavioural biases and to manipulate consumer choice in order to foreclose competitors and/or to increase consumers’ willingness to pay, without necessarily increasing the utility derived from consuming the product.11 This may in certain cases result in a reduction of (the intensity of) competition and an overall increase in prices. This does not necessitate a major shift in competition policy. In most markets, the ability of a firm to exploit such biases will be undermined and prevented by competition, for instance by competitors offering products which make a virtue out of not exploiting these biases. Competition remains vital to provide choice and quality and competition policy remains a crucial tool to make markets work well for consumers. But it may indicate that sometimes consumers are more easily harmed than would otherwise be expected and that a remedy, in order to be effective, should take the behavioural biases into account.12 Behavioural economics also reminds us of the fact that competition policy is only one tool in the toolbox and that there will be situations where conduct of firms harms consumer welfare but where competition policy may not be well placed to solve the problem and where, for instance, consumer policy intervention requiring to reduce the complexity or increase the transparency of pricing of firms may be more effective.

Footnotes: 2

  For the cost concepts used, see Section C, esp paras 1.31–1.35 and 1.58–1.77.

3

  See eg J. M. Clark, ‘Toward a Concept of Workable Competition’ (1940) 30 Am Econ Rev 241. 4

  In economics, the term ‘efficiency’ (or ‘economic efficiency’) generally refers to the extent to which welfare is optimized in a particular market or in the economy at large. Welfare is often conceived as the (weighted) sum of consumer surplus (the difference between consumers’ willingness to pay for consumption and the price paid) and producer surplus (company profits): see Section C for further details. It should be noted that the weights accorded to consumer surplus and producer surplus imply a certain value judgement. The Chicago School proposed to use equal weights, arguing that not antitrust, but other laws should address the ways prosperity is used or distributed in society. See R. Bork, The Antitrust Paradox: A Policy at War with Itself (New York: Basic Books, 1978), ch 5. For a detailed account of the Chicago School, see H. Hovenkamp, Federal Antitrust

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Policy: The Law of Competition and Its Practice (2nd edn, St Paul: West, 1999), 60; M. W. Reder, ‘Chicago Economics: Permanence and Change’ (1982) 20 J Econ Lit 1. 5

  cf E. Fox, ‘What is Harm to Competition? Exclusionary Practices and Anticompetitive Effect’ (2002) 70 Antitrust LJ 371, 377. 6

  Adapted from Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), Fig 1.1, p 5. 7

  For a more detailed account, see Section C.5.

8

  For an overview, see L. Einav and J. Levin, ‘Empirical Industrial Organization: A Progress Report’ (2010) 24(2) J Econ Perspectives 145. 9

  There are good reasons to expect that firms will in general be less inclined to have behavioural biases. Firms usually operate on a larger scale and can thus make use of economies of scale to process information and run their activities professionally. In addition, it may be expected that the market will discipline firms that make sub-optimal choices, by reducing their profits and market shares. Nonetheless, firms may also have behavioural biases, see M. Armstrong and S. Huck, ‘Behavioral Economics as Applied to Firms: A Primer’, Competition Policy International, Vol 6, No 1, Spring 2010. To the extent that these biases influence the likelihood of collusion, this is referred to in Section C.5(c) and (d). 10

  See M. Bennett, J. Fingleton, A. Fletcher, L. Hurley, and D. Ruck, ‘What Does Behavioral Economics Mean for Competition Policy’, Competition Policy International, Vol 6, No 1, Spring 2010. 11

  See E. Garcés Tolon, ‘The Impact of Behavioral Economics on Consumer and Competition Policies’, Competition Policy International, Vol 6, No 1, Spring 2010. 12

  eg if consumers have a bias towards remaining with the default option even if switching to alternative options is factually possible at little cost, a strategy to foreclose which would otherwise be unlikely to work could become effective. In case of a default bias, the remedy could be to prohibit the bundling, but could also be only to require that consumers are offered an explicit choice to avoid or reduce the bias. See the Art 9 remedy in the Microsoft Internet Explorer case, ‘Commission welcomes Microsoft’s roll-out of web browser choice’, Press Release IP/10/216 (March 2010).

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Part I General Principles, 1 The Economics of Competition, C Static Welfare Analysis of Market Power Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Static welfare analysis — Static market power — Market power — Economic or commercial activity — Microeconomics — Economies of scale — Barriers to entry — Perfect competition — Monopoly — Oligopoly — Game theory

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C. Static Welfare Analysis of Market Power (1)  Introduction 1.21  In a nutshell, one could say that the economics of competition is about market power: what it is, how it is created or sustained, and what are its effects? This section provides a (p. 10) microeconomic perspective on these questions and introduces a number of concepts that are commonly used in this context. 1.22  The answer given by economists on the first question asked—what is market power? —concentrates on the power to raise price above the competitive level.13 In the short run this means the power to raise price above marginal cost and in the long run above average total cost.14 In other words, a company has market power if it has a perceptible influence on the price against which it can sell and, if by charging a price above the competitive level, it is able, at least for a significant period, to obtain ‘supra-normal’ profits (often referred to as ‘monopoly’ profits). 1.23  This makes it very clear that market power is not a black-and-white concept and that companies can have different degrees of market power. In principle, the appropriate measuring rod would be the net present value of the monopoly profits a company can make.15 The net present value is today’s value of the profit of this period and all future periods. It depends, therefore, on the monopoly profit per period, on the number of periods a monopoly profit can be sustained before entry or expansion by competitors takes the profit away, and on the discount rate against which future profits are evaluated.16 1.24  A firm with market power may raise its price by reducing its own output or by making competitors reduce theirs. As stated in para 1.22, this price increase should increase the firm’s profits and do so for a significant period of time. What qualifies as a significant period of time will depend on the product and on the circumstances of the market in question, but under Article 102 normally a period of two years will be sufficient to find dominance.17 Under the merger rules, the test is also, in practice, whether the merging companies involved will, in all likelihood, be able to obtain supra-normal profits for a period longer than two years. Under Article 101, shorter periods are also normally taken into account. 1.25  The second question about how market power is created or sustained brings us back to the question of the relevant elements of market structure and conduct. And so does the third question about its effects. This section is devoted to a static welfare analysis of these questions. By static it is meant that the state of technology is assumed to be constant and effects of market power on innovation and vice versa are ignored. The latter effects are dealt with in Section D, not surprisingly titled ‘Dynamic Welfare Analysis of Market Power’. (p. 11) 1.26  Welfare economics is the branch of microeconomics concerned with the efficiency of the company/the market/the economy.18 A welfare economic analysis of the effects of market power concentrates on the effects on efficiency, both allocative and productive efficiency,19 and therewith the effect on total welfare. The following subsections provide an explanation of these and other microeconomic concepts and analyse the market structures of perfect competition, monopoly, and oligopoly on their welfare effects.

(2)  Basic Microeconomic Concepts 1.27  In this subsection, the following basic microeconomic concepts are discussed: consumer surplus (short and long run) production costs, profit maximization, economies of scale, minimum efficient scale, entry barriers, and contestable markets.20

(a)  Consumer Surplus

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1.28  Consumer surplus is the net benefit consumers obtain by buying a certain good or service. It is the difference between their willingness to pay, sometimes called their reservation price, and the price actually paid. As consumers have different preferences and incomes, some are normally willing to pay more than others for a certain good. Also, the higher the quantity of the good a particular consumer obtains, the lower in general his willingness to pay for an additional unit. These characteristics mean that a demand curve, which shows for an individual or a whole market the relationship between the willingness to pay and the quantity bought, is normally downward-sloping. This is shown in Figures 1.3a and 1.3b. Figure 1.3a shows an individual demand curve, where the individual consumer surplus (at a price level of 5) is presented by the shaded area. The individual demand curves add up to a market demand curve. The collective consumer surplus (at a market price of 5) is presented by the shaded area in Figure 1.3b. View full-sized figure

Figure 1.3a  Individual demand curve (p. 12) View full-sized figure

Figure 1.3b  Market demand curve

(b)  Production Costs 1.29  Production costs of a company can be represented as curves. These cost curves are, of course, not the same for different companies and different industries. Some firms are capital-intensive while others are labour-intensive, some have high fixed costs while others have high variable costs, some experience economies of scale while others have flat cost curves or even experience diseconomies of scale. However, there are some general characteristics to cost curves. 1.30  These general characteristics depend very much on whether one looks at the short or long run. In the short run, many production factors may be fixed, that is the producer is not able to vary the quantity of these factors used in response to demand changes. This is usually true for the buildings and other main capital goods and the production process adopted. But it may also be true for labour, at least in a downward sense when rules on firing make adaptation difficult and slow, and sometimes in an upward sense when, for From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

example, training for specific capabilities takes a long time. Other inputs like raw materials, intermediate goods, and energy are often variable. In the long run, all factors become variable as plants, production processes, and personnel (including management) can be totally replaced.

(c)  Short-Run Production Costs 1.31  The general characteristics of the short-run cost curves are best explained by what economists call the law of increasing and decreasing returns. Let us assume for the moment that we have only two factors of production, capital and labour. The former is fixed while the latter is variable.21 1.32  To produce, a company must employ labour to work with the available fixed capital. At first, employing more labour will lead to a more efficient use of capital (by increasing the utilization rate) and of labour, for example through specialization. If by adding an employee the average productivity per employee rises, the returns are increasing. In other words, the marginal productivity, that is, the change in total output resulting from the use of one more employee, is increasing. This means that the costs of producing a unit of output are decreasing. This is so for the average total cost (ATC), that is, all fixed and variable costs divided by (p. 13) total output, as well as for the average variable cost (AVC), that is, all variable cost divided by total output. It is also true for marginal cost (MC), that is, the cost of producing the last unit of output. 1.33  With the fixed capital as a constraint there comes a point where adding another employee will lead to less extra output when compared to adding the penultimate employee. The marginal productivity is declining and the returns start to decrease. The moment the marginal productivity starts to decline, the marginal cost starts to increase: producing one more unit of output becomes more expensive than the previous unit of output in terms of employee time used.22 By adding more employees, the marginal cost will rise further and will cut the average variable and average total cost curves at their lowest point, as depicted in Figure 1.4. View full-sized figure

Figure 1.4  A company’s short-run cost curves ATC, AVC, AFC, and MC 1.34  That the MC curve cuts the other two curves at their minimum is easily explained: when the extra costs incurred by producing one more unit of output are still lower, respectively, than the average variable cost or the average total cost, producing this extra output will further sink these averages. However, the moment that producing this extra unit has marginal costs that are higher than the respective average, the average will start to rise. 1.35  In Figure 1.4, also, the average fixed cost (AFC) curve is depicted. This average will decline as long as output grows, as the fixed costs are spread over more units of output. In Figure 1.4, the cost curves are only drawn insofar as it is economically interesting. That means not too far left or right from the minimum of ATC. The further away from this

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minimum, the less efficient the company produces. At its minimum the company reaches productive efficiency.23

(d)  Profit Maximization 1.36  What range of the cost curves is economically interesting is linked to the goal of the company. Usually it is assumed that this goal is profit maximization. Certainly, in a competitive environment where profits are under pressure, a company is best advised to try to maximize its profits in order to survive in the long run. In a situation of fierce competition, profits will (p. 14) be rather low, just high enough to attract the required production effort, and a deviation from profit maximization will quickly lead to losses. In general, it is only when a company has a certain degree of market power that it can afford to pursue other goals such as sales maximization with a minimum profit constraint.24 1.37  To maximize its profits or, when times are bad, to minimize its losses, a company should produce up to the point where the additional costs of producing one extra unit of output are still covered by the additional revenue earned by this extra unit of output: producing less would mean that marginal cost is smaller than marginal revenue (MR) (MC is below MR), indicating that producing an extra unit of output will make it earn more. Producing more than the amount for which marginal cost equals marginal revenue would mean that marginal cost is higher than marginal revenue, indicating that by reducing output it will earn more. To maximize profits, therefore, the marginal cost should equal the marginal revenue (MC = MR). This rule holds good for companies with or without market power. 1.38  The MR curve will depend on the demand curve the company is facing. When the company operates in a perfectly competitive market it is a price taker: its output has no influence on the price in the market. If it raises its price above the market price, demand for its product will drop to zero. Its marginal revenue equals the market price. Graphically, this means the MR curve is a horizontal line at the level of the market price. In that situation, the MC curve represents the supply curve of the profit-maximizing firm: at each price level, the MC curve indicates the supply of a given firm (MC = MR = p). 1.39  If, on the other hand, the company faces a downward-sloping demand curve, meaning that by varying its output it can change the price at which it can sell, the MR curve will lie beneath the demand curve. Given that the demand curve is downward-sloping, the company has to lower its price if it wants to sell more units of output. This price decrease applies not only to the additional sales but to all its sales.25 As a result, the additional revenue following the expansion of output is lower than the price at which the expansion takes place. 1.40  Let us assume for the moment that the company is a price taker. In Figure 1.5 this means that as long as the market price is below p1 the company is better advised not to produce at all: the price does not even cover the average variable costs. With a price above p1 the profit-maximizing company will produce the amount where its marginal cost (MC) equals the price (which is equal to MR). With a market price between p1 and p2, the company is in fact minimizing its losses, as the price does not yet cover all average total costs. When the price rises above p2, the company will make a profit, as the price exceeds the average total costs. With a price of p3, the profit will be the shaded area ABCD.

(e)  Long-Run Production Costs 1.41  It was stated in para 1.30 that the cost curves depend very much on whether the short or long run is analysed. In the short run, the law of increasing and decreasing returns indicates that the ATC, AVC, and MC curves will first decline and then increase. An area where average costs are constant over a certain range of output is possible, but inevitably the cost curves will (p. 15)

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View full-sized figure

Figure 1.5  A company’s cost curves and profit rise as production is further increased. The optimal capacity utilization (the output level at which average costs are minimized) will not vary much in the short run. 1.42  In the long run, when the fixed production factors are also variable, the picture looks different. If a company producing at its minimum short-run average total cost would like to double its output, it could do so by duplicating the existing plant. This means that the longrun ATC curve will have a flat section. The long-run average total cost is therefore in general depicted as in Figure 1.6. In the same picture, different short-run ATC curves are drawn belonging to different output levels. The long-run ATC curve represents the lowest short-run average total cost achievable for every level of output.26 View full-sized figure

Figure 1.6  Long- and short-run ATC

(f)  Economies of Scale and Minimum Efficient Scale 1.43  The long-run ATC curve drawn in Figure 1.6 illustrates two other important concepts: that of economies of scale and the minimum efficient scale (MES). In Figure 1.6 an output below (p. 16) Q1 will be produced at higher average total cost than is attainable when more than Q1 is produced. Up to Q1, increasing capacity will lead to economies of scale: a higher capacity reduces the average costs. These economies of scale often result from the indivisibility (‘lumpiness’) of certain production factors: the bigger truck that transports more while still requiring only one driver, the bigger company that can afford to have a fulltime specialist employed for every relevant area, the bigger plant that does not need to keep more spare parts in stock than the smaller plant. Economies of scale may also result from technical-physical relationships, such as the bigger oil tanker that requires relatively less steel to be built, or from economies of increased dimensions, such as the larger company that may obtain discounts when buying larger amounts of input or borrowing larger sums.27 More generally, increased output brings a different, more efficient production process within reach. 1.44  Beyond Q1, no more economies of scale can be reaped. This point is called the minimum efficient scale. Although in practice not always easy to establish, it is an important concept helping to explain concentration in a market. The MES determines the maximum number of companies that can operate efficiently in a market, at least when producing below MES level results in significantly higher costs per unit of output. The From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

extent to which producing below MES level results in higher costs is measured by the cost gradient; that is the steepness of the slope of the cost curve. For example, when the cost gradient is significant and the MES equals 10 per cent of total demand, there is room for at most ten efficient companies. 1.45  In the example of an MES of 10 per cent of market demand, it can also be expected that a company having capacity to produce 20 per cent of the market will be able to produce at the same low ATC. In theory, a company can have any size above MES and produce at the same low ATC. In order to produce more, its management could simply copy MES size units. In practice, however, it can be expected that above a certain size diseconomies of scale will also appear. Management may become too complex, the number of management layers will increase, and motivation may reduce. The long-run ATC may creep up when size continues to increase. 1.46  Economies of scale, especially when they are substantial, are an important explanation for concentration tendencies in a market. By indicating the maximum number of firms that can operate efficiently in the market, the MES determines the minimum concentration degree, at least in markets where products are relatively homogenous. As some companies will be above MES scale, the overall concentration in the market will usually be higher. This makes it quite clear that more companies in a market does not necessarily lead to a better market outcome as production may take place at sub-optimal levels and that protecting competitors is not the same as protecting competition or consumers’ interests. 1.47  The economies of scale described in paras 1.43–1.46 are sometimes referred to as static internal economies of scale; internal because they are related to the plant or firm, static because they are not related to past production. Estimates of the importance of these static internal economies of scale depend to a degree on the method of measurement.28 Econometric studies based on (p. 17) cross-section or time-series data on costs and profits tend to find only limited economies of scale. For example, Lyons found that in the UK for most of the 118 trades studied, MES was below 250 employees.29 However, engineering estimates, that is, cost estimates by managers, engineers, etc, tend to give more weight to economies of scale. Surveys report important economies of scale in a number of capitalintensive sectors like motor vehicles, other means of transport, chemicals, machinery and instrument manufacturing, and paper and printing, that is, in particular in the production of industrial goods.30 1.48  In addition to static internal economies of scale, dynamic internal economies of scale are distinguished.31 The latter refer to a lowering of the costs of production over time as a result of experience obtained on past cumulative output. They are also referred to as learning effects. In terms of Figure 1.6, these economies of scale lead to a downward shift of the long-run ATC curve. These economies of scale are not so much an explanation for concentration tendencies but may give rise to a first-mover advantage. The company or companies that entered the market first were possibly able to recoup the higher original costs while latecomers may have to sell immediately at lower prices dictated by the first entrants having gained some experience in the market. Such learning effects are more likely in new industries, especially when operating with a large amount of skilled labour, and less likely in mature industries with known technologies, especially when operating with a high level of fixed capital. 1.49  A concept that is similar to, but distinct from, economies of scale is the concept of economies of scope. These economies refer to settings where the average total cost is reduced as a result of producing a larger product range. Economies of scope result if certain investments (to be) made for one product, for example electric razors, benefit the production and/or sales of an additional product, for example lady shaves. For instance, investments in R&D may provide results which are useful for a number of products and

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investments to establish a brand name may benefit the sales of various products sold under that brand name. The efficient use of such ‘common costs’ may create economies of scope. The existence of common costs will usually make the calculation of production costs per product more difficult, as the allocation of these common costs to the various products in the range introduces an element of arbitrariness.

(g)  Entry Barriers 1.50  As indicated in the previous paragraph, economies of scale are also an important element when describing another main concept of industrial economics, the concept of entry barriers. It was Bain who stressed the importance of entry barriers as a condition for companies with a significant market share to have market power and turn this into high (monopoly) (p. 18) profits. Without entry barriers, easy entry would quickly eliminate such profits. Entry barriers, according to Bain, are ‘the advantages of established sellers in an industry over potential entrant sellers, these advantages being reflected in the extent to which established sellers can persistently raise their prices above a competitive level without attracting new firms to enter the industry’.32 In other words, the incumbent companies have certain advantages that allow them to increase their price above minimum ATC without attracting entry. 1.51  This definition of entry barriers is often used in competition policy as it indicates situations in which a competition concern may arise. In a market with entry barriers, further concentration through mergers may have to be stopped, especially when the incumbent firms already experience reduced competition. A competition authority will also have to be more alert to abuse of a dominant position in a case where a company with a high market share operates on a market shielded by entry barriers. 1.52  This definition of entry barriers, however, does not always give the right policy insights. When the question is raised whether a competition authority should stimulate or force entry in a particular market, another definition, first proposed by Stigler, is superior. He defined entry barriers as costs that new entrants have to bear, but which are not incurred by the incumbents.33 1.53  The difference with Bain’s definition is most easily explained by the example of economies of scale. Economies of scale qualify as an entry barrier under Bain’s definition. As new companies in general enter at a small scale, they will experience a cost disadvantage compared to the incumbents. This will allow the latter, when competition between them is already reduced, to keep their price above their own minimum average total cost and earn high (monopoly) profits.34 However, the incumbents were also faced with scale economies when they entered. In addition, new entrants may be able to enter at minimum efficient scale. Scale economies therefore do not qualify as an entry barrier under Stigler’s definition. Forcing entry by the competition authority will be inefficient when it increases the number of companies above the number of companies that can efficiently operate in the market, that is, when the incumbents are not much bigger than minimum efficient scale. 1.54  In addition to economies of scale, a number of other factors are sometimes mentioned in competition policy analysis as entry barriers, although these may not always qualify as such under Stigler’s definition. Government regulations, especially when establishing exclusive rights, may work as an entry barrier, for example when only a limited number of licences are provided and State aid, when only available to incumbents, will work as an entry barrier. Import tariffs have the same effect on foreign suppliers. Intellectual property rights or ownership of absolutely scarce resources (eg platinum mines) may also inhibit access by those that cannot avail themselves of these patents or scarce resources. An essential facility, defined as a facility access to which is indispensable to be able to produce another good or service (eg the (p. 19) railway track and the railway service), may work as an entry barrier if access to the facility is not open to competitors. Vertical links or vertical From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

integration may make access more difficult and foreclose potential competitors. Economies of scope, that is, lower average total cost as a result of producing a larger product range, may also make entry more difficult. The same can be said of brand loyalty of customers, for example stimulated by high advertising outlays, as it makes customers less willing to switch to comparable or better offers. More generally, when a customer has to bear a high cost in order to switch to a new supplier, such switching costs may hinder entry of new suppliers. It should be added that many of these factors may work not only as an entry barrier but also as a barrier to expansion, preventing companies already in the market from expanding their output. 1.55  The question whether certain of these factors should be described as entry barriers partly depends on whether the necessary outlays are sunk costs. Sunk costs are those costs that have to be made to enter or be active on a market but that are lost when the market is exited. Advertising costs to build consumer loyalty will work as an entry barrier if an exiting firm cannot sell its brand name or use it somewhere else without incurring a loss. The more costs are sunk, the more potential entrants will have to weigh the risks of entering the market and the more credibly incumbents can threaten that they will match new competition as they will not leave the market.35 High sunk costs invested in excess capacity may be an especially credible threat that the incumbent(s) cannot leave the market and will increase output and lower prices upon entry.

(h)  Contestability 1.56  It was Baumol, Panzar, and Willig who stressed the importance of sunk costs with their theory of contestable markets in the early 1980s.36 A market is said to be contestable if there are no sunk costs or other entry barriers and consumers are willing to switch quickly, before incumbents can react, to the better offer of new entrants. Under these conditions, so-called hit-and-run entry is possible. When the incumbents charge a price above minimum average total cost, it becomes profitable to enter and to stay in the market for at least the time it takes before the incumbents lower their prices. The threat of such hit-and-run entry, in other words the existence of potential competition, will discipline the incumbents, even when they have very high market shares. 1.57  At a conceptual level, the theory of contestable markets helped to underline and delineate the possible role of potential competition. In practice, not many markets are truly contestable. The important question is the degree to which markets are contestable. In general, entry requires sunk costs, sometimes minor and sometimes major, and incumbents are often in the position to react quickly, that is, before consumer loyalty wears down. Even in transport markets, where it is possible in theory to redirect assets, such as ships or planes, at short notice from one route to another, other entry barriers like the nonavailability of necessary slots may delay or impede entry. Actual competition is therefore still to be preferred above potential competition.

(p. 20) (3)  Perfect Competition (a)  The Model 1.58  When market models are put on a market-power scale, perfect competition is the extreme at the low end. There is no company that holds market power and competition policy enforcers can quietly write books during office hours. Unfortunately, markets rarely fulfil the conditions of this model. However, the model is useful for two reasons. First, it highlights two very important welfare economic concepts, of allocative and productive efficiency. Secondly, in certain respects, it is useful as a benchmark against which to measure the competitiveness of actual markets.

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1.59  In order to be called perfectly competitive, a market must have a number of characteristics, of which the following are the main ones: there must be many suppliers and many buyers, there are no entry barriers, the product is homogeneous, and there is full transparency. This means that the MES must be small compared to total market demand, so that many companies are able to operate in the market and produce at minimal costs. The condition of transparency means that suppliers and potential suppliers are aware of every change in demand and price and, as there are no entry barriers, swiftly react by expanding or reducing supply. The condition also implies that companies are aware of the most efficient production techniques and that no company is more efficient than the others. 1.60  A company operating under such conditions will be a price taker, as briefly indicated in the previous section. The price is determined by the market and a company’s own output is so small compared to total output that a change in the company’s output has no perceptible influence on the market price. As entry and exit are swift and without costs, the market will always quickly return to its equilibrium where the price exactly matches market demand and market supply, as shown on the right-hand side of Figure 1.7. If demand rises— graphically, this means the demand curve shifting to the right—the price will rise as the current output is not able to satisfy all demand. Entry of new firms or expansion of existing firms will immediately increase output until the equilibrium price is restored. A fall in demand—graphically, the demand curve shifting to the left—leads to firms reducing output or leaving the market until market output is sufficiently reduced and equilibrium restored. 1.61  At the equilibrium market price, every company in the market will produce at the same minimum average total cost and will make no profits. This is shown on the left-hand side of Figure 1.7. By ‘no profits’ it is meant that the company’s income is just enough to cover the rewards that all factors of production, including capital, need to obtain in order to make them stay in this company. In economic terminology, they receive their opportunity cost (the money they would make elsewhere, ie on other markets), but no more. In other words, the situation of no profits allows for normal accounting profits that are necessary to make capital stay in the company. These normal profits are part of the ATC cost curve. However, no excess profits are made.

(b)  The Outcome 1.62  Figure 1.7 deserves some further explanation as it shows a number of important issues. First, there is the difference between the market demand curve and the company’s demand curve, that is, the demand the company faces for its own output. The market demand curve is downward-sloping, as explained in para 1.27 (see Figure 1.3b). The company’s demand curve is (practically) horizontal at the level of the market price. At that price, the company, (p. 21) View full-sized figure

Figure 1.7  Perfect competition given its small capacity, can sell as much as it wants. It does not need to lower its price to sell more. It is also not in a position to lower its price since that would lead to immediate losses as the price would go below marginal cost as well as average total cost. Increasing its price above the market price would lead to an immediate loss of all its sales and imply the company’s exit from the market.

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1.63  Secondly, Figure 1.7 highlights that in perfect competition there is productive efficiency: with given resources the maximum output is produced. This results from every company producing at the minimum average total cost. If a company is less efficient, it will make a loss and exit the market, in which a new efficient entrant will take its place. If a firm introduces a new cost-saving technique, this will be copied immediately by all the others, graphically represented by a downward shift of the supply curve, after which a new equilibrium will be realized at a lower price. 1.64  Thirdly, Figure 1.7 indicates that in the equilibrium situation there is allocative efficiency: welfare is maximized.37 If less output is produced than the market equilibrium quantity, welfare will be lower, because there will be buyers willing to pay more than the equilibrium price but who are not served. That means these buyers would be willing to pay more than it costs to produce more units and welfare could thus be increased by expanding output. Expanding output beyond the equilibrium would also lower welfare as the cost per unit would exceed the lower price level that would need to be set to sell the extra output; in other words, the extra costs would now exceed the willingness to pay of the marginal consumer. Productive resources are used at the wrong place: elsewhere, that is on other markets, they could be used to produce goods for which there is a higher willingness to pay. The allocative efficiency is reflected at company level by every company obtaining a price equal to its marginal costs (P = MC).

(4)  Monopoly (a)  The Model 1.65  Monopoly is at the other extreme of the market-power scale. In the fully-fledged monopoly model, the monopolist has the maximum achievable market power. One might expect that competition policy enforcers, when such a situation occurs, have to give up the possibility of writing books during office hours. However, this may not be the case as the analysis of pure (p. 22) monopoly situations is rather straightforward and markets rarely fulfil the conditions of this model. The model of monopoly is, however, very useful as it helps to highlight a number of important concepts and it provides the clearest example of what competition policy tries to prevent or remedy.38 1.66  In order to be called purely monopolistic a market must have a number of characteristics, the main ones being that there is only one supplier while there are many buyers and that there are entry barriers that practically prevent entry. 1.67  A company operating under such conditions will be a price setter. As it is the only supplier in the market, market demand is the demand for the company’s product. By varying its output, the monopolist can determine the market price along the demand curve, which in a way is its only constraint. As entry is impossible, it can quietly try to maximize its profits or pursue other goals.

(b)  The Outcome 1.68  Assuming that profit maximization is the monopolist’s goal, it will produce that output where its marginal revenues equal its marginal costs (see para 1.37). In Figure 1.8 this is at quantity Qm. With a demand curve that is downward-sloping, its marginal revenue curve will also slope downwards and lie beneath the demand curve. The reason is simple. When the monopolist wants to sell an extra unit of output it has to lower the price somewhat. When price discrimination is assumed impossible, the monopolist has to lower the price not only for this last unit but for all units it wants to sell. This means that the marginal revenue at a particular output is the new price minus the cumulative price loss it has to take on all other units.39 In Figure 1.8 it is further assumed that average total cost and marginal cost are constant (the ATC and MC curves of the monopolist are horizontal), that is, there are no

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fixed costs and no economies of scale. This assumption simplifies the drawings without changing the principal outcome of the model. View full-sized figure

Figure 1.8  Pure monopoly (p. 23) 1.69  Figure 1.8 clearly shows the main disadvantages of monopoly. The monopolist sells output Qm, which is less than the output Qc under competition. As a result, the price the consumers have to pay is higher: Pm compared to Pc. This has two main welfare effects. First, there is a loss of welfare as consumers acquire fewer products than before. The area ABC is what is generally called the dead-weight welfare loss of monopoly. It is ‘dead-weight’ in the sense that the consumer surplus is really lost: it is not acquired by anyone in the economy. Secondly, there is a transfer of income from consumers to monopolist. The monopolist makes a profit of PmABPc. This amount used to be consumer surplus, but with the higher price the consumers have to pay it is turned into profits for the monopolist. 1.70  It can be debated whether the monopolist’s profit should be counted as a welfare loss. One could argue that the transfer of income from consumers to monopolist does not change society’s welfare as a whole, as some gain what many lose.40 However, for a competition authority the case may be quite straightforward. First, there is a clear allocative inefficiency (the dead-weight loss referred to in the previous paragraph). As the monopoly price Pm is higher than the marginal costs, welfare could be increased by producing extra units. The consumers are willing to pay more for these units than it would actually cost to produce them. Secondly, insofar as the goal of competition policy is stated in terms of protection of competition to further the interests of the consumer (as is the case in most jurisdictions), there can be no doubt that monopoly profits—in particular, where they persist —must be seen as something negative which competition policy should try to avoid. 1.71  Another question is whether the monopolist is technically efficient. In the example of Figure 1.8, the answer is ‘yes’. The monopolist is producing at minimum ATC. But there are good reasons to believe a monopolist may not always be so efficient. Not feeling the heat of competition, the company may become slow and inefficient. Slack eats away part of the possible monopoly profits. Taking life easy instead of profit maximization may have become important, especially when the owners (shareholders) do not exercise effective control. It was Leibenstein who coined the phrase ‘X-inefficiency’, meaning internal inefficiency in the form of too high salaries, excessive corporate jets, a surplus of employees, etc. That this leads to an additional welfare loss is shown in Figure 1.9.

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View full-sized figure

Figure 1.9  A monopolist with X-inefficiency (p. 24) 1.72  The X-inefficiency is reflected in higher ATC and higher MC curves. This results in a new equilibrium with the lower quantity Q’m and the higher price P’m. The consumer is paying for the higher costs with a higher price. There is an extra dead-weight welfare loss of EABF. In addition, productive factors of the area HGFD are lost to society, as what was previously monopoly profit has now been used to produce inefficiently. 1.73  A last welfare loss caused by monopoly could be named ‘the price of success’. A monopoly position is very attractive and many resources may be wasted both by those who defend it and those who attack it. Those who defend it may try to erect and maintain entry barriers by keeping excess capacity, by excessive product differentiation, by political lobbying, by starting entry-delaying lawsuits, etc. Those who attack the monopoly position have to spend resources to overcome these barriers. In theory, all monopoly profits could be wasted in the struggle for a share of the pie. 1.74  Not everyone will recognize these costs as a welfare loss. When competition is seen as rivalry—a fight for temporary advantages, a struggle to gain market power before being overtaken by the next wave of competition—at least part of these costs may be seen as the necessary price to be paid for vigorous competition. However, most competition authorities will, for example, be rather suspicious when finding dominant companies running up costs to maintain excess capacity, in an attempt to keep competitors out of the market. 1.75  Monopoly may not only have negative effects but may also lead to certain advantages for consumers. First, it may be the case that economies of scale require such a size that only one company in the market can produce at minimal cost. This is what is called a natural monopoly.41 Producing with more companies would necessarily lead to inefficient production. The dead-weight loss and the price asked by the monopolist may compare favourably with the welfare loss due to higher costs and the price level asked under competition. If protecting consumer welfare is the aim, then the only relevant question in such a static analysis is whether the price asked under monopoly is higher or lower than the price asked under competition. If the protection of total welfare is the aim, it would be preferable to have a monopoly not only when it would lead to a lower price, but also if it would lead to a higher price but the resulting production efficiency gains outweigh the dead-weight welfare loss created by the higher price. 1.76  A second possible positive effect of monopoly, which may be relevant in the context of innovation and patents, is that the prospect of monopoly profits may spark more effort on the part of companies to invest in innovation. The trade-offs in this area are considered in more detail in Section D. 1.77  A third possible positive effect has less relevance for competition policy. Some authors argue that the lower output and higher price of monopoly may counterbalance certain negative externalities in production or consumption. Less consumption of

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environmentally unfriendly products and less use of limited natural resources might actually increase welfare.

(p. 25) (5)  Oligopoly (a)  Introduction 1.78  The models of monopoly and perfect competition may be on opposite sides of the market-power scale, but they are remarkably similar in their emphasis on market structure and neglect of company behaviour. The only behavioural assumption that is introduced is that companies are profit maximizers. The C of the S-C-P paradigm can be ignored as the models are quite straightforward; the market structure leads linea recta to a specific market performance. 1.79  This is not the case for oligopoly, the most important intermediate market form on the market-power scale. Oligopoly is the market structure in which there are a few suppliers, at least two, while the maximum number of companies is not clearly determined. The main characteristic is that the companies in such a market realize or believe that their individual behaviour concerning output, price, etc has a perceptible influence on the market outcome and therefore may provoke reactions from the side of competitors. In the fisheries sector, a fisherman rightly ignores the influence of his catch on the market price of fish. In the oligopolistic car market, a large manufacturer cannot and will not ignore the impact its decisions have on the market and on its competitors and vice versa. This means that the C of the S-C-P scheme becomes more important in oligopolistic markets. It also means that competition issues in such markets are rather complicated. Competition policy enforcers faced with such markets are forced to write their books in the evening. 1.80  Oligopolistic markets are difficult to analyse. The outcome of oligopolistic behaviour can vary to such an extent that one of the more popular statements is that ‘with oligopoly, anything goes’. The market price may be as low as under perfect competition or as high as under pure monopoly or anywhere between these two. The economic models of oligopoly reflect well this complexity. The outcome of oligopoly models is often highly specific to the exact assumptions used in the model. It is therefore important to identify and analyse the model specifications that best fit the actual market conditions. But even then the economic models of oligopoly may leave a wide range of possible outcomes. 1.81  This does not mean that competition policy has no function in oligopolistic markets. Experience shows that anti-competitive outcomes can certainly arise in such markets and that many markets are oligopolistic; they should probably therefore be the focus of competition policy. However, given the complexity of these markets and the limited guidance offered by economic models, the ambitions of the competition enforcer should be modest. Oligopoly cases are the clearest example of what was said in the introduction: that competition cases are concerned with identifying the most plausible story or explanation of the market outcome. A good part of this story will consist of analysing the factors that either enhance or decrease the scope for collusion and anti-competitive outcomes, and choosing the model and specifications that best fit the actual market conditions. Empirical verification is in this context of great importance. 1.82  In the limited space of this chapter, no more than a brief introduction to oligopoly theory can be provided.42 The literature on oligopoly is vast and sometimes very technical. For a (p. 26) layman it may be disappointing to see that the various models are often not very helpful for answering concrete policy questions. The models do not answer the questions of which market conditions will lead companies in an oligopolistic market to compete fiercely on all the important parameters (price, quality, and innovation) and of when competition will be replaced, on one or all parameters, by collusive behaviour. There is no super model that includes all possible relevant factors. Most models concentrate on the effects and interaction of a limited number of factors, abstracting away from more

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realistic settings. However, the literature provides useful insights in the main conditions relevant for anti-competitive effects to arise.

(b)  Game Theory 1.83  Most advances in oligopoly theory have been made since World War II by using game theory, especially non-cooperative games.43 Game theory studies situations of strategic interaction using mathematical models. A game theory model specifies the players in a game (eg firms in a market or individuals in an organization), the information they have (or do not have), the actions they can choose, the timing of these actions, and the pay-offs for each player that result from those actions. In such a model, each player is assumed to choose a strategy (a plan of action) that maximizes his pay-offs based on the information available to him and his expectations about rivals’ actions. 1.84  The main idea behind non-cooperative games, as opposed to cooperative games, is that the parties cannot make binding agreements. A non-cooperative game setting seems to be the appropriate framework to apply as competition rules make anti-competitive agreements unenforceable in court. Cartel members may make agreements, but these are not binding. 1.85  In non-cooperative game theory, fully rational oligopolistic behaviour requires an assessment of the potential actions of competitors. That is, the oligopolists take account of the interdependence of strategies. An equilibrium will therefore only exist when the decisions of companies lead to a ‘self-reinforcing set of strategies in which each strategy is a best response to the other strategies’.44 Such an equilibrium is called a Nash equilibrium, that is, ‘a set of actions is in Nash equilibrium if, given the actions of its rivals, a firm cannot increase its own profit by choosing an action other than its equilibrium action’.45 In other words, the game finds a stable outcome once every oligopolist sticks to its chosen strategy, for example concerning the price it sets for its own product, in light of the strategies chosen by the other oligopolists. 1.86  Game theory has been applied extensively to study the strategic behaviour of companies in oligopolistic markets. Game models with multiple stages are, for instance, appropriate to study situations in which a company, usually the incumbent, has a firstmover advantage over other market players. Such analysis has been applied to examine the scope for entry-deterrence strategies, such as creating excess capacity or product proliferation (introducing products in the market to deter entry, not because it is in itself profitable), as well as limit pricing (pricing low to signal that market conditions are not favourable for (p. 27) entry).46 Also vertical restraints have been studied extensively for their impact on competition, by focusing on the strategic value that such restraints may provide.47 For example, economic models have shown that single branding/exclusive dealing contracts may be tools for foreclosing markets, in particular when they render the anti-competitive strategy (foreclosure) more credible and time-consistent.48 Similarly, delegating pricing decisions to exclusive distributors may allow producers credibly to commit to less competitive behaviour towards each other (to ‘soften’ competition), because exclusive distributors have different pricing incentives than distributors facing intra-brand competition.49 1.87  As noted in para 1.80, the outcomes of the models of strategic interaction tend to rely heavily upon the precise modelling assumptions. One of the important assumptions in this respect concerns the way in which companies are thought to compete. Two stylized modes of competition are often considered: Bertrand competition (price competition) and Cournot competition (quantity competition).50

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1.88  Under Cournot competition, it is assumed that each company in the market decides on its profit-maximizing output assuming the others’ output will remain unchanged. In the (Nash) equilibrium, each company chooses a level of output that is optimal (profitmaximizing) in view of what the other market players produce. The equilibrium of this model features a market price below the monopoly level but (well) above marginal cost (the benchmark of perfect competition). 1.89  Competition in output is often identified with situations where output or capacity decisions are the main drivers of the price level in the market. Conceptually, firms choose output or capacity and then, given the level of demand, adjust prices to sell this output. This might apply, for instance, to certain basic commodity industries, where price levels are primarily determined by the overall level of output in the market, but also to a variety of other markets, such as those for package holidays, hotel accommodation, and office space. In markets where output or capacity decisions are the most important strategic decisions of the firms, the important concern for firms is how their output decision influences market prices. 1.90  Under Bertrand competition, it is assumed that each company in the market decides on its price assuming that other prices in the market will remain unchanged. In the corresponding Nash equilibrium, each company chooses a price level that maximizes profit in view of what the other market players charge. The equilibrium of this model features a market price equal (p. 28) to marginal cost in the case of homogeneous products51 and a price that is higher in the case of differentiated products. 1.91  Competition in prices often refers to situations where firms set prices and adjust their production levels according to demand. Competition in markets for consumer products and for capital goods can often be characterized in this way. In many such markets, capacity and output levels are less determinative of the eventual market outcome. Rather, factors such as product differentiation (the products offered differ in the eyes of buyers with respect to one or more important parameters) provide each firm a certain margin of manoeuvre in its price-setting behaviour.52 1.92  This distinction in types of competition is, of course, stylized: there will be many cases where the type of competition cannot be characterized as being one or the other. Even in markets where ‘output drives price’ or where competition is ‘mostly on price’, it is not to be taken for granted that competition is Bertrand or Cournot. Most markets feature business decisions that go well beyond a choice of price or a choice of quantity at a given point in time. For instance, markets in practice may turn largely on innovation (both product and process innovation) or on building consumer loyalty. Nonetheless, it may be useful to consider the generic market types and to distil some key factors to be examined in each of these. It is the purpose of the economic models to clarify what factors are the more relevant in precise market settings. The role of the investigator is to see to what extent any given model is useful in light of the facts of the case.

(c)  The Scope for Collusion Illustrated with the Prisoner’s Dilemma 1.93  Another important area in which game theory has played a role in clarifying the main issues is that of collusion in oligopolistic markets. Collusion and collusive behaviour are used in this chapter as in the economic literature, that is, as any situation in which market players do not compete ‘to the fullest’ but instead charge higher prices than they otherwise would, provided other firms in the market do so as well. It therefore includes not only explicit collusion in the form of agreements or concerted action but also tacit collusion, whereby market players refrain from adopting a more competitive attitude (eg in terms of price setting) as this would trigger a rational reaction or retaliation from its rivals in later periods.53 The latter is what lawyers define as (conscious) parallel behaviour. Collusion in the economic sense is possible without communication between the companies involved. Economists thus define collusion in terms of effects. This stands in contrast to legal From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

definitions of collusion, which are usually limited to agreements and concerted practices, stressing the possibility for competition rules to provide a remedy for the situation. 1.94  Within the non-cooperative game setting, the game that provides most insight into the difficulties and possibilities of collusion is the prisoner’s dilemma game.54 The original example (p. 29) used to explain the game went along the following lines. A murder is committed, and two suspects are arrested. Not having enough evidence, the police need them to confess in order to have a conviction for murder. If one of the prisoners testifies against the other, the first goes free if the other has not testified against him, and the second goes to jail for ten years. If neither testifies, both get a sentence of one year only for illegal possession of firearms. Lastly, if both testify, both go to prison for seven years. 1.95  The structure of the game is presented in the diagram in Figure 1.10, commonly referred to as the ‘pay-off matrix’. In this case, the pay-off matrix illustrates all the possible outcomes or pay-offs for the two suspects (the first number in each cell of the matrix provides A’s jail sentence in years, the second B’s sentence). View full-sized figure

Figure 1.10  The prisoner’s dilemma game 1.96  It is clear upon close examination that the rational strategy for both suspects in this case is to testify. If B does not testify, it is better for A to testify. If B testifies, it is also better for A to testify. The same applies for the choice faced by B: testifying is optimal for B regardless of what A does. In the jargon of game theory, to testify is the dominant strategy. The result is that both suspects go to jail for seven years as they end up testifying against each other. The problem is one of commitment: the collectively optimal outcome for the two suspects (each serving only the light sentence) is not attained because the suspects cannot make a binding agreement not to testify. 1.97  This analysis can easily be extended to the study of oligopolistic behaviour of companies. Although oligopolists are normally not confined to choosing between two prices, two quantities, etc, it can be assumed that the basic choice is between competing and colluding. Instead of the decisions being ‘not testify’ and ‘testify’ they could be labelled ‘cooperate’ or ‘defect’ in relation to collusive behaviour in the market. The pay-off matrix would then have the structure represented in Figure 1.11. The first figure provides company A’s profit, the second company B’s profit. 1.98  In the situation of Figure 1.11, the dominant strategy for both companies is to defect, in other words to compete. When the other company in the market will restrict output and thereby ensure a high market price, it is advantageous not to restrict output. Similarly, when the other company will not restrict output it is also against one’s own interest to restrict output. As a result, the two companies will not cooperate and will forgo the collective optimal outcome and end up with the equilibrium with the lower collective profit. The latter is the Nash equilibrium of the prisoner’s dilemma game.(p. 30)

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View full-sized figure

Figure 1.11  The prisoner’s dilemma applied to a duopoly 1.99  If all oligopolistic markets followed the simple rules of the prisoner’s dilemma game, there would not be many competition problems. Even duopolists would compete with each other down to the competitive price level. The prisoner’s dilemma shows the basic instability present in many situations of collusion. The collusive outcome creates the possibility to free ride or cheat on the cooperative behaviour of the others, as witnessed in practice by the breaking down and erosion of many cartel agreements. 1.100  However, competition policy practice and simulation experiments show that a collusive outcome is attainable. In practice, to cooperate does seem to be the dominant or chosen strategy in a not insignificant number of cases. This is explained by a number of factors. 1.101  The first factor that makes a collusive outcome more likely is that oligopolists usually do meet each other many times in the marketplace; the game is not played once but more than once. Intuitively this means that although the prisoner’s dilemma pay-off structure may indicate that it is rational to compete if one only looks at one round, such competitive behaviour may spoil future profits that could possibly be attained by collusion. Past behaviour and possible future profits become important when formulating a strategy. 1.102  In game theory one usually distinguishes in this context between games that are infinite versus games that are played a finite number of times. In a prisoner’s dilemma setting that is played an infinite number of rounds, the players might come to a collusive outcome.55 Whether a collusive outcome results depends on the balance for each player of the gains from competing in the first period against the loss of a part of the collusive (monopoly) profit for every period or at least a number of periods thereafter. The incentive to compete will be weighed by each player against the possible punishment the other players may inflict on him in the future if he does not cooperate. Such punishment will in turn depend on the possibilities and rationality of punishing possible competitors. The punishment may consist in returning to the competitive outcome on the market because all firms expand their output. The players may also try to reduce the attractiveness of competing for all players by limiting the scope for possible undetected competition and/or increasing the possibilities of punishment.56 The exchange of sensitive market information may be used by the players to help to detect competition. 1.103  Also when the game is played a limited and not an infinite number of times, a collusive outcome may result in a non-cooperative setting with a prisoner’s dilemma pay-off matrix. (p. 31) Theoretically collusion becomes, however, more difficult. This is explained by backward induction. In a one-period prisoner’s dilemma-type game the best strategy for each player is, as explained before, not to cooperate. This means that in a multi-period game it is rational for both players not to cooperate in the last period. Given the certainty that both will not cooperate in the last period, it is also not rational to cooperate in the penultimate period, as there can be no reward in terms of cooperation in the last period, etc. Thus collusion will not be achieved in any period.

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1.104  However, as soon as the players do not have full information but instead have imperfect information and have to make up their minds about their best strategy under uncertainty—the common situation in real markets—collusion again becomes a possible outcome. Players may not know the number of times the game will be played, may have to guess about the costs and possibilities of the others to punish, may assign probabilities to the possible strategies of the others, etc. This may make it rational to cooperate, at least until someone starts to compete. 1.105  Different strategies can be imagined in repeated games. A most successful strategy in simulation that is also very simple is the so-called tit-for-tat strategy: cooperate on the first round and thereafter do whatever the other player did in the previous round. It has the advantage of starting with a cooperative strategy in the first round to try to reap the gains of collusion. In addition, it provides a quick reaction by hitting back when competitive behaviour is detected. After such punishment, it offers the other the possibility to restore the collusive equilibrium. 1.106  A second factor that makes a collusive outcome more likely is that companies, also in a setting of a non-cooperative game like the prisoner’s dilemma, may behave more as if they are in a cooperative game setting. Companies in general do not behave as nakedly rational as non-cooperative game theory usually assumes. Social constraints, moral codes of conduct, etc do influence behaviour. Business ethics may ‘command’ that oral non-binding agreements are kept; ‘a man a man, a word a word’.57 1.107  This also means that communication on future prices and output, sometimes described as ‘cheap talk’ as it does not involve binding commitments and does not change the pay-off matrix, may not be all ‘cheap talk’. To discuss and hammer out agreements detailing how much each will produce and what price will be charged may be quite vital as companies may become rather nervous about their cooperative attitude when there is not enough communication. Communication may be essential to ‘prevent’ companies from starting to behave as rationally as the underlying non-cooperative game assumes.58 (p. 32) 1.108  From experiments with the prisoner’s dilemma it is known that the narrow ‘self-regarding’ perspective is in general not realistic. The experiments of Flood and Dresher59 in the early 1950s already show this. In a 100-round prisoner’s dilemma experiment they find that even highly qualified players let their choice, while non-collusion is the dominant strategy in view of backward induction, be influenced by emotional considerations and feelings of revenge and that the players act in a surprisingly cooperative manner; in 60 rounds both cooperated while only in 14 rounds both defected.60

(d)  Some Results 1.109  Real oligopoly situations are more complicated than the stylized games described in the previous sub-section. In an oligopoly there are usually more than two players, and each company has the choice not simply between competing or colluding but has to decide on a number of parameters that are important for competition; not just price or output, but also promotional activity, product differentiation, product and process innovation. On each of these parameters, there are not just two options and two pay-offs but usually a range of options and pay-offs. It is therefore not surprising that there is no super oligopoly model that by incorporating all the parameters and strategies provides clear-cut solutions to the oligopoly game. However, game theory helps to understand the inherent tension between competition and collusion within oligopolistic markets. 1.110  Game theory has helped to identify a number of factors which influence the scope for collusion between market players. One way or the other, they all have a bearing on the ease with which firms can establish the terms of coordination (eg to arrive at a ‘focal price’) and on the trade-off, outlined in para 1.102, that each player faces between the gains from

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competing in the short run against the loss of collusive profits for the subsequent period(s). Some of the more important factors are the following.61 •  The number of sellers: the fewer the sellers, the easier it is to agree on the terms of collusion and to monitor adherence. Furthermore, the greater the number of sellers, the greater is the incentive to deviate given that each company has more market share to gain while its lower price will have less effect on the revenues from the output it already sells. •  Market transparency: the more transparent the market is in terms of, for instance, the availability of pricing data or market share data, the easier it becomes for the colluding firms to detect competitive behaviour. •  Product differentiation: the main reason why product differentiation makes tacit collusion more difficult is that it may exacerbate monitoring problems (eg as regards price setting by competitors). When product differentiation is also related to quality differences, companies producing high-quality products may have a greater incentive to deviate than low-quality firms: they may have more to gain from deviating and less to fear from retaliation by others. •  Cost asymmetries: the higher the disparities in terms of cost structure, the less likely it is that tacit collusion will result in a market. First, companies may find it difficult to agree on a ‘common price’: low-cost companies typically prefer a lower collusive level than high-cost (p. 33) companies. Secondly, low-cost companies are more difficult to discipline. This reasoning also underlies the idea that ‘maverick’ firms make collusion more difficult. •  Symmetry of market shares: lack of symmetry in market shares is not by itself an indication that collusion is difficult to achieve in a market. However, when market shares are asymmetric in a given industry, this may be the result of different cost levels and/or differences in product characteristics. These more profound differences are factors that may affect the scope for collusion (see the previous two factors). •  Frequency of interaction: companies will find it easier to sustain coordination when they interact more frequently. This is because companies can react more quickly to a deviation by any of the other firms. Bidding markets featuring large and infrequent contracts are therefore less prone to collusion. •  Entry barriers: tacit collusion is more difficult to sustain when entry barriers are low. In deciding whether to adhere to the terms of coordination, companies make a trade-off between the short-term gains of deviating and the loss in future profits associated with collusion. The prospect of future entry tends to reduce the scope for future collusion, making the latter aspect less relevant in the trade-off. •  Excess capacity: the impact of capacity constraints (or the absence thereof) on the scope for tacit collusion is not so clear-cut. When companies are capacity constrained, they lack both the incentive to deviate (there is little scope for increasing market share), and the ability to react against another company that deviates from the collusion. •  Demand growth: in principle, demand growth increases the value of future gains from collusion and thereby the incentive to adhere to the terms of coordination. However, given that demand growth increases the prospect of future entry, it may also reduce the incentive to collude.

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•  Innovation: innovation makes collusion more difficult. The prospect of innovation reduces both the (expected) value of future coordination and the degree to which other firms can retaliate against a company deviating from the collusion. •  The presence of a ‘ringmaster’: 62 the existence of a dominant firm acting as a price leader and as a swing producer, should changes in demand conditions require it, can be materially important in maintaining price discipline. Rival companies in such a market may choose not to contest the leadership position of the dominant firm, but instead prefer to live under the shelter of the price level maintained by that firm. 1.111  Game theory also puts into clearer perspective the role played by so-called facilitating devices. A number of such practices that facilitate cooperation are described in the literature. Rees, for example, mentions the following facilitating devices: information exchange, trade associations, price leadership, collaborative research and cross-licensing of patents, (p. 34) most-favoured-customer (MFC) and meeting-competition (MC) clauses in sales contracts, resale price maintenance, basing point pricing, common costing books.63 What all these devices have in common is the exchange of information as central element. This is obvious for the direct exchange of information between competitors or the exchange through an intermediary such as a trade organization (collection and dissemination of data, forecasting studies, common costing books, etc). But it is also the case when the exchange runs via the customers (price leadership, MFC and MC clauses, resale price maintenance, basing point pricing). These devices may all be used to limit the influence of factors that destabilize cooperative outcomes or strengthen the factors that support cooperative outcomes. This is done by limiting the gains of competing, by monitoring each other’s behaviour thus making detection of competing easier, by better targeting the infliction of punishment, or by making it easier for firms to reach a view on the appropriate collusive strategy by reducing the effects of factors such as product heterogeneity, uncertainty about future cost, demand, or capacity, and technological change. 1.112  In terms of the prisoner’s dilemma, such facilitating practices may reduce the gains of defecting/competing. They reduce the pay-off/profits that can be obtained from competing while the others act in a collusive manner. In the extreme case, the pay-off matrix may change so much that it is no longer a prisoner’s dilemma type of game. Such a matrix is unlikely under most market conditions, but the oligopolists may take steps to worsen their possible gain from competing, to make the pay-off structure change from a prisoner’s dilemma to a setting where restricting output is the dominant strategy. An example of this extreme case is given by the pay-off matrix represented in Figure 1.12. View full-sized figure

Figure 1.12  A non-cooperative game with cooperation as the dominant strategy 1.113  In such a case, by reducing its price each player loses more in profits on its current sales than it could gain in profits from newly attracted sales. To restrict output has become the dominant strategy for both players and the high price outcome ensues without collusion. Competing is no longer an attractive option. For instance, the adoption by the oligopolists of an MFC plan, guaranteeing to pay customers retroactively any possible discount the company will give within, for example, the next year. Such a plan may significantly undermine an oligopolist’s gain from competing, as the lower price offered to From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

lure new customers away from its competitors will have to be awarded to all its customers during the previous year. If applied simultaneously by all, it will reduce each firm’s gain from competing. However, to start colluding and to implement such facilitating practices that worsen the possible gain from competing, will itself require overcoming a prisoner’s dilemma. (p. 35) 1.114  Although an accurate, predictive, and encompassing oligopoly model does not yet exist, what can one conclude as to the scope for collusion? The factor that is often taken as a starting point for competition policy analysis is the number of firms and their market shares and the resulting market concentration. 1.115  With a limited number of firms in the market, prices and profits may be significantly higher than they would be in a market with many firms. The economic literature does not provide a specific number of firms below which, or a particular level of market concentration above which, supra-normal prices and profits will be likely to arise.64 As explained, the likelihood of such effects lowers as the number of firms increases. Both the likelihood and size of the possible effects can be expected to become rather small above a certain number of firms, possibly when there are more than ten or 12 main firms in the market.65 1.116  In the EU Merger Guidelines, the Commission creates safe harbours by formulating negative presumptions using the Herfindahl-Hirschman Index (HHI).66 It is stated that the Commission is unlikely to identify horizontal competition concerns in a market with a postmerger HHI below 1, 000—that is, in a market with at least ten competitors. In a market with a post-merger HHI between 1, 000 and 2, 000, where there will thus be at least five competitors, the Commission is unlikely to identify horizontal competition concerns if the HHI increase resulting from the merger remains below 250 and in a market with a postmerger HHI above 2, 000 where the HHI increase resulting from the merger remains below 150. Above these thresholds, there is no negative or positive presumption of competition concerns. Other factors that may make collusion easier, more stable, or more effective, such as the possibility to monitor, deter, and raise entry barriers, will have to be evaluated. EU competition policy practice has been rather cautious and has challenged mergers on the basis of concerns of coordinated effects mainly in cases where there are two or three main companies in the market.67 (p. 36) 1.117  In the context of antitrust enforcement under Articles 101 and 102, competition authorities may want to concentrate on the detection of explicit collusion and in addition on the detection and analysis of facilitating practices. Investigation of facilitating devices offers the possibility to scrutinize conscious parallelism as closely as possible and take remedial action by, if necessary, disallowing the facilitating device. In terms of US antitrust practice, this means defining the ‘plus’ in ‘conscious parallelism plus something else’ that together restrict competition. 1.118  The Commission cartel decisions corroborate this analysis, as evidenced by an analysis of all cartel prohibitions adopted by the Commission under Article 101 in the period 2001–11. Although it is not always easy to establish the number of competitors in the relevant market(s) in Commission cartel decisions as it is not always considered necessary carefully to define the market(s) in cases of clear-cut price-fixing and market-sharing cartels, the number of cartelists seems in general to have been below 12 and in most cases the cartel consisted of between three and eight members while covering all or most of the market.68 Exceptions to this rule are mainly found in decisions involving trade associations,69 liner conferences,70 or previously regulated industries such as the steel

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industry,71 where for different reasons effective cartels were able to operate with a higher number of main players. 1.119  The (limited) number of firms in the market also plays a role where exchange of information is used as a facilitating device for parallel behaviour, as recently described in the Guidelines on horizontal cooperation agreements and as previously found in the Fatty Acids case and in the UK Tractors case, two cases where exchange of information was the sole competition (p. 37) infringement.72 In these cases also other important elements of a game-theoretical analysis can be found. In Fatty Acids, the description of the parties’ motivation contains many elements of a non-cooperative game with a prisoner’s dilemma; companies are afraid of being misunderstood by their competitors, afraid of provoking price-cutting which again would make retaliation necessary, when business is stolen recouping it elsewhere would be detrimental to the current equilibrium, output needs to be controlled and monitoring of respective market positions is essential to allow ‘orderly marketing’. In the UK Tractors decision, the Commission emphasized the context of a concentrated market, the creation of market transparency which is likely to destroy what hidden competition there remains in that market, the elimination of uncertainty about competitors’ actions, the shortened reaction lag to price competition which greatly reduces the advantage of a company that tries to undercut, the situation that targeted punishment is made possible, and the possible effect that a reduction of intra-brand competition may have on inter-brand competition, which all fit very well in a game-theoretical explanation.

Footnotes: 13

  Obviously, any company can raise the price at which it sells if it disregards the effect that would have on its sales and profits. What is meant by the ability to raise price above the competitive level is the ability to do so profitably. 14

  The terminology used comes back and is explained in later parts in this section.

15

  In practice, however, the assessment of market power is rarely carried out by measuring profit margins. Instead, whether a particular firm has market power is generally addressed by investigating the factors that, in general, tend to determine these profit margins, in particular: (a) constraints imposed by the existing supplies from, and the position on the market of, actual competitors; (b) constraints imposed by the credible threat of future expansion by actual competitors or entry by potential competitors; and (c) constraints imposed by the bargaining strength of the firm’s customers (see Section F.1). 16

  The net present value of a stream of profits is given by: where n is the number of periods a monopoly profit is made, πi is the profit in period i, r is the discount rate, and ∑ the summation sign for the different periods. As discount rate, usually the competitive rate of return on capital or the rate at which the company can lend money is taken, since this measures the opportunity cost of using the company’s own funds. 17

  See Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ 2009 C45/7, para 11. 18

  T. Scitovsky, Welfare and Competition (London: Unwin University Books, 1952). For the term efficiency, see also n 4. 19

  For an explanation of these terms, see paras 1.35 and 1.63–1.64.

20

  For a more detailed exposition, see eg H. Varian, Microeconomic Analysis (3rd edn, London: W. W. Norton, 1992).

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21

  Variable costs as defined here are the same as avoidable costs; the costs that can be avoided by not producing the additional unit/that particular range of output. 22

  It is assumed that the price of the production factor, in this example the wage rate, is constant and not influenced by the quantity demanded by the company. 23

  It is not relevant to see what happens if more and more employees are added to the fixed capital, making the average costs rise further and further and eventually leading to a decline in output. Nor is it interesting to see what happens when the company produces far below its optimal scale. 24

  Whether a company with market power actually will deviate from the goal of profit maximization will depend on the incentives of management, the control of ownership over management, and in general the restraining influence of the capital markets. See also n 9. 25

  If there is no price discrimination.

26

  The short-run costs are the real costs of a company, used eg when it has to calculate its profit or loss. The long-run costs in Figure 1.6 indicate the possibility frontier where the state of technology is assumed to be constant (static perspective); see Sections C.1 and D.1. 27

  In the latter case, a distinction is made between real economies, based on actual cost savings on the side of the input producer/bank, and pecuniary economies that (merely) reflect a benefit at the expense of the input producer/bank resulting from a different balance of power. 28

  K. Junius, ‘Economies of Scale: A Survey of the Empirical Literature’, Kiel Working Paper No 813, Kiel Institute of World Economics (1997). See also European Commission, The Single Market Review, Subseries V, Vol 4: Economies of Scale (1997); and J. Stennek and F. Verboven, ‘Merger Control and Enterprise Competitiveness: Empirical Analysis and Policy Recommendations’ in European Economy, Reports and Studies No 5/2001, European Commission (2001). 29

  B. Lyons, ‘A New Measure of Minimum Efficient Plant Size in the UK Manufacturing Industry’ (1980) 47 Economica 19. 30

  C. Pratten, ‘A Survey of the Economies of Scale’, Economic Papers of the European Commission No 67 (1988); I. Gill and C. Goh, ‘Scale Economies and Cities’, World Bank Research Observer, Vol 25, No 2, 2010, 235–62. Gill and Goh mainly refer to older studies, reflecting that over the past years there has been little attention paid to the estimation of economies of scale. 31

  The literature also distinguishes (static and dynamic) external economies of scale (see Junius, ‘Economies of Scale’ (n 28)). These refer to positive external effects resulting from firms being situated near each other. These economies play an important role in regional economics and trade theory. They are, however, less relevant from a competition policy perspective. 32

  See J. Bain, Barriers to New Competition (Cambridge, MA: Harvard University Press, 1965), 3. 33

  G. J. Stigler, ‘Barriers to Entry, Economies of Scale and Firm Size’ in R. D. Irwin, The Organization of Industry (Chicago: Homewood, 1968). For a review of the various definitions of entry barrier, see R. P. McAfee, H. M. Mialon, and M. A. Williams, ‘What is a Barrier to Entry?’ (2004) 94(2) Am Econ Rev 461; and D. W. Carlton, ‘Barriers to Entry’ in W. D. Collins (ed), Issues in Competition Law and Policy (Chicago: ABA Section of Antitrust Law, 2008).

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34

  Where the entrant considers entry at large scale, it will seriously have to estimate the influence of its additional output on the market price. If it expects the price to drop to competitive levels entry may not be attractive. 35

  This commitment element also applies to the entrant after market entry. The difference is that the incumbent is already in the market whereas the entrant still has to decide whether to enter. 36

  W. J. Baumol, J. C. Panzar, and R. D. Willig, Contestable Markets and the Theory of Industry Structure (New York: Harcourt Brace Jovanovich, 1982). 37

  See also n 4.

38

  This is not to say that competition policy is only concerned with static monopoly or market power. The dynamic point of view is also important. See esp Sections D and F. 39

  See also para 1.39.

40

  See Bork, The Antitrust Paradox (n 4), ch 5. Bork and other scholars associated with the Chicago School held that the aim of antitrust policy should be to advance total welfare (the sum of consumer surplus and producer surplus), arguing that also s hareholders are, in the end, consumers. Accordingly, the fact that monopoly prices entail a transfer from consumers to shareholders should not be a cause for illegality under the antitrust laws, only the fact that monopoly prices give rise to a dead-weight loss (reduction in output). 41

  In the case where not even a monopolist has sufficient scale to produce at MES level, this has consequences for productive and allocative efficiency. Productive inefficiency will persist until demand grows and allows attainment of MES size. Similarly, as long as ATC is falling over the relevant output range, pricing at marginal cost, ie allocative efficiency, would result in a price below ATC and would thus result in overall losses, which would need to be recovered with the help of, eg, general taxation or two-part tariffs (composed of a fixed fee for the right to use or consume and a (low) marginal tariff based on actual usage or consumption). 42

  For more extensive introductions, see eg Scherer and Ross, Industrial Market Structure and Economic Performance (n 1) or Church and Ware, Industrial Organization (n 1); or, more technical, Tirole, The Theory of Industrial Organization (n 1). 43

  Game theory as a formal theoretical analysis started with the book by the mathematician John von Neumann and the economist Oskar Morgenstern, Theory of Games and Economic Behaviour (Princeton: Princeton University Press, 1944). 44

  D. Yao and S. DeSanti, ‘Game Theory and the Legal Analysis of Tacit Collusion’ (1993) The Antitrust Bulletin, 113–41. 45

  Tirole, The Theory of Industrial Organization (n 1), 206.

46

  For an overview and discussion of such strategies, see Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), ch 10; and Tirole, The Theory of Industrial Organization (n 1), ch 8. 47

  For an overview, see eg M. Waterson, ‘Vertical Integration and Vertical Restraints’ in T. Jenkinson (ed), Readings in Microeconomics (Oxford: Oxford University Press, 1996); P. Rey and T. Vergé, ‘Economics of Vertical Restraints’ in P. Buccirossi (ed), Handbook of Antitrust Economics (Cambridge, MA: MIT Press, 2008), 353–91; or V. Verouden, ‘Vertical Agreements: Motivation and Impact’ in Collins, Issues in Competition Law and Policy (n 33). 48

  cf P. Aghion and P. Bolton, ‘Contracts as a Barrier to Entry’ (1987) 77 J Econ Theory 388.

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49

  cf P. Rey and J. Stiglitz, ‘The Role of Exclusive Territories in Producers’ Competition’ (1995) 26 RAND J Econ 431. Exclusive distribution provides retailers with a certain measure of market power and leads to higher retail margins, but at the same time sales volumes will react less strongly if the producers raise their wholesale prices as an increase in wholesale prices will be (partly) absorbed by the retailers’ margin. This may make producers inclined to use exclusive distribution and carry through price increases, amounting to a ‘softening of competition’. 50

  The two modes of competition are identified with the nineteenth-century economists Bertrand and Cournot, respectively. 51

  If there are cost differences between the companies, the price will be equal to the marginal cost of the second-most efficient firm. 52

  Products may be differentiated in terms of, eg, technical specifications, quality, brand image, level of service, or geographic location. The presence of switching costs can also induce buyers to consider products to be differentiated, since they would have to incur costs in order to switch to a competitor’s product. 53

  cf Tirole, The Theory of Industrial Organization (n 1), 207.

54

  Games with this structure were devised and discussed by Merrill Flood and Melvin Dresher in 1950 as part of their work for the Rand Corporation. The title ‘prisoner’s dilemma’ and the version with prison sentences as pay-offs are due to Albert Tucker (Stanford Encyclopedia of Philosophy at ). Much of the theory of tacit coordination derives from the work of G. Stigler, ‘A Theory of Oligopoly’ (1964) 72(4) J Pol Econ 44–61. The economic literature on tacit coordination is relevant to all forms of coordination not based on legally enforceable contracts. 55

  Such an infinitely repeated single-period game is called a supergame.

56

  The punishment strategy that is chosen by the players influences the pay-off that results after the competing behaviour has been detected. As the question of the best punishment strategy seems still unresolved, this is not discussed further here. 57

  See also paras 1.19–1.20. This does not necessarily mean that players act irrationally, it may mean that their perspective becomes less ‘self-regarding’ and more ‘other regarding’. One could be ‘other regarding’ and have as a moral principle that one does not want to be the first to cheat. When applied rationally, this leads to collusion. See eg E. Fehr and K. M. Schmidt, ‘A Theory of Fairness, Competition, and Cooperation’ (1999) 114(3) Quarterly J Econ 817. Also, sometimes certain deliberations do not enter the firm’s pay-off matrix but may nonetheless influence the firm’s strategy; from a manager’s point of view it may be very rational to avoid being the one who ‘ruins’ the market if that would isolate him on the green on Saturday. See, for further details, H. Pellikaan, Anarchie, Staat en het Prisoner’s Dilemma (Delft: Eburon, 1996), ch 8. 58

  Interestingly, it appears that face-to-face meetings help collusion more than communication via email, see Armstrong and Huck, ‘Behavioral Economics as Applied to Firms’ (n 9), 11. 59

  See n 54.

60

  See W. Poundstone, Prisoner’s Dilemma (New York: Doubleday, 1992), 106–16.

61

  The list of factors is based on M. Ivaldi, B. Jullien, P. Rey, P. Seabright, and J. Tirole, ‘The Economics of Tacit Collusion’, Report to DG Competition (available at ), with the exception of the item ‘ringmaster’. 62

  The term ‘ringmaster’ was originally employed by T. Krattenmaker and S. Salop in a vertical restraints context (‘Anticompetitive Exclusion: Raising Rivals’ Costs to Achieve Power over Price’ (1986) 96(2) Yale LJ 211). However, the intuition can also be extended to a scenario of an asymmetric Stigler-type detection/punishment oligopoly (see Stigler, ‘A Theory of Oligopoly’ (n 54)), in which a dominant firm acts as the leader and enforcer of coordinated interaction (cf S. Salop, Assessment of Dominance: Unilateral and Co-ordinated Effects, speech delivered at the IBA Conference, Brussels, 8 November 2002). See also J. Harrington, ‘How Do Cartels Operate?’ (2006) 2(1) Foundations and Trends in Microeconomics 63: In the carbonless paper cartel, cartel member AWA had a market share in Europe of 30–35% and was the largest producer with capacity exceeding twice that of any other firm. It used its dominant position in the market to threaten aggressive pricing if firms did not comply with the collusive agreement. 63

  R. Rees, ‘Tacit Collusion’ (1993) Oxford Rev Econ Pol 27, 35–7.

64

  A specific number is mentioned by Selten in an article of 1973 and Phlips in later work which builds upon the ideas of Selten. See: R. Selten, ‘A Simple Model of Imperfect Competition Where Four are Few and Six are Many’ (1973) 2 Int’l J Game Theory 141; L. Phlips, Competition Policy: A Game-Theoretic Perspective (Cambridge: Cambridge University Press, 1995); and L. Phlips, ‘On the Detection of Collusion and Predation’ (1996) 40 Eur Econ Rev 495. Their conclusion is that ‘4 are few and 6 are many’, ie when there are four firms or less in a market the likelihood of collusion will be one, whereas this likelihood drops to close to nil when the number of firms becomes six or more. However, their conclusion is only valid with the restrictive assumptions underlying their model. Selten’s model, which is also the basis of Phlips’s work, excludes the possibility of cheating. Each company decides beforehand whether it will cooperate. Once it has decided to cooperate, it sticks to its promise. This therefore resembles the situation of a cooperative game with enforceable agreements. The model shows that such binding agreements will be formed with a likelihood of one as long as the number of firms does not exceed four. 65

  Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), 277 state: ‘As a very crude general rule, if evenly matched firms supply homogeneous products in a well-defined market, they are likely to begin ignoring their influence on price when their number exceeds ten or twelve.’ This number of ten or 12 companies does not necessarily include fringe companies and companies supplying niche markets, which can also be active on the market while not exerting important competitive pressure. 66

  The HHI is a measure of concentration defined as the sum of the squared market shares of all the firms in the market. Eg a market containing five firms with market shares of 40, 20, 15, 15, and 10 per cent, respectively, has an HHI of 2, 550 (40² + 20² + 15² + 15² + 10² = 2, 550). The HHI ranges from close to zero (in an atomistic market) to 10, 000 (in the case of a pure monopoly). 67

  See eg the following merger cases: Case IV/M190 Nestlé/Perrier, OJ 1992 L356/1; Case IV/M308 Kali & Salz, OJ 1994 L186/38 and OJ 1998 C275/3; Case IV/M619 Gencor/Lonhro, OJ 1997 L11/30; Case COMP/M3099 Areva/Urenco/ETCJV, OJ 2006 L61/11; Case COMP/M. 3333 Sony/BMG (I), OJ 2005 L062/30; Case COMP/M.3333 Sony/BMG (II), OJ 2008 C94/9; Case COMP/M.4980 ABF/GBI Business, OJ 2009 C145/09.

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68

  See the following cases: SAS/Maersk Air, OJ 2001 L265/15; Graphite Electrodes, OJ 2002 L100/1; Sodium Gluconate, not yet reported; Vitamins, OJ 2003 L6/1; Citric Acid, OJ 2002 L239/18; Belgium Breweries, OJ 2003 L200/1; Luxembourg Breweries, OJ 2002 L253/21; Zinc Phosphate, OJ 2003 L153/1; German Banks, OJ 2003 L15/1; Carbonless Paper, OJ 2004 L115/88; Specialty Graphite, not yet reported; Plasterboard, OJ 2005 L166/8; Methylglucamine, OJ 2004 38/18; Fine Art Auction Houses, OJ 2005 L200/92; Methionine, OJ 2003 L255/1; Austrian Banks—‘Lombard Club’, OJ 2004 L56/1; Industrial and Medical Gases, OJ 2003 L84/1; Food Flavour Enhancers, OJ 2004 L75/1; Sorbates, OJ 2005 L182/20; Electrical and Mechanical Carbon and Graphite Products, OJ 2004 L125/45; Organic Peroxides, OJ 2005 L110/44; Industrial Copper Tubes, OJ 2004 L125/50; Copper Plumbing Tubes, OJ 2006 L192/21; French Beer, OJ 2005 L184/57; Raw Tobacco in Spain (The Tobacco Processors), OJ 2007 L102/14; Hard Haberdashery/Needles, OJ 2009 C147/23; Choline Chloride, OJ 2005 L190/22; Monochloroacetic Acid, OJ 2006 L353/12; Thread, OJ 2008 C21/10; Italian raw tobacco, OJ 2006 L353/45; Rubber chemicals, OJ 2006 L353/50; Hydrogen peroxide, OJ 2006 L353/54; Methacrylates, OJ 2006 L322/20; Bitumen Nederland, OJ 2007 L196/40; Fittings, OJ 2007 L283/63; Synthetic rubber, OJ 2008 C7/11; Gas insulated switch gear, OJ 2008 C5/7; Elevators and escalators, OJ 2008 C75/19; Netherlands beer market, OJ 2008 C122/1; Hard haberdashery: fasteners, OJ 2009 C47/8; Bitumen Spain, OJ 2009 C321/15; Professional videotapes, OJ 2008 C57/10; Flat glass, OJ 2008 C127/9; Chloroprene rubber, OJ 2008 C251/11; Synthetic rubber, OJ 2009 C86/7; International removal services, OJ 2009 C188/16; Sodium Chlorate, OJ 2009 C137/6; Aluminium Fluoride, OJ 2011 C40/22; Candle waxes, OJ 2009 C295/17; Bananas, OJ 2009 C189/12; Car glass, OJ 2009 C173/13; Marine hoses, OJ 2009 C168/6; E.ON-GDF collusion, OJ 2009 C248/5; Calcium carbide, OJ 2009 C301/18; Power transformers, OJ 2009 C296/21; Heat stabilisers, OJ 2010 C307/9; DRAMs, OJ 2011 C180/15; Carbonless paper, OJ 2011 C138/21; Animal feed phosphates, OJ 2011 C111/15 and 19; LCD, OJ 2011 C295/8; Consumer detergents, OJ 2011 C193/14; Exotic fruit, not yet reported; CRT glass bulbs, not yet reported; Refrigeration compressors, not yet reported. 69

  See the following cases: SPO, OJ 1992 L92; CNSD, OJ 1993 L203/27; SCK/FNK, OJ 1995 L312/79; COAPI, OJ 1995 L122/37; FENEX, OJ 1996 L181/28; FEG and TU, OJ 2003 L39/1; Concrete Reinforcing Bars, OJ 2006 L353/1; French Beef, OJ 2003 L209/12; Raw Tobacco in Spain (The Associations of Tobacco Growers), OJ 2007 L102/14; Industrial bags, OJ 2007 L282/41; Bathroom fittings and fixtures, OJ 2011 C348/12; Airfreight, not yet reported. 70

  See the following cases: TAA, OJ 1994 L376; Far Eastern Freight Conference, OJ 1994 L378/17; TACA, OJ 1999 L95/1; FETTCSA, OJ 2000 L268/1. 71

  See the following cases: Welded Steel Mesh, OJ 1989 L260/1; Steel Beams, OJ 1994 L116/1; Wirtschaftsvereinigung Stahl, OJ 1998 L1/10; Prestressing steel, OJ 2011 C339/7. 72

  Commission Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C11/1, para 79; Fatty Acids, OJ 1987 L3/17; UK Tractors, OJ 1992 L68/19.

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Part I General Principles, 1 The Economics of Competition, D Dynamic Welfare Analysis of Market Power Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Market power — Economic or commercial activity — Microeconomics — Dynamic welfare analysis

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D. Dynamic Welfare Analysis of Market Power73 (1)  Innovation and Welfare 1.120  The static welfare analysis described in Section C does not take dynamic aspects of competition, most notably innovation, into account. Technological developments are abstracted away, by assuming the level of technology as constant. This, of course, is at best reflective of reality in the short term and certainly not in the longer term. In the real world, product markets develop and change over time because of innovation; improved or new products and production processes are introduced. New or improved products will in general lead to greater consumer satisfaction and improved or new production processes will lead to lower production costs. In other words, these dynamic efficiencies lead to welfare gains. A proper welfare analysis of market power should thus not only take the static but also the dynamic negative effects and efficiencies into account and if the rate of innovation is affected by the market structure or the level of competition it may be necessary to assess any trade-off between static and dynamic negative and positive effects. 1.121  There is agreement that competition is the driving force for static allocative efficiency. Competition forces companies in a market with a given technology to offer the best quality products at the lowest prices. However, it is also a generally accepted and wellsubstantiated point of view that innovation is the main source of increases in economic welfare. Starting with Solow, the literature has shown that technological innovation together with an increased ability (skill level) on the part of the labour force are the main driving forces behind productivity gains and welfare growth.74 The most recent literature often speaks of total factor productivity (TFP) as the ‘Solow’ residual. It is the growth factor that remains after changes (p. 38) in the total amount of production factors (eg an increase in the size of the labour force) have been accounted for.75 These studies have continued to show that increased ability of the workforce and innovation are the main drivers of growth.76 This explains why societies in general try to spur the creation and dissemination of innovation. In the case of a choice between dynamic and static efficiencies, the former will quickly outweigh the latter.

(2)  Different Views 1.122  This has led to the question whether innovation instead of price competition should be the focal point of competition policy and, if so, whether this should lead to a drastic revision of competition policy. This question goes to the heart of competition policy and questions its general validity when applied to markets for new and existing products. The assumption is that there may be a contradiction between innovation and (price) competition, or at least that by focusing on the preservation of (price) competition the rate of innovation may be harmed. Underlying this assumption is the view that (high) concentration may have a positive influence on the rate of technological progress. 1.123  There is no clear agreement in the economic literature concerning the benefit of competition for innovation and hence dynamic efficiency. There are economists who, in the footsteps of Schumpeter, claim that innovation is spurred by monopoly.77 Monopoly profits may fund R&D and a high market share may help to appropriate the value of the resulting innovations. They argue that there is therefore a conceptual flaw in competition policy. Competition policy, by attacking monopoly and preventing market power from arising, may have a positive effect on static allocative efficiency but at the same time undermines dynamic efficiency. As the latter is much more important for welfare growth, it is argued that competition policy easily leads to unwanted policy results, that is, less growth and less welfare.

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1.124  The Schumpeterian view has been contradicted by Arrow78 and also by other economists, who have put forward a number of reasons why competition may provide more incentives for innovation than monopoly. A firm under competitive pressure will be less complacent and will have more market share to gain through innovation. In addition, in the case of a product invention the new product will not cannibalize the firm’s own market as it would under monopoly. It is also argued that innovation incentives depend not so much on the post-innovation profits per se, but on the difference between post-innovation and preinnovation profits. The direct effect on welfare is also supposed to be better under competition, especially in the case of a process invention, as the innovation will be applied to a higher output than under monopoly.79 Greater product market competition and a strict competition policy both work as an effective stick to foster innovative effort.80

(p. 39) (3)  Some Empirical Results 1.125  Empirical research on the relationship between market structure and innovation, usually the litmus test in the case of theoretical controversy, does not give unequivocal results but tends to support the view of Arrow. In general, competition and open markets provide the better incentives for innovation while monopoly and high concentration tend to limit and delay innovation.81 There are some indications of an ‘inverted U relationship’ between concentration and the ratio of industry R&D to industry sales, with the highest R&D/sales ratios occurring where the four biggest companies in the industry sell 50–60 per cent of total industry sales.82 It is thus in relatively de-concentrated markets that most is spent on R&D: if in a market the largest four firms collectively have no more than half the market, this means there are thus at least eight but generally more competitors in the market overall, implying that each firm will have only very limited market power. However, it is also clear that other factors such as the technological opportunity of the sector, that is, the ease of achievement of innovations and technological improvements in that sector, are more important than the level of concentration to explain R&D intensity. Nonetheless, using data for the UK and controlling for technological opportunity, Geroski also found higher seller concentration and increases in other monopoly-related variables to have a significant negative impact on the emergence of innovations.83 In a study analysing reports in specialized technical literature covering the entire manufacturing sector, Acs and Andretsch found that the average small-firm innovation rate is higher than the large-firm innovation rate.84 Other research points to the very important role of newcomers, especially where the invention of radically new products and concepts is concerned, and to the related interest in keeping entry barriers at modest levels.85 1.126  Further evidence on the positive relationship between competition and innovation comes from the comparison of the economic performance of countries with open and competitive vis-à-vis restricted market systems.86 Typically, measures of competition intensity at the (p. 40) economy-wide level are positively associated with economic growth. Specifically, product market competition has been found significantly to raise productivity growth rates. Greater product market competition causes not only the productivity level to increase at the firm level, but also reduces the differences in productivity levels between firms within a market by reducing the presence of less productive firms, thereby raising average productivity.87 Competition not only increases productivity by providing more chances for entry and expansion of the more innovative firms at the cost of less productive firms (reallocation or selection effect, also sometimes referred to as the ‘churn’ process in industries), but it also incentivizes incumbent firms to improve their practices and to innovate.88 There is also ample evidence that vigorous domestic competition promotes success in international markets. Comparative case studies in single industries in the US, Japan, and Europe show that import/export and competition (especially global competition with best-practice producers) enhances productivity. At the same time, firms with higher market power tend to be less productive in relative terms and significant increases in

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concentration are generally associated with reductions in efficiency and the level of productivity.89

(4)  The ‘New Economy’ 1.127  In recent years, there has been a more refined debate as to whether the supposed different dynamics of competition in sectors undergoing rapid technological change requires a more or less fundamental revision of competition policy for those sectors.90 For instance, Evans and Schmalensee argue that competition in important new industries centres on investment in intellectual property (IP). Firms engage in competition for the market through sequential winner-takes-all races to produce drastic innovations, rather than through price/output competition in the market and through incremental innovation.91 They argue that firms will obtain considerable short-term market power, but ignoring their dynamic vulnerability may lead to misleading antitrust conclusions. 1.128  For competition policy, it would therefore be important to distinguish between industries where product markets are (continuously) destroyed and replaced through drastic innovations on the one hand and, on the other hand, industries where within product markets (p. 41) innovation develops incrementally. Evans and Schmalensee identified the following industries as having Schumpeterian dimensions: computer software, computer hardware, Internet-based businesses (portals, BtoB exchanges), communications networks, mobile telephony, biotechnology, and, to a lesser extent, pharmaceuticals. 1.129  This is again in the first place an empirical question. Evans and Schmalensee acknowledge that an initial phase with bursts of innovation may only characterize the infant stage of a new industry and may very well be followed by a long period of comparative stability and incremental innovation. They, for instance, refer to the car industry having had Schumpeterian aspects around 1910 and decades of stability afterwards. Other examples are the chemical and electronics industries that were described in the 1950s as ‘neweconomy’.92 It seems most likely that also today’s ‘new economy’ industries will turn into more ‘normal and traditional’ industries if they have not done so in good part already. 1.130  In addition, Evans and Schmalensee recognize that many of the sectors they assess as having Schumpeterian characteristics also have network effects and that these effects tend to reinforce the market leaders’ position. A network effect is created when the consumption of a product by one customer enhances the value of consumption by other customers. The more customers who purchase the product, the higher its value to each of them. The classic example is the telephone. The more people who own a telephone, the more valuable having a phone is to each of them as the network they can call increases. Where such networks have a closed character, due to interoperability problems, network effects can make markets tip and become highly concentrated and can impose significant barriers to entry. Similarly, switching costs and lock-in may prevent displacement of market leaders. 1.131  In line with the general conclusion in the literature, Evans and Schmalensee do not contend that dynamically competitive industries should be immune from careful antitrust scrutiny, nor do they contend that the basic principles of antitrust should be modified.93 Price fixing, foreclosure, market partitioning, etc can and will still harm consumers, also in the ‘new economy’. However, as is the case for every industry, also for the new-economy industries, competition policy needs to take account of industry- or technology-specific characteristics. According to Evans and Schmalensee, in particular market definition and market power analysis have to be modified when applied to highly innovative sectors.

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1.132  In their view, traditional market definition and market share analysis does not acknowledge that in Schumpeterian industries companies are constrained from doing harm to consumers by dynamic competition. An essential element of market-power analysis should be an examination of actual and potential innovative threats, including threats from alternative technologies. Where the market leader’s position may not be based on durable assets such as production capacity but based on the quality of its current products and IP, it may therefore be fragile. They argue that in these industries a market share measures, at best, static market power. Static market power does not provide a useful measure of the real competitive constraints on the leading firms in these industries. They may not be constrained by the (p. 42) behaviour of existing competitors as the latter are often few or absent and scale economies and network effects may form effective barriers to entry for similar products. The real and dynamic constraints may come from firms actually or potentially making significant R&D investments to replace the current products. The question whether these are around and how credible the threat might be, they argue, cannot be measured by market share. Dynamic competition may not be effective when the leading company owns all IP necessary for radical innovation or when it forecloses important distribution channels. It may be, though, that several companies make or can be expected to make significant R&D investments and that experts consider the outcome of the rivalry in doubt, in which case dynamic competition may be effective. In particular in such industries, during this initial phase where markets are continuously destroyed and replaced through drastic innovations, a company’s market share may not reflect well its position on the market and may not serve as a good first indicator of its market power.

(5)  Some Concluding Remarks 1.133  For an analysis of the competition dynamics in a particular industry, it is always necessary to take the characteristics of the industry into account. In principle, however, there seems to be no important conflict between innovation and competition policy aimed at product market competition and no conflict between protecting static and dynamic efficiency. Competition policy, by defending competition and open markets, will in general have a positive impact on both static and dynamic efficiency.94 Companies under competitive pressure will be less complacent and will have more incentive to innovate and gain market share. Product market competition and a strict competition policy generally work as an effective stick to promote innovative effort.

Footnotes: 73

  This section is based on L. Peeperkorn, ‘IP Licenses and Competition Rules: Striking the Right Balance’ (2003) 26 World Competition 527. 74

  R. M. Solow, ‘Technical Change and the Aggregate Production Function’ (1957) Rev Econ and Statistics 312; Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), ch 17; W. K. Tom, ‘Background Note’, Roundtable on Competition Policy and Intellectual Property Rights, Committee on Competition Law and Policy, OECD, October 1997, pp 21–2. 75

  Depending on the definition and data availability, TFP includes or excludes improvements in the quality of the workforce. Where it is excluded, TFP mainly concerns technical and organizational innovation. 76

  B. Van Ark, M. O’Mahony, and M. P. Timmer, ‘The Productivity Gap between Europe and the United States: Trends and Causes’ (2008) 22(1) J Econ Perspectives 25; ‘2012

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Productivity Brief—Key Findings’, The Conference Board, 2012; C. Syverson, ‘What Determines Productivity?’ (2011) J Econ Literature, June, 326. 77

  J. A. Schumpeter, Capitalism, Socialism and Democracy (New York: Harper & Rowe, 1942). 78

  K. J. Arrow, ‘Economic Welfare and the Allocation of Resources for Invention’ [1962] The Rate and Direction of Inventive Activity: Economic and Social Factors 609. 79

  Static welfare analysis indicates that industry output is higher under competition than under monopoly. See Section C. 80

  P. Aghion, N. Bloom, R. Blundell, R. Griffith, and P. Howitt, ‘Competition and Innovation: An Inverted-U Relationship’ (2005) 120 Quarterly J Econ 701; S. Martin, ‘Competition Policy for High Technology Industries’ (2001) J Industry, Comp and Trade 441. 81

  See Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), ch 17; Tom, ‘Background Notes’ (n 74), 22; and ‘Patents, Competition and Innovation’, Background Note by the Secretariat, Competition Committee, OECD, September 2006, pp 27–38. 82

  Aghion et al, Competition and Innovation’ (n 80).

83

  P. Geroski, ‘Innovation, Technological Opportunity, and Market Structure’ [1990] Oxford Economic Papers 42. See also Scherer and Ross, Industrial Market Structure and Economic Performance (n 1), ch 17. 84

  Z. J. Acs and D. B. Andretsch, ‘Innovation, Market Structure and Firm Size’ (1987) LXIX Rev Econ and Statistics 567. 85

  For all this literature it should be noted that research into the relationship between market structure and innovation is complicated by the fact that to a certain extent both are endogenous: both depend on more basic factors such as technological opportunities for innovation and demand conditions. This makes it difficult to identify the relationship between market structure and innovation in isolation. 86

  These findings are based on a large number of studies on the link between competition and productivity which led to the adoption of the Communication from the Commission, A Pro-Active Competition Policy for a Competitive Europe, COM/2004/0293 final/, available at . See also L. Foster, J. Haltiwanger, and C. J. Krizan, ‘Aggregate Productivity Growth: Lessons from Microeconomic Evidence’ in C. R. Hulten, E. R. Dean, and M. J. Harper (eds), New Developments in Productivity Analysis (Chicago: University of Chicago Press, 2001); R. Disney, J. Haskel, and Y. Heden, ‘Restructuring and Productivity Growth in UK Manufacturing’ (2003) 113(489) Economic J 666; E. Bartelsman, J. Haltiwanger, and S. Scarpetta, ‘Microeconomic Evidence on Creative Destruction in Industrial and Developing Countries’, World Bank Policy Research Working Paper No 3464 (2004); L. Foster, J. Haltiwanger, and C. J. Krizan, ‘Market Selection Reallocation and Restructuring in the US Retail Trade Sector In the 1990s’ (2006) 88(4) Rev Econ and Statistics 748; A. Bravo-Biosca, ‘Exploring Business Growth and Contraction in Europe and the US’, NESTA Research Report (2010); C. Syverson, ‘What Determines Productivity?’ (2011) J Econ Literature 326; and N. Bloom, C. Genakos, R. Sadun, and J. Van Reenen, ‘Management Practices Across Firms and Countries’ (2012) 26(1) Academy of Management Perspectives 12. 87

  For specific references, see n 86.

88

  What is described here as an effect of competition is not only an increase of the rate of innovation but also of the rate of dissemination and absorption of new technology and is

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linked to reducing what was termed X-inefficiency in Section C.4(b) on the static welfare effects of monopoly. 89

  T. J. Klette, ‘Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data’ (1999) 47(4) J Ind Econ 451; R. E. Caves and Associates, Industrial Efficiency in Six Nations (Cambridge, MA: MIT Press, 1992); A. Green and D. Mayes, ‘Technical Efficiency in Manufacturing Industries’ (1991) 101 Economic Journal 523. 90

  It is sometimes argued, often in a rather loose way, that the pace of technological change is increasing or has increased in recent times. There seems little evidence of this trend. Traditional indicators such as productivity growth rates have not shown a clear upward trend in the pace of innovation. Some claim that the rate of innovation is poorly measured by such indicators as many qualitative improvements are not captured: however, the same applies for the productivity figures of the past and to show a clear upward trend in the pace of innovation one should in that case show that qualitative improvements have become more important over time. It seems more likely that the impression that innovation is increasing in pace is only a matter of perception: changes in one’s own time always seem more rapid and upsetting, just like the perception of speed will be stronger if one is near to a passing train than when one is looking at the train from a distance. 91

  D. S. Evans and R. Schmalensee, ‘Some Economic Aspects of Antitrust Analysis in Dynamically Competitive Industries’, NBER Working Paper 8268 (May 2001). 92

  See D. E. Lilienthal, Big Business: A New Era (New York: Harper, 1952).

93

  See also eg ‘E-Commerce and its Implications for Competition Policy’, Discussion Paper 1, OFT, August 2000, p 1: ‘e-commerce will not give rise to any entirely new forms of anticompetitive behaviour, nor will it raise any new issues that cannot be dealt with under the existing competition law framework. However, …there are…areas where detailed application of the rules may require some adjustment.’ 94

  cf J. Baker, ‘Beyond Schumpeter vs. Arrow: How Antitrust Fosters Innovation’ (2007) 74 Antitrust LJ 575.

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Part I General Principles, 1 The Economics of Competition, E Market Definition Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Dominant position — Relevant Market Notice — Market definition — Economic or commercial activity — Product market — SSNIP test — Price elasticity — Geographic market — Discriminatory pricing

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E. Market Definition95 1.134  Antitrust analysis focuses on the question whether companies are, or will be, in a position to exercise market power. It is difficult to think of this question without reference to a proper context, without reference to a ‘market’. For example, the analysis of a contract between two companies might indicate that certain clauses in the agreement restrict the competitive conduct of one or both of the parties. However, the effects of the clauses at issue can only be expected to have a significant impact, on any relevant market and hence on market variables such as price or output, if the companies concerned possess some market power. In order to identify the existence or creation of market power, one typically needs to proceed to an analysis of the market.96 1.135  What is the right context for antitrust analysis? What is the ‘relevant market’? Though obviously related, the relevant market for antitrust purposes does not always coincide with the (p. 43) market as it is described in marketing reports or other business reports. Companies, when thinking of what constitutes the relevant market, naturally consider this question from a business perspective. For example, many European companies nowadays operate in several parts of Europe and the world, with a view to expanding their business. For them, the relevant geographic market is European, if not global. Similarly, many well-known companies would broadly describe their relevant area of activity as ‘consumer electronics’, ‘health care’, or ‘automotive’. Market definition for antitrust purposes starts, however, from a different perspective: what options are open for the customers to acquire the product they wish to acquire? What alternatives do they have? Are they good alternatives? It is this perspective that determines, in large part, whether a company has the ability to exercise market power (eg profitably raise price) vis-à-vis its customers, or not. 1.136  Whether a company can exert market power depends on a number of factors. The availability of substitute products for the products offered by the company under consideration is only one of them. The strength of competitors, the presence of entry barriers, the presence of buyer power are other relevant factors. Nonetheless, it is useful to proceed in steps. The objective of defining a market, the first step, is to identify, both in the product and geographic dimension, those products that are capable of constraining the commercial behaviour of the company concerned in that they form sufficiently good substitutes for the product in question.97 It thereby provides a context within which to assess the competition issue, be it the competitive impact of a given agreement, a certain type of company conduct, or a merger. 1.137  Beyond providing context, it is clear that market definition also serves an important practical purpose. Once the market is defined it is possible to assign market shares to the various companies active in the relevant market, in order to obtain a first impression of their relative importance in the competitive process. Market definition thereby allows for a first screening of cases, to see whether there may be competitive issues.98 1.138  The following subsections discuss the main principles of market definition, first in the product dimension and then in the geographic dimension. The section concludes with a number of further considerations on market definition.

(1)  Product Market Definition 1.139  The key concept in the definition of a relevant product market for antitrust purposes is substitutability, that is, the extent to which customers are able and willing to switch to other products in case of a price increase (or a corresponding non-price change such as a reduction in product quality or service).

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1.140  Two main avenues of substitution are often considered: demand-side substitution and supply-side substitution.99 Demand-side substitution relates to the possibility of customers switching to alternative products that are already on offer. Supply-side substitution relates to the possibility of turning to products that are not yet offered by particular competitors, (p. 44) but that would readily be offered by them in the event of a higher price of the product in question.

(a)  Demand-Side Substitution 1.141  The most immediate constraint upon the terms on which a firm supplies a product is the competitive pressure represented by adequate substitute products available (in the relevant geographic area). In the case of a price increase of the product in question, the customer would readily shift to such substitute products. In practice, the market definition problem thus reduces itself to determining the range of products that constitute good substitutes for the customer or, rather, for a sufficiently important number of customers. 1.142  The importance of demand-side substitution is underlined in the traditional description given in the EU to the concept of relevant product market: ‘A relevant product market comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use.’100 1.143  While the underlying idea is clear, in practice it is often rather difficult to determine whether products are good substitutes for each other by focusing on factors such as product characteristics, prices, or intended use alone. For some products it may be readily possible to identify a number of good substitutes on this basis, but more often than not these factors are unlikely to provide a clear basis for deciding which products should be considered part of the relevant market and which should not be considered part of the market. To take an example, different types of malt whisky may well be considered part of the same market. But can malt whisky be considered in the same relevant market as blended whisky? And what about vodka or gin? On the one hand, one would be tempted to say that malt whisky is different from blended whisky and very different from vodka or gin. On the other hand, there are a number of similarities as well: all the products are spirits, their (quality-adjusted) prices are comparable, and the products are consumed in rather similar circumstances. 1.144  Furthermore, it is important to note that not all customers are alike. Defining the market based on the ‘average customer’, where there are significant differences among customers, may lead to erroneous results. In determining whether other products constitute a competitive threat to the product in question, one needs to focus on the so-called marginal customers.101 These are the consumers who are inclined to shift their demand, in whole or in part, to substitutes if the relative price of the product increases. If the proportion of marginal customers is sufficiently large relative to the other customers (called the infra-marginal consumers102 ), a relative price increase might well result in a substantial loss of sales. 1.145  Finally, even when one has reliable information about the actual degree of substitutability between products for the group of customers under consideration, on what basis does one conclude that the substitutability is high enough for products to form part of the same relevant market? Where should one draw a line between the products? What is the benchmark? (p. 45) 1.146  As it turns out, it is useful to apply a ‘unifying principle’ to market definition and to think of a relevant market in terms of what a company would do if it were the sole supplier of the set of products concerned. Specifically, one can ask the question: if a company had a monopoly for this set of products, would it want to raise the price of it? The logic is as follows: if not even a hypothetical monopolist can profitably raise the price on the products in question, then surely companies that control only part of the market cannot From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

either. It makes no sense to look at such a ‘market’ in isolation; one has to look at something wider. By contrast, if a hypothetical monopolist can profitably raise price, then it becomes worthwhile to see whether any of the individual companies on the market (or all of them jointly) have monopoly power. This logic is embodied in the SSNIP methodology for the assessment of relevant markets, which we discuss next.

(b)  The SSNIP Test 1.147  The need for a framework to assess economic substitutability has led to the development of the SSNIP (‘small but significant non-transitory increase in price’) test, also known as the ‘hypothetical monopolist test’.103 The SSNIP test links up with the purpose of market definition itself; that is, to identify the products that are capable of constraining the commercial behaviour of the company supplying the product under consideration. It proposes to make—in an iterative way—a distinction between products that would constrain a company, even if it were a monopolist, from raising the price for the product in question and those products that do not. Thus, the benchmark is whether it would be profitable for such a supplier (the ‘hypothetical monopolist’) to raise the price for the product concerned. The methodology is iterative. 1.148  Specifically, the SSNIP approach suggests the following line of inquiry: start with the product in question, postulate a hypothetical small but significant increase (eg in the range of 5–10 per cent) in the price at which that product is made available (the prices of the alternative products are held constant), and assess the likely reactions of customers to that increase.104 If substitution away from the product by customers would be enough to make the price increase unprofitable because of the resulting loss of sales, then the product is not a relevant market by itself: not even a hypothetical monopolist would be able to profitably raise the price. There are other products that exercise a sufficient competitive constraint in that they prevent a company, even if it had a ‘monopoly’ on the product, from raising the price.105 (p. 46) 1.149  If the price increase of the product is unprofitable, the next step of the SSNIP test is to consider the situation where a company would be the sole supplier of the product under consideration and also its next best substitute (the product to which the greatest proportion of customers switches when the price of the reference product goes up). Would such a company want to raise prices? If it would not, then these two products still do not constitute a relevant market, and it is appropriate to include additional substitutes. If raising prices were profitable, then the two products can be considered a relevant market, given that there are no other products that exert sufficient competitive pressure on the two products. More generally, the steps would be repeated until the set of products is such that small, lasting increases in relative prices would be profitable.106 On such a set of products, a monopolist would find it profitable to raise prices, so it becomes relevant to check whether any of the individual companies on the market (or all of them jointly) possess monopoly power. Hence, we can rightly refer to the market as a ‘relevant’ product market for antitrust purposes. 1.150  In our spirits example, if, in the event of a price increase for malt whisky, customers would switch to blended whisky to such an extent that the price increase for malt whisky would not be profitable due to the resulting loss of sales, then the market would comprise at least all whiskies. The process would have to be extended to other available drinks (eg vodka, gin, jenever, etc) until a set of products is identified for which a price rise would not induce a significant enough substitution in demand. This would then be the relevant antitrust market from the perspective of malt whisky customers.

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1.151  One might be left with the impression, from reading the previous text, that the SSNIP approach is a very ‘quantitative’ tool, and relies on the availability of detailed demand and cost data.107 In our view, the complexity of the SSNIP test should not, however, be overemphasized. The most important aspect of SSNIP is its conceptual side, not its quantitative side.108 Even when no detailed data are available, it is useful to think of the market definition question in terms of SSNIP. By asking a question which is directly linked to the purpose of antitrust analysis (is the exercise of market power an issue for this collection of products?), it brings a certain structure and consistency to the market definition exercise. The SSNIP concept provides for a framework within which to consider the question of economic substitution. (p. 47) 1.152  In applying the SSNIP test, and in particular for the analysis of merger cases, the reference price to use will normally be the prevailing market price. However, special care needs to be taken in the context where the prevailing price has been determined in the absence of sufficient competition. In particular, for the investigation of abuses of dominant positions the fact that the prevailing price might already have been substantially increased by a given practice or conduct should be taken into account. If not, this would lead to overly wide markets being defined, and to an understatement of the firm’s true market power. It is often the case that customers become more willing to switch to other products as the price of a given product increases. Assessing the degree of substitutability at this high price might wrongly suggest that more products are part of the relevant market and that therefore the relevant market is wide. This is the so-called cellophane fallacy.109 In the context of horizontal mergers, the proper reference price arguably depends on the reason why there is insufficient competition.110 When it is due to collective dominance (tacit or explicit coordination) pre-merger, it would be appropriate to start from the ‘competitive’ level (the price level in the absence of coordination), to identify the products relevant for maintaining collective dominance. When the high price is related to a single dominant position, the concern is that the merger may take away a next best substitute at current (high) prices.111

(c)  Elasticity Concepts and the Diversion Ratio 1.153  An important concept in the assessment of demand substitution is the price elasticity of demand. The price elasticity of a product measures how demand for that product changes with the price of the product, keeping other prices constant (this elasticity is also called the own-price elasticity). In particular, it measures the percentage change in demand following a 1 per cent increase in its price. If the price elasticity is, for example, 2.0, this means that, following a 1 per cent price increase, demand for the product goes down by 2.0 per cent. The own-price elasticity is, normally speaking, negative: demand for a product falls when its price increases. However, it is common to leave the ‘minus’ sign out and speak of a high elasticity when the elasticity is high in absolute terms. 1.154  The (own-)price elasticity is in fact a summary indicator of the extent to which a product is subject to demand-side constraints. When the price of a product is raised, customers may, to various extents, switch away from it: they either switch to competing products, or they stop purchasing the product altogether. The (own-)price elasticity of a good captures both these movements. The higher this elasticity, the more the product is subject to demand-side constraints. 1.155  A related elasticity concept is the aggregate price elasticity, which measures how total market demand (combined demand for all products in a particular market) changes with a price increase of 1 per cent (keeping other prices constant).

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(p. 48) 1.156  The own-price elasticity of demand (or, more generally, the aggregate price elasticity for a group of products) provides direct input into the SSNIP test for market definition. For example, if the elasticity of the set of products one posits to be in the same relevant product market is equal to 1.5, the unit sales for the products will go down by approximately 7.5 per cent if prices for the products go up by 5 per cent (the usual SSNIP). Depending on the initial gross profit margins of the products involved, this may be profitable or not profitable. If initial margins are low, the price increase is more likely to be profitable.112 1.157  Another elasticity concept, the cross-price elasticity, is also relevant for analysing demand-side substitution, but from a different perspective. The cross-price elasticity measures how demand for a product changes when the price of some other product changes. For example, if the cross-price elasticity of product A vis-à-vis the price of B is 0.8, this means that, when the price of B goes up by 1 per cent, demand for product A goes up by 0.8 per cent. Similarly, there is a cross-price elasticity for product B with respect to the price of A. 1.158  Cross-price elasticities provide useful information on substitution patterns, but provide less direct input to the SSNIP test than the own-price elasticity. The SSNIP test is primarily concerned with the question of how much demand for product A changes with the price of A. This is measured by the own-price elasticity. The SSNIP test is only in the second instance also concerned with the question to which products demand switches. Accordingly, when, on the basis of the own-price elasticity, one concludes that a given product (or set of products) does not constitute a market on its own, an analysis of cross-price elasticities can point to the products that should be included in the relevant market. At the same time, ownand cross-price elasticities are linked. Generally, the higher the cross-price elasticity of product B with respect to the price of A, the more product B forms a competitive constraint for product A, and the less likely it is that product A is a relevant market on its own.113 1.159  A concept which is closely related to the cross-price elasticity is the diversion ratio.114 The diversion ratio from product A to product B measures the proportion of the sales of product A that are captured by product B in the event of a price increase of product A. The diversion ratio and the cross-price elasticity are alternative ways to measure product substitution, with the former being viewed as somewhat more insightful.115 It has become customary to define the ‘next best substitute’ of a product as that product for which the diversion ratio is highest.

(p. 49) (d)  Supply-Side Substitution 1.160  Supply-side substitution relates to the possibility for customers to turn to products that are not yet offered, but that would readily be offered by companies (either new or existing) in the event of a higher price of the product in question. 1.161  Under the Commission’s Market Definition Notice, supply-side substitution may be taken into account for market definition purposes in those situations in which its effects are ‘equivalent to those of demand substitution in terms of effectiveness and immediacy’.116 This requires that such alternative suppliers be able and willing to switch production to the relevant products and market them in the short term117 without incurring significant additional costs or risks in response to small and permanent changes in relative prices (the SSNIP). When these conditions are met, the additional production that is put on the market may have a disciplinary effect on the competitive behaviour of the companies involved that is equivalent to that of demand substitution.118 The products are then in general considered to be in the same relevant market, irrespective of whether there is substitutability from a demand perspective.

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1.162  A classical example of the role of supply-side substitution is the case of paper.119 Paper is usually supplied in a range of different qualities, from standard writing paper to high-quality papers used, for instance, to publish art books. From a demand point of view, different qualities of paper cannot be used for a specific use. For example, an art book or a high-quality publication often cannot be produced on lower quality paper. Similarly, office paper in A4 size is typically not substitutable with office paper in A3 size. However, it is possible that paper plants are prepared to manufacture the different qualities, and that production can be adjusted with negligible costs and in a short time frame. In the absence of particular difficulties in distribution, paper manufacturers are therefore able to compete for orders of various qualities. Under such circumstances, it makes sense not to define a separate market for each quality of paper and respective usage, but to view the various qualities of paper as part of one relevant market. 1.163  A practical question that arises in this context is how far one must take the argument that supply-side substitution warrants the grouping of various products into a broader market. Suppose, for example, that there is a product A that is produced by various companies, and a product B that is supplied by a number of other companies. Suppose further that only one of the B companies uses a production technology that allows it swiftly to switch production from product B to product A (the other B companies use a technology that only allows them to produce B). Would this be sufficient to conclude that product markets A and B constitute one relevant product market on the basis of supply-side substitution? Grouping the whole (p. 50) A and B market into one would mean that all the single-purpose B companies are somehow viewed as constraining the A companies from raising prices, whereas in fact this is not the case. The same would apply when all B companies can switch production to product A, but in reality only a few will do so, given that the margins obtained on producing the B product are higher. In such circumstances, it is more appropriate to only take the B companies into account to the extent that they are able and willing swiftly to participate in the A market. 1.164  The response formulated to the previously described issue in the Commission’s Notice is to note that it is appropriate to group products into one product market on the basis of supply substitutability, provided that most of the suppliers are able to offer and sell the various qualities under the conditions of immediacy and absence of significant increase in costs.120 1.165  Arguably, the principle that supply-side substitution may be taken into account for market definition in those situations in which its effects are ‘equivalent to those of demand substitution in terms of effectiveness and immediacy’ mandates that a cautious approach is also applied where margin differences (eg as in the case of branded versus private label products) limit supply substitution. Indeed, a useful line of inquiry for analysing supply substitution is suggested by the examination of the margins or gross returns in the production of supply substitutes as compared to the product in question. These margins should tend to equality if the supply substitutes are correctly identified, either because the prices and costs are the same or because quality-adjusted prices and costs tend to converge. Put differently, in the absence of switching barriers, the gross returns to the producers of supply substitutes cannot go too far out of line from those earned by producers of the product in question. 1.166  It is worth noting that the US approach to supply-side substitution is different from that applied in the EU. In principle, supply-side factors are not, as such, taken into account in the US in defining the scope of the relevant product market.121 The alternative suppliers are instead considered to be participating in that market, even if they are not currently selling in the relevant market, in the sense that they would very likely provide a rapid supply response if prices were to rise (these firms are called ‘rapid entrants’).122 In measuring such a firm’s market share, the US agencies include its sales or capacity only to the extent that the firm’s capacity is not ‘committed or so profitably employed outside the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

relevant market, or so high-cost, that it would not likely be used to respond to a SSNIP in the relevant market’.123 1.167  In the previous example, the relevant market in the US would be the ‘market for A’. The multi-purpose B company would be considered a player in this A market, but only to the extent it would be likely to switch production from B to A in the event of a price increase of A; the single-purpose B companies would not be viewed as players in the A market. 1.168  Having established the principle, the US Guidelines indicate, however, that if supplyside substitution ‘is nearly universal among the firms selling one or more of a group of products, the Agencies may use an aggregate description of markets for those products as a matter of (p. 51) convenience’.124 This aggregation of markets bears a resemblance to the approach taken in the Commission Notice to grouping markets on the basis of supply-side substitution when most of the suppliers are able swiftly to offer and sell the various products.125

(2)  The Relevant Geographic Market 1.169  The relevant geographic market is traditionally defined as comprising ‘the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas’.126 Despite this somewhat general wording, the main objective of defining a market, also in its geographic dimension, is to identify those competitors that are capable of constraining the commercial behaviour of the company under consideration, in that they supply products (or are able to do so in a short time frame) that are sufficiently good substitutes for the product in question. Also in the geographic dimension, it is possible to distinguish between demand-side substitution and supply-side substitution (although the latter term is less often used in this context).

(a)  Demand-Side Substitution 1.170  The analysis of demand-side substitution in the context of geographic market definition focuses on the extent to which customers in a given geographic area are able and willing to switch to suppliers located in other areas. The conceptual approach to geographic market definition can again be based on the SSNIP test. One has to assess to what extent the customers of a given product or group of products would switch to suppliers located elsewhere in response to a hypothetical small but significant (in the range of 5–10 per cent), non-transitory increase in the price of the products in the area being considered (prices in other areas held constant). If substitution would be enough to make the postulated price increase unprofitable because of the resulting loss of sales, additional geographic areas are included in the relevant market. This would be done until the set of geographic areas is such that the postulated price increase would be profitable.127 1.171  In order to establish whether companies in different areas constitute an actual alternative source of supply for consumers, a number of relevant factors can be taken into account, such as transportation costs for the products involved, the need for (locally provided) sales support or maintenance services, the importance of national or local preferences, purchasing habits of customers, and product differentiation. All these factors have an impact on the attractiveness of products offered outside the geographic market under consideration for customers located within the relevant market.

(b)  Supply-Side Substitution 1.172  Supply-side substitution relates to the possibility for customers to turn to products that are not yet offered by particular competitors, but that would readily be offered in the event of (p. 52) a higher price of the product in question. In the context of geographic market definition, this relates to the possibility of suppliers located outside a certain geographic area (swiftly) to start supplying into that area. Thus, whereas demand-side From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

substitution relates to the prospect of customers (or their agents) turning to other areas to obtain the product demanded, supply-side substitution relates to the prospect of outside suppliers turning to the area under consideration to start offering their products. 1.173  In this context, it is important to investigate the various supply factors to see whether those companies located in distinct areas face significant impediments to developing their sales on competitive terms throughout the geographic market. Possible impediments may result from requirements for a local presence in order to sell in that area, the conditions of access to distribution channels, costs associated with setting up a distribution network, and the existence or absence of regulatory barriers such as administrative authorizations and packaging regulations. 1.174  Whereas demand-side substitutability is often seen as being the main form of substitution in the context of product market definition, the relative importance of demandside and supply-side substitution is probably more in balance in the context of geographic market definition. In the product dimension, supply-side substitution relates to the ability of companies swiftly to change production from one product to another. The product areas which lend themselves to such substitution are probably limited in number, and may well fall short of the number of cases where companies are able swiftly to offer, in a different area, products they already produce.

(3)  Specific Issues in the Context of Market Definition 1.175  It is worth addressing three specific situations where care has to be taken in the context of market definition.

(a)  Chains of Substitution 1.176  In certain cases, the existence of chains of substitution may warrant a definition of a single relevant market, even where products or areas at either end of the market do not directly compete with one another. Consider, for example, a product with significant transport costs such as construction materials. In such a case, deliveries from a given plant are limited to a certain area around the plant because of transport costs. Such an area could, in principle, constitute the relevant geographic market. However, if the distribution of plants is such that there are considerable overlaps between the areas around the different plants, it is possible that the pricing of those products will be constrained by a chain substitution effect: prices in one area constrain prices in an adjacent area, which in turn constrain prices in another area (not adjacent to the first). If the ‘chain’ that links the three areas is strong enough, it would be appropriate to define the relevant market as including these three areas. Note that application of the SSNIP methodology would indeed identify the relevant market as such, whereas an overly strong emphasis on factors such as transport costs would not. 1.177  Chains of substitution may also be relevant in the context of product market definition.128 Suppose that products A and C are single-purpose software programs each suitable for doing a different computing task and that product B is a dual-purpose software product that can be (p. 53) used for both tasks. Even if products A and C are not direct demand substitutes, it is appropriate to view them as belonging to the same relevant product market when their respective pricing is sufficiently constrained by substitution to product B (in the sense of the SSNIP concept) and vice versa. Product B can then be seen as forming the ‘link’ between products A and C.

(b)  Price Discrimination 1.178  In certain markets, it is possible for suppliers to engage in price discrimination, that is, to charge different prices to different customers depending on their buyer characteristics.129 Price discrimination is possible when suppliers can (explicitly or implicitly) identify to which group an individual customer belongs at the moment of selling the relevant product, and trade among customers (or arbitrage by third parties) is not From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

feasible. In such cases, demand substitution (the ability of customers to obtain substitute products, or to obtain them elsewhere on better terms) may be impaired. If also supply substitution is difficult or impossible, it is appropriate to define a market by reference to the group of customers who may be the subject of such price discrimination. In terms of the SSNIP principle: the possibility of targeting a price increase raises the likelihood of such a price increase being profitable. 1.179  Importantly, the chain of substitution effect described in the previous subsection no longer holds as a factor linking together distinct products or geographic areas when price discrimination is possible. For example, in the context of the software products example, if a hypothetical sole supplier of products A and B could identify customers by their specific software needs, it could increase price on the A product and, to those customers who are in need of the software function performed by A, also on the dual-purpose B product. It cannot even be excluded that, for a hypothetical sole supplier of products A and B, raising price on A alone might be profitable (some customers may switch to product B, but, given that B also belongs to the hypothetical monopolist, this need not be problematic). In market definition, the operational response to the possibility of price discrimination is to define markets by reference to the group of customers who may be the subject of such price differentiation (in the example, the customers in need of the software function performed by A). 1.180  In the context of geographic markets, it is often the case that customers located close to the border are familiar with trading conditions across the border and ready to obtain the products needed there. Similarly, outside suppliers located near the border may be relatively quick at supplying across the border when the opportunity arises. When there is great demand- and supply-side substitutability at the borders, this would point towards a geographic market that is wider than the area delineated by the border if the SSNIP test is applied with a uniform price increase of 5 per cent in mind. An issue to be checked in such cases is whether a sole owner of the production or supply locations in the area could practise geographic price discrimination (in other words, whether a uniform price increase over the area is the appropriate benchmark). If the location of the production or supply locations is such that prices further inland could be different from (ie higher than) those near the border, then the area under consideration might be a relevant market after all.130 In such a case, it might be (p. 54) appropriate to define the relevant geographic market as the original area under consideration, not wider.

(c)  Captive Production 1.181  The definition of the relevant market involving intermediate products is often fairly complex. Intermediate product markets may feature both specialized producers and integrated producers captively producing all or a sizeable proportion of their output for internal use. The competitive constraints on a non-integrated supplier in such a market situation are not just the demand substitution possibilities of its customers (whether integrated or non-integrated), but also the supply possibilities of integrated producers who are currently only participating in the merchant supply a little, if at all. 1.182  In defining product markets for intermediate goods, it is customary first to focus on what is called the ‘merchant market’, that is, that part of the product market for which transactions take place between entities not belonging to one and the same group. This is because of the idea that, in response to a reduction in supply by any given company active on the merchant market, other non-integrated suppliers can normally be assumed to exert a competitive constraint by increasing their supply, whereas an integrated company may be more reluctant to increase supplies on the merchant market (if it is already active on it) or to become active on it (if it is not yet active).131 Even when one decides that the integrated firm is likely to increase supplies or to become active, the question remains how much of its

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sales or capacity to take into account.132 These factors make it appropriate to pay attention to the merchant market as such, especially at the early stages of the investigation. 1.183  At the same time, it is important not to lose sight of the relationship between captive sales and merchant sales in the overall market. It has to be realized (in the application of the SSNIP test) that the incentive to raise the price on the merchant market becomes less, the more the customers of such suppliers (the non-integrated downstream companies) would lose sales and market share to the integrated companies which would not be confronted with an increase in the price at which they can obtain input supplies. If it is the case that raising the price for merchant supplies would be unprofitable in view of the strong presence of integrated suppliers, this would plead in favour of looking at the captive sales and merchant sales as a whole. All in all, the best response to the complexity of market definition in the context of intermediate goods would seem to be to consider both possible market definitions (merchant market and combined market) and, when the companies involved have important market positions on either market, to proceed to a full analysis of competition.

(p. 55) (4)  Further Considerations (a)  Market Definition in Practice 1.184  At the start of this section, it was mentioned that market definition serves the purpose of putting the assessment of market power in a proper context. The more alternatives are available to customers, the less market power the companies supplying a given product are likely to have. Even when companies have a ‘monopoly’ on a given product, they may not have market power over that product when sufficient alternatives are present. By contrast, when there are few alternatives, it is opportune to see whether any particular company, or group of companies, has market power. 1.185  In many cases, the starting point of market definition is to describe clearly the product or service in question and to think of various conceivable markets. This then permits one to decide, from a summary examination of market shares on the various conceivable markets, whether in relation to the operation under analysis there are any competition issues, even on the narrowest conceivable market.133 This allows for a first screening of cases, to see whether there may be competitive issues. 1.186  Having determined that an accurate market definition is needed, the SSNIP methodology suggests the following line of inquiry: start with the product under consideration and assess what proportion of the customers would switch, in whole or in part, from the product if its price were to be raised by a small but significant proportion, and to which substitutes would they switch. To obtain a first indication, an inquiry into the opinions, primarily of customers but also of competitors, can be undertaken concerning the extent to which the products under consideration are adequate substitutes. The accuracy of the inquiry can, in subsequent stages, be improved by addressing more customers and competitors (a wider base of respondents) and asking for more specific information. In this context, evidence of customer switching in the past would be particularly informative. Data on price-cost margins can shed further light on the question whether a ‘hypothetical monopolist’ would find it profitable to raise the price. 1.187  Various additional quantitative and empirical methods are available that can provide information on the degree to which products face demand-side constraints. These methods include the analysis of prices and price movements of the products under consideration to see to what extent they move together over time, the estimation of price elasticities, critical loss analysis, event analysis (to see whether particular events in the past shed light on the

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question of which products compete with one another), and the analysis of bidding data. These methods are presented in further detail in Section G.

(b)  Defining the Market: Not an End in Itself 1.188  While one may debate the various alternative approaches to market definition, the essential point is that the market defined must seek to include the products (and the firms producing them) that represent a competitive constraint on the product(s) in question. Often the difficult issue in market definition is that, whatever the operational formulation or the test employed, the appropriate boundaries of the market cannot be decided precisely. Market (p. 56) definition will indicate which products provide an immediate constraint on the product under investigation, but not that all these products are of equal constraining influence. In the context of differentiated product markets in particular, the issue of differing degrees of competitive pressure between products, even within one and the same relevant market, may be of great importance.134 1.189  The boundaries within which competition is at work cannot be fully captured by the classification of products into different ‘markets’. This merely recalls the fact that market definition is not a goal in itself but an intermediate step for structuring the analysis. The aim of market definition is to analyse the economic substitutability of products in a structured way, not to represent a full analysis of competition among the companies supplying the products.

Footnotes: 95

  This section builds on a text written by Kirti Mehta for the first edition of this book.

96

  As a general rule, market definition is more relevant where the analysis is prospective than in situations where the anti-competitive nature or effect can be analysed more directly, ex post. In the context of horizontal cartels, eg, the anti-competitive object of the behaviour is clear and does not require any market definition. In the latter case, one can still proceed to a definition of the market in order to evaluate the impact of the cartel, as is required in the context of claims for damages. 97

  cf Commission Notice on the definition of the relevant market for the purposes of [EU] competition law, OJ 1997 C372/5; see also J. Baker, ‘Market Definition: An Analytical Overview’ (2007) 74 Antitrust LJ 129. 98

  While there can be some debate as to whether high market shares are good indicators of market power, there is less doubt on low market shares being good indicators of the absence of market power (provided the market has been properly defined). See also Section F. 99

  As will be discussed later (para 1.166), the US approach to supply-side substitution differs from that of the EU. 100

  See eg Market Definition Notice, para 2.

101 

Marginal consumers have, by way of definition, a willingness to pay for the product that is about equal to the price paid. If the price increased, they would probably stop buying the product (eg choose another product) or buy less of it. 102

  Infra-marginal consumers have a willingness to pay for the product that is higher than the price they have to pay for it and so they would substitute less, or not at all, if the relative price increases.

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103

  For a more elaborate discussion of the SSNIP test, see G. J. Werden, ‘The 1982 Merger Guidelines and the Ascent of the Hypothetical Monopolist Paradigm’ (2003) 71 Antitrust LJ 253. See also the 2010 US Horizontal Merger Guidelines, section 4. 104

  What price increase is significant or insignificant depends on the industry. In some markets, eg the market for crude oil, smaller price increases could be considered significant. However, taking a price increase that is too small would not capture the reactions of all the marginal customers, and might understate the extent of likely customer switching. Using a very large price increase would be likely to capture the reactions of significant portions of the infra-marginal customers. If used as a basis for defining the market, this would lead to very wide markets, hiding otherwise significant competition concerns. Further, it must be noted that ‘5–10%’ does not constitute a ‘tolerance level’ below which price increases would be acceptable (see also the 2010 US Horizontal Merger Guidelines, section 4.1.1). 105

  Note, however, that the logic ‘If not even a hypothetical monopolist can profitably raise the price on the products in question, then surely companies that control only part of the market cannot either’ need not hold when in reality the firm active in the postulated (narrow) market also sells substitute products that are outside that postulated market and where the firm has a high market share in those outside markets. In that case, the firm in question might want to raise price on the narrow market, even where a hypothetical monopolist (for which it is assumed that it does not sell anything outside the postulated market) would not. This possibility has to be kept in mind when applying the hypothetical monopolist test for the purpose of market definition. This might raise the question of how any firm producing this product can ever be found dominant on this product or on a wider market given that not even a ‘hypothetical monopolist’ could profitably raise price by more than 5–10 per cent on the product concerned. The answer is simple. At each iteration, the SSNIP test assumes that prices of the products outside the postulated (narrow) market remain constant. This assumption may be incorrect in light of the nature of competition in the market. Especially in oligopolistic markets, producers of competing products may adjust their prices upwards in response to the price increase of the product concerned (see Sections C.5 and F.3 for further detail). The SSNIP test abstracts away from these competition aspects so as to focus purely on the question of the degree to which products are substitutes. 106

  If, for a given collection of products, a price increase is profitable, this is because the next best substitute does not exercise a sufficient constraining influence; hence, a wider market including the next best substitute could also be deemed to be the relevant market as on this wider market too a price rise will be profitable. It is for this reason that for competitive analysis the antitrust authorities normally seek to define the narrowest market among those that are deemed relevant markets. 107

  Cost levels matter in view of the profitability question (‘would it be profitable to raise the price?’). 108

  For similar views, see Baker, ‘Market Definition: An Analytical Overview’ (n 97).

109

  The cellophane fallacy is named after a case in 1956 where a US court overlooked this issue. 110

  See also the 2010 US Horizontal Merger Guidelines, section 4.1.2, and the UK Competition Commission Merger Guidelines, paras 2.09–2.10.

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111

  After all, the objective of market definition is to identify the products that are capable of exerting some competitive pressure on the merging entities’ products, in order to see whether a merger involving these products is problematic from a competition point of view. When the high price is related to coordination among the existing market players, the main concern is that the merger reinforces this coordination by making it less likely to break down in the future. See also Baker, ‘Market Definition: An Analytical Overview’ (n 97). When the high price is related to a single dominant position, there are no products exerting significant competitive pressure at the ‘competitive’ level (if there were, prices would not be that high). Instead, the focus should lie on identifying the products that exert competitive pressure at the higher price level, to see whether a merger involving these products allows the dominant company to further raise price. 112

  An example is developed in Section G.2. One would expect the initial profit margin on any individual product and the own-price elasticity to be related: if the initial profit margin is low, this points to a high own-price elasticity. This insight does not necessarily extend to a set of products, however. Low margins observed on a set of products may be the result of competition within that set of products as opposed to demand-side substitution vis-à-vis products outside that set. 113

  Some caution is necessary in interpreting cross-price elasticities, especially when the sales levels of products A and B are very different. Eg if the cross-price elasticity of product B vis-à-vis the price of A is 10.0, this means that when the price of A goes up by 1 per cent, demand for product B goes up by 10 per cent. If, however, the initial sales level of product A is 100 units and that of product B is only 10 units, then the 10 per cent increase in the demand for product B only represents one unit of B and, correspondingly, a decrease in demand of only one unit of A (on a total of 100, ie a 1 per cent decrease). In other words, a high cross-price elasticity does not automatically mean that the two products are in the same relevant product market. Furthermore, it is possible that the cross-price elasticity is high simply because the price of the product under consideration is itself already high (cf the cellophane fallacy problem discussed in the previous subsection). This consideration is, however, not specific to the cross-price elasticity, it is also relevant to the own-price elasticity. 114

  For a presentation, see C. Shapiro, ‘Mergers with Differentiated Products’, Antitrust Magazine, Spring 1996, pp 23–30. 115

  Also in view of the issues described in n 113.

116

  Market Definition Notice, para 20.

117

  A relevant time frame in this respect is often thought to be one year.

118

  When switching production is possible, but would require significant additional investments or time delays (eg due to the need to adjust existing tangible and intangible production assets), this possibility is not considered at the stage of market definition, but rather at the stage of considering potential competition. This is logical given that market definition is a step in the analysis identifying products that already constitute some form of competitive constraint on the product(s) in question. It makes sense, therefore, to limit attention to those companies that have the ability to provide a swift supply response, and to leave the more involved assessment of other entry to the stage of detailed competition assessment. Proceeding in this way also avoids the practical difficulty of having to assign hypothetical market shares to potential producers, of whom only an undefined proportion may become actual producers. 119

  An example which features in the Market Definition Notice, para 22.

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120

  Market Definition Notice, para 21 (emphasis added).

121

  See also Baker, ‘Market Definition: An Analytical Overview’ (n 97).

122

  US 2010 Horizontal Merger Guidelines, section 4 (‘Market definition focuses solely on demand substitution factors…’). 123

  US 2010 Horizontal Merger Guidelines, section 5.2.

124

  US 2010 Horizontal Merger Guidelines, section 5.1 fn 8. See also G. J. Werden, ‘Market Delineation Algorithms Based on the Hypothetical Monopolist Paradigm’, US DOJ Antitrust Division Economic Analysis Group Discussion Paper No 02-8 (27 July 2002), section 7. 125

  This requirement is also captured by another characterization of the relevant market sometimes used, and according to which a relevant market is a product space in which the ‘conditions of competition are sufficiently homogeneous’. 126

  Market Definition Notice, para 8. See also Case 27/76 United Brands [1978] ECR 207, para 11. 127

  Market Definition Notice, para 29.

128

  It should be noted that chains of substitution are probably less prevalent in the context of product market definition than in the context of geographic market definition. 129

  Bidding markets may be examples of markets where price discrimination is possible. In essence, these are markets where companies compete for specific contracts and where each customer receives, or may receive, a personalized offer. 130

  While it is true that customers located further inland could turn to the (lower priced) areas near the border, when these border areas are also under the control of the hypothetical monopolist, the incentive on the part of the hypothetical monopolist to raise prices inland is higher than when the border areas are not under its control. 131

  The integrated firm’s decision whether to (increase) supply on the merchant market is also a function of the impact this has on the profitability of its business activities further downstream (the stage that uses the intermediate product as an input). Such an impact may exist not only where increasing supplies into the merchant market implies cutting back on the internal use of the intermediate product (and, hence, reducing output of the downstream subsidiary), but also where supplying more of the intermediate product means more competition for the downstream subsidiary from non-integrated downstream rivals using the intermediate product. 132

  As with supply substitution in general, it would make sense to take the integrated firm’s sales or capacity into account in measuring market shares only to the extent that the firm would be able and willing to respond to an increase in price in the merchant market (part of the firm’s capacity may be committed or more profitably employed internally). See also Section E.1(d). 133

  This is not to say that the narrowest market is necessarily the one where the parties’ market shares are the highest. After all, when product markets are defined very narrowly, there may be no competitive overlap in the first place. It also remains important to look at wider possible market definitions. 134

  See also Section F.1. This insight has led to an increase in popularity of methods such as UPP (upward pricing pressure), primarily in the context of mergers with differentiated products. UPP focuses directly on the change in pricing incentives of the merging parties and may avoid the need to define markets in a context where this is.indeed inherently difficult. See Section G.4 for more details.

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Part I General Principles, 1 The Economics of Competition, F Market Power and Dominance Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Dominant position — Market power — Determining abuse of dominant position — Static market power — Market share analysis — Economics — Collective or joint dominance — Exclusive dealing

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F. Market Power and Dominance135 1.190  Market power is often broadly referred to as the power to raise price above the competitive level. While the general idea behind this characterization is fairly clear, a number of comments can be made. The section starts by addressing some of the questions the concept of market power raises. It focuses in particular on the question of how to identify market power in a given market context. It then addresses the relationship between market power and the concept of ‘dominance’, as it is known in Article 102 and the EU Merger Regulation. The section ends with a discussion of ways in which market power may be maintained or enhanced through anti-competitive means, which is the main focus of competition policy. 1.191  From the outset it is important to clarify that market power is not a negative thing per se. Often companies obtain market power in entirely legitimate ways, for example by producing more efficiently than other players, by making better quality products, or by being more innovative—in short by providing benefits to consumers. Consequently, competition policy is not concerned with market power as such. Rather, it is concerned with the ways in which market power may be obtained, maintained, or enhanced (and subsequently exercised) through anti-competitive means, that is, to the detriment of consumers. While this in principle requires an individual analysis for each case, this does not preclude antitrust policy from relying upon certain presumptions regarding the effects once a certain degree of market power has been established. For instance, based on past experience it may be considered that certain specific types of conduct are so likely to increase or maintain market power when the firm already possesses market power that a (negative) presumption is warranted.136

(p. 57) (1)  Market Power (a)  Concept 1.192  Market power can manifest itself in a number of dimensions, such as high prices, reduced output, reduced choice and quality, or diminished technological innovation. The former dimensions—price, output, and choice—are normally at the centre of the analysis as regards the static welfare impact of a given merger, agreement, or conduct. The latter dimensions—quality and innovation, but also choice—are of particular importance when it comes to assessing the dynamic welfare impact. 1.193  While the dynamic perspective of market power is arguably of great importance, antitrust analyses typically start by considering whether a company has (or will obtain) static market power. After all, without market power in the static sense, it is relatively unlikely that a company has market power in the dynamic sense. 1.194  The static notion of market power concentrates on the power to raise price above the competitive level. From a short-term perspective, the competitive price level is often taken to mean the marginal cost level. Market power then refers to the ability to sell a product at a higher price than it actually costs to produce at the margin. Where a company actually charges such a higher price it is said to exercise market power. If a company exercises market power, this implies that there is a certain welfare loss (also called inefficiency) stemming from the fact that some customers do not obtain the product although they have a willingness to pay for the product that is higher than it actually costs the company to make the product. From a longer term perspective, the competitive price level is often taken to mean the average cost level, where the cost benchmark includes a reasonable rate of return on investment.137 Market power then refers to the ability to make

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supra-normal profits, that is, profits that are higher than customary in similar market settings, over a sustained period. 1.195  Obviously, any company can raise the price at which it sells. What is meant by the ability to raise price above the competitive level is the ability to do so profitably. This is only possible for a firm that does not face such pressure from its competitors that any reduction in its own output is easily made up for by the competitors. In such a case, the sales loss facing the company when it raises price above the competitive level is limited,138 and increasing price above the competitive level may be profitable. The less competitors pose a competitive constraint on the firm in question, the more that firm is said to have market power. It follows that a situation of market power is unlikely to arise in a market where expanding output (or indeed entry) is easy, since in such conditions the pressure on prices charged by the incumbent firm(s) is rather persistent. 1.196  There are, in essence, three principal reasons why competitors may not easily make up for a reduction in output of the firm with market power. The first is product differentiation. Product differentiation means that the products that are being offered are imperfect substitutes for each other.139 When rival producers offer alternative products, but these products (p. 58) are not as attractive as the ones offered by the firm raising the price (at least from the viewpoint of the customers of the firm raising the price), customers may prefer to stay with that company even when it raises the price. As a result, the firm in question has a certain leeway, or margin of manoeuvre, in its pricing behaviour. The more the products offered by competitors are close substitutes (or the more easily competitors can reposition their products), the less market power a company is likely to have. 1.197  The second reason why a company may have market power is that rival suppliers, even if they are offering equivalent or similar products to those of the company with market power, are not capable of supplying more in response to a price increase by the firm in question. A prime example is the situation where rivals have capacity constraints or face other barriers to expansion.140 Rivals may, for example, have insufficient access to input supplies, relevant infrastructure, or distribution networks to provide a supply response. Also in these situations, the firm in question has a certain leeway to increase prices. 1.198  A third important source of market power is differences in productive efficiency. Where economies of scale or scope are important, a company with high production levels is able to produce more cheaply at the margin than companies operating at sub-optimal levels.141 This source of market power translates into the inability of rivals to compete at low prices and allows the company with the cost advantage a possibly considerable margin to set prices. 1.199  An extreme case of market power is the situation where a firm has a monopoly on the relevant market, so that there are no rival companies to constrain the firm. A monopoly may be seen as entailing all or some of the sources of market power mentioned previously: strong product differentiation (the product in question basically forms a relevant product market by itself), inability of rivals to provide a supply response (entry barriers142 ), or substantial efficiency differences (no rival is able to supply at competitive prices). 1.200  The fact that setting price above competitive levels is only possible for a firm that does not face such pressure from its competitors so that any reduction in its own output is easily made up for by competitors, suggests an alternative (but equivalent) way of thinking of market power. In this perspective, market power relates to the ability of a firm significantly to influence, through its own output level, the aggregate output of the market.143 The characterization captures quite well the three sources of market power previously identified. Where products are differentiated, the reduction of output by one firm is likely to lead to a reduction of aggregate output, since other rivals’ products are not able to make up for the difference. Similarly, where competitors have capacity constraints or face other barriers to expand output, the reduction of output by one firm is likely to have an From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

impact on total output. Finally, (p. 59) where a company has a significant cost advantage it can, at least within certain boundaries, determine the output level in the market.144 1.201  The previous discussion focused on the competitive constraints that may be exerted by actual or potential competitors. Competitive constraints may in certain circumstances also be exerted by customers, however. Even a company with a high market share may not be able to raise price when its customers have sufficient bargaining strength. Countervailing buyer power may stem, for instance, from the customers’ size or their commercial significance for the company concerned, their ability to promote new entry or capacity expansion (eg by concluding long-term contracts giving rivals the prospect of significant sales volumes), to integrate vertically, and/or credibly to threaten to do so.145 If countervailing power is of a sufficient magnitude, it may deter or defeat an attempt by the company profitably to increase prices.146

(b)  Identification of (Static) Market Power 1.202  The usual starting point for determining whether a company has market power is to consider the relative position of the company vis-à-vis its competitors on the market. Market shares, the main indicators used in this respect, often give at least some indication of the degree to which companies have, or do not have, market power. 1.203  Market shares are used extensively for the purpose of identifying market power, not only because they are relatively simple measures, but also because the more direct methods to measure market power are difficult to use. The microeconomic definition of static market power—the ability to raise price over cost—suggests that one looks at the profit margin of a firm to find out whether this firm has market power. For example, the gross margin is a measure of the degree by which a firm’s price exceeds marginal cost. This margin, while in principle ascertainable, is often difficult to assess in practice. Accounting costs, that is, the costs as they appear in the company’s accounts, need not be accurate measures of the costs involved in producing additional units of output, which is the relevant economic benchmark.147 Accounting costs are often based on aggregate costs calculated over the entire production, rather than cost levels at the margin. In addition, those costs that cannot be directly attributed to the production of a specific product or service (where common production factors are involved) are normally attributed according to standard accounting rules that have little connection with what it costs to increase production. 1.204  If instead the elasticity of demand facing the firm is known with some precision, then that information could give some indication about the firm’s margin. This idea underlies the (p. 60) so-called Lerner index, which is defined as the firm’s gross margin in relation to the current price set by the firm. Economic theory predicts that, at its profitmaximizing point, a firm’s margin will be the reciprocal of the elasticity of demand it faces: where the demand elasticity is low, the firm’s margin is high, and vice versa. However, the elasticity of demand facing a firm is often not known either, at least not with sufficient precision. 1.205  Even when one has (directly or indirectly) established the relevant margin, the question remains as to what is a high margin. Industries may feature different gross and net margins depending on the level of fixed investment, the stage of the industry (growing or stagnant), or the degree of risk involved (the fact that margins turn out to be high ex post may be proper compensation for the risk incurred ex ante). Pharmaceutical companies, for example, often feature high gross and net margins on a limited number of products because R&D expenditure is both significant and risky, and marginal costs of production are low or negligible. One would therefore need to make comparisons with appropriate benchmarks, preferably from the same sector but in a different geographic area. It is clear, however, that

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finding appropriate benchmarks is one of the more difficult issues in the identification of market power through margin analysis. 1.206  Market shares are, by contrast, comparatively simple indicators of market power. The main question is, of course, how good market shares are as an indicator for market power. On the one hand, they are likely to contain some information on the competitive strength of each of the market players. In a competitive market with many players, each firm tends to be a price taker, that is, acts as if facing an infinitely elastic demand curve, irrespective of whether the total market demand is price elastic or inelastic. Similar technology, absence of scale or scope economies, and the commodity nature of products all tend to ensure that many companies are active in the market and that none of these firms has a high market share. Where, however, certain firms have relatively high market shares this may be an indication that such firms are either cost leaders or have product advantages in a differentiated product market. Alternatively, it may reflect a difference in production capacities. In such cases, the practical approach based on market shares can be considered a useful, if approximate, way of identifying firms with market power. 1.207  On the other hand, the observation that one or more companies in a market have significant market shares is compatible with a whole range of market settings, both competitive and less competitive ones. To take one example: a company may have a high market share for merely historical reasons and lack the ability to raise prices above any competitive level because other market participants face no problems in expanding output in response to a price increase by the former company. 1.208  Whether it is appropriate to use market shares as a proxy for market power also depends heavily on the quality of the definition of the ‘relevant market’. In differentiated product markets, in particular, the degree of competition between the respective products may vary in ways not represented by market shares. It may well be that the company with the highest market share faces more competition than niche players with lower market shares. Market shares do not tell how close a substitute one product is vis-à-vis another product. 1.209  Another example of a market where market shares may be less informative is bidding markets. The fact that other firms did not make a sale in a particular bidding contest does not mean that these firms did not pose a significant competitive constraint on the winning (p. 61) firm.148 In addition, the link between market share and market power is probably less direct in bidding markets than in most other markets.149 In bidding markets, each customer receives, or may receive, a personalized offer. Where this is the case, companies can decide to compete more aggressively on the margin, without this necessarily having a direct impact on the margins obtained on their existing customer base. When individual contracts are large and infrequent, the incentive to compete for each of them may be especially strong. Similar arguments can be raised in contexts where competition is ‘for the market’ instead of in the market. 1.210  It is clear that both the approach based on relative market positions and the more direct measurements of market power have certain drawbacks. In identifying whether a company has market power, it therefore remains indispensable to focus on the causes of market power, to focus on those factors that enable the company to raise price: the degree of product differentiation in the market, the presence of barriers to entry and expansion on the part of rivals, and differences in productive efficiency. It is only when such factors are present that one can persuasively say that a company has market power.

(2)  Dominance

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1.211  As the name suggests, the term ‘dominance’ refers to a strong form of market power. A distinction is commonly made between two forms of dominance: single dominance and collective dominance. The first refers to a situation where a single company has substantial market power, the second to a situation where a group of companies jointly hold such market power.

(a)  Single Dominance 1.212  The traditional characterization of the term ‘dominant position’ in EU competition law is that it relates to a ‘position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’.150 1.213  The latter part of this definition, referring to ‘the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers’ is closely related to the three factors giving rise to market power discussed in the previous subsection. Product differentiation in the market, the presence of barriers to entry and expansion on the part of rivals, and differences in productive efficiency all may provide a given company with substantial leeway in determining prices. In this context, it is important to recognize that no company can act entirely independently of competitors, customers, and consumers. It is only natural that a company, even when it is dominant, takes account of the fact that competitors may produce a bit more if it raises its price. Similarly, it will realize that customers are likely to consume less when the price goes up (the ‘discipline of the demand curve’). Whether a company has market power and has the ability to set the price above the competitive level is a matter of degree. Whereas, legally speaking, a company either is or is not dominant, it is (p. 62) important to realize that, from an economic standpoint, the underlying variables determining the degree of market power form a continuum. 1.214  The Commission’s Article 102 Enforcement Priorities Guidance specifies in this context that dominance relates: ‘to the degree of competitive constraint exerted on the undertaking in question. Dominance entails that these competitive constraints are not sufficiently effective and hence that the undertaking in question enjoys substantial market power over a period of time…. The Commission considers that an undertaking which is capable of profitably increasing prices above the competitive level for a significant period of time does not face sufficiently effective competitive constraints and can thus generally be regarded as dominant. The Guidance continues to explain that the assessment of dominance will take into account the competitive structure of the market, and in particular the following factors: (a) constraints imposed by the existing supplies from, and the position on the market of, actual competitors; (b) constraints imposed by the credible threat of future expansion by actual competitors or entry by potential competitors; and (c) constraints imposed by the bargaining strength of the undertaking’s customers.151 1.215  The first element to consider when assessing dominance is probably the market share of the firm in question. In its Guidance, the Commission states that: low market shares are generally a good proxy for the absence of substantial market power. The Commission’s experience suggests that dominance is not likely if the undertaking’s market share is below 40 per cent in the relevant market…. Experience suggests that the higher the market share and the longer the period of time over which it is held, the more likely it is that it constitutes an important preliminary indication of the existence of a dominant position…However, as a

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general rule, the Commission will not come to a final conclusion as to whether or not a case should be pursued without examining all the factors which may be sufficient to constrain the behaviour of the undertaking. In other words, the importance of market shares is qualified by the extent to which they convey information on the ability of rivals to provide a competitive constraint on the dominant firm. The Court has held in this respect that, although the importance of market shares may vary from one market to another: the view may legitimately be taken that very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position. An undertaking which has a very large market share and holds it for some time, by means of the volume of production and the scale of the supply which it stands for— without those having much smaller market shares being able to meet rapidly the demand from those who would like to break away from the undertaking which has the largest market share—is by virtue of that share in a position of strength which makes it an unavoidable trading partner and which, already because of this secures for it, at the very least during relatively long periods, that freedom of action which is the special feature of a dominant position.152 1.216  Thus, dominance is said to exist only when the situation of substantial market shares is expected to be sustained over a period of time during which rival firms and entrants cannot be expected to bid away the dominant firm’s market share through lower pricing and superior quality products and where there is insufficient countervailing power on the side of buyers. (p. 63) 1.217  In general terms, the main factors that are taken into account in determining dominance all relate to the ability and incentive of the smaller competitors to increase their production or otherwise provide a constraining force.153 Economies of scale and scope, control over input supplies, patents, or distribution networks, and other strategic advantages for the dominant firm (eg branding and reputation) are the more important ones in this respect. Such factors may make expansion of smaller firms or entry of new competitors difficult, either in the short term (eg when the new entity controls input supplies) or in the long term (eg when the possession of patent portfolios reduces the ability of competitors to innovate). Similarly, these factors may discourage smaller rivals from expanding and thereby affect their incentive to provide a competitive constraint. Here one can think, for instance, of cases where the company in question has control over the main distribution networks in an industry, leading to a significant reduction in competing rivals’ incentive to invest in marketing effort or R&D. In such circumstances, an asymmetric market structure may prevail in which one firm dominates production and is the principal decision-maker with market power. 1.218  It is worth noting that in economics there also exists a concept called the ‘dominant firm’, but that it has a meaning that is often more specific than the one commonly used in the EU competition context. It refers to a market situation where a single large actor faces a number of fringe competitors (often called the model of the ‘dominant firm and the fringe’).154 In this model, the fringe competitors are price takers, so that they supply up to the point where their marginal costs equal the market price.155 By contrast, the single large firm dominates production of the final good because of a cost advantage and acts strategically with respect to the fringe. The situation of a dominant firm in the total market can be depicted as in Figure 1.13. The dominant firm faces a firm-specific demand curve (ED, in the right-hand graph) which is obtained by deducting from market demand (DD, in the left-hand graph), at each price, the supply responses of all the other firms (SS) in the market. The dominant firm would maximize profits by producing where its marginal costs equal its marginal revenue; this is at the output Q1, which implies the price P1, leaving the

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balance of the output being produced by smaller firms. The small firms accept the price set since their supply response is limited (their marginal costs are increasing and exceed, at some point, the price charged by the dominant firm).

(b)  Collective Dominance 1.219  Collective dominance refers to a situation where a group of companies jointly hold market power. The companies derive this market power, on the one hand, from the fact that other firms in the market cannot challenge the joint market position and, on the other hand, from the fact that the firms have the ability (and probably the incentive) to suppress or limit competition among themselves by colluding.(p. 64) View full-sized figure

Figure 1.13  A dominant firm 1.220  Where the companies collude to raise prices, they can be said to exercise their joint market power.156 Where companies collude to exclude other firms from the market (eg through a system of vertical agreements or rebates), such collusion may work to increase or maintain their joint market power. 1.221  Collusion can be understood either as explicit coordination to engage in a certain market conduct (eg coordination on price by way of explicit communication or a collusive agreement, even if it is non-enforceable in court) or as tacit coordination. The underlying mechanisms are to a large degree the same.157 1.222  As explained in Section C.5, the theory of coordination is anchored in economic models that explain how competitors can cancel the mutual competitive pressure by a coherent system of implicit threats. In a non-collusive setting, each competitor constantly has an incentive to compete. This incentive is ultimately what keeps prices low, and what prevents firms from jointly maximizing their profits. Coordination emerges when this shortrun incentive is overruled by a stronger long-term incentive: each firm in the market exercises a self-imposed competitive restraint in the short run only because it knows that this restraint will be ‘rewarded’ in the long run by the other firms exhibiting similar restraint. 1.223  Coordination on prices is more likely to emerge in markets where it is fairly easy to establish the terms of coordination and where such coordination is sustainable.158 Sustainability requires that there is: (a) sufficient market transparency, so that the coordinating firms are (p. 65) able to monitor to a sufficient degree whether the terms of coordination are being adhered to; (b) the existence of a disciplining mechanism to ensure adherence to the coordination; and (c) the absence of possible actions of outsiders, such as current and future competitors, as well as customers, that can jeopardize the results expected from the coordination. 1.224  The degree to which these conditions are fulfilled all vary with the characteristics of the firms, markets, and products concerned. The reader is referred to Section C.5 for an overview of the most relevant factors.

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(3)  Enhancing Market Power 1.225  The existence of market power, in particular static market power, on the part of a single firm is not a negative thing per se. As indicated in the introduction, companies often obtain market power in entirely legitimate ways, for example by producing more efficiently than other players, by making better quality products, or by being more innovative. Indeed, the prospect of obtaining (some) market power is a major determinant for companies to invest in product and process innovation. Consequently, competition policy is normally not concerned with market power as such. Rather, it is concerned with the ways in which market power may be maintained or enhanced through anti-competitive means. 1.226  One commonly distinguishes between two main ways in which companies may enhance their (individual or collective) market power: through merger, and through exclusion.

(a)  Merger with a Competitor: Unilateral vs Coordinated Effects 1.227  While the existence and extent of any negative impact of a merger on competition will depend on many factors (eg the market position of the companies concerned, the strength of the competitors, the nature of the products, efficiencies), the immediate reason why a merger can have a negative impact is often the same: a merger may diminish the degree of competition in a market by removing important competitive constraints on one or more sellers, which consequently find it profitable to increase prices (or to reduce output, or to take other action to the detriment of consumers). 1.228  The first competitive constraint being removed is that which previously existed between the merging firms. Whereas, before the merger, the merging parties exercised a competitive constraint on each other, in the sense that, if one party were to raise price, it would lose customers to the other party and vice versa, the merger lifts this particular constraint: part of the sales lost due to a price rise on one product will now flow to the product of the merger partner and, as a result, such a price increase may be profitable, while it would not have been profitable prior to the merger. 1.229  To illustrate, let us consider the example of high-quality cars and let us imagine that German purchasers of cars essentially make a choice between brands A (say, an Audi), B (a BMW), M (a Mercedes), and V (a Volvo).159 A reasonable starting point for any market analysis is to assume that pre-merger all producers are marketing their cars in a profitmaximizing way. Car manufacturers may pursue varying strategic objectives,160 but let us assume that each producer tends to choose a selling price that is optimal in view of what the other producers (p. 66) are charging for their product. Accordingly, a reason why, for example, Audi is not charging more for its cars is that it realizes that it would probably lose too many sales to the other three producers. The reason that it does not decrease its price is that it would lose margin and not sufficiently increase volume. Each producer makes a trade-off between volume and margin. 1.230  How would a merger between, for instance, Audi and BMW change the picture? Suppose that Audi and BMW were competitively interdependent in the following way: if Audi were to increase prices by 10 per cent, half of the customers who would stop purchasing an Audi would instead purchase a BMW.161 Similarly, if BMW were to increase prices by 10 per cent, one-third of the customers who would stop purchasing a BMW would instead purchase an Audi. The merger would change the marketing strategy of the new company fundamentally. After all, in deciding on the price of the Audi model, the fact that half of the Audi customers who would be lost following a price increase on Audi would turn up to buy a BMW would be a rather comforting thought for the new company’s management. In the absence of other factors (such as new entry or the realization of

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efficiencies through the merger), the likely result of the merger would be an increase in the price of an Audi and, by analogy, also of a BMW.162 1.231  Such effects are not conditional on competitors changing their way of interacting in a given market (eg by starting to coordinate) but are instead the consequence of the merged firm’s optimal response to the new market configuration where the merging firms no longer compete. The merged firm’s behaviour is profitable even if rivals continue to compete in the same way as they would have done in the absence of the merger. Accordingly, such merger effects are often called ‘unilateral’ or ‘non-coordinated’.163 1.232  This is not to say that competitors cannot also benefit from reductions in competitive pressure as a result of a unilateral price increase by the merging companies. In a way, a merger takes out a source of competition in a market. Other firms’ likely responses to this may also be to increase prices, albeit perhaps to a lesser extent. Therefore, the incentive to raise prices on the side of the merging firms may lead to price increases for all firms present in the same market. 1.233  To come back to our car example: the moment that, as a result of the merger, both Audi and BMW have become more expensive, more customers will show up at the doorsteps of the Mercedes and Volvo dealers. The management of those two companies, confronted with more demand for their products, would make the usual trade-off between volume and margins. They would be likely to increase their prices and margins (even if a little), so as to benefit optimally from the increase in demand they face. 1.234  While competitors may react by raising their prices, it is important to note that it is not these reactions that make the unilateral price rise profitable in the first instance. In the case (p. 67) of unilateral effects, the incentive of the new entity to raise its price stems entirely from the elimination of the competitive constraints that the two merger companies exercised on each other pre-merger, not from the new firm anticipating that its competitors will raise prices. While the magnitude of the price increase may depend on how the other remaining companies respond and vice versa, this is not the underlying reason for the price increase. This is different from the so-called ‘coordinated effects’ which may result from a merger. These refer to price effects (or other effects) which are profitable to the merging firms only because other companies in the market choose to refrain from competing in a strong manner, for example choose to coordinate.164 1.235  The precise nature of the competitive constraints between the parties that a merger eliminates can vary from merger to merger. In some mergers, it may be the fact that the merging entities produce relatively close substitutes that is the important aspect of the merger (our car example). In other mergers, the focus may be on the elimination of direct competition by the combination of important production capacities of the two firms.165 In yet other mergers, it may be the combination of two market participants which previously provided important innovations and thereby influenced the nature of competition significantly. Unilateral effects analysis is therefore not confined to the context of price competition in differentiated product markets. 1.236  It is also worth noting that the previously described effects have by themselves little to do with the question whether the merging firms will become the largest player in a market. What matters is that the merger involves companies that, pre-merger, formed a significant competitive constraint on each other and that the market context is one where the remaining competitors do not form a fully effective competitive constraint. 1.237  In the car example, what drove the result was the fact that a merger between Audi and BMW would eliminate competition between the two and that the two remaining companies would exert only a partial constraint on Audi and BMW. For example, in case of a price increase of 10 per cent on a Audi, half of the former Audi customers would go to BMW

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and not to Mercedes or Volvo. In this sense, Mercedes or Volvo exert only a partial constraint on Audi; the remaining part comes from BMW.166 1.238  Consequently, a fundamental aspect in determining whether a merger should be considered anti-competitive is the degree to which the remaining companies exert a competitive constraint on the merging parties. (p. 68) 1.239  In practice, therefore, there is a high degree of overlap between those cases where the merging parties end up being the dominant player in the market and the cases in which significant unilateral effects are likely to arise. This does not mean to say that market dominance (in the usual sense of the word of being the largest company in the market) is either a necessary or a sufficient condition for negative consequences to occur, but there is a strong correlation.167

(b)  Exclusionary Strategies 1.240  A firm with market power may raise prices by reducing its own output or by making competitors reduce theirs. Strategies that seek to achieve the latter are commonly referred to as ‘exclusionary’.168 A company with market power may seek to exclude rivals in a variety of ways. 1.241  One important way to make rivals produce less is to raise their cost. This is a primary concern in the context of vertical restraints.169 In the context of agreements between companies at different levels in the production or distribution chain (vertical agreements), antitrust concerns may arise when an agreement results in market foreclosure.170 For example, it may be possible for a company to conclude exclusive agreements with the most important suppliers of raw materials or necessary infrastructure and thereby prevent competitors’ access to these inputs or make such access more expensive for them (input foreclosure). When such foreclosure has the effect of significantly increasing the cost levels at which rivals can operate, it may increase the market power of the company having concluded the agreement and lead to higher prices downstream. This scenario is known as enhancing market power through raising rivals’ costs. 1.242  Rivals’ costs may also be increased through agreements that lead to the foreclosure of access to important sales channels (customer foreclosure). Such concerns typically arise in the context of exclusive dealing arrangements in the retailing or distribution sector, but may also apply in the context of loyalty rebates provided by dominant firms. When denied the necessary scale of operations, rival firms may be exposed to a higher cost level (be put on a higher point on the cost curve). Indirectly, and to the extent that customer foreclosure impacts upon the revenue streams of rivals and their ability to invest in R&D and cost reduction, it may also affect their ability to compete in the longer run. 1.243  Although vertical mergers differ from exclusive vertical agreements in that the divisions of the integrated firm can remain active as players in the intermediate goods markets, a vertical merger can modify the incentives of the integrated firm in its dealings with competitors upstream or downstream.171 For instance, a vertically integrated firm, when deciding to (p. 69) supply its competitors downstream with inputs, will take into account how these supplies affect the profits of its own downstream division. If the merged entity has substantial market power in the upstream market, it may have an incentive to raise the price level in that market as that will raise the costs of all non-integrated downstream firms, whereas the integrated firm has access to the input at the cost of production. The change in prices in the upstream market may thus reduce competitive pressure on the integrated firm in the downstream market, leading to overall increases in prices for downstream customers.

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1.244  Assessing whether vertical integration or a vertical agreement has the effect of raising rivals’ costs is in practice a fairly difficult matter. For input foreclosure to be a concern, it must generally be the case that the merging or contracting party involved in the input market has substantial market power: without such market power, it is difficult to see how price can be raised in the input market as a means to raise rivals’ costs. One further needs to see to what extent rival companies lack sufficient alternative sources of supply and, where relevant, the ability to adopt counter-strategies (eg in the form of concluding their own contracts with players upstream, or to integrate vertically by way of merger). Furthermore, it is well recognized that vertical relationships may provide considerable scope for efficiency gains.172 They may reduce transaction costs between the two companies173 and better align the incentives of the companies in bringing a product to market.174 As a result of such efficiency gains, competition in the market may intensify, rather than diminish. 1.245  Apart from creating market power in a given market, vertical contracts or mergers can also serve to protect market power, by increasing entry barriers. Vertical linkages can raise the costs at which potential competitors can operate on a market (input foreclosure), or reduce the revenue streams that can be expected after entry (customer foreclosure). Because of foreclosure, potential competitors may have to enter two markets instead of one: entrants would also have to set up their own input production facilities or distribution system. When this is the result, a company with market power in either of the two relevant markets has become less exposed to potential competition. 1.246  In settings where two or more products are often bought or used in combination, exclusionary conduct can also take the form of tying or bundling. ‘Tying’ occurs when customers who purchase one good (the tying good) are required also to purchase another good from the producer (the tied good). ‘Bundling’ refers to the way products are offered and priced by (p. 70) the dominant undertaking. In the case of pure bundling, the products are only sold jointly in fixed proportions. In the case of mixed bundling, often referred to as a multi-product rebate, the products are also made available separately, but the sum of the prices when sold separately is higher than the bundled price. Tying and bundling can be used to ‘leverage’ a strong market position from one market to another.175 The main antitrust concern in this context is again foreclosure, more particularly customer foreclosure. Such foreclosure may be inspired by the desire to gain market power in the tied goods market, to protect market power in the tying goods market, or a combination of the two.176 As with vertical foreclosure concerns, it is fairly difficult to predict when bundling and tying are detrimental to competition, not least because bundling and tying also have a potential to lead to efficiency gains. 1.247  A final way in which rivals may be excluded in an anti-competitive way is through predatory pricing. Predation refers to the strategy of a (dominant) company to charge very low prices for its products in order to prompt the exit or marginalization of its rivals unable to sustain the losses incurred for a prolonged period. Following the exit or marginalization of rivals, the company would be in a situation of enhanced market power and be able to raise prices. While the idea of predation is rather straightforward, it is clear that there are quite substantial hurdles for such a strategy to work. Not only must rivals be marginalized or forced to exit, it must also be the case that, following their exit, there is no entry by new companies or re-entry by the old ones. 1.248  A complication with pursuing cases of exclusion, especially when they are of the customer foreclosure type, is that the type of behaviour pursued may closely resemble acts of normal competition. The concept of ‘exclusion’ is inherent in any process of competition. When companies seek to supply customers and are very successful in doing so, some rivals are ‘excluded’ in passing and may even have to exit the market. Such exclusion should, in principle, be of no concern to competition policy. Indeed, competition policy should ensure that the normal competitive process is able to perform its task in benefiting the companies From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

that are the more efficient in producing goods and services and the more effective in catering for the customers’ needs. This ground principle, however, also mandates that competition policy should keep an eye on companies that—though ‘successful’ in selling to customers—seek to exclude rivals in ways that are not compatible with the competitive process in the long run and are harmful to consumers. At the same time, the fact that real competition (‘competition on the merits’) and exclusionary practices are so difficult to disentangle only highlights the need to be cautious in intervening in free market processes out of concern that a given company is seeking to exclude rivals. Companies may restrict competition, but so may antitrust authorities—when their policies are too interventionist.

Footnotes: 135

  This section builds on a text written by Kirti Mehta for the first edition of this book and, for the discussion of unilateral effects and tacit coordination, on V. Verouden, C. Bengtsson, and S. Albæk, ‘The EU Notice on Horizontal Mergers: A Further Step Towards Convergence’ [2004] Antitrust Bulletin 243. 136

  J. B. Baker and T. F. Bresnahan, ‘Economic Evidence in Antitrust: Defining Markets and Measuring Market Power’ in Buccirossi, Handbook of Antitrust Economics (n 47), 15. 137

  The cost benchmark is sometimes taken to be forward-looking (ie what would it cost to start production now, with current technology). 138

  ie the demand faced by the firm is inelastic. Put differently, the firm-specific demand curve is downward-sloping (and not flat, as would be the case with perfect competition). 139

  Products may be differentiated in various ways. Differentiation may be based on brand image, technical specifications, product quality, or level of service. It may also find its origin in buyers having to incur switching costs to use a competitor’s product. There may also be differentiation in terms of geographic location, based on branch or store location. Eg location matters for retail distribution, banks, travel agencies, and petrol stations. Note that products can be imperfect substitutes even where they are part of the same relevant market. Substitutability is a matter of degree. 140

  More generally, rivals face increasing marginal cost levels when production levels go up. 141

  See Section C.2. As already indicated, market power is not in itself a bad thing. This holds, in particular, where the market power stems from superior efficiency. 142

  Monopoly positions are normally linked to barriers to entry, such as legal barriers to entry (patents on technology, brand names, statutory monopolies), technological barriers (extreme economies of scale or scope), or strategic entry barriers (related to the incumbent firm’s behaviour or reputation). See Section C.2. 143

  cf B. Klein, ‘Market Power in Antitrust: Economic Analysis after Kodak’ (1993) 3 Supreme Court Econ Rev 43, 76. See also J. Azevedo and M. Walker, ‘Dominance: Meaning and Measurement’ (2002) 23 Eur Comp L Rev 363. 144

  It is only after the price has risen above a certain level that the other companies become competitive and may start to produce or increase output. 145

  As becomes clear from this list of factors, the concept of customer bargaining power is closely linked to the ability and incentive of competing firms to enter or expand (in this case, with the assistance of the customers).

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146

  Buyer power may not, however, be considered a sufficiently effective constraint if it only ensures that a particular or limited segment of customers is shielded from the market power of the dominant undertaking. Cf Article 102 Enforcement Priorities Guidance, para 18. 147

  The marginal cost of production and, on a longer perspective, the incremental cost of production are the relevant benchmarks when assessing economic efficiency. These cost concepts identify how much it actually costs to produce more at the margin and whether customers are left unserved, whose willingness to pay for the product exceeds the cost of production but who do not purchase the product as their willingness to pay is below the price charged. 148

  The same applies when considering market shares on an annual basis where the number of bidding contests in any given year is small. When the number of bids increases, one can expect market shares better to reflect competitive strength. 149

  For a critical analysis of this argument, see P. Klemperer, ‘Bidding Markets’ in Buccirossi, Handbook of Antitrust Economics (n 47). 150

  Case 27/76 United Brands v Commission [1978] ECR 207.

151

  Article 102 Enforcement Priorities Guidance, paras 10–12.

152

  Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461, para 41 (emphasis added). 153

  As indicated in the previous section, even the concept of buyer power is closely linked to the ability and incentive of competing firms to enter or expand (in this case, entry or expansion with the assistance of customers). 154

  The model is due to K. Forchheimer, ‘Theoretisches zum unvollständigen Monopole’ (1908) 32 Schmollers Jahrbuch für Gesetzgebung, Verwaltung und Volkswirtschaft 1. See also M. Riordan, ‘Anticompetitive Vertical Integration by a Dominant Firm’ (1988) 88 Am Econ Rev 1232. 155

  The fringe players do not assume that their individual actions have an influence on the price level in the market, so that the marginal revenue of supplying more equals the market price. 156

  One could debate whether coordination on price can itself be viewed as a way to achieve market power (as is argued by P. Hofer, M. Williams, and L. Wu, ‘Principles of Competition Policy Economics’ [2004] Asia-Pacific Antitrust Rev 4) or that it rather should be viewed as the expression of the exercise of market power. Although ability and effect are difficult to disentangle in the context of collusion, it is true that, in principle, the ability to overcome the prisoner’s dilemma, and thereby being able to collude, is not the same as actually colluding. 157

  The economic literature on tacit coordination, setting out the conditions under which coordination on price is feasible, is relevant to all forms of coordination that have to be maintained through means other than legally enforceable contracts, ie also to most forms of explicit coordination. 158

  Horizontal Merger Guidelines, para 41.

159

  This is a highly stylized example, which ignores, eg, the presence of other car manufacturers in the high-quality segment and the fact that each car manufacturer typically has several models within this segment. 160

  eg a market penetration or a product positioning objective.

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161

  In other words, suppose that the diversion ratio from Audi to BMW (following a price increase of the Audi model of 10 per cent) equals 50 per cent. 162

  The point to remember is that an extra factor—the sales captured by the other model— enters into the pricing equation of the new entity, changing its pricing incentives for each model. 163

  The term ‘unilateral’ might leave the impression that the effects only relate to actions of a single firm, ie the merged entity. As will be developed further in the following paragraphs (1.232–1.233), competitors may also change their price or output levels in response to a merger. For this reason, some have suggested that ‘unilateral effects’ are better referred to as ‘multilateral effects’. See eg J. Vickers, ‘Competition Economics and Policy’, speech delivered at Oxford University, 3 October 2002 (available at ). A decisive factor for effects to be ‘unilateral’ (or ‘multilateral’) is that they do not depend on companies in the market starting to coordinate. For this reason, the Horizontal Merger Guidelines and the Merger Guidelines of the UK Office of Fair Trading (OFT) use the term ‘non-coordinated effects’. 164

  See Section C.5 for more detail on the scope for tacit coordination in a given market.

165

  In markets where output or capacity decisions are the most important strategic decisions of the firms, the important concern for firms is how their output decision influences market prices. In such circumstances, the merged firm may have an incentive to reduce output relative to the pre-merger levels, thereby raising the market price. This incentive is likely to increase, the larger the sales volume of the merged firm, since the corresponding price increase will benefit a larger base of sales. The combination of market shares from two previously independent firms will in some cases thus produce an incentive to reduce output or capacity. For more details, see M. Ivaldi, B. Jullien, P. Rey, P. Seabright and J. Tirole, ‘The Economics of Horizontal Mergers: Unilateral and Coordinated Effects’, Report to DG Competition (available at < http://ec.europa.eu/competition/mergers/ studies_reports/studies_reports.html>. 166

  This example can also serve to illustrate that it is not strictly necessary that the merging parties’ products are ‘closest’ for the merger to produce a (noticeable) price effect. The incentive to raise price exists even if the two merging parties’ products are not closest substitutes. However, it is true that the more the merging products are considered to be ‘closest’ by customers, the more likely it is that a noticeable effect will result (all else being equal). What matters is the degree to which the remaining products exert a competitive constraint on those of the merging parties. 167

  See also the Horizontal Merger Guidelines, para 25, where it is stated that ‘Generally, a merger giving rise to such non-coordinated effects would significantly impede effective competition by creating or strengthening the dominant position of a single firm, one which, typically, would have an appreciably larger market share than the next competitor postmerger’. 168

  The term ‘exclusion’ is broadly used for any (anti-competitive) practice which leads competitors to produce less; it is not limited to situations where competitors are forced to exit the market altogether. The same holds for the term ‘foreclosure’. 169

  cf S. Salop and D. Scheffman, ‘Raising Rivals’ Costs’ (1983) 73 Am Econ Rev 267; Krattenmaker and Salop, ‘Anticompetitive Exclusion’ (n 62). 170

  cf Guidelines on vertical restraints, OJ 2010 C130/1, para 100; Article 102 Enforcement Priorities Guidance, paras 19–20. For an elaborate analysis of foreclosure, see P. Rey and J. Tirole, ‘A Primer on Foreclosure’ in M. Armstrong and R. Porter (eds), Handbook of

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Industrial Organization, Vol 3 (Amsterdam: North-Holland, 2007), 2145–220, as well as the references in Section C.5(b). 171

  cf Guidelines on the assessment of non-horizontal mergers, OJ 2008 C265/6. For an elaborate presentation of the economic literature on non-horizontal mergers, see J. Church, ‘The Impact of Vertical and Conglomerate Mergers on Competition’, Report for DG Competition, September 2004; M. Riordan and S. Salop, ‘Evaluating Vertical Mergers: A Post-Chicago Approach’ (1995) 63 Antitrust LJ 513; Rey and Tirole, ‘A Primer on Foreclosure’ (n 170). 172

  cf Riordan and Salop, ‘Evaluating Vertical Mergers’ (n 171), 523.

173

  Transaction costs can be understood as the usual costs of searching for a trading partner and of drawing up and enforcing contracts, but also as inefficiencies that result from not being able to write contracts as comprehensive as one might wish (incomplete contracts), which may reduce willingness to invest in assets which are specific to the vertical relationship. Mergers, but also exclusive contracts, can have the effect of restoring such incentives. See eg O. Williamson, ‘Transaction Cost Economics’ in R. Schmalensee and R. Willig (eds), Handbook Of Industrial Organization (Amsterdam: Elsevier, 1989). 174

  The incentives for the upstream and downstream companies are not necessarily well aligned. One classic example is the problem of double mark-ups. When the upstream and downstream markets are imperfectly competitive, both the downstream and the upstream company set a mark-up, as a result of which the joint mark-up may be too high from the point of view of the vertical structure as a whole. Depending on the market conditions, reducing the combined mark-up (ie the price) may allow the vertical structure significantly to expand output on the downstream market and increase profits. 175

  There is no received definition of ‘leveraging’ but, in its most neutral sense, it is being able to increase sales in one market (the tied market), by virtue of the strong market position of the product to which it is tied or bundled (the tying market). 176

  See eg M. Whinston, ‘Tying, Foreclosure and Exclusion’ (1990) 80 Am Econ Rev 837. See also Non-Horizontal Merger Guidelines, paras 108, 111.

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Part I General Principles, 1 The Economics of Competition, G Empirical Methods for Market Definition and the Assessment of Market Power Luc Peeperkorn, Vincent Verouden From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Economic or commercial activity — Market power — Market definition, methodology for determining — Technology — Price elasticity — Critical loss analysis

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(p. 71) G. Empirical Methods for Market Definition and the Assessment of Market Power 1.249  Both market definition (an intermediary step in the analysis of market power) and the assessment of market power itself address the following central question: to what extent do companies compete with one another? 1.250  This question, in the majority of cases, is an empirical question. One needs to consider the specific facts of the case. In certain cases, where sufficient data are available, it is possible to apply quantitative, empirical methods to study this question. 1.251  In this section we will discuss the main methods that are available.177 These methods are: the analysis of prices and price movements in the market, the estimation of price elasticities, critical loss analysis, the assessment of prices and market structure, event analysis, the analysis of bidding data, and, finally, techniques involving merger simulation. 1.252  As this review will show, empirical analysis does not need to be sophisticated, nor does it need to rely on having access to numerous data. Some methods are relatively simple. What matters most is that a method is chosen that is sound for the case under investigation. Help from econometricians is valuable in this respect, but using one’s own common sense is also an important ingredient.

(1)  Analysis of Prices and Price Movements 1.253  Prices are probably among the main competitive variables in any market. Analysis of prices, and of price movements, is therefore likely to provide useful first information on the degree to which products compete.

(a)  Price Correlation Analysis 1.254  One intuitive tool for analysing prices is price correlation.178 The main idea behind price correlation analysis is that, when two products are in the same relevant product market, over time their prices are likely to move together relatively closely. After all, when products are substitutes in the eyes of customers, the prices of these products are likely to constrain each other. Note that this does not mean that the prices themselves have to be at the same level; low-priced products of a lower quality may well constrain high-priced goods of a higher quality, and vice versa. 1.255  To illustrate, suppose we have the following monthly price levels for two products A and B, for the years 2010–12:(p. 72) View full-sized figure

Figure 1.14  Price development of products A and B over time

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From Figure 1.14 there appears to be some correlation between the two price series, but it is not perfect. In most months, the prices move in parallel (eg both prices make substantial drops in the second half of 2010, and again in early 2012), but in some months, they move in opposite directions. 1.256  The degree to which two prices move together is measured by the correlation coefficient, a measure that can take a value between –1 and 1. The coefficient is calculated on the basis of the deviations of the prices from their average values at each point in time.179 When the correlation coefficient is equal to 1, the correlation is perfect. It is zero when the prices move independently of each other; it is –1 when the prices persistently move in opposite directions. 1.257  The fact that in Figure 1.14 there appears to be some positive correlation between the two price series is also conveyed by the correlation coefficient, which equals 0.77 in this case (positive value but less than 1). 1.258  When two products are in the same relevant product market, one would expect the correlation coefficient to be fairly high as this would be consistent with prices closely moving together over time. A first practical question that arises is: how high does the correlation coefficient need to be for the products to be considered in the same relevant market? One must have some idea of the relevant benchmark for comparison. One suggested way is to take two products that are known to be in the same relevant market (eg because of (p. 73) their identical product characteristics), and to see how much their prices are correlated. This approach is known as benchmarking. In our previous example, the idea would be to compare the correlation of 0.77 with the correlation between product B and another product C known to be in the same market as B. 1.259  However, one issue with benchmarking is that, if one takes two close substitutes with a price correlation of, say, 0.90, a third product may be perhaps not so correlated (not so close), but still be close enough to be in the same relevant market. Therefore, the ‘benchmark’ obtained from two products in the same relevant market should not be used too strictly, but rather as a rough indication. 1.260  Another important point to be aware of is that prices may be correlated for reasons that have nothing to do with competition between these products. For example, if prices follow the same trend (eg upwards, due to general inflation), this would show up in the correlation coefficient. The problem becomes particularly relevant when two products are made with the same major input. The classic example is prices at the petrol station. It may very well be that prices at petrol stations in Sweden and Portugal are highly correlated but this probably says very little about the relevant geographic market for petrol distribution. Rather, the correlation is likely to be the result of developments in the price of crude oil. Correlation driven by this type of factor is called ‘spurious’ (spurious in the sense that there is correlation due to reasons unrelated to substitutability). 1.261  One must also think of the proper time dimension. The degree of correspondence between two prices depends on the speed with which prices can react to each other. Prices may constrain each other, but only with a certain delay. This would be the case, for example, for a commodity that is traded both at the spot market and on a supply contract basis, with quarterly revisions of the supply price. Prices in the contracted market may react to spot market prices, but can do so only at the revision dates or after the contracts have expired. In this case, the daily or weekly correlation in prices may turn out to be relatively low, while the correlation between prices measured at a quarterly basis is probably higher. In such an instance, the appropriate correlation coefficient to look at would be the one based on quarterly prices.

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1.262  While it is certainly useful to have a look at price correlation (in particular by looking at the graphs), one must realize that it does not provide the full answer to the question whether products belong to the same relevant market. If there is a high correlation between the prices of two products, this simply means that, on average, when the price of one product went up, the price of the other product went up as well, and vice versa. It does not directly address the question of how many customers would switch in the event of a price increase on a product (or group of products), which is the central question for market definition purposes (the SSNIP test). It is true that a high correlation coefficient suggests a strong competitive relationship in this sense, but it can only be taken as indicative evidence.

(b)  Extension: Stationarity/Co-Integration 1.263  As noted previously, measuring price correlation may give rise to misleading (‘spurious’) results if, for example, the prices of two products follow the same general (upward or downward) trend. A price series following a certain trend is in fact a special instance of a price series that is non-stationary: the series cannot be said to move around a stable mean over time.180(p. 74) When working with price series that are non-stationary, there is a high risk that the correlation coefficient is unreliable. 1.264  Co-integration analysis is a rather technical way of analysing price series that are non-stationary.181 It starts from the idea that two price series that are non-stationary may still be connected to each other, that is, ‘co-integrated’ (eg price A is usually 40 per cent higher than price B). The intuition underlying co-integration analysis is the same as that of price correlation analysis: when two products are in the same relevant product market, their prices are likely to move together over time. This can be translated into analysing the difference between two price series (in absolute or relative terms) to see whether that difference follows a stable pattern, that is, is stationary. The statistical test used to analyse whether a series is stationary is rather involved, and typically requires expert input.182

(2)  Analysis of Price Elasticities of Demand 1.265  The price elasticity of a product measures how demand for that product changes with the price of the product (this elasticity is also called the own-price elasticity). In particular, it measures the percentage change in demand following a 1 per cent increase in the price. If the price elasticity is for example 2,183 this means that, following a 1 per cent price increase, demand goes down by 2 per cent. 1.266  As indicated in Section E.1, the own-price elasticity is a summary indicator of the extent to which a product is subject to competitive constraints (due to customer reactions and the presence of competitors). When the price of a product is raised, customers switch away from it: they either switch to competing suppliers, or they stop purchasing the product altogether. The (own-) price elasticity of a good captures both these movements. The higher the own-price elasticity, the more the product is subject to competitive constraints. Alternatively, the lower the own-price elasticity, the higher the degree of market power for the supplier concerned.184 1.267  Price elasticity analysis provides direct input into the SSNIP test for market definition. For example, if the aggregate elasticity185 of the set of products one posits to be in the same relevant product market is equal to 1.5, the unit sales for the products will go down by approximately 7.5 per cent if prices for the products go up by 5 per cent (the usual SSNIP). Depending on the initial gross profit margins of the products involved, this may be profitable or not profitable. If these margins are around 40 per cent, the 5 per cent price increase represents a 12.5 per cent (= 5/40) increase in the profits made on the 92.5 per cent (100% – 7.5%) of sales retained. Comparing the profit gain on retained sales (0.925 ×

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12.5% = 11.6%) with the profit loss on sales lost (0.075 × 100% = 7.5%186 ), the price increase would be profitable. (p. 75) 1.268  The cross-price elasticity measures how demand for a product changes with the price of some other product. For a set of products, there is an array of cross-price elasticities, each corresponding to an individual pair of products. The cross-price elasticity between competing products is normally positive (if the cross-price elasticity is zero, then the products concerned are not competing). Generally, the higher the cross-price elasticity of B with respect to the price of A, the more product B forms a competitive constraint for product A. Cross-price elasticities are thus particularly helpful in evaluating the ‘closeness’ of substitute products (relevant both for market definition and for evaluating possible unilateral effects arising from mergers). 1.269  Information on elasticities can be obtained in various ways.187 Some (rudimentary) information can result from customer surveys that ask the question: ‘in the face of a 5 per cent price increase for product X, and assuming that the price of alternative products did not change, would you switch? If so, by how much?’ If, out of a sample of 100 respondents, 25 indicate that they would switch away half of their demand to other suppliers, this could indicate that the own-price elasticity of the product in question is about 2.5 (assuming the respondents are more or less of equal size). The same question can also be asked for a group of products to see what the elasticity is for the group as a whole.188 1.270  An issue with surveys is that the results obtained from a sample of customers should be representative for the larger group of customers. This is not always easy to achieve, if only for practical reasons (one may need a substantial group of respondents to have representative results). Further, the questions asked should be sufficiently accurate that they leave relatively little room for misinterpretation. Finally, the question is—by definition —hypothetical: ‘what would you do if’. The answers from respondents to a survey are unlikely to be as well thought through as business decisions in the case of real price increases. With these caveats, however, surveys remain a useful tool, and certainly a good starting point.189 1.271  Further (and more affirmative) information on switching behaviour can be obtained from looking at actual decisions to switch in the past. If there are quite a few respondents who indicate that they have switched in the past to take advantage of price differences between products, this signals that the elasticity for a particular product (or set of products) is likely to be substantial. 1.272  To avoid the problem of surveys, information on switching behaviour can also be obtained from looking at historic market sales and price data. These data may reveal a certain pattern, namely that, on average, falls (or increases) in the sale price are followed by a certain increase (or fall) in sales. From this it may be possible to distil the price elasticity of demand. (p. 76) 1.273  To illustrate, suppose that in addition to information on monthly prices in the period 2010–12 (depicted in Figure 1.14), we also have data on the monthly quantities of product A bought. The observed quantities and prices of product A may look like those shown in Figure 1.15.190

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View full-sized figure

Figure 1.15  Observed prices vs quantities 1.274  Each ‘dot’ in Figure 1.15 represents a combination of the observed price and quantity of product A in a particular month (there are 36 dots). The dots indicate a negative relationship between prices and quantities. We can even recognize something like a ‘demand curve’ in the graph, by drawing a line that ‘best fits’ the points on the graph. An example of such a curve is depicted in Figure 1.16. It is downward-sloping, and seems to have a slight curvature. Note however that, strictly speaking, one cannot call the curve a ‘demand curve’ (a curve expressing demand as a function of price), unless one is confident that there are no other (important) factors that influence or explain the observed demand for product A at a certain price of A.191 This aspect usually requires a lot of care in empirical analyses in order to avoid false inferences from the data.(p. 77) View full-sized figure

Figure 1.16  A line of best fit 1.275  The slope of the demand curve (assuming this curve is determined correctly) gives information on the demand elasticity. The greater the slope of the demand curve (the steeper the demand curve) at a given price level, the lower the price elasticity at that price: a change in price has little impact on the quantity bought.192 1.276  If there are no other factors to take into account, an estimate of the price elasticity for product A is obtained from the demand curve that best fits the data points observed. It is quite common to start with the assumption that the elasticity is constant across (the relevant range of) the demand curve, so that there is only one value to be estimated. This assumption determines the shape of the curve.193 The assumption is not entirely innocuous, as the price elasticity of a product tends to increase when the price increases (demand

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often becomes more elastic at higher prices). However, its appropriateness can be checked later.194 (p. 78) 1.277  The standard statistical tool used by economists to find and evaluate a relationship between observed data points is regression analysis.195 Broadly speaking, in its most common uses, regression analysis aims at identifying a line through data points that provides the best fit, that is, which minimizes the differences between the actual observations and the plotted line.196 It then evaluates whether the differences between the actual observations and the plotted line are substantial, in view of the number of data points available. The better the ‘fit’, the more ‘precise’ the estimated relationship can be deemed to be. 1.278  How confident can we be that the resulting elasticity estimate is precise and reliable? In general, the more data points one has, and the better the fit, the more one can be confident of having found a reliable estimate. The extent to which elasticity estimates obtained from regression are ‘precise’ in a statistical sense is answered in the following way. There is a ‘true’ price elasticity of demand, and there is the elasticity estimate found by drawing the line through the available data. In econometrics, when establishing a relationship between variables, it is recognized that there may still be other (small) factors, and measurement errors on the variables, that may produce an observed relationship that is not exactly identical to the ‘true’ relationship. Taken together, these other factors and the measurement errors form a certain ‘chance’ component in the observations (this produces the ‘scatter’ in the graph). 1.279  Technically, econometricians say that they estimate the following ‘model’:

where

stands for the quantity (in logarithms197 ) of product A bought in month t

(t = January 2010, …, December 2012),

the price (in logarithms) of product A in

that month, βrepresents the ‘true’ relationship between the quantity of A and the price of A, and where εt is the error term, that is, the ‘chance’ component at time t causing the quantity of A observed to deviate from the ‘normal’ level at price A (the quantity predicted by the model). Parameter α is a constant term to improve the fit. Under conditions of normality,198 and as long as the error is not ‘systematic’ (eg as would be the case if there were still some other relevant, but omitted variable in the model), it can be shown statistically that, 95 per cent of the time, the ‘true’ elasticity lies within about two standard deviations of the elasticity (p. 79) estimate obtained from the data sample.199 The standard deviation of the estimated elasticity is an estimate of the variability of the elasticity estimate.200 1.280  If we conducted a regression analysis on the data shown in Figure 1.15, we would find that the own-price elasticity of product A would be estimated to be 1.40.201 Allowing for the ‘chance’ component that may have produced this result, it can be said with 95 per cent confidence that on the basis of this regression the ‘true’ elasticity lies between 1.17 and 1.65.202 This interval is called the 95 per cent confidence interval. In principle, the

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narrower the confidence interval (the more closely it surrounds the estimate of 1.40), the more precise the estimate can be considered to be. 1.281  ‘Preciseness’ and ‘reliability’ are, however, relative concepts. As indicated (para 1.275), a problematic issue in the interpretation of the curve in Figure 1.15 arises from the fact that it relates the observed quantities of product A only to the observed prices of A. There may be other factors that influence the quantities of A bought, not just the price of A. When this is the case, then the relationship found by mechanically comparing observed quantities and prices of A (as carried out previously) is unlikely to be the correct one: the found elasticity estimate is then called ‘biased’. And when the elasticity estimate is itself ‘biased’, the confidence intervals surrounding the estimate do not mean much either. 1.282  For instance, when a product B is a good substitute for product A, an obvious factor influencing the demand for A is the price of product B. The way to obtain correct (unbiased) elasticity estimates is to add the price of product B into the analysis as a possible explanatory variable for the demand for A. By explicitly adding the ‘price of B’ to the analysis, the real effect of the ‘price of A’ on ‘quantities of A bought’ is identified. In graphical terms, the picture becomes three-dimensional, with on the vertical axis ‘quantities of A bought’ and on the two ground axes ‘price of A’ and ‘price of B’. Econometric estimation (regression) finds the line that best fits all the data points in the three-dimensional plot.203 The slope of the (new) line with respect to the price of A provides an estimate of the own-price elasticity of product A. The slope of the line with respect to the price of product B gives an estimate of the cross-price elasticity of product A with respect to the price of B. (p. 80) 1.283  Suppose the prices of product B over the period 2010–12 are those depicted in Figure 1.14. Using this information with the data on the prices and quantities of product A shown in Figure 1.15, the own-price elasticity of product A would be estimated to be 2.23. Allowing for the ‘chance’ component that may have produced this result, the ‘true’ elasticity is between 2.09 and 2.37, with about 95 per cent confidence. Note that demand for product A thus turns out to be more elastic than that suggested by the previous regression (2.23 is greater than 1.40). This is consistent with the fact that the prices of products A and B were quite correlated (see Section G.1), suggesting they might be in the same relevant market. On average, increases in the price of A were accompanied by increases in the price of B, limiting the actual sales loss of product A from an increase in its price. However, when prices of B are held constant (the ‘all else being equal’ aspect inherent in the notion of ‘elasticity’), the sales loss of A is higher. 1.284  Regression analysis can also be used to help us to test hypotheses. For example, a regression analysis could be used to test whether two products are, in fact, substitute products. One hypothesis that can be tested is this: products A and B are not substitutes, which means that the cross-price elasticity is (close to) zero. A regression analysis can help us to test this hypothesis by providing an estimate of the cross-price elasticity between products A and B along with the standard deviations of the estimate. In our example, the regression produces an estimate of the cross-price elasticity with respect to the price of B equal to 0.98, with a 95 per cent confidence interval between 0.86 and 1.11. Given that the confidence interval is such that it does not include zero, it can be concluded with 95 per cent confidence that the true coefficient is not zero (in other words, one can be rather confident that the two products are indeed substitutes). In this case, econometricians say that the found coefficient is in statistical terms significantly different from 0, or in short ‘statistically significant’.204

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1.285  In a case where the confidence interval is such that it includes zero, it cannot be excluded with 95 per cent confidence that the true coefficient is in fact different from zero. Suppose, for example, that we had found a cross-price elasticity of 0.21 and a confidence interval between –0.05 and 0.47. In that case, econometricians would say that the found elasticity estimate of 0.21 is statistically not significantly different from zero. In other words, although the found estimate of the cross-price elasticity is positive (0.21), one would not be able confidently to say that the two products are in a competitive relationship. 1.286  There are three broad reasons why estimates may not be significantly different from zero. The first obvious possibility is that the coefficient being estimated is indeed zero or close to zero. Secondly, the data set may be too small to be confident that the result is different from zero: small data sets usually lead to wide confidence intervals, and this shows up in the estimate being ‘statistically insignificant’. Thirdly, the differences between the actual (p. 81) observations and the plotted line are substantial (ie the ‘fit’ is not good enough), so that the confidence interval around the estimate includes ‘zero’. The statistical significance test alerts us that one of these situations applies. 1.287  As noted, estimates obtained from regression analysis are likely to be biased whenever variables that have a significant impact on the dependent variable are omitted from the analysis. In order to have reliable results, it would be necessary to check whether there are any omitted variables left. The added value of regression analysis is that it allows account to be taken of many factors that may potentially have an influence on the variable to be explained. Sometimes it is possible to think of potentially omitted variables. For instance, one could see if there have been promotion campaigns for either product A or B, and include such information in the analysis. In this way, one could check whether the influence of promotion campaigns is statistically significant. Alternatively, one could carry out some (econometric) checks to see whether the differences between the observed data points and the plotted line follow some systematic (yet unexplained) pattern, which would suggest that there may still be other factors at play. In a similar vein, one needs to bear in mind that the observed quantities and prices may not reflect the demand curve as such but rather the relation between quantities and prices in equilibrium. In this case, one is faced with the problem of identification, that is, how to identify the true causal relationship between demanded quantity and price, when they are jointly determined and both affected by multiple factors (including supply-side factors). To address this concern, more advanced econometric analysis is typically needed.205 1.288  A final remark relates to the relation between statistical significance and economic significance. The two concepts are obviously related, but not identical. For example, the estimate of a cross-price elasticity may, through the wealth of data available, be statistically distinguishable from zero, but it may still be very low in economic terms (eg 0.15). Similarly, while an own-price elasticity estimate may, due to a lack of data, not be statistically different from zero, it may still be quite high and important (eg 3.0). It is important to ask oneself why an estimate may be statistically significant or insignificant, and to keep an eye on the value of the estimates to see whether they are important and whether some economic implications could be derived from them.

(3)  Critical Loss Analysis 1.289  Critical loss analysis is another method addressing the market definition question: would a hypothetical monopolist want to raise price on a set of products?206 It addresses the SSNIP test from the other angle: rather than evaluating actual or likely demand-side responses to a price increase (eg through estimation of price elasticities), it looks at the supply side and asks: given a price increase of X per cent, what would the percentage loss in unit sales have to be to make the price increase unprofitable? If the actual loss of sales is

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larger than this amount, then a price increase is unlikely to be profitable. If it is less, it is profitable. (p. 82) 1.290  For example, if the gross profit margin (the difference between price and marginal cost) is 40 per cent, a 5 per cent price increase represents a 12.5 per cent (= 5/40) increase in the profits made on the sales that continue to be made.207 At the same time, the full margin (100 per cent) is lost on the units no longer sold. Let the percentage of sales lost be denoted by L. Then the gain of the price increase is equal to 12.5% × (100-L); the loss is 100% × L. The critical loss is given by that L for which there is no net gain: 12.5% × (100-L) = 100% × L. The critical loss is therefore equal to 11.1 per cent.208 1.291  Critical loss analysis provides a benchmark with which the estimate of the actual sales loss in the case of a price increase can be compared. In the context of market definition, when an estimate of the price elasticity for a group of products in the candidate relevant market is available, one can compare the estimated sales loss (based on the price elasticity) following a 5–10 per cent price increase with the critical loss benchmark or threshold. If the former is higher than the latter, this indicates that the price increase would be unprofitable and that the relevant market should be wider. If not, the candidate market is an antitrust market (and the market assessed may even have been taken too large). 1.292  If no estimate of the price elasticity is available, one can still see whether the critical loss analysis suggests that the elasticity would have to be unrealistically low (or high) for the products to be in the same (or a different) relevant antitrust market. Note that a critical loss easily translates into a ‘critical elasticity’: if the critical loss in the context of a 5 per cent price increase is 11.1 per cent (as in the previous example), this means that the critical elasticity is 11.1%/5% = 2.2. 1.293  The critical loss benchmark for a given product (or group of products) depends on the price-cost margin on the product(s) and on the hypothesised price increase. The larger the margin, the smaller the critical loss will be. This is not surprising given that it is much more costly to lose sales when margins are high than when they are low. 1.294  One common misunderstanding is that, because high margins mean that the critical loss benchmark for a given group of products is low, it follows that the relevant market is probably wider than that group of products. This may indeed be the case, but one must keep an eye on what causes the high margins in the first place. Notably, high margins may be the result of a degree of product differentiation. In such a case, the critical loss may be low, but so is—in all likelihood—the actual loss in the case of a price increase.209 A comparison of critical loss and (likely levels of) actual loss therefore remains preferable in many cases.

(4)  UPP 1.295  A method that has become increasingly popular, especially in the context of assessing the likely impact of mergers in differentiated product markets, is the UPP (‘upward pricing (p. 83) pressure’) method.210 The method tries to gauge how pricing incentives change when a group of products is sold by one firm (the merged entity) instead of being sold by individual firms that make independent pricing decisions. UPP can also be used for the purpose of applying the hypothetical monopolist test (SSNIP test) in the context of market definition,211 even if, in practice, it is rarely used in this way. Indeed, rather than being a tool for market definition, UPP has so far been advocated (and used) primarily in merger cases as a tool for avoiding market definition in a context where this is inherently difficult (differentiated product markets) and for focusing directly on whether the merger will generate upward pricing pressure.

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1.296  The UPP method relies heavily on the concept of diversion ratios and as such is very close in spirit to other methods focusing on the elasticity of demand and closeness of substitution. However, UPP reinterprets the difference in pricing incentives between the single firm and the independent firms from the cost side, in particular, from the angle of opportunity costs. Before the merger, if one of the two merging parties were to increase its sales (by reducing its price), the value of sales lost by the other firm would not be taken into account.212 After the merger, however, this impact on the other firm is taken into account and, indeed, viewed as a cost (an opportunity cost) to increasing sales. This amounts to an increase in the marginal cost of production, which tends to lead to higher prices or ‘upward pricing pressure’. Unless efficiency gains due to the merger are sufficiently large to offset the increased opportunity cost, one can be confident that the merger will likely lead to a net UPP. 1.297  To illustrate, consider a merger between firms A and B which both sell differentiated mobile phones. Assume that they sell mobile phones at a pre-merger price of €100. The marginal costs of production are €75, leaving a gross margin (contribution to profit) of €25. When one firm, say firm A, decreases the price by €2.50 it will sell an additional 10, 000 mobile phones. It will thereby negatively affect the other firms in the market, including firm B. Assume firm B sells 4, 000 mobile phones less as a result (this is another way of saying that the diversion ratio is 0.40) and loses the profit margin of €25 it used to make on those sales, that is, it loses €100, 000 profit in total.213 When firm A merges with firm B to form a single firm, pricing incentives change. The profit margin lost by firm B becomes an opportunity cost for the merged entity when deciding on the optimal price of product A. The value lost by the firm B of €100, 000, averaged over the 10, 000 unit increase in sales, translates into an additional opportunity cost of €10 per mobile phone of brand A.214 (p. 84) 1.298  Higher opportunity costs can be viewed as higher marginal costs for product A, which tends to lead to higher prices. Unless efficiency gains due to the merger exceed this level, the merger will probably lead to price increases. Suppose that we know (eg from past experience in the market) that cost increases are typically passed through by firm A at a rate of about 60 per cent, and let us assume that there are no efficiencies. On this basis, we can anticipate that the merged firm would increase the price of mobile phone A by about €6 (= 60% × 10), that is, carry through a 6 per cent increase in price. 1.299  In its original form, the UPP method compares the increase in the opportunity cost of production (the value of sales lost by the merging partner divided by the volume gain) with the efficiency gain from the merger to see whether there is a net UPP. Typically in merger reviews, however, the assessment of efficiencies is undertaken only in a second step, that is, once it has been established that the merger is likely to give rise to ‘significant’ anti-competitive effects absent efficiencies. In practice, therefore, UPP-type methods are primarily used as screens, to assess whether the merger is prima facie likely to produce significant price effects absent efficiencies. Where applicable, a more direct comparison with the expected efficiencies is then undertaken at a later stage of the investigation. 1.300  When does one say that a predicted UPP is sufficiently large to cause a ‘significant’ price increase? To answer this question one would need to know the relevant pass-through rate, that is, the extent to which an increase in the marginal cost of a product translates into a higher price for it. Precise estimates of the pass-through rate are not typically available, especially during the earlier stages of the investigation.215 One sensible way to proceed which has been proposed in the literature is to proxy the pass-through rate using a default value, for example 50 per cent.216 For instance, if one deems a 5 per cent predicted increase in the price level of any single product of the merging firm to be prima facie problematic (not yet taking into account efficiencies), this would mean that one should be worried about a predicted increase in the opportunity cost (expressed as a percentage of

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the pre-merger price of the product in question217 ) of 10 per cent. Of course, different levels result if one starts from different ‘problematic’ price increases. 1.301  To summarize, three ingredients go into a UPP analysis: diversion ratios, profit margins, and pre-merger prices. Combining these with ‘default’ pass-through rates turns the UPP method into a useful screen to separate mergers that require additional scrutiny from mergers that probably do not. At a second stage, UPP can be used to draw more precise conclusions, based on more detailed analysis of, for example, the nature and type of competition in the market, the likely efficiencies, and the likely pass-through rate.

(5)  Event Analysis 1.302  Relevant information for the purpose of market definition and impact assessment can also be derived from the analysis of past ‘events’ or ‘shocks’ occurring in the industry.218 The idea (p. 85) is to consider the event, and to see how customers and/or companies reacted to it. Typically, but not necessarily, this analysis would involve some type of econometric analysis. 1.303  The ‘events’ can be of various types. An important type of event is past market entry. For instance, if, following market entry by company A, company B lost many sales, but company C’s sales remained constant, then it may be concluded that A and B’s products are in the same relevant market, and C’s products are probably not. This analysis may also be applied on a more general basis, to see which products, rather than others, are closer substitutes for one another. If B’s sales reacted strongly, but C’s sales much less, then one could conclude that products A and B are closer substitutes than products A and C. 1.304  Other examples of ‘events’ include supply shortages, shocks in input prices, regulatory intervention, technological change, and promotional and advertising activity. For example, if a promotional activity on one branded good (eg a strong advertisement campaign, or heavy discounting) resulted in a capture of market share of one other brand in particular, this may be taken as evidence that those two goods are in close competition with each other. 1.305  Exchange-rate developments, given that they relate to trade between countries, may provide some insight into the question of geographic market definition. For example, if in the past, following a strong depreciation of the US dollar persisting for a lengthy period, US exports of the product under consideration did not increase, this could be taken as an indication that the US and the EU formed separate geographic markets for the product. Obviously, with the arrival of the euro, the ‘exchange-rate event’ is likely to become applicable less often in EU investigations, but, in cases involving both euro and non-euro countries, it remains a potential source of information.

(6)  Assessment Methods Relating Price to Market Structure 1.306  A promising avenue for investigating whether products or companies are the subject of significant competitive constraints opens up where it is possible to compare markets with one another, either a comparison between different markets (eg different geographic markets) or a comparison of markets over time (eg following entry or exit in the market or other changes in market structure219).

(a)  Price Concentration Analysis 1.307  An example of comparing markets with one another is price concentration analysis.220 The object of study of price concentration analysis is to see whether prices are systematically higher in markets where there are a few players (high market concentration), than in markets where there are many players (low market concentration).

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(p. 86) 1.308  Figure 1.17 provides an example of what appears to be a positive relationship between market concentration and price for a sample of distinct geographic areas. Where such a positive relationship can be established, this is an indication that the product market under consideration is indeed a relevant antitrust market221 and that an increase in market concentration (eg through a merger) may lead to price increases. If market concentration is high due to the presence of a firm with a very large market share, it is also an indication that this firm is exerting market power and can be deemed dominant in the market. View full-sized figure

Figure 1.17  Price vs concentration 1.309  When there is no clear relationship between concentration and price, this signals that in the more concentrated markets there is no more market power than in less concentrated markets, for instance due to very low entry barriers. It can also signal that the ‘markets’ (on the basis of which concentration is measured) are themselves not really relevant product or geographic markets, but rather part of a broader relevant product or geographic market. For instance, one would expect to find little relation between the number of malt whisky producers and the price of malt whisky, if the relevant market in reality includes both malt whisky and blended whisky. 1.310  Figure 1.17 appears to suggest a positive relationship between concentration and price. The robustness of this conclusion can be (and typically should be) further investigated using econometric methods. Through regression analysis, one can seek to identify a line that best fits all the data points in the plot. The greater the slope of this line, the stronger the relationship (all else being equal). Econometric tests can then be performed, on the basis of the 95 per cent confidence interval around the estimated price concentration relationship, to check whether the relationship is indeed significant from a statistical point of view. 1.311  Importantly, in this context, the regression analysis allows for taking account of factors other than concentration that also affect price. For example, if it is the case that in certain countries the costs of running a business are high, so that prices are relatively high and fewer firms are (p. 87) active, then this would show a certain positive relationship between price and concentration regardless of the intensity of competition in the market. It is hence necessary to take such other factors into account, because analysis of the relation between price and concentration by mechanically comparing those two variables alone is likely to provide misleading results for the purpose of antitrust analysis.222

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1.312  To make meaningful comparisons, it is necessary to compare ‘like with like’. When the products whose prices are being compared are not identical across the regions, price disparities might be the result of differences in the product characteristics and costs, rather than of differences in the degree of competition present in the market. Incorporating product characteristics and costs directly into the analysis may be difficult when data on these variables are difficult to obtain. In such cases, it is preferable to work with margin data, given that margins typically better control for differences in product characteristics and costs than prices.

(b)  Direct Evaluation of Competitive Constraints 1.313  An important variant of the previous method is to perform the analysis not only on the number of market players, but also on the identity of the market players. This essentially amounts to analysing whether the presence of firm A typically goes hand in hand with lower prices charged by firm B, and vice versa.223 If this is the case, this gives an indication of the likely price impact of a merger between companies A and B. Again, econometric methods (regression analysis) can be used to estimate the order of magnitude of the price effect and to check whether the relationship found is in fact significant from a statistical point of view, properly controlling for other relevant factors that may have an influence on prices charged in the market.

(7)  Analysis of Bidding Data 1.314  Certain markets can be characterized as bidding markets. In essence, these are markets where companies compete for specific contracts. The term ‘bidding market’ covers both situations where customers use formal bidding rules (as is the case in public procurement) and situations where customers simply elicit bids from sellers during negotiations. 1.315  Analyses of bidding data are often helpful in evaluating the nature of competitive interaction among firms in the marketplace. They can be used to assess market definition by helping to identify the firms that participate or compete in a bid. They can also be used to assess market power by identifying the firms whose presence is most important in determining the outcomes of bidding situations. 1.316  A particular issue in the context of bidding markets is the question of what role market shares play in the competition assessment. In each particular bidding contest, there is normally only one winner. The fact that another firm did not make a sale in a particular bidding contest does not mean that this firm did not pose a significant competitive constraint on the winning firm. In such a case, market shares (which give an indication of the firms’ success in bids) may not be a good reflection of the competitive significance of firms, especially when (p. 88) the number of bids in a given year is small (when the number of bids increases, one can expect market shares better to reflect competitive strength). 1.317  In addition, the link between market share and market power is probably less direct in bidding markets than in most other markets.224 In bidding markets, each customer receives, or may receive, a personalized offer. Where this is the case, companies can decide to compete more aggressively on the margin, without this necessarily having a direct impact on the margins obtained on their existing customer base. Especially when individual contracts are large and infrequent, the incentive to compete for each of them may be strong. 1.318  Accordingly, in bidding markets it is useful to seek direct information on the importance of the respective market players in the bidding process, and to see whether market shares overstate or understate market power. Three forms of bidding analysis are

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often applied, mostly with a view to establishing which firms have been competing strongly against each other for certain types of contract.225 1.319  Frequency of encounter analysis consists in counting how often specific firms meet. For example, if firm A meets firm B more than 80 per cent of the time in those bids in which it participates, but meets firms C and D only 30 per cent and 20 per cent of the time, respectively, this can be an indication that firms A and B are ‘close’ competitors for the customers they supply.226 1.320  Runner-up analysis seeks to provide more accurate information on the ‘closeness’ of competitors by looking at the number of times company A has come second when company B has won a bid, and vice versa. The more often two companies have put in the two most competitive bids, the more they represent the main competitive threat to each other. 1.321  Price impact analysis (discount analysis) investigates whether the number (and possibly the identity) of bidders present in a bid has a significant impact on the prices (or discounts) being offered. When prices are, on average, higher when the number of bidders is low, this indicates that the number of bidders in the market matters, and that a merger may lead to price increases. One can also investigate whether the prices offered by company A tend to be lower when company B is also bidding (and vice versa). This would give an indication of the likely price impact of a merger between companies A and B. 1.322  Also in this context, one should compare ‘like with like’. When the contracts are particularly diverse in nature or size, it is probably better to compare discounts than actual prices (discounts normally vary less with differences in the actual contract to be performed). Even then, however, one still needs to be aware of factors influencing the level of discounts, such as the value of the deal (higher values usually attract greater discounts). (p. 89) 1.323  A systematic way to investigate the relationship between discounts and the number (or identity) of bidders, and properly to control for other factors influencing the level of discounts, is to carry out a regression analysis. Econometric tests can then be performed to see how precise the relationship found to exist between the number (identity) of bidders and discounts can be deemed to be, on the basis of the 95 per cent confidence interval, and to test whether the relationship is indeed significant from a statistical point of view. 1.324  In certain industries, the number of bidders taking part in any particular bid is determined by the customer itself. If so, and when the number of potential bidders exceeds the number of bidders usually invited, the impact of the observed relationship between the number of bidders and the discount is likely to be small. This is likely to show up in an estimate for the relationship that is insignificant.

(8)  Merger Simulation 1.325  Merger simulation is a more recent technique to simulate the impact of mergers in specific markets.227 Two ingredients go into this technique: information on demand (‘demand elasticities’) and an assumption about the nature of competition in the market (‘a model’). 1.326  The idea behind merger simulation is that if one knows the demand elasticities, and knows the model according to which companies compete, it is possible to predict how prices will change once two firms in the model have merged. 1.327  Also when data on certain model parameters are not available (eg the precise cost levels of the firms, or possibly even the price elasticities of some of the products), it may be possible to ‘retrieve’ these parameters by fitting the market outcome as is predicted by the model for the situation pre-merger (eg in terms of market shares or prices) to the market outcome actually observed pre-merger. This step is called ‘calibrating the model’. With all

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the model parameters available, it is then possible to ‘recalculate’ the model, but with two firms in the model having merged. 1.328  Merger simulation has so far been developed for three main industry settings: differentiated product markets (where companies are assumed to compete on prices à la Bertrand), commodity markets (where companies are assumed to compete on output à la Cournot), and bidding markets (where competition between firms can be modelled as an auction). 1.329  Provided it is carried out properly, the main advantage of merger simulation is that it casts some light on the magnitude of effects that can be expected following the merger, and on the question of whether they will be substantial or minimal. In that sense, the technique is a useful companion to merger analysis that mainly relies on the (qualitative) analysis of the change in market structure. Especially in industry settings where market shares are not (p. 90) necessarily informative (in particular, in differentiated product markets, where market definition itself is a difficult exercise, and in bidding markets), merger simulation can provide added value.228 1.330  In addition, merger simulation can allow for the explicit consideration of merger efficiencies. When one expects the merger to produce significant cost savings (notably, in the form of marginal cost savings), the model can be recalculated on the basis of the new, lower cost level for the merged entity. Merger simulation is thereby a means directly to assess the net impact of a merger on the market. Potentially, this is a major advantage of merger simulation in comparison with more traditional, market structure-based analyses of competition. 1.331  The main weaknesses of merger simulation are also well known. The ‘model’ content in the exercise is very high, possibly to the detriment of the empirics. In its purest form, empirical analysis is about observing things, and drawing inferences that are consistent with what is observed. Merger simulation also considers data, but draws inferences partly on the basis of a model, which is not the same. For example, when merger simulation involves calibration to obtain information on the value of parameters pre-merger, it obtains such estimates on the basis of a model (the model imposes a ‘structure’ on the data). Also, for its predictions, merger simulation clearly relies on the correctness of the specific model being used. 1.332  It is therefore important that one follows a strict approach in the application of merger simulation techniques when assessing mergers. Leading experts in this field commonly emphasize that it is essential that the model used and the estimates obtained provide a good ‘fit’ for the industry at hand, in that they ‘explain’ the past history of the industry at a fairly high level of generality,229 and that sensitivity analysis should be conducted. When the model fits the industry, merger simulation has a number of potential advantages. As a general rule, however, it appears best not to rely on merger simulation alone, but to use it as part of a wider body of evidence.

Footnotes: 177

  For useful reference works, see S. Bishop and M. Walker, Economics of EC Competition Law (3rd edn, London Sweet & Maxwell, 2010); P. Davis and E. Garcés Tolon, Quantitative Techniques for Competition and Antitrust Analysis (Princeton: Princeton University Press, 2009); G. Niels, H. Jenkins, and J. Kavanagh, Economics for Competition Lawyers (Oxford: Oxford University Press, 2011). A recent overview of the use of empirical techniques in EU

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merger control is given in European Commission, ‘Economic Evidence in Merger Control’, Competition Committee, Working Party No 3, OECD, 15 February 2011. 178

  Price correlation analysis has been applied or discussed in various Commission cases, eg Nestlé/Perrier, OJ 1992 L356/1; Procter&Gamble/Schickedanz, OJ 1994 L354/33; Gencor/Lonrho, OJ 1997 L11/30; CVC/Lenzing, OJ 2004 L082/20; Blackstone/Acetex, OJ 2005 L312/60; OMV/MOL [2008], notification withdrawn; Arjowiggins/M-real Zanders Reflex, OJ 2008 C267/14; Ryanair/Aer Lingus, OJ 2008 C47/9; Arsenal/DSP, OJ 2009 C227/24; and Outokumpu/Inoxum, OJ 2013 C312/6. 179

  The correlation coefficient between two price series is equal to the covariance (joint variance) of the price series divided by the product of the standard deviations of the two individual price series. Specifically, if

denotes the price of product A at time t, and

the price of product B at time t, the covariance of the two price series is where P

A

and PB are the average values of the price of A and B, respectively; n is the number of observations; and ∑ the summation sign. The standard deviation of the price series is a measure of the variability of the price over time. For product A, it is the square root of (1/n) ∑ (PtA – PA)2, for product B it is the square root of (1/n) ∑ (PtB – PB)2. Thus, the correlation coefficient (r) is given by the following formula: r = (1/n) ∑ (PtA – PA) (PtB – PB)/√ (1/n) ∑ (PtA – PA)2 √ (1/n) ∑ (PtB – PB)2. The correlation coefficient is always pair-wise (eg between two series of prices). 180

  Another example of a price series that is non-stationary is one where a random price movement at one point in time appears to have effects that persist (eg ‘random walk’). 181

  Co-integration tests have been applied or discussed in a relatively small number of Commission cases, eg Gencor/Lonrho, OJ 1995 C314/14; CVC/Lenzing, OJ 2004 L82/20; Blackstone/Acetex, OJ 2005 L312/60; Ryanair/Aer Lingus, OJ 2008 C47/9; and Arjowiggins/ M-real Zanders Reflex, OJ 2008 C267/14. 182

  See the next subsection for more information on the subject of statistical testing.

183

  Because demand normally decreases if price increases, the own-price elasticity is in principle a negative number. However, it is customary to use the absolute term, ie to present it as a positive number, which is the approach used in this text. 184

  Note that the own-price elasticity of a product is normally greater than 1 (in absolute terms). If it were less than 1, eg 0.5, the supplier of the good could make more money by raising its price (a price increase of 1 per cent would result in only 0.5 per cent less demand, and hence lead to a net increase in profit). 185

  See Section E.1(c). The aggregate elasticity measures how total market demand (combined demand for all products in a particular market) changes with a price increase of 1 per cent. 186

  The full margin (100 per cent) is lost on the units no longer sold.

187

  The Commission considers price elasticities in most cases in a more qualitative manner, eg on the basis of surveys. More sophisticated regression techniques have been applied or discussed in, eg, Procter&Gamble/Schickedanz, OJ 1994 L354/33; Guinness/Grand Metropolitan, OJ 1998 L288/24; TetraLaval/Sidel, OJ 2004 L43/13; Omya/Huber, OJ 2007

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L72/24; Pernod Ricard/V&S, OJ 2008 C219/5; TomTom/Teleatlas, OJ 2008 C237/8; Friesland/ Campina, OJ 2009 C 75/06; Unilever/Sara Lee Body Care, OJ 2012 23/10. 188

  A small but significant minority of switching customers may already be enough for the own-price elasticity of a product to be substantial. See Section D. 189

  For useful guidance on the use of surveys, see eg ‘Good practice in the design and presentation of consumer survey evidence in merger inquiries’ published by the UK OFT and the UK Competition Commission in 2011 (available at ). 190

  In economics, it is customary to display prices on the vertical axis and quantities on the horizontal axis, even when quantities are thought to be a function of prices, rather than the opposite. 191

  As will be discussed in paras 1.282–1.287, the price of substitute products and other factors may substantially influence demand for a given product. This will have to be taken into account. A more fundamental issue is that in each given period the observed prices and quantities are a reflection of the equilibrium in the market (ie the situation where supply equals demand), where quantity and price are jointly determined in a way that does not necessarily mimic the demand curve as such. It is only possible to interpret the dots in Figure 1.15 as a demand curve if we are confident that the observed relation between quantity and price reflects the consumer response to price changes, rather than a mixture of changes in demand and supply conditions. Otherwise, one is faced with the problem of identification: how to identify the true causal relationship between demanded quantity and price, when they are jointly determined and both affected by multiple factors. For this purpose, more advanced econometric analysis is generally needed. 192

  Note that the price elasticity and the slope cannot be ‘equated’, however. The slope relates quantity changes (in units) with price changes (in euros). An elasticity is about relating percentage changes, which is different. Eg for a given price increase of 1 per cent, a drop in sales of 100 units starting from a level of, say, 5, 000 units is not the same as a drop of 100 units at a level of 3, 000 units. The former drop is lower in percentage terms than the latter (2 per cent vs 3.33 per cent). In general terms, the relation between elasticity and the slope of the demand curve is as follows. For a certain unit change in price (Δp) and corresponding unit change in demand(Δq), the elasticity is approximately (Δq/q)/ (Δp/p) = (Δq/Δp) × (p/q), ie the (inverse) slope of the demand curve multiplied by price level p divided by quantity q. 193

  Assuming that the elasticity is constant across the demand curve amounts to assuming that the relationship between the logarithms of quantities and prices is linear. As indicated in n 192, the price elasticity of demand and the slope of the demand curve are related, but not identical. In order to identify (and estimate) elasticities more easily, price and quantity data are usually transformed into logarithmic values (essentially expressing prices and quantities in terms of growth rates compared to a certain base). The slope of a curve in the resulting plot does indicate an elasticity: the slope relates a percentage change in the price with a percentage change in the quantity. 194

  Other simplifications are used as well, especially when simultaneously evaluating the price elasticities (both cross- and own-price elasticity) of various products. Eg the demand functions for differentiated products are sometimes assumed to follow a discrete choice model or an AIDS (Almost Ideal Demand System) model. The purpose of these initial—and generally testable—assumptions is to model consumers’ behaviour in order to unveil the substitution patterns between different products. Also, and this is especially true in the case of discrete choice, these models reduce the number of parameters to be estimated.

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195

  For a good yet non-technical overview, see P. Kennedy, A Guide to Econometrics (6th edn, Cambridge, MA: Wiley-Blackwell, 2008), ch 1. 196

  To measure difference, one can use the absolute differences between the observations and the plotted line, or other measures of difference. The most practical method has proved to be to take the squared differences, and to draw a line such that the sum of the squared differences is minimized. This method is called Ordinary Least Squares (OLS). Statistical tests have been developed for the OLS method, and its variants. 197

  The use of logarithms allows us to interpret the coefficient β as an elasticity, see n 193.

198

  Normality conditions in this context means that the error term follows a ‘normal distribution’ with a mean equal to zero (ie the error is on average zero). The ‘normal distribution’ is a distribution of values with a certain shape. The term ‘normal’ is not taken by chance, in fact. It appears that many things, especially in nature (eg the height of oak trees), follow some normal distribution. A normal distribution is thought to result when the variable itself (height) is the result of many small and independent events influencing the variable (the amount of rainfall during each month, the amount of sunlight, branches breaking off during storms, young couples carving their names into the tree, etc). The— more prosaic—events in economics relate to measurement error, small random events determining demand, etc. 199

  The factor ‘two’ (in ‘two standard deviations’) is in fact closer to 1.96, and is linked to the assumption of normality (see n 198). With a distribution different from the normal distribution, one would need a different factor. The same holds if one were to take a different confidence level (eg with 90 instead of 95 per cent, the factor becomes 1.64). 200

  Remember that there is a ‘chance’ component in the whole exercise, so that the estimate obtained is itself also influenced by chance. Hence, even though we end up having only one estimate of the coefficient (based on the sample), one can speak of a certain (intrinsic or underlying) variability of the estimate. 201

  Estimate obtained using a statistical software package.

202

  Note that this does not mean that the true elasticity lies in the interval with 95 per cent probability. Either the true elasticity lies within the interval (in which case the probability of the true elasticity lying in the interval is 100 per cent) or it does not (in which case the probability of the true elasticity lying in the interval is zero). 203

  Technically, econometricians now estimate the following ‘model’: where

stands

for the quantity (in logarithms) of product A bought in month t (t = January 2010, …, December 2012),

the price (in logarithms) of product A in that month, β the

price (in logarithms) of product B in that month, β and γ represent the ‘true’ relationships between, on the one hand, the quantity of A and, on the other hand, the price A and B respectively, and where εt is the error term, ie the ‘chance’ component in the observations at time t. Parameter α is a constant term to improve the fit. 204

  Closely related to confidence intervals are the concepts of t-statistic and p-value. Whereas confidence intervals depict the range of values around the obtained estimate for which we can be 95 per cent certain that it will contain the ‘true’ coefficient, the t-statistic is the transformation of the obtained estimate into a test variable (think of t-statistic as meaning ‘test statistic’), which is known to follow a certain standard probability distribution. Hence, we can test its significance and, accordingly, that of the corresponding elasticity estimate. When the t-statistic is larger than the critical value ‘two’, it is said to be From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

significantly different from zero at the 95 per cent confidence level (on the number ‘two’, see n 199). The p-value is the probability that an estimate as large as or larger than the one obtained from the sample is obtained, when the true elasticity is in fact zero. When the pvalue is low (eg below 5 per cent), it is unlikely that the true elasticity is indeed zero. At this point, one can conclude that the elasticity is significantly different from zero. 205

  For a useful description of the problem of identification and possible solutions, see J. B. Baker and T. F. Bresnahan, ‘Economic Evidence in Antitrust: Defining Markets and Measuring Market Power’ in Buccirossi, Handbook of Antitrust Economics (n 47). 206

  Critical loss analysis has been applied or discussed in a relatively small number of Commission cases, eg Ineos/Kerling, OJ 2008 C 219/15. 207

  This assumes that the price-cost margin is constant over the sales base. The price-cost margin, also called gross profit margin, is the difference between price (p) and the incremental cost (c) of supplying one more unit of output, expressed as a percentage of price: (p-c)/p. 208

  A general formula for critical loss is given by: Critical Loss = Δp/(Δp + m), where Δp denotes the percentage price change, and m the price-cost margin (in per cent). The formula only holds good when the price-cost margin m is constant over the sales base (in other cases, it is an approximation). In the example, it gives 5%/(5% + 40%) = 11.1%. 209

  cf M. Katz and C. Shapiro, ‘Critical Loss: Let’s Tell the Whole Story’ (2003) Antitrust Magazine, ABA Section of Antitrust Law 49–56. 210

  J. Farrell and C. Shapiro, ‘Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition’ (2010) 10(1) BE J Theoretical Econ; S. Salop and S. Moresi, ‘Updating the Merger Guidelines: Comments’ (2009), available at ; G. Werden, ‘A Robust Test for Consumer Welfare Enhancing Mergers Among Sellers of Differentiated Products’ (1996) 44 J Industrial Econ 409. One of the (few) cases where UPP has so far been used in EU merger control is Case Hutchison 3G Austria/Orange Austria, OJ 2013 C224/6. 211

  J. Farrell and C. Shapiro, ‘Recapture, Pass-Through, and Market Definition’ (2010) Antitrust LJ 585. 212

  cf Section F.3(a) on the unilateral effects of mergers.

213

  As the products are differentiated (eg through brands), firm A’s increase in sales of 10, 000 stem from sales to customers drawn away from competing firms (including firm B) as well as sales to entirely new customers. 214

  Expressed as a percentage of the pre-merger price of brand A, the increase in opportunity costs amounts to 10 per cent. This ratio is also known as GUPPI (Gross Upward Pricing Pressure Index). Formally, the GUPPI for product A equals DAB × mB × PB/PA, where DAB = diversion ratio from product A to product B, mB = the percentage margin on product B, PB = the price of product B, PA = the price of product A. In terms analogous to the 2010 US Merger Guidelines, the GUPPI for product A equals the value of sales diverted to product B (the increase in profit on product B) divided by the lost revenues on product A. 215

  Note that for the purpose of assessing the magnitude of price effects on the merging parties’ products, one needs product-specific pass-through rates, not industry-wide passthrough rates.

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216

  cf Farrell and Shapiro, ‘Antitrust Evaluation of Horizontal Mergers’ (n 210). A 50 per cent pass-through rate is the rate that applies to a context of Bertrand price competition with a market demand that depends linearly on the price of the products concerned. 217

  This ratio is equal to the GUPPI index (cf n 214).

218

  This type of analysis has been applied in some Commission cases, eg Procter&Gamble/ Schickedanz, OJ 1994 L354/33; Kimberley-Clark/Scott, OJ 1996 L183/1; Blackstone/Acetex, OJ 2005 L312/60; Ineos/Kerling, OJ 2008 C219/15; Ryanair/Aer Lingus, OJ 2008 C47/9; Lufthansa/SN Airholding, OJ 2009 C295/10; Arsenal/DSP, OJ 2009 C227/24 in the context of merger control; and COMP/37.507 Generics/Astra Zeneca, OJ 2006 L332/24 in the context of Art 102. Obviously, the industry under investigation must have witnessed an ‘event’ in order to apply this technique. A useful presentation of the technique is provided by M. Coleman and J. Langenfeld, ‘Natural Experiments’ in Collins, Issues in Competition Law and Policy (n 33). 219

  When inferences are drawn from discrete events such as entry and exit, the assessment bears similarities to the event analysis method described in the previous section. 220

  This technique has so far been considered by the Commission in relatively few cases. Examples are Nordic Capital/Mölnlycke Clinical/Kolmi, OJ 1998 C39/19; StatoilHydro/ ConocoPhillips, OJ 2008 C201/5 and a number of cases involving airlines (to investigate whether certain city-to-city routes constitute separate relevant markets), eg Ryanair/Aer Lingus, OJ 2008 C47/9. The closely related technique of comparing the level of discounts and the number of bidders participating in tenders for contracts is discussed in Section G.6. 221

  cf the 2010 US Horizontal Merger Guidelines, section 4.

222

  In this context, one must also be aware of potential feedback effects, eg higher prices in the market attracting entry, which may bias the estimates. 223

  Such direct evaluation of competitive constraints has been performed in eg Ryanair/Aer Lingus, OJ 2008 C47/9; StatoilHydro/ConocoPhillips, OJ 2009 C201/6; and in a number of cases involving bidding markets (cf Section G.7). 224

  But see Klemperer, ‘Bidding Markets’ (n 149), for a critical discussion.

225

  Bidding data have been analysed by the Commission in a considerable number of cases, eg Boeing/McDonnell Douglas, OJ 1997 L336/16; PriceWaterhouse/Coopers & Lybrand, OJ 1999 L50/27; Philips/Agilent, OJ 2001 C92/10; Buhrmann/Samas Office Supplies, OJ 2003 C117/5; GE/Instrumentarium, OJ 2004 L109/1; Oracle/Peoplesoft, OJ 2005 L218/6; IBM/ Telelogic, OJ 2008 C195/05; Syniverse/BSG, OJ 2008 C101/25; AEE/Lentjes, OJ 2009 C101/6; WPP/TNS, OJ 2009 C83/6; Panasonic/Sanyo, OJ 2009 C322/3; Cisco/Tandberg, OJ 2010 C36/7; Oracle/Sun Microsystems, OJ 2010 C91/7; Western Digital Ireland/Viviti Technologies, OJ 2013 C241/6; and UPS/TNT (2013), not yet reported. 226

  Note that such a pattern may be perfectly compatible with a market context where all four firms have equal market share (25 per cent). Eg companies C and D may meet each other more often (and secure more wins) in bidding contests for other customers. 227

  Merger simulation was first used by the Commission in the case of Volvo/Scania, OJ 2001 L143/74. In this case, the Commission decided that, in view of the novel character of the approach and some not fully resolved issues on the reliability of the results and the data, it would not rely on the simulation results for deciding the case. In Lagardere/Natexis/ VUP, OJ 2004 L125/54, the Commission did rely on the results, but only as part of the wider body of evidence. Merger simulation studies have further been considered in Philip Morris/ Papastratos, OJ 2003 C212/4; Sydkraft/Graninge, OJ 2003 C240/4; Oracle/Peoplesoft, OJ 2005 L218/6; BHP Billiton/Rio Tinto [2008], notification withdrawn; EDF/British Energy, OJ

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2009 C38/4; Kraft Foods/Cadbury, OJ 2010 C29/3; Unilever/Sara Lee Body Care, OJ 2012 23/10; and Outokumpu/Inoxum, OJ 2013 C312/6. 228

  Merger simulation may better incorporate the fact that demand substitutability is a matter of degree. The products do not have to be regarded as either ‘in’ or ‘outside’ the market. 229

  G. Werden, L. Froeb, and D. Scheffman, ‘A Daubert Discipline for Merger Simulation’ (2004) 18 Antitrust Magazine 89–95 (the name ‘Daubert’ refers to the doctrine of the same name of the US courts with respect to the admissibility of expert economic evidence).

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Part I General Principles, 2 The Enforcement System Under Regulation 1/2003, A Direct Application of Articles 101 and 102 Eddy De Smijter, Ailsa Sinclair From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Direct effect of Community law — Regulation 1/2003 — Enforcement of Articles 101 and 102 TFEU — Application of EU competition rules — Burden and standard of proof

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A. Direct Application of Articles 101 and 102 (1)  Introduction 2.01  Regulation 1/2003 sets out the procedural rules which govern how Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) are enforced.1 It replaced (p. 92) Regulation 172 with effect from 1 May 2004 and fundamentally changed the procedural framework for applying the EU competition rules. It replaced the centralized notification and authorization system which was created by Regulation 17 with an enforcement system based on the direct application of Articles 101 and 102 in their entirety. 2.02  Under Regulation 17, undertakings had to notify agreements to the Commission in order to benefit from the exception contained in Article 101(3). The Commission had exclusive competence to apply this Treaty provision by granting formal exemption decisions. National competition authorities (NCAs) and courts had no power to grant exemptions under Article 101(3). Commission exemption decisions applying Article 101(3) had the effect of binding NCAs and courts until the expiry date of the particular decision. The Commission’s monopoly on the application of Articles 101(3), combined with the system of prior notification and administrative authorization, resulted in a significant backlog of notifications and the closure of 90 per cent of notifications informally. This diverted the Commission’s resources away from the investigation of serious antitrust infringements.3 2.03  Under Regulation 1/2003, the Commission, the NCAs, and courts of the Member States all have the power to apply Articles 101 and 102 in full.4 Moreover, agreements caught by Article 101(1) but which satisfy the conditions of Article 101(3) are valid and enforceable, no prior decision to that effect being required.5 Notification is no longer a condition for Article 101(3) to apply. Indeed, agreements can no longer be notified to the Commission or the NCAs, as far as the application of EU competition law is concerned. Undertakings themselves must assess whether their agreements and practices comply with Articles 101 and 102. In the new system cases are either initiated ex officio or upon complaint.

(2)  The Aims and Results of the System Change 2.04  The aim of the modernization of the EU antitrust enforcement regime was to create a system that ensures more effective enforcement of the EU competition rules throughout the internal market. This overall aim can be broken down into a number of objectives that have contributed to achieving this goal.

(a)  Increased Application of Articles 101 and 102 at Member State Level 2.05  Articles 5 and 6, in combination with Article 3(1) of the Regulation, give NCAs and courts the power and obligation to apply Articles 101 and 102 in cases where trade between Member States is capable of being affected. As a result, NCAs and courts are involved to a much greater extent in the application of EU competition law. By having multiple enforcers, there is a much wider application of the EU antitrust rules. Since the entry into force and application of Regulation 1/2003, the enforcement of the EU antitrust rules has significantly increased.6 Since 1 May 2004, the Commission has been informed of approximately 700 envisaged decisions applying the EU antitrust rules by the NCAs, pursuant to Article 11(4) (p. 93) of Regulation 1/2003.7 This is a considerable increase compared to the level of enforcement prior 1 May 2004.8 This greater involvement of Member State bodies is often referred to as ‘decentralization’. This did indeed imply—and intentionally so—a measure of decentralization since the Commission’s exclusive competence to apply Article 101(3) is abolished. However, the system created by Regulation 1/2003 does not amount to devolution and should not be seen as an exercise in subsidiarity. The Commission retains full parallel competence in all cases and plays a particular role in ensuring coherent

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application and in defining the orientation of EU competition policy. ‘Communitarization’ of enforcement of competition law, therefore, may be a more fitting term.9 2.06  The greater involvement of NCAs has a number of advantages. It paved the way for greater cooperation and coordination of enforcement activities within the Union. The Commission and the NCAs have created a network (the European Competition Network (ECN)) which provides a framework for work sharing and exchanging information. This is intended to ensure that cases are dealt with by the most appropriate authorities. Close cooperation by ECN members in the application of a common set of rules also promotes consistency and legal certainty by creating a common competition culture. In practice this has surpassed expectations, with there being constant dialogue between the ECN members at all levels to exchange experiences and views. This has increased expertise within the ECN and significantly contributed to the coherent application of the EU antitrust rules.10 In addition, the Regulation contains a number of formal instruments aimed specifically at ensuring consistency in the application of the law.11 2.07  The elimination of the notification system and the Commission’s exclusive power to apply Article 101(3) removed an important obstacle to private enforcement of the EU competition rules. In the system created by Regulation 17, private enforcement of Article 101 could often be effectively blocked by a notification of the agreement to the Commission. If it were not abundantly clear that Article 101(3) was not applicable, the national court would have to suspend proceedings.12 Being aware of this, complainants generally went directly to the Commission. 2.08  Action by private individuals is an important complement to public enforcement. Regulation 1/2003 has served as a first step to open the way to the increased enforcement of Articles 101 and 102. However, Regulation 1/2003 is not in itself sufficient substantially to increase the level of private enforcement in the EU.13

(b)  The Commission’s Focus on Enforcement 2.09  The Commission, like any other enforcement agency, has limited resources, and the Commission did not consider that the enforcement system of Regulation 17 allowed it to (p. 94) make the best use of resources. The notification system rarely revealed cases that posed a real threat to competition and prevented the Commission from using its resources for the detection and punishment of serious infringements.14 2.10  One of the objectives of the reform was to allow the Commission to focus its resources in areas where they make a significant contribution to the enforcement of the EU competition rules. Under Regulation 1/2003, the Commission has three main tasks: (a) to enforce the rules; (b) to develop the orientation of the EU competition rules; and (c) to contribute to the enforcement activities of other enforcers in particular with a view to ensuring coherent application. 2.11  Effective enforcement presupposes both the power to set priorities and the availability of effective tools for that task. The EU Courts recognize the power to set priorities. The case law allows the Commission to assign differing degrees of priority to complaints brought before it and to reject complaints for lack of sufficient EU interest.15 The Commission applies internal principles to set priorities that aim to identify at an early stage the cases that merit further investigation. No single criterion can be decisive in setting priorities. As explained in Best Practices: conduct of proceedings, the Commission focuses its enforcement resources on cases where it appears likely that an infringement may be found, in particular on cases with: (a) the most significant impact on the functioning of competition in the internal market and risk of consumer harm; as well as (b) on cases which are likely to contribute to defining EU competition policy and/or to ensuring the coherent application of Articles 101 and/or 102.16 The Commission’s assessment of whether a case merits further examination also takes into account the possibility of reallocating a case to a member of the ECN and vice versa.17 The fact that the enforcement of the EU From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

antitrust rules by ECN members is now commonplace underpins the Commission’s ability to select cases for further investigation in accordance with its own priority setting. Indeed, the modernization of the antitrust rules has in practice enabled the Commission to be more proactive, as illustrated by the large-scale inquiries it has undertaken in key sectors of the EU economy. This is also the case for its decision-making practice, where the Commission has focused its resources on investigations not simply of hardcore cartels, but also of economically highly important sectors, such as financial services, energy, IT, and media.18

(3)  Self-assessment and Legal Certainty 2.12  Under Regulation 1/2003, undertakings must assess whether their agreements are compatible with Articles 101 and 102. The Commission (or the NCAs) cannot be required by undertakings to assess the compatibility of their agreements with the EU competition rules and make findings of conformity. The abolition of the notification system has entailed a shift from giving comfort to individual agreements to a system of general guidance for undertakings. In making a self-assessment, undertakings can find guidance in the case law and in Commission guidelines. The Commission had already started to provide guidance (p. 95) prior to the modernization of the antitrust rules and has subsequently increased its focus in this regard.19 2.13  The Commission has acknowledged that in certain circumstances it may be useful for it to give informal guidance on novel questions concerning the application of Articles 101 and 102, which are not covered by existing sources of orientation. The Commission’s policy in this regard is developed in its Informal Guidance Notice.20 Guidance letters are not intended to be a substitute for the notification system that was abolished by Regulation 1/2003. There is no legal right to obtain guidance letters. Such letters are issued at the Commission’s discretion taking account of its enforcement priorities. The Notice underlines that since the main aim of Regulation 1/2003 is to strengthen enforcement of the EU competition rules, enforcement action will be given priority. 2.14  Guidance letters are not formally binding on the Commission. However, according to the Notice the Commission will take a previous guidance letter into account, subject in particular to changes in the underlying facts, to any new aspects raised by a complainant, to developments in the case law of the EU Courts, or wider changes in the Commission’s policy. It follows that a guidance letter does give rise to a certain legitimate expectation on the part of the recipient. Departure from a previous guidance letter must be justified by the Commission, inter alia, in light of the factors cited in the Notice. (p. 96) 2.15  To guide it in the exercise of its discretion the Commission has established a number of criteria against which it will assess whether to respond positively to a request and issue a guidance letter. These criteria operate at three levels: (a) the absence of clarity of the law; (b) the public and private interest in the issue of a guidance letter; and (c) the level of available information and other circumstances pertaining to the request for guidance. 2.16  It is an overriding condition that the issues that are raised with the Commission concern application of the law not previously clarified. If there is existing case law or Commission practice and guidance clarifying the issues raised, then the request for guidance will be denied. The Notice makes clear that the Commission will only issue guidance letters in respect of clearly defined, novel, or unresolved issues. The Commission will not consider requests that ask it to take a position on an agreement as a whole.21 2.17  At the next level, the Commission takes into account public and private interests in determining whether it would be useful to issue a guidance letter. The Notice lists the following elements:

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(a)  the economic importance from the point of view of the consumer of the goods and services concerned by the agreement or practice; and/or (b)  the extent to which the agreement or practice corresponds to or is liable to correspond to more widespread economic usage in the marketplace; and/or (c)  the extent of the investment linked to the transaction in relation to the size of the companies concerned and the extent to which the transaction relates to a structural operation, such as the creation of a non-full function joint venture. 2.18  It follows from the use of the words ‘and/or’ that each element may lead the Commission to conclude that a guidance letter should be issued. For instance, the combination of a high degree of uncertainty as to the application of the law (level 1) with a high degree of financial risk (level 2) may be sufficient to warrant a guidance letter. 2.19  Finally, there is a requirement that a guidance letter can be issued on the basis of the information provided and that, as a consequence, no further fact-finding is required. It is made clear in the Notice that no guidance letter will be issued in cases which are pending before the EU Courts, national courts, the Commission, or an NCA. Moreover, the Commission will not consider hypothetical questions or issue guidance letters in the case of agreements or practices that are no longer being implemented. As at the date of publication, no guidance letters have been issued by the Commission. According to the Commission, very few requests for such letters have been made and none of them came close to fulfilling the conditions of being about new or unresolved questions that give rise to genuine uncertainty.22

(4)  The Direct Effect of Articles 101 and 102 2.20  Articles 101(1) and 102 are directly applicable provisions of EU law, creating rights for individuals that can be invoked before national courts.23 Article 101(3) on the other hand does not have direct effect. This follows from Article 103(2)(b), which requires the EU legislator (p. 97) to lay down detailed rules for the application of Article 101(3). In spite of the content of this provision, which does lend itself to direct application, the power accorded to the EU legislator under Article 103 implies that Article 101(3) is not sufficiently unconditional to produce direct effect. Article 103(2)(b) expressly provides for the adoption of detailed implementing measures as a necessary condition for applying Article 101(3). 2.21  When adopting Regulation 17 the EU legislator exercised this power to lay down detailed rules creating a notification system and granting the Commission the exclusive power to apply Article 101(3). Only the Commission could authorize agreements caught by Article 101(1). Neither national courts nor NCAs had the power to apply the exception rule of Article 101(3). If a national court considered a notified agreement to be caught by Article 101(1) it would have to suspend its proceedings and await the outcome of the Commission’s proceedings unless it was abundantly clear that the Commission would find the conditions of Article 101(3) had not been satisfied.24 In cases where the agreement had not been notified and where retroactive notification was not possible,25 the national court would have to strike down the agreement even if it considered that the conditions of Article 101(3) were satisfied. Clearly, this system led to very limited application of Article 101 at Member State level and it was left almost entirely to the Commission to enforce this important Treaty provision. 2.22  Regulation 1/2003 removes the obstacles to effective application of Articles 101 and 102 at Member State level by abolishing the exclusive competence of the Commission to apply Article 101(3). This was achieved by rendering Article 101(3) directly applicable. Article 1(2) of Regulation 1/2003 provides that agreements, decisions, and concerted practices caught by Article 101(1) which satisfy the conditions of Article 101(3) shall not be From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

prohibited, no prior decision to that effect being required.26 Conversely, agreements, decisions, and concerted practices caught by Article 101(1) which do not satisfy the conditions of Article 101(3) are prohibited, no prior decision to that effect being required; see Article 1(1) of the Regulation.27 It follows that whereas under Regulation 17 a formal Commission act was required for the exception to apply, Article 101(3) applies whenever the four conditions are satisfied. The prohibition rule of Article 101(1) applies as long as the conditions for its application are satisfied and the conditions for the application of the exception rule of Article 101(3) are not satisfied. It should be noted that Regulation 1/2003 did not change the system of block exemption Regulations which confers legality under Article 101(3) on agreements that fulfil the requirements set out in the relevant Commission legislation.28 If an agreement fulfils the requirements of a block exemption Regulation, it is legally valid and enforceable and cannot be held invalid by national courts. Under the enforcement system created by Regulation 1/2003, Article 101(3) operates as a defence that undertakings may invoke regarding agreements that are caught by Article 101(1) and are not block-exempted. (p. 98) 2.23  NCAs are empowered by Article 5 of the Regulation to apply Articles 101 and 102. However, it is for the Member States to designate the specific authority or authorities responsible for the application of Articles 101 and 102. In so doing they must ensure that the Regulation is effectively complied with.29 Article 6 of the Regulation provides that national courts shall have the power to apply Articles 101 and 102. However, this provision is in principle superfluous. It follows from Article 1 of the Regulation combined with the principle of direct effect that national courts have the right and the obligation to apply Articles 101 and 102 in full in cases pending before them. 2.24  Various articles of the Regulation make clear that neither at EU nor at national level is it possible to maintain a notification system for the application of Articles 101 and 102. This is achieved by stipulating exhaustively the manner in which proceedings may be initiated. As far as the Member State competition authorities are concerned, Article 5 provides that with a view to adopting specified types of decisions they may act on their own initiative or alternatively on a complaint. They may not act upon a request from parties seeking a positive decision. As is clear from Articles 7 to 10, the same limitation applies to the Commission. In no case is the Commission empowered to adopt a positive decision upon request. The Member States are not obliged by Regulation 1/2003 to abolish notification systems and exemption decisions under national law, but the majority have opted to do so.30

(5)  Burden and Standard of Proof 2.25  Regulation 1/2003 does not affect the substance of Article 101. It merely regulates the procedure for applying this Treaty provision. In particular, the Regulation does not change the fact that Article 101 comprises a prohibition rule, requiring an analysis of likely anti-competitive effects, and a defence,31 requiring an analysis of likely pro-competitive effects and the weighing up of these pro-competitive and anti-competitive effects.32 Regulation 1/2003 does not lead to the integration of Article 101(1) and (3) and the creation of a unified rule limiting the inquiry to whether, on balance, the agreement is anticompetitive. While the overall analysis provides an answer to this question, the fact remains that the analysis is composed of two separate assessments each subject to distinct rules on the burden of proof. 2.26  Article 2 of Regulation 1/2003 provides that the legal burden of proving an infringement of Article 101(1) rests on the party or authority (be it the Commission or an NCA) alleging the infringement, whereas the undertaking claiming the benefit of Article 101(3), bears the legal burden of proving that the conditions of that paragraph are satisfied.33 Article 101(3) is a defence that can be invoked against a finding of an infringement.34 In accordance with general principles of law, it is for the party claiming a defence to prove that the conditions applicable to the defence are satisfied. Moreover, the

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information required to prove that the conditions of Article 101(3) are satisfied is generally in the hands of the undertaking that seeks to rely on the defence. For instance, the parties to the agreement control the cost data and other information required to substantiate claims that the agreement gives rise to (p. 99) objective economic benefits. They are also in a better position to explain why the agreement is indispensable for producing efficiencies and to demonstrate the benefits passed on to consumers. If the legal burden of proof under Article 101(3) were to be placed on the party seeking to establish an infringement the prohibition could be undermined, thereby affecting the very substance of Article 101. Recital 5 also refers to Article 102, stipulating that it is for the party claiming an infringement to prove its existence. This does not mean, however, that the party seeking to establish an infringement must prove the lack of a defence. It is for the party relying on a defence to prove the existence of the conditions for applying that defence. In this regard, recital 5 not only refers to Article 101(3), but to all cases in which a defence can be claimed. 2.27  The EU Courts have provided clarification about the functioning of the rule contained in Article 2 in terms of the Commission’s enforcement practice, holding that in the course of the examination of a case the apportionment of the evidentiary burden of proof may vary: evidence presented by one side may require the other to provide an explanation or justification, the absence of which makes it permissible to conclude that the burden of proof has been discharged.35 For example, an undertaking, when seeking to demonstrate that an agreement or practice fulfils the conditions set out in Article 101(3), may rely on evidence which appears to show that consumers received a fair share of the efficiencies generated by the agreement. In this situation, the evidentiary burden shift to the Commission to disprove the parties’ submissions on this point. If the Commission fails to do so, it may be concluded that the undertaking has discharged its legal burden of proof on this point. In this regard, the Court of Justice has clarified that the Commission cannot dismiss factual arguments and evidence provided in connection with a request for an exemption under Article 101(3). In particular, the examination of such a request ‘may require the nature and specific features of the sector concerned by the agreement to be taken into account if its nature and those specific features are decisive for the outcome of the analysis. Taking those matters into account does not mean that the burden of proof is reversed, but merely ensures that the examination of the request for exemption is conducted in the light of the appropriate factual arguments and evidence provided by the party requesting the exemption.’36 2.28  Article 2 of the Regulation does not determine the standard of proof in proceedings for the application of Articles 101 and 102. This is reflected in recital 5 according to which the Regulation affects neither national rules on the standard of proof nor obligations on competition authorities and courts of the Member States to ascertain the relevant facts of the case. However, in each case it is a condition that such rules and obligations are compatible with general principles of EU law, in particular with the principle of effectiveness (effet utile). This implies in particular that the standard of proof cannot be set at such a high level that the application of Articles 101 and 102 becomes impossible or unduly difficult. In determining the appropriate standard of proof, the economic nature of the rule must be taken into account. In terms of the standard of proof which applies in EU competition proceedings before the Commission, the EU Courts typically refer to the Commission having to (p. 100) demonstrate something to the ‘requisite legal standard’.37 A number of commentators have asserted that this is the standard of the ‘intime conviction’ of the judge, which exists particularly in continental law systems.38 In essence, it appears that the level of proof required is the one which is convincing to the court. In any case, it is clear that not every item of evidence must be consistent with regard to every aspect of the infringement. The EU Courts have repeatedly stated that it is ‘sufficient if the body of evidence relied on by the Commission, viewed as a whole, meets that requirement’.39 With regard to national rules on the standard of proof, an interesting question was addressed by

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the Court of Justice as to whether a causal connection between a concerted practice and the market conduct of the undertakings participating in the practice should be adduced and appraised in accordance with national rules, subject to the principles of effectiveness and equivalence, or whether the EU law presumption of a casual connection in such cases40 should apply. In essence, the Court ruled that the presumption of a causal connection in such cases stems from Article 101(1), as interpreted by the Court, and it consequently forms an integral part of applicable EU law. It is therefore not an independent procedural rule and thus national courts are obliged to apply it.41 2.29  The second proviso in recital 5 which states that Regulation 1/2003 does not affect the obligations of NCAs and courts to ascertain the relevant facts of the case, was introduced to accommodate concerns in some Member States where public authorities are obliged to investigate the case actively, including elements of the case that favour the defendant. The actual wording of recital 5 is inspired by Consten and Grundig42 where the Court held that the Commission ‘may not confine itself to requiring from undertakings proof of the fulfilment of the requirements for the grant of exemption but must, as a matter of good administration, play its part, using the means available to it, in ascertaining the relevant facts and circumstances’. This statement does not affect the allocation of the burden of proof; it merely implies that a public authority is obliged to consider of its own motion obvious arguments and facts that may speak in favour of the defendant. For example, the role of the Commission is not to enforce the rules per se but to apply the rules pursuant to their underlying aim. The aim of Articles 101 and 102 is to protect competition in the market for the benefit of consumers.43 Striking down a pro-competitive agreement simply because the defendant did not raise certain obvious facts and arguments would not contribute to the furtherance of this goal.

Footnotes: 1

  Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 and 102] of the Treaty, OJ 2003 L1/1. Regulation 1/2003 took effect on 1 May 2004. The adoption of Regulation 1/2003 was preceded by a Commission proposal of 27 September 2000 (COM(2000) 582 final) and a Commission White Paper on modernisation of the rules implementing Arts [101 and 102 TFEU] adopted on 28 April 1999, OJ 1999 C132/1. The present chapter deals only to a limited extent with the history of what eventually became Regulation 1/2003. On the procedural framework under Regulation 1/2003 and its implementation, see R. Nazzini, Concurrent Proceedings in Competition Law: Procedure, Evidence and Remedies (Oxford: Oxford University Press, 2004), esp chs 2, 6, 7 and 8. 2

  Council Regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty OJ 1962 013/204. 3

  See the Commission Staff Working Paper accompanying the Communication from the Council to the European Parliament and Council, Report on the functioning of Regulation 1/2003, COM(2009)206 final, para 9. 4

  See further paras 2.20–2.24 on the direct applicability of Art 101(3).

5

  See Art 1(2) of Regulation 1/2003.

6

  See Commission Staff Working Paper (n 3), para 184.

7

  For statistics regarding cases about which the ECN has been informed, see .

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8

  See the Annual Reports on the application of the competition rules in the EU (Part V.B): . 9

  The Regulation is largely limited to regulating issues of procedure at EU level. It only regulates to a very limited extent national procedures. Arts 101 and 102 are applied at Member State level on the basis of Member State rules on procedures and sanctions. 10

  See Commission Staff Working Paper (n 3), s 5.5.1.

11

  See further Section E.3.

12

  See Case C-234/89 Stergios Delimitis v Henninger Braü [1991] ECR I-935, para 50.

13

  See further Section E.4(a).

14

  See COM(2000) 582 final, p 2.

15

  See eg Case T-24/90 Automec v Commission [1992] ECR II-2223, paras 77 and 85. This case law is reflected in recital 18 to Regulation 1/2003. 16

  Notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU, OJ 2011 C308/6, para 13. 17

  See Best Practices: conduct of proceedings, para 14; and see paras 2.156–2.157.

18

  See Commission Staff Working Paper (n 3), s 3.2.2.

19

  Prior to 2004, the Commission adopted guidance on vertical restraints and horizontal cooperation agreements: Commission Regulation No 2790/1999 of 22 December 1999 on the application of Article [101] of the Treaty to categories of vertical agreements and concerted practices, OJ 1999 L336/21; and Commission Notice on Guidelines on Vertical Restraints, OJ 2000 C291/1; Commission Regulation No 2658/2000 of 29 November 2000 on the application of Article [101(3)] of the Treaty to categories of specialisation agreements, OJ 2000 L304/3; Commission Regulation No 2659/2000 of 29 November 2000 on the application of Article [101(3)] to categories of research and development agreements, OJ 2000 L304/7; and the Guidelines on the applicability of Article [101 TFEU] to horizontal cooperation agreements, OJ 2001 C3/2. The 2004 modernization package included general Guidelines on the application of Article [101(3) TFEU], OJ 2004 C101/97, which set out the analytical framework for its application. Moreover, in 2004 the Commission adopted Regulation No 772/2004 of 27 April 2004 on the application of Article [101(3)] of the Treaty to categories of technology transfer agreements, OJ 2004 L123/11, and Guidelines on the application of Article [101 TFEU] to technology transfer agreements, OJ 2004 C101/2. This guidance is regularly updated: see Commission Regulation 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L102/1; the revised Guidelines on vertical restraints, OJ 2010 C130/1; Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements, OJ 2010 L335/36; Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements, OJ 2010 L335/43; and the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C11/1. The Commission has also adopted sector-specific guidance: see Commission Regulation (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector, OJ 2010 L129/52, which replaced Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article [101(3)] of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle

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sector, OJ 2002 L203/30, and the accompanying Supplementary guidelines on vertical restraints in agreements for the sale and repair of motor vehicles and for the distribution of spare parts for motor vehicles, OJ 2010 C138/16, as well as Commission Regulation (EC) No 906/2009 of 28 September 2009 on the application of Article [101(3)] of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia), OJ 2009 L256/31 (which expired on 26 September 2013). 20

  See Commission Notice on informal guidance relating to novel questions concerning Articles [101 and 102 TFEU] that arise in individual cases, OJ 2004 C101/78. 21

  The approach under the Notice is somewhat similar to the Art 267 preliminary reference procedure according to which the requesting Member State court is required to specify the issues of interpretation on which it seeks a preliminary ruling. 22

  See Commission Staff Working Paper (n 3), para 45.

23

  See eg Case C-453/99 Courage v Crehan [2001] ECR I-6297, para 23.

24

  See in this respect, Delimitis (n 12), paras 50–54.

25

  See Art 4(2) of Regulation 17.

26

  The notions of agreements, decisions, and concerted practices are autonomous concepts of EU competition law covering the coordination of undertakings on the market as interpreted by the EU Courts, see recital 8 to the Regulation. In the following, the term ‘agreement’ covers ‘agreements’, ‘decisions’, and ‘concerted practices’. 27

  As far as Art 102 is concerned, Art 1(3) provides that the abuse of a dominant position referred to in Art 102 shall be prohibited, no prior decision to that effect being required. 28

  This is without prejudice to the right of the Commission or NCAs to withdraw the benefit of block exemption Regs in individual cases, on the basis of Art 29 of Regulation 1/2003. 29

  See Art 35(1) of Regulation 1/2003.

30

  See further Section C.4(b).

31

  See recital 5 to Regulation 1/2003.

32

  See recital 5 to Regulation 1/2003.

33

  The allocation in Art 2 of the burden of proof reflects well-settled case law and was confirmed by the CJ in Joined Cases C-204/00, etc Aalborg Portland [2004] ECR I-124, para 78. 34

  See recital 5 to Regulation 1/2003.

35

  See eg Case T-120/04 Organicos Peroxydos v Commission [2006] ECR II-4421, paras 53 and 71 and Case T-36/05 Coats Holding and J&P Coats v Commission [2007] ECR II-110, para 122. 36

  See Cases C-501/106 P, etc GlaxoSmithKline Services Unlimited v Commission [2009] ECR I-9291, paras 102 and 103. 37

  See eg Case C-185/95 P Baustahlgewebe v Commission [1998] ECR I-8417 and Case T-201/04 Microsoft v Commission [2007] ECR II-3601. This wording is also used in recital 5 to Regulation 1/2003. 38

  See eg E. Gippini-Fournier, ‘The Elusive Standard of Proof in EU Competition Cases’ and P. Hellström, ‘A Uniform Standard of Proof in Competition Proceedings’ in C.-D. Ehlermann and M. Marquis (eds), European Competition Law Annual 2009: Evaluation of Evidence and its Judicial Review in Competition Cases (Oxford: Hart Publishing, 2009).

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39

  See eg Joined Cases C-403/04 P and C-405/04 P Sumitomo Metal Industries and Nippon Steel v Commission [2007] ECR I-729, para 42. 40

  According to this presumption, subject to proof to the contrary, the undertakings taking part in the concerted action and remaining active on the market take account of the information exchanged with their competitors in determining their conduct on that market. 41

  Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 52.

42

  See Joined Cases 56/64 and 58/66 Consten and Grundig [1966] ECR 299.

43

  See Article 101(3) Guidelines, para 13.

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Part I General Principles, 2 The Enforcement System Under Regulation 1/2003, B The Relationship Between EU Competition Law and National Competition Law Eddy De Smijter, Ailsa Sinclair From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Community and national competition law, relationship of — Regulation 1/2003 — Member State competence — Enforcement of Articles 101 and 102 TFEU

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(p. 101) B. The Relationship Between EU Competition Law and National Competition Law (1)  Introduction 2.30  In the EU, EU competition law and national competition laws coexist. The Treaty does not expressly exclude the application of national competition laws to agreements and practices capable of affecting trade between Member States. However, dual application raises the question of which law prevails in the case of conflict. Two theories have been put forward.44 Under the so-called double barrier theory conflicts are resolved in favour of the strictest rule. Prohibitions always win. Under the so-called single barrier theory EU law trumps national law in the case of conflict, whether or not EU law is stricter. Since Regulation 17 did not regulate the relationship between EU competition law and national competition law, prior to the adoption of Regulation 1/2003 this was regulated exclusively by the principle of primacy of EU law laid down by the Court of Justice in Walt Wilhelm.45 In Walt Wilhelm, the Court held that parallel application of national competition law is only permissible insofar as it does not prejudice the uniform application throughout the common market of the EU competition rules. 2.31  Regulation 1/2003 makes use of the power laid down in Article 103(2)(e) of the Treaty for the EU legislator to regulate the relationship between national competition law and the EU competition rules. These regulatory rules are contained in Article 3, which constitutes one of the pillars of the enforcement system created by Regulation 1/2003. 2.32  Article 3 follows the line of Walt Wilhelm to the extent that it does not exclude the application of national competition law to agreements and practices capable of affecting trade between Member States.46 Parallel application of EU competition law and national competition law remains possible. However, the application of national competition law is subject to two important conditions. First, whenever the NCAs and courts apply national competition law to agreements and abusive practices, which may affect trade between Member States, they must also apply Articles 101 and 102 (see Art 3(1)). Secondly, agreements which may affect trade between Member States and which are not prohibited under EU competition law cannot be prohibited under national competition law (see Art 3(2)).47 This latter obligation is referred to as the ‘convergence rule’. The convergence rule only applies to agreements; it does not apply in the field of unilateral conduct—that is, part of the scope of application of Article 102.

(2)  Article 3(1): The Obligation to Apply Articles 101 and 102 2.33  Article 3(1) provides that where the competition authorities and courts of the Member States apply national competition law to agreements, decisions of associations of undertakings, or (p. 102) concerted practices within the meaning of Article 101(1) which may affect trade between Member States, or to any abuse prohibited by Article 102, they must also apply Articles 101 and 102 to such agreements, decisions, or concerted practices.

(a)  Scope of Article 3(1) 2.34  NCAs and courts have the power to apply national competition laws to agreements and abusive practices of dominant undertakings, which may affect trade between Member States. However, when they do so, they are obliged also to apply Articles 101 and 102. 2.35  Article 3(1) only imposes obligations as to the application of national competition law: it excludes all stand-alone application of national competition laws to agreements and practices that are capable of affecting trade between Member States. Nothing prevents NCAs and courts from applying only Articles 101 and 102 to agreements and practices capable of affecting trade between Member States. Parallel application of national competition law in cases covered by Article 3(1) mainly aims at protecting national proceedings against legal challenges based on the effect on trade criterion. If Member From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

State enforcers were obliged to make a choice between national law and EU law in each and every case, depending on whether trade between Member States was capable of being affected, there would be a risk that the choice made would be challenged systematically. While the effect on trade concept has been substantially clarified in the case law of the EU Courts, the EU legislator considered it desirable to enable NCAs and courts to avoid such challenges by applying a double legal base. In those cases where it would eventually appear that there was no effect on trade, the decision still stands on the basis of the national competition law provision. 2.36  Under Article 3(1) there are only two situations in which the EU competition rules need not be applied in parallel to national competition law: (a)  the agreement or practice is not capable of affecting trade between Member States; or (b)  the case involves the application of stricter national competition laws to unilateral conduct which does not constitute an abuse prohibited by Article 102. 2.37  The latter situation may arise where national law is applied to unilateral conduct below the level of dominance or to unilateral conduct which is not considered abusive within the meaning of Article 102. In those circumstances, Article 102 is not applicable and as a consequence the obligation contained in Article 3(1) does not apply. It is not sufficient to escape the obligation of Article 3(1) that national law has a wider scope of application than Article 102. There must be stricter application in the individual case. Moreover, to the extent that Article 102 is applied to certain parts of the case, Article 3(1) applies to those parts. 2.38  All agreements capable of affecting trade between Member States are covered by the convergence rule in Article 3(2), which precludes the application of stricter national competition laws. Conversely, as the convergence rule does not apply to unilateral conduct, this provision leaves NCAs and courts the facility to apply stricter national competition laws to unilateral conduct. 2.39  However, given the obligation to apply Article 102 when this Treaty provision is applicable and the fact that a decision adopted in breach of Article 3(1) is challengeable,48 Member State competition authorities and courts are as a practical matter obliged to give reasons why (p. 103) EU law is not being applied. Article 3(1) thereby increases transparency. Moreover, in cases where the national law provision applying to unilateral conduct is a copy of Article 102, it may be difficult to justify why that national law prohibition should be given a wider interpretation than that contained in Article 102. This is particularly true of Member States where there is an obligation under national law to interpret provisions of national competition law in accordance with EU law precedents. It is likely, therefore, that the main scope for applying stricter national competition law to unilateral conduct will be found where a national law prohibition covers conduct engaged in by firms that are not dominant.

(b)  Primary Functions of Article 3(1) 2.40  Recital 8 to Regulation 1/2003 explains that Article 3(1) serves the purpose of ensuring effective enforcement of the EU competition rules and the proper functioning of the cooperation mechanisms contained in the Regulation.

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2.41  The obligation to apply Articles 101 and 102 to agreements and abusive practices affecting trade between Member States increases the number of cases in which the EU competition rules are being applied. It thereby ensures that they are enforced more effectively. Article 3(1) changes fundamentally the situation prevailing under Regulation 17 where there was very little application of Articles 101 and 102 at Member State level. In particular, the NCAs applied national competition law almost exclusively. In an enlarged EU, NCAs and courts need to participate actively in the enforcement of Articles 101 and 102. As is clear from other areas of EU law the Commission alone cannot ensure effective enforcement of the law. The principle of direct effect on which Regulation 1/2003 is based has contributed greatly to the effective enforcement of EU law.49 2.42  The second objective referred to in recital 8 relates to the cooperation mechanism contained in Regulation 1/2003. These cooperation mechanisms concern the relationship between the competition authorities, including the Commission, and between national courts and the Commission. It is a precondition for applying these cooperation mechanisms that Articles 101 and 102 are applied.50 By creating an obligation to do so, Article 3(1) ensures the effectiveness of the cooperation mechanisms. In the absence of Article 3(1), the cooperation mechanisms could have been avoided simply by applying national competition law. 2.43  The cooperation mechanisms contained in the Regulation are aimed particularly at ensuring effective enforcement and at maintaining coherent application within the internal market. The main cooperation mechanisms are contained in Article 11, which constitutes the legal backbone of the ECN.51 The main function of the ECN is to promote effective enforcement by ensuring the efficient use of resources and the coherent application of the EU competition rules. These two aims are reflected in Article 11 of Regulation 1/2003.52 According to Article 11(2), the Commission must inform the NCAs of new cases. Similarly, under Article 11(3) the NCAs must inform the Commission of new cases at an early stage. This information provides a basis for reallocating individual cases to other authorities that are well placed to deal with them. Moreover, Article 11(4) provides that the NCAs must inform the Commission (p. 104) no later than 30 days before they adopt a negative decision and provide a copy of the draft decision or any other document setting out the envisaged course of action. This obligation ensures that policy questions and other issues requiring consistent application are discussed within the ECN before a decision is adopted. In the case of disagreement, the Commission has the power to resolve the conflict and protect consistency by withdrawing the case from the NCA in question. According to Article 11(6), the NCAs are relieved of their competence to apply Articles 101 and 102 when the Commission opens proceedings in the same case.53 So far, the Commission has not used this power to halt NCAs from continuing on a case. 2.44  It is important to appreciate the relationship between Articles 3 and 11(6). The opening of proceedings by the Commission under Article 11(6) only relieves the NCAs of their competence to apply Articles 101 and 102. However, when combined with Article 3, the opening of proceedings will in a great many cases also prevent the NCAs from acting under national competition law.54 In combination, Article 3(1) and (2) limit the scope for stand-alone application of national competition law. Such application only remains possible in respect of aspects of cases that involve the application of stricter national law to unilateral conduct. In all other cases capable of affecting trade between Member States, stand-alone application of national competition law is excluded. In the case of agreements or of unilateral conduct prohibited by Article 102, national competition law can only be applied in parallel with EU law. In all these cases the application of EU law is thus a sine qua non for applying national competition law. When the Commission opens proceedings under Article 11(6) this condition can no longer be satisfied since the NCAs are no longer

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competent to apply Articles 101 and 102 in the case at hand. National competition law therefore cannot be applied either.

(3)  The Convergence Rule of Article 3(2) 2.45  Recital 8 explains that, in order to create a level playing field for agreements, it is necessary to provide that the application of national competition laws to agreements within the meaning of Article 101(1) may not lead to the prohibition of such agreements if they are not also prohibited under EU competition law. This is reflected in Article 3(2), according to which the application of national competition laws must not lead to the prohibition of agreements, decisions of associations of undertakings, or concerted practices which may affect trade between Member States but which do not restrict competition within the meaning of Article 101(1), or which fulfil the conditions of Article 101(3), or which are covered by a block exemption Regulation for the application of Article 101(3). To complete the level playing field, the primacy of EU law prevents Member States from tolerating by virtue of national competition law those agreements that are caught by Article 101 and that do not satisfy the conditions of Article 101(3).55 2.46  Recital 8 also explains that Member States should not be precluded under the Regulation from adopting and applying on their territory stricter national competition laws which prohibit or impose sanctions on unilateral conduct engaged in by undertakings. These stricter national laws may include provisions which prohibit or impose sanctions on behaviour towards economically dependent undertakings. In this respect, Article 3(2) does not prevent the application of stricter national competition laws to unilateral conduct engaged in by (p. 105) undertakings. It follows that the relevant distinction within Article 3(2) is between agreements and unilateral conduct. It is not between Articles 101 and 102 or between dominant firms and non-dominant firms. Dominant undertakings also benefit from the convergence rule of Article 3(2). This interpretation is confirmed by recital 8 according to which agreements within the meaning of Article 101(1) cannot be prohibited if they are not also prohibited by ‘EU competition law’, that is, Articles 101 and 102. This also follows from the fact that Article 101 applies to any agreement capable of affecting trade between Member States irrespective of the market position of the parties. Article 101 covers the complete range from zero market share to monopoly. In the field of agreements Articles 101 and 102 overlap. Articles 101 and 102 may apply simultaneously to the same practice.56 2.47  The aim of Article 3(2) is to create a level playing field within the internal market for agreements capable of affecting trade between Member States. Such agreements are subject to a single competition law standard, namely that of Articles 101 and 102. They cannot be prohibited by national competition law. Article 3(2) thereby relieves undertakings of the burden of having to check their agreements against up to 29 different sets of competition rules.57 The obligation in Article 3(2) prevents the adoption of decisions that prohibit agreements capable of affecting trade between Member States which are not prohibited by EU competition law. 2.48  Article 3(2) does not prevent the application of instruments of national competition law in the investigatory phase. For instance, Article 3(2) does not prevent the application of market investigation instruments and the drawing up of reports on the functioning of particular markets. It follows that Article 3(2) does not interfere with the exercise of powers such as those conferred on the Commission under Article 17 of Regulation 1/2003. Under this article, the Commission may conduct an inquiry into particular sectors of the economy or into a particular type of agreement across various sectors and publish a report on the results of its inquiry. However, when it comes to acting upon any recommendation contained in such reports the obligation contained in Article 3(2) must be complied with.58 This means that agreements identified in a report resulting from an inquiry can only be prohibited insofar as they are also prohibited under EU competition law. For instance, if in

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an inquiry it is found that the functioning of a market could be improved by reducing the duration of contracts imposing exclusive purchasing obligations on retailers, such a finding can only be implemented through competition law if the agreements in question infringe the EU competition rules. This would require that the agreements in question affect actual or potential competition to such an extent that on the relevant market negative effects on prices, output, (p. 106) innovation, or the variety or quality of good and services can be expected with a reasonable degree of probability and that the agreements do not satisfy the conditions of Article 101(3), for instance because the restrictions are reasonably necessary to recoup a pro-competitive investment.59 2.49  The prohibition on applying stricter national competition laws to agreements capable of affecting trade between Member States applies in all cases where an agreement is not prohibited by EU competition law. The reason for non-prohibition under EU competition law may be that the agreement in question does not restrict competition in the first place or that it is covered by the exception in Article 101(3) either following individual assessment or by virtue of a block exemption. In the case of non-restrictive agreements, it is immaterial whether the agreement falls outside Article 101(1) either because the agreement does not give rise to any restriction of competition or because it does not appreciably restrict competition. Agreements that are capable of affecting trade between Member States and that are de minimis under EU law cannot be prohibited under national competition law. 2.50  Before the adoption of Regulation 1/2003 it was argued by some that what may not be appreciable from an EU perspective may be appreciable from a Member State perspective and that in such cases Member States should not be subject to Article 3. This argument was rejected, rightly. It is based on the erroneous assumption that the perspective necessarily differs under EU competition law and national competition law in terms of the effects that are taken into account.60 The EU competition rules constitute a fully-fledged system in its own right and are not intended as a supplement to the national systems. Articles 101 and 102 not only pursue the objective of market integration; their primary and fundamental objective is to preserve undistorted competition and open competitive markets.61 Moreover, Articles 101 and 102 cover not only restrictions that interfere directly with cross-border trade, but also all other restrictions of competition that are common to fully fledged competition laws. When, for example, foreclosure effects are analysed under Articles 101 and 102, not only are the effects on undertakings from other Member States taken into account but the EU competition rules, when applicable, also require that a full analysis be made of the possibilities available to all competitors to enter the market or expand their market positions. 2.51  The application of Article 3(2) does not create an enforcement lacuna at Member State level. Agreements are analysed within the confines of a relevant antitrust market, which is defined on the basis of the possibilities for substitution. When markets are held to be EU-wide it is not because Articles 101 and 102 apply to the whole of the EU but because it is found that suppliers in the EU place an effective competitive constraint on each other due to the absence of barriers to entry.62 When significant barriers to entry exist the geographic market will be (p. 107) defined more narrowly. Agreements which are capable of affecting trade between Member States and which do not appreciably restrict competition within the relevant market are compatible with Article 101(1). This is because such agreements produce only insignificant anti-competitive effects, if any, within the relevant market and, as a consequence, are either neutral or pro-competitive. There is no good reason why the outcome should differ under national competition law. In particular, there is no reason why, within the same relevant antitrust market, the notion of appreciability should differ depending on which law applies.

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(4)  The Legal Consequences of Infringing Article 3(1) and (2) 2.52  Article 3(1) and (2) have direct effect. Both provisions impose unconditional and precise obligations on NCAs and courts, which undertakings can rely on directly. Moreover, it is submitted that decisions adopted in breach of the obligations contained in Article 3 are invalid and unenforceable. 2.53  The obligation contained in Article 3(1) constitutes a fundamental procedural safeguard. The importance of Article 3(1) derives from the fact that NCAs and courts are also obliged to argue their cases on the basis of Articles 101 and 102, rendering transparent any deviation on the basis of national competition law.63 Thus it strengthens the effectiveness of Article 3(2) and the fundamental principle of primacy of EU law. Moreover, Article 3(1) is of fundamental importance due to its intrinsic link to the network mechanisms and in particular Article 11(4) and (6). The act of applying EU law triggers further obligations aimed at ensuring coherent application and protecting the integrity of the internal market. Article 3(1) is thus not a mere formality:64 it is the glue that makes the rest of the Regulation stick. As an essential procedural requirement, the failure to respect Article 3(1) affects the very substance of the decision and thereby its validity.65 If the competition authorities and courts of the Member States fail to observe the obligation imposed by Article 3(1), they expose their decisions to legal challenges and invalidity.66 2.54  Article 3(2), like Article 3(1), is a directly effective rule that can be relied on before national courts, thus relieving undertakings of the burden of having to comply with more than one set of rules. By prescribing a common competition law standard, Article 3(2) creates a level playing field within the internal market. Against this background, it would appear beyond doubt that a decision adopted in breach of Article 3(2) is invalid and unenforceable. In this respect, the provision has the same effect as any other directly effective rule of EU law, rendering inapplicable any conflicting Member State measures.

(5)  Article 3 and the Primacy Rule 2.55  According to the primacy rule the application of national law must not prejudice the full and uniform application of the EU competition rules within the internal market. In Walt (p. 108) Wilhelm,67 the Court of Justice held, inter alia, that agreements benefiting from an exemption under Article 101(3) cannot be prohibited by national competition law. However, the Court has not had occasion to rule on the applicability of the primacy rule to agreements and practices which are not caught by Article 101(1), because they do not restrict competition within the meaning of that provision.68 The number of such cases has increased considerably in recent years as a consequence of the application of a more effects-based approach to Article 101(1). 2.56  Article 3(2) removes uncertainty as to the scope of the primacy rule by establishing in addition a clear convergence rule for the non-prohibition aspect of Article 101(1). Agreements that fall outside the prohibition of Article 101(1), because from the point of view of EU competition law they do not restrict competition at all or do not restrict it appreciably, cannot be prohibited by stricter national competition laws. Article 3 also creates a stronger rule by requiring that national authorities must also argue the case on the basis of EU law. By virtue of Article 3 NCAs and courts are obliged to apply Articles 101 and 102 and are precluded from deviating from the EU law outcome when considering agreements. 2.57  Importantly, however, Regulation 1/2003 leaves the primacy rule untouched. This clear and necessary intention finds expression in the second sentence of Article 3(2) according to which ‘Member States shall not under this Regulation be precluded from adopting and applying on their national territory stricter national laws which prohibit or sanction unilateral conduct engaged in by undertakings’.69 It is also expressed in Article 3(3) according to which the exceptions contained in that provision are ‘without prejudice to

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general principles and other provisions of [EU] law’. It follows in particular that Article 3 does not in any way interfere with the fundamental principle according to which EU law prohibitions trump more lenient treatment under Member State law.70 It also leaves open the possibility for further developments of the non-prohibition aspect of the primacy rule, which remains relevant to unilateral conduct. On the basis of Walt Wilhelm, it can be argued that in cases where the Commission adopts a non-infringement decision under Article 10 of Regulation 1/2003, and finds that certain unilateral conduct does not constitute an abuse of a dominant position, that conduct cannot be prohibited under national competition law. Article 10 decisions relating to the application of Articles 101 and 102 are to be adopted only in the EU public interest and it is submitted that such decisions constitute positive action in the same way as the exemption decisions adopted under Regulation 17.71 Indeed, it follows (p. 109) from Article 16 of Regulation 1/2003 that the NCAs and courts cannot adopt decisions that run counter to, inter alia, non-infringement decisions adopted by the Commission.72 While Article 16 only applies to Member State decisions adopted on the basis of Articles 101 and 102, it can be argued that the purpose of Article 10 read in conjunction with Article 16, namely to enable the Commission to develop EU competition policy and to promote its coherent application throughout the internal market, must be taken into account in the application of the primacy rule.

(6)  Exceptions to Article 3 2.58  Article 3(1) and (2) only cover national competition laws. They do not apply to other national laws. That limitation found its expression in the last paragraph of Article 3, where it is said that Article 3(1) and (2) do not preclude the application of provisions of national law that predominantly pursue an objective different from that pursued by Articles 101 and 102. Article 3(3) contains a second express exception, namely that Article 3(1) and (2) do not apply when NCAs and courts apply national merger control laws. Finally, the last sentence of recital 8 provides that Regulation 1/2003 does not apply to national laws that impose criminal sanctions on natural persons except to the extent that such sanctions are the means by which competition rules applying to undertakings are enforced.

(a)  National Competition Laws 2.59  As stated in the previous paragraph, Article 3, including the convergence rule of Article 3(2), applies only to national competition laws. It does not apply to other types of national laws. It is submitted that it could not be otherwise. Indeed, it is not because an agreement is compatible with the EU competition rules that it is immune to intervention on the basis of any other type of law. The purpose of Article 3 is to ensure effective enforcement of Articles 101 and 102 and to create a level playing field for agreements in the area of competition law, not to prevent Member States from interfering with agreements in the pursuit of legitimate objectives other than the protection of competition. Such measures enacted by Member States must, however, comply with the Treaty rules and secondary legislation, for instance in the field of free movement of goods, services, persons and capital. 2.60  According to Article 3(3) the point of departure is each individual provision of national law and not the overall statute in which it is contained. For each relevant provision it must be determined whether it is a provision of national competition law. Both Article 3(3) and recital 9 include guidance as to what constitutes a provision of national competition law, in particular as regards the distinction between national competition laws and national laws on unfair trading practices. Under Article 3(3) a provision does not lie within the sphere of national competition law if it predominantly73 pursues an objective different from that pursued by Articles 101 and 102. Recital 9 explains that Articles 101 and 102 have as their objective the protection of competition on the market. The meaning of the term ‘protection of competition on the market’ becomes clearer when read in conjunction with Protocol 27, according to which competition in the internal market must not be distorted.74

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Competition (p. 110) is distorted when agreements and practices interfere with the competitive process. When viewed as process, competition implies that economic operators seek to attract demand by offering products that consumers want.75 The competitive process is an interplay between existing and new players on the market. Articles 101 and 102 apply76 to agreements and practices that harm existing competition and prevent new competition from developing.77 2.61  Provisions of national law covered by Article 3 are those that predominantly pursue the objective of protecting competition on the market and which therefore prohibit acts that have actual or presumed effects on competition on the market. The reference to ‘actual or presumed effects’ is very important. It reflects the distinction between restrictions of competition by object and restrictions of competition by effect, which is recognized in most competition law systems and which implies that no analysis of anti-competitive effects is required in respect of certain types of restraint. It is thus not decisive whether the application of the national law provision in question requires market analysis. National per se rules are covered by Article 3 to the extent that they predominantly pursue the objective of protecting competition on the market. This is the case where the prohibition is imposed because it is presumed that the agreement or conduct in question produces adverse effects on the market. The only difference between ‘by object’ rules and ‘by effect’ rules is the fact that in the former case the assessment of the impact on the market is made ex ante at the time of adoption of the rule, obviating the need to analyse the effect on competition in individual cases. 2.62  The distinction between national competition laws and other laws may be particularly difficult to draw in respect of national unfair trading laws. Recital 9 explains that the exception of Article 3(3) covers: national legislation that prohibits or imposes sanctions on acts of unfair trading practice, be they unilateral or contractual. Such legislation pursues a specific objective, irrespective of the actual or presumed effects of such acts on competition on the market. This is particularly the case of legislation which prohibits undertakings from imposing on their trading partners obtaining or attempting to obtain from them terms and conditions that are unjustified, disproportionate or without consideration. 2.63  It is submitted that the main distinguishing feature between the examples of provisions of unfair trading laws referred to in the last sentence of recital 9 and provisions of national competition law is whether the aim of the provision is confined to regulating a contractual relationship with a view to protecting a weaker party against a stronger party or whether (in addition) the market context is taken into account either in the elaboration of the rule or its application. The reference to competition on the market implies that the objective of the national law provision must go beyond the mere regulation of a (contractual) relationship between two undertakings. As soon as it is, for instance, a condition for the application of the national law provision that one of the parties possesses market power, the provision should be qualified as one of national competition law. Similarly, provisions of national law that aim at protecting smaller undertakings in a market against their larger competitors should be (p. 111) qualified as competition law provisions. Even if for lack of appreciable restrictive effects no violation were to be found under Articles 101 and 102, the fact remains that such provisions aim at protecting competition on the market, which is the decisive element. 2.64  Provisions of national law that regulate contractual relationships by stipulating the terms and conditions that must be offered—for instance, by a supplier to distributors— should frequently be classified as provisions of unfair trading law. For example, Directive 86/653 on commercial agents78 regulates, inter alia, termination notices and the compensation that must be provided by the principal to the agent in a case of termination of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the agreement. Such measures are wholly unrelated to the actual or presumed impact of the agreement on competition on the market and therefore fall outside the scope of application of Article 3. Similarly, provisions in unfair trading laws applying to noncontractual relationships such as provisions prohibiting passing-off apply irrespective of the market context and any actual or presumed effects on competition. For instance, the assessment of whether a firm has applied a layout which is unduly close to that of another firm is a question which can and should be answered without taking into account market factors such as the market position of the defendant. 2.65  In some cases it may be relevant to consider the extent to which the national law provision aims at protecting consumer welfare.79 It is submitted that such provisions should qualify as provisions of national competition law where they regulate the conduct of undertakings in relation to other undertakings. For instance, if a provision of national law prohibits exclusive dealing in a particular sector because such dealing is considered to reduce choice for consumers, the provision in question should be considered to belong to the sphere of national competition law. In the case of provisions that directly regulate the conduct of undertakings in respect of final consumers, relying on the consumer welfare criterion is more difficult. Consumer protection legislation, which is not covered by Article 3, can also be said to promote consumer welfare, although in a different way. It is submitted that contrary to competition laws, consumer protection laws are first and foremost based on principles of fairness. While Article 102 admittedly also contains elements of fairness80 it is submitted that its core aim is to prevent agreements and unilateral conduct that interfere with the competitive process and thereby produce inferior market outcomes in terms of prices, quality, output, variety, innovation, etc. Provisions of national consumer protection law that prohibit certain kinds of advertising81 or certain commercial practices such as ‘cold calling’82 are not concerned with market outcomes but rather with protecting consumers against undue influences caused by certain commercial practices.

(b)  National Laws Implementing EU Law Directives 2.66  Over time the EU has adopted a number of Directives aimed at liberalizing various sectors of the economy such as telecommunications, gas, and electricity. Such measures are intended to introduce competition into and protect such competition on the market. They thus pursue (p. 112) the same primary objective as Articles 101 and 102, which are not limited to protecting existing competition. They also apply to agreements and conduct that prevent new competition from developing.83 2.67  The question remains, however, whether national measures implementing such Directives can be considered to constitute provisions of ‘national law’. In interpreting the notion of ‘national law’, it is necessary to consider the impact on the effectiveness of Regulation 1/2003, of excluding from the scope of Article 3 provisions of national law that implement EU Directives. It is clear that including such measures under Article 3 enhances the effectiveness of the network and the mechanisms for maintaining consistency. The exclusion from Article 3 of Member States implementing provisions implies that the various cooperation mechanisms contained in Regulation 1/2003 may not come into play because they only apply in cases where Articles 101 and 102 are being applied. However, while it may be desirable to enhance cooperation in all areas of competition law enforcement, it is not clear that Article 3 was intended to impose networking in areas covered by special EU law regimes. Indeed, EU liberalization measures contain common rules that are specifically tailored to opening up the sectors in question. In contrast to purely national measures, it may reasonably be assumed that, in devising these rules, the EU interest has been taken into account and that consequently there is less need to insist on the systematic parallel application of Articles 101 and 102. Moreover, given the common European origin of the implementing provisions in question, the risk of inconsistency is less pronounced than in the case of measures adopted and applied purely within each national legal order. Finally,

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these EU liberalization measures may set out special cooperation mechanisms that are tailored to the specific instrument.84

(c)  Member State Measures Covered by Article 106 2.68  According to Article 106 of the Treaty, Member State measures that grant special or exclusive rights to undertakings are subject to the rules of the Treaty including Articles 101 and 102. Member State measures granting special or exclusive rights do not constitute national competition laws for the purposes of Article 3. Indeed, they restrict competition rather than protect it. The very purpose of Article 106 is to ensure that such measures do not unduly restrict competition in violation of the EU competition rules. 2.69  The question remains as to how to classify provisions contained in national measures intended to regulate the exercise of special or exclusive rights granted by such measures. For instance, is a provision of national law that imposes on the holder of the special or exclusive right an obligation to supply third parties on fair and non-discriminatory terms a provision of national competition law? Viewed in isolation the purpose of such a provision is to protect competition on the market, namely the downstream market for the goods and services produced by the holder of the special or exclusive right. The fact that the object of the assessment under Article 3(3) is the individual provision of a national measure and not the measure as such, does not exclude the inclusion of such provisions within the scope of application of Article 3. Individual provisions may constitute national competition law for the purposes of Article 3 even if the main thrust of the measure under examination pursues a distinct objective. However, where the conditions imposed form an integral part of the overall measure granting special and exclusive rights, it can be argued that it would be artificial to consider (p. 113) each individual condition in isolation. Even if individual provisions aim at protecting competition on the market, the predominant objective of such provisions, considered in the overall context in which they occur, is not to protect competition on the market. Their aim is merely to regulate the use of the special or exclusive rights granted by the measure. On this interpretation. the individual condition forms an integral part of the grant of the special and exclusive right and it is thus suggested that it falls outside the scope of Article 3.

(d)  National Merger Control Laws 2.70  According to Article 3(3), the first two paragraphs of this article do not apply in the case of national merger control laws. Transactions that qualify as mergers under national law are thus not subject to the obligations contained in Article 3(1) and (2). This exception has its origin in the Commission’s original proposal for Article 3, which provided for exclusive application of Articles 101 and 102 to all agreements and abusive practices capable of affecting trade between Member States. Exclusive application of the EU competition rules on the basis of the Regulation would have meant that no system of ex ante control of agreements and abusive practices within the meaning of Articles 101 and 102 would have been possible at national level. The Regulation precludes any notification system for the application of Articles 101 and 102.85 Indeed, it follows from Article 5 of Regulation 1/2003 that the NCAs are only competent to apply Articles 101 and 102 on their own initiative or on a complaint. Since a number of transactions falling under Articles 101 and 102 are subject to the system of ex ante control of the Merger Regulation,86 mergers were excluded from the scope of application of Article 3 at an early stage in the negotiations concerning the Commission’s original proposal. Subsequently, when Article 3 acquired its current shape and form, it would have been sufficient to limit this exclusion to the application of Article 3(1). It is the obligation to apply Articles 101 and 102 that precludes a system of ex ante control. However, it did not prove possible to limit the exclusion of mergers to Article 3(1). As the merger tests of dominance or substantial impediment to effective competition are normally more difficult to meet than the test of appreciable restriction of competition under Article 101(1), it is unlikely that this exclusion

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has a detrimental impact on the level playing field inside the internal market, taking into account the general principle of primacy of EU law. 2.71  Moreover, general principles of EU law impose some limitations on the scope of the exception. It follows expressly from Article 3(3) that the exception is without prejudice to such general principles. It is a general principle of EU law that exceptions are to be interpreted restrictively. Moreover, the principle of effectiveness (effet utile) implies that the useful effect of Article 3 and the rest of Regulation 1/2003 must be preserved. Accordingly, there are limits as to how far Member States are able to expand the scope of national merger control to escape the obligations of Article 3. While it is in principle for the Member States to determine the scope of their merger control laws, the exercise of this power is subject to the control of the Court of Justice, which has the power to review the limits within which recourse can be had to the exception.87 Member States cannot go beyond what can reasonably be defined as mergers. Some form of structural operation must thus be present.

(p. 114) (e)  Criminal Sanctions on Natural Persons 2.72  A final exception, concerning Member State laws imposing criminal sanctions on natural persons, is reflected in recital 8 to Regulation 1/2003. The last sentence of recital 8 provides that ‘Regulation 1/2003 does not apply to national laws, which impose criminal sanctions on natural persons except to the extent that such sanctions are the means whereby competition rules applying to undertakings are enforced’. When the last sentence of recital 8 applies it is not only Article 3 that does not apply. It is the entire Regulation that does not apply.88 2.73  The exception contained in recital 8 has not found expression in Article 3 or any other operative part of the Regulation. Since recitals do not create new law but rather serve to interpret the operative parts of the legislation, it would appear that the basis for the exception lies in the distinction made in Article 3(3) between national competition laws and other types of national laws. A criminal offence that applies irrespective of any finding of an infringement on the part of undertakings is thus deemed not to belong to the sphere of national competition law in the sense of Article 3. This reading is consistent with the fact that according to the recital it is the entire Regulation that does not apply. 2.74  The last sentence of recital 8 was introduced primarily in order to avoid the application of Article 3(1) to certain types of criminal proceedings against individuals, particularly in the case of hardcore cartels. It was feared that the obligation to apply EU law including the exception in Article 101(3) would make it unduly difficult to impose sanctions on individuals. However, it is submitted that this concern is unwarranted. The exception in Article 101(3) only applies when the four cumulative conditions for exception are satisfied, including the conditions that the restrictions must be indispensable and that consumers must receive a fair share of the benefits. In the case of hardcore cartels that have as their object raising prices to the detriment of consumers these conditions are not satisfied. 2.75  The exception contained in recital 8 envisages national laws that define a violation on the part of natural persons, which is distinct and separate from any violation of competition rules by undertakings. For the exception to apply the criminal offence must apply irrespective of any finding of an infringement on the part of undertakings. In that case the criminal sanctions are not the means by which competition rules applying to undertakings are enforced. The exception is not considered to apply where the sanction on natural persons is imposed as a result of their participation in an infringement found on the part of undertakings or where a sanction imposed on natural persons is a condition for imposing sanctions on undertakings. It is submitted that in such cases there is no violation on the part of the natural person separate and distinct from the infringement on the part of the undertaking. It is merely the means by which competition rules applying to undertakings From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

are enforced. In practice, however, this distinction may be difficult to draw. In particular, in instances where the factual basis for the case is a price-fixing cartel, it would appear somewhat artificial to distinguish the violation on the part of the undertaking and a violation on the part of an individual based on his participation in the operation of the cartel. (p. 115) 2.76  Recital 8 and Article 3(3) only exclude the application of Regulation 1/2003 to certain criminal offences that do not belong to the sphere of national competition law. They do not prevent Member States from empowering their competition authorities or courts, as the case may be, to impose sanctions on individuals for their participation in infringements of Articles 101 and 102. It is for the Member States to determine the types of sanction that national authorities and courts can impose in the case of violation of Articles 101 and 102. As far as the Commission is concerned, Regulation 1/2003 limits its sanctioning powers to fines and periodic penalty payments. Given the wording of Article 103(2)(a), it is doubtful whether the EU legislator could go beyond that and empower the Commission to impose sanctions on individuals.

Footnotes: 44

  For a discussion see M. Waelbroeck and A. Frignani, Commentaire Megret, Concurrence (Brussels: Editions de l'Université de Bruxelles, 1997), ch 3. 45

  Case 14/68 Walt Wilhelm [1969] ECR 1. The primacy principle is dealt with in Section B.

5. 46

  The Commission’s original proposal (COM(2000) 582 final of 27 September 2000) provided for exclusive application of Arts 101 and 102 to agreements and abusive practices capable of affecting trade between Member States. 47

  These two obligations ensure that Art 3 achieves essentially the same aims as the Commission’s original proposal. 48

  See Section B.4.

49

  See Case C-198/01 Consorzio Industrie Fiammiferi (CIF) [2003] ECR I-8055.

50

  Where national competition law is applied in the same case and in parallel with EU competition law, these cooperation mechanisms may also affect the application of national competition law (see eg Art 12(2) of the Regulation). 51

  See Section E.2.

52

  See Section E.3.

53

  On the opening of proceedings, see Best Practices: conduct of proceedings, paras 17–24.

54

  See Case C-17/10 Toshiba, judgment of 14 February 2012, not yet reported, para 75.

55

  See to that effect also Art 1(1) of Regulation 1/2003.

56

  See Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge [2000] ECR I-1365, para 33. Arts 101 and 102 pursue the same aim: see Case 6/72 Continental Can [1973] ECR 215, para 25. The analysis of the same set of facts under either article should therefore lead to the same result. In particular, as both provisions aim at protecting competition in the market (see recital 9 to Regulation 1/2003) it is difficult to imagine an agreement which would not be restrictive of competition within the meaning of Art 101(1) but would nevertheless constitute an abuse under Art 102. It may happen that a blockexempted agreement is abusive. In that case, NCAs and courts have the power to apply Art 102, since a block exemption does not prevent the application of Art 102. However, as a

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consequence of Art 3(2), NCAs and courts are precluded from applying national competition law to block-exempted agreements. 57

  Ideally, the same principle should apply in the case of unilateral conduct. See in this respect the Commission’s original proposal (COM(2000) 5102 final of 27 September 2000). However, this proposal did not find sufficient support in the Council. See in this regard also the forthcoming study on the impact of national rules on unilateral conduct that diverge from Art 102 TFEU, commissioned by the European Commission. 58

  Similarly the obligation contained in Art 3(1) must be complied with. The case for imposing remedies must therefore also be argued on the basis of EU law. 59

  See Article 101(3) Guidelines, paras 24 and 44.

60

  In Walt Wilhelm (n 45) the CJ held that Member State law and EU law view practices from a different perspective. However, the Court made this finding in the context of rejecting the argument that the principle of ne bis in idem prevents the finding of a restrictive agreement under both Member State law and EU law. The Court thus ensured that the application of EU law would not be barred because of the prior application of national law, which from an EU law perspective would have been undesirable. The judgment does not imply that the substantive analytical approach under EU law and Member State law is inherently different. 61

  See in this respect, Consorzio Industrie Fiammiferi (n 49), para 47.

62

  According to the so-called ‘small but significant non-transitory increase in prices’ (SSNIP) test, the relevant geographic market must be expanded to include neighbouring areas, if a hypothetical monopolist in the area tested would not be able to raise prices 5–10 per cent without attracting entry from neighbouring areas to such an extent that the price increase would be unprofitable. In that case the products offered by suppliers in those other areas are substitutable and thus place an effective competitive constraint on the hypothetical monopolist in the test area. 63

  It is submitted that the term ‘apply’ contained in Art 3(1) implies that Arts 101 and 102 must find expression in the operative part of the decision. 64

  Compare in this respect the information mechanism considered by the CJ in Case 380/89 Enichem Base [1989] ECR 2491. 65

  See in this respect. Case C-194/94 CIA International [1996] ECR I-2201 and Section E. 2(b)(iii). 66

  In addition to the possibility of infringement proceedings being brought pursuant to Art 258 TFEU, national law can provide further remedies for breach of this essential procedural requirement. 67

  See Walt Wilhelm (n 45).

68

  It has been forcefully argued by AG Tesauro in Case C-266/93 Volkswagen [1995] ECR I-3479 (see paras 58 and 59 of the Opinion) that when the CJ or the Commission have found that an agreement affecting trade between Member States does not constitute a threat to competition for the purposes of Art 101(1), such an agreement cannot be prohibited under national law, the requirements for asserting the primacy of EU law being satisfied. Even if the CJ were to concur with this interpretation, Art 3 would retain its importance since its application does not depend on the existence of a prior EU act. Art 3 obliges Member State courts and competition authorities to apply Arts 101 and 102 to all agreements and abusive practices capable of affecting trade between Member States and precludes any application of stricter national competition laws to agreements.

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69

  Emphasis added.

70

  Art 1 of Regulation 1/2003. See also Case T-203/01 Michelin II [2003] ECR II-4071, para 112 where the GC held that the fact that the practice in question was compatible with national law was immaterial given the primacy of EU law and the direct effect of Art 102. 71

  In para 5 of the judgment in Walt Wilhelm the CJ acknowledged that the Treaty permits the EU authorities to carry out certain positive, though indirect, action with a view to promoting harmonious development of economic activities within the EU. Art 10 of Regulation 1/2003 is a reflection of this principle. 72

  Art 16 codifies the judgment of the CJ in Case C-344/98 Masterfoods [2000] ECR I-11369. 73

  In the case of provisions with multiple objectives, the predominant objective must be ascertained. This assessment must be made provision by provision. 74

  The same objective was laid down in Art 3(1)(g) of the EC Treaty. As to the relationship between that provision and Arts 101 and 102, see eg Continental Can (n 56), para 23. 75

  In the context of Art 102, this process is referred to as competition on the merits, see eg Michelin II (n 70), paras 54 and 97. 76

  This is not meant to imply that an agreement or practice is prohibited merely because it impacts on the competitive process. What finally matters is the overall impact on consumers’ welfare. 77

  In Joined Cases C-241/91 P and C-242/91 P RTE (Magill) [1995] ECR I-743, a refusal to license was prohibited because it prevented the introduction of a new product. In Delimitis (n 12), the Court held that the impact of networks of agreements on the possibility for new entry must be examined. 78

  Directive 86/653 on the coordination of the laws of the Member States relating to selfemployed commercial agents, OJ 1986 L382/17. 79

  The Article 101(3) Guidelines, para 13, provide that the objective of Art 101 is to protect competition on the market as a means of enhancing consumers’ welfare and of ensuring an efficient allocation of resources. 80

  See eg Michelin II (n 70), para 150.

81

  See eg Joined Cases 34–36/95 De Agostini [1997] ECR I-3843.

82

  See eg Case C-384/93 Alpine Investments [1995] ECR I-1141.

83

  See Section 2.6(a).

84

  See eg Art 7 of Directive 2002/21/EC on a common regulatory framework for electronic communications networks and services, OJ 2002 L108/33. 85

  The Regulation, on the other hand, does not interfere with national notification systems for the application of national competition law. However, as a consequence of the primacy of EU law prohibitions, national exemptions cannot protect agreements against intervention on the basis of Arts 101 and 102. 86

  See Art 3(4) of Regulation 139/2004 on the control of concentrations between undertakings, OJ 2004 L24/1; and Continental Can (n 56). 87

  See in this respect eg Case C-7/98 Krombach [2000] ECR I-1935.

88

  This implies eg that Art 12, which provides for the exchange and use in evidence of confidential information, is not applicable. Information exchanged under the Regulation cannot be used for the purposes of imposing criminal sanctions on natural persons in the context of enforcing a separate and distinct offence as set out in recital 9. See in this

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respect, eg the UK which has a specific cartel offence with respect to individuals pursuant to s 182 of the Enterprise Act 2002.

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Part I General Principles, 2 The Enforcement System Under Regulation 1/2003, C Powers and Decisions of National Competition Authorities Eddy De Smijter, Ailsa Sinclair From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): National Competition Authorities (NCAs) — Application of EU competition rules

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C. Powers and Decisions of National Competition Authorities (1)  Introduction 2.77  According to Article 5 of Regulation 1/2003, the NCAs shall have the power to apply Articles 101 and 102 in individual cases. This provision gives a clear and directly applicable legal basis for NCAs to apply these EU competition law provisions in their entirety. Article 5 marks a radical change in the enforcement of EU competition rules, in particular by granting to NCAs the power to apply Article 101(3), a power which they lacked until 1 May 2004. By empowering NCAs to apply Article 101 as a whole, as well as Article 102, Article 5 of the Regulation indeed completes, together with Articles 1 (the legal exception system) and 3 (the compulsory and convergent application of EU competition law) of Regulation 1/2003, the communitarization of the enforcement of EU competition law.

(2)  The NCA 2.78  Since Article 5 is directly applicable, no national legislation is necessary to give the NCA the power to apply Articles 101 and 102. That being said, most if not all of the EU Member States have confirmed in national legislation that their NCA can apply the EU competition law provisions.89 In so doing, the legislator has at the same time (implicitly) designated the NCAs as responsible for the application of Articles 101 and 102 within the meaning of Article 35(1) of Regulation 1/2003. Indeed, the designation referred to in Article 35(1) of Regulation 1/2003 does not require a specific legislative act further to the adoption of Regulation 1/2003. The designation may as well result from acts prior to the date of adoption of Regulation 1/2003 (16 December 2002), as long as it is unambiguously clear which national authority acts as NCA within the meaning of Regulation 1/2003. One could even argue that as soon as a national authority has been empowered to apply national competition law, that authority has implicitly been designated as a competition authority within the meaning of Article 35(1) of Regulation 1/2003 and is thus also empowered to apply Articles 101 and 102. 2.79  When requiring the Member States to designate an NCA, Regulation 1/2003 does not impose a specific national enforcement model. The only requirement laid down in Article 35(1) is that the designation should guarantee that the provisions of the Regulation are (p. 116) complied with effectively. Subject to the condition of effectiveness, Member States are free to designate their competition authority or authorities. The result is a variety of national enforcement models: some Member States have designated one single NCA, responsible for the application of EU competition rules in their territory, others have designated several NCAs, whose competences are divided according to the sector of the economy or according to the provisions of the Regulation. The latter model is explicitly referred to in Article 35(2), according to which ‘Member States may allocate different powers and functions [referred to in Regulation 1/2003] to…different national authorities, whether administrative or judicial’. 2.80  A debate has arisen in recent years as to whether administrative integrated systems of competition enforcement, which combine investigation and decision-making functions in one body, are compatible with Article 6 of the European Convention on Human Rights (ECHR) on the right to a fair trial and Article 47 of the EU Charter of Fundamental Rights on the right to effective judicial protection. According to the case law of the European Court of Human Rights, it is compatible with Article 6 ECHR for penalties which fall within the non-traditional category of criminal law, to be imposed by an administrative or non-judicial body that combines investigative and decision-making power such as the European Commission, as long as there is a possibility for an appeal ‘before a judicial body that has full jurisdiction, including the power to quash in all respects, on questions of fact and of law, the challenged decision’.90 In September 2011, the European Court of Human Rights had occasion to apply these principles for the first time to an administrative competition

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authority.91 In this case, the Italian competition authority had imposed a fine in an antitrust enforcement case. The Italian national competition authority is an integrated authority that adopts decisions imposing fines, subject to a two-tier judicial control. In other words, the institutional set-up in this case is very similar to that of the majority of NCAs and to the EU system of competition enforcement. The European Court of Human Rights considered that Article 6 ECHR on the right to a fair trial was complied with. It relied in particular on the circumstance that the decisions of the administrative competition authority were subject to judicial review in which it was assessed whether the competition authority had used its powers appropriately, and with respect to fines, the court could verify the suitability of the sanction and had the power to change the amount imposed. This ruling corroborates the case law of the Court of Justice, which has repeatedly found the EU system of competition enforcement to fulfil the requirements of Article 6 ECHR on the right to a fair trial.92 Rulings of the Court of Justice have further confirmed that the review of legality of the Commission’s decisions, supplemented by unlimited jurisdiction for penalties, is in conformity with the principle of effective judicial protection enshrined in Article 47 of the EU Charter of Fundamental Rights.93 In particular, it ruled that review by the EU Courts involves review of both the law and the facts and means that they have the power to assess (p. 117) the evidence, to annul the contested decision, and to alter the amount of the fine. The Court further clarified that the EU Courts cannot use the Commission’s margin of discretion with regard to economic matters in complex economic assessments as a basis to dispense with an in-depth review of the law and of the facts. 2.81  Regulation 1/2003 does not contain any specific criteria to determine whether a given designation of an NCA guarantees effective compliance with the provisions of the Regulation. One can assume, however, that it implies, among other criteria, that NCAs should be able to find and fine infringements of EU competition rules, that they can actively assist Commission officials during their inspections, and that they should be organized in such a way that they can fully participate in the ECN.94 More recently, the Commission has been more explicit in underlining the need to secure adequate financial resources and staffing for NCAs in order to guarantee their effective enforcement of the EU competition rules. In addition, there has been a demand for the impartial and independent functioning of NCAs.95 2.82  In VEBIC, the Court of Justice was asked whether the requirement for NCAs effectively to enforce the EU competition rules in the general interest, had any impact on the NCAs’ role in the review of its decisions. The Court concluded that the said requirement implies that the NCA ‘should be entitled to participate, as a defendant or respondent, in proceedings before a national court which challenge a decision that the authority itself has taken’.96 While it remains for the NCA to assess the extent to which its intervention is necessary and useful to ensure the effective application of EU competition law, the Court considered that a consistent failure to participate in review proceedings would jeopardize the effectiveness of the EU competition rules.

(3)  The Decisions of an NCA 2.83  Article 5 of Regulation 1/2003 lists the decisions an NCA can take when applying Article 101 or 102. According to that provision, the NCA may require that an infringement be brought to an end; order interim measures; accept commitments; impose fines, periodic penalty payments, or any other penalty provided for in its national law; or it may decide that there are no grounds for action on its part. The list of decisions contained in Article 5 is an exhaustive list, without it being necessary for NCAs to be able to take all decisions listed.

(a)  Scope of Article 5

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2.84  Article 5 contains an exhaustive list because when applying Article 101 or 102, NCAs cannot take any decision other than those listed in Article 5. This is particularly relevant in respect of the second paragraph of Article 5, which addresses the situation in which the NCA, on the basis of the information in its possession, comes to the conclusion that the conditions (p. 118) for prohibition are not met. Since the second paragraph of Article 5 is directly applicable, the NCA cannot in those circumstances find that Article 101 or 102 is not applicable,97 but it may decide that there are no grounds for action on its part. When applying Article 101 or 102, NCAs are thus prevented from adopting positive decisions. 2.85  Conversely, Article 5 does not require NCAs to have all powers listed. The designated NCA should thus not necessarily be able to take all decisions listed in Article 5 when applying Article 101 or 102. There are, however, two limitations to this autonomous determination of the type of decisions NCAs may take, which both flow from Article 3(4) of the Treaty on European Union (TEU). 2.86  The first limitation is linked to the fact that Article 3(4) requires Member States to take all appropriate measures to guarantee the full scope and effect of EU law, a requirement that is also echoed in Article 35(1) of Regulation 1/2003. NCAs therefore need to have the necessary powers to contribute to the effective enforcement of the EU competition rules. It is submitted that this requirement entails, first of all, that an NCA should be able to order that an infringement be brought to an end: when it finds an infringement of the EU competition rules, an NCA should at least be able to remedy that situation for the future. However, that in itself is not sufficient to guarantee the full scope and effect of EU law. Indeed, when the only risk run by an infringer of EU competition rules is that it must stop its infringing behaviour, there is no real incentive for undertakings to respect those rules. Article 3(4) TEU therefore requires NCAs to be able to deter potential infringers of EU competition rules effectively. In order to achieve that objective, an NCA should be able to impose effective, proportionate, and dissuasive penalties when it finds that Article 101 or 102 is infringed.98 2.87  The second limitation is known as the principle of equivalence. According to that principle, the procedural rules applicable to the enforcement of EU law may not be less favourable than the rules applicable to the enforcement of similar national law.99 The idea is that it may not be more difficult to enforce EU law than it is to enforce equivalent national law. That principle, although mainly applied by the Court of Justice in cases where a national court has been asked to ensure the protection of the rights which citizens have through the direct effect of EU law, implies that the means by which national authorities enforce EU competition rules must not be less favourable than the means used to enforce national competition rules. Read together with the obligation under Article 3 of Regulation 1/2003 to apply national and EU competition law simultaneously to agreements that may affect trade between Member States, it is submitted that a Member State, when determining which decisions its NCA may take when applying EU competition law, should allow the NCA to take the same decisions as it may take when it is applying national competition law, provided of course that those decisions are included in Article 5 of Regulation 1/2003.

(p. 119) (b)  The Decisions Listed in Article 5 2.88  The decisions listed in Article 5 largely correspond to the decisions the Commission can take when enforcing Articles 101 and 102; with the significant exception that only the Commission may find those provisions to be inapplicable.100 This correspondence does not mean, however, that the scope of the NCA decisions is identical or even similar to that of the ‘corresponding’ Commission decision. For instance, although the ability of an NCA to require that an infringement be brought to an end may also include the power of the NCA to impose remedies to bring the infringement to an end, that does not necessarily imply that the NCA can also impose structural remedies. Similarly, the procedural requirements of a

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national decision-making process may be different from those of the Commission when taking a ‘corresponding’ decision. There is, for instance, no reason why an NCA that wants to accept commitments should be required to publish the main content of those commitments allowing interested third parties to submit observations (see Art 27(4) of Regulation 1/2003). Finally, although an NCA should be able to impose effective, proportionate, and dissuasive penalties when it finds that Article 101 or 102 has been infringed, Regulation 1/2003 does not harmonize the national sanctions applicable to EU competition law infringements. Nothing in the Regulation requires the EU Member States to allow their NCAs to impose (only) those sanctions which the Commission can impose when it finds an infringement of Article 101 or 102, nor should the fines and periodic penalty payments necessarily be the same as those provided in Articles 23 and 24 of the Regulation, nor should the fining policy of NCAs necessarily be similar to that of the Commission.101 2.89  The main limitations on the EU Member States’ freedom to determine both the scope of the decisions (including the sanctions) NCAs can take and the procedural requirements that must be respected when taking those decisions are: the principle of effectiveness (the national rules may not make the enforcement of EU competition law excessively difficult or practically impossible) and the principle of equivalence (the national rules for the enforcement of EU competition law may not be less favourable than the rules applicable to the enforcement of national competition law). In addition, when enforcing EU (competition) rules, national authorities must also respect the general principles of EU law, in particular the fundamental rights of all those involved in the enforcement of EU law. As a consequence, the national procedures for taking the decisions listed in Article 5 of Regulation 1/2003 should also respect the general principles of EU law. 2.90  These limitations soften the existing divergence of procedures and sanctions according to which the Commission and NCAs apply Articles 101 and 102. But also beyond these legal limitations, one notices a growing soft convergence of applicable procedural rules,102 which is sometimes actively steered through the ECN.103

(p. 120) (4)  Triggering a Decision by an NCA (a)  The NCA Acts on its Own Initiative or on a Complaint 2.91  Article 5 states that an NCA may only apply Articles 101 and 102 when it acts on its own initiative or on a complaint. This constraint on the activities of an NCA applies to all decisions listed in Article 5, including the decision that there are no grounds for action on the part of the NCA. The latter might be subject to discussion because the last sentence of Article 5 does not explicitly repeat the said constraint. Yet, it follows from the text of Article 5, second paragraph, and from the context in which this provision should be read, that an NCA cannot upon request from an undertaking decide that there are no grounds for action on its part.104 2.92  Indeed, the text of Article 5, second paragraph, indicates that the information which is in the possession of the NCA is aimed at proving an infringement. However, when that information is not sufficient to prove that the conditions for prohibition are met, the NCA may decide that there are no grounds for action on its part. The fact that the NCA is not obliged to take such a decision is yet another textual argument to show that NCAs are not taking such decisions on request from an undertaking. Finally, recitals 3 and 4 to Regulation 1/2003 indicate that the notification system was replaced by a directly applicable exception system in order to allow authorities to concentrate resources on curbing the most serious infringements. Replacing the system of notification to the Commission by a system of notification to the NCAs therefore runs counter to the aims of the Regulation. Article 5, second paragraph, therefore, cannot be interpreted as establishing a system of EU competition law notification to NCAs. Thus, NCAs can only

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decide that there are no grounds for action on their part when acting on their own initiative or on a complaint.

(b)  National Notification Systems 2.93  The fact that Regulation 1/2003 replaced the system of notification with a directly applicable exception, however, does not exclude Member States maintaining—or even introducing—a system of notification in order to obtain an exemption under national law. The possibility of national notification, which at the time of writing still exists in three of the 28 Member States,105 leads to a peculiar situation when the notified agreement is capable of affecting trade between Member States. When that is the case, Article 3(1) of the Regulation requires the acting NCA also to apply Article 101, although what is meant by ‘apply’ remains unclear. Surely, the NCA cannot exempt under national law an agreement that restricts competition within the meaning of Article 101(1) but does not fulfil the conditions of Article 101(3). Indeed according to Article 1(1) of the Regulation ‘Agreements…caught by Article 101(1) of the Treaty which do not satisfy the conditions of Article 101(3) of the Treaty shall be prohibited’. The primacy of that rule implies that NCAs may only apply exemptions under national law when the agreement fulfils the conditions of Article 101(3). Conversely, it is theoretically possible that, in order to obtain an exemption decision from an NCA, national law could impose conditions over and above those of Article 101(3). However, under Article 3(2) of the Regulation, agreements could not be prohibited even if such additional conditions have not been fulfilled. Adding conditions to Article 101(3) in order to obtain an (p. 121) exemption under national law would create a grey area between prohibition and exemption and, to ensure legal certainty, is therefore to be avoided. Thus it appears that the requirement of Article 3(1) for an NCA to ‘apply Article 101’ to notified agreements which may affect trade between Member States at least refers to the convergence obligation in the application of national competition law to these agreements, for example an NCA exemption decision under national law. 2.94  But the requirement of Article 3(1) to ‘apply Article 101’ may go further than this convergence obligation. One could argue that Article 3(1) requires the NCA to which an agreement capable of affecting trade between Member States has been notified, to take a decision. If, after analysing the agreement, the NCA were to come to the conclusion that the agreement can be exempted under national law, the requirement ‘to apply Article 101’ would then imply that the NCA, on its own initiative, should add the decision that under EU law there is no ground for action on its part, as is provided by Article 5, second paragraph, of the Regulation. Whatever the precise scope of the requirement for the NCA ‘to apply Article 101’, it is clear that exemptions under EU law are excluded even if an NCA is allowed to take exemption decisions under national law. 2.95  Without delving further into the politics of discussing the soundness of maintaining or introducing a national notification system when Regulation 1/2003 has abolished the option of notification at European level, one needs to keep in mind the limited value of a national exemption decision. Although it is undoubtedly true that in some economic systems a national notification system can offer legal certainty to companies whose business affairs keep within the boundaries of the Member States, genuine legal certainty disappears when business is conducted at an interstate level. Indeed, since the jurisdiction and thus the authority of an NCA decision is generally limited by the boundaries of its own Member State, the NCA’s exemption decisions will only create legitimate expectations in respect of itself. No other member of the ECN is bound in European law by the decision of an NCA. A company that has received an exemption decision from an NCA is therefore not protected against an action by any other ECN member in respect of that exempted behaviour.

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Footnotes: 89

  By the time Regulation 1/2003 was adopted, 12 of the then 15 EU Member States already had legislation empowering their NCA to apply Arts 101(1) and 102. See the table in the European Commission’s XXXIInd Report on Competition Policy, 2002, pp 336 and 337. 90

  App 34619/97 Janosevic v Sweden, judgment of 21 May 2003.

91

  App 43509/08 A. Menarini Diagnostics SRL v Italy.

92

  Case T-54/03 Lafarge v Commission, [2008] ECR II-120, esp para 39; Case T-348/94 Enso Espanola v Commission [1998] ECR II-1875, paras 55–65; Case T-156/94 Aristrain v Commission [1999] ECR II-645, paras 30–41. 93

  Case C-386/10 P Chalkor v Commission, judgment of 8 December 2011, not yet reported, paras 62, 63, and 67; Case C-272/09 P KME v Commission, judgment of 8 December 2011, not yet reported, para 106; Case C-501/11 P Schindler v Commission, judgment of 18 July 2013, not yet reported, paras 36–39; and Case C-501/11 P Kone and Others v Commission, judgment of 24 October 2013, not yet reported, paras 20–25. 94

  See the Report of the EP Committee on Economic and Monetary Affairs of 21 June 2001 on the Commission’s proposal for a Council regulation on the implementation of the rules on competition laid down in Articles [101 and 102] of the Treaty and amending Regulations (EEC) 1017/68, (EEC) 2988/74, (EEC) 4056/86 and (EEC) 3975/87 (A5-0229/2001), p 24: NCAs should be ‘equipped to organise an effective network with the Commission and with other member states. The human and technical resources available to national competition authorities may therefore have to be reinforced’. 95

  eg the Commission’s assessment of the 2012 Austrian and Slovenian national reform programme and stability programme (30 May 2012; , p 21 and , pp 19–20). See also the resolution of the heads of European competition authorities on the need for effective institutions (16 November 2010; ). 96

  Case C-439/08 VEBIC [2010] ECR I-12471, paras 59–64.

97

  Only the Commission can make findings of inapplicability, pursuant to Art 10 of Regulation 1/2003. See Case C-375/09 Tele2Polska, [2011] ECR I-3055, paras 22ff. 98

  Case 68/88 Commission v Greece [1989] ECR 2965, para 23. On the necessity of deterrence, compare with the reasoning of the Court in Case 14/83 Von Colson and Kamann [1984] ECR 1891, paras 22 and 23 on equal treatment for men and women in labour conditions. See also Case C-429/07 X [2009] ECR I-4833, para 36: ‘To dissociate the principle of prohibition of anti-competitive practices from the penalties provided for where that principle has not been observed would therefore deprive of any effectiveness the action taken by the authorities responsible for monitoring compliance with that prohibition and punishing such practices.’ 99

  See eg Case 33/76 Rewe [1976] ECR 1989, para 5.

100

  Compare with Arts 7–10, 23, and 24.

101

  See the Guidelines on setting fines imposed pursuant to Art 23(2)(a) of Regulation No 1/2003, OJ 2006 C210/2. 102

  See Commission Staff Working Paper, Report on the functioning of Regulation 1/2003, paras 200ff.

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103

  See eg the 2006 ECN Model Leniency Programme () and the 2009 Report on the Assessment of the State of Convergence in this regard () and V. Juknevičiūtė, J. Capiau, A. Sinclair, I. Breit, D. Dalheimer, P. Krenz, and E. Rikkers, ‘Developments in and Around the European Competition Network and Cooperation in Competition Enforcement in the EU: An Update’ [2012] 3 Concurrences 78–87. 104

  This also appears from the explanatory memorandum on Art 5 in the proposal of the Commission: ‘If the competition authority of a Member State finds that behaviour, acting on a complaint or on its own initiative does not infringe Article [101] as a whole or Article [102], it can close the proceedings or reject the complaint by decision, finding that there are no grounds for action’, OJ 2000 C365E/284. 105

  The notification system still exists in Denmark, Italy, and Latvia.

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Part I General Principles, 2 The Enforcement System Under Regulation 1/2003, D Commission Powers and Decisions Eddy De Smijter, Ailsa Sinclair From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Legislative powers and decisions — Termination of infringement orders — Remedies, power to impose — Complaints — Interim measures — Regulation 1/2003

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D. Commission Powers and Decisions (1)  Introduction 2.96  One of the main goals of Regulation 1/2003 was to provide the Commission with enhanced enforcement tools. Article 4 of Regulation 1/2003 provides that, for the purpose of applying Articles 101 and 102, the Commission shall have the powers provided for by the Regulation. Articles 7–10 go on to stipulate the types of decision that the Commission is empowered to adopt. It is these provisions and the powers of investigation vested in the Commission by Articles 18–21 of the Regulation that are intended to enable the Commission to enforce the EU competition rules effectively. 2.97  The Treaty itself assigns the Commission a special role in the enforcement of the EU competition rules. Case law confirms that the Commission, entrusted by Article 105(1) TFEU with the task of ensuring application of the principles laid down in Articles 101 and 102, is responsible for defining and implementing the orientation of EU competition policy. It is for the Commission, subject to review by the General Court and the Court of Justice, to adopt (p. 122) individual decisions in accordance with the procedural rules in force and to adopt exemption Regulations.106 In order to fulfil the role assigned to it by the Treaty, the Commission is not bound by decisions given by national courts and competition authorities applying Articles 101 and 102. The Commission is also entitled to adopt individual decisions under Articles 101 and 102 at any time to ensure the application of the principles laid down therein, even when an agreement or practice has already been the subject of a decision by an NCA or court and the decision contemplated by the Commission conflicts with that prior decision.107 However, in view of the close cooperation which takes place within the ECN to ensure the coherent application of the EU competition rules, this is rarely likely to happen in practice. 2.98  The special responsibility of the Commission in enforcing Articles 101 and 102 and in defining and implementing EU competition policy is reflected in Regulation 1/2003, in particular in the various provisions intended to ensure the coherent application of Articles 101 and 102.108 It is also reflected in Article 16 of the Regulation under which NCAs and courts cannot take decisions contradicting those adopted or contemplated by the Commission. Article 16 strengthens the effect of Commission decisions in the new enforcement system.

(2)  Article 7: Finding and Termination of Infringements 2.99  Article 7 of Regulation 1/2003 empowers the Commission to find an infringement and order the undertakings concerned to bring it to an end. This provision raises three main issues, namely the scope of the Commission’s power to find infringements, the scope for the Commission to impose remedies and finally the rights of complainants.

(a)  The Power to Find Infringements 2.100  Article 7(1) provides that where the Commission, acting either on a complaint or on its own initiative, finds that there is an infringement of Article 101 or 102, it may by decision require the undertakings and associations of undertakings concerned to bring the infringement to an end. Article 7(1) thus empowers the Commission to find an infringement and impose a cease and desist order in cases where the infringement is ongoing. Article 7(1) further provides that if the Commission has a legitimate interest in doing so, it may also find that an infringement has been committed in the past.109 The Commission must substantiate in light of the facts of the individual case the reasons why it considers that the legitimate interest condition is satisfied.110

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2.101  A legitimate interest may exist in particular in the following three situations: (a)  Deterrence The Commission has a legitimate interest in finding a past infringement with a view to imposing a fine. A typical example would be a cartel that has been brought to an end before the Commission has adopted a decision. In order to ensure effective enforcement through punishment of the perpetrators, it is essential that past infringements can be found and adequately fined. However, deterrence not only stems from (p. 123) fines; it may also stem from the very fact of finding and making public an extremely serious infringement on the part of an undertaking. The interest in enabling the injured parties to bring matters before the national civil courts may also contribute to deterrence and give the Commission legitimate reasons to find a past infringement. 111 (b)  Clarification so as to avoid the infringement being repeated In GVL, 112 the Court of Justice held that the Commission had a legitimate interest in finding a past infringement in a case where there was a real danger of a resumption of the practice. (c)  Policy development 113 If a case involving a past infringement raises new policy issues or issues of consistent application, for instance because NCAs and courts have arrived at different outcomes in similar situations, there may be a need for the Commission to find that an infringement has been committed in the past. 2.102  The fact that the possibility to find a past infringement exists does not mean that the Commission should always act on it. In the exercise of its power the Commission must balance the benefits of making such a finding against the resources that must be committed in order to do so. Since Regulation 1/2003 is intended to allow the Commission to focus on the prosecution of the most serious infringements, the Commission has used its power to find a past infringement in cases where fines are not imposed sparingly.114

(b)  The Power to Impose Remedies 2.103  Article 7(1) of Regulation 2003 provides that the Commission may impose any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end. This provision is based on the ruling of the Court of Justice which confirmed in the context of Article 3 of Regulation 17 (which also regulated the termination of infringements) that the Commission has the power to order the parties to take positive measures to bring an infringement to an end.115 Structural remedies can only be imposed either where there is no equally effective behavioural remedy or where any equally effective behavioural remedy would be more burdensome for the undertaking concerned than the structural remedy.

(i)  General Principles 2.104  Remedies serve to bring an identified infringement of the EU competition rules to an end. Remedies cannot serve as a penalty. The only penalties foreseen in Regulation 1/2003 are fines and periodic penalty payments.116 While in many cases a cease and desist order is sufficient to bring the infringement to an end, there are circumstances in which it is necessary to impose further obligations. Such obligations may for instance, be required when negative effects remain after an agreement or practice has been prohibited or when the prohibited conduct takes the form of a refusal to engage in certain conduct.117 2.105  Since the purpose of any obligation imposed must be designed to bring the infringement to an end, there must be a link between the infringement and the obligations imposed. (p. 124) Moreover, the principle of proportionality requires that the burden imposed on the undertaking in order to end the infringement must not exceed what is appropriate and necessary to attain the objective sought, namely re-establishment of compliance with the rules infringed.118 If several effective and proportionate remedies are available, the undertaking is entitled to choose with which remedy to comply.119 If one From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

proportionate remedy is more effective than other available remedies, the Commission can impose the most effective one. The assessment of the effectiveness and necessity of any remedy must be based on the facts and circumstances of the individual case. A remedy is only effective if in the specific circumstances of the case it cures the competition problem that has been identified. 2.106  The effectiveness of a remedy depends not only on the capacity of the remedy to address a competition problem which has been identified but also its enforceability. For a remedy to be effective it must be possible to monitor compliance. Complex behavioural remedies are often ineffective. As the complexity of a remedy increases, the less likely it is that it will address the competition problem effectively. Behavioural remedies often suffer from a high degree of complexity compared to structural remedies. However, in the field of Articles 101 and 102, behavioural remedies cannot be avoided because the competition problem often arises from the behaviour of the undertaking.

(ii)  Structural and Behavioural Remedies 2.107  Article 7(1) of Regulation 1/2003 empowers the Commission to impose any remedy whether behavioural or structural. The term ‘structural remedy’ covers a wide range of remedies but all must affect the assets of the undertaking. Examples of structural remedies include obligations to dispose of a shareholding in a competitor or to partly or wholly dissolve a joint venture.120 The most far-reaching structural remedy is a break-up of a preexisting entity, that is, an entity as it existed before the infringement was committed. At the time of publication, the Commission has not used its power to impose structural remedies under Article 7, but arguably its power to do so has contributed to the obtaining of structural changes as commitments under Article 9 of Regulation 1/2003.121 2.108  Article 7(1) establishes a presumptive hierarchy between the two categories of remedy: where an equally effective behavioural remedy exists it must be chosen unless it is more burdensome for the undertaking concerned. The stated preference for behavioural remedies is based on the assumption that such remedies are less burdensome for the undertaking concerned. It would be disproportionate to impose a structural remedy where an equally effective behavioural remedy is available. However, as is clear from Article 7(1) itself, the presumption may be rebutted in individual cases. Therefore, an assessment of several equally effective remedies must be made to determine which is the least burdensome. 2.109  The benchmark established by Article 7(1) is whether an alternative less burdensome remedy is ‘equally effective’. The Commission is not obliged to choose a less effective behavioural (p. 125) remedy if a structural remedy is more effective in terms of bringing the infringement to an end. The intention is merely to ensure in accordance with the principle of proportionality that, when faced with two equally effective remedies, the Commission imposes the least burdensome one. It follows that Article 7(1) does not impose restrictions on the choice of remedies beyond those that already flow from general principles.122

(iii)  Break-ups 2.110  Recital 12 to Regulation 1/2003 provides that changes to the structure of an undertaking as it existed before the infringement was committed would only be proportionate where there is a substantial risk of a lasting or repeated infringement that derives from the very structure of the undertaking. This recital deals with the most farreaching structural remedy, namely the break-up of a pre-existing undertaking. The recital reflects the principle of proportionality. Given the far-reaching nature of a break-up, this type of remedy is disproportionate save in exceptional cases.

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2.111  According to recital 12, a break-up may be warranted in cases where the infringement derives from the very structure of the undertaking. This is because, in such cases, it may be very difficult to devise an effective behavioural remedy and to ensure that it continues to be respected. Such situations may in particular arise in cases where an undertaking operates in two or more related markets and where the undertaking controls essential infrastructure or input in an upstream market.123 This situation can be illustrated by a case that fell within the ambit of Article 106. In Raso,124 an undertaking had been granted the exclusive right to provide temporary labour services to undertakings providing dock work services to the users of the port of La Spezia. The undertaking holding the exclusive right was also a service provider in the downstream market in which the monopoly service was an input. The monopolist was thus itself active on the downstream market. The Court of Justice held that the exclusive right violated Article 106 in conjunction with Article 102 because it enabled the undertaking to distort in its favour the equal conditions of competition between the various operators on the downstream market for dock work services. The undertaking was enabled, in particular, to impose unduly high costs on its competitors or to supply them with labour that was less suited to the work to be carried out. To bring the infringement to an end the Member State in question either had to eliminate the exclusive right or ensure that the holder ceased to be active on the downstream service market. 2.112  Given the very far-reaching nature of break-ups as a remedy, it is submitted that the following minimum conditions should be met before considering the imposition of such a remedy: (a)  the infringement has a substantial impact on competition and consumers; (b)  the undertaking has engaged in repeated infringements or the structure of the undertaking causes it to infringe the EU competition rules, for instance by creating an inherent conflict of interest; (c)  other available remedies are ineffective; and (p. 126) (d)  break-up does not lead to a significant loss of efficiency at the level of the undertaking, which would undermine the pro-competitive effects of the remedy. 2.113  The last condition reflects the fact that the ultimate aim of Articles 101 and 102 is to protect competition in the market for the benefit of consumers. If the integration of the assets in question leads to significant efficiencies, a break-up should only be imposed where on balance it would lead to greater benefits for consumers when compared to an alternative remedy.

(c)  Complaints 2.114  Article 7 decisions can be adopted either at the Commission’s own initiative or in response to a complaint. According to Article 7(2), natural or legal persons who can show a legitimate interest and Member States are entitled to lodge complaints. Formal complaints are subject to a particular procedure. Complainants are entitled to have their complaint rejected by a formal and challengeable decision in the event that the Commission decides not to act upon the complaint. If the complaint is admitted, complainants are entitled to certain procedural rights pursuant to Article 6 of Regulation 773/2004,125 which are further described in the Complaints Notice.126 Article 5 of Regulation 773/2004 requires compliance with a special form, Form C (set out in an annex to the Regulation), in order for a complaint to be treated as a formal complaint. The purpose of Form C is to ensure that complainants provide as useful information as possible, as early as possible. As a quid pro quo, the Commission undertakes to inform the complainant within an indicative time frame of four months whether it intends to investigate the complaint further. Even if it does not intend to investigate, the Commission must still reject the complaint to the extent that the

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complainant pursues it. Early communication to the complainant of the Commission’s intentions has two main advantages. It allows the complainant to pursue without undue delay alternative solutions to the alleged competition problem, such as litigation before Member State courts. It also means the Commission must declare early on whether it will give priority to the complaint and commit the necessary resources for further investigation. 2.115  The Commission can reject complaints on a number of grounds. In practice, the most frequently used basis for rejection is that there are insufficient grounds for acting by conducting a further investigation, which is also known as ‘lack of European Union interest’.127 Since Regulation 1/2003 was intended to enable the Commission to focus on prosecuting the most serious infringements, the Commission has placed renewed emphasis on priority setting. Relevant factors include the strategic importance of the case, the impact of the infringement on competition and consumers, and the importance of the case from the point of view of developing EU competition policy.128 Case law confirms that the Commission is entitled to give different priority to cases brought before it and to reject cases on this basis.129 National courts are obliged to decide on all cases brought before them but, by contrast, (p. 127) the Commission, as a competition authority, is entitled to concentrate its resources on the most important cases. However, because of the rights granted to complainants under the Regulation, the Commission is nevertheless obliged to explain in a challengeable act why it considers that it is not in the EU interest to investigate the complaint further. The Court of Justice has held that in order to assess the EU interest in further investigating a case, the Commission must take account of the circumstances of the case and, in particular, the matters of law and fact set out in the complaint referred to it.130 Specifically, it must weigh the significance of the alleged infringement as regards the functioning of the common market against the probability of its being able to establish the existence of the infringement and the extent of the investigative measures necessary in order to fulfil, under the best possible conditions, its task of ensuring the observance of Articles 101 and 102.131 Complaints may also be rejected for lack of substantiation, that is, failure to submit even a minimum of prima facie evidence necessary to substantiate one of several conditions for an infringement of Article 101 or 102, lack of competence, or on substantive grounds, that is, that there is no infringement of Articles 101 and 102. Article 13 of Regulation 1/2003 also introduced the possibility to reject complaints in a simplified procedure on the grounds that one or several NCAs are dealing with a case or have already dealt with it. This mechanism is used on a regular basis.132 The Commission has committed to publish on its website its decisions rejecting complaints or a summary thereof, which should provide greater insight into how it uses this tool in practice.133

(3)  Article 8: Interim Measures 2.116  Article 8(1) of Regulation 1/2003 provides that in cases of urgency due to the risk of serious and irreparable harm to competition, the Commission, acting on its own initiative, may order interim measures by decision, on the basis of a prima facie finding of infringement. Article 8(2) further provides that an interim measures decision shall apply for a specified period of time and may be renewed as necessary. Article 8 largely codifies the case law that developed under Regulation 17. In Camera Care,134 the Court of Justice held that the Commission has the power to adopt interim measures in cases proved to be urgent, in order to avoid a situation likely to cause serious and irreparable damage to the party seeking their adoption, or because the situation is against the public interest. It was further held that such measures must be of a temporary and conservatory nature and restricted to what is required in the circumstances. 2.117  However, Article 8 qualifies the pre-existing state of the law in two important respects. First, interim measures decisions can only be adopted on the Commission’s own initiative. The wording of Article 8 differs from that of Article 7 by not mentioning complaints. Complainants are not granted specific rights in the context of Article 8. It follows that complainants have no legal entitlement to request that interim measures be From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

adopted and that the Commission has no obligation formally to reject requests that it considers ill-founded. However, in the same way that complainants may submit informal complaints, they may (p. 128) also draw to the Commission’s attention cases in which they consider interim measures to be warranted. Secondly, interim measures can only be adopted in the case of urgency due to serious and irreparable harm to competition. It is not sufficient that serious and irreparable harm be caused to an individual undertaking. There must also be indications that competition will be harmed. This qualification reflects the fact that the purpose of Articles 101 and 102 is to protect competition in the market and that the Commission, in its capacity as a competition authority, acts in the public interest to protect competition. National courts are better placed to protect the interests of individual companies. Against this background, the Commission has not to date granted interim measures under Article 8.

(4)  Article 9: Commitments (a)  Introduction 2.118  Article 9 of Regulation 1/2003 empowers the Commission to adopt a new type of decision for the enforcement of EU competition law, namely a decision whereby commitments offered by undertakings are made binding and enforceable on the undertakings concerned. Commitments serve the same purpose as a cease and desist order and remedies imposed by an Article 7 decision: to bring an effective end to an identified competition problem. Since the entry into force of Regulation 1/2003, commitment decisions have come to form a key part of the Commission’s enforcement practice and are regularly used. Many Member States have adopted similar provisions. 2.119  Article 9(1) provides that where the Commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision make those commitments binding on the undertakings. Such a decision may be adopted for a specific period and shall conclude that there are no longer grounds for action by the Commission. 2.120  According to Article 27(4) of Regulation 1/2003, the adoption of an Article 9 decision must be preceded by publication of a document (the so-called ‘market test’) inviting third parties to submit comments on the commitments offered. In order to enable them to do so, the document must contain a summary of the Commission’s concerns and the main content of the commitments.

(b)  The Nature of Article 9 Decisions 2.121  An Article 9 decision is an enforcement instrument. It is not an instrument for providing legal certainty to companies, nor is it a substitute for exemption decisions. Undertakings are not entitled to a commitment decision. Commitment decisions are adopted in circumstances where the Commission intends to adopt a prohibition decision but the commitments offered address effectively the competition concerns identified by the Commission. The decision thus has its origin in an enforcement action. 2.122  According to Article 9(1) and recital 13 the operative part of an Article 9 decision must find that there are no longer grounds for action by the Commission without concluding whether there has been or still is an infringement. The operative part of Article 9 decisions has implications for their effect in law. As explained in recital 13, commitment decisions are without prejudice to the powers of NCAs and courts to find an infringement and decide upon the case. NCAs and courts can both make a finding of a past infringement and a continuing (p. 129) future infringement. Article 16 of Regulation 1/2003, which stipulates that NCAs and courts must not adopt decisions that run counter to those adopted by the Commission, does not preclude such a finding. In practice, it does not appear that many problems have arisen with parallel proceedings by NCAs. Generally, the Commission From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

strives to address competition concerns in commitment cases in such a way that parallel enforcement by NCAs within the territorial coverage of the Commission decision should in principle not be needed.135 In any case, the finding of an infringement is not in conflict with a Commission decision that limits itself to finding that there are no longer grounds for action in its part. Defendants will no doubt cite commitment decisions as de facto evidence against any claim that an infringement continues, since commitments serve the same purpose as an Article 7 decision. Article 9 decisions are adopted by the Commission where it would otherwise have proceeded with the adoption of a prohibition decision. The fact that the Commission accepts the commitments is at least an indication that the commitments remedy the competition problem for the future, provided that the underlying facts remain materially the same. 2.123  The operative part of an Article 9 decision not only finds that there are no longer grounds for action by the Commission. It also renders the commitments binding on the undertakings. This part of the decision is binding on NCAs and courts in the sense that they are precluded from adopting decisions that render ineffective the commitments contained in the operative part of the Commission’s decision, nor can they release the undertakings from those commitments. 2.124  Commitments contained in an Article 9 decision can be enforced by the Commission against the addressees by means of fines and periodic penalty payments. According to Article 23 of Regulation 1/2003, fines of up to 10 per cent of the total turnover of the undertaking concerned in the preceding business year may be imposed where, whether intentionally or negligently, the undertaking fails to comply with commitments that have been made binding. Moreover, periodic penalty payments of up to 5 per cent of the undertaking’s average daily turnover in the preceding business year may be imposed in order to compel undertakings to respect their commitments. 2.125  The Regulation is silent on the question whether third parties can rely on commitments before Member State courts. In other words, it is an open question whether third parties can enforce the commitments and invoke them as a basis for claiming damages. For instance, if an undertaking has made a binding commitment to supply third parties on certain terms and conditions and fails to do so, can the third party in question bring a claim directly on the basis of the commitment decision? Regulation 1/2003 deliberately leaves open this question.136 It is submitted, however, that this question should be answered in the affirmative. According to Article 249 TFEU, EU decisions are binding in their entirety on those to whom they are addressed. Moreover, it is a fundamental principle of EU law that clear and unconditional provisions contained in EU acts have direct effect and can be invoked before national courts. There is no reason why this general principle of EU law should not also apply to commitments rendered binding by an EU act.

(p. 130) (c)  The Purpose of Article 9 Decisions 2.126  In the past the Commission from time to time would close a case informally on condition that the undertakings concerned undertook to abstain from or adopt certain conduct in the future. When a satisfactory solution had been found, it was often considered an unnecessary use of resources to proceed with the case and adopt a prohibition decision, although such action was necessary in order to render the obligations accepted by the undertakings concerned binding and enforceable. In the case of an informal settlement, the only response to a breach of the settlement was the reopening of proceedings with a view to adopting a prohibition decision. By offering the Commission the option of making commitments binding and enforceable, Article 9 remedies this weakness inherent in informal settlement, and provides for greater legal certainty. By adopting a decision under Article 9, the Commission sets a public precedent which other companies can use to modify their conduct. From the point of view of undertakings, Article 9 decisions may be attractive in that they avoid the adoption of a formal finding of an infringement, with the

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accompanying reputational risk and possible imposition of fines. Article 16 of the Regulation allows an infringement decision to serve as a basis for claiming damages. As Article 9 decisions make no such finding they merely constitute an element of fact to be taken into account by NCAs and courts. Another advantage from both the Commission’s and the undertakings’ perspective is that the proceedings are typically faster given that they involve less procedural steps than an infringement decision under Article 7 (no access to file is expressly foreseen, the preliminary assessment and the decision under Art 9 are typically less detailed than their equivalents under Art 7, and an oral hearing is not held). The fact that commitments are negotiated as opposed to being imposed may also be attractive from a company’s perspective and also means that there is less likelihood of an appeal to the EU Courts. That said, from the Commission’s perspective Article 9 decisions have lesser precedial value than decisions under Article 7, given that there is no finding of an infringement with its associated consequences for national courts and NCAs under Article 16. The more limited risk of appeal may also reduce the likelihood of having contentious legal issues clarified by the Court of Justice and if the Commission wants to establish an important legal precedent it may well consider that Article 7 is the preferable procedural route. 2.127  Article 9 decisions are designed for cases where the objective of the enforcement action is to remedy an identified competition problem for the future. As stated in recital 13 to Regulation 1/2003, commitment decisions are not appropriate where the Commission intends to impose a fine. It is not possible in an Article 9 decision for the Commission to accept a commitment to pay a sum of money.137 If the Commission intends to impose a fine, it must proceed with an Article 7 decision. 2.128  The statement in Article 13 to the effect that commitment decisions are not appropriate where the Commission intends to impose a fine does not imply that the adoption of an Article 9 decision is excluded in all cases where in a statement of objections the Commission has indicated that it may impose a fine. The intention was not to prevent the Commission from bringing an end to an identified competition problem merely because of a prior statement to the effect that fines may be imposed. Any such statement in the statement of objections is required from the point of view of rights of defence138 and should not prejudice the final outcome in the case. The assessment of whether the Commission has a legitimate (p. 131) interest in adopting an Article 9 decision as opposed to an Article 7 decision imposing fines should be made at the time the decision is adopted.139 The Commission should be entitled to balance the interest in deterring anti-competitive behaviour through fines against the interest in improving the functioning of a market by eliminating a competition problem for the future. In the individual case it may be more important to bring an end to a competition problem more speedily by imposing binding, effective, and enforceable remedies than to impose a fine. Moreover, the fact that in the past the Commission has imposed fines in a similar case should not in itself bar it from adopting an Article 9 decision in a future case. The intention behind recital 13 is twofold. First, the aim is to avoid a situation where, in the same case or group of cases, commitment decisions are adopted in respect of some undertakings but fines are imposed on others. In such circumstances, the Commission has, through its conduct in relation to certain undertakings, expressed a clear intention to impose a fine and should not therefore treat other undertakings differently. Secondly, the aim is to exclude the adoption of Article 9 decisions in secret cartel cases that fall under the Notice on immunity from fines and reduction of fines in cartel cases, where due to the serious nature of the infringement the Commission has a consistent policy of imposing fines.140 In such cases, there is no

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appropriate commitment. The proper response from the Commission is the imposition of a cease and desist order and deterrent fines.

(d)  The Procedure for Adopting Article 9 Decisions 2.129  Procedures that are terminated with an Article 9 decision begin like any other prohibition proceeding, with a complaint or an ex officio investigation. Investigations are conducted in the same way, the objective being to identify possible competition problems. Moreover, nothing prevents the Commission from pursuing its investigation of a case while assessing the commitments offered. If the commitments are considered insufficient to meet its concerns the Commission may at any time opt for the adoption of an Article 7 decision. 2.130  Procedurally, however, Article 9 decisions do have certain distinctive features. The first element is the requirement that the Commission must have expressed its concerns in ‘its preliminary assessment’.141 In cases where a statement of objections has been issued this document and the preliminary assessment will be one and the same. However, this need not be the case. The preliminary assessment may be a separate document. This interpretation is confirmed by Article 2(1) of Commission Regulation 773/2004 according to which the Commission must initiate proceedings no later than the date on which it issues a preliminary assessment or a statement of objections whichever is earlier. It follows that the preliminary assessment may be issued earlier than the statement of objections. In that case, the analysis may be (substantially) less detailed than that found in a statement of objections. Even so, a preliminary assessment will generally be preceded by a detailed investigation since, without it, the Commission is not in a position to assess whether the commitments are sufficient to meet its concerns. 2.131  The preliminary assessment summarizes the main facts of the case and identifies the competition concerns that in the Commission’s view would warrant the adoption of a prohibition (p. 132) decision. In other words, the preliminary assessment sets out the nature of the infringement alleged by the Commission. The purpose of the preliminary assessment is twofold. First, it serves as a basis for the undertakings concerned to assess the Commission’s allegations. On that basis they can decide whether it is appropriate to offer commitments and, if so, what they should cover.142 Secondly, the preliminary assessment is intended to avoid the Commission negotiating and accepting commitments without having sufficiently investigated the case and identified the competition problems which it creates. As an enforcement authority, the Commission must ensure that the commitments that it accepts do address the competition problem effectively. In most cases a detailed investigation is required before it is possible to identify the true nature of the competition problem and the appropriate remedy. 2.132  According to Article 9(1), commitments are offered after the Commission has issued the preliminary assessment. However, in practice discussions on the issue of commitments are held before the preliminary assessment is issued. If there is no statement of objections, the preliminary assessment is issued only when the adoption of an Article 9 decision is envisaged. As is explained in Best Practices: conduct of proceedings, it is only if the Commission is ‘convinced of the undertakings’ genuine willingness to propose commitments which will effectively address the competition concerns’, that it will issue a preliminary assessment.143 Accordingly, although the parties do not necessarily have to submit a draft commitment text, they must provide the Commission with the main elements of their potential commitments. In terms of the content of commitments, they must meet the competition concerns identified. In light of the principle of proportionality, the Commission is obliged to verify that the commitments address the identified competition concerns and that the commitments offered do not manifestly go beyond those necessary to address these concerns. However, in light of the Alrosa ruling, the Commission is not obliged to compare voluntary commitments made in the context of proceedings pursuant to Article 9 with measures it could impose under Article 7 and to regard as disproportionate any

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commitments which go beyond such measures.144 The parties can offer commitments of either a behavioural or structural nature145 and the Commission has expressly stated that commitments must be unambiguous and self-executing, that is, their implementation is not dependent on the will of a third party.146 2.133  Before adopting the decision the Commission is required to market test the commitments. This market testing is formalized in Article 27(4), according to which an Article 9 decision must be preceded by the publication in the Official Journal of a concise summary of the case and the main content of the commitments. Interested third parties may submit their observations within a time limit fixed by the Commission (and included in the summary published in the Official Journal) and which may not be less than one month. According (p. 133) to Article 27(4), the publication must indicate that the Commission intends to adopt an Article 9 decision. This statement is merely an indication that the Commission considers the commitments sufficiently sound to warrant market testing and does not in any way prejudice the final assessment of the sufficiency of the commitments post-market test. The Commission has also committed to publish on its website the full text of the commitments in the authentic language.147 2.134  The requirement that an Article 27(4) publication be made does not prevent the Commission from proactively complementing the market test by directly contacting third parties that are thought to possess relevant information. The Commission employs this approach in the field of mergers and also makes use of it in the antitrust field.148 In any event, if the case is based on a complaint, the Commission will also inform the complainant about the market test and invite it to submit comments. Similarly, third parties admitted to the procedure will be informed and invited to submit comments. Experience confirms that the market test may constitute a useful check as to whether the commitments are effective. If, on the basis of the market test and any other available information, the Commission considers that the commitments are not sufficient to address the competition concerns identified it should seek additional or modified commitments or proceed to an Article 7 decision.149 Conversely, third party comments may lead the Commission to conclude that certain concerns expressed in the preliminary assessment should not be retained. The Article 27(4) publication and third party input may therefore play an important role.

(e)  Adoption of the Decision and Reopening of the Proceedings 2.135  At the end of the procedure and provided that the commitments are deemed sufficient to address the Commission’s concerns150 the Commission adopts a decision incorporating the commitments and rendering them binding. Without making a determination as to whether there has been or still is an infringement, the decision also briefly describes the conduct engaged in by the undertakings concerned, otherwise it would not be possible to understand the activity addressed by the commitments. The decision may be unlimited in time or adopted for a specific period.151 2.136  In order to comply with the obligation under Article 296 TFEU to state reasons, the decision must set out, at least briefly, what the commitments are and why the Commission considers that they are sufficient to meet its concerns in a proportionate manner. The Commission must find a fine balance between the Treaty obligation to give reasons and the obligation under Regulation 1/2003 not to conclude whether there has been or still is an infringement.

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2.137  According to Article 9(2) of Regulation 1/2003, the Commission may, subject to certain conditions, reopen the proceedings on its own initiative or upon request. Proceedings can be reopened where any of the following three conditions are satisfied:(p. 134) (a)  there has been a material change in any of the facts on which the decision was based; (b)  the undertakings concerned act contrary to their commitments; (c)  the decision was based on incomplete, incorrect, or misleading information provided by the parties. 2.138  The term ‘reopening of proceedings’ covers the situation where the Commission considers that the commitments are insufficient and therefore acts with a view to prohibiting certain practices. Article 9(2) takes account of the legitimate expectation of the addressees by limiting the circumstances in which the Commission can act to their detriment by reopening its proceedings. Article 9(2) also envisages the situation where the Commission considers that the addressees should be released wholly or partly from their commitments. 2.139  Article 9(2)(a) provides that proceedings may be reopened when there has been a material change in any of the facts on which the decision was based. A commitment decision addresses competition concerns identified by the Commission in light of the facts pertaining at the time of the decision. If the facts change materially it may be necessary to reopen proceedings with a view to adjusting the commitments to the new factual situation. For instance, it may be that over time the market position of the addressees has increased to such an extent that the commitments are no longer sufficient. It may even be that the changes are such that the appropriate course of action is the adoption of a prohibition decision. If at the time of adoption of the decision it is likely that market conditions will change in the foreseeable future, it may be appropriate to limit the duration of the decision to a specified period.152 Such limitation allows the situation to be assessed afresh after a certain period of time. It may also be appropriate to limit the decision in time where the impact of the commitments is uncertain. In such circumstances, the Commission may have an interest in limiting the duration of the decision so that it can reassess the effectiveness of the commitments in light of experience. The undertaking concerned may have a similar interest if there is a risk that the commitments may be unnecessarily intrusive. If the decision is of unlimited duration proceedings cannot be reopened merely because experience shows that the commitments are ineffective or unnecessarily intrusive. There must be a material change in the relevant facts. 2.140  Article 9(2)(b) provides that proceedings may be reopened when the undertakings concerned act contrary to their commitments. When the addressees of an Article 9 decision act contrary to their commitments, the normal response of the Commission will be to reopen proceedings with a view to adopting a decision imposing fines and/or periodic penalty payments as provided for in Articles 23 and 24 of the Regulation. In such a decision, the Commission is required to demonstrate that the commitments have been breached. It is not required to show that the conduct in question constitutes an infringement of Articles 101 and 102. The Commission may also reopen proceedings with a view to adopting a prohibition decision under Article 7 of the Regulation. 2.141  Finally, proceedings may be reopened where the parties have provided incomplete, incorrect, or misleading information, in which case the commitments accepted by the

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Commission are likely to be insufficient, and proceedings are likely to be reopened with a view to adopting a prohibition decision imposing remedies. (p. 135) 2.142  To date, the Commission has reopened proceedings on one occasion. This concerned non-compliance with a commitment decision which resulted in the imposition of a fine of €560 million.153

(f)  The Scope for Legal Challenge 2.143  Case law shows that Commission decisions can be challenged insofar as the measure in question produces legal effects that are binding on, and capable of affecting, the interests of the applicant by having a significant effect on his legal position.154 It is clear that commitment decisions produce legal effects on the addressee. The addressee is obliged to act in accordance with the commitments and adapt his market conduct accordingly. The Alrosa ruling clarified that commitment decisions can be challenged on grounds of proportionality. Conceivably, the addressee would also be able to argue that the Commission has abused its powers by forcing it to offer the commitments, that the commitments offered are not correctly reproduced in the decision, or that procedural guarantees have not been respected, for example that the Commission failed to issue a preliminary assessment in accordance with Article 9(1). 2.144  As regards third parties, the Court of Justice has expressly held that it is permissible for a third-party undertaking which considers itself to be affected by a decision taken under Article 7 or 9 of Regulation 1/2003 to protect its rights by bringing an action against that decision.155 To the extent that complainants and third parties have been admitted to the proceedings, it seems likely that they would be regarded as being affected by the decision, especially given that the test for admitting third parties to proceedings is ‘…whether and to what extent the applicant is sufficiently affected by the conduct which is the subject of the competition proceedings’.156 Similarly, complainants have to show a ‘legitimate interest’ in the proceedings in order to be admitted pursuant to Article 5 of Commission Regulation 773/2004. Moreover, if a complaint has been made and is maintained in a case where the Commission ultimately accepts commitments under Article 9, the complaint must be rejected by decision, and this decision may also be challenged before the EU Courts. Although the complaint is rejected by separate decision, the two decisions are intrinsically linked. Indeed, the complainant’s right to challenge the rejection decisions can only be maintained by also allowing him to challenge the commitment decision which precludes the Commission from reopening the proceedings to the detriment of the addressee save in the special circumstances set out in Article 9(2). Finally, a possible basis for third parties, which were not admitted to the proceedings before the Commission, to appeal a commitment decision would be to (p. 136) argue that they are distinguished from other economic operators by virtue of their participation in the market test under Article 27(4).

(5)  Article 10: Finding of Inapplicability (a)  Introduction 2.145  Article 10 empowers the Commission to adopt a new type of decision, a so-called finding of inapplicability, whereby it can take a decision finding that an agreement or practice does not infringe Article 101 or 102. Article 10 provides that where the EU public interest relating to the application of Articles 101 and 102 so requires, the Commission, acting on its own initiative, may by decision find that Article 101 is not applicable to an agreement, a decision by an association of undertakings, or a concerted practice, either because the conditions of Article 101(1) are not fulfilled, or because the conditions of Article 101(3) are satisfied. The Commission may likewise make such a finding with reference to Article 102. According to Article 27(4) of the Regulation, the adoption of an Article 10 decision must be preceded by a publication in the Official Journal of a concise summary of the case and the proposed course of action, that is, the adoption of a non-

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infringement decision. As in the case of Article 9 decisions, interested third parties must thus be invited to submit observations for the same purpose, namely to market test the Commission’s preliminary findings.

(b)  The Nature and Purpose of Article 10 Decisions 2.146  The Commission has exclusive competence to adopt decisions that make a formal finding of non-infringement. The competition authorities of the Member States have no such power.157 Recital 14 provides some insight into the reasons why the Commission was granted this special power and into the nature of the scope of this power. 2.147  Recital 14 provides that, in exceptional cases where the public interest of the ‘[Union]’158 so requires, it may be expedient for the Commission to adopt a decision of a declaratory nature finding that the prohibition in Article 101 or 102 does not apply, with a view to clarifying the law and ensuring its coherent application throughout the EU, in particular with regard to new types of agreements and practices that have not been settled in the existing case law and administrative practice. It follows from Article 10 and recital 14 that non-infringement decisions may only be adopted on the Commission’s own initiative and in exceptional circumstances. These limitations are introduced in order to ensure that Article 10 decisions do not become a substitute for exemption decisions previously adopted under Regulation 17. (p. 137) 2.148  The reference to the ‘EU’ public interest, relating to the application of Articles 101 and 102, serves the same purpose. Article 10 decisions cannot be adopted in the private interest of individual undertakings. The specific reference to Articles 101 and 102 makes clear that Article 10 decisions are a competition instrument. They cannot be used to promote interests other than those which can be subsumed under Articles 101 and 102. Other public interest considerations, such as industrial policy objectives, cannot be used to establish an ‘EU’ public interest within the meaning of Article 10 of the Regulation. The concept of ‘EU’ public interest is thus intrinsically linked to the fundamental aim in Article 3(1)(g) TFEU of establishing a system of undistorted competition.159 2.149  The purpose behind Article 10 decisions is to provide the Commission with an instrument allowing it, where necessary, to clarify the law and ensure its coherent application throughout the EU. Article 10 thereby links in with the special responsibility of the Commission to define and implement the orientation of EU competition policy and to maintain its coherent application. Indeed, one of the main concerns voiced during the elaboration of Regulation 1/2003 was that the empowerment of NCAs and courts to apply Articles 101 and 102 in full would endanger the coherent application of EU competition law. Article 10 provides the Commission with the means to intervene ex ante and orientate EU competition policy by adopting non-infringement decisions in respect of new types of agreements and practices. It also allows the Commission to intervene ex post and address an inconsistency in the application of the law. For instance, if at Member State level the same type of agreement or practice has given rise to diverging decisions, the Commission may intervene and determine the correct approach by adopting an Article 10 decision. Equally, it could also be used ex ante to send a signal to the ECN about how to approach a certain case. However, as is clear from Article 10 and recital 14, the adoption of noninfringement decisions is the exception rather than the rule. This instrument is intended to be used sparingly, reserving it for cases where there is a real need to intervene in favour of an agreement or a practice. Article 10 decisions may be appropriate in particular where an agreement as a whole is considered pro-competitive and has effect in large parts of the EU. In order to ensure that such pro-competitive agreements are allowed to develop, it may be appropriate that the Commission adopts a decision explaining in detail why the agreement is viewed positively.160 In practice, this instrument has not yet been used. The Commission

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takes the view that this means of ensuring consistency has largely been overtaken by efforts within the ECN to promote the coherent application of the EU competition rules.161

(c)  The Legal Effects of Article 10 Decisions 2.150  In their operative part Article 10 decisions make a formal finding that the agreement or practice in question is compatible with Article 101 or 102. It follows from Article 16 that NCAs and courts cannot take decisions that run counter to inter alia Article 10 decisions adopted by the Commission. Article 10 decisions therefore have strong legal effects. Once adopted, NCAs and courts cannot contradict such decisions. Only the EU Courts have the power to (p. 138) do so, either in the context of a direct action under Article 263 TFEU or a preliminary reference under Article 267 TFEU.162 2.151  The statement in recital 14 to the effect that Article 10 decisions are declaratory in nature does not detract from the fact that they have strong legal effects. This statement is meant to distinguish Article 10 decisions from exemption decisions previously adopted under Regulation 17 by making it clear that the effects of Article 10 decisions are linked to the underlying facts and not to a pre-defined period of time. Non-infringement decisions state the law as it stands in light of the facts on which they are based. As long as the facts remain substantially the same, the binding effect of the decision remains intact. However, if the facts change materially, the assessment may also change affecting the basis for the decision. In other words, Article 10 decisions are binding rebus sic stantibus. If it is clear that on the basis of new facts the Commission would no longer consider the agreement compatible with Articles 101 and 102, NCAs and courts can intervene against the agreement or practice without violating their obligations under Article 16. However, in order to avoid being proved wrong at a later point, NCAs and courts would be well advised in such circumstances either to contact the Commission163 or, in the case of the national courts, to make a preliminary reference to the Court of Justice under Article 267 TFEU with a view to ascertaining whether the new facts provide sufficient basis for deviating from the Article 10 decision.

(i)  The Relationship Between Articles 9 and 10 2.152  As a condition for adopting an Article 10 decision the Commission may request that the agreement or practice be modified in certain ways so as to render the agreement or practice compatible with Articles 101 and 102. Article 10, however, does not provide an explicit basis for rendering commitments binding and enforceable. For instance, it may be that for a practice to be compatible with Article 102, the undertaking in question must undertake to grant certain access rights to third parties. Such conditions may be incorporated into the decision, making clear that the undertaking concerned must respect the conditions in order to benefit from the favourable decision. If not, it exposes itself to third party actions and complaints. The fact remains, however, that from the point of view of effective enforcement it would be desirable if commitments could be rendered binding and enforceable, as is the case under Article 9. The question is whether Article 9 and Article 10 decisions can be combined. 2.153  Regulation 1/2003 is silent on the matter and ultimately it will be for the EU Courts to decide. However, there would appear to be no fundamental obstacles to an affirmative answer. The fact that, according to recital 13, commitment decisions do not incorporate a conclusion as to whether an infringement still exists and the fact that Article 10 decisions make a formal finding of non-infringement, would not appear to speak decisively against a combination of the two instruments. Article 9 decisions leave open the question whether an infringement still exists, in order to avoid binding NCAs and national courts with a decision which does not contain detailed legal reasoning showing why the commitments effectively cure the competition problem. By reason of Article 16, this would have been the (p. 139) consequence of making a finding that, following the commitments, there was no longer any infringement. This does not, however, preclude combining an Article 9 decision with an

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Article 10 decision, which does contain detailed reasoning why the agreement or practice is compatible with Articles 101 and 102 and therefore addresses the concern that underlies the statement in recital 13.

Footnotes: 106

  See in particular Masterfoods (n 72), para 46; and see also Section A.

107

  Masterfoods (n 72), para 48.

108

  This was confirmed in Case T-339/04 and Case T-240/04 France Télécom v Commission [2007] ECR II-521, para 79, in which the Court found that Regulation 1/2003 has not changed the general competence of the Commission recognized by the case law of the CJ in Masterfoods (n 72), paras 46 and 48. 109

  This provision codifies the case law of the Court in Case 7/82 Gesellschaft zur Verwetung von Leistungsschutzrechten (GVL) v Commission [1983] ECR 483. 110

  See Joined Cases T-22/02 and T-23/02 Sumitomo [2005] ECR II-4065, para 138.

111

  Sumitomo (n 110), para 137.

112

  GVL (n 109), para 27.

113

  See p 17 of the Explanatory Memorandum to the Commission’s proposal of 27 September 2000 (COM(2000) 582 final). 114

  See Decisions of 26 October 2004 in Case COMP/38/662 GDF/ENEL and GDF/ENI.

115

  Cases 6/73 and 7/73 Istituto Chemieorerapico Italiano and Commercial Solvents v Commission [1974] ECR 223. 116

  See Arts 23 and 24 of Regulation 1/2003.

117

  See eg Joined Cases 6/73 and 7/73 Commercial Solvents [1974] ECR 223.

118

  See Magill (n 77), para 93.

119

  See Automec (n 15), paras 51 and 52.

120

  See eg Commission Decision in Gillette, OJ 1993 L116/21.

121

  The power of the Commission to impose such measures under Art 7 may have facilitated the acceptance of structural commitments by the Commission with the aim of enhancing liberalization in energy markets: see Decision of 26 November 2008 in Cases COMP/39.388 and COMP/39.389 E.ON electricity balancing; Decision of 16 March 2009 in Case COMP/39.402 RWE gas foreclosure; Decision of 3 December 2009 in Case COM/ 39.316 GDF gas foreclosure; Decision of 29 September 2010 in Case COMP/39.315 ENI gas foreclosure; and Decision of 10 April 2013 in Case AT/39727 čEZ concerning the Czech electricity market. 122

  See Automec (n 15), paras 51 and 52.

123

  Often such markets are regulated and thus subject to a special framework. It can be expected that in devising remedies deference will be given to the special framework. For a break-up to be imposed there should therefore be particularly clear evidence that the framework in question is inadequate in terms of ensuring compliance with the EU competition rules. 124

  See Case C-163/96 Raso [1998] ECR I-533. See also Case C-18/88 RTT v GB-Inno-BM [1991] ECR I-5941, where the CJ applied the same reasoning.

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125

  Commission Regulation 773/2004 of 7 April 2004 relating to the conduct of proceedings by the Commission pursuant to Articles [101 and 102 TFEU], OJ 2004 L123/18. 126

  Notice on the handling of complaints by the Commission under Articles [101 and 102 TFEU], OJ 2004 C101/65. 127

  Best Practices: conduct of proceedings, paras 135 and 126.

128

  The Complaints Notice lists in para 44 certain criteria that can be used in isolation or combination for rejections on the ground of lack of ‘European Union interest’. Moreover, the Commission identified in its Report on Competition Policy, 2005, some criteria that it could use to decide whether there is a ‘European Union interest’. 129

  See eg Masterfoods (n 72), para 47.

130

  See Case C-450/98 P IECC v Commission [2001] ECR I-3947, para 57 and the case law cited therein. 131

  See Case T-427/08 Confédération européenne des associations d’horlogers-réparateurs (CEAHR) v Commission, judgment of 15 December 2012, not yet reported. 132

  See Commission Staff Working Paper (n 3), para 118.

133

  Best Practices: conduct of proceedings, para 150.

134

  See eg Automec (n 15), para 76.

135

  See Commission Staff Working Paper (n 3), para 108.

136

  Recital 12 to the Commission’s proposal of 27 September 2000 (COM(2000) 582 final) provided that the commitments could be relied upon by third parties. However, certain Member States considered it more appropriate to leave this question to be decided by the EU Courts. The statement was therefore deleted. 137

  This limitation follows from the Regulation and not from the Treaty itself.

138

  See eg Case T-15/02 BASF [2006] ECR II-497, para 48.

139

  This is also the point at which the Commission has to decide whether the commitments offered address its concerns. 140

  Best Practices: conduct of proceedings, para 116.

141

  The preliminary assessment is a Commission document. It must therefore be adopted in accordance with the Commission’s internal decision-making procedure. 142

  The Regulation does not prevent undertakings from withdrawing their commitments up until the time when the Commission renders them binding. 143

  Best Practices: conduct of proceedings, para 121.

144

  Case C-441/07 P Commission v Alrosa [2010] ECR-I 5949, para 120

145

  The Commission has accepted behavioural commitments in the majority of cases. Structural commitments have been accepted in several cases with the aim of enhancing liberalization in energy markets: see Decision of 26 November 2008 in Cases COMP/39.388 and COMP/39.389 E.ON electricity balancing; Decision of 16 March 2009 in Case COMP/ 39.402 RWE gas foreclosure; Decision of 3 December 2009 in Case COMP/39.316 GDF gas foreclosure; Decision of 29 September 2010 in Case COMP/39.315 ENI gas foreclosure; and Decision of 10 April 2013 in Case AT/39727 čEZ concerning the Czech electricity market. 146

  Best Practices: conduct of proceedings, para 128.

147

  Best Practices: conduct of proceedings, para 129.

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148

  The Commission’s proposal of 27 September 2000 (COM(2000) 582 final) did not provide for the Art 27(4) procedure, the reason being that it was considered more efficient to rely on proactive and targeted market testing. Art 27(4) was introduced at the insistence of the Member States which considered that third parties should be made aware of the main content of the commitments in their own language and have the possibility to make comments on their own initiative. 149

  The Commission has in several cases obtained additional commitments after the market test. 150

  A literal reading of Art 9(1) suggests that the commitments must meet the Commission’s concerns as they stand at the time of the preliminary assessment. This is confirmed by Alrosa (n 144), para 120. 151

  Current Commission practice suggests that decisions will normally be limited in time.

152

  Experience suggests that the Commission will generally limit Art 9 decisions in time.

153

  The fine was imposed on Microsoft in a Decision of 6 March 2013 in Case AT.39530 Microsoft-Tying, for failure to comply with the commitments it had made to offer users a browser choice screen and which were made binding in Decision of 16 December 2009 in Case COMP/39.530 Microsoft-Tying. This Decision states that the failure to comply with a commitment decision is in principle a serious breach of EU law. See SPEECH/12/561 of 17/07/2012 in which Vice-President Almunia of the European Commission also announced that the Commission was considering strengthening the monitoring of commitment decisions, eg through the more frequent appointment of monitoring trustees. 154

  See eg Joined Cases C-68/94 and C-30/95 France and Others v Commission [1998] ECR I-1375, para 62. 155

  Alrosa (n 144), para 90.

156

  See Art 5(2) of the Decision of the President of the European Commission of 13 October 2011, on the function and terms of reference of the hearing officer in certain competition proceedings, OJ 2011 L275/29. See also Art 27(3) of Regulation 1/2003 and eg Case C-70/97 P Kruitvat [1998] ECR I-7183, where the CJ held that a third party that had not participated in the administrative procedure leading to the adoption of the decision could not be regarded as being individually concerned within the meaning of Art 230 EC (now Art 263 TFEU), as it was in a situation which could not be distinguished from that of numerous other economic operators. 157

  Only the Commission can make findings of inapplicability, pursuant to Art 10 of Regulation 1/2003. See Tele2Polska (n 97), para 22 ff. The CJ ruled that the empowerment of NCAs to take decisions stating that there has been no breach of Art 102 TFEU would: call into question the system of cooperation established by the Regulation and would undermine the power of the Commission. Such a ‘negative’ decision on the merits would risk undermining the uniform application of Articles 101 TFEU and 102 TFEU, which is one of the objectives of the Regulation highlighted by recital 1 in its preamble, since such a decision might prevent the Commission from finding subsequently that the practice in question amounts to a breach of those provisions of European Union law. The CJ therefore concluded that it is ‘thus apparent from the wording, the scheme of the Regulation and the objective which it pursues that the Commission alone is empowered to make a finding that there has been no breach of Article 102 TFEU, even if that article is

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applied in a procedure undertaken by a national competition authority.’ See also Section C. 3(a). 158

  Following the entry into force of the Treaty of Lisbon on 1 December 2009, the EU has replaced and succeeded the European Community. 159

  This notion must be clearly distinguished from the (lack of) ‘EU interest’ concept developed in the case law and which governs the rejection of complaints. 160

  Art 10 decisions differ from guidance letters (see Section A.5) in two ways. First, they have a much broader scope. Guidance letters are confined to addressing specific predefined issues whereas Art 10 decisions address the agreement or practice as a whole. Secondly, the legal effects of Art 10 decisions are considerably stronger. 161

  See Commission Staff Working Paper (n 3), para 114.

162

  A decision which has not been challenged by the addressee within the time limit laid down by Art 263 TFEU becomes definitive as against him; see Case C-188/92 TWD Textilwerke Deggendorf [1994] ECR I-833, para 13. The addressee cannot subsequently challenge the decision before national courts and rely on the Art 267 reference procedure to have it annulled by the CJ. National courts are not competent to annul EU acts, see Case 314/85 Foto Frost [1987] ECR 4199, para 17. 163

  Under Art 15(1) of Regulation 1/2003, Member State courts have the right to request opinions from the Commission.

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Part I General Principles, 2 The Enforcement System Under Regulation 1/2003, E Cooperation Between Enforcers Eddy De Smijter, Ailsa Sinclair From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Regulation 1/2003 — European Competition Network — National enforcement — Co-operation between Commission and member states

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E. Cooperation Between Enforcers (1)  Introduction 2.154  One of the objectives of Regulation 1/2003 was to enhance the enforcement of the EU competition rules via an increased involvement of the NCAs and the national courts.164 This increase in enforcers necessitated cooperation and the sharing of work between them and the appropriate instruments to guarantee the coherent application of the rules. The cooperation mechanisms between the competition authorities (the Commission and the NCAs) are laid down in Articles 11–14, 16(2), and 22 of Regulation 1/2003 and are further elaborated in the Commission Notice on the European Competition Network (also referred to as the ‘Network Notice’),165 whereas the cooperation mechanisms between the Commission and the national courts are the subject of Articles 15 and 16(1) of Regulation 1/2003, which are also further elaborated in the National Courts Notice.166

(2)  Cooperation within the ECN 2.155  The major changes167 brought about by Regulation 1/2003 relate to: (a) the work sharing amongst the competition authorities; (b) the possibility for NCAs to ask other NCAs to carry out investigations or other fact-finding measures; and (c) the possibility of exchanging information between the competition authorities and of using the exchanged information in evidence for the purpose of applying EU competition law.

(a)  The Sharing of Work Amongst the Competition Authorities 2.156  Articles 4 and 5 of Regulation 1/2003 give the Commission and the NCAs full parallel competence to apply Articles 101 and 102.168 In the absence of any further provision concerning the division of competence between ECN members, the question as to which ECN member is dealing with a particular case is not a matter of jurisdiction, merely of work sharing among the competition authorities. In that context, terms such as ‘allocation’ or ‘reallocation’ of a case are often used, although both might give the wrong impression of the ECN as a clearing house. Regulation 1/2003 does not provide for the ‘transfer’ of cases, as such; rather (p. 140) ‘reallocation’ involves one authority going ahead with the investigation of a case while the other abstains from acting or closes its case either on the basis of its discretion (not) to act or pursuant to Article 13 of the Regulation. Practice so far has shown, however, that very few cases have been reallocated from one competition authority to another: cases typically stay with the competition authority that started proceedings following a complaint, a leniency application, or any other indication of a competition law infringement.169 It is only when the involvement of another competition authority is necessary to ensure the effective enforcement of the EU competition rules in a particular case that the case may change hands. If authorities disagree on the most suitable allocation of a case, bilateral discussions take place between concerned authorities. However, discussions on the allocation of a case and its subsequent reallocation are rare in practice and have played a role mainly in cartel cases or in investigations started by a complainant. Reallocation of cases between NCAs has occurred very infrequently with most reallocations occurring between the Commission and NCAs.170 2.157  In order to ensure that cases are dealt with by the ECN member(s) that can effectively enforce the EU competition rules—the so-called ‘well-placed competition authority’171 —ECN members inform one another as soon as they start investigating a case.172 This early information system permits the network to detect multiple procedures and it allows for a quick and efficient sharing of work within the ECN.173 Indeed, following the early information, any other competition authority may decide to open proceedings in the same case.174 (p. 141) When that latter authority is the Commission, Article 11(6) of Regulation 1/2003 states that the NCA that initially dealt with the case is relieved of its competence to apply Articles 101 and 102 for that part of the case for which the Commission has initiated proceedings. Conversely, when that latter authority is an NCA, the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

competition authority that initially dealt with the case can continue dealing with the case in parallel or, preferably,175 it may abstain from acting, suspend, or close its file either on the basis of its discretion (not) to act or on the basis of Article 13 of Regulation 1/2003. These principles of work sharing as introduced by Regulation 1/2003 and the Network Notice have been fully endorsed by the General Court in the France Télécom judgments of 8 March 2007.176 2.158  Article 13 of Regulation 1/2003 offers ECN members a stand-alone legal basis to suspend or to close proceedings because another ECN member is dealing or already has dealt with the case.177 The direct effect and the primacy of this rule implies that no further national (implementing) act is needed for an NCA to use Article 13, nor can a (conflicting) national provision prevent, limit, or condition such use. At the same time, it should be recalled that Article 13 confers a discretionary power upon ECN members. That means that although there can be no generic limitation to the use of Article 13, an ECN member can in an individual case decide not to suspend or close its proceedings in order to ensure the effective enforcement of the EU competition rules.178 2.159  There follow some further reflections on the fact that an ECN member is able to suspend or close its own proceedings on the basis ‘that a case is (being) dealt with’ by another ECN member: •  Although Article 13 is not explicit on this point, one can deduce from the fact that it is meant to contribute to the work sharing within the ECN that Article 13 can only be used as a legal basis to suspend or to close proceedings if the competition authority that is already acting or that has already acted on a case, is doing/has done so on the basis of Article 101 or 102, with or without a parallel application of national competition law. 179 Indeed, when a case is being dealt with or has been dealt with solely on the basis of national competition law, an ECN member cannot invoke the satisfactory enforcement of EU competition law as a justification to suspend or to close its own proceedings under Article 101 or 102. It is, however, submitted that the suspension of proceedings or the rejection of a complaint can be legitimately based on Article 13 if at the time of the suspension or rejection another ECN member was dealing with the case under EU competition law, regardless of the outcome of the latter proceedings; this is so even if the proceedings did not finally lead to the (p. 142) application of Article 101 or 102 because, for example, on the basis of the investigation, it was finally concluded that trade between Member States was not affected. •  For an ECN member to be able to suspend or to close proceedings on a case, another competition authority has to be dealing or to have dealt with the same case. According to Article 13, a case can be considered to be the same when it concerns ‘the same agreement, decision of an association or practice’. In the Network Notice, this precondition has been tightened by requiring that ‘the [same] competition issue’ is/has been dealt with, which implies that the agreement, decision, or practice involves ‘the same infringement(s) on the same relevant geographic and product markets’. 180 •  In order to clarify what is meant by ‘dealing with a case’, the Network Notice states that another competition authority is required to be investigating or to have investigated the case. 181 It is thus not necessary for that latter competition authority to have opened proceedings in the case. Since ECN members inform one another as soon as they start investigating a case, that information can be referred to as proof of the fact that the case is being dealt with.

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(b)  An NCA’s Request to Another NCA to Carry Out an Investigation 2.160  Regulation 1/2003 also introduced, in Article 22(1), the possibility of NCAs to carry out inspections or other fact-finding measures in their territory at the request and for the benefit of another NCA. Previously, only the Commission could request such assistance from an NCA.182 Together with the possibility of exchanging information and using it in evidence pursuant to Article 12 of Regulation 1/2003, this new mechanism was necessary to bring about efficient work sharing within the ECN and thus effective enforcement of the EU competition rules.183 Without it, it would indeed have been impossible for the particular NCA dealing with a case to obtain all necessary evidence to apply Articles 101 and 102 effectively. The result would have been that all cases where the evidence is spread over more than one Member State would have had to be dealt with by the Commission or by several NCAs in parallel. Article 22(1) now permits enforcement by the single NCA considered well placed to deal with the case. According to experience gathered so far by the Commission and the NCAs, assistance pursuant to Article 22(1) has become a very useful tool within the network.184 Assistance was requested and provided mainly in the context of inspections, witness interviews and requests for information. 2.161  Similar to other provisions of Regulation 1/2003, Article 22(1) offers NCAs a standalone legal basis on which to carry out inspections or other fact-finding measures on the request of another NCA.185 The direct effect and the primacy of this rule implies that no further national (implementing) act is needed for an NCA to make use of Article 22(1), nor can a (conflicting) national provision prevent, limit, or condition such use. At the same time, it should be recalled that Article 22(1) confers a discretionary power upon the NCAs. That means that although there can be no generic limitation to the use of Article 22(1), an NCA can in an individual case decide not to carry out the requested inspection or fact-finding (p. 143) measure. It is submitted, however, that, because of the obligation of ‘close cooperation’ within the ECN, which is ‘dedicated to the effective enforcement of EU competition rules’, an NCA can only refuse such assistance in exceptional circumstances.186 2.162  When an NCA carries out an inspection or another fact-finding measure on behalf of another NCA, it does so ‘under its national law’ and ‘pursuant to its own rules of procedure, and under its own powers of investigation’.187 That implies, for example, that companies’ rights relating to the inspection are determined by the national law of the assisting NCA. Thus, the question whether information was collected legally is determined by the national law of the assisting NCA that has collected the information. However, Article 12 of Regulation 1/2003 governs the subsequent exchange and use of the information collected in an investigation pursuant to Article 22(1).188 According to the Commission, some practical and legal issues have arisen with Article 22.189 The practical issues were mainly linked to the limited resources of some NCAs (although in most cases requests for assistance have been granted) and language issues. Legal issues have arisen primarily as a result of divergent national procedural frameworks and concerned the acquisition of evidence due to divergences in national legislation concerning requirements to conduct an inspection or to make an information request. A particular question which has come up is whether staff from another Member State’s competition authority can attend, or assist in, inspections carried out by another NCA or on their behalf. The participation of case handlers who are very familiar with the file typically improves the efficiency of such investigations. It appears that this possibility differs among jurisdictions. At the date of publication, this issue was being looked at the context of an ongoing project towards further procedural convergence with regard to investigative powers in the ECN.190

(c)  Exchange of Information and Its Use in Evidence

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2.163  In contrast with the regime that existed before 1 May 2004, Regulation 1/2003 contains an explicit provision concerning both: (a) the exchange of information between the European competition authorities; and (b) the use of such exchanged information for the purpose of applying the EU competition rules. Article 12 constitutes a cornerstone of the efficient and effective work sharing and handling of cases within the ECN. It removed the restrictions that resulted from the Spanish Banks case law, where the Court of Justice ruled that in the absence of an express provision empowering it to do so, the obligation of professional secrecy made it impossible for an NCA which had legally received information from the Commission (by virtue of Art 10(1) of Regulation 17) to use it for a reason other than that for which it was obtained, namely Commission proceedings for applying the EU competition rules. This meant that an NCA could not use such information as evidence in national proceedings governed by national law.191 As it is now possible to exchange information within the ECN, it no longer matters which competition authority discovered the evidence necessary to find (p. 144) the infringement: the authority that can stop and sanction the infringement will be able to obtain the evidence from other competition authorities and use it to prove the infringement. 2.164  This section discusses first the main features of the exchange of information regime within the ECN as it has been established by Regulation 1/2003, focusing in paras 2.161– 2.168 on the power of ECN members to exchange information between themselves, in particular the exchange of information voluntarily submitted by a leniency applicant and, in paras 2.169–2.172, on the safeguards linked to the exchange of confidential information; and in the following section, the use of the exchanged information in evidence.

(i)  Exchange of Information within the ECN [T]he Commission and the [National] Competition Authorities…shall have the Power to provide one another with and use in Evidence. (i)  Empowering ECN Members to Exchange Information

2.165  Article 12 of Regulation 1/2003 empowers ECN members both to exchange information between themselves and to use that information as evidence in their cases. The right of NCAs to exchange and to use information flows directly from the Council Regulation and because of the primacy of European law, it can neither be jeopardized nor conditioned by a national provision. Since the Council Regulation constitutes a sufficient legal basis for ECN members to exchange information within the ECN, the legality of such exchange cannot be challenged. 2.166  The same goes for the use of exchanged information in evidence: as long as the information has been legally collected by the transmitting ECN member, its use by the receiving ECN member cannot be challenged. The limitations on the use in evidence of exchanged information that would exist under the domestic rules of the receiving ECN member are irrelevant because of the primacy of European law. This implies that an ECN member can lawfully use in evidence information that was legally collected by another ECN member, even if the former could not itself have obtained that information.192 (ii)  Allowing ECN Members to Exchange Information

2.167  Article 12, however, does not oblige ECN members to exchange information; it only allows them to do so. Again, that does not mean that a national provision could deprive NCAs of the benefit of the Council Regulation nor could its use be limited in a general way.193 The option laid down in Article 12 simply implies that in a specific case, an ECN member itself has the discretion not to exchange information or not to use the information exchanged in evidence.

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2.168  How the option of exchanging information under Article 12 of Regulation 1/2003 relates to the duty of loyal cooperation as laid down in Article 3(4) TEU nevertheless remains an open question. In its interpretation of that Treaty provision, which obliges the EU Member States to facilitate the achievement of the EU’s tasks, the EU Courts found that Article 3(4) TEU imposes on the European institutions and the EU Member States mutual duties of sincere (p. 145) cooperation with a view to attaining the objectives of the EU Treaties.194 In the context of cooperation between the Commission and the national courts, this provision was referred to by the Court of Justice in order to oblige the Commission to transmit information it held to national courts that were dealing with an infringement of EU rules.195 One may wonder whether such an obligation on the part of the Commission also exists in relation to the NCAs and whether an NCA is under a duty to provide other NCAs with the information it holds.196 The main argument in favour of such a reading of Article 3(4) TEU is its rationale, namely the need for EU institutions and national authorities to assist one another in the application of European rules. The consequence would thus be that the option laid down in Article 12 of Regulation 1/2003 should be interpreted as an obligation to exchange the information requested by another ECN member for the purpose of applying the EU competition rules.197 One could argue, however, that the Council clearly did not intend to impose such an obligation on the ECN members when it expressly provided for the option to exchange evidence.198 So specific a provision would then prevail over the more general obligation of mutual assistance laid down in Article 3(4) TEU, which is only applicable to the extent that EU legislation remains silent as to cooperation between the European institutions and the Member States.199 2.169  In instances where the combined reading of Article 3(4) TEU and Article 12 of Regulation 1/2003 would lead to an obligation on the ECN members to exchange information between themselves, such an obligation obviously cannot be unlimited. Indeed, the Court’s case law concerning the limitations applicable to the obligation on the Commission to transmit information it holds to national courts would also have to apply mutatis mutandis to the exchange of information within the ECN. That would imply, for example, that the Commission may refuse to transmit information for overriding reasons relating to the need to safeguard the interests of the EU or to avoid any interference with its functioning and independence, in particular by jeopardizing the accomplishment of the tasks entrusted to it.200 The Commission relies on this exception, for instance to avoid transmission to national courts of information voluntarily submitted by a leniency applicant without the consent of that applicant.201 This concern to protect the information voluntarily submitted by a (p. 146) leniency applicant, and thus to protect the leniency programme of the competition authority, lies at the heart of some detailed provisions in the Network Notice regarding the exchange of such information. (iii)  Exchanging Information Voluntarily Submitted by a Leniency Applicant

2.170  The Network Notice affirms as a main principle that an ECN member will only transmit information voluntarily submitted by a leniency applicant to another ECN member when the leniency applicant consents to that exchange.202 The reasoning behind this rule is obvious: potential leniency applicants will no longer apply for leniency if the information they voluntarily submit to one ECN member (which in return grants immunity or reduction of fine to the applicant) can be used against them by another ECN member, in particular when the latter does not run a leniency programme and the leniency applicant was thus not even able to apply for leniency to the would-be receiving ECN member.203 The same applies, of course, to information that has been gathered as a result of the leniency application (eg incriminating documents found during an inspection). If there were a free exchange of the latter information, the leniency applicant could still suffer from a sanction imposed by another ECN member, if the latter were able to prove an infringement of the competition rules on basis of information that was found as an indirect consequence of the leniency application. Information obtained as a result of the leniency application therefore

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cannot be transmitted to another ECN member without the consent of the leniency applicant. 2.171  Although these principles guarantee the required adequate protection of the leniency applicant, they might have the adverse effect that not only the leniency applicant but also other participants in the agreement or conduct that infringes the competition rules will escape from effective sanctioning. Indeed, the exchange of information between ECN members will most likely take place because the ECN member wishing to transmit information cannot or can only partially effectively sanction the infringement of the competition rules. The ECN member wishing to receive the information is therefore the authority most likely to be involved in the sanctioning of the infringement. If the exchange between ECN members of information obtained through a leniency application solely depends on the consent of the leniency applicant, the latter will only give its consent when it does not risk any sanction being imposed by the intended recipient ECN member. Under the current rules, that implies that the leniency applicant also applied for leniency to the intended recipient ECN member. Clearly, in such a scenario the exchange of information is of little use since the intended recipient ECN member would have obtained the information directly from the leniency applicant. The chances are therefore high that the limitations to the exchange of information as explained in the previous paragraph lead to no information being exchanged at all, which implies an unwanted scenario of structural under-punishment because not only (p. 147) the leniency applicant but also the other participants in the behaviour infringing the competition rules will escape effective punishment. 2.172  In order to guarantee effective punishment for infringements of the European competition rules, the Network Notice therefore provides for the possibility of an exchange of information between ECN members in the absence of the consent of the leniency applicant, while maintaining the effectiveness of the leniency programme of the transmitting ECN member.204 In order to reconcile these two objectives, the ECN members guarantee to the leniency applicant that it will not be punished by the receiving ECN member on the basis of the information transmitted, nor will it be punished on the basis of any other information subsequently obtained.205 To that end, the recipient ECN member will give a commitment in writing not to use such information to impose sanctions on the leniency applicant or on any other natural or legal person the applicant wishes to protect. The leniency applicant will receive a copy of this written commitment.206

(ii)  The Use of the Exchanged Information in Evidence [A]ny Matter of Fact or of Law, including Confidential Information. 2.173  Article 12 of Regulation 1/2003 allows ECN members to exchange all information between them, explicitly emphasizing that this also includes confidential information. It is only by allowing ECN members to exchange confidential information that the ECN member dealing with a case can obtain all evidence necessary to prove the alleged infringement. ECN members were previously precluded from disclosing business secrets or any other confidential information they obtained in the exercise of their function.207 However, confidential information can be safely exchanged within the ECN because in that context the Regulation has replaced the national guarantees for protection of confidential information with an EU-wide guarantee. (i)  The Relation Between Article 12 and the National Law Provisions Prohibiting NCAs from Divulging Confidential Information

2.174  Most, if not all, EU Member States have rules preventing (p. 148) NCAs from disclosing confidential information they obtain in the exercise of their duties. It is, however, difficult to reconcile those rules with an efficient allocation of cases within the ECN. Indeed, one can easily imagine a situation in which one ECN member is dealing with a case for which another ECN member holds part of the evidence. If, in those circumstances, the latter ECN member was prevented from sending the confidential parts of the said evidence, From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the former ECN member could encounter difficulties in the enforcement of the EU competition rules. Article 12 therefore explicitly allows for the exchange of confidential information and, due to the primacy of EU law, national law provisions cannot be invoked in order to prevent sending the confidential information to other ECN members.208 2.175  The exchange of confidential information not only contributes to the efficient sharing of work within the ECN; in addition, it releases the ECN members themselves from a duty that might exist under their own national provisions to verify, assess, and pronounce on the confidential nature of (parts of) the information they have obtained and intend to send to another ECN member. Since the nature of the information cannot determine whether it is to be exchanged, the ECN member intending to transmit the information does not need to classify the information. Furthermore, to the extent that the original information is being sent, the transmitting ECN member can no longer respond to a demand for access to that information, so the ECN member intending to transmit the information does not need to classify the information that is to be exchanged for that purpose either. Even if the ECN member transmitting the information decides to send copies to the requesting ECN member, the decision whether to exchange information should not be influenced by the fact that such information has been classified or may at a later stage be classified as confidential.209 Indeed, because of the common ECN minimum standard for the protection of confidential information, the intended recipient ECN member will also be required to guarantee the confidentiality of the exchanged information. (ii)  A Wider Umbrella for the Protection of Confidential Information

2.176  The exchange of confidential information within the ECN must not mean that once such information is within the ECN, it can ‘escape’ via the ECN member whose own national rules, if any, provide the lowest degree of protection for confidential information. Regulation 1/2003 therefore contains a common European minimum standard for the protection of confidential information throughout the EU. According to Article 28(2) of Regulation 1/2003, ECN members ‘shall not disclose information acquired or exchanged by them pursuant to this Regulation and of the kind covered by the obligation of professional secrecy’. This implies that all European competition authorities must have an effective procedure to ensure that information which circulates within the ECN and which is covered by professional secrecy, remains within the ECN. The common European concept of professional secrecy, which encompasses the protection of business secrets and other confidential information, thus constitutes an appropriate protection of such information within the ECN.210

(p. 149) (iii)  The Use in Evidence of the Information Exchanged within the ECN 2.177  Article 12 of Regulation 1/2003 not only regulates the exchange of information within the ECN, for example as market intelligence, but also constitutes an important legal basis for the use in evidence of information exchanged. In contrast with the regime that existed before 1 May 2004, Article 12 allows ECN members to use in their proceedings all information received from another ECN member, notwithstanding any national provision to the contrary.211 The only limitations to this power are those contained in Article 12: •  the information should be used for the application of EU competition rules; •  the information should be used in respect to the subject matter for which it was collected by the transmitting ECN member; and •  application of the restrictions in Article 12(3) with regard to the use of information in evidence when imposing sanctions on natural persons.

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2.178  Before examining these restrictions further, however, it may be useful also to recall the restrictions on the use of information that flow from the respect for the general principles of EU law and in particular the fundamental rights as guaranteed by the EU Charter of Fundamental Rights and the ECHR. (i)  The General Principles of EU Law

2.179  All EU Member States have signed and ratified the ECHR and the EU itself is bound to respect the fundamental rights as guaranteed by that Convention.212 It did not come as a surprise, therefore, that the Court of Justice identified these fundamental rights as integral to the general principles of EU law, which should be respected by both the European institutions and the EU Member States, when the latter apply EU law.213 Following the entry into force of the Lisbon Treaty, the EU Charter of Fundamental Rights, which is based inter alia on the ECHR, now has the same legal value as the EU Treaties, that is, primary EU law.214 The Charter applies not only to the institutions and bodies of the EU, but Article 51(1) of the Charter also stipulates that it applies to the Member States when they ‘implement’ EU law. It remains to be seen whether this will be interpreted in a narrow sense and be confined to national measures which implement EU legislation or whether it will be accorded a broader meaning to cover cases where EU law is ‘applied’.215 The latter interpretation would presumably extend to NCAs when they take decisions applying Articles 101 and 102. Over and above the application of the EU Charter of Fundamental Rights, Article 6(2) TEU also commits the EU to accede to the ECHR. 2.180  It is precisely this common minimum standard of fundamental rights which is at the heart of the regime of Article 12, where it states that the ECN member receiving information from (p. 150) another ECN member can use that information in evidence against an undertaking without any restriction other than those listed in Article 12. Without this common minimum standard, the implicit mutual recognition of each other’s standard of protection of the rights of defence enjoyed by undertakings would have been impossible.216 In the same way, this mutual recognition of each other’s standard of protection of fundamental rights is necessary to bring about an effective exchange of information within the ECN and thus to an efficient work sharing within the ECN. Indeed, without this mutual recognition of standards of fundamental rights, the use in evidence—and thus the preceding exchange—of information would be seriously limited. That would mainly be so because the exchange would depend on whether in the state of the ECN member intending to transmit the information the standard of fundamental rights for the collection of the information is such that the information exchanged can be used in evidence under the standards of the intended recipient ECN member. It could further be assumed that such exercise of comparative law would give rise to perpetual and even vexatious challenges by the undertakings involved. 2.181  The fact that Article 12 of Regulation 1/2003 provides for an implicit mutual recognition of standards of fundamental rights implies that such challenges are meaningless. It may, indeed, happen that the national rules of the recipient ECN member offer greater protection of the rights of defence than is guaranteed under the EU Charter of Fundamental Rights or ECHR standard or under the national standard of the transmitting ECN member. However, because of the implicit mutual recognition, such a difference in standards cannot prevent the recipient ECN member from using in evidence information exchanged to the extent that the information was collected legally by the transmitting ECN member in accordance with its domestic rules.217 For instance, even if the national law of the receiving NCA grants legal privilege to documents emanating from in-house lawyers, that NCA can without any problem lawfully use in evidence such documents where they are received from an NCA whose law does not extend the legal privilege to such documents and who thus has collected them legally. It is therefore possible that the primacy of European

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law results in an NCA using in evidence information that has been collected by another (transmitting) ECN member by a means unavailable to the recipient ECN member.218 (ii)  Information Exchanged Can Only Be Used in Evidence for the Application of EU Competition Rules

2.182  Article 12(2) states that ‘Information exchanged shall only be used in evidence for the purpose of applying Article [101] or Article [102] of the Treaty’, thereby excluding the use of information in evidence for any other purpose, such as the application of other EU law provisions or of national competition law. This limitation reflects the respect for professional secrecy rules and the rights of the defence, according to which, in the absence of an explicit derogation, information can only be used for the purpose for (p. 151) which it was obtained.219 Since the information is being exchanged for the purpose of applying Articles 101 and/or 102 (see Art 12(1) of the Regulation), the recipient competition authority cannot use the exchanged information in evidence for a different purpose. Moreover, that restriction is directly related to the legal basis of Regulation 1/2003, namely Article 103 TFEU, which allows the European institutions to adopt Regulations ‘to give effect to the principles set out in Articles 101 and 102’ only. It was thus legally impossible for the Council to empower the competition authorities to exchange and to use in evidence information for the purpose of applying only national competition law. 2.183  However, since the final version of Article 3 of Regulation 1/2003 allows NCAs and national courts to apply national competition rules to cases which fall within the realm of Article 101 or 102 and obliges NCAs and national courts to apply the EU competition rules in those cases as well, it was not feasible to limit the use in evidence of exchanged information to the application of Articles 101 and 102 alone.220 Indeed, allowing the use in evidence of exchanged information for the application of EU competition law, while excluding such use for the parallel application of national competition law to the same case would have a chilling effect on the application of national rules as that application is allowed by Article 3. Article 12(2) therefore, by way of explicit derogation from the absolute parallelism between the purpose of the exchange of information and the use of that information, does allow the use of exchanged information for the application of national competition law where the latter is applied both in the same case and in parallel with EU competition law. 2.184  In addition to the requirement of parallel application, Article 12(2) limits the use of exchanged information for the application of national competition law to situations in which the latter does not lead to a different outcome than the application of EU competition law. Read together with the last sentence of Article 3(2), which contains an exception to the convergence rule, this further limitation implies that NCAs cannot use information exchanged under Article 12(1) to apply stricter national competition law which prohibits or sanctions unilateral conduct that would be permitted under EU competition law. It could also be argued that Article 12(2) excludes the use of exchanged information to grant an exemption under national law, even if applied in parallel with EU competition law, since that outcome is excluded when the NCA is applying the latter rules.221 (iii)  Information Exchanged Can Only Be Used in Evidence in Respect of the Subject Matter for Which it was Collected

2.185  Article 12(2) further limits the use of the exchanged information in evidence by the recipient competition authority to ‘the subject-matter for which it was collected by the transmitting authority’. Again, this limitation reflects the respect for professional secrecy rules and the rights of the defence enjoyed by the undertaking against which the information is being used.222 In order to define the scope of ‘the subject-matter for which [the information] was collected’, inspiration may be drawn from the EU Courts’ (p. 152) case law regarding the limitations imposed by the subject matter of an investigation on the subsequent use by the Commission of the information obtained during that investigation. In Hoechst, the Court linked the requirement for the Commission to specify the subject matter From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

of an inspection to its obligation to ‘clearly indicate the presumed facts which it intends to investigate’.223 That would imply that the receiving competition authority could only use the information exchanged in evidence to prove an infringement relating to the same factual context as that which underlay the information gathering measure of the transmitting authority. 2.186  The Court’s case law seems to suggest that this factual context is composed of the product and the conduct under scrutiny.224 Clearly, the identity of the undertaking under scrutiny is not part of that factual context: thus, the information obtained from one undertaking by the transmitting authority can be used against another undertaking by the recipient authority.225 Similarly, it is submitted that the legal classification of the investigated conduct as a particular infringement is not part of the subject matter of the information gathering measure because it goes beyond the pure factual setting of the investigative measure. As a result, the fact that the transmitting authority has classified some specific behaviour as a possible infringement of national competition rules and collected information for the purpose of applying those rules cannot prevent the receiving authority from using the collected and subsequently exchanged information for the purpose of applying EU competition rules, provided the factual context remains the same. (iv)  The Limitations With Regard to the Use of Information in Evidence to Impose Sanctions on Natural Persons

2.187  Whereas the Commission cannot impose sanctions on natural persons, NCAs can impose whatever penalty is provided for in their national law, including sanctions on natural persons.226 If an NCA that has received information from another ECN member would like to use that information in evidence against a natural person, Article 12(3) of Council Regulation 1/2003 sets further limitations on that use. According to that provision: Information exchanged pursuant to [Article 12(1)] can only be used in evidence to impose sanctions on natural persons where –  the law of the transmitting authority foresees sanctions of a similar kind in relation to an infringement of Article [101 or Article 102 TFEU] or, in the absence thereof, –  the information has been collected in a way which respects the same level of protection of the rights of defence of natural persons as provided for under the national rules of the receiving authority. However, in this [latter] case, the information exchanged cannot be used by the receiving authority to impose custodial sanctions. 2.188  It is not surprising that these limitations are formulated as a conditional mutual recognition of standards of fundamental rights. Indeed, the very reason for these limitations is the difference in fundamental rights protection for natural and legal persons. To treat proceedings against natural persons and those against legal persons in the same way— which would have been the consequence of an absolute mutual recognition of fundamental rights (p. 153) standards—was considered to be an inappropriate circumvention of the higher level of protection accorded to the fundamental rights of natural persons. As a consequence, the unconditional use in proceedings against natural persons of evidence that was collected in proceedings against an undertaking is replaced by a conditional use. 2.189  In much the same fashion as the implicit mutual recognition of standards of fundamental rights for the use of exchanged information in evidence against legal persons as outlined in paras 2.179–2.180, the first indent of Article 12(3) reveals that the ECN members recognize each other’s standards on condition that the law of both the transmitting and the receiving ECN member foresees ‘sanctions of a similar kind’. Whether a sanction is of a similar kind does not depend on the classification of the sanctions under From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

national law (eg ‘administrative’ or ‘criminal’). The Regulation refers rather to the underlying difference in fundamental rights depending on whether the proceedings may result in custodial sanctions or in other types of sanctions, such as fines.227 If in that regard the legal systems of both the transmitting and the receiving ECN members provide for sanctions of a similar kind (eg fines), the procedural safeguards in both systems are deemed to be equivalent. The result of this irrefutable presumption is that there can be no further limitation on the recipient ECN member using the information exchanged in evidence. 2.190  If, however, the laws of the transmitting and the receiving ECN member do not provide sanctions of a similar kind, there can no longer be any presumption of equivalence of procedural safeguards. That does not mean that the use in evidence of information exchanged is completely excluded. Article 12(3) still allows an ad hoc equivalence check. If the result of such a check is that the information has indeed been collected by the transmitting ECN member in a manner which respects the same level of protection of the rights of defence enjoyed by natural persons as provided for under the national rules of the receiving ECN member, the latter can use the information exchanged in evidence. There is, nevertheless, one further limitation to the latter use, which results from a negative presumption raised by a number of Member States during the negotiations in Council. According to that irrefutable negative presumption it is impossible to equate the procedural safeguards in proceedings that may result in custodial sanctions and procedural safeguards with other proceedings. Consequently, the recipient ECN member can only use the information exchanged in evidence to impose custodial sanctions where the first indent of Article 12(3) applies, namely where the laws of both the transmitting and the receiving ECN member provide for a custodial sanction. (v)  Experience with Article 12

2.191  According to the Commission, the possibility to exchange information and to use it as evidence within the ECN is key to the functioning of the network, as it greatly enhances its overall efficiency and it is a precondition for a flexible case-allocation system.228 The exchange of information occurs on a regular basis, in particular: (a) in the context of inspections, which may allow authorities to gain a more complete picture of suspected infringements; (b) in the context of Article 22 inspections where the information collected on behalf of the requesting authority is transferred under Article 12; and (c) in the context where a case is allocated between authorities or is reallocated to another (p. 154) authority. Cases where information was not only exchanged, for example as market intelligence but was also used in evidence are lesser in number and some NCAs have apparently encountered difficulties in using documents collected by other NCAs. There appears to be very little experience with the use of evidence by a competition authority to impose sanctions on individuals and the conditions provided by Article 12(3) in this regard. The Commission, in its Report on the functioning of Regulation 1/2003,229 highlighted that a discussion has arisen on whether the ban on the use in evidence of information by a competition authority for the imposition of custodial sanctions which has received the information from an authority which does not have such sanctions, is too far-reaching and amounts to an obstacle to efficient enforcement. It stated that it may be appropriate to examine whether other options are available, which preserve parties’ rights of defence. A possible alternative in this regard could be a so-called ‘double barrier’ approach, under which two conditions would apply: (a) the transmitting authority would have to verify that the information transmitted can be used in conformity with its rules; and (b) the receiving authority would have to verify that the information received can be used in conformity with its rules.

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(d)  The Obligation of Professional Secrecy and the Need to Disclose Information 2.192  The obligation of professional secrecy refers to the duty imposed by law on officials and other servants in respect of confidentiality. One reason for this obligation is to ensure that undertakings cannot plead commercial sensitivity as an excuse for withholding relevant documents from investigators, thus enabling the Commission and the competition authorities of the Member States to collect the information they need on the widest possible scale.230 At EU level, the concept of professional secrecy is laid down in Article 339 TFEU, which states that: the members of the institutions of the EU, the members of committees, and the officials and other servants of the EU shall be required, even after their duties have ceased, not to disclose information of the kind covered by the obligation of professional secrecy, in particular information about undertakings, their business relations or their cost components. This Treaty provision is repeated and extended in Article 28(2) of Regulation 1/2003. 2.193  Article 28(2) of Regulation 1/2003 requires officials and civil servants from national authorities and from the Commission, as well as other persons working under the supervision of these authorities, not to disclose information acquired or exchanged by them pursuant to the Regulation and of the type covered by the obligation of professional secrecy. The EU law concept of professional secrecy used in Article 28 thus creates a common minimum level of protection throughout the EU. It is submitted that this common minimum level implies that all ECN members need to have an effective procedure for the protection of information that is covered by professional secrecy. It is therefore necessary to identify the scope and the limitations of the EU law concept of professional secrecy.

(i)  Which Information is Covered by Professional Secrecy? (i)  The Wide Coverage of Professional Secrecy

2.194  The case law of the Court of Justice does not contain a general definition of what is covered by professional secrecy. There are only a few cases in which the Court has observed that particular information falls within the realm of the obligation of professional secrecy. (p. 155) 2.195  In Adams, the Court of Justice pointed out that, although Article 339 TFEU primarily refers to information gathered from undertakings, the expression ‘in particular’ shows that the principle in question is a general one which also applies to information supplied by natural persons, if that information is of the kind that is confidential.231 In his Opinion in AKZO, Advocate General Lenz considered that Article 20(2) of Council Regulation 17—which contains similar obligations to those in Article 28(2) of Regulation 1/2003—not only covers business secrets but also information internal to the administration in charge of the application of competition law.232 2.196  In an attempt to grasp what is covered by the concept of professional secrecy, one could say that it probably extends to all information that comes to the knowledge of the ECN members in the exercise of their functions, except for information that is already in the public domain. The concept of professional secrecy thus does not focus on the nature of the information itself but on the circumstances in which it is communicated or obtained. (ii)  Specific Sub-Category Within the Wider Concept of Professional Secrecy: Business Secrets and Other Confidential Information

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2.197  Although the obligation of professional secrecy extends beyond the protection of business secrets or other confidential information, these types of information are the most disputed. It is therefore useful to explore their scope under EU law. (iii)  Business Secrets

2.198  In Postbank, the Court of Justice defined business secrets as ‘information of which not only disclosure to the public but also mere transmission to a person other than the one that provided the information might seriously harm the latter’s interests’.233 The revised Commission Notice on the rules for access to the Commission file mentions the following examples of information that may qualify as business secrets: technical and/or financial information relating to an undertaking’s know-how; methods of assessing costs; production secrets and processes; supply sources; quantities produced and sold; market shares; customer and distributor lists; marketing plans; cost and price structure; and sales strategy.234 2.199  It is clear that information covered by the notion of business secrets may evolve over time: what is commercially important today is not necessarily commercially important at a later stage (eg production secrets and processes for products which are no longer on the market). Moreover, business secrets need no longer be protected when they are in the public domain. This would be the case, for example, when a third party is able to obtain that information without great effort. Therefore, documents containing information which could be obtained from other sources or which is commercially available on the market (eg comparative data, including market share figures, collected by a third party for commercial purposes) can never be regarded as containing business secrets. (p. 156) 2.200  Although it is for each competition authority to assess whether a particular document contains business secrets, inspiration may be drawn from the following nonexhaustive list of criteria which the Commission applies to determine whether information can be deemed to constitute business secrets: to what extent is the information known outside the company; to what extent measures have been taken to protect the information within the company; the value of the information for the company and its competitors; the effort or investment which the undertaking had to make to acquire the information; the effort which others would need to go to in order to acquire or copy the information; and the degree of protection offered to such information under the legislation of the Member State concerned.235 (iv)  Other Confidential Information

2.201  The Commission has established that ‘other confidential information’ means information other than business secrets, which may be considered confidential insofar as its disclosure would significantly harm an undertaking or a person.236 This would cover, for instance, voluntarily supplied information for which confidentiality was requested in order to protect the informant’s anonymity. Indeed, the General Court and the Court of Justice have acknowledged the legitimacy of the reluctance displayed by the Commission in revealing certain letters received from customers of the undertaking which is being investigated, since their disclosure might easily expose the authors to the risk of retaliatory measures. Such retaliation might be feared where undertakings are able to place very considerable economic or commercial pressure on their competitors or on their trading partners, customers, or suppliers.237 Therefore the concept of other confidential information may extend to information that would enable the parties to identify complainants or other third parties where those parties wish to remain anonymous.238 The category of other confidential information also includes military secrets.239

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(ii)  The Disclosure of Information Acquired or Exchanged Pursuant to Regulation 1/2003 2.202  According to Article 28(2) of Regulation 1/2003, ECN members, and also the staff of other Member States’ authorities that receive such information, are prevented from disclosing information that is covered by the professional secrecy obligation and which has been acquired or exchanged pursuant to the Regulation.240 The prohibition not only covers the information the Commission acquires pursuant to its powers of investigation (Arts 17– 21 of the Regulation) and the information an NCA acquires during an inspection or other fact-finding measure pursuant to Article 22 of the Regulation, but extends to all other information that an ECN member or another national authority acquires or exchanges in the context of the cooperation mechanisms provided for in Chapter IV of Regulation 1/2003.241 (p. 157) 2.203  The obligation of professional secrecy, however, cannot prevent the ECN members from using the cooperation mechanisms as foreseen within Regulation 1/2003 itself. Article 28(2) of Regulation 1/2003 therefore confirms that the exchange and use of information which takes place in the context of Articles 11 (cooperation between the Commission and the NCAs), 12 (exchange of information and use of exchanged information), 14 (Advisory Committee), and 15 (cooperation with national courts) of the Regulation cannot be regarded as a violation of the obligation of professional secrecy. Article 28(2) further excludes the use of information under Article 27 from the realm of professional secrecy. That provision allows the Commission to disclose and use information acquired or exchanged pursuant to Regulation 1/2003 in order to prove an infringement of the EU competition rules (paras 2.205–2.206) and to grant access to the file (paras 2.207– 2.208). 2.204  Beyond the exceptions explicitly mentioned in Article 28(2), one may ask whether there are further circumstances in which ECN members are entitled to disregard the professional secrecy obligation imposed by that provision. As the obligation is laid down in an EU Regulation, the exceptions, if any, would have to flow from the TFEU,242 the general principles of EU law, an international agreement concluded by the EU,243 or from the requirement to guarantee the useful effect of the exceptions explicitly stated in Article 28(2). Exceptions could surely not be based on national provisions, because that would jeopardize the common minimum level of protection created by Article 28(2) of Regulation 1/2003.244 However, it is submitted that to the extent that a national provision emanates from a general principle of EU law (eg access to the file in the context of the rights of defence) or is necessary to guarantee the useful effect of the exceptions explicitly stated in Article 28(2) (eg disclosure of information exchanged pursuant to Art 12 in order to prove an infringement of EU competition law), that national provision can be upheld against the obligation of professional secrecy. These further exceptions, however, should be applied strictly and thus cannot go beyond those required according to the general principles of EU law or those necessary to guarantee the useful effect of the exception explicitly stated in Article 28(2). (i)  Disclosure Necessary to Prove an Infringement of Article 101 or 102

2.205  According to the last sentence of Article 27(2) of Regulation 1/2003 and to Article 15(3) of Regulation 773/2004, nothing in Article 27(2) or in Regulation 773/2004, respectively, prevents the Commission from disclosing information necessary to prove an infringement of Article 101 or 102. This means, for example, that information received from other network members may be disclosed by the Commission to other parties to the proceedings if that is necessary to prove an infringement.

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2.206  Where disclosure of business secrets or other confidential information is necessary to prove an infringement, recital 14 to Regulation 773/2004 requires the Commission to assess in the (p. 158) case of each individual document whether the need to disclose is greater than the harm that might result from disclosure. If the Commission intends to disclose information provided by an undertaking, which is claimed to be a business secret or other confidential information, the AKZO procedure is followed: the Commission informs the undertaking in question in writing of its intention and of its reason for disclosing the information. It also sets a time limit for the undertaking to respond. If the undertaking continues to object to the disclosure, the Commission adopts a reasoned decision on the disclosure of the given piece of information.245

(iii)  Disclosure in granting access to the file (i)  Access to the File for the Addressee of a Statement of Objections

2.207  The obligation of professional secrecy laid down in Article 28(2) does not prevent the Commission from granting the addressee of a statement of objections access to the file on the basis of which the Commission formulated its objections.246 This access to all documents, including those exchanged or acquired pursuant to Regulation 1/2003, relied upon by the Commission in making its findings is intended to allow the effective exercise of the addressees’ rights of defence against the objections.247 This access to the file, however, does not extend to business secrets or other confidential information, nor does it extend to internal documents of the Commission or NCAs, in particular correspondence between the Commission and the NCAs or between NCAs.248 2.208  With respect to the category of internal documents, it is clear from case law that the reason why they are not accessible is that Commission departments must be able to express themselves freely within their institution concerning all aspects of ongoing cases.249 The idea behind this is that internal documents are, at most, evaluative in nature and cannot be incriminating or exculpatory. They cannot be used in evidence and thus access to them is not necessary in order to respect the rights of defence.250 The enforcement system established by Regulation 1/2003 requires this reasoning to be extended to the internal documents and correspondence that circulate within the network. If, however, the Commission or another ECN member finds some of that information necessary to prove an infringement of Article 101 or 102, the principles described in paras 2.205–2.206 apply. (p. 159) (ii)  Access to Information by Other Parties with Legitimate Interest, in Particular Complainants

2.209  The last sentence of Article 27(1) states that ‘Complainants shall be associated closely with the proceedings’. That means that, unlike addressees of a statement of objections, complainants only have the right to participate in the administrative procedure. Therefore they cannot claim a right of access to the Commission’s file on the same basis as the undertakings under investigation.251 Article 8 of Regulation 773/2004 establishes this right for a complainant to participate in the procedure by giving him access ‘to the documents on which the Commission bases its provisional assessment. For this purpose, the complainant may however not have access to business secrets and other confidential information belonging to other parties involved in the proceedings’. Although Article 8 does not refer to the (exclusion of) access to the internal documents of the ECN members, in particular to the correspondence between them, it seems obvious that since the addressees of a statement of objections have no access to these documents, third parties, which includes complainants, a fortiori cannot have access to them either. Interested third parties which are admitted to the proceedings do not have a right of access to the file but are informed in writing of the nature and subject matter of the procedure.252

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(3)  Coherent Application within the ECN (a)  Introduction 2.210  The need to ensure the coherent application of Articles 101 and 102 throughout the internal market was one of the main drivers behind the creation of the ECN and a number of the supporting cooperation mechanisms contained in Regulation 1/2003. Prior to the adoption of Regulation 1/2003 there was widespread fear that the empowerment of national courts and competition authorities to apply Articles 101 and 102 in full would lead to inconsistent application of EU competition law.253 2.211  To address these concerns, Regulation 1/2003 created a number of mechanisms that aim at promoting coherent application. These mechanisms constitute the backbone of the ECN’s framework for ensuring consistency. The network itself, however, is not regulated by the Regulation in any detail. The only reference in the operative part of the Regulation is in Article 11(1), which merely requires the Commission and the competition authorities of the Member States to apply the EU competition rules in close cooperation. Recital 15 further provides that the Commission and the competition authorities of the Member States should form together a network of public authorities applying the EU competition rules in close cooperation, and that for that purpose it is necessary to establish arrangements for information exchange and consultation. Recital 15 also states that further modalities for cooperation within the network will be laid down and revised by the Commission in close cooperation with the Member States. These further means of cooperation are contained in the Network Notice. 2.212  The three key mechanisms which seek to ensure the coherent and effective application of the EU antitrust rules are: (a) the obligation on NCAs under Article 11(3) to inform the Commission about a new investigation before, or without delay after, commencing the first (p. 160) formal investigative measure; (b) the obligation under Article 11(4) on NCAs to inform the Commission about envisaged decisions; and (c) the possibility of the Commission to intervene if there is a serious risk of incoherence, by relieving the NCA of its competence to act under Article 11(6). The importance of these tools is clear, given that since the entry into force of Regulation 1/2003, the application of the EU antitrust rules has grown at a remarkable rate.254

(b)  Information under Article 11(3) 2.213  Article 11(3) lays down an obligation on NCAs to inform the Commission when acting under Article 101 or 102 before, or without delay after, commencing the first formal investigative measures. This information is in practice made available to all ECN members. The Commission is under a similar obligation to inform the NCAs subject to Article 11(2). The rationale behind these information requirements is to allow the Network to detect multiple procedures and address possible reallocation issues at an early stage of the investigation. If more than one authority signals their interest to act in the case, bilateral discussions can take place to decide how best to proceed.255 This tool has been well used in practice: seven years after its initial entry into force, the NCAs had notified approximately 1, 500 new investigations under Article 11(3).256

(c)  The Procedure in Article 11(4) 2.214  One of the key instruments for maintaining the coherent application of the EU competition rules at the level of the NCAs is contained in Article 11(4) of Regulation 1/2003, which provides that:

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No later than 30 days before the adoption of a decision requiring that an infringement be brought to an end, accepting commitments or withdrawing the benefit of a block exemption Regulation, the competition authorities of the Member States shall inform the Commission. To that effect, they shall provide the Commission with a summary of the case, the envisaged decision, or in the absence thereof, any other document indicating the proposed course of action. This information may also be made available to the competition authorities of the other Member States. At the request of the Commission, the acting competition authority shall make available to the Commission other documents it holds which are necessary for the assessment of the case. The information supplied to the Commission may be made available to the competition authorities of other Member States. National competition authorities may also exchange between themselves information necessary for the assessment of cases that they are dealing with under Article [101] or Article [102] of the Treaty. 2.215  In order to appreciate the full impact of Article 11(4) this provision should be read in conjunction with Article 11(6) according to which the initiation by the Commission of proceedings for the adoption of a decision under Chapter III of the Regulation relieves the NCAs of their competence to apply Articles 101 and 102. The Commission may exercise this power even at a very late stage in the context of a submission pursuant to Article 11(4).

(i)  The Scope of the Article 11(4) Procedure 2.216  NCAs are obliged to inform the Commission no later than 30 days before adopting certain types of decisions. This may occur earlier, however, in order for the submission under Article 11(4) to achieve its intended aim the case must have developed to such an extent that it is possible to define the proposed course (p. 161) of action. Moreover, if the course of action is subsequently modified significantly, Article 11(4) requires that the Commission be informed again, in which event the Commission has another 30 days to respond. This is the case where, for instance, the competition authority in question, after the initial submission under Article 11(4), adds new objections or where the competition authority in question reorients the case from a prohibition to a commitment decision. 2.217  Nothing prevents the Commission from replying to the submission prior to the expiry of the 30-day period, in which case, the NCAs may adopt the decisions without further delay. An NCA may ask the Commission for a response before the end of the 30-day period, on the basis of special circumstances, in which case the Commission will endeavour to respond as quickly as possible.257 2.218  The obligation to make a submission pursuant to Article 11(4) covers decisions requiring that an infringement be brought to an end, accepting commitments, or withdrawing the benefit of a block exemption Regulation.258 The wording of Article 11(4) does not expressly mention decisions limited to imposing fines and could therefore be read as not including such decisions. However, this would not be a correct interpretation of Article 11(4). It clearly follows from the explanatory memorandum to the Commission’s proposal, which contained the same wording, that decisions imposing fines are covered.259 The inclusion of decisions imposing fines is also necessary in order to preserve the effectiveness of Article 11(4), which is intended to ensure that Articles 101 and 102 are applied in a coherent manner in the case of negative decisions adopted by Member State competition authorities. The types of decision covered by Article 11(4) are the national equivalents of the decisions adopted by the Commission under Articles 7 and 9 of Regulation 1/2003, which cover the finding and termination of infringements, the imposition of fines for such infringements, and the acceptance of commitments. Decisions withdrawing the benefit of a block exemption Regulation do not constitute a separate category in practice. In the case of withdrawal, the competition authorities concerned must demonstrate that the agreement infringes Article 101(1) and that it does not fulfil the

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conditions of Article 101(3).260 A withdrawal must therefore be accompanied by a negative decision addressing the competition problem for the future. 2.219  There is no obligation to inform the Commission of rejections of complaints and other types of decisions whereby NCAs decide that there are no grounds for action on their part. While NCAs are free to use the provision in Article 11(5) and to consult the Commission on such cases, there is no obligation to do so.261 Given the number of rejections of complaints and other decisions whereby files are closed, substantial resources would have been occupied if such decisions had been made subject to a mandatory submission requirement. Moreover, the aim of ensuring coherent application does not require such submissions to be made. (p. 162) Positive decisions262 adopted by NCAs within the limits provided for in Article 5 of the Regulation do not as a matter of law prevent other players in the system from acting. The fact that a particular authority has found that there are no grounds for action on its part, does not prevent other competition authorities or national courts from finding otherwise and prohibiting the agreement or practice in question. The fact that Article 11(4) only covers negative decisions is therefore not an indication that over-enforcement is perceived as a greater problem than underenforcement. It is merely recognition of the fact that in the enforcement system created by Regulation 1/2003 negative decisions always ‘win’263 so that all that is required is a system that prevents the adoption by NCAs of unwarranted negative decisions. Once adopted and implemented, negative decisions are difficult to undo. 2.220  When making a submission to the Commission the NCAs must provide it with a summary of the case, the envisaged decision, or, in its absence, any other document indicating the proposed course of action. Although the language could have been clearer in this respect, the intention is that the NCAs must in all cases provide a summary of the case and indeed this is the case in practice. In addition, they must provide either a draft decision or, in its absence, any other document indicating the proposed course of action. This latter option is particularly relevant where the NCA does not itself draft the final decision but rather submits a statement of objections or a writ or indictment to another authority including a court that adopts the final decision. The language used allows Member States to organize procedures such that Member State courts do not have to submit draft decisions to the Commission. Instead, the writ or indictment submitted to the court may be provided to the Commission in order to fulfil Article 11(4).264 2.221  Under Article 11(4) the Commission is the main interlocutor. NCAs are obliged to provide the Commission with the specified information and allow the Commission 30 days to scrutinize the documents submitted. There is no equivalent obligation in respect of the other NCAs. There is a right but no obligation to inform them, although in practice this occurs as a matter of routine. This choice was made in order to avoid situations where failure in an individual case to inform one or more of the NCAs would expose the subsequent decision to legal challenge.

(ii)  The Article 11(4) Process and its Objective 2.222  The purpose of the procedure established by Article 11(4) is to enable the Commission (and the NCAs) to detect potential problems of inconsistent application and cure them prophylactically. To date, the Commission has sought to ensure coherency through dialogue. However, if the issue is sufficiently serious and no common ground is found, the Commission may open proceedings with the effect of relieving the NCA concerned of its competence to apply Articles 101 and 102.265 (p. 163) 2.223  In the context of an Article 11(4) submission, the Commission can make comments in any appropriate form. The Network Notice expressly acknowledges that the Commission may make written observations.266 In practice, DG Competition has submitted observations to NCAs in many cases, typically in oral form, but also in writing.267 The intervention of the Commission is thus not limited to deciding whether to exercise its power

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under Article 11(6). Indeed, by making reasoned comments on the drafts submitted by the NCAs, the Commission plays an important role in terms of ensuring consistency, which reflects its position as guardian of the EU Treaties, and promoting a common competition culture. According to the Commission, in only a few cases have NCAs not taken its views into account, normally due to specific circumstances of the case. Work within the ECN has also played a key role in ensuring coherence, which impacts the approach a competition authority takes well before the stage of informing the Commission under Article 11(4). Horizontal working groups (e.g. on leniency) and sector-specific sub-groups have been set up, where case handlers from the ECN authorities exchange views and learn from each other’s experiences with particular issues or particular sectors.268 These discussions ensure that the risk of incoherent application is much reduced. 2.224  Comments made by the Commission and discussions between the Commission and the NCAs are internal to the network. The parties to the proceedings in question have no right to be heard or otherwise comment on the view expressed by the Commission. The exclusion of the parties from the Article 11(4) procedure is considered unproblematic from the point of view of rights of defence. To the extent that this process leads to certain objections being dropped, it is for the benefit of the parties.269 If it leads to new objections being raised, the undertakings concerned must be given the opportunity to comment. Rights of defence are therefore protected in the proceedings of the NCA which made a submission pursuant to Article 11(4).

(iii)  The Legal Consequences of Failure to Comply with Article 11(4) 2.225  It is submitted that there can be little doubt that decisions adopted in breach of Article 11(4) are invalid and unenforceable. Article 11(4) imposes a clear and unconditional obligation on the NCAs. Before adopting certain types of decision they must inform the Commission and submit to it certain specified information that allows the Commission to assess the case. Moreover, additional documents must be supplied where necessary for the assessment of the case. The Commission is entitled to comment on the draft with a view to ensuring coherent application and may also exercise its power under Article 11(4) and withdraw the case from the NCA in question. Article 11(4) constitutes an essential procedural requirement that is closely linked to the substantive decision adopted by an NCA. The Commission services issue an acknowledgement of receipt of the envisaged decision, which serves as a procedural document that permits parties to verify compliance with Article 11(4) under the relevant national procedural framework. (p. 164) 2.226  The argument that a decision adopted in violation of Article 11(4) is invalid finds support in the judgment of the Court of Justice in CIA International.270 This case concerned Directive 83/189 laying down a procedure for the provision of information in the field of technical standards and regulations.271 Under Article 8 of this Directive Member States must immediately communicate to the Commission any draft technical regulation. The Commission notifies the other Member States of any draft it has received and the Commission and the Member States may make comments to the Member State which has forwarded the draft technical regulation and that Member State must take such comments into account as far as possible in the subsequent preparation of the technical regulation. Moreover, Article 9 provides that Member States shall postpone the adoption of a draft technical regulation for six months from the date of notification referred to in Article 8(1) if the Commission or another Member State delivers a detailed opinion, within three months of that date, to the effect that the measure envisaged must be amended in order to eliminate or reduce any barriers which it might create to the free movement of goods. It is also provided that, if the Commission ascertains that a communication pursuant to Article 8(1) relates to a subject covered by a proposal for a Directive or Regulation submitted to the Council, it must inform the Member State concerned of this fact within three months of receiving the communication. Member States are obliged to refrain from adopting technical regulations on a subject covered by a proposal for a Directive or Regulation submitted by From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the Commission to the Council before the communication provided for in Article 8(1) for a period of 12 months from the date of its submission. 2.227  In CIA International, the Court of Justice held272 that Directive 83/189 is to be interpreted as meaning that breach of the obligation to notify renders the technical regulations concerned inapplicable and unenforceable against individuals. In reaching this conclusion, the Court referred to the fact that the aim of the procedure was to eliminate obstacles to trade by giving the Commission and the other Member States time to react and to propose amendments for lessening restrictions to the free movement of goods arising from the envisaged measure and to afford the Commission time to propose a harmonizing Directive. The Court also stated that the wording of Articles 8 and 9 of Directive 83/189 was clear in that those articles laid down a procedure for EU control of draft national regulations and the date of their entry into force was made subject to the Commission’s agreement or lack of opposition. 2.228  The Article 11(4) procedure serves an equivalent objective, namely that of ensuring the coherent application of Articles 101 and 102. Moreover, the powers of the Commission are, if anything, more extensive under Regulation 1/2003 than under Directive 83/189, since the Commission has the power under Article 11(6) to prevent the adoption of the decision at Member State level and not merely have it suspended. Undertakings that engaged in proceedings before Member State competition authorities are therefore well advised to require proof that the obligations under Article 11(4) have been complied with, otherwise any subsequent decision is invalid and unenforceable.

(d)  Article 11(6): The Commission’s Power to Withdraw a Case 2.229  Article 11(6) provides that the initiation by the Commission of proceedings for the adoption of a decision under Chapter III shall relieve the NCAs of their competence to apply Articles (p. 165) 101 and 102. If an NCA is already acting in a case, the Commission shall only initiate proceedings after consulting with that authority. 2.230  Article 11(6) forms an essential part of the mechanisms in the Regulation intended to ensure coherent application. This fact is explained in recital 17, which provides that, if the competition rules are to be applied consistently and at the same time the network is to be managed in the best possible way, it was essential to retain the rule that the competition authorities of the Member States are automatically relieved of their competence if the Commission initiates its own proceedings.273

(i)  The Legal Nature of Article 11(6) 2.231  Article 11(6) is a rule of competence. When the Commission opens proceedings in a case, the competence of the NCAs to deal with that same case is eliminated. The opening of proceedings by the Commission is a formal act by which the Commission indicates its intention to adopt a formal decision under Chapter III of the Regulation.274 It can occur at any stage of the investigation of a case.275 2.232  In instances where the Commission is the first to open proceedings in a case, the effect of Article 11(6) is to ensure that the Commission remains the only authority to deal with it. This is a rational solution since the Commission has the power to enforce the EU competition rules throughout the EU. The Commission can provide one-stop enforcement anywhere in the EU. Once the Commission acts there is no need for NCAs to act as well; indeed, if they were to do so, it would lead to duplication of work and create a risk of inconsistent outcomes. In instances where an NCA is already dealing with a case, the effect of the Commission opening proceedings is to withdraw the case from the competition authority in question.276

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2.233  When the Commission closes its proceedings the NCAs regain their competence. In order to prevent the NCAs from adopting a conflicting decision in the case, the Commission must itself adopt a decision. Once adopted, a Commission decision will have the effect provided for in Article 16, preventing the NCAs from adopting conflicting decisions.277

(ii)  The Authorities Covered by Article 11(6) 2.234  According to Article 11(6), the NCAs are relieved of their competence when the Commission opens proceedings. Article 35(3) and (4) of Regulation 1/2003 provide further insight into which NCAs are relieved of their competence. According to Article 35(3), the effects of Article 11(6) apply to the authorities designated by the Member States including national courts, which exercise functions relating to the preparation and adoption of the types of decisions under Article 5 of Regulation (p. 166) 1/2003. On the other hand, the effects of Article 11(6) do not extend to courts in so far as they act as review courts in respect of such decisions. 2.235  Article 35(4) contains a further proviso, that, notwithstanding Article 35(3), in the Member States where in order to adopt certain types of decision provided for in Article 5 of the Regulation, an authority brings an action before a judicial authority that is separate and different from the prosecuting authority and provided that the terms of Article 35(3) are complied with, the effects of Article 11(6) shall be limited to the authority prosecuting the case which shall withdraw its claim before the judicial authority when the Commission opens proceedings and this withdrawal shall bring the national proceedings effectively to an end. The only purpose of Article 35(4) is to allow Member States to arrange their procedures in order formally to avoid the Commission withdrawing a case from a national court in circumstances where cases are brought before the court by a prosecutor.278 In such cases, the application of Article 11(6) can be arranged in such a way that the prosecutor withdraws its claim before the court. It is a condition, however, that such withdrawal effectively brings the national proceedings to an end. If not, the court in question is automatically relieved of its competence. Moreover, Article 35(4) is carefully drafted to ensure that it does not apply to individual authorities that comprise both prosecutorial and judicial arms. The exception does not apply where one part of the authority prepares the statement of objections or equivalent and another part of the same authority takes the decision. In such cases, the decision-making body is automatically relieved of its competence. 2.236  Article 11(6) in conjunction with Article 35(3) and (4) ensure that the Commission has effective means at its disposal to prevent the adoption of a conflicting decision. The opening of proceedings by the Commission prevents the adoption of a decision at Member State level. It follows from the combined rule of Article 35(3) and (4) that the effects of Article 11(6) apply until the adoption of the first decision on the merits of the case at national level.279 2.237  It is submitted that it would have given rise to considerable difficulties if Article 11(6) had been extended to review courts or appeal courts that decide on the legality of already adopted decisions. In order to achieve the aim of Article 11(6), it would not be sufficient to relieve such courts of their competence. It would in addition be necessary to undo a decision which had already been adopted. Once a decision is adopted at national level recourse to other means to resolve a conflict is required. One option is for the Commission to make an amicus curiae submission to the appeals court in accordance with Article 15(3) of the Regulation. Another option for the Commission is to adopt a contrary decision with the effect of Article 16 and thus bind the appeal court, subject to the power of the court to make a preliminary reference to the Court of Justice under Article 267 TFEU.280

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(iii)  Circumstances in Which Withdrawal may be Envisaged 2.238  The Network Notice distinguishes two situations in which the Commission opens proceedings with the effect of withdrawing the case from an NCA. In both situations, the Commission is obliged to (p. 167) consult the authority in question before opening proceedings.281 However, NCAs cannot prevent the Commission from opening proceedings which have the effect of Article 11(6). This is in line with the fact that, according to precedent, the Commission is entitled, at any time, to adopt individual decisions under Articles 101 and 102, even where an agreement or practice has already been the subject of a decision at Member State level and the decision contemplated by the Commission conflicts with that decision.282 2.239  The first situation dealt with in the Notice is where the Commission opens proceedings after an NCA has informed the network of a new case pursuant to Article 11(3) of the Regulation but before the end of the initial indicative allocation period of two months. In this situation, the opening of proceedings is merely a reflection of the fact that the Commission is well placed to deal with the case as an enforcer and that as a consequence the case is allocated to the Commission for further investigation.283 2.240  The second situation concerns cases where proceedings are opened after the initial allocation period and where the case is therefore already being investigated by an NCA. The withdrawal of a case in such circumstances is a far-reaching measure. The Network Notice provides guidance as to the circumstances in which this may be envisaged.284 However, Article 11(6) itself does not impose any limitations of a substantive nature on the Commission. The Commission has full discretion and the examples contained in the Network Notice are merely illustrative in nature. This fact is confirmed in the Notice itself, which employs the words ‘in principle’ when listing the circumstances in which the Commission would consider intervening. The situations expressly mentioned in the Network Notice are the following: (a)  network members envisage conflicting decisions in the same case; (b)  network members envisage a decision which is obviously in conflict with consolidated case law; the standards defined in the judgments of the EU Courts and in previous Decisions and Regulations of the Commission should serve as a yardstick; concerning facts, only a significant divergence will trigger an intervention of the Commission; (c)  network member(s) is (are) unduly drawing out proceedings; (d)  there is a need to adopt a Commission decision to develop EU competition policy in particular when a similar competition issue arises in several Member States; (e)  the NCA does not object. 2.241  Although this list is not exhaustive, it is considered that the categories listed do in fact allow the Commission to intervene in all cases where it would have a legitimate interest in doing so. The main effect of the list is to make clear that the Commission cannot make use of Article 11(6) merely because it finds a particular case interesting. Article 11(6) is not a cherry-picking instrument. Given the cooperative nature of the network and the need for continuing close cooperation in order for the network to function as intended, it would not be in the Commission’s interest to use Article 11(6) for such purposes. Indeed, it is in recognition of the fact that Article 11(6) is intended to be used exceptionally, as well as the

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high (p. 168) level of coherence which has been achieved through the ECN, that the Commission has not made use of this measure to date. 2.242  When ECN members envisage conflicting decisions in the same case there may be, according to point (a) in the previous list, a need for the Commission to intervene in order to prevent the conflict from arising. However, there is no obligation for the Commission to do so. Given that, in the enforcement system created by Regulation 1/2003, prohibition decisions trump non-action decisions adopted by NCAs under Article 5 of the Regulation, there is only a need to intervene where the Commission takes the view that a certain agreement or practice should not be prohibited. 2.243  According to point (b) in the previous list, there may also be a need to intervene when a decision envisaged by an NCA is in obvious conflict with existing case law. Intervention in such cases goes beyond the avoidance of conflicting decisions in the same case. The aim is to preserve the integrity and consistency of the established body of case law. In this regard, the Commission’s role may complement that of the EU Courts. Given the absence of an integrated system of EU Courts in the EU and the limits of the Article 234 preliminary reference procedure, only a Commission decision can trigger a full review by the EU Courts. 2.244  Alternatively point (b) provides that, as regards facts, only a significant divergence will trigger an intervention by the Commission. This distinction between law and facts is considered justified. From the point of view of maintaining consistency it is essential to ensure that there are no major divergences in terms of the analytical approach. For instance, it would be problematic if in one Member State parallel trade restrictions were assessed under the effects standard but at EU level such restrictions were considered restrictions by object. Such differences would strike at the heart of the EU competition rules. The same may not be so when it comes to assessing the facts of individual cases. It may not be unreasonable for two NCAs to reach different conclusions when assessing the facts of a case. For instance, the fact that in one case the relevant market has been considered national does not necessarily mean that it is problematic if in a subsequent case it is found that the relevant market is (now) EU-wide. As stated in the Network Notice, there is only a need to intervene as regards the assessment of the facts when there is significant divergence.285 2.245  According to point (c), the Commission may intervene when a network member is unduly prolonging proceedings. The Commission may thus act in order to ensure effective enforcement of the EU competition rules when NCAs, for whatever reason, fail to do so. This follows from the last part of point (d), which provides that the Commission may open proceedings when there is a need to adopt a Commission decision to ensure effective enforcement. This may be the case, for instance, where experience has shown that NCAs do not intervene effectively against certain types of infringement. 2.246  The policy-developing role of the Commission is expressly recognised in point (d), according to which there may be a need to adopt a Commission decision to develop EU competition policy. It is particularly relevant for the Commission to do so when new types of agreements and practices are being implemented in the EU. By adopting a leading decision, the Commission can send a strong signal to the market on how such agreements and practices will be assessed under the EU competition rules. The Network Notice gives the example of (p. 169) similar competition issues arising in several Member States. However, this is only one example of circumstances in which intervention may be warranted. Moreover, point (d) is not limited to developing new policy orientations. The opening of proceedings with the effect of Article 11(6) may also be warranted in order to maintain the coherence of existing policy instruments such as guidelines. According to case law286 the Commission is responsible for defining and implementing the orientation of EU competition policy. Guidelines play an important role in terms of defining policy. It is for the EU Courts

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as opposed to NCAs and national courts to determine whether the policy orientations developed by the Commission are in accordance with the legal rules laid down in Articles 101 and 102. 2.247  Finally, it follows from point (e) that there is no need for the Commission to justify its intervention in light of the situations described under the previous headings where the affected competition authority does not object. This heading is added for the sake of avoidance of doubt.

(iv)  The Procedure for Applying Article 11(6) 2.248  Article 11(6) provides that if an NCA is already acting in a case, the Commission shall only initiate proceedings after consulting with the competition authority in question. It follows from the Notice287 that an NCA is deemed to be acting in a case when it has informed the network pursuant to Article 11(3). The obligation of consultation imposed on the Commission under Article 11(6) implies that it must explain to the authority in question the reasons why it intends to open proceedings. The NCA has the right to make comments. 2.249  Recital 17 provides that in circumstances where an NCA is already dealing with a case and the Commission intends to open proceedings, it should endeavour to do so as soon as possible. The aim is to ensure that the Commission intervenes as early as possible in order to limit duplication of work and unnecessary use of resources at Member State level. 2.250  According to Article 14(7), the competition authority concerned also has the right to call a meeting of the Advisory Committee to discuss the matter. However, according to the same provision the Committee does not issue an opinion in such cases and neither the Committee nor the competition authority concerned has the power to prevent the Commission from opening proceedings.

(4)  Coherent Application by National Courts (a)  The Competence of National Courts to Apply EU Competition Rules 2.251  As early as the 1970s, the Court of Justice stated that Articles 101(1) and 102 ‘tend by their very nature to produce direct effects in relations between individuals. [T]hese Articles create direct rights in respect of the individuals concerned which the national courts must safeguard’.288 Nevertheless, in the following 30 years, national courts rarely applied the EU competition rules. One may wonder why that is so. Part of the explanation is that national courts were not allowed to apply Article 101(3), which meant that a party could de facto block national procedures by making a notification to the Commission. Another reason may be the fact that complainants often choose the ‘easy’ alternative of coming to the Commission, even if the latter cannot award damages. Yet another reason might be that parties’ lawyers (p. 170) simply did not invoke the EU competition rules, which they were not acquainted with. And, finally, one should not exclude the reticence of some national judges to apply rules other than their domestic provisions. 2.252  Regulation 1/2003 constituted a first step in the direction of stimulating enforcement of the EU competition rules by national courts. Because that was not the prime intention of Regulation 1/2003, that objective was not realized directly by harmonizing national procedural rules,289 but rather by modifying the way in which EU competition rules are enforced, in particular by abolishing the Commission’s monopoly on exemption.290 This change in the system has removed the opportunity for defendants unduly to prolong proceedings before a national court by notifying an agreement to the Commission, and has thus stimulated complainants to start proceedings before national courts, for instance in order to obtain damages.291

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2.253  Once a national court is dealing with a case, Article 3(1) of Regulation 1/2003 imposes on national courts the obligation to apply Articles 101 and 102 as soon as they apply national competition law to agreements, decisions, or abuses within the meaning of Article 101 or 102. The mere possibility of national courts applying EU competition rules has thus been turned into an obligation to apply EU competition rules.292 This obligation becomes particularly relevant in combination with the fact that the EU competition law provisions are a matter of public policy.293 The consequence of such classification is that even if none of the parties in a (pending) national procedure rely on Article 101 or 102, the national judge is obliged to apply those provisions of his own motion, as soon as his domestic law also obliges or allows him to apply domestic public policy rules.294

(b)  The Coherent Application of EU Competition Rules by National Courts 2.254  The enhanced role of national courts in the enforcement of EU competition rules may have led to some uncertainty as to the coherent application of those rules by the courts.295 One should not overestimate the risk of incoherence, however, as the question of how to secure coherent application of EU rules by national courts is neither new nor unique to the field (p. 171) of competition law. Both the Treaties and the case law of the Court of Justice provide for a number of mechanisms aimed at ensuring coherent application of EU rules and in particular, the EU competition rules. 2.255  The main mechanism provided for by the TFEU is the preliminary rulings procedure under Article 267. Although this mechanism remains the most conclusive guarantee of a coherent application of the EU competition rules and is compulsory for last instance courts,296 it appears to be rarely used by national courts.297 The most obvious reason for this reluctance is probably the fact that it takes the Court of Justice more than one year to reply to the preliminary request,298 which constitutes a great disincentive, particularly in private antitrust actions, where parties frequently ask for interim measures and for injunctions as speedy remedies for alleged infringements. 2.256  The question arises whether a national court that operates as an NCA can ask a preliminary question. The Court seemingly limited that possibility when it found that it had no jurisdiction to answer the questions of the Greek Competition Commission.299 The Court came to this conclusion, however, because it found the Greek Competition Commission not to be sufficiently independent from the government and from the prosecuting authority and because it can be relieved of its competence to apply Articles 101 and 102 pursuant to Article 11(6) of Regulation 1/2003.300 Since a national court may refer a question to the Court only if it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature and the opening of proceedings by the Commission relieves the Greek Competition Commission from its competence, the Court found that whenever the latter occurs, ‘the proceedings initiated before that authority will not lead to a decision of a judicial nature’.301 This argument comes as a surprise, not only because it seems to be based on a misreading of earlier case law of the Court,302 but mainly because the Article 11(6) effect—which ‘essentially maintains the rule in Article 9(3) of Council Regulation 17’303 —did not prevent the Court from answering the question posed by the Spanish Tribunal de Defensa de la Competencia, also (p. 172) an NCA.304 One may therefore assume that the Court will not use Article 11(6) as a sufficient basis to refuse jurisdiction to answer a question referred by any of the national courts that act as an NCA. The fact that the Court concludes that the Greek Competition Commission is not a court or tribunal within the meaning of Article 267 TFEU on basis of ‘the factors examined, considered as a whole’305 seems to support that view.306

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2.257  The limited use of the preliminary rulings procedure has a huge impact as it essentially neutralizes what is intended to be the main mechanism for coherence provided for by the TFEU. In order to offer some comfort to judges who would like their judgments to be coherent with the acquis communautaire, but who choose not to refer a preliminary request to the Court of Justice, the Commission has taken a number of initiatives which, although not leading to binding guidance, may contribute to coherent application of EU competition rules by national courts. In addition, Article 15 of Regulation 1/2003 sets a framework for close cooperation between national courts and the Commission.307

(i)  Commission Initiatives towards Coherent Application of EU Competition Rules 2.258  In order to give national judges some guidance in their application of Articles 101 and 102, the Commission has taken the following initiatives: it issues policy notices and guidelines; it co-finances the training of national judges; and it makes publicly available the judgments of national courts applying EU competition rules. (i)  The Commission’s Policy Notices and Guidelines

2.259  When a national court is dealing with a case in which European competition rules are to be applied, it will most probably look for guidance in the case law of the Court of Justice and/or in the decisions and publications of the Commission. Those texts do not all have the same status for guidance purposes. Leaving aside the implications of individual Commission decisions (dealt with in paras 2.254–2.259), it is important to be aware of the fact that the Court’s case law, like the Commission’s block exemption Regulations, gives binding guidance to the national judge.308 By contrast, in the Commission’s notices, guidelines, and even in its annual report on competition policy, the national judge can find non-binding guidance for his judicial work.309 2.260  Although non-binding, the Commission’s notices and guidelines offer an excellent tool for enhancing the coherent application of EU competition rules. To the extent that national courts from all over the EU take account of the notices and guidelines when applying EU competition law, the outcome of their reasoning becomes more predictable and thereby (p. 173) contributes to the legal certainty for business. In particular notices which clarify the Commission’s view of key concepts in the enforcement of competition rules, such as the Market Definition Notice310 or the Effect on trade Guidelines,311 or guidelines which give further details on the application of the binding Commission block exemption Regulations have a high potential for building coherence. (ii)  Co-Financing the Training of National Judges in EU Competition Rules

2.261  When the European Parliament (EP) was considering its position on the Commission’s proposal to replace Regulation 17 with a Regulation establishing a new enforcement system, the Committee on Economic and Monetary Affairs seemed to share the general concerns regarding the application of EU competition rules by national judges. In order to ensure both the effective and the coherent application of those rules, the EP Committee suggested that ‘the practicalities of further training or the creation of specialised courts would need extensive further consideration and discussion if the regime is to operate effectively’.312 The Committee did not elaborate further the idea of creating specialized courts as an undoubtedly stimulating factor of coherence; most likely because it considered that, as a matter of sovereignty, the EU Member States should decide upon that themselves. However, with regard to the aspect of training, it called ‘on the Commission to propose…a programme for the continuing training and education in [EU] competition law of national judges…in pursuit of the principle of the uniform application of [EU] law’.313 2.262  The Commission immediately took up this suggestion and, as early as 2002, launched its programme to finance the training of national judges in EU competition law. So far, the Commission has co-financed approximately 100 training projects, reaching 6, 500 national judges all over the EU. With these projects, the Commission not only wants to encourage the training of national judges in the application of EU competition rules, but From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

also to strengthen judicial cooperation and networking between national competition law judges in order to contribute to a coherent application of the rules. (iii)  A Database on National Judgments

2.263  While fully conscious of the principle of independence of judges, the authors of Regulation 1/2003 were also aware of the risk to coherent application of the law that might result if judges did not interact with other enforcers or did not communicate their rulings applying Articles 101 and 102 other than to the parties to the national proceedings. Consequently, under Article 15(2) of Regulation 1/2003, the Commission must receive a copy of any written judgment relating to the application of Article 101 or 102. DG Competition now makes available on its website non-confidential versions of these received national judgments in their original language. This also allows potential publishers to analyse and comment on these judgments so that they also become known outside the Member State where they were issued.314

(ii)  Consistency in the Case of Parallel or Consecutive Application of EU Competition Rules 2.264  The thorniest issue regarding coherent application of the EU competition rules and the related cooperation between the national courts and the Commission, is the situation in (p. 174) which a national court is applying EU competition law to an agreement, decision, concerted practice, or unilateral behaviour affecting trade between Member States at the same time as, or after, the Commission.315 In the Delimits and Masterfoods cases,316 the Court of Justice had occasion to clarify how consistency could be guaranteed in those circumstances and the Council codified this case law in Article 16(1) of Regulation 1/2003. Depending on who decides first, the national court or the Commission, the obligations for national courts are slightly different. 2.265  The most likely situation—except for the case in which the court is asked for interim measures—is the one in which the Commission reaches a decision before the national court. In those circumstances, the national court cannot make a decision running counter to that of the Commission. If, however, the national court doubts the legality of the Commission’s decision and it would therefore prefer not to follow it, it can only do so once the Court of Justice has pronounced on the illegality of the Commission’s decision. A national court seeking to deviate from a Commission decision in the same case must therefore suspend the national proceedings and ask the Court of Justice for a preliminary ruling.317 2.266  It may also be that while the case is pending before the national court, the EU Courts are reviewing the Commission’s decision at the request of the party to whose detriment the Commission has decided. In such circumstances, the national judge should suspend the national proceedings until the final judgment in the annulment action is taken by the EU Courts. There seem to be two exceptions to this latter obligation, where: (a) the national court considers the validity of the Commission’s decision to be irrelevant to the case it is dealing with; or (b) the national court considers it more appropriate to ask the Court of Justice to pronounce on the validity of the Commission’s decision.318 The latter option may be chosen, for instance, in a case where the national court fears an appeal against the judgment of the General Court and seeks to speed up the process by directly asking the Court of Justice for a preliminary ruling. 2.267  The alternative scenario is the one in which the national court comes to a decision before the Commission does so. Article 16(1) of Regulation 1/2003, echoing the case law of the Court of Justice, states that in those circumstances, the national court must avoid adopting a decision that would conflict with a decision contemplated by the Commission. In contrast to the previous scenario, where Article 16(1) imposes an obligation as to the result that is to be achieved (namely, no deviation), this sounds more like an obligation of best efforts on the part of the national court. As a consequence, this is probably the ‘ideal’

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scenario in which the cooperation mechanisms between the national courts and the Commission could contribute to guaranteeing a coherent outcome. 2.268  Indeed, apart from the most obvious solution which would imply that the national court will suspend its proceedings until the Commission has made a decision, one can also imagine that the obligation to avoid a judgment that would conflict with a future decision of the Commission implies that the national court will use the cooperation mechanisms provided (p. 175) for by Article 15 of Regulation 1/2003 to try to ensure coherence. For instance, the national court could ask the Commission whether it has initiated proceedings relating to the same agreements, decisions, or practices that the national court is dealing with.319 If so, the court could also inquire of the Commission as to the progress of its investigation and proceedings and the likelihood of a decision in that case.320 Furthermore, when a national court considers staying proceedings pending the outcome of the Commission’s proceedings in order to safeguard coherence and thus legal certainty, it may also be useful for the national court to ask the Commission when a decision is likely to be taken. Whenever the Commission is informed of the fact that the case in which it has opened proceedings is also pending in parallel before a national court and that the national court considers its own proceedings to depend on the outcome of the Commission’s proceedings, the Commission will endeavour to give priority to such cases, ‘in particular when the outcome of a civil dispute depends on them’.321 2.269  Finally, whenever the national court cannot reasonably have doubts as to the nature of the Commission’s contemplated decision or where the Commission has already decided on a similar case, the national court should be able to decide on the case pending before it in accordance with that contemplated or earlier decision without needing to ask the Commission for the information referred to previously or awaiting the Commission’s decision.

(c)  Cooperation Between the Commission and the National Courts 2.270  Cooperation between the national courts and the Commission in the application of EU competition rules is a delicate exercise, in which one has to reconcile the independence of the judiciary with the need for the coherent application of Articles 101 and 102. The independence of the judiciary means that cooperation between the national courts and the Commission, as distinct from cooperation within the ECN, is mainly demand-driven, that is, originating from the national courts.322 In order for demand-driven cooperation to lead to coherence, national courts must both be able to identify any difficulty related to the application of competition rules and subsequently be willing to seek support from a ‘coherence fostering’ European authority to contribute to resolving that difficulty. 2.271  In order to assist the national courts to apply the EU competition rules, as early as 1993 the Commission issued a Notice on cooperation with national courts.323 When drafting Regulation 1/2003, the Commission also undertook to revise the previous Notice on cooperation with national courts. The 2004 Notice is intended to serve as a practical tool for (p. 176) national judges who apply Articles 101 and 102 in conformity with Regulation 1/2003. It assembles the relevant case law of the Court of Justice, thus clarifying the procedural context in which national judges are operating. 2.272  Before turning to the detail of those cooperation mechanisms between the Commission and the national courts, the Notice emphasizes the fact that the cooperation mechanisms are intended to assist the national courts. The qualification ‘assistance’ reflects the non-binding character of cooperation. The assistance is non-binding in that a national judge is not obliged to seek the Commission’s assistance, nor is he bound by the assistance given.324 The assistance provided by the Commission under Article 15 of Regulation 1/2003 is also intended exclusively to help the judge. Although that assistance might favour the position of one of the parties over that of the other, the parties’ interests are not relevant as regards the Commission’s assistance. Indeed, the cooperation mechanisms have as their From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

sole objective the guarantee of coherent application of EU competition rules throughout the EU. The Commission is thus endeavouring to protect the general interest and not the private interest of any one of the parties. This is why the Notice on cooperation with national courts states that ‘the Commission will not hear any of the parties about its assistance to the national court’ and it will even inform the court of any contacts it has had with the parties.325 2.273  Turning now to the precise cooperation mechanisms between the Commission and the national courts as they are laid down in Article 15, one may distinguish two basic categories: (a) the possibility for national judges to ask the Commission for information or for its opinion; and (b) the possibility for the Commission and for NCAs to submit written and oral observations to national courts.

(i)  The Opportunity for the National Courts to ask the Commission for Information or for its Opinion 2.274  Article 15(1) of Regulation 1/2003 provides a clear and sufficient legal basis for national judges to ask the Commission for any information it has in its possession or for its opinion on questions concerning the application of EU competition rules. This provision is complementary to the general obligation of the Commission under Article 3(4) TEU to assist the Member States in the application of EU competition law. (i)  The Opportunity to Ask the Commission for Information

2.275  On the basis of Article 3(4) TEU, the Commission is obliged to provide the national judge with such information in its possession as the latter may request. That information may be very general, for example reports the Commission has drawn up, or it may be casespecific, where the judge wants to know whether there are any precedents for the case, whether the Commission has or intends to open its own proceedings in the case, the temporal or substantive scope of the Commission’s investigation, or where the court is asking for specific documents that could help it in the factual, legal, or economic assessment of the case pending before it. The information requested may be publicly available, but it may also be confidential, for example business secrets or other confidential information. (p. 177) 2.276  As a matter of principle, information requested by a national judge will be sent to that judge. There are, however, two exceptions to this general principle. First, the Commission may refuse to transmit information to national courts for overriding reasons relating to the need to safeguard the interests of the EU or to avoid any interference with its functioning and independence, in particular by jeopardizing the accomplishment of the tasks entrusted to it.326 To the extent that the transmission to a national court of information voluntarily submitted by a leniency applicant would jeopardize the Commission’s enforcement powers, the latter will therefore not transmit such information to a national court without the consent of that applicant.327 This position echoes the agreement within the ECN not to exchange information voluntarily submitted by a leniency applicant.328 2.277  Secondly, as the General Court has explained in the Postbank case, cooperation with national courts may not lead the Commission to undermine the guarantees given to natural and legal persons by the EU provisions concerning professional secrecy.329 The Commission shall therefore inform the national court of the confidential nature of the documents it transmits. It is then the responsibility of the national court to guarantee protection of the confidentiality of such information. Where the national court cannot provide a sufficient guarantee of confidentiality, the Commission is entitled to refuse to send the confidential documents. In those Member States where the requirement to guarantee confidentiality prevents the national court from disclosing the information it has received from the Commission to the parties in the pending case as well as to their legal representatives, this form of cooperation between the Commission and national courts risks becoming

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meaningless. It may therefore be argued that the duty of sincere cooperation between the Commission and national authorities requires those Member States—or the national courts in those Member States—to devise solutions, allowing the Commission to send confidential information to the national courts with a view to using such information in ongoing national proceedings.330 2.278  This brings us to the more general question to what extent the limitations which flow from Article 12(2) and (3) of Regulation 1/2003 to the use by a competition authority of information exchanged within the ECN, also apply mutatis mutandis to the information the Commission has sent to a national court following a request pursuant to Article 15(1). It can be argued that although Regulation 1/2003 only regulates very marginally the use by national courts of information received from the Commission, the restrictions laid down in (p. 178) Article 12(2) and (3) also restrict the use by national courts of information received from the Commission. 2.279  The constraints of Article 12(2) are relevant for national courts because of the general principles of EU law and the framework within which the Commission transmits information to national courts. It has, indeed, been argued that the limitation on the use of the exchanged information in evidence only in respect of the subject matter for which it was collected, reflects the basic rights of defence of the undertakings against which the information is being used.331 Since the rights of defence, as with all fundamental rights, fall under the general principles of EU law which all national authorities must respect when applying EU law,332 national courts should also respect this limitation and thus only use the information received from the Commission in evidence in respect of the subject matter for which it was collected. 2.280  Article 12(2) clarifies further that ‘Information exchanged shall only be used for the purpose of applying Article 101 or 102’. That limitation is repeated in Article 15(1) (‘In proceedings for the application of Article 101 or Article 102 of the Treaty’) as a limitation to the request. That same limitation returns in the next phase of cooperation, namely the transmission of information by the Commission. That phase is not dealt with in Regulation 1/2003, nor is it referred to explicitly in the Treaty. The Notice on cooperation with national courts recalls, however, that the EU Courts inferred from Article 3(4) TEU an obligation on the part of the Commission to assist national courts when they apply EU law.333 Such a general obligation would probably not exist when the latter only apply national law.334 Since the purpose both of the request and of the transmission of the information by the Commission is to assist the national court in the application of the EU competition rules, it is submitted that any other use by a national court would constitute an abuse of Article 15(1) and of Article 3(4) TEU. One should not exclude the possibility that such an abuse could be invoked as a ground for the annulment of (that part of) the judgment made on the basis of the transmitted information. 2.281  When a national court, pursuant to Article 3 of Regulation 1/2003, applies EU and national competition law in parallel in the same case, it would be absurd to prevent that court from basing its judgment on the information received from the Commission when applying national competition law, while allowing it for the application of EU competition law. Logic thus suggests that the opening provision in Article 12(2) of Regulation 1/2003 in respect of the use of information exchanged within the ECN for the parallel application of national competition law also applies mutatis mutandis to the use by a national court of information transmitted by the Commission.335 It is debatable, however, whether the additional condition of Article 12(2), namely that the parallel application of national competition law should not lead to a different outcome than that of the application of EU competition law, would also apply to the use by a national court of the information transmitted by the Commission. Indeed, to the extent that this condition goes beyond the convergence requirement of Article (p. 179) 3(2) of Regulation 1/2003 and in the absence of any explicit provision such as Article 12(2), there seems to be no imperative reason why From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

such additional condition would limit the use by a national court of the information transmitted by the Commission to apply EU and national competition law in parallel in the same case. 2.282  Finally, it is also contended that the restrictions contained in Article 12(3) of Regulation 1/2003 apply to national courts. Article 12(3) concerns the limitations on the use in evidence of information exchanged within the ECN in order to impose sanctions on natural persons. It is clear from the context and the wording of that provision336 and from its interpretation in the Network Notice337 that the sanctions referred to are those included in Article 5, first paragraph, last indent, of Regulation 1/2003. Those sanctions could be administrative or criminal fines, custody, or other personal sanctions, such as a professional disqualification. A national court that can impose the sanctions included in Article 5 would thus be designated (implicitly) as an NCA within the meaning of Article 35(1) of Regulation 1/2003. Consequently, the transmission of information by the Commission to such a national court would be covered by Article 12 of Regulation 1/2003 and the limitations of Article 12(3) pm the use of such information by the recipient NCA, in casu a national court, would thus apply automatically. As a result, the use by a national court of information received from the Commission following a request pursuant to Article 15(1) of Regulation 1/2003 is necessarily conditioned by the limitations of Article 12(3). 2.283  The situation is different, though, when the law allowing a national court to impose criminal sanctions on natural persons falls outside the scope of Regulation 1/2003. Such is the case when those sanctions are not ‘the means whereby competition rules applying to undertakings are enforced’.338 Since Regulation 1/2003 does not apply to that situation, information that the Commission may have transmitted to a national court does not fall under the cooperation mechanisms provided for in Article 15(1) of the Regulation, but rather under the general duty of loyal cooperation between the European institutions and the Member States’ authorities, as enshrined in Article 3(4) TEU. Obviously, the limitations of Article 12(3) do not apply to that type of cooperation. However, to the extent that Article 12(3) is an emanation of the general principles of EU law, the said limitations would apply on that ground. (ii)  The Opportunity to Ask the Commission for Its Opinion

2.284  National judges can ask the Commission any question relating to a competition issue raised by the facts of a case and request its interpretation of the EU competition rules. The opinion sought can be legal and/or economic, sectoral or general, procedural or factual. Although the Commission’s opinion is only indicative, without taking any final position on the merits of a pending case,339 it can be assumed that the Commission’s opinions, particularly on the texts it has authored, will have the effect of fostering consistency. That also explains why the Commission announced that (p. 180) it may make its opinions available on its website.340 That channel permits the Commission to give wider publicity to those (parts of) opinions that may be relevant beyond the specific factual settings of the national court case in which it was asked for its opinion.

(ii)  The Submission of Observations 2.285  Apart from the option available to a national court to ask the Commission for assistance in a case with which it is dealing, Article 15 of Regulation 1/2003 provides an opportunity for the Commission and for the NCAs to submit observations to national courts. For most Member States, this possibility constitutes a novelty. According to Article 15(3), all ECN members have the right to submit written observations on their own initiative. The Commission can submit observations where the coherent application of Article 101 or 102 so requires, even if the national proceedings concerned do not pertain to issues relating to the application of Article 101 or 102.341 Such is, for example, the case in national proceedings on the tax deductibility of Commission fines. Since the effectiveness of the penalties imposed by the Commission or by NCAs is a condition for the coherent application

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of Articles 101 and 102 TFEU, the Commission is entitled to submit observations in such national proceedings.342 With the permission of the national court, the Commission and/or the NCA may also come to the courtroom and present oral observations. Although the Commission’s observations do not bind the national court, they will constitute an important tool enabling the Commission to draw the attention of a national court to an issue relating to the coherent application of the EU competition rules. At the time of writing, the Commission has used its competence to submit observations on 11 occasions. They are published on the Commission’s website as soon as the relevant national court so allows.343 2.286  For the Commission or an NCA to intervene in pending national proceedings, it must, of course, be aware of the cases pending before a national court in which it may be appropriate for it to submit observations. In a number of Member States, courts are obliged by law to inform the NCA—and in some also the Commission—about any case brought before them which concerns the application of Article 101 or 102.344 There is also an obligation under Article 15(2) of Regulation 1/2003 to inform the Commission—and in some Member States also the NCA, pursuant to national law—about all judgments in which a national court applies EU competition law.345 Whenever a judgment brought to their attention raises particular concerns, the Commission and NCAs may proactively explore whether that judgment has been appealed and if so, they may consider submitting observations. 2.287  Compared to the ex ante line of information (about a pending case), the ex post line (about a closed case) has the obvious drawback of depending on whether the parties appeal the (p. 181) judgment which gives rise to concern. Moreover, it also excludes the intervention by the competition authorities before the judge of first instance. That in itself should not necessarily be regarded as a negative feature, however. One could argue that it is more appropriate for a competition authority to intervene at a later stage, when the facts have been established and when the domestic judicial protection system has the opportunity to correct itself. However, one should also have regard to the scope and the frequency of (the last instance) review in competition matters in the Member State concerned in order not to miss an occasion usefully to submit observations. 2.288  A final method by which information can be provided will of course be when one of the parties themselves direct the competition authorities’ attention to a pending case in which an intervention is considered expedient. Although the competition authorities should not act upon a request from a party seeking to defend its private interest, the information provided may nevertheless trigger an autonomous decision by the authority to submit observations. When the Commission decides to submit observations following a request from one of the parties, it will obviously not contact that party on the content of its submission and will inform the court about the request it has received.346 2.289  Finally, it should be emphasized that Regulation 1/2003 merely provides an opportunity to submit observations to national courts, without elaborating on the procedural context within which this coherence instrument will be exercised. The Regulation only states that in order to allow them to adequately prepare their observations, the Commission and the NCAs may ask the court for documents which they feel are necessary for assessing the case. Naturally, this information cannot be used by the authority for any other purpose. All other procedural issues, such as when the observations should be submitted or when and how the parties in the case can respond to the observations, are to be dealt with under national law. Member States’ procedural rules and practices determine the relevant procedural framework, duly taking into account the rights of defence of the parties to the proceedings.347 This presumably implies that the court should forward the observations from the competition authority to the parties in order for them to reply. In the absence of a procedural framework, the national court, in compliance with the principle of effectiveness and, where applicable, of equivalence, will have to ensure in any event that the Commission or the NCA can use its right.348 This is most likely to mean that the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

national court will apply mutatis mutandis the domestic rules on intervention by an expert. (p. 182)

Footnotes: 164

  See recitals 6 and 7 to Regulation 1/2003. The previous enforcement system established by Regulation 17 implied that the Commission was de facto the foremost, if not the only, enforcer of the EU competition rules. 165

  The Commission Notice on cooperation within the Network of Competition Authorities, OJ 2004 C101/43. See also recital 15 to Regulation 1/2003. 166

  The Commission Notice on the cooperation between the Commission and the courts of the EU member states in the application of Articles [101 and 102], OJ 2004 C101/54. 167

  Regulation 17 provided for few cooperation mechanisms between the Commission and the NCAs. The main forms of cooperation were related to the investigatory powers of the Commission and to the consultation of the NCAs via the Advisory Committee on Restrictive Practices and Monopolies prior to the Commission taking any enforcement decision: see respectively Arts 11(1), 14(5), and 10(3) of Regulation 17. 168

  Point 11 of the Joint Statement of the Council and the Commission on the functioning of the network, available from the Council register at (document 15435/02 ADD 1), and point 5 of the Network Notice. 169

  See also point 6 of the Network Notice.

170

  See Commission Staff Working Paper (n 3), s 5.2.2 and Juknevičiūtė et al, ‘Developments in and around the European Competition Network’ (n 103). 171

  The Joint Statement of the Council and the Commission on the functioning of the network, introduced the notion of ‘well placed competition authority’ to deal with a case. The Network Notice lists three cumulative conditions to be met for an authority to be considered well placed to deal with a case: (1) the agreement or practice has substantial direct actual or foreseeable effects on competition within its territory, is implemented within or originates from its territory; (2) the authority is able to effectively bring to an end the entire infringement, ie it can adopt a cease-and-desist order the effect of which will be sufficient to bring an end to the infringement and it can, where appropriate, sanction the infringement adequately; (3) it can gather, possibly with the assistance of other authorities, the evidence required to prove the infringement. (point 8 of the Network Notice) Apart from these criteria, the Commission is said to be particularly well placed to deal with a case: if more than three Member States are substantially affected by an agreement or practice, if it is closely linked to other EU provisions which may be exclusively or more effectively applied by the Commission, if EU interest requires the adoption of a Commission decision to develop EU competition policy particularly when a new competition issue arises or to ensure effective enforcement (point 19 of the Joint Statement, see also points 14 and 15 of the Network Notice)

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These criteria are intended to make the work sharing in the ECN more transparent; they cannot be qualified as jurisdictional criteria: ‘each network member retains full discretion in deciding whether or not to investigate a case’ (point 5 of the Network Notice). 172

  Pursuant to Art 11(3) of Regulation 1/2003, NCAs inform the Commission when they are acting under Art 101 or 102, before or without delay after commencing the first formal investigative measure. It has been agreed amongst the members of the ECN that the NCAs will also receive that information (point 17 of the Network Notice). Similarly, the Commission will inform the other ECN members when it begins to investigate a case (see Art 11(2) of Regulation 1/2003). In accordance with point 17 of the Network Notice, ECN members give each other only limited details of the pending case, eg the product, territories, and parties concerned, the alleged infringement, the suspected duration of the infringement, and the origin of the case. 173

  Practice so far shows, however, that work sharing in the network is often organized informally in the earliest stages of the procedures, even before the other ECN members are formally told of a new case. See Commission Staff Working Paper (n 3), s 5.2.2 and Juknevičiūtė et al, ‘Developments in and around the European Competition Network’ (n 103). 174

  See Section E.2(c) on the limitations on using information voluntarily submitted by a leniency applicant. 175

  According to recital 18 to Regulation 1/2003, ‘the objective [is] that each case [is] handled by a single authority’. However, ‘Parallel action by two or three NCAs may be appropriate where an agreement or practice has substantial effects on competition mainly in their respective territories and the action of only one NCA would not be sufficient to bring the entire infringement to an end and/or to sanction it adequately’ (point 12 of the Network Notice). In practice, parallel proceedings by NCAs are still rather rare: see Commission Staff Working Paper (n 3), para 223 and Juknevičiūtė et al, ‘Developments in and around the European Competition Network’ (n 103). 176

  Case T-339/04 and Case T-340/04 France Télécom v Commission [2007] ECR II-521.

177

  Although Art 13(1) only mentions the rejection of a complaint, it can be argued that those NCAs which formally need to close ex officio proceedings can base such closure on Art 13(1) of Regulation 1/2003. See also, implicitly, points 24 and 25 of the Network Notice. 178

  See point 22 of the Network Notice.

179

  See the first sentence of recital 18 to Regulation 1/2003.

180

  Point 21 of the Network Notice.

181

  Point 20 of the Network Notice.

182

  Art 13 of Regulation 17, now Art 22(2) of Regulation 1/2003.

183

  See recital 28 to Regulation 1/2003.

184

  See Commission Staff Working Paper (n 3), para 246. See also . 185

  See Section E.2(c) on Art 12 and Section E.2(a) on Art 13.

186

  Art 11(1) of Regulation 1/2003 and point 5 of the Joint Statement referred to in n 169. It could even be argued that the duty of loyal cooperation as laid down in Art 3(4) TEU would oblige an NCA to provide the necessary assistance for the purpose of applying EU competition rules. 187

  Art 22(1) of Regulation 1/2003 and point 29 of the Network Notice.

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188

  Conversely, it is submitted that the information obtained during the inspections referred to in Art 22(2) must be sent to the Commission in accordance with Art 18(6) of Regulation 1/2003. 189

  See Commission Staff Working Paper (n 3), para 247.

190

  Juknevičiūtė et al, ‘Developments in and around the European Competition Network’ (n 103). 191

  Case C-67/91 Dirección General de Defensa de la Competencia v Asociación Española de Banca Privada and Others [1992] ECR I-4785, paras 34 and 35. 192

  See also M. Bloom, ‘Benefits and Challenges of Leniency Programmes in the Context of EC Modernisation’ in E. A. Raffaelli (ed), Antitrust Between EC Law and National Law, UAE Symposium, VI Conference (Treviso, Italy, 13/14 May) (Brussels: Bruylant, 2005). When using the evidence exchanged under Art 12 of Regulation 1/2003, the Commission and the NCAs obviously must respect the general principles of EU law, eg the rights of defence of the parties involved. This issue is further elaborated in Section E.2(c)(ii). 193

  eg a national provision that would prohibit an NCA from using in evidence documents from in-house lawyers, even if those documents were lawfully obtained from another ECN member that had legally collected the documents, would violate Art 12. 194

  See eg Case C-2/88 Imm Zwartveld [1990] ECR I-3365, para 17.

195

  Case T-353/94 Postbank [1996] ECR II-921, para 64. See further Section E.4(c).

196

  Pursuant to Art 18(6) of Regulation 1/2003, NCAs already have a duty to provide the Commission with information it requests in order to apply Arts 101 and 102. 197

  The question is particularly relevant to the exchange of information between NCAs, since an NCA is already pursuant to Art 18(6) of Regulation 1/2003 obliged to ‘provide the Commission with all necessary information to carry out the duties assigned to it by th[e] Regulation’. 198

  An action for annulment brought by an undertaking against the refusal by the Commission to act on a request by the French competition authority was declared inadmissible by the GC (Case T-607/11 Henkel v Commission, Order of 7 March 2013). It found that there was no need to adjudicate, as the French competition authority had taken a decision in the relevant national proceedings. 199

  On the complementary nature of Art 3(4) TEU, see Case 2/73 Riseria Luigi Geddo v Ente Nazionale Risi [1973] ECR 865, para 4: In providing that Member States shall take all appropriate measures to ensure that their obligations are carried out and shall abstain from any measure liable to jeopardize the attainment of the objectives of the Treaty, Article [3(4) TEU] imposes a general obligation on Member States, the actual significance of which depends, in each particular case, on the provisions of the Treaty or on the rules laid down within its general framework. 200

  Compare with Case C-2/88 Zwartveld [1990] ECR I-4405, paras 10 and 11; Case T-353/94 Postbank [1996] ECR II-921, para 93; and Case C-275/00 First and Franex [2002] ECR I-10943, para 49. 201

  See point 26 in fine of the National Courts Notice.

202

  See in particular points 40 and 41. For the sake of completeness, it should be recalled that the Network Notice also provides for protective measures in the event of other exchanges within the ECN of information voluntarily submitted by a leniency applicant (see point 39 of the Network Notice), eg information submitted to the network pursuant to Art 11 of Regulation 1/2003 (for work-sharing purposes or coherence check) cannot be used by From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

other ECN members as the basis for starting an investigation on their own behalf. Similarly, information transmitted with a view to obtaining assistance from the receiving ECN member under Art 20, 21, or 22 of Regulation 1/2003 may only be used for the purpose of the application of the said articles. 203

  At present, one EU Member State, Malta, does not run a leniency programme, although it is in the processing of introducing one. For a regular update, see . 204

  Apart from the scenario described in this paragraph, there are two further situations where consent is not required for an exchange between ECN members of information obtained through or as a result of a leniency application between ECN members: (a) information may be sent to an ECN member that received a leniency application relating to the same infringement from the same applicant; and (b) if the ECN member that received the leniency application asks an NCA to conduct inspections on its territory, the latter NCA may send the information obtained to the ECN member that initially asked for this assistance. 205

  The guarantee is laid down in the Network Notice. The Commission is bound by the notices it issues and, for this particular notice, all NCAs have signed a statement declaring that they will also abide by the principles set out in the notice, in particular the principles ‘relating to the protection of applicants claiming the benefit of a leniency programme, in any case in which [they are] acting or may act and to which those principles apply’. 206

  According to point 41(2) of the Network Notice: No consent is required where the receiving authority has provided a written commitment that neither the information transmitted to it nor any other information it may obtain following the date and time of transmission as noted by the transmitting authority, will be used by it or by any other authority to which the information is subsequently transmitted to impose sanctions (a) on the leniency applicant, (b) on any other legal or natural person covered by the favourable treatment offered by the transmitting authority as a result of the application made by the applicant under its leniency programme or (c) on any employee or former employee of any of the persons covered by (a) or (b). A copy of the receiving authority’s written commitment will be provided to the applicant.

207

  For the Commission, this rule was an emanation of the general duty not to disclose information of the type covered by the obligation of professional secrecy (Art 339 TFEU), whereas for NCAs the obligation followed from provisions in their national laws. 208

  See para 2.165.

209

  In those exceptional cases where the transmitting ECN member—before or after the transmission—has classified information as confidential on the basis of national legislation, such qualification can obviously not bind the receiving ECN member. The latter will, however, most likely take into account the views indicated by the transmitting ECN member as far as possible. Because of the primacy of EU law, a Commission decision regarding the confidentiality of information binds the other ECN members. 210

  See further on the implication of Art 28, and see also Section E.2(d).

211

  National law provisions can thus not limit this facility. See further on this argument, paras 2.161–2.162. 212

  Art 6(3) TEU.

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213

  Case 5/88 Hubert Wachauf v Germany [1989] ECR 2609, para 19.

214

  Art 6(1) TEU.

215

  The explanation relating to Art 51 of the Charter states: As regards the Member States, it follows unambiguously from the case-law of the Court of Justice that the requirement to respect fundamental rights defined in the context of the Union is only binding on the Member States when they act in the scope of Union law’ (judgment of 13 July 1989, Case 5/88 Wachauf [1989] ECR 2609; judgment of 18 June 1991, Case C-260/89 ERT [1991] ECR I-2925; judgment of 18 December 1997, Case C-309/96 Annibaldi [1997] ECR I-7493). (OJ 2007 C303/17; emphasis added)

See also Case C-C-617/10 Åklageren v Hans Åkerberg Fransson, judgment of 26 February 2013, not yet reported, paras 16–29. 216

  According to recital 16 to Regulation 1/2003, ‘The rights of defence enjoyed by undertakings in the various systems can be considered as sufficiently equivalent’. 217

  It cannot be excluded that the legality of the collection of the information by the transmitting ECN member will be challenged. It has been agreed within the ECN that the transmitting ECN member may inform the receiving ECN member whether the gathering of information was contested or could still be contested (point 27 of the Network Notice). 218

  This finding is particularly important when read in conjunction with Art 22 of Regulation 1/2003, which allows (or when requested by the Commission ‘obliges’) an NCA to carry out any inspection or other fact-finding measure on its territory under its national law in response to a demand from another NCA. The collected evidence is subsequently exchanged and used in accordance with Art 12. 219

  See Dirección General de Defensa (n 191), para 37; and Case 85/87 Dow Benelux [1989] ECR 3137, para 18. Although in the latter case, the Court addressed the scenario of the use of information that was obtained beyond the scope (subject matter and purpose) of an investigation, the finding of the Court probably also holds for the use of information beyond the scope of the investigation. 220

  Compare Arts 3 and 12(2) of the Commission proposal, OJ 2000 C365E/284, with the ultimate version of those provisions. 221

  On the national notification systems and how they relate to Arts 3 and 5 of Regulation 1/2003, see paras 2.93–2.95. 222

  See n 219 and point 28(b) of the Network Notice.

223

  Joined Cases 46/87 and 227/88 Hoechst [1989] ECR 2859, para 41.

224

  Hoechst (n 223), para 42.

225

  Joined Cases T-305/94, etc Limburgse Vinyl Maatschappij and Others (‘PVC II’) [1999] ECR II-931, paras 509 and 512; and Joined Cases T-67/00, etc JFE Engineering and Others (‘Seamless steel tubes and pipes’) [2004] ECR II-2501, para 192: ‘no provision or any general principle of [Union] law prohibits the Commission from relying, as against an undertaking, on statements made by other incriminated undertakings.’ 226

  Compare Arts 23 and 24 of Regulation 1/2003 with Art 5 of the Regulation.

227

  See point 28(c) of the Network Notice.

228

  See Commission Staff Working Paper (n 3), s 5.4.1. See also Juknevičiūtė et al, ‘Developments in and around the European Competition Network’ (n 103).

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229

  Communication from the Council to the European Parliament and Council, Report on the functioning of Regulation 1/2003, COM(2009)206 final, para 27. 230

  Case C-85/76 Hoffmann-La Roche v Commission [1979] ECR 46, para 14.

231

  Case 145/83 Adams [1985] ECR 3539, para 34.

232

  Opinion of AG Lenz in Case 53/85 AKZO Chemie and AKZO Chemie UK v Commission [1986] ECR 1965, paras 5.2 and 5.3. 233

  Case T-353/94 Postbank [1996] ECR II-921, para 87. According to point 18 of the revised Commission Notice on the rules for access to the Commission file, information about an undertaking’s business activity constitutes business secrets in so far as disclosure of such information could result in a serious harm to that undertaking (Commission Notice on the rules for access to the Commission file in cases pursuant to Articles [101 and 101 TFEU], Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) No 139/2004, OJ 2005 C325/7). 234

  Point 18 of the Access to File Notice. See also point 10 of Commission Communication COM(2003) 4582 of 1 December 2003 on professional secrecy in State aid decisions, OJ 2003 C297/6. 235

  Point 13 of the Commission Communication.

236

  Recital 13 to Regulation 773/2004. The XVIIIth Report on Competition Policy, 1988, para 43 specified that the harm would be caused to the supplier of the information. 237

  Case T-65/89 BPB Industries and British Gypsum [1993] ECR II-389; Case C-310/93P BPB Industries and British Gypsum [1995] ECR I-865; and Case T-5/02 Tetra Laval [2002] ECR II-4381, paras 98ff. 238

  When information is confidential from an objective point of view, that information is covered by the obligation of professional secrecy. The subjective wish of the supplier of information to keep that information confidential is therefore irrelevant (Opinion of AG Lenz in Case 53/85 AKZO Chemie and AKZO Chemie UK v Commission [1986] ECR 1965, para 5.4). 239

  Points 19 and 20 of the Access to File Notice.

240

  In addition to the professional secrecy obligation laid down in Art 28(2), Arts 14(6), 27(2) and (4) and 30(2) of Regulation 1/2003 provide further particular protection for business secrets. 241

  It is submitted that this also implies that the comments of DG Competition to the information sent pursuant to Art 11(4) of Regulation 1/2003 are covered by the prohibition laid down in Art 28(2). 242

  eg the duty of loyal cooperation resulting from Art 3(4) TEU requires the Commission to disclose documents to national courts. See points 21–26 of the National Courts Notice and see also Section E.4(c). 243

  See eg Protocol 23 to the EEA Agreement, as recently amended, OJ 2005 L64/57 and L133/35. 244

  This implies, eg, that the receiving NCA cannot transmit the information exchanged to other national or foreign authorities, even if national law provisions or an international agreement would allow or oblige it to do so (Dirección General de Defensa (n 191), paras 41 and 42). It is, however, submitted that disclosure to other national authorities of information exchanged or acquired pursuant to Regulation 1/2003 is possible, when the NCA is obliged to do so for the purpose of applying Art 101 or 102. However, that other

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national authority is also covered by Art 28(2) and therefore cannot use this information for any other purpose, nor can it disclose it further. 245

  The procedure is named after Case 53/85 AKZO Chemie and AKZO Chemie UK v Commission [1986] ECR 1965. 246

  Art 27(2), first sent, of Regulation 1/2003 and Art 15(1) of the Implementing Regulation. 247

  Point 7 of the Access to File Notice.

248

  Art 27(2) of Regulation 1/2003 and Arts 15(2) and 16(1) of Regulation 773/2004.

249

  Joined Cases T-25/95, etc Cimenteries CBR et al [2000] ECR II-491, para 420.

250

  Case T-7/89 Hercules Chemicals [1991] ECR II-1711, paras 51, 52, and 54: regard for the rights of the defence requires that an applicant must have been put in a position to express, as it sees fit, its views on all the objections raised against it by the Commission in the statement of objections addressed to it and on the evidence which is to be used to support those objections and is mentioned by the Commission in the statement of objections or annexed to it…However, regard for the rights of the defence does not require that an undertaking involved in a procedure pursuant to Article [101(1) TFEU] must be able to comment on all the documents forming part of the Commission’s file since there are no provisions requiring the Commission to divulge the contents of its files to the parties concerned…It follows that the Commission has an obligation to make available to the undertakings involved in Article [101(1) TFEU] proceedings all documents, whether in their favour or otherwise, which it has obtained during the course of the investigation, save where the business secrets of other undertakings, the internal documents of the Commission or other confidential information are involved.

251

  Case T-17/93 Matra-Hachette [1994] ECR II-595, para 34.

252

  Art 13(1) of Regulation 773/2004

253

  eg the European Parliament expressed the concern that the reform would lead to a renationalization of EU competition law. See Report of Mr Jonathan Evans of 21 June 2001 (A-0229/2001 final). 254

  .

255

  See Section E.2(a).

256

  .

257

  See para 47 of the Network Notice.

258

  Art 11(4) does not mention interim measures decisions. As a consequence, the obligations of Art 11(4) do not apply to interim measures decisions. Art 11(4) applies to negative decisions except decisions prescribing interim measures. 259

  See Commission proposal of 27 September 2000 (COM(2000) 582 final), pp 9 and 21, which refers to prohibition decisions in general and all decisions by Member States’ authorities aimed at terminating or penalizing an infringement of Art 101 or 102. 260

  See in this respect Article 101(3) Guidelines, para 36.

261

  NCAs have occasionally made use of this facility following the entry into force of Regulation 1/2003.

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262

  A ‘positive’ decision is understood as a formal decision that an authority takes to reject a complaint or to close proceedings where it has come to the conclusion that on the basis of the information in its possession the conditions for prohibition are not met. This must be contrasted with the power of the Commission to make a finding of inapplicability under Art 10 of Regulation 1/2003, which the CJ referred to as a ‘negative decision’ in Tele2Polska (n 97). Other so-called negative powers include the finding and termination of infringements, the imposition of fines for such infringements, and the acceptance of commitments. 263

  It would have been otherwise if NCAs had been empowered to adopt constitutive exemption decisions, see in this respect the White Paper on modernisation, paras 58ff. 264

  This measure of flexibility is reflected in Art 35(1) and (2) of Regulation 1/2003.

265

  See Art 11(6).

266

  See para 46.

267

  See Commission Staff Working Paper (n 3), s 5.5.2.

268

  See Commission Staff Working Paper (n 3), s 5.5.1.

269

  In the case of complaints, the NCA may under the applicable national law on procedure have to reject specific complaints that are not being pursued. Depending on the applicable law, such rejections may be challengeable. In such an event, it makes no difference whether an NCA decides not to pursue a complaint on its own initiative or following comments in the context of the Art 11(4) process. 270

  CIA International (n 65).

271

  OJ 1983 L109/8 as amended by Council Directive 88/182/EEC, OJ 1988 L81/75.

272

  See paras 50 and 54.

273

  As is clear from the word ‘retained’, the rule of Art 11(6) is not new. An equivalent rule was contained in Art 9(3) of Regulation 17. However, the combination of Art 11(6) and Art 3 with its obligation to apply Arts 101 and 102 and the procedure of Art 11(4) has greatly enhanced its importance. 274

  See, concerning Art 9(3) of Regulation 17, Case 48/72 Brasserie de Haecht [1973] ECR 77, para 16. 275

  See para 52 of the Network Notice. Traditionally, proceedings were opened at the stage of the statement of objections. However, the Commission committed in Best Practices: conduct of proceedings, para 17, to open proceedings earlier, when the initial assessment leads to the conclusion that the case merits further investigation and where the scope of the investigation has been sufficiently defined. The exception in this regard is cartel proceedings where the opening of proceedings will normally take place simultaneously with the adoption of the statement of objections, so as not to interfere with possible leniency applications or settlement discussions, although it may take place earlier (see para 24 of the Notice). 276

  This aspect of Art 11(6) is dealt with in more detail in paras 2.238ff.

277

  The Commission’s decision can be challenged before the EU Courts. According to Art 263 TFEU, Member States always have standing to challenge acts adopted, inter alia, by the Commission. 278

  Art 35(4) was introduced to accommodate the sensitivities of certain Member States where the first decision-maker is a court.

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279

  This represents a limitation compared to Art 9(3) of Regulation 17 which in Case 127/73 BRT v SABAM [1974] ECR 51, paras 18–20 was also held to extend to courts reviewing the legality of decisions. 280

  See in this regard, Section E.4(b)(ii).

281

  See Art 11(6) of the Regulation.

282

  See Masterfoods (n 72), para 48.

283

  The Network Notice develops some broad criteria for determining when Network members are well placed to deal with cases and when a reallocation of a case may be warranted, see Section E.2(a). 284

  See para 54.

285

  See para 54(b).

286

  See eg Masterfoods (n 72), para 46.

287

  See para 54.

288

  BRT I (n 279), para 16.

289

  Only Arts 2 and 15 of Regulation 1/2003 contain elements of harmonization of procedural rules for national courts. 290

  For national courts, the elimination of the Commission’s exemption monopoly has been confirmed by Art 6 of Regulation 1/2003. 291

  On the right of natural and legal persons to seek compensation for loss caused by an infringement of Art 101 or 102, see Courage v Crehan (n 23), para 26; Joined Cases C-295– 298/04 Manfredi [2006] ECR I-6619, para 60; and Case C-360/09 Pfleiderer, [2011] ECR I-5161, para 28. On the Commission’s policy to enhance antitrust damages actions, see . 292

  Since the obligation of Art 3(1) constitutes a substantive rule of EU law, it does not apply to situations existing before its entry into force, namely 1 May 2004. See Toshiba (n 54), paras 47–52. 293

  See Case C-126/97 Eco Swiss [1999] ECR I-3055, para 36; Case T-34/92 Fiatagri UK and New Holland Ford [1994] ECR II-905, para 39; Case T-128/98 Aéroports de Paris [2000] ECR II-3929, para 241; and Joined Cases C-295–298/04 Manfredi [2006] ECR I-6619, para 31. 294

  There is only one proviso, namely that national courts cannot be required to raise of their own motion an issue concerning the breach of an EU competition law provision where the examination of that issue would oblige them to abandon the passive role assigned to them by going beyond the ambit of the dispute as defined by the parties (Joined Cases C-430/93 and C-431/93 van Schijndel [1995] ECR I-4705, paras 13–15 and 22). 295

  One of the recurrent observations made during the process that led to Regulation 1/2003 was that national judges were not ready to apply EU competition rules, in particular Art 101(3), because ‘they cannot deal with substantive economic assessments of both the anti- and pro-competitive impacts of agreements’ (Report of the EP Committee on Economic and Monetary Affairs (n 94), p 25). 296

  National courts against whose decisions there is no judicial remedy under national law are obliged to request a preliminary ruling from the CJ (Art 267, third para) whenever they are confronted with an issue which is novel and not straightforward (Case 283/81 CILFIT v Ministry of Health [1982] ECR 3415, paras 13 and 14).

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297

  Between 2007 and 2011, the CJ received 28 preliminary questions regarding EU competition rules (varying between three requests in 2008 and eight requests in 2007), which as a total constitutes less than 2 per cent of all preliminary questions it received over that period (see the annual reports of the CJ on ). 298

  According to the 2011 annual report of the CJ, it takes 16.4 months to reply to a preliminary question. Urgent questions are dealt with in 2.5 months (). 299

  Judgment of the CJ of 31 May 2005 in Case C-53/03 Syfait [2005] ECR I-4609. In his Opinion of 28 October 2004, AG Jacobs came to the opposite conclusion. 300

  Syfait (n 299), paras 29–38.

301

  Syfait (n 299), para 36.

302

  Both in Case C-134/97 Victoria Film [1998] ECR I-7023, paras 14–18 and Case C-195/98 Österreichischer Gewerkschaftsbund [2000] ECR I-10497, paras 25–29 the criterion that a national court may refer a question to the Court only ‘if it is called upon to give judgment in proceedings intended to lead to a decision of a judicial nature’ has been introduced to exclude bodies which act in a more administrative capacity. In Syfait, the Court shifted the focus from the nature of the outcome, a judicial decision, to the outcome itself and thus seemed to add the condition that the proceedings should not only be intended to lead to a decision of a judicial nature, but should effectively result in such a decision. 303

  Syfait (n 299), para 34.

304

  Dirección General de Defensa (n 191).

305

  Syfait (n 299), para 37 (emphasis added).

306

  Point 1 of the National Courts Notice defines national courts within the meaning of the Notice as ‘those courts and tribunals within an EU Member State that can apply Articles 101 and 102 TFEU and that are authorised to ask a preliminary question to the Court of Justice pursuant to Article 267 EC’. The consequence of the Syfait case would thus be that, until the CJ rules differently, the Commission will treat bodies such as the Greek Competition Commission as not being covered by Art 15 of Regulation 1/2003. The practical consequences of this finding should not be overestimated, though, since those bodies can still enjoy the cooperation mechanisms provided within the ECN. 307

  Cooperation between the national courts and the Commission as established by Art 15 is dealt with in paras 2.260–2.278. 308

  Case 63/75 Fonderies Roubaix [1976] ECR 111, paras 9–11; and Delimitis (n 12), para 46. 309

  Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 803, para 27; Delimitis (n 12), para 50; and Joined Cases C-319/93, C-40/94 and C-224/94 Dijkstra [1995] ECR I-4471, para 32. A list of Commission guidelines, notices and Regs in the field of competition policy, in particular the block exemption Regulations is available and regularly updated on DG Competition’s website: . 310

  Notice on the definition of the relevant market for the purposes of [EU] competition law, OJ 1997 C372/5.

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311

  Guidelines on the effect on trade concept contained in Articles [101 and 102 TFEU], OJ 2004 C101/81. 312

  Report of the EP Committee on Economic and Monetary Affairs (n 94), p 26.

313

  Report of the EP Committee on Economic and Monetary Affairs (n 94), p 63.

314

  See .

315

  Art 11(6), juncto Art 35(3) and (4) of Regulation 1/2003 prevents the parallel application of Art 101 or 102 by the Commission and a national court only when the latter has been designated as an NCA. 316

  Delimitis (n 12); and Masterfoods (n 72). On the scope of Masterfoods, see the speeches of the Lords of Appeal in Inntrepreneur Pub Company and Others v Crehan [2006] UKHL 38. 317

  Foto-Frost (n 162), paras 12–20.

318

  Masterfoods (n 72), paras 52–59.

319

  According to the CJ, the opening of proceedings implies an authoritative act of the Commission, evidencing its intention to adopt a decision (Brasserie de Haecht (n 273), para 16). ‘Pursuant to Article 2 of the Implementing Regulation, the Commission may make the opening of proceedings public. The Commission’s policy is to publish the opening of proceedings on the website of the Directorate-General for Competition and issue a press release, unless such publication may harm the investigation’ (point 20 of Best Practices: conduct of proceedings). When proceedings are opened in parallel with the publication of the notice pursuant to Art 27(4) of Regulation 1/2003, the national court will obviously know that the Commission intends to adopt a decision pursuant to Art 9 or 10. 320

  Delimitis (n 12), para 53; and Joined Cases C-319/93, C-40/94 and C-224/94 Dijkstra [1995] ECR I-4471, para 34. 321

  Point 12 of the National Courts Notice.

322

  Clearly, a network such as the ECN could not be established with national courts. Not only would that not have been practically feasible, but it is mainly a matter of independence of the judiciary. Many national judges, however, seek to make contact with their peers in order to exchange experiences and to establish some ‘best practices’ for the swift and coherent application of the EU competition rules. The Association of European Competition Law Judges () is probably the best known network in that respect. 323

  OJ 1993 C39/6.

324

  Note the difference from the preliminary rulings procedure: national courts against whose decisions there is no judicial remedy under national law are obliged to request a preliminary ruling from the CJ (Art 267, third para). The rulings given by the Court bind all national courts (Case 68/74 Alaimo v Préfet du Rhône [1975] ECR 109). 325

  Point 19 in fine of the National Courts Notice.

326

  Case C-2/88 Zwartveld [1990] ECR I-4405, paras 10 and 11; Case C-275/00 First and Franex [2002] ECR I-10943, para 49; and Case T-353/94 Postbank [1996] ECR II-921, para 93. 327

  Point 26 of the Notice on cooperation with national courts. In an amicus curiae observation sent on 3 November 2011 to the UK High Court in the context of a damages action brought by the National Grid, the Commission stated that it is ‘the Commission’s policy…not to disclose to national courts information specifically prepared for voluntary

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submission to the Commission under the Leniency Notice’ (point 13.2; ). 328

  See point 40 of the Network Notice. The exceptions laid down in point 41, such as the written commitment by the receiving authority not to sanction, cannot be fulfilled by a national court. Point 26 of the National Courts Notice does not therefore contain any such exception. 329

  Case T-353/94 Postbank [1996] ECR II-921, para 90.

330

  In its Proposal for a Directive of the European Parliament and of the Council on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union (COM(2013) 404 of 11 June 2013), the Commission suggests that all national courts should have the means to protect confidential information appropriately (Art 5(4)). ‘These [means] may include the possibility of hearings in private, restricting the circle of persons entitled to see the evidence, and instruction of experts to produce summaries of the information in an aggregated or otherwise non-confidential form’ (recital 17). 331

  See Section E.2(c)(ii).

332

  See also Arts 48(2) and 51(1) of the Charter of Fundamental Rights of the European Union. 333

  Point 15 of the National Courts Notice; Case C-2/88 Imm Zwartveld [1990] ECR I-3365, paras 16–22; and Delimitis (n 12), para 53. 334

  See, however, Case C-275/00 First and Franex [2002] ECR I-10943, para 49, in which the Court seems to extend the duty of loyal cooperation to those situations in which a national court needs information that only the Commission can provide, irrespective of whether that national court applies EU law or national law. 335

  See Section E.2(c)(ii).

336

  Art 12(3) deals with the use of information exchanged within the ECN pursuant to Art 12(1). Since the Commission can only impose sanctions on undertakings, Art 12(3) regulates the use in evidence of exchanged information by NCAs in their application of EU competition rules. The application of EU competition rules by an NCA cannot lead to any decision other than those enumerated in Art 5 of Regulation 1/2003 (see also Section C. 3(a)). 337

  See point 28(c) of the Network Notice.

338

  See recital 8 in fine to Regulation 1/2003, also dealt with in Section B.6(e).

339

  National courts can always turn directly to the CJ for a binding interpretation of the rules under the preliminary ruling procedure, which is provided for in Art 267 TFEU. 340

  The opinions are published at . 341

  Case C-429/07 X [2009] ECR I-4833, para 30.

342

  X (n 341), para 37.

343

  .

344

  See eg §90(1) of the German Competition Act; Art 91/H of the Hungarian Competition Act; Art 35 of the Latvian Competition Act; Art 50(2) of the Lithuanian Competition Act; and Art 82a of the Slovak Civil Procedure Code.

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345

  On Art 15(2), see para 2.257. For examples of the obligation under national law to inform the NCA and/or the Commission, see eg §85 of the Austrian Cartel Act; §90a(1) of the German Competition Act; Art 91/H(2) of the Hungarian Competition Act; Section 35(2) of the Latvian Competition Act; Art 50(3) of the Lithuanian Competition Act; Art 61(7) of the Romanian Competition Act; and Art 16(3) and (4) of the Spanish Competition Act. In the UK, the responsibility is left to individual judges (see para 6 of the EU Competition Law Practice Direction). 346

  Point 19 of the National Courts Notice.

347

  Recital 21 to Regulation 1/2003 and point 35 of the National Courts Notice. See eg Art 90a of the German Competition Act and for Ireland, r 22 of the Rules of the Superior Courts (Competition Proceedings) 2005 (SI 130/2005). 348

  Where a Member State has not established the relevant procedural framework, the national court has to determine which national procedural rules are appropriate for the submission of observations in the case pending before it. According to the principle of effectiveness, those national procedural rules may not make the submission of observations by the Commission or by an NCA excessively difficult or practically impossible. According to the principle of equivalence, the national procedural rules for submitting observations in a case regarding the enforcement of EU competition law may not be less favourable than the rules applicable to the submission of observations in a case regarding the enforcement of similar domestic rules.

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Part I General Principles, 3 Article 101, A Introduction Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of

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A. Introduction 3.01  The purpose of the following overview of Article 101 of the Treaty on the Functioning of the European Union (TFEU or ‘the Treaty’) (formerly Art 81 of the EC Treaty) is to consider certain general features of that provision as it is interpreted and applied. The aim is to highlight some of the key legal and policy issues and debates arising from its application, in order to introduce and underpin the substantive chapters.

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Part I General Principles, 3 Article 101, B Scope of Article 101 Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of — Coal and steel — Environment — Cultural benefits — Sports

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B. Scope of Article 101 (1)  Scope 3.02  Pursuant to Article 3 of the Treaty on European Union (TEU), ‘The Union shall establish an internal market’. Protocol 27 that is annexed to the TEU and the TFEU clarifies ‘that the internal market as set out in Article 3 of the Treaty on the European Union includes a system (p. 184) ensuring that competition is not distorted’. Article 101 is interpreted and applied, together with other Treaty provisions, in order to create and sustain that system. 3.03  In general, Article 101 applies to all sectors of the economy except those where the Treaty itself grants exceptions. In accordance with Article 42, the competition rules apply to the production of, and trade in, agricultural products only to the extent determined by the Council within the framework of Article 43(2) and in accordance with the procedure laid down therein, account being taken of the objectives set out in Article 39. These products are listed in Annex II to the Treaty. Regulation 26 of 4 April 1962,1 which was adopted on the basis of Articles 42 and 43, provides that Articles 101 to 106 of the Treaty and all the provisions adopted to implement them are also applicable to agriculture, although it gives three exceptions. Under Article 2(1) of the Regulation, Article 101(1) does not apply to agreements, decisions, and practices which form an integral part of a national market organization or are necessary for the attainment of the objectives set out in Article 39. In particular, it does not apply to agreements, decisions, and practices of farmers, farmers’ associations, or associations of such associations belonging to a single Member State which concern the production or sale of agricultural goods or the use of joint facilities for the storage, treatment, or processing of agricultural products, and under which there is no obligation to charge identical prices. This is so unless the Commission finds that competition is thereby excluded or that the objectives of Article 39 are jeopardized.2

(2)  Coal and Steel 3.04  The TFEU has applied to the coal and steel sectors since the expiry of European Coal and Steel Community (ECSC) Treaty in 2002.3 The nuclear sector is still governed by the Euratom Treaty.

(3)  Defence 3.05  Particular attention must be paid to the application of the competition rules to the defence sector. 3.06  Article 346 provides that: 1. The provisions of this Treaties shall not preclude the application of the following rules: (a)  no Member State shall be obliged to supply information the disclosure of which it considers contrary to the essential interests of its security; (b)  any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the common market regarding products which are not intended for specifically military purposes.

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2. The Council may, acting unanimously on a proposal from the Commission, make changes to the list, which it drew up on 15 April 1958, of the products to which the provisions of paragraph 1(b) apply. (p. 185) 3.07  Pursuant to Article 348: If measures taken in the circumstances referred to in Articles 346 and 347 have the effect of distorting the conditions of competition in the common market, the Commission shall, together with the State concerned, examine how these measures can be adjusted to the rules laid down in the Treaties. By way of derogation from the procedure laid down in Articles 258 and 259, the Commission or any Member State may bring the matter directly before the Court of Justice if it considers that another Member State is making improper use of the powers provided for in Articles 346 and 347. The Court of Justice shall give its ruling in camera. 3.08  In a number of merger cases,4 the Commission has noted that governments of Member States have instructed the undertakings notifying a concentration not to notify information relating to their military activities. The Commission considered information supplied by the governments concerned and noted that: •  the un-notified part of the concentration related only to the production of or trade in arms, munitions, and war material mentioned in the list referred to in Article 346(2); •  the measures taken by the Member States were necessary for the protection of essential security interests; •  there were no spillover effects from military to non-military applications of dual use products; •  the merger would have no significant impact on suppliers and subcontractors of the undertakings concerned or defence ministries in other Member States; •  intermediate consumers would be little affected. 3.09  In these circumstances, the Commission declared itself satisfied with the measures taken by the governments concerned and saw no need to invoke Article 348. It limited its decisions to non-military applications of dual use products. 3.10  It seems from the previous analysis that the Commission will defer to Member States’ refusal to allow undertakings to notify concentrations relating to solely military products. However, the Commission reserves the right to invoke Article 348 if these conditions are not met. The same principles apply, mutatis mutandis, to the other competition rules. 3.11  In other cases5 in which no Member State invoked Article 346, the Commission has applied the Merger Regulation in the normal way to defence or military markets. The Commission has pointed out that ‘markets for defence equipment have shown a move towards a more international approach to procurement over recent years’.6 This suggests that competition in defence markets is ceasing to be a purely national concern. This, of course, reflects general trends in defence policy in Europe in recent years. Again, these principles apply, mutatis mutandis, to the other competition rules.

(p. 186) (4)  Environment and Culture

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3.12  In addition to these provisions, there are also a number of other rules which are relevant to a discussion of the scope of the Article 101. In particular, environmental and cultural issues—on which the Treaty confers some particular significance in the ‘crosssectional clauses’ of Articles 11 and 167—may be taken into account in applying the competition rules. However, they will only be relevant to policy considerations arising under Article 101(3), as they do not have any impact on the notion of the restriction of competition for the purposes of Article 101(1). 3.13  Article 11 provides: ‘Environmental protection requirements must be integrated into the definition and implementation of the Union’s policies and activities, in particular with a view to promoting sustainable development.’ This integration requires the Commission and other bodies applying Article 101 to take account of the impact of the agreements, decisions, or concerted practices under consideration on the promotion of sustainable development, and of their impact on that goal. This will be particularly important in applying Article 101(3). It does not mean that, in the event of a clash between policies, an agreement which should be prohibited on competition grounds but which promotes sustainable development must be allowed to proceed. The Treaty does not prescribe any such hierarchy and an anti-competitive agreement should not be allowed on environmental grounds alone. There may be other ways of protecting the environment and promoting sustainable development.7 3.14  That said, two Commission decisions show an increased willingness to give greater weight to environmental arguments. In DSD,8 the Commission exempted an agreement, at least in part, because it provided ‘direct practical effect to environmental objectives’ set out in the Directive on Packaging Waste. Similarly in CECED9 the Commission exempted an agreement between many European producers of washing machines to stop manufacturing the least energy-efficient machines identified in Commission Directive 95/12/EC. Although a clear restriction of competition, the Commission decided to exempt the agreement, inter alia, because it was likely to lead to more efficient and technologically advanced products replacing machines which consumed high quantities of electricity. On announcing the decision, the then Commissioner, Mario Monti declared that ‘environmental concerns are in no way contradictory with competition policy. This decision clearly illustrates this principle, enshrined in the Treaty, provided that restrictions of competition are proportionate and necessary to achieving the environmental objectives aimed at, to the benefit of current and future generations’.10 3.15  In addition, Article 167 provides: The Union shall contribute to the flowering of the cultures of the Member States, while respecting their national and regional diversity and at the same time bringing the common cultural heritage to the fore…4. The Union shall take cultural aspects into account in its action under other provisions of the Treaties, in particular in order to respect and to promote the diversity of its cultures. (p. 187) The interface between culture and competition has proved controversial and difficult to resolve in recent years as the Commission has, for example, grappled with resale price maintenance for books, the activities of public television companies, and collecting societies.11 In such cases, insofar as agreements have an appreciable effect on competition and trade,12 cultural benefits are likely to be relevant13 but only under Article 101(3).14 This approach has been embodied in the Commission’s policy documents. Paragraph 42 of the Article 101(3) Guidelines15 sets out that: ‘Goals pursued by other Treaty provisions can be taken into account to the extent that they can be subsumed under the four conditions of Article [101(3)].’

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(5)  Sport 3.16  There is no general exclusion for sport from the application of the competition rules. However, matters which are of a ‘purely sporting interest and, as such, have nothing to do with economic activity’16 fall outside the scope of the law. This is because (as in any other case) the law applies only to the extent that the agreement/concerted practice/conduct in question constitutes an economic activity.17 3.17  There has been much debate about the scope of application of the concept of a ‘purely sporting interest’. In a recent landmark judgment, Meca-Medina and Majcen,18 the Court of Justice clarified, albeit in a highly elliptic manner, that European law applies in a far wider range of circumstances than many, including the General Court and the Commission, had assumed; in many ways it can be argued that the Court of Justice’s judgment in this case has all but removed the safe harbour provided by this concept in cases involving restrictions on the freedom of professional and semi-professional sportsmen and women to provide their services. This does not, of course, mean that such restrictions automatically fall within Article 101(1); rather that such sporting cases will be assessed according to the normal rules. 3.18  Meca-Medina and Majcen concerned the anti-doping rules of the International Olympic Committee (IOC). The Court of Justice confirmed that European law did not apply to rules ‘concerning questions which are of purely sporting interest’. However, the Court found that it was often difficult to sever the sporting aspects from the economic ones in cases involving professional and semi-professional sports.19 (p. 188) 3.19  In such cases, the approach set out in the Court of Justice’s judgment in Wouters20 applied. More specifically the following factors were relevant:21 •  first, ‘the overall context in which the decision of the association of undertakings was taken or produces its effects and, more specifically, …its objectives’; •  secondly, ‘whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives’; and •  thirdly, whether these ‘consequential effects’ are ‘proportionate’. 3.20  As regards the ‘overall context’, the Court found that the Commission had been entitled to take the view that the general objectives of the IOC anti-doping rules (to safeguard athletes’ health, the integrity of the sport, and its ethical values) were legitimate: ‘even if the rules at issue were to be regarded as limiting the appellants’ freedom of action, they did not necessarily constitute a restriction of competition since they were justified by a legitimate objective’. 3.21  On the second issue, the Court found that the limitations placed on athletics by the rules were ‘inherent in the organisation and proper conduct of competitive sport’ because their ‘very purpose is to ensure healthy rivalry between athletes’. 3.22  On the third issue, that of proportionality, the Court of Justice acknowledged that the penal nature of the rules and the magnitude of the penalties applicable were capable of producing adverse effects on competition because they could result in an athlete’s exclusion from sporting events ‘and thus in impairment of the conditions under which the activity at issue is engaged in’. To fall outside Article 101(1) they therefore ‘had to be limited to what was necessary to ensure the proper conduct of competitive sport’; on the facts they were.

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Footnotes: 1

  Council Regulation 26/62/EEC applying certain rules of competition to production of and trade in agricultural products, OJ 1962 30 as amended by Council Regulation 49 of 29 June 1962, OJ 1962 53. 2

  See also Council Regulation (EEC) No 2077/92 of 30 June 1992 concerning inter-branch organisations and agreements in the tobacco sector, OJ 1992 L215/80. 3

  Communication from the Commission concerning certain aspects of the treatment of competition cases resulting from the expiry of the ECSC Treaty, OJ 2002 C152/5. 4

  See eg Case IV/M528 British Aerospace/VSEL (1994) (UK); Case IV/M529 GEC/VSEL (1994) (UK); Case IV/M820 British Aerospace/Lagardère SCA (1996) (UK/France). 5

  Case IV/M437 Matra Marconi Space/British Aerospace Space Systems (1994); Case IV/ M571 CGI/Dassault (1995); Case IV/M620 Thomson CSF/Teneo/Indra (1995); Case IV/M767 Thomson/CSF/Finmeccanica/Elettronica (1996); Case IV/M945 Matra BAe Dynamics/DASA/ LFK (1998); Case IV/M1159 Snecma/Messier Dowty (1998). 6

  Case IV/M945 Matra BAe Dynamics/DASA/LFK (1998), para 23.

7

  Similarly, an agreement which is innocent in competition terms, but favours unsustainable development, should be dealt with by other means than the prohibition of Art 101(1). 8

  OJ 2001 L319/1.

9

  OJ 2000 L187/47.

10

  Press Release IP/00/148 (11 February 2000).

11

  Case COMP/38.698 CISAC (2008).

12

  In Press Release IP/02/461 (22 March 2002) the Commissioner, Mario Monti stated that ‘the Commission has no problem with national book price fixing agreements which do not appreciably affect trade between Member States’. This conclusion raises a number of difficult issues. See G. Monti, ‘Article 81 EC and Public Policy’ [2002] 39 CML Rev 1084–6. 13

  It has been argued that the Commission is unable, as a matter of law, to take national interests, including cultural ones, into account in applying Art 101; see Monti, ‘Article 81 EC and Public Policy’ (n 12). 14

  See Commissioner Van Miert’s answer to MEP’s written question on 28 April 1998; [1999] 4 CMLR 394–5. 15

  Guidelines on the application of Article [101(3) TFEU], OJ 2004 C101/97.

16

  Case C-519/04 David Meca-Medina and Igor Majcen v Commission [2006] ECR I-6991, para 25. 17

  See Section C.1 for a general discussion of the concept of ‘economic activity’.

18

  Meca-Medina and Majcen (n 16).

19

  Meca-Medina and Majcen (n 16), para 26.

20

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. In Wouters, the CJ held, in essence, that restraints which are necessary for the implementation of a public interest objective fall outside the scope of Art 101(1); see para 3.189. The Commission has relied on Wouters in reaching a number of decisions, both formal and informal, in sporting cases. Eg in 2002 it rejected a complaint that rules which restricted the ownership of shares in more than one football club competing in the Champions League tournament did ‘not go beyond what is necessary to

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ensure its legitimate aim: i.e. to protect the uncertainty of the results in the interest of the public’: Press Release IP/02/942 (27 June 2002). 21

  Meca-Medina and Majcen (n 16), para 42.

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Part I General Principles, 3 Article 101, C Article 101(1) Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of — Economic or commercial activity — Associations of undertakings — Professions — Article 101 TFEU — Decisions by associations of undertakings — Concerted practices — Restriction of competition — Object or effect — Appreciable effect — Ancillary restrictions — De minimis — Parent companies

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C. Article 101(1) 3.23  Article 101 provides: 1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a)  directly or indirectly fix purchase or selling prices or any other trading conditions; (b)  limit or control production, markets, technical development, or investment; (c)  share markets or sources of supply; (d)  apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e)  make 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. (p. 189) 2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void. 3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: –  any agreement or category of agreements between undertakings; –  any decision or category of decisions by associations of undertakings; –  any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a)  impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b)  afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question. 3.24  Article 101 deals with the impact on competition of contractual (and other consensual) arrangements between undertakings. Where the undertakings concerned are actual or potential competitors, what they decide to do together may be of interest to competition authorities. Even if they are not competitors, those authorities may legitimately take an interest in the impact of their commercial arrangements on third parties, the competitive process, and the competitive outcome.

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3.25  The competitive relations with which Article 101 deals are thus traditionally divided into two categories: horizontal (between undertakings active on the same product markets, in particular actual or potential competitors, in respect of, eg, research, development, production, purchase, or sale of different goods or services) and vertical (between undertakings operating at different economic levels). This useful simplification is followed in the Commission’s policy22 and will be used in this chapter where necessary. 3.26  The following sections will consider the constituent elements of Article 101. Before doing so, it should be recalled that EU law has its own definitions for a number of the terms found in Article 101. Thus, for example, the meaning of ‘undertaking’ or ‘agreement’ in Article 101(1) is different from both the ordinary meaning of those words in English and any special meaning which may have been ascribed to them in legal systems in Member States of the Union (or elsewhere) which use the English language. The terms of Article 101 have the same meaning in all the EU’s official languages. Article 101(1) contains a number of conditions, all of which have to be fulfilled if its prohibition is to apply.

(1)  Undertakings (a)  Definition 3.27  Article 101(1) only applies to undertakings. In order to be an undertaking an entity must be ‘engaged in an economic activity, irrespective of its legal status and the way in which it is financed.’23 This is defined as ‘any activity consisting in offering goods and services on a given (p. 190) market’24 in order to ensure that the rules apply widely, thereby limiting the circumstances in which anti-competitive agreements (or behaviour in relation to Art 102) can escape from the prohibitions by virtue of their legal form rather than their object or effect. As such, entities do not have to be incorporated under company law or take any other legally recognized form in order to be deemed an undertaking. Consequently, even the State itself or a State entity may be considered an undertaking.25 3.28  Similarly, pursuit of profit is not essential.26 In Fédération Française des Sociétés d’Assurances and Others v Ministère de l’Agriculture et de la Pêche,27 the Court of Justice held that a non-profit-making organization which managed a voluntary supplementary pension scheme under rules laid down by public authorities was an undertaking because it carried on an activity in competition with life assurance companies. The position is perhaps best summarized in Film Purchases by German Television Stations,28 where the Commission stated that the term ‘covers any activity directed at trade in goods or services irrespective of the legal form of the undertaking and regardless of whether or not it is intended to earn profits’. 3.29  The wide definition given to this term means that the competition rules apply not only to companies but also to partnerships, the self-employed29 (including performing artists),30 agricultural cooperatives,31 protection and indemnity (P and I) clubs,32 and sports associations. For example, in Distribution of Package Tours during the 1990 World Cup,33 the Commission held that FIFA, football’s world governing body, and the Italian Football Association carried out activities of an economic nature and were therefore undertakings. 3.30  It is worth noting, however, that an entity may be an undertaking in certain circumstances but not in others.34 Practically speaking, this is most likely to be relevant in cases involving State or State-related bodies.35 Thus while a State school might be found not to engage in an (p. 191) economic activity when providing educational services free at the point of use; it is likely to be an undertaking when renting out its facilities.36 3.31  In theory, this line of argument could also apply to businesses. However, advisers should take great care in relying on it as competition authorities and the courts are likely to be highly sceptical of arguments that a business is not engaged in an economic activity—for example, the mere provision of a product or service free to customers would not, in and of itself, be sufficient.37 In practice, this argument is only likely to succeed where the business From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

in question can show that it is acting either as an agent or as a subcontractor for another entity as prescribed in the relevant Commission Guidelines and Notices.38 3.32  An individual acting as a final consumer will, however, never constitute an undertaking.39 In theory, the logic behind the rule could again apply to businesses, particularly partnerships and the self-employed. However, it seems likely that almost all purchases made by such entities would be inputs into the products or services that they market or would, in some other way, be closely linked to the economic activity in which they engage. For example, in Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten40 the Court of Justice found that the self-employed entities in question had acted as undertakings, rather than as consumers, when making contributions to a particular pension scheme which was closely linked to the economic activity in which they engaged. 3.33  However, in certain circumstances intermediate purchases may not constitute an economic activity. In FENIN,41 the General Court held that an organization which purchased products—even in great quantity—not for the purpose of supplying goods and services as part of an economic activity, but in order to use them in the context of a different activity: such as one of a purely social nature, does not act as an undertaking simply because it is a purchaser in a given market. Whilst an entity may wield very considerable economic power, even giving rise to a monopsony, it nevertheless remains the case that, if the activity for which that entity purchases goods is not an economic activity, it is not acting as an undertaking for the purposes of [EU] competition law.42

(p. 192) (b)  Professions 3.34  Although in most Member States, members of the liberal professions (‘professionals’) are regulated by law and are considered, to some extent, to exercise public interest functions, the EU Courts and the Commission have been careful to ensure that the normal rules apply: professionals are undertakings within the meaning of Article 101 if their activities are economic in nature; the fact that their endeavours are intellectual and may require authorization from a State-sanctioned regulatory body and/or compliance with conditions imposed by that body is insufficient to take them outside the scope of Article 101.43 For example, in Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten, the Court of Justice held that medical specialists in the Netherlands were undertakings because they ‘provide, in their capacity as self-employed economic operators, services on a market, namely the market in specialist medical services. They are paid by their patients for the services they provide and assume the financial risks attached to the pursuit of their activity’. The Court of Justice also reiterated that the complexity and technical nature of the services in question and the fact that the medical profession is regulated are immaterial to the question whether the members of the profession were undertakings for the purpose of Article 101.44 In Wouters,45 the Court of Justice found that ‘members of the Bar offer, for a fee, services in the form of legal assistance consisting in the drafting of opinions, contracts and other documents and representation of clients in legal proceedings’ and as such are undertakings.46 3.35  Similarly, the bodies which regulate the professions are likely to be found to be association of undertakings and therefore subject to the law—the EU Courts and the Commission have been extremely reluctant to expand the scope of the exclusion from the rules enjoyed by certain public bodies47 to such regulatory entities. For example, in Commission v Italy48 the Court of Justice found that customs agents were undertakings and that their regulatory body, the National Council of Customs Agents (NCCA), was an association of undertakings. Relying on Bureau National Interprofessionnel du Cognac v Guy Clair,49 the Court went on to hold that the public law nature of the body under review

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did not take it outside the scope of the rules. However, it may be worth noting that in making this judgment the Court relied on the fact that the Italian State had no power to intervene, directly or indirectly, in the appointment of the members of the NCCA and there was nothing in law to prevent the NCCA from acting in the exclusive interest of the profession. (p. 193) 3.36  The Court relied on similar findings in Wouters.50 In that case it was common ground that the Bar of the Netherlands was a statutory body governed by public law and had been entrusted with making regulations in the public interest binding on the members of the profession as well as on third parties. The Court of Justice was asked whether in these circumstances a regulation prohibiting lawyers from entering into partnership with accountants fell within the scope of Article 101(1). It found that when adopting the regulation in question the Bar was neither fulfilling a social function based on the principle of solidarity nor was it exercising powers which were typically those of a public authority. By adopting the regulation in question, the Bar was merely regulating the exercise of an economic activity (the provision of legal services). 3.37  In making this judgment, the Court of Justice highlighted four elements. First was the fact that the governing bodies of the Bar had all been elected by members of the profession. Secondly, the State had no power to intervene in these appointments. Thirdly, when exercising its regulatory powers, the Bar was ‘not required to do so by reference to specified public-interest criteria’—the relevant legislation merely required the Bar to act ‘in the interest of the proper practice of the profession’. Fourthly, by prohibiting multidisciplinary partnerships, the regulation in question influenced the conduct of member of the Bar on the market for legal services, that is, it regulated an economic activity. Taken together, these factors meant that the regulation was merely an expression of the intention of the delegates of the members of this profession to act in a particular manner in carrying out their economic activity. 3.38  This judgment suggests that the scope for argument that regulatory bodies are not undertakings/association of undertakings is extremely narrow—following Wouters, the argument is only likely to carry any force where legislation has laid down clearly defined criteria according to which the body in question must exercise its function and/or where the State appoints the members of that body’s ruling committee. However, in our view, even in this situation the likelihood of success for such arguments is uncertain given the clear reluctance of the EU Courts and the Commission to limit the scope of the competition rules. Wouters itself provides perhaps the strongest indication of this—it is clear from the judgment that the Court of Justice did not want the regulation in question to fall within the scope of Article 101(1). Instead of finding that the Bar was not an association of undertakings, which would have been a relatively easy thing to do on the facts, the Court of Justice chose to deal with the matter by finding that the particular regulation in question did not have as its object or effect the restriction of competition (a far more complex matter).51 This enabled it to find that the competition rules did apply to entities such as the Dutch Bar but did not to the particular activity under review.

(c)  Public Bodies Exception 3.39  The EU Courts and the Commission have followed a similar expansive approach to the jurisdictional reach of Article 101 in cases involving public bodies, or other entities operating under State aegis. In essence, a distinction is drawn ‘between a situation where the State acts in the exercise of official authority and that where it carries on economic activities of an (p. 194) industrial or commercial nature by offering goods or services on the market’.52 It is only in the former that the competition rules do not apply (referred to as ‘public sector exception’ in the remainder of this chapter). This meant, for example, that a

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Soviet trading organization forming part of a ministry53 has been found to be an undertaking for the purposes of Article 101. 3.40  A critical factor in determining whether the public sector exception applies is the nature of the activity carried out by the relevant entity (as distinct from the nature of the body performing a particular activity). Does the activity in question form part of the essential functions of the State? Put another way, does the activity fall within the exercise of powers which are typically those of a public authority? Consequently, in Compass Datenbank v Republik Österreich,54 the Court of Justice pointed out that a public entity may be treated in a hybrid way for the purposes of EU competition law: as regards certain activities that constitute an economic activity, a public body may be regarded as an undertaking, whereas in relation to other activities that constitute the exercise of public powers, it may not be regarded as an undertaking. The Court of Justice went on to clarify that: In so far as a public entity exercises an economic activity which can be separated from the exercise of its public powers, that entity, in relation to that activity, acts as an undertaking, while, if that economic activity cannot be separated from the exercise of its public powers, the activities exercised by that entity as a whole remain activities connected with the exercise of those public powers.55 3.41  In Klaus Höfner and Fritz Elser v Macrotron,56 the Court of Justice held that the Federal German Employment Agency was an undertaking since the service it provided, employment procurement, was an economic activity and one which did not necessarily have to be provided by the State. Conversely in Corinne Bodson v SA Pompes Funèbres des Régions Libérées,57 where the performance of funeral functions was, as a matter of law, entrusted to local communes, the Court of Justice held that Article 101 did ‘not apply to contracts…concluded between communes acting in their capacity as public authorities and undertakings entrusted with the operation of a public service’. 3.42  Similarly, in Diego Calì & Figli v Servizi ecologici porto di Genova (SEPG), the Court of Justice held that the activities of a limited company which had been granted the exclusive right to carry out anti-pollution services on the Genoa Port Authority’s behalf were not of an economic nature, notwithstanding the fact that the company charged vessels a fee, albeit one set unilaterally by the Port Authority, for its services. The Court of Justice found that: The anti-pollution surveillance for which SEPG was responsible…forms part of the essential functions of the State as regards protection of the environment in maritime areas. Such surveillance is connected by its nature, its aim and the rules to which it is subject with the exercise of powers (p. 195) relating to the protection of the environment which are typically those of a public authority. It is not of an economic nature justifying the application of the Treaty rules on competition. The levying of a charge by SEPG for preventive anti-pollution surveillance is an integral part of its surveillance activity in the maritime area of the port and cannot affect the legal status of that activity.58 3.43  Similarly, in Eurocontrol,59 the Court of Justice held that Eurocontrol’s activities were connected with the exercise of powers relating to the control and supervision of air space ‘which are typically those of a public authority’. They were therefore ‘not of an economic nature justifying the application of the Treaty rules of competition’.60 3.44  However, it is important to stress that the mere fact that an activity has a public interest dimension, and/or that the bodies carrying on the activity may be the subject of public service obligations, does not mean that the competition rules will not apply. In Firma Ambulanz Glöckner v Landkreis Südwestpfalz, the Court of Justice found that medical aid organizations entrusted under the relevant legislation with the task of providing ambulance From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

services were undertakings within the meaning of EU competition law; this was the case even though the organizations were specifically named in the legislation and were subject to public service obligations not imposed on private sector competitors. The Court relied on the fact that the services in question were subject to payment from users and that they did not necessarily have to be provided by the named medical organizations or by public authorities; indeed, they were at the time also supplied by private firms. The provision of such services, therefore, constituted an economic activity for the purposes of the application of EU competition law.61 However, it is important to note that the mere fact that a service requires payment from users is not, in and of itself, determinative of the issue. This is particularly the case where the remuneration is laid down by law and not set by the public entity itself.62 3.45  In some cases, a determining factor as to whether the public body exception applies was whether the aim of the activity in question was of a social nature. In Christian Poucet v Assurances Générales de France and Caisse Mutuelle Régionale du Languedoc-Roussillon63 (‘Poucet’), the Court of Justice was asked whether an organization charged with managing a special social security scheme was to be regarded as an undertaking for the purposes of Articles 101 and 102. In response, the Court of Justice stated that: Sickness funds, and the organisations involved in the management of the public social security system, fulfil an exclusively social function. That activity is based on the principle of national solidarity and is entirely non-profit-making…The benefits paid are statutory benefits bearing no relation to the amount of the contributions. Accordingly, that activity is not an economic activity and, therefore, the organisations to which it is entrusted are not undertakings.64 3.46  The crucial fact was that the scheme was run on the basis of ‘solidarity’. Solidarity was ‘embodied in the fact that the contributions paid by active workers serve to finance the pensions of (p. 196) retired workers. It is also reflected by the grant of pension rights where no contributions have been made and of pension rights that are not proportional to the contributions paid’. It follows, the Court of Justice said, ‘that the social security schemes, as described, are based on a system of compulsory contribution, which is indispensable for application of the principle of solidarity and the financial equilibrium of those schemes.’ Put another way, the very essence of the system was to perform a social function which was inherently non-economic (benefits did not depend on the contribution made or the success of a particular investment) and was based on the reallocation of resources for social policy reasons. The General Court applied a similar approach in FENIN, where it found that the Spanish national health system was not an undertaking, in part, because ‘it operates according to the principle of solidarity—it was funded from social security contributions and other State funding and provided services free of charge to its members on the basis of universal cover’.65 This approach was upheld by the Court of Justice on appeal.66 3.47  It is important to stress that the principles in Poucet have usually been applied narrowly. For example, in Fédération Française des Sociétés d’Assurances and Others v Ministère de l’Agriculture et de la Pêche,67 the Court of Justice found that a non-profitmaking organization managing a supplementary pension scheme under rules laid down by public authorities could be an undertaking. It rejected the French government’s argument that the scheme was based on the principle of ‘solidarity’, drawing attention in particular to the fact that the pension scheme under review was one that beneficiaries entered into on a voluntary, rather than a compulsory, basis. Furthermore, the benefits payable depended on the amount of the contributions and the financial results of the investments made. Thus the scheme effectively operated like other pension schemes offered by the private sector; the fact that the body managing the pension scheme pursued a social policy objective under

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national law, was non-profit-making and was restricted in the type of investments it could make was not sufficient to bring the scheme within the public sector exemption. 3.48  The Court of Justice has made similar findings in a number of other cases. For example, in Albany International v Stichting Bedrijfspensioenfonds Textielindustrie,68 it found Article 101 to apply even though the pension scheme was compulsory, non-profitmaking, and operated under criteria which had a social dimension (the benefits to be paid were calculated with reference to the average salary and did not depend on contributions made by a particular beneficiary; also, the pension rights continued to accrue even if the beneficiary ceased to contribute because of ill health or because the employer had become insolvent). In rejecting the argument that the scheme was based on the principle of solidarity, the Court of Justice highlighted that the pension fund itself determined the amount of the contributions and benefits and that the fund operated in accordance with the principle of capitalization: accordingly, the amount of benefits provided by the fund depended on the financial results of the investments (p. 197) it made.69 The position is, however, perhaps best clarified by Advocate General Fennelly’s Opinion in Sodemare v Regione Lombardia where he stated that solidarity is ‘the inherently uncommercial act of involuntary subsidisation of one social group by another’.70

(d)  The Single Economic Unit Doctrine (No Intra-Enterprise Conspiracy in EU Law) 3.49  For the purposes of Article 101(1), at least two ‘undertakings’ must be party to an agreement. However, two or more legally separate entities may be treated as a single undertaking under the competition rules if their relationship justifies regarding them as a single economic unit.71 In this case, agreements between them, even legally enforceable ones, will usually be regarded as an internal allocation of functions within a corporate group rather than an agreement between independent undertakings capable of falling within the prohibition of Article 101(1). This means that Article 101 will not apply to arrangements between them, however anti-competitive they may seem to be.72 However, it also means that parent companies, including those based outside the EU, can be held liable under Article 101 for the behaviour of their subsidiaries operating within the EU, since the undertaking as a whole is active there.73 3.50  In Centrafarm,74 the Court of Justice held that an agreement between undertakings belonging to the same group and having the status of parent and subsidiary was not caught by Article 101(1) ‘if the undertakings form an economic unit within which the subsidiary has no real freedom to determine its course of action on the market, and if the agreements or practices are concerned merely with the internal allocation of tasks as between the undertakings’. Similarly, in Viho75 the Court of Justice held that Article 101(1) could not apply where a subsidiary did not freely determine its conduct on the market, but instead carried out the instructions given to it directly or indirectly by the parent company. 3.51  This logic applies to the question of the liability of parent companies for the activities of their subsidiaries. In Akzo,76 the Court of Justice held that ‘the conduct of a subsidiary may be imputed to the parent company in particular where, although having a separate legal personality, that subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company’. Put differently, a subsidiary cannot be said to be acting independently where the parent company actually exercises decisive influence over its commercial policy.77 In such a case, ‘the (p. 198) parent company and its subsidiary form a single economic unit and therefore form a single undertaking’.78 In that regard it is irrelevant

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whether the parent company itself is engaged in an economic activity of its own or whether it is a mere holding company.79 3.52  Determining whether related firms are independent in their decision making can, in practice, be difficult. However, recent case law has brought substantial clarity. A number of different scenarios can be conceived where companies are not considered independent in their decision making and therefore form part of one undertaking with another company. The EU Courts have had the opportunity to pronounce on where: (a) a subsidiary is whollyowned, or almost wholly-owned, by its parent; (b) a parent holds a majority shareholding in a subsidiary; (c) parents jointly control a joint venture; and (d) a number of companies have non-controlling stakes in another company.

(i)  A Subsidiary Wholly-Owned, or Almost Wholly-Owned, By Its Parent 3.53  As regards the relationship between a parent company and a subsidiary in which it has a 100 per cent shareholding, the Court of Justice held in Akzo that this created ‘a rebuttable presumption that the parent company does in fact exercise decisive influence over the conduct of its subsidiary’.80 The Court of Justice81 held that: In those circumstances, it is sufficient for the Commission to prove that the subsidiary is wholly owned by the parent company in order to presume that the parent exercises a decisive influence over the commercial policy of the subsidiary… unless the parent company, which has the burden of rebutting that presumption, adduces sufficient evidence to show that its subsidiary acts independently on the market.82 Thus, where the Commission relies on the presumption, and the presumption is not rebutted, it is not required to prove that decisive influence has actually been exercised.83 (p. 199) 3.54  With regard to entities that are almost wholly owned, the EU Courts have come to the same conclusion: that the Commission is entitled to rely on a presumption that the parent does, in fact, exercise decisive influence over its daughter where ‘almost all of the capital in the subsidiary is held by the parent company’.84 3.55  To rebut the presumption of actual exercise of decisive influence, the parent company on which liability for the actions of its subsidiary is imputed must adduce sufficient evidence to show that its subsidiary acted independently on the market.85 According to the Court of Justice, ‘account must be taken of all the relevant factors relating to the economic, organisational and legal links which tie [the subsidiary] to its holding entity, which may vary from case to case and cannot therefore be set out in an exhaustive list.’86 Moreover, the conduct of the subsidiary on the market is not the only relevant factor for the establishment of parental liability—or to be more precise, for a finding that a parent and a subsidiary form part of one undertaking—‘but is only one of the signs of the existence of an economic unit.’87 Although it is not possible to provide an exhaustive list of factors that go to this issue, the Court of Justice has held that the a parent’s influence on the following factors relating to a subsidiary may be relevant: pricing policy; production and distribution activities; sales objectives; gross margins; sales costs; cash flow; stocks and marketing.88 3.56  It is worth noting that the presumption is not easily rebutted. In Gosselin Group and Stichting Administratiekantoor Portielje, the General Court found that a holding entity had rebutted the presumption (by showing that it had not adopted any formal management decision during the period for which it was held jointly and severally liable with the subsidiary).89 The Court of Justice disagreed and annulled the General Court’s judgment. It held that the General Court erred in law by not taking into account:

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all the relevant factors relating to the economic, organisational and legal links which tie [the subsidiary] to its holding entity and, therefore, of economic reality. The mere fact that the holding entity did not adopt any management decision in a manner consistent with the formal requirements of company law will not therefore suffice for that purpose.90 The Court of Justice went on to state that the finding that a parent and a subsidiary form an economic unit ‘does not necessarily presuppose the adoption of formal decisions by statutory organs and that, on the contrary, that unit may also have an informal basis, consisting inter alia in personal links between the legal entities comprising such an economic unit.’91 (p. 200) 3.57  Consequently, in order for a parent company to rebut the presumption, it will not be sufficient to show independent action by its subsidiary with regard to one or more policies or strategies such as the distribution and pricing strategy. Rather, the entire business strategy must be determined independently by the subsidiary, so that all relevant factors relating to economic, organizational, and legal links which connect the subsidiary with the parent company must be taken into account92 ; determination of ‘commercial policy is therefore only one of a number of factors and, moreover, contrary to the appellants’ assertions, must not be interpreted restrictively’.93 3.58  It is worth noting that where the Commission decides not to rely on the presumption —even though it could do so in the circumstances of a case at hand—and goes on to demonstrate the actual exercise of decisive influence, the EU Courts will scrutinize the lawfulness of the attribution of parent liability on the basis of the factors proffered by the Commission with a view to proving that decisive influence has, in fact, been exercised.

(ii)  A Parent Holding a Majority Shareholding in a Subsidiary But Less than 100 Per Cent 3.59  Where a parent company does not have a 100 per cent (or almost 100 per cent shareholding) in a subsidiary, there is no presumption regarding the relationship between the two entities. To find a parent liable for the activities of its daughter, the Commission must prove that the ‘subsidiary does not decide independently upon its own conduct on the market, but carries out, in all material respects, the instructions given to it by the parent company, having regard in particular to the economic, organisational and legal links between those two legal entities.’94 3.60  In order to assess whether a subsidiary determines its conduct on the market independently of its shareholder(s), the factors noted in paras 3.56 and 3.5795 (in relation to rebutting the presumption of decisive influence in cases involving 100 per cent share ownership) have to be considered.96 3.61  As already noted, in the context of 100 per cent shareholding the parent company bears the burden of proving the subsidiary’s independent conduct in order to escape liability. However, for cases involving smaller shareholdings it is incumbent upon the Commission to demonstrate that the subsidiary did not act independently of its parent company if it wants to make a liability finding against the latter.97

(iii)  Parent Liability in the Context of Joint Control 3.62  In the past, there was a lack of clarity as to whether—and if so, how—liability could be attributed to parents of a joint venture that is jointly controlled. For example, in Gosme/ Martell,98 the Commission found that Martell was not in a position to control the commercial activities of DMP, which it jointly controlled with Piper-Heidsieck, because both Martell and Piper-Heidsieck each held 50 per cent of DMP’s capital and voting rights; half the supervisory board members represented (p. 201) Martell shareholders and half PiperHeidsieck shareholders; DMP also distributed brands not belonging to its parent companies; Martell and Piper-Heidsieck products were invoiced to wholesalers on the same From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

document; and DMP had its own salesforce and alone concluded the conditions of sale with the buying syndicates. The Commission therefore concluded that Martell and DMP were independent undertakings. Conversely, in Distribution of package tours during the 1990 World Cup, the Commission attributed liability for acts by a joint venture to its parents.99 3.63  This uncertainty has now been resolved: in Alliance One, the Court of Justice held that: the exercise of joint control, by two parent companies who are independent of each other, of their subsidiary does not, in principle, preclude a finding by the Commission of the existence of an economic unit comprising one of those parent companies and the subsidiary concerned, and that this applies even if the proportion of the subsidiary’s share capital owned by that parent company is smaller than that owned by the other parent company.100 The Court of Justice has therefore held101 that a joint venture may form part of one undertaking with each of those of its parent companies that actually exercise—jointly with other parent companies—decisive influence over it.102 3.64  Alliance One confirmed earlier case law by the General Court. In Fuji Electric,103 DuPont,104 and Dow105 the General Court had already held the parents liable for infringements of EU competition law committed by their joint ventures. (p. 202) 3.65  Moreover, in those judgments the General Court set out how it analyses the exercise of joint control by the parents of the joint venture. First, the General Court recalled that the possibility of the exercise of decisive influence—the relevant criteria under EU merger control rules—was not sufficient for the attribution of liability to the parents under Article 101.106 What is required is the actual exercise of the decisive influence over the subsidiary’s commercial policy, which the General Court also refers to as ‘management power’.107 Secondly, the General Court clarified that ‘commercial policy’ does not just mean the day-to-day operations of the subsidiary but includes strategic decisions108 such as with regard to appointment of management, setting the overall policy and vision, approval of the business and strategic plans and annual operating plans, determination of banking policy, and approval of all capital expenditure and borrowing above certain levels.109 3.66  However, it should be noted that the General Court has also held that the ‘power to reject strategic decisions regarding their joint venture’110 could be sufficient for a finding of decisive influence under Article 101. This is best illustrated in the context of full-function joint ventures. The autonomy that full-function joint ventures have vis-à-vis their parents ‘does not mean that the joint venture enjoys autonomy as regards the adoption of its strategic decisions and that it is not therefore under the decisive influence exercised by its parent companies for the purposes of the application of Article [101(1)]’.111 As such, there are strong parallels between the notions of ‘decisive influence’ under the EU Merger Regulation and ‘decisive influence’ in the context of Article 101(1) TFEU; the main difference between the two concepts being that for ‘control’ under the EU Merger Regulation the possibility of the exercise of decisive influence is sufficient, whereas under Article 101(1) that decisive influence must be actually exercised.

(iv)  Companies with Non-Controlling Stakes in Another Company 3.67  Where no parent company exercises decisive influence over a joint venture, the joint venture will not form part of one undertaking with any of its parents. Consequently, the parents cannot be held liable for any competition law infringements of the joint venture. This, however, also means that Article 101(1) can apply to agreements between parents and the joint venture (as they are considered to be distinct undertakings). For example, in Ijsselcentrale,112 four electricity-generation companies had established a joint subsidiary to act as a vehicle for cooperation between them. The Commission held that the subsidiary was not part of the same economic unit as its parents but rather a joint venture controlled From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

by them together.113(p. 203) Similarly, in Baustahlgewebe, the General Court considered that a joint venture in which four companies held non-controlling shareholdings was an ‘autonomous and independent undertaking’.114

(e)  Successor Undertakings 3.68  Two legally separate entities may also be treated as one for the purposes of competition law where one is the economic successor of the other. The Court of Justice has held that ‘a change in the legal form and name of an undertaking does not create a new undertaking free of liability for the anti-competitive behaviour of its predecessor, when, from an economic point of view, the two are identical.’115 At issue is ‘whether there is a functional and economic continuity between the original infringer and the undertaking into which it was merged’.116 3.69  Where an undertaking acquires an entity that has infringed the law, the Court of Justice has held that it ‘falls in principle, to the legal or natural person managing the undertaking in question when the infringement was committed to answer for that infringement, even if, when the Decision finding the infringement was adopted, another person had assumed responsibility for operating the undertaking.’117 Thus, in Zinc Phosphate, the Commission decided that: when an undertaking committed an infringement of Article 101(1)…and when this undertaking later disposed of the assets that were the vehicle of the infringement and withdrew from the market concerned, the undertaking in question will still be held responsible for the infringement if it is still in existence.118 3.70  However, in Aalborg Portland,119 the Court of Justice examined whether the Commission could treat an undertaking as accountable for the anti-competitive conduct of another, when the conduct occurred prior to its formation. More specifically, the Court of Justice considered whether the fact that the (original) infringing entity still exists wholly and necessarily precludes the Commission from proceeding against the successor. 3.71  Aalborg Portland (‘Aalborg’) was formed on 26 June 1990 and acquired, with retroactive effect to 1 January 1990, the cement plant of Aktieselskabet Aalborg PortlandCement Fabrik (‘Aktieselskabet’). For its part, Aktieselskabet became a holding company, with it and another company, Blue Circle, each owning 50 per cent of the shares in Aalborg. 3.72  The General Court upheld the Commission’s decision to hold Aalborg accountable for Aktieselskabet’s participation in the cement cartel during the 1980s, considering that the events in 1990 described in para 3.71 (and by which time the infringements had ceased) constituted a reorganization of the group and that Aalborg and Aktieselskabet were one and the same economic entity. On appeal, Aalborg pointed to the Court’s case law (eg in Anic) stating that ‘the economic continuity test can only apply where the legal person responsible (p. 204) for running the undertaking [in this case, Aktieselskabet] has ceased to exist in law after the infringement has been committed.’120 3.73  In its judgment, the Court of Justice rejected Aalborg’s appeal. It considered that the General Court’s finding should be taken to mean that the undertaking run by Aalborg from 1990 was the same as that previously run by Aktieselskabet and the fact that Aktieselskabet still existed as a legal entity did not invalidate that finding. While the Court acknowledged its previous judgment in Anic, it distinguished that case as being one concerning two existing and functioning undertakings one of which had simply transferred part of its activities to the other and where there was no structural link between them.121 In the present case, Aktieselskabet remained as one of Aalborg’s holding companies.

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(2)  Agreements (a)  General Definition 3.74  The term ‘agreement’ is defined widely for the purposes of Article 101(1). For an agreement to exist it ‘is sufficient if the undertakings in question should have expressed their joint intention to conduct themselves on the market in a specific way’.122 The concept ‘centres around the existence of a concurrence of wills between at least two parties the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention’.123

(b)  Requires At Least Two Undertakings 3.75  In order for an agreement to exist, the concurrence of wills must, as common sense dictates, be between at least two parties. This means that unilateral conduct does not fall within the scope of Article 101.124

(c)  Form Irrelevant 3.76  A ‘concurrence of wills’ does not have to take the form of a legally binding contract for an agreement to exist under Article 101(1)—in fact, its form is almost entirely irrelevant. It can be written or oral,125 signed or unsigned.126 The concept is wide enough to catch arrangements such as gentlemen’s agreements’,127 simple ‘understandings’,128 the constitution of a trade association,129 or non-binding marketing guidelines. For example, in Anheuser-Busch Incorporated—Scottish & Newcastle,130 the Commission decided that guidelines on the positioning and marketing of Budweiser beer in the UK produced by Anheuser, the receipt of which was acknowledged by S&N with the ‘pledge to use its reasonable efforts to ensure compliance…with such…guidelines’131 by its staff and customers was an agreement for the purposes of Article 101(1). This was even though the document may not have constituted (p. 205) a legally binding agreement under the relevant national law, could have been unilaterally altered by Anheuser, and was posited on its face as ‘non-binding recommendations as to steps which S&N could take to promote the beer’s image as a premium lager’. 3.77  The existence of an ‘expression of a joint intention’ or the ‘concurrence of wills’ is particularly easy to show in horizontal cases. An arrangement between competitors is an agreement even if it does not prescribe in detail the conduct to be undertaken; in order to qualify, it is sufficient for it to set the broad framework within which the parties will cease to operate independently. Thus ‘inchoate understandings’, ‘conditional agreements’, and ‘loose’ arrangements have all been considered to fall within the scope of term ‘agreement’.132 In Polypropylene, the Commission held that an agreement exists merely ‘if the parties reach a consensus on a plan which limits or is likely to limit their commercial freedom by determining the lines of their mutual action or abstention from action in the market’.133 3.78  Thus an undertaking can be party to an agreement even if it attends a meeting with its competitors at which it is passive and in which only one participant reveals its intentions.134 In Thyssen Stahl AG,135 the General Court held that mere attendance by an undertaking at meetings involving anti-competitive activities can suffice.136 In Anic,137 the Court of Justice found that since ‘the Commission had been able to establish that Anic had participated in the meetings at which price initiatives had been decided on, planned and monitored, it was for Anic to adduce evidence that it had not subscribed to those initiatives’. 3.79  In order to avoid such a finding, the undertaking in question must either prove that it did not allow the information it had received in any way to influence it actions138 (which would seem almost impossible to do in practice) or have publicly distanced itself from what was discussed so as not to give the impression to the other participants that it subscribed to the aim of the meeting and would act in conformity with it.139 In practical terms, this is From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

likely to require the undertaking to end its participation in the meeting as soon as the anticompetitive nature of the gathering becomes apparent, stating why it is doing so to the attendees. It must also not engage in any activities linked in any way to the meeting. 3.80  In vertical cases, this means that where the Commission has adduced evidence of the existence of an agreement, it is for the dealer wishing to escape from the scope of Article 101(1) to ‘adduce evidence that it distanced itself from that agreement, [the] evidence… must demonstrate a clear intention, brought to the notice of the other participating undertakings, to withdraw from that agreement’.140 (p. 206) 3.81  An agreement is reached even if one or more of the undertakings involved intends to ignore its provisions.141 In Roofing Felt Cartel,142 the Commission found that seven members and two non-members of a trade association had fixed prices. The nonmembers argued that they had joined the cartel for fear of retaliation. They had given the impression of going along with the cartel’s plans, while having no real intention of abiding by its disciplines. They also argued that there was no evidence of their having observed the agreements in practice. However, the Commission held that: neither the state of mind of the non-members when they entered into such agreements as to their intention of abiding by them, nor the fact that the nonmembers did not in fact observe the agreements (as some evidence suggests) would affect the Commission’s finding that the agreements were made and that the nonmembers were parties to them. 3.82  Similarly, an agreement may be found even if undertakings were forced into it.143 Even cheating or occasional outbreaks of fierce competition do not prevent an arrangement from constituting an agreement for the purposes of Article 101(1) where there is a common and continuing objective to cooperate. In Cimenteries CBR SA, the General Court held that ‘it is settled law that the fact that an undertaking does not abide by the outcome of meetings which have a manifestly anti-competitive purpose is not such as to relieve it of full responsibility for the fact that it participated in the agreement or concerted practice’.144 3.83  In Anic,145 the Court of Justice confirmed that ‘there is no need to take account of the concrete effects of an agreement once it appears that it has as its object the prevention, restriction or distortion of competition’. Thus ‘Anic’s arguments that its conduct on the market had been independent of the price initiatives referred to in the Polypropylene Decision are irrelevant, since agreements within the meaning of Article [101] of the Treaty were involved here’.

(d)  Does the Notion of ‘Agreement’ Presuppose that the Parties Jointly Intend to Limit Their Freedom of Action as Regards Future Conduct on the Market? 3.84  As set out at para 3.74, the notion of an agreement within the meaning of Article 101(1) is defined widely by the EU Courts. It ‘is sufficient if the undertakings in question should have expressed their joint intention to conduct themselves on the market in a specific way’146 and the concept ‘centres around the existence of a concurrence of wills between at least two parties the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention’.147 It is, however, argued by some that the reference ‘to conduct themselves on the market in a specific way’ should be seen as a criterion narrowing the notion of agreement to scenarios where the parties express their joint intention to limit their decision-making independence with regard to future market conduct. 3.85  However, while the limitation of the parties’ decision-making independence (or, in other words, liberty to act) plays a role with respect to the concept of restriction of competition (see Section C.6), it appears to have no place in the context of the notion of an agreement (p. 207) within the meaning of Article 101(1). The EU Courts make it clear that they have given the notion of agreement a wide meaning, which is also demonstrated by the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Courts’ approach not to make a clear difference between agreements and concerted practices.148 Nothing in the case law related to ‘agreement’ suggests that the EU Courts wish to limit the wide concept they apply by the criterion ‘to conduct themselves on the market in a specific way’. There is no judgment which has found that a concurrence of wills by the parties should not be considered an agreement within the meaning of Article 101(1) because it was not sufficiently aimed at limiting the parties’ freedom to conduct themselves on the market on a specific way. Indeed, in AC Treuhand, the General Court highlighted that the core of an agreement—which the case law stresses throughout—is the element of ‘joint intention’.149 That that joint intention must relate to future conduct on the market is only intended to ensure that there is a ‘sufficiently clear and precise manifestation of a concurrence of wills between the undertakings involved’,150 but not to limit the broad notion of an agreement within the meaning of Article 101(1). 3.86  Therefore, for example, patent purchase agreements without any accompanying contractual restrictions could also fall within the scope of Article 101(1). Whether they infringe Article 101(1) will, however, depend on whether all the other conditions of that provision are also met, in particular whether or not they lead to a restriction of competition.

(e)  Single Continuous Infringement Doctrine 3.87  As a matter both of evidence and of substantive law,151 it is not necessary for an undertaking to have actively participated in, give its express consent to, or even to have been aware of each and every individual aspect or manifestation of an agreement for it to be party to that agreement. In Polypropylene,152 the Commission decided that the 15 firms involved had reached an agreement even though some had not been to every meeting or been involved in every decision that had been made ‘In the present case the producers, by subscribing to a common plan to regulate prices and supply in the polypropylene market, participated in an overall framework agreement which was manifested in a series of more detailed sub-agreements worked out from time to time.’ Similarly in Pre-Insulated Pipes153 the General Court found that although it was clear that during the cartel negotiations one of the participants, Tarco, had ‘refused to participate in any agreement on prices without a parallel agreement on market-share quotas’ it could not be ‘inferred from the fact that Tarco adopted such a position that it was opposed to the principle of sharing the German market’. 3.88  In Citric Acid,154 a cartel involving five producers in which some 20 multilateral and ten bilateral meetings had been held over a four-year period, the Commission stated that:(p. 208) the term ‘agreement’ can properly be applied not only to any overall plan or to the terms expressly agreed but also to the implementation of what has been agreed on the basis of the same mechanisms and in pursuance of the same common purpose… where the various concerted practices followed and agreements concluded form part of a series of efforts made by the undertakings in pursuit of a common objective of preventing or distorting competition, the Commission is entitled to find that they constitute a single continuous infringement. This means, amongst other things, that an agreement will exists even if the terms of, or the parties to, it change over time. In Pre-Insulated Pipes, which was largely upheld on appeal, the Commission decided that each such change did not imply that a new ‘agreement’ had come into force for the purposes of Article 101(1).155 3.89  It is also worth noting that an undertaking participating in a single complex infringement may be held responsible for the conduct of other undertakings throughout the period of its participation. This could be the case where it is proved ‘that the undertaking in question was aware of the unlawful conduct of the other participants, or could reasonably foresee such conduct, and was prepared to accept the risk’.156 Relying on paragraph 203 of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Anic,157 the General Court held that such a conclusion was ‘not at odds with the principle that responsibility for such infringements is personal in nature, nor does it neglect individual analysis of the evidence adduced, in disregard of the applicable rules of evidence, or infringe the rights of defence of the undertakings involved’. 3.90  The rationale for the concept that parties may be held responsible for a ‘single continuous infringement’ even though they are shown to have participated only directly in one or some of its constituent elements (sometimes referred to as the ‘single overall agreement concept’) is perhaps most clearly set out in (then) Advocate General Vesterdorf’s Joint Opinion in Rhône Poulenc:158 If one considers how the alleged cartel probably worked in practice, it is plain to see that it can be extraordinarily difficult to determine in detail the degree of involvement of each party. Who had the idea of taking this or that initiative? Who sought to persuade those others who were perhaps less enthusiastic? Who came to the meetings best prepared? And so on. It is self-evident that where there are no admissions on the part of the participating undertakings, it is often not possible to unravel all those threads in an administrative procedure in which most of the evidence is based on written documents…. [Therefore] some relaxation of the requirements of proof must be regarded as unobjectionable. Otherwise, in many cases the Commission would in all likelihood have to abandon prosecution from the outset in cases where there is unquestionably an unlawful cartel but where it is not possible to adduce detailed proof of each party’s involvement in the cartel’s activities. Such a result would in practice rob Article [101] of much of its effectiveness. 3.91  Although the ‘single continuous infringement’ doctrine gives the courts and competition authorities a powerful tool in handling cartels, the scope of its application is, however, subject to two caveats. First, as the General Court held in Limburgse Vinyl Maatschappij, an undertaking can be found liable in this way ‘only if it is shown that it knew, or must have known, that the collusion in which it participated…was part of an overall plan intended to distort (p. 209) competition’.159 The General Court applied this test in Cimenteries, but replaced the words ‘must have known’ with the term ‘ought to have known’.160 This follows the Court of Justice judgment in Anic where the Court confirmed the objective nature of the test by holding that the Commission had to establish ‘that the undertaking in question was aware of the offending conduct of the other participants or that it could reasonably have foreseen it and that it was prepared to take the risk’.161 3.92  Secondly, the particular infringement must be part of, or fall within, the broad framework under which the parties cease to operate independently; in other words, it must be demonstrated that ‘the overall plan included all the constituent elements of the cartel’162 as found by the Commission. This means that different arrangements can only be regarded as constituent elements of a single agreement if they form part of an overall plan pursuing a common objective;163 this would be the case where, for example, they were ‘intrinsically linked’. In Buchmann,164 the Commission had decided that Buchmann had been party to an overall agreement covering price fixing, output limitation, and market sharing. This was the case even though Buchmann had not participated in any of the discussions on market sharing. According to the Commission, Buchmann and other suppliers were ‘well aware of the general understanding between the major producers to maintain “constant levels of supply” [ie market sharing] and, no doubt, of the need to adapt their own conduct to it’.165 On appeal, the General Court rejected the Commission’s view that Buchmann ‘must have been aware of the market sharing’166 on two principal grounds. First, the Commission had not provided any evidence to show that despite Buchmann’s absence from the meetings on

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market sharing, it had ‘subscribed to a general agreement providing, in particular, for the freezing of the market shares of the main producers’.167 Secondly, it found that: the mere fact that those undertakings participated in collusion on prices and collusion on downtime [output limitation] does not demonstrate that they also participated in collusion on market shares. Contrary to the Commission’s apparent claim, the collusion on market shares was not intrinsically linked to collusion on prices and/or collusion on downtime.168 The Commission had therefore not proved that ‘the applicant knew, or must have known, that its own unlawful conduct was part of an overall plan which included, over and above the collusion on prices and the collusion on downtime in which it actually participated, also collusion on the market shares of the major producers’.169 3.93  The General Court made a similar finding in Cimenteries where it rejected the Commission’s argument that a particular infringement (exchange of prices between Français Ciments and Buzzi) had been part of the overall agreement (between numerous producers across (p. 210) Europe to stay out of each other’s home markets). The General Court reached this conclusion because the only evidence upon which the Commission had relied in respect of this particular infringement was a fax which did ‘not express any intention on the part of those undertakings to observe any principle of non-transhipment to home markets’.170 In addition, the Commission had not stated ‘anywhere in the contested decision that by the exchange of prices…. Ciments Français and Buzzi sought to observe such a principle’171 or indeed how the exchange of this information ‘pursued the same anticompetitive object’172 as the main agreement.173 3.94  Recently, the General Court has had the opportunity to revisit the concept of single and continuous infringements on a number of occasions. In Team Relocations, the General Court, relying on Anic and Cimenteries, summarized the criteria which must be met in order to find that an undertaking was part of a single and continuous infringement: (a) the existence of an overall plan by the parties pursuing a common objective; (b) an intentional contribution of the undertaking to that plan; and (c) the awareness of the undertaking (proved or assumed) of the offending conduct of the other participants.174 3.95  For the third criterion to be fulfilled, it is sufficient if the undertaking ‘could not fail to have been aware of the offending conduct of the other participants’.175 Whereas in Team Relocations the General Court held that the conditions for finding a single and continuous infringement were fulfilled, in Coppens the General Court annulled the Commission’s decision in its entirety as the Commission had failed to prove that Coppens, which had only participated in certain parts of a cartel, had been aware of the other parties’ wider anticompetitive conduct or that it could have reasonably foreseen such conduct.176 On appeal, however, the Court of Justice, which took no issue with the criteria applied by the General Court for assessing a single and continuous infringement as such, partially set aside the General Court’s judgment. The Court of Justice took the view that the General Court had wrongly annulled the Commission’s decision in its entirety because it was clear that Coppens had participated in some parts of a single and continuous infringement, for which it should be held liable.177 This shows that the notion of ‘single and continuous infringement’ is an asymmetrical concept. In other words, there does not necessarily have to be one (and the same) single and continuous infringement for what appears to be one cartel, there can be different single and continuous infringements for different parties. For example, companies 1 to 3 may form part of a single and continuous infringement regarding products A+ B+ C, territory D+ E, infringements F+ G+ H, and duration X; however, company 4 may only form part of a subset of that single and continuous infringement, for example products A+ B, territory D, infringements G+ H, and duration X–Y; the situation of company 5 may be: product C, territory E, infringement F, and duration X–Z. Consequently, companies 1 to 3 form part (p. 211) of the same single and continuous infringement, From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

company 4 forms part of companies 1 to 3’s single and continuous infringement to a limited extent, so does company 5. An alternative way of looking at this would be to consider that different undertakings can be party to different parts of one single and continuous infringement. 3.96  In Quinn Barlo, the General Court found that the Commission could not base its finding of a single and continuous infringement on the mere fact that Quinn Barlo was aware of and pursued anti-competitive objectives with regard to a certain product because this fact did not mean that it was aware of the single objective pursued by the cartel as a whole in the sector to which that product belongs.178 Consequently, the General Court held that the Commission could not find Quinn Barlo: to be held liable for a single infringement solely because of objective links between that infringement and the agreement in which that undertaking participated, such as belonging to the same economic sector, even though it had not been established that it was aware of the existence of such a single infringement or that it could reasonably have foreseen it and was prepared to take that risk.179 3.97  In AC Treuhand, the General Court had to deal with the question whether a consultancy firm that had helped to organize a cartel could be part of a single and continuous infringement with the cartelists even though as a consultancy firm it was not active on the same market as other participants of the cartel. The Court held that Article 101(1) did not require all parties to the infringement to be commercially active on the same market. It also held that for Article 101(1) to apply it was not necessary for a party’s freedom of action to be restricted on the market on which it is primarily active (in AC Treuhand’s case, the consultancy market). Taking these together, the General Court found that AC Treuhand had: tacitly approve[d] an unlawful initiative, without publicly distancing itself from the content of that initiative or reporting it to the administrative authorities…the effect of its behaviour is to encourage the continuation of the infringement and to compromise its discovery. It thereby engage[d] in a passive form of participation in the infringement which is therefore capable of rendering that undertaking liable in the context of a single agreement.180 3.98  It has been suggested that a further caveat or limitation exists regarding the application of the concept of a single and continuous infringement: that it applies only in the context of a complex cartel of long duration. Proponents of this view rely on two arguments. First, the concept has been applied only in such situations. Secondly, they point to cases such as Citric Acid where the Commission stated that: a complex cartel may properly be viewed as a single continuing cartel for the time frame in which it existed…. Indeed, in a complex cartel of long duration, where the various concerted practices followed and agreements concluded form part of a series of efforts made by the undertakings in pursuit of a common objective of preventing or distorting competition, the Commission is entitled to find that they constitute a single continuous infringement.181 3.99  This would not appear to be a correct interpretation of the law for two reasons. First, the mere fact that the concept has, thus far, only been applied in particular types of case does not, in and of itself, mean that it cannot be used in other situations. Secondly, the very

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rationale (p. 212) underpinning the concept, best captured by Advocate General Vesterdorf’s Opinion in Rhône Poulenc,182 mitigates against such a view. 3.100  Whilst the situation described by Advocate General Vesterdorf is most likely to feature in cartels of long duration, it can also arise in relation to less complex, shorter agreements: there is therefore no reason as a matter of principle to limit its application in the way suggested—as the General Court observed in Hercules,183 it would be artificial to split up continuous conduct, characterized by a single purpose, by treating it as consisting of a number of separate infringements.

(f)  Tacit Acquiescence in Relation to the Particular Anti-Competitive Measure in Question is the Minimum Requirement in Vertical Cases 3.101  Unlike cartels, in which agreements or concerted practices are readily found, the EU Courts have, at least in more recent judgments,184 been more circumspect in applying a wide definition to the terms ‘expression of a joint intention’ or ‘concurrence of wills’ in vertical cases. Whilst acknowledging that in certain instances185 ‘measures adopted or imposed in an apparently unilateral manner by a manufacturer…have been regarded as constituting an agreement [with its distributor] within the meaning of Article [101(1)]’,186 the EU Courts have in recent cases gone on to underline that an agreement requires at least the ‘implied participation’187 or ‘tacit acquiescence’ of dealers.188 3.102  This is the case even in the context of an ongoing business relationship where, until a few years ago, it had been thought by many commentators that, at least as far as selective distribution systems were concerned, dealers could be found to have agreed to whatever sales policies the manufacturer had chosen to adopt by the very fact of agreeing to becoming part of a network. 3.103  This position is no longer tenable following a number of judgments. In Bayer, the Court of Justice clearly stated that: The mere concomitant existence of an agreement which is in itself neutral and a measure restricting competition that has been imposed unilaterally does not amount to an agreement prohibited by that provision. Thus, the mere fact that a measure adopted by a manufacturer, which has the object or effect of restricting competition, falls within the context of continuous business relations between the manufacturer and its wholesalers is not sufficient for a finding that such an agreement exists.189 This, together with the EU Courts’ findings in Bayer and Volkswagen II in the previous case law, suggests that, unlike cartels, where the ‘single overall agreement’ concept can apply, for (p. 213) vertical agreements, Article 101(1) requires that the express or tacit acquiescence must be in relation to the particular measure in question.190

(i)  Volkswagen II191 3.104  The General Court’s judgment in Volkswagen II (which was upheld in almost all respects on appeal)192 perhaps summarizes best many aspects of the law. 3.105  The dealership agreement under review required dealers to comply with all instructions issued regarding distribution of new Volkswagen cars, stocking replacement parts, customer service, sales promotion, advertising, training, and ensuring quality in each area of Volkswagen’s business. It also permitted Volkswagen to issue non-binding price recommendations concerning retail prices and discounts. On 6 July 2001 the Commission issued a decision193 in which it found that Volkswagen had infringed Article 101 by sending circulars/letters (referred to as ‘calls’) instructing its German dealers to grant limited discounts, or no discounts at all, on the new Passat model. Volkswagen appealed, arguing

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that the Commission had failed to show that the issuing of the ‘calls’ constituted an agreement under Article 101(1). 3.106  On appeal, the Commission asserted that: according to the AEG,194 Ford,195 BMW,196 and Volkswagen I197 judgments it is not necessary, at least in the case of selective distribution systems…to look for acquiescence to a call by the manufacturer in the behaviour which the dealer adopts in the context of that call…Such acquiescence must be regarded as established as a matter of principle, from the mere fact that the dealer has entered the distribution network. It is therefore deemed to have been given by the dealer… 198

It went on to add that it ‘is presumed that by joining a distribution system, the dealer approves the manufacturer’s distribution policy in advance, a policy which is naturally not foreseeable (p. 214) in all its details when the dealer joins. Those principles apply also to the manufacturer’s policy in relation to resale prices’.199 3.107  The General Court held that the Commission had misinterpreted the case law in deciding that acquiescence could be regarded as having been established ‘as a matter of principle by the mere fact that the dealer has entered the distribution network’. The Court went on to say, for example, that, contrary to the Commission’s claim, in AEG the Court of Justice had found that the distributors in question had acquiesced in AEG’s anti-competitive actions. This was because AEG operated a distribution system under which it could refuse to appoint any dealer it chose, including those qualified to enter. Therefore, by entering the system, distributors were, by definition, agreeing to and benefiting from AEG’s appointment policy. 3.108  As for Ford and BMW, the General Court essentially held that those cases did not concern whether an agreement had been entered into at all but whether the circulars sent by these manufacturers to their dealers could be said to have been incorporated into existing agreements. Thus the General Court distinguished Ford from Volkswagen II by holding that in the former case it was common ground that the circular had been implemented in practice by Ford and that, despite protests from certain quarters, dealers had complied with it. The Ford judgment therefore concerned whether the circular in question could be said to have been incorporated into the Ford dealership agreement and should thus have been assessed together with the main agreement under Article 101(3); hence, the case was not about whether the sending of a circular constituted an agreement in itself. Similarly, the General Court did not think that the BMW judgment was directly relevant. This was because in BMW the question was not so much whether an agreement had actually been reached by BMW and its dealers as a result of the circular sent by the former but rather whether such a request, assuming that it was accepted and therefore constituted an agreement within the meaning of Article 101(1), came within the relevant exempting regulation.

(ii)  What Does Tacit Acquiescence Require? 3.109  In Bayer,200 the Court of Justice confirmed that an agreement could not be regarded as having been concluded ‘by tacit acceptance’ if all that existed was a unilateral decision by the supplier to follow a particular course of action. On the facts, the Court found that Bayer had decided to limit the amount it supplied to certain distributors unilaterally: it had neither told these suppliers where they should sell the product nor made supply conditional on the final destination of the product. Consistent with this, Bayer had not checked to see

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where sales had been made following the reduction in supply. There was therefore no agreement for the purposes of Article 101. 3.110  Tacit acquiescence requires an express or implied ‘invitation’ from one party to the other party to fulfil an anti-competitive goal ‘jointly’. This can ‘be deduced from the conduct of the parties concerned’. 3.111  In deciding whether an invitation has been made, the Commission and the EU Courts are likely to consider whether the supplier is able to achieve its aims without the dealers’ assistance. For example, in rejecting the Commission’s finding of an agreement, the Court of Justice noted that Bayer was able to reduce parallel imports simply by unilaterally cutting (p. 215) the amount it supplied to its dealers.201 The Court distinguished this situation from that in Sandoz where the supplier needed the assistance of its distributors to eliminate or reduce parallel imports. This also distinguishes Bayer from Volkswagen II—in the latter, the practice in question, resale price maintenance, required the cooperation of dealers to succeed. In such circumstances, it is likely to be relatively easy to show tacit acceptance.202 3.112  In the absence of an ‘invitation’, tacit acquiescence can still be found if the dealer shares the same intention as the supplier—thus in Bayer the question was whether wholesalers ‘shared the intention of Bayer to prevent parallel imports’.203 In this regard, the Court of Justice’s judgment could be read as implying that it may be sufficient for the dealer merely ‘to give [the supplier] the impression’ of going along with the latter’s strategy.204 However, the Court’s reference in the judgment to the need to consider the ‘genuine wishes’205 of the wholesalers and its focus on assessing the behaviour of the wholesalers following the adoption of the policy by Bayer, suggests that this may not be enough. Instead the EU Courts and the Commission are likely, in order to determine whether dealers share the intention of the supplier, to consider a number of factors. In particular, the Courts are likely to consider whether it is in the interest of dealers to observe the supplier’s policy. Conversely, in Bayer the supplier’s policy was to prevent parallel imports from Spain to the UK. This was clearly not in the interest of dealers in Spain which lost profitable export opportunities as a result. 3.113  As part of its assessment, the EU Courts may consider the ‘actual conduct’206 of the dealers to determine whether there has been acquiescence. In GSK,207 the General Court held that ‘evidence may consist of direct evidence, taking the form, for example, of a written document or, failing that, indirect evidence, for example in the form of conduct’. In Volkswagen I, the Court of Justice relied on the fact that the dealers had complied with the manufacturer’s initiatives and had refused to sell to their foreign customers to find the existence of an agreement.208 In Bayer, the General Court relied on dealers’ conduct to find that no agreement existed:209 the Court found that the dealers could not have shared Bayer’s intention; in fact, their action demonstrated their firm intention to continue with parallel exporting.210 The fact that they had kept their intention secret and, indeed, may have deliberately attempted to give Bayer the impression they were acting in accordance with the manufacturer’s policy, did not vitiate the Court’s finding (as the Commission had suggested) as they had done this in order to secure supplies for export.211

(p. 216) (iii)  Care Should be Taken in Applying the Bayer/Volkswagen II Approach 3.114  The Bayer/Volkswagen II judgments have reignited debate about the concept of an agreement and the scope of application of Article 101(1).212 Some commentators have suggested that the EU Courts have, through these cases, increased the hurdle for the European Commission and national competition authorities (NCAs) in vertical cases where there is no direct evidence of agreements existing.

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3.115  The authors do not share these views, other than to a limited extent. Although these judgments are important, and may require the Commission to analyse the facts more closely, they do not mean that agreements which would have been caught in the past are now significantly more likely to fall outside Article 101(1). 3.116  Great care therefore needs to be taken by undertakings seeking to rely on these judgments to escape Article 101(1). It is worth noting, for example, that the way in which the Court of Justice distinguished Bayer from its judgment in Sandoz suggests that the EU Courts may not require much more than passive acquiescence in cases where the supplier has sought the cooperation of dealers. The Court of Justice noted that the fact that the dealers in that case had continued to purchase from Sandoz after it had inserted the words ‘export prohibited’ on invoices was sufficient for an agreement to exist. In Bayer, the emphasis the General Court placed on evidence such as the fact that some wholesalers had continued to seek additional supplies for export213 suggests that, had they merely reduced or eliminated exports with no more, the General Court may have found tacit acquiescence. 3.117  Particular care needs to be taken where the dealers’ cooperation is necessary for the achievement of the supplier’s policy or where it is in their interest to observe the supplier’s policy.214

(g)  Formal Termination May Not be Sufficient 3.118  The formal termination of an agreement does not necessarily mean that there is no longer a violation of Article 101. In EMI Records v CBS United Kingdom,215 the Court of Justice held that for Article 101 to apply ‘it is sufficient that such agreements continue to produce their effects after they have formally ceased to be in force’. However, the Court of Justice added that ‘An agreement is only to be regarded as continuing to produce its effects if from the behaviour of the parties concerned there may be inferred the existence of elements of concerted practice and of coordination peculiar to the agreement and producing the same result as that envisaged by the agreement’.216 Thus, the agreement must continue to influence the conduct of the parties on the market.217 (p. 217) 3.119  The fact that the terms of, or the parties to, an arrangement change over time does not mean that as a result it ceases to be an agreement under Article 101(1). In Pre-Insulated Pipes, the Commission decided that each such change did not imply that a new ‘agreement’ had come into force for the purposes of Article 101(1).218 3.120  Agreements made before accession of a Member State will be deemed to be agreements for the purposes of Article 101(1) if they continue to produce their effects within the EU after the date of accession.219 In any event, the fact that an agreement was concluded outside the EU does not prevent Article 101(1) applying to it if the general rules on EU jurisdiction apply.220

(h)  Judicial Settlement 3.121  It is not certain whether a settlement reached before a national court which constitutes a judicial act is an agreement capable of falling within the prohibition of Article 101(1). In Bayer and Maschinenfabrik Hennecke v Heinz Süllhöfer, the Court of Justice held that ‘In its prohibition of certain “agreements” between undertakings, Article [101(1)] makes no distinction between agreements whose purpose is to put an end to litigation and those concluded with other aims in mind’. However, it went on to note that ‘this assessment of such a settlement is without prejudice to the question whether, and to what extent, a judicial settlement reached before a national court which constitutes a judicial act may be invalid for breach of Community competition rules.’221 There is, however, no doubt that agreements between undertakings to settle actual or potential litigation, for example on matters of intellectual property, may fall under Article 101(1).222 For instance, the

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Commission has intervened against so-called ‘reverse payment settlement agreements’ in the pharmaceutical sector.223

(3)  Decisions by Associations of Undertakings 3.122  Article 101(1) explicitly recognizes that collusion can take place through the medium of an association. The purpose of this wide ambit of Article 101(1) is to ‘catch [all] forms of collusion having the same nature which are distinguishable from each other only by their intensity and the forms in which they manifest themselves.’224 To this end, the notion of decisions by associations of undertakings: seeks to prevent undertakings from being able to evade the rules on competition on account simply of the form in which they coordinate their conduct on the market. To ensure that this principle is effective, Article [101(1)] covers not only direct methods of coordinating conduct between undertakings (agreements and concerted practices) but also institutionalised forms of cooperation, that is to say, situations in which economic operators act through a collective structure or a common body.225 (p. 218) 3.123  As with the other terms of Article 101(1), the word ‘association’ is defined widely and is not restricted to trade associations. The decisive criterion is whether there is ‘an institutionalised form of coordination’.226 That is the case where members of an organization exercise decision-making powers in respect of the essential aspect of its operation.227 Thus such bodies as agricultural cooperatives,228 associations entrusted with statutory functions,229 associations of trade associations,230 or an entity like the MasterCard payment organization231 may be held to be ‘associations of undertakings’ under Article 101(1). 3.124  Similarly, the word ‘decision’ has a wider meaning under Article 101(1) than might appear at first glance. Thus, where an association of undertakings is found to exist, its ‘decisions’ do not need to be binding on its members to bring them within the scope of Article 101(1). All that is required is that the ‘decision’ be made with the object or effect of influencing the commercial behaviour of the association’s members. In Verband der Sachversicherer,232 an association of German insurers issued a recommendation to its members to raise premiums. The association had argued that this recommendation had been made by a committee which was not competent to adopt decisions binding on the association or its members. The recommendation therefore fell outside the scope of the prohibition. The Court of Justice held that the recommendation was a decision as it reflected the association’s resolve to coordinate the conduct of its members on the German insurance market in accordance with the terms of the recommendation.233 3.125  It should be noted that if a recommendation is carried out or, indeed, if it merely influences the behaviour of the members of the association, this can also amount to an agreement or a concerted practice as between the members themselves.234 The importance of the concept of ‘decisions by associations of undertakings’ therefore lies in the fact that it enables those applying Article 101(1) to hold associations liable for the anti-competitive behaviour of their members.

(4)  Concerted Practices (a)  Definition 3.126  A concerted practice is a form of coordination where undertakings,235 without concluding any sort of agreement or establishing a plan of action, ‘knowingly substitute practical cooperation between them for the risks of competition’.236 The aim of the Treaty, in establishing the concept of concerted practice, is to prevent undertakings from evading

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the application of Article 101(1) by colluding in an anti-competitive manner which falls short of an agreement. (p. 219) 3.127  In Imperial Chemical Industries (ICI), the Court of Justice held that, although undertakings were free to alter their behaviour to take into account the present or foreseeable conduct of their competitors, it was nevertheless: contrary to the rules on competition contained in the Treaty for a producer to cooperate with his competitors, in any way whatsoever, in order to determine a coordinated course of action…and to ensure its success by prior elimination of all uncertainty as to each other’s conduct regarding the essential elements of that action.237 3.128  The Court of Justice confirmed and developed this definition in Suiker Unie.238 The Commission had decided that sugar producers in Belgium, Germany, and the Netherlands had engaged in a concerted practice to control the supply of sugar into the Netherlands. The producers had argued that for a concerted practice to exist it would have been necessary for them to have established a plan which removed in advance any doubt as to their future conduct; otherwise, they asserted, every attempt by an undertaking to react intelligently to the acts of its competitors could be portrayed as an offence. In their case no plan had been worked out, so no concerted practice had taken place. 3.129  The Court of Justice again acknowledged that the law did not deprive economic operators of the right to adapt themselves intelligently to the conduct of their competitors. However, the underlying notion of competition in the Treaty was that each economic operator had to ‘determine independently the policy which he intends to adopt on the common market including the choice of the persons and undertakings to which he makes offers or sells’. The law therefore strictly precluded: any direct or indirect contact between such operators, 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. Thus the law ‘in no way requires the working out of an actual plan’239 for a concerted practice to exist; nor does it require the consensus necessary to be reached orally or to come about from direct contact. 3.130  In SA Hercules Chemicals,240 the General Court applied the tests laid down in ICI and Suiker Unie. The Commission had found that the applicant had participated in meetings during which it discussed with its competitors matters such as the prices they wished to see charged on the market, the prices they intended to charge, their profitability thresholds, their sales figures, and the identity of customers. The General Court confirmed that the applicant, through its participation in those meetings, had taken part together with its competitors: in concerted action the purpose of which was to influence their conduct on the market and to disclose to each other the course of conduct which each of the producers itself contemplated adopting on the market. Accordingly, not only did the applicant pursue the aim of eliminating in advance uncertainty about the future conduct of its competitors but also, in determining the policy which it intended to follow on the market, it could not fail to take account, directly or indirectly, of the information obtained during the course of those meetings. Similarly, in determining the policy which they intended to follow, its competitors were bound to take (p. 220) into account, directly or indirectly, the information disclosed to them by the

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applicant about the course of conduct which the applicant itself had decided upon or which it contemplated adopting on the market.241 3.131  Thus it would seem that to prove a concerted practice a number of elements will usually have to be identified. First, some form of contact between undertakings is necessary; however, this ‘contact’ can be indirect and ‘weak’. For example, if A makes a public announcement of its intention to behave in a particular manner, ‘contact’ may be held to have taken place if A did so in the knowledge that its competitors would take note of that announcement and follow its lead. 3.132  Secondly, there must some meeting of minds or consensus between the parties to cooperate rather than compete. However, as with ‘contact’, this ‘meeting of minds’ can be found rather easily. In Cimenteries, the General Court found that Lafarge was party to a concerted practice merely because it had received information about the commercial activities of its competitors. In this regard, the General Court found that the existence of a concerted practice did not require a formal understanding to be given as to future conduct.242 It went on to recall that ‘it is settled law that the fact that an undertaking does not abide by the outcome of meetings which have a manifestly anti-competitive purpose is not such as to relieve it of full responsibility for the fact that it participated in the agreement or concerted practice’.243 3.133  Thirdly, ‘the concept of a concerted practice…implies, besides undertakings’ concerting with each other, subsequent conduct on the market, and a relationship of cause and effect between the two’.244 However, again the threshold for proving this is low: for example, in Hüls the Court of Justice held that since the Commission had established that the applicant had participated in meetings between undertakings of a manifestly anticompetitive nature, it ‘did not have to adduce evidence that their concerting together had manifested itself in conduct on the market or that it had had effects restrictive of competition’.245 That is to say in hardcore horizontal cases, once there is ‘contact’ and a ‘meeting of minds’, there is a ‘presumption’246 that conduct will follow, that is, that there will be causality between the concertation and a party’s conduct on the market. 3.134  The EU Courts have, however, made clear that this presumption can be rebutted if the undertaking in question is able to adduce ‘proof’247 that the concertation did not have ‘any influence whatsoever on its own conduct on the market’.248 The practical implications of this are, however, likely to be limited. For example, in the case of a meeting between competitors at which commercially sensitive matters are discussed, the undertaking wishing to rebut the presumption must show that it did not engage in any activities linked to the concertation and that it did not, in any way, take into account the commercial information it had learned (p. 221) at the meeting in determining its conduct on that market.249 This is because it is assumed that ‘the recipient of the information in question cannot normally fail to take that information into account when formulating its policy on the market’.250 3.135  Thus, whilst theoretically possible, this hurdle would seem too high for undertakings to overcome in most cases—it is worth recalling in particular that evidence showing a lack of effect on the market (eg higher prices) is not, in and of itself, sufficient. Case law suggests that to rebut the presumption of causality—between the concertation and a party’s market conduct (eg attempting to charge higher prices)—the undertaking in question must at least have ended its participation in the meeting as soon as the anti-competitive nature of the gathering became apparent251 and to have ‘publicly distance[d] itself from what was discussed’ in order not to give the impression to the other participants that it subscribed to the aim of the meeting and would act in conformity with it.252 Thus in Hüls the Court of Justice implied that Hüls could have escaped the scope of Article 101(1) if it had put ‘forward evidence to establish that its participation in those [manifestly anti-competitive] meetings was without any anticompetitive intention by demonstrating that it had indicated From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

to its competitors that it was participating in those meetings in a spirit that was different from theirs’.253 3.136  The Commission has summarized its interpretation of what constitutes a concerted practice in its Horizontal Cooperation Guidelines.254 In doing so it has also provided some useful clarifications on the relationship between a concerted practice and a restriction of competition as well as on how to analyse whether certain conduct (notably information exchange) constitutes a concerted practice where the restriction of competition that it might entail is by effect (and not by object). Both clarifications are important as most judgments of the EU Courts on the concept of a concerted practice (a) concerned restrictions of competition by object, and (b) did not clearly differentiate their analysis of the criteria of concerted practice and restriction of competition.255 3.137  First, the Horizontal Cooperation Guidelines state the obvious; that is, that the existence of a concerted practice (or an agreement or a decision by an association of undertakings) does not prejudge whether that concerted practice (or agreement or decision by an association of undertakings) gives rise to a restriction of competition.256 Secondly, the Horizontal Cooperation Guidelines clarify that for an exchange of information to qualify as a concerted practice, the nature of the information plays a role: only where the information exchanged or disclosed is ‘strategic’, that is to say where its exchange or disclosure reduces strategic uncertainty in the market (which is the case, eg, for information related to prices or quantities), can an exchange or disclosure of information be considered a concerted practice.257 3.138  The Commission further reiterated in its Horizontal Cooperation Guidelines that ‘A situation where only one undertaking discloses strategic information to its competitor(s) who (p. 222) accept(s) it can also constitute a concerted practice. Such disclosure could occur, for example, through contacts via mail, emails, phone calls, meetings etc.’258 In that regard, it may be sufficient for the finding of a concerted practice that only one competitor, on a single occasion, discloses strategic information to its competitors.259 This shows that the Commission transposes the ‘meeting-related’ case law to all other forms of communication between undertakings. 3.139  As regards ‘a unilateral announcement that is also genuinely public, for example through a newspaper’, the Commission takes the view that this may under certain circumstances constitute a concerted practice. This may be the case: for example in a situation where such an announcement was followed by public announcements by other competitors, not least because strategic responses of competitors to each other’s public announcements (which, to take one instance, might involve readjustments of their own earlier announcements to announcements made by competitors) could prove to be a strategy for reaching a common understanding about the terms of coordination.260

(b)  Can a Concerted Practice be Inferred from Circumstantial Evidence Alone? 3.140  Although in most cases involving concerted practices there will be evidence of contact and a common intent to cooperate rather than compete, in certain circumstances a concerted practice may be inferred from circumstantial evidence alone. The test, however, is strict and hard to meet. In ICI,261 the Commission found that the major producers of aniline dyes in the EU, who had all raised their prices by similar amounts on three separate occasions between 1964 and 1967, had engaged in a concerted practice. The parties appealed arguing that the increases could be explained by the oligopolistic nature of the markets concerned. Dismissing the appeal, the Court of Justice held that while parallel behaviour by itself did not constitute a concerted practice ‘it may however amount to strong evidence of such a practice if it leads to conditions of competition which do not correspond to the normal conditions of the market having regard to the nature of the products, the size From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

and number of undertakings, and the volume of the said market’.262 The Court of Justice found that the market for aniline dyes was not oligopolistic. It was national in scope with clear differences in characteristics between the different geographic markets. It was therefore ‘hardly conceivable that the same action could be taken spontaneously at the same time, on the same national markets and for the same range of products’263 as a result of independent decision making. 3.141  In Ahlström Osakeyhtiö (Wood Pulp II),264 the Court of Justice clarified further the standard of proof required. It noted that Article 101 did not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors. Thus parallel conduct in itself: cannot be regarded as furnishing proof of concertation unless concertation constitutes the only plausible explanation for such conduct. Accordingly, it is necessary in this case to ascertain (p. 223) whether the parallel conduct alleged by the Commission cannot, taking account of the nature of the products, the size and the number of the undertakings and the volume of the market in question, be explained otherwise than by concertation.265 3.142  In Compagnie Royale Asturienne des Mines and Rheinzink,266 the Commission had held that two zinc producers had engaged in a concerted practice to prevent parallel imports from Belgium to Germany by terminating deliveries to their Belgian distributor within a week of each other. To refute this argument, the Court of Justice held that it would be sufficient for the applicants to prove circumstances which cast the facts established by the Commission in a different light and which thus allowed another explanation of their parallel behaviour. In this case the termination of deliveries could be explained by nonpayment of invoices by the distributor over the preceding few months.

(c)  Vertical Concerted Practices 3.143  It has been suggested to the authors that the concept of a concerted practice has no application in the context of a vertical relationship between suppliers and their distributors. Those who advocate this view draw on the classic, often-repeated definitions of concerted practice given in two of the leading cases, ICI267 and Suiker Unie268 which seems to limit the scope of the concept to competitor interaction only. Thus, in the former the Court of Justice defined concerted practice as a form of coordination where undertakings ‘knowingly substitute practical co-operation between them for the risks of competition’ whilst in the latter it referred to ‘any direct or indirect contact between such operators, 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’.269 In addition, proponents of this view argue that the jurisprudence and principles summarized in para 3.126 et seq, only make sense in the context of competitor coordination since vertical relationships are generally pro-competitive. 3.144  The view summarized here is, as a matter of law, erroneous—there is nothing either in the wording of Article 101(1) itself or any of the jurisprudence which definitively takes vertical cases outside the scope of the concept of concert practice. Indeed, the opposite is true. Thus, for example, in SA Musique Diffusion française,270 the Court of Justice found that Pioneer, a supplier of camera equipment, had engaged in a concerted practice with three of its distributors to prevent parallel imports. The Court of Justice made the same finding on similar facts in Hasselblad (GB).271

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3.145  However, as a matter of practice, there is some merit to the ideas set out in para 3.143. Two points are worth stressing in this regard. First, whilst it is easy, for example, to understand why a meeting between competitors at which commercially sensitive matters are discussed (p. 224) creates a presumption of anti-competitive conduct, the same is not true for contact between a supplier and a distributor. By definition, they have a commercial relationship which often requires contact and possibly some coordination of commercial activities (most obviously in the case of selective distribution). This is not to suggest that the concept of concerted practice does not apply in vertical cases but rather that the principles set out thus far by the Commission and the EU Courts have a limited application because they were developed in the context of catching competitor collusion. 3.146  Secondly, and perhaps more importantly (though formally about the concept of an agreement) it seems clear that Bayer has, for now, set the upper limit for the scope of application of Article 101(1) in vertical cases (ie that there must be, at a minimum, tacit acquiescence for Art 101(1) to apply).272 It seems inconceivable, given the clear statements by both the General Court and the Court of Justice, that the European Commission, NCAs, or national courts would try to bypass the test set out therein. The only exception to this is likely to be in a case where the facts are similar to those in Musique Diffusion Française and Hasselblad, that is, where the supplier plays a coordinating role of some sort in a concerted practice between its distributors.273

(i)  ‘Hub and Spoke’ Concerted Practices 3.147  The term ‘hub and spoke’ refers to situations where either (a) two or more suppliers exchange information or otherwise collude with the help of a distributor which acts as a ‘conduit’ for them, or (b) two or more distributors do so with the help of a supplier. An example might be where supplier A provides information to a distributor which then passes it on to supplier B. The same pattern could apply to information sharing between two or more distributors via a supplier. The question arises whether, and if so, under which circumstances such ‘hub-and-spoke’ scenarios can amount to a concerted practice between the three parties, in particular between the two participants that are competitors. The answer is not simple as conversations and discussions are common place between suppliers and distributors. 3.148  It is suggested that under EU competition law, the criteria for a single and continuous infringement and the General Court’s judgment in AC Treuhand274 will be relevant for assessing whether a tripartite or multi-partite information exchange across different levels of the value chain amounts to a concerted practice, notably between those competing companies that do not directly interact with each other. In AC Treuhand, the General Court confirmed that a party that does not compete with the other participants of a cartel might nevertheless be part of one and the same infringement of Article 101 with those other participants. In that case, the General Court held that a consultancy firm that had facilitated a cartel—by, for example, organizing meetings, storing certain secret documents relating to the cartel, collecting and treating certain information concerning the commercial activity of the cartel participants, and communicating that data to them— participated in a single and continuous infringement of Article 101 together with the cartelists. In so doing, the General Court relied upon the established criteria for a single and continuous infringement, that is to say: (a) the existence of an overall plan by the parties pursuing a common objective; (b) an (p. 225) intentional contribution of the undertaking to that plan; and (c) the awareness of the undertaking (proved or presumed) of the offending conduct to the other participants.275 3.149  It is suggested that those same criteria should also be decisive for ‘hub-and-spoke’ scenarios. First, as in AC Treuhand, ‘hub and spoke’ describes scenarios where one party that is not active on the same level of the value chain facilitates collusion between competitors. Secondly, the criteria for establishing a single and continuous infringement are adequate in that they allow the attribution to competitors (eg distributors) of purportedly From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

independent interactions between players that are not competitors (ie between a supplier and a distributors). The criteria for establishing a single and continuous infringement ensure that only where those purportedly independent interactions that are in fact part of an overall plan to which all parties intentionally contribute and where the parties are aware (or should be aware) of the other parties’ conduct. will lead to a finding of a concerted practices in a hub-and-spoke situation. These are clearly circumscribed conditions that ensure that normal business interactions between suppliers and distributors will not need to be unduly stifled in order to avoid being part of a ‘hub-and-spoke’ cartel.

(5)  Distinction Between Agreements and Concerted Practices 3.150  It can be difficult to identify exactly where an agreement ends and a concerted practice starts. The concepts are fluid and may overlap. An infringement may begin in one form and, as it evolves over time, progressively assume some or all the characteristics of another. In fact, it often makes little sense to try to draw a distinction between the two concepts as an infringement may present simultaneously the characteristics of an agreement and a concerted practice.276 Indeed, in cartel cases, the Commission often alleges that an agreement and/or concerted practice has taken place without distinguishing between the two. Nothing turns on the precise distinction for the purposes of the substantive analysis under Article 101(1).277 This is clear from the Commission’s PreInsulated Pipes decision, in which it held that: where the various concerted practices followed and agreements concluded form part of a series of efforts made by the undertakings in pursuit of a common objective of preventing or distorting competition, the Commission is entitled to find that they constitute a single continuous infringement. As the General Court observed on this point in Case T-7/89: it would be artificial to split up such continuous conduct, characterised by a single purpose, by treating it as a number of separate infringements: ‘The fact is that the (undertakings) took part—over a period of years—in an integrated set of schemes constituting a single infringement, which progressively manifested itself in both unlawful agreements and unlawful concerted practices’.278 3.151  The validity of the Commission’s practice of classifying infringements as ‘agreements and/or concerted practices’ has been upheld on numerous occasions. In Anic, the Court of Justice held that a: comparison between that definition of agreement and the definition of a concerted practice…shows that, from the subjective point of view, they are intended to catch forms of (p. 226) collusion having the same nature and are only distinguishable from each other by their intensity and the forms in which they manifest themselves.279 3.152  In Limburgse Vinyl Maatschappij,280 the General Court rejected the argument made that the concept was cumulative (‘and’) rather than alternative (‘or’), that is that ‘Only if proof of both classifications were established’281 could the concept apply. It held that: the dual classification must be understood not as requiring simultaneous and cumulative proof that every one of those factual elements reveals the factors constituting an agreement and a concerted practice, but rather as designating a complex whole that includes factual elements of which some have been classified as an agreement and others as a concerted practice within the meaning on Article

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[101(1)], which does not provide for any specific classification in respect of that type of complex infringement.282 3.153  The General Court further explained that ‘In the context of a complex infringement which involves many producers seeking over a number of years to regulate the market between them the Commission cannot be expected to classify the infringement precisely, for each undertaking and for any given moment’. In fact, the Commission was ‘entitled to classify that type of complex infringement as an agreement “and/or” concerted practice, inasmuch as the infringement includes elements which are to be classified as an “agreement” and elements which are to be classified as a “concerted practice”’.283 3.154  This leaves one obvious question unanswered: does the concept only apply to complex cartels of long duration as the previous quote suggests? It is certainly true that the EU Courts have used this formulation, or a version of it, on more than one occasion.284 However, as a practical matter, this fact alone is likely to be of limited use to parties seeking to challenge a Commission decision. There are two main reasons for this. First, the ‘jurisdictional’ concepts inherent in Article 101(1) such as ‘undertaking’,285 ‘agreement’,286 ‘concerted practice’,287 and ‘effect on trade’288 have evolved in such a way as to ensure that undertakings engaging in anti-competitive practices do not escape the scope of Article 101(1) through use of clever legal arguments. Given this, it seems likely that, if called to define either of the terms ‘complex’ or ‘long duration’ in a future case, the EU Courts would do so in such a manner as to ensure that enforcement is not undermined. Secondly, and perhaps more importantly from a practical viewpoint, given that the EU Courts have acknowledged that the concept is not ‘cumulative’ but rather is ‘alternative’, it would matter little if the Commission fell on the first, higher leg of the concept (ie proving an ‘agreement’). As long as there was sufficient evidence to support a finding of a concerted practice, Article 101(1) could apply. The one proviso to this may be in vertical cases where the scope of application of ‘concerted practice’ may have narrowed following Bayer.289

(p. 227) (6)  State Compulsion 3.155  Article 101 does not apply if ‘anti-competitive conduct is required of undertakings by national290 legislation or if the latter creates a legal framework which itself eliminates any possibility of competitive activity on their part’.291 As the Commission points out in its Horizontal Cooperation Guidelines: ‘In such a situation, a restriction of competition is not attributable, as Article 101 implicitly requires, to the autonomous conduct of the companies and they are shielded from all the consequences of an infringement of that article’. The Guidelines add in a footnote that this would be the case ‘At least until a decision to disapply the national legislation has been adopted and that decisions has become definitive.’292 3.156  The scope of application of the State compulsion defence is extremely narrow. Thus in Aluminium Imports From Eastern Europe the Commission rejected the cartel members’ argument that their conduct fell outside the scope of Article 101 because it had the backing of the UK authorities. The Commission, whilst acknowledging that the UK government had ‘supported and encouraged’ the anti-competitive arrangements, found that the parties had not been placed under any legal obligation to behave in an anti-competitive way. As such, Article 101(1) applied.293 In SSI, the Commission decided—and was upheld by the Court of Justice294 —that whilst competition in the cigarette industry in the Netherlands was limited because of the heavy taxes imposed there was still ‘a sufficient margin within which manufacturers/importers and dealers could compete with one another’. Article 101 applied since it could not be argued that there was ‘no scope at all for competition or that the scope is so limited that there would no longer be any scope for active competition’. In fact, in such a situation, ‘it is even more important…that firms should not make agreements or engage in practices that eliminate the scope for competition that remains’.295 This suggests that the

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test set out in para 3.155 is cumulative: State compulsion itself is not enough; it must also eliminate ‘any margin of autonomy on the part of those undertakings’.296 3.157  In one case, the General Court appears to have loosened marginally the criteria by holding that Article 101 would not apply if there was ‘objective, relevant and consistent evidence’ that undertakings had been obliged to engage in conduct ‘through the exercise of irresistible pressures, such as, for example, the threat to adopt State measures likely to cause them to sustain substantial losses’,297 that is, the ‘exclusion’ does not appear to require the existence of binding regulatory provisions; threats may suffice. However, as the more recent Court of Justice judgment in Deutsche Telekom made clear, the EU Courts (and the Commission) (p. 228) are extremely reluctant to accept a State compulsion defence unless there is no scope for the undertakings concerned to engage in competitive activities.298 3.158  In CIF, a reference under Article 234 from the Tribunale Amministrativo per il Lazio, the Court of Justice confirmed that ‘the duty to disapply national legislation which contravenes [EU] law applies not only to national courts but also to all organs of the State, including administrative authorities’.299 The Court also highlighted the distinction between conduct by an undertaking that is required by national legislation and conduct that is ‘merely facilitated or encouraged’ by it.300 For the former, an NCA may not impose penalties on the undertaking in respect of past conduct, as the offending national law constitutes a ‘justification which shields the undertaking concerned from all the consequences of an infringement’.301 (The NCA may, however, impose penalties for conduct subsequent to the decision to disapply the national legislation.) On the other hand, if a national law ‘merely encourages, or makes it easier for an undertaking to engage in autonomous anti-competitive conduct’, the undertaking remains subject to Articles 101 and 102 and may incur penalties. However, when setting the level of the penalty, the undertaking’s conduct may be assessed in light of the national legal framework, as a mitigating factor.302 3.159  An interesting, yet undecided, question is how the Commission and EU Courts would deal with State compulsion that does not stem from an EU Member State but from a third country government. An example could be that a participant of an export cartel argues that the government of the non-EU country in which it is situated obliged it to participate in the cartel. Would, or should, the Commission accept such a defence? On the one hand, as with a State compulsion scenario involving an EU Member State, the company participating in the cartel may not have had any choice so that its participation is not due to an autonomous decision. On the other hand, in an EU State compulsion scenario, the Commission can address the competition problem arising from the Member State’s legislation by having recourse to Article 4(3) TEU (former Art 10 EC Treaty) with a view to having that Member State’s anti-competitive legislation revoked or modified. Such a possibility does not exist vis-à-vis third countries. Consequently, accepting a State compulsion defence for conduct imposed by third countries could render the EU competition rules ineffective and lead to incurable competitive harm in the EU. Therefore, it can be argued that the Commission should not accept such a defence.303

(7)  The Notion of Restriction of Competition under EU Competition Law 3.160  The central debate within Article 101(1) has always revolved around the following question: ‘what is a restriction of competition and how is it to be measured?’ Put another way, what is the provision supposed to protect? Many different answers have been given: some (p. 229) see the EU’s competition rules as about the maximization of consumer welfare; others look to concept such as fairness and the ordo-liberal view that the aim of competition law is to control private economic power; alternatively, it is argued that the purpose of Article 101 (and 102) is to protect the process of rivalry itself; yet others point to From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the role of competition as a tool to help the EU to fulfil overarching objectives such as market integration,304 etc. Whilst this debate may at first seem of academic interest only, it is of crucial importance to an understanding of how and why the Commission and the EU Courts have applied the rules in the past and how they are likely to do so going forward. 3.161  It is worth noting at the outset that the EU’s competition rules were incorporated into the EEC Treaty at the insistence of the German delegation and were inspired by the laws in force in Germany. In addition, it should be recalled that until the appointment of Philip Lowe in 2002, every Director General of DG Competition but one had been German. The German approach to competition law, which itself was based on the ordo-liberal philosophy305 of the ‘Freiburg School’, therefore had a strong influence on the development of competition law in the EU. 3.162  At its core the Freiburg School sought to limit and control private economic power by prohibiting agreements306 that placed unjustified limits on the competitive autonomy of firms. Its goal was not to maximize efficiency (although consumer benefits were recognized and valued) but rather ‘the protection of individual economic freedom of action’307 in the interest of a free and fair political/social order. Freedom and fairness meant that markets should be kept as open as possible—clauses which limited sources of supply or the access of third parties from markets were therefore viewed with suspicion. 3.163  The Commission added an economic element to these ideas by arguing that the process of competition itself or, to be more precise, the process of rivalry between undertakings, produced the best economic results. For example, in its Report on Competition Policy, 1971 (Vol I), the Commission described competition as ‘the best stimulant of economic activity’. It went on to argue that competition, ‘Through the interplay of decentralised decision-making machinery’, enabled enterprises ‘continuously to improve their efficiency which is the sine qua non for a steady improvement in living standards and employment prospects. From this point of view, competition policy is an essential means for satisfying to a great extent the individual and collective needs of our society.’ Over a decade later, in its Fifteenth Report, the Commission described the role of competition, and thus of Article 101(1), as preserving ‘the freedom and right of initiative of the individual economic operators’ and fostering ‘the spirit of enterprise’. Thus, for the Commission the protection of rivalry and the freedom of action of the parties to the agreement (as well as those third parties affected by it) has been, in the past, an end in itself. 3.164  In practice, this philosophy often led to a legalistic examination of the clauses in agreements to identify whether restraints had been placed on the commercial conduct of the parties or (p. 230) third parties;308 analysis of economic effects was almost exclusively carried out under Article 101(3). 3.165  Given the nature of most contracts, the impact of this policy was felt most powerfully by those entering into vertical agreements which often contained restraints of one sort or another (eg the granting of exclusivity). In this way, the Commission’s approach to the concept of a ‘restriction of competition’ drew thousands of agreements, the vast majority of which were harmless or efficiency-enhancing, into the scope of Article 101(1). 3.166  This effect was strengthened by the determination of the European institutions to create and sustain the internal market. The competition rules were seen as an important way of preventing firms from establishing barriers to trade and allowing consumers to purchase freely from anywhere within the EU.309 As a result, agreements which potentially harmed the internal market were found to fall foul of Article 101 even if, in certain cases, their prohibition may have hurt consumers directly.310 However, the internal market

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objective also reinforced the scepticism of the Commission towards all vertical agreements containing territorial restrictions. 3.167  These attitudes began to change with the adoption of the Green Paper on Vertical Agreements in EC Competition Policy in 1996311 as economic analysis increasingly came to be at the forefront of the Commission’s activities. This culminated in 2004 with the Commission stating explicitly in its Article 101(3) Guidelines that the ‘objective of Article [101] is to protect competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources’.312 Although much of the policy had already been developed in preceding documents such as the Commission’s 2000 Guidelines on Vertical Restraints313 and its 2001 Guidelines on the applicability of Article [101 TFEU] to horizontal cooperation agreements,314 this bold statement confirmed that nothing less than a seismic shift had taken place in the enforcement of Article 101. Today, for example, for the Commission to find an agreement to be restrictive by effect: it must affect actual or potential competition to such an extent that on the relevant market negative effects on prices, output, innovation or the variety or quality of goods and services can be expected with a reasonable degree of probability…it is not sufficient in itself that the agreement restricts the freedom of action of one or more of the parties.315 3.168  Soon thereafter, in GlaxoSmithKline,316 the General Court adopted a similar reasoning and placed consumer welfare at the centre of its analysis. It held that ‘the objective assigned to Article [101(1) TFEU]…is to prevent undertakings, by restricting competition between themselves or with third parties, from reducing the welfare of the final consumer for the products (p. 231) in question’.317 Echoing to some extent the Article 101(3) Guidelines, the Court went on to hold that a key issue for the application of Article 101(1) was the ‘repercussions’ which an agreement ‘has or may have on one or other of the parameters of competition, such as the quantity in which a product is supplied or the price at which it is sold, that provides evidence of such a restriction’.318 The General Court went even further than the Commission when it put the final consumer at the centre of its analysis—the Commission, in its Article 101(3) Guidelines, had taken the view that ‘consumers within the meaning of Article [101(3)] are the customers of the parties to the agreement and subsequent purchasers’.319 3.169  These developments are, of course, welcome and, arguably, long overdue. They allow a more informed analysis of whether an agreement is good or bad for competition by focusing on its likely impact on the parameters of competition in a market such as price, output, product quality or variety, or innovation. 3.170  However, for a number of reasons, practitioners will need to treat them with at least a degree of caution. First, whilst an increasing number of commentaries320 have reinterpreted some of the existing case law in line with the approach set out in recent Commission policy statements, many321 (arguably the majority) continue to provide a more traditional interpretation of the case law.322 Secondly, and perhaps more importantly from a practitioner’s perspective, the policy reforms initiated by the 1996 Green Paper on Vertical Agreements have not, as yet, been fully endorsed by the Court of Justice. Nor have they resulted in a slew of judgments from the EU Courts which have plainly adopted the new approach—GSK is so far, in fact, one of only a small number of cases in which an EU Court has explicitly applied a consumer welfare test under Article 101.323 3.171  In fact, subsequent to the General Court’s judgment in GSK, in Lelos324 the Court of Justice found that the prevention of parallel trade may—in and of itself—constitute an abuse of a dominant position within the meaning of Article 102 and added, as an obiter dictum, that it may also constitute a restriction of competition by object within the meaning of Article 101.325 Perhaps more significantly, in the appeal against the General Court’s GSK(p.

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232) judgment,326 the Court of Justice held that an agreement that is aimed at preventing parallel trade has an anti-competitive object within the meaning of Article 101(1). More importantly, it went on to add that ‘for a finding that an agreement has an anti-competitive object, it is not necessary that final consumers be deprived of the advantages of effective competition in terms of supply or price.’327 However, the Court of Justice did not take a position on whether the agreement was also restrictive by effect and, consequently, as to how effects should be measured, in particular whether the General Court was right to rely on the consumer welfare standard. It could, of course, have done so. Given the general thrust of this judgment and that of Lelos, it is perhaps safest for practitioners to take its silence as an indicator that it does not share the views set out by the General Court in GSK.328 3.172  However, the need for caution flagged in para 3.170 should not be taken too far for two reasons. First, the General Court continues to lean towards an effect-based approach despite the judgments of the Court of Justice in Lelos and GSK. For example, in Visa/ Morgan Stanley329 the Commission had concluded that the rules and regulations of the Visa payment system and the decision to apply those to Morgan Stanley (MS) was restrictive by effect because they prevented a potential competitor (MS) from entering a market in which there was scope for further competition. In particular, MS’s entry could have resulted in more efficient intra-brand competition, which would have had a positive impact both on the price and quality in the relevant market. Consequently, keeping Morgan Stanley out of the market had potential restrictive effects on competition. On appeal,330 the General Court fully upheld the Commission’s decision. In so doing, the General Court (basing itself on European Night Services331 and John Deere332 ) appears to have endorsed the effects-based methodology applied by the Commission when analysing (potential) restrictive effects on competition. 3.173  Secondly, the Court of Justice’s reluctance to adopt an effect-based approach appears to be most strongly focused in cases concerning the internal market. In a number of recent judgments the Court of Justice appears to have started to gravitate towards embracing the effects-based approach in cases under Article 102. It would seem unlikely that its willingness to do so under that article would not translate into the approach that it takes to Article 101 cases. 3.174  In Deutsche Telekom333 and TeliaSonera,334 the Court of Justice rejected arguments claiming that for a margin squeeze to be considered abusive under Article 102 it would not be required to show anti-competitive effects. In those two judgments, the Court of Justice also shed some light on what it considers to be (potential) anti-competitive effects. Notably, in (p. 233) Deutsche Telekom, the Court of Justice held ‘that Article [102] aims, in particular, to protect consumers by means of undistorted competition.’335 It concluded that: the margin squeeze also has the effect that consumers suffer detriment as a result of the limitation of the choices available to them and, therefore, of the prospect of a longer-term reduction of retail prices as a result of competition exerted by competitors who are at least as efficient in that market. This not only shows that the Court of Justice appears to be more open to adopting an effects-based approach under Article 102 than was previously the case, but also that it shares the Commission’s view that anti-competitive effects are those that have a (potential) bearing on the market outcome, that is, on parameters of competition such as price, output, choice, etc. 3.175  In Post Danmark,336 an Article 102 preliminary ruling concerning selective price cutting by a dominant company, the Grand Chamber of the Court of Justice held that:

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not every exclusionary effect is necessarily detrimental to competition. Competition on the merits may, by definition, lead to the departure from the market or the marginalisation of competitors that are less efficient and so less attractive to consumers from the point of view of, among other things, price, choice, quality or innovation.337 Therefore, the Court of Justice continued, the mere fact that a dominant company price discriminates between different customers ‘cannot of itself suggest that there exists an exclusionary abuse’.338 Consequently, the finding of an abuse would require showing anticompetitive effects,339 which the Court of Justice describes as ‘any likely negative effects on competition and consumer welfare in the affected markets.’340 The Court of Justice concluded that ‘In order to assess the existence of anti-competitive effects circumstances as those of that case, it is necessary to consider whether that pricing policy, without objective justification, produces an actual or likely exclusionary effect, to the detriment of competition and, thereby of consumers’ interests.’341 3.176  Similarly, in AstraZeneca,342 the Court of Justice held that (a) deliberately misleading representations by a pharmaceutical company to patent offices and courts in order to block market entry by manufacturers of generic products, and (b) making requests for deregistration of the marketing authorizations of certain medicines in order to delay or make more difficult the marketing of generic products, are only to be considered abusive within the meaning of Article 102 where such conduct gives rise to potential anticompetitive effects. 3.177  These recent judgments, viewed together, can be interpreted as an indication that the Court of Justice has, with the exception of cases impinging on the internal market imperative, started to lean more towards an effects-based approach under both Articles 101 and 102 which is guided, at least to quite some extent, by consumer welfare considerations set out in the Commission’s various policy documents. (p. 234) 3.178  Given all this, practitioners would be well advised to consider the factors highlighted in para 3.170 et seq, and the text in paras 3.179 et seq, when counselling clients. Four points in particular are worth highlighting in this regard. 3.179  First, the General Court’s apparent willingness to overturn parallel import decisions,343 and some Commission decisions which sought to rationalize its internal market objective on economic, rather than political, grounds344 should not be taken to suggest that an effects-based approach will usually be adopted in cases affecting the internal market objective. As the Court of Justice’s judgments in Lelos and GSK have unequivocally confirmed, this core pillar of EU competition law is, not rooted in consumer welfare considerations.345 3.180  Secondly, in other types of case, when conducting a self-assessment of agreements under Article 101(1), regard should be had first to the approach laid out in the Commission’s various policy documents. That is to say, companies and their advisers should in particular try to identify whether their agreements—unless they have an anti-competitive object—give rise to likely negative effects on parameters on competition such as price, output, product quality or variety, or innovation. 3.181  Thirdly, the Commission and the EU Courts share the view that agreements which restrict intra-brand competition do not fall outside the scope of Article 101(1) merely because they increase inter-brand competition.346 3.182  Fourthly, and perhaps most importantly from a private enforcement perspective, it may still take more time for the new effects-based policy to be fully reflected in the case law of the EU Courts and the decisional practice of the European Commission—even though a number of important developments in that direction have already occurred. As such, the impact of pre-existing jurisprudence, which, to varying degrees, was influenced by the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Commission’s former emphasis on ‘free’ competition, may continue to be felt before national courts. It is to be hoped, however, that whilst acknowledging the old case law, national judges will feel sufficiently confident to apply the approach enunciated by the Commission in the various notices and guidelines that have been issued since 1999. Failure to do so would create a significant (p. 235) and damaging divergence with the approach that will be taken by the Commission and NCAs to cases under Article 101.347 3.183  The following sections will consider the concept of a restriction of competition in more detail. Five preliminary points are worth noting at the outset. First, for an agreement to be caught by Article 101(1) it must have the object or effect of preventing, restricting, or distorting competition. Object and effect are alternative and not cumulative requirements. Thus, if an agreement restricts competition by object, it is not necessary to show that it is also restrictive by effect or vice versa.348 Secondly, nothing turns on the terms prevention, restriction, and distortion.349 Thirdly, whilst Article 101(1) does not contain the word ‘appreciable’, it is clear from the case law of the EU Courts and the administrative practice of the Commission that a restriction of competition will not fall within the scope of Article 101(1) unless it has an appreciable impact on competition in the relevant market.350 Fourthly, Article 101 is applicable both to horizontal and vertical agreements.351 Fifthly, Article 101(1) applies not only to restrictions of actual but also potential competition.352

(8)  Restriction by Object (a)  Concept of Restriction by Object 3.184  Agreements353 which have an anti-competitive object fall within the scope of Article 101(1). Such ‘restrictions by object’ are those that ‘by their very nature have the potential to restrict competition within the meaning of Article 101(1)’.354 The Court of Justice has stated clearly on several occasions that, once an anti-competitive object has been shown, ‘there is no need to take account of the concrete effect of an agreement’.355 Thus if the object of an agreement is to fix prices it will not be necessary to show that actual prices were in fact affected. Similarly, arguments which purport to show that such agreements may also have pro-competitive effects will normally not be considered under Article 101(1), but under Article 101(3).356 (p. 236) 3.185  However, no agreement is automatically restrictive by object: pursuant to established case law, agreements must be assessed in light of their content, their objectives, their legal and economic context, and the way they are actually implemented. Moreover, even though the parties’ intent is not a prerequisite for the determination that an agreement has an anti-competitive object, it is nevertheless a factor which the Commission may—and usually will—take into account, if established.357 Thus agreements can be restrictive by object even if the parties to it are able to show that restricting competition was not their aim, or that they had other laudable motives.358 Conversely, the Commission and the EU Courts cannot find that a particular agreement has as its object a restriction of competition merely because the aim of the parties is to restrict competition. 3.186  When assessing whether an agreement restricts competition by object, it is helpful to have three categories in mind. (a)  Category 1: ‘obvious’ restrictions of competition, which ‘have such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article [101(1)] to demonstrate any actual effects on the market’, and where the ‘presumption is based on the serious nature of the restriction and on experience showing that restrictions of competition by object are likely to produce negative

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effects on the market and to jeopardise the objectives pursued by the [EU] competition rules’; 359 (b)  Category 2: ‘ostensibly obvious’ restrictions of competition, which, upon further assessment, reveal that they do not pursue an anti-competitive object; (c)  Category 3: ‘not-so-obvious’ restrictions of competition, which, upon further assessment, reveal an anti-competitive object. 360

(i)  Category 1 3.187  Category 1 comprises agreements which are typically restrictive of competition and where usually no detailed examination is required to come to a conclusion as to their anticompetitive object. Other chapters in this book will identify and cover in detail the types of clauses or activities which have been deemed to be restrictive by object.361 For present purposes it is sufficient to note that agreements between competitors362 which have the obvious consequence of price fixing, market sharing, or collective exclusive dealing363 (more commonly known as ‘group boycotts’) will, almost certainly, fall into this category. In the context of a cartel, the exchange of commercially sensitive information is also highly likely to be caught by object, even if the exchange is not about future pricing intentions but about current prices.364 In fact, in Aalborg Portland,365 the Court of Justice confirmed the General (p. 237) Court’s finding that although the information in that case had been ‘in the public domain or related to historical and purely statistical prices’ its exchange had infringed because it: underpinne[d] another anticompetitive arrangement. That interpretation is based on the consideration that the circulation of price information limited to the members of an anti-competitive cartel has the effect of increasing transparency on a market where competition is already much reduced and of facilitating control of compliance with the cartel by its members. 3.188  For vertical agreements, only those which impede parallel trade within the EU366 or enforce resale price maintenance367 are likely to be considered restrictive by object. 3.189  It is important to stress that few types of agreement have as their object the restriction of competition; conversely, agreements other than those listed in paras 3.187 and 3.188 may be restrictive by object: they merely list those which the EU institutions have thus far deemed to fall into this category. 3.190  No further guidance is however provided in the Article 101(3) Guidelines as to how these factors are to be applied in practice. This is largely because the determination of whether an agreement or concerted practice is an object restriction is, predominantly, a question of policy for the EU institutions.368 Thus, in its Article 101(3) Guidelines the Commission states that in determining its stance it bases itself ‘on experience showing that restrictions of competition by object are likely to produce negative effects on the market and to jeopardise the objectives pursued by the Community competition rules’.369 Amongst other things, this ‘policy’ element means that there is very little room for NCAs or national courts to expand the scope of restrictions caught by object beyond those explicitly identified as such by the EU Courts in case law and by the Commission in its decisions, notices, and guidelines.

(ii)  Category 2 3.191  Certain agreements, which prima facie appear to restrict competition by object (eg price fixing, market sharing), may, exceptionally, after further analysis turn out not to pursue an anti-competitive object. Hence, in practical terms, those criteria give the

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Commission and NCAs a certain flexibility in their assessment as to whether an agreement constitutes is a restriction by object. 3.192  An example of an agreement falling in ‘Category 2’ can be found in Erauw-Jacquery. The Court of Justice held, relying on Nungesser,370 that an agreement prohibiting a licensee from exporting, directly or indirectly, certain varieties of cereal seeds protected by plant breeders’ rights did not infringe Article 101(1) given the costs and risks involved in developing seed varieties.371 Likewise in Javico, the export ban imposed on distributors in Russia and Ukraine did not have as its object the restriction of competition within the EU although it could be restrictive by effect.372 (p. 238) 3.193  Another recent example is the Court of Justice’s judgment in Pierre Fabre,373 where the Court held that selective distribution systems ‘are to be considered, in the absence of objective justification, as “restrictions by object” as they tend to reduce price competition’.374 The Court of Justice, referring to its judgment in AEG-Telefunken,375 went on to state: However, it has always been recognised in the case-law of the Court that there are legitimate requirements, such as the maintenance of a specialist trade capable of providing specific services as regards high-quality and high-technology products, which may justify a reduction of price competition in favour of competition relating to factors other than price. Systems of selective distribution, in so far as they aim at the attainment of a legitimate goal capable of improving competition in relation to factors other than price, therefore constitute an element of competition which is in conformity with Article 101(1) TFEU.376 3.194  It is important to note, however, that these cases are not authority for the proposition that an extensive analysis of actual or potential effects of an agreement is necessary for it to be restrictive by object. In fact, in the vast majority of cases, the types of agreements listed in paras 3.149–3.150 will easily be found to fall within Article 101(1)— cases such as Erauw-Jacquery are distinguishable on their facts and do not undermine the basic position set out by the Court of Justice in Consten and Grundig. 3.195  Consequently, care should be taken by practitioners when relying on ‘Category 2’— in most cases claims from the parties as to the legitimate ‘objective aims’ of the agreement are unlikely to be successful. For example, in IAZ International Belgium377 the parties challenged a decision in which the Commission had held that the object of an agreement between them was to restrict competition. The parties were manufacturers and exclusive importers of washing machines affiliated to certain trade organizations in Belgium. They had agreed that one of them would carry out checks on appliances and grant a conformity label to machines fulfilling the relevant criteria. According to the parties, the purpose of the agreement was to monitor the conformity of washing machines in order to preserve the quality of drinking water. However, whilst acknowledging this, the Commission had, in its decision, concluded that the agreements also hindered parallel trade as it ‘enable[d] sole importers to check parallel imports and to take any other restrictive measures to prevent them’.378 The Court of Justice held that, notwithstanding the fact that the agreement pursued the objective of protecting public health and reducing the cost of conformity checks, its object was to restrict competition within the internal market. The Court of Justice further held that it did not matter for (p. 239) this purpose that it had not been established that the intention of all the parties was to restrict competition. 3.196  Likewise in Slovenska sporitel’na, the Court of Justice held that an agreement between three competitors to take measures to exclude a potential competitor form the market could escape being considered a restriction by object because the potential competitor’s activities were allegedly illegal.379 The Court of Justice held that ‘it is for

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public authorities and not private undertakings or associations of undertakings to ensure compliance with statutory requirements.’380 Therefore: the fact that an undertaking that is adversely affected by an agreement whose object is the restriction of competition was allegedly operating illegally on the relevant market at the time when the agreement was concluded is of no relevance to the question whether the agreement constitutes an infringement of that provision.381 3.197  It has been argued by some that the Court of Justice in its T-Mobile judgment has established an additional requirement to be fulfilled for finding an agreement restrictive of competition by object: that it must at least be capable of having restrictive effects on competition. Or in other words: where an agreement is incapable of having restrictive effects it cannot restrict competition by object. This argument is rooted in a passage of the judgment where the Court of Justice held that: for a concerted practice to be regarded as having an anti-competitive object, it is sufficient that it has the potential to have a negative impact on competition. In other words, the concerted practice must simply be capable in an individual case, having regard to the specific legal and economic context, of resulting in the prevention, restriction or distortion of competition within the [internal] market.382 If that argument were to hold, this would give parties to an agreement which would normally constitute a restriction by object, the defence that the agreement should not be considered to have an anti-competitive object because, due its specific legal and economic context, it cannot produce any anti-competitive effects in the circumstances of the case at hand. If that were correct, claims could successfully be made that, for example due to the parties’ market position or other peculiar market characteristics, certain agreements which prima facie restrict competition by object do not do so upon closer examination. 3.198  As such, the better view is that paragraph 31 of T-Mobile is no authority for such an ‘incapability defence’ in the case of obvious restrictions of competition. First, paragraph 29 of T-Mobile describes restrictions by object as those that are ‘by their very nature, … injurious to the proper functioning of competition.’383 An ‘incapability defence’ is hard if not impossible to reconcile with the idea that restrictions by object are ‘by their very nature’ (due to abstract considerations and without recourse to the circumstances of each individual case) harmful to competition. Secondly, the Court of Justice went on to recall in paragraph 30 of T-Mobile its established case law that there is no need to show effects where it is demonstrated that an agreement has an anti-competitive object (contrary to the claim by the referring (p. 240) Dutch court).384 Consequently, the finding that an agreement has an anti-competitive object cannot be called into question by the fact that it has not produced any actual or potential effects on the market. However, allowing an ‘incapability defence’ which claims that an agreement cannot give rise to any effects in the concrete circumstances of the case at hand is not markedly different from arguing that it does not create any potential effects. Inferring an ‘incapability defence’ from paragraph 31 of TMobile would therefore not only be at odds with what the Court of Justice said in paragraph 30 of that judgment (and with the established case law on which it builds), it would more generally blur the difference between restrictions by object and restrictions by (potential) effects. It is difficult to imagine that this is what the Court of Justice wanted to do. Consequently, paragraph 31 of T-Mobile should not to be understood as establishing that in general a further criterion must be fulfilled in order to find a restriction by object. Rather, it is a passage that tried to express in different words the established case law that for

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showing restrictions by object there is no need to go as far as to demonstrate any actual or potential effects.385 3.199  Whether companies have the possibility to invoke the argument that their agreement should not be considered to have an anti-competitive object due to their insignificant market positions and, consequently, the limited impact of the agreement on the market, is not a question of whether there is an ‘incapability defence’ on the basis of paragraph 31 of T-Mobile. It is a question of ‘appreciability’, which is dealt with in Section C.8(b). 3.200  Another recent judgment that has led some to argue that some form of effect analysis is necessary in object cases is E.On Ruhrgas.386 In this case, the General Court (partially) struck down the Commission’s finding that an agreement between the German gas incumbent Ruhrgas and the French gas incumbent GDF (which stipulated that the latter would not enter the German market) constituted a restriction of competition by object. The General Court found that at the material time (ie before the liberalization of the European gas markets) there was no potential competition between Ruhrgas and GDF in Germany as Ruhrgas had a lawful de facto territorial monopoly there (together with some other German suppliers) as part of the German pre-liberalization market organization.387 However, Article 101(1) ‘applies only to sectors open to competition’.388 This judgment should not be misconstrued as an indication that the General Court has established a general requirement to conduct a counterfactual/potential effects analysis in ‘by object’ cases as a limiting factor for obvious restrictions of competition. The better view is that the requirement to demonstrate that the parties were at least potential competitors is simply part of the analysis of whether a market-sharing agreement is ‘by its very nature’ restrictive of competition. If due to the organization of a market there is no potential for competition, there is by implication no competition to restrict. The fact that in organizing the market Germany had relied on contractual arrangements rather than the grant of statutory monopoly rights did not alter the fact that de facto E.ON Ruhrgas and other suppliers benefited from territorial monopolies.

(p. 241) (iii)  Category 3 3.201  Apart from the obvious restrictions of competition that fall into ‘Category 1’ there may also be ‘not-so-obvious’ restrictions of competition, which, upon further assessment, reveal an anti-competitive object. The Article 101(3) Guidelines states that: an examination of the facts underlying the agreement and the specific circumstances in which it operates may be required before it can be concluded whether a particular restriction constitutes a restriction of competition by object. The way in which an agreement is actually implemented may reveal a restriction by object even where the formal agreement does not contain an express provision to that effect.389 3.202  An example would be a cross-distribution agreement between competitors. For such agreements it is not immediately clear whether they are anti-competitive and, if so, whether they restrict competition by object or by effect. Much depends on the circumstances of the case at hand and a close examination of the facts is required. This can be illustrated by the following hypothetical case. Brewery A is only active in its home country X, whereas brewery B is only active in its home country Y. They enter into a cross-distribution agreement, whereby A would distribute B’s beer in country X and B would distribute A’s beer in country Y. Such an agreement may be absolutely innocuous and pro-competitive, in particular where it is the only opportunity for the two companies to venture outside their home markets. Depending on the facts and context, however, the agreement may not be benign. It could be that the parties’ objective is the opposite of the stated aim of the agreement, that is, the cross-distribution agreement could effectively be a tool to allocate

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markets and to protect the parties’ home market from competition by the respective other party. This could be the case, for example, where the parties appoint each other as exclusive distributors but make sure that in fact nothing or very little is distributed under the agreement. In such a case, it is the background and context of the agreement that would lead to the conclusion that it pursues an anti-competitive object.390 3.203  There is, however, some uncertainty as to the boundaries between ‘Category 3’ cases and effect cases following the Court of Justice’s ruling in Allianz Hungary.391 (i)  Allianz Hungary

3.204  Following a request for a preliminary ruling, the Court of Justice had to analyse whether bilateral agreements between an insurance company and car repairers (or an association of car repairers) under which the hourly rate repairers could charge depended, inter alia, on how many insurance contracts the repairer has brokered for the insurance company, restricted competition by object. The agreements in question were vertical agreements. In its judgment, the Court of Justice first restated the established case law that where it has been demonstrated that an agreement has an anti-competitive object, there is no need to show its effects.392 The Court of Justice went on to recall that restrictions by object are those that ‘by their very nature’ are injurious to competition393 and reiterated the traditional criteria to be relied on when assessing whether an agreement has an anticompetitive object. The Court of Justice then went on to refer to T-Mobile394 and held that: (p. 242) in order for the agreement to be regarded as having an anti-competitive object it is sufficient that it has the potential to have a negative impact on competition, that is to say, that it be capable in an individual case of resulting in the prevention, restriction or distortion of competition within the internal market. Whether and to what extent, in fact, such an effect results can only be of relevance for determining the amount of any fine and assessing any claim for damages.395 3.205  The Court of Justice noted that the fact that the agreements were vertical ‘in no way excludes the possibility that the[y] constitute[d] a restriction of competition “by object”. While vertical agreements are, by their nature, often less damaging to competition than horizontal agreements, they can, nevertheless, in some cases, also have a particularly significant restrictive potential’.396 Consequently, in order to assess whether the vertical agreements in question have an anti-competitive object, it will ‘be necessary to determine whether [they], taking account of the economic and legal context of which they form part, …are sufficiently injurious to competition on the car insurance market as to amount to a restriction of competition by object.’397 In the case at hand, the Court of Justice considered it important to determine in that regard whether the applicable Hungarian domestic law required that car dealers acting as intermediaries or brokers must be independent of the insurance companies.398 3.206  In addition, the Court of Justice found, the agreements in question could also restrict competition by object if it were: likely that, having regard to the economic context, competition on that market would be eliminated or seriously weakened following the conclusion of those agreements. In order to determine the likelihood of such a result, …in particular… the structure of the market, the existence of alternative distribution channels and their respective importance and the market power of the companies concerned [should be taken into account].399

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In particular, this last passage shows that, ‘a concrete and individual examination of the wording and aim of…agreements and of the economic and legal context of which they form a part’ is required to allow the conclusion that an agreement is by its very nature restrictive of competition, that is, restricts competition by object.400 3.207  The agreements where such a detailed and thorough examination will be required are usually those agreements where it is not immediately evident that they pursue an anticompetitive object. While the general thrust of the Allianz Hungary judgment is unobjectionable, the factors and criteria on which the Court of Justice relies to determine whether an agreement that does not have an obvious anti-competitive object nevertheless restricts competition by object, risk moving the boundaries between restrictions by object and by (potential) effect. The Court of Justice established as a key criterion for finding a ‘Category 3 object restriction’ the likelihood that the conclusion of the agreement would eliminate or seriously weaken competition, in other words causality between the agreement and likely negative effects on completion. This becomes even clearer when looking at the factors which in the Court of Justice’s view play a role for finding such a likelihood: the market structure, the existence of alternative distribution channels and their respective importance, and the market power of the companies concerned. It is submitted that identical factors would be relied on when (p. 243) analysing the potential restrictive effects of an agreement on competition. Consequently, in Allianz Hungary the Court of Justice seems to require a potential effects analysis in order to establish a restriction by object. This is at best hard to reconcile with the Court of Justice’s standing case law—which the Court of Justice even recalled in Allianz Hungary—that where an agreement has an anticompetitive object no actual or potential effects on competition must be shown. 3.208  Despite the considerable uncertainty with regard to the boundaries of restrictions by object and effect to which Allianz Hungary gives rise, the repercussions of the judgment should not be overestimated either. It should be borne in mind that Allianz Hungary is confined to ‘Category 3’ agreements. Its requirements do not apply to obvious restrictions of competition. In particular, Allianz Hungary cannot be interpreted to establish additional factors that may limit the classification of obvious restrictions of competition as restrictions by object. Consequently, Allianz Hungary does not mean that in classical price-fixing or market-sharing cartel cases it would be necessary to, for example, define markets, calculate market shares, or analyse market structures or entry barriers in order to be able to conclude that the cartel has an anti-competitive object.

(b)  Restriction by Object and Appreciability 3.209  Whether an agreement which, prima facie, has as its object the restriction of competition can nevertheless escape the prohibition of Article 101(1) if it has only an ‘insignificant effect’ on the market, has been a controversial question for a long time. That controversy had been triggered by the fact that the Commission was advocating for a stricter approach than the EU Courts had been taking since the 1969 Völk judgment.401 It was only in late 2012 that the Court of Justice changed its view and adopted a different course in its Expedia judgment.402 In the following, the ‘pre-Expedia’ case law will be contrasted with the Commission’s approach. Then, the Expedia judgment and its repercussions will be discussed.

(i)  The ‘Pre-Expedia’ Case Law 3.210  In Società Italiana Vetro,403 the General Court rejected the Commission’s submission that the evidence of the agreements between the parties was so unambiguous and explicit that any investigation whatsoever into the structure of the market had been entirely superfluous. While acknowledging that the Commission was not required to discuss in its decisions all the arguments raised by undertakings, the General Court held that the Commission ought to have examined more fully the structure and the functioning of the market in order to show why the conclusions drawn by the applicants were groundless.404

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The Court of Justice affirmed this position in Javico where it held that: ‘even an agreement imposing absolute territorial protection may escape the prohibition laid down in Article [101] if it affects the market only insignificantly, regard being had to the weak position of the persons concerned on the market in the products in question.’405 3.211  What is an ‘insignificant effect’? As a preliminary point it is worth recalling that the Commission is not required to prove that an object restriction has or even could have the effect of raising prices or restricting output. EU competition law assumes that object (p. 244) restrictions will potentially have this effect.406 Rather, the issue is whether the effect is likely to be of sufficient magnitude to affect competition appreciably. For object restrictions this has largely been assessed with reference to the market position of the parties.407 In its submission in Völk v Vervaecke,408 a case concerning absolute territorial protection, the Commission stated that the production of washing machines by Mr Völk’s company represented 0.08 per cent of the total production of the internal market and 0.2 per cent of production in the Federal Republic of Germany. Its market share of sales in Belgium and Luxembourg, the territory of its exclusive distributor Vervaecke, was approximately 0.6 per cent. On the basis of these small market shares, the Commission accepted that the agreement did not appreciably restrict competition. On the other hand, in Miller,409 which concerned a territorial restriction by object, the Court of Justice found that the company concerned, which had a market share of the German market in sound recordings which varied between 5 and 6 per cent, could not be compared with the undertakings in the Völk case and that Article 101(1) was infringed. 3.212  These cases suggested that for vertical restrictions, shares below 1 per cent were likely to be ‘insignificant’ while above 5 per cent, the effect was likely to be appreciable and Article 101(1) was likely to apply. Between 1 and 5 per cent could be best described as a grey area. 3.213  As for horizontal cases, it seemed highly unlikely that, even if applicable, market shares in this region would ever be relevant from a practical perspective: it is difficult to conceive of price-fixing or market-sharing agreements between entities with combined market shares in single digits on a properly defined market. In any event, given the general tenor of the case law on cartels,410 it would seem implausible that the EU Courts would permit cartels to escape the Article 101 prohibition on the basis of low market shares alone. 3.214  However, in Ziegler—a cartel case—the General Court expressed the view, in an obiter dictum, that even in cases of obvious restrictions of competition (ie ‘Category 1’ restrictions by object, see paras 3.187 et seq) the Commission is required to define the relevant market in order ‘to determine whether the agreement or concerted practice at issue is liable to affect trade between Member States and has as its object or effect the prevention, restriction or distortion of competition.’411 The General Court explained that even though:(p. 245) for the purpose of the application of [Article 101(1) TFEU], the Commission is not required to show the actual anti-competitive effects of agreements or practices which have as their object the prevention, restriction or distortion of competition… [Article 101(1) TFEU] is not applicable if the effect of a restrictive practice on intraCommunity trade or on competition is not ‘appreciable’. An agreement escapes the prohibition laid down in [Article 101(1) TFEU] if it restricts competition or affects trade between Member States only insignificantly.412 Had this approach been followed by the Court of Justice (quod non—see paras 3.217 and 3.218 on the Expedia judgment413 ), this would have meant that the Commission would have been required in every cartel case to define the relevant market and to analyse the participants’ market positions in order to determine that the cartel appreciably restricted competition by object. It would have also required forming a clear view on when the parties’

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market shares are too insignificant for their cartel to qualify as an appreciable restriction. The General Court refrained from giving any guidance on where the ‘appreciability market share threshold’ for cartels could lie.

(ii)  The Commission’s Approach to Appreciability in Object Cases 3.215  It is worth noting that through its notices, guidelines, and block exemptions, the Commission has, arguably, conveyed its desire for a stricter approach than that set out in the case law discussed in paras 3.210 and 3.211.414 Unlike the Court of Justice’s case law, these documents and legislative instruments provide no ‘safe harbours’ as to when ‘by object restrictions’ would not appreciably restrict competition. For example, the Commission expressly states that its De Minimis Notice415 (which establishes market share thresholds below which, in the Commission’s view, there is no appreciable restriction of competition) does not apply to agreements containing the following ‘hardcore’ restrictions:416 1. as regards agreements between competitors as defined in point 7, 417 restrictions which directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object or effect; (a)  the fixing of prices when selling the products to third parties; (b)  the limitation of output or sales; (c)  the allocation or markets or customers; 2. as regards agreements between non-competitors as defined in point 7, 418 restrictions which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object: (p. 246) (a)  the restriction of the buyer’s ability to determine its sales price, without prejudice to the possibility of the supplier imposing a maximum sale price or recommending a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from or incentives offered by, any of the parties; (b)  the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods or services, except the following restrictions which are not hardcore— –  the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer, –  the restriction of sales to end users by a buyer operating at the wholesale level of trade, –  the restriction of sales to unauthorised distributors by the members of a selective distribution system, and –  the restriction of the buyer’s ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier;

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(c)  the restriction of active or passive sales to end users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment; (d)  the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade; (e)  the restriction agreed between a supplier of components and a buyer who incorporates those components, which limits the supplier’s ability to sell the components as spare parts to end users or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods; 3. as regards agreements between competitors, where the competitors operate, for the purposes of the agreement, at a different level of the production or distribution chain, any of the hardcore restrictions listed in 1. and 2. above. 3.216  The approach taken by the Commission in the De Minimis Notice means, for instance, that it would not apply to a case involving ‘hardcore’ restrictions even where the parties’ market shares were akin to those in Völk.419 Similarly, the vertical and horizontal block exemptions do not apply to agreements which contain even one blacklisted clause— although block exemptions are only relevant in the context of Article 101(3), they indicate the Commission’s overall view, and the message it wishes to convey, as to the seriousness of particular restrictions.

(iii)  The Expedia Judgment 3.217  In Expedia,420 the Court of Justice had the opportunity to pronounce again on the question whether the appreciability of a restriction of competition needs to be proven in ‘by object’ cases under Article 101. Previous case law such as Völk421 suggested that agreements restricting competition by object may fall outside Article 101(1) where the parties’ market shares are insignificant. In Expedia, the Court of Justice first emphasized the distinction between restrictions by object and those by effect, highlighting that restrictions by object are ‘by their very nature…injurious to the proper functioning of normal competition’.422 The Court of Justice then concluded that agreements which (a) may affect trade between Member States, and (b) have an anti-competitive object, are (p. 247) deemed to appreciably restrict competition, independently of whether they have any concrete effects on competition.423 The judgment therefore effectively sets aside the previous Völk case law. Consequently, parties to an agreement pursuing an anti-competitive object (and which appreciably affects trade between Member States) will not be able to claim that their agreement does not fall within Article 101(1) because of their insignificant market shares. In other words, the Court of Justice has buried the idea of any market sharebased safe harbour for restrictions by object, thereby converging the case law with the Commission’s policy approach. 3.218  On the other hand, as a matter of prosecutorial discretion it is unlikely that the Commission (or indeed NCAs applying Art 101) would allocate resources to cases in which market shares were in single digits. Such considerations are, of course, not of direct relevance to cases brought before national courts by private litigants.424 Given the general tenor of the case law and the implicit policy stance taken by the Commission in its guidelines/block exemptions, it is highly likely that the rules would be applied strictly. Thus, in summary, it would seem fair to conclude that, even for companies with little market

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power, agreements containing restrictions by object run a very serious risk of infringing Article 101(1).

(9)  Restriction by Effect425 3.219  If an agreement does not have the object of restricting competition: the consequences of the agreement should then be considered and for it to be caught by the prohibition it is then necessary to find that those factors are present which show that competition has in fact been prevented or restricted or distorted to an appreciable extent. The competition in question must be understood within the actual context in which it would occur in the absence of the agreement in dispute.426 3.220  In other words, if there is appreciably less competition as a result of the agreement, Article 101(1) will apply. This apparently simple formulation, however, masks an interesting debate. What does ‘appreciably less competition’ mean and how is it to be measured? 3.221  As noted in Section C.8(b), the Commission centred its assessment427 in the past on the impact of the agreement on the: •  process of rivalry between the parties and/or from third parties through either foreclosure of potential new entrants or hindrance of existing players in the market; and •  the internal market. (p. 248) 3.222  In doing so it focused, to varying degrees, on the extent to which agreements limited the commercial freedom of action of the parties or third parties. For example, in its XXIIIrd Report on Competition Policy, 1993, the Commission explained that an exclusive distribution agreement ‘is viewed as restricting competition since it limits the parties’ freedom of action in the territory covered’.428

(a)  The EU Courts Had Broadly Endorsed the Commission’s Traditional Approach 3.223  The impact of agreements on the process of rivalry, whether between the parties to the agreement and/or from third parties, has also been an important feature of the case law of the EU Courts. For example, in its 1967 preliminary ruling, SA Brasserie de Haecht v Consorts Wilkin-Janssen,429 the Court of Justice was asked to consider whether, on the facts of the case, it was necessary to take into account under Article 101(1) ‘the simultaneous existence of a large number of contracts of the same type’ or whether ‘consideration must be limited to an examination of the effects on the market of the said agreements considered in isolation’. The Court of Justice replied that ‘the existence of similar contracts may be taken into consideration for this objective to the extent to which the general body of contracts of this type is capable of restricting the freedom of trade’.430 3.224  This focus on rivalry is clear even from cases which have traditionally been relied upon by those who see a ‘rule of reason’431 in the jurisprudence of the EU Courts. For example, in Delimitis,432 a preliminary reference case relating to a beer supply agreement, the Court of Justice required a detailed economic assessment to be made. However, this was carried out in order to analyse the impact of the agreement (together with other contracts of the same type) ‘on the opportunities of national competitors, or those from other Member States, to gain access to the market…or to increase their market share’.433 The Court of Justice held that:

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a beer supply agreement is prohibited by Article [101(1)]…if two cumulative conditions are met. The first is that…it is difficult for competitors who could enter the market or increase their market share to gain access to the national market for the distribution of beer in premises for the sale and consumption of drinks…The second condition is that the agreement in question must make a significant contribution to the sealing-off effect brought about by the totality of those agreements in their economic and legal context.434 As in Brasserie de Haecht, no assessment as to the likely effect of this foreclosure on market parameters (eg price or output) was made. The key issue was whether, as a matter of economic reality, the agreements hindered entry of potential competitors or the expansion of existing players. (p. 249) 3.225  A similar conclusion can be drawn from the European Night Services judgment in which the General Court held, referring specifically to Delimitis: that the examination of conditions of competition is based not only on existing competition between undertakings already present on the relevant market but also on potential competition, in order to ascertain whether…there are real concrete possibilities for the undertakings concerned to compete among themselves or for a new competitor to penetrate the relevant market and compete with the undertakings already established (Delimitis, cited above, paragraph 21).435 Again the focus was on the impact of the agreement on entry and expansion. 3.226  Yet more recently in Van den Bergh Foods, the General Court’s attention was, once again, on the impact of the agreement on the ability of actual or potential competitors to enter or expand. Thus it stated that: in order to determine whether HB’s exclusive distribution agreements fall within the prohibition contained in Article 85(1) it is appropriate…to consider whether… those agreements cumulatively have the effect of denying access to that market to new competitors. If…such examination reveals that it is difficult to gain access to the market, it is then necessary to assess the extent to which the agreements at issue contribute to the cumulative effect produced, on the basis that only those agreements which make a significant contribution to any partitioning of the market are prohibited.436 3.227  The General Court took a similar approach in Métropole Télévision437 a case concerning the pay-TV market in France. The General Court upheld the Commission’s finding that a clause obliging the parents of a joint venture to supply certain channels exclusively to their subsidiary fell foul of Article 101(1). The Commission had found that whilst these channels did not constitute a type of content that was ‘essential for pay-TV’, the exclusivity clause denied ‘competitors access to attractive programmes’438 and, as such, had a foreclosure effect sufficient to bring it within the scope of Article 101(1). 3.228  However in O2,439 the General Court adopted an approach which appeared to focus on the impact of the agreement on the intensity of competition in the market: In the present case, it cannot therefore be ruled out that a roaming agreement of the type concluded between T-Mobile and O2, instead of restricting competition between network operators, is, on the contrary, capable of enabling, in certain circumstances, the smallest operator to compete with the major players, such as in

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this case T-Mobile but also D2 Vodafone on the retail market, or even dominant operators, as T-Mobile is on the wholesale market.440 3.229  O2 was a potentially significant development in the General Court’s case law, particularly when combined with the General Court’s focus in GlaxoSmithKline441 on consumer welfare. However, as noted in paras 3.324 et seq,442 it is possible to distinguish O2, at least to some extent, on its facts and in light of some of the language used by the General Court.

(p. 250) (b)  The EU Courts Have Modified the Traditional Approach in a Number of Important Ways 3.230  As noted in paras 3.223 et seq, the EU Courts have broadly endorsed the Commission’s traditional interpretation of the concept of a ‘restriction of competition’. However, in several important judgments they modified the approach in a number of significant respects. Most importantly, they held that restrictions of rivalry were not, in and of themselves, restrictions of competition for the purposes of Article 101(1)—rather, restrictions had to be assessed in their specific market context. This introduced a stronger economic element to Article 101(1) and ultimately led to the adoption of the Article 101(3) Guidelines which explicitly rely on an assessment of market power and/or the likely impact of agreements on price, output, product quality or variety, or innovation443 to determine the application of Article 101(1).

(c)  Restrictions of Rivalry Must Be Assessed in Their Market Context 3.231  A restriction of rivalry is not, in and of itself, sufficient for the application of Article 101(1): agreements must be assessed in their specific market context. This is clear from the Court of Justice’s first competition law judgment, Société Technique Minière. The Court of Justice held that: in order to decide whether an agreement containing a clause ‘granting an exclusive right of sale’ is to be considered as prohibited by reason of its object or of its effect, it is appropriate to take into account in particular the nature and quantity, limited or otherwise, of the products covered by the agreement, the position and importance of the grantor and the concessionaire on the market for the products concerned, the isolated nature of the disputed agreement or, alternatively, its position in a series of agreements, the severity of the clauses intended to protect the exclusive dealership or, alternatively, the opportunities allowed for other commercial competitors in the same products by way of parallel re-exportation and importation.444 3.232  In the following year, the Court of Justice made the need for market analysis even more clear: in Brasserie de Haecht it held that: it would be pointless to consider an agreement, decision or practice by reason of its effect if those effects were to be taken distinct from the markets in which they are seen to operate…[t]hus in order to examine whether it is caught by Article [101] an agreement cannot be examined in isolation from…the factual or legal circumstances causing it to prevent, restrict or distort competition.445 3.233  In fact, over the years there have been numerous examples of the EU Courts finding clauses which restrict rivalry between the parties and/or from third parties and which fall outside Article 101(1) because of the market context in which they were applied. Such cases fall into four, to some extent, overlapping categories.

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3.234  First are cases in which the restrictive clause under review is objectively necessary for the implementation of a legitimate purpose. These types of clause are known as ‘ancillary restraints’. Second are exclusivity clauses without which the relevant goods/ services would not be supplied because of the commercial risks involved (these are referred to at paras 3.271 et seq as clauses where exclusivity is necessary for supply). Third are those cases that do not (p. 251) affect competition446 ‘to an appreciable extent’.447 This category covers restrictions that have an insignificant effect on the market either because of the weak position of the parties or because they have a de minimis impact on rivalry given their ‘nature’.448 Fourth are vertical restraints which do not have a foreclosure effect either because there are ‘real concrete’449 ways for competitors to enter or expand or, where such opportunities do not exist, because they do not make a significant contribution to the sealing-off effect.450 This is often referred to as the ‘cumulative effect doctrine’.

(d)  Ancillary Restraints Doctrine 3.235  Clauses which restrict rivalry between the parties and/or third parties fall outside Article 101(1) if they are directly related and necessary to the implementation of a legitimate purpose; this purpose may be commercial or relate to a public interest.

(i)  Commercial Ancillarity 3.236  In a number of important and oft-cited judgments, the EU Courts held that restrictions which are necessary for the implementation of a legitimate commercial purpose fall outside Article 101(1). For example, in Metro I the Court found that, given the characteristics of the market in question, ‘selective distribution systems constituted…an aspect of competition which accords with Article 85(1), provided that resellers are chosen on the basis of objective criteria…and that such conditions are laid down uniformly for all potential resellers and are not applied in a discriminatory fashion’.451 Having found the selective distribution to be legitimate, the Court of Justice went on to hold that clauses which limited the freedom of the parties or third parties but which were necessary for the system to function, and proportionate, fell outside Article 101(1). The clearest example of this is at paragraph 27 where the Court of Justice held that to ‘be effective, any marketing system based on the selection of outlets necessarily entails the obligation upon wholesalers forming part of the network to supply only appointed resellers…’ The Court of Justice went on to find that ‘provided that the obligations undertaken in connection with such safeguards do not exceed the objective in view they do not in themselves represent a restriction on competition but are the corollary of the principle obligation and contribute to it fulfilment’.452 3.237  The Court of Justice took a similar approach to distribution through franchising. In Pronuptia,453 the Court of Justice found that a system under which: an undertaking, which has established itself as a distributor on a given market and thus developed certain business methods, grants independent traders, for a fee, the right to establish themselves in other markets using its business name and the business methods which have made it successful…does not in itself interfere with competition.454 (p. 252) It went on to find that for the system to work the franchisor must be able to communicate his know-how to the franchisees and provide them with the necessary assistance in order to enable them to apply his methods, without running the risk that that know-how and assistance might benefit competitors, even indirectly. It followed from this that provisions which were essential ‘to avoid that risk, do not constitute restrictions on competition for the purposes of Article [101](1)’. Similarly, the franchisor had to be able to take the measures which were necessary to maintain the identity and reputation of the network bearing his business name or symbol. This meant that obligations on the franchisee to apply the business methods developed by the franchisor and to use the know-how From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

provided or clauses which allowed the franchisor to select the products offered by the franchisee or a provision requiring the franchisee to sell only products supplied by the franchisor (or other franchisees) did not fall within Article 101(1)—this was the case despite the fact that such clauses clearly limited the commercial freedom of the franchisee and potentially third parties. 3.238  More recently, in Pierre Fabre,455 the Court of Justice had to deal again with the application of Article 101(1) on selective distribution systems. The selective distribution system at issue foresaw that the sale of certain cosmetics and personal care products must be made in a physical shop in the presence of a qualified pharmacist. This de facto prohibited sales of those products on the Internet. The Court of Justice held that such a restriction ‘considerably reduces the ability of an authorised distributor to sell the products to customers outside the contractual territory or area of activity. It is therefore liable to restrict competition in that sector.’456 The Court of Justice went on to state, basing itself on AEG-Telefunken,457 that as selective distribution systems ‘necessarily affect competition’ they are ‘to be considered, in the absence of objective justification, as “restrictions by object”.’458 However, selective distribution systems may not infringe Article 101(1) at all where the reduction of price competition that they bring about is justified by an improvement of competition ‘in relation to factors other than price’. Such selective distribution systems ‘therefore constitute an element of competition which is in conformity with Article 101(1) TFEU.’459 That is in particular the case where the resellers that form part of the selective distribution are chosen on the basis of the Metro I criteria.460 This approach, even though not new—as it is based on AEG Telefunken—is nevertheless remarkable for a judgment rendered in 2011. The best interpretation is probably to consider it to be an application of the ancillary restraints doctrine, even though some might even argue that the Court of Justice applied a rule of reason—in an ‘by object’ case—as the Court of Justice appears to have conducted some balancing of price- and non-price-related aspects in the context of Article 101(1).461 3.239  Whilst the ancillary restraints doctrine has been seen as particularly important in vertical cases, it can apply to any type of agreement which might fall within the scope of Article 101(1). Thus in Erauw-Jacquery,462 the Court of Justice held that a clause preventing a licensee from exporting seeds protected by plant breeders’ rights could fall outside Article 101(1) (p. 253) where it was necessary to enable the licensor to select its licensees. Similarly in Coditel 2,463 the Court of Justice held that an exclusive licence to exhibit a film in a particular territory would not restrict competition if it was necessary to protect the investment of the licensee. 3.240  In Gøttrup-Klim,464 the Court of Justice was asked to consider whether a joint buying cooperative which prevented its members from buying through other similar arrangements (referred to in the judgments as the ‘prohibition of dual membership’)465 fell within Article 101(1). It held that such a restriction could be lawful if it was necessary for the effective operation of the cooperative: Where some members of two competing cooperative purchasing associations belong to both at the same time, the result is to make each association less capable of pursuing its objectives for the benefit of the rest of its members, especially where the members concerned, as in the case in point, are themselves cooperative associations with a large number of individual members. It follows that such dual membership would jeopardize both the proper functioning of the cooperative and its contractual power in relation to producers. Prohibition of dual membership does not, therefore, necessarily constitute a restriction of competition within the

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meaning of Article 101(1) of the Treaty and may even have beneficial effects on competition.466 3.241  However, the Court of Justice underlined that ‘in order to escape the prohibition laid down in Article 101(1) of the Treaty, the restrictions imposed on members by the statutes of co-operative purchasing associations must be limited to what is necessary to ensure that the cooperative functions properly and maintains its contractual power in relation to producers’;467 that is, the restrictions must be proportionate.468 3.242  The Commission has, albeit to a lesser extent, also applied the doctrine. The best example of this is Elopak/Metal Box–Odin, in which the Commission considered the overall effect of the creation of a joint venture called Odin and came to the conclusion that it did not fall within Article 101(1). It went on to say, however, that the ‘specific provisions of the agreement must…be examined to ascertain whether such provisions restrict competition within the meaning of Article [101(1)], or whether they are no more than is necessary to ensure the starting up and the proper functioning of the joint venture’.469 Analysing the clauses, the Commission found that they were either: provisions not restricting competition in the sense of Article [101(1)], or provisions which in other contexts might restrict competition but which in the context of the present case do not. Since such provisions cannot be disassociated from the creation of Odin without undermining its existence and purpose and since the creation of Odin does not fall within the scope of Article [101(1)], these specific provisions also fall outside the scope of Article [101(1)].470

(ii)  Public Interest Ancillarity 3.243  The cases outlined in paras 3.236 et seq, cover what one leading commentator has described as ‘commercial ancillarity’,471 that is, restrictions which are necessary for the implementation of a legitimate commercial purpose. However, in its EPI Code (p. 254) of Conduct472 decision the Commission appeared to extend the concept to cover restraints which are necessary on public interest grounds.473 The case concerned the code of conduct of the Institute of Professional Representatives before the European Patent Office (EPO). The Commission found that a number of these rules fell outside Article 101(1) because: ‘They are necessary, in view of the specific context of this profession, in order to ensure impartiality, competence, integrity and responsibility on the part of representatives, to prevent conflicts of interest and misleading advertising, to protect professional secrecy or to guarantee the proper functioning of the EPO’.474 3.244  The legitimacy of this approach was challenged by Advocate General Léger in Wouters.475 In essence, he argued that the ancillary restraint doctrine was: strictly confined to a purely competitive balance-sheet of the effects of the agreement. Where, taken as a whole, the agreement is capable of encouraging competition on the market, the clauses essential to its performance may escape the prohibition laid down in Article 101(1) of the Treaty. The only legitimate goal which may be pursued in accordance with that provision is therefore exclusively competitive in nature.476 The Commission’s approach in the EPI Code of Conduct decision,477 on the other hand, effectively introduced into Article 101(1) considerations which were linked to the pursuit of a public interest objective. It also implied that the Commission and the EU Courts should not only consider the question of whether a restriction of competition exists, but also whether it might be justified under Article 101(1). Such an interpretation, warned the

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Advocate General, was ‘liable to negate a great part of the effectiveness’478 of Article 101(3). 3.245  Without explicitly referring to it, the Court of Justice’s judgment clarified that the ancillary restraints doctrine does not apply exclusively to restrictions which are necessary for the attainment of a legitimate commercial objective. The Court held that: a national regulation such as the 1993 Regulation adopted by a body such as the Bar of the Netherlands does not infringe Article [101(1)] of the Treaty, since that body could reasonably have considered that that regulation, despite the effects restrictive of competition that are inherent in it, is necessary for the proper practice of the legal profession, as organised in the Member State concerned.479 3.246  Naturally, since Wouters was a preliminary ruling, the Court of Justice limited itself to answering the specific question put to it. However, other than the allusion in the paragraph quoted previously to ‘a national regulation…adopted by a body such as the Bar’, there is nothing in (p. 255) the judgment which limits its application to the rules of regulatory bodies. Indeed, most480 commentators have, correctly, concluded that the judgment applies to any481 public interest objective. The Commission has taken a similar position: in a subsequent complaint rejection decision, it applied Wouters to rules which restricted the ownership of shares in more than one football club competing in the Champions League tournament. It decided that ‘the limitation of the freedom of action of clubs and investors which the rule entails does not go beyond what is necessary to ensure its legitimate aim: i.e. to protect the uncertainty of the results in the interest of the public’.482 3.247  In a similar vein, in Meca-Medina,483 the Court of Justice held that the anti-doping rules of the IOC fell outside the scope of Article 101(1) since they were ‘justified by a legitimate objective’, were ‘inherent in the organisation and proper conduct of competitive sport’,484 and were ‘not…disproportionate’.485 In doing so, the Court of Justice explicitly applied the approach set out in Wouters.486 Recently, the Court of Justice reaffirmed its Wouters reasoning in preliminary rulings in OTOC487 and CNG,488 which dealt with, respectively, rules by the Portuguese Order of Chartered Accountants on compulsory training for its members, and criteria determining the remuneration of geologists established by the Italian Council of Geologists.

(iii)  The Narrow Scope of the Ancillary Restraints Doctrine 3.248  Despite the fact that it can be used on non-commercial grounds,489 the scope of application of the ancillary restraints doctrine is quite limited. 3.249  The Pronuptia490 case itself provides a good example of this—the Court of Justice held that since a franchise agreement typically resulted in a sharing of markets between the franchisor and the franchisees or between franchisees, its restrictive clauses could, in certain circumstances,491 fall within Article 101(1) even if:(p. 256) a prospective franchisee would not take the risk of becoming part of the chain, investing his own money, paying a relatively high entry fee and undertaking to pay a substantial annual royalty, unless he could hope, thanks to a degree of protection against competition on the part of the franchisor and other franchisees, that his business would be profitable. That consideration, however, is relevant only to an examination of the agreement in the light of the conditions laid down in Article [101(3)].492

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3.250  This narrowness of application was confirmed by the General Court’s judgment in Métropole Télévision493 and, more recently, in MasterCard.494 The General Court explained that the concept only covered clauses which are ‘directly related and necessary to the implementation of a main agreement’.495 (i)  Directly Related and Subordinate

3.251  A restriction is said to be ‘directly related to [the] implementation of a main operation’ if it is ‘subordinate to the implementation of that operation and…has an evident link with it’.496 3.252  This element of the doctrine is relatively straightforward to understand and apply: the activity covered by the clause must be part of, or at least be closely linked to, the main agreement; however, it must not be the main purpose for which the parties come together. Thus, for example, in Métropole Télévision the main operation was the establishment of a joint venture in the pay-TV market, whilst a clause through which the parties granted certain exclusive rights to the joint venture was found to be subordinate and linked. The justification for this is obvious: there is a clear connection between a pay-TV platform and the supply of content; however, supplying the channels to the joint venture was, in this case, not the main reason the parties entered into the business relationship. Another example would be a clause in a franchise agreement which allows a franchisor to select the products offered by the franchisee. This restraint clearly covers an activity which is subordinate but nevertheless closely linked to the implementation of a franchise system (which is the main operation).497 (ii)  Necessary

3.253  Relying on the Court of Justice’s judgment in Remia,498 the General Court held in Métropole Télévision499 and, more recently, in MasterCard,500 that for the necessity element of the doctrine to apply two conditions had to be satisfied: •  first, the restriction had to be objectively necessary for the implementation of the main operation; and •  secondly, it had to be proportionate. (iii)  Objective Necessity for the Implementation of the Main Operation

3.254  Objective necessity means that in the absence of the clause in question, the main operation would be ‘difficult501(p. 257) or even impossible to implement’.502 In Métropole Télévision and subsequently in Van den Bergh Foods,503 the General Court held that determination of this did not require a weighing-up of the pro- and anti-competitive effects of the clause in question;504 rather a ‘relatively abstract’505 examination needed to be conducted. 3.255  Thus the key question is not whether the restriction is indispensable to the commercial success of the main operation but rather its importance for the implementation of the main agreement.506 3.256  In many ways this distinction is difficult to understand: undertakings enter into commercial agreements to make or save money. Commercial considerations are therefore at the very core of these agreements. From an economic perspective, there would therefore appear to be little difference between clauses which are necessary from a commercial perspective and those which are required for the ‘implementation’ of agreements. 3.257  The need for the distinction becomes clearer, however, when viewed through a legal or policy lens. Although it is not immediately evident from Métropole Télévision, the General Court appears to have drawn a distinction between clauses which are required for the main agreement to function at all and clauses which may or may not be necessary depending on the economic circumstances of each particular case: the applicants had submitted that a clause granting a new joint venture exclusive rights to certain generalFrom: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

interest channels was indispensable to its penetration of the pay-TV market in France. Therefore it was ancillary. In response, the General Court found that: the fact that the exclusivity clause would be necessary to allow [the joint venture] to establish itself on a long-term basis on that market it is not relevant to the classification of that clause as an ancillary restriction…such considerations, relating to the indispensable nature of the restriction in the light of the competitive situation on the relevant market…can be taken into account only in the framework of Article [101(3)] of the Treaty.507 The General Court went on to observe that although the applicants had been able to establish to the requisite legal standard that the exclusivity clause was directly related to the establishment of the TPS joint venture, they had not shown that the exclusive broadcasting of the general-interest channels was ‘objectively necessary’ for that operation: ‘as the Commission has rightly stated, a company in the pay-TV sector can be launched in France without having exclusive rights to the general-interest channels’.508 3.258  In explaining this distinction, the General Court referred to the Remia judgment509 in which the Court of Justice held that a non-compete clause was: objectively necessary for a successful transfer of undertakings, in as much as, without such a clause…It is clear that the agreement for the transfer of the undertaking could not be given effect. The vendor…would still be in a position to win back his former customers immediately after the transfer and thereby drive the…[transferee] out of business.510 (p. 258) The Court of Justice’s concern here was that the contract would not be entered into at all, but for the non-compete clause. 3.259  The General Court also sought to explain its logic by drawing on previous Commission decisions, in particular those which related to P&I Clubs.511 These are mutual non-profit associations of shipowners, charters, and operators who share the risk of providing their members with protection and indemnity insurance. The Commission found that such ‘claim-sharing arrangement cannot function properly without at least one level of cover to be offered being agreed by all its members. The reason is that no member would be willing to share claims brought to the pool by other clubs of a higher amount than the ones it can bring to the pool.’ According to the Commission, since mutuals do not charge premiums in claim-sharing agreements, there is ‘no workable method available to force the members which would bring larger claims to compensate the others’,512 that is, the system could not function without claim-sharing. 3.260  The General Court reaffirmed this approach in MasterCard, where it held that: the fact that the absence of the MIF [multi-lateral interchange fee] may have adverse consequences for the functioning of the MasterCard system does not, in itself, mean that the MIF must be regarded as being objectively necessary, if it is apparent from an examination of the MasterCard system in its economic and legal context that it is still capable of functioning without it.513 3.261  The distinction drawn by the General Court in Métropole Télévision and MasterCard is also found in previous ancillary restraint judgments, in particular Pronuptia. In that judgment the Court of Justice drew, in broad terms, a distinction between two types of clause. The first were those which were necessary ‘for the system to work’,514 such as obligations requiring the franchisee to use the business methods and know-how developed by the franchisor, or to sell the contract goods only in premises laid out and decorated according to the franchisor’s instructions.515 Without these there could be no franchise system. The second were clauses which dampened price competition between franchisees. From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Whilst recognizing that it was ‘of course possible that a prospective franchisee would not take the risk of becoming part of the chain, investing his own money, paying a relatively high entry fee and undertaking to pay a substantial annual royalty, unless he could hope, thanks to a degree of protection against competition on the part of the franchisor and other franchisees, that his business would be profitable’,516 the Court held that this was not an assessment that should be made under Article 101(1): such consideration were relevant only to an examination under Article 101(3).517 3.262  There are two main policy reasons for drawing this distinction. First, as the Commission argued in its White Paper on Modernisation of the Rules Implementing Articles 85 and 86,518 ‘if more systematic use were made under Article 85(1) of an analysis of the pro and anticompetitive aspects of a restrictive agreement, Article 85(3) would be cast aside, whereas (p. 259) any such change could be made only through revision of the Treaty’.519 The General Court explicitly echoed this by holding that ‘it would be wrong, when classifying ancillary restrictions, to interpret the requirement for objective necessity as implying a need to weigh the pro and anti-competitive effects of an agreement [under Article 101(1)]. Such an analysis can take place only in the specific framework of Article [101(1)] of the Treaty’.520 3.263  Secondly, the very fact that only an ‘abstract’521 analysis should be carried out and, indeed, that ancillary restraints are cleared, irrespective of their effect, means that clauses which could be harmful may be taken outside Article 101(1). Prudence would seem to dictate that the scope of application of the doctrine should not be too wide. 3.264  It is worth noting that the objective necessity test also applies in ‘public interest’ ancillarity cases. In Wouters,522 the Court of Justice found that a regulation prohibiting multi-disciplinary partnerships imposed by the Bar of the Netherlands fell outside the scope of Article 101(1), despite its restrictive effects, since it could ‘reasonably be considered to be necessary in order to ensure the proper practice of the legal profession, as it is organised in the Member State concerned’.523 3.265  Although this language is not identical to that used in Métropole Télévision, the underlying approach is, it is submitted, the same: was the restraint in question (here a regulation) objectively necessary, or in the language of the judgment ‘could…reasonably be considered to be necessary’, for the implementation of a legitimate purpose? The Court found that the regulation was necessary to ensure that the professional conduct rules for members of the Bar were complied with, having regard to the way the profession was organized in that State. The Court based this on its finding that members of the Bar might no longer be in a position to advise and represent their clients independently and in the observance of strict professional secrecy if they belonged to an organization such as an accountancy firm—clearly a legitimate public policy concern. (iv)  Proportionality

3.266  Where a restriction is objectively necessary, it is still necessary to verify whether its duration and its material and geographic scope exceed what is necessary to implement the main operation. If the duration or the scope of the restriction is excessive, the clause must be assessed separately under Article 101(3).524 3.267  This apparently clear formulation masks an important evidentiary point: careful examination of the relevant cases in this area shows that very little is required to take a clause outside the scope of the doctrine. For example, in Métropole Télévision the General Court found that a clause granting a new joint venture exclusive rights to certain generalinterest channels for a period of ten years was disproportionate. The reasons given for this finding amounted to no more than mere assertion:525 the General Court found, without any real evidence to support (p. 260) its position, that it was ‘quite probable’ that the competitive disadvantage from which the joint venture suffered at its creation (principally its lack of access to exclusive film and sports rights) would diminish over time. Similarly, it From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

argued that the clause deprived the joint venture’s actual and potential competitors of access to the programmes that were considered ‘attractive by a large number’ of French television viewers—however, no real attempt was made by the Commission, nor deemed necessary by the General Court, to assess the nature or extent of the foreclosure or indeed to establish, in any concrete way, the importance of this content to competition in this market. Finally, the Court pointed to the existence of so-called ‘shadow zones’ in France— that is, areas with poor reception of free-to-air television. It found that the viewers in these areas who wanted to subscribe to a pay-TV company which also broadcasted generalinterest channels could only turn to the joint venture. Again, there is very little in either the Commission’s decision or the General Court’s judgment on the likely impact of this on competition; even basic questions such as whether this group was of sufficient size to prevent entry of other players into the market were not considered necessary.526 3.268  Once again, it is worth noting that, as with objective necessity, the proportionality test also applies in ‘public interest’ ancillarity cases. In Wouters,527 the Court of Justice found that a rule prohibiting multi-disciplinary partnerships imposed by the Bar of the Netherlands had restrictive effects; however, these effects did not ‘go beyond what is necessary in order to ensure the proper practice of the legal profession’.528

(iv)  Concluding Remark: Ancillary Restraints Doctrine Difficult to Apply but Relevant for the Identification of the Relevant Counterfactual in Effects Analysis 3.269  Notwithstanding the clarification of certain elements of the ancillarity test by the General Court in Métropole Télévision, it is clear that the concept still raises more questions than it answers. It is very difficult, if not impossible, to identify in the abstract whether a particular restraint will be treated as ancillary to a particular type of agreement. Of course, similar challenges exist when applying the concept of indispensability under Article 101(3).529 However, in such cases, advisers can often turn to the ‘black lists’ in the various block exemption Regulations or the existing case law. Unfortunately, there is little case law under Article 101(1) to guide companies and their advisers.530 The doctrine cannot therefore be applied with certainty by those who wish to argue that a particular restrictive clause in an agreement falls outside Article 101(1). Perhaps, more importantly, whilst the distinction drawn by the General Court between ‘implementation’ and ‘commercial needs’ makes a degree of sense from a policy viewpoint, it is very difficult to apply from a practical perspective. (p. 261) 3.270  Nevertheless, whether a restriction falls under the ancillary restraints doctrine or not is of practical relevance as it determines the relevant ‘counterfactual’ in a competitive effects analysis. Where the alleged restriction is not an ancillary restraint, that is to say where it is not directly related to and necessary to the implementation of a main operation,531 the Commission can assess the effects on competition of individual clauses independently of the potential effects of the entire agreements of which they form part.532 It is submitted, however, that this does not relieve the Commission of the obligation to assess the clause in its economic and legal context and therefore take into account the broader commercial context to which the clause belongs. In other words, it cannot be assessed in isolation.

(e)  Exclusivity Necessary for Supply 3.271  The preceding sections considered one category of cases in which the EU Courts have found restrictive clauses to fall outside Article 101(1) because of the market context in which they were applied. Another category covers the situation whereby goods/services would not be supplied by an undertaking without at least a degree of exclusivity because of the commercial risks involved. Thus in Société Technique Minière,533 the Court of Justice held that ‘it may be doubted whether there is an interference with competition if the said agreement seems really necessary for the penetration of a new area by an undertaking’.534 Similarly in Nungesser,535 the Court found the exclusivity under review to be compatible

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with Article 101(1):536 having regard to the specific nature of the products in question the Court of Justice concluded that an undertaking: which was not certain that it would not encounter competition from other licensees for the territory granted to it, or from the owner of the right himself, might be deterred from accepting the risk of cultivating and marketing that product; such a result would be damaging to the dissemination of a new technology and would prejudice competition in the [Union] between the new product and similar existing products.537 3.272  The logic underlying these cases (and those discussed at paras 3.275 et seq) is the same: Article 101(1) does not apply if, from an objective perspective, it is clear that undertakings could not, or would not, supply or enter the market in the absence of the restraint in question given the risks involved. Put differently, Article 101(1) does not apply in such cases because in the absence of the ‘necessary’ restraint the undertakings in question (or at least ‘objective’ undertakings in a similar setting) would not participate in the market and compete.

(i)  Exclusivity Must be Objectively Necessary 3.273  As with the ancillary restraints doctrine, this line of case law only applies to restrictions which are objectively necessary—the subjective views of the parties may of course, in certain circumstances, be relevant but they will in no way be determinative. Thus in assessing whether ‘the said agreement seems really necessary’ the Court of Justice did not consider the subjective intention or needs of the parties in Société Technique Minière. Instead it focused on objective market characteristics: in particular the nature and quantity, limited or otherwise, of the products covered by the agreement, the position and importance of the grantor and the concessionaire on the market (p. 262) for the products concerned, the isolated nature of the disputed agreement or, alternatively, its position in a series of agreements, the severity of the clauses intended to protect the exclusive dealership or, alternatively, the opportunities allowed for other commercial competitors in the same products by way of parallel re-exportation and importation.538 Similarly in Nungesser, the Court of Justice did not consider or refer to the particular applicant’s needs or its appetite for risk; instead it focused on an objective assessment and made a generic finding that ‘an undertaking established in another Member State…might be deterred from accepting the risk…[h]aving regard to the specific nature of the product in question’.539

(ii)  It is Unclear Whether this Doctrine Applies to Agreements Between Competitors 3.274  It has been suggested by some commentators540 that this line of case law is relevant only to distribution and licensing agreements and does not apply to agreements between competitors. Paragraphs 18(2) and 29 of the Article 101(3) Guidelines, when read together, seem to make, or at least imply, a similar point. 3.275  However, it is worth noting that the logic underlying of these cases is close, if not identical, to that used in potential competition cases: it is settled law that Article 101 only applies to agreements between actual or potential competitors;541 it does not apply to agreements between undertakings which do not compete with each other (nor are likely to do so within a reasonable timescale).542 Amongst other things, this means that Article 101 does not apply to agreements which are necessary for entry to take place. For example, in European Night Services,543 a case concerning agreements establishing a joint venture (the ENS JV) between several European rail companies to provide train services through the Channel Tunnel, the parties appealed the Commission’s decision to grant a conditional exemption. They argued that their agreements did not restrict competition because, inter From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

alia, the evidence showed that none of the railway undertakings alone would have accepted the risks of supplying the service. Moreover, the procurement of rolling stock involved various fixed costs such that an undertaking could only make a profit by increasing output to a minimum efficient size—individually, none of the railway undertakings would have been in a position to increase the level of services to that minimum. 3.276  In response, the Commission argued that the fact that the parties had assumed significant commercial risks and incurred high costs did not mean that appreciable competition between the parties was improbable: a railway undertaking established in one Member State could, for example, form an international grouping with another railway undertaking established (p. 263) in another Member State and obtain from Eurotunnel, the infrastructure manager, the paths necessary to pass through the Channel Tunnel and thus operate international transport services. 3.277  The General Court rejected the Commission’s arguments finding, inter alia, that it was unrealistic, given the novelty and the specific features of the night rail services in question, to enter in the way envisaged by the Commission. The prohibitive cost of the investment required for such services through the Channel Tunnel and the fact that there were no economies of scale in the operation of a single route, as opposed to the four routes to be operated together by ENS JV, made entry of the type envisaged by the Commission unrealistic. In making this finding, the Court drew attention to the fact that no rail company had ever entered the market of another Member State in the manner implied by the Commission’s arguments. The General Court held that: the examination of conditions of competition is based not only on existing competition between undertakings already present on the relevant market but also on potential competition in order to ascertain whether, in the light of the structure of the market and the economic and legal context within which it functions, there are real concrete possibilities for the undertakings concerned to compete among themselves or for a new competitor to penetrate the relevant market and compete with the undertakings already established. The Court went on to note that the ‘assumption of potential competitive circumstances presupposes that each parent alone is in a position to fulfil the tasks assigned to the [joint venture] and that it does not forfeit its capabilities to do so’ by the creation of the joint venture. 3.278  More recently in O2,544 a case concerning infrastructure sharing and national roaming in Germany between two mobile operators (O2 and T-Mobile), the General Court relied explicitly on the formulation set out in Société Technique Minière, that ‘interference with competition may in particular be doubted if the agreement seems really necessary for the penetration of a new area’.545

(iii)  Doctrine Only Likely to Apply in Clear-Cut Cases 3.279  At one level, the logic of this approach (ie exclusivity being necessary for supply) suggests that a thorough examination of the market is required in order to assess the level of risk and extent of exclusivity needed. Indeed, in Société Technique Minière the Court of Justice held that: in order to decide whether an agreement containing a clause ‘granting an exclusive right of sale’ is to be considered as prohibited…it is appropriate to take into account in particular the nature and quantity, limited or otherwise, of the products covered by the agreement, the position and importance of the grantor and the concessionaire on the market for the products concerned, the isolated nature of the disputed agreement or, alternatively, its position in a series of agreements, the severity of the clauses intended to protect the exclusive dealership or, alternatively,

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the opportunities allowed for other commercial competitors in the same products by way of parallel re-exportation and importation. 3.280  However, in practice, this level of analysis may not be necessary or required—for example, the assessment of the Court of Justice in Nungesser was relatively superficial and impressionistic. In fact, it can be argued with some force that the EU Courts are likely to adopt an approach similar to that used in ancillary restraint cases—in Métropole Télévision the General (p. 264) Court held that it would be inappropriate to conduct a full market analysis when determining whether a clause was ancillary; instead, a ‘relatively abstract’546 examination was required. This was, at least in part, because it felt that Article 101(3) ‘would lose much of its effectiveness if [a detailed] examination had already to be carried out under Article [101(1)]’.547 A priori, it is difficult to identify reasons why this logic would not apply in Société Technique Minière/ Nungesser-type cases. 3.281  In practice this is likely to mean that the Société Technique Minière/Nungesser approach will only apply in clear-cut cases; in situations where the facts are more complex (or where a more thorough analysis is required for some other reason) it is likely that the EU Courts will, assuming all other conditions are met, bring the case within the scope of Article 101(1) in order to assess, under Article 101(3), the claims made by the parties. (i)  Exception to General Rule

3.282  The main exception to this general rule is likely to be in potential competition cases, that is, where an assessment has to be made of the likelihood of entry by undertakings which are not actual but may be potential competitors. According to both the Commission and the General Court, the analysis in such cases has ‘to be based on realistic grounds, the mere theoretical possibility to enter a market is not sufficient’.548 In European Night Services,549 the General Court held that this involved an examination of ‘the structure of the market and the economic and legal context within which it functions’ in order to determine whether there are ‘real concrete possibilities’550 for the undertakings concerned to compete among themselves or for a new competitor to penetrate the relevant market and compete with the undertakings already established. It is not decisive though whether the undertaking in question has the concrete intention to enter the relevant market in the near future. Its ability to do so is sufficient. An undertaking cannot, however, be considered a potential competitor if its entry into a market is not an economically viable strategy.551 3.283  Similarly in O2,552 the General Court criticized the Commission for undertaking an insufficiently detailed assessment of this issue under Article 101(1). In particular, the General Court found that the Commission had been wrong to assume that it was unnecessary to consider in ‘more detail’ under Article 101(1) ‘whether, in the absence of the agreement, O2 would have been present on the [new] 3G market work’.553 3.284  Perhaps more significantly, the General Court found, at least in respect of this issue, that the Commission should not have limited its detailed economic analysis to Article 101(3) —its findings under Article 101(3) implied ‘some uncertainty concerning the competitive situation and, in particular, as regard O2’s position in the absence of the agreement’. This showed, the General Court concluded, that the presence of O2 on the 3G communications market could not be taken for granted, as the Commission had assumed, and that ‘an examination in this respect was necessary not only for the purposes of granting an exemption but, prior to that, (p. 265) for the purposes of the economic analysis of the effects of the agreement on the competitive situation determining the applicability of Article [101 TFEU]’.554 3.285  The fact that a more thorough analysis is required in such cases is not surprising given the greater risks associated with horizontal agreements. However, a degree of care should be taken in relying too heavily on the statements in European Night Services and O2. In the former case the General Court appears to have been heavily influenced by the

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fact that the contested decision and the documents before it contained little if any evidence as to the existence of undertakings in other Member States which had entered or intended to enter this or similar markets; indeed, the converse was true—there was evidence from third parties on the Commission’s file which indicated that other operators shared the parties’ views as to the viability of entry.555 Thus, for example, part of the Commission’s case was that each of the parent undertakings could set up subsidiaries in the Member States of the other parent undertakings and form, either with its own subsidiaries or with other railway undertakings established in the other Member States concerned, international groupings in direct competition with ENS. The Court considered this to be ‘a hypothesis unsupported by any evidence or any analysis of the structures of the relevant market from which it might be concluded that it represented a real, concrete possibility’. Indeed, there was: no indication either in the contested decision or in the documents before the Court that there are any railway undertakings with subsidiaries in other Member States having themselves the status of railway undertakings, such as to demonstrate any actual exercise of the right to freedom of establishment on the market for rail transport in the [Union]. In essence, the General Court found that the Commission’s case was, at least on this point, based on no more than a theoretical possibility of entry. In the circumstances, the General Court’s approach is not surprising. 3.286  Similarly in O2 the General Court was, as is clear from the citations in paras 3.226 and 3.227, highly critical of the Commission’s factual analysis and approach under Article 101(1), in particular its assumption as to the ability of O2 to enter the new 3G market and compete, given its findings under Article 101(3) on O2’s likely competitive position. 3.287  It is also worth comparing the approach taken in European Night Services, and to a lesser extent O2, with that in Tiércé-Ladbroke,556 a judgment handed down only 15 months before European Night Services. In the latter case, the General Court annulled the decision because the Commission had failed to take into account a possible restriction of potential competition. The level of analysis it conducted on this issue was, however, little short of cursory and may not, it is submitted, have withstood the type of scrutiny undertaken in its own European Night Service/O2 judgments: although the parties could have entered the market with ease (entry in this case meant granting a licence) there was no evidence that they either intended, or had a particular incentive, to do so, that is, it could be argued with at least a degree of force that their entry was no more than a theoretical possibility (albeit one that could have occurred very easily had they chosen to do so).

(p. 266) (iv)  Does the Approach Apply to ‘Object’ Cases? 3.288  It is worth noting that the Court of Justice has explicitly limited the application of this doctrine to agreements which did not entail absolute territorial protection: ‘The Court has consistently held…that absolute territorial protection granted to a licensee in order to enable parallel imports to be controlled and prevented results in the artificial maintenance of separate national markets, [is] contrary to the Treaty’.557 However, as is clear from Pierre Fabre, the approach also applies in the context of selective distribution systems, which the Court of Justice considers, in the absence of an objective justification, to restrict competition by object.558

(v)  Difference Between Exclusivity Necessary for Supply and Ancillary Restraints Doctrines

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3.289  At first glance there appears to be a degree of tension between the Société Technique Minière559 /Nungesser560 approach and the ancillary restraints doctrines. In Métropole Télévision561 and subsequently Van den Bergh Foods,562 the General Court held that a clause would be ancillary if in its absence, the main operation would be ‘difficult or even impossible to implement’;563 the question of whether the restriction was necessary for the commercial success of the main operation was, for the reasons outlined in preceding section, a matter largely for Article 101(3). However, under the Société Technique Minière/ Nungesser case law, the commercial aspects of the case are central to the analysis. 3.290  These judgments are not inconsistent with one another. The Société Technique Minière/Nungesser line of cases applies to agreements in which market entry would not occur at all but for the restrictive clause. Conversely, in Métropole Télévision the General Court found that a company could be launched in the relevant market without the exclusivity granted in the agreement under review.564 As such, the restrictive clause under review went to the commercial success of the joint venture rather than whether entry could take place at all.565 3.291  This distinction has arguably been muddied slightly by the General Court’s recent reliance under Article 101(1) in O2 (a case concerning 3G mobile telephony) on factors normally considered under Article 101(3) (speed of roll-out, better coverage, quality, transmission rates). 3.292  Two points are worth noting in this regard, however. First, the General Court considered these factors as part of its assessment of whether O2 could enter the market and be an ‘effective competitor’566 in the absence of the agreement. It found that ‘O2’s competitive position…would probably not have been secure without the agreement, and it might even have been jeopardised.’567 It is submitted that this approach is not significantly different to that taken in the Societé Technique Minière/Nungesser/European Night Services line of cases. (p. 267) 3.293  Secondly, the General Court explicitly recognized that it had not, in this judgment, ruled on the correct test in this regard. It held that: The argument relied on by the defendant at the hearing that there is a significant difference between not being able to penetrate a market and being able to do so with difficulty cannot, in any event, invalidate the above considerations since, in the Decision, the Commission specifically failed to analyse objectively the competition situation in the absence of the agreement under Article 101(1).568

(f)  Appreciability 3.294  Agreements which restrict competition will nevertheless fall outside Article 101(1) if they do not have an appreciable impact on competition (or on interstate trade).569 In Völk v Vervaecke,570 one of its earliest competition cases, the Court of Justice held that: An agreement falls outside the prohibition in Article [101(1)] where it has only an insignificant effect on the market, taking into account the weak position which the persons concerned have on the market of the product in question. 3.295  The Commission has given guidance on this concept (also known as the de minimis doctrine) in its De Minimis Notice.571 This Notice provides market share572 thresholds below which, in Commission’s view,573 an agreement574 cannot have an appreciable effect on competition. The thresholds575 are as follows:

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(a)  the aggregate market share held by the parties to the agreement does not exceed 10 per cent on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors (‘horizontal’ agreements); or (b)  if the market share held by each of the parties to the agreement does not exceed 15 per cent on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors (‘vertical’ agreements or ‘agreements between noncompetitors’). 3.296  In the case of a mixed horizontal/vertical agreement or where it is difficult to classify the agreement as either horizontal or vertical, the 10 per cent threshold is applicable. The threshold is reduced further to 5 per cent, for both horizontal and vertical agreements, where there is a parallel network of agreements having similar foreclosure effects on the relevant market, that is, only those suppliers or distributors with a market share of less than 5 per cent can rely on the provisions of this Notice to escape the scope of Article 101(1). As for cumulative (p. 268) foreclosure itself,576 the Notice states that such effects are unlikely to occur if less than 30 per cent of the relevant market is covered by parallel networks of agreements having similar effects. 3.297  It is important to stress, however, that agreements which breach the thresholds of the Notice do not necessarily fall within the scope of Article 101(1). In European Night Services, the General Court held that the ‘mere fact that [the] threshold may be reached and even exceeded does not make it possible to conclude with certainty that an agreement is caught by Article [101(1)] of the Treaty’.577 Thus, even where agreements exceed the thresholds set out in the Notice, ‘the Commission must provide an adequate statement of its reasons for considering such agreements to be caught by the prohibition’ of Article 101(1).578 This is reflected in the Notice itself which expressly states that ‘In this notice the Commission quantifies, with the help of market share thresholds, what is not an appreciable restriction of competition under Article 101. This negative definition of appreciability does not imply that agreements between undertakings which exceed the thresholds set out in this notice appreciably restrict competition’.579 As such, the Notice effectively sets ‘safe harbours’ below which agreements cannot be said to have an appreciable effect on competition.

(g)  Cumulative Effects Doctrine 3.298  The cumulative effects doctrine covers the fourth category of cases in which the EU Courts have found restrictive clauses to fall outside Article 101(1) because of the market context in which they operate. 3.299  Under the doctrine, vertical agreements containing restrictions do not fall within the scope of Article 101(1) if there are ‘real concrete possibilities’580 for new players to enter the market or for existing participants to expand. Where this is not the case (ie where the market is foreclosed), exclusive agreements can still escape the application of Article 101(1) if they do not significantly contribute to the foreclosure effect. 3.300  The doctrine is set out most clearly in Van den Bergh Foods where the General Court held581 that ‘When examining the correctness of the Commission’s assessment of the existence and degree of market foreclosure, the Court cannot confine itself to looking at the effects of the exclusivity clause, considered in isolation, referring only to the contractual restrictions imposed by [the supplier’s] distribution agreements on individual retailers’. In

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order to determine whether such agreements fall within Article 101(1), it is necessary to consider whether: all the similar agreements entered into in the relevant market and the other features of the economic and legal context of the agreements at issue, show that those agreements cumulatively have the effect of denying access to that market to new competitors. If, on examination, that is found not to be the case, the individual agreements making up the bundle of agreements cannot impair competition within the meaning of Article [101(1)] of the Treaty. (p. 269) If, on the other hand, such examination shows that it is ‘difficult to gain access to the market, it is then necessary to assess the extent to which the agreements at issue contribute to the cumulative effect produced, on the basis that only those agreements which make a significant contribution to any partitioning of the market are prohibited’. 3.301  It is worth noting that the scope of application of the doctrine is not as wide as it might, at first, seem: if a bundle of contracts from a particular producer makes a sufficient contribution to the foreclosure effect to fall within Article 101(1) then every agreement within the bundle, however small, will be caught. 3.302  The cumulative effects doctrine raises a number of complex practical and theoretical issues. These are discussed in Chapter 9, Section C.582 [To be checked]

(h)  The Purpose of the Market Analysis (i)  No Rule of Reason under Article 101(1) 3.303  As discussed in Section C.8(c), a restriction of rivalry is not, in and of itself, sufficient for the application of Article 101(1): agreements must be assessed in their specific market context. In a series of appeals, including Métropole Télévision583 and Van den Bergh Foods,584 it was argued by the applicants that this meant that agreements fell within Article 101(1) only where a weighing up of the pro- and anti-competitive effects showed that there was a net negative impact on competition. This approach, sometimes known as the ‘rule of reason’, was challenged by the Commission and rejected by the General Court. 3.304  The question whether Article 101(1) requires (or at least should require) a balancing exercise of this nature to be conducted has long been debated585 and has not, in the view of some commentators, been settled by the General Court’s judgments in Métropole Télévision and Van den Bergh Foods. Those who believe that Article 101(1) requires such an approach rely on the line of (mostly Court of Justice) cases discussed in Sections C.8(d) and (e), in particular Metro I and II,586 Nungesser,587 Coditel,588 Pronuptia,589 Gøttrup-Klim,590 European (p. 270) Night Services,591 Wouters,592 and O2.593 In summary, the argument is as follows:594 in these cases the EU Courts found restrictive clauses to fall outside Article 101(1) either because they were necessary for the implementation of a legitimate commercial or public policy purpose (‘ancillary restraints doctrine’) or for goods/services to be supplied at all because of the commercial risks involved (‘necessity for supply doctrine’). A balancing of pro- and anti-competitive effects is inherent in such approaches. Thus, the very finding that a particular activity is legitimate implies a value judgement; in a commercial ancillarity case this will inevitably involve an assessment of whether the main agreement ‘taken as a whole…is capable of encouraging competition on the market’595 or is at least neutral in competitive terms; in a vertical ‘necessity for supply’ doctrine case it could involve a balancing of increased inter-brand competition against a reduction in intrabrand competition.

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3.305  The need for a balancing of the kind envisaged by the parties in Métropole Télévision and Van den Bergh Foods has, however, been rejected by the majority of commentators. There are a number of reasons for this. First, as noted in paras 3.219 to 3.229, the Commission’s and the EU Courts’ focus had, until recently, been on whether the agreement under review hindered the entry of potential competitors or the expansion of existing players. A rule of reason approach, however, requires a weighing up of the pro- and anti-competitive effects to determine an agreement’s net effect on competition—the impact of the agreement on existing or potential players would be but one element within this. 3.306  Secondly, whilst a degree of balancing is clearly inherent in the ‘ancillary restraints’ and ‘necessity for supply’ doctrines, with the exception of the Metro cases,596 GøttrupKlim,597 Wouters,598 and O2599 there is little in the language of the judgments referred to in para 3.304 to suggest that a fuller market assessment was conducted by the EU Courts in order to ascertain the overall, or net, impact on competition. 3.307  Rather, in the cases categorized in para 3.304 as falling within the ancillary restraints doctrine, the EU Courts appear to have taken the ‘commonsense’ view that certain forms of activity such as franchising (Pronuptia) and the sale of a business (Remia) were legitimate activities which would have been harmed by an overly expansive application of Article 101(1). By taking this approach, the EU Courts prevented Article 101(1) from ‘extending wholly abstractly and without distinction to all agreements whose effect is to restrict the freedom of action of one or more of the parties’.600 (p. 271) 3.308  In the case of the ‘necessity for supply’ doctrine, the level of economic analysis conducted by the Court of Justice in its leading judgments was, it is submitted, too superficial and impressionistic to suggest that a balancing of the kind necessary under the rule of reason approach was conducted. 3.309  As for the judgments referred to in para 3.304, it will be argued that they are either distinguishable (Metro I/II and, with greater difficulty, O2) or are best interpreted as ancillary restraints cases (Gøttrup-Klim and Wouters). 3.310  Thirdly is the clear, unambiguous rejection of the approach by the General Court in Métropole Télévision,601 Van den Bergh Foods,602 and MasterCard.603

(ii)  Gøttrup-Klim604 3.311  In this case the Court of Justice was asked to consider whether a joint buying cooperative which prevented its members from buying through other similar arrangements (referred to in the judgments as the ‘prohibition of dual membership’)605 fell within Article 101(1). In setting out its view, the Court used language which could be read as implying a consideration of the overall effect on competition: it held that ‘the activities of cooperative purchasing associations may…make way for more effective competition…[the p]rohibition of dual membership does not, therefore, necessarily constitute a restriction of competition… and may even have beneficial effects on competition’.606 3.312  However, the Court’s conclusion was, it is submitted, primarily driven by the imbalance in the bargaining position of the sellers and buyers in this market: the Court found that the joint buying cooperative ‘constitute[d] a significant counterweight to the contractual power of large producers’ and that the prohibition of dual membership was necessary for its effective operation. The Court found that where some members of two competing cooperative purchasing associations belong to both at the same time, ‘the result is to make each association less capable of pursuing its objectives for the benefit of the rest of its members’, especially where the members concerned, as in the case in point, are themselves cooperative associations with a large number of individual members. It followed from this that such ‘dual membership would jeopardize both the proper functioning of the cooperative and its contractual power in relation to producers’. The Court of Justice went on to hold that ‘in order to escape the prohibition laid down in Article [101(1)] of the Treaty,

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the restrictions imposed on members by the statutes of cooperative purchasing associations must be limited to what is necessary to ensure that the cooperative functions properly and maintains its contractual power in relation to producers’.607 3.313  Therefore, whilst not impossible to argue the contrary, the case is better understood as one in which the ancillary restraints doctrine was applied in a market context in which the relevant undertakings had little economic power. Put differently, whilst the case may be consistent with a rule of reason approach, it would be dangerous for advisers overly to rely on it as (p. 272) precedent for the proposition that a real balancing of pro- and anticompetitive effects608 is necessary under Article 101(1) given (a) the fact that the case concerned a joint purchasing arrangement in which the purchasers were evidently in a much weaker position that the suppliers and (b) the fact that the Court of Justice’s approach is consistent with the ancillary restraints doctrine—a doctrine which, unlike the rule of reason, has explicitly been confirmed by both the Commission and the General Court as being a legitimate creature of EU competition law.

(iii)  Wouters609 3.314  A similar conclusion can be drawn from Wouters—a preliminary reference under Article 234 of the Treaty (now Art 267 TFEU) in which the Court of Justice found a national regulation prohibiting multi-disciplinary partnerships between member of the Dutch bar and accountants to fall outside the scope of Article 101(1). As with Gøttrup-Klim, it is possible to argue that Wouters is an example of the balancing of pro- and anti-competitive effects under Article 101(1): the Court found that the national regulation was liable to limit production and technical development within the meaning of Article 101(1)(b). It gave three reasons for this: first, since legal services more and more frequently required recourse to an accountant, a multi-disciplinary partnership of members of the Bar and accountants would make it possible to offer a wider range of services. Clients would thus be able to turn to a single entity for a large part of the services necessary for the organization, management, and operation of their business (ie ‘the one-stop shop advantage’).610 Secondly, a multi-disciplinary partnership would be capable of satisfying the needs of what the Court referred to as ‘the increasing interpenetration of national markets and the consequent necessity for continuous adaptation to national and international legislation’. Thirdly, the Court found that it was not inconceivable that the economies of scale resulting from such multi-disciplinary partnerships might have positive effects on the cost of services. 3.315  On the other side, the Court went on to identify benefits which flowed from the regulation. First, it found that the conflict of interest requirement on law firms could, if they were permitted to enter into partnership with accountancy firms, lead to a reduction in the number of undertakings offering legal services. This was because the accountancy market was already highly concentrated.611 Secondly, it found that members of the Bar: might no longer be in a position to advise and represent their clients independently and in the observance of strict professional secrecy if they belonged to an organisation which was also responsible for producing an account of the financial results of the transactions in respect of which their services were called upon and for certifying those accounts.612 3.316  Although these findings were based on assertion rather than detailed argument backed by facts or any real analysis, the Court of Justice would appear to have engaged in at least a degree of balancing between pro- and anti-competitive effects under Article 101(1). This has led some613 to argue that in doing so the Court of Justice adopted a rule of real approach (albeit a highly superficial one).

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(p. 273) 3.317  This interpretation is not, however, easy to reconcile with the main thrust of the judgment, which focused on whether the prohibition was necessary for the proper practice of the legal profession (rather than whether its pro-competitive benefits outweighed its anti-competitive harm). 3.318  The Court held that in applying Article 101(1) ‘account must be taken of [the regulation’s] objectives…[i]t has then to be considered whether the consequential effects restrictive of competition are inherent in the pursuit of those objectives’.614 The Court found that the aim of the regulation was to ensure that the rules of professional conduct for members of the Bar were complied with, having regard to the prevailing perceptions of the profession in that country. The Bar of the Netherlands was entitled to consider that its members might no longer be in a position to act independently and in the observance of strict professional secrecy if they belonged to an organization which ‘was also responsible for producing an account of the financial results of the transactions in respect of which their services were called upon and for certifying those accounts’. In addition, accountants in the Netherlands were not bound by a rule of professional secrecy which was comparable to that of the Bar. In light of these considerations, the Court of Justice concluded that it ‘does not appear that the effects restrictive of competition such as those resulting for members of the Bar practising in the Netherlands from a Regulation such as the 1993 Regulation go beyond what is necessary in order to ensure the proper practice of the legal profession’ in the Netherlands. 3.319  Thus (as with Gøttrup-Klim) whilst not impossible to argue the contrary, the most prudent course for advisers would be to consider this case as one in which the ancillary restraints doctrine was applied (but on public interest grounds). From a rule of reason-type perspective, Wouters is, at most, authority for the proposition that public policy considerations can, in certain circumstances, outweigh harm to competition. This is, however, some way from the proposition that Wouters is authority for the view that Article 101(1) applies only where the pro-competitive effects of an agreement outweigh its anticompetitive harm (such that the overall, or net, effect on competition is neutral or positive).615

(iv)  Metro I and II616 3.320  In these cases, the Court of Justice held that selective distribution systems based only on qualitative and non-discriminatory criteria (‘simple selective distribution’) did not fall within the scope of Article 101(1), notwithstanding the fact that they might have a dampening effect on price competition. It stated that the price effect was counterbalanced by competition on the quality of the services supplied to customers, which was not normally possible in the absence of an adequate profit margin covering the higher costs entailed by such services.617 3.321  The language and approach adopted by the Court of Justice indicate indeed that a degree of balancing was conducted. However, even those who see these cases as authority for a rule of reason approach acknowledge that the judgments do not allow for a clear conclusion to be (p. 274) reached as to where the Court drew the line between Article 101(1) and (3).618 For example, in Metro II the Court considered the increase in the degree of concentration on the market as ‘a factor to be taken into consideration in examining an application for the renewal of an exemption under Article [101(3)] of the Treaty’619 — however, most commentators would agree that under a rule of reason approach the degree of concentration would, first and foremost, be a matter for Article 101(1). Furthermore, any conclusions which may be drawn from these cases on this issue is clouded by the fact that the Court also relied on tests such as the reasonableness of the requirement (para 33) and

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the necessity of the clause for the attainment of a (legitimate) objective (para 27) to reach it conclusion.620 3.322  It can also be argued that the agreements fell outside Article 101(1) because there was no foreclosure effect. First, in a simple selective distribution system there is generally no restriction of rivalry since there is no limit on the number of undertakings that can join. In such circumstances, there is only likely to be a foreclosure effect of the type relevant to Article 101(1) where the existence of a number of similar systems leaves no room for other methods of distribution.621 Secondly, and perhaps more importantly, are the particular facts of the Metro cases themselves: for example, in Metro II the Commission had submitted evidence which showed that Metro had been excluded from only ‘three “simple” distribution systems and four systems entailing other obligations. By contrast, some leading manufacturers distribute their products without resorting to any selection’. The Court found that it was: possible for Metro [the would-be distributor] or other self-service wholesalers to market consumer electronics equipment, and colour television sets in particular, obtained from other producers…Metro has not, however, proved that other methods of distribution of a different kind, such as the self-service wholesale trade, no longer exist on the relevant market.622 It is possible to see this as a finding that the market was not foreclosed—an undertaking wishing to enter could do so in other ways. 3.323  Given all this, even if a balancing exercise of some sort was conducted by the Court, it would be prudent for advisers to regard this area of law as sui generis. It is interesting to note in this regard that these cases do not appear to have been relied upon by the applicants in any of the recent appeals based on the rule of reason.623

(v)  O2624 3.324  This case concerned an infrastructure sharing and national roaming arrangement in Germany between two mobile operators, O2 and T-Mobile. The General Court explicitly relied on the test set out by the Court of Justice in Société Technique Minière625 in reaching its conclusions: the General Court held that for an agreement to be restrictive by effect: it is necessary to find that those factors are present which show that competition has in fact been prevented or restricted or distorted to an appreciable extent. The competition in question (p. 275) must be understood within the actual context in which it would occur in the absence of the agreement in dispute; the interference with competition may in particular be doubted if the agreement seems really necessary for the penetration of a new area. On the facts, the General Court found that the Commission had failed to assess properly ‘the extent to which the agreement was necessary for O2 to penetrate the 3G mobile communications market’.626 The Court went on to find that O2’s position on the 3G market would ‘probably not have been secure without the agreement, and it might even have been jeopardised’.627 3.325  In reaching this conclusion, however, the General Court appeared to rely on factors such as the efficiency, efficacy, and speed of entry.628 In particular, the General Court found that the ‘roaming agreement of the type concluded…is capable of enabling, in certain circumstances, the smallest operator [O2] to compete with the major players’. In essence, the General Court appeared to find that in the absence of these arrangements O2 would have been a less effective competitor to the major incumbents.

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3.326  Under the more traditional approach, the General Court would have limited itself to considering whether the ‘the agreement seems really necessary for the penetration of a new area’.629 The ‘pro-competitive’ assessment of whether the agreement enabled a weaker competitor to compete more effectively with strong incumbents would have been considered under Article 101(3). (i)  Does O2 Signal a Change in Direction?

3.327  The case can be interpreted in two ways. On the one hand, the General Court itself argued that such an approach did ‘not amount to carrying out an assessment of the pro- and anti-competitive effects of the agreement and thus to applying a rule of reason, which the Community judicature has not deemed to have its place under Article 101(1)’.630 3.328  It is also worth noting that O2 contains a number of elements which suggest that the General Court’s findings were case-specific. First, the General Court is very careful to stress the ‘specific characteristics’631 of (what it refers to on a number of occasions in the judgment as) this ‘emerging market’.632 (p. 276) 3.329  Secondly, when noting the pro-competitive elements of the arrangements, the General Court often uses language which is highly qualified. For instance, the quote set out in para 3.270 contains a significant number of caveats—for the sake of clarity it is repeated here for added emphasis: ‘In the present case, it cannot be ruled out that a roaming agreement of the type concluded…is…capable of enabling, in certain circumstances, the smallest operator to compete with major players…’.633 3.330  Thirdly, it is evident from the language used that the General Court was unimpressed by the Commission’s case—the judgment could thus be seen as a ‘commonsense’ one in which the General Court refused to find anti-competitive an agreement which helped a very weak competitor to enter and compete more effectively with much stronger incumbents. 3.331  Fourthly, unlike cases such as Métropole Télévision634 and Van den Bergh Foods,635 the agreements in O2 raised no foreclosure issues. They also did not appear to harm the process of rivalry between the parties. The Court found: that the general assessment in recital 107 of the [Commission’s decision] that national roaming restricts competition because it enables a roaming operator to slow down the roll-out of its network and places it in a situation of technical and commercial dependence on the network of the visited operator is not based on any concrete evidence specific to the agreement and contained in the [Commission’s decision].636 3.332  Finally, and perhaps most significantly, the judgment is not clear as to the importance of the agreement for O2’s participation in the market: whilst some paragraphs, such as 109, suggest that agreements merely permitted O2 to compete more vigorously with bigger players, others, in particular paragraph 114, suggest that O2’s position was far more precarious: ‘It is therefore apparent, ’ the General Court concluded, ‘that, in the light of the specific characteristics of the relevant emerging market, O2’s competitive situation on the 3G market would probably not have been secure without the agreement, and it might even have been jeopardised’. This finding arguably brings this case in line with the ‘necessity for supply’ doctrine. 3.333  That said, in light of the nature of the assessment made, and the focus of the General Court on consumer welfare in other recent cases,637 it is however possible to

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argue, at least with a degree of force, that O2 is some sort of a turning point in the approach taken by the General Court to Article 101(1). 3.334  First, unlike Métropole Télévision and Van den Bergh Foods, the judgment in O2 was handed down after the adoption of the Article 101(3) Guidelines.638 Although the EU Courts have increasingly shown less deference to the Commission, the position taken by the General Court in this case is broadly in line with the general approach set out in the Article 101(3) Guidelines.639 (p. 277) 3.335  Secondly, and more importantly, it is clear from the judgment that the General Court could easily have overturned the Commission’s decision on the basis of the Commission’s failure to take into account properly relevant facts such as changes to the duration of the agreements made by the parties after notification. For instance, the General Court found that ‘the general assessment of the restrictive nature of roaming is not substantiated in the light of the key parameter consisting in the duration of the agreement, that is to say taking account of the timetable for phasing out roaming envisaged for each area’.640 Had the Commission: actually taken into account the amendments to the agreement concerning roaming in urban areas in the examination of whether the agreement is compatible with the common market, it is possible that it would have made findings which differ from those which it reached in the Decision, in particular as regards the need for those new elements for O2 to gain access to the 3G market in urban areas.641 Similarly, the General Court found that the Commission was wrong to work on the assumption that since O2 was present on the 2G market, it would, in the absence of the agreement, necessarily also be present on the 3G market: It must be held that that assumption is not supported in the Decision by any analysis or justification showing that it is correct, a finding that, moreover, the defendant could only confirm at the hearing. Given that there was no such objective examination of the competition situation in the absence of the agreement, the Commission could not have properly assessed the extent to which the agreement was necessary for O2 to penetrate the 3G mobile communications market. The Commission therefore failed to fulfil its obligation to carry out an objective analysis of the impact of the agreement on the competitive situation.642 In summary, the General Court found that the decision ‘suffers from insufficient analysis’ and complained that the decision was confined, in respect of roaming at least, ‘to a petitio principii and to broad and general statements’.643 3.336  Instead of overturning the Commission’s decision on the basis of these flaws, the General Court however chose to undertake a detailed analysis of the market under Article 101(1) which encompassed some ‘pro-competitive’ factors traditionally reserved for consideration under Article 101(3). It is worth noting in this regard that the General Court appeared, at least implicitly, to acknowledge the difference between its approach and the more traditional view advocated by the Commission at the hearing: The argument relied on by the defendant at the hearing that there is a significant difference between not being able to penetrate a market and being able to do so with difficulty cannot, in any event, invalidate the above considerations since, in the Decision, the Commission specifically failed to analyse objectively the competition

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situation in the absence of the agreement under Article [101(1)] and Article 53(1) of the EEA Agreement.644 In other words, the Commission has not identified the relevant ‘counterfactual’ as constituent part of a competitive effects analysis.

(p. 278) (vi)  Explicit Rejection of the Rule of Reason under Article 101(1) by the General Court 3.337  In Métropole Télévision645 and subsequently in Van den Bergh Foods646 —and more recently in O2 and MasterCard647 —the General Court explicitly rejected the rule of reason approach under Article 101(1). The Court held that the requirement to assess agreements in their market context did not mean that ‘it is necessary to weigh the pro and anticompetitive effects of an agreement in order to determine whether it is caught by the prohibition laid down in [Article 101(1)]’.648 This is because such an approach would be ‘difficult to reconcile with the rules prescribed by [Article 101].’649 Article 101 ‘expressly provides, in its third paragraph, for the exemption of agreements that restrict competition where they satisfy a number of conditions…It is only within the specific framework of that provision that the pro and anticompetitive aspects of a restriction may be weighed.’ The General Court explained that Article 101(3) ‘would lose much of its effectiveness if such an examination had already to be carried out under Article [101(1)] of the Treaty’.650

(i)  Extent of Market Analysis 3.338  Having rejected the rule of reason, the General Court went on to hold that the purpose of the market analysis is to prevent Article 101(1) from ‘extending wholly abstractly and without distinction to all agreements whose effect is to restrict the freedom of action of one or more of the parties’.651 3.339  However, given its objective, the extent of the analysis may vary from case to case. In Delimitis,652 the Court of Justice conducted a detailed analysis of the market to determine whether access was appreciably impeded by the vertical agreements under review. This involved not only the definition of the relevant antitrust market but also identification and consideration of the options available to undertakings wishing to enter the market in light of the number and duration of other restrictive agreements already in place. In a similar case, Van den Bergh Foods, the General Court arguably undertook an even more exhaustive factual analysis to ascertain the degree to which the market was foreclosed to potential new entrants, and/or existing players wishing to expand, and whether Van den Bergh’s agreement appreciably contributed to this foreclosure.653 It is worth noting, however, that the analysis conducted by the General Court in this case, whilst relatively detailed in comparison to many of its other judgments, was not especially precise on the question of whether there were, in fact, sufficient opportunities for new competitors to penetrate that market. For example, it did not consider the minimum number of sales outlets necessary for profitable entry in this market.654 3.340  In O2,655 the General Court was critical of the Commission for its failure to undertake a thorough assessment. For example, it held that the Commission had been wrong to work on (p. 279) the assumption that, in the absence of the agreement, O2 would be present on the 3G mobile market agreement merely because it was present on the 2G one: It must be held that that assumption is not supported in the Decision by any analysis or justification showing that it is correct, a finding that, moreover, the defendant could only confirm at the hearing. Given that there was no such objective examination of the competition situation in the absence of the agreement, the Commission could not have properly assessed the extent to which the agreement was necessary for O2 to penetrate the 3G mobile communications market. The

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Commission therefore failed to fulfill its obligation to carry out an objective analysis of the impact of the agreement on the competitive situation.656 Similarly, as regards the impact of agreement on wholesale prices, the General Court found that the Commission’s case had ‘not been demonstrated’. Indeed, the Commission’s findings were, according to the General Court: belied by the statement in the Decision that the parties to the agreement have different pricing principles (recital 140). Moreover, in response to the questions put by the [General Court], referred to in paragraph 36 above, concerning O2’s price structure, the applicant has supplied information from which it is apparent that, by means of different types of products and services, a variety of subscription packages and pricing formulae combining many variables, it attempts to differentiate itself from T-Mobile.657 3.341  Conversely in Métropole Télévision,658 a case concerning the pay-TV market in France, the General Court limited itself merely to upholding, with little more, the Commission’s cursory analysis of the impact of a clause obliging the parents of a joint venture to supply certain channels exclusively to their subsidiary. The Commission had found that although these channels did not constitute a type of content that was ‘essential for pay-TV’, and that two other digital bouquets had been launched (one of which, according to the Commission itself, had been a ‘great success’) without offering this content, the exclusivity clause nevertheless had a foreclosure effect sufficient to bring it within the scope of Article 101(1) because: (a)  the channels supplied by the JV’s parents ‘traditionally attract the largest audience shares in France, namely 90% of viewers, if all methods of transmission are aggregated, and 75.1 % of cable viewers’; (b)  ‘There is also potential demand for the general-interest channels broadcast in digital mode, which could largely be accounted for by a peculiarity concerning the reception of terrestrial broadcasts in France. Although broadcasting via terrestrial frequencies is by far the most common method of transmission, reception of the programmes is occasionally poor or even impossible in some areas of France. According to a survey conducted by Médiamétrie over the period November to December 1997, 9, 254, 000 of the 22, 330, 000 homes with a television set were located in areas where reception of the general-interest channels is poor…’ (c)  the attractiveness of the general-interest channels as part of TPS’s bouquet was estimated in surveys carried out on behalf of the company: …of interviewees stated that they had decided to subscribe because of the presence of the general-interest channels. 3.342  In comparison to the approach taken by the EU Courts in Delimitis, Van den Bergh Foods, and O2, the analysis in Métropole Télévision was fleeting—no real attempt was made by the Commission, nor deemed necessary by the General Court, to assess the nature or extent of (p. 280) the foreclosure or indeed to establish, in any concrete way, the importance of this content to competition in this market.659 In essence, the Commission had found, and the General Court had confirmed, that the exclusivity clause was restrictive of competition because it denied ‘competitors access to attractive programmes’.660

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3.343  The discrepancy between the EU Courts’ approaches in these cases creates a degree of uncertainty as to the extent of analysis and evidence that is required for Article 101(1) to apply. Although tempting for the Commission, NCAs, and plaintiffs to follow Métropole Télévision, it is submitted that the cursory analysis and level of detail relied upon by the General Court in that case is something of an aberration.

(j)  Restrictive Clauses Are Not a Necessary Condition for the Application of Article 101(1) 3.344  Both the Commission and the EU Courts have recognized that agreements which do not contain clauses restricting the commercial freedom of the parties can restrict rivalry between them or adversely affect the position of third parties, and therefore fall within Article 101(1). For example, in UK Agricultural Tractor Registration Exchange661 an information sharing system had been set up which had the effect of revealing to all competitors the market positions and strategies of individual undertakings. The system did not contractually limit the participants’ freedom to take independent commercial decisions. The Commission and subsequently the Court of Justice found that, on a highly oligopolistic market, uncertainty about the future conduct of competitors was one of the only remaining spurs to competition. The exchange of information which reduced this uncertainty was therefore likely substantially to impair competition between them. Thus, the agreement fell within Article 101(1) even though it did not explicitly limit the parties’ commercial freedom. Similarly, in British-American Tobacco,662 the Court of Justice held that an acquisition of a minority shareholding in a competitor could fall within Article 101(1) if, inter alia, it served as an instrument for influencing the commercial conduct of the companies in question or created a structure likely to be used for such cooperation between them. 3.345  A comparable logic has been used by the Commission in some of its decisions. In GEC-Weir Sodium Circulators, the Commission held that: Even in the absence of express provisions, the creation of a joint venture generally has a notable effect on the conduct of parent parties who have a significant holding in the joint venture. Within the field of the joint venture and in related fields such parties are likely to co-ordinate their conduct and be influenced in what would otherwise have been their independent decisions and activities. Where the parent parties are actual or potential competitors, their participation in a joint venture is accordingly likely to impair free competition between them, regardless of the existence of explicit restrictive provisions to that effect.663 (p. 281) 3.346  More recently, in its Horizontal Cooperation Guidelines, the Commission stated that for an agreement to have restrictive effects on competition within the meaning of Article 101(1), it ‘must reduce the parties’ decision-making independence’.664 However, contractual terms in the agreement which limit the participants’ freedom to take independent commercial decisions are just one of the factors taken into account when this analysis is made—another is that the agreement ‘influenc[es] the market conduct of at least one of the parties by causing a change in its incentives.’665

(k)  The Commission’s Policy as set out in the Article 101(3) Guidelines 3.347  The Commission’s traditional approach, which was heavily criticized by many commentators,666 gradually changed from the mid-1990s onwards to encompass greater economic analysis.667 It culminated in 2004 with the adoption of the Article 101(3) Guidelines which explicitly state that ‘Article [101(1)] only applies where on the basis of a proper market analysis it can be concluded that the agreement has likely anti-competitive effects on the market’.668 Underpinning this is an assessment of market power and the

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likely impact of agreements on price, output, innovation, and the variety or quality of goods and services.669 3.348  How is this ‘economic’ approach to be applied? The Article 101(3) Guidelines set out a two-step test for the assessment of cases under Article 101(1). The first step consists of the identification counterfactuals, one for agreements affecting inter-brand competition and the other for restrictions on intra-brand competition, which are intended to determine whether the agreement is capable of restricting competition. 3.349  The second step involves an assessment of the likely impact of the agreement on the parameters of competition: for an agreement to fall within Article 101(1) ‘it must affect actual or potential competition to such an extent that on the relevant market negative effects on prices, output, innovation or the variety or quality of goods and services can be expected with a reasonable degree of probability’.670

(i)  Step 1: The Counterfactual 3.350  Paragraph 18 of the Article 101(3) Guidelines sets out two counterfactuals to assess cases under Article 101(1). The first applies to agreements which allegedly affect interbrand competition between the parties or from third parties. It seeks to determine whether ‘the agreement restrict[s] actual or potential competition that would have existed without the agreement’. If the answer is yes, the ‘agreement may be caught by Article [101(1)]’.671 (p. 282) 3.351  The Guidelines provide examples of how the counterfactual might be applied in practice. The first is where two undertakings established in different Member States undertake not to sell products in each other’s home markets. In this case, potential competition that existed prior to the agreement is restricted. The second example given is that of a supplier imposing obligations on its distributors not to sell competing products. These obligations foreclose third party access to the market. As such, actual or potential competition that would have existed in the absence of the agreement is restricted. 3.352  The Article 101(3) Guidelines make clear that the economic and legal context will be taken into account in assessing whether the parties to an agreement are actual or potential competitors. For instance: if due to the financial risks involved and the technical capabilities of the parties it is unlikely on the basis of objective factors that each party would be able to carry out on its own the activities covered by the agreement the parties are deemed to be non-competitors in respect of that activity’. However, ‘it is for the parties to bring forward evidence to that effect.672 3.353  The second counterfactual seeks to determine whether ‘the agreement restrict[s] actual or potential competition that would have existed in the absence of the contractual restraint(s)’.673 Although the literal interpretation of this phrase suggests otherwise, paragraph 18(2) of the Article 101(3) Guidelines makes it clear that this counterfactual, in practice, will relate to intra-brand competition. The example given in the Article 101(3) Guidelines is of a supplier restricting its distributors from competing with one another through the use of resale price maintenance and territorial or customer sales restrictions— in this situation ‘(potential) competition that could have existed between the distributors absent the restraints is restricted’. 3.354  The distinction drawn between inter- and intra-brand competition at this level of the analysis appears to have been made for two reasons. First, to underline the implications of the Court of Justice’s judgment in Consten and Grundig where the Court held that: ‘although competition between producers is generally more noticeable than between distributors of products of the same make, it does not thereby follow that an agreement tending to restrict the latter kind of competition should escape the prohibition of Article [101(1)] merely because it might increase the former’.674 By setting out two separate

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counterfactuals, the Article 101(3) Guidelines underline the view that agreements that restrict intra-brand competition are caught by Article 101(1) even if they also promote inter-brand competition.675 (p. 283) 3.355  The second, and in practical terms the more important, reason for two counterfactuals appears to be that it allows the Commission to take into account, at this stage in the analysis, the approach outlined by the Court of Justice in Société Technique Minière676 and the cases where exclusivity is necessary for supply.677 These judgments made clear that restraints which restrict intra-brand competition but are ‘objectively necessary for the existence [note not implementation or commercial success]678 of an agreement of that type or that nature’ are excluded from the application of Article 101(1).679 The rationale for the ‘18(2) exclusion’ appears subtle but convoluted: the starting point is the fact that there can be no intra-brand competition without vertical agreements. Therefore, as a matter of logic, if a restraint is necessary for the conclusion of a vertical agreement then it can be said to be necessary for the very existence of the intra-brand competition that the agreement creates. Put differently, without the ‘necessary’ restraint, there would be no agreement and therefore no intra-brand competition for Article 101(1) to protect (at least not the intra-brand competition which would have been created by the agreement). As such, intra-brand restraints that are ‘objectively necessary’ for the existence of a vertical agreement fall outside Article 101(1). 3.356  What does ‘objectively necessary’ mean? The Article 101(3) Guidelines make clear that this: exclusion of the application of Article [101(1)] can only be made on the basis of objective factors external to the parties themselves and not the subjective views and characteristics of the parties. The question is not whether the parties in their particular situation would not have accepted to conclude a less restrictive agreement, but whether given the nature of the agreement and the characteristics of the market a less restrictive agreement would not have been concluded by undertakings in a similar setting.680 In other words the ‘18(2) exclusion’ does not apply merely because, in the absence of the restraint, the parties to the agreement would not have concluded it. The ‘18(2) exclusion’ only applies if, in the absence of the restraint, undertakings in a similar setting would probably not have concluded an agreement of the same type or nature. 3.357  The description given in the Article 101(3) Guidelines of the ‘18(2) exclusion’ is, at least linguistically, almost identical to that used for ancillary restraints.681 However, the Article 101(3) Guidelines assert that whilst the two concepts are ‘similar’, they are not the same. As explained elsewhere in this chapter,682 the ancillary restraints doctrine is relevant only to the practical implementation, as opposed to the commercial success of an agreement. Its scope of application is therefore narrower than that of the ‘18(2) exclusion’.683 From a practical perspective, the important implication of this is that the assessment of commercial risk under (p. 284) Article 101(1) is, according to the Article 101(3) Guidelines, mainly relevant to intra-brand restraints—arguments based on the commercial need for restraints on inter-brand competition are unlikely to be successful in taking agreements outside Article 101(1). This is reflected in the examples given in the Article 101(3) Guidelines of situations covered by the ‘18(2) exclusion’. The first is where a potential licensee would not take a licence for a new technology which requires large upfront investment without initial protection from licensees in other territories.684 The second is where a licensor would be unlikely to license widely if he faced direct competition from his own licensees.685

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3.358  As an aside it is also worth noting that whilst the ‘18(2) exclusion’ is built on the logic of the Court of Justice’s judgments in Société Technique Minière and the cases where exclusivity is necessary for supply, it also introduced a new aspect by including within its scope elements which are akin to those found under the ‘objective justification’ defence to Article 102—the example given in the Article 101(3) Guidelines is of ‘a prohibition imposed on all distributors not to sell to certain categories of end users…for reasons of safety or health related to the dangerous nature of the product in question’.686

(ii)  Step 2: Assessment of the Likely Effect of the Agreement Restraint on Prices, Output, Innovation, or the Variety or Quality of Goods or Services 3.359  The second step in the analysis is to consider whether the agreement affects actual or potential competition to such an extent that on the relevant market appreciable negative effects on prices, output, innovation, or the variety or quality of goods and services can be expected with a reasonable degree of probability. 3.360  For the avoidance of doubt, this step is only relevant if application of the counterfactuals shows that an agreement is capable of restricting competition. 3.361  In certain cases, it may be possible to show anti-competitive effects, such as price increases, directly by analysing the conduct of the parties to the agreement on the market and/or the available data. However, in most instances, this will not be possible either because the data does not exist or because the agreement has yet to be put into effect. 3.362  According to the Article 101(3) Guidelines, in such cases analysis of the restrictive effects of the agreement requires consideration ‘inter alia [of] the nature of the products, the market position of the parties, the market position of competitors, the market position of buyers, the existence of potential competitors and the level of entry barriers’.687 The aim of this analysis is to ascertain if ‘the parties individually or jointly have or obtain some degree of market power and [whether] the agreement contributes to the creation, maintenance or strengthening of that market power or allows the parties to exploit such market power’.688 Where this is the case, the Article 101(3) Guidelines assume that ‘negative effects on competition within the relevant market are likely to occur’.689 3.363  Market power is defined as: (p. 285) the ability to maintain prices above competitive levels for a significant period of time or to maintain output in terms of product quantities, product quality and variety or innovation below competitive levels for a significant period of time… [i]t is when competitive constraints are insufficient to maintain prices and output at competitive levels that undertakings have market power within the meaning of Article [101(1)].690 The Article 101(3) Guidelines go on to confirm that the degree of market power normally required for the finding of an infringement under Article 101(1) is less than that required for a finding of dominance under Article 102. 3.364  In this context, it is submitted that ‘appreciability’ and ‘market power’ effectively serve the same purpose, that is, to define when an agreement, concerted practice, or decision by an association of undertakings has such an impact on the market that it can be said that adverse effects on the market outcome—that is, parameters of competition such as price, output, product quality or variety, or innovation—are likely. The former is, effectively, a remnant of an era where a restriction of competition was tantamount to a restriction of the parties’ freedom of action. ‘Appreciability’ served as a filter to exclude from the prohibition of Article 101 agreements which restrict the parties’ freedom of action but which are unlikely to have a meaningful (‘appreciable’) impact on the market given the parties’ insignificant clout on the market. It is therefore a legal concept which the Court of Justice introduced to ensure that the freedom of action doctrine, which as noted in paras 3.160 et seq, was at the centre of competition enforcement in the EU until not so long ago, From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

did not ensnare agreements which had an ‘insignificant’ or, in the Commission’s words, ‘negligible’ effect on the market.691 Without such an instrument, the freedom of action theory would have brought within the scope of Article 101(1) a far larger number of agreements since, almost by definition, most contracts limit, to some extent, the commercial freedom of the parties. 3.365  ‘Market power’ is, in essence, no different; although it employs a different perspective. Under the ‘market power concept’ embraced by the Commission, the limitation of the parties’ decision-making independence (freedom of action) also plays a role for finding a restriction of competition within the meaning of Article 101(1).692 But it is only a starting point in the analysis and does not suffice to label agreements as restrictive of competition. The parties’ ‘market power’ is used as a proxy for the likelihood that the restriction of the parties’ freedom of action will have a negative impact on the market. ‘Market power’ is defined by the Commission as ‘the ability to profitably maintain prices above competitive levels for a period of time or to profitably maintain output in terms of product quantities, product quality and (p. 286) variety or innovation below competitive levels for a period of time.’693 Therefore, where the parties have market power, they are able negatively to affect the market outcome by, for example, increasing prices—and, as profit-maximizing undertakings, they naturally also have the incentive to do so. This means that in effect the difference between the ‘appreciability’ and the ‘market power’ approaches is only semantic. Whereas the ‘appreciability approach’ limits a wide notion of restriction of competition to catch only those restrictions that have a likely negative impact on the market, the ‘market power approach’ only considers limitations of the parties’ liberty to act as restrictive where they have such an impact. Consequently, what the Commission now considers a ‘restriction of competition’ is the same as what would have been referred to not so long ago as an ‘appreciable restriction of competition.’

(l)  The Current State of Affairs: Developments in the Commission’s Policy and the EU Courts’ Case Law Subsequent to the Article 101(3) Guidelines 3.366  Subsequent to the adoption of the Article 101(3) Guidelines in 2004, both the Commission and the EU Courts have had the opportunity to revisit the approach taken in the Article 101(3) Guidelines. It is submitted that both the Commission and the EU Courts have effectively endorsed that approach, while at the same time making some noteworthy adjustments. The Commission’s main policy document adopted after the Article 101(3) Guidelines and that deals in depth and at an abstract level with the notion of restrictive effects on competition, are the Horizontal Cooperation Guidelines, adopted in 2011. The EU Courts’ most recent principal judgments dealing with the concept of anti-competitive effects are those rendered in Visa/Morgan Stanley694 and MasterCard.695 The following paragraphs aim to describe the current state of affairs as to how an assessment of restrictive effects on competition within the meaning of Article 101(1) should be carried out in light of those policy documents and judgments. 3.367  For an agreement to have restrictive effects on competition within the meaning of Article 101(1), it must be capable of restricting competitive pressure,696 notably by having an actual or potential appreciable adverse impact on at least one of the parameters of competition on the market, such as price, output, product quality, product variety, or innovation. According to the Horizontal Cooperation Guidelines: Agreements can have such effects by appreciably reducing competition between the parties to the agreement or between any one of them and third parties. This means that the agreement, apart from having an actual or potential effect on the market, must reduce the parties’ decision-making independence, either due to obligations contained in the agreement which regulate the market conduct of at least one of the

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parties or by influencing the market conduct of at least one of the parties by causing a change in its incentives.697 This makes explicit that for the Commission the finding of anti-competitive effects requires both a reduction of the parties’ ‘decision-making independence’, that is, their freedom of action, and an appreciable impact on the market outcome. It also makes clear that a restriction (p. 287) of the parties’ freedom of action does not require restrictive clauses in an agreement; it is sufficient if the agreement changes at least one of the parties’ incentives to compete. 3.368  The assessment of whether an agreement has restrictive effects on competition must be made in comparison to the actual context in which competition would occur in the absence of the agreement with all of its alleged restrictions.698 Making that comparison entails that the Commission identifies a situation which could have realistically occurred in the absence of the alleged restriction; in other words, that the Commission identifies the relevant ‘counterfactual’. 3.369  However, the distinction between inter-brand and intra-brand competition—that is, the approach taken in the Article 101(3) Guidelines—does not appear to be decisive (at least) for the General Court for the identification of the relevant counterfactual. In MasterCard, the General Court held that the key question is rather whether a restriction is an ancillary restraint or not. According to the General Court, where the alleged restriction is not an ancillary restraint, that is to say where it is not directly related to and necessary to the implementation of a main operation,699 the Commission can assess the effects on competition of individual clauses independently of the potential effects of the entire agreements of which they form part. Where an alleged restriction is an ancillary restraint, the effects of the alleged restriction have to be analysed in conjunction with the main agreement.700 Consequently, in the case of a restriction that is not an ancillary restraint the relevant question is what would have happened in the absence of the restriction. The answer to that question needs to be assessed on an individual basis and cannot be given in the abstract. The answer could be, for example, that absent the restriction the parties would have concluded the same cooperation (ie the economic activity governed by the agreement) without the restriction. The answer could also be that the parties would not have entered into the cooperation at all. 3.370  An alternative situation can be relied on as a counterfactual where it is realistic, that is, as the General Court held in MasterCard, where it would have been economically viable.701 This means that it is not required to identify the most likely counterfactual. Consequently, parties cannot successfully argue that an economically viable counterfactual identified by the Commission should be disregarded, as another counterfactual would have been a more likely alternative course of action by the parties in the absence of the restriction or agreement. 3.371  In order to establish that an agreement leads to potential restrictive effects on competition, there must be, according to the Horizontal Cooperation Guidelines, a reasonable degree of probability that negative effects on the market outcome can be expected.702 In order to prove actual or potential restrictive effects on competition, it is necessary to take into account competition between the parties and competition from third parties, in particular actual or potential competition that would have existed in the absence of the alleged restriction.703 This will depend on several factors such as the nature and content of the agreement and (p. 288) its restrictive provisions and the extent to which the parties individually or jointly have or obtain some degree of market power.704 Moreover, when assessing the competitive effects of an agreement under Article 101(1), account should be taken of the actual conditions in which the agreement produces its effects, in particular the economic and legal context in which the undertakings concerned operate, the

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nature of the products or services concerned, as well as the real operating conditions and the structure of the market concerned.705 3.372  The nature and content of the agreement is important for the competitive assessment as this is what effectively shapes the possible competition concerns to which an agreement may give rise. Different types of agreements can lead to different conceivable theories of harm. For example—leaving all efficiency considerations aside—joint R&D agreements may, possibly, lead to reduced or slowed innovation, for instance in the event of a cooperation between developers of two competing technologies which takes place very late in the development process.706 Such a cooperation may reduce technical progress and consumer choice rather than facilitate innovation. A joint production agreement may directly limit competition between the parties and lead to reduced output or variety when compared to a situation where the parties would have produced individually. Joint production may also facilitate tacit collusion and lead to coordinated market conduct, for example where the cooperation leads to a situation where the parties’ costs will be aligned to such an extent that price competition will be substantially reduced.707 The main competition concern in relation to joint commercialization agreements such as joint selling is price fixing.708 3.373  Whether a possible competition concern to which an agreement can give rise is in fact likely to materialize is a separate question. This will largely depend on whether the parties have market power and the extent to which the agreement contributes to the creation, maintenance, or strengthening of that market power or allows the parties to exploit such market power. Market power is defined as ‘the ability to profitably maintain prices above competitive levels for a period of time or to profitably maintain output in terms of product quantities, product quality and variety or innovation below competitive levels’.709 Where profit-maximizing companies have the ability profitably to increase their prices, they will also have an incentive to do so. Consequently, where companies have market power and act rationally, they are likely to use it—and that will then lead to higher prices or less output, product quality and variety, or innovation; in other words, anti-competitive effects. 3.374  Guidance on how market power is identified can been gleamed, to varying degrees, from block exemption Regulations and Commission policy statements, in particular the Horizontal Cooperation Guidelines, the Vertical Restraint Guidelines, and the De Minimis Notice.

(i)  Horizontal Cooperation Guidelines 3.375  The most recent policy document in which the Commission sheds light on the concept of market power is the Horizontal Cooperation Guidelines, which set out the Commission’s approach to assessing horizontal cooperation agreements under Article 101. (p. 289) 3.376  The Commission, first, clarifies that prices above variable costs are generally not indicative of market power—in fact, such prices are normally required to achieve a positive return on investment.710 Secondly, the Commission acknowledges that market power ‘is a question of degree’. Market power sufficient to give rise to a restriction of competition within the meaning of Article 101(1) may be insufficient for the finding of a dominant position within the meaning of Article 102, ‘where a substantial degree of market power is required’.711 3.377  Thirdly, the assessment of market power usually starts with an analysis of the parties’ current market position as expressed in market shares. In addition, the stability of the parties’ market shares over time, entry barriers, likelihood of entry, and countervailing buyer power are relevant. Also the likely evolution of market shares in the future can, if such a prediction could be made with a reasonable degree of certainty, play a role.712

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3.378  The Horizontal Cooperation Guidelines explain that ‘where the parties have a low combined market share, the horizontal co-operation agreement is unlikely to give rise to restrictive effects on competition within the meaning of Article 101(1) and, normally, no further analysis will be required’.713 What is meant by ‘low combined market share’ can be inferred from the market share thresholds and safe harbours set out in the Commission’s block exemption Regulations or guidelines such as the Horizontal Cooperation Guidelines or the De Minimis Notice.714 The Horizontal Cooperation Guidelines acknowledge that due to the variety of effects to which different agreements can give rise and the various market conditions in which they take place, there can be no general market share threshold above which market power can be presumed.715 3.379  As regards the safe harbour market share thresholds, that is, market share thresholds below which it is presumed that there is no market power, the Commission also differentiates by type of agreement in the Horizontal Cooperation Guidelines. For production agreements that do not fall under Regulation 1218/2010,716 that is, horizontal subcontracting agreements with a view to expanding production, the Horizontal Cooperation Guidelines foresee a safe harbour market share threshold of 20 per cent (the same as under Regulation 1218/2010), below which it is assumed that the parties’ agreement is unlikely to lead to restrictive effects on competition.717 Parties to joint purchasing agreements are presumed not have market power where ‘the parties to the joint purchasing arrangement have a combined market share not exceeding 15% on the purchasing market or markets as well as a combined market share not exceeding 15% on the selling market or markets’.718 As regards joint commercialization agreements, ‘it is unlikely that market power exists if the parties to the agreement have a combined market share not exceeding 15%’.719

(p. 290) (ii)  Block Exemption Regulations 3.380  Even though they make application of Article 101(3)—and are therefore a proxy for whether the indispensable restrictions of an agreement are counterbalanced by efficiencies that sufficiently benefit consumers, while not eliminating competition—block exemption Regulations confer market share-based safe harbours, below which it can effectively be assumed that the parties do not have market power. Regulation 1217/2010720 foresees a market share threshold of 25 per cent for agreements between competitors, Regulation 1218/2010 a market share threshold of 20 per cent, and Regulation 772/2004721 a market share threshold of 20 per cent for agreements between competitors and 30 per cent for agreements between non-competitors. Regulation 330/2010722 applies ‘on condition that the market share held by the supplier does not exceed 30% of the relevant market on which it sells the contract goods or services and the market share held by the buyer does not exceed 30% of the relevant market on which it purchases the contract goods or services’.

(iii)  De Minimis Notice 3.381  This Notice provides general market share thresholds below which, in Commission’s view,723 an agreement cannot have an appreciable effect724 on competition. 3.382  The thresholds are as follows: (a)  the aggregate market share held by the parties to the agreement does not exceed 10 per cent on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors (‘horizontal’ agreements); or (b)  if the market share held by each of the parties to the agreement does not exceed 15 per cent on any of the relevant markets affected by the agreement, where the

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agreement is made between undertakings which are not actual or potential competitors (‘vertical’ agreements or ‘agreements between non-competitors’). 3.383  In the case of a mixed horizontal/vertical agreement or where it is difficult to classify the agreement as either horizontal or vertical, the 10 per cent threshold is applicable. The threshold is reduced further to 5 per cent, for both horizontal and vertical agreements, where there is a parallel network of agreements having similar foreclosure effects on the relevant market, that is, only those suppliers or distributors with a market share of less than 5 per cent can rely on the provisions of the Notice to escape the scope of Article 101(1). As for cumulative foreclosure itself, the Notice states that such effects are unlikely to occur if less than 30 per cent of the relevant market is covered by parallel networks of agreements having similar effects. (p. 291) 3.384  It is important to stress, however, that agreements which breach the thresholds of the Notice do not necessarily fall within the scope of Article 101(1). In European Night Services, the General Court held that the ‘mere fact that [the] threshold may be reached and even exceeded does not make it possible to conclude with certainty that an agreement is caught by Article [101(1)] of the Treaty’.725 Thus, even where agreements exceed the thresholds set out in the Notice, ‘the Commission must provide an adequate statement of its reasons for considering such agreements to be caught by the prohibition’ of Article 101(1).726 This is reflected in the Notice itself which expressly states that ‘In this notice the Commission quantifies, with the help of market share thresholds, what is not an appreciable restriction of competition under Article [101]. This negative definition of appreciability does not imply that agreements between undertakings which exceed the thresholds set out in this notice appreciably restrict competition’.727 As such the Notice effectively sets ‘safe harbours’ below which the parties cannot be said to have market power; it does not however provide a starting point for the existence of market power.

Footnotes: 22

  Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C11/1, para 1. 23

  Case C-41/90 Klaus Höfner and Fritz Elser v Macrotron [1991] ECR I-1979, para 21; Case C-35/96 Commission v Italian Republic [1998] ECR I-3851, para 49; Case C-244/94 Fédération Française des Sociétés d’Assurances (FFSA) and Others v Ministère de l’Agriculture et de la Pêche [1995] ECR I-4013, para 14; Case C-55/96 Job Centre coop arl [1997] ECR I-7119, para 21; Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 35; Case C-440/11 P Commission v Stichting Administratiekantoor Portielje, not yet reported, para 36. 24

  Case C-118/85 Commission v Italy [1987] ECR 2599, para 7 (emphasis added); Case C-82/01 P Aéroports de Paris v Commission [2002] ECR I-9297, para 79; Case C-49/07 MOTOE [2008] ECR I-4863, para 22; Case C-437/09 AG2R Prévoyance [2011] ECR I-973, para 42; Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 35. 25

  Case 41/83 Italy v Commission [1985] ECR 873, paras 16–20; Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 35. 26

  Case 7/82 GVL v Commission [1983] ECR 483.

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27

  Case C-244/94 Fédération Française des Sociétés d’Assurances and Others v Ministère de l’Agriculture et de la Pêche [1995] ECR I-4013, para 17. 28

  OJ 1989 L284/36.

29

  Coapi, OJ 1995 L122/37, para 32. On the other hand, individuals acting solely in their capacity as employees are not considered to be undertakings. See eg Joined Cases 40/73, etc Coöperative Vereniging ‘Suiker Unie’ UA and Others v Commission [1975] ECR 1663. Similarly agents may, in certain circumstances, not be undertakings. See Chapter 9, Section D.3. 30

  RAI/UNITEL, OJ 1978 L157/39.

31

  Case 61/80 Coöperatieve Stremsel- en Kleurselfabriek v Commission [1981] ECR 851.

32

  P&I Clubs, OJ 1985 L376/2, OJ 1999 L126/12. In its decision of 19 May 1999, the Commission stated at para 50: ‘The pooling Agreement and the IGA are agreements between the P&I Clubs. These must be considered non-profit-making undertakings performing an economic activity. In fact, they compete between themselves as well as other mutuals and profit-making insurers in some segments of the P&I insurance business.’ 33

  Distribution of Package Tours during the 1990 World Cup, OJ 1992 L326/31.

34

  See Opinion of AG Jacobs in Case C-67/96 Albany International v Stichting Bedrijfspensionenfonds Textielindustrie [1999] ECR I-5751, para 207. 35

  Case C-82/01 P Aéroports de Paris v Commission [2002] ECR I-9297, para 72; Case C-49/07 MOTOE [2008] ECR I-4863, para 25; Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 37. 36

  See discussion of public bodies in Section C.1(c); see also Spanish Courier Services, OJ 1990 L233/19; Höfner and Elser (n 23); Case C-179/90 Merci Convenzionali Porto di Genova v Siderurgica Gabrielli [1991] ECR I-5889; Case C-475/99 Firma Ambulanz Glöckner v Landkreis Südwestpfalz [2001] ECR I-8089; see also Eco-Emballages, OJ 2001 L 233/37, para 70 in which local authorities were found to be undertakings when entering into contracts for the collection of waste. 37

  eg an undertaking offering advertising funded services free of charge to consumers engages in economic activity, see in this regard Case 352/85 Bond van Adverteerders [1988] ECR 2085. 38

  The competition rules relating to both agency and subcontracting agreements are complex. See Chapter 9, Section D.3 and Section D generally. See also the Commission’s Guidelines on vertical restraints, OJ 2010 C130/1, paras 12–21 (for agency) and 22 (for subcontracting), and the Commission’s Notice of 18 December 1978 concerning its assessment of certain subcontracting agreements in relation to Article [101(1) TFEU], OJ 1979 C1/2 (for subcontracting). 39

  See Joined Cases C-180–184/98 Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten [2000] ECR I-6451, paras 79–81. The main exception to this is Case T-319/99 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission [2003] ECR II-357, paras 35–37. 40

  Joined Cases C-180–184/98 Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten [2000] ECR I-6451, paras 79–81. 41

  Case T-319/99 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission [2003] ECR II-357, para 37. The judgment was

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upheld by the CJ in Case C-205/03 P Federación Española de Empresas de Tecnología Sanitaria (FENIN) v Commission [2006] ECR I-6295, para 25. 42

  Emphasis added. The judgment does not deal with the thorny issues of whether such an organization would be an undertaking if it also uses the products/services purchased to supply goods/services as part of an economic activity (eg where a national health service charges non-EU patients for services). It is submitted that in such cases the EU Courts are more likely than not to find the organization to be an undertaking for the purposes of Art 101. See n 30. How they would do so, however, is unclear given the fact that it will usually be difficult to distinguish between purchases made for the provision of economic and noneconomic activities downstream. The issue was raised both before the GC and the CJ but declared inadmissible as it had been raised for the first time at the appeal stage. 43

  Commission v Italy (n 23), para 38.

44

  Joined Cases C-180–184/98 Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten [2000] ECR I-6451, paras 74–77. 45

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 46

  The same issues in relation to the members of the Italian Bar are discussed in the Opinion of AG Léger in Case C-35/99 Criminal proceedings against Manuele Arduino, third parties: Diego Dessi, Giovanni Bertolotto and Compagnia Assicuratrice RAS [2002] ECR I-1529. 47

  See Section C.1(c).

48

  Case C-35/96 Commission v Italy [1998] ECR I-3851.

49

  Case 123/83 Bureau National Interprofessionnel du Cognac v Guy Clair [1985] ECR 391, para 17. 50

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 51

  See paras 3.188ff.

52

  Case C-343/95 Diego Cali & Figli Servizi ecologici porto di Genova (SEPG) [1997] ECR I-1547, [1997] 5 CMLR 484, para 16. See also Case 118/85 Commission v Italy [1987] ECR 2599, para 7; Case 107/84 Commission v Germany [1985] ECR 2655, paras 14 and 15; Case C-364/92 SAT Fluggesellschaft [1994] ECR I-43, para 30; Case C-49/07 MOTOE [2008] ECR I-4863, para 24; Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 36. 53

  Aluminium imports from Eastern Europe, OJ 1985 L92/1.

54

  Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, para 37.

55

  See also Case C-113/07 P SELEX Sistemi Integrati v Commission [2009] ECR I-2207, paras 72ff and Joined Cases C-264/01, etc AOK-Bundesverband and Others [2004] ECR I-2493, para 58. 56

  Case C-41/90 Höfner and Elser [1991] ECR I-1979.

57

  Case 30/87 [1988] ECR 2479, para 35.

58

  Case C-343/95 Diego Cali & Figli Servizi ecologici porto di Genova (SEPG) [1997] ECR I-1547, paras 22–24 (emphasis added). 59

  Case C-364/92 [1994] ECR I-43.

60

  Eurocontrol (n 59), para 30.

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61

  Case C-475/99 Firma Ambulanz Glöckner v Landkreis Südwestpfalz [2001] ECR I-8089, paras 19–22. 62

  Case C-138/11 Compass Datenbank v Republik Österreich, not yet reported, paras 39 and 40–42; see also Case C-364/92 SAT Fluggesellschaft [1994] ECR I-43, paras 28ff and Case C-242/95 Diego Calì & Figli Servizi ecologici porto di Genova (SEPG) [1997] ECR I-1547, paras 22–25. 63

  Joined Cases C-159/91 and C-160/91 Christian Poucet v Assurances Générales de France and Caisse Mutuelle Régionale du Languedoc-Roussillon [1993] ECR I-637, paras 4, 18, 19, 11, and 13. 64

  Emphasis added.

65

  Case T-319/99 Federación Nacional de Empresas de Instrumentación Científica, Médica, Técnica y Dental (FENIN) v Commission [2003] ECR II-357, para 39, upheld on appeal in Case C-205/03 P Federación Española de Empresas de Tecnología Sanitaria (FENIN) v Commission [2006] ECR I-6295. 66

  Case C-205/03 P Federación Española de Empresas de Tecnología Sanitaria (FENIN) v Commission [2006] ECR I-6295. 67

  Case C-244/94 Fédération Française des Sociétés d’Assurances and Others v Ministère de l’Agriculture et de la Pêche [1995] ECR I-4013. 68

  Case C-67/96 Albany International v Stichting Bedrijfspensioenfonds Textielindustrie [1999] ECR I-5751, paras 71–87. 69

  Paras 81–82. See also Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten (n 44), paras 108–119. 70

  Case C-70/95 Sodemare v Regione Lombardia [1997] ECR I-3395, para 29.

71

  Case 170/83 Hydrotherm Gerätebau v Compact del Dott Ing Mario Andreoli & C Sas [1984] ECR 2999, para 11; Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 56; Stichting Administratiekantoor Portielje (n 23), para 36. 72

  Art 102 may, however, apply.

73

  Case 48/69 ICI v Commission [1972] ECR 619; Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 58; Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 43; Stichting Administratiekantoor Portielje (n 23), paras 38 and 44. 74

  Case 15/74 Centrafarm v Sterling Drug [1974] ECR 1147.

75

  Case C-73/95 Viho Europe v Commission [1996] ECR I-5457.

76

  Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 58; see also Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 43; Stichting Administratiekantoor Portielje (n 23), para 38. 77

  See also Stichting Administratiekantoor Portielje (n 23), para 40; Case C-508/11 P ENi v Commission, not yet reported, para 47; Case C-521/09 Elf Aquitaine v Commission [2011] ECR I-8947, paras 56 and 63; Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 46.

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78

  Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 59; Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 44; Stichting Administratiekantoor Portielje (n 23), para 39. 79

  Stichting Administratiekantoor Portielje (n 23), para 43.

80

  Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 60.

81

  Akzo Nobel (n 80), para 61.

82

  This rule also applies where a holding company owns all of the capital of an interposed company which in turn owns 100 per cent of the capital of a company that has infringed the EU competition rules, ie there is a rebuttable presumption that the holding company exercises decisive influence over the interposed company, and, ultimately over the company that has directly committed the infringement. See Case C-90/09 P General Química and Others v Commission [2011] ECR I-1, para 88; Case C-508/11 P ENi v Commission, not yet reported, para 48. 83

  The CJ has had the occasion to deal with the question of whether the presumption of the exercise of decisive influence, and the fact that it is difficult to rebut, are in contradiction with Art 6 of the European Convention on Human Rights (ECHR). The CJ ruled that ‘a presumption, even where it is difficult to rebut, remains within acceptable limits so long as it is proportionate to the legitimate aim pursued, it is possible to adduce evidence to the contrary and the rights of the defence are safeguarded’. See Case C-521/09 P Elf Aquitaine v Commission [2011] ECR I-8947, para 62; Case C-501/11 P Schindler Holding and Others v Commission, not yet reported, para 107; see also Case C-45/08 Spector Photo Group and Chris Van Raemdonck v Commissie voor het Bank-, Financie- en Assurantiewezen (CBFA) [2009] ECR I-12073, paras 43ff. According to the CJ, the presumption that decisive influence is exercised over a wholly owned or almost wholly owned subsidiary serves the legitimate aim of: striking a balance between protecting competition in the EU and the principle of the presumption of innocence; ensuring that penalties should applied solely to the offender; preserving the principle of legal certainty; and protecting the rights of defence, including the principle of equality of arms. The CJ concluded that the presumption is proportionate to those legitimate aims. The presumption therefore does not contravene the principles enshrined in Art 6 ECHR (and Art 47 of the Charter of Fundamental Rights). See Case C-521/09 P Elf Aquitaine v Commission [2011] ECR I-8947, para 59; Case C-501/11 P Schindler Holding and Others v Commission, not yet reported, para 108. 84

  Case C-289/11 P Legris Industries v Commission, not yet reported, para 46; Case C-508/11 P ENi v Commission, not yet reported, para 47. 85

  Stichting Administratiekantoor Portielje (n 23), para 41; Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 61. 86

  Stichting Administratiekantoor Portielje (n 23), para 60.

87

  Case C-97/08 P Akzo Nobel and Others v Commission [2009] ECR I-8237, para 73.

88

  Akzo Nobel (n 87), para 74.

89

  Joined Cases T-208/08 and T-209/08 Gosselin Group and Stichting Administratiekantoor Portielje v Commission [2011] ECR II-3639, para 54. 90

  Stichting Administratiekantoor Portielje (n 23), para 66.

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91

  Stichting Administratiekantoor Portielje (n 23), para 68; see also Case T-77/08 Dow Chemical v Commission, not yet reported, para 107. 92

  Case T-112/05 Akzo Nobel and Others v Commission [2007] ECR II-5049, paras 62ff; Case C-521/09 P Elf Aquitaine v Commission [2011] ECR I-8947, para 58; Case C-501/11 P Schindler Holding and Others v Commission, not yet reported, para 112. 93

  Case C-501/11 P Schindler Holding and Others v Commission, not yet reported, para 112. 94

  Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 43. 95

  See also Section C.1(d)(iii).

96

  Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 45. 97

  Case T-76/08 EI du Pont de Nemours and Others v Commission, not yet reported, para 61. 98

  Gosme/Martell–DMP, OJ 1991 L185/23.

99

  Commission Decision 92/521/EEC of 27 October 1992 in Cases IV/33.384 and IV/33.378, OJ 1992 L326/31. 100

  Joined Cases C-628/10 P and C-14/11 P Alliance One International and Standard Commercial Tobacco v Commission and Commission v Alliance One International and Others, not yet reported, para 101. 101

  See also Case T-76/08 EI du Pont de Nemours and Others v Commission, not yet reported, para 74 and Case T-77/08 Dow Chemical v Commission, not yet reported, para 108, where the GC found that DDE, a joint venture of Dow and DuPont, formed part of one undertaking with Dow and part of one undertaking with DuPont. 102

  Whether the parent companies themselves will be considered, vis-à-vis each other, to be part of a single economic entity simply by virtue of joint control of a joint venture, is another question. The intuitive answer would be ‘no’ where they do not exercise decisive influence over each other or where there is no further parent company that exercises decisive influence over the two joint venture parents. However, the CJ has recently held, without explaining its reasoning, that: Where two parent companies each have a 50% shareholding in the joint venture which committed an infringement of the rules of competition law, it is only for the purposes of establishing liability for participation in the infringement of that law and only in so far as the Commission has demonstrated, on the basis of factual evidence, that both parent companies did in fact exercise decisive influence over the joint venture, that those three (emphasis added) entities can be considered to form a single economic unit and therefore form a single undertaking for the purposes of Article [101 TFEU]. This gives rise to the question whether, by that rationale, anti-competitive agreements between the parents would be outside the scope of Art 101 because they have to be considered ‘intra-group’. The CJ appears to wish to avoid such a conclusion by trying to limit its statement (‘only for the purposes of establishing liability’), but it is submitted that such a relativity of the notion of undertaking is hard to reconcile with the objective test the case law otherwise follows (‘exercise of decisive influence’). Where that test is fulfilled, companies should form part of one undertaking—be it for the purposes of establishing parent liability, be it for the purposes of assessing whether there is an agreement between From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

independent undertakings or an intra-group agreement that falls outside the scope of Art 101. See Case C-179/12 P Dow Chemical v Commission, not yet reported, para 58; Case 172/12 P EI du Pont de Nemours, not yet reported, para 47. 103

  Case T-132/07 Fuji Electric v Commission [2011] ECR II-4091, paras 179ff, 202.

104

  Case T-76/08 EI du Pont de Nemours and Others v Commission, not yet reported, paras 58ff. 105

  Case T-77/08 Dow Chemical v Commission, not yet reported, paras 70ff.

106

  EI du Pont (n 104), para 60; see also Case 107/82 AEG-Telefunken v Commission [1983] ECR 3151, para 50; Case T-314/01 Coöperatieve Verkoop- en Productievereniging van Aardappelmeel en Derivaten Avebe BA v Commission [2006] ECR II-3085, para 136. 107

  Fuji (n 103), para 181; EI du Pont (n 104), para 61; Case T-314/01 Coöperatieve Verkoop- en Productievereniging van Aardappelmeel en Derivaten Avebe BA v Commission [2006] ECR II-3085, para 136. 108

  Fuji (n 103), para 184; EI du Pont (n 104), paras 66 and 78; Dow (n 105), paras 92 and 101; see also Case T-112/05 Akzo Nobel and Others v Commission [2007] ECR II-5049, paras 73ff. 109

  EI du Pont (n 104), para 66.

110

  Dow (n 105), para 92.

111

  Dow (n 105), para 93.

112

  Ijsselcentrale and Others, OJ 1991 L28/32.

113

  The parties had also argued that the subsidiary and the electricity generators formed an economic unit because they were components of one indivisible public electricity supply system. The Commission rejected this argument. It held that the four participants did not belong to a single group of companies. They were separate legal persons, and were not controlled by a single person, natural or legal. Each generating company determined its own conduct independently. The fact that the generators formed an indivisible part of the public electricity supply system did not mean that they were part of the same economic unit. 114

  Case T-145/89 Baustahlgewebe v Commission [1995] ECR II-991, para 108.

115

  Joined Cases 29/83 and 30/83 Compagnie Royale Asturienne des Mines and Rheinzink v Commission [1984] ECR 1679, para 9. 116

  PVC, OJ 1989 L74/1, para 42.

117

  Case C-279/98 P Cascades v Commission [2000] ECR I-9693, para 78.

118

  OJ 2003 L153/1, para 238 (emphasis added), referring to Case T-80/89 BASF and Others v Commission (polypropylene) [1995] ECR II-729, the judgment was upheld by the CJ in Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125. 119

  Joined Cases C-204/00 P, etc Aalborg Portland and Others v Commission [2004] ECR I-123. 120

  Aalborg (n 119), para 347.

121

  Aalborg (n 119), para 359.

122

  Case T-7/89 SA Hercules Chemicals v Commission [1991] ECR II-1711, para 2.

123

  Case T-41/96 Bayer v Commission [2000] ECR II-3383, para 69.

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124

  See Section C.2(e).

125

  Case 28/77 Tepea v Commission [1978] ECR 1391.

126

  BP Kemi—DDSF, OJ 1979 L286/32.

127

  Case 41/69 ACF Chemiefarma v Commission [1970] ECR 661.

128

  SSI, OJ 1982 L232/1.

129

  Re Nuovo CEGEAM, OJ 1984 L99/29.

130

  Case IV/34.237/F3 Anheuser-Busch—Scottish & Newcastle, OJ 2000 L49/37.

131

  Anheuser-Busch (n 130), para 53.

132

  See generally Case T-9/99 HFB Holding für Fernwärmetechnik Beteiligungsgesellschaft and Others v Commission (Pre-Insulated Pipe Cartel) [2002] ECR II-1487. 133

  OJ 1986 L230/1, para 81.

134

  Case T-202/98 Tate & Lyle v Commission [2001] ECR II-2035, para 54.

135

  Case T-141/94 Thyssen Stahl v Commission [1999] ECR II-347, para 177.

136

  See also discussion of presumption in concerted practice at para 3.110.

137

  Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125, para 96.

138

  C-199/92 P Hüls v Commission [1999] ECR I-4287, para 162.

139

  Case T-9/99 HFB Holding für Fernwärmetechnik Beteiligungsgesellschaft and Others v Commission (Pre-Insulated Pipe Cartel) [2002] ECR II-1487, para 223; Case T141/89 Tréfileurope Sales v Commission [1995] ECR II-791, para 85; Joined Cases C-204/00 P, etc Aalborg Portland and Others v Commission [2004] ECR I-123, paras 55 and 81–84; and Case T-61/99 Adriatica di Navigazione v Commission [2003] ECR II 5349, paras 135–138. 140

  See Joined Cases C-2/01 P and C-3/01 Bundesverband der Arzneimittel-Importeure and Commission v Bayer [2004] ECR I-23, para 82. 141

  Joined Cases 209–215 and 218/78 Heintz Van Landewyck and Others v Commission [1980] ECR 3125. 142

  OJ 1986 L232/15, para 86, upheld on appeal: Case 246/86 SC Belasco and Others v Commission [1989] ECR 2117. 143

  Cases T-25/95, etc Cimenteries CBR v Commission [2000] ECR II-491, para 2557.

144

  Cimenteries (n 143), para 1389.

145

  Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125, paras 96–99.

146

  Hercules Chemicals (n 122), para 2.

147

  Case T-41/96 Bayer (n 123), para 69.

148

  See Case T-99/04 AC Treuhand v Commission [2008] ECR II-1501, para 118, referring to Anic (n 145), para 115. 149

  Case T-99/04 AC Treuhand v Commission [2008] ECR II-1501, para 122.

150

  AC Treuhand (n 149), para 125.

151

  See eg Anic (n 145); Case T-1/89 Rhône Poulenc v Commission [1991] ECR II-867, para 126; Case T-141/89 Tréfileurope Sales v Commission [1995] ECR II-791, para 85; Cases T-305/94, etc Limburgse Vinyl Maatschappij and other v Commission [1999] ECR II-931. 152

  OJ 1986 L230/1.

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153

  Case T-9/99 HFB Holding für Fernwärmetechnik Beteiligungsgesellschaft and Others v Commission (Pre-Insulated Pipe Cartel) [2002] ECR II-1487, para 205. 154

  OJ 2002 L239/18, paras 145–147.

155

  Pre-Insulated Pipes, OJ 1999 L24/1, paras 129–138.

156

  Case T-9/99 HFB Holding für Fernwärmetechnik Beteiligungsgesellschaft and Others v Commission (Pre-Insulated Pipe Cartel) [2002] ECR II-1487, para 231. 157

  Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125.

158

  Case T-1/89 Rhône Poulenc v Commission [1991] ECR II-867.

159

  Joined Cases T-305/94, etc Limburgse Vinyl Maatschappij and Others v Commission [1999] ECR II-931, para 773. 160

  Cases T-25/95, etc Cimenteries CBR v Commission [2000] ECR II-491, para 4109.

161

  Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125, para 83 (emphasis added). 162

  Joined Cases T-305/94, etc Limburgse Vinyl Maatschappij and Others v Commission [1999] ECR II-931, para 773. 163

  Rhône Poulenc (n 158), para 126.

164

  Case T-295/94 Buchmann v Commission [1998] ECR II-813.

165

  Buchmann (n 164), para 115.

166

  Buchmann (n 164), para 118.

167

  Buchmann (n 164), para 118.

168

  Buchmann (n 164), para 119 (emphasis added).

169

  Buchmann (n 164), para 123.

170

  Cimenteries (n 160), para 4041.

171

  Cimenteries (n 160), para 4041.

172

  Cimenteries (n 160), para 4057.

173

  It is worth noting that the fact that an agreement or concerted practice is not part of a particular cartel does not mean that it is legitimate by virtue of that fact alone. 174

  Joined Cases T-204/08 and T-212/08 Team Relocations and Others v Commission [2011] ECR II-3569, paras 32ff and 37; see also AC Treuhand (n 149), para 130 and Quinn Barlo (n 178), para 128. 175

  Joined Cases T-204/08 and T-212/08 Team Relocations and Others v Commission [2011] ECR II-3569, para 52. 176

  Case T-210/08 Verhuizingen Coppens v Commission [2011] ECR I-3713, paras 28ff and 31. 177

  Case C-441/11 P Commission v Verhuizingen Coppens, not yet reported, paras 41ff.

178

  Case T-208/06 Quinn Barlo and Others v Commission [2011] ECR II-7953, para 149.

179

  Quinn Barlo (n 178), para 150.

180

  Case T-99/04 AC Treuhand v Commission [2008] ECR II-1501, para 130.

181

  OJ 2002 L239/18, paras 146–147 (emphasis added).

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182

  Case T-1/89 Rhône Poulenc v Commission [1991] ECR II-867. See quotation at para 3.60. 183

  Case T-7/89 SA Hercules Chemicals v Commission [1991] ECR II-1711, paras 262–263.

184

  Given the way in which the GC and the CJ distinguished Bayer and Volkswagen II from previous judgments, great care must be taken in drawing any conclusions from older cases. See C. Brown, ‘Bayer v Commission: the Court of Justice Agrees’ [2004] ECLR 388. 185

  The Court explicitly refers to the following judgments in this regard: Joined Cases 32/78 and 36–82/78 BMW Belgium v Commission [1979] ECR 2435, paras 28–30; Case 107/82 AEG v Commission [1983] ECR 3151, para 38; Joined Cases 25/84 and 26/84 Ford v Commission [1985] ECR 2725, para 21; Case C-277/87 Sandoz prodotti farmaceutici v Commission [1990] ECR-I 45, paras 7–12; Case C-70/93 Bayerische Motorwerke v ALD [1995] ECR-I 3439 (BMW), paras 16 and 17; and Case T-41/96 Bayer (n 123), para 70. 186

  Case T-208/01 Volkswagen v Commission [2003] ECR II-5141, para 34.

187

  Case T-41/96 Bayer (n 123), para 71.

188

  Case T-41/96 Bayer (n 123), para 71.

189

  Joined Cases C-2/01 P and C-3/01 Bundesverband der Arzneimittel-Importeure and Commission v Bayer [2004] ECR I-23, para 141. 190

  This conclusion is not invalidated, it is submitted, by the GC’s statement in para 77 of Case T-168/01 GlaxoSmithKline Services Unlimited v Commission that the Commission is ‘not required to establish the existence of a joint intention to pursue an anti-competitive aim’ (emphasis added). This statement was made in response the parties’ argument that they had not manifested a concurrent will to restrict competition, but merely a concurrent will to sell and purchase medicines according to the terms set out in the General Sales Conditions (these were contractually binding sales conditions relating to the sale of medicines to Spanish wholesalers. The arrangements incorporated a dual pricing system which resulted in Spanish wholesalers being charged a higher price for drugs resold in other Member States than for those resold in Spain). The GC found, at paras 78–81, that Glaxo and its wholesalers had in fact conducted themselves on the market in the manner specified in the General Sales Conditions (in the terms used in para 3.69 of this chapter, the General Sales Conditions were the ‘the particular measure in question’). As such, there was an agreement—the fact that the Commission had not adduced evidence of a joint intention to restrict competition through a formal prohibition on exports did not change that finding. 191

  Case T-208/01 Volkswagen v Commission [2003] ECR II-5141.

192

  Case C-74/04 P Commission v Volkswagen [2006] ECR I-6585. The only material issue on which the CJ did not uphold the GC was the latter’s finding that where the parties had entered into a lawful contract, ‘an unlawful…variation could not be regarded as having been accepted in advance’. The CJ held that no such assumption could be made: an assessment of the clauses in dispute had to be made ‘individually, taking account, where applicable, of all other relevant factors, such as the aims pursued by that agreement in the light of the economic and legal context in which it was signed’ (para 45). 193

  Volkswagen, OJ 2001 L262/14.

194

  Case 107/82 AEG v Commission [1983] ECR 3151.

195

  Joined Cases 25/84 and 26/84 Ford v Commission [1985] ECR 2725.

196

  Case C-70/93 Bayerische Motorenwerke v ALD [1995] ECR I-3439.

197

  Case T-62/98 Volkswagen v Commission [2000] ECR II-2707.

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198

  Case T-208/01 Volkswagen (n 191), para 25.

199

  Case T-208/01 Volkswagen (n 191), para 26.

200

  All Bayer quotes in the following paras are, unless otherwise stated, taken from Joined Cases C-2/01 P and C-3/01 Bundesverband der Arzneimittel-Importeure and Commission v Bayer [2004] ECR I-23, paras 100–101. 201

  Although the CJ did not explain the relevance of this factor, it might have resulted from the Court asking itself the following question: ‘would an invitation have been made if assistance had not been needed?’ Common sense would suggest an answer in the negative. 202

  eg the fact that some dealers may have offered discounts on the resale price of a supplier is unlikely to be sufficient, on its own, to prevent the EU Courts from finding an agreement—it may very well be that the discounting would have been deeper in the absence of the supplier’s invitation to coordinate. 203

  Cases C-2/01 P and C-3/01 Bayer (n 200), para 121.

204

  Cases C-2/01 P and C-3/01 Bayer (n 200), para 122.

205

  Cases C-2/01 P and C-3/01 Bayer (n 200), para 121.

206

  Cases C-2/01 P and C-3/01 Bayer (n 200), para 129.

207

  Case T-168/01 GlaxoSmithKline Services Unlimited v Commission [2006] ECR II-2969, para 83. In making this finding the GC relied expressly on paras 82 and 100 of the CJ’s judgment in Bayer. 208

  Case T-208/01 Volkswagen v Commission [2003] ECR II-5141, para 53.

209

  Bayer (n 200), para 21 quoting para 154 of the GC’s judgment in the same case.

210

  eg the Court noted that dealers had responded to Bayer’s policy by, inter alia, trying to persuade Bayer that domestic demand had grown (eg by establishing new wholesalers). 211

  Case T-41/96 Bayer (n 123), paras 152–157.

212

  eg F. Wijckmans, F. Tuytschaever, and A. Vanderelst, Vertical Agreements in EC Competition Law (Oxford: Oxford University Press, 2006), 65–71; C. Brown, ‘Bayer v Commission: the Court of Justice Agrees’ [2004] ECLR 386; D. Bailey, ‘Reaching Agreement’ 2005 4(20) Comp LI 3; S. B. Völcker, ‘Developments in EC Competition Law in 2003: An Overview’ [2004] CML Rev 1031–3; A. Jones and B. Sufrin, EC Competition Law: Text, Cases, and Materials (2nd edn, Oxford: Oxford University Press, 2004), 138–46. 213

  Case T-41/96 Bayer v Commission [2000] ECR II-3383, para 126.

214

  Bayer (n 213), para 129. See paras 3.77–3.79.

215

  Case 51/75 EMI Records v CBS United Kingdom [1976] ECR 811, para 30.

216

  EMI, para 31. See also Case T-360/09 E.ON Ruhrgas and E.ON v Commission [2010] ECR I-174, para 251, where the GC held that in the case of agreements which have ceased to be in force, it is sufficient, in order for Art 101 to apply, that they produce their effects beyond the date on which they formally came to an end. It follows that the duration of an infringement must be appraised not by reference to the period during which an agreement is in force, but by reference to the period during which the undertakings concerned adopted conduct prohibited by Art 101. 217

  Soda-ash/Solvay, ICI, OJ 1991 L152/1, para 54.

218

  Pre-Insulated Pipes, OJ 1999 L24/1, paras 129–138.

219

  Case 40/70 Sirena v Eda and Others [1971] ECR 69.

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220

  On jurisdiction, see Section D.

221

  Case 65/86 Bayer and Maschinenfabrik Hennecke v Heinz Süllhöfer [1988] ECR 5249, paras 1 and 15. 222

  See eg Toltecs-Dorcet, OJ 1982 L379/19.

223

  Decision of 19 June 2013 in Case COMP/AT.39226 Lundbeck.

224

  Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 23 and Case T-111/08 MasterCard and Others [2009] ECR I-5655, para 242. 225

  Case T-111/08 MasterCard (n 224), para 243, referring to the Opinion of AG Léger in Wouters (n 50), para 62. 226

  Case T-111/08 MasterCard (n 224), para 244.

227

  Case T-111/08 MasterCard (n 224), para 245.

228

  MELDOC, OJ 1986 L348/50.

229

  Pabst & Richarz/BNIA, OJ 1976 L231/24; Coapi, OJ 1995 L122/37.

230

  Milchförderungsfonds, OJ 1985 L35/35.

231

  Case T-111/08 MasterCard (n 224), paras 238ff.

232

  Case 45/85 [1987] ECR 405.

233

  Verband der Sachversicherer (n 232), para 29

234

  Roofing Felt Cartel, OJ 1986 L232/15, upheld on appeal: Case 246/86 SC Belasco and Others v Commission [1989] ECR 2117. 235

  It has been suggested that concerted practices can also cover vertical arrangements. This is discussed in Section C.4(c). 236

  Case 48/69 ICI v Commission [1972] ECR 619, para 64; Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 26. 237

  ICI (n 236), para 118.

238

  Joined Cases 40/73, etc Coöperatieve Vereniging ‘Suiker Unie’ and Others v Commission [1975] ECR 1663. 239

  Case T-202/98 Tate & Lyle v Commission [2001] ECR II-2035, para 55.

240

  Case T-7/89 [1991] ECR II-1711.

241

  SA Hercules Chemicals (n 240), paras 259–260. See also Pre-Insulated Pipes, OJ 1999 L24/1, paras 129–138. 242

  Case T-25/95 Cimenteries CBR v Commission [2000] ECR II-491, para 1852.

243

  Cimenteries (n 242), para 1389.

244

  Case C-199/92 P Hüls v Commission [1999] ECR I-4287, para 161.

245

  Hüls (n 244), para 167.

246

  Hüls (n 244), para 162; see also Cimenteries (n 242), para 1865.

247

  Cimenteries (n 242), para 1865. The case was largely upheld on appeal in Joined Cases C-204/00 P, etc Aalborg Portland v Commission [2004] ECR I-123. 248

  Hüls (n 244), para 167.

249

  Hüls (n 248), para 162; Case C-49/92 P Commission v Anic Partezipazioni [1999] ECR I-4125, para 121.

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250

  Argos and Littlewoods v Office of Fair Trading [2004] CAT 24, para 663.

251

  Case T-9/99 HFB Holding für Fernwärmetechnik Beteiligungsgesellschaft and Others v Commission (Pre-Insulated Pipes) [2002] ECR II-1487, para 223. 252

  Case T-141/89 Tréfileurope Sales v Commission [1995] ECR II-791, para 85.

253

  Case C-199/92 P Hüls v Commission [1999] ECR I-4287, para 155.

254

  Horizontal Cooperation Guidelines, paras 60ff.

255

  See eg Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paras 26ff.

256

  Horizontal Cooperation Guidelines, para 60.

257

  Horizontal Cooperation Guidelines, para 61.

258

  Horizontal Cooperation Guidelines, para 62.

259

  Horizontal Cooperation Guidelines, para 62; Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 59. 260

  Horizontal Cooperation Guidelines, para 63.

261

  Case 48/69 ICI v Commission [1972] ECR 619.

262

  ICI (n 261), para 66.

263

  ICI (n 261), para 109.

264

  Joined Cases C-89/85, etc Ahlström Osakeyhtiö et al v Commission (Wood Pulp II) [1993] ECR I-1307. 265

  Wood Pulp II (n 264), paras 61–72; see also Case T-442/08 International Confederation of Societies of Authors and Composers (CISAC) v Commission, not yet reported, paras 99, 133ff, and 182. 266

  Joined Cases 29/83 and 30/83 Compagnie Royale Asturienne des Mines and Rheinzink v Commission [1984] ECR 1679. 267

  Case 48/69 ICI v Commission [1972] ECR 619, para 64.

268

  Joined Cases 40/73, etc Coöperatieve Vereniging ‘Suiker Unie’ UA and Others v Commission [1975] ECR 1663. 269

  Suiker Uni (n 268), para 174.

270

  Joined Cases 100/80, etc SA Musique Diffusion française and Others v Commission [1983] ECR 1825, paras 72–80. 271

  Case 86/82 Hasselblad (GB) v Commission [1984] ECR 883, paras 24–29.

272

  See Section C.2(f).

273

  See eg the judgment of the UK’s Competition Appeal Tribunal in JJB Sport v Office of Fair Trading [2004] CAT 17. 274

  Case T-99/04 AC Treuhand v Commission [2008] ECR II-1501.

275

  AC Treuhand (n 274), para 130; see also Joined Cases T-204/08 and T-212/08 Team Relocations and Others v Commission [2011] ECR II-3569, paras 32ff and 37 and Quinn Barlo (n 178), para 128. 276

  Pre-Insulated Pipes, OJ 1999 L24/1, paras 129–138.

277

  Polypropylene, OJ 1986 L230/1, para 85.

278

  OJ 1999 L24/1, para 131.

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279

  Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125, para 131.

280

  Joined Cases T-305/94, etc Limburgse Vinyl Maatschappij and Other v Commission [1999] ECR II-931. 281

  Limburgse Vinyl Maatschappij (n 280), para 692.

282

  Limburgse Vinyl Maatschappij (n 280), para 698.

283

  Limburgse Vinyl Maatschappij (n 280), paras 696–697.

284

  See eg Case T-1/89 Rhône-Poulenc v Commission [1991] ECR II-867, para 127 or Case T-9/89 Hüls v Commission [1992] ECR II-499, para 299. 285

  See Section C.1.

286

  See Section C.2.

287

  See Section C.4.

288

  See Section D.4.

289

  Joined Cases C-2/01 P and C-3/01 Bundesverband der Arzneimittel-Importeure and Commission v Bayer [2004] ECR I-23. See Section C.2(f). 290

  Even though not yet decided by the Commission or the EU Courts, it is suggested that ‘national legislation’ also includes legislation by a Member State’s federal states, provinces, regions, etc. 291

  Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555, paras 80ff (emphasis added); Case T-228/97 Irish Sugar v Commission [1999] ECR II-2969, para 130; Case T-513/93 Consiglio Nazionale degli Spedizionieri Doganali v Commission [2000] ECR II-1807, para 58. 292

  Horizontal Cooperation Guidelines, para 22 and fn 25, making reference to Case C-198/01 Consorzio Industrie Faimmiferi (CIF) [2003] ECR I-8055, paras 54ff. 293

  OJ 1985 L92/1, paras 6–10.

294

  Joined Cases 240/82, etc Stichting Sigarettenindustrie [1985] ECR 3831, paras 27ff.

295

  OJ 1982 L232/1, para 100.

296

  Deutsche Telekom (n 291), paras 80ff; Case T-387/94 Asia Motor France and Others v Commission [1996] ECR II-961, para 63. 297

  See eg Case T-66/99 Minoan Lines v Commission (Greek Ferries) [2003] ECR II-5515, para 179. 298

  Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555, paras 80ff; see also eg Joined Cases 209/78, etc Van Landewyck [1980] ECR 3125, paras 130ff; Joined Cases 240/82, etc Stichting Sigarettenindustrie [1985] ECR 3831, paras 27ff; Joined Cases C-359/95 P and C-379/95 P Ladbroke Racing [1997] ECR I-6265, paras 33ff. 299

  Case C-198/01 Consorzio Industrie Faimmiferi (CIF) [2003] ECR I-8055, para 49.

300

  See also Joined Cases T-217/03 and T-245/03 French Beef [2006] ECR II-4987, para 92; Case T-7/92 Asia Motor France II [1993] ECR II-669, para 71; Case T-148/89 Tréfilunion [1995] ECR II-1063, para 118; Horizontal Cooperation Guidelines, para 22. 301

  Horizontal Cooperation Guidelines, para 54.

302

  Horizontal Cooperation Guidelines, para 57.

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303

  The EU Courts have often relied on the principle of effectiveness in the interpretation of the EU competition rules, see eg Case C-453/99 Courage v Bernard Crehan and Bernard Crehan v Courage and Others [2001] ECR I-6297, para 26. 304

  For a brief account, see F. Souty, Le droit de la concurrence de l’Union Européenne (2nd edn, Paris: Montchrestien, 1999), 23ff. 305

  For a detailed discussion of the ordo-liberal approach and its impact, see D. Gerber, Law and Competition in 20th Century: Protecting Promotheus (Oxford: Clarendon Press, 1998). 306

  Unless specified to the contrary, reference hereinafter to ‘agreement’ should be taken as encompassing concerted practices and decisions of associations. 307

  W. Möschel, ‘Competition Policy from an Ordo Point of View’ in A. Peacock and H. Willgerodt (eds), German Neo-liberals and the Social Market Economy (London: Macmillan, 1989). 308

  See eg B. E. Hawk, ‘System Failures: Vertical Restraints and EC Competition Law’ (1995) 32 CML Rev 973, 977. 309

  See eg D. Deacon, ‘Vertical Restraints Under EU Competition Law: New Directions 1995’ in 1995 Fordham Corp L Inst (1996), 307, 309. 310

  See eg the Distillers Company, Conditions of Sale and Price Terms, OJ 1978 L50/16.

311

  COM(96) 721, January 1997.

312

  Article 101(3) Guidelines, para 13.

313

  Commission Notice, Guidelines on Vertical Restraints, OJ 2000 C291/1.

314

  Commission Notice, Guidelines on the applicability of Article [101 TFEU] to horizontal cooperation agreements, OJ 2001 C3/2. 315

  See Article 101(3) Guidelines, para 24 and fn 31.

316

  Case T-168/01 GlaxoSmithKline Services Unlimited v Commission [2006] ECR II-2969, para 118. 317

  Emphasis added.

318

  Case T-168/01 GlaxoSmithKline (n 316), para 167.

319

  Article 101(3) Guidelines, para 84.

320

  See eg Chapter 2 of the first edition of this book; see also R. Nazzini, ‘Article 81 EC Between Time Present and Time Past: A Normative Critique of “Restriction of Competition” in EU Law’ [2006] 43 CML Rev 497; O. Odudu, ‘Interpreting Article 81(1): Demonstrating Restrictive Effect’ (2001) 26 EL Rev 261, 271–2. 321

  See eg G. Monti, European Competition Policy (Cambridge: Cambridge University Press, 2007); P. Roth, V. Rose, and A. McNab (eds), Bellamy and Child: European Community Law of Competition (6th edn, Oxford: Oxford University Press, 2007); Butterworths Competition Law (December 2005); R. Whish, Competition Law (5th edn, LexisNexis Butterworths, 2003); P. Manzini, ‘The European Rule of Reason-Crossing the Sea of Doubt’ (2002) 8 ECLR 392. 322

  This may of course be more a reflection of the date of publication of a number of these books and articles—many were written prior to the adoption of the Article 101(3) Guidelines. That said, the Article 101(3) Guidelines were merely the culmination of a policy decision which was clear from the time of the adoption of the 2001 Guidelines on Horizontal

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Cooperation and also, arguably though less explicitly, from the 1999 Guidelines on Vertical Restraints. 323

  See Case 28/77 Tepea v Commission [1978] ECR 1391, para 56; Joined Cases T-213/01 and T-214/01 Österreichische Postsparkasse and Bank für Arbeit und Wirtschaft v Commission [2006] ECR II-1601, para 115; and Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, which also refer to consumer welfare in a less forthright manner. 324

  Joined Cases C-468/06, etc Sot Lelos kai Sia EE v GlaxoSmithKline AEVE Farmakeftikon Proionton [2008] ECR I-7139. 325

  Sot Lelos (n 324), para 65.

326

  Joined Cases C-501/06 P, etc GlaxoSmithKline and Others [2009] ECR I-9291.

327

  Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 63.

328

  Another way of reading the GlaxoSmithKline judgment could be that there is a presumption that consumers benefit from market integration and that a need to show adverse effects on consumers would contradict settled case law that there is no need to show effects in ‘by object’ cases. Thus, the analysis of consumer benefits shifts to Art 101(3). 329

  Decision of 3 October 2007 in Case COMP/D1/37860 Morgan Stanley/Visa International and Visa Europe. 330

  Case T-461/07 Visa Europe and Visa International Service v Commission [2011] ECR II-1729. 331

  Case T-374/94 European Night Services and Others v Commission [1998] ECR II-3141.

332

  Case C-7/95 John Deere v Commission [1998] ECR I-3111.

333

  Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555, paras 177ff and 252ff. 334

  Case C-52/09 Konkurrensverket/TeliaSonera Sverige [2011] ECR I-527, paras 62ff.

335

  Deutsche Telekom (n 333), para 180.

336

  Case C-209/10 Post Danmark v Konkurrencerådet, not yet reported.

337

  Post Danmark (n 336), para 22.

338

  Post Danmark (n 336), para 30.

339

  Post Danmark (n 336), para 40.

340

  Post Danmark (n 336), para 42.

341

  Post Danmark (n 336), para 44.

342

  Case C-457/10 P AstraZeneca and Others v Commission, not yet reported, paras 105ff and 153. 343

  See eg Case T-41/96 Bayer v Commission [2000] ECR II-3383; Case T-168/01 GlaxoSmithKline Services Unlimited (n 207). 344

  The most obvious example of a slight relaxation in the Commission’s approach to absolute territorial protection can be found at paras 60ff and 107(b) of the Vertical Restraint Guidelines:

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hardcore restrictions may be objectively necessary in exceptional cases for an agreement of a particular type of nature and therefore fall outside Article 101(1)…. Where substantial investments by the distributor to start up and/or develop the new market are necessary, restrictions of passive sales by other distributors into such a territory or to such a customer group which are necessary for the distributor to recoup those investments generally fall outside the scope of Article 101(1) during the first two years that the distributor is selling the contract goods or services in that or to that customer group, even though such hardcore restrictions are in general presumed to fall within the scope of Article 101(1). See also para 13 of its Article 101(3) Guidelines, where the Commission states that ‘preservation of an open single market promotes an efficient allocation of resources throughout the Community for the benefit of consumers’. 345

  Joined Cases C-468/06, etc Sot Lelos kai Sia EE v GlaxoSmithKline AEVE Farmakeftikon Proionton [2008] ECR I-7139, para 65; Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 63. 346

  See the Commission’s Article 101(3) Guidelines, para 17, where the Commission states that ‘Article [101(1)] prohibits restrictions of both inter-brand competition and intra-brand competition.’ See also Case T-112/99 Métropole télévision (M6), Suez-Lyonnaise des Eaux, France Télécom and Télévision française 1 (TF1) v Commission [2001] ECR II-2459 and the discussion of this at paras 3.303ff. 347

  In a recent judgment (Case 1041/2/1/04 The British Horseracing Board v OFT, para 189) the UK’s Competition Appeals Tribunal (CAT) considered whether the Office of Fair Trading had shown that the price in question ‘was’ above the competitive level. Although part of the OFT’s case, it can be argued with some force that, in requiring the OFT to demonstrate an actual, rather than a likely, effect on price the CAT went too far. 348

  Consten and Grundig (n 323); Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235, 249; Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 55; Case C-209/07 Competition Authority v Beef Industry Development Society and Barry Brothers (Carrigmore) Meats [2008] ECR I-8637, para 16; Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paras 29; John Deere (n 332), para 77; Case C-68/12 Protimonopolny urad Slovenskej republicky v Slovenska sporitel’na, not yet reported, para 17. 349

  See eg Horizontal Cooperation Guidelines, para 23, fn 5.

350

  Société Technique Minière (n 348).

351

  Consten and Grundig (n 323).

352

  Case T-504/93 Tiércé-Ladbroke v Commission [1997] ECR II-923; Visa Europe (n 330), paras 127, 131, and 146. 353

  The term ‘agreement’ should be read as covering concerted practices and decisions of associations. 354

  Beef Industry Development Society and Barry Brothers (Carrigmore) Meats (n 348), para 17; Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 29; Case C-226/11 Expedia v Autorité de la concurrence and Others, not yet reported, para 36; Horizontal Cooperation Guidelines, para 24; Article 101(3) Guidelines, para 21. 355

  Consten and Grundig (n 323); Société Technique Minière (n 348), 249; Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 55; Beef Industry Development Society and Barry Brothers (Carrigmore) Meats (n 348), para 16; Case C-8/08 T-Mobile Netherlands and

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Others [2009] ECR I-4529, paras 29ff; John Deere (n 332), para 77; Slovenska sporitel’na (n 348), para 17. 356

  European Night Services (n 331), para 136; see also Case 19/77 Miller International Schallplatten v Commission [1978] ECR 131. 357

  See eg Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 58; Beef Industry Development Society and Barry Brothers (Carrigmore) Meats (n 348), paras 15ff; Article 101(3) Guidelines, paras 21ff; Horizontal Cooperation Guidelines, para 25. 358

  See eg Joined Cases 96/82, etc NV IAZ International Belgium and Others v Commission [1983] ECR 3369. 359

  Article 101(3) Guidelines, para 21; similarly Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paras 29ff. 360

  See Article 101(3) Guidelines, para 22.

361

  See eg Chapter 9, Section B.3 (hardcore restrictions in vertical agreements), para 7.329 (joint selling agreements), paras 7.439 et seq (exchange of confidential information). 362

  See Chapter 7 on horizontal agreements.

363

  See eg Nederlandse Federative Vereniging voor de Groothandel op Elektrotechnisch Gebied and Technische Unie (FEG and TU), OJ 2000 L39/1. 364

  See eg Cimentaries (n 242).

365

  Joined Cases C-204/00 P, etc Aalborg Portland v Commission [2004] ECR-I 123, para 281. 366

  See Consten and Grundig v Commission (n 323); Case 19/77 Miller International Schallplatten v Commission [1978] ECR 131; Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 59. 367

  Case 243/83 SA Binon v SA Agence et Messageries de la Presse [1985] ECR 2015, para 44. 368

  See in this respect, Whish, Competition Law (n 321), 112.

369

  Emphasis added.

370

  Case 258/78 Nungesser v Commission [1982] ECR 2105.

371

  Case 27/87 SPRL Louis Erauw-Jacquery v La Hesbignonne SC [1988] ECR 1919, paras 10–11. 372

  Case C-306/96 Javico International and Javico v Yves Saint Laurent Parfums (YSLP) [1998] ECR I-1983, para 19. 373

  Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Others [2011] ECR I-9419, paras 39ff. 374

  Whether it would be the better view not to consider selective distribution systems as restrictions by object but to analyse them with regard to their effects on competition, is another question. 375

  Case C-107/82 AEG-Telefunken v Commission [1983] ECR 3151, para 33.

376

  It could also be argued that the CJ effectively applied a rule of reason analysis in a ‘by object’ case as it appears to have balanced under Art 101(1) the possible negative effects of an agreement on one parameter of competition—price—with its positive effects on other parameters of competition. Normally such balancing would only be carried out under Art 101(3). This is because for Art 101(1) to engage it is sufficient for an agreement to have a potential anti-competitive effects on just one parameter of competition; whether those negative effects are outweighed by pro-competitive effects on other parameters of

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competition would be a question of Art 101(3). The better view, however, seems to be that the CJ considered the restriction of price competition to be an ancillary restraint. 377

  Joined Cases 96/82, etc NV IAZ International Belgium and Others v Commission [1983] ECR 3369; see also eg AROW/BNIC, OJ 1982 L379/1. 378

  NAVEWA-ANSEAU, OJ 1982 L167/39, para 56.

379

  Case C-68/12 Protimonopolny urad Slovenskej republicky v Slovenska sporitel’na, not yet reported, paras 19ff. 380

  Slovenska sporitel’na (n 379), para 20.

381

  Slovenska sporitel’na (n 379), para 21.

382

  Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 31.

383

  T-Mobile (n 382), para 29.

384

  T-Mobile (n 382), para 30.

385

  Even though, as has been shown, T-Mobile does not confer an ‘incapability defence’ as a limiting factor for treating obvious restrictions of competition as restrictions by object, there is a linked notion that may play a role for ‘Category 3’ agreements (see paras 3.201ff). An agreement which has the ‘capability of resulting in a restriction of competition’ may be restrictive by object even if, on its face, it does not appear to have an anti-competitive object. 386

  Case T-360/09 E.On Ruhrgas and E.On v Commission, not yet reported.

387

  E.On Ruhrgas (n 386), paras 98–117.

388

  E.On Ruhrgas (n 386), para 84.

389

  Article 101(3) Guidelines, para 22.

390

  For an additional example, see the Commission’s decision in Case IV/30.739 Siemens/ Fanuc. 391

  Case C-32/11 Allianz Hungária Biztosító Zrt and Others v Gazdasági Versenyhivatal, not yet reported. 392

  Allianz Hungária (n 391), para 34.

393

  Allianz Hungária (n 391), para 35.

394

  Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, para 31.

395

  Allianz Hungária (n 391), para 38.

396

  Allianz Hungária (n 391), para 43.

397

  Allianz Hungária (n 391), para 46.

398

  Allianz Hungária (n 391), para 47.

399

  Allianz Hungária (n 391), para 48.

400

  Allianz Hungária (n 391), para 51.

401

  Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295, paras 5–7.

402

  Case C-226/11 Expedia v Autorité de la concurrence and Others, not yet reported.

403

  Joined Cases T-68/89, T-77/89 and T-78/89 Società Italiana Vetro, Fabbrica Pisana and PPG Vernante Pennitalia v Commission [1992] ECR II-1403. 404

  Società Italiana Vetro (n 403), para 159.

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405

  Case C-306/96 Javico International v Yves Saint Laurent Parfums [1998] ECR I-1983, paras 15–17. 406

  See Article 101(3) Guidelines, para 21.

407

  It is worth noting that whilst the appreciability doctrine is usually thought of in market share terms, it has also been considered not to apply if the restriction itself is insignificant. Eg in Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten (n 44), the CJ found that a decision to set up a pension fund entrusted with the management of a supplementary pension scheme was not an appreciable restriction. This was because the pension fund produced: restrictive effects only in relation to one cost factor of the services offered by selfemployed medical specialists…which is insignificant in comparison with other factors, such as medical fees or the cost of medical equipment. The cost of the supplementary pension scheme has only a marginal and indirect influence on the final cost of the services offered by self-employed medical specialists. In UEFA’s broadcasting regulations the Commission decided that regulations which prevented the live transmission of matches at certain times, in order to protect amateur participation in sport and to encourage live attendance at football matches, was not an appreciable restriction. See also Irish Banks’ Standing Committee, OJ 1986 L295/28; Visa International, OJ 2001 L293/24; Identrus, OJ 2001 L249/12. 408

  Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295.

409

  Case 19/77 Miller International Schallplatten v Commission [1978] ECR 131.

410

  See para 3.149.

411

  Case T-199/08 Ziegler v Commission [2011] ECR II-03507, para 45.

412

  Ziegler (n 411), paras 43 and 44.

413

  Case C-226/11 Expedia v Autorité de la concurrence and Others, not yet reported.

414

  But see Case 30/78 Distillers v Commission [1980] ECR 2229, where the CJ concluded that an agreement affecting the distribution of Pimms was of importance, notwithstanding its small market share, because its producer Distillers occupied an important position on the market for drinks generally. Similarly in Cases 100–103/80 Musique Diffusion Française v Commission [1983] ECR 1825, the CJ held that a concerted practice was not within the de minimis doctrine where the parties’ market shares were small but the market was a fragmented one, their market shares exceeded those of most competitors, and their turnover figures were high. 415

  Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article [101(1) TFEU], OJ 2001 C368/13. 416

  Point 11 of the De Minimis Notice. These restrictions essentially equate to the ‘Category 1’ object restrictions noted in para 3.187. See also Chapter 9, Section B.3 (hardcore restrictions in vertical agreements), para 7.329 (joint selling agreements), paras 7.439 et seq (exchange of confidential information). 417

  Competitors are defined as undertakings which are actual or potential competitors on any relevant market affected by the agreement (see point 7(a) of the De Minimis Notice). 418

  Non-competitors are defined as undertakings which are not actual or potential competitors on any relevant market affected by the agreement (see point 7(b) of the De Minimis Notice).

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419

  Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295.

420

  Case C-226/11 Expedia v Autorité de la concurrence and Others, not yet reported.

421

  Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295.

422

  Expedia (n 420), para 36.

423

  Expedia (n 420), para 37.

424

  They may, however, be one of the considerations taken into account by national courts when assessing the likelihood of anti-competitive harm, perhaps on applications for summary judgment. 425

  This chapter focuses on the broad analytical framework established by the Commission in its policy statements and relevant decisional practice. It will also examine the case law of the EU Courts from this perspective. Chapters 7 and 9 consider the detailed framework set out in the Horizontal Cooperation Guidelines and the Vertical Restraint Guidelines respectively for analysis of the competitive impact of various types of agreements. 426

  Société Technique Minière (n 348), 249 and 250 (emphasis added); John Deere (n 332), para 76; O2 (n 655), para 68; Visa Europe (n 330), para 69; Case T-111/08 MasterCard (n 224), para 128. 427

  See eg Bayer/Gist Brocades, OJ 1975 L30/13; Vacuum Interrupters, OJ 1977 48/32 (section II, para 17); Rennet, OJ 1980 L51/19; Carlsberg, OJ 1984 L207/26 (para II(A)(3)(i) and (ii)); VIFKA, OJ 1986 L291/46 (para 12); Dutch Banks, OJ 1989 L253/1 (para 55); XXIIIrd Report on Competition Policy, 1993, para 212; Van den Bergh Foods, OJ 1998 L246/1 (paras 143 and 184); Eurovision (Métropole), OJ 2000 L151/18 (para 107). 428

  XXIIIrd Report on Competition Policy, 1993, para 212 (emphasis added).

429

  Case 23/67 SA Brasserie de Haecht v Consorts Wilkin-Janssen [1967] ECR 407.

430

  Emphasis added.

431

  Whereby the competitive benefits and harms of a practice will be balanced before its legality is determined. For arguments in favour of the use of the rule of reason, see eg R. Joliet, The Rule of Reason in Antitrust Law; American, German and Common Market Laws in Comparative Perspective (The Hague: Martinus Nijhoff, 1967); I. Forrester and C. Norall, ‘The Laicization of Community Law: Self-Help and the Rule of Reason: How Competition Law is and Could be Applied’ (1984) CML Rev 21; M. Schechter, ‘The Rule of Reason in European Competition Law’ (1983) 2 Legal Issues of European Integration 1. 432

  Case C-234/89 Stergios Delimitis v Henninger Bräu [1991] ECR I-935.

433

  Para 15 (emphasis added).

434

  Para 27 (emphasis added).

435

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 137 (emphasis added). 436

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, para 83 (emphasis added). 437

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459.

438

  TPS, OJ 1999 L90/6, para 107. See also the discussion at para 3.202.

439

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231.

440

  O2 (n 439), para 109.

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441

  Case T-168/01 GlaxoSmithKline Services Unlimited v Commission [2006] ECR II-2969.

442

  See para 3.324.

443

  Often, the term ‘price’ is used as shorthand for the various market parameters which the Commission may consider. 444

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1996] ECR 235, para 250.

445

  Case 23/67 SA Brasserie de Haecht v Consorts Wilkin-Janssen [1967] ECR 407, 415 (emphasis added). 446

  There will also have to be an effect on trade. This is dealt with in Section D.

447

  See Case 22/71 Béguelin Import v SAGL Import Export [1971] ECR 949, para 16.

448

  The ‘nature’ of an agreement relates to factors such as ‘the area and objective’ of the arrangement, ‘the competitive relationship between the parties’, and the ‘extent to which they combine their activities’; see Horizontal Cooperation Guidelines, para 32. 449

  Delimitis (n 432), para 21.

450

  Delimitis (n 432), para 27; Van den Bergh Foods (n 436), paras 109–118. See also Chapter 9 on vertical agreements. 451

  Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875, para 20. The question of whether this constitutes a rule of reason approach is dealt in paras 3.303ff. 452

  Metro SB-Grossmärkte, para 27.

453

  Case 161/84 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353. 454

  Pronuptia, paras 14–15. The question of whether this constitutes a rule of reason approach is dealt with in paras 3.303ff. 455

  Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Others [2011] ECR I-9419. 456

  Pierre Fabre, para 38.

457

  Case 107/82 Allgemeine Elektrizitäts-Gesellschaft AEG-Telefunken v Commission [1983] ECR 3151, para 33. 458

  Pierre Fabre (n 455), para 39.

459

  Pierre Fabre (n 455), para 40.

460

  Pierre Fabre (n 455), para 41; the CJ found that those criteria were not fulfilled in the case at hand. 461

  See the discussion of the ‘rule of reason’ at Section C.8(h).

462

  Case 27/87 SPRL Louis Erauw-Jacquery v La Hesbignonne SC [1988] ECR 1919.

463

  Case 262/81 Coditel and Others v Ciné-Vog Films and Others [1982] ECR 3381.

464

  Case C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641. 465

  Gøttrup-Klim, para 34.

466

  Emphasis added.

467

  Emphasis added.

468

  See para 3.256.

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469

  OJ 1990 L209/15, paras 28–29.

470

  Elopak/Metal Box–Odin, para 36.

471

  Whish, Competition Law (n 321), 119.

472

  OJ 1999 L106/14.

473

  It has been argued that the main reason the Commission adopted this approach, rather than issuing an exemption or comfort letter, was that it wanted to avoid a flood of notifications of the rules of bodies which regulate professions; it should be recalled that under Regulation 17 (OJ 1962 013/204) agreements falling within the scope of Art 101(1) had to be notified to the Commission if they were to be exempted under Art 101(3). See eg H. Nyssens, ‘Concurrence et ordres professionnels: les trompettes de Jéricho sonnentelles?’ (1999) Revue de Droit Commercial Belge 475. 474

  OJ 1999 L106/14, para 38.

475

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 476

  Para 104 of the AG’s Opinion (emphasis added).

477

  OJ 1999 L106/14.

478

  Para 107 of the AG’s Opinion.

479

  Wouters (n 475), para 110 (emphasis added).

480

  See eg G. Monti, ‘Article 81 EC and Public Policy’ (n 12), 1057–99. A similar, though not identical, interpretation is given in A. Komninos, ‘Non-Competition Concerns: Resolution of Conflicts in the Integrated Article 81 EC’, Working Paper (L) 08/05 Oxford Centre for Competition Law and Policy. Komninos argues that the Wouters approach is based on ‘the theory of mandatory requirements that was developed in the Court’s four freedoms case law.’ However, Whish, Competition Law (n 321), 122, states that the judgment is limited to ‘regulatory rule[s] adopted for the protection of consumers’. However, closer examination of Whish suggests that this is not the case: the author specifically refers to the press release in UEFA/ENIC, a case relating to rules which restricted the ownership of shares in more than one football club competing in the Champions League tournament. Press Release IP/02/942 (27 June 2002) clearly states that ‘the limitation of the freedom of action of clubs and investors which the rule entails does not go beyond what is necessary to ensure its legitimate aim: ie to protect the uncertainty of the results in the interest of the public’ (emphasis added). 481

  It should be noted, however, that where the public interest relates to an EU policy, the judgment in Joined Cases C-115/97, etc Brentjens’ Handelsonderneming v Stichting Bedrijfspensioenfonds voor de Handel in Bouwmaterialen [1999] ECR I-6025 is more likely to be considered the leading authority. 482

  Press Release IP/02/942 (27 Jubne 2002).

483

  Case C-519/04 David Meca-Medina and Igor Majcen v Commission [2006] ECR I-6991.

484

  Meca-Medina and Majcen (n 483), para 45.

485

  Meca-Medina and Majcen (n 483), para 55.

486

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 487

  Case C-1/12 Ordem dos Técnicos Oficiais de Contas v Autoridade da Conconrrência, not yet reported.

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488

  Case C-136/12 Consiglio nazionale dei geologi v Autorità garante della concorrenza e del mercate, not yet reported. 489

  See paras 3.243ff.

490

  Case 161/84 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353. 491

  See Chapter 9, Section E.5 on vertical agreements.

492

  Pronuptia (n 490), para 24.

493

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459; see also subsequently Van den Bergh Foods (n 436). 494

  Case T-111/08 MasterCard and Others v Commission, not yet reported, paras 77ff.

495

  Métropole télévision (n 493), para 104; Case T-111/08 MasterCard (n 494), para 77.

496

  Métropole télévision (n 493), para 104; Case T-111/08 MasterCard (n 494), para 78.

497

  Pronuptia (n 490).

498

  Case 42/84 Remia and Others v Commission [1985] ECR 2545, para 20.

499

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459, para 106. 500

  Case T-111/08 MasterCard and Others v Commission, not yet reported, para 79.

501

  Para 111 of Métropole Télévison appears to give some guidance on what the GC meant by ‘difficult’ by referring, without dissent, to various decisions in which the Commission had found clauses to be ancillary where ‘the operation in question…could only be implemented under more uncertain conditions, at substantially higher cost, over an appreciably longer period or with considerably less probability of success’. 502

  Métropole télévision (n 499), para 109 (emphasis added); Case T-111/08 MasterCard (n 500), para 80. 503

  Case T-65/98 [2003] ECR II-4653.

504

  Métropole télévision (n 499), para 107; Case T-111/08 MasterCard (n 500), para 80.

505

  Métropole télévision (n 499), para 109; Case T-111/08 MasterCard (n 500), para 80.

506

  Case T-111/08 MasterCard (n 500), para 80.

507

  Métropole télévision (n 499) paras 120–121; Case T-111/08 MasterCard (n 500), para 89. 508

  Métropole télévision (n 499), para 122.

509

  Case 42/84 Remia and Others v Commission [1985] ECR 2545.

510

  Métropole télévision (n 499), para 110 (emphasis added).

511

  OJ 1999 L125/12.

512

  P&I Clubs (n 511), para 77.

513

  Case T-111/08 MasterCard (n 500), para 90.

514

  Case 161/84 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353, para 15. 515

  Pronuptia (n 514), see generally paras 16–22.

516

  Pronuptia (n 514), para 24.

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517

  See also Case T-111/08 MasterCard (n 500), para 101.

518

  European Commission, White Paper on Modernisation of the Rules Implementing Arts 85 and 86 of the EC Treaty—Commission programme No 99/027, COM(1999) 101, April 1999. 519

  White Paper on Modernisation (n 518), para 57.

520

  Métropole télévision (n 499), para 107.

521

  Métropole télévision (n 499), para 109; Case T-111/08 MasterCard (n 500), para 80.

522

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 523

  Wouters (n 522), para 107; see also Meca-Medina and Majcen (n 483).

524

  See to that effect, Case T-61/89 Dansk Pelsdyravlerforening v Commission [1992] ECR II-1931, para 78, where the GC pointed to the parties’ strong market position, which could lead to foreclosure of competitors; Case T-111/08 MasterCard (n 500), para 81. 525

  Métropole télévision (n 499), paras 123–126.

526

  Although mere speculation, given the EU Courts’ approach in previous cases, the GC’s failure to conduct a more detailed assessment may simply have reflected the nature of the submissions made by the applicants in Métropole Télévision—careful reading of the Van den Bergh Foods judgment, eg, suggests that the submissions made by the applicants in that case were far more detailed and sophisticated than in Métropole Télévision. 527

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 528

  See also Meca-Medina and Majcen v Commission (n 483).

529

  Is this different from the indispensability test under Art 101(3)? Under Art 101(3), the test is whether the clause is necessary for the attainment of the benefits identified. Under Art 101(1), the question is whether the clause is necessary for the existence and implementation of the agreement. 530

  Nor can the decisions under the Merger Regulation be relied on under Art 101 except, perhaps, for structural operations. 531

  Métropole télévision (n 499), para 104; Case T-111/08 MasterCard (n 500), para 77.

532

  Case T-111/08 MasterCard (n 500), para 75.

533

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235.

534

  Maschinenbau Ulm, 250; see more recently O2 (n 439), para 68.

535

  Case 258/78 L. C. Nungesser and Others v Commission [1982] ECR 2515.

536

  Insofar as it did not prevent parallel imports. See para 3.231 dealing with this.

537

  Nungesser (n 535), para 57.

538

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1966] ECR 235, 250.

539

  Nungesser (n 535), paras 57–58.

540

  See eg Butterworths Competition Law (December 2005), I/126, para 203 (Issue 54).

541

  For a detailed discussion and definition of potential competition and competitors, see paras 7.66–7.77. See also Convention Chaufourniers, OJ 1969 L122/8; Clima Chappée— Buderus, OJ 1969 L195/1; Wild—Leitz, OJ 1972 L61/27; Vacuum Interrupters, OJ 1977 L48/32; Sopelem/Vickers, OJ 1978 L70/47; Distillers—Victuallers, OJ 1980 L233/43; Re UK Agricultural Tractor Registration Exchange, OJ 1992 L68/19; HOV SVZ/MCN, OJ 1994 L104/34; Case IV/M1340 BNP/Dresdner Bank—Austrian JV (1998); Iridium, OJ 1997 L16/87;

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Air France/Alitalia, OJ 2003 C297/10; European Night Services (n 435); also Case T-504/93 Tiércé-Ladbroke v Commission [1997] ECR II-923, where the GC annulled a Commission decision which failed to take into account a possible restriction of potential competition; Visa Europe (n 330), para 68. 542

  Insofar as they do not restrict competition from or between third parties.

543

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 137. 544

  Case T-328/03 O2 (Germany) v Commission, judgment of 2 May 2006, para 68.

545

  O2 (n 544), para 77.

546

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459, para 109. 547

  Métropole télévision, para 74; see also Van den Bergh Foods (n 503), para 107.

548

  Horizontal Cooperation Guidelines, para 10; European Night Services (n 543), para 137; Visa Europe (n 330), paras 167ff. 549

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141. 550

  European Night Services (n 549), para 137 (emphasis added).

551

  Visa Europe (n 330), paras 167ff.

552

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231.

553

  O2 (n 552), para 77.

554

  O2 (n 552), para 79 (emphasis added).

555

  See, in this regard, Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 145. 556

  Case T-504/93 Tiercé Ladbroke v Commission [1997] ECR II-923.

557

  Nungesser (n 535), para 61.

558

  Case C-439/09 Pierre Fabre Dermo-Cosmétique SAS v Président de l’Autorité de la concurrence and Others [2011] ECR I-9419, paras 38ff. 559

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1996] ECR 235.

560

  Case 258/78 L. C. Nungesser and Others v Commission [1982] ECR 2515.

561

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459.

562

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653.

563

  Métropole télévision (561), para 109. There is also a proportionality leg to the test; see para 3.198. 564

  Métropole télévision (n 563), paras 120–122.

565

  It is worth noting that the test is likely to be an objective one: Métropole télévision, para 109; see also Delimitis (n 432), para 21 where the CJ referred to ‘real concrete possibilities…for a new competitor to penetrate the relevant market and compete with the undertakings already established’; see also Visa Europe (n 330), paras 167ff. 566

  O2 (n 552), para 78.

567

  O2 (n 552), para 114.

568

  O2 (n 552), para 115.

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569

  See also Section D.5.

570

  Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295, paras 5–7.

571

  See also discussion at Sections C.8(b) and C.9. See also Chapter 9, Section D.2.

572

  Market shares are to be calculated on the basis of sales value data or, where appropriate, purchase value data. If value data are not available, estimates based on other reliable market information, including volume data, may be used. 573

  Though binding only on itself, the Commission expressly states that the aim of the Notice is ‘to give guidance to the courts and authorities of the Member States in their application of Article [101]’; see para I.4 of the Notice. 574

  The Notice does not apply to ‘hardcore restrictions’—see para II.11 of the Notice. See also Section C.8(b) and Chapter 9, Section D.2. 575

  The thresholds are, to some extent, flexible: para 9 states that agreements will benefit from the safe harbours provided by the Notice as long as market shares do not exceed the thresholds, in two successive calendar years, by more than two percentage points. 576

  For an explanation of cumulative effects doctrine see Section C.8(g), as well as Chapter 9, Section C. 577

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 102; see also Case T-7/93 Langnese-Iglo v Commission [1995] ECR II-1533, para 98. 578

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 102. 579

  Para I.2 of the Notice.

580

  Delimitis (n 432), para 21.

581

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, paras 82–83.

582

  See also Delimitis (n 432), paras 14–27; Langnese-Iglo (n 577), esp paras 94–95 and 101. 583

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459 [2001] ECR II-2459. 584

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653.

585

  See eg Joliet, The Rule of Reason in Antitrust Law (n 431); V. Korah, ‘The Rise and Fall of Provisional Validity: The Need for a Rule of Reason in EEC Antitrust’ (1981) Northwestern J Int’l L and Business 320; E. Steindorff, ‘Article 85 and the Rule of Reason’ (1984) 21 CML Rev 639; L. Gyselen, ‘Vertical Restraints in the Distribution Process: Strength and Weakness of the Free Rider Rationale under EEC Competition Law’ (1984) 21 CML Rev 647; Forrester and Norall, ‘The Laicization of Community Law’ (n 431), 11; R. Whish and B. Sufrin, ‘Article 85 and the Rule of Reason’ 7 YEL (1987) 1; G. Wils, ‘“Rule of Reason”: Une Regle Raisonnable en Droit Communautaire?’ (1990) CDE 19; Manzini, ‘The European Rule of Reason’ (n 321); Butterworths Competition Law, issue 54 [2003], Division I, para 188–205; P. Nicolaides, ‘The Balancing Myth: The Economics of Article 81(1) & (3)’ (2005) LIEI 1236. 586

  Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875; Case 75/84 Metro SB-Großmärkte v Commission [1986] ECR 3021. 587

  Case 258/78 L. C. Nungesser and Others v Commission [1982] ECR 2515.

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588

  Case 262/81 Coditel, Compagnie générale pour la diffusion de la télévision and Others v Ciné-Vog Films and Others [1982] ECR 3381. 589

  Case 161/84 Pronuptia de Paris v Pronuptia de Paris Irmgard Schillgalis [1986] ECR 353. 590

  Case C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641, paras 32–34. 591

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141. 592

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 593

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231.

594

  This is a very simplified version of the argument based on Chapter 2 of the first edition of this book and Sections C.9(d) and C.9(e) of this chapter. For a different, elegant exposition of this view see Nazzini, ‘Article 81 EC’ (n 320) and Odudu, ‘Interpreting Article 81(1)’ (n 320), 271–2. 595

  Wouters (n 592), Opinion of AG Léger, para 104.

596

  Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875; Case 75/84 Metro SB-Grossmärkte v Commission [1986] ECR 3021. 597

  Case C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641, paras 32–34. 598

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 599

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231.

600

  Métropole télévision (n 583), para 77.

601

  Métropole télévision (n 583), para 78.

602

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, para 107.

603

  Case T-111/08 MasterCard and Others v Commission, not yet reported, para 101.

604

  Case C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR I-5641, paras 32–34. 605

  Gøttrup-Klim (n 604), para 34.

606

  Emphasis added.

607

  Gøttrup-Klim (n 604), para 35.

608

  See V. Verouden, ‘Vertical Agreements and Article 81(1) EC’ (2003) 71 Antitrust LJ 528.

609

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577. 610

  Wouters (n 609), para 87.

611

  Wouters (n 609), paras 91–93.

612

  Wouters (n 609), para 105.

613

  See eg Nazzini, ‘Article 81 EC’ (n 320).

614

  Wouters (n 609), para 97.

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615

  But see Nazzini, ‘Article 81 EC’ (n 320). One of Nazzini’s arguments is that the proper practice of the legal profession benefits consumers. This allows him to interpret any weighing up that may have taken place as being economic (rather than public interest) in nature and therefore within the rule of reason; see also Monti, ‘Article 81 EC and Public Policy’ (n 12), 1084–6; cf Komninos ‘Non-Competition Concerns’ (n 480). 616

  Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875 (‘Metro I’); Case 75/84 Metro SB-Grossmärkte v Commission [1986] ECR 3021 (‘Metro II’). 617

  See paras 20–22 of Metro I and para 45 of Metro II, where the CJ summarized its own findings in its previous judgment; see also Pierre Fabre (n 558), para 40. 618

  See n 53, Nazzini, ‘Article 81 EC’ (n 320).

619

  Metro II (n 616), para 88.

620

  See also Pierre Fabre (n 558), para 41.

621

  Metro II (n 616), paras 41–42. But see Case T-19/92 Groupement d’Achat Edouard Leclerc v Commission [1996] ECR II-1851, paras 178–192 and Case T-88/92 Groupement d’Achat Edouard Leclerc v Commission [1996] ECR II-1961, paras 170–184 where these types of arguments were rejected. 622

  Metro II (n 616), paras 64–66.

623

  Métropole télévision (n 583), para 68; Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 53. 624

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231, para 68.

625

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1996] ECR 235, 249–50.

626

  O2 (n 624), para 77.

627

  O2 (n 624), para 114.

628

  The GC implied that the factors the Commission had relied upon to grant an exemption were relevant to the assessment under Art 101(1). In particular the GC noted the following from the Commission’s decision: O2 ‘would not have been able to gain access to the market efficiently’ and would likely have been unable, at least in certain geographic areas, unable to fulfil its obligations under its operating licence (paras 111–112); O2 was unlikely to be in a position to quickly build out a high-quality network covering a sufficient area to enable the company to compete effectively from the outset against other established licensed operators (para 112); Without access to national roaming for 3G services on T-Mobile’s network, O2… would be a less effective competitor during its roll-out phase and would be unlikely to enter 3G wholesale and retail markets as a nationwide competitor (or in any event as a competitor offering the broadest geographical scope that is likely to be available at that time). (recital 135) (para 113) 629

  O2 (n 624), para 68. It is worth noting in this regard that the GC did not find that without rapid, efficient entry O2 would have been unable to enter the market. 630

  O2 (n 624), para 69.

631

  O2 (n 624), para 110.

632

  O2 (n 624), para 114.

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633

  O2 (n 624), para 109 (emphasis added).

634

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459.

635

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653.

636

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231, para 102.

637

  Case T-168/01 GlaxoSmithKline Services Unlimited (n 441); see discussion at paras 3.167–3.169. See also Joined Cases T-213/01, etc Österreichische Postsparkasse and Others v Commission [2006] ECR II-1601. 638

  See Section C.9.

639

  See Article 101(3) Guidelines, para 18(1).

640

  O2 (n 636), para 93.

641

  O2 (n 636), para 95.

642

  O2 (n 636), para 77.

643

  O2 (n 636), para 116.

644

  O2 (n 636), para 115.

645

  Case T-112/99 Métropole télévision (M6) and Others v Commission [2001] ECR II-2459.

646

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653.

647

  O2 (n 636); Case T-111/08 MasterCard (n 603).

648

  Métropole télévision (n 645), para 72.

649

  Métropole télévision (n 645), para 73.

650

  Métropole télévision (n 645), para 74; Van den Bergh Foods (n 646), para 107.

651

  Métropole télévision (n 645), para 77.

652

  Case C-234/89 Stergios Delimitis v Henninger Bräu [1991] ECR I-935.

653

  Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, see esp paras 108–118. 654

  See Chapter 9 (vertical agreements), Sections C.2 and C.3.

655

  Case T-328/03 O2 (Germany) v Commission [2006] ECR II-1231.

656

  O2 (n 655), para 77.

657

  O2 (n 655), para 100.

658

  Case T-112/99 Métropole télévision (M6)and Others v Commission [2001] ECR II-2459.

659

  Although mere speculation, given the EU Courts’ approach in previous cases, the GC’s failure to conduct a more detailed assessment may simply have reflected the nature of the submissions made by the applicants in Métropole Télévision—careful reading of the Van den Bergh Foods judgment, eg, suggests that the submissions made by the applicants in that case were far more detailed and sophisticated than in Métropole Télévision. 660

  TPS, OJ 1999 L90/6, para 107.

661

  OJ 1992 L68/19, paras 36–37; John Deere (n 332); Case C-8/95 New Holland Ford v Commission [1998] ECR I-3175. 662

  Joined Cases 142/84, etc British American Tobacco Company and R. J. Reynolds Industries v Commission [1987] ECR 4487, paras 37–39.

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663

  OJ 1977 L327/26, section II, para 2.

664

  Horizontal Cooperation Guidelines, para 27.

665

  Horizontal Cooperation Guidelines, para 27; see also Article 101(3) Guidelines, para 15.

666

  See eg B. E. Hawk, ‘System Failure: Vertical Restraints and EC Competition Law’ (1995) 32 CML Rev 973; Forrester and Norall, ‘The Laicization of Community Law’ (n 431). 667

  See eg para 19 of the Commission’s 2000 Guidelines on the applicability of Article [101 TFEU] to horizontal cooperation agreements, OJ 2001 C3/2. 668

  See Article 101(3) Guidelines, para 24G.

669

  This policy shift however is not, as yet, reflected in the Commission’s decisional practice or, with the important exception of the GSK judgment (Case T-168/01, judgment of 27 September 2006), in the case law of the EU Courts. Existing case law is therefore still of relevance; indeed, it has been argued that the GC’s 2001 judgment in Métropole télévision (n 658) reaffirmed the ordo-liberal underpinnings of Art 101(1). See, in particular, the seminal article by Monti, ‘Article 81 EC and Public Policy’, 1057–99; Manzini, ‘The European Rule of Reason’. 670

  See Article 101(3) Guidelines, para 24.

671

  Article 101(3) Guidelines, para 18(1).

672

  Article 101(3) Guidelines, para 18(1).

673

  Article 101(3) Guidelines, para 18(2).

674

  Joined Cases 56/64 and 58/66 Établissements Consten and Grundig-Verkaufs-GmbH v Commission [1966] ECR 429. 675

  Métropole télévision (n 658). The GC’s explicit refusal in Métropole Télévision to take into account either the degree of inter-brand competition existing in the market at the time of entry—the incumbent operator, Canal+ was almost certainly dominant—or its likely development had led some authors to call into question the effects-based approach set out in the Article 101(3) Guidelines; see eg Nazzini, ‘Article 81 EC’ (n 320); see also Verouden, ‘Vertical Agreements and Article 81(1) EC’ (n 608), 525–75 (this paper was published before the Article 101(3) Guidelines were adopted. As such, it does not explicitly challenge the position set out therein). In essence, these commentators argued that a focus on the effects of agreements on price and output requires a holistic (or what Verouden calls a ‘net effect’—see p 528) assessment of competition to be made. In the case of Métropole Télévison, this would have required an analysis of the restraints in light of the degree of inter-brand competition in the market; it would also have required an assessment to be made of the impact of the restraint on the development of inter-brand competition. In simple terms, it is argued that if the likely effect of the restraints in Métropole Télévision was to promote inter-brand competition (by enabling the new entrant to compete more vigorously with the dominant incumbent) then the likely effect of the clause, had it not been challenged, would have been more vigorous price/service/quality competition. As such, Art 101(1) could not be said to apply. 676

  Case 56/65 Société Technique Minière v Maschinenbau Ulm [1996] ECR 235.

677

  This conclusion is derived from para 29 of the Article 101(3) Guidelines which states that ‘It follows that the ancillary restraints test is similar to the test set out in paragraph 18(2) above. However, the ancillary restraints test applies in all cases where the main

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transaction is not restrictive of competition. It is not limited to determining the impact of the agreement on intra-brand competition’ (emphasis added). 678

  See discussion on ancillarity in Section C.9(d).

679

  Article 101(3) Guidelines, para 18(2) (emphasis added).

680

  Article 101(3) Guidelines, para 18(2).

681

  Article 101(3) Guidelines, para 29.

682

  See para 3.231.

683

  See Article 101(3) Guidelines, paras 30–31.

684

  See para 101 of the Commission’s Guidelines on the application of Article [101 TFEU] to technology transfer agreements, OJ 2004 C101/2. 685

  Technology Transfer Guidelines, para 172.

686

  Article 101(3) Guidelines, para 18(2).

687

  Article 101(3) Guidelines, para 27.

688

  Article 101(3) Guidelines, para 25.

689

  Article 101(3) Guidelines, para 25.

690

  Article 101(3) Guidelines, para 25.

691

  It is worth noting that whilst the appreciability doctrine is usually thought of in market share terms, it can also not apply if the restriction itself is insignificant. Eg in Pavel Pavlov v Stichting Pensioenfonds Medische Specialisten (n 44), the CJ found that a decision to set up a pension fund entrusted with the management of a supplementary pension scheme was not an appreciable restriction. This was because the pension fund produced: restrictive effects only in relation to one cost factor of the services offered by selfemployed medical specialists…which is insignificant in comparison with other factors, such as medical fees or the cost of medical equipment. The cost of the supplementary pension scheme has only a marginal and indirect influence on the final cost of the services offered by self-employed medical specialists. In UEFA’s Broadcasting Regulations, the Commission decided that regulations which prevented the live transmission of matches at certain times, in order to protect amateur participation in sport and to encourage live attendance at football matches, was not an appreciable restriction. See also Irish Banks’ Standing Committee, OJ 1986 L295/28; Visa International, OJ 2001 L293/24, on appeal Case T-28/02 First Data v Commission [2005] ECR II-4119; Identrus, OJ 2001 L249/12. 692

  See Horizontal Cooperation Guidelines, para 27.

693

  Horizontal Cooperation Guidelines, para 39.

694

  Case T-461/07 Visa Europe and Visa International Service v Commission [2011] ECR II-1729. 695

  Case T-111/08 MasterCard. and Others v Commission, not yet reported.

696

  Case T-111/08 MasterCard (n 695), para 166.

697

  Horizontal Cooperation Guidelines, para 27; see also John Deere (n 332), para 88; Case C-238/05 Asnef-Equifax and Others v Asociación de Usuarios de Servicios Bancarios (Ausbanc) [2006] ECR I-11125, para 51; Case T-111/08 MasterCard (n 695), para 166.

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698

  Case T-111/08 MasterCard (n 695), para 98; John Deere (n 332), para 76; Horizontal Cooperation Guidelines, para 29. 699

  Métropole télévision (658), para 104; Case T-111/08 MasterCard (n 695), para 77.

700

  Case T-111/08 MasterCard (n 695), para 75.

701

  Case T-111/08 MasterCard (n 695), paras 99, 132, and 143.

702

  Horizontal Cooperation Guidelines, para 28.

703

  Horizontal Cooperation Guidelines, para 29; Société Technique Minière (n 676); Case 31/80 L’Oréal v De Nieuwe AMCK [1980] ECR 3775, para 19; John Deere (n 332), para 76; Case T-111/08 MasterCard (n 695), para 98. 704

  Horizontal Cooperation Guidelines, para 28.

705

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 136; Visa Europe (n 694), para 67; Case T-111/08 MasterCard (n 695), paras 87 and 127. 706

  Horizontal Cooperation Guidelines, para 127.

707

  Horizontal Cooperation Guidelines, paras 157ff and 162ff.

708

  Horizontal Cooperation Guidelines, para 230.

709

  Horizontal Cooperation Guidelines, para 39.

710

  Horizontal Cooperation Guidelines, para 40.

711

  Horizontal Cooperation Guidelines, para 42.

712

  Horizontal Cooperation Guidelines, paras 43ff.

713

  Horizontal Cooperation Guidelines, para 44.

714

  Horizontal Cooperation Guidelines, para 44.

715

  Horizontal Cooperation Guidelines, para 44.

716

  Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements, OJ 2010 L335/43. 717

  Horizontal Cooperation Guidelines, para 169.

718

  Horizontal Cooperation Guidelines, para 208.

719

  Horizontal Cooperation Guidelines, para 240.

720

  Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements, OJ 2010 L335/36, Art 4. 721

  Commission Regulation (EC) No 772/2004 of 27 April 2004 on the application of Article [101(3)] of the Treaty to categories of technology transfer agreements, OJ 2004 L123/11, Art 3. 722

  Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L102/1, Art 3. 723

  Though binding only on itself, the Commission expressly states that the aim of the Notice is ‘to give guidance to the courts and authorities of the Member States in their application of Article 81’; see para I.4 of the Notice.

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724

  The Notice does not apply to horizontal agreements which are caught by object or to vertical agreements between competitors—see para II.11 of the Notice. See also Chapter 9, Section B.5(b). 725

  Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 102; see also Langnese-Iglo (n 577), para 98. 726

  Case T-374/94 [1988] European Night Services v Commission [1998] ECR II-3141, para 102. 727

  Para I.2 of the Notice.

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Part I General Principles, 3 Article 101, D Jurisdiction Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of — Jurisdictions — Effect on trade between member states — Appreciable effect

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D. Jurisdiction (1)  General 3.385  It is a condition for applying Articles 101 and 102 that the agreement or practice in question ‘may affect trade between Member States’. In the absence of such effect, the EU competition rules do not apply, with the result that the agreement or practice is subject only to Member State or third country competition law, as the case may be. The effect on trade criterion thus determines the jurisdictional reach of Articles 101 and 102. 3.386  The effect on trade concept also determines the scope of the obligation under Article 3(1) of Regulation 1/2003728 of the NCAs and national courts to apply Articles 101 and 102 and the obligation under Article 3(2) not to prohibit agreements that are compatible with the EU competition rules. In the enforcement system created by Regulation 1/2003, the effect on trade concept is thus of particular significance. 3.387  The Commission has adopted Effect on trade Guidelines,729 in which the Commission largely limits itself to restating principles derived from the existing case law of the EU Courts. It is an interpretative text in which few attempts are made to develop the law. In particular, there is deliberately no attempt to limit the scope of the effect on trade concept. This is hardly surprising given the fact that any such attempt would expose more agreements to stand-alone application of national competition law. Indeed, the spirit of Article 3 of Regulation 1/2003 points in the opposite direction: the EU competition rules should constitute the common competition law standard for the internal market.

(p. 292) (2)  The Concept of Trade Between Member States 3.388  The function of the concept of ‘trade’ is to establish a nexus between the case at hand and Articles 101 and 102 in order to justify EU law jurisdiction. According to the case law of the Court of Justice, the concept of ‘trade’ is a wide one covering all cross-border economic activity including establishment.730 This interpretation reflects the fundamental objective of the EU to create an internal market with free movement of goods, services, persons, and capital. Limiting the jurisdictional reach of Articles 101 and 102 to agreements and practices influencing cross-border exchanges of goods and services would ignore the wider objective of the EU and would therefore be unduly narrow. 3.389  In interpreting the concept of trade, it is also necessary to take into account the fact that according to Article 3 TEU and Protocol 27 annexed to the TEU and the TFEU, one of the objectives of the EU is the creation of a system to ensure that competition in the internal market is not distorted. As competition inside the internal market is necessarily distorted when the competitive structure within the EU is impaired, Articles 101 and 102 also apply to agreements and practices that affect the competitive structure within the internal market by eliminating or threatening to eliminate a competitor.731 It is not a condition for EU law jurisdiction to exist in such cases that the output of the undertaking in question be sold on the EU internal market. In Commercial Solvents,732 the Court of Justice held that Article 102 was applicable even though the output of the targeted undertaking was sold mainly to third countries. 3.390  The requirement that there must be an effect on trade ‘between Member States’ implies that there must be an impact733 on cross-border economic activity involving at least two Member States. It is not required that the agreement or practice affect trade between the whole of one Member State and the whole of another Member State. Articles 101 and 102 may also be applicable in cases involving part of a Member State, provided that the effect on trade is appreciable.734

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3.391  The application of the effect on trade criterion is independent of the definition of relevant geographic markets. Trade between Member States may also be affected in cases where the relevant market is national or sub-national.735 This is important from the point of view of Article 3 of Regulation 1/2003. The obligations contained in this article will apply to a number of cases where the relevant market does not extend beyond the territory of a single Member State.

(3)  The Link Between Trade and the Agreement or Practice 3.392  In the case of Article 101, it is the agreement that must be capable of affecting trade between Member States. It is not required that each individual part of the agreement, including any (p. 293) restriction of competition which may flow from the agreement, is capable of doing so.736 If the agreement as a whole is capable of affecting trade between Member States, there is EU law jurisdiction in respect of the entire agreement, including any parts of the agreement that individually do not affect trade between Member States.737 3.393  In cases where the contractual relations between the same parties cover several activities, these activities must, in order to form part of the same agreement, be directly linked to and form an integral part of the same overall business arrangement.738 If not, each activity constitutes a separate agreement. On the other hand, it is immaterial whether the participation of a particular undertaking in the agreement has an appreciable effect on trade between Member States.739 An undertaking cannot escape EU law jurisdiction merely because its own contribution to an agreement, which itself is capable of affecting trade between Member States, is insignificant. 3.394  In the case of Article 102, it is the abuse that must affect trade between Member States. This does not imply, however, that each element of the behaviour engaged in by the dominant undertaking must be assessed in isolation. Conduct that forms part of an overall strategy pursued by the dominant undertaking must be assessed in terms of its overall impact. Where a dominant undertaking adopts various practices in pursuit of the same aim, for instance practices that aim at eliminating or foreclosing competitors, it is sufficient in order for Article 102 to be applicable to all the practices forming part of this overall strategy, that at least one of these practices be capable of affecting trade between Member States.740

(4)  The Notion of ‘May Affect’ (a)  Introduction 3.395  The notion ‘may affect’ determines the nature and intensity of the influence on trade between Member States that must be established for Articles 101 and 102 to be applicable. According to the standard test developed by the Court of Justice, ‘it must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States’.741 In addition, according to settled case law the influence on trade must be ‘appreciable’.742 As we shall see, appreciability is assessed on the basis of the position and importance on the market of the undertakings concerned. (p. 294) 3.396  The test developed by the Court of Justice is relatively abstract in nature. It is submitted that it could not be otherwise. The establishment of jurisdiction cannot depend on detailed factual analysis. If that were the case it would be difficult to assess ex ante what is the applicable law. There would also be a risk that jurisdiction would be unstable, frequently disappearing and re-emerging over time. The principles developed by the Court

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of Justice make it possible to assess the issue of EU law jurisdiction on the basis of a limited number of core elements which are often available ex ante or after relatively limited inquiry.

(b)  A Sufficient Degree of Probability 3.397  The words ‘may affect’ and the reference by the Court of Justice to ‘a sufficient degree of probability’ imply that, in order for EU law jurisdiction to be established, it is not required that the agreement or practice actually has had, has, or will have an effect on trade between Member States. It is sufficient that the agreement or practice is ‘capable’ of having such an effect.743 It is not possible to point to a single decisive factor for the assessment. The ability of an agreement to affect trade between Member States is based on several factors that individually may not be decisive.744 3.398  The analysis is based on three main elements:745 (a)  the nature of the agreement and practice; (b)  the nature of the products covered by the agreement or practice; (c)  the position and importance of the undertakings concerned.

746

3.399  The nature of the agreement and practice provides important insight into its ability to affect trade between Member States. Some agreements and practices are, by their very nature, capable of affecting trade between Member States. For example, cross-border cartels and agreements concerning imports and exports are necessarily capable of affecting trade between Member States as they have a direct impact on cross-border economic activity. Moreover, such agreements are directly linked to the very essence of the internal market and the objective of the EU competition rules of ensuring that competition in the internal market is not distorted. It would deprive the EU competition rules of their raison d’être if they were not applicable to agreements such as cross-border cartels. On the other hand, certain other types of agreements are not, by their very nature, capable of affecting trade between Member States and require more detailed analysis. This is, for example, the case with joint ventures confined to a single Member State: such agreements do not have an inherent link with cross-border economic activity. 3.400  The nature of the products covered by the agreements or practices also provides an indication of whether trade between Member States is capable of being affected. When, by their nature, products are easily traded across borders or are important for undertakings that want to enter or expand their activities in other Member States, EU jurisdiction is more readily established than in cases where, due to their nature, there is limited demand for products offered by suppliers from other Member States or where the products are of limited interest from the point (p. 295) of view of cross-border establishment or the expansion of the economic activity carried out from such place of establishment.747 3.401  The domicile of the undertakings concerned is also taken into account. The Court of Justice has thus held that the mere fact that the participants in a national arrangement also include undertakings from other Member States is an important, but not decisive, element.748 3.402  The market position of the undertakings concerned and their sales volumes are indicative, from a quantitative point of view, of the ability of the agreement or practice concerned to affect trade between Member States. 3.403  In addition to the factors already mentioned, it is necessary to take account of the legal and factual environment in which the agreement or practice operates. The relevant economic and legal context provides insight into the potential for trade between Member States to be affected. If there are absolute barriers to cross-border trade between Member States, which are external to the agreement or practice, trade is only capable of being affected if those barriers are likely to disappear in the foreseeable future. In cases where From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the barriers are not absolute but merely render cross-border activity more difficult, it is of the utmost importance to ensure that agreements and practices do not further hinder such activities. Agreements and practices that do so are capable of affecting trade between Member States.749

(c)  An Influence on the Pattern of Trade 3.404  The term ‘pattern of trade’ is neutral. It is not a condition that trade be restricted or reduced.750 Patterns of trade can also be affected when an agreement or practice causes an increase in trade. Indeed, EU law jurisdiction is established if trade between Member States is likely to develop differently with the agreement or practice as compared to the way in which it would probably have developed in the absence of the agreement or practice.751 3.405  Moreover and importantly, it is not necessary, for the purposes of establishing EU law jurisdiction, to establish a link between the alleged restriction of competition and the ability of the agreement to affect trade between Member States. Non-restrictive agreements may also affect trade between Member States. This is reflected in Article 3(2) of Regulation 1/2003 which, inter alia, provides that agreements which may affect trade between Member States but which do not restrict competition within the meaning of Article 101(1) cannot be prohibited by national competition law. The EU legislator has thus assumed that non-restrictive agreements may affect trade between Member States. That said, however, the alleged restrictions arising from an agreement may provide a clear indication as to the ability of the agreement to affect trade between Member States. For instance, a distribution agreement prohibiting exports is by its very nature capable of affecting trade between Member States, although not necessarily to an appreciable extent.

(p. 296) (i)  Direct or Indirect, Actual or Potential 3.406  The required influence of agreements and practices on patterns of trade between Member States can be ‘direct or indirect, actual or potential’. When attempting to establish the true meaning of these terms, it is important to keep in mind that it is only required to show that the agreement is capable of affecting trade between Member States. The assessment remains fairly abstract as regards direct and actual effects. The main focus is on the link between the agreement and practice and the cross-border economic activity which is allegedly capable of being affected. There is no obligation or need to calculate the actual volume of trade between Member States affected by the agreement or practice. 3.407  Direct effects normally occur in relation to the products covered by the agreement or practice.752 An agreement whereby the parties agree not to sell into certain territories produces direct effects on trade between Member States. Actual effects are produced when an agreement that is capable of affecting trade between Member States has been implemented.753 3.408  Indirect effects often occur in relation to products that are related to those covered by an agreement or practice. For instance, in BNIC v Clair754 the Court of Justice held that trade between Member States was capable of being affected in the case of an agreement involving the fixing of the price of spirits used in the production of cognac. The spirits in question were not exported and only spirits made from grapes grown in the Cognac region could be used in the production of cognac. The agreement therefore did not produce direct effects on trade between Member States. However, given that the product covered by the agreement was used in the production of a product that was traded between Member States, the agreement was capable of producing indirect effects on trade between Member States.

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3.409  Indirect effects on trade between Member States may also occur in relation to the products covered by the agreement or practice. For instance, agreements whereby a manufacturer limits warranties to products sold by distributors within their Member State of establishment create disincentives for consumers from other Member States to buy the products because they would not be able to invoke the warranty.755 Export by official distributors and parallel traders would be more difficult because, in the eyes of consumers, the products are less attractive without the manufacturer’s warranty.756 3.410  Potential effects are those that may occur in the future with a sufficient degree of probability. It follows that market developments must be taken into account.757 Even if trade is not capable of being affected at the time the agreement is concluded or the practice is implemented, Articles 101 and 102 remain applicable if the factors which led to that conclusion are likely to change in the foreseeable future. If cross-border economic activity is not possible due to barriers to entry, it must be considered whether those barriers are going to be eliminated or sufficiently reduced within a reasonable period of time. If so, EU jurisdiction is established ex ante. Intervention does not have to wait for the point in time when cross-border economic activity becomes possible. (p. 297) 3.411  Even if, at a given point in time, cross-border economic activity does not occur, the EU competition rules are applicable if, due to the nature of the products concerned, cross-border economic activity is possible and the agreement is capable of affecting such activity. For instance, it may be that at a given point in time market conditions are unfavourable to cross-border trade, for example because prices are similar in the Member States in question.758 Trade is nevertheless capable of being affected if the situation may change as a result of changing market conditions.759 What matters is the ability of the agreement or practice to affect trade between Member States and not whether at any given point it actually does so. 3.412  The inclusion of indirect or potential effects in the analysis of effect on trade between Member States does not mean that the analysis can be based on remote or hypothetical effects. The likelihood of a particular agreement to produce indirect or potential effects must be explained by the competition authority or party claiming that trade between Member States is capable of being appreciably affected. Hypothetical or speculative effects are not sufficient for establishing EU law jurisdiction.760

(5)  Appreciability (a)  General Principles 3.413  Agreements and practices fall outside the scope of application of Articles 101 and 102 when they affect the market only insignificantly.761 For EU law jurisdiction to be established, the agreement or practice must be capable of appreciably affecting trade between Member States.762 3.414  Appreciability is assessed, in particular, by reference to the position and the importance of the relevant undertakings on the market for the products concerned.763 The stronger the market position of such undertakings, the more likely it is that an agreement or practice capable of affecting trade between Member States can be held to do so appreciably.764 However, it is important also to take account of other factors such as the nature of the agreement and practice and the nature of the products that they cover. When, by its very nature, an agreement or practice is capable of affecting trade between Member States, the appreciability threshold is (p. 298) lower than in the case of agreements and practices that are not, by their very nature, capable of affecting trade between Member States.765

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3.415  In a number of cases concerning imports and exports, the Court of Justice has considered that the appreciability requirement was fulfilled when the sales of the undertakings concerned accounted for approximately 5 per cent of the market.766 Market share alone, however, has not always been considered the decisive factor. In particular, it is necessary also to take account of the turnover of the undertakings in the products concerned. In Musique Diffusion Française, where the products in question accounted for just above 3 per cent of sales on the national markets concerned, the Court of Justice held that the agreements, which hindered parallel trade, were capable of appreciably affecting trade between Member States due to the high turnover of the parties and the relative market position of the products, compared to those of products produced by competing suppliers.767 It follows that the application of the appreciability test does not necessarily require that relevant markets be defined and market shares calculated.768 The sales of an undertaking in absolute terms may be sufficient to support a finding that the impact on trade is appreciable.

(b)  Quantification 3.416  The Effect on trade Guidelines do not contain elaborate criteria for determining when the effect on trade of an agreement or practice on trade between Member States is appreciable. With one exception, the Commission has limited itself to setting out a presumption indicating when trade between Member States is not capable of being appreciably affected. This presumption must be distinguished from the de minimis rule contained in the De Minimis Notice. The latter rule concerns only the question of what constitutes an appreciable restriction of competition within the meaning of Article 101(1), which is a distinct issue. The De Minimis Notice has no bearing on whether an agreement is capable of appreciably affecting trade between Member States. The Effect on trade Guidelines contain in paragraph 52 a distinct negative rebuttable presumption769 according to which: the Commission holds the view that in principle agreements are not capable of appreciably affecting trade between Member States when the following cumulative conditions are met: (a)  The aggregate market share of the parties on any relevant market within the Community affected by the agreement does not exceed 5%, and (b)  In the case of horizontal agreements, the aggregate annual Community turnover of the undertakings concerned 770 in the products covered by the agreement does not exceed 40 million Euro. In the case of agreements concerning the joint buying of products the relevant turnover shall be the parties’ combined purchases of the products covered by the agreement. (p. 299) In the case of vertical agreements, the aggregate annual Community turnover of the supplier in the products covered by the agreement does not exceed 40 million Euro. In the case of licence agreements the relevant turnover shall be the aggregate turnover of the licensees in the products incorporating the licensed technology and the licensor’s own turnover in such products. In cases involving agreements concluded between a buyer and several suppliers the relevant turnover shall be the buyer’s combined purchases of the products covered by the agreements. 3.417  According to paragraph 52 of the Effect on trade Guidelines, the negative presumption remains applicable where during two successive calendar years the turnover threshold is not exceeded by more than 10 per cent and the market threshold is not exceeded by more than two percentage points. In cases where the agreement concerns an emerging not yet existing market and where as a consequence the parties neither generate

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relevant turnover nor accumulate any relevant market share, the negative presumption does not apply. The Effect on trade Guidelines provide that in such cases appreciability may have to be assessed on the basis of the position of the parties on related product markets or their strength in technologies relating to the agreement. 3.418  It is also worth mentioning that according to paragraph 56 of the Effect on trade Guidelines, in the case of networks of agreements entered into by the same supplier with different distributors, sales made through the entire network are taken into account. Moreover, according to paragraph 57, contracts that form part of the same overall business arrangement constitute a single agreement for the purposes of the negative presumption. Undertakings cannot bring themselves below the thresholds by dividing up an agreement that from an economic perspective forms a whole. 3.419  The two cumulative conditions of the negative presumption can be traced back to case law. The 5 per cent market share threshold follows from Miller771 according to which a market share of 5 per cent is sufficient to be appreciable, at least in the case of agreements that by their very nature are capable of affecting trade between Member States. The turnover threshold as such is derived from Musique Diffusion Française772 where the Court of Justice held that trade was capable of being appreciably affected due to the large turnover of the undertakings concerned in spite of the fact that their market share was around 3 per cent. 3.420  The turnover threshold of €40 million is calculated on the basis of the EU turnover in the products covered by the agreement.773 This calculation method differs from that contained in Commission Recommendation 96/280/EC concerning the definition of micro, small, and medium-sized enterprises,774 which uses total turnover. There is no link between the Effect on trade Guidelines and Commission Recommendation 96/280/EC.775 A threshold based on agreement-specific turnover is clearly more difficult to apply than a threshold based on total turnover. However, it is submitted that it is a better proxy for appreciable effects on (p. 300) trade. In the case of multi-product firms, the total turnover of an undertaking may say very little about the ability of an agreement to affect trade between Member States, which is the relevant issue. 3.421  The wording of the two cumulative thresholds of the negative presumption suffers from a certain lack of clarity. The reference to ‘aggregate market share’ in paragraph 52(a) makes sense in the case of agreements between undertakings operating at the same level of trade. However, in the case of agreements between undertakings operating at different levels of trade, such as agreements between a supplier and its distributor where the supplier itself does not also distribute, there is nothing to aggregate. There is only one market share on each relevant market, namely that of the supplier or the distributor as the case may be. Paragraph 52(a) should therefore be read as providing that market shares must be calculated for each relevant market affected by the agreement and that, where applicable, the market shares of the parties must be aggregated. 3.422  The purpose of paragraph 52(b) is to identify the relevant turnover. However, the relationship between the two parts is not entirely clear. In particular, it is unfortunate that in the second part, which deals with vertical agreements, reference is made to the licensor’s turnover on the product market.776 The text would have been clearer if all horizontal agreement in respect of which aggregation is relevant had been dealt with in the first part and the second part had been confined to purely vertical agreements in respect of which the parties do not generate turnover on the same relevant market. 3.423  In the case of horizontal agreements, the relevant turnover is that which the parties generate on the relevant markets where they act as sellers. The only explicit exception is purchasing agreements where the relevant turnover is the turnover generated on the purchasing market. However, as regards licence agreements it is necessary to read the part of paragraph 52(b) dealing with horizontal agreements in light of the second part dealing From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

with vertical agreements. It follows from a combined reading of these two parts that, in the case of licence agreements, the relevant turnover of the licensor is the combined turnover of the licensees and the licensor in the products incorporating the licensed technology and the relevant turnover of the licensee is its turnover in products that compete with the products covered by the agreement. 3.424  In the case of vertical supply agreements, the relevant turnover is that of the supplier777 and in the case of vertical purchasing agreements, that is, agreements whereby a buyer sources from several suppliers, the relevant turnover is that of the buyer. A particular rule applies to licence agreements: the turnover of the licensor in its capacity as licensor is limited to royalties. Royalties are generally calculated as a percentage of the price of the product or a fixed amount per product sold by the licensee. Royalty income of €40 million thus represents a much larger turnover on the market for products incorporating the licensed technology, which generally is the market on which the effects of the agreement are analysed.778 This must be taken into account when assessing whether the agreement is capable of appreciably affecting (p. 301) cross-border economic activity. The Effect on trade Guidelines reflect this fact when providing that in respect of licence agreements the relevant turnover is that of the licensees on the market where they sell the products incorporating the licensed technology. 3.425  In addition to the negative presumption, the Effect on trade Guidelines also set out a positive rebuttable presumption of appreciable effects on trade. In this respect, paragraph 53 provides that: the Commission will also hold the view that where an agreement by its very nature is capable of affecting trade between Member States, for example, because it concerns imports and exports or covers several Member States, there is a rebuttable positive presumption that such effects on trade are appreciable when the turnover of the parties in the products covered by the agreement…exceeds 40 million euro. In the case of agreements that by their very nature are capable of affecting trade between Member States it can also often be presumed that such effects are appreciable when the market share of the parties exceeds the 5 per cent threshold…However, this presumption does not apply where the agreement covers only part of a Member State. 3.426  This positive presumption reflects case law according to which the definition of relevant markets and thus the calculation of market shares is not a precondition of assessing appreciability.779 When by its very nature an agreement is capable of affecting trade between Member States, turnover may be sufficient. However, the positive presumption based on turnover may be rebutted where the turnover in question is insignificant in comparison to the overall size of the market. The Effect on trade Guidelines also recognize that market share is not always a good indicator of the ability of an agreement to appreciably affect trade between Member States. The relevant market may, for instance, be local, in which case market share provides no useful information on the question of appreciability. For this reason, the positive presumption based on market shares does not apply in the case of sub-national markets.

(6)  Assessment of Various Types of Agreement and Practices (a)  Introduction 3.427  With a view to illustrating the general principles developed in previous sections, the Effect on trade Guidelines deal with various types of agreements and abusive practices in three separate sections. These sections cover: (a) agreements and practices covering or implemented in several Member States;780 (b) agreements and practices covering a single, or only part of a, Member State;781 and (c) agreements and practices involving imports and

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exports with undertakings located in third countries, and agreements and practices involving undertakings located in third countries.782

(b)  Agreements and Practices Concerning Imports and Exports and Agreements and Practices Implemented in Several Member States 3.428  The first category covers agreements concerning imports and exports and agreements and practices such as cross-border cartels, joint ventures, and abusive practices that by their very nature are capable of affecting trade between Member States. In these cases, the main issue to (p. 302) be considered is that of appreciability. If this condition is satisfied, it is uncontroversial that there should be EU law jurisdiction in the case of cross-border agreements and practices and agreements concerning imports and exports such as agreements that hinder parallel trade. Such agreements and practices go to the heart of Articles 101 and 102, namely the protection of undistorted competition within the internal market. If the EU competition rules were not applicable, for instance to crossborder cartels, the only alternative would be to apply national competition law, which fails to take into account the EU dimension.

(c)  Agreements and Practices Confined to the Whole or Part of a Member State 3.429  The issue becomes more complex in the case of agreements and practices that do not extend beyond the territory of a single Member State. In such cases, it may be necessary to proceed with a more detailed inquiry into the capability of the agreements or abusive practices to affect trade between Member States. This is particularly warranted in the case of agreements that are not by their very nature capable of affecting trade between Member States. This is, for instance, likely to be the case with horizontal cooperation agreements and in particular non-full-function joint ventures, which are confined to a single Member State and which do not directly relate to imports and exports. Such agreements may, in particular, be capable of affecting trade between Member States where they have foreclosure effects.783 Similarly, vertical agreements covering the whole of a Member State may, in particular, be capable of affecting patterns of trade between Member States when they concern imports and exports and when they make it more difficult for undertakings from other Member States to penetrate the national market in question, either by means of exports or by means of establishment.784 3.430  In a number of cases that have mainly involved cartels, sector-wide horizontal agreements, agreements hindering parallel trade, and abuse of dominance785 the Court of Justice has held that agreements and practices extending over the whole territory of a Member State have by their very nature the effect of reinforcing the partitioning of markets on a national basis by hindering the economic penetration which the Treaty is designed to bring about. Agreements and abusive practices that cover the whole of a Member State often make it more difficult for undertakings from other Member States to engage in economic activity in the Member State in question. These difficulties may stem from the fact that the agreement or practice creates barriers to entry, as is the case where a dominant firm concludes exclusive dealing agreements with a number of customers,786 or from the fact that in order to sustain the agreement the parties need to take action against outsiders. For example, in the case of a cartel the participating undertakings normally need to take action to exclude competitors from other Member States or alternatively include them in the cartel.787 If they do not, the cartel risks being undermined by competition from such undertakings. 3.431  In assessing whether agreements covering the whole of a Member State may affect trade between Member States it is, in addition to the nature of the agreement, particularly relevant (p. 303) to take into account whether the products covered by the agreement are ‘tradeable’. A product is tradeable if there is cross-border demand for it or if the product constitutes a significant factor in the choice made by undertakings from other Member From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

States whether to establish themselves in the Member State in question. The importance of tradeability is illustrated by the judgments in Bagnasco788 and Wouters.789 The Bagnasco case concerned an agreement in the Italian banking sector establishing standard terms and conditions for current account credit facilities. The Court of Justice held that trade between Member States was not capable of being appreciably affected. In so holding, the Court of Justice referred to the fact that the Commission had found that the banking service in question involved economic activities that had a very limited impact on trade between Member States and that the participation of the subsidiaries or branches of non-Italian financial establishments was limited. The Commission had also made clear, in reply to a question put to it by the Court, that potential recourse to contracts for credit facilities and contracts for the provision of general guarantees by the main customers of foreign banks, that is to say large undertakings and foreign economic operators, was not great and, in any event, was not a factor of decisive importance in the decision made by foreign banks whether to establish themselves in Italy. The Court of Justice concluded that the Commission’s findings had not been called into question in the proceedings. Conversely, in Wouters, where the Court of Justice considered a rule laid down by the Dutch Bar Association prohibiting joint partnerships between lawyers and accountants, the Court of Justice applied the standard formula on cases covering the whole of a Member State to find that trade between Member States was capable of being affected. It added that the effect was all the more appreciable because the agreement applied equally to visiting lawyers who were registered members of the Bar of another Member State, because economic and commercial law more and more frequently regulates transnational transactions and, lastly, because the firms of accountants looking for lawyers as partners were generally international groups present in several Member States. In other words, the services in question were clearly tradeable.

(d)  Agreements and Practices Covering Part of a Member State 3.432  In assessing agreements and practices that only cover part of a Member State, it is necessary to consider what proportion of the Member State in question is covered by the agreement and what proportion of its territory is open to trade.790 If, for example, transport costs render it economically unviable for undertakings from other Member States to serve the entire territory of another Member State, trade is capable of being affected if the agreement forecloses access to the part of the territory of a Member State that is open to trade, provided that this part is not insignificant.791 3.433  When an agreement forecloses access to a regional market, the volume of sales affected must be significant in proportion to the overall volume of sales of the products concerned inside the Member State in question.792 This assessment cannot be based merely on geographic (p. 304) coverage. The market share of the parties to the agreement must also be given fairly limited weight. Even if the parties have a high market share in a properly defined regional market, the size of that market in terms of volume may still be insignificant when compared to total sales of the products concerned within the Member State in question. In general, the best indicator of the capacity of the agreement (appreciably) to affect trade between Member States is the share of the national market in terms of volume that is being foreclosed. Agreements covering areas with a high concentration of demand will thus more readily affect trade between Member States than those covering areas where demand is less concentrated. For EU jurisdiction to be established, the share of the national market that is being foreclosed must be significant. Agreements that are local in nature are in themselves not capable of appreciably affecting trade between Member States.793 This is the case even if the local market is located in a border region. Conversely, if the foreclosed share of the national market is significant, trade is capable of being affected even where the market in question is not located in a border region. The same is true for abusive practices.794 Trade may not be capable of being

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appreciably affected if the abuse is purely local in nature or involves only an insignificant share of the sales of the dominant undertaking.795 3.434  According to paragraphs 92 and 97 of the Effect on trade Guidelines, some guidance may be derived from the condition in Article 102 that the dominant position must cover a substantial part of the internal market. Agreements and abusive practices that, for example, have the effect of hindering competitors from other Member States in their efforts to gain access to part of a Member State, which constitutes a substantial part of the internal market, should be considered as having an appreciable effect on trade between Member States. In the application of this criterion, regard must be had in particular to the size of the market in question in terms of volume. Regions and even a port or an airport situated in a Member State may, depending on their importance, constitute a substantial part of the internal market.796 In these cases, it must be considered whether the infrastructure in question is used to provide cross-border services and, if so, to what extent. Where infrastructures such as airports and ports are important in providing cross-border services, trade between Member States is capable of being affected. The Effect on trade Guidelines do not suggest that trade is not capable of affecting trade between Member States when the agreement or practice does not cover a substantial part of the internal market. It is only a positive presumption.

(e)  Agreements and Practices Involving Third Countries 3.435  Articles 101 and 102 apply irrespective of where the undertakings are located or where the agreement was concluded. Articles 101 and 102 may also apply to agreements and practices that cover third countries and are entered into or conducted by undertakings established in those countries, provided that the agreements and practices are capable of affecting trade between Member States. According to paragraph 100 of the Effect on trade Guidelines, EU law is applicable if the agreement or practice is either implemented or produces effects inside the EU. As such, the application of EU law is compatible with the requirements of public international law. (p. 305) 3.436  The leading case on the implementation doctrine is Woodpulp797 where the Court of Justice held that: It should be observed that an infringement of Article [101], such as the conclusion of an agreement which has had the effect of restricting competition within the common market, consists of conduct made up of two elements, the formation of the agreement, decision or concerted practice and the implementation thereof. If the applicability of prohibitions laid down under competition law were made to depend on the place where the agreement, decision or concerted practice was formed, the result would obviously be to give undertakings an easy means of evading those prohibitions. The decisive factor is therefore the place where it is implemented. The producers in this case implemented their pricing agreement within the common market. It is immaterial in that respect whether or not they had recourse to subsidiaries, agents, sub-agents, or branches within the [Union] in order to make their contacts with purchasers within the [Union]. Accordingly the [Union]’s jurisdiction to apply its competition rules to such conduct is covered by the territoriality principle as universally recognized in public international law. 3.437  It follows that as soon as undertakings established outside the EU take steps to implement agreements and abusive practices within the EU, Articles 101 and 102 may be applied provided the requisite effect on trade between Member States can be established.

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3.438  Under the effects doctrine, jurisdiction can be established simply on the basis of economic effects produced within a given territory: implementation within that territory is not required. Following the judgment in Woodpulp, it was an open question as to whether the effects doctrine was recognized in EU law. However, this has now been accepted by the General Court in Gencor798 where it held that the application of the EU Merger Regulation was justified under public international law when it is foreseeable that a proposed concentration will have an immediate and substantial effect in the EU. It follows therefore that the effects doctrine is, as a matter of law, compatible with the EU legal order. Although this conclusion was reached in the context of a merger case, there is no reason to believe that the EU Courts would not also apply the effects doctrine within the field of Articles 101 and 102. The fact that under the EU Merger Regulation jurisdiction is based on turnover threshold rather than the effect on trade concept should not be considered decisive. When agreements and practices produce effects within the EU, they may well affect patterns of trade within the EU, thereby satisfying the requirements for finding an effect on trade. 3.439  Where the object of the agreement is to restrict competition inside the EU, the required effect on trade between Member States is more readily established than where the object is predominantly to regulate competition outside the EU. In the former case, the agreement or practice has a direct impact on competition inside the EU and trade between Member States. Such agreements and practices, which may concern both imports and exports, are normally by their very nature capable of affecting trade between Member States. In the case of imports, this category includes agreements that bring about an isolation of the internal market.799 In the case of exports, this category includes cases where undertakings that compete in two or (p. 306) more Member States agree to export certain (surplus) quantities to third countries with a view to coordinating their market conduct inside the EU.800 3.440  In the case of agreements and practices the object of which is not to restrict competition inside the EU, it is relevant to examine the effects of the agreement or practice on customers and other operators inside the EU who rely on the products of the undertakings that are parties to the agreement or practice.801 3.441  Trade may also be capable of being affected when the agreement prevents reimports into the EU. This may, for example, be the case with vertical agreements between EU suppliers and third country distributors, imposing restrictions on resale outside an allocated territory, including the EU. If, in the absence of the agreement, resale to the EU would be possible and likely, such imports may be capable of affecting patterns of trade inside the EU.802 However, for such effects to be likely, there must be an appreciable difference between the prices of the products charged in the EU and those charged outside the EU, and this price difference must not be eroded by customs duties and transport costs. In addition, the product volumes exported compared to the total market for those products in the territory of the internal market must not be insignificant.803 If these product volumes are insignificant compared to those sold inside the EU, the impact of any re-importation on trade between Member States will not be appreciable. In making this assessment, regard must be had not only to the individual agreement concluded between the parties, but also to any cumulative effect of similar agreements concluded by the same and competing suppliers.804 It may be, for example, that the product volumes covered by a single agreement are quite small, but that the product volumes covered by several such agreements are significant. In that case, the agreements taken as a whole may be capable of appreciably affecting trade between Member States.

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Footnotes: 728

  Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 and 101] of the Treaty, OJ 2003 L1/1. 729

  Commission Notice, Guidelines on the effect on trade concept contained in Articles [101 and 102 TFEU], OJ 2004 C101/81. 730

  See Case 172/80 Züchner [1981] ECR 2021, para 18. See also Wouters (n 609), para 95; Ambulanz Glöckner (n 61), para 49; Joined Cases C-215/96 and 216/96 Bagnasco [1999] ECR I-135, para 51; Case C-55/96 Job Centre [1997] ECR I-7119, para 37; and Höfner and Elser (n 56), para 33. 731

  See eg Joined Cases T-24/93, etc Compagnie Maritime Belge [1996] ECR II-1201, para 203; and Joined Cases 6/73 and 7/73 Commercial Solvents [1974] ECR 223, paras 32 and 33. 732

  Joined Cases 6/73 and 7/73 Commercial Solvents [1974] ECR 223, paras 32 and 33.

733

  Which may be direct or indirect, actual or potential; see paras 3.406ff.

734

  See eg Joined Cases T-213/95 and T-18/96 SCK and FNK [1997] ECR II-1739.

735

  See Effect on trade Guidelines, para 22.

736

  See Case 193/83 Windsurfing International [1986] ECR 611, para 96; and Case T-77/94 Vereniging van Groothandelaren in Bloemkwekerijprodukten [1997] ECR II-759, para 126. 737

  See Effect on trade Guidelines, para 14.

738

  See Vereniging van Groothandelaren (n 735), paras 142–144.

739

  See eg Case T-2/89 Petrofina [1991] ECR II-1087, para 226.

740

  See in this respect, Case 85/76 Hoffmann-La Roche [1979] ECR 461, para 126; Effect on trade Guidelines, para 17. 741

  See eg Züchner (n 730); Case 319/82 Kerpen & Kerpen [1983] ECR 4173; Joined Cases 240/82, etc Stichting Sigarettenindustrie [1985] ECR 3831, para 48; and Cimenteries (n 242), para 3930; Asnef-Equifax (n 697), para 34; Case C-439/11 P Ziegler v Commission, not yet reported, para 92. In some judgments, mainly relating to vertical agreements, the EU Courts have added wording to the effect that the agreement was capable of hindering the attainment of the objectives of an internal market between Member States, see eg Case T-62/98 Volkswagen [2000] ECR II-2707, para 179; Bagnasco (n 730), para 47; and Société Technique Minière (n 676). The impact of an agreement on the internal market objective is thus a factor which can be taken into account. 742

  See in this respect, Béguelin (n 447), para 16.

743

  See eg Case T-228/97 Irish Sugar [1999] ECR II-2969, para 170; and Case 19/77 Miller [1978] ECR 131, para 15. 744

  See eg Joined Cases C-295/04, etc Manfredi [2006] ECR I-6619, para 43; and Case C-250/92 Gøttrup-Klim ea Grovvareforeninger v Dansk Landbrugs Grovvareselskab [1994] ECR II-5641, para 54; Asnef-Equifax (n 697), para 34; C-439/11 P Ziegler v Commission, not yet reported, para 93. 745

  See the Effect on trade Guidelines, para 28.

746

  See eg Case C-306/96 Javico [1998] ECR I-1983, para 17; and Béguelin (n 447), para 18.

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747

  Compare in this respect, Manfredi (n 744), para 49; Wouters (n 609), para 95; and Bagnasco (n 730), para 51. 748

  See Manfredi (n 744), para 44.

749

  See Effect on trade Guidelines, para 32.

750

  See eg Case T-141/89 Tréfileurope [1995] ECR II-791; Case T-29/92 Vereniging van Samenwerkende Prijsregelende Organisaties in de Bouwnijverheid (SPO) [1995] ECR II-289, as far as exports were concerned; and Commission Decision in Volkswagen (II), OJ 2001 L262/14. 751

  See in this respect, Case 71/74 Frubo [1975] ECR 563, para 38; Joined Cases 209/78, etc Van Landewyck [1980] ECR 3125, para 172; Case T-61/89 Dansk Pelsdyravler Forening [1992] ECR II-1931, para 143; and Case T-65/89, BPB Industries and British Gypsum [1993] ECR II-389, para 135. 752

  See Effect on trade Guidelines, para 39.

753

  Effect on trade Guidelines, para 40.

754

  See Case 123/83 BNIC v Clair [1985] ECR 391, para 29.

755

  See Commission Decision in Zanussi, OL 1978 L322/36, para 11.

756

  See in this respect, Case 31/85 ETA Fabrique d’Ebauches [1985] ECR 3933, paras 12 and 13. 757

  See Joined Cases C-241/91 P, etc Radio Telefis Eireann (RTE) and Independent Television Publications (ITP) v Commission (Magill) [1995] ECR I-743, para 70; and Case 107/82 Allgemeine Elektrizitäts-Gesellschaft AEG-Telefunken v Commission [1983] ECR 3151, para 60. 758

  In Austrian Banks, OJ 2004 L56/1 market conditions were such that it was not attractive for Austrian customers to borrow from banks established in Germany. However, the continuous monitoring of rates offered by German banks indicated that the services in question were tradeable and that the cartel agreement was capable of producing potential effects on trade between Member States. Similarly, in Case C-359/01 P British Sugar [2004] ECR I, para 81, the fact that the parties has continuously monitored import levels and engaged in limit pricing to control imports was held by the CJ to confirm the Commission’s finding that trade between Member States was capable of being affected. 759

  See Case 107/82 Allgemeine Elektrizitäts-Gesellschaft AEG-Telefunken v Commission [1983] ECR 3151, para 60. 760

  See Effect on trade Guidelines, para 43. This is in line with the case law of the CJ in the field of free movement of goods: see eg Case C-379/92 Peralta [1994] ECR I-3453, para 24, where the CJ held that the restrictive effect that the measure in question might have on the free movement of goods was too uncertain and indirect for it to be regarded as being of a nature to hinder trade between Member States. 761

  See Case 5/69 Franz Völk v SPRL Ets J. Vervaecke [1969] ECR 295, para 7.

762

  See Béguelin (n 447), para 16; see also Case T-199/08 Zieger v Commission [2011] ECR II-3507, paras 52ff. 763

  See eg Case C-306/96 Javico [1998] ECR I-1983, para 17 and Case T-65/89 BPB Industries and British Gypsum [1993] ECR II-389, para 138. 764

  See Case T-65/89 BPB Industries and British Gypsum [1993] ECR II-389, para 138.

765

  See Effect on trade Guidelines, para 45.

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766

  See Case 19/77 Miller [1978] ECR 131, paras 9 and 10 and Case 107/82 Allgemeine Elektrizitäts-Gesellschaft AEG-Telefunken v Commission [1983] ECR 3151, para 58. 767

  See Joined Cases 100/80, etc Musique Diffusion Française [1983] ECR 1825, para 86.

768

  See in this respect, Case T-62/98 Volkswagen v Commission [2000] ECR II-2707, paras 179 and 231 and Case T-213/00 CMA CGM and others v Commission [2003] ECR II-913, paras 219 and 220. 769

  The Effect on trade Guidelines refer to this presumption as the ‘NAAT-rule’ (no appreciable affectation of trade). From a linguistic point of view, the word ‘affectation’, which appears to have been borrowed from the French, is somewhat unfortunate. In the present context, the NAAT-rule is referred to as the negative presumption. 770

  The term ‘undertakings concerned’ includes connected undertakings as defined in para 12.2 of the De Minimis Notice. 771

  Case 19/77 Miller [1978] ECR 131.

772

  See Joined Cases 100/80, etc Musique Diffusion Française [1983] ECR 1825, para 86.

773

  In the 1986 De Minimis Notice (OJ 1986 C231/2) which also covered appreciability in relation to effect on trade, the turnover threshold was calculated on the basis of total turnover, which explains the higher threshold of €300 million. 774

  OJ 1996 L107/4. With effect from 1 January 2005 this Recommendation was replaced by Commission Recommendation 2003/361/EC concerning the definition of micro, small and medium-sized enterprises, OJ 2003 L124/36. 775

  See Effect on trade Guidelines, para 50.

776

  As opposed to the technology market; as to this distinction, see the Technology Transfer Guidelines, paras 20 and 22. 777

  In the case of networks of agreements entered into by the same supplier with different distributors, sales made through the entire network are taken into account, see para 56 of the Effect on trade Guidelines. This means that the relevant turnover is that of the supplier vis-à-vis all its distributors. 778

  See in this respect, the Technology Transfer Guidelines.

779

  See Case T-62/98 Volkswagen [2000] ECR II-2707, paras 179 and 231; and Case T-213/00 CMA CGM and Others v Commission [2003] ECR II-913, paras 219 and 220. 780

  See Effect on trade Guidelines, para 3.1.

781

  Effect on trade Guidelines, para 3.2.

782

  Effect on trade Guidelines, para 3.3.

783

  See Effect on trade Guidelines, para 84.

784

  Effect on trade Guidelines, para 86.

785

  See Wouters (n 609), para 95; Case T-62/98 Volkswagen [2000] ECR II-2707, para 179; Case C-70/93 Bayerische Motorenwerke [1995] ECR I-3439, para 20; and Case T-29/92 SPO [1995] ECR II-289, para 229. 786

  See Case 61/80 Coöperative Stremsel- en Kleurselfabriek [1981] ECR 851, para 15.

787

  See eg Case 246/86 Belasco [1989] ECR 2117, paras 32–38; Case 45/85 Verband der Sachversicherer [1987] ECR 405, para 50; John Deere (n 332); and Manfredi (n 744), para 49.

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788

  Joined Cases C-215/96 and 216/96 Bagnasco [1999] ECR I-135, para 51.

789

  Case C-309/99 J. C. J. Wouters and Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577, para 95. This full Court judgment makes clear that there is no basis for interpreting Bagnasco (see n 788) as contracting the scope of application of EU law. In Wouters, the CJ expressly upholds prior case law including the judgment in Case 8/72 Vereeniging van Cementhandelaren [1972] ECR 977, para 29. 790

  See Effect on trade Guidelines, para 89.

791

  See in this respect, Joined Cases T-213/95, etc SCK and FNK [1997] ECR II-1739, paras 177–181. 792

  See Effect on trade Guidelines, para 90.

793

  Effect on trade Guidelines, para 91.

794

  Effect on trade Guidelines, para 96.

795

  Effect on trade Guidelines, para 96.

796

  See eg Ambulanz Glöckner (n 61), para 49; Case C-179/90 Merci convenzionali porto di Genova [1991] ECR I-5889; and Case C-242/95 GT-Link [1997] ECR I-4449. 797

  See Joined Cases C-89/85, etc Ahlström Osakeyhtiö (Woodpulp) [1988] ECR 651, paras 16–18. 798

  See Case T-102/96 Gencor [1999] ECR II-753.

799

  See in this respect, Case 51/75 EMI v CBS [1976] ECR 811, paras 28 and 29 and Commission Decision in Siemens/Fanuc, OJ 1985 L376/29. 800

  See in this respect, Joined Cases 29/83 and 30/83 CRAM and Rheinzink [1984] ECR 1679; and Suiker Unie (n 268), paras 564 and 580. 801

  See Compagnie Maritime Belge (n 731), para 203.

802

  See in this respect, Case C-306/96 Javico [1998] ECR I-1983. It is submitted that it ought to suffice that such price differences may arise. As it stands, it is difficult to reconcile this part of the Effect on trade Guidelines with the principles developed in earlier parts according to which it is sufficient to show a potential effect on trade. The language used by the CJ in Javico to which the Effect on trade Guidelines refer may be explained by the fact that the CJ dealt with the issues of effect on trade and restriction of competition at the same time. The analysis of restrictive effects under Art 101(1) is a continuous process. It can therefore be argued that in a case such as Javico a finding of restrictive effects requires the presence of material price differences. However, this distinction between effect on trade and restriction is not clearly drawn in this part of the Effect on trade Guidelines. 803

  Javico (n 802), paras 24–26.

804

  See Effect on trade Guidelines, para 109. It is submitted that it should suffice that the quantities in question are large compared to the quantities sold in the Member State of importation. Such imports can affect prices in the importing Member State and thereby parallel trade between this Member State and other Member States. For Art 101 to be applicable, it is not required that the agreement affects trade throughout the EU.

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Part I General Principles, 3 Article 101, E Article 101(2) Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of — Nullity/Voidness

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E. Article 101(2) 3.442  Pursuant to Article 101(2), ‘any agreements or decisions prohibited pursuant to this Article shall be automatically void’. The agreements and decisions as a whole are unenforceable, unless the restrictive elements (ie that which is prohibited by Art 101(1) and not saved by Art 101(3)) can be separated from the remainder. If so, only those restrictive elements are void and unenforceable. Severability is a matter for the national court applying its own contract (p. 307) law, as long as the EU law requirement that no effect be given to the restrictive elements is respected. The Court of Justice has held805 that: the automatic nullity decreed by Article [101(2)] of the Treaty applies only to those contractual provisions which are incompatible with Article [101(1)]. The consequences of such nullity for other parts of the agreement, and for any orders and deliveries made on the basis of the agreement, and the resulting financial obligations are not a matter for [Union] law. Those consequences are to be determined by the national court according to its own law. 3.443  It is beyond the scope of this chapter to delve into the many interesting questions which arise in respect of Article 101(2). Similarly, we have decided not to examine the issue of provisional validity and the impact of accession to the EU, which are dealt with extensively in other works. 3.444  However, it should be pointed out that the Court of Justice recently handed down an interesting ruling on the repercussions of an unlawful horizontal market-sharing agreement on the vertical agreements concluded with third parties on the basis of the horizontal agreement. In Allianz Hungary, the Court of Justice held that the vertical agreements concluded in order to implement a horizontal market-sharing agreement that constitutes a restriction by object would also be unlawful.806 This ruling may have far-reaching consequences on national contract law as it could, for example, mean that as a matter of EU law, sales contracts between cartel members and their customers could be automatically void under Article 101(2).

Footnotes: 805

  Case 319/82 Société de Vente de Ciments et Bétons de l’Est v Kerpen & Kerpen [1983] 4173, paras 11 and 12. 806

  Case C-32/11 Allianz Hungária Biztosító Zrt and Others v Gazdasági Versenyhivatal, not yet reported, para 45.

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Part I General Principles, 3 Article 101, F The Article 101(3) Exception Jonathan Faull, Lars Kjøbye, Henning Leupold, Ali Nikpay From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 101 TFEU, application of — Article 101(3) TFEU application to individual contracts — Consumer benefits — Block exemptions — Economic and other benefits

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F. The Article 101(3) Exception (1)  Introduction 3.445  Article 101(3) contains an exception807 to the prohibition of restrictive agreements contained in Article 101(1). Agreements, concerted practices, and decisions of associations of undertakings caught by Article 101(1) that satisfy the conditions of Article 101(3) are valid and enforceable, no prior decision to that effect being required.808 3.446  The Article 101(3) Guidelines develop an economics-based methodology for the application of Article 101. This methodology is intended to apply to all types of agreements including those covered by other Commission guidelines. 3.447  The application of Article 101(3) is subject to four cumulative conditions: (a)  the agreement must contribute to improving the production or distribution of goods or contribute to promoting technical or economic progress; (b)  consumers must receive a fair share of the resulting benefits; (c)  the restrictions must be indispensable to the attainment of these objectives; and (d)  the agreement must not afford the parties the possibility of eliminating competition in respect of a substantial part of the products in question. (p. 308) 3.448  When these four conditions are satisfied, the agreement enhances competition within the relevant market, since it leads the undertakings concerned to offer cheaper or better products to consumers, compensating the latter for the adverse effects of the restrictions of competition.809 The very essence of the competitive rivalry is to win customers by offering cheaper, better, and more innovative products on the market. Agreements that, on balance, enhance output (in the broad sense of the term) on the market are pro-competitive. 3.449  Article 101(3) can be applied either to individual agreements or to categories of agreements by way of a ‘block exemption Regulation’. In individual cases, Article 101(3) provides a defence against a finding of an infringement of Article 101(1). The burden of proof under Article 101(3) rests on the party seeking to rely on it.810 The extent of the burden depends on the strength of the case made by the party claiming a breach of Article 101(1). In GlaxoSmithKline,811 the General Court found that the likely negative effects of the agreements concluded by the defendant were limited. Only limited benefits were therefore required to outweigh the negative effects.812 When an agreement is covered by a block exemption, the parties to the restrictive agreement are relieved of the requirement to show that their individual agreement satisfies each of the conditions of Article 101(3). They need only prove that the restrictive agreement benefits from the block exemption. 3.450  The party relying on Article 101(3) must demonstrate that the four conditions are satisfied by means of convincing arguments and evidence.813 When this threshold is reached, the party claiming an infringement of Article 101(1) must adduce additional convincing arguments and evidence in order to counter the defence. 3.451  Before making a finding of infringement, the Commission is obliged adequately to examine all relevant evidence brought forward by the defendant under Article 101(3) and, as far as necessary, refute it by means of arguments and evidence capable of substantiating its conclusion. Failing such explanation or justification, it may be concluded that the burden of proof borne by the person who relies on Article 10(3) has been discharged.814 In GlaxoSmithKline, the Court of Justice explained further that when the investigated parties have put forward arguments and evidence that the conditions of Article 101(3) are satisfied, the Commission must determine whether it seems more likely either that the agreement in question makes it possible to obtain appreciable advantages or that it will not.815 The From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

standard of proof is balance of probability. If it is more likely than not that the agreement will enhance competition for the benefit of consumers the agreement is compatible with Article 101.

(p. 309) (2)  The Relationship Between Article 101(1) and Article 101(3) 3.452  The aim of Article 101 is to identify and prohibit agreements that harm competition on the market and thereby harm consumers.816 It is only after analysing both Article 101(1) and Article 101(3) that it may be concluded whether an agreement is anti-competitive. 3.453  The bifurcation of Article 101 does not affect the nature and content of the substantive analysis. Article 101(1) and (3) contain all the necessary elements of a rule of reason approach, with the anti-competitive aspects of agreements analysed under Article 101(1) and the pro-competitive elements analysed and balanced against the anticompetitive elements under Article 101(3). There is no balancing of overall effects under Article 101(1).817 The prohibition applies where the agreement and its restraints appreciably affect competition in the market.818 However, given the allocation of the burden of proof, it is clearly of significance whether an issue is analysed under Article 101(1) or Article 101(3). 3.454  When applying Article 101(1) and Article 101(3) it is important to maintain a balance between the two parts of the analysis in order to ensure that the prohibition catches agreements that harm competition while leaving untouched innocuous and procompetitive agreements. The Article 101(3) Guidelines seek to achieve this balance by combining a fairly narrow scope of Article 101(1) with a similarly narrow interpretation of Article 101(3). First, in distinguishing restrictions by ‘object’ and ‘effect’, the Article 101(3) Guidelines define the former as restrictions that have such a high potential for adverse effects on competition that such effects can be presumed, such that it is unnecessary to carry out a full market analysis before applying Article 101(1).819 In the Article 101(3) Guidelines, restrictions by object are largely equated with hardcore restrictions.820 Secondly, as regards restrictions by effect, paragraph 24 of the Guidelines provide that ‘the prohibition of Article [101(1)] only applies where on the basis of proper market analysis it can be concluded that the agreement has likely anticompetitive effects on the market.’821 Such effects occur when ‘on the relevant market negative effects on prices, output, innovation or the variety or quality of goods and (p. 310) services can be expected with a reasonable degree of probability.’822 As a consequence of this economic approach to Article 101(1), which gives Article 101(1) a fairly narrow scope of application, the Guidelines are also fairly demanding in terms of the evidence required before the conclusion can be drawn that the pro-competitive benefits flowing from the agreement outweigh the anti-competitive effects.

(3)  General Principles for the Application of Article 101(3) (a)  Introduction 3.455  Article 101(3) provides a structured framework for assessing the economic benefits generated by restrictive agreements and balancing them against the anti-competitive effects. This analysis of economic benefits forms an inherent part of any competition law system that has as its ultimate aim the protection of economic welfare in general and consumer welfare in particular. 3.456  According to settled case law, the four conditions of Article 101(3) are cumulative:823 they must all be satisfied in order for the exception rule to be applicable. If they are not, Article 101(3) will not apply.824 The four conditions of Article 101(3) are also

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exhaustive: when they are met the exception applies and is not dependent on any other condition.825 3.457  Article 101(3) does not exclude a priori certain types of agreement from its scope. All restrictive agreements that fulfil the four conditions of Article 101(3) are covered by the exception rule.826 Article 101 does not contain a per se rule. However, this fact is not as significant as it might seem: restrictions of competition that can be qualified as ‘hardcore’ are very unlikely to fulfil the conditions of Article 101(3).827 Such agreements generally fail (at least) the first two conditions of Article 101(3): they neither create objective economic benefits nor do they benefit consumers.828 For example, a horizontal agreement that serves no other purpose than to fix prices, limits output and leads to misallocation of resources. It also transfers value from consumers to producers since it leads to higher prices without producing any countervailing value to consumers within the relevant market. Hardcore restrictions generally also fail the indispensability test under the third condition.829 However, the absence of a per se rule introduces a useful check on hardcore lists: if a significant number of cases involving hardcore restrictions do satisfy the conditions of Article 101(3), the restriction in question should be reclassified. A restriction should only be classified as hardcore if upon individual assessment such agreements would almost always be prohibited. Naked cartels, for instance, clearly satisfy this test.

(p. 311) (b)  The Nature of the Benefits that Can Be Taken into Account 3.458  The Treaty pursues a number of objectives, some of which must explicitly be taken into account in the pursuit of other policies.830 Such objectives may be taken into account in the application of Article 101(3) on condition that they can be subsumed under the four conditions in that provision.831 The four conditions are exhaustive. In order for Article 101(3) to apply, the objective in question must therefore translate into economic benefits that satisfy the four conditions of that provision, including the requirement that consumers must receive a fair share of the resulting benefits.832 3.459  This interpretation is confirmed by the case law. In Metro I,833 the Court referred to the provision of employment in the following way: Furthermore, the establishment of supply forecasts for a reasonable period constitutes a stabilising factor with regard to the provision of employment which, since it improves the general conditions of production, especially when market conditions are unfavourable, comes within the framework of the objectives to which reference may be had pursuant to Article [101(3)]. The Court did not consider employment as such to be an objective economic benefit falling under Article 101(3). However, the stabilizing effect on employment was relevant because it improved production. Fluctuating demand forces an undertaking at one point in time to reduce personnel and at another point in time to increase it. This imposes costs in the form of transaction costs, training costs, and loss of valuable skills. The stabilizing effect of an agreement on employment may thus translate into cost savings and other efficiency gains. The benefit referred to by the Court could thus without difficulty be subsumed under the first condition of Article 101(3). Similarly in Matra834 the General Court emphasized the fact that the Commission’s reference in Ford/Volkswagen835 —the decision under review—to the project’s impact on public infrastructure and on employment in a region in Portugal had no bearing on the assessment under Article 101(3), thereby confirming the fact that the benefits in question, as such, did not constitute objective economic benefits within the meaning of Article 101(3).

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3.460  In CECED,836 the Commission went some distance towards accepting restrictive agreements on environmental protection grounds. The case concerned an agreement between producers and importers of washing machines, who accounted for 90 per cent of the market, to cease producing and importing machines in energy classes E to D. The Commission found that the agreement was caught by Article 101(1)837 but that it satisfied the conditions of Article 101(3). The benefits under Article 101(3) were considered to be twofold. First, the Commission argued convincingly that the agreement would reduce energy consumption (p. 312) leading to direct savings for users which would compensate them relatively quickly for the higher price that they would probably have to pay for washing machines. Secondly, the Commission considered that the agreement would reduce pollution to the benefit of society and consumers at large. It is submitted that there are several problems with this argument. It leads to a situation where one group of consumers, namely users of washing machines, through the higher price for washing machines, bear the cost of a benefit bestowed, at least principally, on other consumers. The decision thereby departs from the principle, which is now clearly stated in the Article 101(3) Guidelines and confirmed by the General Court, that the group of consumers that is harmed by the anti-competitive effects of the agreement must also derive countervailing benefits from the agreement.838 Given the wider scope of the analysis, this issue was not sufficiently addressed. Moreover, even the benefits to consumers at large depended on the method employed for generating electricity. In regions relying on, for instance, hydroelectric power the benefits that the Commission derived from the agreement would be non-existent.839

(c)  The Relevant Market as the Proper Framework for Applying Article 101(3) 3.461  Under the Guidelines, benefits flowing from restrictive agreements are in principle analysed within the confines of each relevant market to which the agreement relates.840 The Guidelines thereby adhere to the traditional antitrust approach of using the relevant market as the basis for analysing anti-competitive and pro-competitive effects. Moreover, the fact that under Article 101(3) consumers must receive a fair share of the benefits resulting from the agreement implies that negative effects on consumers in one product or geographic market cannot normally be balanced against and compensated for by positive effects for consumers in another unrelated product or geographic market. The exception made in the Article 101(3) Guidelines841 is where two markets are related, in which case benefits achieved on separate markets can be taken into account ‘provided that the group of consumers affected by the restriction and benefiting from the efficiency gains are substantially the same’. Taken as a whole, the principles contained in the Article 101(3) Guidelines thus require that the consumers who pay and the consumers who benefit must be substantially the same.842 (p. 313) 3.462  The approach set out in the Article 101(3) Guidelines is reflected in the judgment of the General Court in MasterCard.843 The case involved a payment card system that enabled cardholders to pay for goods and services sold by affiliated merchants. The participating banks issued cards to users, acquired merchants, and processed transactions. Merchants paid a fee to the acquiring banks which in turn paid a fee to the issuing banks— the multilateral interchange fee or ‘MIF’—which was the bone of contention. Mastercard argued that the card system created a number of benefits that had to be taken into account under Article 101(3) irrespective of the markets in which they materialized or whether they accrued to cardholders or merchants. The General Court rejected this view: ‘as merchants constitute one of the two groups of users affected by the payment cards, the very existence of the second condition of Article 101(3) TFEU necessarily means that the existence of appreciable objective advantages attributable to the MIF must also be established in regard to them.’ In other words, the affected groups of consumers must receive a fair share of the

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benefits. By contrast, it is not required that each individual member of an affected group of consumers receives a fair share of the benefits.844 3.463  In a recent commitments decision involving the Star Alliance carriers, the Commission appears to have broadened to some extent the test enshrined in the Article 101(3) Guidelines in view of the specific context of the case.845 The Commission identified competition concerns regarding the Frankfurt–New York route and took the preliminary view that while the agreement generated efficiencies that to some extent benefited premium passengers on the route—which constituted a separate market—these benefits were probably insufficient to compensate those passengers for the adverse effects. In addition, the Commission took into account efficiencies on ‘behind and beyond routes’ but concluded that consumers would not derive sufficient benefits. In taking these additional benefits into account, the Commission argued that ‘passengers travelling on the Frankfurt– New York route take the same flight as passengers travelling on behind and beyond routes, involving the Frankfurt–New York segment’ and that ‘there is considerable commonality in the consumer groups that travel on the route of concern and related behind and beyond routes, and that there is a two-way flow of efficiencies across these routes.’846 The Commission preliminarily accepted to credit the out-of-market efficiencies accruing to the passengers who travel both on the Frankfurt–New York route and related behind and beyond routes in its assessment under Article (p. 314) 101(3) but took the view that they were insufficient to outweigh the adverse effects.847 The Commission did not take into account benefits to passengers not flying on the Frankfurt–New York route.848 Thus, it appears that the principal difference between the approach of the Article 101(3) Guidelines and that taken in the Star Alliance case is the fact that the Article 101(3) Guidelines require that the affected group of consumers be ‘substantially the same’ whereas the decision refers to ‘considerable commonality in the consumer groups’. It is submitted, however, that this is a distinction without a difference. What matters is that the adversely affected consumers as a group benefit from the efficiencies to such an extent that they are no worse off. It is immaterial that they form part of a larger group of consumers—in this case, passengers on beyond and behind routes—who also benefit. It is also not decisive that within an affected consumer group there is a very high degree of overlap between those who benefit and those who are harmed. What matters is that the group as a whole is no worse off. For instance, if a cooperation agreement enables the parties to market a higher quality product with new features that are deemed to compensate for a higher price, the test of Article 101(3) is satisfied even if a significant share of the affected group would prefer the inferior lower price product. The purpose of the ‘substantially the same’ exception in the Article 101(3) Guidelines is merely to ensure that the analysis of efficiencies market-by-market takes into account that sometimes the adversely affected consumers may derive benefits in related markets and that such benefits must be takes into account in the assessment under Article 101(3). The Article 101(3) Guidelines give the example where consumers buy transportation services in related markets.849 While in that case the consumers purchased a bundle of services and therefore were substantially the same, the key point is that the adversely affected consumers as a group potentially derived countervailing benefits in related markets and that those benefits must be taken into account. On that reading of the Article 101(3) Guidelines, the judgment in MasterCard and the decision in the Star Alliance case appear entirely consistent.

(d)  The Temporal Application of Article 101(3) 3.464  Article 101 applies to agreements according to the actual legal and economic context in which they occur.850 The application of Article 101(1) and Article 101(3) thus depends crucially on the facts pertaining at the point when the assessment is made. It follows that the assessment cannot be made exclusively on the basis of the facts pertaining at the time when the agreement was concluded. If the circumstances subsequently change, the assessment may also change. It would be neither legally possible nor economically From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

justified to base the assessment exclusively on the situation ex ante. The mere fact that at the time of conclusion an agreement is not caught by Article 101(1) nor satisfies the conditions of Article 101(3), (p. 315) does not imply that the agreement is immune to subsequent intervention. Undertakings are obliged to reassess their agreements when circumstances change materially. 3.465  This principle does not mean that the ex ante situation is irrelevant. It merely implies that all relevant facts have to be taken into account, whether or not they pre-date or post-date the agreement. In order not to discourage pro-competitive agreements, it is particularly important to take account of ex ante investments committed by the parties. The Article 101(3) Guidelines851 expressly recognize that it is necessary to take into account the initial sunk investments made by any of the parties and the time needed and the restraints required to commit and recoup an efficiency-enhancing investment. The risk facing the parties and the sunk investment that must be committed to implement the agreement may thus lead to the agreement falling outside Article 101(1) or fulfilling the conditions of Article 101(3), as the case may be, for the period of time required to recoup the investment.852 3.466  The Article 101(3) Guidelines853 make one exception to the principle that agreements are assessed on the basis of the facts pertaining at the time the assessment is made. In certain cases the agreement is an irreversible event, in the sense that once the restrictive agreement has been implemented the ex ante situation cannot be re-established. In such cases, the assessment must be made exclusively on the basis of the facts pertaining at the time of implementation. The Article 101(3) Guidelines give the example of an R&D agreement whereby the parties agree to abandon their respective research projects and pool their capabilities. In such a case, from an objective point of view, it may be technically and economically impossible to revive a project once it has been abandoned. The assessment of the anti-competitive and pro-competitive effects of the agreement to abandon the individual research projects must therefore be made at the time of the completion of its implementation. If at that point the agreement is compatible with Article 101, for instance because a sufficient number of third parties have competing R&D projects, the parties’ agreement to abandon their individual projects remains compatible with Article 101, even if at a later point the third party projects fail. The Article 101(3) Guidelines caution, however, that the prohibition of Article 101 may apply to other parts of the agreement in respect of which the issue of irreversibility does not arise. If, for example, in addition to joint R&D, the agreement provides for joint exploitation, Article 101 may apply to this part of the agreement if, due to subsequent market developments, the agreement becomes restrictive of competition and does not (any longer) satisfy the conditions of Article 101(3).

(e)  Block Exemptions 3.467  Block exemption Regulations are EU acts that produce effects erga omnes.854 Agreements that benefit from a block exemption are presumed to satisfy the conditions of Article 101(3) and thus to be legally valid and enforceable. (p. 316) 3.468  In the enforcement system created by Regulation 1/2003, only the Commission (and the Council)855 has the power to adopt block exemption Regulations concerning the application of Article 101(3). The NCAs may apply Articles 101 and 102 in individual cases.856 The Commission’s powers are laid down in enabling Regulations adopted by the Council.857 So far these cover vertical agreements, technology transfer agreements, R&D and specialization agreements, and insurance.858 3.469  The application of Article 101(3) to categories of agreements by way of block exemption Regulations is based on the presumption that restrictive agreements that fall within their scope859 fulfil each of the four conditions laid down in Article 101(3). A block exemption is therefore appropriate only when it can reasonably be assumed that upon individual assessment the vast majority of agreements falling within its scope would satisfy From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the conditions of Article 101(3). This is the reason why block exemptions are based on market share thresholds to limit their scope. Subject to the market share thresholds, the block exemptions have a wide scope of application in terms of the restrictions covered. Every provision which is not identified as a hardcore or excluded restriction benefits from the block exemption. 3.470  The mere fact that an agreement is covered by a block exemption does not imply that it is necessarily caught by Article 101(1). Block exemptions formally cover many agreements that are not restrictive of competition in the first place. The fact that an agreement is not block-exempted does not give rise to any presumption that the agreement in question is caught by Article 101(1) or that it fails to satisfy the conditions of Article 101(3).860 Individual assessment is required. The only exception is where the agreement contains hardcore restrictions in which case there is a presumption that the agreement is incompatible with Article 101.861 3.471  If, in an individual case, the agreement is caught by Article 101(1) and the conditions of Article 101(3) are not fulfilled, the block exemption may be withdrawn. According to Article 29(1) of Regulation 1/2003, the Commission has the power to withdraw the benefit of a block exemption when it finds in a particular case that an agreement covered by a block exemption Regulation has certain effects that are incompatible with Article 101(3). Pursuant to Article 29(2) of Regulation 1/2003, an NCA may also withdraw the benefit of a Commission block exemption Regulation in respect of its territory (or part of its territory), if this territory has all the characteristics of a distinct geographic market. In the case (p. 317) of withdrawal, it is for the NCA concerned to demonstrate that the agreement infringes Article 101(1) and that it does not fulfil the conditions of Article 101(3). Since withdrawal implies that the agreement is incompatible with Article 101 as a whole, withdrawal necessarily implies the adoption of a decision under either Article 7 or Article 9 of Regulation 1/2003 or equivalent national provisions.

(4)  The Four Conditions of Article 101(3) (a)  Introduction 3.472  Article 101(3) contains four cumulative tests the purpose of which is to identify the economic benefits produced by agreements and their overall impact on consumers. Prior to the Article 101(3) Guidelines, the Commission focused mainly on the last two conditions of Article 101(3) concerning indispensability and no elimination of competition. It focused less on the quantification and verification of efficiency claims and on verifying that consumers received a fair share of the efficiencies.862 The Article 101(3) Guidelines put more emphasis on the first two conditions of Article 101(3), reflecting the regime created by Regulation 1/2003, where undertakings have to self-assess their agreements and where the Commission focuses on proactive enforcement against agreements and practices that give rise to real competition concerns.

(b)  The First Test of Article 101(3): Efficiency Gains 3.473  According to the first condition of Article 101(3), the restrictive agreement must contribute to improving the production or distribution of goods or to promoting technical or economic progress. This provision refers expressly only to goods, but applies by analogy to services.863 3.474  Under the first condition, no inquiry is conducted into whether the restraints are indispensable or what the benefits are for consumers. The purpose of the first condition is to identify all economic benefits flowing from the restrictive agreement irrespective of the markets in which they arise.864 In Van den Bergh Foods and GlaxoSmithKline,865 the General Court held that ‘the improvement must in particular display appreciable objective advantages of such a character as to compensate for the disadvantages which they cause in the field of competition’. Although it is not entirely clear what is meant by ‘in the field of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

competition’, this passage would appear to imply that an analysis of the impact of the agreement on total economic welfare is required. However, such an interpretation leads to a double welfare test, since the condition that consumers must receive a fair share of the benefits already requires that for Article 101(3) to apply the agreement must not lead to a loss of consumer welfare. As the consumer welfare standard is stricter than the total welfare standard, it makes little sense to apply both in the same case. It is therefore submitted that the better approach is that no balancing of positive and negative effects is required under the first condition. 3.475  The benefits that are taken into account under the first condition need not flow from the restrictions contained in the agreement. The link between the benefits and the restrictions (p. 318) is analysed under the condition of indispensability. However, in some cases the restriction constitutes a separate agreement for the purposes of Article 101. In MasterCard, the General Court held that since the MIF that was agreed between the participating banks was not ancillary to the Mastercard system, the MIF itself had to generate benefits in order to satisfy the conditions of Article 101(3).866 It is submitted, however, that this assessment must take into account the economic and legal context in which the MIF occurs such that it is not disassociated from the fact that it related to a credit card system. Otherwise there is a risk that elements that form part of a broader cooperation are looked at is isolation whenever the narrow conditions of the ancillary restraints test are not satisfied.867 3.476  In general, relevant economic benefits stem from the economic activity which is regulated by the agreement and more specifically from an integration of economic activity whereby undertakings combine assets to achieve what they could not achieve as efficiently on their own or whereby they entrust another undertaking with tasks that can be performed more efficiently by that other undertaking.868 The R&D, production, and distribution process may be viewed as a chain869 that can be divided into a number of stages. Cooperation between undertakings at each stage of this chain may give rise to economic benefits within the meaning of Article 101(3).870 To the extent, however, that an agreement has wider efficiency-enhancing effects within the relevant market, for example because it leads to a reduction in industry-wide costs, these additional benefits are also taken into account.871 3.477  Only objective benefits can be taken into account.872 Benefits are not assessed from the subjective point of view of the parties.873 Cost savings that arise from the mere exercise of market power by the parties cannot be taken into account. For example, when companies agree to fix prices or share markets they reduce output and production costs. Reduced competition may also lead to lower sales and marketing expenditure. Such cost reductions are a direct consequence of a reduction in output and value. They do not produce any procompetitive effects on the market and cannot be taken into account.874 3.478  In the Article 101(3) Guidelines, the Commission uses the term ‘efficiencies’ to capture all the various economic benefits covered by Article 101(3). The scope of this term is wider than that flowing from the traditional definition of efficiencies in economic literature, where it generally covers the production of a certain product using fewer resources. In the Article 101(3) Guidelines, the notion of ‘efficiencies’ covers static and dynamic efficiencies in the shape of cost savings, new or improved products, enhanced product variety, and innovation.875 (p. 319) 3.479  The Article 101(3) Guidelines do not expressly refer to the market integration goal of the EU competition rules. However, this should not be taken as an indication that the market integration goal is being de-emphasized or abandoned. It merely reflects the fact that in the context of Article 101(3) market integration and the benefits flowing from the internal market must and normally will translate into the types of efficiencies that are covered by Article 101(3). Only benefits that can be subsumed under

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the four conditions of Article 101(3) can be taken into account.876 This can be illustrated by the Commission’s decision in Uniform Eurocheques877 where the efficiencies took the form of an improved cross-border payment system. This agreement clearly promoted market integration. Importantly, however, it did so by making available an improved service to consumers; a type of efficiency that falls squarely within the scope of Article 101(3).

(i)  Examples of Relevant Types of Efficiencies 3.480  The Article 101(3) Guidelines distinguish two basic categories of efficiencies, namely ‘cost efficiencies’ and what, for lack of a better term, are called ‘qualitative efficiencies’, encompassing inter alia new and improved products. These are broad categories of efficiencies and the Article 101(3) Guidelines do not express any preference for any particular category. Cost savings are not given more weight than other types of efficiencies. 3.481  Cost efficiencies can stem from agreements resulting in the development of new production technologies and methods. As stated in the Article 101(3) Guidelines, it is generally when technological advances are made that the greatest potential for cost savings is achieved.878 Synergies resulting from the integration of existing assets are another source of efficiency. When the parties to an agreement combine their respective assets they may be able to attain a cost/output configuration that would not otherwise be possible. The combination of two existing technologies that have complementary strengths may reduce production costs or lead to the production of a higher quality product.879 Undertakings concluding agreements may also be able to achieve lower costs as a result of economies of scale, that is, declining cost per unit of output as output increases, and economies of scope, which arise when firms achieve cost savings by producing different products on the basis of the same input. Cost reductions may also result from agreements that allow for better planning of production, reducing the need to hold expensive inventory and allowing for better capacity utilization. 3.482  Agreements between undertakings may also generate efficiencies of a qualitative nature. Depending on the individual case, such efficiencies may be of equal or greater importance than cost efficiencies.880 Technical and technological advances form an essential and dynamic part of the economy, generating significant benefits in the form of new or improved goods and services. By cooperating, undertakings may be able to create efficiencies that would not otherwise have been possible or would have been possible only with substantial delay or at higher cost. In the same way that the combination of complementary assets can give rise to cost savings, combinations of assets may also create synergies that create efficiencies of a qualitative nature. The combination of R&D and production assets in the context of a joint (p. 320) venture or a licence agreement may, for instance, lead to the production of new products, products with novel features, or higher quality products.

(ii)  The Substantiation of Efficiency Claims 3.483  In order to maintain a proper balance between Article 101(1) and Article 101(3) and as a consequence of the greater weight attributed to economic analysis and the consumer welfare objective, the Article 101(3) Guidelines impose quite some rigour in the assessment of efficiency claims, it being clear, however, that substantiation of efficiencies is not an exact science. Efficiency claims must be backed up by evidence before they can be given weight by the Commission.881 The Article 101(3) Guidelines882 provide that all efficiency claims must be substantiated so that the following can be verified: (a)  the nature of the claimed efficiencies; (b)  the link between the agreement and the efficiencies;

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(c)  the likelihood and magnitude of each claimed efficiency; and (d)  how and when each claimed efficiency would be achieved. 3.484  Point (a) is intended to enable the Commission to verify that the claimed efficiencies are objective in nature and therefore capable of being taken into account. Clarifying the nature of the claimed efficiencies is also important to the subsequent analysis of whether consumers receive a fair share of the benefits. Certain types of efficiencies are more likely to be passed on to consumers than others.883 3.485  Point (b) allows the Commission to verify whether there is a sufficient causal link between the agreement and the claimed efficiencies.884 At this stage of the analysis, the inquiry is limited to examining whether the claimed efficiencies flow from the agreement. Further analysis of the link between the efficiencies and the restrictions of competition caused by the agreement is conducted within the framework of the condition of indispensability. Generally, the claimed efficiencies will result from the economic activity covered by the agreement itself, but sometimes agreements have wider efficiencyenhancing effects, for example because they lead to a reduction in industry-wide costs, in which case such additional benefits are also taken into account.885 3.486  According to the Article 101(3) Guidelines, the causal link between the agreement and the claimed efficiencies must normally be direct.886 A direct causal link exists, for instance, where a technology transfer agreement allows the licensees to produce new or improved products or a distribution agreement allows products to be distributed at lower cost or valuable services to be produced. As regards indirect effects, the Article 101(3) Guidelines provide that as a general rule such effects are too uncertain and too remote to be taken into account.887 The use of the term ‘as a general rule’ implies that indirect effects can be taken into account. However, their existence must be proved convincingly.888 3.487  The purpose of points (c) and (d) is to enable the Commission to verify the value of the claimed efficiencies, which in the context of the third condition of Article 101(3) must be (p. 321) balanced against the negative effects identified under Article 101(1).889 The parties must describe the method(s) by which the efficiencies have been or will be achieved. If the agreement has yet to be fully implemented, the parties must substantiate any projections concerning the date from which the efficiencies will become operational in order to have a significant positive impact in the market.890 The data submitted must be verifiable so that there can be a sufficient degree of certainty that the efficiencies have materialized or are likely to materialize. The Article 101(3) Guidelines also require that, in the case of claimed cost efficiencies, the undertakings concerned calculate or estimate as accurately as reasonably possible the value of the efficiencies and describe in detail how the amount has been computed.891 In the case of claimed efficiencies in the form of new or improved products and other non-cost-based efficiencies, the undertakings claiming the benefit of Article 101(3) must describe and explain in detail the nature and value of the efficiencies and how and why they constitute an objective economic benefit.892 3.488  While the Article 101(3) Guidelines establish a rigorous framework for assessing efficiency claims, they explicitly acknowledge that assessing and quantifying efficiencies are not an exact science. Words such as ‘as accurately as reasonably possible’ suggest that that the obligation imposed is one of best efforts. Moreover, the Article 101(3) Guidelines as a whole are based on a sliding-scale approach:893 the greater the competition concerns identified under Article 101(1), the greater must be the efficiencies and the more they must be substantiated. The analysis of pro-competitive and anti-competitive effects under Article

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101 is a question of probabilities.894 What the undertaking invoking Article 101(3) is required to do is to make a convincing case in its favour.

(c)  The Second Test of Article 101(3): Indispensability 3.489  The Article 101(3) Guidelines deal with the third condition of Article 101(3) before the second condition. It is submitted that in general there are good reasons for doing so. The second condition, according to which consumers must receive a fair share of the benefits, implies a balancing of pro-competitive and anti-competitive effects. This balancing exercise should not include restrictions that are in any event unnecessary to achieve the efficiencies. If it were otherwise, an agreement might be denied the benefit of Article 101(3) in its entirety even though the second condition could be satisfied if certain unnecessary restrictions were eliminated. This is particularly relevant in cases where a restriction can be eliminated or modified without undermining the commercial arrangement covered by the agreement. Automatic nullity under Article 101(2) only extends to those parts of the agreement that are incompatible with Article 101, provided that such parts are severable from the agreement as a whole.895 If only part of the agreement is null and void, the consequences thereof for the remaining part of the agreement must be determined according to the applicable national law.896 3.490  When applying the indispensability test, the decisive factor is whether the restrictive agreement and individual restrictions make it possible to perform the underlying economic (p. 322) activity more efficiently than would probably have been the case in the absence of the agreement or the restriction concerned.897 The question is not whether, in the absence of the restriction, the agreement would have been concluded, but whether more efficiencies are produced with the agreement or restriction than would have been the case in the absence of the agreement or restriction.898 3.491  The indispensability test contained in Article 101(3) requires an assessment of whether the efficiencies are specific to the agreement and its individual restrictions. There must be a causal link between the efficiencies and the restrictions showing that the restrictions are necessary in order to obtain the efficiencies that flow from the agreement. The test applied in the Article 101(3) Guidelines is one of ‘reasonable necessity’.899 The Commission does not interpret the concept of indispensability as implying a test of ‘strict necessity’. In a world where business decisions must be made on the basis of imperfect information and where enforcement agencies are not often well placed to second-guess such decisions, a certain margin of error is considered justified. 3.492  The assessment of indispensability is made by reference to the actual context in which the agreement operates and must take account in particular of the structure of the market, the economic risks related to the agreement, and the incentives for the parties.900 The more uncertain the success of the product covered by the agreement, the more a restriction may be required to ensure that the efficiencies will materialize. In some cases, a restriction may be indispensable only for a certain period of time, in which case the exception of Article 101(3) applies only during that period. In making this assessment it is necessary to take due account of the period of time required for the parties to achieve the efficiencies justifying the application of the exception rule.901 In cases where the benefits cannot be achieved without considerable investment, account must be taken in particular of the time required to recoup that investment. 3.493  In some cases the agreement as such is restrictive of competition. This may be the case, for instance, where the very creation of a production joint venture restricts competition between the parties in a downstream market. In such cases, it is necessary to assess whether the efficiencies could have been achieved by means of a less restrictive alternative, whether by a different type of agreement or by the parties acting individually. The parties must explain and demonstrate why seemingly realistic and significantly less restrictive alternatives to the agreement would be significantly less efficient.902 The Article From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

101(3) Guidelines stress that the Commission will not second-guess the business judgement of the parties.903 The Commission will intervene only when it is reasonably clear that there are realistic and attainable less restrictive alternatives to the agreement entered into by the parties. It is submitted that, under the policy orientations contained in the Article 101(3) Guidelines, the (p. 323) Commission will only rarely find that the agreement as a whole is not indispensable. In most cases it will therefore only be necessary to assess whether the individual restrictions contained in the agreement are necessary to produce the efficiencies identified in the application of the first condition of Article 101(3). 3.494  Once it is found that the agreement in question is necessary in order to produce the efficiencies, the indispensability of each restriction of competition flowing from the agreement must be assessed. A restriction is indispensable if its absence would eliminate or significantly reduce the efficiencies achieved by the agreement or make it significantly less likely that they will materialize.904 The assessment of alternative solutions must take into account the actual and potential improvement in competition by the elimination of a particular restriction or the application of a less restrictive alternative. The third condition of Article 101(3) thus incorporates a sliding scale. The more restrictive the restraint, the stricter the test under the third condition.905 Restrictions that are identified as hardcore restrictions in Commission block exemption Regulations or guidelines and notices are unlikely to be considered indispensable.

(d)  The Third Test of Article 101(3): A Fair Share for Consumers 3.495  According to Article 101(3), consumers must receive a fair share of the benefits that have been identified in the context of the first condition. Consumers within the meaning of the second condition of Article 101(3) are the users of the product covered by the agreement. The term ‘consumers’ is thus not synonymous with ‘final consumers’.906 The Article 101(3) Guidelines refer to ‘direct or indirect’ users.907 The reference to indirect users is particularly intended to cover situations where the direct buyer does not pay for the product and as a consequence is not the one who benefits from a passing on of cost efficiencies. For instance, prescription drugs are generally paid for wholly or partly by social security bodies. In such cases, the (main) beneficiary of any cost efficiencies will be the social security scheme which pays the bill rather than the patient who consumes the product. In this example, the social security body is an indirect user. 3.496  The reference in the Article 101(3) Guidelines908 to ‘direct and indirect users’ and ‘customers of the parties and subsequent buyers’ is not intended to impose on the parties a requirement to show that the benefits are passed to final consumers. As stated, the concept of consumer is not synonymous with final consumer. If the buyers of the products receive a fair share of the efficiencies generated by the agreement, the third condition of Article 101(3) is satisfied even if for some reason these benefits are not passed on to final consumers. For instance, it may be that due to the presence of market power at the level of the immediate buyers, cost savings stemming from the agreement are not passed on to subsequent buyers. However, this does not lead to Article 101(3) being inapplicable. Procompetitive agreements should not be struck down because of a competition problem at the next level. This interpretation is in line with the general principle of the Article 101(3) Guidelines according to which the group of consumers that is adversely affected by the agreement must also benefit from the (p. 324) efficiencies.909 Once this condition is satisfied it is not necessary for subsequent buyers to benefit as well. 3.497  The concept of ‘fair share’ establishes the benchmark for assessing whether a sufficient portion of the efficiencies is passed on to consumers for the second condition of Article 101(3) to be satisfied. According to the Article 101(3) Guidelines,910 this test is met when pass-on is such that it at least compensates consumers for any actual or likely negative impact caused to them by the restriction of competition found under Article 101(1). If on balance an agreement has no likely negative effect on consumer welfare it

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should not be prohibited. Article 101 prohibits anti-competitive agreements, that is, agreements that have likely adverse effects on competition and consumers. While on equity grounds it might be considered desirable that consumers obtain a certain proportion of the efficiency gains, it is submitted that the Article 101(3) Guidelines rightly reject such an approach, which can only lead to arbitrary outcomes and introduction of elements into the analysis that are foreign to Article 101. 3.498  For consumers to obtain a fair share of the benefits, it is not necessary for them to receive a share of each and every efficiency gain identified under the first condition. It suffices that sufficient benefits are passed on to compensate for the negative effects of the restrictive agreement. In that case, consumers obtain a fair share of the overall benefits.911 The essence of this analysis is captured in the following two questions: (a) are prices in the market likely to increase and (b) if so, are such price increases likely to be offset by product improvements or other efficiencies? In general, it can reasonably be assumed that if prices are unlikely to rise either in absolute terms or relative to the value of the products, then consumers of the products in question are not adversely affected and the agreement is not anti-competitive as regards that group of consumers. However, as these questions do not deal with, in particular, positive and adverse effects on innovation, they should not be applied mechanically. 3.499  In guidelines predating the Article 101(3) Guidelines912 the Commission assumed that sufficient pass-on will normally occur if sufficient competition that effectively constrains the parties to keep to the agreement is maintained on the market. The Article 101(3) Guidelines have abandoned this presumption. In the absence of restrictions by object, Article 101(1) applies only when the parties have or obtain a significant degree913 of market power and the agreement contributes to the creation, maintenance, or strengthening of market power. In other words, Article 101(1) applies only where the undertakings concerned are not subject to an effective competitive constraint.914 In such cases, it cannot be assumed that residual competition on its own is sufficient to ensure that adequate pass-on occurs. This is not to say that residual competition is irrelevant. However, if residual competition is insufficient to prevent the parties from exercising market power, it is difficult to see why residual competition in (p. 325) itself would be sufficient to force the parties to pass on efficiencies to consumers. It is necessary to consider a number of factors. 3.500  The factors that according to the Article 101(3) Guidelines are particularly relevant are: (a) the characteristics and structure of the market; (b) the nature and magnitude of the efficiency gains; (c) the elasticity of demand; and (d) the magnitude of the restriction of competition.915 The reference to market structure and characteristics captures the degree of residual competition in the relevant market. 3.501  The second factor reflects the fact that some types of efficiency are more likely to be passed on than others. Indeed, efficiencies of a qualitative nature that manifest themselves in the goods and services sold to consumers are necessarily passed on. If a production joint venture leads to the production of an improved product or a distribution agreement leads to the provision of improved services, these benefits are necessarily passed on to users of the goods and services in question. In such cases, the main task is to assess whether these benefits are sufficient to compensate for any price increase or other likely anti-competitive effects resulting from the agreement, such as foreclosure of competitors and a resulting loss of product variety. 3.502  In the case of cost efficiencies, the situation is more complex. Cost savings will generally only benefit consumers if they lead the undertakings concerned to lower prices. Economic theory suggests that this is more likely to occur in the case of reductions in variable costs than in the case of fixed cost reductions. Undertakings maximize their profits by selling units of output until marginal revenue equals marginal cost. Marginal revenue is the change in total revenue resulting from selling an additional unit of output. Marginal

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cost is the change in total cost resulting from producing that additional unit of output. If marginal costs fall, even undertakings with market power may have an incentive to reduce prices. This can be illustrated by the following example.916 Undertaking X produces under licence and pays a royalty of €10 per unit. Assuming that there are no other costs, X will produce and sell units until the extra sales generates less than €10 in additional revenue per unit. X now terminates the agreement and takes out another licence for a lump sum payment of €1 million. X will now produce and sell units until the extra sales make no addition to total revenues. The investment of €1 million in the licence does not necessarily affect X’s pricing. Feeding fixed costs into pricing decisions does not increase revenues and profits. Clearly, the difference between total revenues and total costs determines whether X is profitable. However, that is a different issue from the one that is relevant in this context, namely whether cost efficiencies are likely to be passed on to consumers in the form of price reductions. 3.503  These considerations are reflected in the Article 101(3) Guidelines,917 according to which: undertakings may have a direct incentive to pass on to consumers in the form of higher output and lower prices efficiencies that reduce marginal costs, whereas they have no such direct incentive with regard to efficiencies that reduce fixed costs. Consumers are therefore more likely to receive a fair share of the cost efficiencies in the case of reductions in variable costs than they are in the case of reductions in fixed costs. (p. 326) This passage does not rule out taking into account fixed costs savings. However, given that economic theory predicts that undertakings have no direct incentive to pass on fixed cost reductions, the burden of proof is higher in the case of such efficiencies. It may be that in reality reductions in fixed costs do have an impact on pricing decisions, and if undertakings can make a robust case in their favour, the Article 101(3) Guidelines leave the door open for taking such efficiencies into account. 3.504  The extent to which cost savings will lead to an increase in output and a reduction in price also depends on the elasticity of demand. The actual pass-on rate depends on the extent to which consumers respond to changes in price. The greater the increase in demand caused by a decrease in price, the greater the pass-on rate. This follows from the fact that the greater the additional sales caused by a price reduction due to an increase in output, the more likely it is that these sales will offset the loss of revenue caused by the lower price resulting from the increase in output.918 In the absence of price discrimination, the lowering of prices affects all units sold by the undertaking, in which case marginal revenue is less than the price obtained for the marginal product.919 3.505  Finally, the second condition of Article 101(3) implies that the pro-competitive effects and the anti-competitive effects created by the agreement must be balanced against each other and the pro-competitive effects must outweigh the anti-competitive effects. The efficiency effect must dominate the market power effect of the agreement. While this exercise forms an inherent part of any rule of reason analysis embedded in Article 101 as a whole, it can in practice be a difficult one. It is therefore important that the Article 101(3) Guidelines920 provide that if the restrictive effects of an agreement are relatively limited and the efficiencies are substantial, it is likely that a fair share of the cost savings will be passed on to consumers. In such cases, it is therefore normally not necessary to engage in a detailed analysis of the second condition of Article 101(3), provided that the three other conditions for the application of this provision are fulfilled. Conversely, if the restrictive effects of the agreement are substantial and the cost savings are relatively insignificant, it is very unlikely that the second condition of Article 101(3) will be fulfilled. Full-blown

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balancing is thus confined to ‘grey zone’ cases, where it is unavoidable, unless the agreement has already failed one of the other cumulative conditions of Article 101(3).

(e)  The Fourth Test of Article 101(3): No Elimination of Competition in Respect of a Substantial Part of the Products in Question 3.506  According to the fourth condition of Article 101(3), the agreement must not afford the undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products in question. When competition is eliminated, the competitive process is brought to an end and short-term efficiency gains are outweighed by longer term losses stemming inter alia from expenditures incurred by the incumbent to maintain its position (rent seeking), misallocation of resources, reduced innovation and higher prices.921 (p. 327) 3.507  The concept of eliminating competition is distinct from that of dominance.922 Dominance may be sufficient for a finding of elimination of competition but a mere finding of dominance is not sufficient. Further inquiry into the degree of market power and the relationship between the agreement and such market power is required.923 Article 101(3) remains applicable until competition is being eliminated within the meaning of the last condition, provided that the other conditions are satisfied. 3.508  The application of Article 101(3) does not prevent the application of Article 102.924 Agreements that constitute an abuse of a dominant position cannot benefit from Article 101(3). However, since Articles 101 and 102 pursue the same objective of protecting effective competition on the market, the two articles are interpreted consistently. Despite the fact that Article 102 does not contain an explicit efficiency defence, it is interpreted as requiring the same analysis.925 3.509  Whether competition is eliminated within the meaning of the last condition of Article 101(3) depends on the degree of competition existing prior to the agreement and on the impact of the restrictive agreement on such competition, that is, the reduction in competition brought about by the agreement. The more competition is already weakened in the market concerned, the slighter the further reduction required for competition to be eliminated within the meaning of Article 101(3).926 3.510  The Article 101(3) Guidelines refrain from establishing threshold values for finding elimination of competition and the analysis cannot be based on market share alone. The last condition of Article 101(3) requires a careful analysis of the various sources of competitive constraint. This analysis is based on the same factors that are relevant in the context of Article 101(1), namely the market position of the parties to the agreement, the market position of competitors and their ability to compete, the market position of buyers, and barriers to entry. As regards the market position of buyers, what matters is not whether certain strong buyers may be able to extract more favourable conditions from the parties to the agreement than their weaker competitors.927 The presence of strong buyers can only serve to counter a prima facie finding of elimination of competition if it is likely that the buyers in question will pave the way for effective new entry that constrains the parties’ market power more generally. 3.511  The last condition of Article 101(3) refers to ‘a substantial part of the products concerned’ which appears to be distinct from the concept of ‘relevant market’ which is the traditional framework for competition law analysis. While it is clear that the issue of elimination of competition will generally be assessed with regard to a relevant market, the more open-ended language leaves room for taking account of the impact of the agreement on competition (p. 328) within a differentiated product market. This is reflected in the Article 101(3) Guidelines928 which acknowledge that, when undertakings offer differentiated products, the competitive constraint that individual products impose on each other differs according to the degree of substitutability between them. The Article 101(3) Guidelines therefore require consideration of the degree of substitutability between the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

products offered by the parties, that is, the competitive constraint that they impose on each other. The more closely substitutable the products of the parties to the agreement, the greater the likely restrictive effect of the agreement. The more substitutable the products, the greater the likely change brought about by the agreement in terms of restriction of competition in the market and the more likely it is that competition in respect of a substantial part of the products concerned risks being eliminated.

Footnotes: 807

  Under Regulation 1/2003, Art 101(3) is a directly applicable exception. The term ‘exemption’, which was closely related to the Regulation 17/68 enforcement system based on notifications, is no longer used. 808

  See Art 1(2) of Regulation 1/2003.

809

  In Case T-168/01 GlaxoSmithKline Services Unlimited (n 441), at paras 118 and 171, the GC confirmed that the objective of the EU competition rules is to prevent undertakings from reducing consumer welfare. 810

  See Art 2 of Regulation 1/2003. This rule was confirmed by the CJ in Joined Cases C-204/00, etc Aalborg Portland [2004] ECR I, para 78. 811

  See Case T-168/01 GlaxoSmithKline Services Unlimited [2006] ECR II-2969 and Slovenska sporitel’na (n 379), para 36. 812

  See also Article 101(3) Guidelines, para 90.

813

  Article 101(3) Guidelines, para 235, and Case T-111/08 MasterCard (n 695), para 196.

814

  Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 95; and Case T-111/08 MasterCard (n 695), para 197. 815

  Joined Cases C-501/06 P, etc GlaxoSmithKline (n 326), para 94.

816

  See in this regard, recital 9 to Regulation 1/2003.

817

  See Van den Bergh Foods (n 653), para 107; and Métropole télévision (n 658), para 74. In these cases, the GC held that it is only in the precise framework of Art 101(3) that the pro- and anti-competitive aspects of a restriction may be weighed. 818

  See Joined Cases 56/64 and 58/66 Établissements Consten and Grundig-Verkaufs-GmbH v Commission [1966] ECR 429. The fact that there is no rule of reason under Art 101(1) does not imply that efficiencies are entirely irrelevant in the context of Art 101(1). Efficiencies may affect the incentives of the parties and make collusion in the market less likely. This may, eg, be the case where the agreement creates a maverick. In such cases, the agreement may fall outside Art 101(1) for lack of likely anti-competitive effects. 819

  See Article 101(3) Guidelines, para 23.

820

  Article 101(3) Guidelines, para 23. The subsequent Horizontal Cooperation Guidelines arguably appear to adopt a slightly different approach to restrictions by object. They define a significant category of agreements that are not hardcore restrictions but are nevertheless considered to have as their object the restriction of competition. This category includes (subject to narrow exceptions) agreements involving joint setting of prices, output and where and to whom the products covered by the cooperation are sold even when the restraints form part of a broader integration of economic activity engaged in between the parties. Hence, price fixing is a restriction by object even when it occurs in the context of a production joint venture that extends into joint distribution, see eg para 160 of the Horizontal Cooperation Guidelines. This approach is illustrated by Case COMP/39.596 BA/ AA/IB (2010). Since in the case of restrictions by object, adverse effects on competition are presumed, this approach makes it easier to find infringements of Art 101(1). It thereby

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shifts the burden to the party invoking Art 101(3) to show that on the facts the agreement is pro-competitive and thereby shifts the balance between Art 101(1) and (3) reflected in the Article 101(3) Guidelines. 821

  See in this respect, Joined Cases T-374/94, etc European Night Services and Others v Commission. 822

  See Article 101(3) Guidelines, para 24.

823

  See eg Case T-185/00 Métropole télévision (M6) [2002] ECR II-3805, para 86; Case T-17/93 Matra Hachette [1994] ECR II-595, para 85; and Joined Cases 43/82 and 63/82 VBVB and VBBB [1984] ECR 19, para 61. 824

  See Case T-213/00 CMA CGM and Others [2003] ECR II-913 para 226.

825

  See Case T-168/01 GlaxoSmithKline Services Unlimited (n 811), para 234 and Article 101(3) Guidelines, para 42. 826

  See Case T-168/01 GlaxoSmithKline Services Unlimited (n 811), para 233; and Matra Hachette (n 823), para 139. 827

  See Article 101(3) Guidelines, para 46.

828

  See eg Case T-29/92 Vereniging van Samenwerkende Prijsregelende Organisaties in de Bouwnijverheid (SPO) [1995] ECR II-289. 829

  See eg Nungesser (n 587), para 77, concerning absolute territorial protection.

830

  See Arts 11 and 167 of the Treaty concerning environmental protection and culture.

831

  See Article 101(3) Guidelines, para 42.

832

  In the enforcement system created by Regulation 1/2003 this is very important. It is not the task of the enforcement agencies and courts to permit anti-competitive agreements in order to promote other policy objectives. If that were possible, the scope for inconsistent application and divergence would be significant. 833

  Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875.

834

  Case T-17/93 Matra Hachette [1994] ECR 595, para 139.

835

  OJ 1993 L20/14.

836

  OJ 2000 L187/47.

837

  The Commission considered inter alia that the agreement reduced the demand for electricity, which it equated with an output restriction. By qualifying clear-cut efficiency as an output restriction, the decision runs counter to the normal interpretation of Art 101 where efficiencies are taken into account as pro-competitive effects in the application of Art 101(3). 838

  See the following section.

839

  The decision attempts to address under Art 101(3) a perceived externality, namely pollution of the environment. However, it was not argued that the washing machines themselves caused pollution. The source of pollution was certain forms of electricity generation required for the machines to run. In such cases, the externality should be addressed at source, in casu electricity generation, and not by accepting restrictive agreements that at best have an indirect effect on the identified problem. Moreover, it is submitted that it would be more appropriate to take externalities into account under Art 101(1). The environment is a resource which is used by polluters but which, in the absence of a tax or other instrument, is not factored into the price of the product. It can be argued

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that agreements which internalize genuine externalities in a proportionate manner are not restrictive of competition in the first place. 840

  See Article 101(3) Guidelines, para 43. This is also the approach set out in para 79 of the Commission’s 2004 Horizontal Merger Guidelines, OJ 2004 C31/5, and n 36 of the US Horizontal Merger Guidelines. 841

  See Article 101(3) Guidelines, para 43.

842

  A departure from this approach would require complex interpersonal comparisons to be carried out in each and every case where competition concerns and efficiencies occur in distinct markets. Having to engage in inter-personal comparisons is fraught with difficulty, as can be illustrated by the following examples taken from Lars Kjølbye, ‘The New Guidelines on the Application of Art 81(3): An Economic Approach’ [2004] ECLR 566: A and B produce heart drugs for which there are no substitutes. They also produce a diabetes drug for which three other substitutes exist. A and B agree to pool their respective R&D activities in both fields of activity. In the context of Art 101(1), it is found that the agreement is likely to lead to higher prices and reduced R&D on the market for heart decease drugs whereas consumers of diabetes drugs obtain an improved product. How should one balance these two effects? A and B manufacture heavy trucks. They establish a joint venture combining their distribution and service organizations in several Member States. Relevant markets are national. In one Member State where the parties have a relatively weak market position, the agreement does not appreciably restrict competition. In fact, the agreement is procompetitive because it allows the parties to compete more effectively with larger incumbents. In another Member State where the parties have a strong position, the agreement is caught by Art 101(1) because it allows the parties to increase their market power, making price increases likely. Again, how should one balance a likely higher price for consumers in one Member State against a likely lower price for consumers in the other Member State? 843

  Case T-111/08 MasterCard and Others v Commission, not yet reported, para 228.

844

  Asnef-Equifax (n 697), para 70.

845

  Case COMP/AT.39.595 Continental/United/Lufthansa/Air Canada (2013) and Press Release IP/13/456 (23 May 2013) which states that: In light of the specific characteristics of the aviation industry and of the particular circumstances of this case, the Commission considered it appropriate to broaden the existing test for assessing efficiencies, contained in its Guidelines for application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU). 846

  Paras 74 and 75.

847

  Para 76.

848

  Press Release IP/13/456 makes clear that: This broadened test includes efficiencies produced on routes related to the route of concern—the so-called ‘behind and beyond routes’ (eg Prague–Frankfurt–New York or Frankfurt–New York–Seattle)—provided there is a considerable commonality between passenger groups travelling on the route of concern and these related routes. However, under this broadened test the Commission accepted only those efficiencies that accrued to the passengers also travelling on the Frankfurt–New

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York route. In other words, the broadened test does not weigh up the harm suffered by one customer group against benefits perceived by another customer group. 849

  Article 101(3) Guidelines, fn 57.

850

  See eg Joined Cases 25/84 and 26/84 Ford [1985] ECR 2725, para 33; Asnef-Equifax (n 697), para 49; and Case T-111/08 MasterCard (n 643), para 87. 851

  See para 44.

852

  The Technology Transfer Guidelines give examples of both situations. Para 101 provides that in the case of agreements between non-competitors, it is likely—given the investment required by licensees penetrating a new territory—that licensees would not enter into a licence agreement without an initial period of protection against passive sales from licensees in other territories, ie protection against intra-brand competition, in which case the agreement falls outside Art 101(1). Para 170 provides that restrictions on active sales in non-reciprocal agreements between competitors may satisfy the conditions of Art 101(3), in particular, where the licensee has a relatively weak market position in the territory allocated to him and has to make a significant investment in order to exploit the licensed technology efficiently. 853

  See para 45.

854

  See in this respect Art 288 TFEU.

855

  In the past certain block exemptions have been adopted by the Council. Block exemptions are enforcement instruments applying Art 101(3). They are therefore different from other types of legislative act adopted by the EU legislator. It is therefore a welcome development that in recent years the Council has confined itself to granting legislative powers to the Commission, refraining from adopting block exemptions itself. 856

  See Art 5 of Regulation 1/2003.

857

  The Council did not in Regulation 1/2003—as proposed by the Commission—grant the latter a general power to adopt block exemptions. 858

  See Regulation 19/65/EEC of 2 March of the Council on application of Article [101(3)] of the Treaty to certain categories of agreements and concerted practices, OJ 1965 L36/533, as amended by Council Regulation 1215/1999, OJ 1999 L148/1; Regulation (EEC) No 2821/71 of the Council of 20 December 1971 on the application of Article [101(3)] of the Treaty to categories of agreements, decisions and concerted practices, OJ 1971 L285/46; Council Regulation 1534/91 on the application of Article [101(3)] to certain categories of agreements, decisions and concerted practices in the insurance sector, OJ 1991 L143/1. 859

  The fact that an agreement is block-exempted does not in itself indicate that the individual agreement is caught by Art 101(1). 860

  See eg Technology Transfer Guidelines, para 37.

861

  See Article 101(3) Guidelines, para 46.

862

  The system of prior notification and authorization created by Regulation 17 led to a reactive enforcement culture where the Commission spent a considerable amount of time checking individual clauses in notified agreements. The condition of indispensability was well suited for that purpose. 863

  See Article 101(3) Guidelines, para 48.

864

  See Case T-111/08 MasterCard (n 643), para 228.

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865

  See Case T-65/98 Van den Bergh Foods v Commission [2003] ECR II-4653, para 139; and Case T-168/01 GlaxoSmithKline Services Unlimited (n 811), paras 247 and 304–307. 866

  See Case T-111/08 MasterCard (n 643), para 207.

867

  See Section C.9(d).

868

  See Article 101(3) Guidelines, para 60.

869

  This term has been developed by M. Porter, Competitive Advantage (New York: The Free Press, 1985). 870

  See Article 101(3) Guidelines, para 61.

871

  Article 101(3) Guidelines, para 53.

872

  See eg Joined Cases 56/64 and 58/66 Établissements Consten and Grundig-VerkaufsGmbH v Commission [1966] ECR 429. 873

  See Case T-111/08 MasterCard (n 643), para 221.

874

  See Article 101(3) Guidelines, para 49.

875

  See also the Technology Transfer Guidelines which emphasize the fact that innovation constitutes an essential and dynamic component of an open and competitive market economy. 876

  See Article 101(3) Guidelines, para 42 and Section F.3(b).

877

  See OJ 1985 L35/43.

878

  See Article 101(3) Guidelines, para 64.

879

  Article 101(3) Guidelines, para 65.

880

  Article 101(3) Guidelines, para 69.

881

  See Case 111/08 MasterCard (n 643), para 196.

882

  See Article 101(3) Guidelines, paras 98 and 102.

883

  See further Section F.4(d).

884

  See in this regard, Case T-111/08 MasterCard (n 643), paras 226 and 233.

885

  See Article 101(3) Guidelines, para 53.

886

  Article 101(3) Guidelines, para 54.

887

  Article 101(3) Guidelines, para 54.

888

  See Case T-168/01 GlaxoSmithKline Services Unlimited (n 811), para 280.

889

  See Article 101(3) Guidelines, para 55.

890

  Article 101(3) Guidelines, para 58.

891

  Article 101(3) Guidelines, para 56.

892

  See Article 101(3) Guidelines, para 57.

893

  See eg para 90.

894

  See Case T-168/01 GlaxoSmithKline Services Unlimited (n 811), para 302.

895

  See Société Technique Minière (n 676).

896

  See in this respect, Kerpen & Kerpen (n 805), paras 11 and 12.

897

  See Article 101(3) Guidelines, para 74.

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898

  See in this regard, Case T-111/08 MasterCard (n 643), para 80.

899

  See Article 101(3) Guidelines, para 73.

900

  See Article 101(3) Guidelines, para 80.

901

  See Joined Cases T-374/94, etc European Night Services and Others v Commission [1998] ECR II-3141, para 230. 902

  In this regard the Article 101(3) Guidelines reflect the fact that in the new enforcement system the Commission will focus on cases that give rise to real competition concerns and will not engage in micromanagement of agreements. 903

  See Article 101(3) Guidelines, para 75.

904

  Article 101(3) Guidelines, para 79.

905

  Case T-86/95 Compagnie Générale Maritime and Others [2002] ECR II-1011, paras 392–395. 906

  The French version of the Treaty uses the term ‘utilisateurs’. Certain other language versions use a similar term, which is wider than that of final consumer. See also Case T-111/08 MasterCard (n 643), para 228. 907

  See Article 101(3) Guidelines, para 84.

908

  Article 101(3) Guidelines, para 84.

909

  See Section F.3(c).

910

  See Article 101(3) Guidelines, para 85.

911

  See in this respect, Case 26/76 Metro SB-Grossmärkte v Commission [1977] ECR 1875, para 48. 912

  See para 34 of the 2000 Guidelines on Horizontal Cooperation and para 136 of the 1999 Guidelines on Vertical Restraints. 913

  This term is used in several places in the Technology Transfer Guidelines to signify the degree of market power required for Art 101(1) to apply. This degree of market power is not the same as that required for a finding of dominance, which in the Guidelines is referred to as ‘substantial’ market power. 914

  The reference in the Horizontal Cooperation Guidelines and Vertical Restraint Guidelines to effective competitive constraints raises the question why the agreement is caught by Art 101(1) in the first place. 915

  See Article 101(3) Guidelines, para 96.

916

  The example is taken from Kjølbye, ‘The New Commission Guidelines on the application of Article 81(3)’, 575. 917

  See Article 101(3) Guidelines, para 98.

918

  See Article 101(3) Guidelines, para 99.

919

  Article 101(3) Guidelines, para 99. If the undertakings concerned are able to charge different prices to different customers, ie price discriminate, pass-on will normally only benefit price-sensitive consumers. 920

  See Article 101(3) Guidelines, paras 90 and 91.

921

  See Article 101(3) Guidelines, para 105.

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922

  See Joined Cases T-191/98, T-212/98 and T-214/98 Atlantic Container Line (TACA), [2003] ECR II-3275, para 939; and Case T-395/94 Atlantic Container Line [2002] ECR II-875, para 330. 923

  Once remedies that reduce the impact on competition below the threshold of elimination of competition are found, the last condition of Art 101(3) cannot serve as a basis for removing further restrictions of competition. This can be required only if the other three conditions of Art 101(3) are not satisfied. 924

  See Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge and Others v Commission [2000] ECR I-1365, para 130. 925

  Regarding the application of the principles enshrined in Art 101(3) to Art 102, see Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ 2009 C45/7, paras 28–31, and Post Danmark (n 336), paras 40–42. 926

  See Article 101(3) Guidelines, para 107.

927

  See in this respect, Case T-228/97 Irish Sugar [1999] ECR II-2969, para 101 and the Article 101(3) Guidelines, para 115(v). 928

  See Article 101(3) Guidelines, para 113.

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Part I General Principles, 4 Article 102, A The System of Enforcement of Article 102 Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Relationship with Article 101 TFEU — Exploitative abuse — Exclusionary abuse — Remedies, power to impose — Economics — Judicial review

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A. The System of Enforcement of Article 102 (1)  Introduction (a)  Elements of Article 102 4.01  Article 102 of the Treaty on the Functioning of the European Union (TFEU) (formerly Art 82 of the EC Treaty) is a central pillar of the ‘system ensuring that competition in the internal market is not distorted’, set down in Article 3(1)(g) TFEU. Article 102 contributes to the proper functioning of the internal market by restricting or prohibiting certain types of conduct by firms in a dominant position as incompatible with the internal market1 Article 102 states: Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the internal market insofar as it may affect trade between Member States. 4.02  There are a number of key elements contained in this prohibition: 4.03  First, Article 102 does not prevent the mere creation or possession of a dominant position. As its wording clearly states, it prohibits ‘abuses’ of such a dominant position.2 These abuses may consist in one of the four different actions listed in Article 102: •  imposing unfair purchase or selling prices, or unfair trading conditions; •  limiting production, markets, or technical development to the prejudice of consumers; •  applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; •  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. This list is non-exhaustive; practices not listed may also be considered abusive.3 (p. 331) 4.04  Secondly, the prohibition applies only to the conduct of undertakings with a dominant position. As discussed in Section B, undertakings in a dominant position are basically firms holding a significant degree of market power in one or more of the markets in which they operate. A dominant position is normally held individually and exceptionally, collectively. 4.05  Thirdly, the dominant position of the undertaking must be held within the internal market or within a substantial part of it. The purpose of this requirement is to exclude purely localized monopoly situations in which there is no EU interest. Together with the necessity that the abuse of a dominant position has an effect on trade between Member States, the requirement determines the limit of the EU’s jurisdiction. A ‘substantial part’ does not simply mean substantial in geographic terms. In Suiker Unie, the Court of Justice stated that: For the purpose of determining whether a specific territory is large enough to amount to a ‘substantial part of the common market’ within the meaning of Article [102 TFEU] the pattern and volume of the production and consumption of the said product as well as the habits and economic opportunities of vendors and purchasers must be considered.4

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4.06  Fourthly, according to well-established case law, the application of Article 102 does not have to wait until after the full effects of the abusive conduct have materialized. According to the General Court: …Article [102 TFEU] does not apply only from the time when there is no more, or practically no more, competition on the market. If the Commission were required to wait until competitors were eliminated from the market, or until their elimination was sufficiently imminent, before being able to take action under Article [102 TFEU], that would clearly run counter to the objective of that provision, which is to maintain undistorted competition in the common market and, in particular, to safeguard the competition that still exists on the relevant market.5 4.07  Fifthly, the wording of Article 102 does not make any reference to the consequences of the violation of the prohibition that it establishes. The European Commission, as well as national competition authorities applying the EU competition rules can order that the infringement be terminated and may impose fines on undertakings found to have breached Article 102. In addition, an abuse of a dominant position may have the consequence that the agreements concluded in exercise of such abuse are void. Decisions by the European Commission may be appealed to the General Court and the Court of Justice. Damages arising from infringements of Article 102 can be sought in national courts.

(b)  Relationship Between Article 101 and Article 102 4.08  Articles 101 and 102 are not mutually exclusive. In Hoffmann-La Roche,6 the Court of Justice confirmed that both Articles 101 and 102 may apply to the same contractual arrangements. In that case, it found that the Commission was at liberty to proceed under either Article 101 or Article 102, when dealing with exclusive requirements contracts concluded by a dominant undertaking. The Court of Justice held that: the question might be asked whether the conduct in question does not fall within Article [101 TFEU] and possibly within its paragraph (3) thereof. However, the fact that agreements (p. 332) of this kind might fall within Article [101] and in particular within paragraph (3) thereof does not preclude the application of Article [102], since this latter article is expressly aimed in fact at situations which clearly originate in contractual relations so that in such cases the Commission is entitled, taking into account the nature of the reciprocal undertakings entered into and the competitive position of the various contracting parties on the market or markets in which they operate to proceed on the basis of Article [101] or Article [102].7 4.09  The relationship between Articles 101 and 102 is also relevant in the context of undertakings found to be ‘collectively dominant’ for the purposes of Article 102. Both Article 101 and Article 102 may apply to the conduct of such undertakings. It is possible that the agreement between the parties will infringe Article 101 and that the behaviour conducted in consequence of the agreement will amount to an abuse of a collective dominant position. Moreover, the collective dominant position may arise from agreements between the parties. Collective dominance is discussed in Section C.4.

(c)  Purpose of Article 102: Protection of Competition or Protection of Competitors? 4.10  The way in which the Commission and the EU Courts have interpreted Article 102 has been controversial. Article 102 has mainly been applied to ‘exclusionary abuses’, that is, to conduct which impedes effective competition by excluding (foreclosing) competitors. Arguably, it has been applied in a predominantly formalistic way, focusing on the form of the conduct and drawing presumptions from that, rather than analysing the actual effects on the market. Many commentators have argued that, at least prior to the recent Article 102

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review, it has often been applied in order to protect competitors as such rather than to protect the competitive process for the benefit of consumers. 4.11  There is widespread consensus, however, that Article 102 is not designed to protect competitors from competitive pressure. Its purpose is rather to prohibit conduct that, either directly by exploiting customers or indirectly by excluding competitors, reduces the welfare of the society, which most commentators and policymakers identify with the welfare of the consumers.8 4.12  Abusive conduct can be divided into two categories: exploitative conduct (eg imposing unfair prices or trading conditions) and exclusionary conduct (eg predatory pricing or refusal to deal), which is aimed at excluding competitors from the market. A third category of abuse is described in Article 102(c), which appears to prohibit discrimination which is neither exclusionary nor exploitative. However, this type of abuse may no longer be a priority for the Commission. Furthermore, even in the case of exclusionary abuses the Commission’s ultimate concern (in terms of the cases it brings) is with consumer welfare. Indeed, exclusionary conduct may completely or partially prevent profitable expansion in, or access to, a market to actual or potential competitors, mitigating the competitive constraints faced by the dominant firm and hence allowing it, subsequently, to extract greater rents from consumers—that is to say, exploit them, at the expense of allocative and possibly dynamic efficiency. Over the past two decades, the European Commission has primarily focused its enforcement practice on exclusionary practices. (p. 333) 4.13  In recent judgments, notably Deutsche Telekom9 and Post Danmark,10 following the approach already adopted in Continental Can, the Court of Justice has emphasized that the reason for the prohibition of exclusionary practices by a dominant firm is that such practices may also result in detriment to consumers.

(d)  Role of Efficiencies in Article 102 Assessment 4.14  Unlike Article 101 which deals with restrictive agreements, Article 102 does not contain an explicit efficiency defence. As a result, the principle of ‘objective justification’ has been developed in the case law of the EU Courts and the case practice of the European Commission and has de facto been incorporated into Article 102 as an efficiency defence similar to that contained in Article 101(3). These principles have been codified in the Commission Guidance, as explained in detail in Section D.5. 4.15  Unlike under Article 101, in respect of which Article 2 of Regulation 1/2003 provides that the burden of proving that the conditions in Article 101(3) are satisfied lies on the party relying on such conditions, Article 2 of Regulation 1/2003 provides that the burden of proving an infringement of Article 102 rests squarely on the European Commission or the party alleging the infringement.11 However, the case law has clarified that the burden of producing sufficient evidence to establish the existence of an objective justification rests with the firm that claims the benefit of the efficiency defence. It then falls to the European Commission, in practice often after hearing other parties claiming an infringement of Article 102, ‘to show that the arguments and evidence relied on by the undertaking cannot prevail and, accordingly, that the justification put forward cannot be accepted’.12

(2)  Categorization of Abuses: Exploitative vs Exclusionary 4.16  The prohibition of abuses under Article 102 can take two forms. On the one hand, Article 102 can be enforced to prevent direct harm by prohibiting exploitative behaviour and, therefore, by effectively regulating market outcomes. Alternatively, Article 102 can also achieve the same result indirectly, by prohibiting exclusionary behaviour that would harm the competitive process, thereby ultimately harming intermediate and end customers.

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As already explained, Article 102(c) appears to also prohibit discrimination which is neither exclusionary nor exploitative. This type of abuse is discussed in section L.

(a)  Prohibition of Customer Exploitation 4.17  A prohibition of customer exploitation focuses on the effects of the exercise of market power, in terms of higher prices, reduction of output, or various types of customer discrimination. By limiting those effects, for instance by prohibiting excessive prices, competition rules can prevent a certain degree of exploitation of customers in those markets where firms enjoy substantial market power. 4.18  Exploitative practices are covered by the wording of Article 102, particularly by the reference to ‘unfair purchase or selling prices’ and to ‘limiting production…to the detriment of consumers’, but are prosecuted less frequently than one might expect. This can be explained (p. 334) by the fact that restricting a dominant firm’s ability to exercise market power in all but very exceptional circumstances would directly conflict with the rationale that underpins the legality of dominance under Article 102.13 The very competitive process that Article 102 seeks to protect may result in the survival of one or only a few very efficient firms and the prospect of the attainment of significant market power and the increased profits resulting therefrom may provide important incentives to compete, innovate, and seek ways better to satisfy consumer demand. Dynamic competition, through innovation, product improvement and development of new markets is just as important in terms of enhancing the welfare of the society as short-run allocative and productive efficiency. The exercise of market power by incumbents will normally attract new entrants into the market (at least, in industries with limited barriers to entry). The entry of such firms will normally increase competition, reduce prices, and improve consumer welfare. It is reasonable for the Commission not to intervene in circumstances where dynamic competition ensures that the market self-corrects through an evolutionary process whereby unproductive firms decline or exit and are replaced by the entry or expansion of more efficient firms.14 4.19  At the same time, competition authorities must ensure that dominant firms do not distort such dynamic competition, through exploitative practices that constrain the ability or destroy the incentives of rival to compete. 4.20  Notwithstanding the need finely to balance the enforcement of unilateral conduct to preserve both static and dynamic competition, there are serious difficulties to distinguish the exercise of market power from its possession. Indeed, firms with market power will, by behaving in a ‘commercially rational’ manner (ie trying to maximize their profits), inevitably charge higher prices and produce less output than firms in a competitive market. Therefore, the prohibition of customer exploitation may lead, if broadly interpreted, to the prohibition of the mere existence of firms holding market power.15 4.21  Any intervention by competition authorities to curb exploitative behaviour would require them to determine the level of output and/or the price that should be charged by the dominant undertaking. Neither competition authorities nor courts are particularly well suited to regulate prices or output. 4.22  The case law establishes that Article 102 prohibits exploitative prices or trading conditions that are unfair under Article 102(a).16 An alternative legal basis for exploitative abuses can be found in Article 102(b), which prohibits the limitation of production, markets, or technical development to the prejudice of consumers.17 Whichever the legal basis, the abuse would consist in charging a price that has ‘no reasonable relation to the economic value of the product supplied’18 or in ‘directly or indirectly imposing unfair trading conditions’.19

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(p. 335) (b)  Prohibition of Exclusionary Practices 4.23  The second approach for dealing with firms holding substantial market power consists of prohibiting conduct which excludes or tends to exclude competitors from the market, through means other than competition on the merits. Thus the prohibition does not extend to the mere possession of significant market power or the effects of such possession, but rather to the strengthening, extension, or maintenance of such market power by exclusionary practices thereby harming the competitive process to the detriment consumers. 4.24  In Continental Can, the Court took the earliest opportunity to say that Article 102 ‘is not only aimed at practices which may cause damage to consumers directly, but also at those which are detrimental to them through their impact on an effective competition structure’.20 4.25  The emphasis on controlling exclusionary conduct avoids direct regulation of the prices and output of dominant firms. It relies on the self-regulating mechanism of the market for preventing dominant undertakings from harming consumer welfare. The primary aim of Article 102 is thus to ensure that the market functions properly and that competition is not distorted by anti-competitive conduct. 4.26  The difficulty inherent in controlling exclusionary conduct is how to distinguish situations where competitors are harmed or excluded from the market due to competition on the merits, which is permitted, from harm or exclusion by anti-competitive means, which is not. If the notion of exclusionary abuse is too widely defined, there is a risk of creating disincentives for innovation and investment by efficient firms seeking to become market leaders, and simultaneously, artificially enabling comparatively less efficient rivals to remain operating. Conversely, if the notion of anti-competitive conduct is too narrowly defined, rivals may be discouraged from competing on the merits, and less efficient leading firms may ultimately prevail in the market. 4.27  Striking the right balance is thus critical to ensure competitive markets work effectively. This also explains the depth and richness of the debate surrounding the proper enforcement rules, guidance, and the appropriate standard and burden of proof required to establish an infringement of Article 102. 4.28  Similar actions can have very different effects depending on the circumstances.21 Hence, a formalistic approach to Article 102 (ie rigid per se rules or form-based presumptions) can be very problematic. It is thus not surprising that, following the policy shifts in the application of Article 101 and the Merger Regulation, the Commission has gradually adopted a more economics-based approach to abuse of dominance, as explained in more detailed in Section B.

(3)  Consequences of Infringement of Article 102 (a)  Introduction 4.29  If the Commission establishes that a dominant firm has infringed Article 102, it can issue a decision ordering the undertaking to put an end to the abuse (by taking positive or negative (p. 336) measures) and, where certain conditions are met, impose structural remedies.22 Further, it can impose fines on the undertaking. These fines can be substantial: for instance, in its Intel decision, the Commission imposed a fine of over €1 billion on a single undertaking.23 4.30  The different types of sanctions and remedies correspond to the different objectives of the Commission in imposing them: fines are used for punishment and deterrence and

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injunction-type remedies are intended to terminate violations and restore competition to injured markets.24

(b)  Guiding Principles 4.31  The Commission’s power is limited by the general principle of proportionality, which requires that the burden imposed on an undertaking in order to bring an infringement to an end does not exceed what is appropriate and necessary to attain the re-establishment of compliance with the rules infringed.25 4.32  However, the Court of Justice has held that even a measure taken by an EU authority leading to the insolvency or liquidation of a given undertaking is not prohibited as such by EU law.26 As stated by Maier-Rigaud, Hellstrom, and Bulst, ‘the burden on an infringer claiming that a remedy is disproportionate is therefore likely to be a high one’.27 4.33  If the Commission considers that several effective remedies are available, it may consult the defendant as well as other market players in order to select the least costly in terms of implementation, monitoring, and foregone efficiencies.28 In some cases, the Commission has even invited the parties to put forward proposals for bringing an effective end to the infringement identified in the decision29 or has presented alternative remedies in a statement of objections and asked the company concerned to comment on the effectiveness and proportionality of the alternatives.30 4.34  The second guiding principle is legal certainty. Any remedy imposed must be clear and precise so that the undertaking may know without ambiguity its rights and obligations and may take steps accordingly.31 This is critical in the case of access remedies and other types of behavioural remedies or conduct restrictions. It is the responsibility of the dominant firm, (p. 337) however, to identify in due time any sources of confusion or ambiguity and seek clarification as early as possible.

(c)  Types of Sanctions and Remedies in Article 102 Cases (i)  Fines 4.35  Article 23 of Regulation 1/2003 allows the Commission to impose fines on undertakings that infringe Article 102. Fines can be applied for infringements made either intentionally or negligently. They may not exceed 10 per cent of the turnover in the preceding business year of each of the undertakings participating in the infringement. 4.36  The object of fines imposed under Article 102 is not to recover unjustified gains, but ‘to suppress illegal activities and to prevent any reference’.32 Article 23(5) of Regulation 1/2003 also states that fines imposed under Articles 101 and 102 ‘shall not be of a criminal law nature’,33 with their intended function as a deterrent and punishment for a wrong committed. 4.37  The Commission’s policy on how it calculates fines for antitrust violations, including of Article 102, are set out in its Fining Guidelines.34 4.38  There is a trend towards higher fines under Article 102 over time, although this is in part also related to the specific circumstances affecting each case.35 Prior to 2004, no fine exceeded 1 per cent of turnover, whereas there has subsequently been several instances of fines above this level, the maximum being 7 per cent of turnover in the case of Tomra.36 4.39  The Commission’s discretion to increase fines for policy reasons has been upheld by the EU Courts.37 This explains both the recent increase and the fact that fines can be substantially different in similar cases. 4.40  The ability to set one fine for multiple abuses provides further flexibility. For instance, the Commission states in its decision in Tomra: ‘The Commission is entitled to impose a single fine for a multiplicity of infringements without being required to state specifically how it took into account each of the abusive components objected to for the purposes of

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setting the fine.’38 In TetraPak, the General Court noted that a breakdown is, in particular, impossible where all the infringements are part of a coherent overall strategy.39 (p. 338) 4.41  There is no equivalent of the leniency policy under Article 102. This means that companies cannot obtain reductions in fines through cooperation. Likewise, the recently introduced settlement procedure does not apply to Article 102 cases. Consequently, there is no incentive for companies to seek the Commission’s guidance or to assist the Commission when it investigates a potential abuse. There is an informal ‘settlement’ policy but companies cannot derive any legal certainty from it; as argued by Dethmers, ‘they would take a huge risk when volunteering potential abuse cases to the Commission’. 4.42  Finally, historically the EU Courts have been reluctant to interfere with the Commission’s discretion in setting fines under Article 102. There have only been three appeals where the General Court has reduced the level of fines, one appeal where it has annulled the fine imposed by the Commission, and one where the fine was annulled by the Court of Justice.40 4.43  The Commission’s willingness to impose heavy fines in respect of breaches of Article 102 has been contentious in light of the difficulties involved in determining whether an infringement of Article 102 has been committed and the controversy surrounding many of the Commission’s decisions taken under Article 102. Several commentators41 have argued that in cases where the Commission characterizes an infringement as a restriction by effect, it can only be in rare cases that the dominant undertaking may be held to have committed the infringement with intent or negligence (the test for the latter is, broadly, that the dominant undertaking should have known that the behaviour was restrictive of competition). Dominant firms may not be able to determine with sufficient certainty when certain behaviour actually or likely results in anti-competitive foreclosure. Arguably, this is because the required analysis depends heavily on complex economics and companies may not have access to the necessary information to make this assessment. However, the adoption of the Article 102 Enforcement Priorities Guidance42 serves, inter alia, the purpose of providing enhanced legal certainty, both by offering a general framework of analysis for unilateral conduct liable to infringe Article 102 as well as more specific conditions with respect to the most common type of anti-competitive practices. However, because the Guidance is limited to setting the European Commission’s enforcement priorities, its usefulness in this respect may be limited. In any event, irrespective of whether an infringement is characterized by reference to its ‘object’ or ‘effect’, it is a separate question whether it has been committed intentionally or negligently. The latter question can be determined in the abstract and must be assessed on the facts of each individual case. 4.44  Finally, the threat of fines for non-compliance with remedies following an infringement decision has become very credible following the imposition (later confirmed by the General Court) of severe fines on Microsoft for inadequate implementation and noncompliance with remedies related to a finding of an infringement of Article 102.43

(p. 339) (ii)  Cease and Desist Orders 4.45  In some cases, the conduct found to be an abuse will have ended before the decision is taken and market circumstances will make its renewal unlikely. Where this is not the case, a cease and desist order should suffice to terminate the abusive conduct. A cease and desist order is binding on the undertakings to which it is addressed. The order can also extend to any future behaviour which has an effect similar to the conduct deemed to be abusive.

(iii)  Behavioural Remedies

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4.46  To secure the termination of the infringement, the decision may also require the undertaking which has abused its dominant position to adopt a certain course of action (behavioural remedies). As the Court of Justice held in Commercial Solvents, the decision can include ‘an order to do certain acts or provide certain advantages which have been wrongfully withheld, as prohibiting the continuation of certain actions, practices or situations which are contrary to the [Treaty].’44 4.47  An order to adopt a certain course of action will be more likely in cases of refusal to deal. For example, the Commission may require a resumption of supply or the provision of access to any facility or information to which access has been denied. In both cases, the Commission can order that the access terms be reasonable, but should not interfere in the principle of freedom of contract if it is not strictly necessary.45

(iv)  Structural Remedies 4.48  Article 7 of Regulation 1/2003 enables the Commission to: impose any behavioural or structural remedies which are proportionate to the infringement committed and necessary to bring the infringement effectively to an end. Structural remedies can only be imposed either where there is no equally effective behavioural remedy or where an equally effective behavioural remedy would be more burdensome for the undertaking concerned than the structural remedy. 4.49  Recital 12 to Regulation 1/2003 stresses the need to respect proportionality when imposing remedies, and indicates in particular that ‘Changes to the structure of an undertaking as it (p. 340) existed before the infringement was committed would only be proportionate where there is a substantial risk of a lasting or repeated infringement that derives from the very structure of the undertaking’. 4.50  So far, the Commission has not yet imposed a structural remedy in a prohibition decision under Article 7 of Regulation 1/2003 in an Article 102 case.

(v)  Which Remedy is Most Appropriate? 4.51  Article 7 seemingly establishes a preference for behavioural remedies if they appear as effective as structural remedies. However, the notion of ‘equally effective’ is complex, as behavioural and structural remedies work differently.46 Structural remedies are aimed at changing the incentives of the firm(s) in the market, which is achieved once the remedies are implemented. Behavioural remedies, on the other hand, try to redress specific conduct in a context where incentives remain essentially unchanged.

(d)  Procedural Issues 4.52  The Commission does not usually separate the procedure for finding an infringement and designing a suitable remedy.47 Both issues are generally addressed at the same time in the statement of objections, administrative hearing, and decision. Commission officials have argued that, in cases where proportionality issues arise, it may be worth considering a staggered remedy.48 The decision would then involve several steps. In a first step, the least burdensome measure (eg a mere cease and desist order) would be imposed, subject to a time limit within which the Commission would assess the measure’s effect on the market and the sustainability of such an effect, if any. The second step would provide for a more effective, but also more intrusive remedy, which could also be a structural one. The undertaking concerned would be obliged to comply with that second remedy once the Commission has established that the infringement was not ended within the time limit prescribed for the first step. Proportionality could be established by showing that the first

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remedy was not effective, given that all other proportionality issues that could potentially arise should already have been addressed in the original infringement decision.

(4)  Commitment Decisions (Article 9 of Regulation 1/2003)49 4.53  Article 9 of Regulation 1/2003 introduced a new type of decision allowing the Commission to close a case without making an infringement finding, in light of commitments proposed by the parties which the decision makes binding on them.

(a)  Basic Principles 4.54  Article 9(1) states: Where the Commission intends to adopt a decision requiring that an infringement be brought to an end and the undertakings concerned offer commitments to meet the concerns expressed to them by the Commission in its preliminary assessment, the Commission may by decision (p. 341) make those commitments binding on the undertakings. Such a decision may be adopted for a specified period and shall conclude that there are no longer grounds for action by the Commission.50 4.55  The Commission has made extensive use of Article 9 commitments decisions,51 for instance in energy markets where the application of Article 102 has arguably contributed to the liberalization process and reinforced the emergence of a single market in energy.52 4.56  Commitment decisions aim at putting an end to an (alleged) infringement and can impose behavioural or structural remedies. The commitments may, but need not necessarily, be limited in time.

(b)  Importance of Commitment Decisions in Article 102 Cases 4.57  The role of commitment decisions has become particularly critical also in new technology markets. Indeed, Commissioner Almunia has recently stated: ‘I believe that these fast-moving markets would particularly benefit from a quick resolution of the competition issues identified. Restoring competition swiftly to the benefit of users at an early stage is always preferable to lengthy proceedings, although these sometimes become indispensable to competition enforcement’.53 4.58  Commentators have argued that dominant firms under investigation have clear incentives to offer commitments instead of risking an adverse decision following the ordinary procedure under Article 7,54 inter alia: •  Avoiding a long, time-consuming, and expensive legal controversy over the facts, the economic assessment and the law, and the reputational damages that might accompany such expanded proceedings. •  Avoiding a formal finding of an infringement which could be used in private damages actions in the courts of the Member States, and which could possibly lead to the imposition of a fine; thus, a party seeking private enforcement in national courts will still need (p. 342) to prove that the defendant’s behaviour was an infringement of Article 102 to obtain compensation for damages. •  The possibility of proposing to the Commission remedies which it knows can operate in practice; furthermore, it can fine-tune its proposals to meets the Commission’s preliminary concerns while disrupting its business practices as little as possible. •  Obtaining an implicit safe harbour for future conduct in cases where the limits of the Article 102 obligations are unclear.

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4.59  The Commission also has good reasons to favour commitment decisions in dominance cases:55 •  The most obvious advantage for the Commission is that commitment decisions usually allow it to settle proceedings faster and in a less burdensome manner, resulting in expediency and efficient use of resources. 56 For instance, the Commission can avoid long discussions on the relevant market, the degree of dominance, and the extent of the ‘special responsibility’ of the dominant company. •  Commitment decisions may allow the Commission to resolve competition concerns that do not correspond to previously defined infringements of Article 102, with a limited risk of the decision being challenged before the General Court. •  The fact that these decisions are usually less contentious also provides the Commission with a unique opportunity to revisit certain prohibitions, the scope of which it may be willing to curb. For instance, when dealing with a case involving potentially exclusionary practices, the Commission could use reasoning on why the commitments remove the preliminary concerns to confirm its willingness to set aside the previous ‘form-based’ approaches to Article 102 in favour of an ‘effects-based’ analysis, without having to enter into a full-fledged discussion on the compatibility of such an approach with the case law of the Court of Justice and the General Court. •  Commitment decisions are particularly apt in cases where a cease and desist order does not solve the competition problem and certain remedies are necessary to restore competitive market conditions. In this respect, the interest of the Commission should be aligned with those of the other parties, that is, to define remedies that can operate in practice and put an end, as swiftly as possible, to the restrictive effects of the practices. 57 4.60  In the recent past, the Commission has been heavily inclined towards settling abuse of dominance cases with Article 9 commitment decisions. In the past five years, the Commission has settled 16 cases.58 By contrast it has only issued two infringement (Art (p. 343) 7) decisions: Telekomunikacja Polska59 and Intel.60 Indeed, in Microsoft (tying) (or Microsoft II), the Commission settled a case which was arguably similar to Microsoft I, which three years earlier had been concluded with an infringement decision and the imposition of a significant fine.

(c)  Concerns Regarding the Use of Commitment Decisions in Article 102 Cases 4.61  The Commission’s developing commitment decision practice has confirmed the practical need for a procedure that allows for a speedier resolution of competition cases. At the same time, commentators have raised important concerns regarding the commitment procedure’s potentially problematic effects on EU competition policy and the absence of safeguards to prevent its abuse.61 4.62  First, in the name of administrative efficiency, Article 9 decisions, understood as a flexible settlement procedure, may liberate the Commission from judicial control.62 The Commission could be induced to use its bargaining power in commitment procedures to reach beyond the goal of remedying a given infringement and act as a sector regulator. 4.63  Secondly, and more importantly, the legislature clearly did not envisage commitment decisions as suitable in cases ‘where the Commission intends to impose a fine’. However, fines are generally appropriate in every case where the breach of Article 102 is relatively clear and does not present significantly novel features. In recent commitment decisions such as Standard & Poor’s,63 IBM,64 and a number of energy cases, for example, the Commission settled cases where anti-competitive effects had lasted for a significant period

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of time, thereby failing to punish past conduct the Commission had found to be anticompetitive. 4.64  Thirdly, using Article 9 in cases where the infringement is uncertain or presents novel features would risk chilling legitimate (and possibly pro-competitive) behaviour without having made an in-depth assessment of the competitive effects of the allegedly abusive practices. This is undesirable both from the perspective of the public interest and from that of the undertakings involved in the procedure. 4.65  Fourthly, and related to the previous point, one clear disadvantage of the trend towards settlements in Article 102 cases is the relative scarcity of guidance as regards what practices are more likely to infringe Article 102, and the evidentiary burden required to establish such infringement. By the same token, there is even less guidance on which practices by dominant companies will generally be considered competition on the merits and thus legal under Article 102. 4.66  Fifthly, the wording of Article 9 suggests that the Commission should express its concerns first, and then the company should propose the commitments necessary to meet these concerns but, as a practical matter, commitments can be informally offered and negotiated before the Commission has officially expressed its concerns.65 From a legal and logical point (p. 344) of view, this situation is inadequate. The company should negotiate its commitments knowing exactly what the concerns of the Commission are and what is the supporting evidence. Offering commitments without a precise understanding of the Commission’s concerns could result in overly-comprehensive and thus disproportionate remedies. This is aggravated by the fact that, once the commitments have been made binding, they become for that company the ‘standard of legality’ as to the application of Article 102 to the practices analysed by the Commission. Infringing the commitments is illegal in itself. Even if the company later comes to the conclusion that the Commission’s concerns could have been addressed in a less onerous way, this would be an insufficient basis for requesting that the Commission reopen the proceedings. The company would thus have to continue complying with the commitments to avoid being fined without any need for the Commission to establish an infringement of Article 102. 4.67  Note also that commitments, to date, have often offered no assessment of objective justifications. Commitments seem therefore to shift the focus of the assessment on eliminating the anti-competitive concern raised by the EU Commission and move it away from a broader more integrated balancing of the pros and cons of the specific behaviour. Due to that practice, a transparent evaluation of efficiency considerations in the Commission’s decisions is not achieved. From a policy perspective, this is a lost opportunity for providing more guidance to the business community on which efficiency justifications are acceptable and which are not.66

(5)  Judicial Review of Article 102 Decisions 4.68  Article 263 TFEU provides that the Court of Justice has jurisdiction over actions brought against Commission decisions ‘on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or of any rule of law relating to their application, or misuse of powers.’ 4.69  With the exception of the EU Courts’ unlimited jurisdiction to review fines, the Courts are only entitled to review the legality of the Commission’s Article 102 decisions and, when these decisions are illegal, to annul them, rather than re-examine the case on the merits.67 In practice, this means that the EU Courts are not entitled—as in a classic appeal procedure —to substitute their point of view for that of the Commission and adopt a fresh decision on

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the merits. When the EU Courts find a decision to be invalid, they must annul it (in full or in part).68 4.70  The EU Courts have also recognized a ‘margin of discretion’ to the Commission when reviewing ‘complex economic matters’. As pointed out by former President of the General Court Bo Vesterdorf: The intensity of control [exercised by the EU Courts over Commission decisions] varies depending on whether the Courts are reviewing, on the one hand, the correctness of the facts or the correct application of the law (full control) and, on the other hand, the correctness of the Commission’s appreciation of complex economic matters (restrained control).69 (p. 345) In particular, in matters of complex technical or economic assessment, the standard of review is limited to verifying whether the facts relied on have been accurately stated, whether there has been any manifest error of appraisal, whether the legal consequences deduced from those facts were accurate, whether the rules on procedure and on the statement of reasons have been complied with, and whether there has been any misuse of power.70

(a)  Review of Facts and Law 4.71  As pointed out by practitioners,71 it is often hard to distinguish between issues of facts and law, and economic analysis. However, the EU Courts exercise full scrutiny over the interpretation of EU competition law. The Commission enjoys no margin of discretion when it comes to the interpretation of the law. In this respect, the EU Courts have developed legal standards both with respect to the procedural and substantive aspects of competition law. 4.72  As far as procedural aspects are concerned, the EU Courts have emphasized the importance that the Commission respects the ‘rights of defence’ in its enforcement of competition law. In a significant number of cases, the EU Courts have sought to ensure the strict observance of procedural rights by the Commission in its Article 102 investigations. 4.73  As far as substantive aspects are concerned, the EU Courts have developed in their case law a variety of legal standards (or tests) that should be relied upon to determine the compatibility with EU competition law of a wide range of commercial practices (including rebates, predatory pricing, tying and bundling, refusal to supply). 4.74  Importantly, these legal tests are ‘economic’ in nature. Questions such as whether evidence of likely ‘recoupment’ should be brought to determine whether the prices of a dominant firm are predatory or whether such a test should rely on one given cost benchmark rather than another, cannot be detached from the economics of exclusionary pricing. This shows that as regards Article 102, legal and economic questions cannot be easily separated—the legal standards adopted by the EU Courts often rely on conventional economic reasoning and need to be implemented through economic tools. One can legitimately expect that as economic tools and analysis evolve, the EU Courts may also refine or update legal standards of enforcement. 4.75  However, as Geradin and Petit soberly point out, ‘appraisal of the facts is critical as the vast majority of competition cases are won or lost on the facts rather than on abstract legal or economic theories’. The critical importance of controlling the facts was one of the reasons that led to the creation of the ‘Court of First Instance’ in 1989 (now the General Court). As a result, many judgments of the General Court are very detailed, and the Commission’s inadequate treatment of the facts has led to the annulment of a significant

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number of Commission decisions both in the field of anti-competitive agreements and mergers, though, somewhat surprisingly, not in the field of Article 102.

(p. 346) (b)  Review of ‘Complex Economic Matters’ 4.76  The application of a deferential standard of review to complex economic matters is not a recent phenomenon. Such a standard was already applied by the Court of Justice in its seminal Consten v Grundig judgment, where it held that: judicial review of complex economic evaluations by the Commission concerning [Article 101(3)] exemptions must take account of their nature by confining itself to an examination of the relevance of the facts and legal circumstances which the Commission deduces therefrom. This review must in the first place be carried in respect of the reasons given for the decisions which must set out the facts and considerations on which the said evaluations are based.72 4.77  This standard of review has also been applied in cases involving the application of Article 102 and the Merger Control Regulation.73 In Microsoft I, for instance, the General Court observed that it followed: from consistent case-law that, although as a general rule the [EU] Courts undertake a comprehensive review of the question as to whether or not the conditions for the application of the competition rules are met, their review of complex economic appraisals made by the Commission is necessarily limited to checking whether the relevant rules on procedure and on stating reasons have been complied with, whether the facts have been accurately stated and whether there has been any manifest error of assessment or a misuse of powers.74 4.78  In KME,75 a case concerning an appeal against a fine imposed for a violation of Article 101, the Court of Justice held that the review of legality under Article 263, supplemented by the unlimited jurisdiction as to fines under Article 31 of Regulation 1/2003, is compatible with the EU law fundamental right to effective judicial protection, because it gives the EU Courts the power to review Commission decisions both in law and in fact, to assess the evidence, to annul the contested decision, and to vary the amount of the fine. Importantly, when setting out the rules that were considered compliant with fundamental rights, the Court reiterated the deferential standard of review of complex economic matters.76 At the same time, the Court emphasized that the EU Courts cannot use the Commission’s discretion ‘as a basis for dispensing with the conduct of an in-depth review of the law and of the facts’.77 Whether the judgment signals, therefore, the beginning of a less deferential review even in matters of complex economic assessment remains to be seen. 4.79  The central question is, of course, to determine the content and contours of the notion of ‘complex economic matters’. This question is critically important. First, whether a contested item in a Commission decision is labelled as a question of ‘fact’ or an ‘economic issue’ and, if the latter, whether this issue is ‘complex’ determines the intensity of the review that should be carried out by the Commission. Secondly, as the Commission is increasingly applying a more ‘economic approach’ to competition cases, unless the deferential standard of review applied to complex economic matters is carefully circumscribed, the review of its decisions could become increasingly ‘light’ on the ground that the appraisal of complex economic (p. 347) issues should be the province of the Commission. This is of particular concern when the Commission must decide whether the anti-competitive effects of an agreement (or a proposed merger) on a particular market are

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outweighed by the pro-competitive efficiencies created by this transaction on another market. 4.80  In the Microsoft I judgment (paras 85–90) the General Court sets out the extent of its judicial review. In doing so, it sends a mixed message: on the one hand, it highlights the limitations on the Court’s review of complex economic appraisals. On the other hand, the General Court makes clear that the standard which it has applied in merger cases is, at least in principle, also applicable in Article 102 cases: While the [EU] Courts recognize that the Commission has a margin of appreciation in economic or technical matters that does not mean that they must decline to review the Commission’s interpretation of economic or technical data. The [EU] Courts must not only establish whether the evidence put forward is factually accurate, reliable and consistent but must also determine whether that evidence contains all the relevant data that must be taken into consideration in appraising a complex situation and whether it is capable of substantiating the conclusions drawn from it.78 4.81  This suggests that even in the field of Article 102 enforcement, complex economic appraisals, while perhaps subject to a certain degree of deference to the Commission’s appraisal, will nevertheless remain intense, even more so after the judgment of the Court of Justice in KME. 4.82  Some commentators have argued79 that the EU Courts are likely to exercise restraint if the Commission is seen to have generally done a diligent job. For example, in the Microsoft I case, the Court clearly believed that the Commission had gone to great lengths to provide factual support for its case and the emphasis is clearly on the limited review in complex circumstances.

Footnotes: 1

  Abuses of a dominant position are prohibited only insofar as they may affect trade between Member States. This condition, also included in Art 101, delimits the sphere of application of EU competition law. 2

  The case law is absolutely settled on this point: Case 322/81 NV Nederlandsche Banden Industrie Michelin v Commission [1983] ECR 3461 (Michelin I), para 57; Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge Transports v Commission [2000] ECR I-1365, para 37; Case C-52/09 Konkurrensverket v TeliaSonera Sverige [2011] ECR I-527, para 24. 3

  Case 6/72 Europemballage and Continental Can v Commission [1973] ECR 215 (Continental Can); Case C-333/94 P Tetra Pak International v Commission [1996] ECR I-5951 (Tetra Pak II); Case C-95/04 P British Airways v Commission [2007] ECR I-2331. See also R. Nazzini, The Foundations of European Union Competition Law: The Objective and Principles of Article 102 (Oxford: Oxford University Press, 2011), 111. 4

  Joined Cases 40/73, etc Coöperatieve Vereniging ‘Suiker Unie’ UA and Others v Commission [1975] ECR 1663, para 371. 5

  Case T-201/04 Microsoft v Commission [2007] ECR II-3601 (Microsoft I), para 10.

6

  Case 85/76 Hoffmann-La Roche v Commission [1979] ECR 461. See also Case C-395/96 P Compagnie Maritime Belge (n 2). 7

  Hoffmann-La Roche (n 6), para 116.

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8

  See eg N. Kroes, ‘Preliminary Thoughts on Policy Review of Article 82’, speech at the Fordham Corporate Law Institute, New York, 23 September 2005, where the former Commissioner of Competition states that: ‘Article [102] enforcement should focus on real competition problems: In other words, behavior that has actual or likely restrictive effects on the market, which harm consumers.’ For a legal and normative analysis of the objective of competition law in general, and Art 102 in particular, see Nazzini, The Foundations of European Union Competition Law (n 3), 11–50 and 107–55. 9

  Case T-271/03 Deutsche Telekom v Commission [2008] ECR II-477.

10

  Case C-209/10 Post Danmark v Konkurrencerådet, judgment of 27 March 2012, not yet reported. 11

  R. Nazzini, ‘The Wood Began to Move: An Essay on Consumer Welfare, Evidence and Burden of Proof in Article 82 Cases’ (2006) 31 EL Rev 518. 12

  Case T-201/04 Microsoft I (n 5), para 688.

13

  Nazzini, The Foundations of European Union Competition Law (n 3), 279.

14

  See J. Vickers, ‘Concepts of Competition’, Oxford Economic Papers, Vol 47, No 1, pp 1– 23, January 1995. 15

  Nazzini, The Foundations of European Union Competition Law (n 3), 279.

16

  Case 27/76 United Brands and United Brands Continentaal v Commission [1978] ECR 207, para 248; Case 66/86 Ahmed Saeed Flugreisen and Silver Line Reisebüro v Zentrale zur Bekämpfung unlauteren Wettbewerbs [1989] ECR 803, para 43; Case 395/87 Ministère Public v Jean-Louis Tournier [1989] ECR 2521, para 34. See also R. O’Donoghue and A. J. Padilla, The Law and Economics of Article 82 (Oxford: Hart Publishing, 2006), 603. 17

  On the problem of the legal basis, see Nazzini, The Foundations of European Union Competition Law (n 3). 18

  United Brands (n 16), para 250.

19

  Case 127/73 Belgische Radio en Televisie v SV SABAM and NV Fonior [1974] ECR 313 (SABAM), para 6. 20

  Continental Can (n 3).

21

  ‘The identification of exclusionary behaviour is one of the most difficult topics in competition policy, as often exclusionary practices cannot be distinguished from competitive actions that benefit consumers’, M. Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 411. 22

  Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles [101 and 102] of the Treaty, OJ 2003 L1/1, Art 7. The power to impose remedies of a structural nature, ie to order divestment and break up companies, was introduced by Regulation 1/2003. On the European Commission policy regarding remedies in Art 102, see F. Maier-Rigaud, P. Hellstrom, and F. Bulst, ‘Remedies in European Antitrust Law’ (2009) 76 Antitrust LJ 43. 23

  Case COMP/C-3/37.990 Intel, OJ 2009 C227/23, on appeal Case T-286/09 Intel v Commission, judgment pending. 24

  Fines of a public law or administrative nature such as those the Commission may impose under Regulation 1/2003, are not intended to provide compensation to victims of the abuse. 25

  Case T-201/04 Microsoft I (n 5), para 1276.

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26

  Case 52/84 Commission v Kingdom of Belgium [1986] ECR 89, para 14; Case C-499/99 Commission v Kingdom of Spain [2002] ECR I-6031, para 38. 27

  See Maier-Rigaud, Hellstrom, and Bulst, ‘Remedies in European Antitrust Law’ (n 22), section V. 28

  See Case T-24/90 Automec v Commission [1992] ECR II-2223, paras 51–52.

29

  See eg Decision of 9 December 1971 in Case IV/26811 Continental Can Co or more recently in Cases COMP/C3/39.740, COMP/C-3/39.775 and COMP/C3/39.768 Google, where the Commission invited the defendant to propose alternative remedies even without presenting a statement of objections. 30

  eg Microsoft was asked to provide an assessment of the impact of a ‘must carry’ obligation of a competing media player or an ‘unbundling’ remedy. 31

  Joined Cases 92 and 93/87 Commission v French Republic et al [1989] ECR 405, para 22. 32

  Case 41/69 ACF Chemiefarma v Commission [1970] ECR 661, [173].

33

  This does not mean that fines under Regulation 1/2003 cannot be deemed ‘criminal’ for the purposes of the application of certain provisions of the EU Charter of Fundamental Rights or the European Convention on Human Rights. See R. Nazzini, ‘Administrative Enforcement, Judicial Review and Fundamental Rights in EU Competition Law: A Comparative Contextual-Functionalist Perspective’ (2012) 49 CML Rev 971. 34

  Guidelines on setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ 2006 C210/2, para 1. 35

  For a summary of the Commission’s recent practice regarding fines under Art 102, see F. Dethmers, ‘Fines Under Article 102 of the Treaty on the Functioning of the European Union’ [2011] 2 Eur Comp L Rev 86–98. 36

  Case COMP/E-1/38.113 Prokent-Tomra, OJ 2008 C219 (Tomra).

37

  Case T-23/99 LR AF 1998 A/S (formerly Løgstør Rør) v Commission [2002] ECR II-1705, [2002] 5 CMLR 10, [237]. See also Case T-229/94 Deutsche Bahn v Commission [1997] ECR II-1689, [1998] 4 CMLR 220, [127]: ‘it should be pointed out that fines constitute an instrument of the Commission’s competition policy and that that institution must therefore be allowed a margin of discretion when fixing their amount in order that it may direct the conduct of undertakings towards compliance with the competition rules.’ 38

  Case COMP/E-1/38.113 —Tomra (n 36), para 415.

39

  Case T-83/91 Tetra Pak International v Commission [1994] ECR II-755, [1997] 4 CMLR 726, [236]. 40

  This is in contrast to Art 101 cases, where the EU Courts reduce the fines imposed by the Commission on a regular basis. 41

  See Dethmers, ‘Fines Under Article 102’ (n 35).

42

  Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ 2009 C45/7. 43

  In 2004, the Commission fined Microsoft a then-record €497 million for abusing its dominant position by restricting interoperability between Windows PCs and non-Microsoft work group servers, and by tying its Windows Media Player to its Windows operating system (Case COMP/C-3/37.792 Microsoft I, OJ 2007 L32/23).

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In 2006, the Commission fined Microsoft €280.5 million for failure to comply with the 2004 decision (OJ 2008 C138/10). In 2008, upon finding that Microsoft charged unreasonable prices for access to interface documentation for work group servers, the Commission fined the company €899 million for failure to supply interoperability information on reasonable and non-discriminatory terms (OJ 2009 C166/20). In June 2012, the GC reduced this amount to €860 million (Case T-167/08 Microsoft v Commission, judgment of 27 June 2012, not yet reported (Microsoft I periodic penalty). In 2007 the Commission initiated an investigation into whether Microsoft was skewing competition among browsers by systematically incorporating its own Internet Explorer browser into the Windows operating system. This case was closed pursuant to Microsoft’s commitments (Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II)) OJ 2010 C36/7. According to the Commission decision, Microsoft was required to display a ‘choice screen’ or ‘ballot screen’ until 2014, which would enable Windows users in the EU easily to select their desired web browser. However, the choice screen was not rolled out in certain products following the launch in May 2011 of the Windows 7 Service Pack 1. As a result, for over 14 months, some 15.3 million users of this Windows version did not see the choice screen. The lapse came to light in July 2012, after rivals reported the absence of the choice screen. In fact, no trustee had been appointed by the Commission to monitor Microsoft’s compliance with its commitments. Microsoft blamed the incident on a technical error. However, Commissioner Almunia considered Microsoft’s breach to be a ‘very serious infringement’: ‘the lack of compliance is, as a matter of principle, a serious breach of EU law itself’ (see Statement by Vice-President Almunia on Microsoft European Commission, SPEECH/13/192 of 06/03/2013) and in March 2013 the Commission imposed a fine of €561 million (Case AT.39530 Microsoft—Tying, OJ 2013 C120/15). 44

  See Joined Cases 6 and 7/73 Istituto Chemioterapico Italiano and Commercial Solvents v Commissionn [1974] ECR 223 (Commercial Solvents), para 45. 45

  An important example of behavioural remedies is the first Microsoft case (Case COMP/ C-3/37.792, see n 43), where the Commission imposed on Microsoft the obligation to make interoperability information available and allow its use on FRAND terms. In addition, in order to terminate the tying abuse identified, Microsoft was obliged to offer a fullfunctioning version of its operating system, the tying product, which did not incorporate Windows Media Player, the tied product. However, Microsoft retained the right also to offer a bundle of both products. 46

  See also M. Adam and F. Maier-Rigaud, ‘The Law and Economics of Article 82 EC and the Commission Guidance Paper on Exclusionary Conduct’ (2009) 1 J Comp L (Zeitschrift für Wettbewerbsrecht) 131. 47

  Note that Art 8 of Regulation 1/2003 allows the Commission to order interim measures under certain circumstances. 48

  See Maier-Rigaud, Hellstrom, and Bulst, ‘Remedies in European Antitrust Law’ (n 22), section V. 49

  For a detailed overview of the role and risks of commitment decisions, see in particular E. Gippini-Fournier, ‘The Modernisation of European Competition Law: First Experiences with Regulation 1/2003’, Report to FIDE Congress, 2008. 50

  The commitment decision procedure formalizes a long-standing practice of informal settlements under Regulation No 17: First Regulation implementing Articles 85 and 86 of the Treaty, OJ 1962 013/204. Compared to this practice, the procedure under Art 9 facilitates the enforcement of commitments offered by the undertakings concerned. While a breach of commitments accepted under the informal practice could only be sanctioned by reopening the case and ultimately proving an infringement of the competition rules, nonFrom: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

compliance with commitments made binding under Art 9 of Regulation 1/2003 is itself a legal offence that can be sanctioned through the imposition of fines or periodic penalty payments (Arts 23(2)(c) and 24(1)(c) of Regulation 1/2003). For an in-depth analysis, see H. Schweitzer, ‘Commitment Decisions Under Art 9 of Regulation 1/2003: The Developing EC Practice and Case Law’, SSRN Electronic Journal, 2008. 51

  See eg Case COMP/A.39.116/B2 Coca-Cola, OJ 2005 L253/21. See also, Case COMP/ B-2/38.381 De Beers, OJ 2006 L205/24, quashed by the GC in Case T-170/06 Alrosa v Commission [2007] ECR II-2601; judgment set aside Case C-441/07 P Commission v Alrosa, not yet reported . 52

  Case COMP/B-1/200337.966 Distrigas, Summary, OJ 2008 C9/8; Case COMP/39.316 GDF, Summary, OJ 2009 C57/13, Press Release IP/09/1872; Cases COMP/39.388 and COMP/39.389 German Electricity Wholesale Markets and German Electricity Balancing Markets (E.ON), Summary, OJ 2009 C36/8; Case COMP/39.402 RWE—Gas Foreclosure Summary, OJ 2009 C133/10; Case COMP/39.386 Long-Term Electricity Contracts in France Summary, OJ 2010 C133/5; Case COMP/39.351 Swedish Interconnectors Summary, OJ 2010 C142/08; Case COMP/39.317 E.ON Gas Summary, OJ 2010 C278/9; Case COMP/39.315 ENI Summary, OJ 2010 C352/8; Decision of 10 April 2013 in Case COMP/39.727 ČEZ, not yet reported. 53

  SPEECH/12/372 of 21/05/2012.

54

  See eg C. Caffarra and M. Walker, ‘An Exploration into the Use of Economics before Courts in Europe’ (2010) 1 J Eur Comp L & Practice 158–61 or N. Petit, ‘Recent Developments in Article 102 TFEU’, speech at Intertic Conference, Rome, May 2013. 55

  For an in-depth analysis, see C.-D. Ehlermann and M. Marquis (eds), European Competition Law Annual 2008: Antitrust Settlements under EC Competition Law (Oxford: Hart Publishing, 2009). 56

  P. Lowe and F. Maier-Rigaud, ‘Quo Vadis, Antirust Remedies?’ in B. Hawk (ed), International Antitrust Law and Policy: Fordham Competition Law 2007 (New York: Juris Publishing, 2008), ch 20. 57

  In any event. the Commission may, upon request or on its own initiative, reopen the proceedings: (a) where there has been a material change in any of the facts on which the decision was based; (b) where the undertakings concerned act contrary to their commitments; or (c) where the decision was based on incomplete, incorrect, or misleading information provided by the parties. 58

  ČEZ (n 52); Case AT.39.230 Rio Tinto Alcan, OJ 2013 C89/06; Case AT.39.654 Reuters Instrument Codes (2012); Case COMP/39.692 IBM Maintenance services, OJ 2012 C18/06; Case COMP/39.592 Standard & Poor’s, OJ 2012 C31/08; ENI (n 52); E.ON Gas (n 52); Swedish Interconnectors (n 52); Long-term electricity contracts in France (n 52); Case COMP/39.530 Microsoft (tying) (n 43); Case COMP/38.636 RAMBUS Summary, OJ 2010 C30/17, decision not yet reported; GDF (n 52); Case COMP/39.416 Ship classification, OJ 2010 C2/05; RWE Gas Foreclosure (n 52); E.ON (n 52); Case COMP/39.389 German Electricity Balancing Team, OJ 2009 C36/08. 59

  Case COMP/39.525 Telekomunikacja Polska, OJ 2011 C324/07.

60

  Case COMP/C-3 /37.990 Intel (n 23).

61

  See Schweitzer, ‘Commitment Decisions Under Art 9 of Regulation 1/2003’ (n 50).

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62

  The requirement that the undertakings concerned must consent to the commitments is not necessarily a sufficient safeguard against these risks since they may face strong incentives to settle. 63

  Standard & Poor’s (n 58).

64

  IBM Maintenance Services (n 58).

65

  See Google (n 29).

66

  H. W. Friederiszick and L. Gratz, ‘Dominant and Efficient: On the Relevance of Efficiencies in Abuse of Dominance Cases’, ESMT White Paper No WP–12–01 (2012). 67

  On the standard of review, see Nazzini, ‘Administrative Enforcement’ (n 33), 991–6.

68

  Only if the illegality is such that the decision would have been different absent such illegality. 69

  See B. Vesterdorf, ‘Judicial Review in EC Competition Law: Reflections on the Role of the Community Courts in the EC System of Competition Law Enforcement’ (2005) 1 Global Comp Policy 1. 70

  Case T-201/04 Microsoft I (n 5), paras 87–89; Case T-65/96 Kish Glass v Commission [2000] ECR II-1885, para 64, upheld on appeal by order of the CJ in Case C-241/00 P Kish Glass v Commission [2001] ECR I-7759; Case 42/84 Remia v Commission [1985] ECR 2545, para 34; Joined Cases 142 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487, para 62. 71

  See, in particular, D. Geradin and N. Petit, ‘Judicial Review in European Union Competition Law: A Quantitative and Qualitative Assessment’, TILEC Discussion Paper 2011-008 (2011). 72

  Joined Cases 56 and 58/64 Etablissements Consten and Grundig-Verkaufs-GmbH [1966] ECR 299 (Consten and Grundig). 73

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, para 39.

74

  Case T-201/04 Microsoft I (n 5), para 87.

75

  Case C-272/09 P KME Germany, KME France and KME Italy v Commission (KME), judgment of 8 December 2011, not yet reported. 76

  KME (n 75), para 94.

77

  KME (n 75), para 102.

78

  See C-12/03 Tetra Laval (n 73), para 328.

79

  See C. Ahlborn and D. S. Evans, ‘The Microsoft Judgment and Its Implications for Competition Policy Towards Dominant Firms in Europe’ (2009) 75 Antitrust LJ 887.

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Part I General Principles, 4 Article 102, B The Article 102 Enforcement Priorities Guidance Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 102 TFEU — Enforcement by EU Commission — Economic or commercial activity

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B. The Article 102 Enforcement Priorities Guidance (1)  The Emergence of the Effects-Based Approach (a)  Traditional Approach under EU Law 4.83  The early case law on Article 102 appeared less concerned with promoting economic efficiency and consumer welfare and more with protecting the structure of the market. According to many commentators, this was justified by the fact that at the time the EC Treaty was ratified and the competition rules came into force, the market structure across the EU was oligopolistic, and hence competition law became a tool for limitation of private power.80 4.84  Continental Can,81 the first Article 102 judgment, sowed the seed for this perception. On the one hand, the Court of Justice in that case ruled that Article 102 was ultimately focused on consumer harm, holding that it is not only ‘aimed at practices which may cause damage to consumers directly, but also to practices that are detrimental to consumers through their impact on an effective competitive structure’. The Court thus confirmed that exclusionary (p. 348) as well as exploitative abuses are covered by the prohibition. On the other hand, the Court’s ruling that it was an abuse for a dominant undertaking to strengthen its market power by acquiring another undertaking was focused on the position of the undertaking: abuse may therefore occur if an undertaking in a dominant position strengthens such position in such a way that the degree of dominance reached substantially fetters competition, i.e. that only undertakings remain in the market whose behaviour depends on the dominant one.82 4.85  The Court of Justice in Hoffman-La Roche prefaced its assessment by reference to markets ‘where, as a result of the very presence of the undertaking in question, the degree of competition is weakened’.83 The absence of a direct reference to consumer harm in the definition of abuse, combined with the statement that the ‘very presence’ of the dominant firm would ‘weaken competition’ probably influenced the Commission and the EU Courts in subsequent judgments towards adopting a more form-based approach to enforcement. In Hoffmann-La Roche, the Court considered loyalty rebates abusive because such a practice leads to the application of different prices to customers purchasing the same quantities from the dominant undertaking and is designed to deny other producers access to the market.84 The Court did not particularly consider the specific effects on the market of the conduct in question. Indeed, the primary reason for the illegality of retroactive conditional rebates by the dominant undertaking was clearly articulated by the Court. The Court said that fidelity rebates ‘are not based on an economic transaction which justifies this burden or benefit but are designed to deprive the purchaser of or restrict his possible choices of sources of supply and to deny other producers access to the market’.85

(b)  Form- vs Effects-Based Approach 4.86  In a form-based approach, whether a practice can be considered an abuse can be inferred from its nature and objective characteristics. Hence, it is not necessary to determine the specific effects of the practice in question. 4.87  A form-based approach targets abstract features of characteristics of the conduct (eg sale below cost, supply only subject to exclusivity, tying of two different products) or underlying aims (eg strategy aimed at eliminating a particular competitor or rebates aimed at ensuring loyalty of a customer) of a commercial conduct, which may typically indicate a

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risk of anti-competitive effects. Applying a form-based approach, evidence of actual or likely anti-competitive effects would not be necessary. 4.88  By contrast, the effects-based approach advocates an analysis of the potential, likely, or, in some circumstances, the actual effects on competition in the market context of each individual case before finding an infringement.

(c)  Pros and Cons of an Effects-Based Approach 4.89  An effects-based approach implies that one has to articulate the theory of harm in terms of the sequence of cause and effect through which the conduct of a dominant firm leads to (p. 349) harm to consumers, as compared to a well-defined counterfactual. In addition, the ‘harm’ must be well defined (eg as an increase in price or, in a more complex setting, a decrease in consumer welfare through reduction in choice, restrictions on quantity available, or limited product innovation). 4.90  An effects-based approach has several advantages over a form-based approach.86 •  First, it recognizes that many forms of conduct can be either pro-competitive or anti-competitive; the effects depend on the circumstances. An economic analysis of the facts and market conditions makes it possible to differentiate between competition on the merits and anti-competitive conduct. •  Secondly, given limited resources, it makes sense to focus on the most important problems where antitrust intervention can enhance welfare (this view is articulated by the Commission in the Commission Guidance (at para 5)). •  Thirdly, it provides useful information about the magnitude of the harm to consumers and to society. Fines and damages could be based on the identified effects, which could improve the efficacy of sanctions. •  Finally, insofar as direct evidence of likely or actual effects may be required, it reduces the risk of false positives and thus the risk of over-deterrence and chilling pro-competitive behaviour. 4.91  On the other hand, an effects-based approach has a number of disadvantages: •  First, it is more demanding and possibly more difficult to apply in a given situation. Individual firms must continually assess the legality of their behaviour. A complex case-by-case analysis would introduce administrative costs and uncertainty. The method chosen to implement an effects-based approach must, therefore, be relatively straightforward, robust, and predictable so that dominant firms have a reasonable chance to draw the line between legal and illegal behaviour with some certainty. •  Secondly, there is a risk of inconsistent national approaches; Article 102 is directly applicable in the Member States by their competition authorities and courts, not all of which have the resources or expertise to conduct complex economic analyses. •  Thirdly, by insisting on proof of consumer harm in each and every case, the effectsbased approach, if generally applied without qualifications, may raise the bar for competition authorities and claimants in civil proceedings to such an extent that socially harmful behaviour could escape the prohibition of Article 102.

(d)  The Recent Adoption by the EU Courts of a More Explicitly Effects-Based Approach 4.92  In recent judgments EU Courts have tended to adopt a less form-based approach, emphasizing that consumer welfare is one of the objectives of Article 102. In 2006, in GlaxoSmithKline, the General Court stated that the ‘objective of the [Union]…is to prevent undertakings, by restricting competition between themselves or with third parties, from reducing the welfare of the final consumer of the products in question’.87 However, the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Court of Justice set aside the judgment of the General Court on this point.88 The Court (p. 350) made three points: (a) nothing in Article 101 indicates that ‘only those agreements which deprive consumers of certain advantages may have an anti-competitive object’; (b) Article 101, like other EU competition rules, ‘aims to protect not only the interests of competitors or of consumers, but also the structure of the market and, in so doing, competition as such’; and (c) as a consequence, ‘for a finding that an agreement has an anti-competitive object, it is not necessary that final consumers be deprived of the advantages of effective competition in terms of supply or price’.89 The General Court similarly referred directly to the welfare of end consumers in Österreichische Postsparkasse90 but the case related to access to file rather than to the substantive application of the EU competition rules, and, in light of the ruling of the Court of Justice in GlaxoSmithKline, carries little or no weight. This does not mean that consumer welfare is not one of the objectives of Article 102, and EU competition law more generally, and that consumer harm cannot be applied as a test for determining whether conduct infringes Article 102. In this respect, an important development in the case law is the Court of Justice’s judgment in Post Danmark. The Court, relying on previous authorities, reformulated the definition of abuse in Hoffmann-La Roche by defining anti-competitive effect as ‘the effect, to the detriment of consumers, of hindering the maintenance of the degree of competition existing in the market or the growth of that competition’. The significant change is the insertion of the phrase ‘to the detriment of consumers’.91 Furthermore, in ruling on the preliminary reference, the Court stated that ‘In order to assess the existence of anti-competitive effects in circumstances such as those of that case, it is necessary to consider whether that pricing policy, without objective justification, produces an actual or likely exclusionary effect, to the detriment of competition and, thereby, of consumers’ interests’.92 However, it is not possible to draw the conclusion from Post Danmark that consumer welfare has become the only objective of Article 102 or that in each and every Article 102 case it is necessary to prove consumer harm in order to establish an infringement of the prohibition. Since Continental Can it has been clear that the protection of consumer welfare is an objective which can be achieved by protecting the process of competition as conducive to welfare improvements. Post Danmark may be read as a development, and a long overdue clarification, of this position, emphasizing that Article 102 does not protect competitors for its own sake but protects competition as a means to safeguard the welfare of the society. How this will translate into the individual tests of abuse is quite another matter. It will have to be observed how the Court of Justice will rule, over the next years, on arguments to the effect that, in a given case, the Commission has failed to prove consumer harm to the required legal standard. It quite possible that the Court will continue to apply the previous abuse tests, refining them incrementally in a way which is more in tune with an approach based on the analysis of the effects of conduct on the market and on welfare, and will recognize that consumer harm may in certain circumstances, but by no means always, be presumed.

(p. 351) (2)  The Commission’s Review of Article 102 Policy (a)  Purpose of the Review 4.93  In 2003 DG Competition initiated a major internal review of its policy on Article 102. According to the Director General of DG Competition, the purpose of the internal review was ‘to evaluate policy, to assess how it could be made more effective, and to define ways in which we might make it more transparent’.93 He also stated that ‘a credible policy on abusive conduct must be compatible with mainstream economics’.94

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4.94  During the review the Chief Economist of DG Competition commissioned a report from EAGCP, the Economic Advisory Group on Competition Policy, which was published in July 2005 (the ‘EAGCP report’).95

(b)  The Staff Discussion Paper 4.95  The review resulted in the publication in December 2005 of a DG Competition Staff Discussion Paper on the application of the article to exclusionary abuses (the ‘Discussion Paper’). 4.96  The Discussion Paper dealt only with the application of Article 102 to exclusionary abuses (defined as behaviour by a dominant undertaking which is likely to have a foreclosure effect on the market). It adopted the consumer welfare standard, stating that the objective of Article 102 with regard to exclusionary abuses was ‘the protection of competition on the market as a means of enhancing consumer welfare and of ensuring an efficient allocation of resources’. 4.97  The Discussion Paper was put out for public consultation and stimulated a lively, wide-ranging debate. Broadly speaking, the direction of the Discussion Paper was welcomed by most practitioners, scholars, and other commentators but there was much disagreement about the specific proposals and some concern as to how far undertakings would be faced with even less legal certainty about the behaviour prohibited under Article 102. The outcome of the consultation was expected by many people to be the publication of guidelines similar to the Article 101(3) Guidelines.

(3)  The Article 102 Enforcement Priorities Guidance (a)  Adoption of Guidance as opposed to Guidelines 4.98  The Commission finally adopted in February 2009 not ‘guidelines’ but ‘Guidance’ on the Commission’s enforcement priorities in applying Article 102 to abusive exclusionary conduct by dominant undertakings. The choice not to adopt guidelines was probably motivated by two factors:(p. 352) •  First, under EU law, it is clear that soft law instruments (eg guidelines, communications) may give rise to a legitimate expectation that the content therein will be adhered to in subsequent decisions. By limiting itself to a statement of prosecutorial discretion outlining how it will define its enforcement priorities, the Commission gave itself greater flexibility for future changes in an area rife with disagreements and complex economic arguments. •  Secondly, the Commission’s leeway to change the approach to Article 102 enforcement is significantly limited by the fact that the previous structural analysis was embedded in binding EU case law.

(b)  Economics-Based Approach to Enforcement 4.99  Nonetheless, the Article 102 Enforcement Priorities Guidance constitutes a shift towards an effects-based approach to abusive conduct under Article 102. The stated goal is to protect competition and consumer welfare, not (individual) competitors who do not deliver to consumers. The Guidance is also explicit in recognizing that dominant companies should be free to compete aggressively as long as this competition is ultimately for the benefit of consumers. 4.100  The effects-based approach thus means that the Commission will carefully discern competition on the merits, which has beneficial effects for consumers and should therefore be allowed, from competition that is liable to lead to anti-competitive foreclosure, that is, foreclosure that is likely to harm consumers. Since the focus of the Commission’s policy is on the effects on consumers, it should be prepared to examine claims put forward by a dominant firm that its conduct is justified on efficiency grounds. There is no reason why the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Commission’s approach to efficiency defences under Article 102 should be significantly different from that applicable under Article 101 and mergers. 4.101  In terms of how the Commission carries out its economic assessments, the Commission Guidance requires ‘cogent and convincing’ evidence for a finding of anticompetitive foreclosure.96 However, it primarily anticipates the use of qualitative evidence, allowing quantitative evidence where this is ‘possible and appropriate.’97 This rather cautious endorsement of quantitative evidence leaves the Commission considerable flexibility to base its findings on whatever evidence is available in a specific case. While the use of econometric analysis will certainly play an important role in future Article 102 enforcement, at present it cannot be expected that cases will systematically be decided by complex econometric studies. 4.102  The Commission Guidance does not break with prior abuse analysis, and some may argue that it does not go far enough. But the emphasis on consumer harm constitutes a significant step forward in bringing the Commission’s enforcement practice more in line with economic theory and international enforcement practice. On the basis of this conceptual underpinning, the Commission Guidance also provides a more coherent overall framework of analysis, something that many practitioners have called for in light of a number of diverging Commission decisions and EU Court judgments. Moreover, the emphasis on consumer harm coincides with a more explicit recognition of the consumer benefits that can result from fierce competition on the merits by dominant companies.

(p. 353) (c)  Impact of the Guidance on Future Cases 4.103  Adopting the approach in the Guidance, the Commission can simply refrain from bringing cases where there is no consumer harm. Although, in theory, such ‘inactivity’ could be challenged by a disgruntled complainant, it is well established that the Commission is entitled to set its own priorities.98 4.104  The Commission Guidance reflects the current state of economic thinking and, as such, presents a solid and sound base for enforcement, and thereby provides greater clarity and predictability as to the circumstances that are liable to prompt an intervention by the Commission. The Commission will continue to pursue vigorously exclusionary conduct by dominant companies which is likely to harm competition and thereby consumers. By establishing its enforcement priorities, it seeks to make its intervention as effective as possible. Also, the Commission Guidance should help dominant undertakings to refrain from engaging in abusive conduct in the first place. 4.105  The Commission is perfectly aware that it is bound by the case law and that if it applied a wholly different interpretation of Article 102 than that set down by the EU Courts, it would be challenged on appeal. However, it is possible that, given the judicial review standard which the General Court applies in Article 102 cases and the role policy development that is thus recognized to the Commission, the Commission might be able to instigate a subtle development of the law in this area.

(d)  Overview of the Guidance 4.106  The Guidance does not deal with exploitative abuses and abusive discrimination. It contains an introductory section setting out the purpose of the Guidance; an explanation of its general approach to exclusionary conduct, including a short section on market power and dominance, and a general section on price-based exclusionary conduct; and then a part applying that approach to specific forms of exclusionary conduct. These are exclusive dealing, including conditional rebates; tying and bundling; predation; and some

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exclusionary refusals to supply, under which the Commission includes margin squeezes (it expressly does not cover, eg, refusals to supply to prevent parallel trade). 4.107  A technique used by the Commission throughout the Guidance is to set out a general rule as to what will ‘normally’ be the situation but to also retain a wide degree of administrative discretion.

(e)  Brief Summary of the Approach to Abuse 4.108  Each of sections E to L contains an analysis of the Guidance as applied to particular abuses. This section therefore confines itself to providing a brief overview. 4.109  There are two steps in the general analytical framework that the Commission will apply to determine if the dominant firm has infringed Article 102. 4.110  The first step is for the Commission to explain on the basis of cogent and convincing evidence how the allegedly abusive conduct is likely to result in anti-competitive foreclosure and thereby harm consumers. 4.111  The second step is for the firm to rebut this finding of a likely negative effect by showing that it is likely to create efficiencies which offset the negative effects of the conduct for consumers. If (p. 354) persuaded that such efficiencies meet the conditions laid out in the Commission Guidance, the Commission shall consider the firm’s conduct as legal under Article 102.

(i)  Anti-Competitive Foreclosure 4.112  The Commission Guidance defines anti-competitive foreclosure as ‘a situation where effective access of actual or potential competitors to supplies or markets is hampered or eliminated as a result of the conduct of the dominant undertaking whereby the dominant undertaking is likely to be in a position to profitably increase prices to the detriment of consumers’.99 4.113  The Commission Guidance lists a number of factors that will generally be relevant to the Commission’s assessment of foreclosure, including the position of the dominant undertaking, the conditions on the relevant market, the position of the dominant undertaking’s competitors, the position of the customers or input suppliers, the extent of the allegedly abusive conduct, possible evidence of actual foreclosure, and direct evidence of any exclusionary strategy.100

(ii)  Assessment of the Effect on Consumers 4.114  Assessing the likely effects of the conduct of the dominant undertaking is not an easy task. It entails comparing the current or likely future situation in the relevant market with an appropriate counterfactual.101 4.115  This requires a comprehensive analysis of a number of factors described in paragraph 20 of the Guidance (the so-called ‘paragraph 20 factors’), such as the conditions on the relevant market (eg the existence of economies of scale and/or scope), the duration of the conduct of the dominant undertaking and the part of the market affected by it, any direct evidence of an exclusionary strategy or of actual foreclosure, and also the situation of the dominant undertaking’s competitors, customers, and input suppliers. 4.116  The Commission Guidance also identifies the as-efficient competitor test as a useful analytical tool for price-based conduct.102 This highlights that ultimately, to show anticompetitive effects, one must provide evidence that the conduct in question has led, or is likely to lead, to price increases, reduced quality, less consumer choice, or less innovation, than in the absence of the practice.

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4.117  In general, the assessment will be based on various factors, for example: (a) the capability of competitors, customers, and suppliers to counter the conduct of the dominant firm; (b) the extent of the conduct (in general the larger the extent of the conduct in scope or duration, (p. 355) the greater the likelihood of foreclosure); (c) possible evidence of actual effects where the conduct has been in place for a sufficient period of time; and (d) possible direct evidence from internal documents of an exclusionary strategy by the dominant company. 4.118  Notwithstanding these issues, the use of an effects-based approach does not imply that it is necessary to apply very complex economic or econometric analysis. Actual or likely negative effects can in general be shown by carefully analysing the conduct and factual developments and the ways in which the conduct is likely to affect the market. Economic and econometric modelling can be a very useful tool but it will have to be interpreted in light of the circumstances of the case. It is unlikely that econometric evidence alone could sustain a finding of abuse or rebut cogent and convincing evidence of abuse based on a qualitative assessment.

(iii)  Objective Justifications and Efficiencies 4.119  Even if it is proven that a firm is dominant and that its conduct has, or is likely to, foreclose rivals and that this is likely to result in consumer harm (ie anti-competitive foreclosure), the Guidance provides that the dominant firm can put forward efficiency justifications for its conduct. 4.120  The Commission Guidance establishes a four-pronged test whereby the undertaking must demonstrate that: (a) its conduct results in efficiencies; (b) the conduct is indispensable to achieving such efficiencies; (c) the efficiencies outweigh any anticompetitive effects of its conduct; and (d) that effective competition is not fully eliminated.103 4.121  As regards the burden of proof and the evidential burden,104 the Commission Guidance indicates that the dominant firm ‘will generally be expected to demonstrate, with a sufficient degree of probability, and on the basis of verifiable evidence, that the following cumulative conditions are fulfilled’. This is not an absolute requirement; there may be circumstances where demonstration of one or more criteria requires information that only the Commission can obtain. Moreover, the Commission Guidance also makes it clear that the Commission bears the ultimate responsibility for balancing ‘any apparent anticompetitive effects against any advanced and substantiated efficiencies’ to determine whether the conduct ‘is likely to result in consumer harm.’105

Footnotes: 80

  See eg G. Amato, Antitrust and the Bounds of Power (Oxford: Hart Publishing, 1997), 113. 81

  Continental Can (n 3).

82 

Continental Can (n 3), para 26.

83

  On the other hand, it also makes it clear that conduct departing from ‘normal competition’ will be considered abusive if it ‘has the effect of hindering the maintenance of the degree of competition still existing on the market or the growth of that competition.’ Thus, effectively, the operative part of this definition is contained in its second limb, namely, conduct can be characterized as an abuse if it has a detrimental effect on competition. 84

  Hoffmann-La Roche (n 6), para 90.

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85

  Hoffmann-La Roche (n 6), para 90.

86

  See also M. Ganslandt, ‘New Rules for Dominant Firms in Europe’, available at SSRN 970840, 1 (2006), 1–28. 87

  Case T-168/01 GlaxoSmithKline Services v Commission [2006] ECR II-2969, para 118.

88

  Joined Cases C-501/06 P, etc GlaxoSmithKline Services Unlimited v Commission and Commission v GlaxoSmithKline Services Unlimited and European Association of Euro Pharmaceutical Companies (EAEPC) v Commission and Asociación de exportadores españoles de productos farmacéuticos (Aseprofar) v Commission [2009] ECR I-9291 (GlaxoSmithKline), paras 58–67. 89

  Joined Cases C-501/06 P, etc GlaxoSmithKline (n 88), para 63.

90

  Joined Cases T-213/01 and T-214/01 Österreichische Postsparkasse and Bank für Arbeit und Wirtschaft v Commission [2006] ECR II-1601, para 103. 91

  Post Danmark (n 10), para 24.

92

  Post Danmark (n 10), para 44 and operative part.

93

  Speech by the Director General of DG Competition, P. Lowe, at Fordham Corporate Law Institute 30th Annual Conference on International Antitrust Law and Policy, 23 October 2003, published at 2003 Fordham Corp L Inst (2004), 163, referring to the speech of (then) Commissioner Mario Monti at the 8th EU Competition Law and Policy Workshop, EUI, June 2003, published as C.-D. Ehlermann and I. Atanasiu (eds), European Competition Law Annual 2003: What is an Abuse of a Dominant Position? (Oxford: Hart Publishing, 2006), 3, 9. 94

  P. Lowe, speech delivered at the Thirtieth Annual Conference on International Antitrust Law and Policy, Fordham Antitrust Conference, 23 October 2003, 2; see also Economic Advisory Group, ‘An Economic Approach to Art 102’ (July 2005), available at . 95

  EAGCP Report (n 94).

96

  Article 102 Enforcement Priorities Guidance, para 20. The importance of economic analysis in EU competition enforcement has been codified in the Best Practices for the submission of economic evidence and data collection in cases concerning the application of articles 101 and 102 and in merger cases, available at . 97

  Article 102 Enforcement Priorities Guidance, para 19.

98

  Automec (n 28), para 51–52.

99

  Article 102 Enforcement Priorities Guidance, para 19.

100

  Article 102 Enforcement Priorities Guidance, para 20.

101

  The Article 102 Enforcement Priorities Guidance, para 21 states that: This assessment will usually be made by comparing the actual or likely future situation in the relevant market (with the dominant undertaking’s conduct in place) with an appropriate counterfactual, such as the simple absence of the conduct in question or with another realistic alternative scenario, having regard to established business practices.

However, the Commission’s recent practice shows that it may still take a relatively simplistic approach to defining the counterfactual. Eg in Telekomunikacja Polska (n 59) it rejected as misleading TP’s attempt to explain low broadband penetration rate in Poland by factors exogenous to the infringement (eg the level of GDP per capita, the number of personal computers per 100 inhabitants, and the level of development of DSL lines). A more From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

robust approach would have been to build an economic model which took into account these and other relevant factors in order to estimate the broadband penetration rate and the level of Internet prices in the absence of the agreement. 102

  Article 102 Enforcement Priorities Guidance, para 23; however, para 24 of the Commission Guidance acknowledges that in certain circumstances the presence of a less efficient competitor may also exert a competitive constraint that should be taken into account. 103

  Article 102 Enforcement Priorities Guidance, para 30.

104

  The burden of proof denotes the onus of proving a fact to the required legal standard while the evidential burden is the burden of adducing sufficient evidence that, if not contradicted or rebutted, is capable of establishing a defence or a prima facie case: see Nazzini, ‘The Wood Began to Move’ (n 11). 105

  Article 102 Enforcement Priorities Guidance, para 31.

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Part I General Principles, 4 Article 102, C Dominance Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Dominant position — Determining abuse of dominant position — Market power — Market definition — Market share analysis — Undertakings — Barriers to entry — Economic or commercial activity — Collective or joint dominance — Oligopoly

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C. Dominance 4.122  Article 102 prohibits the abuse of a dominant position by ‘one or more undertakings’. There are, thus, two types of dominance under Article 102 depending on whether the dominant position is held by one undertaking or two or more undertakings: single dominance and collective dominance. This section will deal with these two types of dominance in turn.

(1)  Concept of Single Dominance (a)  Legal Definition of Single Dominance 4.123  The EU Courts define the dominant position referred to in Article 102 as ‘a position of economic strength enjoyed by an undertaking that enables it to prevent effective competition (p. 356) being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers, and ultimately consumers’.106

(b)  Concerns Regarding the Elements of the Definition of Dominance 4.124  The legal definition has two elements, independence and prevention of effective competition, both of which can be complex from an economic perspective. 4.125  Some commentators have argued that the first element of the test (power to behave to an appreciable extent independently of its competitors and customers) is arguably a purely legal construct, rather than a concept that has meaning in economic terms. Under this argument, the concept of ‘acting independently’ does not provide a basis for differentiating between dominant firms and non-dominant firms, as no firm can set price entirely independently of its customers or consumers: in general, increasing price causes a loss of revenue, either because consumers turn to rival firms or because they drop out of the market. Even a textbook monopolist faces a downward-sloping demand curve. However, from a legal perspective, the requirement of independence is probably more straightforward. The independence to which the case law refers is not, and could not be, the ability to set price entirely independently of demand. Rather, it is the ability of an undertaking to behave unconstrained, to an appreciable extent, by competitive pressure and demand discipline.107 4.126  Superficially, one could consider that the second element of the test (a position of economic strength that enables it to prevent effective competition being maintained) equates ‘dominance’ with ‘abuse’. Put another way, this second element would imply that some practices have the capability to foreclose, whereas others simply increase sales through expanding the market. Since ‘capability to foreclose’ is a feature or characteristic of the practice, this boils down to a form-based analysis, where the practice is assessed in abstract terms without regard for its actual effects in the market, let alone on consumer welfare. Having established that a firm is dominant, it has a special responsibility not to engage in any form of conduct that has such capability to foreclose, irrespective of its actual effects.108 Taking this element of the definition out of context has contributed to the misguided belief among some practitioners that ‘dominance’ is a stigma and virtually illegal since practically any exclusionary action undertaken by a dominant firm would constitute an abuse. However, once again, this criticism of the requirement of the ability to prevent effective competition goes too far and makes things more complicated than they actually are. The meaning of this requirement is, indeed, much simpler. The ability to harm competition must result from the position of economic strength which is the hallmark of dominance, namely substantial and durable market power. Therefore, a dominant undertaking is a firm with substantial and durable market power which is able, by its

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conduct, to harm competition and, after Post Danmark, one could add to the detriment of consumers.

(c)  Approach Taken in the Guidance to the Test Elements 4.127  The Commission Guidance seeks to provide additional clarity as regards the two elements of the test. 4.128  First, the Guidance makes it clear that the notion of independence in the legal definition of dominance is related to the level of competitive constraints facing the firm.109 The (p. 357) independence requirement is not absolute; it is a question of degree. This means that, for a firm to be dominant, its decisions should be fairly insensitive to actions and reactions of competitors, customers, and, ultimately, consumers. A firm facing low demand elasticity and low rivals’ price and quantity elasticities can behave independently of competitors and consumers to an appreciable extent. This is reflected in its ability to increase prices significantly above competitive levels over an extended period. Thus, dominance means that the firm in question is only to a limited extent constrained by effective competitive forces and therefore enjoys substantial and durable market power. 4.129  Secondly, the Guidance, in line with settled case law, is explicit that it is not illegal to hold a dominant position. Therefore, the ability to ‘prevent effective competition being maintained’ does not refer to any form of exclusion of any competition, even if the exclusion may result in increased market power on the dominated market or on another market. On the contrary, even an already dominant firm is free to compete fiercely and force its rivals to exit the market or play a very limited role on it, provided that its conduct is competition on the merits and in the end consumers are not harmed. Only if the exit or the marginalization of rivals eliminates a source of competitive pressure such that the dominant firm is able to raise prices or reduce quality and choice (hence, to the detriment of consumers) and this result is achieved by anti-competitive means can its conduct be considered abusive. The whole point of the Commission Guidance is to explain how this might come about and what elements the Commission needs to bring forward to prove it.

(d)  Assessment of Market Power 4.130  In economic terms, the position of ‘economic strength’ being measured equates to the concept of ‘market power’. 4.131  A seller is said to possess market power if it can raise price above the competitive level without losing so many sales so rapidly that the price increase is unprofitable. More generally, market power is the power to influence market prices, output, innovation, the variety or quality of goods and services, or other parameters of competition on the market for a significant period of time. Perfect competition (where no seller or buyer can influence the price at which transactions occur) is rarely encountered outside textbooks; almost all firms have some market power, though most have very little. Accordingly, the relevant question from an economic perspective is not whether market power is present, but whether it is important (ie significant). 4.132  The Commission’s Guidance regards the concept of dominance as coextensive with substantial and durable market power.110 Citing the case law of the EU Courts in Hoffmann La-Roche111 and United Brands,112 the Guidance explains that the notion of independence in the case law is related to the degree of competitive constraint exerted on the dominant undertaking by other market players. The lack of sufficiently effective competitive pressure means that the conduct of a dominant undertaking is largely insensitive to the reactions of rivals, customers, and consumers.113 The Commission goes on to say that ‘an undertaking which is capable of profitably increasing prices above the competitive level for a significant (p. 358) period of time does not face sufficiently effective competitive constraints and can thus generally be regarded as dominant’.114 This definition, with the qualification that, to be dominant, an undertaking must be able not only to raise prices above the competitive level

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but also to do so to a substantial degree, can be accepted as a working definition of the market power requirement of dominance.

(e)  How Does the Guidance Approach Fit with the Legal Approach 4.133  The question then is whether dominance requires more than the possession of substantial and durable market power. The case law appears to place emphasis on the dominant undertaking’s ability to harm competition rather than on its ability to raise price substantially above the competitive level for a significant period of time.115 It could be argued that there is a tension between a structural definition of dominance as substantial and durable market power, adopted by the Commission in its Guidance, and a behavioural definition of dominance as ability to harm competition, adopted by the EU Courts. 4.134  This tension may be more apparent than real and can be reconciled. The ability of a dominant undertaking to harm competition presupposes substantial and durable market power. If a firm is subject to effective competitive pressure and, therefore, has no substantial market power, it is unlikely to be able to harm competition within the meaning of Article 102 because competitors and customers will generally be able to neutralize any potentially anti-competitive behaviour of the firm in question. The application of a prohibition of abusive unilateral conduct to such firms would give rise to a high risk of error that would not be counterbalanced by the magnitude and likelihood of the harm that they can inflict on the economy. It can be concluded, therefore, that the definition of dominance in the case law and that in the Guidance on Article 102 are coextensive and both equally consistent with the text and purpose of Article 102. 4.135  The behavioural definition of dominance in the case law has, however, one advantage over the structuralist approach adopted in the Guidance: it focuses the analysis on the abuse as a whole in the overall market context rather than on market definition and static indicators of market power. Indeed, several economists116 have argued that separate market definition and assessment of market power, prior to the assessment of the competitive effects of conduct, can lead to a number of errors. If there is direct evidence of that a firm’s conduct leads to anti-competitive effects, this also constitutes proof that the firm in question holds significant market power in the affected market, or in the case of leveraging exclusionary strategies in a closely related market.117 4.136  Under this approach, determining whether an undertaking is dominant is not a separate and distinct step to the assessment of the abuse. It is part and parcel of the same test. The lack of competitive constraints on the dominant firm, the presence of high barriers to entry, and the absence of countervailing buyer power are certainly part of the dominance screening but are, first and foremost, necessary elements of the assessment of the anticompetitive effect of the (p. 359) conduct under review. The focus on the dominant undertaking’s ability to harm competition contributes to the integrated assessment of dominance and abuse and reduces the risk of falling into the trap of a two-stage analysis in which dominance and abuse are considered as two sequential and separate stages in the application of Article 102. 4.137  However, while inferring dominance from the proof of abuse is appealing (particularly in cases where delineating market boundaries may not be easy) for all practical purposes the dominance requirement provides a safe harbour for most firms and, hence, considerable legal certainty. Such a safe harbour is valuable since whereas it may be difficult to disentangle the anti-competitive effects of a particular practice, even for the defendant, it is often easier to establish in a wide range of circumstances that a particular firm would not be dominant, enhancing administrability and saving on scarce enforcement resources.

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4.138  In practice, therefore, it is reasonable to assess dominance separately as a complement to the analysis of effects; not least to minimize the risk of excessive intervention. Absent a precise magnitude of the anti-competitive effects one should note that a separate assessment of dominance can establish a threshold for intervention; based on the risks and costs associated with intervention one should be reluctant to intervene unless significant and durable market power can be identified. Another important factor is the limitations of economic theory. It is important to keep in mind that, in general, there is no single, undisputed model that can be used for the assessment of anti-competitive effects. As a result, in addition to requiring theoretically ‘robust’ results for effects assessments, a threshold such as a finding of significant market power (monopoly power) can be useful to avoid over-intervention.118

(2)  Factors Relevant to Single Dominance 4.139  The existence of a dominant position is normally inferred from a variety of quantitative and qualitative factors, some of which may carry more weight than others, depending on the circumstances of the case.

(a)  Economic Measurement of Market Power 4.140  A precise measure of market power is the Lerner index (or price-cost margin) which measures the degree to which prices exceed long-run marginal costs. Prices above long-run marginal cost lead to both inefficient allocations since consumption will be too low in response to prices that are too high and potentially to transfers from consumers to producers. 4.141  A relationship can be established between several structural factors, including market shares, and the Lerner index. But market shares are not only one and often not the most decisive of such factors. In an oligopoly that includes both large rivals and a pricetaking competitive fringe, the Lerner index for an individual firm is given by119 an equation relating the Lerner index (a quantitative measure of market power or marker performance) with several factors. First, intuitively and clearly recognized in the case law and Commission practice, higher market shares would, all else being equal, lead to a higher mark-up over competitive price levels. However, there are other important determinants of market power: market power is greater: (a) the smaller is the elasticity of market demand, (b) the smaller is the market share (p. 360) of the competitive fringe, (c) the smaller is the elasticity of supply of the competitive fringe, (d) the larger is the expected aggregate output response by the other non-price-taking firms to a one-unit charge in the output of the firm. 4.142  Thus, in oligopoly models, the degree of market power, and thus the existence of dominance depends not just on market shares but also on the sensitiveness of consumers to price increases (measured by the demand elasticity) and the ability and incentives of competing firms (large rivals and price takers) to react to price increases, either by entering or expanding output. Firms with high market shares may have little or no market power if price increases resulted in consumers dropping from the market, extensive entry, or output expansion by competitors.120

(b)  Factors Under the Case Law and the Commission’s Guidance 4.143  The Guidance divides the relevant factors into three categories: (a) the position of the undertaking concerned and its competitors; (b) the barriers to entry to the market; and (c) the position of customers.121 This type of analysis is consistent with the case law and is sound in theory and in policy: the analysis of dominance should start with the analysis of the short-term competitive constraints on the putative dominant firm (position of the undertaking concerned and competitors), then move to the assessment of long-term constraints (barriers to entry), and, finally, to buyer power as a factor capable of

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neutralizing the market power that would otherwise result from the absence of sufficient competitive pressure on the supply side.

(i)  The Position of the Undertaking Concerned and Its Competitors 4.144  The first step in the analysis is to determine the relative market positions and strength of the undertaking and its competitors. (i)  Market Definition

4.145  The case law has consistently required the Commission to define the relevant market as a necessary step in the assessment of dominance.122 The general consensus is that the main purpose of market definition is to identify in a systematic way the immediate competitive constraints faced by an undertaking. The objective of defining a market (in both product and geographic scope) is to identify all actual competitors of the undertaking concerned that are capable of constraining its behaviour.123 4.146  Market definition is dealt with in detail in Chapter 1 and is not repeated in detail here. However, it is worth noting that a commonly accepted market definition test is the SSNIP test,124 which measures the response of consumers to a ‘small but significant nontransitory (p. 361) increase in price’ (normally 5–10 per cent). This can pose problems in the context of Article 102. In particular, the SSNIP test is normally based on the assumption that prevailing prices constitute the appropriate benchmark for the analysis, which may not be the case in Article 102 cases. The very notion of dominance involves an assessment of whether the undertaking in question is subject to effective competitive constraints. The appropriate benchmark for such an assessment is the competitive price, which may not be the prevailing price. Indeed, the prevailing price may already have been substantially increased, a fact which must be taken into account.125 Otherwise, the market could be defined too widely, as it might include products or geographic areas, which only impose a competitive constraint due to the fact that prices have already been elevated above competitive levels. This phenomenon is sometimes referred to as ‘the cellophane fallacy’.126 4.147  Article 102 cases may also involve markets in which there is no dominant company. For instance, the problem being investigated could be claims that an allegedly dominant company ‘leverages’ its market power from one market into another market. In this second market, the SSNIP test may be more readily applicable, as there may be no reason to suspect that the prices in that market are already above competitive levels. 4.148  Nonetheless, the existence of the cellophane fallacy implies that market definition in Article 102 cases needs to be particularly carefully considered and that any single method of market definition, including in particular the SSNIP test, is likely to be inadequate. It is necessary to rely on a variety of methods for checking the robustness of possible alternative market definitions.127 (ii)  Market Shares

4.149  Market definition identifies the potential short-term significant competitive constraints on the products supplied by the undertaking concerned. To assess how effective these constraints actually are, the most immediate, albeit imperfect, indicator is market share. Calculation methods

4.150  The calculation of market shares is also dealt with in detail in Chapter 1. For the purposes of this chapter, it suffices to say a few words of caution as regards the calculation of market shares.128 First, the extent to which market shares are effective in indicating market strength may depend on the underlying basis for the calculation. For instance, market shares by volume are generally a good indicator of the market strength of firms in homogenous markets,129 whereas in differentiated markets, market share calculated by value (p. 362) may be preferable130 because they reflect the consumers’ willingness to pay for different products.131 In bidding markets, market shares relating to the installed base or From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the order backlog may be better indicators of market strength than market shares based on sales.132 Market share as indicators of market power

4.151  Although market shares are informative as to market power, they may be imperfect indicators of this, for a number of reasons: 4.152  First, the degree of product differentiation in the market can impact on the importance of market shares. Products are differentiated when they differ in the eyes of consumers, for instance due to brand image, product features, product quality, level of service, or the location of the seller. When products are differentiated, the competitive constraint that they impose on each other is likely to differ even where they form part of the same relevant market. Substitutability is a question of degree. In assessing the competitive constraint imposed by rivals, it must therefore be taken into account what is the degree of substitutability of their products with those offered by the allegedly dominant undertaking. It may be that a rival with a 10 per cent market share imposes a greater competitive constraint on an undertaking with a 50 per cent market share than another rival supplying 20 per cent of the market. This may, for instance, be the case where the undertaking with the lower market share and the allegedly dominant undertaking both sell premium-branded products whereas the rival with the larger market share sells a bargain brand. 4.153  Secondly, when competition is ‘localized’ due to differentiation, market shares may indicate little about the degree of competition among products. For example, consider a market for automobiles in which the two best-selling products are a minivan and a sports car. While the minivan appeals most strongly to practical buyers, the sports car appeals primarily to buyers not motivated by practical concerns. It is likely that the best-selling minivan competes most closely with other minivans, while the sports car competes primarily with other sports models. Therefore, the degree of competition between the two best-selling models would be limited; the best-selling minivan is primarily constrained by the price and features of other minivans (even if their market share is low), and similarly for sports models. If substantial differentiation can be demonstrated, market share computation is unlikely to yield reliable information, and other tests must be employed to diagnose the importance of market power. 4.154  A different problem relates to market share volatility. For example, in markets where demand is lumpy two or more firms may alternate as the market leader over time, even if the market remains unchallenged by new entrants. Inferences from market share levels under the case law

4.155  As to what inferences can be drawn from market shares, the case law has traditionally placed emphasis on ‘very large market shares’ as evidence of dominance.133 This was the approach adopted in Hoffmann-La Roche, where the Court of Justice held that the weight of market shares as evidence of a dominant position is not constant and varies from market to market.134 However, the Court went on to say that ‘very large shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position’.135 The Court clarified that the market share must be held ‘for some (p. 363) time’ and that the rivals must be unable ‘to meet rapidly the demand from those who would like to break away from the undertaking which has the largest market share’.136 On the other hand, the mere fact that a market share has been stable is not evidence of dominance because the fact that market shares do not change may be consistent with an effectively competitive market.137 However, when a dominant position is proven at a given point in

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time, the fact that the market share has been retained ‘may be a factor disclosing that this position is being maintained’.138 4.156  Following Hoffmann-La Roche, the Court of Justice continued to apply a nuanced approach to market shares. Michelin I is an illustration of this trend.139 In that case, the dominant undertaking had a market share of between 57 and 65 per cent on the Dutch market for new replacement tyres for new vehicles.140 The Court held that that factor was relevant but did not say that it was sufficient.141 In fact, the Court went on to examine a number of other factors that, together, proved that Michelin was dominant.142 AKZO

4.157  arguably brought about a change in this position. In that case, the Commission had followed the orthodox Hoffmann-La Roche approach. Market shares of 50 per cent had been considered ‘already indicative of a significant degree of market power’143 but the assessment had included all the relevant ‘economic evidence’, including: (a) the position of actual competitors; (b) the stability of AKZO’s market share; (c) AKZO’s aggressive and successful response to entry over the relevant period, during which it successfully excluded ‘troublesome competitors’ and raised prices as a result; (d) AKZO’s high margins and price or volume increases even in periods of economic downturn; and (e) the fact that AKZO had the broadest range of products, the most highly developed commercial and technical marketing organization, and the leading knowledge in safety and toxicology.144 Before the Court of Justice, AKZO challenged the finding that it was dominant. In rejecting this ground of appeal, the Court of Justice relied on Hoffmann-La Roche for the principle that very large market shares are in themselves and save in exceptional circumstances evidence of a dominant position. The Court went on to say that this was the case when there was a market share of 50 per cent ‘such as that found to exist in this case’.145 Despite suggesting that market shares alone were sufficient evidence of dominance, the Court also relied on some of the additional factors identified by the Commission as confirming the finding of dominance.146 4.158  Ever since AKZO, it is believed that EU case law adopts a rebuttable presumption of dominance at a 50 per cent market share.147 (p. 364) 4.159  Until AKZO, however, the Court of Justice had never pointed to a particular level of market share that could in itself be relied on as sufficient evidence of dominance. In AKZO, the Court of Justice held that a market share of 50 per cent ‘such as that found to exist in this case’ was in itself evidence of dominance, thus presuming dominance to exist at that level.148 It is questionable, however, whether this presumption is a generally applicable legal presumption or, rather, an inference that the Court drew on the facts on that case. The language in subsequent cases suggests that the so-called ‘presumption’ of dominance is, at most, a permissible inference on the facts of each individual case. 4.160  The subsequent case law has implicitly doubted the persuasiveness of the ‘presumption’ of dominance. Many of the leading cases do not use the term ‘presumption’, preferring the more nuanced approach in Hoffmann-La Roche. The General Court in Hilti, for example, while citing AKZO as a precedent, held that a market share between 70 and 80 per cent was ‘a clear indication of the existence of a dominant position in the relevant market’.149 The term ‘indication’ is, in law, very different from the term ‘presumption’. Indication is not a term of art but denotes, as a matter of ordinary language, an element of the overall evidential picture. Presumption has a precise legal meaning. It is an inference as to a material fact that the decision-maker is allowed to draw from a different fact. And yet the Court did not refer to a presumption of dominance even if the market shares in Hilti

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were well above 50 per cent. On the contrary, the Court examined a number of other factors that contributed to establishing Hilti’s dominant position.150 4.161  The General Court confirmed this approach in AstraZeneca.151 In that case, the dominant undertaking had market shares almost invariably above 50 per cent and often in the region of 60 to 80 per cent.152 The Court cited AKZO for the proposition that market shares of more than 50 per cent are ‘very large’ market shares within the meaning of Hoffmann-La Roche, but did not use the term ‘presumption’.153 A presumption of dominance based on market shares only would mean that a given market share can be sufficient evidence of dominance. On the contrary, the Court emphasized that the Commission had carried out an in-depth analysis of the competitive conditions beyond market shares.154 As regards the role of market shares, the Court simply said that ‘the Commission could not disregard the importance that had to be attached to AstraZeneca’s generally very large market share throughout the entire relevant period’.155 Having reviewed the market share data country by country, the Court concluded that the Commission ‘was entitled to take the view that AstraZeneca’s possession of a particularly high market share and, in any event, a share which was much higher than those of its competitors, was an entirely relevant indicator of its market power’.156 An ‘entirely relevant indicator’ is not a presumption. It is simply relevant evidence to be assessed together with the other evidence in the case. (p. 365) 4.162  Even if certain cases have more robustly referred to AKZO as establishing a presumption, they still fall short of endorsing it. In Irish Sugar, for example, the General Court held that, in light of AKZO, Irish Sugar’s dominant position ‘could be deduced simply from the finding that, during that period, it made more than 90% of the sales recorded on that market’.157 However, not only did the Court apply the presumption to a much higher market share, but it went on to examine in detail the evidence in rebuttal adduced by Irish Sugar. This evidence included the alleged absence of barriers to entry and expansion158 and the presence of buyer power.159 These circumstances are far from exceptional. On each and every market, it is relevant to examine potential competition from actual and new rivals and whether customers are able to prevent the allegedly dominant undertaking from harming competition. The thorough examination of these circumstances in Irish Sugar confirms that the Court was prepared to see the presumption of dominance, even at a 90 per cent market share, as a weak presumption, which could be rebutted by evidence of the presence of effective competitive constraints. 4.163  In conclusion, the case law supports the proposition that very large market shares, possibly starting with at a lower threshold of 50 per cent, are at most a first indication of dominance. Contrary to what is generally believed, it may be doubted whether the case law establishes a legal presumption of dominance, that is, a presumption that, as a matter of law, compels the decision-maker to find dominance if the undertaking in question has a market share of 50 per cent or above. The AKZO presumption of dominance is probably a permissible inference on the facts of individual cases. But even if the view is taken that it is indeed a legal presumption, it is certainly a weak one. Therefore, because, if a dominant undertaking contests that it is dominant, it will without any doubt adduce evidence of factors other than market shares, in practice a finding of dominance will rarely, if ever, be based on market shares alone. Inferences from market share levels under the Guidance

4.164  As regards market shares, the Guidance does not refer to the AKZO case law that market shares in excess of 50 per cent can be considered a strong indication of dominance.

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4.165  Instead, at paragraph 14, the Guidance establishes a new ‘soft safe harbour’ for companies with a market share below 40 per cent: ‘The Commission considers that low market shares are generally a good proxy for the absence of substantial market power. The Commission’s experience suggests that dominance is not likely if the undertaking’s market share is below 40% in the relevant market.’ 4.166  Above 40 per cent, the Commission Guidance expresses an increased openness to accept that high market shares do not necessarily indicate dominance. Instead, market shares provide a useful first indication of the overall market structure. But more important for the assessment of dominance are: (a) constraints imposed by a credible threat of future expansion by actual competitors; or (b) entry by potential competitors; as well as (c) the bargaining strength of the firm’s customers.160 4.167  The Commission makes it clear that it will not come ‘to a final conclusion as to whether or not a case should be pursued without examining all the factors which may be sufficient (p. 366) to constrain the behaviour of the undertaking’.161 That said, market shares remain important: ‘the higher the market share and the longer the period of time over which it is held, the more likely it is that it constitutes an important preliminary indication of the existence of a dominant position’.162 Recent Commission investigations have focused on undertakings with very large market shares, certainly well in excess of 50 per cent.163 4.168  Normally, the Commission uses current market shares in its competitive analysis. However, historic market shares may be used if market shares have been volatile, for instance when the market is characterized by large, lumpy orders. Changes in historic market shares may also provide useful information about the competitive process and the likely future importance of the various competitors, for instance by indicating whether firms have been gaining or losing market shares. In any event, the Commission generally interprets market shares in light of likely market conditions, for instance whether the market is highly dynamic in character and whether the market structure is unstable due to innovation or growth. (iii)  Profitability of the Undertaking

4.169  Under the case law of the EU Courts, it is well established that a temporary lack of profitability is not incompatible with a dominant position.164 This stands to reason; a dominant undertaking may well be inefficient, or invest in rent seeking or exclusionary behaviour such as predation. 4.170  The question arises whether the opposite holds true, in other words, whether high profitability can be evidence of dominance. The answer, in theory, is yes provided that (a) the measure of profitability used is a reliable indicator of economic profitability, not accounting profits,165 and (b) high economic profit persists over the long term (short-term economic profits may be consistent with effective competition). 4.171  In practice, however, the complexity of profitability analysis means that accounting measures tend to be used and, as a result, the analysis can, at most, be relied on as corroboration for a finding of dominance based on other factors. In Intel, for example, the Commission compared Intel’s gross and operating margins with those of AMD, its only significant competitor. Gross margins, reflecting the ratio of revenues over variable costs, were higher for Intel but were very high for both undertakings. However, in an industry with substantial sunk costs, high gross margins are necessary just for firms to stay in the market. The Commission, therefore, also compared operating margins, that is, the ratio of revenues over a measure of total costs. AMD’s operating margins were 4 per cent while Intel’s were 31 per cent. This, however, was only one of the factors on which the Commission relied to find that Intel had substantial market power.166 In Microsoft I, the Commission held that a profit margin of 81 (p. 367) per cent was ‘high by any measure’ and ‘consistent’ with Microsoft’s dominance in the client PC operating system market.167 This From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

language points in the right direction. Very high accounting profits that are out of the ordinary in the industry under review or in comparable industries can, at most, corroborate a prima facie finding of dominance. They do not, in themselves, permit an inference of dominance. (iv)  Conduct of the Undertaking

4.172  It can be argued that, since dominance is the ability to behave independently of competitors and customers, evidence of such independent behaviour may allow an inference of dominance. However, there is clearly a danger of circular reasoning if strategic behaviour (which is often found in competitive markets), without reference to other factors, is taken as sufficient and conclusive evidence of dominance. This is the reason why in none of the cases involving the application of Article 102 to date, has the assessment of behavioural factors alone sufficed or provided a substitute for an analysis of the structure of the market and of the position of the putative dominant firm in that market. To the extent that behavioural factors are considered, they are therefore complementary to such a structural analysis. 4.173  However, the conduct of an undertaking can contribute to the maintenance of its market power and, thereby, constitute a barrier to entry to the market. For example, the threat of engaging in a price war or expanding output in response to entry can amount to a barrier sufficient to deter new entrants. Major investments in publicity or product range, for instance, may also raise the cost of entry of the rivals and deter or exclude entry. In its 2004 Horizontal Merger Guidelines, the Commission notes that ‘entry is likely to be more difficult if the incumbents are able to protect their market shares by offering long-term contracts or giving targeted pre-emptive price reductions to those customers that the entrant is trying to acquire’.168 4.174  If behavioural evidence can be a factor in evidencing the existence of a dominant position, the question arises whether it could equally be evidence of the absence of a dominant position. The answer to this is affirmative. In particular, the Court of Justice has recognized that the fact that an undertaking has been forced to lower its prices in reaction to competitors’ discounts ‘is in general incompatible with that independent conduct which is the hallmark of a dominant position’.169 However, care should be exercised in interpreting behavioural evidence of this kind to ascertain that the price reduction is not simply a temporary measure or strategic behaviour aimed at excluding a competitor.170 (v)  The Position of Competitors

4.175  The market shares of the competitive fringe are an indicator of the competitive pressure that rivals are able to exert on the dominant undertaking. There is no legal rule or presumption as to the market shares of competitors. The test is whether competitors are able to exercise effective competitive pressure on the putative dominant undertaking. The significance of the rivals’ market shares depends on the dynamics of competition and the features of the market. (p. 368) 4.176  Generally, three types of comparison can be made. First, it is relevant to compare the market share of the undertaking concerned with the market shares of its rivals individually.171 Secondly, it is relevant to compare the market share of the undertaking concerned with the cumulative total of the market shares of the most significant (not necessarily all) rivals.172 Thirdly, it is relevant to examine the evolution of the market shares of rivals over time. 4.177  However, while these comparisons can be indicative as to the competitive constraint faced by the putative dominant undertaking, the fact that its market share has declined and the market shares of its rivals have increased is not necessarily sufficient to rebut a prima facie finding of dominance.173 The reason for this is that a dominant undertaking may engage in abusive behaviour in order to slow down the process of the erosion of its market power so as to delay the benefits of the market becoming more competitive. A dominant From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

undertaking which is losing market share to more efficient rivals can, for example, engage in predation so as to delay the progress of the market towards a more competitive outcome. This form of competitive harm is also relevant under Article 102 and intervention is warranted in such circumstances. 4.178  Market shares are not always a good indicator of the competitive pressure that a rival exerts on the allegedly dominant undertaking. A competitor with a low market share but significant excess capacity may be an effective competitive constraint.174 4.179  Aggressive competition from the competitive fringe is not inconsistent with a dominant position.175 Therefore, it is not sufficient to show that there are competitors on the market and that they attempted to challenge the market position of the dominant undertaking, for example by aggressive promotional campaigns. What counts is whether this resulted in effective competitive pressure on the dominant undertaking, so that it lost market share or lowered its price. Thus, in Hoffmann-La Roche, the Court of Justice said that if an undertaking is compelled to lower its prices as a result of competitive pressure, the undertaking in question may not be dominant.176

(ii)  Barriers to Entry and Expansion 4.180  Having assessed the position of the undertaking and its competitors (and thus shortterm competitive constraints on the undertaking), the next step under the Guidance is to assess whether the undertaking faces longer term competitive constraints. The Commission does so by analysing whether there are constraints imposed by the credible threat of future expansion by actual competitors or entry by potential competitors.177 4.181  Entry can take several forms. New firms may build new capacity or take over existing capacity to use it in new and more productive ways. Incumbent firms within the market may build new plants or capacity, make product improvements, or expand into neighbouring markets. Incumbent firms may invest in upstream or downstream companies to supply materials and process their output, respectively. New technology and production methods may be developed by incumbents, which may also attract new entrants. (p. 369) 4.182  Under both the Commission’s practice and the case law of the EU Courts, dominance is incompatible with the absence of significant barriers to entry or expansion178 to the market because, if entry and/or expansion is easy, an undertaking would not be able to sustain prices significantly and persistently above the competitive level. The Commission considers that for entry to be a relevant competitive constraint on the putative dominant undertaking it must be ‘likely, timely and sufficient’.179 •  Entry is likely if it is ‘sufficiently profitable for the competitor or entrant, taking into account factors such as the barriers to expansion or entry, the likely reactions of the allegedly dominant undertaking and other competitors, and the risks and costs of failure’. Entry may be particularly likely if suppliers in other markets already possess production facilities that could be used to enter the market in question, thus reducing the sunk costs of entry. 180 •  Entry is timely if it is ‘sufficiently swift to deter or defeat the exercise of substantial market power’. The Commission generally looks at whether any entry has been or would have been sufficiently immediate and persistent to prevent the exercise of substantial market power. The appropriate time period depends on the characteristics and dynamics of the market. The period of time needed for undertakings already on the market to adjust their capacity can be used as a yardstick to determine this period.

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•  Entry is sufficient if it is ‘of such a magnitude as to be able to deter any attempt to increase prices by the putatively dominant undertaking in the relevant market’. Therefore, for instance, entry on a small scale or in a niche market would generally not be sufficient. 4.183  In virtually all cases, the Commission looks carefully at the history of the industry when assessing barriers to expansion or entry. It is unlikely that the Commission will find barriers to expansion and entry in an industry that has experienced frequent and successful examples of entry. On the other hand, if previous attempts to expand in or enter into the market have been unsuccessful, perhaps due to deterring behaviour by incumbents, then expansion and entry would seem less likely to have constituted an effective constraint. 4.184  The prices post-expansion or entry depend first on the impact on prices of the additional output put on the market by the expansion or by the new entrant, but also on the reaction of incumbents, in particular the allegedly dominant undertaking. Likely strategic responses (p. 370) from the incumbents are therefore taken into account. An aggressive competitive response from incumbents would be particularly likely if they have committed to large excess capacity. The allegedly dominant undertakings may also have built a reputation of responding aggressively to expansion or entry. When assessing whether expansion or entry would be profitable, the likely evolution of the market should also be taken into account. Expansion or entry is more likely to be profitable in a market that is expected to experience high growth in the future relative to a market that is expected to decline or stagnate. 4.185  Notwithstanding the helpful general framework set out in the Article 102 Enforcement Priorities Guidance, there is no legal definition of what a relevant ‘barrier to entry’ is under EU law, nor is there an exhaustive list of relevant barriers to entry.181 When identifying possible barriers to expansion and entry, it is important to focus on whether rivals can reasonably replicate circumstances that give advantages to the allegedly dominant undertaking. Barriers to expansion and entry can have a number of origins relating to the legal or economic environment that pertains on the relevant market. (i)  Regulatory Barriers to Entry

4.186  Regulations, though beneficial for a variety of reasons ranging from ensuring the stability of the financial system to protecting the environment, may inhibit the extent to which competition can flourish in certain circumstances. 4.187  If the law makes entry impossible or subject to special conditions or authorizations, this may contribute to an incumbent firm’s substantial and durable market power and its ability to harm competition. This is clearly the case of State monopolies,182 but also applies to markets where entry is subject to authorization and the granting of the authorization is either costly and difficult or unlikely in practice.183 4.188  Some types of regulations may impose limits on the production process and the characteristics of the finished product, for instance health and safety standards. Others may limit the number of competitors in the market, for example by requiring that only firms with a licence or permit may operate within it. A limitation on the number of licences and permits may act as an absolute barrier to entry. 4.189  From the perspective of competitive markets, there is a distinction between regulations that impose some barriers evenly on all firms and those that hit new entrants harder than incumbent firms. Thus, for example, subsidies, tax reliefs, and preferential purchasing may raise barriers to entry in a market if potential entrants are not equally eligible for them. Tariff and non-tariff barriers can similarly give advantages to incumbent firms. Planning laws and licensing laws that impose limits on the number of retail outlets limit expansion possibilities of existing and entry possibilities for new retailers, which in turn may make it more difficult (p. 371) for suppliers to gain access to efficient distribution. From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Finally, quality, environmental, and health and safety standards that apply to all the firms in a market may on occasions adversely affect entry although making no distinction between incumbents and new entrants (eg they might favour the technology the incumbent owns and therefore raise the costs of a new entrant). Some regulations may give advantage to incumbents by not requiring them to comply with the same standards as new entrants. 4.190  Intellectual property (IP) rights may constitute a barrier to entry only if, and to the extent that, they either make it impossible for competitors to enter the market, or they only allow competition from inferior substitutes.184 This means that a case-by-case analysis is necessary because IP rights in themselves do not constitute a barrier to entry. Nor do they confer a dominant position on the holder.185 However, successful enforcement of IP rights against competitors, even when entirely lawful, may be evidence that there are no effective substitutes for the product supplied by the dominant undertaking.186 (ii)  Capacity Constraints

4.191  Competitors may have to commit large sunk investments in order to expand capacity. An investment or cost is sunk when it cannot be recovered if the undertaking exits the market. Moreover, even existing excess capacity may be so expensive to employ that these costs constitute a barrier to expansion; for instance, the costs of introducing another shift in a factory may constitute a barrier to expansion. (iii)  Economies of Scale and Scope

4.192  Economies of scale arise when average costs fall as output increases. Economies of scope arise when the average costs of producing or distributing two or more products are lower than the average costs associated with only one product. Economies of scale or scope in themselves are not a barrier to entry.187 They are a feature of the market in respect of which firms must compete. In order to succeed, firms must be able to capture a share of the market which is at least equal to the minimum efficient scale of production and have the lowest cost curve. Even if a large undertaking engaged in below-cost pricing or entered into widespread exclusivity agreements, an entrant would be able to compete by incurring the same losses or offering the same prices. 4.193  Nonetheless, large-scale production or distribution may give the allegedly dominant undertaking an advantage over smaller competitors. Scale and scope economies result from the spreading of fixed costs over larger output or a broader set of products, leading to a reduction of average costs. When economies of scale or scope are large compared to the size of the market, efficient expansion or entry is more costly and risky. Large fixed costs have to be committed and the output produced will constitute a significant increase in output, which is likely (p. 372) in itself to have a significant impact on price post-expansion or entry. If expansion or entry occurs at an inefficient scale, the competitive constraint imposed on the incumbents will be less effective. In assessing barriers to expansion and entry, it is therefore useful to consider the minimum efficient scale in the market concerned. The minimum efficient scale is the level of output required to minimize average cost, exhausting economies of scale.188 4.194  In particular, economies of scale combined with additional factors may give rise to a barrier to entry. In Intel, such additional factors were the sunk costs of entry.189 A dominant undertaking could discourage entry by committing to, or establishing a reputation for, a practice that denies an entrant a minimum efficient scale. Ex ante, entry becomes too risky. Ex post, economies of scale may contribute to a dominant undertaking’s ability to exclude competitors who face much higher costs through above-cost price cuts. The case law and the Commission practice, however, have sometimes considered economies of scale as contributing to a dominant position without any further analysis.190

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4.195  As regards economies of scope, the mere fact that an undertaking has lower costs because it is a multi-product firm is not a barrier to entry. However, a wide product range, in combination with other factors such as the ‘must stock’ quality of one of the products in the range and sunk costs of entry to the ‘must-stock’ product market, may give the dominant undertaking the ability to exclude competitors.191 4.196  A wide product range is, however, unlikely to be a sufficient condition, even combined with a large market share in one product market, for an undertaking to be dominant. Its relevance and significance must be established on the facts of each individual case. In Hoffmann-La Roche, the Court of Justice held that a wider vitamin range was not a relevant factor in establishing dominance. Competitors could also offer a wide range of products purchased by the same customers, albeit not vitamins, and could therefore counteract any anti-competitive strategy employed by the dominant undertaking.192 (iv)  Network Effects

4.197  Direct network effects arise when a consumer’s valuation of a product increases as the number of users of the product rises. For instance, the valuation of Internet access increases as the number of users of the Internet rises as users can communicate by email, use social network platforms, or share files. Indirect network effects arise when a consumer’s valuation for a product increases as the function of the number or quality of complementary products. The valuation of a credit card increases as the number of merchants accepting the card rises. 4.198  Network effects may give an undertaking the ability to harm competition in certain circumstances. Generally, if all the products on the market are compatible, network effects cannot give rise to a barrier to entry. All firms benefit from market expansion and each firm has the incentive to sell products that consumers value the most at the lowest price in order to gain as large a share of the market as possible. (p. 373) 4.199  If products are incompatible and no firm has an advantage other than superior efficiency or commercial strategy, again, firms will compete to gain as large a share of the market as possible. The difference is that, once a firm has won the competitive race, it will be more difficult for an existing competitor or a new entrant to gain market share from the leading firm because consumers value the new product less. At that point, network effects may give the leading firm the ability and incentive to harm competition in order to protect its market power. 4.200  In Microsoft I, indirect network effects characterized the market. Media players are platform software. Content providers and software developers develop content and applications for a given technology and face increased costs in making their products compatible with more than one technology. There are then strong incentives to develop content and applications for the technology that has the widest presence on the market. This in turn raises a barrier to entry for non-compatible technologies. Even if a noncompatible media player were significantly better than Windows Media Player, as long as not enough content and applications were written for it, the new media player would not be able to compete effectively on the market.193 By tying Windows Media Player with its dominant Windows operating system, Microsoft was found to foreclose other media players. The strong network effects on the market contributed to its ability to do so. (v)  Switching Costs

4.201  A switching cost may be defined as the one-off cost that consumers associate with switching from one supplier to another, other than the costs of purchasing the product itself. Switching costs may be of different types. In AstraZeneca, the inertia of doctors in prescribing new drugs was a factor which contributed to reinforce the dominant undertaking’s first-mover advantage.194 In Oracle/Sun Microsystems, the costs of retraining staff to support a different database had a negative impact on customers’ incentives to switch supplier.195 The same could be said of the costs of moving the data to a new From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

database, recreating the schema describing the data’s content and relationships to the database manager, and recreating the software managing the database infrastructure.196 Brand loyalty may give rise to a switching cost. To overcome customers’ loyalty to the incumbent’s brand, new firms may have to invest heavily in advertising. This investment is sunk.197 (vi)  Vertical Integration and Exclusive or Preferential Access to Inputs or Customers

4.202  Firms compete not only by improving the quality of their products or developing new ones, lowering their costs, and reaching out to customers. They also compete in the way they structure their value chain. Vertical integration is a strategic decision by firms, adopted when it is more efficient (and thus advantageous) than outsourcing. (p. 374) 4.203  Vertical integration is not in itself a barrier to entry but may become one in a number of circumstances that vary from case to case. •  First, vertical integration may give a firm better access to key inputs or downstream markets. If, as a consequence, a rival can only access inferior inputs or is foreclosed from significant portions of the downstream market, vertical integration contributes to a firm’s substantial and durable market power. The same effect, however, may occur if an undertaking has exclusive or preferential access to key inputs or customers through contractual arrangements. 198 •  Secondly, as in United Brands, 199 vertical integration may reduce or eliminate capacity constraints or supply chain risks. This means that while competitors may be subject to capacity constraints or supply shortages, the vertically integrated firm is not. As a consequence, customers are unable to shift all their requirements to competitors because, if they did, they would be exposed to a risk of shortages and under-supply. Therefore, the demand for the relevant product may be described as being divided into a non-contestable share, for which there is no competition, and a contestable share, for which the dominant undertaking and its competitors may compete on an equal footing. Vertical integration may contribute to the durability of market power by giving the dominant undertaking the ability to exclude rivals by leveraging the market power over the non-contestable share of demand to the contestable share of demand. •  Thirdly, vertical integration may give an undertaking the ability to exclude rivals through practices such as refusal to supply or margin squeeze. Vertical integration may make it profitable for an undertaking not to supply an upstream customer who is also a downstream competitor with an indispensable input, as the loss of profits resulting from the foregone sales may be compensated by the increased downstream profits (thanks to the reduction of the competitive pressure from the foreclosed competitor). 4.204  In all the scenarios described in para 4.203, vertical integration in itself is clearly not a barrier to entry. Vertical integration can amount to a barrier to entry if, and only if, in combination with other factors, it contributes to the undertaking’s substantial and durable market power.200 (vii)  Financial Strength

4.205  The financial strength of an incumbent firm is not in itself a barrier to entry. Nor is it sufficient by itself, or even in combination with a very high market share, to establish dominance conclusively. In Hoffmann-La-Roche, the Court of Justice held that the fact that the turnover of Hoffmann-La-Roche exceeded those of its competitors and the strength of the Roche group were irrelevant to the assessment of dominance.201 In AstraZeneca, the General Court accepted that the superior financial resources of the dominant undertaking were ‘not sufficient in themselves’ to establish dominance. However, the Court added that, together with other elements, they allowed the inference that AstraZeneca had ‘superior From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

resources to those of its competitors such as to reinforce its market position in relation to them’.202 4.206  Notwithstanding judicial statements such as those in AstraZeneca, financial strength should only be considered a barrier to entry if asymmetric access to finance gives the incumbent (p. 375) firm the ability to exclude rivals.203 Conversely, the financial strength of rivals may displace an inference of dominance if it gives rivals the ability to counterbalance potential anti-competitive strategies of the allegedly dominant undertaking.204 (viii)  Spare or Excess Capacity

4.207  Spare or excess capacity205 may be a barrier to entry because it may give the dominant undertaking the ability to exclude competitors. Entry depends on expected postentry profitability and, therefore, expected post-entry output. If the incumbent committed to maintaining excess capacity and, therefore, is able to increase output significantly, entry could become unprofitable. The same principle applies to the expansion of existing rivals. If expansion is costly, because for instance an additional plant must be built, the fact that the market leader has significant excess capacity may discourage expansion.206 4.208  Conversely, the existence of competitors with substantial excess capacity may lead to the conclusion that a company with large market shares is not dominant, because any attempt to exploit its position would be met by an increase in production by its competitors.207 4.209  If the putative dominant undertaking has excess capacity and is therefore able to increase output to respond to entry or expansion by rivals, it is not necessary to determine whether such a strategic behaviour in itself constitutes an abuse in order to consider it as a barrier to entry. It is clear that an exclusionary abuse may in turn create a barrier to entering the market in question. That is not to say, however, that any strategic behaviour intended to raise the cost of entry for rivals is automatically an abuse in the sense of Article 102 or that such behaviour can only be considered a barrier to entry if it is an abuse. 4.210  A special case is when all market participants have excess capacity. In Hoffmann-La Roche, undertakings planned capacity over a long period of time. As a consequence, all competitors had unused capacity. Nevertheless, the Court of Justice still held that the dominant undertaking was in a ‘privileged position’ because it was by itself capable of meeting the entire worldwide demand for the relevant products and the holding of excess capacity did not place it ‘in a difficult economic or financial situation’.208 However, if the allegedly dominant undertaking is capacity constrained, while its competitors have spare capacity, this is generally evidence of lack of ability to exclude.209 The same principle applies when the allegedly dominant undertaking has spare capacity but its competitors’ excess capacity is superior.210 (ix)  Other Factors

4.211  Absolute cost advantages: these include preferential access to essential facilities, natural resources, innovation and R&D, IP rights and capital conferring a competitive advantage on the allegedly dominant undertaking, which makes it difficult for other (p. 376) undertakings to compete effectively. In the large majority of cases, financial strength is unlikely to be an issue. However, in some cases it may be one of the factors that contribute to a finding of a dominant position, in particular in those cases where: (a) finance is relevant to the competitive process in the industry under review; (b) there are significant asymmetries between competitors in terms of their internal financing capabilities; and (c) particular features of the industry make it difficult for firms to attract external funds.

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4.212  Privileged access to supply: the allegedly dominant undertaking may be vertically integrated or may have established sufficient control or influence over the supply of inputs that expansion or entry by smaller rival firms may be difficult or costly. 4.213  A highly developed distribution and sales network: the allegedly dominant undertaking may have its own dense outlet network, established distribution logistics or wide geographical coverage that would be difficult for rivals to replicate. 4.214  The established position of the incumbent firms on the market: it may be difficult to enter an industry where experience or reputation is necessary to compete effectively, both of which may be difficult to obtain as an entrant. Factors such as consumer loyalty to a particular brand, the closeness of relationships between suppliers and customers, the importance of promotion or advertising, or other reputational advantages will be taken into account. Advertising and other investments in reputation are often sunk costs which cannot be recovered in the case of exit and which therefore make entry more risky. 4.215  Other strategic barriers to expansion or entry: these encompass situations where it is costly for customers to switch to a new supplier. This may, for example, be the case where personnel have been trained to use the product of the allegedly dominant undertaking or where due to network effects the value of rivals’ products are lower because they do not have a large installed base of customers. For instance, the value of a piece of software may not only depend on the intrinsic qualities of the product but also on how many people use it and thus with whom the new buyers can exchange files. Finally, the incumbent firms may through the use of long-term contracts with customers have made it difficult for rivals at a particular point in time to find a sufficient number of customers able to switch supplier that expansion or entry would be profitable.

(iii)  Countervailing Buyer Power 4.216  Competitive constraints can be exercised not only by actual or potential competitors but also by buyers.211 However, for countervailing buyer power to negate a prima facie inference of dominance it is generally necessary that the buyer has sufficiently credible alternatives (including switching to existing suppliers, sponsoring new entry, or integrating vertically), to neutralize the undertaking’s ability and incentive to harm competition. It is not sufficient that a putative dominant undertaking has one or few large customers who may be able to negotiate lower prices than smaller buyers on the market.212 4.217  The case law and decisional practice recognize the relevance of countervailing buyer power. In Italian Flat Glass, the General Court set aside a finding of collective dominance on the grounds that, inter alia, the Commission had failed to examine whether the presence of a powerful buyer could neutralize the economic power of the three allegedly collectively (p. 377) dominant oligopolists.213 In Irish Sugar, the General Court rejected, on the facts, the argument that the presence of two powerful buyers was sufficient to rebut a prima facie case of dominance of a seller with a market share of 90 per cent.214 The Court held that the market shares of the customers in question were not such that they could counterbalance the dominant position of Irish Sugar.215 There were a number of customers on the market who were not in a position to constrain the market power of the dominant seller.216 The commercial strength of the two largest customers was not capable of influencing the prices charged to the other buyers.217

(3)  Concept of Collective Dominance (a)  Definition of Collective Dominance 4.218  Article 102 prohibits any abuse of a dominant position ‘by one or more undertakings’. The General Court recognized the concept of ‘collective dominance’ under Article 102 for the first time in Italian Flat Glass.218 Ever since, the case law on collective dominance developed in parallel under the merger control regime and under Article 102. It is established, however, that the definition of collective dominance under Article 102 is the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

same as in merger control.219 As a consequence, precedents under the EU Merger Regulations220 are also relevant to the application of Article 102. 4.219  The law on collective dominance has been characterized by much confusion and lack of precision. Over the years, the cases and the vast literature that ensued dwelled at length on the type of ‘links’ between undertakings that could give rise to a collective dominant position. Part of the problem was certainly that collective dominance was being used to deal with different issues. •  On the one hand, the Commission seized on this concept of collective dominance to deal with coordinated effects in mergers under the 1989 Merger Regulation, under which a merger could be prohibited only if it led to the creation or strengthening of a dominant position. 221 (p. 378) •  On the other hand, collective dominance was used to address collusive behaviour that could not be addressed, or it was thought it was more difficult to address, under Article 101. 222 4.220  As a result, collective dominance is a label that covers two quite different legal and economic concepts: explicit collusion through commercial or structural links between undertakings, which may be described as ‘non-oligopolistic collective dominance’,223 and tacit oligopolistic collusion, which may be described as ‘oligopolistic collective dominance’.224

(b)  Non-Oligopolistic Collective Dominance 4.221  Non-oligopolistic collective dominance arises when two or more undertakings act as a single entity on the market because of structural or commercial links or direct or indirect contacts between them and, as a collective entity, have substantial and durable market power and the ability to harm competition. 4.222  In Italian Flat Glass, the Commission had found that three undertakings had engaged in agreements and concerted practices prohibited under Article 101 and had abused their collective dominant position under Article 102.225 The undertakings concerned controlled more than 80 per cent of the relevant market.226 They systematically sold products to each other so as to allow each undertaking to offer a full range of products. There was evidence that the market was transparent227 and that the product was homogenous.228 The General Court set aside the decision adopted by the Commission under Article 102 but accepted that two or more undertakings may be united by such economic links that confer on them, jointly, a dominant position vis-à-vis the other operators on the relevant market.229 The test, however, was vague and underdeveloped. 4.223  The Court of Justice confirmed the possibility of a collective dominant position in Almelo, a case concerning regional energy distributors in the Netherlands, which operated under exclusive licences and all adopted the same terms and conditions drawn up by their trade association. The general conditions for the supply of electric power by a regional distributor to local distributors contained an exclusive purchasing obligation.230 The general conditions applied by the regional distributor in question followed the model terms and conditions for the supply of electricity drawn up by the Association of Operators of Electricity (p. 379) Undertakings in the Netherlands.231 The Court of Justice held that the clause in question was an agreement between undertakings having a restrictive effect on competition232 and that the same clause could be an abuse of a collective dominant position by the regional electricity distributors in the Netherlands.233 The Court stated that for such a collective dominant position to exist, the undertakings in the group must be linked in such a way that they adopt the same conduct on the market.234 It was, however, for the national court to consider whether there existed between the regional electricity distributors in the

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Netherlands links which were sufficiently strong for there to be a collective dominant position in a substantial part of the internal market.235 4.224  In Compagnie Maritime Belge, the Court of Justice upheld a finding of abuse of collective dominance in a case where the members of a liner conference were explicitly coordinating their competitive behaviour, targeting a new entrant to the market. The application of Article 102 allowed the Commission to prohibit this arrangement even though liner conferences were block-exempted from the application of Article 101(1).236 The facts of the case were as follows. Associated Central West Africa Lines (Cewal) was a liner conference operating between Zaire and Angola and the ports in the North Sea. It targeted its main competitor by insisting that an agreement concluded with the Zairean authorities and granting Cewal exclusive rights on the shipping routes between Zaire and Northern Europe be strictly complied with, by implementing a system of selective price cuts, and by loyalty contracts and anti-competitive rebates.237 4.225  Before the General Court, the members of the conference disputed that they held a collective dominant position. Before the assessment of dominance, the Court asked whether the conference was a collective entity. Liner conferences were, at that time, exempted (p. 380) from the application of Article 101. Regulation 4056/86 defined liner conferences as follows:238 a group of two or more vessel-operating carriers which provides international liner services for the carriage of cargo on a particular route or routes within specified geographical limits and which has an agreement or arrangement, whatever its nature, within the framework of which they operate under uniform or common freight rates and any other agreed conditions with respect to the provision of liner services. 4.226  In light of the definition of liner conferences in EU law, three factors were considered relevant to the finding that Cewal was a collective entity. The first was structural: the members of the conference participated in a number of committees in which they discussed their commercial policy. The second related to the absence of effective competition between the members of the conference: the purpose of the liner conference was ‘to define and apply uniform freight rates and other common conditions of carriage’. The third was behavioural: the allegedly abusive conduct of the conference members demonstrated ‘the intention to adopt together the same conduct on the market in order to react unilaterally to a change, deemed to be a threat, in the competitive situation on the market on which they operate’.239 This, together with a market share of 90 per cent held by the conference, was sufficient to establish that the collective entity was dominant.240 4.227  A similar approach to Compagnie Maritime Belge was adopted by the General Court in Atlantic Container Line. The collective entity was again a liner conference and the Court held that the Commission ‘was entitled to conclude’ that a collective entity with a market share of 60 per cent was dominant.241 The Court also pointed out that the Commission had relied on evidence other than market shares242 and had carried out a thorough examination of all the factors adduced by applicants to rebut the presumption that an undertaking or collective entity with a market share above 50 per cent is dominant.243 4.228  Compagnie Maritime Belge and Atlantic Container Line were cases that could not have been brought under Article 101 because of the liner conference block exemption. They lay down general legal principles, however, that apply regardless of whether the abusive behaviour by a collectively dominant undertaking could be prohibited under Article 101 or not. The question arises, though, as a matter of enforcement policy, as to whether nonoligopolistic collective dominance should be dealt with under Article 101 rather than under Article 102 when it is possible to do so. Generally, the links that give rise to a nonoligopolistic collective dominant position are also likely to be an infringement of Article 101.

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This in no way precludes the application of Article 102 or dictates, as a matter of law, that Article 101 must apply exclusively or a matter of priority.244 However, as a matter of policy and in practice, whenever possible, it (p. 381) may be advisable to apply Article 101 to nonoligopolistic collective dominance. Article 101 prohibits the very links that make nonoligopolistic collective dominance possible. When the commercial arrangements or the direct or indirect contacts that make non-oligopolistic collective dominance possible are prohibited and declared void, the market forces can start operating normally again. Applying Article 102 in these circumstances requires not only proof of the links in question but also additional proof of dominance and abuse.

(c)  Vertical Non-Oligopolistic Collective Dominance 4.229  In Irish Sugar, the Commission found that Irish Sugar and its distributor Sugar Distributors Ltd (SDL) had a collective dominant position on the market for retail white granulated sugar in Ireland.245 The abuse consisted in Irish Sugar and SDL taking action to restrict imports of sugar from France and from Northern Ireland.246 SDL on its own had agreed with certain customers to swap Irish Sugar’s products for a competitor’s products247 and had granted a fidelity rebate to customers.248 Irish Sugar funded the rebate.249 The General Court upheld the Commission’s finding of vertical collective dominance. The test for non-oligopolistic vertical collective dominance was the same as for non-oligopolistic collective dominance in general: whether structural or commercial links or direct or indirect contacts between two or more undertakings give them the ability and the incentive to act on the market as a collective entity.250 On the facts, it was undisputed that Irish Sugar did not have management control of SDL and that, as a consequence, Irish Sugar and SDL were not a single undertaking even if Irish Sugar held 51 per cent of the shares in SDL’s holding company.251 The Court nevertheless ruled that the two undertakings were collectively dominant because of sufficient structural and commercial links and contacts between them. These links included promotional payments by the supplier to the distributor, the supplier’s shareholding and board representation in the distributor, and regular meetings and sharing of information.252 4.230  Commentators have puzzled at this concept of vertical collective dominance, stressing that the very premise of collective dominance is that undertakings are active on the same market.253 Indeed, Irish Sugar appears to have been the only Commission case of vertical collective dominance so far. As a result, the inference is warranted that these cases are likely to be extremely rare and probably best addressed, as a matter of policy and whenever possible, under Article 101.

(d)  Oligopolistic Collective Dominance 4.231  Since Kali and Saltz in 1998, the case law has consistently accepted that the economic links giving rise to collective dominance include the relationship of interdependence between the members of a tight oligopoly which, in a market with the appropriate characteristics in particular in terms of market concentration, transparency, and product homogeneity, are able to anticipate one another’s behaviour and therefore have a strong incentive to align their (p. 382) conduct on the market, in particular in such a way as to maximize joint profits by reducing output with a view to increasing prices.254 Thus, oligopolistic collective dominance is the equivalent of oligopolistic coordination resulting from market interaction and not, or at least not to a decisive extent, from structural or commercial links or direct or indirect communications between the oligopolists. 4.232  If the concept of oligopolistic collective dominance has been established since the late 1990s, the development of a coherent test has taken considerably longer. The first meaningful attempt to set out a test for oligopolistic collective dominance is Airtours. In that case, the Commission had prohibited a merger on the ground that it would create a collective dominant position on the UK market for short-haul foreign package holidays held

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by the merged entity and the two other leading tour operators. The Commission’s theory of harm rested entirely on the oligopolistic structure of the market.255 4.233  The General Court annulled the decision of the Commission. However, it adopted the test put forward by the applicant and accepted by the Commission in its pleadings. The test consists of three conditions that must be met for collective dominance to be established.256 •  Each member of the dominant oligopoly must have the ability to monitor whether the others are implementing the terms of coordination. This means that the market must be sufficiently transparent for all the members of the oligopoly to become aware, sufficiently precisely and quickly, of each others’ conduct. •  Tacit coordination must be sustainable over time. There must be an incentive not to depart from the terms of coordination. Retaliation is inherent in this condition. Each member of the oligopoly must be aware that its departure from the terms of coordination to gain market share will cause the others to do the same. As a consequence, the former would derive no benefit from its competitive behaviour. •  The foreseeable reaction of current and future competitors and customers must not be such as to jeopardize the results expected from the coordination. 4.234  The Airtours conditions for oligopolistic collective dominance are a laudable but ultimately unsatisfactory attempt to articulate a soundly structured legal test. The conditions miss a number of important elements. Most importantly, the test does not address the question of whether the oligopolists have the ability to reach a common understanding of the terms of coordination in the first place. Nor does the test require a meaningful analysis as to whether the oligopolists have the incentive to coordinate, given their costs and their demand curves. So while the Airtours conditions are certainly necessary for oligopolistic collective dominance to arise, they are clearly not sufficient. 4.235  The shortcomings of the Airtours test were addressed in Impala,257 a merger case where the Court of Justice, having recalled the principles underpinning oligopolistic collective dominance already established in the case law of the Court of Justice,258 set out four elements that constitute the legal framework for assessing oligopolistic collective dominance.259 The (p. 383) Court, however, was at pains to clarify that a mechanical approach is to be avoided. What matters is the verification of the overall economic mechanism of a hypothetical tacit coordination rather than a verification of each criterion in isolation.260 The four factors are as follows. 4.236  First, the oligopolists must be able to arrive at a shared understanding of the terms of coordination and the focal point of such coordination.261 Coordination is more likely to emerge in markets where it is relatively simple to reach a common understanding on the terms of coordination. The simpler and more stable the economic environment, the easier it is for undertakings to reach a common understanding. Indeed, they may be able to coordinate their behaviour on the market by observing and reacting to each other’s behaviour. In other words, they may be able to adopt a common strategy that allows them to present themselves or act together as a collective entity. Coordination may take various forms. In some markets, the most likely coordination may involve directly coordinating on prices in order to keep them above the competitive level. In other markets, coordination may aim at limiting production or the amount of new capacity brought to the market. Firms may also coordinate by dividing the market, for instance by geographic area or other customer characteristics, or by allocating contracts in bidding markets. The ability to arrive at and sustain such coordination depends on a number of factors, the presence of which must be carefully examined in each case.

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4.237  Secondly, the coordination must be sustainable over time. Therefore, the oligopolists must be able to monitor to a sufficient degree whether the terms of coordination are being adhered to. This requires that the market be sufficiently transparent for each undertaking concerned to be aware, sufficiently precisely and quickly, of the way in which the market conduct of each of the other participants is evolving.262 4.238  Thirdly, the implementation of the common policy must be sustainable over time, which presupposes the existence of sufficient deterrent mechanisms which are sufficiently severe to convince all the undertakings concerned that it is in their best interest to adhere to the common policy.263 A credible deterrent mechanism requires that the oligopolists must have the ability and incentive to punish deviations. 4.239  Fourthly, it must be established that competitive constraints do not jeopardize the implementation of the common strategy. As in the case of single dominance, this requires an analysis of: (a) the market position and strength of rivals that do not form part of the collective entity; (b) the market position and strength of buyers; and (c) the potential for new entry as indicated by the height of entry barriers. 4.240  The framework developed by the EU Courts in Airtours and Impala is broadly consistent with economic theory. As a matter of law, the same test applies under Article 102.264 The question is whether, as a matter of enforcement policy, this framework can be usefully applied in an Article 102 case. In fact, the only Article 102 case concerning an abuse of oligopolistic collective dominance that has resulted in a decision addressing a potential abuse is the E.ON(p. 384) commitments decision, a case concerning exclusionary and exploitative abuses by E.ON on the German wholesale electricity market.265 This suggests that cases of oligopolistic collective dominance are likely to be rare and perhaps confined to tight oligopolies in recently liberalized markets where the risk of erroneous intervention is lower and the benefits of fostering competition more compelling.

(4)  Abuse of a Collective Dominant Position 4.241  A collective dominant position is not in itself an infringement of Article 102. What is prohibited is the abuse of the collective dominant position. Abuses of a collective dominant position may, but do not have to, be joint abuses (ie abuses carried out by all the undertakings concerned). In Irish Sugar, the General Court held that ‘the abuse does not necessarily have to be the action of all the undertakings in question. It only has to be capable of being identified as one of the manifestations of such a joint dominant position being held’.266 Therefore, it is possible for undertakings to carry out single abuses of a collective dominant position (ie abuses carried out by only one of the collectively dominant undertakings).

(a)  Joint Abuses 4.242  Joint abuses of a collective dominant position occur when some or all the collectively dominant undertakings engage in abusive conduct in concert. Generally, this form of abuse occurs in the case of non-oligopolistic collective dominance, when undertakings communicate directly with each other or have established stable structural links. In Compagnie Maritime Belge, the members of a dominant liner conference jointly engaged in certain abusive practices through the medium of the conference.267 The General Court applied the same principles in Atlantic Container Line, where it was found to be abusive for a liner conference to impose on its members measures aimed at limiting or eliminating competition between them (eg the prohibition or restriction of individual service contracts with shippers and the application in service contracts of standard terms collectively agreed

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by the conference).268 In Irish Sugar, the grating of a fidelity rebate was part of ‘a strategy devised jointly’ by the undertakings holding a vertical collective dominant position.269

(b)  Single Abuses 4.243  In Irish Sugar, the Commission found a single abuse of a collective dominant position where the jointly dominant supplier and distributor of white granulated sugar in Ireland engaged in a number of abusive practices individually.270 Even when the parties carried out the same type of practice on the same market, the General Court, upholding the Commission’s decision, did not require that the abusive practices, individually carried out, were jointly planned (p. 385) or agreed.271 Furthermore, certain practices were carried out by the distributor alone and still found abusive.272 In E.ON, the Commission was concerned that E.ON, one of the three collectively dominant undertakings on the German wholesale electricity market, could have deterred competitors’ investment in the generation market by entering into long-term supply contracts and offering competitors a participation in a E.ON generation plant273 and could have withheld available generation capacity that would have been profitable to sell in order to raise overall prices.274 The decision does not discuss the position of the other two oligopolists and there was no suggestion that they might have engaged in the same behaviour.

(5)  Dominance and Abuse in Neighbouring Markets 4.244  In most cases, dominance and abuse take place on the same market. However, there are special circumstances in which an undertaking dominant in market A may commit an abuse by engaging in anti-competitive conduct in market B, with the anti-competitive effects occurring in market A, in market B, or even in a third market C. The case law and the enforcement practice of the Commission have so far established the following instances in which this may occur. 4.245  When a product is used as an input for another product, a vertically integrated undertaking dominant on the market for the input may commit an abuse by refusing to supply the input or engaging in a margin squeeze to the detriment of competitors on the downstream market. In such practices, the abuse and the dominant position take place on the dominated market but the anti-competitive effect occurs on a non-dominated market.275 4.246  When two products are complementary or are sold, to a large extent, to the same group of customers, an undertaking dominant on the market for one of the products may commit an abuse by engaging in tying, bundling, multi-product rebates, or practices aimed at protecting the dominated market by excluding competitors from the non-dominated market. The conduct takes place, at least in part, on a non-dominated market and the anticompetitive effect may occur on the non-dominated market and also on the dominated market.276 4.247  In special circumstances, an undertaking dominant in one market and with a leading position in a neighbouring market may abuse its dominant position by engaging in conduct that takes place on the neighbouring market and with anti-competitive effects also occurring only on the neighbouring market. In Tetra Pak II, the General Court277 and the Court of Justice278 confirmed the Commission’s finding that Tetra Pak had committed abuses in the markets for non-aseptic packaging machines and non-aseptic cartons, while Tetra Pak’s dominant position had only been established in the markets for aseptic packaging machines and aseptic cartons (where it had a market share of nearly 90 per cent). In that case, strong links existed between the aseptic and non-aseptic packaging machines and cartons markets. (p. 386) In particular, both aseptic and non-aseptic products were used for packaging the same products (ie fruit juices and dairy products); Tetra Pak had a virtual monopoly in the aseptic sector, a high market share in the non-aseptic sector, and an overall position of strength on both sectors considered together; a substantial proportion of Tetra Pak’s customers operated in both sectors; and several important

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competitors also operated in both sectors. However, it is not clear why these factors should be sufficient for establishing an abuse on a market where the undertaking concerned is not dominant in the absence of an anti-competitive effect occurring on the dominated market. In Tetra Pak II, the EU Courts required neither an attempt at leveraging the market power on the dominated market to the neighbouring market nor a strategy to protect the market power on the dominated market by excluding competitors from the non-dominated market. In the absence of such a link, it is unclear why Article 102 should apply to conduct on a nondominated market simply because of the factors identified by the EU Courts. In the absence of any clear policy rationale, the Tetra Pak II doctrine is very doubtful. Caution should be exercised in finding an abuse on a non-dominated market when neither the conduct nor the anti-competitive effects occur on the dominated market. The dominant position confers on the undertaking concerned neither the ability nor the incentive to harm competition. Therefore, it is difficult to understand why the undertaking in question is committing an abuse of a dominant position as required by Article 102.

(6)  Dominance in New Economy Markets 4.248  ‘New economy markets’ is a phrase generally used to indicate markets within the knowledge economy, where fast succession of technological changes and product innovation play a key role. Characteristics of such markets are: products that have a short life cycle and are technically complex, the occurrence of standardization, and a large need for product compatibility and interoperability. It is argued by both lawyers and economists that market definition and the assessment of market power in such markets should be dealt with differently. 4.249  In many new economy markets, competition revolves around innovation rather than price. Rather than taking place on the market, the competition is for the market. This is called dynamic competition (as opposed to static competition: competition on price). Consequently, in this type of competition the winner often takes all: the most successful competitor shall dominate the whole market. This process is often called ‘tipping’. This dominant position is nevertheless fragile, because if another competitor innovates successfully it may in turn take over the whole market. 4.250  A focus on product substitutability and market share will often fail to acknowledge these dynamics of new economy markets. High market shares do not properly reflect the competitive constraints that the ‘winner’ of the market in question is under. Also, products in the new economy are often technologically complex and hence their characteristics differ to a high extent, as a result of which consumers will perceive certain products as nonsubstitutable, even though they may be substitutable on the basis of price. As a consequence, an assessment of product substitutability may make the market seem narrower than it actually is. 4.251  When traditional methods for market definition are applied to markets in the new economy, this may therefore lead to the conclusion that an undertaking is dominant, whereas in reality the undertaking involved may be under severe competitive constraints. As a result, several authors have criticized this focus on ‘traditional’ methods and price competition.

Footnotes: 106

  United Brands (n 16), para 65.

107

  Nazzini, The Foundations of European Union Competition Law (n 3), 337–8.

108

  Michelin I (n 2), para 57

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109

  Article 102 Enforcement Priorities Guidance, para 10.

110

  Article 102 Enforcement Priorities Guidance, para 8.

111

  Hoffmann-La Roche (n 6), para 38.

112

  United Brands (n 16).

113

  Article 102 Enforcement Priorities Guidance, para 8.

114

  Article 102 Enforcement Priorities Guidance, para 11.

115

  United Brands (n 16), paras 63–65; Hoffmann-La Roche (n 6), para 38; TeliaSonera (n 2), paras 20–23. 116

  See eg S. C. Salop, ‘The First Principles Approach to Antitrust, Kodak, and Antitrust at the Millennium’ (2000) 68 Antitrust LJ 187, 199. 117

  See para 4.136 The same idea was advocated by the EAGCP Report (n 94). The report argued that this approach might depart from the tradition of case law concerning Art 102, but would not depart from the legal norm itself. 118

  See J. Vickers, ‘Abuse of Market Power’, speech to the 31st Conference of the European Association for Research in Industrial Economics, Berlin, 3 September 2004. 119

  For the derivation of this equation see eg J. A. Ordover, A. Sykes, and R. D. Willig, ‘Herfindhal Concentration, Rivalry and Mergers’ (1982) 95 Harvard L Rev 1857–74. 120

  For a more detailed analysis of each of this factors (except the conjectural variation term), see the seminal article by W. Landes and R. Posner, ‘Market Power in Antitrust Cases’ (1981) 94 Harvard L Rev 937. 121

  Article 102 Enforcement Priorities Guidance, para 12.

122

  United Brands (n 16), para 10; Hoffmann-La Roche (n 6), para 21.

123

  Guidance on this issue can be found in the Notice on the definition of relevant market for the purposes of [EU] competition law, OJ 1997 C372/5. 124

  The test asks whether the customers of the undertaking(s) concerned would switch to readily available substitutes or to suppliers located elsewhere to such an extent that it would be unprofitable to implement a small but significant (normally in the range 5–10 per cent), non-transitory increase in relative prices for the products and the areas being considered. If answered in the affirmative, additional substitutes and areas are added to the relevant market until such a price increase would be profitable. At that point, a hypothetical single seller of the now included products and within the now included areas would be able to profitably raise prices by 5–10 per cent, signifying that the products and areas in question constitute a market that is worth monopolizing. As a consequence thereof, it constitutes an appropriate framework for competition analysis. 125

  See Market Definition Notice, para 19.

126

  See Market Definition Notice, para 19.

127

  See Market Definition Notice, para 25.

128

  A final problem is that in a well-defined market it is not straightforward to compute meaningful market shares. Werden speaks of ‘assigning’ market shares to reflect the wide range of conscious choices to be made: G. J. Werden, ‘Assigning Market Shares’ (2002) 70 Antitrust LJ 67. He points out that assigning market shares often presents the figurative, or even literal, problem of adding apples and oranges. If the relevant market is fresh fruit, some common denominator must be found that permits the aggregation of apples, oranges, and other fruit. Market shares can always be assigned on the basis of revenues, using dollars for what economists would call a ‘numeraire’. In practice, market shares are often assigned on a basis that is not quite a common denominator, either because there is none,

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or because expensive and time-consuming data collection would be required to utilize a true common denominator. Werden also points to the distinction between equilibrium and structural market shares. The exercise of market power can significantly reduce equilibrium market shares. The reasoning is simple, a dominant firm exercises market power by constraining output and raising prices. It will lose some market share to rivals, although not enough to render the increase in price unprofitable. 129

  See eg Market Definition Notice, para 54.

130

  Market Definition Notice, para 55.

131

  Case IV/M214 Du Pont/ICI, OJ 1993 L7/13, recital 31.

132

  Case T-210/01 General Electric [2005] ECR II-5575, paras 124 and 191.

133

  Hoffmann-La Roche (n 6).

134

  Hoffmann-La Roche (n 6), para 40.

135

  Hoffmann-La Roche (n 6), para 41.

136

  Hoffmann-La Roche (n 6), para 41.

137

  Hoffmann-La Roche (n 6), para 44.

138

  Hoffmann-La Roche (n 6), para 44.

139

  Michelin I (n 2), paras 32–61.

140

  Michelin I (n 2), para 33.

141

  Michelin I (n 2), para 52.

142

  Michelin I (n 2), paras 53–61.

143

  Case IV/30.698 ECS/AKZO, OJ 1985 L374/1 (AKZO), recital 68.

144

  Case IV/30.698 AKZO (n 143), recital 69.

145

  Case C-62/86 AKZO v Commission [1991] ECR I-3359 (AKZO), para 60.

146

  Although none of them was particularly convincing: Case C-62/86 AKZO (n 145), para 61. 147

  eg R. O’Donoghue and A. J. Padilla, The Law and Economics of Article 102 (2nd edn, Oxford: Hart Publishing, 2013), 148; R. Whish, Competition Law (6th edn, Oxford: Oxford University Press, 2008), 177; C. E. Mosso et al, ‘Article 82’ in the 2nd edition of this book, 313 and 325. 148

  Case C-62/86 AKZO (n 145), para 60.

149

  Case T-30/89 Hilti v Commission [1990] ECR II-1439, para 92.

150

  Case T-30/89 Hilti (n 149), para 93.

151

  Case T-321/05 AstraZeneca v Commission [2010] ECR II-2805.

152

  Case T-321/05 AstraZeneca (n 151), paras 246–252.

153

  Case T-321/05 AstraZeneca (n 151), para 243.

154

  Case T-321/05 AstraZeneca (n 151), para 244.

155

  Case T-321/05 AstraZeneca (n 151), para 245.

156

  Case T-321/05 AstraZeneca (n 151), para 253.

157

  Case T-228/97 Irish Sugar [1999] ECR II-2969, para 71.

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158

  Irish Sugar (n 157), paras 73–92.

159

  Irish Sugar (n 157), paras 92–104.

160

  Article 102 Enforcement Priorities Guidance, paras 13 and 15.

161

  Article 102 Enforcement Priorities Guidance, para 15.

162

  Article 102 Enforcement Priorities Guidance, para 15.

163

  See eg the Commission’s investigations in recent years into companies such as Microsoft, Intel, and Google. 164

  Michelin I (n 2), para 59; Irish Sugar (n 157), para 103.

165

  The point is well established in the literature, see eg R. Amit and J. Livnat, ‘Efficient Corporate Diversification: Methods and Implications’ (1989) 35 Management Science 879; G. Benston, ‘The Validity of Profits-Structure Studies with Particular Reference to the FTC’s Line of Business Data’ (1985) 75 Am Econ Rev 37; E. Brynjolfsson, ‘The Productivity Paradox of Information Technology’ (1993) 36(12) Communications of the Association for Computing Machinery 66; C. Montgomery and B. Wernerfelt, ‘Diversification, Ricardian Rents, and Tobin’s q’ (1988) 19 RAND J Econ 623; F. M. Fisher and J. J. McGowan, ‘On the Misuse of Accounting Rates of Return to Infer Monopoly Profits’ (1983) 73 Am Econ Rev 82. 166

  Case COMP/C-3/37.990 Intel (n 23), recitals 875–880.

167

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 464.

168

  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ 2004 C31/5. 169

  Hoffmann-La Roche (n 6), para 71.

170

  Hoffmann-La Roche (n 6), para 78.

171

  Hoffmann-La Roche (n 6), paras 48 and 59; Case T-219/99 British Airways v Commission [2003] ECR II-5917, para 210; Case T-321/05 AstraZeneca (n 151), paras 246– 247 and 251–252. 172

  Hoffmann-La Roche (n 6), para 66 (Hoffmann-La Roche’s share was much larger than the combined share of its two next largest competitors). 173

  Case T-219/99 British Airways (n 171), paras 211 and 224.

174

  eg Case COMP/M.4381 JCI/FIAMM, OJ 2009 C241/12, recital 268.

175

  General Electric (n 132), para 117; Case T-340/03 France Télécom v Commission [2007] ECR II-107, para 101. 176

  Hoffmann-La Roche (n 6), para 71.

177

  Article 102 Enforcement Priorities Guidance, para 12.

178

  For ease of exposition, the phrase ‘barriers to entry’ will include barriers to expansion unless the context unequivocally requires otherwise. 179

  Article 102 Enforcement Priorities Guidance, para 16.

180

  A sunk cost is a cost of entry to the market that is not fully recoverable upon exit. Substantial sunk costs may contribute to an incumbent undertaking’s substantial and durable market power and its ability to harm competition. This is for two reasons. First, sunk costs make entry less likely; as a result, they contribute to a dominant undertaking’s incentive to invest in the exclusion of competitors because, entry being less likely postexclusion, it is more probable that the dominant firm will be able to recoup its investment and continue to earn supra-competitive profits. Secondly, sunk costs may give the dominant firm the ability to discourage entry by committing to, or establishing a reputation for, practices that lower the likely profits of the entrant. If anticipated post-entry profits are From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

lower than required for the entrant to recoup sunk costs in addition to covering any other fixed or variable cost, entry will not occur. In United Brands, the CJ held that ‘the exceptionally large capital investments required for the creation and running of banana plantations’ constituted a barrier to entry. In Intel, the Commission established that there were significant sunk costs in the R&D and production of microprocessors based on the x86 architecture (compatible with Windows and Linux operating systems). Together with the substantial economies of scale in production, these factors gave rise to a barrier to entry. This was because not only would a new entrant have to invest significantly to enter the market but also because, in order to operate at an efficient scale, it would have to capture a sizeable share of the market. 181

  But see the catalogue of barriers to entry in the Article 102 Enforcement Priorities Guidance, para 17. 182

  eg Case T-139/98 Amministrazione Autonoma dei Monopoli di Stato v Commission [2001] ECR II-3413 (AAMS). 183

  See eg M. E. Burgess, J. J. Burgess and S. J. Burgess (trading as J. J. Burgess & Sons) v Office of Fair Trading [2005] CAT 25, [2005] CompAR 1151, paras 161 and 247 (where the UK Competition Appeal Tribunal (CAT) held that there were ‘insurmountable’ barriers to entry given that there was no realistic prospect of another crematorium obtaining planning permission within the same geographic market). On the other hand, in the decision of the Director General of Fair Trading No CA98/2/2001 Napp Pharmaceutical Holdings and Subsidiaries (30 March 2001) (Napp), paras 102–103, partly upheld by the CAT in Napp Pharmaceutical Holdings v Director General of Fair Trading [2002] CAT 1, [2002] Comp AR 13, [2002] ECC 13, regulatory barriers were found to exist, but not to be such as to deter firms from entering the UK market for a specialized drug if there were profits to be made. 184

  Case 40/70 Sirena v Eda [1971] ECR 69, para 16; Case 78/70 Deutsche Grammophon v Metro-SB-Großmärkte [1971] ECR 487, paras 16–17. 185

  Joined Cases C-241/91 and 242/91 P Radio Telefis Eireann (RTE) and Independent Television Publications (ITP) v Commission [1995] ECR I-743 (Magill), para 46; Case T-321/05 AstraZeneca (n 151), para 270. 186

  This appears to be the preferable interpretation of Case T-321/05 AstraZeneca (n 151), paras 271–275, where the Court held that the strong patent protection enjoyed by the drug supplied by the dominant undertaking allowed the latter to ‘impose significant constraints on its competitors’. This was ‘a relevant indicator’ of dominance. See also Case COMP/ C-3/37.990 Intel (n 23) (summary decision), recital 848, where the Commission pointed out that the x86 microprocessor was manufactured by Intel and AMD on the basis of a crosslicence in the context of a global settlement following a number of patent infringement actions brought by Intel against AMD. Therefore, the Commission stated: ‘the extensive litigation history highlights the significant intellectual property-related barriers that any new entrant to the x86 CPU market would have to overcome’. 187

  Notwithstanding the fact that the EU Courts have occasionally listed economies of scale as contributing to dominance without further analysis: see eg United Brands (n 16), para 95. 188

  Scale economies are normally exhausted at a certain point. Thereafter average costs will stabilize and eventually rise due to, eg, capacity constraints and bottlenecks. 189

  Intel (n 23), recitals 854–866.

190

  Case IV/31.900 BPB Industries, OJ 1989 L10/50, rectified in OJ 1989 L52/42 (British Plasterboard), recital 116.

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191

  eg Case IV/M.053 Aéreospatiale Alenia/de Havilland, OJ 1991 L334/42, recital 30.

192

  Hoffmann-La Roche (n 6), paras 45–46.

193

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 883–896.

194

  Case T-321/05 AstraZeneca (n 151), para 83, where, however, doctors’ inertia was not explicitly characterized as a switching cost as the issue only arose at market definition stage. 195

  Case COMP/M.5529 Oracle/Sun Microsystems, OJ 2010 C91/7 (summary decision), para 137. See also Napp (n 183), para 278, discussing the switching costs of training doctors and nurses to administer a new drug. 196

  Case COMP/M.5529 Oracle/Sun Microsystems (n 195), para 137.

197

  United Brands (n 16), paras 91–94; Case T-203/01 Manufacture Française des Pneumatiques Michelin v Commission [2003] ECR II-4071 (Michelin II), para 185; Case IV/ M.190 Nestlé/Perrier, OJ 1992 L356/1, recitals 81 and 83; Case IV/M.430 Procter & Gamble/VP Schickendanz, OJ 1994 L354/32, recital 149; Case IV/M.623 Kimberly-Clark/ Scott Paper, OJ 1996 L183/1, recital 87; Case IV/M.794 Coca-Cola/Amalgamated Beverages GB, OJ 1997 L218/15, recital 137; Case IV/M.833 Coca-Cola/Carlsberg, OJ 1998 L145/41, recital 72; Case IV/M.938 Guiness/Grand Metropolitan, OJ 1998 L288/24, recital 52. 198

  Case COMP/M.4504 SFR/Télé2 France, OJ 2007 L316/57.

199

  United Brands (n 16), paras 70–81.

200

  Case COMP/M.5153 Arsenal/DSP, OJ 2009 C227/24.

201

  Hoffmann-La Roche (n 6), para 47.

202

  Case T-321/05 AstraZeneca (n 151), para 286.

203

  Case COMP/JV.55 Hutchison/RCPM/ECT, OJ 2003 L223/1.

204

  Case COMP/M.4731 Google/Double Click, OJ 2008 C184/10 (summary decision), recital 357. 205

  It is important to distinguish ‘excess’ capacity from ‘idle’ capacity. The former allows a firm to increase its level of production at short notice and without substantial capacity maintenance costs. The latter, often the result of the advent of new technology, is capacity the usage of which is expensive and usually not economically viable. It should not therefore be taken into account as a factor supporting a finding of dominance. 206

  The CJ in Hoffmann-La Roche (n 6), accepted that the company’s overcapacity was a factor relevant to the issue of dominance. 207

  See Case IV/M.315 Mannesmannn/Vallourec/Ilva, OJ 1994 L102/15 or Case IV/M.17 Aérospatiale/MBB, OJ 1991 C59/13 (notice of decision). 208

  Hoffmann-La Roche (n 6), para 48.

209

  Case COMP/M.4403 Thales/Finmeccanica/AAS/Telespazio, OJ 2009 C34/5 (summary decision), recital 327. 210

  Case COMP/M.4734 INEOS/Kerling, OJ 2008 C219/18 (summary decision), recital 179.

211

  Article 102 Enforcement Priorities Guidance, para 18.

212

  Article 102 Enforcement Priorities Guidance, para 18.

213

  Joined Cases T-68/89, 77/89 and 78/89 Società Italiana Vetro, Fabbrica Pisana and PPG Vernante Pennitalia v Commission [1992] ECR II-1403 (Italian Flat Glass), para 366.

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214

  Irish Sugar (n 157), paras 98–104.

215

  Irish Sugar (n 157), para 98.

216

  Irish Sugar (n 157), para 98.

217

  Irish Sugar (n 157), para 100.

218

  The first case to recognize that Art 102 prohibits the abuse of collective dominance was Italian Flat Glass (n 213). 219

  Case T-193/02 Laurent Piau v Commission [2005] ECR II-209, para 111, concerning an alleged abuse of a collective dominant position under Art 102, where the GC adopted the test set out in Case T-342/99 Airtours v Commission [2002] ECR II-2585, para 62. The judgment of the GC in Piau was upheld on appeal in Case C-171/05 P Laurent Piau v Commission [2006] ECR I-37 but the issue of collective dominance did not arise on appeal: see para 33. 220

  Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings, OJ 1989 L395/1, corrected version OJ 1990 L257/13, as amended by Council Regulation (EC) No 1310/97 of 30 June 1997 amending Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, OJ 1997 L180/1, corrigendum, OJ 1998 L40/17 (‘1989 Merger Regulation’) and Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ 2004 L24/1 (‘2004 Merger Regulation’). 221

  eg Case T-102/96 Gencor v Commission [1999] ECR II-753; Joined Cases C-68/94 P and C-30/95 P French Republic v Commission [1998] ECR I-1375 (Kali and Salz); Airtours (n 219); Case C-413/06 P Bertelsmann and Sony Corp of America v Independent Music Publishers and Labels Association (Impala) [2008] ECR I-495. 222

  See, as the classic examples, Joined Cases T-24–26/93 and T-28/93 Compagnie Maritime Belge v Commission [1996] ECR II-1201, para 15, upheld in Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge (n 2). See also Joined Cases T-191/98 and T-212– 214/98 Atlantic Container Line v Commission [2003] ECR II-3275. 223

  Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge (n 2), para 36; Case C-393/92 Municipality of Almelo v NV Energiebedrijf Ijsselmij [1994] ECR I-1477 (Almelo), para 42. 224

  Gencor (n 221); Airtours (n 219); Impala (n 221). On the terminology and distinct concepts of non-oligopolistic and oligopolistic collective dominance, see Nazzini, The Foundations of European Union Competition Law, 362–90. 225

  Italian Flat Glass (n 213).

226

  Italian Flat Glass (n 213), para 350.

227

  Italian Flat Glass (n 213), paras 18 and 22.

228

  Italian Flat Glass (n 213), para 23, quoting the Commission’s finding that the undertakings in question manufactured ‘identical products’. 229

  Italian Flat Glass (n 213), para 358; Case T-193/02 Laurent Piau (n 219), para 110, upheld in Case C-171/05 P Laurent Piau (n 219) (summary publication) (note that the issue of collective dominance did not arise on appeal); Joined Cases C-395/96 P and C-396/96 P Compagnie Maritime Belge (n 2), para 36. 230

  Almelo (n 223), para 35.

231

  Almelo (n 223), para 38.

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232

  Almelo (n 223), paras 35–36.

233

  Almelo (n 223), paras 40–45. The Court cited Case 30/87 Corinne Bodson v SA Pompes Funèbres des Régions Libérées [1988] ECR 2479. The latter case, however, does not explicitly address the question of a collective dominant position. It is true that the CJ consistently refers to a ‘group of undertakings’ in the part of the judgment dealing with Art 102 but this seems to be on the assumption that the group in question is a single undertaking for the purpose of Arts 101 and 102. The Court had already ruled that if the undertakings in question constitute an economic unit any agreements between them cannot fall under Art 101. The part of the judgment discussing the issue of dominance opens with the following statement: ‘Any anti-competitive behaviour on the part of a group of undertakings holding concessions which constitute an economic unit as defined in the caselaw of the Court must be considered in the light of Article [102] of the Treaty’. It seems, therefore, that the CJ in Almelo incorrectly cited the Bodson case as an authority on collective dominance. 234

  Almelo (n 223), para 42. The definition of collective dominance in Almelo clearly implies that there must be no competition between the collectively dominant undertakings. See Case C-96/94 Centro Servizi Spediporto v Spedizioni Marittima del Golfo [1995] ECR I-2883, paras 33–34 (finding that national legislation providing that a committee with a minority representation of road haulage contractors had the power to recommend road haulage tariffs to be approved and made mandatory by the relevant minister did not confer on the undertakings concerned a collective dominant position because it did not eliminate competition between them) and Joined Cases C-140–142/94 DIP v Comune di Bassano del Grappa [1995] I-3257, paras 26–27 (finding that national legislation requiring a licence to be obtained before opening a shop in a municipality by a procedure envisaging the advisory opinion of a committee in which established traders were represented, albeit in the minority, did not confer on the established traders a collective dominant position because it did not eliminate competition between them). 235

  Almelo (n 223), para 43.

236

  Almelo (n 223), paras 130, 134, and 136.

237

  Joined Cases T-24–26/93 and 28/93 Compagnie Maritime Belge (n 222), para 15.

238

  Council Regulation (EEC) No 4056/86 of 22 December 1986 laying down detailed rules for the application of Articles [101 and 102] of the Treaty to maritime transport, OJ 1986 L378/4, Art 1(3)(b). 239

  Joined Cases T-24–26/93 and 28/93 Compagnie Maritime Belge (n 222), para 65. This analysis was upheld on appeal in Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), paras 46–59. 240

  Joined Cases T-24–26/93 and 28/93 Compagnie Maritime Belge (n 222), paras 76 (setting out the legal principle that ‘extremely large market shares are in themselves evidence of the existence of a dominant position’) and 77 (examining the relevance of the collective entity’s market share). The Court, however, also examined additional factors relevant to dominance, albeit succinctly: see paras 78 and 79. 241

  Atlantic Container Line (n 222), para 908.

242

  Atlantic Container Line (n 222), para 904.

243

  Atlantic Container Line (n 222), paras 903–942, 953–998, and 1009–1037.

244

  Atlantic Container Line (n 222), paras 33 and 130.

245

  Cases IV/34.621 and 35.059/F-3 Irish Sugar plc, OJ 1997 L258/1, recitals 99–113.

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246

  Irish Sugar plc (n 245), recitals 119–22 and 128–35.

247

  Irish Sugar plc (n 245), recitals 124–6.

248

  Irish Sugar plc (n 245), recital 127.

249

  Irish Sugar plc (n 245), recital 127.

250

  Irish Sugar (n 157), paras 45–47.

251

  Irish Sugar (n 157), para 49 and Irish Sugar plc (n 245), recital 111, where the Commission appears to have conceded the point. 252

  Irish Sugar (n 157), paras 51–59.

253

  O’Donoghue and Padilla, The Law and Economics of Article 82 (n 147), 163–4.

254

  Kali and Saltz (n 221), para 221; Gencor (n 222), para 276; Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), para 45. 255

  Case IV/M.1524 Airtours/First Choice, OJ 2000 L93/1, paras 51–56 and 158.

256

  Airtours (n 219), para 62.

257

  Impala (n 221).

258

  Impala (n 221), paras 121–122.

259

  Impala (n 221), para 123.

260

  Impala (n 221), para 125.

261

  Impala (n 221), para 123.

262

  Impala (n 221), para 123.

263

  Impala (n 221), para 123.

264

  Laurent Piau (n 219), para 111.

265

  E.ON (n 52), recitals 13–24.

266

  Irish Sugar (n 157), para 66. See also Atlantic Container Line (n 222), para 633, where the principle was applied to the position of a party to a non-oligopolistic collective entity which had minimal market share and turnover and did not follow the conduct adopted by the other parties. The Court held that this did not prevent that party from being a member of the collective entity because such membership resulted from structural and commercial links not from the adoption of the same conduct. This reasoning can only apply to nonoligopolistic collective dominance. 267

  Joined Cases T-24–26/93 and 28/93 Compagnie Maritime Belge (n 222), paras 105, 139, 151, and 182–186. 268

  Atlantic Container Line (n 222), paras 1106 and 1190.

269

  Irish Sugar (n 157), para 198.

270

  Irish Sugar plc (n 245), recital 117.

271

  Irish Sugar (n 157), paras 173–193 (concerning border rebates granted by either Irish Sugar or SDL). 272

  Irish Sugar (n 157), paras 226–234 (concerning product swaps agreed with one wholesaler and one retailer). 273

  E.ON (n 52), recitals 41–44.

274

  E.ON (n 52), recitals 28–40.

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275

  See the case law on refusal to supply, eg Cases C-241/91 and C-242/91 P Magill (n 185); Case C-418/01 IMS Health v NDC Health [2004] ECR I-5039. 276

  See the case law on tying and bundling, eg Case T-30/89 Hilti (n 149); Case C-333/94 P Tetra Pak II (n 3); Case T-201/04 Microsoft I (n 5); Case COMP/C-3/39.530 Microsoft (tying) (Microsoft II) (n 43). 277

  Case T-83/91 Tetra Pak II (n 39).

278

  Case C-333/94 P Tetra Pak II (n 3).

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Part I General Principles, 4 Article 102, D Concept of Abuse Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Abuse of dominant position — Economic or commercial activity — Exclusionary abuse — Exploitative abuse — Discrimination — Foreclosure effect

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(p. 387) D. Concept of Abuse (1)  General Concept of Abuse 4.252  Article 102 does not set out a clear and self-contained definition of abuse. It prohibits any abuse of a dominant position by one or more undertakings and lists four types of abuse. It is well established, however, that this list is not exhaustive and that an abuse may occur that does not fall under any of the abuses in the illustrative list.279 4.253  The case law of the EU Courts and the Commission’s practice have traditionally distinguished between three categories of abuse: •  exclusionary abuses, in which competition is harmed by conduct that hinders the competitive opportunities of rivals; •  exploitative abuses, in which competition is harmed by the dominant undertaking charging prices or applying trading conditions that are, to a significant degree, above or more onerous than the prices or the trading conditions that would be charged or applied in a competitive market; •  discriminatory abuses, in which competition is harmed by discriminatory prices or trading conditions charged or applied by the dominant undertaking on an intermediate market with the effect of placing certain suppliers or customers of the dominant undertaking at a ‘competitive disadvantage’. According to some economists, discriminatory abuses may also be classified as exploitative abuses since they also result in direct harm to consumers.

(2)  Definition of Abuse Under the EU Courts’ Case Law 4.254  In Hoffmann-La Roche, the Court of Justice set out the standard and often-repeated definition of abuse:280 The concept of abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products and services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing on the market or the growth of that competition. 4.255  This definition is quintessentially vague. The requirement that there must be an effect on market structure in the form of an impediment to competition is obvious, but neither the type nor the extent of the necessary effect is defined. 4.256  The concept of abuse under Hoffmann-La Roche is traditionally considered as requiring the conduct of the dominant undertaking to be assessed by reference to conduct that amounts to ‘competition on the merits’.281 Conduct that does not amount to ‘competition on the merits’ will be abusive. Again, although this functions as a guiding principle, it is also vague and (p. 388) undefined. Even the most obvious and straightforward application of this principle, namely that, as a general rule, Article 102 does not protect from competition undertakings that are less efficient that the dominant firm, was only explicitly affirmed by the Court of Justice in 2012.282 4.257  In Post Danmark, the Court of Justice introduced significant clarification into this classic definition, namely that the abuse is to the detriment of consumers.283 Whether this means that the Court recognizes, as a general principle, that the prohibition of exclusionary abuses also results in the prevention of consumer detriment or that consumer harm is an element of the abuse test, is unclear. However, the better view appears to be that the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

statement in Post Danmark is a general statement of principle and does not change the well-established abuse tests developed in the case law in the EU Courts. 4.258  Aside from the difficulties arising from the lack of detail or specificity in the Hoffmann-La Roche–Post Danmark definition of abuse, this definition appears on its face to cover exclusionary abuses only. 4.259  Exploitative abuses are abuses that consist in the imposition or unfair prices or trading conditions on customers or suppliers of the dominant undertaking or in a limitation of production to the detriment of consumers, according to Article 102(a) or (b), respectively. Generally, this is understood as meaning that the dominant undertaking applies prices or trading conditions that are significantly and persistently higher or more onerous that those that would prevail under competition conditions, thus causing consumer harm. 4.260  Discriminatory abuses are explicitly defined in Article 102(c) as the application by the dominant undertaking of dissimilar conditions to equivalent transactions with its suppliers or customers, thereby placing them at a competitive disadvantage.

(3)  The Test for Abuse 4.261  Antitrust decisions are taken based on incomplete information. An effects-based approach to Article 102 requires decision rules that increase predictability and minimize the risk of regulatory mistakes. A commentator put this fundamental question in the following way: ‘But what are, or should be, the underlying principles by reference to which conduct that distorts and harms competition can be distinguished from normal competition on the merits?’284

(a)  Exploitative and Discriminatory Abuses 4.262  As regards exploitative abuses, the test to be applied is clearly a consumer harm test: exploitative conduct is, inherently, conduct that harms consumers by raising prices and reducing output. As a consequence, the debate is mainly about the policy rationale for these rules and the risks of erroneous intervention associated with their enforcement. The test for discriminatory abuses is set out in Article 102(c) and is discussed in Section L.

(b)  Exclusionary Abuses 4.263  As regards exclusionary abuses, on the other hand, there is no clear guidance in Article 102 as to a general test and the case law has not developed guidance on the category as a whole, preferring instead to restate the definition of abuse in Hoffmann-La Roche–Post Danmark and develop specific tests for specific exclusionary abuses. (p. 389) 4.264  In the absence of a detailed legal exposition of the principles underlying the test for exclusionary abuses as a category, it is helpful to consider the economic principles that underlie the approach to this category of abuses and how the Commission will assess what constitutes an exclusionary abuse.

(i)  Potential Tests Based on Economic Principles 4.265  The literature has put forward a number of tests considered suitable as a matter of policy and which have some underpinning in the case law.285 •  The ‘profit sacrifice’ test—namely, that anti-competitive exclusion is a willingness to sacrifice short-run revenues for the future benefits of high prices in a market from which rivals have been excluded. The best example of such a test in the case law is the sacrifice-cum-recoupment test for predatory pricing, where the profit sacrifice comes from the sale of product below cost price during a certain period of time and the long-term benefit is the foreclosure from the market of competitors that are unable to sustain loss-making sales during that same period. The sacrifice test is also useful in unilateral refusal-to-deal cases. 286 However, a problem with this test is that most substantial investments (eg building a plant or product innovations) involve a

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short-term ‘sacrifice’ of profit and the test does not adequately distinguish anticompetitive ‘sacrifice’ from pro-competitive ‘investment’. It also works poorly in relation to abuses that are not costly to the dominant firm, such as tying. •  The ‘no economic sense’ or ‘but for’ tests—namely, that conduct by a dominant firm is abusive only if it makes no economic sense unless it is understood as a mechanism for excluding rivals in order to earn monopoly as a result or if it would not have been engaged in but for its exclusionary effect. 287 This is closely linked to the question of the objective justification of the conduct. The disadvantage of this test is that not all harmful exclusionary conduct is ‘irrational’ in the sense that the only explanation that makes it seem profitable is destruction or discipline of rivals. Conduct that is harmful but rational would therefore not be prevented under this test. 288 (p. 390) •  The ‘as-efficient competitor’ test. This test has found acceptance in predatory pricing cases, particularly in discussions of how to identify a price as predatory. The reasoning is that a firm should not be penalized for having lower costs than its rivals and pricing accordingly. As a result, a price is predatory only if it is reasonably calculated to exclude a rival who is at least as efficient as the defendant. However, this can result in under-enforcement where the rival that is most likely to emerge is less efficient than the dominant firm (eg in cases involving fraudulent or otherwise improper IP infringement claims, where the rival will typically just have begun production and will have an unequal ability to bear litigation costs). •  The ‘raising rivals’ costs’ test. Strategies to deny rivals market access by increasing their costs may succeed in situations where more aggressive ones involving the complete destruction of rivals might not. Once rivals’ costs have been increased, the dominant firm can raise its own price or increase its market share at their expense. The real value of this test is to show that conduct can be anti-competitive even though it does not involve the complete elimination of rivals. Situations in which rivals stay in the market but their costs increase may be more likely to occur and exist in a wider variety than those in which rivals are destroyed. However, cost-raising strategies might be less detectable and less likely to invite prosecution. On the other hand, many practices that raise rivals’ costs (eg innovation that either deprives rivals of revenue or forces them to innovate in return), are also welfare enhancing. As a result, ‘raising rivals’ costs’ can never operate as a complete test for exclusionary conduct. One must always add an adverb such as ‘unreasonably’, but that invariably requires some kind of balancing or trade-off.

(ii)  Approach Taken in the Commission’s Guidance 4.266  The publication of the Article 102 Enforcement Priorities Guidance was a significant step forward in the development of the Commission’s policy in this respect. Given the current state of the law, it is unsurprising that the Commission has not adopted a single test to identify abusive exclusionary conduct. Instead, the Commission adopts a two-step approach to the issue: (a) examining whether the conduct is likely to restrict competition and harm consumers; and (b) considering whether the anti-competitive effects are outweighed by efficiencies. As to step (b), see Section D.5. 4.267  As to step (a), the Commission Guidance introduces the concept of anti-competitive foreclosure (see Section B.3(b)), which identifies consumer welfare as the ‘metric’ to determine whether there has been an abuse. Anti-competitive foreclosure is defined as foreclosure ‘having an adverse impact on consumer welfare, whether in the form of higher

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price levels than would have otherwise prevailed or in some other form such as limiting quality or reducing consumer choice’.289 (i)  Anti-Competitive Foreclosure: General

4.268  The Commission explains this test as requiring the likelihood that, as a result of the exclusion or marginalization of competitors, the dominant undertaking will be in a position profitably to increase or maintain prices above the competitive level or negatively to affect the non-price parameters of competition such as choice, innovation, and quality.290 Such an exercise can rely on qualitative as well as on quantitative evidence.291 Finally, the negative impact on consumers is not necessarily the impact (p. 391) on final consumers but may be the impact on the immediate customers of the dominant undertaking.292 4.269  Factors (not necessarily cumulative) that the Commission considers relevant to establishing anti-competitive foreclosure are:293 •  the position of the dominant undertaking; •  the conditions on the relevant market, in particular barriers to entry and expansion; •  the position of the dominant undertaking’s competitors, the competitive significance of foreclosed competitors, and the counter-strategies available to rivals; •  the position of customers or input suppliers, the selectivity of the conduct, the strategic significance of customers or suppliers for rivals, the strategies available to customers; •  the extent of the conduct; •  evidence of actual foreclosure; •  direct evidence of any exclusionary strategy, including evidence of intent. (ii)  Test for Foreclosure in Pricing Cases

4.270  The Guidance goes on to consider what might amount to foreclosure in pricing conduct cases. The Commission Guidance comes close to endorsing the equally efficient competitor principle as a necessary condition for price-based exclusion, stating that the Commission ‘will normally only intervene if the conduct concerned has already been or is capable of hampering competition from competitors which are as efficient as the dominant undertaking’.294 However, the test itself does not constitute a sufficient condition for finding an abuse: if the Commission does establish exclusion on the basis of an equally efficient competitor analysis, it will then integrate this in the general assessment of anticompetitive foreclosure. 4.271  As for predatory pricing specifically, the Guidance emphasizes both ‘profitsacrifice’ (and opens the door for a more general application of the ‘no economic sense’ test to pricing that, although above cost, involves a loss compared to the short-run profitmaximizing price) as well as the ‘as-efficient competitor’ test, which serves as a safeguard, as the Commission normally only considers pricing below long-run average incremental cost as capable of foreclosing an equally efficient competitor. 4.272  Regarding conditional rebates, the Commission proposes to evaluate whether an ‘asefficient competitor’ would be excluded on the basis of the ‘effective price’ (ie the price a rival has to match to win the contestable portion of a customer’s demand).295 A similar analysis will be applied to multi-product rebates by comparing the incremental price with the incremental costs of each of the bundled products.296

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4.273  The most fundamental criticism of the ‘as-efficient competitor’ test is that economic efficiency and consumer welfare can, in some circumstances, benefit from the existence of less efficient competitors; either in a static sense by the restraint that inefficient rivals may exert on the dominant firm’s pricing, or in a dynamic sense where new rivals have the potential, but need time, to reach sufficient efficiency.297 The Commission acknowledges this in its (p. 392) Guidance, and allows a more dynamic approach in its enforcement of pricing conduct if exceptional circumstances so require.298 4.274  The Guidance does not refer to the ‘as-efficient competitor’ principle in the context of the non-price-based abuses, namely exclusive dealing, tying and bundling, and refusal to supply, with the exception of margin squeeze (a pricing conduct discussed in the Guidance as a variation on refusal to supply), where the Commission describes the practice as a scheme which does not allow an equally efficient competitor to trade profitably on a lasting basis.299 Absent unusual evidence, there is no direct, workable extension of the price-cost approach to these non-price-based practices. (iii)  When is Foreclosure Enough to be Anti-Competitive?

4.275  Having established that a certain conduct forecloses rivals from individual customers, whether by means of the equally efficient competitor test or not, the question then arises whether the foreclosing conduct in question covers a sufficient portion of the relevant market to deprive the competitor of minimum efficient scale—the scale needed to be able to exercise effective competitive pressure. Such an analysis can in principle be performed either on the basis of actual competitors’ costs, or of a hypothetical equally efficient competitor’s costs. 4.276  In the Guidance, the Commission considers competitors ‘less likely to enter or stay in the market if the dominant undertaking forecloses a significant part of the relevant market’300 (regarding markets with economies of scale). It considers that ‘the higher the percentage of total sales in the relevant market affected by the conduct…the greater is the likely foreclosure effect’. 4.277  It has been argued that the Commission should establish that the conduct foreclosed a sufficient part of the market to prevent an as-efficient competitor from reaching minimum viable scale (thus excluding such a competitor from the market). The Court of Justice in Tomra rejected the need for such a ‘minimum viable scale’ test, and determined that it was not essential to establish a precise threshold for what portion of the relevant market had to be foreclosed.301 4.278  The Court did, however, consider what portion of the market was covered by the conduct, and concluded that foreclosure of two-fifths of the market in the case at hand ‘in any event’ proved foreclosure to the requisite legal standard.302 4.279  In conclusion, it is difficult to draw any generally applicable conclusions as to the level of actual foreclosure that would be sufficient to amount to anticompetitive foreclosure as a rule. (iv)  Likely Harm to Consumers

4.280  What distinguishes anti-competitive exclusion from competition on the merits is whether, as a result of the exclusion, consumers are likely to be harmed. (p. 393) Thus, to amount to anti-competitive foreclosure under the Guidance, the conduct must meet this criterion. 4.281  In the Post Danmark case, it appears that the Court of Justice has lent some support to this approach, by holding that Article 102:

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applies, in particular, to the conduct of a dominant undertaking that, through recourse to methods different from those governing normal competition on the basis of the performance of commercial operators, has the effect, to the detriment of consumers, of hindering the maintenance of the degree of competition existing in the market or the growth of that competition.303 4.282  It is not clear, however, what the significance of this different formulation of the test in Post Danmark will actually mean. British Airways, also a Court of Justice case, is unequivocal in ruling that proof of consumer harm is not a requirement for a finding of exclusionary abuse under Article 102.304 Thus, Post Danmark may simply have restated the proposition that Article 102 prohibits not only abuses that harm consumers directly but also those that harm them indirectly through the impairment of an effective competitive structure.305 Under this approach, Article 102 protects market structure because to do so is in the interest of consumers but does not require proof of consumer harm for an abuse to be established in each and every case.

(4)  The Special Responsibility of the Dominant Undertaking 4.283  In assessing whether the conduct of the dominant undertaking amounts to an abuse, the case law has traditionally and repeatedly affirmed that a dominant undertaking has a ‘special responsibility’ not to impair undistorted competition in the internal market.306 4.284  The ‘special responsibility’ requirement can be, perhaps naively, interpreted as imposing particular obligations on the dominant undertaking. In particular, critics have argued that a literal reading of the ‘special responsibility’ would oblige a dominant undertaking not to: •  engage in any conduct that is capable of harming competitors’ market shares, incentives to innovate, or profitability; or •  engage in any pricing practices that would result in the dominant firm earning profits greater than those that would be earned if the market were characterized by more effective competition. 307 4.285  However, such a literal interpretation of the special responsibility requirement would be inappropriate for two reasons. First, the EU Courts have made clear that the purpose of the competition rules, including Article 102, is to protect the competitive process in the internal market, to the benefit of consumers.308 An effective competitive process requires (p. 394) competition on the merits through which some undertakings will gain and some will lose. It stands to reason, therefore, that the prohibition of abusive conduct should not be viewed as synonymous with prohibiting competition on the merits. 4.286  Secondly, in real-world markets (as opposed to abstract theoretical economic markets), virtually all firms have some degree of market power, even if it is limited. However, only the behaviour of those with substantial and durable market power can harm the competitive process to an extent that would justify restricting their conduct. As a result, non-dominant firms have no special responsibility to refrain from engaging in abusive conduct and their conduct falls outside the scope of Article 102. On this view, the ‘special responsibility’ requirement can be seen as simply a reminder that dominance is a necessary condition for the applicability of Article 102. This would appear to be the view taken in first paragraph of the Article 102 Enforcement Priorities Guidance where the Commission states:

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Article [102 TFEU] prohibits abuses of a dominant position. In accordance with the case-law, it is not in itself illegal for an undertaking to be in a dominant position and such a dominant undertaking is entitled to compete on the merits. However, the undertaking concerned has a special responsibility not to allow its conduct to impair genuine undistorted competition on the common market. 4.287  In view of this statement, it is submitted that not too much should be read into the ‘special responsibility’ requirement. It is simply shorthand for saying that conduct that would be perfectly lawful if carried out by a non-dominant firm may be prohibited if carried out by a dominant undertaking. It is not a legal rule which imposes duties and liabilities on dominant undertakings. 4.288  This interpretation is borne out by the fact that the majority of cases refer to the concept of special responsibility as a descriptive shorthand for saying that a dominant undertaking is subject to rules that do not apply to other firms.309 In some complex Article 102 cases, the EU Courts have been perfectly able to rule on the question of abuse without any reference to the ‘special responsibility’ requirement.310 4.289  In some cases, the EU Courts have stated that the scope of the ‘special responsibility’ depends on the facts of each individual case.311 Yet again, that appears to be descriptive shorthand for explaining that, in the application of Article 102, what is an abuse depends on several factors that may be different from case to case such as the degree of dominance,312 the magnitude (p. 395) of the competitive harm,313 the objective being pursued,314 and the means employed to achieve it.315

(5)  Objective Justification (a)  General 4.290  Conduct that amounts to a prima facie abuse will not infringe Article 102 if it is objectively justified. In Post Danmark, the Court of Justice adopted the same approach as the Guidance and separated objective justification defences into two categories: objective necessity and efficiencies.316

(b)  Objective Necessity 4.291  In order to avail itself of an objective necessity defence,317 the dominant undertaking must plead and provide evidence to the effect that its conduct pursues a legitimate objective (other than efficiencies) and is necessary and proportionate to the pursuit of such an objective. Examples of such objectives are health and safety considerations,318 or technical or commercial requirements relating to the product or service in question.319 This defence differs from the efficiency defence because it does not require any balancing between the negative effects on competition of the conduct and its benefits. Therefore, as long as the conduct is necessary to the achievement of the objective and proportionate to it, an objective necessity defence is made out. On the contrary, if efficiencies are pleaded, a further balancing act is required.

(c)  Efficiency Defence 4.292  An efficiency defence is made out when the exclusionary effect is counterbalanced or outweighed by advantages in terms of efficiencies that also benefit consumers.320 In British Airways, the Court of Justice set out the following efficiency defence test:321 Assessment of the economic justification for a system of discounts or bonuses established by an undertaking in a dominant position is to be made on the basis of the whole of the circumstances of the case…It has to be determined whether the exclusionary effect arising from such a system, which is disadvantageous for competition, may be counterbalanced, or outweighed, by advantages in terms of efficiency which also benefit the consumer. If the exclusionary effect of that system

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bears no relation to advantages for the market and consumers, or if it goes beyond what is necessary in order to attain those advantages, that system must be regarded as an abuse. 4.293  The Article 102 Enforcement Priorities Guidance introduced a stricter test than in British Airways, in particular by requiring that the dominant undertaking’s conduct must not (p. 396) eliminate ‘effective competition’.322 In the Commission’s view, four cumulative conditions must be fulfilled for an efficiency defence to be established:323 •  the efficiencies have been, or are likely to be, realized as a result of the conduct; •  the conduct is indispensable to the realization of those efficiencies. There must be no less anti-competitive conduct that is capable of producing the same efficiencies; •  the likely efficiencies brought about by the conduct outweigh any likely negative effects on competition and consumer welfare in the affected markets; and •  the conduct does not eliminate effective competition. 4.294  The Court of Justice in Post Danmark appears to change the test in British Airways and follows closely the Commission’s approach:324 It is for the dominant undertaking to show that the efficiency gains likely to result from the conduct under consideration counteract any likely negative effects on competition and consumer welfare in the affected markets, that those gains have been, or are likely to be, brought about as a result of that conduct, that such conduct is necessary for the achievement of those gains in efficiency and that it does not eliminate effective competition, by removing all or most existing sources of actual or potential competition. 4.295  Thus, the Court introduces three new elements in the test: •  the anti-competitive effect as well as the efficiencies must be ‘likely’; •  the negative effects of the conduct are described as effects on ‘competition and consumer welfare’, thus appearing to endorse the idea that an exclusionary effect is prohibited under Article 102 if the exclusion has a negative effect on prices, output, quality, choice, or innovation; •  the conduct must not eliminate ‘effective competition’. 4.296  The most important change in the objective justification test is that the conduct must not eliminate effective competition. This requirement, not present in British Airways but clearly taken from the Article 102 Enforcement Priorities Guidance, if applied literally, would essentially rule out the possibility that a dominant undertaking may be able to make out an efficiency defence. Effective competition is, indeed, incompatible with a dominant position. However, the Court went on to say that the conduct must not eliminate ‘all or most existing sources of actual or potential competition’. Therefore, the better view is that, if this requirement is to be introduced as part of the efficiency defence test, ‘effective’ competition should be read as ‘existing’ competition. 4.297  As regards the burden of proof and the evidentiary burden, in the Microsoft judgment, the General Court answered the question where the burden lay to balance any efficiencies and harm to competition:

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although the burden of proof of the existence of the circumstances that constitute an infringement of Article [102 TFEU] is borne by the Commission, it is for the dominant undertaking concerned, and not for the Commission, before the end of the administrative procedure, to raise any plea of objective justification and to support it with arguments and evidence. It then falls to the Commission, where it proposes to make a finding of an abuse of a dominant (p. 397) position, to show that the arguments and evidence relied on by the undertaking cannot prevail and, accordingly, that the justification put forward cannot be accepted.325

Footnotes: 279

  Continental Can (n 3); Case C-333/94 P Tetra Pak II (n 3); Case C-95/04 P British Airways (n 3). 280

  Hoffmann-La Roche (n 6), para 91.

281

  ‘Competition on the merits’ is an alternative phrase used in the case law to denote the concept of ‘normal competition’ in Hoffmann-La Roche (n 6): see eg Case T-65/98 Van den Bergh Foods Ltd v Commission [2003] ECR II-4653, para 157, appeal dismissed in Case C-552/03 P Unilever Bestfoods (Ireland) v Commission [2006] ECR I-9091 (Van den Bergh Foods); Opinion of AG Kokott in Case C-95/04 P British Airways (n 3), para 24. 282

  Post Danmark (n 10), para 21.

283

  Post Danmark (n 10), para 24.

284

  J. Vickers, ‘Abuse of Market Power’ (2005) 115 The Economic Journal 504.

285

  Nazzini, The Foundations of European Union Competition Law (n 3), demonstrates that all these tests have some legal underpinning in EU law although none has ever been endorsed as the only abuse test by the EU Courts. 286

  The short-term disadvantage in this case would be the loss of the revenue that the dominant supplier could have realized if it had supplied the requested product. In classical refusal to supply cases, the long-term benefit to the dominant firm would be the foreclosure of the competitor in the secondary market. In cases along the lines of United Brands, the anti-competitive benefit would be to enforce a certain behaviour on its customers (eg single branding, exclusive supply, purchase of bundled, or tied products) and thus to limit the ability of its existing competitors or new entrants to compete in the dominated market. The absence of such anti-competitive benefit should lead to a negative finding of abuse. 287

  See eg G. Werden, ‘Identifying Exclusionary Conduct under Section 2: The “NoEconomic” Sense Test’ (2006) 73 Antitrust LJ 413–33 and A. D. Melamed, ‘Exclusive Dealing Agreements and Other Exclusionary Conduct: Are There Unifying Principles?’ (2006) 73 Antitrust LJ 375–412. 288

  Indeed, exclusionary conduct is not necessarily extremely costly for the defendant. Eg supplying false information or failing to disclose important information to a government official or standard-setting organization need not cost any more than supplying truthful information, but it can create monopoly under appropriate circumstances (see Section J.2). In fact, the provision of false information may be less costly than the provision of truthful information, since false information may be easier and cheaper to manufacture. Further, the provision of such information to a government official might be profitable (ie ‘make sense’) whether it destroys a rival or merely results in increased output for the defendant. Eg the firm that acquires a patent by making false statements to the patent examiner and then brings infringement actions against rivals might be dominant and bent on protecting that

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position. But it might also be one of many firms in a product-differentiated market, seeking to do no more than protect its sales from a close substitute. 289

  Article 102 Enforcement Priorities Guidance, para 19.

290

  Article 102 Enforcement Priorities Guidance, para 19, read in conjunction with para 11.

291

  Article 102 Enforcement Priorities Guidance, para 19.

292

  Article 102 Enforcement Priorities Guidance, para 19.

293

  Article 102 Enforcement Priorities Guidance, para 20.

294

  Article 102 Enforcement Priorities Guidance, para 23.

295

  Article 102 Enforcement Priorities Guidance, paras 41–45.

296

  Article 102 Enforcement Priorities Guidance, paras 59–61.

297

  Vickers, ‘Abuse of Market Power’ (n 284), 249–50.

298

  Article 102 Enforcement Priorities Guidance, para 24.

299

  Article 102 Enforcement Priorities Guidance, para 80. The cost benchmark which the Commission will generally rely on to determine the costs of an equally efficient competitor are the long-run average incremental costs of the dominant company’s downstream division. 300

  Article 102 Enforcement Priorities Guidance, para 20.

301

  Case T-155/06 Tomra Systems v Commission [2010] ECR II-4361, paras 238–246.

302

  Case T-155/06 Tomra (n 301).

303

  Post Danmark (n 10), para 24 (emphasis added).

304

  Case C-95/04 P British Airways (n 3), paras 106–107.

305

  Continental Can (n 3), para 26.

306

  Michelin I (n 2), para 57.

307

  Arguably, this follows from the definition of excessive pricing in United Brands. Competition is presumed to bring prices in line with average costs of production. Hence, a price above the competitive level could be regarded as a price that ‘has no reasonable relation to the economic value of the product supplied’. As a result, one could argue that a dominant firm has a special responsibility to behave ‘as if’ it faced sufficient competitive constraints and refrained from reaping supra-competitive profits by charging excessive prices. 308

  See Case T-271/03 Deutsche Telekom (n 9) upheld in Case C-280/08 P Deutsche Telekom v Commission [2010] ECR I-9555 and Post Danmark (n 10). 309

  eg Michelin I (n 2), paras 114–121.

310

  eg Joined Cases C-468–478/06 Sot Lélos kai Sia EE v GlaxoSmithKline AEVE Farmakeftikon Proionton [2008] ECR I-7139 (Sot Lélos kai Sia); IMS Health (n 275). 311

  eg Joined Cases C-395/96 and C-396/96 P Compagnie Maritime Belge (n 2), para 114: ‘the actual scope of the special responsibility imposed on a dominant undertaking must be considered in the light of the specific circumstances of each case which show that competition has been weakened’; Case C-333/94 P Tetra Pak II (n 3), para 25: ‘the actual scope of the special responsibility imposed on a dominant undertaking must be considered in the light of the specific circumstances of each case which show a weakened competitive situation’, upholding Case T-83/91 Tetra Pak II (n 39), para 115.

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312

  The classic example is Joined Cases C-395/96 and C-396/96 P Compagnie Maritime Belge (n 2), para 119: It is sufficient to recall that the conduct at issue here is that of a conference having a share of over 90% of the market in question and only one competitor. The appellants have, moreover, never seriously disputed, and indeed admitted at the hearing, that the purpose of the conduct complained of was to eliminate G & C from the market. 313

  eg Case T-65/89 BPB Industries and British Gypsum v Commission [1993] ECR II-389 (British Plasterboard), para 68: ‘the conclusion of exclusive supply contracts in respect of a substantial proportion of purchases constitutes an unacceptable obstacle to entry to that market’. 314

  The objectives pursued by the dominant undertaking must relate ‘to the defence of the legitimate interests of an undertaking engaged in competition on the merits’: Case T-321/05 AstraZeneca (n 151), para 672. 315

  The means employed are subject to a test of reasonableness and proportionality: see Joined Cases T-24–26/93 and T-28/93 Compagnie Maritime Belge (n 222), para 148. 316

  Post Danmark (n 10), para 41 and Article 102 Enforcement Priorities Guidance, para 28. 317

  Article 102 Enforcement Priorities Guidance, para 29.

318

  Case T-30/89 Hilti (n 149), paras 118–119; Case T-83/91 Tetra Pak II (n 39), paras 83, 84, and 138. 319

  Case 311/84 Centre Belge d’Etudes de Marché—Télémarketing (CBEM) v SA Compagnie Luxembourgeoise de Télédiffusion (CLT) and Information Publicité Benelux (IPB) [1985] ECR 3261 (Telemarketing), paras 26–27. 320

  Post Danmark (n 10), para 41.

321

  Case C-95/04 P British Airways (n 3), para 86.

322

  Article 102 Enforcement Priorities Guidance, paras 28–31.

323

  Article 102 Enforcement Priorities Guidance, para 30.

324

  Post Danmark (n 10), para 42.

325

  Case T-201/04 Microsoft I (n 5), para 688.

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Part I General Principles, 4 Article 102, E Predatory Pricing Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Predatory pricing — Enforcement by EU Commission — Exclusionary abuse — Foreclosure effect — Barriers to entry

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E. Predatory Pricing (1)  What is Predatory Pricing? (a)  Definition 4.298  Predatory pricing can be defined as the practice where a dominant company lowers its price and thereby deliberately incurs losses or foregoes profits in the short run so as to enable it to eliminate or discipline one or more rivals or to prevent entry by one or more potential rivals. The foreclosure of the rival may then allow the dominant firm to increase price further above supra-competitive levels for a significant period. In such circumstances, although consumers may benefit in the short term from low prices, in the long term they may be worse off.

(b)  Economic Theories of Predatory Pricing 4.299  The economic theories of predation have evolved considerably since the 1950s (when predation was argued to be economically irrational and thus not to be a real concern). The current established models of predation326 provide three main motivations or rationales for a firm to engage in predatory pricing, namely to allow it to: •  drive a financially constrained competitor out of the market. Thus, if the rival must incur some fixed cost to remain in operation, then, by driving the market price below variable costs resulting in a loss at least as large as fixed costs the predator may exhausts its rival’s reserves, driving it out of the market. Predation would be both feasible and rational, provided the monopoly rents the predator receives once exit has occurred are sufficient to compensate for the reduction in profits during the predatory episode. This assumes a constraint on the financial resources of the rival (eg difficulties raising debt from lenders 327 ); •  gain a reputation as an aggressive competitor. Potential entrants will observe that competition is unprofitable when facing the incumbent and will therefore be deterred from entering the market. Such a reputation will allow the predator to enjoy monopoly profits in other markets without the cost of fighting a price war in each one of them, particularly if the predator operates in multiple, closely related markets (eg airline markets); •  send a signal to potential entrants to deter new entry. The signal may be that either demand is weak 328 or that the incumbent’s costs are low. In either case, the intended message may be that there is no prospect of profitable entry.

(p. 398) (c)  Distinguishing Predatory Pricing From Normal Competition 4.300  Predatory pricing is, in practice, often difficult to distinguish from normal price competition. The lowering of prices, the directly visible part of predation, is also an essential element of competition and consumer welfare (consumers benefit when firms aggressively compete to price as low as possible—price competition enables consumers to secure desired products and services for less). In addition, lowering price temporarily may be necessary to bring a new product to market or enter a new market. As a result, there is general consensus that pricing is not predatory merely because a dominant company is lowering its price. In other words, dominant firms have no special responsibility to keep prices above a certain level to ensure rivals remain profitable and active in the market. 4.301  Distinguishing harmful predation from pro-competitive discounting is often difficult and runs the risk of erroneous condemnation, which can discourage firms from engaging in beneficial price competition and thus ‘chill the very conduct the antitrust laws are designed to protect.’329 Both the Commission and the EU Courts have generally paid attention to mainstream economic thinking. Consequently, enforcement has generally mirrored the

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evolution of economic analysis of predation, culminating with the adoption of the Article 102 Enforcement Priorities Guidance.

(2)  Predation Under EU Law: The AKZO Test 4.302  The EU Courts’ approach to predatory pricing was set down in AKZO.330 AKZO supplied organic peroxides to customers in a number of industries. A competitor, ECS, which supplied organic peroxides to millers, decided to expand beyond the flour industry and approached a German plastics’ manufacturer (BASF) with a view to supplying it. In response, AKZO offered organic peroxides to ECS’s regular customers at prices well below those which it offered its normal customers. ECS argued that the only rationale for this could be the elimination of ECS from the market. The Commission found that AKZO had engaged in predatory pricing and the Court of Justice upheld its decision. The Court laid down two tests for when pricing would amount to predatory pricing in breach of Article 102. 4.303  First, prices below average variable costs ‘by means of which a dominant undertaking seeks to eliminate a competitor must be regarded as abusive’. The Court explained the rationale for the test in the following way:331 A dominant undertaking has no interest in applying such prices except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position, since each sale generates a loss, namely the total amount of the fixed costs (that is to say, those which remain constant regardless of the quantities produced) and, at least, part of the variable costs relating to the unit produced. 4.304  Secondly, prices above average variable costs but below average total costs ‘must be regarded as abusive if they are determined as part of a plan for eliminating a competitor’.332 The Court went on to explain333 that ‘Such prices can drive from the market undertakings which are (p. 399) perhaps as efficient as the dominant undertaking but which, because of their smaller financial resources, are incapable of withstanding the competition waged against them.’ 4.305  The price-cost tests set down in AKZO and endorsed in subsequent cases334 raise a number of questions and potential difficulties.

(a)  Whether and How to Assess the Intent of the Dominant Firm 4.306  The Court of Justice clarified why proof of intent is not required when prices are below average variable costs in France Télécom, when it explained that ‘prices below average variable costs must be considered prima facie abusive inasmuch as, in applying such prices, an undertaking in a dominant position is presumed to pursue no other economic objective save that of eliminating its competitors’.335 The ‘no economic sense’ test for prices below average variable costs is, therefore, a test of intent. Furthermore, because the Court in France Télécom used the phrase ‘prima facie’ and the verb ‘presumed’, it follows that it is open to the dominant undertaking to rebut the inference of predation not only by adducing evidence of an objective justification but also by displacing the presumption of intent, although in practice the two defences will almost always be indistinguishable. 4.307  On the other hand, if prices are above average variable costs but below average total costs, the conduct of the dominant undertaking is abusive only if there is proof of a plan to eliminate a competitor.336

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4.308  The question arises whether a ‘plan’ or ‘intent’ to eliminate a competitor is a test of intent or an objective assessment of the conduct in its market context. In AKZO, the Court held that certain price quotations could only be explained by AKZO’s ‘intention to damage’ its competitor ECS.337 In the same case, the Court of Justice considered that AKZO’s pricing policies had the ‘aim of damaging ECS’s viability’.338 In Tetra Pak II, the General Court relied on evidence of ‘eliminatory intent’, a ‘plan for eliminating’ Tetra Pak’s competitor Elopak, and an ‘eliminatory strategy’.339 The Court also held that, when prices were above average variable costs but below average total costs, the AKZO rule required the ascertainment of ‘the strategy of the undertaking in a dominant position’.340 The Court of Justice used the phrase ‘economic purpose’ in relation to prices below average variable costs and ‘intention’ in relation to prices above average variable costs but below average total costs.341 In France Télécom, the General Court referred to ‘a plan for eliminating a competitor’342 and ‘intention to eliminate competition’.343 The Court of Justice used the phrases ‘plan having the purpose of eliminating a competitor’344 and, in relation to prices below average variable costs, ‘economic (p. 400) objective’345 and ‘eliminatory intent’.346 Disposing concisely of the argument of the applicant that the General Court had relied only on subjective elements to establish a predatory plan, the Court of Justice said that ‘although the [General Court] referred to a “strategy to preempt” the market by WIN [the dominant undertaking], it none the less deduced this from objective factors such as that undertaking’s internal documents’.347 Thus, reliance on internal documents was sufficient to establish intention. It would appear, therefore, that the test is a test of subjective intent but intent may be inferred from circumstantial evidence and must have been implemented through conduct capable of achieving the intended result not only in the abstract but also in its market context.

(b)  What is the Appropriate Cost-Based Benchmark? 4.309  The AKZO tests rely on cost benchmarks to determine whether conduct by the dominant undertaking is capable of excluding ‘as-efficient’ competitors. The Court explicitly relied on the ‘as efficient competitor’ rationale in relation to prices above average variable costs and below average total costs348 but the same rationale applies a fortiori when prices are below average variable costs.349 The price-cost test is explicitly linked to the equally efficient competitor test.350 4.310  The Commission Guidance also adopts cost tests to determine whether the conduct of a dominant undertaking entails a ‘sacrifice’ and whether it is likely to exclude an equally efficient competitor (see paras 64–66 of the Guidance). However, the cost benchmarks adopted in the Guidance differ from those set down in the case law. It is, therefore, of fundamental importance to understand what principles govern the choice of the appropriate cost benchmarks. In particular, it is submitted that the choice of the cost benchmarks is not an issue of fact to be determined on a case-by-case basis but a legal question to be answered in light of the as-efficient competitor principle.351 4.311  The Court of Justice in AKZO defined variable cost as the cost that varies ‘depending on the quantities produced’.352 Average variable cost is the variable cost per unit of output.353 Total cost is the sum of ‘fixed costs plus variable costs’.354 While there is no definition of fixed costs in the case, such a definition follows from the definition of variable cost. Therefore, fixed costs are costs that do not vary depending on the quantities produced. Average total cost equals the total cost divided by the unit of output. The cost concepts in AKZO are borrowed from microeconomic theory. Under basic microeconomic principles, marginal cost and marginal revenue determine the firm’s output decision. A firm will produce up (p. 401) to the point where marginal cost equals marginal revenue. Marginal cost determines the profit-maximizing (or loss-minimizing) output that a firm produces. Average variable cost are often said to be a proxy to marginal cost. Average total cost can be plotted not only in the short run but also in the long run. In the long run, if average revenue falls below long-run average (total) cost, then the firm is making an From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

unsustainable loss. In the absence of other incentives, it is rational for such a firm to exit the market. 4.312  To understand why these concepts are used in the Court’s test for predation, it is important to stress that the predation test is not concerned with whether a firm is producing more or less than the optimal output. Clearly, if a firm’s price is below its marginal cost, this is an indication of irrational market behaviour, which may (or may not) have the aim of excluding a competitor. However, because the objective of the test is to infer whether the pricing policy of the dominant undertaking is capable of excluding an ‘asefficient competitor’, more robust inferences can be drawn from the implications of the pricing policy under review for temporary closure and exit decisions of an equally efficient competitor. This is what the AKZO tests arguably achieve.355 If the dominant undertaking is making such a loss that it would be rational to cease production in the short term, an exclusionary strategy may be inferred. 4.313  This is the case when prices are below average variable cost.356 If prices are below average variable costs, the dominant undertaking could simply cease production and be better off. There may be benign reasons why it does not do so but the prices in question call for an explanation. If the dominant undertaking is not recovering its average total cost, an equally efficient competitor having to match the dominant undertaking’s prices would exit the market in the long term. In the short term, however, it is still rational for the dominant undertaking to produce because it is recovering its variable costs and, possibly, part of its fixed costs. Therefore, a competition authority or claimant must prove a predatory strategy to establish a prima facie case of predation. 4.314  This analysis of the rationale for the AKZO price-cost tests suggests that cost benchmarks other than average variable cost and average total cost may be used under Article 102 provided that the cost benchmark allows the drawing of an inference of predation under the AKZO test. Therefore, prices must be regarded as predatory whenever, at those prices, it would be more rational for the firm to cease production or not to increase output in the first place. The appropriate cost benchmark is whatever measure of cost determines the firm’s short-term closure decision in the industry. Furthermore, prices would be predatory whenever they have an impact on the profitability of the firm such that, if they persist for a sufficiently long period of time, the firm would exit the market. The appropriate cost benchmark is whatever measure of cost determines the firm’s exit decision in the long term.

(c)  Is a Below Cost Test Appropriate? 4.315  Although the Court of Justice set down tests based on below cost pricing, there are a number of arguments in favour of penalizing above cost predatory pricing under certain, even if uncommon, circumstances. (p. 402) 4.316  First, dynamic efficiencies mean that sometimes above cost pricing can injure ‘as-efficient’ producers. Smaller rivals or potential entrants may face much higher average costs than the incumbent and may take a long time to increase their demand to levels that would yield costs as low as those of the incumbent. Because production is subject to increasing returns of scale, the incumbent may price above its average total cost but below its rival’s average (total) cost and successfully predate.357 And if potential entrants anticipate being driven out of the market shortly after entry, they will typically not enter at all. 4.317  Secondly, relative efficiency is a multi-dimensional concept and cannot be based solely on observed costs differences. The price-cost tests implicitly assume that firms are identical except with respect to average costs, which determines their relative efficiency. However, in reality this assumption is often untenable. Firms may have similar costs and prices yet differ in the quality of their products or services, location, or conditions of supply. The products they offer may be differentiated (or branded), targeting slightly different From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

customer segments within the same relevant market. Some firms may offer a single product others may be multi-product companies and may sell (or produce) several goods in combination. Firms may also differ in the ability or incentive to invest in future product development. 4.318  The argument that price-cost tests protect as-efficient rivals is thus misguided. Observed costs are just one dimension of efficiency. For instance, a predator may overinvest in quality, innovation, or any other important dimension of competition such as frequency of service. Prices may be higher than own costs, maybe even higher than rivals’ costs. However, the quality-adjusted (or innovation-adjusted) price may still be the lowest and could thus be predatory under appropriate conditions. 4.319  Thirdly, the presence in the market of a ‘less efficient’ competitor may be beneficial in terms of consumer welfare. In every market, some firms are more efficient than others, yet workable competition is still valuable. The existence of less efficient firms may significantly constrain the pricing of that dominant firm. Prices may be above levels that would result if equally efficient competitors existed but may nonetheless be far below the monopoly price. 4.320  Probably inspired by these considerations, the Commission and the EU Courts have, in very rare cases, held that unconditional above-cost price cuts may be abusive. This appears to have happened in three sets of circumstances: (a) when the above-cost price cut is part of a wider exclusionary strategy; (b) when the above-cost price cut is applied selectively by a quasi-monopolist to eliminate its only competitor; and (c) when the abovecost price cut is aimed at preventing parallel trade.

(i)  Above-Cost Price Cuts as Part of a Wider Exclusionary Strategy 4.321  In Eurofix-Bauco v Hilti,358 the Commission found that Hilti had abused359 its dominant position360 on the (p. 403) EU-wide markets for nail guns,361 Hilti-compatible nails,362 and Hilti-compatible cartridges.363 The purpose of the various abusive practices was to foreclose independent suppliers of Hilti-compatible cartridges and nails so as to strengthen its dominance on these markets.364 The abuse consisted in Hilti tying the sale of cartridges to the sale of a corresponding supply of nails, reducing discounts and levels of service, including training, on-site servicing of tools, and technical advice, to cartridge-only customers365 or customers who purchased nails from independents,366 and refusing to honour guarantees whenever non-Hilti nails had been used on a Hilti nail gun.367 In order to prevent independent nail suppliers from obtaining their own supply of cartridges, Hilti ensured that Hilti or Hilti-compatible cartridges were not available to them by restricting parallel imports from the Netherlands to the UK,368 limiting the supply of cartridges to customers suspected of reselling them,369 and delaying the granting of a compulsory patent licence available in the UK which would have allowed third parties to manufacture Hilticompatible cartridges.370 In the UK, Hilti also applied a secret policy of granting higher discounts to brand-loyal customers.371 4.322  In the context of this complex set of abusive practices all with the same aim of foreclosing independent nail producers, the Commission also objected to certain above-cost price cuts offered to purchasers of competitors’ nail guns and nails in order to convert them to Hilti.372 First, these price cuts were selective and discriminated against Hilti’s customers who ‘effectively bear the cost of the lower prices to other customers’. Secondly, they were not a competitive reaction to its competitors ‘but reflected Hilti’s pre-established policy of attempting to limit their entry into the market for Hilti-compatible nails’. Thirdly, only a dominant undertaking such as Hilti could price-discriminate in this way ‘because it is able,

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through its market power, to maintain prices to all its other customers unaffected by its selectively discriminatory discounts’.373 4.323  The General Court upheld the finding of abuse relating to above-cost price cuts to rivals’ customers under the broader heading of ‘selective and discriminatory policies towards its competitors and their customers’.374 Astonishingly, the only reason supporting the Court’s conclusion was that the conduct under review was abusive because it was ‘liable to deter other undertakings from establishing themselves in the market’.375 The only plausible explanation is that the Court was endorsing the second ground on which the Commission found the price cuts abusive, namely that they were part of a wider exclusionary policy. This is clear if one considers that the first and the third grounds relied on by the Commission referred (p. 404) to price discrimination while the Court considered the discounts abusive purely because of their exclusionary effect. The issue of abuse did not arise on appeal before the Court of Justice.376

(ii)  Above-Cost Price Cuts by a Quasi-Monopolist Liable to Exclude its Only Competitor 4.324  In Cewal,377 the Commission found that the members of a liner conference had abused their collective dominant position on the market for liner shipping services378 between north European ports from Scandinavia to Antwerp–Zeebrugge and Zaire.379 The abuse consisted of the targeted380 implementation of above-cost price cuts designed to drive their only competitor (G & C) out of the market, a practice then known in the maritime trade as ‘fighting ships’.381 Fighting ships were those ships scheduled to sail on or close to the dates of the sailings of the only competitor. The freight charged was the same as or lower than the freight of the competitor but, it appears, above the costs of the member of the collectively dominant shipping conference. The practice entailed a profit sacrifice but not an accounting loss. The profit sacrifice was shared by all conference members because of the rotating system of designation of the fighting ships.382 The practice was carried out as part of a plan to eliminate the only competitor.383 4.325  In Compagnie Maritime Belge, the General Court upheld the finding of abuse.384 Rejecting the appeal on this point, the Court of Justice attempted to explain why above-cost price cuts were exclusionary on the facts of the case. It said that liner conferences provide adequate efficient scheduled maritime transport services. As a consequence, when a single conference has a dominant position on a particular market, its customers ‘would have little interest in resorting to an independent competitor, unless the competitor were able to offer prices lower than those of the liner conference.’385 This means that the competitor was facing a switching cost and, therefore, it was not sufficient for it simply to match the prices of the dominant undertaking. The Court went on to say that selective above cost prices matching the prices charged by the competitor had a dual effect: they eliminated the only way in which the rival could compete effectively while, at the same time, protecting the dominant undertaking’s supra-competitive profits on other routes.386 Finally, (p. 405) the Court concluded that, in circumstances where the dominant undertaking had a 90 per cent market share, there was only one competitor, and the purpose of the conduct was to eliminate the competitor, the prices in question were abusive.387 This approach, it appears, is not necessarily inconsistent with the as-efficient competitor test now strongly endorsed in Post Danmark. However, after Post Danmark, a finding of abuse in circumstances such as those in Compagnie Maritime Belge would arguably require at least proof that the foreclosed competitor could have become as efficient as the dominant undertaking but for the abuse, which, for example, prevented him from reaching the minimum efficient scale to operate on the market.

(iii)  Above-Cost Price Cuts Restricting Free Trade

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4.326  In Irish Sugar,388 the Commission found that Irish Sugar had abused its single and, prior to a certain date, collective389 dominant position on the retail and industrial markets for granulated sugar in the Republic of Ireland. In the context of a general policy of protecting its home markets from imports from other Member States and competing sugar packers in the Republic of Ireland, Irish Sugar adopted a policy of ‘border rebates’ granted to selected customers established in the border area with Northern Ireland. The border rebate was unrelated to objective economic factors. Rather, ‘it was used and modulated whenever it was considered that the price difference between Northern Ireland and Ireland might have induced cross-border sales’.390 This practice was part of a much wider exclusionary strategy.391 4.327  The General Court upheld the border rebate abuse because, inter alia, the border rebates constituted a barrier to the achievement of the internal market and ‘prejudicial to the outcome of effective and undistorted competition, especially with regard to the interests of consumers’.392 However, recognizing the exceptional nature of the prohibition of unconditional above-cost price cuts, the Court limited the application of the prohibition of above-cost price cuts designed to prevent parallel imports to ‘an undertaking holding a dominant position as extensive as that enjoyed by the applicant’,393 which held 88 per cent of the relevant market.394

(p. 406) (d)  Difficulties With Relying on Price-Cost Tests 4.328  The following problems can be identified as regards reliance on price-cost tests: (a) in some situations, predation can take place without the need for the dominant undertaking to price below cost (ie below cost pricing may not be a necessary condition); (b) in some situations, below cost pricing on its own may not result in predation (ie below cost pricing may not be a sufficient condition); (c) in some situations, below cost pricing can be procompetitive; and (d) measurement of both prices and costs is a challenging exercise, fraught with difficulties, even in the best of circumstances.

(i)  Below Cost Pricing May Not Be a Necessary Condition 4.329  When an incumbent predates to acquire a reputation for aggressive behaviour, it is not necessary to price below cost; the incumbent could choose to price at (rather than below) average total cost and thus reduce all prospect of profit. If potential entrants are led to believe that it will always respond to entry by pricing at average total cost, they may prefer to stay out of the market, thus allowing the incumbent to exercise market power. 4.330  Below cost pricing is also not a necessary condition in financial predation models. This is because the cost of capital to the prey is endogenously increased by the threat of predation. The point at which it is unprofitable for the prey to enter or remain in the market may be reached before the predators’ prices fall below its costs. In signalling models, where a high-cost incumbent lowers its prices to mislead a potential entrant into believing it has low costs and that entry would be unprofitable, the price can successfully reduce the entrant’s expectations without having to be below the incumbent’s own costs.

(ii)  Below Cost Pricing May Not Be a Sufficient Condition 4.331  In economic models of rational predation, ‘below cost pricing’ does not emerge as a sufficient condition; if prices were later expected to increase, rivals would not be deterred or driven out of the market by prices below average costs. Other elements need to be present for a predatory strategy to pay off. In particular, predatory pricing is only likely to be successful when, unlike the dominant company, the rival is financially constrained and informational asymmetries, endemic to capital markets, exist between the firm and its lenders or investors.

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4.332  Further, as the objective of predatory pricing is to take market share from rivals, such a strategy requires both a price decrease and an output increase. Therefore, reducing price below cost will not be successful if the dominant firm is capacity-constrained and thus unable to cover (temporarily) what was supplied by those rivals and possibly any additional demand stimulated by the price decrease.

(iii)  Below Cost Pricing May Be Pro-Competitive 4.333  A firm may price below its cost to promote a new product or enter a new market, reduce costs through learning-by-doing, or increase the value of its product through network externalities. Such pricing is essentially dynamic in that the price cutter anticipates that lower costs or increased marketing efficiency in the future will compensate for present losses.395 4.334  In the presence of two-sided markets, a short-run analysis based on one side of the market would easily characterize a low price as predatory. A well-known example of a twosided (p. 407) market is the business model of the Adobe Acrobat Reader and Writer. While the Acrobat Reader is offered free over the Internet, arguably below any reasonable measure of cost, Acrobat Writer is sold for a fee. The rationale behind this pricing strategy stems from the fact that the incentive to purchase and create files with Acrobat Writer is greater when there is a large number of users that have Acrobat Reader installed.396 In such cases, a simple price-cost comparison cannot differentiate between predation and legitimate market-expanding strategies. Only a thorough analysis of the alleged predator’s conduct can do so.

(iv)  Below-Cost Pricing Tests Create Measurement Difficulties 4.335  In practice, price-cost rules have proven difficult to implement even in the most stable and simply structured of manufacturing industries. We are not aware of any investigation that has not led to substantial disputes over how to calculate and allocate costs. With cases involving multi-product firms, the issue of common costs arises and raises practical difficulties. The allocation of costs related to advertising and promotion causes problems when expenses cover different markets and different products. Similar costallocation (and pricing) difficulties arise when there exist economies of scope combined with network effects. For example, today’s world of scheduled air carriers, working out of a hub-and-spoke network, is fundamentally different from the world in which economists in the 1970s debated about cost-based tests of predation. In an industry characterized by multiple products (different routes, categories or frequencies), extremely low marginal prices, and joint network costs, the cost of a particular seat on a particular route is impossible to calculate. 4.336  As explained by Areeda and Turner in their seminal article on predation,397 the economic costs facing a firm differ in an important respect: some are ‘fixed’ and others are ‘variable’. •  Fixed costs are costs that do not vary with changes in output and would continue even if the firm produced no output at all. They typically include most management expenses, interest on bonded debt, depreciation (to the extent that equipment is not consumed by using it), property taxes, and other irreducible overheads. Fixed costs should also be deemed to include the return on investment that would currently be necessary to attract capital to the firm—what the economist refers to as the opportunity cost to the owners of the firm. •  Variable costs, as the name implies, are costs that vary with changes in output. They typically include such items as materials, fuel, labour directly used to produce

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the product, repair and maintenance, and per-unit royalties and licence fees. The average variable cost is the sum of all variable costs divided by output. 4.337  Marginal cost is the increment to total cost that results from producing an additional increment of output—it is a function solely of variable costs. Marginal cost usually decreases over low levels of output and increases as production approaches plant capacity. Average cost is the sum of fixed cost and total variable cost, divided by output. It is, by definition, higher (p. 408) than average variable cost at all outputs, but will typically be below marginal cost at very high levels of output, when the plant is strained beyond efficient operating capacity. 4.338  Whilst analytically clear, the identification of variable and fixed costs is complex in practice. Which costs are fixed and which are variable (and hence marginal) is a function of both (a) the magnitude of the contemplated change in output and (b) time. Virtually all costs are variable when a firm, operating at capacity, plans to double its output by constructing new plants and purchasing new equipment. Moreover, more costs become variable as the time period increases. As a result, the existence of predatory pricing depends critically on the period over which the relative efficiency is considered. Thus, price-cost tests are deceptively simple analytically but, in practice, depend on subjective value judgements as to whether a cost is variable or fixed. 4.339  Further, there are many unresolved issues about the treatment of costs in some markets, including how to treat costs in industries with near-zero marginal costs, how to apply cost tests in situations in which equally efficient firms have different ratios of fixed to variable costs, what to do when, in declining industries, all firms have marginal costs that are below their variable costs. 4.340  Finally, appropriately defined economic costs will often be different from costs in the firm’s books, which are collated according to accounting principles (rather than economic principles). None of these difficulties in identifying, measuring, and allocating costs makes it particularly easy or swift to apply price-costs tests. The ensuing delays and controversy do not result in legal certainty either. In conclusion, the usefulness of price-cost tests is the exception, rather than the rule, and thus cannot form the basis for sound enforcement policy nor provide legal rules, that necessarily must apply in the general case.398

(e)  The Post Danmark Test 4.341  In the recent Post Danmark case, the Court of Justice was asked to rule on whether prices applied by a dominant postal operator to one of its customers were abusive if such prices were above the average incremental cost of the business activity in question but below its average total cost.399 It was uncontested in the case that there was no proof of a plan to eliminate a competitor.400 The Court held that, in these circumstances, in order to establish an anti-competitive effect, ‘it is necessary to consider whether that pricing policy, without objective justification, produces an actual or likely exclusionary effect, to the detriment of competition and, thereby, of consumers’ interests’.401 The exclusionary effect the Court had in mind is the exclusion of an equally efficient competitor—the judgment is crystal clear (p. 409) that competitors which are less efficient than the dominant undertaking are not entitled to protection from competition through Article 102.402 4.342  Therefore, the Court is probably laying down a further test, in addition to the AKZO tests: when the dominant undertaking is not recovering its average total costs but is recovering its average variable cost and, possibly, also a portion of its fixed costs, but there is no proof of a plan to eliminate a competitor, it is still possible to establish an abuse if there is proof of the likely exclusion of an equally efficient competition, to the detriment of the consumers. This is clearly an endorsement of the general framework of the Article 102 Enforcement Priorities Guidance, which relies on the likely foreclosure of equally efficient competitors leading to consumer harm as a general test for pricing abuses. Whether Post From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Danmark will have further ramifications for the law on predation remains to be seen. It may be argued, for instance, that, if the general framework is a test of likely foreclosure of equally efficient competitors leading to consumer harm, the AKZO tests are not tests in their own right. They are simply presumptions that allow an inference of likely foreclosure of equally efficient competitors. If this is the case, then, whenever either AKZO test is met, it should be open to the dominant undertaking to rebut the presumption of abuse by arguing and adducing sufficient evidence to prove that the conduct does not lead to the likely foreclosure of equally efficient competitors or does not lead to consumer harm.

(f)  The Role of Recoupment? 4.343  An important question in predation is whether the competition authority or claimant must prove that the dominant undertaking will be likely to recoup the losses incurred by engaging in the predatory strategy. The basic argument is that, if recoupment is unlikely, then it would be irrational for a dominant undertaking to engage in predation. The below cost pricing must, therefore, have another explanation. Another argument is that, in the absence of recoupment, below cost prices are beneficial to consumer welfare, although, on the other hand, they result in over-consumption and allocative inefficiency. 4.344  In AKZO, the Court of Justice noted that a dominant firm has no interest in pricing below average variable cost ‘except that of eliminating competitors so as to enable it subsequently to raise its prices by taking advantage of its monopolistic position’. The Court therefore appears to presume the recoupment will take place and does not expressly require the need to prove it in order to establish predation. In Tetra Pak II, the Court of Justice upheld the decision of the General Court, which declined to lay down the prospect of recouping losses ‘as a new pre-requisite’ for establishing the existence of predatory pricing, observing that it must be possible to penalize predatory pricing whenever there is a risk that competitors may be eliminated. The recent Court of Justice decision in France Télécom has similarly endorsed the AKZO test, dispensing with the need to prove recoupment when the ‘eliminatory intent of the undertaking at issue could be presumed in view of that undertaking’s application of prices lower than average variable costs’.403 4.345  Many commentators have argued that by not requiring evidence of recoupment, the legal standard set down by the Court of Justice omits an integral part of predation, rendering it incomplete. (p. 410) 4.346  However, it is clear that recoupment can be relevant; the Court of Justice in Post Danmark clarified that recoupment is an element of a predatory strategy that may be relevant to rebut a defence of objective justification for prices below average variable costs and to prove a predatory strategy if prices are above average variable costs but below average total costs.404 4.347  A separate question is whether proof of the impossibility of recoupment is inconsistent with a finding of abuse. In France Télécom, the Court held that this is not the law.405 This ruling is counter-intuitive because if there is no way in which a dominant undertaking can benefit from predation, this is strong evidence that the conduct is not abusive as it cannot harm competition in the long term. However, it is important to focus on the reason why the Court considered that the impossibility of recoupment was not incompatible with a finding of abuse. Even if the dominant undertaking cannot recoup its losses, predation allows it to ‘reinforce its dominant position…so that the degree of competition existing on the market, already weakened precisely because of the presence of the undertaking concerned, is further reduced and customers suffer loss as a result of the limitation of the choices available to them’.406 The strengthening or even the maintenance of a dominant position is, however, a form of consumer harm.407 The Court was thus rejecting the definition of recoupment as a comparison of future gains with current losses. The Court was not saying that proof of lack of incentive to predate is compatible with a finding of predation. EU law, however, considers that the strengthening or maintenance of a From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

dominant position is a sufficient predatory incentive. It is permissible to infer this condition from the elements relevant to the assessment of dominance408 as long as the market structure is not likely to change significantly post-exclusion. This understanding of recoupment or, more correctly, of consumer harm, is consistent with the approach adopted in the Article 102 Enforcement Priorities Guidance.409

(3)  The Predation Test in the Article 102 Enforcement Priorities Guidance 4.348  The Article 102 Enforcement Priorities Guidance defines predation as follows:410 A dominant undertaking engages in predatory conduct by deliberately incurring losses or foregoing profits in the short-term…so as to foreclose or be likely to foreclose one or more of its actual or potential competitors with a view to strengthening or maintaining its market power, thereby causing consumer harm. (p. 411) 4.349  The Guidance, in line with modern economic models of rational predation, takes a dynamic view of predation as a three-stage strategy. It defines predation as conduct by a dominant undertaking which (a) deliberately incurs losses or foregoes profits in the short term so as to (b) foreclose its rivals with a view to (c) strengthening or maintaining its market power, thereby causing consumer harm.411 4.350  Under the Guidance, to differentiate between price predation and pro-competitive discounting the Commission will first assess whether the dominant firm has deliberately sacrificed profits. If the answer to this is positive, the Commission will then ask three further questions in its prioritization exercise (during which both price-cost tests as well as a direct evaluation of incremental benefits and costs of a suspect predatory action can be considered). •  Is the conduct capable of excluding an equally efficient competitor? Generally, only prices below long-run average incremental costs (LRAIC 412 ) are likely to exclude equally efficient competitors. Furthermore, the Commission will give weight to factors that facilitate exclusion and make predation rational, such as asymmetric information that enables the dominant undertaking to distort signals about profitability on the market, the ability of the dominant undertaking to establish a reputation for predatory conduct that deters entry, and the reliance of rivals on external finances. 413

•  Is the conduct likely to cause consumer harm? •  Does the conduct produce efficiencies that outweigh the harm to consumers?

414

(a)  Profit Sacrifice 4.351  The ‘sacrifice’ element of the predation test415 is met if short-term revenues are lower than could have been expected from a reasonable alternative conduct.416 Prices below average avoidable costs (AAC417 ) are seen as a clear indication of sacrifice.418 However, the Commission considers that there can be ‘sacrifice’ whenever ‘the allegedly predatory conduct leads in the short term to net revenues lower than could have been expected from a reasonable alternative conduct’. This means that, if the dominant undertaking incurred a loss that it could have avoided by pursuing a rational and practicable alternative which was realistic given the market conditions, the ‘sacrifice’ element of the test is met.419

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4.352  The Commission defines AAC as ‘the average of the costs that could have been avoided if the company had not produced a discrete amount of (extra) output, in this case the amount allegedly the subject of abusive conduct’.420 Average variable cost and AAC are the same if the dominant undertaking does not incur any fixed cost in producing the incremental output that is alleged to be the subject of abusive conduct. However, AAC will be higher than (p. 412) average variable cost if the dominant undertaking incurs a fixed cost in producing that extra output. For instance, predation may entail not only a price cut but also adding extra capacity or launching an advertising campaign.421 This is consistent with the AKZO test for prices below average variable cost. Ex ante, the dominant undertaking should not have increased output in the first place. By analogy with the shortterm shutdown decision, the mere fact that prices are below AAC, therefore, warrants a presumption of predation.

(i)  Advantages and Disadvantages of Using AAC to Measure Profit Sacrifice 4.353  The switch to average avoidable cost is welcome. First, this will avoid endless disputes about the definition of variable vs fixed costs. Secondly, as the Commission Guidance points out,422 it may be necessary to look at incremental revenues in case the dominant company’s conduct in question negatively affects its revenues in other markets or in relation to other products. Similarly, in the case of two-sided markets it may be necessary to look at revenues and costs of both sides at the same time. 4.354  However, in practice, similar problems to those identified in relation to the EU Courts’ costs tests may remain. In theory, a predator will sacrifice profits when its marginal cost exceeds its marginal revenue. However, marginal costs and marginal revenues are notoriously difficult to measure. In particular, average avoidable costs can be lower than average incremental costs, and as such bias the sacrifice test in favour of the dominant firm. This is for various reasons. •  First, price is not equal to marginal revenue except for firms that have no market power. Microeconomic principles show that any profit-maximizing firm with market power sets price above marginal revenue. As a result, using price instead of marginal revenue provides only a conservative estimate of profit sacrifice. A firm could lower price so that marginal revenue is less than marginal cost, yet price remains above marginal cost. •  Secondly, AAC can be a poor proxy for marginal cost. When the marginal cost curve is increasing with output, as the predator expands output, marginal cost is higher than average variable cost. Comparing price with average variable cost during the predation phase is again favourable to the predator. Prices might be above average variable cost and yet below marginal cost. •  Thirdly, average incremental cost will account for all costs, including sunk costs, incurred in producing the extra predatory output, whereas AAC will exclude these sunk costs as those cannot be avoided. •  Finally, in practice the price and average cost are often computed as market-wide measures but not as incremental metrics and this tends to mask profit sacrifice. 423

(ii)  Possible Alternative: Comparing Incremental Revenues with Incremental Costs 4.355  Commentators have suggested alternative approached to estimate profit sacrifice that do not relay on price-cost comparisons. The most direct way to test for a temporary profit sacrifice (p. 413) is to compare the incremental costs and revenues of the alleged predatory practice. That is, does the conduct of the firm actually generate more revenues than the costs incurred? If the incremental costs of expanding output or increasing quality

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is higher than the associated incremental revenues, clearly this provides immediate evidence of profit sacrifice. 4.356  This approach is sufficiently flexible to be applicable also in non-price predation cases, simplifying the sacrifice inquiry relative to traditional price-cost tests. For example, following entry of a threatening rival a dominant firm may ramp up its advertising campaign to a point beyond that of a normal competitive response. In fact, the firm is sacrificing profits because the extra revenues generated by that extra advertising are less than the associated costs. And when the predatory behaviour includes a myriad of actions such as lower prices, large advertising campaign, or extra-service directed at attracting additional customers, the combined incremental revenues of all these activities can be compared with the incremental costs. 4.357  This approach would avoid the need for debate over the relevant cost measure with the parties. In particular, it would avoid complex judgement calls about which costs should be considered variable or fixed. In addition, the issue of allocating common costs should not arise as only incremental costs are concerned. When the firm offers steep discounts or adopts other form of non-linear pricing, it may be more accurate to compute the per-unit incremental revenues rather than using the market-wide per-unit price. 4.358  The difficulty with this approach, however, may be to determine exactly when the alleged predatory practice began. But usually alleged predatory practices are marked by a departure from the normal conduct that provides a natural anchor to compute incremental costs and revenues. In the case of dispute, sensitivity analysis can be conducted in computing incremental revenues and incremental costs.

(iii)  Assessing Whether There are Other, More Profitable Actions 4.359  In some cases, where it may be difficult to gather sufficient data to determine whether incremental costs are above incremental revenues, it is still in principle possible to establish whether the firm has engaged in profit sacrifice. This would require a showing that an alternative course of action for the firm exists that would have led to greater profits. This exercise relies on comparing profit under predation (observable) and profit under accommodation (not directly observable). This type of evidence can be very persuasive as long as it is the result of a careful empirical analysis. The Guidance Paper adopts this possible alternative way of showing profit sacrifice. 4.360  The Commission, however, should not second-guess what alternatives firms could have opted for. For example, an incumbent airline may respond to entry by a financially constrained firm by doubling the number of flights on that particular route. In contrast, on other routes where entrants are not financially constrained the incumbent responds by reducing (or not significantly increasing) the frequency of its service. In this situation, it could be convincingly argued that the response to entry in the first route involves profit sacrifice, in comparison with the response to entry in ‘normal’ circumstances (ie when predation is unlikely to succeed because entrants have deep pockets). Such analysis must be borne out by actual data, not mere speculation. 4.361  When assessing alternative actions, one must avoid three common pitfalls. First, as already discussed, profit sacrifice refers to avoiding a more profitable course of action, but not necessarily the most profitable. Secondly, sacrifice must be assessed with reference to a hypothetical (p. 414) response in an environment where there is no exclusion and rivals compete. There is no sacrifice even if a more profitable response to entry might well be to set a duopoly price in tacit collusion with the entrant. Thirdly, entry ordinarily reduces an incumbent’s profits even if the incumbent responds optimally. That profit reduction must

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not be confused with sacrifice. That is, the relevant counterfactual must also consider likely entry if it is expected to take place independently of predation. 4.362  This alternative route to show actual profit sacrifice should be used when there is strong evidence regarding likely (or actual) exclusion and likely (or actual) recoupment. This reflects our view that there should be a sliding scale as regards the standard of proof of actual sacrifice. The more convincing the evidence on the first two conditions, the less detailed the required analysis to establish sacrifice.

(b)  Exclusion of an Equally Efficient Competitor 4.363  Under the Guidance, the Commission considers that generally only prices below LRAIC are likely to exclude equally efficient competitors. 4.364  The Commission defines LRAIC as ‘the average of all the (variable and fixed) costs that a company incurs to produce a particular product’.424 The LRAIC does not include only the fixed costs incurred during the period of the alleged abuse but all the fixed (and variable) costs attributable to a given product in the long term. For single-product undertakings, ATC and LRAIC are the same.425 For multi-product undertakings, the measure of LRAIC solves the problem of the allocation of common costs, which was not addressed in the AKZO case. It can thus be concluded that LRAIC serves the same function as average total cost. It determines whether it would be rational for an equally efficient competitor to exit the market should prices fall persistently below this cost measure over the long term. 4.365  However, the Commission will not rely solely on LRAIC figures, but will look at additional factors to determine whether predation would be rational and likely to succeed.426 In particular, the Commission will consider why the rival might prefer to exit rather than compete against the predator. This requires an understanding of the extent and duration of the alleged predation, the relative financial strength of the predator relative to the prey, and the victims’ expected profitability of staying in the market.427 4.366  The factors relevant to whether predation may be successful in excluding an ‘asefficient’ competitor will vary between markets and type of predation. For example: •  predatory pricing to deter entry by misleading the entrant into believing the incumbent has low costs requires that there be no transparency as to the cost structure of the incumbent. The possible cost reduction must be of sufficient magnitude to require the victim to exit or stay out. Low-cost signalling is a risky strategy to drive out an existing rival unless there are (p. 415) high re-entry barriers. In the absence of substantial entry and re-entry barriers, rivals would then have an incentive to enter or re-enter the market, preventing recoupment; •  test market predation requires evidence that predatory conduct prevents a potential entrant from learning about demand under normal competitive conditions. Thus, the price cutting by the predator must be secret (otherwise the prey will not be misled into thinking that demand for its product is low). If other equally efficient information channels are available, such as market research or prospective customers, then a representative firm in the industry would not be confused, and a test-market jamming strategy would be implausible. Thus, there must be evidence that alternative information channels were unavailable, significantly more costly, or less accurate; •  on the contrary, for signal-jamming predation, it is necessary to show that the initial sacrifice (ie price cuts or other forms of predatory conduct) is public, since the purpose of the price cut is simply to obfuscate the test market results of the new entrant. Instead of being misled into believing that demand is weak, the victim may

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simply be unable to assess the demand for its product due to the signal-jamming effect.

(c)  Consumer Harm and Recoupment 4.367  The Commission in the Guidance Paper does not see consumer harm as a postpredation price increase to a level higher than that prevailing before the conduct or a price increase that enables the dominant undertaking to recoup the losses incurred as a result of the predatory strategy. Consumer harm is much more broadly understood as including any likely effect of the abusive conduct that not only increases, but also merely preserves, or slows down the decline of, the market power of the dominant undertaking. In this way, consumer harm is probably going to be inferred from structural elements inherent in the assessment of dominance and behavioural elements inherent in the assessment of abuse without the requirement of a further and separate proof of ‘recoupment’. 4.368  However, a showing of probable recoupment could be considered a sufficient condition to establish in the language of the Guidance Paper that ‘the dominant undertaking can reasonably expect its market power after the predatory conduct comes to an end to be greater than it would have been had the undertaking not engaged in that conduct in the first place, that is to say, if the undertaking is likely to be in a position to benefit from the sacrifice.’ 4.369  Proof of probable recoupment requires evidence that market conditions and the predator’s conduct makes future recoupment likely. Importantly, recoupment need not be confined to the market in which predatory behaviour occurs. 4.370  Moreover, recoupment differs according to whether the predatory attack is directed against an existing competitor or against an entrant or potential entrant. In the former case, the target is a competitor who has been exercising a downward influence on the predator’s price. A successful predatory attack will allow the predator to raise its price above the pre-predation level and recover its losses. In the case of predation against an entrant or potential entrant, the predator lowers its price in order to make entry appear unviable. If that strategy succeeds, the predator will then raise its price back to the prepredation level but, in all likelihood, it would not try to raise it above that level (if it could do so profitably, it would have already done so before the entrant appeared). 4.371  The assessment of the probable recoupment should take into account a variety of structural conditions that contribute to the likelihood that a predatory pricing strategy will be successful.

(p. 416) (i)  Entry is Unlikely After the Prey is Excluded or Disciplined 4.372  The presence of entry barriers after exclusion is essential if a predator is to have any hope of recovering losses it incurs at the sacrifice stage. Once it drives competitors out, the predator needs to raise its price high enough to earn the supra-competitive profits that justify its initial sacrifice. 4.373  In principle, assessing predation at the recoupment stage (ie post-exclusion) is easier than at the sacrifice stage (pre-exclusion). At the recoupment stage, it may be possible to observe whether the predator enjoys increased market power relative to the scenario without predation. In contrast, to assess the prospect of recoupment at the sacrifice stage a competition agency must rely on estimates regarding future events and market conditions. For recoupment to be probable, entry must be shown to be unlikely, insufficient, or belated. The assessment is similar to the forward-looking assessment carried out in merger cases.

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4.374  Sunk costs are important; the presence of high sunk costs would indicate that entry is highly risky and recoupment is likely. However, when recoupment is assessed at the profit-sacrifice stage without the benefit of observing the post-exclusion period, a forwardlooking assessment of predation might prove difficult. The presence of high sunk costs would also make it more difficult to drive existing rivals out of the market. Indeed, these irreversible investments make it more costly for the prey to exit the market. This element must therefore be taken into account in the assessment of likely exclusion. 4.375  Finally, whether assessing predation at the sacrifice or at the recoupment stage historical evidence on entry should be analysed with care to ensure that it is probative. First, evidence of no significant entry can mean the market is competitive since large-scale entry does not occur because it is unattractive because prices are close to marginal costs. Conversely, the fact that entry has occurred in the past does not imply that there are no barriers to entry or that entry is necessarily easy. In general, a clear signal of low barriers is provided only by effective, viable entry that takes a non-trivial market share.

(ii)  Re-Entry is Unlikely 4.376  Re-entry barriers are equally important when assessing likely recoupment. A reentry barrier may be defined as the cost that a firm that has exited a market must incur to resume production. If the firm can costlessly re-assemble the physical and human capital dispersed upon exit, then no re-entry barriers exist. In this case, a firm is unlikely to recoup the lost profits because its rivals remain viable even after they cease production. Hence, there can be no motive for predation. 4.377  Re-entry barriers exist, for example, when it is difficult and expensive for a firm that has left the market to repair the damage done to its reputation when it exited. Alternatively, it may be difficult for some firms to rehire the specialists who lost their jobs when the firm went out of business, or to find new ones to replace them.

(iii)  Assessment of the Competitive Constraint Exercised by the Excluded Rival 4.378  The possibilities to recoup an initial sacrifice will depend on the identity of the prey. Suppose the prey is relatively efficient, produces a close substitute to the predator’s product, is a potential entrant on various markets on which the predator is established, or a maverick whose presence impedes coordinated behaviour with other rivals. It is likely that the exclusion of such rival will significantly increase the predator’s market power. And this greatly facilitates the possibilities of recoupment. Again, such assessment bears similarities with the analysis of competitive effects in horizontal mergers where the emphasis is on the extent to which the merging parties were close competitors pre-merger.

(p. 417) (iv)  Dominance Is Not Evidence of Recoupment 4.379  Recoupment depends on whether the potential gains after exclusion more than offset the initial profit sacrifice. These potential gains derive from the difference in market power the predator enjoys after rivals are excluded. Recoupment is therefore likely if predation leads to a significant increase in market power. But, recoupment is not systematically related to dominance, which measures the level of market power of the predator before or during the predatory attack. Market conditions after predation are generally different to market conditions before predation, not least because some firms may have been induced to exit the market thereby exerting no further competitive constraints on the dominant firm and potential entrants may have been discouraged and reallocated their assets to other markets. In other words, the market structure is not the same as rivals exit the market or potential entrants stay out. Consequently, an assessment of dominance, prior or during the predatory attack, is a priori unreliable for gauging the ability of the predator to exercise increased market power post-exclusion.

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4.380  To assess the possibility of recoupment, one must first determine the extent to which the predator’s exercise of market power will increase after the prey’s exclusion. And this depends on the extent of the competitive constraint the prey exerted on the predator. For example, if the prey offered close substitutes its exclusion is likely to allow the predator to increase prices significantly. None of this is taken into account in the assessment of dominance before the recoupment phase. 4.381  Recoupment also depends on the actual sacrifice level needed to induce exclusion. If, to be successful, a predatory strategy requires substantial losses, then the recoupment will also need to be substantial. Again, dominance offers little indication as to the extent of the profit sacrifice required to induce exclusion. 4.382  In addition, there is at least one well-identified situation for which dominance is poorly related to recoupment possibilities. As McGee argued, a firm leaving the market may recover some of its investments by selling out its assets to another rival or a potential entrant.428 The assets stay in the market, making it difficult for the predator to increase prices to recoup its losses. In this case, evidence of dominance will provide little indication as to the possibility of recoupment. 4.383  Indeed, economic reasoning indicates that, for predation to lead to consumer harm, it is not necessary that the predator has significant market power at the time it engages in the profit sacrifice. To predate successfully, all a predator needs is some inherent advantage over its prey to attract demand in the event of a price decrease. Additionally, the predator needs to have sufficient excess capacity to serve the market as the price is lowered and demand expands. In other words, dominance (and certainly high market shares) is not strictly necessary to predate successfully. Indeed, a dominant firm with a high market share will tend to have a limited incentive to predate (a point made first by the Chicago School, which remains valid in cases of predation and recoupment in the same market). Firms with large market shares would suffer considerable losses at the sacrifice stage, as low prices will extend over a large sales volume. Moreover, the presence of a dominant firm indicates that the degree of competition is already weakened. As a result, such a dominant firm may earn limited gains from further increasing its grip on the market.

(p. 418) (d)  Objective Justification 4.384  The Guidance Paper expressly includes, as a final consideration, whether procompetitive efficiencies outweigh the consumer harm resulting from the pricing strategy. In the Article 102 Enforcement Priorities Guidance, the Commission considers that efficiencies associated with predatory conduct are ‘unlikely’ but are not ruled out altogether. However, the Commission does not explain what type of efficiency a predatory strategy may produce and merely points out that faced with efficiency claims it will evaluate whether the general conditions to taking efficiencies into account are met—see Section D.5(c). 4.385  This reluctance towards taking into consideration objective justifications and efficiencies can be explained. 4.386  First, most pro-competitive justifications for low prices or discounting seek to explain why prices may be below a relevant measure of costs. However, as explained in Section D.3(a)–(c), in the Article 102 Enforcement Priorities Guidance the Commission directs its enforcement priorities towards predation cases where anti-competitive foreclosure and hence likely consumer harm can be established. This extends the analysis beyond the question of whether prices are below costs. Indeed, it focuses on the reasons that induce a prey to exit, whether the excluded rivals are as efficient as the predator and ultimately whether consumers are worse off given the competitive conditions that would prevail following the exclusion of rivals. It follows that the Commission, in seeking to

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establish anti-competitive foreclosure, will assess whether or not the low prices are in fact pro-competitive. 4.387  Secondly, beyond pro-competitive justifications for below cost pricing (which will already have been taken into account), other objective justifications are generally extremely narrow in scope and require exceptional circumstances to be of such a significance so as to meet the general conditions, and in particular indispensability. 4.388  In any event, it cannot be ruled out that prima facie predatory conduct can be objectively justified, albeit rarely. Pro-competitive justifications for apparently predatory conduct include the following.

(i)  Market-Expanding Efficiencies 4.389  Low pricing may be justified by market-expanding dynamic efficiencies. A firm may price below its costs to promote a new product or enter a new market, entice consumers to shop at an existing outlet, reduce costs through learning-by-doing, or increase the value of its product through network externalities. Such dynamic efficiencies explain how the higher sales resulting from lower prices might increase future profits even with no exclusionary or disciplining effect. Evaluation of market-expanding efficiencies may raise difficult issues of characterization as they also involve recoupment, but in this case it comes not from output contracting monopoly pricing, but from output expanding efficiencies. 4.390  To achieve market-expanding efficiencies serves as a relevant business justification for a low-price strategy especially in new and emerging markets and network industries which are characterized by large up-front fixed costs. Under these circumstances, businesses often have to accept losses in the start-up period but may be able to recovery them by achieving greater scale and scope and learning over time. 4.391  The mere presence of these efficiencies does not preclude a coexisting predatory strategy to exclude or discipline rivals. In one scenario, the exclusionary impact of lower prices and (p. 419) the resulting increase in market power for the predator may be present but insufficient, in itself, to justify the initial profit sacrifice. However, it is possible that a firm will predate if the additional gains that result from market expansion together with the increased market power, compensate for the initial sacrifice. In another scenario, by exercising increased market power after exclusion the predator can entirely recoup its initial investment. Hence, there is predation. However, efficiency gains from learning curves or network effects could be substantial. The resulting incentive to reduce prices could more than offset the incentive to increase them after rivals are excluded. Thus predation could, on balance, benefit consumers in the same way a merger to monopoly can reduce prices if it leads to significant marginal cost reductions. In these situations, the Commission should not intervene to avoid the risk of false negatives.

(ii)  To Facilitate Learning and Awareness of a Product Among Consumers 4.392  The objective to facilitate learning and awareness of a product among consumers is relevant in the case of a new product launch or when a company wants to capture new customer segments. The objective establishes a business justification for low pricing where a product requires consumer familiarity or awareness before it can be appreciated by consumers. Further, it might form a justification for low pricing when consumers communicate their views of product quality to other consumers by word of mouth. This may be particularly relevant for technology products.

(iii)  To Improve the Firm’s Positioning as a Low-Price Company 4.393  To improve its positioning as a low-price company may also be considered a relevant business justification for a low-price strategy, for instance in the case of a repositioning or restructuring of a company. Such a low-price repositioning may involve only specific products, where firms set low prices to few products but high prices to the majority of products. This strategy is also referred to as loss leading: ‘Once the consumer is on the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

seller’s premises or committed to certain purchases anyway, the buyer will buy enough of other products to provide a profit greater than the loss on the product used as the loss leader.’ Losses on the leading products may be justified by higher profits on the following profits. 4.394  Bolton, Broadley, and Riordan429 point out that similar efficiency gains may be achieved in the case of two-sided markets or second-degree price discrimination. For example, a publisher might sell newspapers below cost in order to expand circulation and sell more advertising; or an airline might cut prices on discount economy-fare tickets in order to justify additional flights and sell more business-class tickets.

(e)  Meeting Competition Defence 4.395  The Commission has been reluctant in the past to accept the meeting competition defence. This is because pricing below average avoidable cost is neither suitable nor indispensable to minimize the dominant company’s losses. Where the pricing abuse concerns pricing above average avoidable cost, the Commission may wish to consider the meeting competition defence but only if it is shown that the response is suitable, indispensable, and proportionate. This requires that there are no other less anti-competitive means to minimize the losses and that the conduct is limited in time to the absolute minimum and does not significantly delay (p. 420) or hamper entry or expansion by competitors. A further problem with meeting competition defences is that the products may not be the same. If the incumbent’s product is higher quality than the entrant’s, then matching the price of the entrant is not meeting competition. Thus a meeting competition defence would be difficult to administer and could protect below cost pricing that harms competition and consumers.

(f)  Other Loss-Minimizing Strategies 4.396  Exceptional reasons may justify temporary prices below AAC. This could, for instance, be the case where there is an issue of restart-up costs or strong learning effects.430 Another example may be where certain longer term supply contracts with fixed prices have become loss making due to unforeseen and significant increases in input prices and where the dominant company is obliged to honour the supply obligations. Above the AAC benchmark, the company may show that its low price is actually a short-run, lossminimizing response to changed conditions in the market, such as resulting from a dramatic fall in demand leading to excess capacity. This could also be the case where there is a need to sell off perishable inventory or phased out or obsolete products or where the costs of storage have become prohibitive.431

Footnotes: 326 

A good exposition along with some intuitive discussion can be found in J. Tirole, The Theory of Industrial Organisation (Cambridge, MA: MIT Press, 1988); P. Rey and J. Tirole, ‘Analyse Economique de la Notion de Prix de Prédation’ (1997) 12 Revue Française d’Economie 3–32; P. Bolton, J. Broadley and M. H. Riordan, ‘Predatory Pricing: Strategic Theory and Legal Policy’ (2000) 88 Georgetown LJ 2239; and M. Motta, Competition Policy (Cambridge: Cambridge University Press, 2003), ch 7. 327

  The modern theories of financial predation rest on theoretical developments laid down by economists in the 1980s about the optimality of debt contracts—see in particular D. Gale and M. Hellwig, ‘Incentive Compatible Debt Contract: The One-Period Problem’ (1985) 52 Rev of Econ Studies 647–63.

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328

  See D. Fudenberg and J. Tirole, ‘Predation Without Reputation’, Working Paper 377, Massachusetts Institute of Technology (1985) for a discussion of test-market predation and signal jamming. 329

  P. Areeda, ‘Monopolization, Mergers, and Markets: A Century Past and the Future’ (1987) 75 Cal L Rev 959, 965–70. 330

  Case C-62/86 AKZO (n 145).

331

  Case C-62/86 AKZO (n 145), para 71.

332

  Case C-62/86 AKZO (n 145), para 72; Case T-83/91 Tetra Pak II (n 39), para 149.

333

  Case C-62/86 AKZO (n 145), para 72.

334

  Case T-83/91 Tetra Pak II (n 39), para 148 (relying on Case C-62/86AKZO (n 145), para 71) and paras 150, upheld on appeal in Case C-333/94 P Tetra Pak II (n 3), para 41. 335

  Case C-202/07 P France Télécom [2009] ECR I-2369, para 109.

336

  Case C-62/86 AKZO (n 145), paras 71–74; Case C-333/94 P Tetra Pak II (n 3), para 41; Case C-202/07 P France Télécom (n 335), para 109. 337

  Case C-62/86 AKZO (n 145), para 102.

338

  Case C-62/86 AKZO (n 145), para 103. See also paras 108 and 109.

339

  Case T-83/91 Tetra Pak II (n 39), para 151. See also para 190, where the Court refers to ‘eliminatory intent’. 340

  Case T-83/91 Tetra Pak II (n 39), para 187.

341

  Case C-333/94 P Tetra Pak II (n 3), paras 40–42.

342

  Case T-340/03 France Télécom (n 175), para 130. See also para 209, which refers to ‘a plan of predation’. 343

  Case T-340/03 France Télécom (n 175), para 197.

344

  Case C-202/07 P France Télécom (n 335), para 109. See also para 111, where the Court uses similar terminology. 345

  Case C-202/07 P France Télécom (n 335), para 109.

346

  Case C-202/07 P France Télécom (n 335), para 110.

347

  Case C-202/07 P France Télécom (n 335), para 98.

348

  Case C-202/07 P France Télécom (n 335), para 72.

349

  The price/cost test in AKZO has been consistently applied by the EU Courts in predation cases: see Case C-333/94 P Tetra Pak II (n 3), para 41 and Case C-202/07 P France Télécom (n 335), para 109. 350

  The position is not the same under US antitrust practice; See Brooke Group v Brown & Williamson Tobacco, 509 US 209 (1993). See also Northeastern Telephone v AT & T, 651 F2d 76 (2nd Cir 1981), cert denied, 455 US 943, 102 S Ct 1438, 71 L Ed 2d 654 (1982); MCI Communications v American Telephone and Telegraph, 708 F2d 1081, 1132–3 (7th Cir 1983), cert denied, 464 US 891, 104 S Ct 234 (1983); Borden v Federal Trade Commission 674 F2d 498 (6th Cir 1982) vacated on other grounds, 461 US 940 (1983). 351

  See Nazzini, The Foundations of European Union Competition Law (n 3), 223–9.

352

  Case C-62/86AKZO (n 145), para 71.

353

  Case C-62/86 AKZO (n 145), para 71.

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354

  Case C-62/86 AKZO (n 145), para 72.

355

  For this explanation of the AKZO tests, see Nazzini, The Foundations of European Union Competition Law (n 3), 223–9. 356

  Case C-202/07 P France Télécom (n 335), para 110, where the Court held that proof of recoupment is not necessary ‘in circumstances where the eliminatory intent of the undertaking at issue could be presumed in view of that undertaking’s application of prices lower than average variable costs’. 357

  Consider eg the airline industry. On many routes, an incumbent airline dominates the market and sells at a price above costs. Periodically, another airline enters the market at a lower price. The incumbent airline then lowers its price to beat (or match) the entrant, prices remain above the incumbent’s own costs. However, because the entrant has higher costs (or lower quality), it cannot compete at the new price and is driven out of the market. Moreover, it can never reach sufficient scale to minimize costs. Once the less efficient entrant is safely gone, the incumbent re-establishes the previous price. 358

  Cases IV/30.787 and IV/31.488 Eurofix-Bauco v Hilti, OJ 1988 L65/19 (Hilti).

359

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 74 summarizes the main elements and purpose of the abuses. 360

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 66–73.

361

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 55–56.

362

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 55–56.

363

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 55–56.

364

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 74.

365

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 30–34 and 75.

366

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 46.

367

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 44 and 79.

368

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 35–37 and 76.

369

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 41 and 77. Of course, Hilti refused to supply independent nail producers directly: recital 38. 370

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 39–40 and 78.

371

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 42–43, 47, and 82–83.

372

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 46 and 80.

373

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 80.

374

  Case T-30/89 Hilti (n 149), para 100.

375

  Case T-30/89 Hilti (n 149), para 100.

376

  The grounds of appeal were limited to market definition issues and were all rejected: see Case C-53/92 P Hilti [1994] ECR I-667. The grounds of appeal are helpfully summarized in the Opinion of AG Jacobs at para 13. 377

  Case IV/32.448 and IV/32.450: Cewal, Cowac and Ukwal, OJ 1993 L34/20 (Cewal).

378

  Cewal (n 377), recitals 8–12 and 52.

379

  Cewal (n 377), recitals 53–56.

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380

  The terminology used is inconsistent: see Cewal (n 377), recital 73 (‘special “fighting rates”’) and recital 80 (‘special price’ and ‘exceptional price’). However, the idea is clear: the freight rate in question is applied only when the ship is scheduled to sail close to or on the same date of the sailings of the competitor’s ships and is not an across-the-board price reduction. 381

  Cewal (n 377), recital 32.

382

  Cewal (n 377), recitals 32, 73, and 82.

383

  Cewal (n 377), recital 79, where the Commission relies on the use of the term ‘fighting ships’ which was well understood in the trade as an exclusionary practice and the setting up of a ‘Special Fighting Committee’. Further evidence of an exclusionary plan is set out in recital 32 where the Commission describes in more detail the implementation of the practice and certain internal documents revealing an anti-competitive purpose and awareness of anti-competitive effect although, given the several exclusionary practices implemented by the conference, it was not clear which one had been the cause of the foreclosure. 384

  Joined Cases T-24–26/93 and 28/93 Compagnie Maritime Belge (n 222), upheld on appeal on the finding in question in Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2). 385

  Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), para 116.

386

  Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), para 117.

387

  Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), para 119.

388

  Irish Sugar plc (n 245), partly upheld in Irish Sugar (n 157) (which set aside the finding of selective low prices to customer’s of a French competitor on the industrial sugar market and reduced the fine). The CJ dismissed an appeal in Case C-497/99 P Irish Sugar [2001] ECR I-5333. The grounds of appeal to the CJ concerned the finding of a dominant position and not the abuse. 389

  The collective dominant position was held by Irish Sugar as producer and Sugar Distributors Ltd, a subsidiary of Irish Sugar carrying out the distribution function for the group. However, prior to 1990, Irish Sugar had contested that it controlled SDL. The Commission found that prior to 1990 Irish Sugar and SDL were collectively dominant: see Irish Sugar plc (n 245), recitals 111–113. See also paras 4.241ff of this chapter. In the text, references to Irish Sugar or the dominant undertaking include both Irish Sugar and SDL unless the context clearly requires otherwise. 390

  Irish Sugar plc (n 245), recitals 57–69 and 128–135.

391

  Additional practices aimed at limiting imports were to put pressure on a State-owned carrier not to transport imported sugar, to agree with retailers to exchange a competitor’s sugar with the dominant undertaking’s sugar, and to apply a fidelity rebate. Furthermore, Irish Sugar engaged in abusive price discrimination against customers who did not export the processed products by granting exporters an export rebate and discriminated against sugar packers who bought sugar to compete with Irish Sugar’s downstream retail business. Finally, it offered major food wholesalers a rebate conditional on the achievement of a growth target: Irish Sugar plc (n 245), recitals 43–44, 46–53, 70–84, 120–122, 124–127, and 136–154. 392

  Irish Sugar (n 157), para 185.

393

  Irish Sugar (n 157), para 185.

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394

  Irish Sugar (n 157), para 186. The market in question is the retail sugar market.

395

  Bolton, Broadley, and Riordan, ‘Predatory Pricing’ (n 326), discuss extensively why a firm may legitimately lower prices in the context of: (a) promotional pricing; (b) learning by doing; and (c) network externalities. 396

  Other examples include yield management pricing; low-cost airlines have championed highly discounted fares. Although these fares are available to only a few passengers, the €1 one-way fare would clearly appear to be below any measure of the cost of transporting a passenger. Similarly, supermarket chains are sometimes accused of predatory pricing as they set the price of some products, eg beer, below cost. Yet they may set a loss-leader strategy on a select group of products in order to increase footfall. 397

  P. Areeda and D. F. Turner, ‘Predatory Pricing and Related Practices Under Section 2 of the Sherman Act’ [1975] Harvard L Rev, available at . 398

  A price-cost test may not be reliable in ensuring that a competition authority does not mistakenly confuse predation with pro-competitive aggressive conduct. When designing bright-line tests, two aspects need to be considered. First, what is the probability of making an error and, second, what are the consequences of making such error. M. Delamano and B. Durand, ‘A Three-Step Structured Rule of Reason to Assess Predation under Article 102’, Office of the Chief Economist, Discussion Paper, DG (2010) argue that price costs are inadequate, inter alia, because even if the test is implemented with great care a small probability of error in mistaking pro-competitive discounting with price predation would still lead to far too many false positives simply because pre-competitive discounting is probably far more common than rational anti-competitive predation. 399

  Post Danmark (n 10), para 18.

400

  Post Danmark (n 10), para 18.

401

  Post Danmark (n 10), para 44.

402

  Post Danmark (n 10), para 21.

403

  Post Danmark (n 10), para 110.

404

  Post Danmark (n 10), para 111.

405

  Post Danmark (n 10), para 112.

406

  Post Danmark (n 10), para 112.

407

  Article 102 Enforcement Priorities Guidance, para 71, where the Commission states that consumer harm occurs when ‘the conduct would be likely to prevent or delay a decline in prices that would otherwise have occurred’. While the consumer harm test is not relevant in predation analysis, this is a correct definition of a form of recoupment as incentive to predate. 408

  G. Niels and H. Jenkins, ‘Reform of Article 82: Where the Link between Dominance and Effects Breaks Down’ (2005) 26 ECLR 605, 606; M. Motta, ‘The European Commission’s Guidance Communication on Article 82’ (2009) 30 ECLR 593, 596; R. J. Van den Bergh and P. D. Camesasca, European Competition Law and Economics (Antwerp: Intersentia, 2001), 294. 409

  Article 102 Enforcement Priorities Guidance, para 70: Generally speaking, consumers are likely to be harmed if the dominant undertaking can reasonably expect its market power after the predatory conduct comes to an end to be greater than it would have been had the undertaking not engaged in that

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conduct in the first place, that is to say, if the undertaking is likely to be in a position to benefit from the sacrifice. 410

  Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings, OJ 2009 C45/7, para 63. 411

  Article 102 Enforcement Priorities Guidance, para 59.

412

  Long-run average incremental cost is the average of all the (variable and fixed) costs that a company incurs to produce a particular product. 413

  Article 102 Enforcement Priorities Guidance, paras 64–65.

414

  Article 102 Enforcement Priorities Guidance, para 69.

415

  Article 102 Enforcement Priorities Guidance, paras 59 and 60–63.

416

  Article 102 Enforcement Priorities Guidance, para 61.

417

  AAC is the average of the costs that could have been avoided if the company had not produced a discrete amount of (extra) output, in this case the amount allegedly the subject of abusive conduct. In most cases, AAC and the average variable cost (AVC) will be the same, as it is often only variable costs that can be avoided. 418

  Article 102 Enforcement Priorities Guidance, para 64.

419

  Article 102 Enforcement Priorities Guidance, para 65.

420

  Article 102 Enforcement Priorities Guidance, para 26 fn 18.

421

  Article 102 Enforcement Priorities Guidance, para 64 fn 40, which explains that the sunk cost of adding extra capacity would be an element of average avoidable cost but not of average variable cost. 422

  See Article 102 Enforcement Priorities Guidance, fn 19.

423

  Comparing average revenues with some average cost benchmark in the market can then be a poor test for determining whether the incremental profits associated with an alleged predatory practice are negative or positive. First, the predator, facing a demand curve that is downward-sloping, will tend to earn less on incremental sales, the predatory sales. As a result, the average revenue will be greater than (average) incremental revenues. Secondly, if costs increase with output, incremental costs would be higher than average costs. 424

  Article 102 Enforcement Priorities Guidance, para 26 fn 18.

425

  Article 102 Enforcement Priorities Guidance, para 26 fn 18.

426

  Evidence that predation failed in the past, eg because rivals were not excluded, is useful but not conclusive. Indeed, a predatory strategy could be maintained despite several periods of failure. In each new period, the probability of success may be updated downwards. But if the potential gains substantially exceed the costs the expected return of predating might still be positive. 427

  Bolton, Broadley, and Riordan, ‘Predatory Pricing’ (n 326), offers an exhaustive review of the relevant factors which a competition agency has to assess to establish whether aggressive conduct could lead the prey to exit or stay out of the market. They identify various subsets of observable factors one can rely on as proof of the likely exclusion depending on the underlying mechanism of predation. The reader is referred to their work. 428

  J. S. McGee, ‘Predatory Price Cutting: The Standard Oil (N.J.) Case’ (1958) 1 J L and Econ 137.

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429

  See Bolton, Broadley, and Riordan, ‘Predatory Pricing’ (n 326); and P. Bolton, J. Broadley, and M. Riordan, ‘Predatory Pricing: Response to Critique and Further Elaboration’ (2001) 89 Georgetown LJ 2496–529. 430

  More accurately, in the case of learning effects the price may be below AAC if calculated using historical cost data from the period during which the learning effects are achieved, but could be above AAC if the calculation is based on a longer period including the period after the learning effects have had their cost-reducing effect. 431

  Sometimes a certain pricing behaviour may be justified for more than one reason. Eg the need to sell off perishable inventory or phased out or obsolete products at a loss-making price may indicate that there will be no (lasting) exclusionary effect on rivals. In such cases, it may also have to be taken into account that certain costs that would under normal circumstances be considered variable costs may have become fixed costs at the time of sale.

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Part I General Principles, 4 Article 102, F Exclusive Dealing: Exclusivity Obligations and Loyalty Rebates Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Exclusive dealing — Exclusive distribution and supply agreements — Foreclosure effect — Barriers to entry

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F. Exclusive Dealing: Exclusivity Obligations and Loyalty Rebates (1)  Case Law and Commission Decisional Practice (a)  Definition and Types of Exclusivity 4.397  Exclusivity may be defined as the obligation of a customer to purchase goods or services on a given market exclusively or to a large extent from the dominant undertaking.432 Exclusive dealing obligations may amount to an abuse under Article 102.

(i)  Legal and De Facto Exclusivity 4.398  Article 102 applies to exclusivity obligations imposed either legally or de facto. The Irish ice-cream cases provide a good example of both situations. Originally, Van den Bergh Foods, a dominant producer of impulse ice-cream, supplied freezer cabinets to small outlets, provided they purchased exclusively its own brands. This legal exclusivity provision was eliminated after the Commission addressed a formal statement of objections to the dominant undertaking.433 It was replaced by a prohibition on outlets against stocking other ice-cream brands in Van den Bergh Food’s freezers. The Commission considered that such a prohibition led to de facto exclusivity because most outlets did not have the space or means to have a second freezer and it prohibited this in a formal decision.434 (p. 421) 4.399  The General Court upheld the finding that the dominant company was abusing its position ‘by inducing retailers who, for the purpose of stocking impulse icecream, did not have their own freezer cabinet, or a cabinet made available by an ice-cream supplier other than HB, to accept agreements for the provision of cabinets subject to a condition of exclusivity’.435 The Court clearly stated that it was appropriate to analyse ‘not only the provisions of Van den Bergh Food’s distribution agreements, which do not formally preclude retailers from stocking other suppliers’ ice creams in their sales outlets, but also the application of those agreements in the relevant market and the commercial options actually open to retailers pursuant to those agreements’.436 Offering to supply freezer cabinets to the retailers and maintaining the cabinets free of any direct charge to the retailers constituted an abuse in the specific circumstances of the case. 4.400  The Court reached this conclusion despite the fact that the provision of freezer cabinets on a condition of exclusivity constituted standard practice on the relevant market. It took the view that in a competitive market, those agreements are concluded in the interests of the two parties, whereas in a market characterized by a dominant position held by one of the parties, the assessment might be different.

(ii)  Requirements Contracts 4.401  Exclusivity within the meaning of the Article 102 case law does not have to be enshrined in a legal obligation of exclusivity but may consist in requirements contracts providing for a commitment to purchase certain quantities amounting to a large proportion of the customer’s total requirements. In Hoffmann-La Roche, certain agreements imposed on customers the obligation to obtain quantities which were close to their total requirements, thereby producing a level of foreclosure similar to that produced by total requirements contracts. In the Soda Ash cases, Solvay and ICI used similar mechanisms, including the use of ‘tonnage contracts’ (where the tonnage corresponded more or less to a customer’s total requirements) ensuring virtual de facto exclusivity.437 It remains to be seen whether a parallel can be established between the concept of exclusive dealing under Article 102 (‘all or almost all of the requirements’) and the definition of non-compete obligations (80 per cent or more of the requirements) in Article 1(d) of the Block Exemption Regulation for vertical restraints438 and the Vertical Restraint Guidelines.439 The

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consequence would be establishing a bright line of 80 per cent of requirements for the definition of what is an exclusive agreement under Article 102.

(iii)  English Clauses 4.402  So-called ‘English clauses’ or ‘most-favoured-customer clauses’ included in supply contracts allow the purchaser to switch from one supplier to another if that other supplier is able to offer more favourable terms which the dominant undertaking is not willing to match. These clauses impede other suppliers from attracting a customer through a lower offer unless the actual dominant supplier allows it. 4.403  The Vertical Restraint Guidelines consider that English clauses ‘can be expected to have the same effect as a single branding obligation, especially when the buyer has to reveal who makes (p. 422) the better offer’.440 The same analysis may be applied under Article 102. In Hoffmann-La Roche, the Court of Justice was very critical of English clauses, stressing that ‘even in the most favourable circumstances, the English clause does not in fact remedy to a great extent the distortion of competition [caused by the exclusivity clauses]. By virtue of the machinery of the English clause it is for Roche itself to decide whether, by adjusting its prices or not, it will permit competition.’441 4.404  English clauses enhance transparency in the market and increase the likelihood that a competitor lowering prices will not gain market share but will prompt the incumbent supplier to match the lower price. The generalization of these clauses in highly concentrated markets could lead to a parallelism of conduct between different players and would avoid price competition between them. Should it be possible to prove that a collective dominant position exists in such a market, challenging such clauses as an abuse would arguably be one of the means available to competition authorities to reduce anticompetitive effects of oligopolies. However, the Commission’s recent practice suggests that these types of restriction are not an enforcement priority for the Commission under Article 102.

(iv)  Imposition of Exclusive Obligations on Suppliers 4.405  In the IRI/Nielsen442 case, the Commission provisionally concluded (this case was resolved informally) that Nielsen had abused its dominant position on the European market for retail tracking services by concluding exclusivity contracts with retailers. These contracts were patently exclusionary, in that they prevented those retailers from providing certain kinds of market data, a type of raw information crucial to produce retail tracking reports, to competitors of Nielsen. In BPB Industries and British Gypsum,443 a case concerning exclusive supply obligations imposed by a dominant buyer to its providers, the General Court reiterated the principle stated in Hoffmann-La Roche and added that the conclusion of exclusive supply contracts in respect of a substantial proportion of purchases constitutes an unacceptable obstacle to entry. This finding was upheld by the Court of Justice.444

(v)  Exclusivity Imposed by Distributors 4.406  Exclusivity imposed by dominant distributors may also be problematic, not only because it may foreclose competing distributors but also because it may restrict the supply of goods and services to consumers. Thus, in Hachette,445 a case which did not result in a formal decision, the Commission objected to the imposition, by the two dominant newspaper distributors in France, of exclusive distribution arrangements on French publishers seeking to export newspapers/periodicals to other Member States, as well as on foreign publishers wishing to import such publications into France from other Member States. The Commission was of the view that the exclusive obligations rendered access to these import and export markets very difficult. In another case resolved without a formal decision, Visa International abandoned a plan to introduce exclusivity obligations in its arrangements with banks. Those arrangements, which would have prohibited the banks (p.

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423) from issuing competing cards, had been objected to by the Commission on account of their probable anti-competitive consequences.446

(b)  The Abuse Test in Exclusivity Cases 4.407  It is clear from the case law that a dominant undertaking that enters into exclusive contracts with its trading partners might commit an abuse under Article 102. What is less clear, however, is whether the case law allows a finding of abuse based purely on the existence of legal or de facto exclusivity or requires separate proof of likely or actual foreclosure. 4.408  In Hoffmann-La Roche, the Court of Justice made a comprehensive statement explaining when exclusivity obligations imposed on, or agreed with, customers, would infringe Article 102, saying that: an undertaking which is in a dominant position on a market and ties purchasers— even if it does so at their own request—by an obligation or promise on their part to obtain all or most of their requirements exclusively from the said undertaking abuses its dominant position within the meaning of Article [102].447 The Court of Justice said that exclusivity between a dominant undertaking and its customers was an abuse because such arrangements are not competition on the merits but are designed to restrict or eliminate altogether the customer’s freedom to choose his sources of supply and to deny other undertakings access to the market.448 This approach appears to suggest that, in the absence of objective justification, a dominant undertaking is not allowed to enter into exclusive contracts with its trading partners. 4.409  A number of cases, however, do not support the proposition that exclusivity is prima facie abusive even in the absence of proof of likely foreclosure. Already in Suiker Unie, also a Court of Justice case and thus of equal authority to Hoffmann-La Roche, which was decided a few years earlier, the Court had held that exclusivity may be an abuse if competitors are left with no available distribution channels through which they can market their products on a sufficiently large scale.449 This clearly required, at the very least, proof of likely foreclosure albeit, rightly, the Court did not require that competitors be eliminated. It was sufficient that they could not operate efficiently and were thus marginalized. 4.410  After Hoffmann-La Roche, the General Court applied a foreclosure test to exclusive purchasing in Van den Bergh. The Court stated: ‘The fact that an undertaking in a dominant position on a market ties de facto—even at their own request—40 per cent of outlets in the relevant market by an exclusivity clause which in reality creates outlet exclusivity constitutes an abuse of a dominant position.’450 The Court, therefore, considered relevant the extent of the share of supply affected by the exclusivity which could only have been material to the assessment of the likely foreclosure effect of the practice. The judgment was upheld by the Court of Justice. While the Court did not rule, specifically, on the elements of the legal test to determine whether exclusivity is an abuse under Article 102 as it declared the grounds of appeal either manifestly inadmissible or manifestly unfounded, the logical and unchallenged premise of the order was that the General Court was correct in assessing the likely foreclosure effects of (p. 424) the exclusivity clauses.451 Therefore, notwithstanding Hoffmann-La Roche, the better view appears to be that an obligation by a customer to purchase all or most of its requirements from a dominant undertaking is an abuse within the meaning of Article 102 only if it is likely to foreclose the dominant undertaking’s competitors.

(c)  Objective Justification

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4.411  The imposition of exclusivity arrangements may in certain circumstances be considered objectively justifiable. This will normally only be the case where the anticompetitive effects are kept to the minimum necessary for the attainment of some economic advantage. Exclusive supply contracts of a limited duration, for example, have been accepted by the Commission on the ground that they provide the customer with the benefit of security of supply. Thus, in a case concerning the European soda ash market,452 the Commission objected (in a proceeding terminated informally) to contracts between ICI and Solvay on the one hand, and their customers on the other, which provided for exclusive supply. The Commission, however, accepted amendments to those contracts which provided for supply of fixed tonnage for periods not exceeding two years, pointing out that this amendment amounted to a balance between the customer’s need for security of supply and the freedom to turn elsewhere for supplies. 4.412  In Van den Bergh Foods, however, the General Court refused to consider as an objective justification the fact that the provision of freezer cabinets on a condition of exclusivity constituted standard business practice that would satisfy the interest of both the ice-cream supplier and the retailer. The Court indicated that it could not accept the argument that this practice could be abusive only if there were no objective commercial justification for it. It stated that such standard business practices, which would not be objectionable in a competitive market, ‘cannot be accepted without reservation in the case of a market on which, precisely because of the dominant position held by one of the traders, competition is already restricted’.453 These clear statements would appear to limit considerably the possibility of invoking legitimate business reasons as a justification for this type of abuse. However, the law may develop a more flexible approach to objective justification following the adoption by the Commission of the 2010 Vertical Restraint Guidelines and the Article 102 Enforcement Priorities Guidance, which clearly regard the efficiencies potentially resulting from exclusive agreements as a credible pro-competitive rationale for such agreements.

(d)  Definition and Types of Conditional Rebates 4.413  Conditional rebates may be defined as discounts conditional upon certain behaviour of the customer and which do not result in below cost prices when all the purchases to that customer over the relevant period are considered (or rebates that reward customers for a particular purchasing behaviour). 4.414  Conditional rebates are set by reference to a number of parameters: • Scope: rebates may either be granted for units that exceed a certain minimum threshold (‘incremental rebates’) or apply the discount to all units purchased in the relevant period, below and above the threshold, once the threshold has been attained (‘retroactive rebates’). (p. 425) An incremental rebate of 10 per cent off a list price of £10 with a threshold of 100 units means that the customer will pay £9 for all units he purchases in excess of 100. In the same example, a retroactive rebate means that the customer will not only pay £9 for all units he purchases in excess of 100 but he is also entitled to a retroactive discount of 10 per cent on the 100 units he has already purchased. On attaining the threshold, the customer is entitled to a £100 retroactive discount in addition to the 10 per cent discount on all the extra units he buys. • Application: rebates may either apply uniformly to all customers (‘standardized rebates’) or they may be individually tailored to different purchasers (‘individualized rebates’). • Threshold: the threshold beyond which a rebate is granted may either be a quantity target (‘volume discounts’) or may require a purchaser to order a certain percentage

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(‘market share discounts’) and sometimes even all of its purchases from a firm (‘exclusive dealing’). 4.415  The competition law concern is that conditional rebates may foreclose competitors because they allow the dominant undertaking to leverage the market power it has on the non-contestable share of demand in order to prevent customers from switching to competitors for the contestable share of demand. The non-contestable share of demand is defined as ‘the amount that would be purchased by the dominant undertaking in any event’. The contestable share of demand is defined as ‘the amount for which the customer may prefer to be able to find substitutes’. By setting the threshold or the percentage requirement that triggers a retroactive rebate above the non-contestable share, the dominant undertaking may provide customers with a strong incentive to source from it not only the non-contestable share but also part or all of the contestable share. Because if the customer switches to a competitor, he loses the entire rebate, including, in retroactive rebates, the discount on the units of the non-contestable share, a competitor will have to offer a price that compensates the competitor for such a loss.

(e)  Abuse Test in Rebates Cases (i)  Rebates That Are Presumptively Lawful (Quantity Rebates) 4.416  A quantity rebate is a rebate conditional on the size of an individual order. This form of rebate may be incapable of foreclosing equally efficient competitors unless it is predatory. The case law establishes that quantity discounts are presumptively not abusive. In particular, it is well established that ‘a quantity rebate system has no loyalty-inducing effect if discounts are granted on invoice according to the size of the order’.454

(ii)  Rebates That Are Nakedly Exclusionary 4.417  In Intel,455 rebates conditional upon the customer delaying, cancelling, or otherwise restricting the commercialization of products based on the microprocessor of AMD, Intel’s only competitor, were assessed as ‘naked restrictions’. Payments by the dominant undertaking to three of its customers Hewlett Packard (HP), Acer, and Lenovo on condition that the launch of specific AMD-based products was delayed or cancelled or their commercialization restricted had as their sole conceivable purpose the restriction of competition. The Commission added that the payments were a material factor in the customer delaying, cancelling, or otherwise restricting the planned commercialization of specific competitors’ products for which there was consumer demand. As a result, consumers were deprived of a choice, which they would have otherwise had.456 The delayed or failed commercialization of AMD-based products for which there was consumer demand (p. 426) was an anti-competitive effect within the meaning of the case law,457 although the law did not require proof of the ‘effects of the conduct and its impact on the market’.458

(iii)  Fidelity Rebates 4.418  The first case in which the Court of Justice found that a conditional rebate was abusive was Suiker Unie,459 where a loyalty rebate granted on the condition that the customer covered all its annual requirements from the dominant undertaking was held to be an infringement of Article 102(b) because it made it impossible or more difficult for competitors of the dominant undertaking to sell sugar to the latter’s customers460 and could further consolidate the dominant position.461 4.419  In the subsequent Hoffmann-La Roche decision,462 the Commission held that fidelity rebates whereby customers agreed to purchase all or most of their requirements from a dominant undertaking—in this case Hoffmann-La Roche and its subsidiaries (Roche)—in consideration of a rebate paid on all purchases at the end of the year were an abuse of dominant position.463 Upholding the Commission’s decision, the Court of Justice464 held that a dominant undertaking may not apply, either by agreement with the customer or

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unilaterally, a system of rebates conditional on the customer obtaining all or most of its requirements from the undertaking in a dominant position. 4.420  In Hoffmann-La Roche, the Court applied the test for anti-competitive rebates to two types of rebates. First, rebates granted provided that all or most requirements were obtained from Roche were abusive simply because they aim at achieving de facto exclusivity albeit through the provision of an incentive rather than a legal obligation.465 Secondly, progressive rebates granted based on the achievement of percentage targets of total requirements were abusive because they were ‘a specially worked out form of fidelity rebate’466 as demonstrated by the fact that they were individualized and not objectively determined for all customers.467

(iv)  Individualized Target Rebates 4.421  In Michelin I,468 the Commission held that Michelin had abused its dominant position on the Dutch market for new replacement tyres for trucks and buses by implementing a system of individualized target rebates. The system was somewhat complex and changed over the duration of the infringement, but its material features can be easily described. The rebate applied to all yearly purchases provided that the customer (p. 427) achieved a yearly target. The yearly target was individually negotiated and was either higher or, in periods of low demand, equal to the previous year’s purchases.469 4.422  The Court of Justice470 upheld the Commission’s finding that Michelin’s rebate system was exclusionary. It distinguished the rebate system under review from the rebate system in Hoffmann-La Roche on the basis that the rebates in the latter case were conditional upon exclusivity or the attainment of a certain percentage of the customer’s total requirements. In Michelin I, instead, the rebate was conditional on the attainment of targets based on the previous year’s turnover and individually negotiated.471 For the assessment of the latter type of rebate, the Court laid down the following test:472 In deciding whether Michelin NV abused its dominant position in applying its discount system it is therefore necessary to consider all the circumstances, particularly the criteria and rules for the grant of the discount, and to investigate whether, in providing an advantage not based on any economic service justifying it, the discount tends to remove or restrict the buyer’s freedom to choose his sources of supply, to bar competitors from access to the market, to apply dissimilar conditions to equivalent transactions with other trading parties or to strengthen the dominant position by distorting competition. 4.423  Whilst this test appears to require a full market inquiry, in Michelin I the Court focused almost exclusively on the ‘criteria and rules for the grant of the discount’.473 4.424  More recent case law appears to confirm that individualized rebates can be abusive without the need to demonstrate actual foreclosure. In Tomra,474 the Commission attempted to analyse the likely foreclosure effect of individualized rebates. The Commission held that Tomra had abused its dominant position on five national markets for high-end reverse vending machines. Tomra’s conduct fell under three categories: exclusive dealing,475 individualized quantity commitments,476 and individualized rebate schemes under which customers were granted a rebate if they met or exceeded certain purchasing targets in the reference period.477 However, and unlike in Intel,478 the Commission did not consider whether the practices under review, and, in particular, the rebates, were capable or likely to foreclose an as-efficient competitor. In Tomra, the foreclosure of any competitor was considered sufficient. The Commission inferred the capability of the rebates to foreclose from the combination of retroactivity, which made marginal sales very attractive to the customer, and the setting of a threshold or thresholds very close to the customer’s

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total requirements. This practice raised the customer’s cost of switching to a different supplier ‘even for a small number of units’.479 4.425  The General Court upheld the Commission’s decision, holding that there is no requirement to demonstrate the actual foreclosure effects of a rebate.480 The Court of Justice agreed with this approach, clarifying also that the Commission is not required to identify the minimum (p. 428) viable share at which a competitor can supply the products efficiently and to compare the prices charged by the dominant undertaking with its costs.481 Indeed, the Court of Justice upheld the analysis of the court below to the effect that retroactive rebates applied by a dominant undertaking to its largest customers amounting to two-thirds of total market demand are abusive if they are individually negotiated and the thresholds are set close to the customer’s estimated total requirements or past purchased volumes.482

(v)  Standardized Rebates 4.426  In Michelin II,483 the General Court examined a rebate system whereby the discounts were calculated based on ‘a large number of very close thresholds’ relating the volumes purchased. The Court inferred foreclosure from the characteristics of the rebate system, namely the reference period was one year and the discount was granted on total turnover.484 As regards the reference period, the Court held that the loyalty-inducing ‘nature of a system of discounts calculated on total turnover increases in proportion to the length of the reference period’.485 And, if the discount is granted for purchases over a reference period, ‘the loyalty-inducing effect is less significant where the additional discount applied only to the quantities exceeding the threshold’ rather than on the total turnover over the period.486 What the General Court did in Michelin II was, essentially, to infer the exclusionary effect of the rebate purely from its form and then to say that, because the rebates in question had been implemented, the likely foreclosure effect of the rebates, which the Court described as capability or tendency to foreclose, had been established. 4.427  In British Airways,487 the Court of Justice applied the Michelin I test to a standardized rebate system. The Court reformulated the test as requiring an exclusionary effect. The Court went on to define ‘exclusionary effect’ as the capability of the rebates ‘of making market entry very difficult or impossible for competitors of the undertaking in a dominant position and, secondly, of making it more difficult or impossible for its cocontractors to choose between various sources of supply or commercial partners’.488 4.428  The Court of Justice considered that the exclusionary effect of the rebates in question could be inferred from three elements: (a) the targets were defined individually (in the case at hand, based on the turnover of each individual travel agent with British Airways (BA));489 (b) their incentive effect at the margin resulting from the retroactive application of the rebate;490 and (c) the divergence between the market share of the dominant undertaking and those of its competitors, which made it ‘particularly difficult’ for competitors to ‘outbid’ the dominant (p. 429) undertaking, also in view of the fact that the latter is ‘generally’ an ‘unavoidable business partner’.491

(2)  Policy and Effects-Based Approach (a)  Commission’s Approach Under the Article 102 Enforcement Priorities Guidance 4.429  In the Article 102 Enforcement Priorities Guidance, the Commission outlines an effects-based approach towards loyalty rebates and exclusive dealing, which fundamentally departs from the form-based prohibition that has long been the hallmark of the case law. From a policy perspective, a number of specific changes stand out.

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4.430  First, the Article 102 Enforcement Priorities Guidance starts from the premise that demand-enhancing practices are often a natural expression of the competitive process. Whereas earlier case law such as Hoffmann-La Roche held that such loyalty-inducements constitute ‘recourse to methods different from those governing normal competition’,492 the Article 102 Enforcement Priorities Guidance cautions that ‘Conditional rebates are not an uncommon practice’493 and that ‘Vigorous price competition is generally beneficial to consumers.’494 4.431  Secondly, the Commission notes that loyalty-inducement tends to have procompetitive effects if it does not foreclose equally efficient competitors from the market. Whereas governing legal precedents such as British Airways considered conditional rebates to be ‘artificial distortions’ that ‘can only be intended to tie customers to which [they are] granted and place competitors in an unfavourable competitive position’,495 the Article 102 Enforcement Priorities Guidance notes that ‘Undertakings may offer such rebates in order to attract more demand, and as such they may stimulate demand and benefit consumers’,496 so ‘the Commission will normally only intervene where the conduct concerned has already been or is capable of hampering competition’.497 4.432  Thirdly, the Article 102 Enforcement Priorities Guidance does not outlaw specific loyalty-inducing practices based on their form alone. Whereas retroactive rebates,498 individualized rebates,499 market share contracts,500 and exclusive-dealing clauses501 have been considered illegal in the case law without an analysis of their effects, the Commission will now instead ‘focus its attention on those cases where it is likely that consumers as a whole will not benefit’.502 4.433  Fourthly, the Commission observes that competitive harm is unlikely unless a dominant firm leverages market power from non-contestable sales into contestable sales. Specifically, (p. 430) the Commission explains that ‘If competitors can compete on equal terms for each customer’s entire demand, exclusive purchasing obligations are generally unlikely to hamper effective competition’.503 If contestability is limited, however: A conditional rebate granted by a dominant undertaking may enable it to use the ‘non contestable’ portion of the demand of each customer (that is to say, the amount that would be purchased from the dominant undertaking in any event) as leverage to decrease the price to be paid for the ‘contestable’ portion of demand (that is to say, the amount for which the customer may prefer and be able to find substitutes).504 4.434  Fifthly, the Commission lays out a three-step test to assess the competitive implications of loyalty-inducing contracts. Initially, the Commission will use the as-efficient competitor test to establish whether a dominant firm’s conduct is capable of creating foreclosure.505 Once some degree of foreclosure is established, the Commission then proceeds to assess in a second step whether this is likely to lead to competitive harm (an instance of anti-competitive foreclosure in the terminology of the Article 102 Enforcement Priorities Guidance).506 Finally, if it has been established that the conduct in question is likely to impair competition, the Commission will consider whether countervailing efficiencies give rise to an objective justification for the conduct.507

(b)  The Logic of the Commission’s Approach Towards Loyalty Rebates and Exclusive Dealing 4.435  While the Commission’s new approach towards loyalty rebates resonates with the principles applied in Intel,508 it represents a fundamental departure from even the most

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recent EU Court’s decisions such as Solvay509 or Tomra,510 neither of which is easy to square with an effects-based approach. 4.436  As noted in Section F.1, the economic presumption underlying the case law had generally been that loyalty rebates ‘[do] not correspond to normal price competition’511 and ‘can only be intended to tie customers to which [they are] granted and place competitors in an unfavourable competitive position.’512 However, as the Commission recognizes with the publication of the Article 102 Enforcement Priorities Guidance, this presumption sits uncomfortably with basic economic principles and commercial realities in European (p. 431) markets. Indeed, loyalty schemes are among the most widely used business practices and are also regularly employed by firms in highly competitive industries, where monopolization is hardly a plausible motivation.

(i)  Economic Reasoning for Use of Rebate Schemes 4.437  When firms assess which prices they should charge for different volumes a customer may demand, they generally consider the value that buyers attach to those different volumes. In most instances, customers have a significantly higher willingness to pay for the first units they purchase from a firm than for subsequent units. In Intel, for example, original equipment manufacturers (OEMs) had a strong inclination to purchase at least a certain portion of their CPU requirements from Intel, because some final customers had a strong preference for Intel-based computers.513 The ‘must stock’ nature of its chips therefore gave Intel market power over an OEM’s initial portion of demand. At the same time, OEMs were likely to have a much lower willingness to pay for subsequent units from Intel, because other final customers cared much less about the choice of processor. This change of valuations across the demand curve implies that Intel faced a much higher elasticity of demand for incremental volumes (reflecting the preparedness of some final consumers to substitute between Intel and AMD-based computers). 4.438  A higher elasticity of demand for incremental units implies that the commercial pressure a manufacturer faces becomes larger and larger the more units it tries to sell to a customer. Market imperatives therefore push producers to lower their prices for incremental units. This competitive mechanism is at work in practically all real-world markets and explains why producers both in highly competitive and in less competitive industries regularly grant loyalty rebates for larger orders: they compete at the margin profitably to increase sales.514 4.439  From an economic perspective, such price reductions at the margin tend to intensify overall competition in a market. Generally speaking, firms feel the competitive pressure of their rivals most intensely for contestable units, that is, for those portions of demand for which customers consider switching between different suppliers. Since loyalty rebates are used to lower prices precisely on those marginal units, competition in the market becomes highly effective when firms use requirement contracts to compete for expanded output.515 For this reason, overall prices tend to be lower (and consumer welfare tends to be higher) when firms are permitted to compete in rebates.516 4.440  This competitive logic also applies to exclusive-dealing contracts, which often spur highly intense competition for customers.517 It is therefore not surprising that exclusivity is often requested by buyers themselves in commercial practice (eg when purchasers issue tenders for exclusive supply). By committing to buy from only one supplier, buyers can increase their (p. 432) countervailing power and play different viable suppliers off against each other. As Richard Steuer notes, exclusive dealing ‘is an all-or-nothing game, with each supplier knowing that it must offer the best terms to obtain any of that customer’s business.’518 But also where exclusivity is imposed by sellers, buyers often benefit from

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substantial price reductions, since producers must compensate their customers for the lack of variety that exclusivity entails.519 4.441  For this reason, there is much to be said for the Commission’s stance that loyalty clauses should only be subjected to antitrust prosecution if they are used in ways that foreclose efficient rivals from the market. As long as smaller rivals are not obstructed from competing in the market, loyalty-inducement spurs rather than inhibits intense competition for distribution. 4.442  In line with the Commission’s revised approach, economic theory shows that the specific form that competitive rebates take may vary considerably from one instance to another. For example, in markets where purchasers noticeably differ in terms of their size or preference, suppliers have strong incentives to offer individualized rebates with customer-specific targets to compete for incremental demand.520 Similarly, when producers have incomplete information about their customers’ willingness to pay or face uncertainty on the level of demand, they often have an incentive to use retroactive rebates521 or market share contracts522 profitably to expand output. The use of sophisticated loyalty schemes is no indication—in and of itself—of anti-competitive intent or effect. It is therefore sensible that the Commission considers the specific form of a rebate only insofar as it contributes to anti-competitive effects in the market, rather than outlawing particular types of rebates per se.

(ii)  Possible Anti-Competitive Harm From Use of Rebate Schemes 4.443  Even so, the Article 102 Enforcement Priorities Guidance also emphasizes that loyalty-inducing practices can lead to severe competitive harm when they are used by dominant firms for anti-competitive purposes. Indeed, the same commercial tools that permit dominant firms to compete most fiercely are typically also the tools that are most effective if put to anti-competitive use. In markets which are conducive to monopolization, rebates with exclusionary design can therefore create considerable damage to the competitive process. 4.444  In some industries, achieving scale is an important determinant of competitive success (eg because demand exhibits network effects or because supply exhibits production economies). In such instances, firms that already control a huge part of a market may then be tempted to foreclose rivals from achieving minimum efficient scale permanently to hamper their ability to compete.523 4.445  For competition authorities, then, the difficulty lies in distinguishing between low price practices that constitute competition on the merits and low price practices that constitute (p. 433) exclusionary conduct. In view of the practical difficulty in distinguishing between these two motivations, European and US courts have taken markedly different approaches toward loyalty-inducing conduct. While US courts have tended to apply a presumption of legality to single-product loyalty rebates, because ‘cutting prices in order to increase business often is the very essence of competition, which antitrust laws are designed to encourage’,524 the Court of Justice has consistently applied a presumption of illegality, as noted in Section F.1(b). In its Article 102 Enforcement Priorities Guidance and most recent case practice, the Commission now takes a middle-ground between these two polar approaches by prohibiting loyalty rebates if and only if they can be expected to harm competition and consumers.

(c)  Identifying Anti-Competitive Foreclosure Under the Article 102 Enforcement Priorities Guidance

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4.446  Perhaps more so than for other practices, the Commission has outlined a concrete test to assess the legality of exclusivity-inducing conduct in the Article 102 Enforcement Priorities Guidance.

(i)  Step 1: The As-Efficient Competitor Test 4.447  As a first step of analysis, the Commission envisages conducting the AECT to assess whether an equally efficient competitor would be able to compete for contestable sales with the dominant undertaking’s pricing scheme. According to this test, a dominant firm is said to cause foreclosure when the effective price that rivals have to compete with is below the dominant firm’s own costs. 4.448  The AECT is thus grounded in the standard predation test, but takes two specificities into account that competition with loyalty-inducing schemes brings about: (a) the fact that smaller competitors may not be able to contest the entirety of a customer’s demand (eg on account of the ‘must have’ nature of the dominant firm’s product); and (b) the fact that with retroactive discounts, customers who consider switching part of their demand to a rival would also lose part of the rebate they receive on the units that are not being switched (which implies that the effective price of the switched units is lower than the nominal price displayed in the rebate grid). 4.449  When rivals can effectively compete for the entirety of a customer’s demand, the AECT simply boils down to a normal predatory pricing test, in which case the dominant firm’s average price per unit is compared with its average unit cost. When part of a customer’s demand cannot realistically be contested by a smaller rival, however, then only the contestable part of the customer’s demand is taken into account to calculate the effective price that rivals face.525

(ii)  Step 2: Assessment of Anti-Competitive Foreclosure 4.450  If some degree of below cost pricing has been established with the AECT, the Commission proceeds to assess, in a second step, whether such foreclosure is likely to lead to competitive harm in the market. Since low prices do not in themselves harm competition, the Commission will then analyse the likelihood of exclusion in light of the facts of the case. (p. 434) 4.451  In practice, perhaps the most important piece of evidence to consider in this part of the analysis is the foreclosure share which is induced by the dominant firm’s practice (ie the percentage of the market that is affected by the conduct).526 When substantial parts of the market are foreclosed by the dominant firm’s practice and scale economies play a significant role in the industry, exclusivity-inducing conduct may materially impair the competitive viability of smaller rivals.527 Conversely, anti-competitive allegations usually lack merit when only a small portion of the relevant market is affected by the conduct. 4.452  More generally, the risk of anti-competitive foreclosure through loyalty-inducing contracts is highest where: •  the dominant firm controls an exceptionally high share of the market; •  rivals can only realistically compete for part of a customer’s demand on account of the ‘must have’ nature of the dominant company’s brand; •  the dominant firm uses contractual arrangements with strong exclusionary potential (eg exclusive dealing) to foreclose a substantial part of the market; •  scale economies in the industry are significant (eg due to the importance of network effects or because of recurrent investments in innovation).

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4.453  Under such circumstances, anti-competitive effects are more likely because: •  the price-reducing effect of loyalty rebates and exclusive dealing tends to be less significant when the dominant firm controls an extraordinarily large market share; 528 •  the inability of rivals to serve the entire demand of a customer may give rise to leveraging opportunities from non-contestable into contestable sales; 529 •  when smaller competitors are hindered from maintaining an efficient scale because a substantial part of the market has become inaccessible, they are likely to lose their ability to compete effectively. 530

(iii)  Countervailing Efficiencies and Objective Justification 4.454  Once competitive harm has been shown, the Article 102 Enforcement Priorities Guidance envisages as a final step in the analysis the consideration of potential objective justifications for the conduct. Whereas such countervailing efficiencies have so far been routinely dismissed by the Commission in its case practice, the Article 102 Enforcement Priorities Guidance now recognizes that firms (p. 435) may have valid reasons to use loyalty-inducing contracts even if they cause a certain degree of foreclosure. 4.455  Indeed, real-world distribution contracts with exclusivity-inducing features are often motivated by efficiency considerations. For instance, a leading survey of industry studies on exclusive dealing and related practices concludes: ‘it appears that when manufacturers choose to impose such restraints, not only do they make themselves better off but they also typically allow consumers to benefit from higher quality products and better service provision.’531 Certainly, one should be careful not to over-interpret the evidentiary value of such results, since many of these studies were conducted in markets where no single firm held a dominant position. Nonetheless, the regular prevalence of efficiency effects resulting from exclusive contracts suggests that pro-competitive rationales should be given serious consideration when assessing the overall effects of loyalty-inducing schemes. 4.456  In relation to distribution arrangements, loyalty contracts are often motivated by manufacturers’ desire to encourage dealers to engage in brand-specific promotion.532 For instance, as explained in the Article 102 Enforcement Priorities Guidance, a need for vertical control can arise when there is a risk that distributors could free ride on the manufacturer’s prior investments into the distribution system.533 For example, in CocaCola, the well-known soft drink producer provided restaurants with fountain dispensers on a rent-free basis in order to promote sales of its carbonated soft drinks.534 Similarly, in Michelin II, Michelin financially contributed toward quality-enhancing investments into dealers’ sales outlets.535 In Van den Bergh Foods, finally, a dominant ice-cream manufacturer supplied stores with rent-free freezer cabinets to promote the sale of icecream.536 4.457  In such instances, manufacturers have incurred substantial ex ante expenditures to promote downstream sales and distribution, which creates a temptation for dealers to free ride on these investments ex post. Indeed, other manufacturers—which did not contribute to those dealer investments—do not have to recover the costs of the investments through their wholesale prices. This may permit them to offer more favourable wholesale terms to dealers than investing manufacturers. Dealers may then have an incentive to use the promotional investments of the larger firm to sell the potentially cheaper products of a smaller rival. For instance, a restaurant could use Coca-Cola’s free fountain dispensers to sell Pepsi-Cola; car repair shops could sell Goodyear tyres in outlets that were financed by Michelin; and kiosks could sell Mars ice-cream in Van den Bergh’s freezer cabinets.

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4.458  In all of these markets, it is customary for manufacturers to protect their investments into the distribution network from free-riding through the use of exclusive contracts. For instance, smaller ice-cream producers also supplied freezer cabinets to retailers on condition that they were used to sell their own ice cream. Similarly, Pepsi effectively competes for restaurant distribution with Coca-Cola by offering own fountain dispensers (again, conditional on (p. 436) exclusivity). In such instances, the efficient provision of brand-specific promotional services may provide a valid pro-competitive justification for the use of loyalty rebates and exclusive dealing.537 While such considerations were quickly dismissed in all of the cases mentioned in para 4.432, the explicit recognition of free-riding motivations in the Article 102 Enforcement Priorities Guidance suggests that they might be given greater weight in future cases. 4.459  In any event, however, such efficiencies will have to be weighed against the harm to competition that may arise (even if unintentional) as a result of exclusionary contracts. For instance, when a dominant firm forecloses such a large part of the market with exclusive contracts that equally efficient competitors could not realistically survive, the conduct would probably be considered anti-competitive even if it was sincerely motivated by procompetitive promotional considerations.

(d)  The Limits of the Article 102 Enforcement Priorities Guidance Approach 4.460  There has long been a debate surrounding the proper antitrust treatment of loyaltyinducing practices. While the form-based approach taken in decisions such as Michelin II and Tomra has almost universally been criticized as misguided, not all observers have embraced the transition to the effects-based approach in the Article 102 Enforcement Priorities Guidance.538 4.461  Some observers have cautioned that the effects-based standard makes it more difficult to punish anti-competitive conduct. For instance, the Commission’s test has been criticized by a leading economist, Professor Nicholas Economides, because ‘it uses the monopolist’s costs, even though the entrant can have higher costs because of the anticompetitive actions of the monopolist; in any case, a higher cost competitor can constrain price and increase consumer surplus—therefore inefficient competitors should not be excluded.’539 Instead, Economides proposes the use of competitors’ costs in the price-cost test whenever it ‘can be shown that the elimination of the competing firm reduces competition and decreases consumer surplus’.540 4.462  This alternative approach, however, may cause a number of serious problems, which explains why the Commission has decided not to pursue it. First, the use of competitors’ cost in a pricing test would effectively force dominant firms to refrain from competing when winning business would endanger the commercial viability of less efficient competitors. Secondly, this standard lacks any degree of legal certainty, since firms normally have no way of observing the costs of their rivals (which would be required under this approach to evaluate the legality of the firm’s pricing). Thirdly, the criticism that the AECT accepts the predatory exclusion of less efficient rivals appears to be misplaced. In particular, the ‘asefficient competitor’ in the test is merely a hypothetical construct to assess whether the dominant firm would (p. 437) be in a position to compete against its own prices. It does not, by any means, require that actual competitors are in fact equally efficient as the dominant firm.541 4.463  A number of observers have also argued that the Article 102 Enforcement Priorities Guidance approach is still overly interventionist and stifles competition by discouraging the use of competitive pricing policies. For example, the US Department of Justice (DOJ) has dismissed proposals to switch to a similar system on the ground that loyalty rebates are far too likely to be pro-competitive in nature to justify subjecting firms to the uncertainties of an effects-based foreclosure analysis. Instead, the DOJ proposed the use of standard predatory pricing analysis in its withdrawn Section 2 report, noting that ‘the standard From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

predatory-pricing approach to single-product loyalty discounts has a number of advantages, including its administrability, clarity, and reduced risk of chilling procompetitive price competition.’542 4.464  The US’s permissive approach toward the assessment of loyalty-inducing practices clearly risks missing genuinely anti-competitive conduct in many instances. For this reason, defences based on such a lax evidentiary standard are unlikely to make much of an impression in European antitrust proceedings. For all its shortcomings in curbing potentially anti-competitive behaviour, however, the DOJ’s criticism of foreclosure-based antitrust standards contains some relevant considerations for the application of Article 102 towards requirement practices. 4.465  First, it is undoubtedly correct that the AECT poses certain challenges in terms of practical administrability, since it is a far more complex pricing test than the standard predation test. The primary difficulty it entails is the determination of the contestable share of demand, an exercise that often leaves room for subjective judgement. 4.466  Secondly, this uncertainty is amplified from the perspective of firms which try to devise their pricing schemes so as to comply with competition rules. After all, what turns out to be viewed as contestable by a competition authority ex post may differ substantially from the firm’s own best judgement ex ante, when it competed for incremental sales. 4.467  As a result, it has been argued that dominant firms may be reluctant to use loyalty rebates to compete fiercely for expanded output, out of a concern that any margin of error would ultimately be used against them in an investigation. However, there is little or no evidence that such reluctance is widespread and, in any event, effective steps can be taken by firms to minimize the risk of violating the Article 102 Enforcement Priorities Guidance standard.543

(e)  The Commission’s Application of the New Approach 4.468  The first case in which the Commission tested the approach under the Article 102 Enforcement Priorities Guidance is Intel. In Intel, the Commission held that Intel had abused its dominant position on the worldwide market for x86 microprocessors (microprocessors are also described in the decision as central processing units or CPUs) for desktops, laptops, and (p. 438) servers. Over a period of more than ten years, Intel had a market share consistently around or above 80 per cent of the wider market and around or above 70 per cent in any of the desktop, laptop, and server market segments. Intel had only one significant competitor, AMD, with an average market share in volume terms around or above 15 per cent. As well as nakedly exclusionary rebates, Intel also granted rebates to OEMs and to one retailer conditional on the customer or the retailer buying the totality, or a very high percentage, of their requirements from Intel and not buying, promoting, or launching AMD products. 4.469  The Commission characterized the requirements rebates in Intel as fidelity rebates and, therefore, abusive unless objectively justified. Nonetheless, the Commission carried out an economic assessment of (a) the role of each of the rebates in the customer’s purchasing decisions and (b) the effect of the rebate on the market. 4.470  The Commission applied the AECT to the fidelity rebates, adopting the analytical framework put forward for the assessment of rebates in the Article 102 Enforcement Priorities Guidance. The decision illustrates some of the practical difficulties in the application of such a test to rebates. First, the Commission had to calculate the contestable share of demand, namely the portion of demand reasonably open to competition. This requires the determination of the time frame of the analysis. In Intel, the Commission took the view that the appropriate reference period was one year because this was the maximum duration of contractual commitments in the industry and the market was characterized by a high rate of innovation, which meant that the shelf life of PCs was short. As regards the size

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of the contestable share, the Commission relied on internal customers’ estimates and, in one instance, on historical market shares in the absence of foreclosure. The Commission then considered whether a competitor with the same costs as Intel was foreclosed by the rebate. The chosen cost benchmark was AAC. Because Intel’s rebates failed the test under an AAC benchmark, it was not necessary to consider whether a higher cost benchmark would have been more appropriate. 4.471  Having found a foreclosure effect customer by customer, the Commission went on to assess the impact of the rebate schemes on the market. The rebates foreclosed access to certain customers who were of strategic importance for market penetration and expansion because of their market share, their stronger presence in the more profitable segments of the market, and their ability to create consumer confidence in new products. Intel had the ability and the incentive to exercise tight control over its customers due to it being an unavoidable trading partner, the customers’ low margins, and the importance of the product in question as a proportion of the customers’ procurement costs. The share of the market to which the rebates applied was ‘significant’. 4.472  In considering whether the foreclosure would lead to consumer harm, the Commission demonstrated that the rebates under review in that case artificially restricted the choice of end-users. Such a restriction was not simply the lack of availability of AMDbased PCs and servers but the lack of availability of such AMD-based products of a particular OEM brand. In response to the argument that consumers could not be worse off as a result of lower prices, the Commission stated that the leveraging of market power over the non-contestable share to the contestable share allows a dominant undertaking to exclude equally efficient competitors even if its overall average price is higher than the competitors’ prices. Therefore, the anti-competitive rebates were detrimental to consumers both in the short and in the long term ‘in terms of price, choice and innovation’. (p. 439) 4.473  The Commission did not find that the rebates were objectively justified or that the harm was outweighed by countervailing efficiencies.

Footnotes: 432

  Article 102 Enforcement Priorities Guidance, para 33. This definition is consistent with the definition in Hoffmann-La Roche (n 6), para 89. 433

  Cases IV/34.073, IV/34.395 and IV/35.436 Van den Bergh Foods, OJ 1988 L246/1.

434

  Cases IV/34.073, IV/34.395 and IV/35.436 Van den Bergh Foods (n 433).

435

  Case T-65/98 Van den Bergh Foods (n 281), paras 160 and 161.

436

  Case T-65/98 Van den Bergh Foods (n 281).

437

  Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L102/1, Art 1(d). 438

  OJ 1999 L336/21.

439

  Guidelines on vertical restraints, OJ 2010 C130/1, para 66.

440

  Vertical Restraints Guidelines, para 129.

441

  Hoffmann-La Roche (n 6), para 107.

442

  Press Release IP/96/1117 (4 December 1996).

443

  Case T-65/89 British Plasterboard (n 313), para 68.

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444

  Case C-310/93P BPB Industries and British Gypsum v Commission [1995] ECR I-865 (British Plasterboard), para 68. 445

  Hachette, VIIIth Report on Competition Policy, 1978, paras 114–115.

446

  Visa International, XXVIth Report on Competition Policy, 1996, para 63.

447

  Hoffmann-La Roche (n 6), para 89.

448

  Hoffmann-La Roche (n 6), para 90.

449

  Suiker Unie (n 4), para 486.

450

  Case T-65/98 Van den Bergh Foods (n 281), paras 159–160.

451

  Case C-552/03 P Van den Bergh Foods (n 281).

452

  Soda Ash, XIth Report on Competition Policy, 1981, paras 73–76.

453

  Case T-65/98 Van den Bergh Foods (n 281), para 159.

454

  Michelin II (n 197), para 85; Michelin I (n 2), para 71; Hoffmann-La Roche (n 6), para 90; Case C-163/99 Portuguese Republic v Commission [2001] ECR I-2613, para 50. 455

  Case COMP/C-3/37.990 Intel (n 23), recitals 1643–1683, under appeal in Case T-286/09 Intel (n 23). 456

  Case COMP/C-3/37.990 Intel (n 23), recitals 1652, 1655, 1664, and 1666.

457

  Case COMP/C-3/37.990 Intel (n 23), recitals 1672 and 1675.

458

  Case COMP/C-3/37.990 Intel (n 23), recital 1667.

459

  Suiker Unie (n 4).

460

  Suiker Unie (n 4), para 526. The language used to describe the foreclosure effect is that the rebate ‘gave other producers and especially those having their places of business in other Member States no chance or restricted their opportunities of competing with sugar sold by szv’. 461

  Suiker Unie (n 4), para 527.

462

  Case IV/29.020 Vitamins, OJ 1976 L223/27.

463

  Vitamins (n 462), recital 22.

464

  Hoffmann-La Roche (n 6).

465

  Hoffmann-La Roche (n 6), paras 94–96.

466

  Hoffmann-La Roche (n 6), para 98.

467

  Hoffmann-La Roche (n 6), para 100.

468

  Case COMP 322/81 Bandengroothandel Frieschebrug BV/NV Nederlandsche BandenIndustrie Michelin, OJ 1981 L353/33 (Banden-Industrie Michelin), recital 38. The Commission also found that the rebate system under review was discriminatory. The discounts were not given in consideration of objectively verifiable services by the dealers. Nor were they predetermined based on objective criteria equally applicable and disclosed to all dealers. Rather, the system resulted in dealers in a comparable position receiving different rebates: see recitals 41–43. The finding of abusive discrimination was set aside by the CJ in Michelin I (n 2), paras 87–91. 469

  Banden-Industrie Michelin (n 468), recitals 20–27.

470

  Michelin I (n 2), paras 70–86.

471

  Michelin I (n 2), para 72.

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472

  Michelin I (n 2), para 73.

473

  Michelin I (n 2), para 73.

474

  Case COMP/E-1/38.113 Tomra (n 36).

475

  Case COMP/E-1/38.113 Tomra (n 36), recitals 286–296.

476

  Case COMP/E-1/38.113 Tomra (n 36), recitals 297–313.

477

  Case COMP/E-1/38.113 Tomra (n 36), recitals 314–329.

478

  Case COMP/C-3/37.990 Intel (n 23), recitals 1002–1578.

479

  Case COMP/E-1/38.113 Tomra (n 36), recital 322.

480

  Case T-155/06 Tomra (n 301), paras 286–290.

481

  Case C-549/10 P Tomra Systems v Commission, judgment of 19 April 2012, not yet reported, paras 46, 73, and 80. 482

  Case C-549/10 P Tomra (n 481), para 75.

483

  Michelin II (n 197), para 67.

484

  Michelin II (n 197), para 95. In the same para, the Court also referred to the variation of the discount rates between the lower and higher quantitative thresholds in the grid, by which the Court meant that at lower thresholds, the increase of the discount was higher and at higher thresholds, the increase of the discount was lower (as low as 0.05 per cent for the final steps). This feature of the system, however, was put forward by the applicant as an argument to show the absence of any foreclosure effect (see para 90) and was rejected by the Court (see paras 91–94). It appears, therefore, that the difference in the rates at which the rebate increased was not a material feature of the infringement. 485

  Michelin II (n 197), para 85.

486

  Michelin II (n 197), para 85.

487

  Case C-95/04 P British Airways (n 3), paras 65–70.

488

  Case C-95/04 P British Airways (n 3), para 68.

489

  Case C-95/04 P British Airways (n 3), para 71–72.

490

  Case C-95/04 P British Airways (n 3), para 73–74.

491

  Case C-95/04 P British Airways (n 3), paras 71 and 75–76. In the analysis of the foreclosure effect, the CJ followed closely the Opinion of AG Kokott at paras 48–53. 492

  Hoffmann-La Roche (n 6), para 6.

493

  Article 102 Enforcement Priorities Guidance, para 37.

494

  Article 102 Enforcement Priorities Guidance, para 23.

495

  Case T-219/99 British Airways (n 171), paras 263–264.

496

  Article 102 Enforcement Priorities Guidance, para 23.

497

  Article 102 Enforcement Priorities Guidance, para 37.

498

  eg see Michelin II (n 197), paras 88 and 113.

499

  eg see Hoffmann-La Roche (n 6), para 100.

500

  eg Coca-Cola (n 51), paras 32 and 42.

501

  eg see Case T-65/98 Van den Bergh Foods (n 281), para 162.

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502

  Article 102 Enforcement Priorities Guidance, para 34.

503

  Article 102 Enforcement Priorities Guidance, para 36. In the same paragraph, the Commission cites excessive contract duration as a potential exception to this rule. From an economic perspective, long-term contracts can potentially be an obstacle for hypothetical future entrants, who are not (yet) in a position to make counter-offers at the time the contract is concluded. 504

  Article 102 Enforcement Priorities Guidance, para 39.

505

  Article 102 Enforcement Priorities Guidance, para 27 (‘If the data clearly suggest that an equally efficient competitor can compete effectively with the pricing conduct of the dominant undertaking, the Commission will, in principle, infer that the dominant firm’s pricing conduct is not likely to have an adverse impact on effective competition, and thus on consumers, and will therefore be unlikely to intervene’). 506

  Article 102 Enforcement Priorities Guidance, para 27 (‘If, on the contrary, the data suggest that the price charged by the dominant undertaking has the potential to foreclose equally efficient competitors, then the Commission will integrate this in the general assessment of anti-competitive foreclosure…, taking into account other relevant quantitative and/or qualitative evidence’). 507

  Article 102 Enforcement Priorities Guidance, para 46 (‘Provided that the conditions set out in Section III D are fulfilled, the Commission will consider claims by dominant undertakings that rebate systems achieve cost or other advantages which are passed on to consumers’). 508

  Case COMP/C-3/37.990 Intel (n 23).

509

  Case T-57/01 Solvay v Commission [2009] ECR II-4621.

510

  Case T-155/06 Tomra (n 301).

511

  Michelin II (n 197), para 137.

512

  Case T-219/99 British Airways (n 171), para 263.

513

  Case COMP/C-3/37.990 Intel (n 23), para 1010.

514

  It is sometimes argued that such price differentiation across different units of demand is an expression of monopoly power. This is incorrect, however. As industry studies of price discrimination confirm, ‘The extent of price discrimination has often been found to increase as competition intensifies, in contrast to conventional wisdom but consistent with new theoretical insights’; F. Verboven, ‘Price Discrimination: Empirical Studies’ in N. Durlauf and L. E. Blume (eds), The New Palgrave Dictionary in Economics (2nd edn, Basingstoke: Palgrave Macmillan, 2008). 515

  Note that in many European rebates cases smaller competitors also used loyalty rebates to compete with their dominant rivals. Eg Michelin II (n 197), para 48; Case T-219/99 British Airways (n 171), para 64. 516

  See generally H. Zenger, ‘Loyalty Rebates and the Competitive Process’ (2012) 8 J Comp L & Econ 717. 517

  See generally B. Klein and K. M. Murphy, ‘Exclusive Dealing Intensifies Competition for Distribution’ (2008) 75 Antitrust LJ 433. 518

  R. M. Steuer, ‘Customer-Instigated Exclusive Dealing’ (2000) 68 Antitrust LJ 239, 240.

519

  eg B. Klein, ‘Exclusive Dealing as Competition for Distribution “On the Merits”’ (2003) 12 Geo Mason L Rev 119, 156.

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520

  eg H. Zenger, ‘The Marginal Price Effects of Antitrust Rules Against Price Discrimination (2012) 117 Econ Letters 921. 521

  eg S. Kolay, G. Shaffer, and J. A. Ordover, ‘All-Unit Discounts in Retail Contracts’ (2004) 13 J Econ & Management Strategy 429. 522

  eg A. Majumdar and G. Shaffer, ‘Market Share Contracts with Asymmetric Information’ (2009) 18 J Econ & Management Strategy 393. 523

  eg lack of commercial success may make it difficult for smaller firms to receive sufficient internal or external financing for productive investments, which is often necessary to remain a viable competitive force. Eg see Bolton, Brodley, and Riordan (n 326). 524

  Concord Boat v Brunswick, 207 F3d 1039 (8th Cir 2000).

525

  eg in Intel, the Commission argued that AMD was not in a position to compete for the entirety of a customer’s demand, because consumer demand for Intel-powered PCs would have made it impossible for an OEM to rely only on AMD-based products. In Michelin II, by contrast, there was no obvious reason why Michelin’s competitors should not be able to compete for the entirety of a customer’s demand. Indeed, companies such as Goodyear and Bridgestone appear to produce viable competitive alternatives for the range of products offered by Michelin. 526

  See Article 102 Enforcement Priorities Guidance, para 20 (noting that ‘in general, the higher the percentage of total sales in the relevant market affected by the conduct, …the greater is the likely foreclosure effect’). 527

  See generally D. A. Crane and G. Miralles, ‘Toward a Unified Theory of Exclusionary Vertical Restraints’ (2011) 84 S Cal L Rev 605; J. M. Jacobson, ‘Exclusive Dealing, “Foreclosure, ” and Consumer Harm’ (2002) 70 Antitrust LJ 311; J. M. Jacobson and S. A. Sher, ‘“No Economic Sense” Makes no Sense for Exclusive Dealing’ (2006) 73 Antitrust LJ 779. 528

  eg see H. Zenger, ‘When Does Exclusive Dealing Intensify Competition for Distribution? Comment on Klein and Murphy’ (2010) 77 Antitrust LJ 205 (showing that the price-reducing effect of exclusive dealing becomes less significant the more market power the dominant firm possesses). But see also B. Klein and K. M. Murphy, ‘How Exclusivity is Used to Intensify Competition for Distribution—Reply to Zenger’ (2011) 77 Antitrust LJ 691 (providing counter-arguments). 529

  eg see W. K. Tom, D. A. Balto, and N. W. Averitt, ‘Anticompetitive Aspects of MarketShare Discounts and Other Incentives to Exclusive Dealing’ (2000) 67 Antitrust LJ 615 (assessing potential anti-competitive effects of exclusivity-inducing contracts). 530

  eg see D. W. Carlton, ‘A General Analysis of Exclusionary Conduct and Refusal to Deal— Why Aspen and Kodak are Misguided’ (2001) 68 Antitrust LJ 659, 670 (noting that ‘harm to competition need[s] some scale economies effect’). 531

  F. Lafontaine and M. Slade, ‘Exclusive Contracts and Vertical Restraints: Empirical Evidence and Public Policy’ in P. Buccirossi (ed), Handbook of Antitrust Economics (Cambridge, MA: MIT Press, 2008), 391. 532

  See generally B. Klein and A. V. Lerner, ‘The Expanded Economics of Free-Riding: How Exclusive Dealing Prevents Free-Riding and Creates Undivided Loyalty’ (2007) 74 Antitrust LJ 473. 533

  See Article 102 Enforcement Priorities Guidance, para 46.

534

  Coca-Cola (n 51), paras 29–31.

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535

  Michelin II (n 197), para 168.

536

  Case T-65/98 Van den Bergh Foods (n 281), para 2.

537

  For an analysis of the adverse competitive consequences of free-riding when exclusive dealing is prohibited through antitrust intervention, see S. E. Masten and E. A. Snyder, ‘United States Versus United Shoe Machinery Corporation: On the Merits’ (1993) 36 J L & Econ 33. 538

  For a critical review of the case law, see eg D. Waelbroeck, ‘Michelin II: A Per Se Rule Against Rebates by Dominant Companies?’ (2005) 1 J Comp L & Econ 149; C. Ahlborn and D. Bailey, ‘Discounts, Rebates and Selective Pricing by Dominant Firms: A Trans-Atlantic Comparison’ (2006) 2 Eur Comp J 101; G. Federico, ‘Tomra v Commission of the European Communities: Reversing Progress on Rebates?’ (2011) 31 Eur Com L Rev 139. 539

  N. Economides, ‘Loyalty/Requirement Rebates and the Antitrust Modernization Commission: What is the Appropriate Liability Standard?’ (2009) 54 Antitrust Bull 259, at 273. 540

  Economides, ‘Loyalty/Requirement Rebates’ (n 539), 277.

541

  In commercial practice, even grossly inefficient firms sometimes survive in the market, eg because they offer differentiated products that are particularly valued by certain customers. 542

  US Department of Justice, ‘Competition and Monopoly: Single-Firm Conduct Under Section 2 of the Sherman Act’ (2008), 117. 543

  eg firms that grant retroactive rebates can use multiple thresholds to minimize compliance risks. See generally H. Zenger, ‘Devising Loyalty Rebates that Comply with the As-Efficient-Competitor Test’ [2013] 3 Concurrences 16.

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Part I General Principles, 4 Article 102, G Tying and Bundling Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Tying agreements — Tying — Dominant position — Foreclosure effect — Barriers to entry

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G. Tying and Bundling (1)  Introduction (a)  Definition of Tying and Bundling 4.474  Tying and bundling are pervasive business practices that consist in the selling of two or more products jointly. 4.475  Three types of practice may be distinguished: •  Tying occurs when two products, A and B, are marketed so that customers buying A (the tying product) must also buy B (the tied product). B, however, can also be purchased as a stand-alone product. 544 Tying can be technical or contractual. As the Article 102 Enforcement Priorities Guidance explains, ‘technical tying occurs when the tying product is designed in such a way that it only works properly with the tied product (and not with the alternatives offered by competitors)’ whereas ‘contractual tying occurs when the customer who purchases the tying product undertakes also to purchase the tied product (and not the alternatives offered by competitors)’. 545 • Pure bundling occurs when two products are only sold jointly in fixed proportions. 546 In Napier Brown–British Sugar, the Commission objected to British Sugar’s practice of offering only delivered prices and not ex-factory prices, thereby forcing customers to use British Sugar’s delivery services. 547 In the UK case of Genzyme, Genzyme, the dominant producer of a drug for a rare disease, charged the National Health Service a price which included the price of the drug and the price for home delivery and home-care services in the community. 548 Because pure bundling is a form of reciprocal tying in that neither product is available alone, so that each is tied to the other, the assessment of pure bundling is not materially different to the assessment of tying. This section, therefore, will not deal with pure bundling separately. • Mixed bundling occurs when ‘the products are also made available separately, but the sum of the prices when sold separately is higher than the bundled price’. 549 4.476  Article 102(d) lists tying as one of the possible abuses, providing that an abuse may consist in ‘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’. Clearly, however, this definition is purely illustrative. Tying may be abusive beyond the circumstances described in Article 102(d). For instance, it is well established that tying may be abusive when there is a natural link (p. 440) between the two products,550 or when the tying is in accordance with commercial usage.551 What counts is whether the tying is abusive under the general principles of Article 102.552 Furthermore, mixed bundling is not covered by Article 102(d) but there is little doubt that it can be an abuse under the general principles of Article 102.

(b)  Relationship with Article 101 4.477  Contractual tying is an agreement between undertakings that may fall within the scope of Article 101. When the market shares of the supplier and the buyer on the tying and the tied markets do not exceed 30 per cent, contractual tying is exempted from the application of Article 101(1) under Regulation 330/2010.553 Regulation 330/2010 is without prejudice to the application of Article 102.554 In practice, a dominant undertaking will have a market share higher than 30 per cent so that Regulation 330/2010 does not apply in any event. The Commission provides guidance on the assessment of contractual tying under Article 101 when the agreement falls outside the scope of Regulation 330/2010 in the Vertical Restraint Guidelines.555 The Guidelines are expressed to be ‘without prejudice to the possible parallel application of Article 102…to vertical agreements’.556 However, they

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may still provide some useful indications as to the circumstances in which tying may be abusive. This is demonstrated by the fact that the Article 102 Enforcement Priorities Guidance and the Vertical Restraint Guidelines adopt the same approach to the question of whether the tying and the tied products are distinct557 and to certain aspects of the foreclosure analysis.558 Thus in Rio Tinto, a commitments decision, the Commission’s preliminary assessment under Article 101 relies heavily on the preliminary assessment under Article 102.559

(2)  Legal Analysis and Case Law on Tying 4.478  The assessment of tying and bundling under Article 102 has given rise to a degree of uncertainty and controversy.560 There is a perception that the EU Courts apply a rule of per se (p. 441) illegality to tying561 that is wholly inappropriate.562 On the other hand, some argue that the current approach of the EU Courts, far from being a form of per se illegality, is a balanced approach that leads to reasonable results.563 4.479  The test developed by the case law for anti-competitive tying requires proof of the following elements:564 •  a dominant position on the tying market; •  the components of the bundle must be separate products; •  customers must be coerced to obtain the tied product together with the tying product; •  the foreclosure of competitors on the tied market, which the case law suggests may be presumed in certain circumstances, probably when it is clear that foreclosure is inherent in the tying practice, that is, when the mere fact that customers are coerced to obtain the tied product when they purchase the tying product means that there is no space for competitors on the tying market to supply their products; •  the tying is not objectively justified.

(a)  A Dominant Position on the Tying Market 4.480  For tying to be abusive, the undertaking engaging in tying must be dominant on the tying market.565 In Eurofix-Bauco v Hilti, Hilti was dominant on the tying market, the market for cartridges compatible with Hilti nail guns.566 The tied products were Hilticompatible nails. Hilti was also dominant on the market for nail guns. The dominant position on the market for nail guns was the source of Hilti’s ability to exclude competitors in the markets for Hilti-compatible consumables. Hilti’s market shares were 55 per cent on the market for nail guns and at or above 70 per cent on the markets for cartridges and nails.567 4.481  In Microsoft I, the Commission found that Microsoft had been tying its Windows Media Player (WMP) to its Windows client PC operating system since the launch of Windows (p. 442) 98 Second Edition until the date of the Commission decision in 2004.568 Microsoft had an ‘overwhelmingly dominant position’ on the worldwide market for client PC operating systems,569 which only allowed for ‘fringe competition’.570 Microsoft’s market shares were above 90 per cent for most of the period of the infringement and above 80 per cent for eight years.571 The next largest competitor had a market share not exceeding 3 per cent.572 There were also high barriers to entry to the market in the form of indirect network effects,573 evidence that Microsoft was able to behave independently of its customers,574 and financial performance figures consistent with substantial market power.575 It is worth noting that the Commission carried out this analysis even though Microsoft conceded in the administrative procedure that it held a dominant position on the worldwide market for client PC operating systems.576 A plausible explanation for the Commission’s approach is, therefore, that the features of Microsoft’s dominant position were relevant to the analysis of

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tying beyond the bare assertion that Microsoft held a dominant position. The same approach was adopted in Microsoft II, a commitments decision concerning Microsoft’s tying of its web browser Internet Explorer to its PC client operating system Windows.577 Although Microsoft accepted that it had a dominant position on the worldwide market for client PC operating systems,578 the Commission examined the features of Microsoft’s dominant position emphasizing its high market share of around 90 per cent held for ten years, the strong network effects on the market, and the high cost of developing and testing a new client PC operating system.579

(b)  The Two-Product Test 4.482  For a tying abuse to be established, the tying and the tied product must be separate products. The test to determine whether two components of a bundle are distinct products asks whether there is independent demand for the tied product at the level of the supply chain where the restriction of competition is alleged to take effect. 4.483  When available, historical evidence of supply and demand may be relevant to the issue of whether two components of a bundle are two distinct products. The fact that undertakings supplying only one component have been active for a long period of time may be strongly probative evidence that there is independent demand for that component and that it can be efficiently supplied by stand-alone producers.580 In Hilti, the General (p. 443) Court upheld the Commission’s definition of a separate market for nails to be used with Hilti nail guns. The question was whether nail guns, cartridges, and nails were a unitary product or constituted three separate markets.581 The Court considered the structure of supply and noted that for decades there had been independent suppliers of nails which did not manufacture nail guns. This was in itself ‘sound evidence’ that there was a separate market for nails.582 4.484  The independent demand test must be performed separately for the tied product. In Microsoft I, the Court rejected Microsoft’s argument that the test should be whether there was demand for the tying product without the tied product.583 As the Court rightly noted, such a test would have meant that complementary products could not be separate products.584 This would have been absurd as the same benefits that arise from competition in terms of lower prices and innovation may arise when different undertakings compete for different complementary products of an integrated system. The Court further noted that it was relevant at which level of the distribution chain the tying was taking place. The PC manufacturer has a separate demand for all hardware and software components of a PC, which it assembles and sells as a bundle to the final consumers through a retailer or directly through a vertically integrated sales outlet. In Microsoft I, the tying was occurring at the level of PC manufacturers (OEMs). Therefore, whether there was independent demand for client PC operating systems and streaming media players had to be assessed at the level of the OEM.585 4.485  Microsoft I also addressed the difficult issue of the time frame for the application of the two-product test. The General Court recognized that the two-product test must be applied in a dynamic way. Two distinct products may become a unitary product because of technological developments and the evolution of the market.586 The Court limited its observation to ‘the IT and communications industry’,587 but the same principle applies to any market where the same phenomenon may occur. However, the Court went on to say that the two-product test must be applied at the time when the abuse occurred.588 This presumably means that, while a unitary product may have been two products in the past and while two products may become a unitary product in the future, what counts is whether

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there are two distinct products or a unitary product at the time when the abuse is alleged to have been committed. (p. 444) 4.486  The application of this principle may be problematic. Two distinct products may have become one only recently so that mere reliance on historical evidence would be misleading and result in a false conviction. Care must, therefore, be exercised in the assessment of historical evidence in fast-moving markets. 4.487  As regards the risk of an incorrect finding of separate products, the solution is to verify the two-product hypothesis based on the relevant evidence. In mature markets, the following could be sufficient proof of the existence of independent consumer demand for the tied product: the existence of stand-alone suppliers of the tied products;589 general interoperability of the products on the tied market with the products on the tying market;590 distinct distribution, marketing, and licensing practices for the tying and the tied product;591 or a significant number of consumers purchasing the tied product separately from the tying product.592 In developing markets, particularly in markets for new or developing technologies, historical evidence must be validated by forward-looking analysis,593 including: (a)  how significant and differentiated the tied product is, and is likely to be, for consumers. The more significant and differentiated the tied product currently is, and is likely to be in the future, the weaker the case that the two products are, or are likely to become, a unitary product; (b)  whether the tying and the tied products meet distinct consumer needs or have distinct functionalities. In Microsoft I, the Windows client PC operating system controlled the basic functions of a PC and enabled the user to run application software on the PC while streaming media players and allowed the user to listen to, or watch, audio or video content streamed from the Internet. 594 In Microsoft II, again Windows had a different functionality from web browsers because the latter enabled the user to see Internet pages while the former, as ‘system software’, had the different function described in Microsoft I; 595 (c)  whether the tying and the tied products are technically integrated, in that a tied product, when manufactured separately, does not perform in the integrated system as well as the tied product when manufactured together with the tying product. Care must be taken to discount any technical integration which is the result of a deliberate choice of the dominant undertaking to make its tying product incompatible with complementary products supplied by competitors. Technical integration must be the result of technological development and not a strategic commitment to tying.

(c)  Coercion 4.488  Article 102(d) describes tying as the making the conclusion of a contract ‘subject to the acceptance by the other parties of supplementary obligations’. Therefore, tying requires that (p. 445) customers of the dominant undertaking be compelled to acquire the tied product if they wish to purchase the tying product. More generally, in the absence of coercion, competitors of the dominant undertaking could at any time persuade customers to buy their own products. In order to prevent that from happening, the dominant undertaking must either be more efficient than its competitors or deploy anti-competitive practices that provide incentives for customers not to switch in the form of loyalty rebates or multiproduct rebates. Coercion may take different forms: •  when purchasers of the tying product must undertake a contractual obligation to purchase the tied product (contractual tying);

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•  when the tying and the tied products are technically integrated and when such integration is not required by technological constraints or not necessary for the superior performance of the integrated system (technical tying); •  a refusal to supply the tying product without the tied product.

596

4.489  The question of what amounts to coercion has given rise to some discussion in the case law although, in principle, it ought not to be controversial. There is coercion each time a customer wishing to purchase the tying product has no choice but also to obtain the tied product. The case law has clarified that the customer need not be forced to use the tied product. So, in Hilti, the customers who purchased Hilti’s nail guns had to purchase Hilti’s cartridges too, although they were then perfectly free to throw them away and use cartridges supplied by competitors.597 4.490  More problematic is the case in which it is a widespread market practice to supply the tied products without any price increase to the consumer. When this occurs, the approach of the General Court in Microsoft I means that there is coercion but not necessarily foreclosure. In that case, all the Court required was that the customers be coerced to obtain the tied product and not, in addition, that they be prevented from using rivals’ products. This is clear from the Court’s analysis of the US settlement in which Microsoft had agreed to remove all icons and automatic points of access and to disable the default implementation of Windows Media Player. This arrangement did not allow customers to obtain the Windows client PC operating system without Windows Media Player and, therefore, did not invalidate the finding that customers were coerced to obtain the latter product.598 In principle, this approach is correct, provided that coercion is properly understood as an element of the behaviour that triggers the application of the tying test and not as a form of anti-competitive effect. In other words, it is not an abuse to coerce customers to obtain the tied product. When customers are so coerced, however, this is relevant to the assessment of whether competitors are foreclosed from the tied market. This is possible even if customers do not pay for the tied product and are not prevented from using competing products. This was the case in Microsoft I where, (p. 446) once all Windows operating systems were tied with Windows Media Players, competitors could not resort to any other distribution channel to distribute their products.599 4.491  As is clear from the discussion in paras 4.488–4.490, coercion is useful to distinguish tying from other abusive practices such as loyalty or bundled rebates. Its significance, however, should not be overstated. What matters is whether the practice under review forecloses as-efficient competitors in the tied market. The approach of the Commission in the Article 102 Enforcement Priorities Guidance, which does not regard coercion as a separate element of the assessment of tying, is consistent with this analysis.600

(d)  Anti-Competitive Effect (i)  The Requirement to Prove Foreclosure of As-Efficient Competitors 4.492  In Microsoft I, the Commission accepted that it was necessary to prove that the tying of Windows Media Player with the Windows client PC operating system had a foreclosure effect. However, the Commission was at pains to distinguish ‘classic tying cases’, where the foreclosure effect would be ‘demonstrated by the bundling of a separate product with the dominant product’ from the case of Microsoft, where ‘users can and do to a certain extent obtain third party media players through the Internet, sometimes for free’.601 The General Court appears to have endorsed such an approach, albeit only tentatively.

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4.493  On the one hand, the Court held that unilateral conduct infringes Article 102 only if it is capable of restricting competition.602 On the other hand, the Court, in upholding the Commission’s test and its conclusions on the facts, stressed that, normally, the Commission assumed that tying has by its nature a foreclosure effect.603 It is noteworthy, however, that the Court did not say that, in law, tying is presumed to have a foreclosure effect. It said that it was the Commission’s practice to follow this approach. Nor are the distinguishing factors relied on by the Commission particularly convincing. The fact that customers can obtain the tied product from other suppliers notwithstanding the dominant undertaking’s tying practice is not at all exceptional and applies in principle to all tying cases in which it is not technically impossible to use third party tied products with the dominant undertaking’s tying product. The key question is always that of the incentives of the customers to switch to alternatives when they have already obtained the tied product from the dominant undertaking. But any analysis of customers’ incentives already amounts to an analysis of foreclosure because the focus will be on why the customer does not switch to an equally efficient supplier of the tied product. 4.494  The circumstance that customers in Microsoft I could obtain the tied product ‘sometimes for free’ is equally inconclusive as a distinguishing factor. In fact, far from relaxing the presumption of foreclosure, such a circumstance may be an even stronger indication of anti-competitive effects as it might suggest that competitors are forced to give away their products for free in order to stay on the market. They may do so either in order to keep a (p. 447) presence on the market in the hope that the circumstances change in the short to medium term or because they are able to cross-subsidize their loss through the sale of complementary products. In either case, there is an anti-competitive effect. In the former case, because the dominant undertaking imposes a loss on its rivals it does not incur itself, which is likely to foreclose an equally efficient competitor from the tied market. In the latter case, because it is an abuse for a dominant undertaking to force competitors to rely on a cross-subsidy in order to remain on a market thus distorting the competitive process.604 In any event, the question remains that of the incentives of the customers to obtain a competing product. In Microsoft I, both OEMs and final consumers had strong disincentives to install an additional media player on a PC.605 4.495  There are, therefore, strong arguments for the proposition that a finding of abusive tying invariably requires a finding of foreclosure. The idea that the Commission practice or the case law regards certain ‘classic tying cases’ as abusive practices regardless of the proof of likely foreclosure effect does not find support in the authorities. 4.496  In Eurofix-Bauco v Hilti, the Commission made the following findings. •  The competitive significance of the markets for Hilti-compatible consumables was that, given Hilti’s significant market shares, suppliers of consumables for nail guns would not generally be able to achieve the economies of scale necessary to compete effectively if they did not supply Hilti-compatible products. 606 •  Hilti had been able severely to limit effective competition from independent producers of Hilti-compatible nails. 607 •  Hilti had been able to preserve and strengthen its dominant positions on the markets for nail guns, Hilti-compatible cartridges, and Hilti-compatible nails. Hilti’s strategy was to use its dominant positions on the markets where barriers to entry were highest, namely the markets for nail guns and Hilti-compatible cartridges, in order to reinforce its dominance on the market where it was most vulnerable, namely the market for Hilti-compatible nails. 608

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•  The tying and other discriminatory policies against customers who bought only the tying product had ‘the object or effect of excluding independent nail makers who may threaten the dominant position Hilti holds’. 609 •  Tying was part of a wider exclusionary strategy.

610

4.497  In Hilti, the issue of the foreclosure effect of the conduct under review was not raised before the EU Courts. However, in its decision, the Commission had considered both the exclusionary effect of the practice on stand-alone customers and the link between the tying and the protection of market power on the tying market and on the primary market for nail guns. 4.498  In Tetra Pak II, Tetra Pak was already dominant or in a leading position on the tied markets611 and the Commission found that tying and the other abusive practices under review in that (p. 448) case aimed at eliminating any possibility of competition on the tied markets.612 The ‘elimination of any possibility of competition’ on a dominated market or a market on which the undertaking has a leading position amounts to the maintenance or strengthening of market power on those markets. Before the General Court, Tetra Pak argued that the Commission found the tying of cartons to machines to be an infringement of Article 102 without considering whether these practices ‘had any real effect on competition’.613 The Court rejected this argument but not on the ground that tying is prohibited regardless of its effect on competition. On the contrary, the Court said that the tying clauses had to be appraised in the context of the other 24 contractual clauses under review, the ‘effect’ of which was ‘an overall strategy aiming to make the customer totally dependent on Tetra Pak for the entire life of the machine once purchased or leased, thereby excluding in particular any possibility of competition at the level both of cartons and of associated products’.614 The Court went on to comment on the ‘object’ of certain other clauses which ‘could’ be considered abusive in themselves. Importantly, these clauses did not include the terms obliging customers to purchase only cartons from Tetra Pak for use with Tetra Pak machines.615 The General Court, therefore, considered that tying had an exclusionary effect. There may be doubts about the evidence that the Court considered sufficient to support this finding but there can be no question that, in law, an exclusionary effect was held to be established in that case. The issue of anti-competitive effects did not arise on appeal before the Court of Justice. 4.499  In Microsoft I, the Commission relied on the following factors in order to establish foreclosure in the tied market. •  Given Microsoft’s market share on the PC operating system market, the tying of Windows Media Player with the Windows operating system constituted a distribution practice, which ensured that Windows Media Player was as ubiquitous as the Windows operating system. Consumers had no or low incentives to obtain a second media player providing similar functionality. 616 •  No other distributional practice was capable of offsetting Microsoft’s advantage. OEMs did not have an incentive to enter into agreements with media player suppliers for the installation of an additional media player. The reduced hard disk capacity and the increased customer support costs were not justified by demand for a second product providing similar functionality to Microsoft’s. 617 Nor could downloading be regarded as an efficient distribution practice because of many users’ reluctance to download a second media player from the Internet. Furthermore, downloading as a distributional channel could not guarantee a given market share to any of Microsoft’s competitors. Instead, the knowledge that Windows Media Player was on almost all

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PCs provided incentives for content providers and software developers to write their content and applications for it. 618 •  Bundling media players with other Internet services or software was less efficient and effective than tying because it could not guarantee the presence of the media player on a given (p. 449) number of PCs, which was key to providing incentives for content providers and software developers to write content and applications for it. Furthermore, such a distributional strategy could not achieve the same level of penetration as Microsoft’s tying. 619 Retail distribution was found to be more costly, to impose a transaction cost on consumers, and to require retailers to earn a margin by charging the end users. 620 •  The market was characterized by indirect network effects. Media players are platform software. Content providers and software developers develop content and applications for a given technology and face increased costs in making their products compatible with more than one technology. There are, therefore, strong incentives to develop content and applications for the technology which has the widest presence on the market. This in turn raises a barrier to entry for non-compatible technologies. Even if a non-compatible media player were significantly better than Windows Media Player, as long as not enough content and applications were written for it, it would not be able to compete effectively on the market. 621 •  Increased market share on the tied market was likely to distort competition in complementary markets. In particular, the Commission examined the market for DRM technology, which is a technology used for the secure distribution of paid digital content over the Internet. Microsoft incorporated its own proprietary DRM technology into its media player and, in this way, was able to generate further indirect network effects which made any competitor wishing to offer DRM functionality dependent on obtaining a licence from Microsoft or else be unable to compete effectively. 622 •  Microsoft significantly increased its market share of the tied market during the period of the infringement and there was a structural break in the market trend when Microsoft started to tie its media player to Windows. 623 •  The main competitor of Microsoft, RealNetworks, relied on revenues from licences of Real Player 624 and, as a consequence of Microsoft’s conduct, was in a weaker financial position. 625 This was notwithstanding the fact that market literature and studies did not show that Windows Media Player had a competitive advantage over Real Player in terms of quality of the product. 626 4.500  The General Court defined foreclosure as the effect ‘of affecting relations on the market between Microsoft, OEMs and suppliers of third party media players by appreciably altering the balance of competition in favour of Microsoft and to the detriment of the other (p. 450) operators’.627 The test the Court applied was whether tying had a negative effect on the structure of competition.628 Only the first three elements of the Commission’s analysis described in the previous list were held to be necessary to support the finding of foreclosure.629 The Court emphasized that the tying gave Microsoft a significant market penetration advantage, which was not based on competition on the merits630 and that absent the anti-competitive tying the competition between Real Player and Windows Media Player ‘would have been decided on the basis of the intrinsic merits of the two products’.631 It also clarified that a foreclosure effect occurs not only when competitors are eliminated but also when competition is weakened.632

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4.501  In conclusion, it can hardly be said that the case law establishes or even supports the proposition that tying is a per se abuse. In the only two cases in which the issue has so far arisen, namely Tetra Pak II and Microsoft I, the General Court clearly assessed whether the Commission had established that the practices under review had an exclusionary effect. The Court of Justice has never ruled on the issue. The better view, therefore, appears to be that a finding of likely foreclosure on the tied market is a necessary element of the abuse although, possibly, in certain cases the EU Courts will be prepared to accept that likely foreclosure can be inferred from the features of the tying practice and the structural analysis of the tying and tied markets.

(e)  Objective Justification 4.502  It is well established that tying and bundling may generate significant efficiencies or pursue other legitimate objectives such as the preservation of the producer’s goodwill, quality assurance, and ensuring compliance with safety requirements. Paragraphs 4.503– 4.518 discuss the categories of defence that have been examined in the case law.

(i)  Reduction in Transaction Costs 4.503  Because customers are coerced to obtain two products together, tying reduces transaction and search costs. However, for a reduction in transaction costs to be considered as relevant efficiency, it should generally benefit the customers of the dominant undertaking not consumers further downstream. In Microsoft I, the General Court said that ‘consumer demand for an “out-of-the-box” client PC incorporating a streaming media player can be fully satisfied by OEMs, who are in the business of assembling such PCs and combining, inter alia, a client PC operating system with the applications desired by consumers’.633 Therefore, tying on an intermediate market is not suitable for reducing transaction costs on the final market if the intermediate resellers of the tying and the tied products could themselves assemble integrated bundles under competitive conditions. In such circumstances, the bundle does not have to be imposed by the dominant undertaking. 4.504  In any event, even if a reduction in transaction costs is accepted as a potential efficiency resulting from tying, the question is always whether there are less restrictive means of achieving this objective and whether the benefits of the practice outweigh its negative effects. Generally, it would appear that mixed bundling is a less restrictive alternative to tying. (p. 451) Provided that the incremental price of each component is not below its LRAIC, consumers would have the choice of buying the bundle, thus saving transaction and search costs, or buying two stand-alone components. 4.505  In Microsoft I, it was held that consumer demand for an integrated operating system with media functionality did not justify the tying of Windows and Microsoft Media Player because the Commission decision did not ‘prevent Microsoft from continuing to offer the bundled version of Windows and Windows Media Player to consumers who prefer that solution’.634 While the Court did not apply the proportionality test in a structured way, this appears to be an application of the less restrictive means test: the same objective of offering an integrated solution to those who prefer it can be achieved by mixed bundling. Tying is therefore not required. 4.506  If there are no less restrictive alternatives to tying, then it is necessary to balance its benefits against its negative effects. This may be particularly difficult when the tying occurs at retail level and the customers are unsophisticated consumers. When, however, the tying occurs on an intermediate market or the customers are sophisticated and wellinformed consumers, it is unlikely that the savings in transaction costs outweigh the anticompetitive harm of tying.

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4.507  Some of these issues, discussed in paras 4.503–4.506, may be illustrated by reference to the facts of the Microsoft II case. A possible justification for tying Windows with Internet Explorer was that users benefited from having a web browser pre-installed on their PC. This saved them the transaction costs of selecting and installing a web browser themselves. There was, however, a less restrictive means of achieving this objective: offering a mixed bundle that allowed customers to choose whether they wanted an integrated system or stand-alone products. Only if no less restrictive alternatives had been available, would the question have arisen whether the benefits of the tying outweighed its negative effects. 4.508  Further, in a case such as Microsoft II, it is always necessary to analyse the effect of the allegedly abusive practice at the level of the supply chain where it takes place. In that case, the tying was occurring at the level of the OEMs. The tying was therefore not even suitable for achieving the objective of reducing transaction costs for consumers because this objective could be achieved by OEMs offering the final consumers the bundles they valued, including bundles of Windows and non-Microsoft web browsers. 4.509  The principle that it is possible to distil from this analysis is, therefore, that the final consumer’s preference for a bundle rather than for individual products is not, in itself, an objective justification when the bundle could still be offered under competitive conditions because allegedly anti-competitive tying does not take place at retail level. In Microsoft II, absent an anti-competitive agreement, competition would probably not have been restricted if the OEMs, as opposed to the supplier of the dominant operating system, had tied operating systems with web browsers as a result of a choice determined by competition among web browser suppliers.

(ii)  Preservation of Goodwill, Quality Assurance, and Ensuring Compliance with Safety Requirements 4.510  Tying may be a way of preventing customers from using, in conjunction with the dominant undertaking’s primary products, complementary products that may (p. 452) reduce the performance of either the product or the system as a whole, or may give rise to the risk of faulty performance, or pose safety hazards. However, in Hilti, the Commission argued that a dominant undertaking was not entitled to prevent the use of complements in conjunction with its own products even if there was a genuine safety concern.635 The General Court accepted this argument. It held that Hilti could not rely on a duty of care arising under national product liability law, because national law could not take precedence over EU law636 and that, when there are public authorities entrusted with the enforcement of rules on the sale of dangerous products and misleading advertising, the dominant undertaking is not allowed to take unilateral measures to ensure the safety of its own products. Instead, it must request the intervention of the competent public authorities,637 which would result in an impartial adjudication of the dispute.638

(iii)  Dynamic Efficiency 4.511  Two products may perform better together than if used with other complements. Over time, two products may become so closely associated in the eyes of the consumer that they become a unitary product because no significant number of consumers would require the functionality of either component without that of the other. This is achieved when two components are technically integrated. Improved technical performance and the development of a new, integrated product are forms of dynamic efficiency that are without any doubt legitimate objectives under Article 102. In Microsoft I, Microsoft put forward a number of arguments to the effect that unbundling Windows and Media Player would result in lower performance or a degradation of the system. The Court rejected those arguments

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for lack of evidence but accepted, implicitly, that, if substantiated, they could have constituted a valid objective justification.639 4.512  Technological tying appears to be a legitimate means for achieving superior integrated performance or developing a new integrated product. However, it must be the least restrictive means of achieving the objective. In order to satisfy this limb of the proportionality test, technical integration must not be the result of a deliberate choice of the dominant undertaking to design complementary products that can only operate optimally together. This would be no more than a commitment to tying that enhances rather than reduces the anti-competitive effects of the practice in question.640 Therefore, tying must be the result of a genuine technological constraint so that the same result cannot be achieved by mixed bundling, or specifying minimum standards or requirements for the tied product. 4.513  Finally, if tying is the least anti-competitive means of achieving the objective of superior performance or product development, it is necessary to balance the negative effects of tying against its benefits. In this balancing exercise, it must be borne in mind that dynamic efficiency is the most important driver of long-term productivity and social welfare, which are the key objectives of Article 102. Provided that technological tying produces genuine and not insubstantial benefits in terms of product improvement or development of a new product, at the very least the importance of these benefits under Article 102 should give rise to a presumption that dynamic efficiency prevails over the anti-competitive harm of tying.

(p. 453) (iv)  Standardization 4.514  Tying may produce benefits in terms of standardization. Standardization may have several benefits, including ensuring the interoperability of complementary products, reducing costs, and ensuring minimum quality requirements. While standards are generally developed through horizontal cooperation or imposed by public authorities, tying may result in a de facto standardization, particularly if engaged in by a quasi-monopolist on the tying market which successfully monopolizes the tied market. There are, however, considerable difficulties in accepting standardization as a legitimate objective under Article 102. Even if standardization were a legitimate objective, it would appear unlikely that it would pass muster under the proportionality test. 4.515  The issue arose in Microsoft I. Microsoft claimed that the tying of Windows and Windows Media Player allowed software developers and content providers to write their software and applications for a single platform without incurring the extra cost of ensuring that their products could run on a number of different streaming media players.641 The Court rejected this argument on three grounds: 4.516  First, standardization of media player technology on the media player market was precisely one of the sources of the anti-competitive effects of the tying.642 Although the Court did not go as far as saying that standardization achieved by the unilateral conduct of a dominant undertaking can never be a legitimate objective under Article 102, there are clearly conceptual difficulties in accepting that the source of the anti-competitive effect is, at the same time, a relevant benefit under Article 102. However, the proportionality test under Article 102 requires not only that the objective be legitimate, but also that the conduct be proportionate to the achievement of the objective. The better view therefore seems to be that when a benefit is in principle capable of increasing social welfare and productivity in the long term, it is a legitimate objective under Article 102; so it is with standardization. The fact that standardization is the source of the anti-competitive effect is not an obstacle to this conclusion. The very purpose of the objective justification test is to

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ascertain whether conduct that is prima facie abusive is, in fact, beneficial. The question is whether the other limbs of the proportionality test are met. 4.517  Secondly, standardization, while beneficial in certain circumstances, ‘cannot be allowed to be imposed unilaterally by an undertaking in a dominant position by means of tying’.643 The Court, therefore, implicitly held that cooperative standardization or standardization resulting from an effective competitive process absent the exclusionary tying is a less restrictive alternative to unilateral standardization. This principle is probably true in most circumstances. Cooperative or competitive standardization is more likely to result in the most efficient standard being adopted rather than in the standard imposed by a dominant undertaking through the leveraging of its market power. Furthermore, even cooperative standardization which may entail a restriction of competition justified under Article 101(1) is less anti-competitive than unilateral standardization because it allows different competing standards to be assessed and selected based on the merits of each candidate standard.644 (p. 454) 4.518  Thirdly, although the widespread presence of Windows Media Player may have advantages for software developers and Internet site developers, ‘that cannot suffice to offset the anti-competitive effects of the tying at issue’.645 The Court, therefore, held that the balancing of the benefits of tying against its anti-competitive effects clearly showed that the anti-competitive effects outweighed the benefits. This balancing test is fact-sensitive and no general rule can be distilled from a single case. It cannot be excluded that the benefits of standardization, for instance in terms of allowing market interpenetration, interoperability, and follow-on innovation including by firms that are not dependent on the dominant undertaking, are very substantial. If they are, they may outweigh the anticompetitive effects of the tying on the facts of a particular case. It would appear, however, that this stage of the proportionality test is unlikely to be decisive in an individual case because, very often, there will be less restrictive means of achieving the desired standardization.

(3)  Case Law on Mixed Bundling 4.519  There are very few cases on mixed bundling and, as a result, the case law has not developed an established test for its assessment. 4.520  One notable example is Coca-Cola. In that case, the Commission took the view that the granting of rebates by Coca-Cola and three of its major bottlers to customers purchasing a wide range of products in the on-premise and the take-home channels had the effect of making it more difficult for competitors to obtain sales space. The practice consisted in bundling together a number of stock-keeping units (SKUs), each corresponding to different products, such as Coca-Cola and Fanta Orange, and making payments of up to 2 per cent of total turnover to customers buying the whole bundle. Because the best-selling products generated significant turnover, the incentive for the customers to buy the whole bundle (10–20 SKUs on the on-premise channel and 20–60 SKUs on the take-home channel) was strong.646 4.521  The Commission accepted commitments by the allegedly jointly dominant undertakings. Coca-Cola and the bottlers undertook not to condition any payment or other advantage granted with respect to any branded cola carbonated soft drinks or branded orange carbonated soft drinks upon the customer stocking one or more additional beverages from their range. They also undertook not to condition any payment or other advantage on the customer agreeing that the carbonated soft drinks bought from the dominant firms comprise a specified percentage of the total number of carbonated soft drink SKUs (or a subset thereof) listed by the customer in the previous year.647

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(4)  Policy and Effects-Based Approach (a)  The Article 102 Enforcement Priorities Guidance Approach Towards Tying and Bundling 4.522  In the Article 102 Enforcement Priorities Guidance, the Commission outlines an effects-based approach towards tying and bundling practices. This approach is based on the premise that (p. 455) tying practices should only be considered an antitrust violation if they harm competition and consumers. There are a number of key elements to the Commission’s approach. 4.523  First, the Commission does not maintain a presumption that tying normally causes competitive harm. Instead, the Article 102 Enforcement Priorities Guidance notes that ‘Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways.’648 4.524  Secondly, the Commission proposes a new test to assess the potential anticompetitive implications of tying practices. Specifically, the Article 102 Enforcement Priorities Guidance proposes that ‘The Commission will normally take action under Article [102] where an undertaking is dominant in the tying market and where, in addition, the following conditions are fulfilled: (i) the tying and tied products are distinct products and (ii) the tying practice is likely to lead to anti-competitive foreclosure.’649 This differs from the legal conditions discussed in Section G.2 in that the Article 102 Enforcement Priorities Guidance places explicit emphasis on a showing of likely harm not only to competition but also to consumers. 4.525  Thirdly, the Commission outlines a number of specific circumstances when tying may lead to competitive harm. Among others, the Commission considers that anticompetitive effects are more likely: •  when tying takes the form of integrating different products (technological tying); 650

•  when a number of products are tied in a multi-product bundle that cannot be replicated by rivals; 651 •  when tying leads to significant scale-disadvantages for single-product competitors, because multi-product purchasers are forced to buy from the dominant firm; 652 •  when tying is used to prevent partial substitution between the tying and the tied good; 653 •  when tying is used to circumvent regulatory price caps in the tying good market; 654 and •  when monopolization of a complementary good market makes it less profitable for potential entrants to challenge the dominant firm’s position in the original tying good market. 655 4.526  Fourthly, the Commission proposes to use the as-efficient competitor test to assess whether bundled discounts effectively amount to a tie. Specifically, the Commission notes that:(p. 456) If the incremental price that customers pay for each of the dominant undertaking’s products in the bundle remains above the LRAIC of the dominant undertaking from including that product in the bundle, the Commission will normally not intervene

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since an equally efficient competitor with only one product should in principle be able to compete profitably against the bundle.656 4.527  Fifthly, the Commission considers that it is unlikely to intervene in situations where competitors of the dominant firm can offer both the tying and tied goods themselves. Specifically, the Article 102 Enforcement Priorities Guidance explains: If the evidence suggests that competitors of the dominant undertaking are selling identical bundles, or could do so in a timely way without being deterred by possible additional costs, the Commission will generally regard this as a bundle competing against a bundle, in which case the relevant question is not whether the incremental revenue covers the incremental costs for each product in the bundle, but rather whether the price of the bundle as a whole is predatory.657 4.528  Sixthly, in cases where tying or bundling practices lead to anti-competitive harm, the Commission will weigh this harm against potential countervailing efficiency benefits resulting from integration.658

(b)  No Presumption of Anti-Competitive Harm 4.529  Perhaps the biggest change in the Commission’s new approach towards tying and bundling is that it will not approach tying practices from a presumption of harm. This implies that allegations of an antitrust violation must be based on a concrete theory of harm that explains why the practice is harmful given the facts of the case. The underlying conviction that ‘Tying and bundling are common practices intended to provide customers with better products or offerings in more cost effective ways’659 is well grounded both in economic theory and in commercial practice. For instance, Carlton and Waldman, perhaps the most eminent scholars on the economics of anti-competitive tying, note that ‘[a] crucial aspect of tying from an antitrust perspective is that there is so much tying in real-world markets and most of that tying is driven by efficiency.’660 4.530  Indeed, tying or bundling several distinct products into new combined offerings is one of the most pervasive features of real-world markets and in many cases has neither exclusionary intent nor effect. Accordingly, such practices are ubiquitous in many highly competitive markets, where attempted monopolization would hardly be a viable business strategy. While, of course, this does not imply that tying would necessarily also be benign in highly concentrated markets, it does show that such conduct is regularly motivated by the desire to create superior offerings to consumers. For example, restaurants routinely require that customers do not bring their own wine to dinner (thereby tying food and drinks), toy manufacturers offer complete sets of different figures (thereby bundling different toy components), and (p. 457) computer manufacturers offer their hardware with pre-installed software packages (thereby tying hardware and software). 4.531  Moreover, product innovation in modern economies routinely involves the combination of hitherto separate products, which are put to more productive use by integrating them. For example, smart phones are a combination of numerous previously separate functionalities, such as telephony, Internet browsing, productivity suits, calendars, and a multitude of other bundled applications. Finally, a large number of products in the economy are tied in order to achieve cost savings through integration or other more complex efficiencies.661 4.532  The case law attempts to address the ensuing concern that an overly stringent tying law might prevent efficient product integration by imposing the requirement of the separate product test. However, since this test merely requires the (theoretical) existence of separate product markets for a finding of an antitrust violation, this screen is unlikely to be of much practical help in creating a safe harbour for benign forms of tying. For instance, when computer manufacturers first offered PCs with an integrated hard disk, hard disks were still

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bought separately by many consumers. Similarly, there is little doubt that a certain number of restaurant guests would bring their own wine to a restaurant if they were allowed to do so. But, of course, these examples of separate product markets do not imply that such tying practices are necessarily anti-competitive. For all practical purposes, the process of discarding meritless tying allegations is therefore unlikely to be achieved at the first stage of the Commission’s analysis (separate products test). It is the new second stage (proving a theory of harm) and possible third stage (efficiency defence) which are geared towards providing administrative safeguards against meritless allegations. 4.533  From an economic perspective, circumstances where tying and bundling leads to anti-competitive harm clearly exist, but are also much less common than an overly strict reading of the case law would seem to suggest. Indeed, documented real-world instances of anti-competitive tying remain relatively rare.662 Perhaps most notably, the anti-competitive presumption under a per se approach tends to be economically unconvincing: that a monopolist in some product A should be expected to find it profitable to leverage its market power into a neighbouring market B, where the dominant firm faces competition. Allegedly, tying then permits the dominant firm to monopolize market B and increase profits by forcing unwanted complements on consumers. As Chicago School scholars pointed out more than 50 years ago, however, there is a logical flaw in this presumption—a critique that has become known as the ‘one-monopoly-profit theorem’.663 If a dominant firm coerces customers to purchase product B even if it would be socially more efficient for them to buy B from a rival, then this would reduce the value of product A for those customers by exactly the amount that consumers lose from the coercive purchase of B. This loss in willingness to pay means that the dominant firm can normally extract less from consumers when it ties the two products than would be the case if it offered the products separately.664 (p. 458) 4.534  In terms of the economic presumptions that can be drawn, it therefore appears that monopolists do not normally have an incentive to kill off efficient complementary goods markets that help to make the monopolist’s primary good more attractive. For this reason, tying that reduces choice often also brings about lower prices for consumers.665 Given the plethora of pro-competitive rationales for tying, it is therefore important to explain why a particular tying practice creates anti-competitive foreclosure (and why the dominant firm would have an incentive to employ the hypothesized anticompetitive approach to the market). 4.535  Some prior Commission decisions indicate that an overly aggressive application of tying law may lead to doubtful market outcomes. For instance, in the Microsoft Media Player case, the Commission forced Microsoft to unbundle its Media Player from its dominant Windows operating system.666 As a result, customers had the opportunity of purchasing the Windows operating system without a pre-installed Media Player. It later turned out, however, that the unbundled version of Windows was a commercial failure, with virtually all consumers continuing to opt for the bundled version (much along the lines of Microsoft’s claim that consumers considered integration to be efficient in the first place). In practice, the Commission’s intervention therefore did not bring the alleged foreclosure of rival media players to an end, yet the market for media players is today more vibrant than ever, with a multitude of strong suppliers competing successfully for market share. 4.536  Similarly, in IBM, the Commission found that selling computer CPUs in conjunction with memory devices and basic software applications amounted to anti-competitive tying.667 Not long thereafter, however, such integration became standard practice throughout the computer industry, underlining the pro-competitive nature of this form of integration. 4.537  In order to limit the risk of ill-conceived interventions, the Commission is therefore right to ground its new approach on the showing of likely anti-competitive effects.

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(c)  Anti-Competitive Tying and Bundling 4.538  Although there is no anti-competitive presumption with respect to tying and bundling, such practices can sometimes lead to serious competitive harm if employed by a dominant firm. As the Article 102 Enforcement Priorities Guidance rightly observes, ‘Tying or bundling may lead to anti-competitive effects in the tied market, the tying market, or both at the same time.’668 The Article 102 Enforcement Priorities Guidance describes some of the cases where tying can create competitive injury, without however providing much detail. In this section, we therefore elaborate on the circumstances that have been identified in the economic literature under which tying can generate anti-competitive harm. 4.539  We first consider the case where a dominant firm is alleged to leverage market power from the tying good market into a competitive tied good market. In this case, the first question to address is how the dominant firm could benefit from anti-competitive leveraging, given that its customers’ willingness to pay for the bundle decreases if they are forced to purchase unwanted components (as explained at para 4.533). Perhaps the two most prominent instances where such anti-competitive leverage can be profitable are the following. (p. 459) 4.540  First, when the dominant firm is not a monopolist in the tying good market, but faces some degree of residual competition, then the dominant firm is unable to extract the full monopoly profit through its pricing of the tying good alone. In such cases, monopolization of the tied good market may permit the dominant firm to create additional market power for the bundle through control of the complementary good market. As the economic literature has shown, such monopolization through tying may prove successful if the tied good market is characterized by significant economies of scale (eg due to production economies or network effects).669 In such markets, foreclosure of a sufficiently large part of the tied good business may force competitors to exit the market on account of insufficient scale or otherwise marginalize them in their ability to remain competitive. 4.541  While this mechanism of exclusion is an economically plausible one that explains how market power can be extended to neighbouring markets, it may nonetheless bring about certain difficulties for a dominant undertaking. Indeed, this type of exclusion simultaneously requires: •  imperfect market power in the tying good market (so the dominant firm has an incentive to monopolize the tied good market); and •  substantial foreclosure in the tied good market (so the dominant firm has the ability to monopolize the tied good market). 4.542  There is an inherent tension between these two requirements. On the one hand, profitable exclusion requires that the dominant firm’s market power in the tying good market is not too large (as otherwise there would be no reason to monopolize the tied good market in the first place). On the other hand, when the dominant firm faces appreciable competition in the tying good market, then the ability to foreclosure the tied good market may be compromised, as tied good competitors can then combine their products with those of third party suppliers in the tying good market. The risk of anti-competitive foreclosure deriving from this type of leverage is therefore largest when the dominant firm’s pricing in the tying good market is constrained despite holding a very large market share (the most obvious example being a monopolist that faces price cap regulation on the tying good). 4.543  Secondly, when not all customers in the tied good market use the tying good and tied good jointly, monopolization of the tied good market may permit a dominant firm to

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create market power over purchasers who do not consume the tying good. The following example by Dennis Carlton illustrates this situation:670 Imagine a monopoly resort hotel on an island where hotel workers live. By requiring that hotel guests eat only in the hotel, the hotel may prevent other restaurants from developing that would otherwise serve both tourists and natives. Although the tourists were already subject to the monopoly power of the hotel (through the room rate), local residents were not, and hence are harmed by the reduction in competition. Note the special features required for a harm to competition—scale economies combined with a group of consumers that desire only product B. 4.544  In this illustrative example, local residents are the single-product consumers who are harmed by the tying practice. Notably, therefore, the users who are hurt by the tying practice here are not the users who actually purchase the tied bundle, but those who purchase the tied good as a single product offer. (p. 460) 4.545  As correctly noted by the Commission, anti-competitive tying need not necessarily be geared at extracting additional rents in the tied good market. In some instances, tying may also be used to exclude competitors that over time might erode the original market power in the tying good market. Again, two specific instances stand out. 4.546  First, monopolization of a complementary good market can make it less profitable for potential entrants to enter the tying good market, because it is unclear whether necessary complements will be readily available. Similarly, investments in innovation to improve a competitor’s primary product offering can become more daunting for smaller firms when they are faced with the prospect of a monopolized complementary goods market. One important reason why tying may hamper innovation and entry in such cases is that it tends to be more difficult for firms to enter two markets simultaneously (or invent two products simultaneously) than one alone.671 4.547  Secondly, in evolving industries, monopolization of the market for a complementary good may permit a monopolist to maintain its monopoly power in the primary good market when there is a risk that rival complementary goods could in the future develop into a valid replacement for the monopolist’s tying product.672 By foreclosing a sufficient part of the tied good market, the monopolist may again attempt to undermine the profitability of operation or innovation of rival producers. As in previous examples, this requires that scale economies are sufficiently pronounced, so that the fixed costs of entry, innovation, or operation can no longer be covered by smaller rivals. 4.548  The existence of scale economies and substantial foreclosure shares are crucial for the possibility of excluding rivals in these mechanisms. As the Article 102 Enforcement Priorities Guidance rightly observes, ‘Economies of scale mean that competitors are less likely to enter or stay in the market if the dominant undertaking forecloses a significant part of the relevant market.’673 Under these circumstances, a dominant firm may have both the ability and the incentive to foreclose rivals in the tied good market by making operation, entry, or innovation less profitable. Since the extent of the available commercial opportunities for rivals is diminished through the tie, the dominant firm may thus create market power in the tied good market or protect its existing market power in the tying good market from future erosion through innovation or entry. 4.549  It is generally critical to identify how such additional market power can be gained in order to avoid the pitfalls of the one-monopoly-profit theorem. In particular, a plausible theory of harm is based on harm to competition, rather than just harm to competitors. The specific examples discussed in this section of circumstances where a dominant firm may have an incentive to harm complementary producers were: (a) imperfect market power in the tying good market (so monopolization of the tied good market could be used to achieve

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full market power over the entire bundle); (b) independent single-product use of the tied good by some consumers (so the dominant firm may extend its market power also to singleproduct users who faced competitive conditions for the tied good prior to exclusion); (c) undermining innovation or entry by rivals for whom it is more difficult to develop two products (p. 461) simultaneously; and (c) protection of a tying good monopoly from the threat that competitors’ complementary goods might develop into a viable substitute for the tying good. 4.550  Such theories of harm have been most fruitfully applied in high technology industry in the past, where the conditions for profitable exclusion are more likely to be satisfied than in some other markets. First, economies of scale are paramount in the industry, making it more likely that substantial foreclosure can evict rivals from the market (or otherwise undermine their ability to compete or innovate). Secondly, in evolving industries such as software, product boundaries change at a rapid pace, which may open up opportunities for extending market power to yet undeveloped future markets (or alternatively, protecting existing monopolies from the competitive threat of cross-product innovation by other firms). 4.551  Perhaps the most notable example here is the Microsoft work group server case (although the leveraging strategy was formally implemented through a refusal to supply).674 In this case, it was argued that Microsoft’s exclusion of competitors in the work group server market through leveraging was (among other) a means to protect its original market power for PC operating systems (OSes). Kühn and Van Reenen describe this as follows:675 One version of the threat was that increasing numbers of applications could be delivered through servers and the need for a sophisticated and expensive OS on the PC client would erode. Server OSes typically run on open standards (variants of UNIX) and APIs so developers could increasingly write to these standards and APIs rather than Windows. Since they are operating systems that have to support a similar range of applications as PC OSes, server operating systems can credibly be expected to offer a rich set of APIs to programmers. This would mean that the server OS became a potential alternative applications platform. This could then introduce effective competition into the PC OS market. If applications only needed a slimmed down version of the PC client OS users would not necessarily need PC OS upgrades to buy into new OS functionality supporting their applications. (this is why it was called the ‘thin client model’). Effectively, a server platform based on a server OS could have become a potential competitor for the PC platform running a Windows OS. One way to prevent this danger was for Microsoft to monopolize the server market through degraded interoperability—even if this meant in the shortrun sacrificing profits. 4.552  However, while evolving high technology industries are a prime candidate for profitable exclusion, the potential risks associated with antitrust intervention in such markets are also larger than elsewhere. In particular, the potential efficiencies stemming from product integration and bundling tend to be more pronounced in these industries.676 Moreover, many of the high tech firms that have come under antitrust scrutiny in the past (from IBM over Microsoft to Intel) have eventually faced significant competitive challenges precisely because of the rapidly evolving boundaries of those markets. Great care should therefore be taken in such cases to ensure that competition law interventions foster, rather than impede, pro-competitive innovation.677

(p. 462) (d)  Price Discrimination and Multi-Product Rebates

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4.553  In many real-world cases, tying and bundling practices are motivated by price discrimination rather than an attempt to achieve market power through anti-competitive exclusion.678 Perhaps the two most prominent examples of this type of tying and bundling are aftermarket ties and multi-product rebates. 4.554  Aftermarket tying is assessed by the Commission under the general standard for tying explained in Section G.4(a). What is specific about aftermarket tying, however, is that the risk of such tying creating market power tends to be lower than for other forms of tying.679 In particular, aftermarket tying is typically used by manufacturers to achieve an effective price balance between primary good prices and aftermarket prices. For example, producers of laser printers often charge relatively low prices for the printer itself, but then earn significant margins on consumables, which contribute toward the recovery of their fixed costs. By excluding alternative suppliers of aftermarket complements, producers can therefore create a price structure that permits them to meter consumption in proportion to usage in order to increase overall output.680 Since such cases often involve industries where several firms operate both on the primary market and the complementary market, limiting access for alternative aftermarket suppliers in many cases amounts to no more than harm to competitors. As the Commission’s emphasis on bundle-to-bundle competition suggests,681 however, such forms of price discrimination do not in themselves create harm for competition (especially when employed by firms that operate in competitive primary good markets). Moreover, aftermarket tying may create significant efficiencies, suggesting that, from an economic perspective, aftermarket tying cases are less likely to reproduce anti-competitive effects than some other tying practices.682 4.555  Similarly to aftermarket tying, multi-product rebates are usually a means to engage in price differentiation. As in the case of single-product rebates (see Section F.2(b)), multiproduct rebates are typically granted by firms to compete for additional sales.683 Accordingly, the Article 102 Enforcement Priorities Guidance proposes to apply the asefficient competitor test to verify whether such rebates have the potential of foreclosing single-product rivals (and thereby effectively amounting to a commercial tie).684 4.556  A difference between multi-product and single-product rebates, however, is that in multi-product settings, the occurrence of effective prices below cost does not necessarily indicate a profit sacrifice on the part of the dominant firm intended to harm rivals. (p. 463) Profit-maximizing multi-product pricing may naturally involve incremental prices below variable cost for one product to increase the sales of other products in the bundle with higher margin.685 For this reason, the showing of anti-competitive foreclosure through the development and application of a convincing theory of harm is particularly important in cases of multi-product rebates, in order to avoid condemning practices which technically create foreclosure but lack competitive harm. 4.557  Nonetheless, it is important to note that the existence of a benign price discrimination motivation for incremental prices below cost does not protect dominant firms from antitrust prosecution for causing competitive harm. The concept of abuse is objective and is not dependent on the intent of the dominant undertaking. Indeed, when below-cost bundled prices lead to exclusionary effects along the lines outlined at Section G.4(a), then the fact that such pricing did not involve a profit sacrifice for the dominant firm does not absolve that firm from its special responsibility not to distort competition.

Footnotes: 544

  Article 102 Enforcement Priorities Guidance, para 48.

545

  Article 102 Enforcement Priorities Guidance, para 48 fn 33.

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546

  Article 102 Enforcement Priorities Guidance, para 48.

547

  Case IV/30.178 Napier Brown-British Sugar, 1988 OJ L284/41, recital 32.

548

  Decision of the Director General of Fair Trading No CA98/3/03 Exclusionary Behaviour by Genzyme Ltd (27 March 2003) (Genzyme), paras 115–120, partly upheld on appeal in Genzyme v Office of Fair Trading [2004] CAT 4, [2004] Comp AR 358. The Competition Appeal Tribunal upheld a separate finding of margin squeeze and held that the bundling reinforced the effect of the margin squeeze but was not a self-standing abuse: para 561. 549

  Article 102 Enforcement Priorities Guidance, para 48.

550

  Case C-333/94 P Tetra Pak II (n 3), para 37.

551

  Case T-83/91 Tetra Pak II (n 39), para 137, upheld on appeal in Case C-333/94 P Tetra Pak II (n 3), paras 35–37. It is worth noting that the case law shows some scepticism about the very possibility of applying a test of ‘commercial usage’ in markets dominated by a ‘super-dominant’ firm: see Case T-201/04 Microsoft I (n 5), para 940, where Microsoft had 95 per cent of the market. 552

  Case T-201/04 Microsoft I (n 5), para 942.

553

  Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ 2010 L102/1. 554

  See Case C-310/93 P British Plasterboard (n 445), para 11 and Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge Transports (n 2), para 130. 555

  Guidelines on vertical restraints, OJ 2010 C130/1, paras 214–222.

556

  Vertical Restraint Guidelines, para 1.

557

  Compare the Vertical Restraint Guidelines, para 215 with the Article 102 Enforcement Priorities Guidance, para 51. 558

  eg Vertical Restraint Guidelines, para 216 and Article 102 Enforcement Priorities Guidance, para 55 (addressing in the same way the problem that if there is not a sufficient number of customers purchasing the tied product alone to allow competitors of the tying firm in the tied market to achieve economies of scale or other efficiencies, the tying can lead to those customers facing higher prices) and Vertical Restraint Guidelines, para 217 and Article 102 Enforcement Priorities Guidance, para 56 (describing in the same terms a possible anti-competitive effect of tying, namely preventing customers who buy the tying and the tied products in variable proportions as inputs of a production process from reacting to a price increase of the tying product by buying more of the tied product). 559

  Rio Tinto Alcan (n 58).

560

  See, also for further references, J.-Y. Art and G. S. McCurdy, ‘The European Commission’s Media Player Remedy in its Microsoft Decision: Compulsory Code Removal Despite the Absence of Tying or Foreclosure’ [2004] ECLR 694; M. Dolmans and T. Graf, ‘Analysis of Tying Under Article 82 EC: The European Commission’s Microsoft Decision in Perspective’ (2004) 27 World Comp 225; D. Ridyard, ‘Tying and Bundling—Cause for Complaint?’ [2005] ECLR 316; K.-U. Kühn, R. Stillman, and C. Caffarra, ‘Economic Theories of Bundling and Their Policy Implications in Abuse Cases: An Assessment in Light of the Microsoft Case’ (2005) 1 Eur Comp J 85; R. J. Van den Bergh and P. D. Camesasca, European Competition Law and Economics: A Comparative Perspective (2nd edn, London, Sweet & Maxwell 2006), 264–76; O’Donoghue and Padilla, The Law and Economics of Article 82 (n 147\0, 477–518; F. E. G. Diaz and A. L. Garcia, ‘Tying and Bundling under EU Competition Law: Future Prospects’ (2007) 3 Comp L Int’l 13; J. Langer, Tying and Bundling as a Leveraging Concern under EC Competition Law (Alphen aan den Rijn: Kluwer Law International, 2007); Mosso et al in the 2nd edn of this book, 313, 368–73; A. Jones and B. From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Sufrin, EC Competition Law (3rd edn, Oxford: Oxford University Press, 2008), 514–28; R. Thompson and J. O’Flaherty, ‘Article 82’ in P. Roth and V. Rose (eds), Bellamy & Child: European Community Law of Competition (6th edn, Oxford: Oxford University Press, 2008), 909, 998–1004; Whish, Competition Law (n 147), 679–87; E. Rousseva, Rethinking Exclusionary Abuses in EU Competition Law (Oxford: Hart Publishing, 2010), 219–57 and 396–403; H. K. S. Schmidt, ‘The Influence of IP Rights on Product Definition in Competition Law—The Curious Case of Tying’ (2010) 21 Int’l Company and Commercial L Rev 224. 561

  eg D. S. Evans, A. J. Padilla and M. A. Salinger, ‘A Pragmatic Approach to Identifying and Analysing Legitimate Tying Cases’ in C.-D. Ehlermann and I. Atanasiu (eds), European Competition Law Annual 2003: What Is an Abuse of a Dominant Position? (Oxford: Hart Publishing, 2006), 556, 558. 562

  C. Ahlborn, D. S. Evands, and J. A. Padilla, ‘The Antitrust Economics of Tying: A Farewell to Per Se Illegality’ (2004) 49 Antitrust Bull 297, 289–90. 563

  Dolmans and Graf, ‘Analysis of Tying Under Article 82 EC’ (n 560), 226–38 and 242–4.

564

  Case T-201/04 Microsoft I (n 5), paras 850–869.

565

  Case T-201/04 Microsoft I (n 5), paras 869 and 870.

566

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 70.

567

  Case T-30/89 Hilti (n 149), para 85.

568

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 310–314 and Art 2(b).

569

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 435, relying on the concept of ‘superdominance’ in the Opinion of AG Fennelly in Joined Cases C-395/96 and 396/96 P Compagnie Maritime Belge (n 2), para 137. 570

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 343.

571

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 430–435.

572

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 434.

573

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 448–459.

574

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 462–463.

575

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 464.

576

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 429.

577

  Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II) (n 43).

578

  Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II) (n 43), recitals 17 and 30.

579

  Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II) (n 43), recitals 24–30.

580

  Case T-201/04 Microsoft I (n 5), para 927 (using the phrase ‘serious evidence’) and Case T-30/89 Hilti (n 149), para 67 (using the phrase ‘sound evidence’). In the text, the terminology ‘strongly probative evidence’ is preferred to the terminology used by the GC as the latter is vague and imprecise and has no technical meaning in the theory and law of evidence. See also Article 102 Enforcement Priorities Guidance, para 51: Evidence that two products are distinct could include direct evidence that, when given a choice, customers purchase the tying and the tied products separately from different sources of supply, or indirect evidence, such as the presence on the market of undertakings specialised in the manufacture or sale of the tied product without the tying product or of each of the products bundled by the dominant undertaking,

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or evidence indicating that undertakings with little market power, particularly in competitive markets, tend not to tie or not to bundle such products. In similar terms, see Vertical Restraint Guidelines, para 215. 581

  Case T-30/89 Hilti (n 149), para 64.

582

  Case T-30/89 Hilti (n 149), para 67; Case T-83/91 Tetra Pak II (n 39), para 82; and Case C-333/94 P Tetra Pak II (n 3), para 36. 583

  Case T-201/04 Microsoft I (n 5), para 919.

584

  Case T-201/04 Microsoft I (n 5), para 921.

585

  Case T-201/04 Microsoft I (n 5), para 923.

586

  Case T-201/04 Microsoft I (n 5), para 913.

587

  Case T-201/04 Microsoft I (n 5), para 913.

588

  Case T-201/04 Microsoft I (n 5), para 914.

589

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 804 and Case T-201/04 Microsoft I (n 5), para 927. 590

  Case T-201/04 Microsoft I (n 5), para 928.

591

  Case T-201/04 Microsoft I (n 5), paras 929–931.

592

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 806 and Case T-201/04 Microsoft I (n 5), para 932, where the Commission and the GC respectively referred to ‘a not insignificant number of consumers’. A not insignificant number of consumers are a significant number of consumers if the double negative is elided. 593

  This analysis is also relevant to the application of the test in mature markets and may be relevant to objective justification to the extent that it is purely forward-looking, ie it is clear that the products are currently distinct but they are likely to become a better or lower cost unitary product in the future and tying is a proportionate way of achieving that aim. 594

  Case T-201/04 Microsoft I (n 5), para 926.

595

  Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II) (n 43), recitals 19–22 and 36.

596

  Case COMP/C-3/39.530 Microsoft (tying) (or Microsoft II) (n 43), recitals 25, 26, 31, and 32. In fact, any tying practice may be described as a refusal to supply the tying product without the tied product. Refusal to supply may also relate to an ancillary service such as a refusal to honour guarantees on the tying product if the customer does not use it with the dominant undertaking’s tied product: recital 44. 597

  See the description of the abusive practices in Case T-30/89 Hilti (n 149), para 16.

598

  Case T-201/04 Microsoft I (n 5), paras 972–974. The Court also noted, at para 974, that Windows Media Player ‘reappeared’ each time Internet Explorer was used to access media files streamed over the Internet. 599

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 843–876 and Case T-201/04 Microsoft I (n 5), paras 1031–1058. 600

  Article 102 Enforcement Priorities Guidance, para 58, still describes tying as a practice that requires customers of one tying product to obtain the tied product. The use of the verb ‘require’ demonstrates that coercion is still an element of the test but simply in that it distinguishes tying from other practices. 601

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 841.

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602

  Case T-201/04 Microsoft I (n 5), para 867.

603

  Case T-201/04 Microsoft I (n 5), paras 868, 1035, and 1036.

604

  Case T-271/03 Deutsche Telekom (n 9), paras 263, 267–269, and 271.

605

  Case T-201/04 Microsoft I (n 5), paras 1041–1045.

606

  Cases IV/30.787 and IV/31.488Hilti (n 358), recital 70.

607

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 72.

608

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 74.

609

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recital 75.

610

  Cases IV/30.787 and IV/31.488 Hilti (n 358), recitals 76–85.

611

  Case IV/31.043 Tetra Pak II, OJ 1992 L72/1, recitals 99–102.

612

  Case IV/31.043 Tetra Pak II (n 611), recital 146, upheld on appeal in Case T-83/91 Tetra Pak II (n 39), para 135. 613

  Case T-83/91 Tetra Pak II (n 39), para 128.

614

  Case T-83/91 Tetra Pak II (n 39), para 135.

615

  Case T-83/91 Tetra Pak II (n 39), para 135.

616

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 843–848.

617

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 849–857.

618

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 858–875.

619

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 872–873. Doubt may be cast on some of the reasoning of the Commission on this issue. The Commission appeared to assume that only a distribution practice that guaranteed a competitor at the same level of penetration as that of Windows Media Player would be sufficient to rebut the prima facie evidence of foreclosure. That was by definition impossible on the facts given the high market share Microsoft had on the tying market. The solution to this problem can perhaps be found in the indirect network effects evidence. Incentives for content providers and software developers depended on the guaranteed presence of Windows Media Players on most PCs. Once that was established, there were no or low incentives to write content and applications for other media players. See the discussion of indirect network effects in para 4.499. 620

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 876.

621

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 883–896.

622

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 897–899.

623

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 900–944.

624

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 945.

625

  Case COMP/C-3/37.792 Microsoft I (n 43), recital 953.

626

  Case COMP/C-3/37.792 Microsoft I (n 43), recitals 949–951.

627

  Case T-201/04 Microsoft I (n 5), para 1034.

628

  Case T-201/04 Microsoft I (n 5), para 1054.

629

  Case T-201/04 Microsoft I (n 5), paras 1031–1058.

630

  Case T-201/04 Microsoft I (n 5), para 1038.

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631

  Case T-201/04 Microsoft I (n 5), para 1046.

632

  Case T-201/04 Microsoft I (n 5), para 1055.

633

  Case T-201/04 Microsoft I (n 5), para 1155.

634

  Case T-201/04 Microsoft I (n 5), para 1155.

635

  Case T-30/89 Hilti (n 149), para 98.

636

  Case T-30/89 Hilti (n 149), para 119.

637

  Case T-30/89 Hilti (n 149), paras 115–118.

638

  This part of the judgment was not appealed to the CJ.

639

  Case T-201/04 Microsoft I (n 5), paras 1160 and 1163–1166.

640

  Article 102 Enforcement Priorities Guidance, para 53.

641

  Case T-201/04 Microsoft I (n 5), para 1151.

642

  Case T-201/04 Microsoft I (n 5), para 1151.

643

  Case T-201/04 Microsoft I (n 5), para 1152.

644

  See Communication from the Commission: Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements (the ‘Guidelines on Horizontal Cooperation Agreements’), OJ 2011 C11/1, paras 252–323. 645

  Case T-201/04 Microsoft I (n 5), para 1151.

646

  Coca-Cola (n 51), recital 35.

647

  Coca-Cola (n 51), Annex, point 6, second and third indents. See also Coca-Cola, European Commission, XIXth Report on Competition Policy, 1989, para 50; see also European Commission, ‘The European Commission Accepts an Undertaking from Digital Concerning its Supply and Pricing Practices in the Field of Computer Maintenance Services’, Press Release IP/97/868 (10 October 1997). The prospective analysis of whether a merged entity is likely to engage in future anti-competitive mixed bundling gives rise to a test that relies entirely on the prospective ability and incentive to exclude: see Case COMP/ M.3304 GE/Amersham, OJ 2004 C74/5, recitals 37–42. 648

  Article 102 Enforcement Priorities Guidance, para 49.

649

  Article 102 Enforcement Priorities Guidance, para 50.

650

  Article 102 Enforcement Priorities Guidance, para 53 (‘The risk of anti-competitive foreclosure is expected to be greater where the dominant undertaking makes its tying or bundling strategy a lasting one, for example through technical tying which is costly to reverse’). 651

  Article 102 Enforcement Priorities Guidance, para 54 (‘The greater the number of such products in the bundle, the stronger the likely anti-competitive foreclosure’). 652

  Article 102 Enforcement Priorities Guidance, para 55 (‘If there is not a sufficient number of customers who will buy the tied product alone to sustain competitors of the dominant undertaking in the tied market, the tying can lead to those customers facing higher prices’). 653

  Article 102 Enforcement Priorities Guidance, para 56 (‘By tying the two products the dominant undertaking may seek to avoid this substitution and as a result be able to raise prices’).

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654

  Article 102 Enforcement Priorities Guidance, para 57 (‘If the prices the dominant undertaking can charge in the tying market are regulated, tying may allow the dominant undertaking to raise prices in the tied market in order to compensate for the loss of revenue caused by the regulation in the tying market’). 655

  Article 102 Enforcement Priorities Guidance, para 55 (‘If the tied product is an important complementary product for customers of the tying product, a reduction of alternative suppliers of the tied product and hence a reduced availability of that product can make entry to the tying market alone more difficult’). 656

  Article 102 Enforcement Priorities Guidance, para 60.

657

  Article 102 Enforcement Priorities Guidance, para 61.

658

  Article 102 Enforcement Priorities Guidance, para 62 (‘Provided that the conditions set out in Section III D are fulfilled, the Commission will look into claims by dominant undertakings that their tying and bundling practices may lead to savings in production or distribution that would benefit consumers’). 659

  Article 102 Enforcement Priorities Guidance, para 49.

660

  D. Carlton and M. Waldman, ‘Theories of Tying and Implications for Antitrust’ (2008) 2 Issues in Comp L and Policy 1859. See also European Commission, Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ 2008 C265/7, para 93 (‘Tying and bundling as such are common practices that often have no anticompetitive consequences’). 661

  eg see D. S. Evans and M. Salinger, ‘Why Do Firms Bundle and Tie? Evidence from Competitive Markets and Implications for Tying Law’ (2005) 22 Yale J on Reg 37; R. W. Kenney and B. Klein, ‘How Block Booking Facilitated Self Enforcing Film Contracts’ (2000) 43 J L & Econ 427. 662

  eg see M. Salinger, ‘Business Justification Defences in Tying Arrangements’ in W. D. Collins (ed), Issues in Competition Law and Policy (Chicago: ABA Section of Antitrust Law, 2006). 663

  A. Director and E. H. Levi, ‘Law and the Future: Trade Regulation’ (1956) 51 Nw U L Rev 281. 664

  As we will discuss in Section G.4(c), there are a number of instances when this simple logic does not apply. In such cases, tying may be used anti-competitively to leverage market power into neighbouring markets. The identification of such an instance in a concrete case forms the basis of the theory of harm in a tying case. 665

  eg see N. Economides, ‘Desirability of Compatibility in the Absence of Network Externalities’ (1989) 79 Am Econ Rev 1165. 666

  Case COMP/C-3/37.792 Microsoft I (n 43).

667

  IBM System/370, XIVth Report on Competition Policy (1984), paras 94–95.

668

  Article 102 Enforcement Priorities Guidance, para 52.

669

  See M. D. Whinston, ‘Tying, Foreclosure, and Exclusion’ (1990) 80 Am Econ Rev 837.

670

  Carlton, ‘A General Analysis of Exclusionary Conduct’ (n 530), 667.

671

  eg see J.-P. Choi and C. Stefanadis, ‘Tying, Investment, and the Dynamic Leverage Theory’ (2001) 32 RAND J Econ 52. 672

  See D. W. Carlton and M. Waldman, ‘The Strategic Use of Tying to Preserve and Create Market Power in Evolving Industries’ (2002) 33 RAND J Econ 194.

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673

  Article 102 Enforcement Priorities Guidance, para 20.

674

  Case COMP/C-3/37.792 Microsoft I (n 43).

675

  K.-U. Kühn and J. Van Reenen, ‘Interoperability and Market Foreclosure in the European Microsoft Case’, Centre for Economic Performance Special Paper No 20 (2008), 17–18. 676

  eg see K. N. Hylton and M. Salinger, ‘Tying Law & Policy: A Decision-Theoretic Approach’ (2001) 69 Antitrust LJ 469; Y. Bakos and E. Brynjolfsson, ‘Bundling and Competition on the Internet’ (2000) 19 Marketing Sci 63. 677

  For a general economic analysis of antitrust intervention in innovative industries, see I. Segal and M. D. Whinston, ‘Antitrust in Innovative Industries’ (2007) 97 Am Econ Rev 1703. 678

  eg see R. Preston McAfee, J. McMillan, and M. D. Whinston, ‘Multiproduct Monopoly, Commodity Bundling, and Correlation of Values’ (1989) 104 Quarterly J Econ 371. 679

  For a general discussion, see eg C. Shapiro, ‘Aftermarkets and Consumer Welfare: Making Sense of Kodak’ (1995) 63 Antitrust LJ 483. 680

  eg see B. Klein and J. Shepard Wiley Jr, ‘Competitive Price Discrimination as an Antitrust Justification for Intellectual Property Refusals to Deal’ (2003) 70 Antitrust LJ 599. 681

  Article 102 Enforcement Priorities Guidance, para 61.

682

  eg see M. Waldman and D. W. Carlton, ‘Competition, Monopoly, and Aftermarkets’ (2010) 26 J L Econ & Org 54. 683

  eg see B. Klein and A. V. Lerner, ‘The Law and Economics of Bundled Pricing: Le Page’s, Peace Health, and the Evolving Antitrust Standard (2008) 53 Antitrust Bull 555. 684

  Article 102 Enforcement Priorities Guidance, para 60 (‘If the incremental price that customers pay for each of the dominant undertaking’s products in the bundle remains above the LRAIC of the dominant undertaking from including that product in the bundle, the Commission will normally not intervene since an equally efficient competitor with only one product should in principle be able to compete profitably against the bundle’). 685

  eg see D. W. Carlton and M. Waldman, ‘Safe Harbors for Quantity Discounts and Bundling’ (2008) 15 Geo Mason L Rev 1231, 1236–7.

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Part I General Principles, 4 Article 102, H Refusal to Supply Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Exclusive dealing — Refusal to supply — Foreclosure effect — Refusal to licence — Patents and know how

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H. Refusal to Supply (1)  Concept of Abusive Refusal to Supply 4.558  Most legal systems recognize the principles of a market economy and the freedom to engage in business activities, including the freedom for undertakings to decide with whom they will trade. As the General Court acknowledged in Bayer, the case law of the EU Courts expressly acknowledges that even an undertaking in a dominant position may, in certain cases, refuse to sell.686 In Bronner,687 Advocate General Jacobs stated: First, it is apparent that the right to choose one’s trading partners and freely to dispose of one’s property are generally recognized principles in the laws of the Member States, in some cases with constitutional status. Incursions on those rights require careful justification. 4.559  In other words, as a general principle dominant undertakings have the right to refuse to license and unilaterally to decide with which third party they wish to deal. However, a duty to deal can be imposed in certain well-defined circumstances.688 4.560  Both the case law and economic thinking have evolved in the last two decades in order to delineate the necessary and/or sufficient conditions required to establish that a refusal to supply constitutes an infringement of Article 102.

(2)  Basic Elements (a)  Competitive Advantage on Downstream Market 4.561  There is a wide array of commercial conduct that can be classified as refusal to deal. The following is a non-exhaustive list of types of refusal that might be caught by Article 102: refusal to supply key input products and services; refusal to provide essential proprietary information; refusal to license IP rights; and refusal to grant access to an essential facility or network, (p. 464) or only doing so on uneconomic terms. The common thread tying these various types of behaviour together is that what is refused—be it a product, service, information, access right to an infrastructure or platform—is essential for competing in a downstream or complementary market where the dominant firm is also present.689 4.562  The primary concern, therefore, is that, as a result of the refusal to supply, competition will be distorted in a market downstream from the market for the refused input. Such competition problems typically arise where the firm which is dominant on the upstream market for the input is at the same time a competitor of the customer it refuses to supply in the downstream market.

(b)  Enforcement of Other Abuse 4.563  Where the customer is not a competitor on a downstream market, the refusal will not directly benefit the dominant undertaking through a restriction in the customer’s ability to compete on that market. This creates a strong assumption that, absent other exclusionary practices, a company refusing to supply a non-competing customer must have good business reasons to do so, such as problems with the customer’s payment history. 4.564  Nonetheless there are circumstances where the purpose of the refusal to deal is to punish customers in the downstream market for dealing with upstream competitors of the dominant firm. Rather than characterizing such conduct as a refusal to supply, it is arguably more correct to categorize it as an exclusive dealing or tying abuse. Examples include halting supplies to punish buyers for dealing with competitors690 and refusing to supply buyers that do not agree to exclusive dealing or tying arrangements.691

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(c)  Constructive Refusal to Supply 4.565  The concept of a refusal to deal covers not only situations of pure or straightforward refusal, but also instances of agreement by the dominant company to deal but under unreasonable or uneconomic conditions. 4.566  The Commission has also acknowledged that inexplicable or unjustified delays in responding to a request for access may constitute an abuse.692 Likewise, an obligation imposed by a dominant supplier to indicate the geographical destination of the goods supplied and the identity of the final customers may—in appropriate circumstances—be considered as amounting to a constructive refusal.693

(p. 465) (d)  De novo Refusals vs Withdrawal of Supply 4.567  A distinction can be made between a refusal to supply an existing customer and a refusal to supply a potential customer. In other words, a refusal to deal can take the form of either the withdrawal of supply or of a refusal to start supplying. 4.568  While, in conceptual terms, treatment of these two types of situation under Article 102 should be the same, certain inferences may be drawn from the rupture of an existing supply relationship. The existing relationship may, for example, be indicative of the essential or indispensable nature of the input, in particular if the customer has made particular investments in order to use the input. Moreover, it may in such a case be easier to demonstrate that the refusal is likely to give rise to an anti-competitive effect. Further, it may be harder objectively to justify termination of a previously satisfactory relationship.

(3)  Types of Refusal to Supply 4.569  Depending on the characteristics of the ‘refused input’ one can formalistically distinguish between four types of refusals to supply (or deal): refusal to supply a physical product or service; refusal to provide access to an essential facility, asset, or platform; refusal to license IP rights; and refusal to provide access to interoperability information. In policy terms, the Article 102 Enforcement Priorities Guidance takes the view that the framework for evaluating a refusal to supply any input type should be essentially the same across all cases, in the sense that the same core conditions to establish an infringement apply. However, the characteristics of the refused input and the nature of the refusal (outright or partial) may influence the circumstances of each case and thus affect the nature of the evidence required to meet the conditions. The EU Courts’ case law, on the other hand, contains different tests in relation to ‘refusal to supply any input’ and ‘refusal to license an IP right’ and it remains to be seen whether it will follow the Commission in adopting a unified approach.

(a)  Refusal to Supply a Physical Product or Service 4.570  There may be a number of legitimate and competitively neutral reasons why dominant undertakings could find it in their interest to refuse to supply a physical product or service (bad credit, late payments, etc). However, in vertically related markets, an abuse may occur where a dominant firm refuses to supply an input to downstream competitors to preserve market power in that downstream market.

(b)  Refusal to Provide Access to an Essential Facility 4.571  This generally involves denial of access to a facility necessary to compete with a downstream competitor, to preserve market power in that downstream market. The Commission, in its enforcement practice, had adopted the ‘essential facilities’ doctrine most often in situations relating to a utility or transport infrastructure which exhibits natural monopoly characteristics. Examples include ports, airports, railway bridges, electricity transmission grids, and pipelines. Such facilities are ‘essential’ in that, by nature, they

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cannot be replicated in an economically viable manner and therefore are subject to a natural monopoly.

(c)  Refusal to License IP Rights 4.572  In the context of IP rights, a refusal to deal refers to a situation in which the IP right owner refuses to give a licence, leaving potential licensees with no option but to seek a compulsory licence. However, a refusal to license is not limited to cases of outright refusal but may also include (p. 466) situations in which there is a delay in negotiations694 or cases in which the acceptance of the licensing terms proves to be so difficult that they amount to an effective refusal to deal.695 4.573  However, the Courts recognized early on that caution is required before intervention is contemplated in relation to firms whose dominant position results from the possession of IP rights. •  First, although some IP rights may create a dominant position, IP rights do not necessarily (and indeed only rarely) imply dominance because consumers may be able to substitute other technologies or products for the protected technologies or products. Therefore, neither the Commission nor the EU Courts presume the existence of market power from the mere presence of an IP right. •  Secondly, IP rights grant a temporary monopoly in the invention, mark, creative work, or information developed by a firm as a reward for investment, and hence provide a critical incentive for firms to innovate. In these cases, the competition authorities and the courts must balance the incentive to innovate, protected by the IP right, over the promotion of competition in the market. 4.574  As a result, there is no general obligation for the IP right holder to license the IP right, even where the holder acquires a dominant position in the technology or product market. However, in exceptional circumstances, EU law will permit intervention to oblige a firm to license its IP rights to competitors.

(d)  Refusal to Supply Information Needed for Interoperability 4.575  A situation which may deserve special consideration is when an undertaking refuses to supply information, irrespective of whether that information is protected by IP rights, in a way that allows it to extend its dominance from one market to another. This is the case for information necessary for interoperability between one market and another. Although there is no general obligation even for dominant companies to ensure interoperability, leveraging market power from one market to another by refusing interoperability information may be an abuse of a dominant position. 4.576  Interoperability issues generally arise in high technology markets where software producers may be dependent on interface information concerning the operation of other software (eg platform operating systems) in order to produce products (applications) which are compatible.

(4)  Potential Anti-Competitive Effects of Refusals to Supply 4.577  There are some arguments that, in a vertical situation where there is an input over which supply is refused and a downstream product for which that input is needed, there is only one final market and only one monopoly profit to be reaped. If the dominant firm is able to capture the monopoly profit of the final market even if there is downstream competition, then monopolization of the downstream market cannot have anti-competitive effects because there is no competition anyway. In this case, a refusal to supply downstream

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firms is likely to be (p. 467) motivated by efficiency concerns rather than anti-competitive intent. However, there are still a number of reasons why anti-competitive effects may arise. 4.578  First, the refusal may restore the ability of the dominant firm to exert substantial market power in the downstream market. For example, where the dominant firm has previously been unable to exert market power on the downstream market (eg because of an inability to price discriminate due to arbitrage), refusing to deal with all downstream firms but one, or entering into an exclusive dealing agreement with that particular firm, eliminates downstream competition and thus fosters the upstream firm’s ability to exploit its market power.696 4.579  Secondly, the refusal may allow the firm to leverage upstream dominance to acquire, expand, or maintain market power in a downstream market. For example, where the input and the downstream products are not perfect complements and competition in the downstream market is characterized by economies of scale, learning effects, or network externalities, a firm with a dominant position upstream may seek to limit a rival’s ability to compete by raising its costs of access to a necessary input. As a result, the dominant firm may ‘leverage’ a dominant position upstream into the downstream market. This mechanism is commonly referred in the economic literature as input foreclosure (or raising rivals’ costs).697 4.580  Thirdly, the refusal may protect or reinforce a dominant position upstream. Where there is a market for a primary good (upstream) and a secondary, complementary good (downstream), potential competitors may refrain from entering the upstream market if they face the incumbent as its sole complementary good producer. By refusing to supply the input to independent downstream rivals, the dominant firm has a head start in the race to become the standard in the downstream market and protect its position in the upstream market from the threat of entry.

(5)  The Case Law on Refusal to Supply (a)  General Framework 4.581  Given the high risk of discouraging investment inherent in the imposition on dominant upstream firms of a duty actively to assist their downstream competitors, EU law requires a high intervention threshold for refusal to supply. The precise scope of the test or tests for refusal to supply is, however, not entirely clear. An element common to all types of refusals to supply is that the input must be ‘indispensable’ for the customer. The case law also requires a severe exclusionary effect, with formulations ranging from the elimination of the competitor requesting access to the input; to the (likely) elimination of all competition on the downstream market; through the intermediate formulation of liable or likely to eliminate all effective competition. 4.582  The case law appears to treat refusals to supply any input in general differently from refusals to license an IP right. A refusal to license IP rights is abusive only in ‘exceptional circumstances’.698 The exceptional circumstances identified in the case law overlap in part with the elements of the general refusal to supply test but add the condition that the refusal to supply must cause consumer harm, which so far the case law has identified in the form of the (p. 468) prevention of the emergence of a new product for which there is consumer demand or deterrence of innovation.699 4.583  A further qualification that applies to refusals to license IP rights is that a dominant undertaking cannot be required to adopt a course of conduct that deprives it of the substance of the IP right in question.700 In Volvo v Veng701 and Renault,702 the Court of Justice considered whether a refusal by car manufacturers to license design rights on spare parts to independent manufacturers was abusive. The Court found that a refusal to grant a licence could not constitute an abuse in itself because if it did the proprietor would be deprived of the substance of its exclusive right. However, the exercise of the IP right could From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

be abusive if it involved certain anti-competitive conduct, for example ‘the arbitrary refusal to supply spare parts to independent repairers, the fixing of prices for spare parts at an unfair level or a decision no longer to produce spare parts for a particular model even though many cars of that model are still in circulation’.703 4.584  The elements of the refusal to supply test, namely the indispensability of the input, the exclusionary effect, consumer harm, which appears to be required only in the case of refusal to license an IP right, and the absence of objective justification are examined in this section.

(b)  Indispensability 4.585  The requirement of indispensability or, in the terminology of the Article 102 Enforcement Priorities Guidance, ‘objective necessity’, functions as a filter to identify cases that are clearly not problematic. If the input is not indispensable, no competition concern arises under Article 102 as regards refusal to supply. As an element of the abuse test, its role is that of a first indicator of the capability of the conduct to cause competitive harm through a severe restriction of competition. 4.586  It is worth noting in this regard that, as a matter of law, there is no reason to define a special category of indispensability as ‘essential facilities’.704 The term is sometimes used in a descriptive way to denote a certain type of indispensable input but it would appear that no legal consequences flow from such a description over and above the application of the general refusal to supply test. (p. 469) 4.587  In the case law, the term ‘indispensable’ was first used by the Court of Justice in the Télémarketing case, but with little guidance on its precise meaning.705 Some clarity was provided in the later case of Magill, where three broadcasters held a factual and, to the extent that the information was protected by copyright, legal monopoly over their own television listings.706 Each dominant undertaking published its own weekly television guide and prevented others from publishing weekly listings. Without the right to reproduce the programme schedule of each broadcaster, it was impossible for third parties or each dominant undertaking to publish a comprehensive weekly television guide. The concept of indispensability implicitly adopted by the Court was the legal impossibility of replicating the input.707 4.588  In Oscar Bronner, the Court of Justice defined indispensability as the absence of a potential realistic alternative to the upstream input as a result of technical, legal, or economic obstacles capable of making it impossible or unreasonably difficult for an undertaking with a market share comparable to that of the dominant undertaking to replicate the input either on its own or together with other undertakings. It is not sufficient that such alternative inputs as there may be are less ‘advantageous’ than the input owned by the dominant undertaking or that the undertaking requesting access cannot replicate the input because of its smaller size.708 4.589  In IMS, the Court held that indispensability was not limited to the legal or technical impossibility of replicating the input but included cases in which to replicate the input is ‘not economically viable for production on a scale comparable to that of the undertaking which controls the existing product or service’.709 That case concerned a copyrighted grid which divided the territory of Germany into 1, 860 areas or bricks (the ‘1860 brick structure’). Pharmaceutical companies received data disaggregated at the level of each brick and organized their supplies based on that structure. As a result, the 1860 brick structure was a de facto industry standard.

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4.590  In Microsoft I, the question was how to assess whether a certain degree of interoperability between the Microsoft client PC operating system Windows and third party work group server operating systems was ‘indispensable’ for undertakings operating on the work group server operating system market. The General Court held that any degree of interoperability which did not allow Microsoft’s rivals on the work group server operating system market to compete ‘viably’ on the market would fall short of the standard required under Article 102 because it would not allow effective competition to take place on the market.710 4.591  Microsoft I appears to be consistent with Tiercé Ladbroke, where the General Court examined indispensability in relation to the ability of downstream firms to compete effectively. The applicant submitted that the sound and pictures of French horse races were indispensable (p. 470) for taking off-course bets. The Court disagreed. The betting shop operator seeking to obtain a licence to televise the French races had a ‘significant position’ on the Belgian market as regards bets on French races. Moreover, bets were placed before the beginning of the race so that whether or not the race was televised could not have a decisive influence on the placing of the bet. This analysis implied that input was not indispensable because it did not prevent the applicant from competing effectively.711 However, it is questionable whether the General Court in Tiercé Ladbroke held that any input necessary for downstream firms to compete effectively was indispensable or it made the rather more limited point that, since the complainant was able to compete effectively, the input could not be indispensable. 4.592  In IMS, the Court held that it is not necessary that there is a market for the upstream product. The determinative issue is whether there are two different production stages with an upstream input being indispensable for the supply of the downstream product. The Court explained this requirement in terms of the existence of a potential or even hypothetical upstream market.712 The Article 102 Enforcement Priorities Guidance adopts the approach in IMS and explains that it is not necessary ‘for the refused product to have been already traded: it is sufficient that there is demand from potential purchasers and that a potential market for the input at stake can be identified’.713 When this is the case, the input is not a product because it is not supplied on a market. However, the dominant undertaking is capable, through the control of a ‘bottleneck’, to exclude downstream competitors. 4.593  It is questionable whether the indispensability requirement should be extended to inputs that are not in existence but would be profitable to develop if the market power rents of the downstream division of the dominant undertaking are not taken into account. In ENI, a commitments decision, the Commission took the preliminary view that ENI did not invest in additional capacity on its gas pipelines because third party access to increased capacity on the gas transport market would have boosted competition on the downstream gas supply markets to the detriment of ENI’s own downstream business. ENI decided to forgo the higher upstream profits that would have been generated by the sale of the additional capacity on ENI’s pipelines in order to protect its downstream market power.714 This decision can be explained in light of the policy objective to use Article 102 to foster competition on recently liberalized markets. However, second-guessing the investment decisions of dominant undertakings, even if they control indispensable inputs or ‘essential facilities’, risks imposing an ex ante regulatory obligation of uncertain content that may distort optimal investment incentives. While the Commission practice suggests that certain undertakings singled out as holders of ‘essential facilities’ may have such an obligation under Article 102,715 the EU Courts have not yet ruled on this issue. Given that the risk of competitive distortions is particularly acute in this area, it has been suggested that, at the

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very least, it should be necessary to prove that the under-investment strategy has been carried out with anti-competitive intent.716

(p. 471) (c)  The Foreclosure Effect 4.594  A refusal to supply is only abusive if the competitive harm results from a restriction of competition. However, the case law is not clear as to the type of foreclosure effect required. 4.595  Formally, the case law sets out three approaches. The first approach would appear to apply to ‘refusals to supply any input’. Under this approach, the elimination of all competition on the part of the undertaking requesting access would appear to be sufficient. In Commercial Solvents, the Court of Justice held that the required exclusionary effect of a refusal to supply by a dominant undertaking that decided to integrate downwards was the elimination of all competition on the part of the downstream competitor requesting access. On the facts, however, the foreclosed competitor was one of the principal suppliers of the downstream product in the internal market.717 4.596  In Oscar Bronner, the Court of Justice applied the case law on IP rights to the refusal to allow access to a distribution system plainly not protected by IP rights. It did so, however, in a hypothetical form718 and applied the foreclosure test of elimination of competition on the part of the undertaking requesting access instead of the more stringent test of elimination of all competition required by the case law on IP rights.719 In that case, on the facts, the input was not indispensable so that it was not possible to draw any inferences as to the capability of the conduct to exclude all competitors or only some. 4.597  A second approach has been applied in relation to ‘refusals to license IP rights’. In such cases, the EU Courts appear to have held such a refusal to be abusive only if it leads to the elimination of all competition on the market. In Magill, the Court of Justice considered that the ‘exceptional circumstances’ in which a refusal to grant a copyright licence was abusive included the fact that, by the refusal, the dominant undertaking reserved to itself the downstream market excluding all competition on that market.720 The same test was applied in IMS.721 4.598  The third test was adopted in Microsoft I, where the General Court sought to strike a balance between the two alternatives of elimination of a competitor and elimination of all competition, and construed ‘elimination of all competition’ as ‘elimination of effective competition’.722 It held that elimination of effective competition means that competitors are marginalized or substantially weakened to the extent that they do not exert any effective competitive pressure on the dominant undertaking.723 The question whether the approach in Microsoft I applies only in IP cases or whether it is relevant to all refusals to supply is complex and is discussed in Section H.6(b).

(d)  Raising Rivals’ Costs as Exclusionary Effect? 4.599  In light of the analysis in Section H.5(c), the question arises whether the foreclosure test includes instances in which the refusal to supply simply raises rivals’ costs. (p. 472) 4.600  In British Midland v Aer Lingus, the abuse was Aer Lingus’s refusal to provide interline facilities to British Midland when the latter entered the London Heathrow– Dublin route.724 British Midland could compete effectively and operate profitably over time. The refusal to supply, however, raised its costs and shrank its revenues. This is a much lower threshold than the elimination of all effective competition. The case can be explained on the ground that the Commission was pursuing a policy of encouraging competition in civil aviation markets which, at the relevant time, were subject to regulatory restrictions, extensive industry cooperation, and capacity constraints. Furthermore, Aer Lingus had previously provided interlining facilities to British Midland on other routes. The refusal to interline was clearly a reaction to entry aimed at protecting the dominant position on the relevant market.725 It was also contrary to widespread industry practice, whereby From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

interlining was only refused because of difficulties in currency conversion or doubts about the creditworthiness of the airline requesting the facility.726 4.601  Clearstream Banking is also in conflict with the principle that the refusal to supply must eliminate all effective competition. In that case, the dominant undertaking delayed granting a downstream competitor access to its indispensable upstream clearing and settlement services.727 The delay related only to access to primary clearing and settlement of registered shares transactions while access was already provided in relation to bearer shares.728 The General Court set out all the foreclosure tests applied in the case law: the Microsoft I test of elimination of all effective competition,729 the Oscar Bronner test of elimination of competition on the part of the undertaking requesting access,730 and the Michelin II test731 requiring that the allegedly abusive conduct tended to restrict competition or was capable of doing so.732 On the facts, the Court held that the refusal to supply hindered the competitor’s ‘capacity to provide comprehensive, pan-European and innovative services’. This ‘harmed competition in the provision of cross-border secondary clearing and settlement services’.733 This test is hardly a test of elimination of all competition, whether at all or on the part of a particular undertaking. The Court applied a test of ‘tendency’ to restrict competition, which significantly lowers the enhanced intervention threshold that the case law adopts in refusal to supply cases. The case may be explained as an endorsement of the Commission’s concern about promoting a single market in settlement and clearing in the EU and should probably be limited to its facts.

(e)  The Foreclosure Effect and the ‘Essential Facilities’ Doctrine in Commission Practice 4.602  In the 1990s, the Commission sought to extend the refusal to supply case law from physical inputs to access to a facility that is essential to the production of a product or provision of a service. (p. 473) 4.603  Two Commission decisions from the early 1990s provide a good example of the development of the doctrine.734 Both decisions concerned Holyhead Harbour, a focal point for ferry services between Britain and Ireland. The harbour was managed by Sealink, a company which also operated ferries from the harbour. A rival ferry company, B&I, which also operated at Holyhead, complained that Sealink, as manager of the harbour, modified the sailing schedule of its own ferry operator in such a way that it interfered with B&I’s loading and unloading of ferries. The Commission considered the harbour to be an essential facility, which it defined, for the first time, as ‘a facility or infrastructure without access to which competitors cannot provide services to their customers’.735 In the Commission’s view, Sealink’s provision of access to the harbour to B&I on less favourable terms than those accorded to Sealink’s own ferry service was a breach of Article 102. The Commission’s finding of a breach was not predicated on B&I becoming eliminated from the market and there was no evidence that B&I withdrew from it. Rather, what was condemned was Sealink’s placing of B&I at a competitive disadvantage by discriminating in favour of Sealink’s own ferry service. 4.604  In its second decision concerning the harbour,736 the Commission imposed interim measures against Sealink in order to ensure that it provided reasonable, non-discriminatory access to the harbour to Sea Containers, which sought to introduce a new ferry service at the harbour. The Commission held that the essential facilities doctrine applied equally to established competitors and new entrants to the market. 4.605  The Commission has applied the essential facilities doctrine in a number of cases involving access to a physical facility or a service.737 There is no trace of this approach in the Article 102 Enforcement Priorities Guidance and, arguably, the Commission will now

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apply the general refusal to supply framework whether or not the input is a physical infrastructure that can be described as an ‘essential facility’.

(f)  Consumer Harm 4.606  Consumer harm as a distinct element of the test for vertical refusal to supply is clearly required when the refusal relates to an IP right. In Magill, the Court of Justice held that an ‘exceptional circumstance’ in that case was that the refusal to license prevented the emergence of a new product for which there was potential consumer demand.738 In Tiercé Ladbroke, the General Court held that the refusal to supply sound and pictures of French horse races to a Belgian betting shop operator was not abusive because it did not prevent the emergence of a new (p. 474) product.739 The Court of Justice in IMS v NDC clarified that the indispensability test and the consumer harm test are cumulative and not alternative.740 4.607  The new product test caused a difficulty in the Microsoft I case. In that case, the refusal to license did not prevent the emergence of a completely new product (ie a product which would be in a different product market). Rather, it prevented the development of differentiated products with improved features that customers would value. The General Court held that the new product test must be read in the context of Article 102(b). The test is, therefore, harm to consumers. Consumers may be harmed not only as a result of limitation of production or markets but also because of reduced innovation.741 Less availability of differentiated products742 and lower incentives to innovate for the dominant undertaking’s competitors743 amounted to consumer harm. This test is probably consistent with the previous case law. In IMS, the new product was defined, albeit implicitly, as a product which may be within the existing product market but which must have additional features for which there is potential demand.744 4.608  It is important to highlight that the consumer harm test in relation to IP rights relates to the need to protect the subject matter of such rights. The case law establishes that the consumer harm caused by a vertical refusal to license must consist in reduced availability of differentiated products or lower innovation and not simply in higher prices and lower output. This is because the very subject matter of an IP right is the right to prevent anyone else from reproducing the protected invention, mark, creative work, or information. The same considerations, however, do not necessarily apply to the right to physical property, which consists in the exclusive enjoyment of an asset but not in the right to prevent anyone else from producing or acquiring similar assets. Arguably, the case law in relation to refusals to supply physical goods or services is more likely to assume that consumer harm would result from the conduct and thus it does not require direct consumer harm to be demonstrated. In Commercial Solvents, a case concerning refusal to supply an indispensable raw material, the Court of Justice did not require a finding of consumer harm for an abusive refusal to supply to be established. Instead, the Court took the view that the impairment of an effective competitive structure in the EU was sufficient. The Court, however, added that the impairment of an effective competitive structure harmed consumers indirectly.745 This could only mean that a negative impact on an effective competitive structure is also likely to result in higher prices, lower quality, and less innovation on the market. In Clearstream, a case concerning refusal to supply services, the General Court held that the conduct under review harmed innovation and, ultimately, customers of cross-border secondary clearing and settlement services.746 The Commission had also found a negative impact both on innovation and on output.747 Neither the Commission nor the Court, however, set out consumer harm as a necessary element of the abuse test.

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(p. 475) (g)  Interoperability Cases Since Microsoft 4.609  Since Microsoft, the Commission has opened a number of investigations748 into interoperability issues but has either closed these on administrative grounds749 or reached a settlement with the undertaking under investigation.750 In March 2012, the Commission announced an investigation into the US software company The MathWorks, Inc, which develops software products used in academia and engineering to design and simulate control systems. This followed a complaint by the Texas-based technology company National Instruments that MathWorks had refused to provide it with software licences and accompanying interoperability information for its two main products. Commissioner Almunia used the initiation of this investigation as an opportunity to emphasize that ‘software interoperability…remains central to our enforcement practice’.751

(h)  Refusal to Supply an Existing Customer 4.610  The case law applies a different test to the discontinuance of supplies to an existing customer. In United Brands, the Court of Justice said that a dominant undertaking with a strong brand valued by consumers could not ‘stop supplying a long standing customer who abides by regular commercial practice, if the orders placed by that customer are in no way out of the ordinary’.752 In Sot Lelos kai Sia, the Court of Justice confirmed this principle in the case of a dominant undertaking which refused to supply customers engaging in parallel trade.753 4.611  On closer analysis, these cases are not concerned with a vertical foreclosure strategy whereby a vertically integrated dominant undertaking refuses to supply an indispensable input to downstream competitors. In United Brands, the dominant undertaking stopped supplying a customer because the latter had become heavily engaged in the promotion and sale of the products of a competitor. The effect of the practice was to deter other customers from stocking and promoting competitors’ products. The refusal to supply was, therefore, a way of enforcing a single-branding strategy.754 When refusal to supply is used to enforce another anti-competitive practice, arguably the correct approach should be to examine the refusal to supply under the test applicable to the main abuse. In Sot Lelos kai Sia, the refusal to supply had the purpose of restricting intra-EU trade.755 The exclusionary effect concerned undertakings that were competing with the dominant firm at the same level of the supply chain. 4.612  This analysis raises the question whether the case law on discontinuing supplies to an existing customer will be of relevance to future refusal to supply cases where the refusal is not a means of reinforcing another abuse.

(p. 476) (i)  Defences (Objective Necessity and Objective Justification) 4.613  The case law recognizes that a refusal to supply may be justified by objective necessity or efficiencies although, generally, such defences have failed on the facts. 4.614  In Télémarketing, the Court pointed out that refusal to supply would only be abusive in the absence of ‘objective necessity’756 or when it is ‘is not justified by technical or commercial requirements relating to the nature of the television’.757 No further guidance was given, however, as to what might constitute an objective justification. 4.615  In Magill, the Court of Justice held that the absence of ‘justification either in the activity of television broadcasting or in that of publishing television magazines’ was an exceptional circumstance under which a refusal to grant a copyright licence was an infringement of Article 102.758 4.616  In IMS v NDC, the Commission considered and rejected a number of defences, including: (a) the dominant undertaking’s entitlement not to license an IP right to a prospective licensee who is challenging the existence or validity of the right; (b) the level of

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the royalties offered; and (c) previous instances in which former employees of the prospective licensee allegedly stole information from the dominant undertaking.759 4.617  In Clearstream Banking, the Court rejected the argument that an otherwise abusive refusal to supply could be justified either as a retaliatory measure against a refusal by the competitor to grant the dominant undertaking access to equivalent services in another Member States760 or because of the desire of the dominant undertaking to negotiate other elements of the business relationship with the competitor.761 The Clearstream Banking case established that arguments of this kind are not capable of rebutting a prima facie case of abuse as a matter of law. The Court held that special responsibility of the dominant undertaking means that it cannot take steps aimed at protecting its commercial interests when they are attacked, if the effect would be to strengthen its dominant position. This principle deprives the dominant undertaking of the possibility of engaging in conduct which would be lawful if it were not dominant.762 Therefore, a dominant undertaking cannot be allowed to engage in conduct that infringes Article 102 because it wishes to obtain commercial advantages from the foreclosed competitor. 4.618  In Microsoft, the General Court held that the negative impact of an obligation to license an IP right on the dominant undertaking’s incentives to innovate was a permissible objective justification. Although the Court did not explicitly say so, the question related to ex ante incentives. However, the distinction between ex ante incentives and ex post rewards is largely theoretical. If, historically, without the expectation of exclusive use, the investment would not have been made, this constitutes strong evidence that future investment incentives are likely to be discouraged.763 (p. 477) 4.619  The Court accepted that a negative impact of the obligation to supply on the dominant undertaking’s incentives to innovate may be an objective justification.764 The Court clarified that the incentives in question are the incentives of the dominant undertaking. There is no market-wide balancing of investment incentives of the industry as a whole.765 Instead, the test applied by the Court set out a two-stage test. First, it was necessary to determine whether the obligation to supply significantly reduced the dominant undertaking’s incentives to invest.766 Secondly, it was necessary to assess whether the significant reduction in the investment incentives might prevail over the ‘exceptional circumstances’ which gave rise to the alleged abuse. This test is problematic in that it seeks to balance heterogeneous factors. The exceptional circumstances include the indispensability of the input. It is difficult to see how indispensability as such may be outweighed by reduced investment incentives. A better way to understand the test is to construe the reference to the ‘exceptional circumstances’ as a reference to the competitive harm, including the elimination of effective competition and the resulting consumer harm. The Court itself singled out the limitation of technical development to the prejudice of consumers as an exceptional circumstance relevant to the balancing test. On the facts, in Microsoft, the dynamic efficiency defence was rejected because the dominant undertaking had failed to adduce sufficient evidence to substantiate the issue.767

(6)  The Approach Under the Commission’s Guidance (a)  General Approach 4.620  The Guidance makes no reference to ‘exceptional circumstances’ as in previous cases such as Magill, IMS, and Microsoft, nor is it made clear that there can be a duty to contract only if the refusal is illegal for some specific and identifiable reason, and not merely because a contract would lead to more competition in the short term. However, the Guidance takes as its starting point ‘the position that, generally speaking, any undertaking,

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whether dominant or not, should have the right to choose its trading partners and to dispose freely of its property’.768 4.621  The Guidance also recognizes the potential harm to innovation that can arise from imposing an obligation to supply: intervention on competition law grounds requires careful consideration where the application of Article [102] would lead to the imposition of an obligation to supply on the dominant undertaking. The existence of such an obligation—even for a fair remuneration—may undermine undertakings’ incentives to invest and innovate and, thereby, possibly harm consumers. The knowledge that they may have a duty to supply against their will may lead dominant undertakings—or undertakings who anticipate that they may become dominant—not to invest, or to invest less, in the activity in question. Also, competitors may be tempted to free ride on investments made by the dominant undertaking instead of investing themselves. Neither of these consequences would, in the long run, be in the interest of consumers.769 (p. 478) 4.622  According to the Guidance, a refusal to deal will only be unlawful if it can be shown that it will lead to anti-competitive foreclosure and consequently, harm to consumers in the long run. Importantly, this does not mean that any competition must be altogether excluded from the market, but rather that effective competition is significantly diminished or eliminated. In some cases, the relevant question will therefore be whether there is sufficient likelihood that competitors, by investing in actual or potential substitutes for the refused input, could counter in the foreseeable future the negative consequences of the refusal on consumer welfare. 4.623  In line with the Court of Justice’s finding in IMS, the Guidance provides that it is not necessary for the refused input to have already been traded; it is sufficient that there is demand from potential purchasers and that a potential market for the input at stake can be identified.770

(b)  Necessary Conditions 4.624  According to the Guidance, the Commission will consider a refusal to supply as an enforcement priority if all the following circumstances are present:771 (a)  the refusal relates to a product or service that is objectively necessary to be able to compete effectively on a downstream market; (b)  the refusal is likely to lead to the elimination of effective competition on the downstream market; and (c)  the refusal is likely to lead to consumer harm. 4.625  These conditions seem consistent with economic theory. They are also broadly compatible with the recent jurisprudence in IMS and Microsoft albeit with two qualifications, which must be borne in mind until the EU Courts explicitly develop their case law in line with the Guidance. Both qualifications result from the fact that the Guidance extends the approach in Microsoft I to all refusal to supply cases (and in so doing does not treat ‘refusal to license IP rights’ differently from refusals to supply generally). Thus, the Guidance adopts the tests of elimination of all effective competition and consumer harm, as formulated in Microsoft, as the tests applicable in all refusal to supply cases. 4.626  The first qualification relates to the intensity of the exclusionary effect. The case law of the Court of Justice has referred to the elimination of competition by the competitor requesting access as a sufficient foreclosure effect in cases concerning the refusal to supply any input other than an IP right.772 The Commission’s approach of setting out a test of

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elimination of effective competition applicable to all refusal to supply cases is a welcome development as intervention when only one competitor is foreclosed may be problematic. 4.627  The second qualification relates to the consumer harm test. The case law of the Court of Justice on refusals to license IP rights may be understood as requiring an enhanced consumer harm test in the form of the prevention of the emergence of a new product.773 The new product test may be read as including negative effects on innovation which would contribute to developing differentiated products within the same product market, but it is not clear whether it can be read as a general consumer harm test, including, for example, simply an output reduction or an increase in prices (which appears to be the approach taken in the (p. 479) Guidance). Whether this interpretation of the previous case law in light of the Microsoft case will prevail remains to be seen but this development in the Guidance is potentially more problematic because it could be seen as extending the possibility to intervene in cases of refusal to license an IP right.

(i)  Objective Necessity 4.628  The requirement of objective necessity of the input is broadly equivalent to the ‘indispensability’ criterion under the case law. When real or potential substitutes exist in the market, the input of the dominant company is not indispensable. The same holds if it would be legally and economically possible for other companies to produce the input in question themselves. Applying this framework to the case of IP rights means that an IP right is not objectively necessary if it is possible for competitors to turn to any workable alternative technology or to ‘invent around’ the IP right. On the other hand, this requirement would probably be met where the technology has become the standard or where interoperability with the IP right-protected product is necessary for a company to enter or remain on the product market. 4.629  The Guidance notes that the objective necessity criterion will be more easily fulfilled in cases whether there is a pre-existing supply relationship, particularly where the requesting undertaking made relationship-specific investments in order to be able to use the input.

(ii)  Elimination of Effective Competition 4.630  The likelihood of effective competition being eliminated is generally greater the higher the market share of the dominant undertaking in the downstream market. The less capacity-constrained the dominant undertaking relative to competitors in the downstream market, the closer the substitutability between the dominant undertaking’s output and that of its competitors in the downstream market, the greater the proportion of competitors in the downstream market that are affected, and the more likely it is that the demand that could be served by the foreclosed competitors would be diverted away from them to the advantage of the dominant undertaking.

(iii)  Consumer Harm (and Incentives Balancing Test) 4.631  Following the same approach as it did in the Microsoft decision, the Commission Guidance introduces the ‘new product’ test under the case law, not as a separate standalone condition, but rather as a way to determine whether the refusal is likely to lead to consumer harm, namely whether the refusal would prevent innovative goods or services being brought to the market or would stifle follow-on innovation. 4.632  In examining the likely impact of a refusal to supply on consumer welfare, the Commission will examine whether, for consumers, the likely negative consequences of the refusal to supply in the relevant market outweigh over time the negative consequences of imposing an obligation to supply. If they do, the Commission will normally pursue the case.

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4.633  Clearly, the extent to which the exclusion of one competitor has an impact on the level of competition depends on the pre-existing competition on the downstream market. For instance, if there are several competitors in the downstream market and the owner of the indispensable input is not itself active in that market, the impact on competition of the exclusion may be small. It is more likely that there is a negative effect on competition on the downstream market if, for instance, the input owner is itself active in the downstream market and excludes one of its few competitors. The identity of the excluded actual or potential competitor also may be important for the assessment of the effect on the level of competition of the exclusion. The exclusion of a particular competitor may have a special effect on competition, for instance if it is a ‘maverick’ or an innovator.

(p. 480) (iv)  Objective Justifications (Efficiencies) 4.634  A dominant undertaking bears the burden of adducing sufficient evidence to establish that any efficiencies outweigh the negative impact of a refusal to supply or that the refusal is objectively justified. In line with this, the Guidance provides that it falls on the dominant undertaking to demonstrate any negative impact which an obligation to supply is likely to have on its own level of innovation. If a dominant undertaking has previously supplied the input in question, this can be relevant for the assessment of any claim that the refusal to supply is justified on efficiency grounds. 4.635  However, the Commission has expressly stated that it will consider arguments regarding the need to obtain an adequate return on investments and incentives to innovate in the future. In this respect, if the refused input is the result of investment or innovation activities of the dominant firm then forcing the firm to supply or to give its competitors access is an expropriation of the returns of the firm’s efforts. This may discourage this and other firms from investing in the future and it may reduce the incentives to innovate.

(7)  Refusal to Supply and Patents 4.636  None of the refusal to license IP cases dealt with by the Commission and the EU Courts refers to patents; rather, the IP rights at issue have been design, copyright, database, software, and trade secret protection. These are all to some extent more trivial or less intensively protected assets than patents. Indeed, the only compulsory licences ordered by the Commission and upheld on appeal involved an odd national copyright upon basic information, without any creative added-value, and interoperability information for operating systems. This poses the question whether antitrust intervention would be an appropriate instrument to deal with patent issues. 4.637  It is worth noting in that regard that, when the Commission and the Court of Justice have had to determine the validity and the scope of patents for the purpose of applying competition law, they have, in effect, sidestepped the issue.774

Footnotes: 686  687

Case T-41/96 Bayer v Commission [2000] ECR II-3383, [2001] 4 CMLR 126, para 180.

  Case C-7/97 Oscar Bronner v Mediaprint [1998] ECR I-7791, [1999] 4 CMLR 112.

688

  The dominant firm may also be a group of firms or an industry association refusing access to a jointly-owned facility. In this case there is exclusion of a competitor on the same or a horizontally adjacent market. 689

  The term ‘downstream’ is used as shorthand to denote a market in which the product refused by the dominant firm constitutes an input that is essential for competitors to be

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able to compete effectively. It could be a vertically related market or a market for a complementary product, or a product otherwise related from the perspective of customers. 690

  United Brands (n 16). In United Brands, the CJ dealt with a refusal to deal in the vertical context. UBC was dominant in the supply of bananas to ripeners/distributors. It cut off supplies to a Danish customer when it discovered that the customer had begun promoting a rival brand. The CJ found that this was a breach of Art 102. In the Court’s opinion, the company must have been aware that its actions would make other ripeners more reluctant to stock rival brands, thereby increasing UBC’s dominant position. The CJ also considered the action taken by UBC disproportionate to the commercial threat it faced. United Brands clearly did not involve market leveraging. It is, rather, an example of a different type of abuse under Art 102, namely the enforcement of a single branding strategy. In this case, the dominant supplier and the customer were not in a competitive relationship in the downstream market. 691

  See Article 102 Enforcement Priorities Guidance, para 77.

692

  Notice on the application of the competition rules to access agreements in the telecommunications sector, OJ 1998 C265/02, para 95. 693

  Polaroid/SSI Europe, XIIIth Report on Competition Policy, 1984, paras 155–157.

694

  Delays in negotiations are only abusive if there is a duty to deal. Hence, when negotiations are delayed it should first be examined whether there is a duty to negotiate and reach an agreement in the first place. 695

  With regard to the licensing terms, while they may in themselves amount to an abuse of a dominant position (eg tying, non-compete obligations), there may also be cases where this is not the case, such as high royalty rates. Where the terms are such that any licensee is prevented from making an economically viable use of the licence, then the offer to deal may amount to a refusal. 696

  It can be argued that banning discrimination would also help the dominant firm to resist demands for selective price cuts and thus contribute to maintaining high prices. Vertical integration also constitutes an alternative solution to the upstream firm’s commitment problem. 697

  See also the Non-Horizontal Merger Guidelines.

698

  Cases C-241/91 and C-242/91 P Magill (n 185), para 50; IMS Health (n 275), para 35; Case T-201/04 Microsoft I (n 5), para 331. 699

  Contrast Commercial Solvents (n 44) and Télémarketing (n 310) with Cases C-241/91 and C-242/91 P Magill (n 185); IMS Health (n 275); and Case T-201/04 Microsoft I (n 5). 700

  For the clearest statement of this principle, see Case 238/87 AB Volvo v Eric Veng (UK) [1988] ECR 6211. 701

  Case C-238/87 Volvo v Veng [1988] ECR 6211. Volvo was the proprietor in the UK of registered design in respect of body panels for motor vehicles. Veng imported the same body panels, manufactured without authority from Volvo, and marketed them in the UK. Volvo claimed Veng’s activity infringed its exclusive rights and refused to license such rights. The national judge referred to the CJ for preliminary ruling. 702

  Case C-53/87 Consorzio italiano della componentistica di ricambio per autoveicoli & Maxicar v Régie nationale des usines Renault [1988] ECR 6039. Similarly to Volvo, here an Italian trade association comprising a number of undertakings which manufactured and marketed non-original bodywork and spare parts for motor vehicle asked a national judge for a declaration against Renault that such activity did not constitute illegal conduct.

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Renault counterclaimed for infringement and the national court referred to the CJ for a preliminary ruling. 703

  Volvo v Veng (n 701), para 9.

704

  The terminology is occasionally used by the Commission: Case IV/34.689 Sea Containers v Stena Sealink, OJ 1994 L15/8, recital 66 and ENI Summary (n 52), recitals 39 and 56. The use of the term in competition law originates in the US: MCI Communications (n 350). See also H. Hovenkamp, Federal Antitrust Policy: The Law of Competition and Its Practice (St Paul: Thompson/West Publishing, 2005), 309–14. On the essential facilities ‘doctrine’ in EU law, see V. Korah, ‘Access to Essential Facilities under the Commerce Act in Light of Experience in Australia, the European Union and the United States’ (2000) 31 Victoria University of Wellington L Rev 231 and A. Capobianco, ‘The Essential Facility Doctrine: Similarities and Differences between the American and European Approaches’ (2001) 26 EL Rev 548. 705

  Télémarketing (n 310), para 26. The term ‘indispensable’ was not used in Commercial Solvents (n 44) although the input in that case was probably indispensable on the facts. 706

  Case IV/31.851 Magill TV Guide/ITP, BBC and RTE, OJ 1989 L78/43 (Magill TV Guide), recital 22, upheld in Case T-69/89 Radio Telefis Eireann v Commission [1991] ECR II-485 (Magill), appeal dismissed in Cases C-241/91 and C-242/91 P Magill (n 185). 707

  Case IV/31.851 Magill TV Guide (n 706), recital 23; Case T-69/89 Magill (n 706), para 63; Cases C-241/91 and C-242/91 Magill (n 185), paras 47 and 53. 708

  Oscar Bronner (n 687), paras 43–46.

709

  IMS Health (n 275), para 28.

710

  Case T-201/04 Microsoft I (n 5), para 229.

711

  Case T-504/93 Tiercé Ladbroke v Commission [1997] ECR II-923, paras 131–132.

712

  IMS Health (n 275), paras 44–45.

713

  Article 102 Enforcement Priorities Guidance, para 79.

714

  ENI (n 52), recitals 55–60.

715

  In addition to Sea Containers v Stena Sealink (n 704) and ENI (n 52), see also Flughafen Frankfurt/Main, OJ 1998 L72/30. 716

  See Nazzini, The Foundations of European Union Competition Law, pointing out that in ENI, the deliberate nature of ENI’s conduct was considered relevant to the analysis: ENI (n 52), recital 60. 717

  Commercial Solvents (n 44), para 25. In Télémarketing, the test was framed as the ‘possibility of eliminating all competition from another undertaking’: Télémarketing (n 319), paras 26–27. 718

  Oscar Bronner (n 687), para 41: ‘even if that case-law on the exercise of an intellectual property right were applicable to the exercise of any property right’. 719

  Oscar Bronner (n 687), para 41.

720

  Case C-241/91 and C-242/91 P Magill (n 185), para 56.

721

  IMS Health (n 275), para 47.

722

  Case T-201/04 Microsoft I (n 5), para 563 where the Court held that ‘what matters…is that the refusal at issue is liable to, or is likely to, eliminate all effective competition on the market’.

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723

  Case T-201/04 Microsoft I (n 5), paras 570, 575–579, and 580–612.

724

  British Midland v Aer Lingus, OJ 1992 L96/34, recitals 14–30.

725

  British Midland v Aer Lingus (n 725), recital 26.

726

  British Midland v Aer Lingus (n 725), recitals 25 and 30.

727

  Case T-301/04 Clearstream Banking and Clearstream International v Commission [2009] ECR II-3155, paras 93–138. 728

  Clearstream (n 727), para 102.

729

  Clearstream (n 727), para 148.

730

  Clearstream (n 727), para 147.

731

  Michelin II (n 197), para 239.

732

  Clearstream (n 727), para 144.

733

  Clearstream (n 727), para 149.

734

  Case IV/34.174 B&I/Sealink—Holyhead [1992] CMLR 255 and Case IV/34.689 Sea Containers/Stena Sealink, OJ 1994 L15/8. 735

  B&I/Sealink (n 734), para 41.

736

  Sea Containers/Stena Sealink (n 734).

737

  See Case T-128/98 Aéroports de Paris v Commission [2000] ECR II-3929; Joined Cases T-374, 375, 384 and 388/94 European Night Services Ltd (ENS) and Others v Commission [1998] ECR II-3141; Telemarketing (n 319). The Commission recalled the essential facilities doctrine in some cases during the 1990s, such as Sea Containers v Stena Sealink (n 734), and most recently in Case COMP/37.685, GVG/FS, 2004 OJ L11/17, in which the Commission found that Ferrovie dello Stato (FS), the Italian national railway company, abused its dominant position because it prevented GVG, a small German railway company, from providing rolling stock and tracks for an international rail passenger transport service between Basle and Milan. See also M. Siragusa and M. Beretta, ‘La Dottrina Delle Essential Facilities nel Diritto Comunitario e Italiano Della Concorrenza’ (1999) Contratto e impresa/ Europa 260. On the scarce fortune of this doctrine in the US and for a comparative perspective, see A. Stratakis, ‘Comparative Analysis of the US and EU Approach and Enforcement of the Essential Facilities Doctrine’ (2006) 27 Eur Comp L Rev 434. 738

  Case C-241/91 and C-242/91 P Magill (n 185), para 54.

739

  Tiercé Ladbroke (n 711), para 131.

740

  IMS Health (n 275), para 37.

741

  Case T-201/04 Microsoft I (n 5), paras 643–647.

742

  Case T-201/04 Microsoft I (n 5), paras 650–652.

743

  Case T-201/04 Microsoft I (n 5), paras 653–654.

744

  IMS Health (n 275), para 49.

745

  Commercial Solvents (n 44), para 32; Continental Can (n 3), para 26.

746

  Clearstream (n 727), para 149.

747

  Case COMP/38.096 Clearstream, OJ 2009 C165/7, recitals 228, 231, and 232.

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748

  In addition, a complaint regarding interoperability was brought against IBM by Platform Solutions Inc (PSI) but was dropped when PSI was acquired by IBM. The Commission did not open a formal investigation into the complaint. 749

  MEMO/08/19 (14 September 2008), Commission initiates formal proceedings against Microsoft in two cases of suspected abuse of dominant market position. 750

  IBM Maintenance Services (n 58).

751

  Almunia, ‘Higher Duty for Competition Enforcers’, speech at the International Bar Association Antitrust Conference, 15 June 2012 (SPEECH/12/453). 752

  United Brands (n 16), para 182. See also Napier Brown-British Sugar (n 547), recitals 63 and 64. 753

  Sot Lélos kai Sia (n 310), paras 49 and 70–71.

754

  United Brands (n 16), paras 163–203.

755

  Sot Lélos kai Sia (n 310), paras 65–66.

756

  Telemarketing (n 319), para 26.

757

  Telemarketing (n 319), para 27.

758

  Case C-241/91 and 242/91 P Magill (n 185), para 55.

759

  IMS Health (n 275), paras 167–174.

760

  Clearstream (n 727), paras 131–137.

761

  Clearstream (n 727), paras 121–130, 134, and 136.

762

  Clearstream (n 727), paras 132–133.

763

  See Case COMP/C-3/37.792 Microsoft I (n 43), recital 709, where Microsoft’s argument related both to the protection of past investments and to the incentives to invest in the future. The ex ante and ex post perspectives and the impact on future investment incentives are not discussed in the judgment, which refers generally to incentives to innovate: Case T-201/04 Microsoft I (n 5), paras 668, 689 (with a reference to Microsoft’s argument about ‘future incentives to invest’), 697, 698 (again referring to Microsoft’s argument about ‘future’ incentives), 699, 701–703, and 706–710. 764

  Case T-201/04 Microsoft I (n 5), paras 696–712.

765

  Case T-201/04 Microsoft I (n 5), paras 704–709.

766

  Case T-201/04 Microsoft I (n 5), para 701.

767

  Case T-201/04 Microsoft I (n 5), paras 698–712.

768

  Article 102 Enforcement Priorities Guidance, para 75.

769

  Article 102 Enforcement Priorities Guidance, para 75.

770

  See IMS Health (n 275), para 44.

771

  Article 102 Enforcement Priorities Guidance, para 81.

772

  See Section H.5(c).

773

  See Section H.5(f).

774

  Case 193/83 Windsurfing Int’l v Commission [1986] ECR 611; Case IV/C-29.290 Vaessen/Moris, OJ 1979 L19/32.

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Part I General Principles, 4 Article 102, I Margin Squeeze Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Price squeezing — Super-dominance — Economics — Exclusive dealing — Refusal to supply — Refusal to licence

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I. Margin Squeeze (1)  Concept of a Margin Squeeze Abuse 4.638  Instead of refusing to supply, a vertically integrated firm that is dominant in the supply of essential upstream inputs may set prices at the upstream and downstream levels so that the margin between these prices is insufficient for a downstream competitor to cover its costs.775 If such pricing forecloses as efficient downstream competitors, then it may harm end customers and constitute an abuse under Article 102.776 (p. 481) 4.639  The EU Courts have confirmed that a margin squeeze is a stand-alone abuse, which arises due to the exclusionary effect that results from an insufficient spread between the wholesale and retail price of a product.777 It is not dependent on either the wholesale or retail price being abusive in itself. 4.640  Margin squeeze cases are most common in regulated industries such as telecommunications where there are clear requirements on certain firms to supply upstream inputs to downstream competitors. However, margin squeeze cases have also arisen from time to time in industries where regulatory obligations to supply do not exist, such as primary metals, sugar, and pharmaceuticals.778 4.641  Margin squeeze allegations are typically made in network industries where a vertically integrated operator supplies access to its network to downstream competitors.

(2)  Legal Analysis of Margin Squeeze (a)  The Early Case Law 4.642  The EU case law regarding margin squeeze is limited; until 2003 only three cases touched upon the issue. The first case was National Carbonizing779 in 1976, where margin squeeze was treated as a specific form of refusal to deal. 4.643  The second case, Napier Brown in 1988,780 involved British Sugar. British Sugar was dominant in both the upstream (industrial sugar) and downstream (retail sugar) markets. Napier Brown was dependent on supplies of industrial sugar from British Sugar in order to be able to operate in the retail sugar market. The margin between the price British Sugar charged Napier Brown for the industrial sugar, on the one hand, and the price British Sugar charged for its own consumer sales, on the other, was below British Sugar’s own repackaging and selling costs, and thus did not allow Napier Brown to remain viable as a packer and seller of retail sugar. The Commission therefore found that British Sugar had abused its position through a margin squeeze. The Commission also relied on evidence that the behaviour formed part of a deliberate price-cutting campaign by British Sugar aimed at excluding Napier Brown from the retail market. 4.644  In the third case, Industrie des Poundres Sphériques,781 where the allegation of margin squeeze was rejected,782 the General Court described the abuse in the following terms: Price squeezing may be said to take place when an undertaking which is in a dominant position on the market for an unprocessed product and itself uses part of its production for the manufacture of a more processed product, while at the same time selling off surplus unprocessed product on the market, sets the price at which it sells the unprocessed product at such (p. 482) a level that those who purchase it do not have a sufficient profit margin on the processing to remain competitive on the market for the processed product.

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4.645  None of the early cases was particularly illuminating as to the conditions in which an abusive margin squeeze may take place.

(b)  Elements of the Abuse 4.646  Since 2003, the Commission and the EU Courts have considered margin squeezes in a number of cases, which established the essential elements of the abuse. 4.647  In 2003, the Commission fined Deutsche Telekom for having implemented a prolonged price squeeze policy, aimed at excluding rivals from the retail markets for broadband and narrowband Internet access services.783 The Commission stated that a price squeeze may infringe Article 102 when the margin between downstream and upstream prices is negative or, in any case, insufficient to cover the costs borne by the vertically integrated firm to supply its own services in the downstream market.784 4.648  In that case, the fees charged by Deutsche Telekom for wholesale access to the local loop were so high that competitors were forced to charge their end-users prices higher than those that the dominant company charged its own end-users for similar services. Since wholesale charges were higher than Deutsche Telekom’s own prices for retail local network access, competitors, even those that were at least as efficient as the incumbent operator, could never make a profit, because on top of the wholesale charges they also had other costs such as marketing, billing, debt collection, and so on. 4.649  Deutsche Telekom argued that in order to establish abuse of a dominant position, the Commission must not only prove that there is a margin squeeze, but also demonstrate that this margin squeeze has negative effects on the market, for example by hindering competitors or restricting competition downstream in the form of barriers to market entry for competitors. The Commission rejected this argument, taking a form-based approach and relying on older cases (AKZO and Hoffmann-La Roche) to find that solely by proving the existence of a margin squeeze, it had ‘done enough to establish the existence of an abuse of a dominant market position’. 4.650  Deutsche Telekom appealed the decision and the General Court upheld the Commission’s decision. The General Court’s judgment and the judgment of the Court of Justice on further appeal, clarified a number of important elements regarding the margin squeeze abuse. The Court of Justice in 2011 was called upon to answer a number of questions on a preliminary reference from the Stockholm District Court in TeliaSonera, which confirmed and provided further guidance on the EU Courts’ approach to margin squeeze abuses.785 These principles were confirmed by the General Court in 2012 in relation to an appeal from the Commission Telefónica decision in 2007.786

(i)  Margin Squeeze is a Stand-Alone Abuse 4.651  The General Court in Deutsche Telekom held that the abusive nature of a margin squeeze is connected with the spread between the upstream prices and the downstream prices. In other words, there is no need for the Commission to (p. 483) demonstrate that either the wholesale or the retail prices are abusive in themselves.787 This finding was upheld by the Court of Justice on appeal.788 In this sense, margin squeeze is a stand-alone abuse under Article 102.

(ii)  The Need to Demonstrate an Anti-Competitive Effect 4.652  Both the General Court and the Court of Justice in Deutsche Telekom rejected the Commission’s argument that the very existence of a margin squeeze constitutes an abuse and that it is not necessary for an anti-competitive effect to be demonstrated.789

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4.653  Both Courts repeated the traditional Hoffmann-La Roche and AKZO requirement that conduct is abusive when it ‘has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition’.790 4.654  However, as regards the effect that the Commission had to show, the General Court found that Deutsche Telekom’s position as a former monopolist meant that the effects to be shown related to possible barriers to entry caused by the pricing, and that a margin squeeze relating to wholesale access which is indispensable for retail services would ‘in principle hinder the growth of competition in the downstream markets’.791 This was upheld by the Court of Justice. Thus, a showing of actual effect was not needed. 4.655  In TeliaSonera, the Court of Justice confirmed that: in order to establish whether such a practice is abusive, that practice must have an anti-competitive effect on the market, but the effect does not necessarily have to be concrete, and it is sufficient to demonstrate that there is an anti-competitive effect which may potentially exclude competitors who are at least as efficient as the dominant undertaking.792 4.656  However, this does not mean that the effect can be merely theoretical. In Deutsche Telekom, the Court of Justice held that: where a dominant undertaking actually implements a pricing practice resulting in a margin squeeze of its equally efficient competitors, with the purpose of driving them from the relevant market, the fact that the desired result is not ultimately achieved does not alter its categorisation as abuse within the meaning of Article [102]. However, in the absence of any effect on the competitive situation of competitors, a pricing practice such as that at issue cannot be classified as exclusionary if it does not make their market penetration any more difficult.793 The latter sentence was approved by the Court of Justice in TeliaSonera.794

(iii)  Factors Relevant to Assessing Potential Anti-Competitive Effect 4.657  In TeliaSonera, the Court of Justice provided guidance on the factors that should be assessed as regards whether a margin squeeze would be likely to have an anti-competitive effect. 4.658  First, the functional relationship between the wholesale product and the retail product should be assessed. Accordingly, whether the wholesale product is indispensable may be relevant. In (p. 484) this respect, an at least potentially anti-competitive effect is probable if the wholesale product is indispensable to competitors’ retail products, and cannot be excluded even where there are alternatives available for the wholesale product.795 Thus, in order for a margin squeeze abuse to occur, it is not necessary to establish that the wholesale product is indispensable (indeed, in that case TeliaSonera was not under a regulatory duty to supply wholesale access, unlike the situation in Deutsche Telekom). This goes further than the approach taken by the Commission in its Guidance (see Section I.4).796 4.659  Secondly, the level of the margin squeeze is important. If the margin is negative (ie if the wholesale price is higher than the retail price charged to end-users; sometimes referred to as a ‘margin crush’) an exclusionary effect is probable, since an equally or more efficient company may be compelled to sell at a loss. Again, the absence of a negative margin does not mean that there is no anti-competitive effect; it is just that more will be needed to demonstrate it.797

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(iv)  Anti-Competitive Effect is Assessed by Reference to the ‘As-Efficient Competitor’ Test 4.660  In Deutsche Telekom, both the General Court and the Court of Justice considered that the appropriate test for assessing whether a margin squeeze would have an anticompetitive effect is the ‘as-efficient competitor’ test or AECT. 4.661  Upholding the findings of the General Court, the Court of Justice stated that Article 102: prohibits a dominant undertaking from, inter alia, adopting pricing practices which have an exclusionary effect on its equally efficient actual or potential competitors, that is to say practices which are capable of making market entry very difficult or impossible for such competitors…thereby strengthening its dominant position by using methods other than those which come within the scope of competition on the merits.798

(v)  Basis for Calculating Potential Effects is the Cost Data of the Dominant Undertaking 4.662  In Deutsche Telekom, the General Court stated that ‘the abusive nature of a dominant undertaking’s pricing practices is determined in principle on the basis of its own situation, and therefore on the basis of its own charges and costs, rather than on the basis of the situation of actual or potential competitors’. The Court found that ‘any other approach could be contrary to the general principle of legal certainty’, as accurate information on the cost structure of competitors is generally not known to the dominant undertaking, which would not be in a position to assess ex ante the lawfulness of its own activities.799 This approach was upheld by the Court of Justice.800 4.663  The appropriateness of assessing the alleged abuse by reference to the ‘as-efficient competitor’ test and using the cost data of the dominant undertaking was confirmed in TeliaSonera, where the Court of Justice held that if the dominant undertaking:(p. 485) would have been unable to offer its retail services otherwise than at a loss, that would mean that competitors who might be excluded by the application of the pricing practice in question could not be considered to be less efficient than the dominant undertaking and, consequently, that the risk of their exclusion was due to distorted competition. Such competition would not be based solely on the respective merits of the undertakings concerned.801

(vi)  A Margin Squeeze is Capable of Objective Justification 4.664  In TeliaSonera, the Court of Justice made it clear that an ostensible margin squeeze may be capable of economic justification by the dominant undertaking. Even a dominant company remains at liberty to demonstrate that its pricing practice, albeit producing an exclusionary effect, is economically justified. It is always necessary to look at the overall impact on the market and consumers and the assessment should take into account all the circumstances of the case.802

(vii)  Level of Dominance Goes to Effect, Not to the Existence of the Abuse 4.665  In TeliaSonera, the Court of Justice also appears to have laid to rest any thinking that the level of market power (so called ‘super-dominance’) can affect whether an abuse has been committed. It clarified that the degree of a company’s market power is relevant as regards the extent of the effect of the margin squeeze, rather than whether the abuse as such exists.803

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4.666  Further, TeliaSonera established that when a vertically integrated firm attempts to leverage its dominant position in the upstream market into the downstream market, there is a sufficient link between dominance and abuse for the purpose of Article 102. Consequently, in margin squeeze cases there is no requirement of dominance in the downstream market.

(3)  Economic Assessment (a)  General 4.667  The elements of the abuse set down in the case law of the EU Courts are consistent with economic theory and with the Commission’s drive towards an effects-based approach to Article 102. 4.668  The adoption of the as-efficient competitor test is economically sound, as it avoids sheltering inefficient downstream operators which could result in consumers paying higher prices, is consistent with the paradigm of protecting competition on the merits, and preserves the incentives of the dominant undertaking to pass on the efficiency gains from vertical integration. 4.669  The as-efficient competitor test also offers greater legal certainty and ability to assess ex ante compliance than the alternative tests relying on the costs of either a reasonably efficient competitor or an actual competitor. For example, it may be extremely difficult, if not arbitrary, to determine the cost level of a reasonably efficient entrant. Reference to actual competitors’ cost levels would not be adequate, as it could protect inefficient firms. It would also be unclear how to determine which rival should be used as the benchmark. In any case, the dominant undertaking may not be aware of rivals’ costs. 4.670  In addition, the costs of the dominant firm’s downstream division represent the most reliable benchmark for the application of a cost-based test establishing a presumption of legality at a first stage of analysis. Nonetheless, competition authorities and courts should take into (p. 486) account factors such as product differentiation and differences in cost structures in the subsequent phase of the comprehensive assessment of the competitive impact of the practice. In relation to the former, rivals’ margins may be higher than those of the dominant firm; in the latter, their costs may be lower. In both situations, a price squeeze policy on the part of the dominant firm may not produce significant exclusionary effects.

(b)  The Cost Benchmark 4.671  The Commission states in the Guidance that the benchmark on which the Commission will generally rely to determine the costs of an as-efficient competitor are the LRAIC of the downstream division of the integrated dominant undertaking.804 In order to assess whether the prices that the dominant firm applies over time are such that they can foreclose as-efficient competitors, the costs considered must include the total costs which are incremental to the provision of the product/service. These are also the costs which form the basis of a firm’s decision to invest. 4.672  The difference between the total costs of the firm taking all its products in account, and the total costs of the firm excluding the output of the individual product in question, must be calculated. Variable, total, and common costs are included as long as they are incremental to the downstream product. The Commission noted in its 2007 decision in Telefónica that the mere fact that a cost is common to different services does not necessarily imply that the LRAIC is zero. Indeed, the LRAIC also includes any increase in the common costs that are due to the provision of the relevant product/service in the downstream market.

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4.673  The actual calculation of an average wholesale and retail price must be carried out on a case-by-case basis. The question is whether the spread between the upstream and the downstream prices of a dominant and vertically integrated undertaking covers at least the downstream LRAIC of that undertaking.

(c)  Profitability Analysis 4.674  A margin squeeze test entails assessing whether the vertically integrated dominant firm’s own downstream operations could operate profitably on the basis of the upstream price charged to its competitors by its upstream operating arm. 4.675  There are two methods for assessing this: the ‘period by period’ approach and the discounted cash flow (DCF) approach. 4.676  The former, which has been applied by the Commission in decisions involving price abuses (which have subsequently been upheld by the Courts), compares for every year (or for shorter periods) the observed revenues and costs extracted from the dominant firm’s accounts in which investment expenditure has been amortized over appropriate periods. 4.677  The DCF approach assesses the overall profitability over an adequate period (in general several years) in order to take account not only of current revenues but also of future revenues flowing from current investments. The firm’s future growth is taken into account in the profitability analysis by aggregating the expected future cash flows over time in order to arrive at (p. 487) a single measure, namely the net present value (NPV). What constitutes an ‘adequate period’ and the cost of capital are important parameters in this analysis.805 4.678  While the DCF method risks taking into account faulty forecasts, which may lead to a false positive in a growing market, the period-by-period method might lead to accounting distortions. Learning by doing, decreasing input costs due to new technology, and other factors may cause the cost of a unit to fall over time, hence historic costs may not be reliable. In addition, initial investments calculated to be recouped at a later point may very well occur.

(d)  Assessment of the Spread 4.679  After determining which product should be taken into account, the spread is found by comparing the charges imposed by the dominant firm at wholesale level and retail level. Three scenarios are possible: the margin can be positive, negative, or zero. 4.680  If the margin is negative, this means that the charge for wholesale access is actually higher than the price charged by the vertically integrated firm at downstream level. A margin squeeze is then present, without further cost analysis needed. 4.681  However, even where the margin is positive or zero, there may still be (as recognized by the Court in TeliaSonera) a margin squeeze. The retail charges must be sufficient to cover the product-specific costs of supplying the downstream product in question (eg customer care, administrative expenses, transport). If the margin is zero, margin squeeze will most likely occur. If it is positive, an analysis of the product-specific costs is required.

(e)  Specific Considerations in Start-Up Phases 4.682  Start-up phases in markets raise significant complexities in margin squeeze cases. The mere fact of the dominant firm making losses or its failure to pass an as-efficient competitor test should not be sufficient in itself for a finding of abuse. In such cases, the Commission should explain that: (a) relying on historical costs only will generally be inappropriate; (b) it may make sense to exclude a short start-up phase from the analysis entirely; (c) loss minimization is an acceptable strategy for a dominant firm in a start-up phase; and (d) failure by the dominant firm to take remedial action once it became apparent

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that it would not meet the targets would constitute abusive conduct (assuming the other conditions are met).

(4)  Interplay Between Margin Squeeze and Refusal to Deal: Indispensability 4.683  Margin squeeze is often characterized as a form of refusal to supply, including in the Commission’s Guidance. By so doing, the Guidance extends the application of the general framework of analysis of refusal to deal cases to margin squeeze abuses. Thus the following conditions must be met: •  the refusal relates to a product or service that is objectively necessary to be able to compete effectively on a downstream market; •  the refusal is likely to lead to the elimination of effective competition on the downstream market; and •  the refusal is likely to lead to consumer harm. (p. 488) 4.684  It is therefore questionable whether a margin squeeze can be abusive if the conditions set down in the case law regarding refusals to supply are not met; in other words, can there be an abusive margin squeeze in a situation where there would not be an obligation to supply? 4.685  This issue arose in 2007 in the Commission’s Telefónica decision, which was issued before the Commission’s Guidance.806 Telefónica was the sole operator of a nationwide fixed telephone network in the Spanish market. Before liberalization, it enjoyed a legal monopoly and, after liberalization it still enjoyed a dominant position. Competitors who wanted to compete with Telefónica at retail level could either build another local access network (which required huge investments and was not economically viable) or gain access to wholesale broadband supplied exclusively by Telefónica. De facto, all competitors relied on one of the wholesale products provided by Telefónica. 4.686  At retail level, Telefónica had a duty to supply its competitors at fair conditions and had to ensure that the retail prices were replicable on the basis of their wholesale product. Existing commercial relationships could not be terminated without the prior consent of the authorities. 4.687  In its decision, the Commission found (contrary to the arguments of Telefónica) that the requirements for imposing an obligation to supply, in particular the indispensability condition, did not need to be met in the circumstances of the case. In particular, while the conditions under the refusal to supply case law weighed the negative incentives on innovation for the dominant undertaking against the potential restriction on innovation, the circumstances of this case ‘fundamentally differed’ from those conditions. First, Telefónica had a duty to supply the upstream inputs in question. This duty had been imposed by the national telecommunications regulator after a market and dominance analysis based on competition law principles, including a careful balancing of the respective incentives to invest and innovate of the dominant firm and its competitors. This assessment was in all material aspects the same as the balancing exercise that the Commission would carry out in the application of Article 102. Secondly, it was not necessary to protect the ex ante incentives of the incumbent, as its infrastructure was to a large extent the fruit of investments undertaken well before the advent of broadband services in Spain and in a context where the dominant firm was benefiting from special or exclusive rights that shielded it from competition.

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4.688  The Guidance appears to have been influenced by the Telefónica decision, providing specifically that in certain circumstances, a refusal to supply or margin squeeze can be found without explicitly having to test the three standard conditions. These circumstances are where the input owner’s and/or other operators’ incentives to invest and innovate upstream, whether ex ante or ex post, are manifestly not affected.807 This is particularly likely to be the case where: •  regulation compatible with EU law already imposes an obligation to supply on the dominant undertaking and it is clear, from the considerations underlying such regulation, that the necessary balancing of incentives has already been made by the public authority when imposing such an obligation to supply; or (p. 489) •  the upstream market position of the dominant undertaking has been developed under the protection of special or exclusive rights or has been financed by State resources. 4.689  The Commission’s decision in Telefónica and the specific circumstances set out in the Guidance have been characterized as ‘exceptions’ and criticized by commentators.808 In particular, it has been argued that the verification of the strict obligations imposed under the refusal to supply case law cannot be delegated to national regulatory authorities, given the serious consequences attached to findings of abuse of dominance under Article 102; that from a dynamic point of view, a duty to provide a certain margin to competitors may significantly diminish the incentive of upstream competitors to invest; and that enforcement of what effectively amounts to pricing regulation is for national regulators, not antitrust courts. 4.690  However, it is arguable that the criticisms of these ‘exceptions’ is unwarranted, in particular as they do not allow the Commission to ‘deviate from its general enforcement standard of showing likely anti-competitive foreclosure’. The Commission still needs to prove an elimination of effective competition and consumer harm and these simply provide a (rebuttable) presumption that the indispensability condition is met. 4.691  In any event, the General Court in its 2012 judgment in the appeal against the Telefónica decision, relying on the judgment of the Court of Justice in TeliaSonera, confirmed that a margin squeeze abuse ‘may, in itself, constitute an independent form of abuse distinct from that of refusal to supply’ and that: it cannot be inferred…that the conditions to be met in order to establish that a refusal to supply is abusive must necessarily also apply when assessing the abusive nature of conduct which consists in supplying services or selling goods on conditions which are disadvantageous or on which there might be no purchaser.809 4.692  It therefore appears that, although a margin squeeze can amount to a constructive refusal to supply, it can also arise in circumstances where the input over which the squeeze is applied is not indispensable and for which an obligation to supply would not be imposed.

(5)  Interplay Between Margin Squeeze and Regulatory Obligations 4.693  The landmark margin squeeze cases have taken place in regulated industries. In this circumstance, the question arises whether the concurrent application of a specific regulatory scheme leaves room for antitrust liability. In particular, those dominant firms involved in the investigations to date have argued that national price regulation should have shielded them from an intervention by the Commission under Article 102. However, both the General Court and the Court of Justice have confirmed that where sector-specific legislation leaves scope for competition in the regulated sector (eg, where the upper limit of the price is set but the dominant firm could set or request to set a lower price), an abusive

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margin squeeze may occur. What matters is that there is scope for autonomous conduct on the part of the dominant undertaking.

Footnotes: 775

  In a hypothetical example, a margin squeeze would occur if the unit cost of producing Internet transport service is €1, the cost of producing each unit of the retail Internet service is €3, the wholesale price of transport is €4, and the retail price of the Internet service is €6. Under these assumptions, a non-integrated downstream firm’s margin would be retail price – wholesale price – downstream unit cost, or 6 – 4 – 3 = –1. An integrated firm’s margin would be retail price – upstream unit cost – downstream unit cost, or 6 – 1 – 3 = 2. 776

  For a good overview of the case law regarding margin squeezes in Europe, see C. Veljanovski, ‘Margin Squeeze and Competition Law: An Overview of EU and National Case Law’ (7 June 2012) e-Competition Bulletin Margin Squeeze, Art No 46442. 777

  See para 4.651.

778

  Case T-5/97 Industrie des Poudres Sphériques v Commission [2000] ECR II-3755 (GC); Napier Brown-British Sugar (n 547); and the UK Competition Appeals Tribunal decision in Genzyme (n 548). 779

  Commission Decision 76/185/ECSC National Coal Board, National Smokeless Fuels and the National Carbonizing, OJ 1976 L35/6; Case 109/75 National Carbonizing v Commission [1975] ECR 1193. 780

  Napier Brown-British Sugar (n 547).

781

  Industrie des Poudres Sphériques (n 778).

782

  In that case, IPS claimed that PEM charged excessive prices at wholesale level, that the retail prices were predatory, and that the pricing amounted to an abusive margin squeeze. However, the GC disagreed. The wording of the judgment led to some confusion regarding whether margin squeeze is dependent on one of the prices in question being abusive in itself, ie excessive or predatory. However, this has now been resolved by Deutsche Telekom (see further para 4.652). 783

  Cases COMP/C-1/37.451, 37.578 and 37.579 Deutsche Telekom, OJ 2003 L263/9.

784

  Cases COMP/C-1/37.451, 37.578 and 37.579 Deutsche Telekom (n 783), recitals 102, 107, and 140. 785

  TeliaSonera (n 2).

786

  Case T-336/07 Telefonica v Commission (2012), not yet reported, para 180.

787

  Case T-271/03 Deutsche Telekom (n 9).

788

  Case C-280/08 P Deutsche Telekom (n 308).

789

  Case T-271/03 Deutsche Telekom (n 9), paras 233–234; Case C-280/08 P Deutsche Telekom (n 308), para 250. 790

  Case T-271/03 Deutsche Telekom (n 9), para 233.

791

  Case T-271/03 Deutsche Telekom (n 9), paras 235–237.

792

  TeliaSonera (n 2), para 64.

793

  Case C-280/08 P Deutsche Telekom (n 308), para 254.

794

  TeliaSonera (n 2), para 66.

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795

  TeliaSonera (n 2), paras 69–72.

796

  The Court’s approach may raise questions as to the extent to which dominant companies should rely on the Commission’s Guidance, which would further increase uncertainty in this complex area of competition law. The approach also contrasts with US law, where—following the Trinko approach—margin squeeze has been narrowed so that it only arises when there is both a duty to deal at the wholesale level and predatory pricing at the retail level. 797

  TeliaSonera (n 2), paras 73–74.

798

  Case C-280/08 Deutsche Telekom (n 308), para 177.

799

  Case T-271/03 Deutsche Telekom (n 9), paras 188–192.

800

  Case C-280/08 Deutsche Telekom (n 308), paras 195–204.

801

  TeliaSonera (n 2) para 43.

802

  TeliaSonera (n 2), paras 75–77.

803

  TeliaSonera (n 2), para 81.

804

  In some cases, the LRAIC of a non-integrated competitor downstream might be used as the benchmark, eg when it is not possible clearly to allocate the dominant undertaking’s costs to downstream and upstream operations. 805

  In Case COMP/38.784 Wanadoo Espana v Telefónica OJ 2008 C83/6, the Commission calculated the NPV over a little more than five years (by reference to the economic lifetime of the assets employed in the business in question), using a weighted average cost of capital of 15.72 per cent, which was used by the regulator and proposed by the dominant firm itself, but subsequently contested by the latter. 806

  Wanadoo España v Telefónica (n 805).

807

  Article 102 Enforcement Priorities Guidance, para 82.

808

  See eg D. Geradin, ‘Refusal to Supply and Margin Squeeze: A Discussion of Why the ‘Telefonica Exceptions’ are Wrong’, TILEC Discussion Paper 2011-051 (2011). 809

  Telefonica (n 786), para 180.

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Part I General Principles, 4 Article 102, J Specific Abusive Practices in Relation to IP Rights Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Exclusive licensing — Refusal to licence — Patents and know how — Pharmaceutical products — Fair, reasonable, and non-discriminatory terms (FRAND) — Article 102 TFEU

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(p. 490) J. Specific Abusive Practices in Relation to IP Rights (1)  Introduction (a)  Complementary Aims of IP Rights and Antitrust 4.694  Antitrust seeks to achieve the object of maximizing allocative, productive, and dynamic efficiency by preventing dominant firm output reduction and unlawful restrictions on competition. IP rights endeavour to achieve the same result by providing legal exclusivity as an incentive for innovation and for the manufacture of new and cheaper products; in the short term, consumers are supplied with an additional choice, albeit at a higher price; and in the long term, when the patent expires, the industry as a whole can produce more and at lower cost. 4.695  Economists and practitioners alike are increasingly concerned that the patent system can be exploited to the primary benefit of those companies holding large portfolios of patents.810 The expansion of the domains of patentability, and the gradual loosening of standards for granting patents has de facto widely broadened the role of patents well beyond the purported aim of providing sufficient incentives to encourage innovative efforts. As a result, patents may be used for strategic purposes (eg to deter entry, to block rival innovations, or as ‘bargaining chips’ in the exchanges of technology among firms).

(b)  Appropriateness of Antitrust Intervention in the IP Rights Arena 4.696  In light of the potential harm that could arise from strategic misuse of IP right, the question arises when antitrust should intervene. In particular, those who caution against antitrust enforcement in the IP rights arena argue that, in fast-paced, high technology markets, antitrust enforcement (in particular through Art 102) would hamper incentives to innovate. 4.697  This concern appears to be based on three premises: (a) IP laws grant holders an economic monopoly; (b) the acquisition of monopoly power is the only way to appropriate revenues from inventions; and (c) antitrust liability would necessarily have overall adverse effects on incentives to innovate.811 4.698  Whilst generally sound, these assumptions do not apply in all circumstances. First, IP rights in general, and patents in particular, do not necessarily and automatically confer monopoly power on their owners; they simply confer the right to exclude others from producing what is covered by the IP of interest. Substitutes may exist in the market and the legal exclusivity granted by a patent does not necessarily therefore coincide with an economic monopoly in the marketplace. 4.699  Secondly, as regards the appropriation of revenues which provide an incentive to innovate, IP rights are not always the most significant factor in ensuring returns in most industries. Factors such as lead time, building a reputation, first-mover advantages, network and (p. 491) learning effects, and costly replicability may present greater sources of excludability and supra-competitive profit.812 4.700  Finally, patents may have little effect on incentives to innovate in industries in which the parties have to maintain a high level of R&D to remain competitive or where the ability of competitors to invent around patents reduces the value of patent protection. In particular, as antitrust enforcement applies only in limited circumstances (eg where the conditions of Art 102 are met), it would only rarely impose a constraint on the courses of action available to IP owners. 4.701  Further arguments in favour of antitrust enforcement in the IP arena are that (a) where patents are awarded to dubious applications or are too broad, they can harm the equilibrium between IP and competition by discouraging the monitoring of innovation and by artificially increasing final prices due to unwarranted royalties; and (b) since technological change is a sequential process in which each innovation is built on knowledge From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

patented by forerunners, strategic patenting and hold-up strategies can have a negative impact on the dynamic competition and the ability and incentives of both patent holders and rivals to innovate.

(c)  Potential Competition Concerns Arising out of IP Rights 4.702  Two industries in which IP rights are key and where the potential for anticompetitive harm through the use of IP rights has arisen are pharmaceuticals and information and communication technology (‘ICT’). The types of potential Article 102 abuses that may arise in these industries are therefore instructive. 4.703  In the pharmaceutical area, the Commission has found the following to be abusive: the supply of misleading information to extend patent validity and the withdrawal of marketing authorizations to prevent generic entry. 4.704  In 2009, the Commission published the results of a sectoral inquiry into the pharmaceutical industry.813 In this, the Commission identified the possibility for originator companies to engage in strategies designed to reduce price competition by artificially delaying the entry of generic products into the market. The Commission categorized these, in particular, as: (a) patent filing strategies to extend the breath and duration of the patent protection; and (b) patent settlements with reverse payments—also known as pay-for-delay cases. 4.705  In the ICT sector, where standard setting is vital and where certain patents can become essential to the development of technology (standard essential patents, or SEPs), key issues that can arise are: (a) patent hold-ups through patent ambush; (b) patent holdups through fair, reasonable, and non-discriminatory (FRAND) violations; and (c) anticompetitive litigation in relation to standard essential patents. 4.706  Each of these categories is examined in Sections J.2 to J.7. Section J.8 then examines some general issues applicable to all abusive practices in the IP rights arena.

(p. 492) (2)  Supply of Misleading Information to Extend Patent Validity 4.707  Conduct involving the provision of misleading information to national patent offices in order to extend the lifetime of a patent was found by the Commission to be abusive in its 2005 AstraZeneca decision.814 4.708  In that case, AstraZeneca had applied to various national patent offices for extensions of the patent protection for Losec (an anti-ulcer drug) through a Supplementary Protection Certificate (SPC), which gives up to five extra years of patent protection. This additional protection is designed to compensate for delays that can occur between the filing of a patent for a drug and the grant of the marketing authorization that allows the company to place the drug on the market. 4.709  Under the applicable EU Regulation, the supplementary patent protection begins on the date of ‘the first authorization to place the product on the market’. During the 1990s, when AstraZeneca engaged in the conduct in question, the meaning of this phrase was unclear. A common interpretation of the phrase was that it referred to the date when the national authority granted the authorization. However, AstraZeneca adopted an alternative interpretation (which was also possible) that the relevant date was the first date when all administrative steps had been completed and the marketing authorization actually became effective, which was the date when the national government approved the price of the product. Under this interpretation, the SPC would begin later, which meant a longer period of exclusivity.

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4.710  The abuse arose not because of the interpretation taken by AstraZeneca, but because when it applied for the SPCs, it did not explain its interpretation to the patent office, but simply put the date when the marketing authorization became effective. According to the Commission, this misled the national patent offices because they were likely simply to assume that this date was the date of the grant of the marketing authorization and, if they had known that AstraZeneca was referring to the later date, they might not have granted the SPC, or at least not starting on the later date. Hence, the Commission concluded that AstraZeneca engaged in a ‘pattern of misleading representations as part of its SPC Strategy for omeprazole during two stages with a view to preventing, or at least delaying generic entry’. 4.711  As regards the actual effect of the conduct, the Commission found that AstraZeneca obtained SPCs for omeprazole in three Member States where it was not eligible for SPC protection, because of its allegedly misleading submissions to patent offices. Although the SPCs in two of these countries were eventually invalidated, the proceedings before national courts extended beyond the duration of the omeprazole patent. In four other Member States, AstraZeneca’s misrepresentations gave it several extra months of SPC protection. According to the Commission, during that time generic entry was delayed or at the very least made more difficult, as generic producers were forced to spend time, effort, and money in challenging SPCs before national courts and patent offices in several Member States. (p. 493) 4.712  Both the General Court and the Court of Justice upheld the Commission’s finding of abuse.815 The Commission’s decision and the judgments of the EU Courts provide guidance on a number of important elements regarding the potential for conduct in the acquisition and use of IP rights to amount to an abuse.

(a)  Nature of the Abuse 4.713  Both the General Court and the Court of Justice linked the dominant firm’s conduct in this case to abusive conduct outside the bounds of competition on the merits. 4.714  According to the Court of Justice, AstraZeneca’s deliberate attempt to mislead the patent offices through ‘consistent and linear’ conduct, consisting of ‘highly misleading representations’ and a ‘manifest lack of transparency’, fell outside the scope of competition on the merits.816 4.715  From an economic viewpoint, this approach appears to be sound. In designing the SPC process, the possibility of short-run anti-competitive foreclosure is accounted for (but outweighed by the consumer welfare benefits of the system). Since the harm to short-run consumer welfare inherent to the procedures that AstraZeneca enforced was thus accounted for within the legal framework outside antitrust law, antitrust liability should require further elements to show why the conduct should be condemned. In the Court’s view, submitting misleading information to the authorities transformed the foreclosure that usually comes with the grant of SPCs from a ‘necessary harm’ into an ‘unmeritorious harm’, which lacks any countervailing efficiencies or pro-competitive effects, such as the creation of an invention. This provided the further element necessary to impose antitrust liability.

(b)  Intent Not Determinative 4.716  The General Court stressed that it was not necessary to establish a deliberate intent to deceive, though such an intent would be taken into account. In this respect, the Court considered that there was ample evidence that AstraZeneca’s statements were ‘objectively misleading’ and that AstraZeneca could not ‘reasonably be unaware’ of this.817

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4.717  The Court of Justice clarified that intentionally misleading a regulatory authority was abusive but that innocent misrepresentations would not be unless the undertaking failed to rectify the mistake once it was appreciated.818 4.718  The Court of Justice also made it clear that dominant companies would not be considered to have engaged in abusive conduct simply because a patent application was struck down when challenged: ‘[it] thus cannot be inferred…that any patent application made by such an undertaking which is rejected on the ground that it does not satisfy the patentability criteria automatically gives rise to liability under Article [102].’819 4.719  Thus it would appear that the test is not purely objective, but rather one that takes subjective intent into account without requiring proof of intent to mislead.

(p. 494) (c)  Evidence of Actual Effects 4.720  Finally, as regards whether an effect is required, the General Court held that it did not matter that the conduct did not actually produce the desired effects, that is, that AstraZeneca was unsuccessful in obtaining SPCs granting protection beyond the original patent. According to the Court, it was sufficient that AstraZeneca’s conduct was ‘very likely’ to result in the issuance of the SPCs and that, if the SPCs had been issued, they would have produced significant anti-competitive effects.820 4.721  From an economic perspective, it is appropriate that the Commission can enforce Article 102 even if (a) the full effects of conduct resulting in anti-competitive foreclosure have not yet materialized and (b) even if the full effects do not ultimately materialize as intended by the dominant firm provided there was a likely prospect that they would do so. In this case, what appears most relevant is whether generic manufacturers and importers were, in fact, prevented from competing due to a reasonable fear that AstraZeneca might be able to enforce a certificate.

(3)  Withdrawal of Marketing Authorization to Restrict Entry of Generics 4.722  In the AstraZeneca case, the Commission also found that AstraZeneca had committed an abuse by withdrawing the marketing authorizations for the capsule form of Losec in various Member States (it replaced the original capsule formulation of Losec with a new, improved tablet formulation that could be dissolved in water for ease of ingestion). This limited the opportunities to compete for generic competitors who did not have access to the tablet product, as they could no longer rely on AstraZeneca’s capsule marketing authorizations as evidence of the safety of their capsules. It was therefore more difficult for a generic competitor to enter the market once the patent protection on the original version had expired. 4.723  The Commission, relying on Compagnie Maritime Belge, asserted that the use of public procedures and regulations, including administrative and judicial process, may constitute an abuse of dominance.821 This is particularly so when the dominant company acts ‘with the clear purpose of excluding competitors’ and ‘the authorities or bodies…have no or little discretion’ in applying such public procedures and regulations.822 In that case, ‘the national authorities concerned considered, as expected by AstraZeneca, that they did not have discretion to maintain the marketing authorisation when its withdrawal was requested’ and, consequently, the anti- competitive effect was not the result of ‘an independent review of the merits of the petition as regards its anticompetitive effect, but rather the automatic (or almost automatic) effect of a private request’. 4.724  The Commission’s finding was upheld on appeal.

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4.725  According to the General Court, the withdrawal of the marketing authorization did not involve the legitimate protection of an investment because AstraZeneca’s exclusive right to make use of the data on its tests and clinical trials had expired. Again, therefore, AstraZeneca’s conduct did not amount to competition on the merits. 4.726  As regards the need to show effect, the Court of Justice reiterated the settled legal position that, although the practice of a dominant undertaking cannot be categorized as abusive in the (p. 495) absence of any anti-competitive effect, such an effect does not have to be actual or concrete. It is sufficient to demonstrate that there is a ‘potential anticompetitive effect’. However, the authority cannot simply presume a potential effect, but must adduce tangible evidence of a likelihood of such an effect.823 4.727  The Court also held that AstraZeneca had failed to establish an objective justification for the withdrawal because it did not show that the continued maintenance of the marketing authorization would result in a significant burden.824 4.728  Finally, the Court emphasized that the fact that AstraZeneca was entitled under the relevant pharmaceutical legislation to withdraw the marketing authorization was irrelevant to the assessment of whether the withdrawal constituted an abuse.825

(4)  Patent Filing Strategies (a)  Early Cases on Strategic Use of Patents 4.729  The possibility to engage in abusive conduct through the strategic use of patent or regulatory procedures to acquire or extend IP rights is not new, although cases are rare. In the early case of Consten & Grundig, registration of a trademark with the intention to impede trade between the Member States was held to contribute to an antitrust violation.826 In Hilti,827 the General Court upheld a finding of abuse related to the fixing of licensing terms during the period of extended patent validity: Hilti was not prepared to grant licences on a voluntary basis and during the proceedings for the grant of licences of right it demanded a fee approximately six times higher than the figure ultimately appointed by the Comptroller of Patents. A reasonable trader, as Hilti claims to have been, should at least have realized that by demanding such a large fee it was needlessly protracting the proceedings for the grant of licences of right, and such behaviour undeniably constitutes an abuse. 4.730  In Osram/Airam, the Commission asserted that a dominant company registering a trademark which it knows to be already used by a competitor in another Member State may infringe Article 102, when such conduct may restrict the competitor’s ability to compete in the market dominated by the firm concerned. Following the Commission’s intervention, the parties reached an agreement whereby Airam was allowed to use its mark in any EU Member State, as long as it used it together with its corporate description, so that the possibility of confusion was eliminated.828 Osram/Airam did not present a strong case for antitrust intervention. Osram’s conduct may have been objectively justified as a means to protect its trademark from dilution and to maintain its goodwill; also, it was unlikely that it would lead to significant market foreclosure.829 Following the adoption of the Article 102 Enforcement Priorities Guidance, it seems unlikely that the Commission would now challenge the same conduct.

(p. 496) (b)  Defensive Patent Strategies: Blocking Patents 4.731  According to the Pharmaceutical Sector Inquiry Report, dominant companies sometimes engage in defensive patent strategies that ‘focus on excluding competitors without pursuing innovative efforts’.830 In particular, defensive patent strategies may be used to create enforceable rights—namely, in the form of blocking patents—with the aim of

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preventing competitors from further engaging in their own R&D efforts or creating prior art as soon as the patent application is published. These tend to take two forms.831 4.732  First, and most importantly, pharmaceutical companies often apply for secondary patents (eg for processes or reformulations) in addition to the base patent in order to extend the exclusivity beyond the expiry of the protection period of the base patent. If this happens towards the end of the term of protection of the base patent—a strategy that is generally termed ‘evergreening of patents’—this will cause the most delay to the market entry of generics. 4.733  Secondly, pharmaceutical companies may file patents for forms of incremental innovation, thereby creating ‘patent clusters’ surrounding the base patent (eg regarding reformulations and new medical uses that may emerge from clinical trials). While entirely legitimate from a perspective of patent law, this creates problems for the market entry of generics to the extent that, given the merely incremental nature of the invention, such secondary patents may be more susceptible to invalidation and thereby increase the uncertainty about when generics may actually enter the market.832 4.734  In the Sector Inquiry Report, the Commission hints at a criterion for distinguishing between legal and illegal patent filing strategies: ‘While [such a strategy], during the period of exclusivity, is generally in line with the underlying objectives of patent systems, it may in certain cases only be aimed at excluding competition and not at safeguarding a viable commercial development of own innovation covered by the clusters.’833 4.735  In this context, therefore, it appears that the intent behind the conduct will be key.

(c)  Other Strategic Behaviour 4.736  The Commission’s scepticism regarding certain patent filing strategies appears to have led to the presumably unintended risk of companies strategically involving the Commission in patent disputes. Thus, on 6 July 2011, the European Commission closed an investigation into allegations by Almirall, a Spanish pharmaceutical company, that Boehringer Ingelheim, a German pharmaceutical company, had engaged in abusive conduct in violation of Article 102 by making unmeritorious filings for patents covering new treatments of a lung disease known as chronic obstructive pulmonary disease (COPD) which, if granted, could block or (p. 497) delay considerably the market entry of Almirall’s products. Following intervention by the Commission, the parties entered into a patent settlement that would allow Amirall to enter the market and the Commission closed the case, concluding that ‘a settlement agreement between the parties is the most efficient and speedy way to ensure that consumers will be able to benefit from Almirall’s products’.834 4.737  Unlike other cases involving the alleged misuse of IP and regulatory strategies, the complaint in this case appeared to involve a fairly routine IP dispute concerning the validity of a patent. Such disputes are common and there is a robust framework established for patent litigation at both European and national levels, which often involves specialist courts. Indeed, Boehringer and Almirall were engaged in litigation both before national courts and before the European Patent Office. Almirall apparently decided to supplement its patent litigation strategy by complaining to the European Commission. The Commission’s willingness to open an investigation and intervene in the dispute has therefore caused some concern.

(5)  Patent Settlements With Reverse Payments (Pay for Delay) (a)  Overview: Potential Benefits and Harms From Patent Settlements

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4.738  Challenging a patent’s validity through litigation is costly because (a) proving invalidity is in general very demanding for the challenger, especially for new patentable subject matter such as software; and (b) challenging has the dimension of a public good: other firms benefit from a successful challenge initiated by a competitor, since they get the new technology freely. It follows that the individual incentives to challenge a patent’s validity are low. This is why disputes on weak patents are more frequently solved through private settlements than through a judicial litigation procedure. Hence, private settlements are often preferred to legal proceedings. 4.739  However, it does not necessarily follow that all settlements are consistent with the public interest. The potential for settlements to harm competition appears particularly high where branded manufacturers pay money to generic producers to delay entry into the market as part of the settlement (reverse payments or pay for delay). Broadly speaking, there are three potential approaches to such settlements: •  such settlements could be accepted under a full ‘rule of reason’ approach and prohibited only if their negative effects on competition are not outweighed by any redeeming virtues. This is the US approach after the Supreme Court ruling in Federal Trade Commission v Actavis, 835 where the Court however also left the door open for a structured rule of reason approach when it said that ‘trial courts can structure antitrust litigation so as to avoid, on the one hand, the use of antitrust theories too abbreviated to permit proper analysis, and, on the other, consideration of every possible fact or theory irrespective of the minimal light it may shed on the basic question—that of the presence of significant unjustified anticompetitive consequences’; •  such settlements, while not automatically unlawful, could be considered as attracting close antitrust scrutiny for the very fact that they provide for a payment by the originator to the generic manufacturer or because they limit entry by generic manufacturers into areas (p. 498) outside the territorial scope of the patent or where the originator knows that the patent does not meet the patentability criteria. This appears to be the EU approach, particularly in light of the Commission’s Third Report on the Monitoring of Patent Settlements (period: January to December 2011), which is the latest general policy statement on this topic; •  such settlements could be considered presumptively lawful unless there is proof of sham litigation or that the patent had been obtained fraudulently or its invalidity was known in advance. This more permissive approach, which held sway in some courts of appeals in the US, has now been overruled by the Supreme Court in Actavis.

(b)  Commission Practice 4.740  Reverse-payment patent settlements continue to be a priority for the Commission. There have been three cases in recent years involving reverse-payment settlement agreements brought under Article 101 and/or Article 102: Cephalon,836 Lundbeck,837 and Servier.838 4.741  The Commission also carries out ongoing monitoring of patent settlements between originator and generic companies to identify so-called ‘reverse-payment’ patent settlements and other settlements that could delay generic entry, such as those that contain restrictions extending beyond the geographic or material scope of the patent. 4.742  In both the Pharmaceutical Sector Inquiry Report and in its various communications dealing with the monitoring exercise, the Commission has avoided outright condemnation of reverse-payment settlements, categorizing them as ‘potentially’ problematic and emphasizing that each agreement must be assessed on its own merits. This cautious

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language may be attributed to the fact that the Commission does not want to be seen as prejudging any ongoing investigations. 4.743  However, it seems clear that the Commission views such agreements as more than just ‘potentially’ problematic, a view that is reflected in its report on the second monitoring exercise, where it suggested that a reduction in the number of reverse- payment settlements was a positive development.839,840 4.744  As regards Article 102, the Commission’s general approach is that a dominant originator company should not be permitted to provide economic rewards inducing its potential generic competitors to discontinue the generic challenge and exit the market. The possibility for exclusion through patent settlements arises also when the originator buys out a generic challenger and thus terminates the latter’s attempts (product development, patent actions) viably to enter the market. (p. 499) 4.745  Prohibiting such exclusion is arguably in line with the Article 102 Enforcement Priorities Guidance, according to which the emphasis of the Commission’s enforcement in relation to exclusionary conduct is on safeguarding the competitive process and ensuring that dominant companies do not exclude rivals by means other than competition on the merits.841 The only difference would be that the exclusion is not achieved indirectly (by inducements to customers not to deal with the competitor), but directly (by inducing the competitor itself to withdraw from the competitive process).

(6)  Patent Hold-Up in the Context of Standard Setting (a)  Context: Standard Setting and Patent Hold-Up Possibilities 4.746  In industries where standards are important, businesses frequently collaborate to establish standards by working through standard-setting organizations (SSOs) to develop a standard that all firms, regardless of whether they participate in the process, can then use in making products.842 SSOs vary widely in size, formality, operation, and scope. 4.747  Problems can arise in the SSO context when standards incorporate technologies that are protected by IP rights. Before a standard is adopted, the industry may have flexibility with respect to the exact technical characteristics of the standard. As a result, during the standard development process, patents may be in competition with each other for inclusion in the standard. Patents only become ‘essential’ after a specific standard has been adopted and there is a ‘lock-in’ to the standard. At that point, switching to an alternative technology may have become too onerous. The holder of patents essential to the standard may thus increase its bargaining power and may be able to extract more favourable licensing terms after standardization. This phenomenon is described in the economics literature as ex post opportunism or patent hold-up.843 There are two types of patent hold-up. 4.748  First, the patent holder may intentionally ignore SSO rules requiring disclosure of all relevant patents before the adoption of a standard. By doing so, it may induce the SSO to adopt a standard that incorporates IP rights that are held by the patent holder that would not be otherwise adopted. 4.749  Secondly, it may commit to offer its IP right under FRAND licensing terms ex ante and then later hold-up technology adopters by requesting licensing terms (including royalty rates) that are not in line with its announced commitment to FRAND terms after the adoption of the standard (ie ex post). 4.750  The basic mechanism of the hold-up is the same in either case: the patent holder makes unexpected demands for licensing fees on the standard only after it has been established. (p. 500) The hold-up potential is based on the lock-in that is created by the costs of re-engineering or switching away from an established standard. Hence, hold-up can only be an antitrust concern where it is clear that at the time that the patent holder

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enforces its IP right, technology adopters are locked into the chosen standard and cannot switch away to alternative standards without incurring substantial costs.

(b)  Patent Ambush (i)  Definition 4.751  The term patent ambush is used when an owner of an IP right is engaged in an SSO and does not disclose that he holds essential patents for the adoption of the standard. Most SSOs contractually oblige their members to disclose all essential patents in order to ensure a transparent standard-setting process during which all the participants are mutually aware of all the protected technologies owned by them that may be incorporated into the industry standard. During the sessions of the technical committee within the SSO that decides on the industry standard, a non-disclosing participant can obtain information that enables him to modify his patent applications in a way that they cover the future standard and to insert his patents into the standard.

(ii)  Anti-Competitive Effects of Patent Ambush 4.752  A number of harmful effects may follow when a company becomes dominant by ‘ambushing’ an SSO by withholding information regarding essential patents. •  First, there may be a general chilling effect on standard-setting activities if manufacturers become more worried about exposing themselves to patent ambushes. That, in turn, could lead to inefficient fragmentation and lack of interoperability in other markets that would have benefited from formal standard setting. •  Secondly, some or all of the ambusher’s monopoly-level licensing fees may be passed on to consumers in the market where the ambush occurred. •  Thirdly, there may be serious delays in the implementation of the ambushed standard while the victims search for workarounds or ways to invalidate the ambusher’s IP. Any follow-on innovations that the victims are developing based on the standard may slow down or come to a halt during that time.

(iii)  Conditions for Abuse: The Rambus Decision 4.753  The Rambus case844 involved allegations of patent ambush in relation to DRAM chips (a type of electronic memory primarily used in computer systems, but also used in a wide range of other products that need to store data temporarily, including servers, workstations, printers, PDAs, and cameras). The case was ultimately settled when Rambus offered commitments to address the Commission’s concerns. 4.754  JEDEC, an industry-wide US-based standard-setting organization, developed a standard for DRAMs. According to the Commission’s decision, JEDEC-compliant synchronous DRAM chips accounted for more than 96 per cent of overall sales of DRAM chips between 2004 and 2008. 4.755  Rambus was a member of JEDEC from 1991 to 1996. The complaint alleged that Rambus had a twofold plan: first to get its newly developed proprietary DRAM technology accepted as a standard and, secondly, if this plan failed, to capture the JEDEC standard and claim (p. 501) licence fees from all synchronous DRAM chip manufacturers. The complaint further alleged that Rambus failed to disclose its relevant patent applications and patents to JEDEC, which deprived JEDEC of the opportunity to adopt standards that were clearly outside the scope of Rambus’s patents, and hence that Rambus illegitimately captured the relevant JEDEC standards.

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4.756  In its statement of objections, the Commission considered that Rambus may have engaged in intentionally deceptive conduct by not disclosing the existence of the patents and patent applications that it later claimed were relevant to the adopted standard. As a result, Rambus may have been abusing its dominant position by claiming royalties for the use of its patents from JEDEC-compliant DRAM manufacturers at a level that, absent its allegedly intentional deceptive conduct, it would not have been able to charge. The Commission provisionally concluded that claiming such royalties was incompatible with Article 102, in light of the specific circumstances of the case. 4.757  The Commission’s assessment put forward a number of conditions needed to show that patent ambush amounts to an abuse. 4.758  First, it must be shown that the firm has intentionally failed to disclose essential patents until after a patent-implicating standard has been adopted. In that case, the Commission found that Rambus deliberately used its participation in JEDEC to revise and tailor its pending patent applications in an effort to gain control over JEDEC-standardcompliant synchronous DRAM chips. 4.759  Secondly, it must be shown that, in the absence of the deceptive conduct, alternative technologies or substitute patents would have probably been selected in the standard. Again, the Commission provisionally considered that, save for Rambus’s alleged deceit, JEDEC members were likely to have designed a ‘patent-free’ standard around Rambus’s patents. A number of factors pointed in this direction: (a) evidence of concern regarding costs associated with any DRAM interface technology; (b) an industry disposition against including patents in standards, with payment of royalties being exceptional; and (c) significant evidence that during Rambus’s membership of JEDEC, a broad range of alternative technologies were available and considered to be technically and commercially feasible. 4.760  Thirdly, it is necessary that the industry has made significant specific investments by the time the patent holder reveals its patents. In the Rambus case, there were substantial barriers to entry into the market and, by that time, the industry was locked into the JEDEC DRAM standards. 4.761  Fourthly, it must be shown that, as a direct result of the deceptive conduct, the undertaking acquires a dominant position (if it does not already have one) and subsequently exploits it. In Rambus, that condition was met for a number of reasons: (a) the percentage of worldwide commercial DRAM production exposed to Rambus’s patent claims was more than 90 per cent; (b) Rambus had been and remained the only company asserting patents on DRAM interface technology; and (c) there were substantial barriers to entry into the market, primarily due to the fact that the industry was locked in to JEDEC standards. 4.762  This approach, however, is somewhat controversial. Under Article 102, only the abuse of a dominant position may be prohibited. This means that, on the plain meaning of Article 102, only conduct carried out by a company that is already dominant may be abusive. The (p. 502) exclusionary conduct engaged in by Rambus was carried out when Rambus was not (yet) dominant. Therefore, it may be argued, the only legal basis on which Rambus could have been found to have abused its dominant position was the prohibition of exploitative abuse if its conduct following the patent hold-up resulted in the charging of excessively high or discriminatory royalties. As a consequence, in December 2009, the Commission adopted a decision that rendered legally binding commitments offered by Rambus that in particular put a cap on its royalty rates for certain patent DRAMS. The decision confirmed that the commitments were adequate to address the concerns that Rambus may have been abusing its dominant position by claiming excessive royalties.

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(c)  FRAND Hold-Up (i)  Definition of FRAND Hold-Up: The Qualcomm Case 4.763  FRAND hold-up is a specific form of abuse (normally characterized as a form of excessive pricing), carried out in the context of patent licensing. It is exemplified by the Qualcomm case, which was opened following a joint complaint submitted between October 2005 and January 2006 by six mobile phone and chipset manufacturers.845 In this case, the complainants alleged that Qualcomm engaged in exploitative conduct contrary to Article 102 because, before the adoption of the WCDMA standard for 3G mobile telephony, Qualcomm gave a commitment to license its patents on FRAND terms and without such commitment another standard would have been adopted. Once the WCDMA standard had been adopted, Qualcomm allegedly charged rates for accessing its patents that were above the FRAND level. 4.764  The Commission investigated whether the royalties that Qualcomm had been charging since its patented technology became part of Europe’s 3G standard were unreasonably high. However, in November 2009 after a lengthy investigation, the Commission closed its proceedings against Qualcomm, because all six complainants withdrew their complaints and the case was no longer an enforcement priority. The Commission emphasized its continued commitment to pursue ‘illegal behaviour by dominant companies in key innovative sectors like telecoms and IT’, but at the same time struck a cautionary note, observing that ‘any antitrust enforcer has to be careful about overturning commercial agreements’.846

(ii)  Particular Issues Surrounding Article 102 Enforcement in FRAND Licensing (i)  FRAND is Not a Static or Pre-Defined Concept

4.765  As mentioned in para 4.747, after the adoption of an industry standard, the chosen technology may lack effective substitutes and the owner of a patented technology may thus have additional market power vis-à-vis ‘locked-in’ licensees. To reduce the risk of excessive prices being imposed, SSOs usually require patent holders to commit to license IP rights that are essential to the standard on FRAND terms. 4.766  Quite intentionally, FRAND terms do not specify a concrete royalty rate. It is very difficult to agree on specific licensing terms ex ante because of the nature of IP rights negotiations: very little is known about how the market will develop or the value of each patent portfolio in the future. 4.767  FRAND is a compromise that balances the incentives of potential licensees and licensors to achieve efficient standardization and rate of innovation. The former seek protection from (p. 503) becoming dependent on a particular licensor; the latter cannot commit ex ante to offer specific conditions before the future value of their technology is revealed. FRAND allows for the flexibility that is needed to unblock the standardization process and eventually adopt a standard. FRAND terms naturally vary across players and technologies. 4.768  The concept of FRAND is dynamic. FRAND is the ‘reasonable price’ that could be negotiated by parties if patent holders’ market power had not been increased by the adoption of the standard. What is FRAND for the purpose of one licence will depend on many factors, including the relationship between the licensor and licensee, the terms that are included in the licence relating to, for example, cross-licences, royalty rates, scope of the licence, and so on. Hence, FRAND terms naturally vary across players and technologies. 4.769  The built-in ambiguity in the definition of FRAND makes it difficult to identify the counterfactual for ‘reasonable’ licensing terms that is needed to establish a FRAND violation.

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4.770  As the Commission noted when it closed the Qualcomm investigation: ‘The Qualcomm case has raised important issues about the pricing of technology after its adoption as part of an industry standard. In practice, such assessments may be very complex, and any antitrust enforcer has to be careful about overturning commercial agreements.’847 (ii)  What Constitutes ‘Fair’ and ‘Reasonable’?

4.771  To assist in identifying the appropriate counterfactual for ‘fair’ and ‘reasonable’ licensing terms, some objective tests have been proposed. None is without drawbacks. 4.772  One test is strict proportionality: this tallies up the number of relevant patents that a company owns and divides it by the total number of patents in the standard. This suggestion is meritless. While it avoids relying on subjective concepts, it places the same value on breakthrough inventions as it does on those that are barely incremental. In other words, it values quantity not quality and would be likely to trigger patent races (and perhaps poor-quality patents). In addition, the method fails to address the most important question—what should the denominator be?—and it ignores the issue of pending patents— do they count or not? 4.773  A second test is to cap the licensing fees for a particular patent at the amount that its owner was charging before the standard was adopted. However, this method would clearly not work for IP rights that were not being licensed before the standard was approved. Additionally, it does not take into account that it is rational to seed a market by giving early adopters a lower fee than those demanded later if it becomes clear that the patented technology is a commercial success. Furthermore, licensing terms will probably differ from one licensee to another. It may not be clear which agreement is the right one to use as for example, the fees demanded from some licensees will be lower if those licensees give the patent holder a cross-license to their technologies. 4.774  The third method, which has been the best received,848 is to determine the fee on the basis of the royalty that the essential patent holder could have obtained before a standard (p. 504) was adopted (ie on an ex ante basis).849 The idea behind this is that ‘Reasonable should mean the royalties that the patent holder could obtain in open, upfront competition with other technologies, not the royalties that the patent holder can extract once other participants are effectively locked in to use technology covered by the patent.’850 This approach is based on the notion proposed by Swanson and Baumol of an auction between different technologies during the development phase of the standard. Swanson and Baumol argue that the outcome of such an auction would provide a benchmark for what is a fair and reasonable royalty, as it would fully reflect the degree of competition between IP right holders existing prior to adoption of the standard.851 However, whilst conceptually appealing and theoretically sound, there are number of problems with this approach. Practical difficulties

4.775  While the ex ante approach may be tractable where one company holds one patent defining one good (as in the Swanson and Baumol model), this does not reflect the reality of modern standards, which are usually comprised of tens of firms holding hundreds or thousands of patents that define one complex good with multiple facets or components. Auction bidders would need to evaluate the options on price plus a host of other dimensions, including technical superiority, ease of implementation, and so forth. Relatedly, the engineers active in SSOs typically make hundreds of different technology choices for components. Taking this point to its logical conclusion, an SSO would need to run hundreds of auctions fully to specify the licensing price of a standard. Finally, since many of the components rely on other components, the various auctions would be linked in complicated ways, and might need to be conducted in a particular sequence. Even if it were feasible to

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arrange, a multi-tiered auction of this sort would require tremendous ex ante investment from SSO members. Potential lack of commercially attractive alternatives

4.776  The Swanson and Baumol model assumes that competing technologies for every relevant portion of the standard will be available. The model therefore offers few insights on instances where technologies that are complements (rather than substitutes) are incorporated into a standard, save for the possibility of reducing royalties for portions of the standard for which substitutes exist, but which will remain complementary to other IP rights incorporated into the standard. Uncertainty

4.777  In practice, it is not entirely clear what ex ante really means. Standards generally evolve over time. Would an auction need to be held each time a technology component were modified? Every time a new technological option surfaced? Just before the final vote (p. 505) for a new version of the standard? These timing decisions would probably have a significant impact on the outcome of the auction. 4.778  Another uncertainty that may lower royalty rates in any counterfactual negotiation is that such a negotiation usually presupposes that the parties know that a patent is valid. However, many litigated patents are found to be invalid. As such, any negotiation that occurs before litigation would be expected to reflect some chance that the patent in question would be found to be invalid, leading to a lower counterfactual royalty. Under-compensation

4.779  Even where a simple auction model applies, the payment to the winner of the ex ante auction may not be sufficient properly to compensate the investment costs incurred in developing its superior technology. The innovator will presumably receive a payment equal to the incremental value of its technology relative to the next best option, for as long as the standard relies on its technology and its patent does not expire. This amount may or may not exceed its R&D costs (plus an adequate rate of return which takes into account the risky nature of its investment). Strategic behaviour by vertically integrated firms

4.780  The ex ante competition model also assumes that SSO members will not manipulate voting. However, an ex ante auction may produce inefficient results when the competing technologies are in the hands of both vertically integrated and non-integrated companies. The dual role of vertically integrated companies in the standard-setting process—innovators and users—places them at a competitive advantage in the auction process. First, they may be able to set very low royalty rates because they have the option to fund their investment with downstream profits. Secondly, they simultaneously act as sellers and buyers of their own IP and may thus be able to win the auction sponsored by the SSO even if their technologies are less valuable than those of their non-integrated counterparts.852 (iii)  What Constitutes ‘Non-Discriminatory’?

4.781  The ‘non-discriminatory’ element of FRAND is normally considered to require that IP right owners to license similarly situated adopters on the same terms. 4.782  Another interpretation (suggested by Swanson and Baumol) is that an IP right owner that competes downstream with other adopters of the standardized product must treat its adopter-licensees no less favourably than it treats itself. In other words, it should charge licensees what it ‘implicitly charges itself for use of the [intellectual] property.’853

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(p. 506) 4.783  In any event, under both the patent and antitrust laws, a patent holder, even one with monopoly power, can under many circumstances legally discriminate and charge different royalties to different customers. A claim under Article 102 should then also be accompanied by some likely harm to competition in a market other than that directly related to the patent claim (eg in a vertically related downstream market).

(iii)  Importance of FRAND 4.784  Despite the problems in identifying what FRAND terms would be, it is precisely its vagueness that makes FRAND commitments such a powerful ex ante mechanism.854 Imprecise FRAND commitments promote competition among the implementers of a standard. Actual negotiations take place bilaterally and confidentially, with public knowledge of the licence offer no more specific than that it will be reasonable and fair. Each firm seeking a licence therefore has strong incentives to negotiate the best terms it can win from the patent holder, so that its downstream operations acquire a competitive edge compared to other implementers. The FRAND commitment then provides a backstop for this competitive process, enabling licensees to bring private lawsuits in the event that a patent holder is perceived as violating the commitment. 4.785  The importance of FRAND can seen from the Commission’s IPCom case, which was resolved around the time that the Commission closed its investigation into Qualcomm.855 In 2007, the German non-practising entity IPCom had acquired a patent portfolio from Bosch which included patents essential to the GSM and UMTS standards. Bosch had participated in the process that set these standards as a member of the European Telecommunications Standards Institute, had declared certain of its patents essential to these standards, and had committed to grant irrevocable licences for such patents on FRAND terms. Bosch was not in a position lucratively to enforce these patents themselves against Nokia, because of the threat of counter-lawsuits concerning overlapping portfolios on other markets and the fear of losing Nokia as a customer in its core business activities. IPCom, in contrast, could enforce the acquired rights against Nokia. 4.786  There was initially doubt as to whether IPCom would consider itself bound to continue Bosch’s FRAND licensing policy, but following discussions with the Commission, IPCom made a public declaration that it would do so.856 In welcoming IPCom’s declaration, the Commission noted that the pro-competitive economic effects of standard setting would be placed at risk if the commitments made as part of the process did not survive transfer.

(7)  Anti-Competitive Litigation in Relation to Standard Essential Patents 4.787  A specific concern raised in the mobile devices sector is the use of injunctions to enforce SEPs, whereby SEP holders seek to enjoin any products implementing the standard from (p. 507) being sold on the market. Companies in this sector are frequently engaged in patent licensing discussions. However, through the use of injunctions, SEP holders can potentially make demands in these licensing negotiations (eg payment of higher royalty rates) that their commercial partners would not otherwise accept. 4.788  As competition is very much based on differentiating features of the devices—such as design, speed, security, or other functionalities—if a company can be coerced into crosslicensing such differentiated patents in exchange for the right to use a SEP, this could potentially affect the incentives to innovate in the first place. 4.789  A guarantee of judicial protection of the legal exclusivity over the patented technology is an integral pillar of the patent system as long as the patent is valid. The enforcement of the patent portfolio is therefore normally not deemed to be vexatious. Accordingly, there can be seen a well-founded reluctance to consider the initiation of

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litigation to enforce IP rights as abusive. However, litigation of this kind can be abusive in certain circumstances. 4.790  In January 2012, the Commission opened a formal antitrust investigation against Samsung Electronics to assess whether it may have abusively used certain of its essential patent rights to distort competition in the field of mobile devices in Europe.857 In April 2012, the Commission opened two further formal proceedings against Motorola Mobility to assess whether Motorola may have abusively used certain of its standard essential patents relating to mobile, wireless, and video compression standards to distort competition.858 These proceedings are ongoing at the time of writing. 4.791  A distinguishing feature of SEPs is that they are (normally) subject to a commitment to license, and to license on FRAND terms. Hence, it has been argued that as long as a company implementing the standard in question is willing to take a licence on FRAND terms, an injunction may not be justified, even if the parties disagree as to the exact level of FRAND. In the absence of an agreement, the exact FRAND level might finally have to be determined by a court or arbitrator. As the Commission set out in its decision in relation to the Google/Motorola Mobility merger, without the possibility of having the FRAND rates proposed by the SEP holder reviewed by an independent third party (court or arbitrator) absent the threat of an injunction, FRAND negotiations may be distorted to the detriment of potential licensees and, ultimately, consumers who might be faced with less choice and innovation.859 4.792  It should be noted that the possibility of finding litigation to be abusive is not entirely new; in ITT Promedia/Belgacom, the Commission stated that in bringing a lawsuit a dominant company could violate Article 102, if the dominant company brings an action (a) which cannot reasonably be considered as an attempt to establish its rights and can therefore only serve to harass the opposite party, and (b) which is conceived in the framework of a plan the goal of which is to eliminate competition.860 Both of these conditions must be fulfilled. 4.793  As regards the first condition, the action must be objectively and manifestly unfounded. If it is intended to assert what the claimant could, at the time of bringing the action, reasonably (p. 508) consider to be its rights, it cannot be an antitrust violation. The second criterion requires showing an anti-competitive object of the dominant company bringing a legal action. 4.794  In ITT Promedia, the General Court adopted the cumulative tests framed by the Commission for an abuse to be established, namely: (a) the proceedings cannot reasonably be considered as an attempt to establish the rights of the undertaking concerned and can therefore only serve to harass the opposite party and (b) they are conceived in the framework of a plan the goal of which is to eliminate competition.861 The Court added that access to a court is a general principle common to the legal traditions of the Member States and protected by the European Convention of Human Rights. As a consequence, the bringing of legal proceedings can only constitute an abuse in exceptional circumstances and the criteria set out by the Commission must be construed narrowly.862 This approach is even more compelling today after the right to access to a court has been recognized in Article 47 of the Charter of Fundamental Rights of the European Union. 4.795  At the time of writing, the Commission is consulting on commitments offered by Samsung under Article 9 of Regulation 1/2003. Samsung proposes to commit for a period of five years not to seek any injunctions on the basis of any of its SEPs, present and future, that relate to technologies implemented in smartphones and tablets (‘Mobile SEPs’) against any company that agrees to a particular licensing framework. The licensing framework consists of: (a) a negotiation period of up to 12 months and (b) if no agreement is reached, a third party determination of FRAND terms by either a court or an arbitrator, as agreed by

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the parties. If the parties cannot agree on either submitting to court or arbitration, the parties will have to submit to arbitration.863 4.796  If the commitments offered by Samsung were adopted in the current form, the question would arise as to whether they are consistent with the ITT Promedia case law. In the Samsung case, it appears that: (a) the patent is a standard essential patent, without which no interoperable products may be offered on the market; (b) the patentee had made a FRAND commitment, thus committing to grant a licence to all willing licencees on fair, reasonable, and non-discriminatory terms; and (c) the commitment not to apply for an injunction only applies if the prospective respondent has agreed to a licensing framework, including determination of the terms of the licence by a court or arbitral tribunal in the last resort. It would appear, therefore, that to the extent that the Samsung case is of precedential value, this would be limited to its material facts. In particular, it would seem that the mere fact that the holder of a SEP applies for an injunction cannot constitute an abuse even if it has made a FRAND commitment. Rather, it is necessary that the prospective licencee has made a serious commitment to negotiate the terms of the licence, possibly by going as far as offering to submit to a binding third party dispute resolution mechanism which can reasonably be accepted by the patentee.

(8)  Issues Applicable Across IP Rights Cases (a)  Assessing Dominance in Pharmaceutical IP Rights Cases 4.797  The assessment of dominance in IP rights cases can be problematic, as in many cases companies may be competing to be first to market a product or technology without any of them yet (p. 509) being dominant, or possibly even active, in the relevant market. This is particularly the case in the pharmaceutical sector. However, without a finding of dominance, Article 102 cannot be invoked to prevent the anti-competitive harm that may result from such conduct. 4.798  There are two complementary and mutually reinforcing ways to resolve this difficulty: •  to infer dominance from the level of rents enjoyed by the defendant; and •  to focus on direct evidence of dominance resulting from the anti-competitive effects of the objected practices.

(i)  Inferring Dominance from Level of Rents864 4.799  There is no systematic evidence or a priori reason to believe that branded producers suffer from higher average variable (and marginal) production (or distribution) costs as compared to a generic producer. On the contrary, a large branded producer may even enjoy lower average variable (and marginal) costs, for instance because of lower (non-labour) intermediate input costs. 4.800  Thus, and save proof of the contrary, the steady state post-generic entry price covers costs, both of the generic and branded producers. It is thus possible to estimate the amount of rents enjoyed by the branded producers prior to generic entry by multiplying the wedge between pre- and post-entry prices by the quantities sold by the branded producer. An alternative consists in looking at balance sheet data and subtracting accounting costs from the value of sales. 4.801  The existence of rents prior to generic entry is not controversial: their (partial or total) rapid disappearance following the launch of a bioequivalent substitute that competes on prices is itself the very proof of their existence. In general, this rent erosion occurs over a short period in a ceteris paribus context. Thus, generic entry is the prima facie

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explanation for their disappearance. This is confirmed by industry reports, information made publicly available by the companies, as well as internal strategy documents. 4.802  The absolute size of the rents depends on market size, the availability of substitutes, costs, and price. Furthermore, maximum reimbursed price is in large part determined by the availability of substitutes and taking into account therapeutic effectiveness. In turn, the number of substitutes depends on (current or expected) market size. The proliferation of ‘me too’ drugs is much more prevalent in large markets (with the latter measured by actual sales, which may differ from the potential market). 4.803  The fact that price competition is absent and that prices are set above costs ensures that the seller can extract rents as long as volumes are non-negligible. It is worth emphasizing that this rent appropriation will also benefit ‘small’ players as long as absolute (value) market size is large. 4.804  However, the persistence of large rents does not mean that the undertaking is not subject to competitive constraints. In the context of a crowded product space, differentiation via promotional effort is highly attractive as a way of retaining and expanding a patient base. In itself, the fact that firms expend large resources on promotional effort, often of a persuasive type, is direct evidence that these competitive constraints are present. Despite the large spend (p. 510) on promotional effort, rents are often not dissipated; the specificities of the pharmaceutical industry mean that the amount of effective promotion is limited at any moment in time and promotional effort per practitioner is subject to an upper limit before negative returns result. Thus, even if the product space is crowded, effective rents (and market power) will not be eroded by promotional spend as long as market size is sufficiently large.

(ii)  Dominance Relative to a Competitive Counterfactual Post-Loss of Exclusivity 4.805  Whether the defendant held a dominant position throughout the relevant period can be established by assessing the competitive constraints and their effect on prices and profits after the entry of generics relative to the constraints prior to such entry. As opposed to an indirect assessment based on structural indicators, this corresponds to a direct assessment of dominance in the sense that, ceteris paribus, if it is proven that absence of price competition allows the defendant to enjoy significant rents then it follows that preventing entry of generic alternatives places the defendant in a position of economic strength affording it, to an appreciable extent, the power to behave independently of generic competitors (ie dominance).

(b)  Anti-Competitive Foreclosure and Objective Justification in IP Rights Cases 4.806  An infringement of Article 102 exists if exclusion leads to anti-competitive foreclosure (ie foreclosure leading to consumer harm). Thus, an abuse can be inferred if the conduct results in: •  exclusion of effective competition from generic rivals through various practices, including patent filing strategies, patent acquisition, and patent settlements (before or after loss of exclusivity); combined with •  direct evidence of the defendant being able to maintain higher prices in the market for the patented product after loss of exclusivity, relative to a counterfactual where the generics would have otherwise exerted strong competitive price pressure. 4.807  If these two conditions are met, it can be concluded that the defendant has illegitimately maintained a dominant position beyond the loss of exclusivity and by also maintaining the prices charged prior to the loss of exclusivity has abused such position.

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4.808  However, under Article 102 (as set out in the Guidance), even if conduct results in anti-competitive foreclosure, it may be possible for the dominant undertaking to provide an objective justification for that conduct. In relation to IP rights, a key issue in this respect is whether the applicant can rely on the pro-innovation rationale of patent law in order to justify its conduct. Indeed, in innovation-related cases, the EU Courts would nowadays apply a balancing approach by weighing the anti- competitive effects of the abusive conduct with the adverse effects on innovation produced by competition law intervention. In AstraZeneca, the Court of Justice applied a very straightforward approach by relying on the decision of the legislature; accepting substantive patent law as a non-rebuttable presumption for the appropriate balancing of the interest in promoting innovation through patent law and the interest in controlling prices by allowing generic products to enter the market. The Court concluded that an extension of the term of protection based on the deceptive conduct of an applicant who is not entitled to such an extension could not be objectively justified.865 4.809  Within the framework of the balancing of the negative effects on competition—in terms of both static price competition and dynamic competition in innovation—the burden should (p. 511) be on the competition law enforcer to prove that the patent applicant pursued an exclusively anti-competitive strategy at the time of filing the patent application. It is crucial to set a high benchmark for competition law liability in the case of such patent filings. Otherwise, competition law would work as a deterrent to undertakings from using the patent system even for pro-competitive purposes. Competition law liability in patent filing cases has to remain the very rare exception rather than a basis for frequent enforcement action.

(c)  Applicability of Article 102 to ‘Standard’ Strategies/Tactics Available Under IP Rights 4.810  Practitioners have expressed general concerns that the Commission has used Article 102 to restrict the scope of strategies available to dominant firms to protect their IP rights and, in particular, that it has done so when these strategies do not in any way infringe patent or other government regulations. 4.811  Companies that engage in product development typically have IP and regulatory experts whose job is to develop strategies that allow the companies to maximize the value of their IP rights (which are generally the result of many years of expensive R&D). Rivals also have regulatory experts seeking to find procedural loopholes to enter the market as early as possible and at limited cost. The outcome of these legal battles in the IP rights law arena may negatively affect innovation incentives if dominant firms consider that any actions to protect their IP rights could infringe Article 102 even if it does not violate patent or related regulation.866 4.812  However, there are some aspects of the Court of Justice judgment in the AstraZeneca case that suggest that relatively common IP and regulatory strategies would not necessarily be problematic. Importantly, the Court stated expressly that innovative companies should not refrain from acquiring a comprehensive portfolio of IP rights, nor should they refrain from enforcing them. 4.813  Further, the Court clarified that the assessment of whether a given conduct can be regarded as competition on the merits is to be made ‘in concreto’ and ‘may vary according to the specific circumstances of each case’.867

(d)  Intervention under Article 102 vs Enforcement of IP Law

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4.814  Where conduct could be characterized as a violation of IP law (eg the provision of misleading information to national patent offices), the question arises whether Article 102 should be invoked. There are various possible justifications for doing so. 4.815  First, because of the lack of harmonization, the EU IP system provides a limited number of remedies to IP law violations. 4.816  Secondly, even if the EU IP system provided a remedy for IP rights abuses, antitrust remedies would provide additional remedies against fraudulent and abusive behaviour, thereby widening the variety of remedies available to plaintiffs. 4.817  Arguably, in the case of practices that violate both antitrust law and regulations in ‘regulated markets’, Article 102 should play only residual role. This is for two reasons: (a) because in the regulated markets, the specific regulator is tasked with ensuring market functioning; and (b) the possibility of false positives means that antitrust enforcement is less appropriate. (p. 512) 4.818  However, antitrust enforcement under Article 102 may still be appropriate, not least because there is no single EU IP regulator and patent examiners will not typically have the information needed to detect anti-competitive foreclosure using the patent process system (such information is likely only to be available in internal documents, which can be obtained using the investigative powers of a competition agency). 4.819  Finally, in assessing whether a patent filing is illegal under competition law it is relevant whether the patent office had discretion in making its decision or was under a strict obligation to grant the patent. The patent applicant is entitled to the patent if the patentability requirements are fulfilled. The applicant’s intention as to how to use the patent after the grant which, according to the Commission, would obviously be the decisive criterion under competition law, must not, and indeed cannot, be taken into account by the patent office. 4.820  As a result, the argument that competition law should not be applied to patent lawcompliant behaviour would effectively create an exemption of patent law from EU competition law contrary to the guarantee of undistorted competition in the internal market.

Footnotes: 810

  For a critical discussion, see G. Dosi, L. Marengo, and C. Pasquali, ‘How Much Should Society Fuel the Greed of Innovators? On the Relations Between Appropriability, Opportunities and Rates of Innovation’ (2006) 35 Research Policy 1110–21. 811

  See also I. Haracoglou, Competition Law & Patents—A Follow-On Innovation Perspective in the Biopharmaceutical Industry (Cheltenham: Edward Elgar, 2008). 812

  Kenneth Arrow suggests that a monopolist has less incentive to innovate than a firm in a competitive industry, as the latter has a higher incentive to reduce the cost of its product. Hence, anti-trust liability does not necessarily lead to an overall reduction in incentives to innovate in the relevant industry; K. Arrow, ‘Economic Welfare and the Allocation of Resources for Invention’ in Essays in the Theory of Risk-Bearing (Chicago: Markham Publishing, 1971). 813

  The report is available at: . 814

  The AstraZeneca case concerned measures taken to extend protection for omeprazole, an anti-ulcer drug marketed under the name Losec. Losec is a pioneer drug for the treatment of gastrointestinal acid-related diseases, more effective than previously developed methods of treatment. It was the best-selling prescription medicine ever, with sales reaching $6.3 billion in 2000; Case COMP/A.37.507/F3 AstraZeneca, OJ 2006 L332/24 From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

See also Press Release IP/05/737 (15 June 2005), ‘Commission fines AstraZeneca €60 million for misusing patent system to delay market entry of competing generic drugs’. 815

  Case T-321/05 AstraZeneca (n 151) and Case C-457/10 P AstraZeneca v Commission (2012), not yet reported. 816

  Case C-457/10 P AstraZeneca (n 815), para 93.

817

  Case T-321/05 AstraZeneca (n 151), paras 493–495.

818

  Case C-457/10 P AstraZeneca (n 815), para 99.

819

  Case C-457/10 P AstraZeneca (n 815), para 99.

820

  Case T-321/05 AstraZeneca (n 151), para 602.

821

  Case COMP/A.37.507/F3 AstraZeneca (n 814), para 743.

822

  Case COMP/A.37.507/F3 AstraZeneca (n 814), para 818.

823

  Case C-457/10 P AstraZeneca (n 815), para 112.

824

  Case C-457/10 P AstraZeneca (n 815), paras 135–138.

825

  Case C-457/10 P AstraZeneca (n 815), para 118.

826

  Consten and Grundig (n 72).

827

  Case T-30/89 Hilti (n 149).

828

  European Commission, XIth Report on Competition Policy, 1981, para 97; see also Van Bael & Bellis, Competition Law of the European Community (Alphen aan den Rijn: Kluwer, 2005), 973–4. 829

  See also K. Czapracka, Intellectual Property and the Limits of Antitrust: A Comparative Study of US and EU Approaches (Cheltenham: Edward Elgar, 2010). 830

  See Pharmaceutical Industry Report (n 813), Executive Summary, ch 3.3.1 (p 16). According to the Commission, patent-filing strategies that are intended to block the market entry of generic products form an integral part of the so-called life-cycle management of the patent portfolios of pharmaceutical companies, a practice that has the aim of ‘obtaining the most efficient, broadest and longest possible patent protection for this product and variations thereof’. 831

  See J. Drexl, ‘AstraZeneca and the EU Sector Inquiry: When Do Patent Filings Violate Competition Law?’, Institute for Intellectual Property & Competition Law (2012). 832

  In the sector inquiry, the Commission found evidence that such ‘secondary patenting’ strategies are implemented by originator companies with the clear intention of blocking generics by raising legal uncertainty. The Commission also discovered that originator companies very consciously consider even weak patents as tools for blocking generics. 833

  Pharmaceutical Industry Report (n 813), para 523.

834

  Press Release IP/11/842 (6 July 2011), ‘Commission welcomes improved market entry for lung disease treatments’. 835

  570 US __ (2013).

836

  Case COMP/39.686 Cephalon. Case brought under Art 101. The Commission’s investigation is ongoing. 837

  Case COMP/39.226 Lundbeck. Case brought under Art 101; Commission decision of 19 June 2013, not yet reported.

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838

  Case COMP/39.612 Perindopril (Servier). Case brought under Arts 101 and 102. The Commission’s investigation is ongoing and a statement of objections has been sent to the parties (see Press Release IP/12/835 (30 July 2012). 839

  The Commission argued that one explanation for the decrease in the number of reverse-payment settlements and the amount of the payments involved ‘may be the increased awareness of companies and their legal advisors regarding the question whether such agreements might attract competition scrutiny’. It also noted that ‘the fact that the Commission announced a continued monitoring of patent settlements and the opening of competition proceedings in the Servier and Lundbeck cases might have had a deterrent effect’. 840

  For a more detailed assessment see D. W. Hull, ‘The Application of EU Competition Law in the Pharmaceutical Sector’ (2011) 2(5) J Eur Comp L & Practice 480–8. 841

  See Article 102 Enforcement Priorities Guidance, para 6.

842

  The alternative is standard setting in the marketplace where firms vigorously compete in a winner-takes-all standards war to establish their own technology as the de facto standard. In a ‘standards war’, substitute products with incompatible designs are introduced into a market, and users’ purchase decisions ultimately establish one design as the dominant design or de facto standard. 843

  This type of hold-up is a variant of the classical ‘hold-up problem’. The hold-up problem pertains to problems of relationship-specific investment, whereas the hold-up contemplated here pertains to standards-specific investment. The hold-up problem indicates the prospect of underinvestment in collaborations in which parties must sink investments that are specific to the collaboration, investments that may be costly to redeploy or have a significantly lower value if redeployed outside of the collaboration. The potential for one party to hold up another party that has sunk investments specific to the relationship may discourage that other party from investing efficiently in the collaboration in the first place. 844

  Rambus (n 58).

845

  Nokia, Ericsson, Panasonic, Broadcom, NEC, and Texas Instruments.

846

  European Commission, Antitrust: Commission Closes Formal Proceedings Against Qualcomm, MEMO/09/516 (24 November 2009). 847

  European Commission, Antitrust: Commission Closes Formal Proceedings Against Qualcomm, MEMO/09/516 (24 November 2009). 848

  See eg D. Geradin, ‘Pricing Abuses by Essential Patent Holders in a Standard-Setting Context: A View from Europe’ (2009) 76(1) Antitrust LJ 329–57. 849

  A similar approach has been fielded in the area of Art 101: the Guidelines on the applicability of Article 101 of the Treaty on the Functioning of the European Union to horizontal co-operation agreements, OJ 2011 C11/1, provide that, in the case of a dispute on the level of remuneration, the assessment should be based on whether the fees bear a reasonable relationship to the economic value of the IP rights. One way of determining this value would be to compare the licensing fees charged by the company in question for the relevant patents in a competitive environment before the industry was locked-in to the standard (ex ante) with those charged after the industry had been locked-in (ex post). However, there may be alternative methods to establish that value. 850

  See C. Shapiro and H. Varian, Information Rules: A Strategic Guide To The Network Economy (Boston, MA: Harvard Business School Press, 1999), 241; the economic logic of this approach derives from a paper by D. Swanson and W. Baumol, ‘Reasonable and

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Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market Power’ (2005) 73 Antitrust LJ 1. 851

  This reasonable royalty would, of course, be constrained by the price of the final product in the downstream market. If a proposed royalty were too high, it would result in downstream manufacturers producing at a loss and they would veto the technology during the auction. 852

  Economic theory predicts that holding a stake in the prize of an auction generally referred to as a ‘toehold’ in the literature, may have a significant impact on bidders’ behaviour and hence on the results of the auction. A bidder is said to have a toehold in an auction if he owns a stake in the prize that is being auctioned. The literature has established that the presence of a toehold has two effects on bidding behaviour. The first is a direct effect: a toehold changes a bidder’s valuation because a share of the auction prize flows back to him through his stake in the prize. In other words, having a toehold makes winning the auction more valuable, therefore the toehold bidder can bid more aggressively. In addition, there is also an indirect effect. The existence of toeholds aggravates the risk of the winner’s curse for bidders without toeholds (or with toeholds that are relatively small compared to another bidder’s), making them bid even less than they otherwise would have. This is because a bidder who beats a bidder with a (larger) toehold learns that the true value of the prize has been grossly overestimated. Conversely, the risk of the winner’s curse is reduced for the bidder with the largest toehold, meaning this bidder will shade his bid less than she otherwise would have. As a result, the toehold bidder is more likely to win. 853

  Swanson and Baumol, ‘Reasonable and Nondiscriminatory (RAND) Royalties, Standards Selection, and Control of Market Power’ (n 850), also suggest a principle for determining licence fees based on the ‘efficient component pricing rule’ (ECPR), which they claim is ‘both necessary and sufficient for a licence fee to be competitively neutral in downstream markets and, therefore, at least on that basis, a necessary condition for that fee to be nondiscriminatory. That is to say, any licence fee that substantially departs from the ECPR level can be deemed to violate the RAND requirement of non-discrimination’. 854

  D. Lichtman, ‘IP Licensing within Standard Setting Organisations, the RAND Debate’, Address before the Intersection of Intellectual Property Rights with Antitrust Law Conference, 14 March 2007, reported in D. Gerardin, A. L. Farrar, and A. J. Padilla, ‘Standard Setting, RAND Licensing and Ex Ante Auctions: The Policy Implications of Asymmetry’, Conference proceedings, Paper Standardization and Innovation in Information Technology, 5th International Conference (2007). 855

  European Commission, Antitrust: Commission welcomes IPCom’s public FRAND declaration, MEMO/09/549 (10 December 2009). 856

  IPCOM, ‘Declaration to the European Commission’, available at . 857

  Case COMP/39.939 Samsung/Enforcement of UMTS standards essential patents.

858

  Case COMP/39.985 Motorola/Enforcement of GPRS standard essential patents.

859

  Case COMP/M.6381 Google/Motorola Mobility, para 140.

860

  Case COMP/35.268 ITT Promedia/Belgacom.

861

  Case T-111/96 ITT Promedia NV v Commission [1998] ECR II-2937, para 55.

862

  ITT Promedia (n 861).

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863

  See Press Release IP/13/971 (17 October 2013), ‘Commission consults on commitments offered by Samsung Electronics regarding use of standard essential patents’. These issues may ultimately be decided by the CJ in the pending preliminary reference Case C-170/13 Huawei Technologies Co Ltd v 2TE Corp, OJ 2013 C215/5. 864

  The notion of economic rent refers to the difference between actual earnings in an activity and the returns necessary to attract resources to that activity. The existence of rents is compatible with different competitive regimes, ranging from the textbook case of ‘perfect’ competition to a monopoly situation. The nature of competitive interaction determines the distribution of rents across different market participants. 865

  Case C-457/10 P AstraZeneca (n 815), paras 107–112.

866

  See Press Release IP/11/842 on the Boeheringer Ingelheim v Almirall case (6 July 2011). 867

  Case C-457/10 P AstraZeneca (n 815), para 99.

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Part I General Principles, 4 Article 102, K Exploitative Abuses Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Excessive pricing — Unfair or excessive pricing — Exploitative abuse — Economics — Unfair terms, imposition of — Foreclosure effect

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K. Exploitative Abuses (1)  Concept of Excessive Pricing 4.821  In economic terms, excessive prices are those which are set at above the competitive level as a result of the exercise of market power. A prohibition on excessive prices raises a number of issues. 4.822  The main conceptual problem is that, theoretically, an exploitative abuse could be committed every time a company with market power operates in the market. Indeed, by definition, companies with market power charge a higher price and produce lower output than companies operating in a purely competitive situation and, therefore, reduce the welfare of customers. The question, therefore, is where to draw the line. 4.823  This problem is closely linked to the practical difficulty of assessing exploitative effects: in order to determine whether a particular firm is exploiting its customers, it must be determined at what level of prices and/or output it would not be doing so. The level of prices and output that would prevail in a competitive situation would be the appropriate reference, but in most cases it will be impossible for competition authorities and courts to determine this. Therefore, other references have been used, such as a comparison to the situation in similar markets or an assessment of the level of satisfaction of demand in the market in question. 4.824  Finally, it is often pointed out that excessive prices are not anti-competitive, that is to say, that in a functioning market economy economic rents are the ex post reward of the market for ex ante competition to create superior products. The hope for monopoly profits thereby channels investments into those areas of production where consumers derive the highest value from product development.868 The associated returns on innovation in turn invite competitive imitation by other firms that ultimately contest the position of dominant incumbents. (p. 513) This, broadly speaking, is the approach adopted by the US courts,869 which have repeatedly refused to countenance a ‘reasonable price’ test, principally on account of the inherent uncertainty of such a test. 4.825  On the other hand, the prevailing view is that Article 102 is expressly concerned with a dominant firm’s ability to exploit consumers, including by charging them unfairly high prices or by limiting production to the detriment of consumers. Protecting consumers from direct exploitation by dominant firms is regarded as a legitimate policy objective of competition law, at least in certain circumstances—for example, where the barriers to entering a market are particularly high or where a firm’s dominance arises as a result of forces other than competition, such a policy interest may be particularly compelling. 4.826  Nonetheless, excessive pricing has proved to be a notoriously difficult abuse to prosecute, principally on account of the complexity involved in calculating what amounts to an unreasonably high price. Taking on such cases is also unsatisfactory in the sense that the intervening authority is expected to take on the role of a quasi-price regulator, with the task of second-guessing the market as to the correct price level. Conversely, from a dominant undertaking’s point of view, control of excessive pricing poses a problem of legal certainty: how high can its prices lawfully be set? It is perhaps not surprising, therefore, that the Commission has only rarely taken decisions making a finding of excessive pricing, notably in General Motors and United Brands and, even then, the findings were in both instances subsequently struck down by the Court of Justice.

(2)  The Test for Excessive Pricing Under EU Case Law (a)  The United Brands Test

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4.827  In the 1975 General Motors case,870 the Court of Justice held that excessive pricing could constitute an abuse if the price was excessive in relation to the economic value of the service provided and had the effect of either curbing parallel imports (thereby eliminating the possibility of competition from lower prices charged elsewhere) or of leading to unfair trade. However, the Court did not attempt to define any test for such an abuse: the underlying decision was overturned because the behaviour which might have constituted an abuse was explainable by exceptional circumstances which applied only for a short time and was terminated before the Commission had begun its investigation. 4.828  The first attempt to set out a test for excessive pricing was United Brands.871 In that instance, the prices charged by UBC in the Member States where it operated varied considerably: the greatest price difference being between Ireland and Denmark, with the level 138 per cent higher in the latter than in the former. Using the Irish prices as a base, the Commission concluded that the prices charged by UBC were ‘excessive in relation to the economic value of the product supplied’, that the differences could not be accounted for by transport costs, and that the prices were excessive by comparison with those charged by UBC’s competitors. However, no detailed cost-price analysis was carried out. On appeal, the Court of Justice held that the Commission’s economic analysis was flawed and overturned the Commission’s finding. (p. 514) 4.829  In doing so, the Court of Justice confirmed that Article 102 can prohibit excessive (or unfair) pricing and broadly defined an excessive price as one which ‘has no reasonable relation to the economic value of the product supplied’. The Court set down the test for this as follows. 4.830  The questions to be determined are whether the difference between the costs actually incurred and the price actually charged is excessive and, if the answer to this question is in the affirmative, to consider whether a price has been imposed which is either unfair in itself or when compared to competing products.872 4.831  This is a twofold test: the first part requires a cost-price analysis, followed by a determination of whether the difference is excessive; the second part necessitates determining whether a price is either excessive in itself or by comparison to competitors’ products. As to the determination of the ‘excess’, the Court considered that this could be determined objectively by a comparison of the selling price and the cost of production (which would disclose the amount of profit margin). 4.832  However, the Court did not provide any guidance as to what level of margin would be ‘excessive’ or when an ‘excessive’ price would amount to an ‘unfair’ price. Also, it did not provide guidance as to which costs should be taken into account in making the cost-price analysis.

(b)  Difficulties in the Application of the United Brands Test: Port of Helsingborg 4.833  The practical difficulties in applying the United Brands test are illustrated by the Commission’s decision in Port of Helsingborg. In that case, the Commission rejected two parallel complaints alleging that the Port of Helsingborg charged excessive port fees for services provided to ferry operators active on the Helsingborg–Elsinore route between Sweden and Denmark, having applied the United Brands twofold test.873 The Commission found that the revenues derived from the ferry operations ‘would seem to exceed the costs actually incurred by the port to provide services and facilities to these users’. However, the Commission did not determine whether the difference was sufficiently large for the prices to be considered excessive, on the basis that, in any event, it had to address the second limb of the United Brands test. After detailed analysis, the Commission found that there was

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‘insufficient evidence’ to conclude that the port fees were unfair either compared to prices charged to other users or by other ports, or in themselves. 4.834  As to the issue of whether the prices were unfair compared to prices charged to other users, the Commission sought to compare the prices charged by the Port of Helsingborg with prices charged by other ports and between the fees charged by the port to ferry operators and those charged to cargo vessels. However, the Commission took the view that differences in charging systems and the services provided made it very difficult to compare prices in a meaningful way and that in the end there was ‘insufficient evidence’ to conclude on the basis of such comparisons that the prices were unfair. 4.835  In relation to the issue of whether the prices were unfair in themselves, the Commission argued that non-cost factors also had to be taken into account in order to assess the ‘economic value’ of the services provided. One such factor was the attractive location of the Port of Helsingborg which allowed its customers a short-distance service. On the basis of these (p. 515) considerations, the Commission again found that there was ‘insufficient evidence’ to conclude that the prices were unfair in themselves.

(c)  Alternative Approaches under the Case Law 4.836  In a number of judgments given by the Court of Justice following a request for a preliminary ruling, the Court has suggested alternative methods that a national court could apply to determine whether a price is ‘excessive in relation to the economic value of the service provided’. 4.837  In Bodson,874 the issue was whether the prices for certain ‘external services’ relating to funerals were excessive. The prices in question were charged by a private undertaking which had been given a concession to provide the services in 2, 800 French communes. The Court found that a comparison with prices in the 30, 000 communes that had either left the provision of ‘external services’ unregulated or operated the services themselves would be a basis for deciding whether the prices of the private undertaking in question were excessive. 4.838  In Lucazeau v SACEM,875 the Court held that a dominant national copyright management society imposes unfair trading conditions where it charges appreciably higher royalties to discotheques than those charged in other Member States, provided that the comparison has been carried out on a consistent basis. 4.839  The Court’s judgments in these two cases hinted at some possible comparisons but gave no indication of how large those differences needed to be before a finding of excessive prices would be appropriate. To date, there is, therefore, still no clear guidance on this issue from the EU Courts. 4.840  In Kanal 5,876 the Court of Justice adopted yet another test. The case concerned the fees charged by a copyright management society to television broadcasters.877 The fee was determined on the basis of the broadcasters’ revenues. In considering whether the royalties were reasonable in relation to the economic value of the service, the Court said: It is appropriate to seek an appropriate balance between the interest of composers of music protected by copyright to receive remuneration for the television broadcast of those works and those of the television broadcasting companies to be able to broadcast those works under reasonable conditions. 4.841  The Court thus considered that royalties are a normal exploitation of the copyright and pursued the legitimate aim of safeguarding the authors’ rights and interests vis-à-vis the users of their musical works.878

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4.842  Royalties calculated on the basis of the broadcasters’ revenue were, ‘in principle, reasonable in relation to the economic value of the service provided’.879 Furthermore, the copyright owner had a ‘legitimate interest’ in the calculation of the royalties based on the number of performances and this was also reflected in the fee model under review.880 (p. 516) 4.843  However, implicitly recognizing that such a model did not allow for the calculation of the actual contribution of the broadcast music to the broadcaster’s revenue, the Court went on to say that the remuneration model could amount to an abuse if a different method existed which enabled a more accurate quantification of the use of the broadcast music and its audience and did not lead to a disproportionate increase in the costs of the management society while allowing the latter to continue to protect the interest of composers and music editors.881

(3)  Imposing Other Unfair Terms 4.844  In addition to condemning excessive prices, Article 102(a) also considers that the imposition of other unfair trading conditions may constitute an abuse. Determining whether a trading condition imposed by a dominant undertaking is unfair presents the same problems as determining whether a price is unfair or excessive. 4.845  Determining whether a trading condition is unfair requires the authorities to apply Article 102 to assess what would be the conditions that would prevail in a competitive environment. 4.846  In exceptional cases, the Commission and the Court have considered that conditions imposed by dominant undertakings were unfair and, therefore, contrary to Article 102. In BRT v SABAM,882 a case concerning a performing rights society, it was considered that restrictions imposed on the authors who were members of the society were unfair insofar as they were not necessary to allow the performing rights society to conduct its business properly (ie to negotiate with radio and TV stations over copyright licences). 4.847  In other cases, the criteria for determining whether a trading condition was fair have focused on the burden that the condition places on customers. In Alsatel,883 a case concerning the rental of telecommunication equipment, the Court of Justice considered that a clause allowing the dominant company unilaterally to increase the rent and automatically extend the rental contract for 15 years was excessive. Similarly, in Tetra Pak II,884 a clause providing for the payment of rent at the beginning of the contract in almost the same amount as the value of the machine, was considered unfair. Indeed, it would force the customer to pay as much as if it had purchased the machine, but would deprive it of the legal benefits of being the owner. 4.848  In AAMS, the General Court885 confirmed a Commission decision886 finding that the Italian State tobacco monopoly had abused its de facto monopoly on the market for wholesale distribution of cigarettes in two ways. First, AAMS inserted into distribution contracts clauses which gave it as the distributor of foreign cigarettes the right to intervene in certain choices of the foreign firms and, therefore, to limit the competitive initiatives of those firms on the Italian market. For instance, the contracts only allowed foreign firms to introduce new brands twice a year and limited in various ways the quantities of cigarettes that the foreign firms could bring into the market. Secondly, AAMS unilaterally took certain decisions with regard to imported cigarettes which amounted to abusive behaviour. These included AAMS refusing (p. 517) to authorize increases in cigarette imports within the limits of the distribution contracts and taking action aimed at ensuring that independent segments of the Italian distribution system downstream from AAMS would favour domestic cigarettes over foreign cigarettes.

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4.849  Finally, conditions have also been considered abusive when imposed by dominant buyers. In Eurofima887 (a company created by the main European rail operators in order to develop new rail passenger carriages), the Commission considered that a dominant buyer of railway stock was abusing its dominant position by inviting tenders for development contracts on condition that unlimited patent licences were granted to it without further remuneration.

(4)  Economic Approach to Excessive Pricing (a)  Circumstances Suitable for Intervention 4.850  As discussed in Section K.1, temporarily high prices are generally part of a normal competitive scenario and therefore not abusive. Case practice suggests that the Commission would not intervene in markets where it is likely that over time normal competitive forces, including parallel trade, will eliminate the possibility for a dominant company to charge high prices. Intervention is therefore limited to markets characterized by very high and long-lasting barriers to entry and expansion. In particular, this would be the case for legal and natural monopolies. In any event, exploitative abuses raise a number of conceptual and practical problems.888 4.851  First, all-encompassing prohibition of excessive pricing would be tantamount to imposing a prohibition on the mere exercise of market power and either imposing a sanction purely as a result of a finding of dominance or attempting to regulate the price that a dominant undertaking may charge. 4.852  Secondly, a prohibition of monopoly prices is not immediately related to the protection of effective competition. Supra-competitive prices in themselves do not necessarily prevent, distort, or restrict competition. 4.853  Thirdly, prohibiting monopoly prices means that the dominant undertaking must charge a price that is either equal to marginal cost or at some level between the marginal cost price and the monopoly price. This price entails a profit sacrifice and may be exclusionary. 4.854  Fourthly, there are fundamental problems with the administrability and error costs of excessive pricing tests and the remedy necessary to end the abuse. To establish that a price is above the competitive level is already extremely difficult, as this task requires the calculation of the price that would prevail in the industry under competitive conditions and identification of the level above which a supra-competitive price becomes abusive. (p. 518) 4.855  However, there are economic arguments in favour of intervention, at least in limited circumstances.889

(i)  To Restore Dynamic Competition 4.856  While economic theory may predict that if a dominant undertaking is charging a supra-competitive price, new firms should enter a market and quickly erode any supracompetitive profits in the industry, the reality may prove otherwise, particularly where a market is characterized by structural problems and high barriers to entry. 4.857  As such, excessive prices, in particular over extended periods and in the absence of new entry and dynamic competition, can lead to injury to consumers both in the short and the long term.

(ii)  Exploitative Prices as a Result of Exclusionary Conduct 4.858  A second instance where, from a substantive point of view, antitrust intervention against excessive prices can be warranted in exceptional cases is where excessive pricing is the unambiguous result of prior exclusionary conduct. In such instances, high prices ex post are not the market’s reward for prior investment and foresight on the part of the dominant

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undertaking, but result from an anti-competitive strategy that first put the dominant firm in the position of being able to charge those high prices. 4.859  An illustration of this approach is Napp,890 the leading UK case on excessive pricing. Napp, the dominant supplier of a slow-release morphine drug called MST, had engaged in predation in the hospital segment of the market, which was open to competition. This had allowed Napp to charge excessive prices in the community segment of the market, where there were high barriers to entry and switching costs.891 The UK Competition Appeal Tribunal (CAT) endorsed the view of the Office of Fair Trading (OFT) and categorized Napp’s ability to charge excessive prices in the community sector as a form of ‘recoupment’.892 In the CAT, the OFT argued that the excessive pricing abuse was not selfstanding, but depended upon Napp’s exclusionary conduct in the hospital segment which enabled Napp to charge excessive prices in the community segment.893 4.860  However, the CAT did not construe this argument as meaning that excessive pricing could only be abusive if it was made possible by the dominant undertaking’s exclusionary behaviour. The CAT considered that such a contention would have been wrong in law.894 However, on the facts, the reason why successful entry was more difficult was that Napp engaged in predatory behaviour.895 In policy terms, the OFT was right to characterize the excessive pricing abuse as dependent on the exclusionary abuse. 4.861  It is possible to envisage exploitative prices made possible by exclusionary behaviour that is not an infringement of Article 102. In Rambus, the Commission accepted commitments in (p. 519) a case in which Rambus was accused of charging excessive royalties for the use of patented technology relating to DRAM chipsets.896 Rambus was alleged to be dominant on the worldwide market for DRAM interface technology as a result of a patent ambush (see Section J.6(b)).897 The subsequent exploitative royalties depended upon this exclusionary conduct, which was considered by the Commission to be abusive because it was intentionally deceitful behaviour leading to Rambus becoming superdominant on the market.898 However, an alternative basis for intervention recognized by the Commission was that Rambus held a super-dominant position and entry was impossible or highly unlikely even in the long term, given that the industry was locked into the standard.899 The excessive royalties in such an instance would not have been dependent on prior exclusionary conduct.

(iii)  Exploitation of Dominance Resulting from Non-Competitive Forces 4.862  Similarly, it should be added that, in some instances, a firm’s dominance arises as a result of forces other than competition. A number of exploitative abuse cases in EU law, for example, are concerned with dominant undertakings that either enjoyed some special or exclusive right granted by the State or were former legal monopolies.900

(b)  Determining Whether Prices are Abusive 4.863  The United Brands test contains two limbs: (a) the difference between the costs actually incurred and the price actually charged is excessive and (b) the price is either unfair in itself or when compared to competing products.

(i)  The Price-Cost Difference is Excessive 4.864  The first limb implies that high prices by themselves are not abusive if they do not lead to an excessive difference between price and costs, that is, if they do not lead to an excessive profit margin. High prices could, for instance, be explained by differences in cost conditions.901

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4.865  Although the Court has not ruled on this, it is arguably not sufficient that the profit margin is simply higher than ‘normal’ or ‘competitive’ profit margins. Only very large deviations from competitive conditions should be indicative of abusive pricing. 4.866  When calculating the profit margin, due consideration should be given to the investment risks involved in the industry concerned. Profit margins are typically calculated on the basis of the prices and costs of products that are sold on the market. However, in many industries there are substantial risks involved in developing products and there may be several unsuccessful products for each product that is successfully brought to market. There is therefore a risk that intervening too easily against the pricing of the few successful companies in such industries could risk chilling welfare-enhancing investment efforts.

(ii)  Unfair Price in Itself or Compared to Others 4.867  The second limb of the test implies that it cannot be determined from a comparison of prices and costs alone whether prices are abusive. A high profit margin may result both from high prices and from low costs. It is therefore necessary to decide whether a high profit margin originates from high prices or from low costs. (p. 520) 4.868  If the high profit margin results from the dominant company being very efficient, it cannot be said that the prices are unfair in themselves. To test this it may be useful to compare the prices of the dominant company with the costs of other companies, for instance with the costs of the next most profitable competitor. If the profit margin based on such a comparison is not high, it is likely that the high profit margin of the dominant company is a result of superior efficiency. 4.869  United Brands defined an excessive price, among other things, as a price that bears no reasonable relation to the economic value of the good or service supplied and is higher than such value. However, one should not take this definition literally. A monopolist would never want to charge more than the value of the product to consumers because then they would not buy it. The most the dominant firm can do is exploit its consumers’ willingness to pay. Hence, for example, a perfectly discriminating monopolist extracts all consumer surplus. This is the most extreme case of consumer exploitation, even though the monopolist is not charging consumers a price exceeding the product’s ‘economic value’ to consumers. It follows, then, that the definition of an excessive price should hinge on the difference between the price actually charged and the price that would prevail under viable competition. 4.870  Indeed, the Court in United Brands followed its definition of an excessive price with the statement that ‘it is advisable therefore to ascertain whether the dominant undertaking has made use of the opportunities arising out of its dominant position in such a way as to reap trading benefits which it would not have reaped if there had been normal and sufficiently effective competition.’902 4.871  Accordingly, the assessment of excessive pricing requires the Commission or EU Courts to establish what the competitive price might have been had the market been competitive and whether the difference between this price and the price charged by the dominant undertaking is ‘excessive.’ This introduces two difficulties. 4.872  First, depending on the circumstances, one can take different views as to what amounts to an unfair difference between the competitive price and the price actually charged. A related complication concerns the need, in certain cases, to stimulate investment; an investment-intensive industry may justify a higher margin above the competitive price than an industry which is less investment-intensive.

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4.873  Secondly, the question arises as to the meaning of ‘the price that would have prevailed in a competitive market’. It seems clear that this definition does not refer to perfect competition, where price goes all the way down to marginal cost. But how imperfect is the competition envisaged by this standard? For example, imperfect competition between two differentiated or capacity-constrained players yields prices different from imperfect competition between more than two players. The degree of product differentiation or capacity constraints affects the ‘competitive’ price that prevails, as does the level of demand, firms’ cost structures, and cost differences among firms. Hence, even the definition of what an excessive price should be compared to is ambiguous and changes from case to case. 4.874  The subsequent judgments of the Court of Justice endorse a number of possible tests for excessive pricing, with the two central trends being to work from either a cost-plus formula (p. 521) or from some form of price comparison.903 One important benefit of applying several different benchmarks to one particular case is that it helps to alleviate distortions caused by using certain kinds of benchmarks. (i)  Discrimination-Based Benchmarks

4.875  The first benchmark is a comparison of the prices charged by the dominant company with prices it charges in other markets. This comparison tries to compare the potentially excessive prices with prices established in competitive markets (eg other geographic markets where the firm does not possess substantial market power, or other product markets which are closely linked to the product in question). Care must be taken here to control for any difference in, for instance, product quality and distribution costs. 4.876  Another benchmark based on price discrimination concerns inter-temporal price discrimination. That is, a dominant firm’s excessive pre-entry price is shown via its lower post-entry price. Alternatively, it may be possible to show that the dominant company increased its prices substantially after it became dominant. This comparison is only valid if there are no other satisfactory explanations for the price increase, such as a substantial increase in costs. 4.877  The virtue of price discrimination benchmarks is that they closely resemble the doctrinal definition of an excessive price. If an excessive price is a price that is too far above the price that would have prevailed under competition, then a plausible way to examine what price the dominant firm would have charged under competition is to see what price this same firm is charging for the same product in a market (or in a period) in which it is subject to competitive forces or to high demand elasticity. 4.878  However, one downside of relying on a price discrimination benchmark relates to the distorted ex ante incentives it creates: a dominant firm that knows pricing differences could expose it to excessive pricing claims may refrain from, or soften, its discrimination. This benefits consumers who were discriminated against, but would harm consumers who benefited from the discrimination. For example, a dominant firm might not only lower the price it charges its high-price consumer, (say, in market A), but also raise the price it charges its low-price consumers (say, in market B). (ii)  Direct Price-Cost Comparisons

4.879  Direct price-cost comparisons are an important alternative (or addition) to discrimination benchmarks. Indeed, in United Brands, the Court of Justice dismissed the Commission’s sole reliance on price discrimination between geographic regions and demanded a price-cost comparison.

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(p. 522) 4.880  The problem with price-cost comparisons, however, is the difficulty of assessing the appropriate measure of cost and what margin above cost would prevail under competition. In particular, it may be difficult to decide which costs are to be considered; to determine those costs; and it may also be the case that merely knowing the cost does not convey the entire picture. As an example, a monopolist with high X-inefficiency will have higher costs, and on this basis could face exoneration compared to an equivalent monopolist with low X-inefficiency. 4.881  In addition, if it is necessary to determine that prices are excessive, then a cost-plus formula is clearly the right approach. However, this is not a role that competition authorities are well placed to play.

(5)  Unfairly Low Prices Extracted by Dominant Buyers 4.882  Although instances appear to be rare, it has been established that Article 102 can also be applied in relation to the behaviour of a company (or companies in the case of joint dominance) which is a dominant purchaser in the relevant market, and which exercises its buying power to extract unfairly low prices from its suppliers. In particular, concern is increasingly being expressed by suppliers and consumers about the power of major retail groups in certain Member States. 4.883  In CICCE,904 the Commission rejected a complaint from a film distributors’ association against three French TV stations, in which the complainants alleged that the stations had set unfairly low broadcasting fees for airing their films. While accepting that the TV stations possessed the requisite buying power to enable them to commit an abuse by charging excessively low fees, the Commission’s rejection of the complaint was upheld by the Court of Justice on the ground that the allegation was unsupported by sufficiently detailed evidence demonstrating that the fees bore no reasonable relation to the economic value of the films: a value which would vary according to each individual film. Once again, the difficulty of proving unfair pricing abuses is evident.

(6)  Limiting Production, Markets, or Technical Development 4.884  Article 102(b) also provides a legal basis for the prohibition of abuses which consist of limiting production, markets, or technical development to the prejudice of consumers. 4.885  As with excessive pricing, there are no simple criteria for determining what should be the amount and quality of output produced by an undertaking in a dominant position (or the level of technical development that it should attain) in order not to prejudice consumers and, therefore, not to engage in an abuse within the meaning of Article 102. 4.886  A criterion that can be used is to assess whether the output produced by the dominant undertaking, both in qualitative and quantitative terms, leaves a substantial amount of the demand unsatisfied. If this is the case, the undertaking may be found to have infringed Article 102. The Court of Justice has applied this criterion to undertakings entrusted by Member States with an exclusive right to perform certain activities. In Hoffner and Elser v Macrotron,905 it considered that the Bundesanstalt für Arbeit, a German agency with the monopoly on the provision of labour services, had failed to meet the demand for its services and that it had, (p. 523) therefore, abused its dominant position. Similarly, in Port of Genoa,906 the Court of Justice considered that the undertaking with the exclusive right to organize dock work had abused its dominant position by failing to use modern technology, which resulted in increased costs and longer service delays. In both cases, the Court found that granting exclusive rights under such conditions constituted an infringement of Article 102 together with Article 106.

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4.887  This criterion has been used not only in the case of legal monopolies, but also in relation to private undertakings holding a dominant position. The Commission considered, for instance, that the International Group of P&I Clubs,907 which covers around 90 per cent of the market for maritime third party liability insurance, had abused its dominant position by only providing a single level of insurance cover, thereby leaving a substantial proportion of the demand unsatisfied. 4.888  In E.ON, a commitments decision, the Commission considered that one of three oligopolists holding together around 75 per cent of the market had engaged in an exploitative abuse consisting in withholding capacity on the German wholesale electricity market.908 This had not only the short-term impact of raising prices significantly at times of peak demand but also increased the prices of forward products (such as options and futures), which were based on short-term prices and demand volatility.909

Footnotes: 868

  See generally G. Weyl and J. Tirole, ‘Market Power Screens Willingness-to-Pay’ (2012) 127 Quarterly J Econ 1971. 869

  See eg the judgment by the US Supreme Court in Verizon Communications v Law Offices of Curtis V. Trinko LLP, 540 US 398 (2004). The approach is also favoured by some commentators on EU law: see V. Korah, EC Competition Law and Practice (Oxford: Hart Publishing, 2000). 870

  Case 26/75 General Motors Continental v Commission [1975] ECR 1367.

871

  United Brands (n 16).

872

  United Brands (n 16), paras 250–252.

873

  Decision of 23 July 2004 in Case COMP/36.568 Scandlines Sverige v Port of Helsingborg and Decision of 23 July 2004 in Case COMP/36.570 Sundbusserne v Port of Helsingborg. 874

  Corinne Bodson (n 233).

875

  Joined Cases 110/88, 241/88 and 242/88 François Lucazeau and Others v Societé des Auteurs, Compositeurs et Editeurs de Musique (SACEM) [1989] ECR 2811. 876

  Case C-52/07 Kanal 5 v STIM [2008] ECR I-9275, paras 28–29.

877

  This issue was addressed from the perspective of an exploitative abuse by the CJ in Tournier (n 16). 878

  Kanal 5 (n 876), paras 34–35.

879

  Kanal 5 (n 876), para 37.

880

  Kanal 5 (n 876), paras 38–39.

881

  Kanal 5 (n 876), para 40; Tournier (n 16), para 45.

882

  SABAM (n 19).

883

  Case 247/86 Alsatel [1988] ECR 5987, para 10.

884

  Case IV/31.043 Tetra Pak II (n 611), paras 135–138.

885

  AAMS (n 182).

886

  Case IV/36.010-F3 Amministrazione Autonoma dei Monopoli di Stato, OJ 1998 L252/47.

887

  Eurofima, IIIrd Report on Competition Policy, 1973, para 68.

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888

  In 2003 Philip Lowe, then Director General of DG Competition, summarized the arguments made by critics of DG Competition’s policy as being: (a) measurement of an unfair or excessive price is difficult; (b) exploitative practices are self-correcting; (c) intervention requires skills and monitoring processes that competition authorities are illequipped to deal with; and (d) prohibiting monopoly prices is tantamount to prohibiting monopolies. See P. Lowe, ‘DG Competition’s Review of the Policy on Abuse of Dominance’, speech at the Fordham Corporate Law Institute, 23–24 October 2003. Further mention is made of the particular role of the policy in ‘newly liberalized sectors’. 889

  R. Nazzini, ‘Abuse beyond Exclusion: Exploitation and Discrimination under Article 102 TFEU’ in B. E. Hawk (ed), International Antitrust Law & Policy: Fordham Competition Law 2012 (New York, Juris Publishing, 2013), 461, 464–6. 890

  Decision of the Director General of Fair Trading No CA98/2/2001 Napp (n 183).

891

  Decision of the Director General of Fair Trading No CA98/2/2001 Napp (n 183), paras 142–143, partly upheld on appeal in Napp (n 183). 892

  Napp (n 183), paras 261 and 299.

893

  Napp (n 183), paras 364–365.

894

  Napp (n 183), para 434.

895

  Napp (n 183), paras 168–180.

896

  Rambus (n 58).

897

  Rambus (n 58), recitals 16, 17, and 26.

898

  Rambus (n 58), recitals 27–29 and 40–43.

899

  Rambus (n 58), recitals 19–25 and 47.

900

  Nazzini, ‘Abuse beyond Exclusion’ (n 889), 466–70.

901

  United Brands (n 16), para 228.

902

  United Brands (n 16), para 249.

903

  In Napp (n 183) a slight variation was introduced by referring to a price comparison and finding that high profits would not generate entry within a reasonable period. However, as Furse (M. Furse, ‘Excessive Prices, Unfair Prices and Economic Value: The Law of Excessive Pricing under Article 82 and the Chapter II Prohibition’ 4(1) ECJ 59) points out: The addition by the OFT and the CAT in Napp of the unlikelihood of entry in a reasonable period to erode the excessive price is not a helpful one. If the concern is that the market power held by the dominant undertaking is durable, then attention should be paid to the factors that support this durability, not to pricing, unless strategic pricing is itself acting as an entry barrier. To take the approach of recognising the permanence of the monopoly and to force it to lower prices changes the role of the competition authority from one of enforcement to one of regulation. While the US regime does price regulate, it does so making the form of regulation explicit, and this is the better approach. 904

  Case 298/83 Comité des industries cinématographiques des Communautés européennes CICCE v Commission [1985] ECR 1105. 905

  Case C-41/90 Hofner and Elser v Macrotron [1991] ECR I-1979.

906

  Case C-179/90 Port of Genoa v Gabrielli [1991] ECR I-5889.

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907

  Cases No IV/D-1/30.373 and No IV/D-1/37.143 International Group of P&I Clubs, OJ 1999 L125/12. 908

  E.ON (n 52), recitals 28–40.

909

  E.ON (n 52), recitals 35–38.

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Part I General Principles, 4 Article 102, L Price Discrimination Miguel de la Mano, Renato Nazzini, Hans Zenger From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Discrimination — Discriminatory pricing — Enforcement by EU Commission — Foreclosure effect

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L. Price Discrimination (1)  Concept of Price Discrimination 4.889  Price discrimination is the practice of selling the same product to different buyers at different prices, in circumstances where the price differential is not justified by cost differences. Selling the same product to different buyers at a uniform price while the costs of supply, for instance transportation costs, differ is also price discrimination. In practice, competition cases concentrate on the first situation of discrimination. 4.890  To be properly characterized as price discrimination, the conduct must meet the following four conditions: •  the price must concern the same products. In many cases, it will be evident whether the same product is involved, especially where an identical product is purchased by different customers. However, what sometimes may appear to be exactly the same product, may not be: for example, renting a particular holiday house for a week would be a different product if the alternatives are a week in August versus a week in November. However, to be identified as the same product the products do not need to be exactly identical. Minor differences, for instance in the form of customized packaging, extra options, or home delivery, will normally not be sufficient to identify different products, but will be taken into account when considering possible cost justifications for price differences; •  there must be no cost differences justifying the price differences. Differences in delivery costs or differences in costs related to customer specifications may mean that different prices do not amount to price discrimination; (p. 524) •  in order to be comparable, the purchases of different customers must occur in the same relevant period. This does not require the purchases to be made exactly at the same time, but the period in between purchases must not be so long as to allow the existence of other factors to influence a firm’s pricing policy (eg general changes in demand on the market or changes in the competitive situation on the market); •  the different buyers must be independent from the seller. Price discrimination does not occur where there are differences between the internal transfer price the seller agrees with its own group companies and the price agreed with third parties. However, such price differences may be investigated as a margin squeeze (see Section I).

(2)  Competition Concerns Regarding Price Discrimination 4.891  Price discrimination, and more generally price variations, can be pro-competitive and part of normal price competition. Prices vary over time in competitive markets, not only because of fluctuations in cost but also because of changes in demand and other market conditions. Different customers may also obtain different prices as a result of differences in negotiation skills and bargaining positions. Such price differentials between customers, which are often temporary, are in general not anti-competitive but on the contrary form part of the dynamics of the competitive process of adaptation and improvement which leads to overall lower prices. Low prices may also be part of an entry strategy and add to the competitive pressure in a market. 4.892  Nevertheless, under EU competition policy, price discrimination can be considered problematic for three reasons.

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4.893  First, price discrimination can be used to exclude competitors of the dominant supplier on the upstream market. An example is a lower price that is available to customers that might switch more easily to competitors and that is not available to other customers. More generally, price discrimination may be the result of a rebate system that leads to price differences between customers or where lower prices are linked to accepting an exclusive purchasing obligation. Such exclusionary effects can either affect the dominant firm’s rivals (primary line discrimination) or the dominant firm’s downstream customers (secondary line discrimination). Exclusionary price discrimination is dealt with in this chapter as part of the assessment of predatory pricing, exclusive dealing, loyalty rebates, and tying and bundling.910 4.894  Secondly, price discrimination by dominant firms may reduce consumer welfare by extracting consumer surplus (without any exclusionary impact on competitors). This is generally (p. 525) referred to as ‘exploitative’ price discrimination. The test will therefore be whether the higher prices charged to certain, but not all, customers are exploitative. Section K deals with cases where price discrimination is exploitative. 4.895  The question then is whether there is a third category of price discrimination in EU law which is neither exclusionary nor exploitative but is nonetheless abusive within the meaning of Article 102. Section L.3 considers the answer to this question. In summary, the case law and the practice of the Commission have identified two types of price discrimination that fall within this third category. •  geographical price discrimination and discrimination based on nationality: the pursuit of the internal market objective has given a mandate to DG Competition to defeat attempts by private firms to erect barriers to trade between Member States which allow them to price discriminate across countries (the issue of geographic price discrimination has been particularly prominent in the area of car sales and pharmaceuticals); and •  market distorting price discrimination: Article 102(c) provides that an abuse may consist in ‘applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage’. This abuse stands out in the context of Article 102 as a whole because it does not require the exclusion of rivals. The anti-competitive effect is not the foreclosure of competitors and the strengthening, maintenance, or acquisition of market power by the dominant undertaking but the distortion of the competitive process on the downstream market. Three elements are necessary for a prima facie case of abuse to be established: (a) equivalent transactions; (b) dissimilar conditions; (c) competitive disadvantage. Once these three elements have been established, it is for the dominant undertaking to adduce sufficient evidence tending to show that its conduct is objectively justified. This is the only type of discrimination prohibited under Article 102(c). It can be defined as market-distorting discrimination given that its immediate anti-competitive effect is the distortion of downstream competition. While, in recent years, the enforcement practice of the Commission has moved away from this type of abuse, both the text of Article 102(c) and the case law of the Court of Justice clearly provide that a dominant undertaking may abuse its dominant position by ‘applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage’. What is much less clear is the precise scope of the test and, in particular, the meaning of ‘competitive disadvantage’.

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(3)  Case Law and Commission Practice on Article 102(c) Discriminatory Pricing Abuses 4.896  Article 102(c) prohibits a dominant firm from ‘applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage’. In practice, this has resulted in cases relating to discrimination based on nationality, geography, and what are referred to later as ‘market distorting price discrimination’. To some extent, the issues covered in this section no longer appear to be an enforcement priority for the Commission—the last significant decision of this type was taken in 2004 (Clearstream).

(a)  Discrimination Based on Nationality 4.897  It is a fundamental tenet of EU law, enshrined in Article 18 TFEU (ex Art 12 EC), that discrimination on the basis of nationality is prohibited. Discrimination on the basis of nationality has the effect of impeding the development of the internal market. The EU competition (p. 526) rules serve the purpose not only of protecting competition, but also of ensuring the integration and proper functioning of that market. For that reason, this form of discrimination can legitimately be prohibited by Article 102. 4.898  The prohibition covers both direct and indirect discrimination, and so extends to discrimination on the basis, for example, of domicile or place of establishment. In Corsica Ferries,911 the Court of Justice found that pilot tariffs had been set in such a way as to discriminate indirectly against certain ships on the basis of nationality. In GVL,912 the Court held that a refusal by a dominant company to supply a category of customers, defined according to those customers’ nationality or domicile, was contrary to Article 102.

(b)  Geographical Price Discrimination 4.899  The United Brands and Tetra Pak cases demonstrate that if a dominant firm charges different prices in different Member States, it can also attract the sanction of Article 102.913 It seems clear that, in these cases, the Commission and the EU Courts have been motivated by the desire to prevent segmentation of the market along national lines. However, these cases are less straightforward than cases involving discrimination on the basis of nationality, because it is not clear whether it is the discrimination as such which has been condemned, or the discrimination combined with other market-partitioning factors specific to those cases. The latter appears to be the better view. 4.900  In United Brands, UBC had a long-standing policy of supplying bananas to ripenerdistributors in the Member States where it operated, at considerably varying price levels. The bananas were of identical quality, were sold in an identical condition, and in the same place (usually Bremerhaven or Rotterdam). The Commission, in a decision upheld by the Court of Justice, found this to be an infringement of Article 102(c). It seems rather farreaching, on the face of it, that Article 102 should be extended to apply to a company which pursues a different pricing policy in different national markets. It should be noted, however, that the Commission and Court appear to have been particularly influenced by what they saw as UBC’s deliberate attempt to partition the EU along national market lines, in particular by imposing obligations on its customers not to resell green bananas. This additional restriction had the effect of rendering more difficult the possibilities for arbitrage through the development of a cross-border wholesale trade in bananas. However, the resale restrictions and discriminatory pricing were separately condemned by the Commission and Court. 4.901  UBC argued that its pricing policy was objectively justified since it was charging what the market would bear, and that this differed significantly from one geographic market to another. The reasons for these differences depended, according to UBC, on a variety of locally specific factors such as seasonal demand variations. This argument was not accepted by either the Commission or the Court. The Commission placed particular emphasis on the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

fact that identical bananas were usually sold in the same place at widely varying prices. The Court also appeared to rely on the fact that UBC was not itself directly selling in the markets concerned, but only to resellers who were selling there; only the latter were bearing the risks inherent in the local markets, and so only they would need to take into account local market specificities in setting price levels. This may indicate that the closer a dominant company’s direct involvement in the market, the more it will be permitted to price discriminate. (p. 527) 4.902  In Tetra Pak II, however, the Commission and the EU Courts condemned geographical price discrimination by a vertically integrated dominant firm selling directly to customers in a variety of national markets. In that case also, the differences between the prices charged in various Member States were very considerable. The Commission and the EU Courts did not accept that the price differences could have any legitimate explanation other than an attempt to partition the internal market along national lines. Again, as in United Brands, the Commission and Court placed reliance on the fact that resale restrictions were imposed on Tetra Pak’s customers and, again, the resale restrictions and discriminatory pricing were separately condemned. 4.903  This approach has, with a degree of justification, been sharply condemned by some commentators. It can be argued that, in cases such as those described in paras 4.899– 4.902, it is the resale restrictions alone which should be condemned. The possibility of arbitrage should ensure that markets become more integrated notwithstanding the price discrimination (although in the case of integrated firms selling directly to consumers, this would be more difficult). 4.904  Given this, the Commission has been willing to challenge practices aimed at restricting the possibility of arbitrage. 4.905  In Irish Sugar, the Commission impugned a series of abuses aimed at protecting the Irish sugar market from imports.914 These included an ad hoc rebate scheme operated periodically by the dominant supplier of sugar in Ireland, whose purpose was patently protectionist. The scheme sought to restrict imports from Northern Ireland (where sugar prices were usually lower than in the Republic), including re-imports of Irish Sugar’s own products, by offering so-called ‘border rebates’ to customers on the Irish side of the border area, the clear aim being to discourage them from importing sugar from Northern Ireland. The company also engaged in ‘selective pricing’ of Irish Sugar’s own retail brand, offering it to some customers at lower prices than others—particularly where those customers had started to stock, or had expressed an interest in stocking, imported sugar brands.915 4.906  Finally, a specific form of geographical price discrimination was also sanctioned by the Commission in Irish Sugar. The dominant supplier had been operating a system of socalled ‘sugar export rebates’, whereby rebates were granted on sales of industrial sugar to companies exporting the final processed products from Ireland to other Member States. The Commission found that this scheme of rebates was a clear example of discrimination with trade-distorting consequences. Irish Sugar claimed that domestic processors were not placed at a competitive disadvantage in relation to the exporters, as the two were competing on different markets. However, the Commission pointed out that the rebate scheme also discriminated against local processors by placing them at a competitive disadvantage in relation to third parties, such as importers into Ireland of processed sugar products from other Member States.916

(p. 528) (c)  Market-Distorting Price Discrimination (i)  Definition

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4.907  Market-distorting price discrimination under Article 102(c) occurs when three elements are established: (a) there are equivalent transactions; (b) to which the dominant undertaking applies dissimilar conditions; (c) placing downstream undertakings at a competitive disadvantage. As explained in para 4.893, competitive disadvantage vis-à-vis the dominant undertaking is better understood and analysed as an exclusionary abuse, for instance in the context of vertical foreclosure. Article 102(c), therefore, applies to market distortions in the competitive relationship between two or more customers of the dominant undertakings.

(ii)  Equivalent Transactions 4.908  The definition of discrimination in Article 102(c) requires in the first place that the transactions are equivalent. Equivalent transactions need not be identical. In HOV SVZ/ MCN, the Commission considered that substitutable rail transport services amounted to equivalent transactions even though the distance of the journeys varied.917 4.909  The transaction may be a more limited element of a wider agreement between the parties. In Alpha Flight Services/Aéroports de Paris, Aéroports de Paris (ADP) was dominant on the market for the provision of airport management services at the Paris airports918 and licensed undertakings to carry out ground-handling services.919 The agreements clearly distinguished between a fee in respect of the premises licensed to a ground-handling undertaking within the airport and a commercial fee. The property fee was based on the characteristics of each site, the equipment included in the licence, and the surface area occupied by the licensee.920 The commercial fees varied depending on whether the services were provided by an undertaking to other undertakings within the same group (‘selfhandling’) or to third parties (‘third party ground-handling’). The fees also differed undertaking by undertaking.921 The Commission examined only the commercial fees thus implying that the transaction excluded the property fee. The reason was that the two fees were paid in consideration for different services. The property fee was in consideration for the occupation of land. Ground-handling undertakings could rent land outside the airports and ADP was, therefore, in competition with owners of land in the proximity of the airports.922 The commercial fee was in consideration for the airport management services provided by ADP at the airports,923 a market on which ADP had a legal monopoly.924 This analysis demonstrates that a single contract may include several transactions. Three elements are relevant for distinguishing different transactions within a single contract: (a) the terms of the contract; (b) the different competitive (p. 529) conditions under which the different transactions take place, namely whether two or more transactions relate to products belonging to different markets; and (c) the overall context of the transactions, including the remuneration structure, the specific utility the customer derives from the transaction, and the economic substance of the arrangement. 4.910  When the dominant undertaking provides the same product to different undertakings at the same cost, the transactions are prima facie equivalent. In Alpha Flight Services/Aéroports de Paris, ADP charged a lower fee for self-handling than for the provision of ground-handling services to third parties. The transactions were equivalent.925 The General Court held that the equivalence of two transactions must be assessed in regard to the relationship between the dominant undertaking and its customers and not in relation to the position of the customers on downstream markets.926 The same applies when the purchaser of services remunerates sellers at different prices for the same services because of the different utility it derives from the transactions. The issue arose in British Airways, where the dominant undertaking argued that the services of two travel agents selling BA tickets generating the same revenue were not equivalent if one travel agent had increased its sales and the other had not. The EU Courts rejected this argument on the ground that the two travel agents provided the same service to BA.927 This proposition is correct insofar as it relates to the test for equivalent transactions and not to the abuse test. To determine whether two transactions are equivalent, the relevant factors are the product supplied and From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

its cost. However, the finding that two transactions are equivalent is not in itself an abuse. Not only must dissimilar conditions apply but there must be an anti-competitive effect. Furthermore, the focus on the relationship between the dominant undertaking and its customers does not rule out the relevance of the utility that each customer derives from the transaction. If a dominant undertaking charges lower royalties for a licence to broadcast a film to a regional broadcaster with 200, 000 viewers than for a licence to broadcast the same film to a broadcaster with 20 million viewers, it is not necessarily an abuse. However, Aéroports de Paris suggests that the customers’ utility is not part of the test for equivalent transactions. It is true that Article 102(c) uses the term ‘transaction’ instead of ‘product’ and this suggests that the commercial context is relevant. The commercial context, however, remains the context of the transaction between seller and buyer and does not include the utility that the buyer derives from downstream demand. To continue with the example of licences granted to broadcasters with different viewer numbers, while the number of viewers is outside the definition of transaction under Article 102(c), the terms of the licence, for instance the times at which the film can be broadcast or the payment terms, are not. It is worth noting that this definition of equivalent transactions is consistent with the economic concept of price discrimination, which focuses on the product and the cost of (p. 530) supply and not on the utility of the customer. Two identical products supplied at the same cost but at different prices to two customers who derive different levels of utility from the purchase of the products, are a form of price discrimination. Whether this is detrimental to competition is, of course, quite another matter.

(iii)  Dissimilar Conditions 4.911  The key factor in determining whether conditions are dissimilar, particularly when the condition in question is the price, is the cost of supply. However, it is not sufficient to adduce evidence of a cost difference to establish that the conditions are not dissimilar. The cost difference must relate to the difference in price. In HOV SVZ/MCN, the dominant undertaking claimed that the higher tariff, which applied to carriage by rail between Germany and Dutch and Belgian ports, compared to the lower tariff, which applied to carriage by rail between German ports and German towns, was due to the additional costs incurred on the international routes, including changing locomotives, the costs of apportioning revenue between different operators, and custom duties. Both the Commission and the General Court held that the additional costs, which were only a small fraction of the total cost of the services, could not justify the difference in price.928 4.912  Importantly, a cost difference which is the result of a deliberate choice of the dominant undertaking to favour its own operations over those of its competitors would not justify a price difference even if such a difference reflects a difference in costs. In Deutsche Bahn, Deutsche Bahn argued before the General Court that the tariff applied by its own vertically integrated carrier was lower than the tariff applied by its competitors because the costs of the vertically integrated carrier were lower. The Court held that Deutsche Bahn itself had produced a difference in the costs of equivalent services by increasing the efficiency of its own services only while it could have extended the same efficiencyenhancing measures to the services provided by its downstream competitors.929 So stated, this principle is too broad. First, it must clearly be confined to cases in which a vertically integrated dominant undertaking, which also provides an essential input to a downstream competitor, deliberately increases the efficiency of its own input and not the input supplied to the competitor. In other words, it only applies to discrimination between the downstream division of the dominant undertaking and its downstream competitors. In all other cases of discrimination, the dominant undertaking is entitled to improve its efficiency selectively and pass any cost savings on to its customers. As a general rule, this does not amount to discrimination. Secondly, even a vertically integrated dominant undertaking cannot be required to extend any efficiency-enhancing measures which benefit its downstream division to all its customers. The discriminatory supply of an inferior input can only be an

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abuse when it prevents equally efficient downstream rivals from competing effectively. This means that such conduct is only an abuse if it fails the margin squeeze test.930 The reason why this test was not applied in Deutsche Bahn was that Deutsche Bahn had the power to control the downstream prices of its competitors and the abuse was market-partitioning. 4.913  For equivalent transactions relating to substitutable products or different amounts of output, unit costs and prices may have to be calculated in order to determine whether the conditions applied are dissimilar. In HOV SVZ/MCN, the Commission considered that substitutable rail carriage services amounted to equivalent transactions. However, in order to determine (p. 531) whether the conditions applied were dissimilar, it calculated the average price per kilometre of transport of the same type of container.931 4.914  Finally, the competitive conditions under which a transaction takes place are also relevant. In a more competitive market, ceteris paribus prices will naturally tend to be lower. In HOV SVZ/MCN, the Commission and the General Court accepted that differences in the intensity of competition could justify lower prices on the more competitive market but rejected the argument of the dominant undertaking, which attempted to justify higher prices on the more competitive market.932

(iv)  Competitive Disadvantage 4.915  Article 102(c) requires that price discrimination causes a competitive disadvantage to downstream undertakings. The case law and decisional practice of the Commission have not so far clearly established a test for competitive disadvantage. 4.916  In Soda-ash/Solvay,933 the Commission held that the exclusionary rebate system adopted by Solvay was not only exclusionary but also discriminatory under Article 102(c).934 The Commission relied on the following factors: •  the rebates were not cost-reflective;

935

•  there were ‘considerable differences’ within one Member State as to the size of the rebates and the thresholds which triggered the rebates. 936 Even customers who bought all their requirements from the dominant undertaking could pay ‘substantially’ different unit prices; 937 •  the price discrimination ‘had a considerable effect upon the costs of the undertakings affected’. The input in question was 70 per cent of the raw material batch cost and 13 per cent by weight of the finished product. From this, the Commission inferred that the discrimination affected the ‘profitability and competitive positions’ of the customers. 938 4.917  In this case, the Commission did examine whether customers were placed at a competitive disadvantage. The problem is the inference that a considerable impact on costs affects competition. As a general proposition, cost variations, even when significant, do not necessarily distort downstream competition. Significant cost variations may simply reduce the profits of certain customers. But in industries where there are no significant investment requirements and as long as the rate of return of downstream firms remains above or at the cost of capital, anti-competitive effects are unlikely. The price discrimination simply transfers surplus from customers to the dominant undertaking. Therefore, a presumption that whenever the price discrimination significantly affects the costs of downstream competitors there is a ‘competitive disadvantage’ under Article 102(c) is not warranted. It is worth emphasizing that this provision requires not only a ‘disadvantage’ but a ‘competitive disadvantage’. Any reduced profits would certainly be a disadvantage but do not necessarily affect an undertaking’s (p. 532) ability to compete. This is also consistent with the objective of Article 102 which is not to protect individual interests in a given level of surplus, even if a negative effect on the surplus of an individual customer is the result of the exercise of

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market power, but to prevent effective competition being distorted to the detriment of longterm productivity growth and social welfare. 4.918  A modest step forward in the assessment of competitive disadvantage was made in British Airways. In that case, the Commission found that BA’s commission schemes with travel agents in the UK were not only exclusionary but also discriminatory within the meaning of Article 102(c).939 The scheme resulted in different rates of commission being paid for the same revenue generated by the sale of BA tickets and was not justified by any efficiencies accruing to the dominant undertaking or by the service provided by the travel agents.940 The Commission did not simply recycle the exclusionary abuse as discrimination under Article 102(c)941 but attempted to establish the requirement of competitive disadvantage and went even slightly further than the Soda-ash/Solvay 2003 decision in the analysis of downstream competition. The following factors were established: •  travel agents competed by promoting their services or by passing on part of the commission to their customers; 942 •  commission income financed promotional expenditure and lower fares;

943

•  when an agent dealt with a large airline, ‘the agent’s income would be significantly affected by the type of commission offered by the powerful airline’; 944 •  discriminatory levels of commission distorted the ability of travel agents to compete with one another. 945 4.919  The Commission, however, stopped short of explaining the nature of the competitive distortion. The theory of harm could have been that financial resources were necessary to compete downstream. Significant differences in the rates of commission would have affected the ability of equally efficient travel agents to compete in a way that did not reflect their comparative efficiency but did reflect the turnover they achieved with the dominant undertaking. 4.920  The General Court upheld the Commission’s finding of abuse emphasizing that BA had stated that competition between travel agents was intense.946 The Court’s ruling on this point is succinct to say the least and yet the Court felt it necessary to describe the intensity of competition on the downstream market. This must have been because the impact of a distortion in the commission revenue on downstream competition depended on downstream margins and the pressure on downstream undertakings to promote their services and lower their prices. Quite rightly, the Advocate General placed emphasis on this statement of the Court,947 which, interestingly, is not to be found in the Commission decision. The Advocate General added one further element, which she found in different parts of the judgment (p. 533) under appeal although not in the section on discrimination. She pointed out that the commission schemes under review ‘could lead to sharp and significant variations in the income of the individual travel agents’.948 So, while she rightly considered that the reasoning of the General Court was ‘extraordinarily scanty’ on the issue of price discrimination, she expressed the view that the Court did not commit an error of law.949 The Court of Justice clarified that Article 102(c) aims at avoiding distortions of competition in the internal market. Therefore, competitive disadvantage must be understood as a distortion of the competitive relation between customers or suppliers of the dominant undertaking.950 Because it is the competitive position of suppliers or customers vis-à-vis each other which is relevant, it is beyond doubt that a mere financial disadvantage for some undertaking is not sufficient to establish competitive disadvantage under Article 102(c). A fortiori, it is also beyond doubt that mere price discrimination is not an abuse.951 The Court, however, went on to say that there is no requirement to prove an actual and quantifiable competitive disadvantage of individual undertakings. Article 102(c) applies as soon as the conduct of the dominant undertaking ‘tends, having regard to the whole of the circumstances of the case, to lead to a distortion of competition’.952 This test must be From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

understood in the context of the general test for anti-competitive effects under Article 102. An abuse is established in law when the conduct under review is capable of having anticompetitive effects or tends or is likely to have such effects. No proof of actual effects is required.953 4.921  One notable feature of the test for market-distorting price discrimination is that the test is sensitive to the facts of the case. This may help to explain why, when the abuse is also exclusionary, the Commission and the EU Courts have applied a very low standard under Article 102(c). In such cases, it may be thought that the risk of error is lower than in cases where the abuse is only under Article 102(c). First, since it is exclusionary, the conduct is abusive in any event. The incremental error risk from the prohibition of discrimination in the case at hand is zero. Secondly, the finding of exclusionary abuse already means that the conduct has a net negative effect on social welfare. 4.922  It may be thought that the exclusionary element of the conduct under review must also tend to distort competition downstream. This line of reasoning, which is perhaps behind cases such as British Airways, would be mistaken. It essentially assumes that exclusionary discrimination is also, automatically, market-distorting. This is simply a non sequitur. Nor is it true that the error cost of the additional prohibition of discrimination when conduct is exclusionary is zero or even negligible. When a rebate scheme is prohibited as exclusionary and discriminatory, the dominant undertaking must ensure, first, that the rebate is not capable of excluding equally efficient competitors, for instance by setting the thresholds and rates so that the effective price is always above the relevant measure of cost for the contestable share of demand and, secondly, that all customers are treated equally, so that the same price is paid for equivalent transactions, which may well mean that the rebate system may not be individualized. This was the position in British Airways.954 If the rebate is only exclusionary, the (p. 534) dominant undertaking may still negotiate contracts individually and grant rebates to different customers based on different targets and rates as long as the effective price on the contestable share of demand does not fall below the relevant measure of cost. This was the position in Intel, where the dominant undertaking had been enjoined from offering exclusionary discounts but was still permitted to negotiate different discounts with different customers.955 4.923  If different prices to different customers do not distort downstream competition, a prohibition on discrimination may give rise to negative effects on productivity and social welfare. In any event, such a prohibition constitutes an illegitimate interference with the competitive process even if the same conduct happens to distort competition upstream in that it excludes competitors of the dominant undertaking. The Court of Justice in British Airways came close to setting out the right test. The weakness of the case is that it appears to endorse a very low threshold for a finding of ‘competitive disadvantage’. Nor did the Court set out clear principles as to what constitutes competitive disadvantage under Article 102(c). 4.924  An example of the application of the British Airways test of competitive disadvantage is Clearstream. Clearstream was the monopolist provider of primary clearing and settlement services for securities issued under German law. It had refused to supply Euroclear with direct access to its primary clearing and settlement services and discriminated against EB in the provision of these services. Refusal to supply and discrimination were, however, considered as a single abuse. The abuse in question was exclusionary because Euroclear competed with a sister company of Clearstream. However, Clearstream had also charged Euroclear discriminatory fees for its services, placing it at a competitive disadvantage.956 The General Court’s analysis of the requirement of ‘competitive disadvantage’ is, in the words of Advocate General Kokott in British Airways, ‘extraordinarily scanty’.957 The Court was content to note that the application of discriminatory fees for a period of five years by a monopolist to a customer ‘could not fail to cause’ that customer ‘a competitive disadvantage’.958 The General Court clearly failed to From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

provide reasons as to the key element of market-distorting price discrimination, namely the effect of the discrimination on the downstream competitive process. The judgment can probably be explained on the ground that the discrimination in question was, in reality, part of a wider exclusionary strategy. However, the astonishing superficiality with which the Court addressed the requirement of competitive disadvantage risks creating a precedent that may be applied to purely market-distorting discrimination. Exclusionary abuses must be examined as such. There is nothing to be gained in applying Article 102(c) to exclusionary abuses with a lower threshold of ‘competitive disadvantage’. There is, however, much to be feared from such an approach because that lower threshold may be applied to purely market-distorting price discrimination. This would not only be contrary to the language of Article 102(c) but would give rise to systematic false convictions and almost unthinkable over-deterrence of legitimate pro-competitive discounting. 4.925  Given the little guidance that the case law provides, it is necessary to construe the meaning of ‘competitive disadvantage’ from first principles. While the forms of competitive disadvantage are innumerable and cannot be crystallized in a prescriptive list, the starting point (p. 535) must be that the prohibition of market-distorting price discrimination is at the boundaries of the concept of abuse of dominance. The anti-competitive effect is more difficult to detect in practice than an exclusionary effect because the dominant undertaking’s incentive to distort downstream competition is much less obvious. Furthermore, the preponderance of economic literature at this stage tends to agree that while price discrimination may well be detrimental to productivity and social welfare, it is difficult to identify conditions under which a negative effect is certain or even likely. Therefore, the risk of an enforcement error is high. In these circumstances, the pursuit of the objectives of Article 102 requires balancing the risk of false convictions against the risk of false acquittals. This calls for a higher threshold of intervention. In price discrimination cases, it would be difficult to adopt a consumer harm test, which EU law adopts as an additional safeguard against the risk of false convictions in refusal to supply and exploitative abuses. This is because in price discrimination some consumers are harmed while others benefit. Determining whether the surplus of the dominant undertaking’s customers is, as a whole, higher or lower without price discrimination would require a highly speculative counterfactual analysis. Even more speculative would be to determine the effect of the conduct under review on the customers of the undertakings that are subject to discrimination. 4.926  Instead, the text of Article 102(c), the case law, and the decisional practice of the Commission all point to a test that focuses on the effect of price discrimination on the competitive process unfolding on the downstream market. The effect on downstream competition must be construed as a significant effect on downstream competition. This is because any discrimination by a dominant undertaking may be considered likely to have some effect on downstream competition. In the absence of a requirement of significance, the condition of effect on downstream competition would amount to little more than an inference that, when the costs of downstream undertakings are affected, some distortion of downstream competition must inevitably follow.959 4.927  The Commission applied a test of significant effect on downstream competition in Alpha Flight Services/Aéroports de Paris. This test is consistent with the test set out by the Court of Justice in British Airways but differs in the intensity of the anti-competitive effect required. As explained in paras 4.921–4.926, there are strong legal and policy arguments in favour of a higher threshold. Furthermore, in British Airways the Court of Justice did not discuss the intensity of the anti-competitive effect, only the likelihood of it occurring. Alpha Flight Services/Aéroports de Paris, on the other hand, is one of the rare cases in which there was no exclusionary effect but only and exclusively a market-distorting effect. The Commission’s decision was upheld by the General Court and the Court of Justice. Therefore,

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the approach in Alpha Flight Services/Aéroports de Paris is not only persuasive but has been endorsed by the EU Courts and is consistent with British Airways. 4.928  In Alpha Flight Services/Aéroports de Paris, ADP was dominant on the market for airport management services at the Paris airports. ADP charged a lower fee for selfhandling than for the provision of ground-handling services to third parties. Furthermore, it charged different (p. 536) levels of fee to different customers. The Commission held that these fees were discriminatory and abusive because they distorted competition on the market for ground-handling services and on the air transport market.960 The General Court and the Court of Justice upheld the Commission’s reasoning and findings.961 The marketdistorting effect took place on a downstream market on which the dominant undertaking was not present.962 There was no need for the dominant undertaking to have any intention to harm competition,963 nor was it relevant that the dominant undertaking had no incentive to do so. The incentive to price discriminate can simply be short-term profit maximization. The conduct may still be abusive if it distorts downstream competition within the meaning of Article 102(c). In Alpha Flight Services/Aéroports de Paris, the downstream marketdistorting effect resulted from the following factors. (i)  The Discriminatory Fees Were an ‘Important Part of a Supplier’s Cost Structure’964

4.929  The impact of the discriminatory fees on costs had a ‘significant effect’ on downstream competition.965 It is worth noting that the threshold is higher than the effect generally required for an abuse under Article 102.966 This is justified because the anticompetitive effect takes place on a market where competition is not already weakened by the very presence of the dominant undertaking within the meaning of the case law. In fact, the downstream market can be competitive. Prohibiting any upstream price discrimination capable of distorting competition on the downstream market would give rise to a disproportionate risk of false convictions and over-deterrence. (ii)  A ‘Significant Effect’ Should Be Required

4.930  The ‘significant effect’ on competition required proof of the impact of the discriminatory fees on the parameters of downstream competition. The Commission found that as they affected marginal cost, upstream fees were reflected in the downstream unit prices.967 Furthermore, discrimination must result in significant differences in the cost of downstream competitors. In Alpha Flight Services/Aéroports de Paris, competitors paying the highest fee were forced either to lose customers or to reduce their margins to compensate for the discriminatory fee.968 There were ‘large variations’ in the fees actually paid.969 4.931  The discrimination between self-handing services and ground-handling services supplied to third parties produced further anti-competitive effects. First, it gave an unjustified competitive advantage to undertakings engaging in both types of service compared to undertaking providing only ground-handling services to third parties.970 This advantage was unfair or (p. 537) unjustified because it was purely the result of profitmaximizing price discrimination by an upstream dominant undertaking and was not based on the relative efficiency of downstream competitors. Secondly, it distorted the airlines’ choice between self-handing and outsourcing ground-handling to third parties. This choice was not based on the relative efficiency of the two business models but on the artificial cost differences created by the upstream price discrimination.971 4.932  The negative effects on competition may relate to losses in productive or dynamic efficiency. In Alpha Flight Services/Aéroports de Paris, the Commission emphasized that ground-handling accounted for a large proportion of airlines’ operating costs. Therefore, productive efficiency was particular important.972 The airlines’ choice of suppliers was based on the price of the service but the price of the service did not reflect the efficiency of the supplier. Therefore, ‘the quality and efficiency of the services concerned are liable to be considerably affected owing to the distortions of competition between suppliers’.973 Finally, From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the quality of ground-handling services was an important element of airlines’ competitive strategies in differentiating themselves and meeting the demands and expectations of the passengers.974 4.933  The negative effects of discrimination may also take place on markets further downstream from the market where the customers of the dominant undertaking compete. In Alpha Flight Services/Aéroports de Paris, the Commission held that the price discrimination effectively subsidized self-handling compared to ground-handling services provided by third parties. Because only the airlines with a large volume of traffic at the Paris airports were able to operate a self-handing service efficiently, these airlines enjoyed an advantage over airlines that had no choice but to use the more expensive third party ground-handling services.975 This is, however, not necessary for a finding of abuse at least when a distortion of competition between the customers of the dominant undertaking is established.976 4.934  In conclusion, Alpha Flight Services/Aéroports de Paris sets out a sensible, more effects-based test for market-distorting price discrimination. The price discrimination must be likely to restrict or distort downstream competition significantly. In order to establish a prima facie case of downstream competitive distortion, it is necessary to prove at least four elements: (a) the discrimination must significantly affect the costs of the downstream undertakings; (b) these significant differences in cost affect the parameters of competition, including price, output, or innovation; (c) there is a negative effect on the productive or dynamic efficiency of certain undertakings compared to others; and (d) the negative impact on productive or dynamic efficiency affect a significant share of supply. Although this last requirement is not explicit in the case law and decisional practice of the Commission, it follows directly from the objectives of Article 102. It is obviously not sufficient that one competitor is disadvantaged; the discrimination must affect a sufficiently large share of the downstream market so that harm to (p. 538) the competitive process may be inferred. Lower profits of individual competitors should not amount to competitive disadvantage within the meaning of Article 102(c).

(4)  Policy and Effects-Based Approach (a)  The Commission’s Current Enforcement Approach 4.935  The practical enforcement of price discrimination law has decreased tremendously over the course of the last decade, with very few cases brought after the advent of the effects-based approach to Article 102. This is particularly true for cases of pure secondary line discrimination (ie charging different prices to independent distributors), which appear to have all but vanished from the enforcement agenda. But even in cases where price discrimination was used as a tool to implement an exclusionary strategy, the Commission has in recent years tended to refrain from raising a concern under Article 102(c), instead bringing such cases as purely exclusionary abuses. 4.936  This shift towards assessing exclusionary price discrimination purely under an exclusionary abuse test has occurred both for upstream foreclosure (eg anti-competitive rebates) and downstream foreclosure (eg margin squeezes). Whereas the Commission had regularly raised price discrimination allegations against individualized rebates in earlier cases, such as Hoffmann-La Roche977 and Michelin I,978 no such allegation was raised in the more recent Tomra979 and Intel980 decisions, although both firms had employed targeted rebates. Similarly, in the recent Deutsche Bahn Energie981 case, the Commission assessed Deutsche Bahn’s differentiated upstream price schedule not under a price discrimination standard (as in the earlier Deutsche Bahn case982 ), but instead employed a margin squeeze standard. In other words, the Commission investigated directly whether Deutsche Bahn’s

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conduct led to exclusionary effects on the downstream market, rather than trying indirectly to infer vertical foreclosure from the presence or absence of price discrimination. 4.937  This effects-based practice has recently been endorsed by the Court in Post Danmark, which notes that ‘charging different customers or different classes of customers different prices for goods or services whose costs are the same or, conversely, charging a single price to customers for whom supply costs differ, cannot of itself suggest that there exists an exclusionary abuse.’983 Instead, the Court endorsed the use of the as-efficient competitor test to assess whether the pricing conduct in question led to foreclosure. 4.938  For all practical purposes, it therefore appears that the Commission’s current policy towards price discrimination is one of reluctance to intervene, except perhaps in extreme cases, such as discrimination by State-owned enterprises on the basis of nationality rather than commercial interest, or where as a result of the price discrimination, total output is reduced.

Footnotes: 910

  Price discrimination can also be a way to implement a predatory pricing strategy; it can reduce the costs of the strategy and, therefore, make it profitable to predate. Assume a dominant firm serves two market segments and there is entry on only one of the segments. By selectively offering predatory prices to customers in the segment facing entry, the costs of the strategy would be lower than if the predatory price had to be charged across the board, to both segments. In some instances, the ability to target price cuts could reduce the costs of predation enough to be outweighed by the long-run benefits of impeding entry. In such circumstances, it is not the price discrimination as such that may lead to anticompetitive effects but the predatory strategy. In the context of an effects-based analysis of targeted price cuts, it is the predatory nature of the price cuts that would cause foreclosure effects. A similar conclusion is warranted in the case of bundling strategies. By charging different prices to different customers (depending on whether they buy one product or more), exclusionary effects may arise if competitors are marginalized and forced to exit when bundling induces customers to purchase less from a new entrant, thus jeopardizing its prospect to reach minimum viable scale (when there are fixed costs to recover). Again, the analysis of the foreclosure effect would be concerned with the effect of the bundling practices. The fact that price discrimination is also an element of the practice should not alter the competitive assessment. 911

  Case C-18/93 Corsica Ferries Italia v Corpo dei Piloti del Porto di Genova [1994] ECR I-1783. 912

  Case 7/82 Gesellschaft zur Verwertung von Leistungsschutzrechten GVL v Commission [1983] ECR 485. 913

  United Brands (n 16); Case C-333/94 P Tetra Pak II (n 3).

914

  Irish Sugar plc (n 245), upheld in Irish Sugar (n 157).

915

  Similar rebates were also impugned by the Commission and the EU Courts in Case IV/ 31.900 British Plasterboard (n 190); Case T-65/89 British Plasterboard (n 313); Case C-310/93 P British Plasterboard (n 445). 916

  Irish Sugar (n 157), para 140.

917

  Case IV/33.941 HOV SVZ/MCN, OJ 1994 L104/34, recital 160, upheld in Case T-229/94 Deutsche Bahn (n 37), upheld on appeal in Case C-436/97 P Deutsche Bahn v Commission [1999] ECR I-2387.

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918

  Case IV/35.613 Alpha Flight Services/Aéroports de Paris, OJ 1998 L230/10, recitals 72– 82, upheld in Case T-128/98 Aéroports de Paris (n 737), appeal dismissed in Case C-82/01 P Aéroports de Paris v Commission [2002] ECR I-9297. 919

  The ground-handling services in question were freight and mail handling, aircraft cleaning and servicing, and catering: Alpha Flight Services/Aéroports de Paris (n 918), recital 66. 920

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 92 and 97.

921

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 6–22.

922

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 86–98 and Case T-128/98 Aéroports de Paris (n 737), paras 113–118 but with no reference to the competitive conditions ADP faced on the market for the supply of premises for the operation of groundhandling services at the Paris airports. 923

  Alpha Flight Services/Aéroports de Paris (n 918), recital 105 and Case T-128/98 Aéroports de Paris (n 737), para 118. 924

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 72–82 and Case T-128/98 Aéroports de Paris (n 737), paras 147–153. 925

  Alpha Flight Services/Aéroports de Paris (n 918), recital 117 and Case T-128/98 Aéroports de Paris (n 737), paras 206–210. See, for the same approach, Case IV/35.703 Portuguese Airports, OJ 1999 L69/31 recital 27, upheld in Case C-163/99 Portuguese Republic v Commission (n 454). 926

  Case T-128/98 Aéroports de Paris (n 737), para 206, upheld on appeal in Case C-82/01 P Aéroports de Paris (n 918), para 115. 927

  Case IV/D-2/34.780 Virgin/British Airways, OJ 2000 L30/1, recital 109; Case T-219/99 British Airways (n 171), para 236; Case C-95/04 P British Airways (n 3), paras 138–140, holding that the services of travel agents selling tickets generating the same revenue were equivalent although the CJ declared inadmissible the argument relating to the greater economic utility of increased sales at para 137. But if the services are equivalent, then the difference in economic utility can only go to the issue of effect or objective justification. See also Opinion of AG Kokott in Case C-95/04 P British Airways (n 3), paras 111–119, where the AG characterized this argument as an objective justification even if she dealt with it under the heading of ‘equivalence of the transactions of the travel agents (first part of the fifth ground of appeal)’. 928

  HOV SVZ/MCN (n 917), recitals 230–234 and Case T-229/94 Deutsche Bahn (n 37), para 90. 929

  Case T-229/94 Deutsche Bahn (n 37), para 89.

930

  On margin squeeze, see Section I.

931

  HOV SVZ/MCN (n 917), recitals 163–177.

932

  HOV SVZ/MCN (n 917), recitals 199–211 and Case T-229/94 Deutsche Bahn (n 37), para 91. 933

  Case IV/33.133-C Soda-ash/Solvay, OJ 1991 L152/21 (Soda-Ash/Solvay 1991), annulled in Case T-32/91 Solvay v Commission [1995] ECR II-1825, upheld on appeal in Joined Cases C-287/95 and 288/95 P Commission v Solvay [2000] ECR I-2391. The decision was readopted in Soda-ash/Solvay, OJ 2003 L10/10 (Soda-ash/Solvay 2003). 934

  Soda-ash/Solvay 2003 (n 933), recitals 181–185.

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935

  Soda-ash/Solvay 2003 (n 933), recital 181.

936

  Soda-ash/Solvay 2003 (n 933), recital 182.

937

  Soda-ash/Solvay 2003 (n 933), recitals 183–184.

938

  Soda-ash/Solvay 2003 (n 933), recital 185.

939

  Case IV/D-2/34.780 Virgin/British Airways (n 927), upheld in Case T-219/99 British Airways (n 171), appeal dismissed in Case C-95/04 P British Airways (n 3). 940

  Case IV/D-2/34.780 Virgin/British Airways (n 927), recitals 109–110.

941

  As it had done in earlier cases, eg Vitamins (n 462); Michelin I (n 2); and Cewal (n 377).

942

  Case IV/D-2/34.780 Virgin/British Airways (n 927), recital 111.

943

  Case IV/D-2/34.780 Virgin/British Airways (n 927), recital 111.

944

  Case IV/D-2/34.780 Virgin/British Airways (n 927), recital 32.

945

  Case IV/D-2/34.780 Virgin/British Airways (n 927), recital 111.

946

  Case T-219/99 British Airways (n 171), paras 233–240.

947

  Opinion of AG Kokott in Case C-95/04 P British Airways (n 3), para 127.

948

  Case C-95/04 P British Airways (n 3), para 128.

949

  Case C-95/04 P British Airways (n 3), para 130.

950

  Case C-95/04 P British Airways (n 3), paras 143–144.

951

  Case C-95/04 P British Airways (n 3), para 144, where the Court said very clearly that mere discrimination is not sufficient and that competitive disadvantage must be separately proved. 952

  Case C-95/04 P British Airways (n 3), para 145.

953

  On the general test, see para 4.86.

954

  Case IV/D-2/34.780 Virgin/British Airways (n 927), operative part, Arts 1 and 3.

955

  Commission Decision of 13 March 2009 in Case COMP/37.990 Intel (n 23), operative part, Arts 1 and 3. 956

  Clearstream (n 727), paras 5–24. On the refusal to supply aspects of this case, see para 4.601. 957

  Opinion of AG Kokott in Case C-95/04 P British Airways (n 3), para 130.

958

  Clearstream (n 727), para 194.

959

  A test without the requirement of significance would therefore risk over-intervention.

960

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 32–34, 67, and 109–133.

961

  Case T-128/98 Aéroports de Paris (n 737), paras 215–218 and Case C-82/01 P Aéroports de Paris (n 918), para 116. 962

  Case T-128/98 Aéroports de Paris (n 737), para 164. This downstream market-distorting effect is different from the commission of the abuse on a market other than the dominated market, which is limited to exceptional circumstances: see Case C-333/94 P Tetra Pak II (n 3), para 25. 963

  Case T-128/98 Aéroports de Paris (n 737), para 173.

964

  Alpha Flight Services/Aéroports de Paris (n 918), recital 109.

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965

  Alpha Flight Services/Aéroports de Paris (n 918), recital 109.

966

  See paras 4.275ff.

967

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 109, 32–34, and 38.

968

  Alpha Flight Services/Aéroports de Paris (n 918), recital 110.

969

  Alpha Flight Services/Aéroports de Paris (n 918), recital 114.

970

  Case T-128/98 Aéroports de Paris (n 737), para 215 and Case C-82/01 P Aéroports de Paris (n 915), para 116. 971

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 67, 131, and 132; Case T-128/98 Aéroports de Paris (n 737), para 215; Case C-82/01 P Aéroports de Paris (n 918), para 116. 972

  Alpha Flight Services/Aéroports de Paris (n 918), recital 67.

973

  Alpha Flight Services/Aéroports de Paris (n 918), recital 131.

974

  Alpha Flight Services/Aéroports de Paris (n 918), recital 132.

975

  Alpha Flight Services/Aéroports de Paris (n 918), recitals 120 (concerning the position of airlines which were licensed only to self-handle which affected competition between airlines and the efficient choice of the ground-handling business model), 123 and 130 and Case T-128/98 Aéroports de Paris (n 737), para 218. 976

  Case T-128/98 Aéroports de Paris (n 737), para 218.

977

  Hoffmann-La Roche (n 6).

978

  Michelin I (n 2).

979

  Case T-155/06 Tomra (n 301).

980

  Commission Decision of 13 March 2009 in Case COMP/37.990 Intel (n 23).

981

  Case COMP/39.678 Deutsche Bahn Energie OJ 2013 C237/28. At the time of writing, the Commission is market testing commitments proposed by Deutsche Bahn concerning its pricing system for traction current in Germany. 982

  Case T-229/94 Deutsche Bahn (n 37).

983

  Post Danmark (n 10), para 30.

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Part I General Principles, 5 Mergers, A Introduction Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Procedure under the Merger Regulation — Application of EU competition rules — National merger control

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(p. 540) A. Introduction (1)  Origins and Evolution of EU Merger Control (a)  Introduction of an EU Merger Control System 5.01  Council Regulation (EEC) No 4064/89 on the control of concentrations between undertakings (‘the 1989 Merger Regulation’) was adopted on 21 December 1989 and entered into force on 21 September 1990. Prior to that, there was no systematic regime for the control of mergers and acquisitions at EU level.1 As a result, the Commission had to rely on the EEC Treaty equivalents of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) to address competition concerns arising from acquisitions.2 5.02  By the latter half of the 1980s, it had however become clear that the existing instruments did not allow the Commission effectively to control concentrations which risked bringing about anti-competitive effects on the European market.3 Moreover, the progressive establishment of national merger control systems across Europe began to create obstacles to consolidation, insofar as large acquisitions required multiple notifications, with the risk of conflicting assessments and significant costs in terms of time and economic resources. In response to these various factors, the 1989 Merger Regulation was adopted.

(b)  The First Decade of Application of EU Merger Control 5.03  It took only a short time for the Commission to start testing the limits of the new instrument at its disposal. In its second year of operation, the Commission adopted its first prohibition decision.4 During the next few years, the Commission took an expansive view of the substantive test included in the 1989 Merger Regulation, for instance by finding that the dominance test applied to collective dominance,5 and established important jurisdictional principles, for instance with regard to acquisition of control, assessment of joint ventures, and jurisdictional thresholds, which today form the backbone of the EU merger control system. 5.04  The 1989 Merger Regulation was regarded as a success. The Commission quickly gained the reputation of handling the cases that were notified in an efficient and timely manner. (p. 541) From the outset, the Commission adopted reasoned decisions instead of simply relying on the possibility of tacitly approving them.6 In addition, the Commission proved able to face the rapid increase in the number7 and the growing complexity of the cases under its review. 5.05  The 1989 Merger Regulation was subject to limited amendment in June 1997, which made two important jurisdictional changes.8 First, a new set of thresholds captured transactions between companies whose turnover figures are below the main thresholds but which nonetheless carry out significant activities in at least three Member States. Secondly, the Commission’s ability to review concentrations was expanded to include scrutiny over all ‘full-function’ joint ventures, including those which could give rise to coordination of the competitive behaviour of their parent companies.9 In addition, the 1997 reform formally adopted what had already been the Commission’s practice with respect to the acceptance of remedies in Phase I and referrals to Member States of only part of a transaction (partial referrals). 5.06  In 2000, the Commission introduced a simplified procedure for the treatment of certain concentrations that are normally considered not to raise competition concerns.10

(c)  The Judgments in Airtours, Tetra Laval, and Schneider 5.07  In 2002, the General Court issued three judgments annulling the prohibition decisions in Airtours/First Choice,11 Tetra Laval/Sidel,12 and Schneider/Legrand.13 In these judgments, the General Court took a firm stance against the Commission’s substantive assessment of certain anti-competitive effects in those cases, namely the assessment of coordinated effects (Airtours/First Choice) and conglomerate effects (Tetra Laval/Sidel). The From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

General Court also directed criticism at the way in which the Commission had conducted the investigations (Airtours/First Choice and Tetra Laval/Sidel) and its treatment of the parties’ rights of defence (Schneider/Legrand). (p. 542) 5.08  The three judgments were considered a significant setback for the Commission. In response, the Commission implemented a number of changes in its handling of merger control cases. First, it recalibrated the focus of its substantive analysis more clearly on horizontal effects, and in particular on unilateral effects, without however abandoning the possibility of pursuing other theories of harm where appropriate. Secondly, DG Competition reorganized the structure responsible for merger control. The Merger Task-Force (which until then grouped all merger units in a horizontal structure) was split up, and separate sector-specific merger units were created and integrated—together with antitrust and State aid units—in directorates organized on a sectoral basis.14 Furthermore, a Chief Economist Team was established in order to ensure consistency with the principles of mainstream economics and improve the robustness of the Commission’s appraisal through the use, inter alia, of econometric techniques. Thirdly, the internal system of checks and balances was reinforced, as set out further in Section D.2.

(d)  The 2004 Reform 5.09  The changes in the organization and working methods introduced in 2002 and 2003 were followed in 2004 by the first major and comprehensive reform of the 1989 Merger Regulation. On 20 January 2004, the Council adopted Regulation 139/2004 (‘the Merger Regulation’), recasting the 1989 Merger Regulation and incorporating further amendments.15 Most importantly, the previous substantive test based on dominance was replaced with a significant impediment to effective competition (SIEC) test and remedied a perceived gap in the Commission’s initial enforcement powers by allowing it more comprehensively to address unilateral effects in oligopolistic scenarios. In addition, the introduction of the SIEC test brought the European system closer to those merger control regimes that make use of substantive tests based on the reduction of competition, such as the ‘substantial lessening of competition’ test adopted in the US and the UK.16 5.10  The 2004 reform also included significant amendments on procedure. The most important of these innovations is the introduction of pre-notification referrals (discussed in detail in Section C.2). Other significant aspects of the procedural reform of 2004 included the implementation of a slightly more flexible timetable (eg the introduction of ‘stop the clock’ mechanisms, the elimination of the deadline for notifications, the possibility of earlier notifications, or the replacement of weeks and months for working days in the relevant time periods) and the enhancement of the Commission’s investigative powers.

(e)  Evolution of EU Merger Control Following the 2004 Reform 5.11  The 2004 reform was followed shortly thereafter by the Horizontal Merger Guidelines,17 which codified previous experience in relation to horizontal unilateral and coordinated effects. The Horizontal Merger Guidelines constitute the basis for the assessment of the vast majority of cases that are dealt with by the Commission. Given their level of detail and their emphasis on a more ‘effects-based’ approach, the Guidelines are, as a matter of practice, (p. 543) possibly even more important than the amendment of the substantive test in the Merger Regulation in terms of the evolution of EU merger control. 5.12  In addition, in 2005 the Commission issued a Notice on referrals of concentrations between the Commission and Member States,18 containing detailed explanations on the conditions under which referral may be appropriate. This Notice is particularly important in relation to pre-notification referrals, which were introduced in the 2004 reform and today constitute the large majority of referrals. Towards the end of 2005, the Commission also

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published a merger remedies study, which analysed 96 remedies accepted between 1996 and 2000 and contributed significantly to the refinement of its remedies policy. 5.13  In 2008, the Commission issued the Non-Horizontal Merger Guidelines,19 providing a coherent framework for the assessment of vertical and conglomerate effects. These Guidelines constitute a decisive further step towards a more economic assessment of mergers, insofar as they place emphasis on consumer harm in the competitive appraisal. The Commission also issued a new Notice on Remedies.20 5.14  In 2013, DG Competition launched two public consultations on possible further modifications of the EU merger regime. First, in February, it announced its Merger Simplification Project, the main objectives of which were the extension of the scope of the simplified procedure and the streamlining of the various merger filing forms. In March, a public consultation was launched on a Draft Regulation amending the Implementing Regulation along the same lines.21 The Merger Simplification Package was ultimately adopted on 5 December 2013, bringing about a modification of the Implementing Regulation (including its Annexes I to III) and a new Notice on a simplified procedure. Secondly, in June, DG Competition publicly consulted22 on the possibility of extending the EU merger control framework to encompass the review of acquisitions of non-controlling minority shareholdings,23 as well as of introducing a number of reforms in the mechanisms for the referral of cases from Member States to the Commission pursuant to Article 4(5) and Article 22 of the Merger Regulation.24

(2)  Core Principles of EU Merger Control (a)  Compulsory Ex Ante Notification 5.15  The European merger control system is based on a system of notification prior to implementation. Unlike merger control in certain Member States (eg the UK), the parties are obliged to notify to the Commission any concentration falling within its jurisdiction.25(p. 544) A ‘standstill obligation’ is also included in the Merger Regulation, which provides that the parties are prohibited from implementing a transaction until tacit or explicit clearance from the Commission has been obtained.26 5.16  There are three main consequences of using a system of ex ante control as opposed to a system of ex post scrutiny. First, ex ante control increases legal certainty, as a clearance decision rules out the possibility for later competition-based objections to a transaction. Secondly, the power to prevent a merger from being completed is much more effective than the power to impose fines or require the dissolution of an anti-competitive merger, the latter often being a very difficult process. Thirdly, an ex ante system means that the substantive assessment is necessarily forward-looking. The Commission ‘must take into account any significant impediment to effective competition likely to be caused by a concentration’.27 The competitive appraisal is therefore carried out by means of a comparison between the competitive conditions that would result from the merger with the prevailing competitive conditions absent the merger (the ‘counterfactual’).28

(b)  One-Stop Shop 5.17  The Merger Regulation is based on a ‘clear division of competence’ between the Commission and Member States.29 Transactions meeting the jurisdictional thresholds must be notified to the Commission; those that do not meet the thresholds are subject to national merger control. The ‘one-stop shop’ system prevents the possibility of conflicting decisions within the EU. Moreover, it allows the parties to liaise with a single authority for the purposes of competition clearance in the whole of the EU territory rather than with multiple bodies.

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5.18  As discussed in Section B.8, the jurisdictional thresholds are based on turnover criteria. The main advantage of a turnover threshold-based system is that it is transparent, simple to employ, and objective. There is, however, a risk that such a system would not catch all mergers capable of having a significant cross-border effect on competition or that, conversely, not all operations meeting the thresholds would necessarily entail significant cross border effects.30 5.19  The Merger Regulation therefore includes a system of referral that allows the reallocation of mergers between the Commission and Member State national competition authorities (NCAs), according to the principle of ‘most appropriate authority’, discussed in detail in Section C.2.31 In the last ten years, the use of referrals has increased significantly and the referral system seems to be working well, but some improvements could still be introduced, notably in relation to the time required for a referral to be requested and granted. The Commission has recently issued a public consultation which contains proposals that should (p. 545) lead to an acceleration of the referral process in the case of Article 4(5) and Article 22 referrals from Member States to the Commission.32

(c)  One-Tier Administrative Procedure Subject to Judicial Review 5.20  Unlike in the US or the UK (currently), the Commission does not bring problematic cases before a court or refer them to a different administrative authority. Rather, the Commission deals with cases from the very initial steps of the merger control procedure (‘pre-notification’ phase) until the very last stages, culminating in either clearance or prohibition. 5.21  There is, however, a right of appeal to the EU Courts, discussed in detail in Section G.

(d)  Enforcement Objectives 5.22  The sole objective of the European merger control system is to ensure that competition in the internal market is not distorted.33 Apart from a limited number of residual provisions (eg Article 21(4) of the Merger Regulation, which provides the possibility for Member States to adopt measures to protect their legitimate interests, such as public security, media plurality and prudential rules), non-competition issues are not taken into account in the assessment of mergers. In particular, industrial policy concerns are not part of the assessment under the Merger Regulation.34 5.23  In the course of its enforcement activity, the Commission has generally adopted a consumer- welfare approach, which has become more explicit in recent years (see Section E.3). For the purposes of the Merger Regulation, the term ‘consumers’ covers any purchaser of goods or services. This means that intermediate customers are also seen as ‘consumers’ under the Merger Regulation.35

(3)  Statistics on Enforcement Over Time 5.24  As of November 2013, the Commission had received 5, 403 notifications of concentrations under the Merger Regulation. Of these, 151 were withdrawn in either Phase I or Phase II, 2, 128 transactions were cleared under the simplified procedure and 2, 998 notifications resulted in Phase I or Phase II decisions under the normal procedure. 5.25  The enforcement activity of the Commission can be measured using the ‘intervention rate’, which is the ratio between, on the one hand, the sum of decisions approving transactions with remedies, decisions prohibiting transactions, and transactions abandoned by the parties after the opening of Phase II proceedings36 and, on the other hand, the total number of decisions adopted every year by the Commission.

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5.26  The graphs and analysis in paras 5.27–5.30 consider the Commission’s enforcement using this measure. Some preliminary notes of caution are, however, necessary as regards this type of analysis. First, the number of cases and their potential complexity are functions of the (p. 546) transactions themselves. As a result, the ‘output’ in terms of number and type of decisions is not in the hands of the Commission.37 Secondly, a yearly breakdown can be misleading, as complex cases that are likely to result in remedies decisions or prohibitions tend to last for relatively long periods. Depending on the timing of the notification, this can result in the bulk of the work being done in one year but not recorded as a decision until the following year. Thirdly, the Commission’s practice over time provides businesses with a good sense of the types of transaction that may be prohibited or subject to ‘deal breaking’ remedies. In such circumstances, a decreasing intervention rate may simply be a symptom of increased predictability of merger decisions. Lastly, it is worth noting that the Commission does not have targets for enforcement as that could lead to a certain bias in the assessment of particular cases. 5.27  Over the period January 1990 to November 2013, the average intervention rate of the Commission was 7.04 per cent. This means that on average less than 1 in 10 notifications results in commitment decisions, prohibitions, or abandonment during Phase II. 5.28  While an overall average is a useful indicator, it is perhaps more helpful to analyse how the Commission’s enforcement has developed over time. Figure 5.1 tracks the Commission’s intervention rate since the introduction of the European merger control system. View full-sized figure

Figure 5.1  Commission’s intervention rate 1990–2013* *

Up to November 2013

5.29  The intervention rate shown in Figure 5.1 has been calculated by reference to the total number of notifications. That said, a large portion of these cases are unlikely to give rise to competition concerns and are cleared through the ‘simplified procedure’ process. Thus, it is more meaningful to examine the development of the enforcement rate in nonsimplified cases, in the period 2001–13 (see Figure 5.2).38(p. 547)

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View full-sized figure

Figure 5.2  Commission’s intervention rate in non-simplified cases 2001–13* *

Up to November 2013

5.30  In the period January 2001 to November 2013, the average intervention rate of the Commission on non-simplified procedures was 14.41 per cent. This is relatively constant, although it does occasionally vary significantly between different years. The relative stability in the intervention rate over the past 11 years would seem to suggest that the European merger control system has entered a phase of maturity and that, in the absence of very specific circumstances, peaks of particularly low or high levels of enforcement appear to be unlikely in the future.

Footnotes: 1

  The 1951 Treaty establishing the European Coal and Steel Community (ECSC Treaty) contained a limited ex ante system of merger control. 2

  In 1973, the CJ adopted its judgment in Continental Can, confirming the Commission’s ability to apply Art 102 (at the time, Art 86 EEC) to acquisitions by a dominant company (Case C-6/72 Europemballage and Continental Can v Commission [1973] ECR 215). In the years that followed, the Commission increasingly applied Art 102 to acquisitions, even requiring the parties to submit remedies to avoid infringement proceedings (eg Mecaniver/ PPG, OJ 1985 L35/54). In the course of the 1980s, the Commission also started to apply Art 101 (at the time, Art 85 EEC) to concentrative operations. In Joined Cases 142 and 156/84 BAT and Reynolds v Commission [1987] ECR 4487 (‘Philip Morris’), the CJ upheld this approach. 3

  In particular, Art 101 required the existence of an agreement, which was not always possible to establish in cases of acquisition of control. In turn, Art 102 could only be applied when the undertaking already held a dominant position before the concentration. Finally, the ex post nature of both instruments was not well suited to the control of structural operations. 4

  Case IV/M.53 Aerospatiale-Alenia/de Havilland (1991), OJ 1991 L334/42.

5

  Case IV/M.190 Nestlé/Perrier (1992), OJ 1992 L356/1. The CJ confirmed the validity of the Commission’s approach with regard to collective dominance in Joined Cases C-68/94 and C-30/95 France v Commission (Kali & Salz) [1998] ECR I-375. The recognition of this principle was particularly important, given that while Art 102 explicitly refers to ‘Any abuse by one or more undertakings’ (emphasis added), the 1989 Merger Regulation only referred to ‘a concentration which creates or strengthens a dominant position’, without any mention of the individual or collective nature of such dominance. 6

  Under Art 10(6) of the 1989 Merger Regulation, if the Commission did not take a decision within the legal deadline, the concentration was deemed to have been declared compatible

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with the internal market. This provision remains fundamentally unchanged in the current Merger Regulation. 7

  The yearly number of notifications grew from 64 in the first full year of application of the Merger Regulation (1991) to 131 five years later (1996) and to 335 by 2001. 8

  Council Regulation (EC) No 1310/97 of 30 June 1997 amending Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, OJ 1997 L180/1. 9

  The 1989 Merger Regulation provided that joint ventures were to be assessed under the rules on anti-competitive agreements when they gave rise to coordination between the parents (‘cooperative joint ventures’). Cooperative joint ventures were therefore excluded from EU merger control, even where they met the criteria for ‘full functionality’ (ie where they performed on a lasting basis all the functions of an autonomous economic entity). Only full-function joint ventures not giving rise to coordination of the competitive behaviour of the parents amongst themselves or between them and the joint venture (‘concentrative joint ventures’) fell within the scope of the 1989 Merger Regulation. After the 1997 reform, all full-function joint ventures are reviewed under the merger control framework, regardless of whether they may give rise to coordination between the parents. These types of coordinated effects (‘spillover effects’) are now assessed by the Commission under Art 2(4) and (5) of the Merger Regulation. See eg Cases COMP/M.1327 NC/Canal + /CDPQ/BankAmerica (1998); COMP/JV.15 BT/AT&T (1999); and COMP/JV.22 Fujitsu/Siemens (1999). For more details on spillover effects, see C. Bengtsson, J.M. Carpi Badia, G. Loriot, and A. Whelan, ‘The Substantive Assessment of Mergers—Anti-Competitive Effects’ in G. Drauz and C. Jones, EU Competition Law (2nd edn, Deventer: Claeys & Casteels, 2012), 460ff. 10

  Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EEC) No 4064/89, OJ 2000 C217/32. See Section D.8 for a discussion of the simplified procedure. 11

  Case COMP/M.1524 (1999); Case T-342/99 Airtours v Commission [2002] ECR II-2585.

12

  Case COMP/M.2416 (2001); Case T-5/02 Tetra Laval v Commission [2002] ECR II-4381.

13

  Case COMP/M.2416 (2001); Case T-310/01 Schneider Electric v Commission [2002] ECR II-4071. 14

  In January 2014, Directorate B was responsible for energy and environment; Directorate C for information, communication, and media; Directorate D for financial services; Directorate E for basic industries, manufacturing, and agriculture; and Directorate F for transport, post, and other services. 15

  Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ 2004 L 24/1. 16

  See R. Whish and D. Bailey, Competition Law (7th edn, Oxford: Oxford University Press, 2012), 864–7; S. Volcker, ‘Mind the Gap: Unilateral Effects Analysis Arrives in EC Merger Control’ (2004) Eur Comp L Rev 25–7. 17

  Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ 2004 C31/5. 18

  Commission Notice on Case Referral in respect of concentrations, OJ 2005 C56/2.

19

  Guidelines on the assessment of non-horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ 2008 C265/6. 20

  Commission Notice on remedies acceptable under the Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004, OJ 2008 C267/1.

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21

  See Press Release IP/13/288 (27 March 2013).

22

  Commission Staff Working Document, Towards more effective EU merger control, 25 June 2013, SWD(2013) 239. See also Press Release IP/13/584. The consultation also contains proposals concerning various other amendments, eg the exclusion from the scope of the Merger Regulation of joint ventures located and operating outside the EEA without any conceivable impact on markets in the EEA, and a modification of Art 8(4) of the Merger Regulation to allow the dissolution of partially implemented transactions declared incompatible with the internal market. 23

  Described further in Section B.3(f).

24

  Described further in Section C.2(e).

25

  Merger Regulation, Art 4(1).

26

  Merger Regulation, Art 7(1).

27

  Emphasis added. See Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings, OJ 2004 C 31/03 (‘Horizontal Merger Guidelines’), para 2. 28

  Horizontal Merger Guidelines, para 9. See also Non-Horizontal Merger Guidelines, para 20. See the discussion at Section E.1(b). 29

  Commission Notice on Case Referral in respect of concentrations (‘Notice on Referrals’), para 2. 30

  For an assessment on the effectiveness of the thresholds, see R. Van den Bergh and P. Camesasca, European Competition Law and Economics: A Comparative Perspective (Antwerp: Intersentia, 2001), 145–51. 31

  See Notice on Referrals, paras 5 and 8.

32

  See more specifically, Section C.2(e).

33

  Merger Regulation, recitals 2–6 and 24.

34

  See, however, D. Geradin and I. Girgenson, ‘Industrial Policy and European Merger Control—A Reassessment’ (2011), available at . 35

  Non-Horizontal Merger Guidelines, para 16.

36

  The rationale for including transactions abandoned in Phase II in the calculation of the intervention rate is that these transactions can generally be presumed to be aborted by the parties in anticipation of the likely negative outcome of the Commission review. 37

  N. Calvino, ‘When Do Mergers Raise Concerns? An Analysis of the Assessment Carried out by the European Commission under the New Merger Regulation’ [2011] J Eur Comp L & Practice 2. 38

  The Notice on Simplified Procedure entered into force in the second half of 2000. Thus, the first full year that can be taken into account for the purpose of these statistics is 2001.

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Part I General Principles, 5 Mergers, B Jurisdiction Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Appeals to General Court — Notification — Application of EU competition rules — National merger control — Sole control — Ancillary restrictions — Economic or commercial activity

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B. Jurisdiction (1)  Overview 5.31  Under the ‘one-stop shop’ system of EU merger control, concentrations that come within the scope of the Merger Regulation are reviewed exclusively at the EU level, by the Commission under the rules of the Merger Regulation.39 By contrast, those concentrations not covered by the Merger Regulation may be subject to review by the EU Member States, in accordance with their respective merger control regimes.40 This allocation of jurisdiction is without prejudice to the possibility of referrals in appropriate circumstances.41

(p. 548) (a)  Two-Limbed Test to Determine Jurisdiction 5.32  There are two limbs to the test for whether a concentration falls within the scope of application of the Merger Regulation. First, the transaction must constitute a ‘concentration’ within the meaning of the Merger Regulation.42 Secondly, the concentration must have an ‘EU dimension’.43

(i)  The Concept of a ‘Concentration’ 5.33  The concept of a concentration comprises operations which bring about a lasting change in the control over at least one undertaking and accordingly in the structure of the market.44 This includes three broad categories of transaction: (a) the merger of two or more previously independent undertakings or parts of undertakings; (b) the acquisition of control (direct or indirect, de jure or de facto) over the whole or parts of one or more undertakings; and (c) the creation of a full-function joint venture (ie a joint venture performing on a lasting basis all the functions of an autonomous economic entity).45 5.34  Each of these categories involves sufficiently long-lasting structural changes to bring almost all such transactions within the Merger Regulation. However, acquisitions of control on a temporary basis (eg the acquisition of control by a liquidator in insolvency proceedings or the temporary holding by a credit institution of securities acquired for resale) are not deemed to constitute concentrations because they lack such a structural/long-lasting nature.46

(ii)  The Requirement of an ‘EU Dimension’ 5.35  For a concentration to be notified to the Commission, it must have an EU dimension.47 This depends on whether the undertakings concerned meet certain thresholds regarding their worldwide turnover, EU-wide turnover, and turnover in each Member State.48 The combination of these different thresholds ensures that concentrations have an EU dimension only if they involve large undertakings, with significant activities in the EU, which are not mainly active in only one Member State.

(b)  Regulatory Framework: The Merger Regulation and the Jurisdictional Notice 5.36  The Merger Regulation sets out the main concepts and elements required to assess jurisdiction. In particular, it defines the concept of a concentration, identifies the categories of transactions which are covered by it, describes situations where no concentration will be deemed to arise and others where different transactions will be considered as one concentration, establishes the relevant sets of turnover thresholds required for finding an EU dimension, and sets out rules for the calculation of turnover. These provisions are developed (p. 549) in and complemented by the 2008 Consolidated Jurisdictional Notice (the ‘Jurisdictional Notice’).49 5.37  Table 5.1 identifies the main jurisdictional provisions of the Merger Regulation and the Jurisdictional Notice.

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Table 5.1  Main provisions on jurisdiction

Definition of a concentration

Merger Regulation

Jurisdictional Notice

Article 3

Paragraphs 7, 8

recitals 8, 20 – Mergers

Article 3(1)(a)

Paragraphs 9, 10

– Acquisitions of control

Article 3(1)(a), (2), (3)

Paragraphs 11–35, 54–90

– Full function joint ventures

Article 3(4)

Paragraphs 91–109

recital 20 – Scenarios where no concentrations arise

Article 3(5)

Paragraphs 51, 52–53, 110– 116

– Staggered and interrelated transactions

Article 5(2) 2nd subpara

Paragraphs 36–50

recital 20 Abandonment of concentrations and changes in transactions post-clearance

—

Paragraphs 117–123

EU dimension: turnover thresholds

Article 1

Paragraphs 124–128

recitals 9, 10 EU dimension: undertakings concerned

—

Paragraphs 129–153

EU dimension: calculation of turnover

Article 5

Paragraphs 157–220

recital 22

(c)  Discussions with the Commission on Jurisdiction in Individual Cases 5.38  The EU Courts have ruled that it is the responsibility of the undertakings concerned to assess the nature and potential EU dimension of a planned transaction and to determine, as a result, which authorities should be notified.50 Similarly, Member States’ competition authorities must check, when a concentration is notified to them, that such concentration does not have an EU dimension.51 5.39  While the Jurisdictional Notice is a comprehensive text, its application to the wide array of possible factual and legal circumstances is not always straightforward: often cases raise novel issues or present specificities that cast legitimate doubts on whether the EU jurisdictional tests are met. In view of these complexities, undertakings (namely, the potential notifying parties) can request informal guidance on jurisdictional matters from DG Competition. 5.40  Such guidance is known as a ‘Consultation on jurisdiction’ and is given the case-file descriptor ‘C.’. Consultations must directly relate to an actual, planned transaction; they cannot (p. 550) be merely hypothetical.52 The undertakings concerned must submit sufficiently detailed background information for the Commission properly to assess its jurisdiction over the case.53 If the Commission preliminarily concludes that the transaction does not fall under the EU merger regime, the competent Director of DG Competition will communicate this assessment to the undertakings concerned by letter. If the case team considers instead that the Commission is competent, it informally signals its positive assessment to the undertakings concerned (usually by email or phone call), so that the pre-

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notification phase may start in earnest (typically, the case becomes an ‘M.’ file at that stage).54 5.41  Third parties, in turn, may submit a complaint to the Commission, where they believe that a concentration with an EU dimension has not been notified to the Commission.55 While there is no formal mechanism for such complaints in the Merger Regulation,56 the General Court has noted (acknowledging the existing practice) that the Commission is required to decide on the principle of its competence as supervising authority57 and must, in the interests of sound administration, conduct a thorough and impartial examination of the complaint and provide reasoned answers to the complainant’s arguments.58 However, receipt (p. 551) of a complaint does not suspend any pending national procedure.59 If the Commission preliminarily considers that it does have jurisdiction, it will require the undertakings concerned to submit a notification. 5.42  The formal decision on jurisdiction over a notified concentration is only taken, in any event, at the end of the Phase I process, in the decision adopted in accordance with Article 6 of the Merger Regulation.60

(2)  The Concept of a Concentration: Merger 5.43  The Merger Regulation does not explicitly define the concept of a merger. However, by confining it to operations between previously independent undertakings, the Regulation excludes purely internal restructurings. Additionally, by differentiating it from an acquisition of control by one undertaking over another, the Regulation presupposes a position of parity between the participating undertakings.61 5.44  The Jurisdictional Notice does provide a detailed definition of a merger62 which is described as the amalgamation of two or more independent undertakings into a new one, as a result of which either: (a) the pre-existing companies cease to exist as separate legal entities; (b) one undertaking is absorbed by another and ceases to exist as a legal entity, while the company that has absorbed it retains its legal identity; or (c) the combination of the activities results de facto in the creation of a single economic unit.63 While (a) and (b) constitute ‘legal’ mergers, (c) represents an ‘economic’ merger. 5.45  As an example of a legal merger, see VEBA/VIAG,64 where two hitherto independent undertakings decided to merge. See also Conoco/Phillips Petroleum,65 where two US companies agreed that each would merge with separate newly created companies, wholly owned by a new parent, of which the two undertakings became wholly owned subsidiaries. For an illustration of a case where the undertaking absorbed ceased to exist as a separate legal entity and the absorber remained as the surviving corporation, see Ingram Micro/ Brightpoint.66 5.46  Carnival Corporation/P&O Princess II67 provides an illustration of an economic merger: the notifying parties, two cruise companies, agreed to create a dual listed company structure combining their activities. While the operation did not involve a legal merger or the transfer of assets between the undertakings concerned, both agreed to be managed and operated as if they were a single economic enterprise, pursuant to contractual arrangements and amendments to their respective constitutional documents. Although each company was to (p. 552) continue to have a separate existence, their respective boards and senior management were to be identical. 5.47  Typically, mergers (notably legal mergers) do not present any significant complexity in terms of establishing EU jurisdiction. Sometimes, however, the characterization of an operation as a merger or an acquisition of control may not be entirely evident (eg where an undertaking merges with a subsidiary of another undertaking).68 In practical terms, whether a concentration is a merger or an acquisition of control will notably impact on the formalities of notification; all parties to a merger are required to submit the notification and are treated as ‘notifying parties’, whereas the undertaking that is the target of the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

acquisition of control is not a notifying party and is considered to be an ‘other involved party’ (like the seller).69

(3)  The Concept of a Concentration: Acquisition of Control (a)  Overview 5.48  The vast majority of concentrations notified to the Commission involve the acquisition of control by an undertaking of another undertaking or business. Ultimately, whether an operation gives rise to an acquisition of control depends on a number of legal and/or factual elements.70 The main elements relevant to the assessment of whether there has been an acquisition of control are set out in Article 3(1)(b) of the Merger Regulation and developed in the Jurisdictional Notice.71

(b)  Control 5.49  The concept of control under the Merger Regulation may be different from that applied in other areas of EU and national legislation (eg prudential rules, taxation, air transport or media) and thus the interpretation of these other legal texts may be of little relevance for the purposes of the implementation of EU merger control.72 (p. 553) 5.50  Control is generally determined by qualitative rather than quantitative criteria. Control is defined by Article 3(2) of the Merger Regulation as the possibility of exercising decisive influence over an undertaking. This influence may consist of the power to determine the strategic behaviour of the undertaking (positive control) or the power to veto the adoption of essential decisions for the determination of such strategic behaviour (negative control). 5.51  The mere possibility of exercising decisive influence is enough for a finding of control. In practice, this means that it is not necessary to show that such influence will ever actually be exercised.73 Indeed, an acquisition of control may occur even if this is not the declared intention of the acquirer (eg shares may be bought exclusively as a financial investment, without any underlying intention of managing the company).74 The concept of control is thus based on objective criteria, insofar as it is not based on the intention of the acquirer(s).

(i)  Who Acquires Control? 5.52  To come within the scope of the Merger Regulation, a concentration must involve a change of the current holder(s) of control or in the nature of such control. 5.53  Generally, control is obtained by one or by several undertakings.75 Acquisitions by natural persons only come within the scope of the Merger Regulation insofar as such persons carry out further economic activities on their own account or control at least one other undertaking.76 5.54  The acquisition of control can be direct or indirect; according to Article 3(3) of the Merger Regulation, control may be acquired by persons or undertakings which are holders of the rights or entitled to rights under the contracts concerned or, while not being holders of such rights or entitled to rights under such contracts, have the power to exercise the rights deriving therefrom. The practice of the Commission is not simply to look at the formal holder of the rights but to look behind this and focus on the person or undertaking who has the real power to exercise the rights conferring control.77 5.55  In the case of a shareholding held by different entities in a group, the Commission will look closely at the identity of the entity ultimately exercising control (decisive influence) over the different undertakings involved. This analysis may occasionally be relatively complex, as demonstrated in Anglo American Corporation/Lonrho,78 where the assessment of indirect control was conducted on the basis not only of (cross-) shareholdings

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between different undertakings involved, but also of other factors such as contractual relations, sources of financing and family links.79 (p. 554) 5.56  Finally, in cases of acquisition of control by investment funds, it is generally considered that control is not exercised by the fund itself or by the investors who participate as limited partners, but by the investment company which set up the fund.80

(ii)  How Can Control Be Acquired? 5.57  The acquisition of control may occur either on a de jure or a de facto basis and through a variety of means. Article 3(2) of the Merger Regulation provides that control may be constituted by rights, contracts, or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on an undertaking. This provision explicitly refers to the ownership or the right to use all or part of the assets of an undertaking and to rights or contracts which confer decisive influence on the composition, voting, or decisions of the organs of an undertaking. 5.58  The most common means of acquiring control is undoubtedly the acquisition of shares (in the case of legal entities) or of assets (in the case of a business not organized or acquired as a separate legal entity). 5.59  Control can also be acquired on a contractual basis,81 as in the case of long-term82 contracts transferring powers over the management and the resources of an undertaking (eg the Beherrschungsvertrag and the Contrato de subordinação in German and Portuguese law, respectively).83 Franchising agreements do not normally confer control over the franchisee’s business to the franchisor.84 Purely financial agreements, in turn, do not normally constitute a concentration as they do not involve a change in control over management and resources.85 5.60  In exceptional circumstances, a situation of economic dependence may lead to control on a de facto basis where, for example, very important long-term supply agreements or credits provided by suppliers or customers, when coupled with structural links, confer decisive influence.86 5.61  In some cases, the means by which control is acquired is the action of a party other than the one acquiring control. For example, if a large shareholder exits a company and sells its shares to a multitude of small investors, a previously non-controlling shareholder may find itself in a situation of de facto control, insofar as it now holds sufficient votes to obtain a stable majority at the General Assembly Meetings that small investors are unlikely to attend.87

(p. 555) (iii)  The Object of Control 5.62  Article 3(1)(b) of the Merger Regulation identifies what can constitute the object of the acquisition of control, namely one or more undertakings (ie legal entities) or parts or assets thereof. In the latter case, the assets must constitute a business with a market presence, to which a market turnover can clearly be attributed.88 5.63  Such assets may notably consist in manufacturing assets (eg an operation including machinery, motor vehicles, equipment, real property and inventory,89 an electrical power plant,90 or a gas distribution network91). 5.64  The transfer of the client base of a business or of intangible assets such as brands, patents, or copyrights may amount to a concentration if the client base is enough to result in the transfer of a business with a market turnover.92

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5.65  According to the Jurisdictional Notice, in the case of the transfer of mere licences for IP rights, such licences must, at the very least, be exclusive in a certain territory.93 Outsourcing contracts are not generally considered to amount to a concentration, unless they involve the transfer of associated assets and/or personnel that would enable the outsourcing supplier to provide services not only to the outsourcing customer but also to third parties.94 5.66  A good example of when an asset transfer can amount to a concentration is Microsoft/ Yahoo! Search Business,95 where the Commission considered that the notified transaction included the most important assets for a search-advertising business, namely the search and advertising platform technology (Microsoft obtained exclusive access to all the core technologies of the Yahoo search engine), human capital (Microsoft was to hire at least 400 Yahoo employees), and advertising customers (Yahoo customers were to be migrated to Microsoft’s advertising platform) and thus constituted the acquisition of a business with market presence.96

(iv)  The Lasting Nature of the Change in Control 5.67  Only operations that bring about a lasting change in the control of the undertakings concerned and in the structure of the market will come within the scope of the Merger Regulation.97 5.68  This requirement can be met even if the underlying agreements are entered into for a finite period of time, as long as they are renewable or the period envisaged is sufficiently long (a (p. 556) period of eight to ten years is generally considered as sufficiently lengthy, but a case-by-case analysis is ultimately necessary).98 5.69  The Jurisdictional Notice provides specific guidance with respect to several types of transaction deemed to be transitory in nature.99 5.70  First, where several undertakings agree to acquire another company and divide up its assets immediately thereafter, the initial transaction (unlike the subsequent acquisitions of the different parts) is not considered to amount to a concentration, provided that the breakup is legally binding, presents no uncertainty, and takes place within a period of no more than approximately one year.100 5.71  Secondly, where an operation leads to joint control for a start-up period (again of up to one year) but, according to legally binding agreements, will result in sole control by one of the initial shareholders, only the latter acquisition of control will amount to a concentration and needs to be notified.101 5.72  Thirdly, ‘parking transactions’, whereby an undertaking is acquired by an interim buyer (typically a bank) ‘on behalf’ of the ultimate acquirer, to which the business is subsequently sold, are, under certain conditions, considered as the first step of a single concentration comprising the lasting acquisition of control by the ultimate acquirer. In its assessment of such scenarios, the Commission will examine the agreements entered into by the parties, to determine in particular whether the ultimate acquirer bears the major part of the economic risk, solely initiated the sequence of transactions, and is granted specific rights, as well as the links between the interim buyer and the ultimate acquirer.

(v)  Internal Restructurings and Concentrations Involving State-Owned Undertakings 5.73  As a general rule, an internal restructuring within a group of companies (eg a merger of two subsidiaries) does not constitute a concentration because it does not bring about a change of control and therefore does not modify the structure of the market.102 5.74  However, transactions involving mergers between State-owned undertakings present certain specificities. In line with the general rule that the concept of control under the Merger Regulation is based on the possibility of exercising decisive influence, rather than on formal ownership, the key factor will be whether the undertakings have a power of decision independent of the State (and of each other) before and after the transaction.103 From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Where the (p. 557) undertakings were formerly part of different economic units each having an independent power of decision, they will be considered to have acted autonomously from each other prior to the transaction (even if they belonged to the same State or public body) and a transaction which brings about a change in control through the loss of that autonomy of decision would therefore amount to a concentration. Conversely, where the different economic units will continue to have an independent power of decision post-merger, the operation is not considered to be a concentration, even if the shares of those undertakings are now held by the same public holding company, as there is no change in control that modifies the structure of the market. 5.75  EDF/Segebel104 provides a practical illustration of the evaluation of whether an economic unit has an independent power of decision. In that case, the Commission examined whether EDF (in which the French State had a majority shareholding of almost 85 per cent) had such a power, particularly in relation to GDF Suez/Electrabel (where the same State was the major shareholder, with 35 per cent of the shares).105 The Commission particularly examined whether EDF set its own business plan, budget, and strategy, in its own commercial interest, independently from other undertakings owned by the same State entity. Relevant factors identified in that regard were: (a) the existence of interlocking directorships between undertakings owned by the same acquiring entity; and (b) the presence of adequate safeguards ensuring that commercially sensitive information was not shared between such undertakings.106 5.76  In the context of the 2008 financial crisis, the Commission examined various State interventions aimed at stabilizing the financial markets, including the acquisition by the State of controlling shareholdings in individual financial institutions. An illustrative example is SoFFin/Hypo Real Estate,107 where the Commission took a two-step approach to determine whether the acquisition of control by the German Federal State (via SoFFin, the Special Fund for Financial Market Stabilization) over Hypo Real Estate was notifiable under the Merger Regulation: first, it examined whether Hypo Real Estate would, posttransaction, comprise an economic unit that retained an independent power of decision. Secondly, having determined that this was not the case,108 and that the transaction would therefore lead to (p. 558) a change in control, the Commission went on to consider which was the ultimate acquiring entity and which other undertakings controlled by the latter needed to be considered for the purpose of calculating the relevant turnover.109 5.77  Recently, the question whether an undertaking has an independent power of decision has also been asked of companies owned by non-EU States, typically China. In DSM/ Sinochem/JV,110 the Commission examined whether Sinochem, a company wholly owned by the Chinese State (indirectly through the State-owned Assets Supervision and Administration Commission or SASAC) constituted an economic unit having such an independent power.111 The purpose of the assessment in that case was to determine which turnover was attributable to Sinochem for the purposes of the EU dimension test. The Commission followed the two-step approach described at para 5.76 but was ultimately unable to conclude whether Sinochem enjoyed an independent power of decision, notably in the absence of representations by the Chinese State. The issue was, in any event, left open since the turnover threshold was met irrespective of this assessment.

(c)  The Acquisition of Sole Control 5.78  An undertaking will exercise sole control over another undertaking where it has the power to determine the strategic commercial decisions of the target, or to veto such strategic decisions. The first scenario, positive sole control, is normally achieved by the acquisition of a majority of voting rights.112 In the second scenario, negative sole control, the veto power allows the holder to use the threat of creating a deadlock situation to

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determine the strategic behaviour of the controlled undertaking.113 Sole control may be acquired on a de jure or de facto basis.

(i)  De Jure Sole Control 5.79  De jure sole control114 derives from: (a) the acquisition of a majority of the voting rights of a company;115 (b) the acquisition of a minority shareholding (p. 559) with specific rights attached (eg preferential shares conferring the power to appoint more than half the members of the supervisory board or the administrative board);116 or (c) the attainment of the right to manage the activities of the company and to determine its business policy on the basis of its organizational structure (eg a general partner in a limited partnership).117

(ii)  De Facto Sole Control 5.80  De facto sole control is acquired where a minority shareholder is highly likely to achieve a stable majority at the shareholders’ meetings. The assessment of whether a change in the shareholding structure (eg the acquisition of shares, an increase in voting rights of existing shares or the exit of other large shareholders) leads to an acquisition of de facto sole control is a prospective one, with a number of stages:118 5.81  The starting point is the attendance rates at shareholders’ meetings in previous years (typically, three to five), preferably regular rather than extraordinary meetings (where the attendance rate may be higher due to the particular importance of the issues at stake). These rates provide a rough indication of the average percentage of voting rights typically required successfully to control the decision making (the ‘actual’ rather than the ‘legal’ majority). 5.82  This percentage is then used as a benchmark for a post-transaction scenario, taking into account foreseeable changes in shareholders’ presence which might arise in the future following the operation. If the voting rights of a minority shareholder are sufficient to meet the majority actually required on the basis of the percentages, the shareholder may be deemed to have acquired de facto sole control. 5.83  The Commission, however, generally incorporates further qualitative elements to the quantitative analysis. In particular, account is taken of whether: (a) the remaining shares are widely dispersed (as very small shareholders do not typically attend shareholders meetings to exercise their voting rights); (b) other important shareholders have structural, economic or family links with any large minority shareholder (and are likely to align their votes with the latter’s, bringing the combined percentage above the level needed for a majority); and (c) other important shareholders have either a strategic or a purely financial interest in the company (the former being more likely to try to play an active role in the management of the company than the latter). 5.84  Where an assessment of the detail and specificities of the attendance rates and voting rights may raise difficulties, the parties are recommended to contact the Commission early on to assess whether a concentration arises which must be notified. (p. 560) 5.85  News Corp/Premiere119 provides a practical example of the application of the methodology described at paras 5.81 to 5.83.120 Based on the attendance rates at Premiere’s 2006 and 2007 annual shareholders meetings, the Commission concluded that News Corp’s initial shareholding in Premiere (24.2 per cent)121 would have been sufficient for it to exercise a de facto majority of the voting rights. In 2006, the attendance rate had been 44.92 per cent. Although it had dropped to 29.61 per cent in 2007, the Commission added an additional 14.58 per cent for that year which corresponded to shares held under a trust agreement for Unity Media, which was not present at the meeting due to an arrangement with the German competition authority. The average attendance rate for 2006 and 2007 was therefore calculated to be 45.6 per cent. With such an attendance rate, News Corp’s 24.2 per cent would be sufficient to allow it to exercise the majority of votes at a shareholders’ meeting. The Commission further observed that, in June 2008, the attendance

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rate during Premiere’s latest annual shareholders’ meeting reached 54.52 per cent. Despite the fact that News Corp would not have had a majority at that meeting, the Commission concluded that News Corp would acquire de facto sole control since, for a number of reasons, the attendance at the 2008 shareholders’ meeting had been exceptionally high and future attendance rates were likely to be comparable to the average attendance rate for 2006 and 2007.122 5.86  In the assessment of de facto control, options to purchase or convert shares are generally not taken into account unless they have to be exercised in the near future according to legally binding agreements.123 Unless this is the case, only in exceptional circumstances and generally in combination with other elements, will an option be deemed to grant control.124

(d)  The Acquisition of Joint Control 5.87  Unlike sole control, which confers upon a specific shareholder the power to determine the strategic decisions of an undertaking, joint control is characterized by the existence of several shareholders who must reach a common understanding to determine the commercial strategy of the undertaking.125 Joint control exists, in particular, where two or more undertakings have (de jure or de facto) the power to block the adoption of strategic decisions in the target company.126 (p. 561) 5.88  The Jurisdictional Notice identifies three scenarios which can give rise to joint control: equality in voting rights and/or in participation rights; the existence of veto rights; and joint exercise of voting rights.

(i)  Equal Voting Rights 5.89  The first situation takes place where there are only two shareholders in an undertaking, which share equally the voting rights127 or have the right to appoint an equal number of members to the decision-making bodies.128

(ii)  Veto Rights 5.90  The second scenario arises where minority shareholders have the right to veto129 decisions that are essential for the strategic commercial behaviour of the undertaking.130 The veto rights must relate to decisions that are strategic, rather than those that concern the essence of the undertaking: veto rights on changes in the company statutes, an increase or decrease in the capital, or the liquidation of the company are generally considered as decisions that protect the financial interests of minority shareholders rather than strategic commercial decisions. Veto rights over such decisions do not, therefore, confer joint control. Equally, the veto rights do not need to relate to the day-to-day running of the business, as long as they relate to the strategic decisions.131 5.91  The Jurisdictional Notice identifies four main strategic decisions that are relevant for the purposes of assessing joint control: (a) appointment and dismissal of senior management (p. 562) (eg the members of the board); (b) determination of the budget; (c) adoption of the business plan; and (d) approval of investments. In specific markets, other decisions may also be strategic, such as the choice of technology in sectors where innovation is key.132 5.92  For a finding of joint control, it is not necessary to have all the veto rights mentioned at para 5.91. Whether one or more will be sufficient depends on the particular importance of each right in the context of the specific business at stake. For instance, a veto right over the adoption of the business plan may or may not confer control depending on whether the plan sets down a detailed strategy on the measures to be taken to achieve the company’s aims or merely contains general declarations without much practical consequence. Similarly, the importance of a veto right on investments depends both on the level of the

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investment which triggers the veto133 and the extent to which investments constitute an essential feature of the relevant market.134

(iii)  Joint Exercise of Voting Rights 5.93  The third and final scenario is the joint exercise of voting rights by two or more shareholders, either pursuant to a legally binding agreement or, more exceptionally, on a de facto basis. Joint control via a legally binding agreement usually involves a pooling agreement, whereby the shareholders undertake to act in the same way, or is exercised by means of a jointly controlled holding company, to which the parties’ respective voting rights have been transferred. Joint control on a de facto basis requires that there is such commonality of interests (and thus dependency) between the minority shareholders that it is unlikely that they will vote against each other.135 This may be the case where each parent company provides a contribution to the joint venture (eg technology or input) which is vital for its operation.136 Clearly, the greater the number of parent companies involved, the more remote the prospect of a finding of de facto joint control. In the absence of strong common interests, the possibility of changing coalitions (switching alliances) between minority shareholders generally excludes joint control.137 5.94  While the existence of a casting vote in favour of a minority shareholder will, in principle, lead to a situation of sole control (as it gives that shareholder a final say on strategic decisions), joint control may arise if the conditions for the exercise of the casting vote are such that its relevance and effectiveness are limited in practice (eg if the procedure involved is particularly lengthy and cumbersome, or if its exercise triggers significant financial consequences).138

(p. 563) (e)  Changes in the Structure and/or Quality of Control 5.95  The Merger Regulation applies to operations that result in a change either to the identity of the undertaking(s) or person(s) holding control over a company or in the nature or quality of the control exerted by the former over the latter. 5.96  As regards a change in who has control over an undertaking, the application of the Merger Regulation to operations that replace the sole controlling shareholder is selfexplanatory. It is also relatively clear that operations involving a change in the identity of one or more jointly-controlling shareholders should be reviewed, given the need for jointlycontrolling shareholders to cooperate with each other in determining the strategic behaviour of the undertaking; in this respect, the entry of a new shareholder (either in addition to or to replace pre-existing shareholders) adds a new set of interests to the decision making and thus affects the potential conduct of the undertaking on the market. 5.97  Finally, as to the significance of changes in the nature of control, decisive influence exercised alone is substantially different from decisive influence exercised jointly, since in the latter case the controlling shareholders have to take into account their respective (and potentially different) interests when determining the strategic behaviour of the controlled undertaking. 5.98  Conversely, the Merger Regulation does not concern corporate changes that affect neither the incentives of the controlling shareholder(s) nor the nature of the control structure itself. Thus, for instance, neither a mere reduction in the number of jointlycontrolling shareholders nor a change from negative to positive control of a sole controlling shareholder would fall to be reviewed under the Merger Regulation. 5.99  Table 5.2 summarizes the main types of changes that may affect the structure of control, distinguishing between those that constitute a concentration (and may thus need to be notified) and those that do not.139

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Table 5.2  Typology of changes in the scenario of control

Concentration

No concentration

Change from sole to joint control

Change from negative to positive sole control

Change from joint to sole control140 Increase in the number of jointly-controlling shareholders (ie entry of an additional shareholder)141

Reduction of the number of jointly-controlling shareholders142

Change in the identity of jointly-controlling shareholders (ie replacement of a shareholder)

Mere changes in the level of shareholdings of the jointly-controlling shareholders143

(p. 564) (f)  Non-Controlling Minority Shareholdings (Structural Links) 5.100  The acquisition of a minority shareholding (sometimes referred to as a structural link) that does not confer on the acquirer either (positive or negative) sole control or (de facto or de jure) joint control does not constitute a concentration for the purposes of the Merger Regulation.144 Under the current EU merger regime, the Commission can only examine the effects of non-controlling minority shareholdings in cases where it is competent to analyse a separate merger or acquisition of control and only to the extent of assessing pre-existing shareholdings of the undertakings concerned in other entities. The Commission has intervened in such scenarios in a number of cases, making its clearance decision on the merger or acquisition conditional upon remedies, often entailing a divesture of the pre-existing minority shareholding in those other entities.145 5.101  Acquisitions of structural links may lead to anticompetitive effects by: (a) reducing the competitive pressure between competitors (horizontal unilateral effects); (b) facilitating coordination among competitors (horizontal coordinated effects); or (c) allowing companies to hamper competitors’ access to inputs or customers in the case of vertical structural links (vertical effects). While such potential anti-competitive effects are likely to be less pronounced than in the case of acquisitions of control, they may nonetheless lead to a significant impediment to effective competition (potentially affecting, eg, innovation, growth, offer, or prices). Moreover, the scope for potential efficiencies is generally smaller in the case of structural links than in the case of acquisitions of control.146 5.102  The tools currently available under the Merger Regulation do not allow the Commission systematically to prevent the potential anti-competitive effects deriving from structural links that do not amount to an acquisition of control.147 To remedy this situation, the Commission (p. 565) is currently considering extending the scope of the Merger Regulation to give it the ability to intervene in relation to problematic acquisitions of structural links,148 in particular those between competitors or in a vertical relationship.149 5.103  The Commission is considering two basic options for the selection of cases (with a consequent impact on the relevant procedural framework). The first option is to extend the current system of ex ante merger control to (certain) structural links. This would entail the extension of the notification and standstill obligations to the acquisition of such links. The second option is for the Commission to have discretion to select cases of structural links to investigate. This second option could entail either a self-assessment system, whereby the parties would be allowed to proceed with the transaction unless and until the Commission intervenes (the latter will have to rely on market intelligence and complaints to become aware of cases that may raise competition issues) or, alternatively, a so-called transparency system, where the parties would be required to file a short information notice (containing information on the undertakings involved, the type of transaction and an overview of the economic sectors or markets concerned). Under both the self-assessment and transparency procedures, it would need to be decided whether parties should have the possibility to make From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

a voluntary notification. Furthermore, precise rules would be required to delineate the respective powers of the Commission and the Member States NCAs, including (possibly) a referral mechanism. 5.104  The precise identification of the types of minority shareholding acquisition that would be subject to EU merger control depends to some extent on which of these options is ultimately retained. If a notification system is adopted, safe harbours are likely to be necessary, based on shareholding levels (eg 10 per cent) and/or the absence of special shareholders’ rights. An alternative is the adoption of a substantive criterion, such as the acquisition of a competitively significant or material influence, used in Germany and the UK respectively. In turn, under a self-assessment or transparency system, the Commission would have the discretion to select those cases which it intends to review. Under all options, it is likely that EU jurisdiction would be subject to the turnover thresholds of the Merger Regulation currently in place. 5.105  As to the substantive standard applicable to the examination of structural links, the Commission seems inclined to apply the current SIEC test. Additional clarifications may however be required, probably in the form of specific guidelines. Joint ventures will in all likelihood also be subject to an assessment of whether the structural link has the object or effect of coordinating the parents’ conduct and, if so, whether such coordination infringes Article 101.150

(p. 566) (g)  Exceptions Under Article 3(5) of the Merger Regulation 5.106  Article 3(5) sets out three situations where the acquisition of a controlling interest (each involving the purchase of securities only) does not constitute a concentration under the Merger Regulation. 5.107  First, the acquisition by a financial institution or insurance company of securities with a view to reselling them. The acquiring company must not exercise the voting rights to determine the strategic commercial behaviour of the target company151 and must dispose of its controlling interest within one year (the Commission may, however, extend this period at the request of the acquirer).152 5.108  Secondly, the acquisition of control by an office-holder in insolvency or liquidation proceedings.153 5.109  Thirdly, certain acquisitions by a financial holding company,154 as long as the exercise of the relevant voting rights is exercised only to maintain the full value of the investment and not to determine directly or indirectly the strategic commercial conduct of the target. 5.110  In these three scenarios, the controlling interest must be held on a temporary basis and/or under conditions that do not allow the acquiring company to determine the competitive behaviour of the controlled undertaking. The exceptions are interpreted narrowly and do not apply to typical investment fund structures (which normally appoint the members of the management and supervisory boards of the target and even proceed to restructure the latter) or if the transaction is part of a broader operation (eg in the case of ‘parking transactions’).155

(4)  Joint Ventures (a)  Introduction 5.111  The assessment of whether a transaction involving a joint venture falls within the scope of the Merger Regulation raises a number of specific issues.

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5.112  As a general rule, for such an operation to bring about a lasting change in the control of the undertakings concerned and therefore in the structure of the market, it must involve a joint venture performing on a lasting basis all the functions of an autonomous economic entity.156 This requirement is known as the ‘full-functionality test’. 5.113  It is therefore necessary to define what constitutes a joint venture (Section B.4(b)); to determine in which cases the full-functionality test applies (Section B.4(c)); and to determine under which conditions this test is met (Section B.4(d)).

(p. 567) (b)  Concept of Joint Venture 5.114  Neither the Merger Regulation nor the Jurisdictional Notice defines the concept of joint venture. It is commonly accepted that a joint venture is an undertaking which is jointly controlled by several other undertakings. Indeed, the Jurisdictional Notice equates the concept of joint venture with the existence of joint control over an undertaking.157 5.115  Article 3(4) of the Merger Regulation provides that the creation of a joint venture performing on a lasting basis all the functions of an autonomous economic entity (a socalled full-function joint venture) constitutes a concentration.158 5.116  Beyond the creation of the joint venture itself, a number of transactions may need to be notified over the lifetime of a joint enterprise. 5.117  First, the replacement of one or several of the parent companies of a full-function joint venture or the addition of a new one may need to be notified. In contrast, a mere reduction in the number of parents does not constitute a concentration, unless it results in a change from joint to sole control.159 5.118  Secondly, an enlargement of the scope of the activities of a full-function joint venture may also need to be notified. This will be the case where the parent companies transfer to the joint venture either the whole or part of another undertaking (provided that this acquisition, in itself, constitutes a concentration) or significant additional assets, contracts, know-how, or other rights160 (provided that they constitute the basis for an extension of the activities of the joint venture into product or geographic markets which were not initially part of its object and that such activities are also performed on a fullfunction basis).161 5.119  Thirdly, a concentration arises where a non-full-function joint venture becomes full function.162 The triggering event for the obligation to notify is normally the decision of the parents or of the joint venture’s management that results in the change from non-full function to full-functionality (eg a decision that the joint venture should start supplying the market and not only the parent companies).163

(p. 568) (c)  Identification of the Relevant Jurisdictional Test 5.120  As a general rule, the Merger Regulation applies only to joint ventures which meet the full-functionality test.164 In certain transactions involving joint ventures, however, this test is not relevant.

(i)  Creation of a Joint Venture 5.121  Pursuant to Article 3(4) of the Merger Regulation and paragraph 92 of the Jurisdictional Notice, the creation of a joint venture must meet the criterion of fullfunctionality in order to constitute a concentration. This requirement applies both to greenfield joint ventures where the parties set up the joint venture with newly created/built assets (Figure 5.3) and to joint ventures to which the parties contribute assets that they previously owned individually (Figure 5.4).165

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View full-sized figure

Figure 5.3  Creation of a joint venture (greenfield operation) View full-sized figure

Figure 5.4  Creation of a joint venture (one parent contributes assets)

(p. 569) (ii)  Joint Acquisitions of an Undertaking or Business 5.122  Pursuant to paragraph 91 of the Jurisdictional Notice, where several undertakings acquire joint control of an existing undertaking or parts of an undertaking (assets constituting a business with a market presence) from third parties (see Figure 5.5), the question of full-functionality will not be relevant.166 View full-sized figure

Figure 5.5  Joint acquisition of control from a third party (Jurisdictional Notice, para 91) 5.123  In such cases, the relevant jurisdictional test is whether the target of the acquisition of control is a business with a market presence to which a turnover can be clearly attributed (Jurisdictional Notice, para 24). This test differs from the full-functionality test in a number of respects. First, full-functionality requires an assessment of the operational autonomy of the joint venture and of its relations with its parents. Secondly, the fullfunctionality assessment is typically forward-looking (will the joint venture operate on a market independently and on a lasting basis?), while the test set out in paragraph 24 of the Notice is applied ex ante (does the target business currently have a market presence to which a turnover can be attributed?). Thus, for example, the creation of a joint venture that will only sell its products to its parents (and therefore not to third parties) does not typically meet the full-functionality test and would therefore not be notifiable. However, the acquisition from a third party of joint control over a business selling on the market may be notifiable even if, after the transaction, it will only sell its products to its parents, as it

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constitutes an acquisition of a business with a market presence to which turnover can be attributed. 5.124  The rationale behind the rule in paragraph 91 of the Jurisdictional Notice is straightforward. The acquisition of joint control over an existing undertaking or assets will lead to a structural change in the market because it concerns a business with an actual market presence. This will apply even if, according to the plans of the acquiring undertakings, the target will no longer be considered full-function after the transaction (eg because it will thereafter sell exclusively to its parents).167 5.125  A key element in the reasoning behind this rule is that the Commission is understandably wary of transactions through which two or more undertakings could acquire an undertaking (p. 570) or a business from a third party and withdraw it from the market: for example, it is possible to conceive of a situation where two companies acquire a business that supplies an input necessary for their respective downstream products, with the aim of keeping that source of supply (which was previously supplied to the market) exclusively for themselves and preventing their competitors from having access to those supplies. 5.126  Paragraph 91 of the Jurisdictional Notice explicitly requires that the operation involves an acquisition of control ‘from third parties’.168 Hence, this provision does not seem to cover a transaction whereby one or several companies acquire joint control over an undertaking and the company that sold the stake to them remains as one of the jointly controlling undertakings post-transaction (namely, cases where the seller retains joint control: see Figure 5.6). It could be argued that such an acquisition might lead to a structural change in the market and thus that the rule of paragraph 91 could be applied by analogy to this scenario.169 Alternatively, it is also arguable that, since such a transaction does not strictly fall within the scenario set out in paragraph 91, it should instead be subject to the requirement of full-functionality, pursuant to paragraph 92 of the Notice.170 View full-sized figure

Figure 5.6  Joint acquisition of control (seller retains control)

(iii)  Other Operations Involving Joint Ventures 5.127  For operations consisting in the replacement or the addition of a controlling shareholder in a joint venture (Figures 5.7 and 5.8), the appropriate test is, it is submitted, a test based on the full-functionality criterion. Indeed, there seems to be little merit in the assessment of these transactions if the joint venture is not (p. 571)

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View full-sized figure

Figure 5.7  Replacement of a co-controlling shareholder View full-sized figure

Figure 5.8  Entry of a new co-controlling shareholder full function before and after the operation. The full-functionality test is also the relevant standard in those transactions consisting in the enlargement of the scope of the activities of a full-function joint venture or whereby a non-full-function joint venture becomes full function. (d)  The Requirement of Full-Functionality

(i)  Overview 5.128  The full-functionality criterion determines whether the Merger Regulation or Article 101 will apply to the creation of a joint venture. The creation of a full-function joint venture constitutes a concentration falling under the Merger Regulation. Agreements concerning the formation of a joint venture which is not full function, on the other hand, are subject to the rules of Article 101.171 This distinction between full-function and non-full-function joint ventures replaces the original difference in treatment between concentrative and cooperative joint ventures under the 1989 Merger Regulation.172 (p. 572) 5.129  In order to be considered full function, the joint venture must be intended (and have been provided with the necessary resources) to operate independently and on a lasting basis on a market and not merely to take over one specific function within its parent companies’ business activities.173 Full-functionality must be understood as the possibility for the joint venture to enjoy operational autonomy (in the day-to-day running of its business), not as the power independently to adopt its strategic decisions: it is intrinsic to the notion of a joint venture that the latter is vested in its parent companies.174 5.130  Where an operation creates different legal entities constituting a single economic unit, the assessment of full-functionality must take into account this overall reality. For example, in IBM Italia/Business Solutions/JV175 the Commission considered that the three separate legal entities (with different governance rules) established by the parties constituted a single economic unit. The Commission notably relied on the parties intentions, as manifested in the underlying Memorandum of Understanding, and took into account that the three entities were highly interdependent; one was to provide various services to the other two entities and to act as their intermediary and marketing organization, while the latter were contractually obliged to sell their services through the former. While each of the legal entities was unlikely to be full function on its own, the Commission concluded that From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

these separate legal entities would act together and that, as such, constituted a single fullfunction joint venture.176

(ii)  Sufficient Resources to Operate Independently on the Market 5.131  A full-function joint venture must have a management dedicated to its day-to-day operations and access to sufficient resources (notably finance, staff, and tangible and intangible assets) to conduct its business activities as provided for in its founding agreement.177 The Commission has generally considered that the secondment of personnel by the parent companies does not prevent a finding of full-functionality, provided it is only for a start-up period or is conducted at arm’s length, on the basis of normal commercial conditions.178 Further, although the joint venture (p. 573) must have sufficient resources, whether it is profitable will not determine the assessment of its operational autonomy.

(iii)  Relations Between the Joint Venture and its Parent Companies 5.132  A joint venture which merely takes over one specific function within its parent companies’ business activities (eg R&D, production, or distribution) without its own access to or presence on the market is not considered to be full function.179 However, a joint venture that make use of the distribution network or outlet of one or more of its parent companies will normally still be considered to be full function, provided that the parent companies are acting only as agents of the joint venture.180 5.133  The assessment of full-functionality therefore involves a careful examination of all commercial relationships between the joint venture and its parents, particularly in cases where the parent companies have a significant presence in markets upstream or downstream to those where the joint venture is active. 5.134  As a general rule, full-functionality is not excluded where the joint venture relies almost entirely on sales to or purchases from its parent companies for a start-up period, normally not exceeding three years.181 The Jurisdictional Notice contains specific provisions for situations going beyond such an initial period. 5.135  First, as sales from the joint venture to its parents, the Commission takes into account the anticipated relative proportion of those sales as compared with the total production of the joint venture. If the joint venture is expected to achieve more than 50 per cent of its turnover with third parties, it will be presumed to be full function.182 If the predicted sales to third parties are less than 20 per cent of total production, there is a presumption of non full-functionality. Between these indicative thresholds, a case-by-case analysis is required of whether the commercial relations between the joint venture and its parents will be at arm’s length183 on the basis of normal commercial conditions.184 The determination of the relative proportion of sales to the parent companies is based on past accounts and substantiated business plans, also taking account of the relevant market structure.185 (p. 574) 5.136  Secondly, as regards purchases from its parents, the essential element is the value added by the joint venture to the purchased products or services.186 If the added value is minor, the joint venture will typically be considered as a joint sales agency and therefore not full function in character. On the other hand, a joint venture active in a trade market and performing the normal functions of a trading company will generally be considered full function, provided it has the necessary facilities (eg outlets, stockholding, warehouses, depots, transport fleets, and sales and service personnel) and is likely to obtain a substantial proportion of its supplies from sources other than its parent companies.187

(iv)  Operating on a Lasting Basis

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5.137  To be full function, a joint venture needs to operate on a lasting basis. This requirement will not be met where the joint venture is established for a short finite duration (eg where it is set up to construct a specific project but not to manage it once construction has been completed). In contrast, the requirement will be fulfilled where the period of operation contemplated in the joint venture agreement is sufficiently long to bring about a lasting change in the structure of the undertakings concerned188 or if the agreement allows for a continuation of the joint venture at the end of the finite period.189 Provisions allowing for dissolution of the joint venture in the event of commercial failure or fundamental disagreement between its parents will not prevent a joint venture from being considered to operate on a lasting basis.190 5.138  Where the commencement of the joint venture’s activities is dependent on a decision of a third party that is not certain to be made in favour of the joint venture (eg the award of a tender or the grant of a licence), the joint venture will not be considered as operating on a lasting basis while the decision remains outstanding. The concentration will only arise once the relevant decision has been taken in favour of the joint venture.191

(5)  Interrelated and Staggered Operations 5.139  Seemingly separate transactions may be treated together under the Merger Regulation in two scenarios. First, interrelated operations may be deemed to constitute a single concentration within the meaning of Article 3 of the Merger Regulation. Secondly, pursuant to Article 5(2), second subparagraph, successive concentrations may be treated as one when they take place between the same parties within a two-year period. (p. 575) 5.140  The aim of these two jurisdictional provisions is distinct: Article 3 defines the concept of a concentration, while Article 5(2) deals with the identification of the relevant turnover for the purposes of establishing an EU dimension.192 Where there are two or more transactions between the same persons or undertakings, it must first be determined if the operations are interrelated. If so, they constitute one concentration and may be notifiable on that basis. If they are not interrelated but take place over a two-year period, they will be treated as one and the same concentration arising on the date of the last transaction, according to Article 5(2), second subparagraph.193

(a)  Interdependent Transactions 5.141  Article 3(1) of the Merger Regulation defines the concept of a concentration by reference to the acquisition of control, rather than the means by which this is achieved. It is therefore necessary to identify the economic reality underlying the transactions (as opposed to their legal form) and the aim pursued by the parties. In line with this approach, recital 20 to the Merger Regulation provides that it is appropriate to treat as a single concentration transactions that are closely connected (eg those that are linked by condition). 5.142  On this basis, two or more transactions are deemed to constitute a single concentration if they are unitary in nature, that is, if they are interdependent in the sense that none of the transactions would be carried out without the other(s).194 This requirement is clearly satisfied where the respective transaction agreements are mutually linked (de jure conditionality). In the absence of contractual stipulations, however, it may also be possible to show that the implementation of each transaction necessarily depends on the conclusion of the other (de facto conditionality). An assessment of de facto conditionality is concerned with the economic rationale behind the transactions and normally requires that the conclusion of the relevant agreements be simultaneous (or at least take place within a relatively short period of time).195

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5.143  Further, control over each undertaking must ultimately be acquired by the same undertaking(s). Thus, in de-mergers of joint ventures (by which different parts of an undertaking are split between its former parent companies) or asset swaps, the different acquisitions of control by the different buyers are not deemed to be interrelated and are assessed separately.196 The acquisition of joint control of one part of an undertaking and sole control of another part is in principle regarded as two separate concentrations. However, if the acquisitions are legally or economically interdependent, they may be deemed to be a single concentration if the undertaking acquiring sole control is also one of the undertakings acquiring joint control.197 Separately, it is not possible to treat as one concentration transactions which (p. 576) concern the acquisition of control of an undertaking and the acquisition of a non-controlling interest in another company (as the latter does not amount to a concentration).198 5.144  The Jurisdictional Notice explicitly discusses four situations which will normally result in transactions being considered to be interrelated. 5.145  First, the acquisition of a single business (whether a corporate entity or a package of tangible and/or intangible assets) through several legal transactions.199 5.146  Secondly, the parallel acquisition of control over several undertakings, whereby company A acquires control of both company B and company C in parallel from separate sellers, and this takes place on the condition that A is not obliged to buy B or C and neither seller is obliged to sell unless both transactions proceed.200 5.147  Thirdly, the serial acquisition of control, where company A acquires control of company B conditional on B’s prior or simultaneous acquisition of company C; similarly, where company A agrees first to acquire sole control of company B, with a view to directly selling parts thereof to company C, resulting in the joint control of B by A and C.201 5.148  Fourthly, the acquisition of control by a series of transactions in securities from one or several sellers taking place within a reasonably short period of time.202

(b)  Consecutive Transactions Between the Same Parties (Staggered Transactions) 5.149  Pursuant to Article 5(2), second subparagraph, of the Merger Regulation, two or more transactions (each of which results in an acquisition of control) taking place within a two-year period between the same persons or undertakings shall be treated as one and the same concentration arising on the date of the last transaction, irrespective of whether the transactions relate to parts of the same business or concern the same sector.203 (p. 577) 5.150  The objective of this provision is to prevent parties artificially circumventing the Commission’s jurisdiction by breaking up one overall operation into a series of smaller deals, each falling below the relevant turnover thresholds (often referred to as ‘salami tactics’). 5.151  For this provision to apply, the buyers and sellers in each transaction must be the same; companies belonging to the same group are treated as one for this purpose.204 Hence, the presence of a different or additional buyer or seller in one of the transactions will exclude the application of this rule. However, in situations where one transaction results in sole control and another in joint control, Article 5(2), second subparagraph applies if the other jointly controlling parent in the second transaction is the seller of the controlling stake in the first transaction.205

(6)  Ancillary Restraints

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5.152  Ancillary restraints are restrictions directly related and necessary to the implementation of a concentration.206 The Commission’s jurisdiction extends over the assessment of these restrictions, which will be covered by the merger clearance decision.207 However, since nowadays the Commission does not generally assess individual ancillary restraints in its decision, notifying companies must self-assess the validity of such restrictions. The Commission has provided detailed guidance in a specific Notice,208 setting out principles for assessing whether and to what extent the most common types of agreement are deemed to be ancillary restraints, while reserving the possibility of exercising a residual function with regard to specific novel or unresolved issues209 (in such cases, the Commission may, at the request of the undertakings concerned, expressly assess the ancillary character of the restrictions at stake in its merger decision).210

(7)  The Requirement of an EU Dimension 5.153  The second condition for the application of the Merger Regulation is that the concentration has an EU dimension. This requires that the turnover of the undertakings concerned satisfies the thresholds set out in Article 1 of the Merger Regulation. The identification of the undertakings concerned and the calculation of their turnover are dealt with under Part C of the Jurisdictional Notice.

(p. 578) (a)  The Purpose of Turnover Thresholds 5.154  The Merger Regulation is intended to apply to concentrations that bring about a significant structural change in the internal market, as opposed to those which do not appreciably concern the EU and those whose effects are likely to be contained within the borders of a Member State.211 Naturally, this will depend on the size of the undertakings taking part in the concentration and on the amount of business they carry out in the EU, as well as on whether their European activities are concentrated in one Member State or are diversified across several. 5.155  This basic intuition is translated into a jurisdictional test through the mechanism of turnover thresholds, which are used as a proxy for identifying the overall economic resources of the participating undertakings.212 A concentration with an EU dimension is deemed to exist where the aggregate turnover of the undertakings concerned exceeds the given thresholds. For this purpose, it does not matter whether the undertakings have their seat or their principal field of activity in the EU as the thresholds ensure, in any event, that they have substantial operations in the EU.213 5.156  The use of quantitative thresholds creates an objective test, which is generally easy to apply and meets the need to determine in a rapid and predictable manner whether a concentration should be notified to the Commission.214 It is important to remember, however, that the thresholds are merely used for the establishment of jurisdiction and do not provide any indication, even prima facie, of the existence of market power on the side of the merging parties.

(b)  The Principal Threshold under Article 1(2) of the Merger Regulation 5.157  The principal turnover threshold is set out in Article 1(2) of the Merger Regulation. This was originally established under the 1989 Merger Regulation and has not been revised since that time. 5.158  Under Article 1(2), a concentration has an EU dimension where the combined aggregate worldwide turnover of all the undertakings concerned is more than €5, 000 million and the aggregate EU-wide turnover of each of at least two of the undertakings concerned is more than €250 million; unless each of the undertakings concerned achieves

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more than two-thirds of its aggregate EU-wide turnover within one and the same Member State. 5.159  The two-thirds rule is a corrective mechanism that excludes from the Commission’s jurisdiction cases that present a clear nexus to one and only one Member State.215

(p. 579) (c)  The Alternative Threshold under Article 1(3) of the Merger Regulation 5.160  The 1989 Merger Regulation was amended in 1998, when a new (third) subparagraph was included in Article 1.216 This sets out an alternative, lower set of turnover thresholds. The purpose of this alternative threshold is to attribute an EU dimension to a category of cases that, because they did not meet the principal threshold, could require multiple filings, in several EU Member States. It was perceived that such cases could have a significant cross-border impact but could not benefit from the one-stop-shop principle of the Merger Regulation. 5.161  The alternative threshold under Article 1(3) stipulates that a concentration that does not meet the thresholds laid down in Article 1(2) will nonetheless have an EU dimension where: (a) the combined aggregate worldwide turnover of all the undertakings concerned is more than €2, 500 million; (b) in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than €100 million; (c) in each of at least three Member States included for the purpose of point (b), the aggregate turnover of each of at least two of the undertakings concerned is more than €25 million; and (d) the aggregate EU-wide turnover of each of at least two of the undertakings concerned is more than €100 million, unless each of the undertakings concerned achieves more than two-thirds of its aggregate EU-wide turnover within one and the same Member State.217 5.162  Article 1(3) is intended to capture concentrations where significant turnover is achieved in three or more Member States, thus applying a (proxy) cross-border effects test, rather than instituting a simple rule attributing an EU dimension to all concentrations that require notification in at least three Member States.218 Article 1(3) also contains the ‘twothirds rule’ as a corrective mechanism.

(d)  Appraisal of the Operation of the Turnover Thresholds 5.163  The turnover thresholds provided for in Article 1(2) and (3) of the Merger Regulation have not been altered since their entry into force in 1990 and 1998, respectively. In particular, their quantitative levels have not been adjusted to take account of developments such as price inflation and the successive enlargements of the EU. Instead, when the Merger Regulation was adopted in 2004, it was decided to introduce increased flexibility in the referral system.219 5.164  Article 1(4) of the Merger Regulation required the Commission to report to the Council on the operation of the thresholds by 1 July 2009.220 Following a detailed review of its experience to date in the application of the thresholds and consultation with Member States (p. 580) and stakeholders, the Commission concluded that, although a number of transactions with potentially significant cross-border effects still appeared to remain outside the scope of the Merger Regulation, the threshold criteria, in conjunction with the various referral mechanisms, are, overall, a satisfactory way to allocate jurisdiction. The Commission, thus, did not propose any reform in the system or level of thresholds.221 That said, while the system is on the whole considered satisfactory, it is worth mentioning some of the concerns identified in the 2009 report, which remain relevant.

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5.165  First, Article 1(2), which continues to be the legal basis for the vast majority of notifications under the Merger Regulation,222 does not catch some types of case that may have a significant cross-border impact, particularly in industries where transactions involving companies with limited turnover may nevertheless affect the internal market (eg transactions in IT markets).223 5.166  Secondly, it is clear that the alternative thresholds in Article 1(3) have decreased the number of potential multiple filings and parallel reviews of transactions across several Member States, significantly contributing to a better allocation of cases.224 However, in its current form, Article 1(3) has not entirely removed the need for multiple filings. 5.167  Finally, experience shows that the two-thirds rule under both Article 1(2) and (3) generally serves as a reasonably effective proxy for identifying the more appropriate jurisdiction and ultimately applies only to a relatively small number of cases, mostly involving large Member States (notably France, Germany, Italy, and Spain) and predominantly in the financial services, energy, and telecommunications sectors. Nonetheless, as a result of this rule, a number of important merger cases which could have a significant cross-border impact (even on markets defined as national in scope)225 will fall to be examined by national authorities rather than the Commission. This can raise two particular concerns; first, it is generally more difficult for an NCA to factor cross-border effects into its assessment and, secondly, the fact that the rule tends to apply in industries such as energy, financial services, and telecommunications means that the national authorities may take into account considerations going beyond a pure competition analysis (the security of energy supply or the stability of the financial sector, to mention but two significant examples) in assessing whether to clear a transaction.

(p. 581) (8)  The Calculation of Relevant Turnover 5.168  The calculation of relevant turnover for the purposes of the thresholds is a two-step process. First, the undertakings directly participating in the concentration (the ‘undertakings concerned’)226 must be identified. Secondly, the individual and aggregate turnover of their respective groups must be calculated and allocated geographically. Detailed rules for both steps are set out in the Merger Regulation and the Jurisdictional Notice.

(a)  Step 1: Identifying the Undertakings Concerned 5.169  Typically, the identification of the undertakings concerned in a given concentration is a relatively straightforward exercise, particularly in light of the detailed and comprehensive guidance provided by the Jurisdictional Notice, the rules of which are summarized in Table 5.3. Table 5.3  Undertakings concerned per type of concentration227

Undertakings concerned

Reference Jurisdictional Notice

Merger

Each of the merging entities

Paragraph 132

Acquisition of sole control

Acquiring undertaking

Paragraphs 134, 135 and 141

Target undertaking Acquisition of parts of an undertaking and staggered operations

Acquiring undertaking Parts of the target undertaking affected by the transaction(s)

Paragraphs 136 and 137

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Change from joint to sole control

Undertakings concerned

Reference Jurisdictional Notice

Acquiring shareholder

Paragraph 138

Target undertaking Acquisition of joint control of a newly created undertaking

Each of the companies acquiring control

Paragraph 139

Acquisition of joint control over a pre-existing undertaking or business

Each of the companies acquiring control

Paragraph 140

Change of controlling shareholder(s) in a joint venture

Each controlling shareholder (existing and new)

Target undertaking/business

Paragraphs 142–144

Joint venture Acquisition of control by a joint venture

Either (a) the joint venture or (b) each of its parent companies, depending on whether the joint venture is an acquisition vehicle

Paragraphs 145–147

Target undertaking Break-up of a company or JV

Acquiring undertaking in each of the transactions

Paragraphs 141 and 148 to 150

Acquired businesses/parts in each of the transactions Acquisition of control by a natural person

Individual person Target undertaking

Paragraphs 151 and 152

Acquisition of control by a Stateowned undertaking

Acquiring undertaking

Paragraph 153

Target undertaking (even if owned by the same State, if it was previously part of a different economic unit having an independent power of decision)

(p. 582) 5.170  Occasionally, however, the identification of the undertaking(s) concerned (notably on the acquiring side) may raise some difficulties, particularly in cases where the company formally acquiring control is an acquisition vehicle for other undertaking(s).

(i)  General Rule 5.171  As a general rule, the undertakings concerned are those whose activities are being combined or which are part of the structure of control that will result from the concentration (on the acquiring and acquired side). 5.172  Therefore, in a merger, the undertakings concerned are each of the merging entities. 5.173  In cases involving the acquisition of control, the undertakings concerned are, in principle, each one of the undertakings acquiring or retaining sole or joint control (provided that they are not mere acquisition vehicles), as well as those undertakings (or parts thereof) over which control is acquired (unless they are newly created entities or have already been taken into account as part of one of the acquirers).228 5.174  The seller or the remaining part of the seller’s business, which will not form part of the structure post-transaction, will not be considered as an undertaking concerned.229

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(ii)  Specific Scenarios on the Acquiring Side 5.175  The Commission typically considers that the firm actually acquiring control (the one holding or entitled to the rights under the relevant contract) will be the undertaking concerned and not its ultimate parent company, unless the former is simply an acquisition vehicle, in which case account is taken of the company which will in fact exercise control.230 5.176  Where the acquirer is a joint venture, it is necessary to determine whether the joint venture should be regarded as the undertaking concerned (the turnover of which would include the turnover of all of its parent companies, see Section B.8(b)(ii)), or whether each of its parent companies should individually be regarded as undertakings concerned.231 In principle, a (p. 583) full-function joint venture already operating on the same market as the target will be considered to be the undertaking concerned. Conversely, the parent companies of the acquiring joint venture will be the undertakings concerned where the joint venture either: (a) has been set up especially for the purpose of acquiring the target company; (b) has not yet started to operate; (c) is not full function; or (d) is an association of undertakings.232 Equally, the parent companies will be the undertakings concerned where the circumstances lead the Commission to believe that they are the real players behind the operation, for example because of their significant involvement in the initiation, organization, and financing of the acquisition.233 5.177  In cases involving the entry or substitution of one or more controlling shareholders in a joint venture, the undertakings concerned are those shareholders (both existing and new) who will exercise joint control post-transaction, as well as the joint venture itself, but not the ‘exiting’ shareholders.234 5.178  If control is acquired by a natural person, that person is considered the undertaking concerned (together with the target). Note, however, that this natural person must carry out further economic activities or control one or more other undertakings. 5.179  In a merger or an acquisition of control involving two undertakings owned by the same State (or the same public body) that were previously part of different economic units having an independent power of decision, both companies will qualify as undertakings concerned, even though they are owned by the same State.

(iii)  Specific Scenarios on the Acquired Side 5.180  On the acquired side, the undertaking concerned is the undertaking (or parts thereof) that is the subject of the transaction.235 5.181  In situations involving staggered operations,236 account is taken (as a whole) of the target undertaking(s) (or parts thereof) acquired from the same seller over the relevant two-year period. 5.182  Where there is an acquisition of joint control over a newly-created undertaking, the joint venture is not an undertaking concerned (since it does not yet exist and has no turnover of (p. 584) its own).237 In contrast, if joint control is acquired over a pre-existing undertaking or business, that undertaking or business is also considered to be an undertaking concerned. 5.183  When a company is acquired by one or more undertakings who intend to immediately split and sell on the assets they have just acquired, the transaction is generally not regarded as an acquisition of control over the target company (and is therefore not notifiable as such) but rather as separate transactions, each involving the acquisitions of control over each of the assets by the ultimate purchasers of those assets. These latter acquisitions may be notifiable. The undertakings concerned will be the acquiring undertakings and the acquired parts in each of the transactions. A similar situation arises when two (or more) undertakings break up a joint venture and split the assets (constituting

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businesses) between them and where two (or more) companies exchange assets constituting a business on each side (ie swap agreements).238

(b)  Step 2: Methodology for the Calculation of Turnover 5.184  Article 5 of the Merger Regulation sets out the basic rules for the calculation of the turnover of the undertakings concerned. These provisions are developed in paragraphs 157 to 220 of the Jurisdictional Notice.

(i)  Concept of Turnover 5.185  As a general rule, the relevant turnover comprises the amounts239 derived from the sale of products and the provision of services falling within the undertakings’ ordinary activities,240 after deduction of sales rebates and VAT (and other taxes directly related to turnover).241 Therefore, account is taken only of net turnover, adjusted to reflect the real economic strength of the undertaking concerned. 5.186  While sales of products are generally easy to categorize, the calculation of the amounts derived from the provision of services may be somewhat more complex and will ultimately depend on the type of service and the underlying legal and economic arrangements in the sector in question.242 5.187  Generally, the turnover of intermediaries243 will consist solely of the amount of their commission, even where they invoice the entire amount of the cost of the good or service to the final customer.244

(p. 585) (ii)  Attribution of Turnover Between Undertakings in a Group 5.188  In order to capture the economic resources involved in a transaction, the turnover of an undertaking concerned includes not only the figures of the relevant corporate entity, but the overall turnover of the group to which it belongs.245 5.189  Conversely, to avoid the inclusion of economic resources that will have no role to play post-transaction, where the concentration consists of the acquisition of parts, whether or not constituted as legal entities, of one or more undertakings, only the turnover relating to the parts which are the subject of the concentration shall be taken into account with regard to the seller(s).246 5.190  The Merger Regulation does not explicitly define the concept of a group of companies. However, Article 5(4) sets out detailed criteria to identify those undertakings whose turnover may be attributed to the undertaking concerned as a result of certain direct or indirect links with the latter.247 5.191  To this end, Article 5(4)248 provides that the calculation must add together the turnover of the undertaking concerned249 and the respective turnovers of its subsidiaries,250 parent companies,251 and sister undertakings (ie other subsidiaries of the parent companies of the undertaking concerned),252 as well as those companies that are jointly held by two or more of the undertakings previously listed.253 5.192  To identify ‘parental relationships’, Article 5(4) lists the following criteria: (a) ownership of more than half the capital or business assets; (b) the power to exercise more than half the voting rights; (c) the power to appoint more than half the members of the supervisory board, the administrative board or bodies legally representing the undertakings; or (d) the right to manage the undertakings’ affairs.254 5.193  Figure 5.9, included in the Jurisdictional Notice,255 provides a useful visual representation of the types of related undertakings.

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5.194  As a rule, where the undertaking concerned has control over a subsidiary (determined in accordance with the test under Art 5(4)(b)), the whole turnover of the subsidiary in question (p. 586) View full-sized figure

Figure 5.9  Types of undertakings belonging to a group (% of voting rights) will be taken into account regardless of the actual shareholding held by the undertaking concerned. 5.195  However, according to Article 5(5)(b), where undertakings concerned jointly control a subsidiary venture, the turnover of that joint venture is apportioned equally among them. To this end, the turnover of joint ventures between undertakings concerned and third parties is allocated to the undertaking concerned on a per capita basis (in other words, according to the number of undertakings exercising joint control) irrespective of the actual shareholding held by each.256

(iii)  Treatment of Internal Turnover 5.196  The Merger Regulation contains additional rules relating to the treatment of turnover in cases where several undertakings belong to the same group. 5.197  In particular, according to Article 5(1), first subparagraph, the aggregate turnover of an undertaking concerned shall not include the sale of products or the provision of services between any of the undertakings within the group. The rationale behind this provision is to (p. 587) exclude the proceeds of intra-group transactions and to limit the relevant turnover to that derived from external sales to third parties.257 5.198  Article 5(5)(a) applies this principle specifically to the situation where an undertaking is jointly controlled by two undertakings concerned, and aims to avoid double counting when calculating the respective turnover of the parent undertakings.258 In particular, the turnover resulting from sales between the joint venture and each of the undertakings concerned (internal turnover) is excluded. This principle applies equally to joint ventures between undertakings concerned and third parties.259

(iv)  Geographic Allocation of Turnover 5.199  The turnover of the undertakings concerned must be allocated geographically, in order to establish the revenues originating in the EU and in each of its Member States. If the corporate audited accounts do not provide for a detailed geographical breakdown of turnover (which is frequently the case), undertakings must submit the best figures available to them. 5.200  Turnover is allocated on the basis of either the location of the customer at the time of the transaction or of the place where the service/product is provided/delivered (in other words, where the characteristic action under the contract is performed). Typically, these

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will coincide and thus identify where competition between alternative suppliers can be deemed to occur. 5.201  With regard to the sale of goods, including online sales of physical products, the place of delivery generally prevails over the place where the purchase agreement was entered into and over the billing address.260 5.202  In the case of services, turnover is normally allocated to the place where the service is actually provided to the customer. For cross-border services, account is taken of whether the one who travels is the service provider, the customer, or the service itself.261 In the latter case (eg online supply of software or transport of goods), the relevant criterion is generally the location of the customer.262 5.203  Airline mergers provide an interesting (albeit somewhat extreme) illustration of the complexities involved in the geographical allocation of turnover originating from services. In early cases, the Commission identified three methods to assign revenue from individual routes: (a) allocating the turnover to the country of destination; (b) allocating 50 per cent of the turnover to the country of origin and the remaining 50 per cent to the country of destination; and (c) allocating the turnover to the country where the ticket sale (p. 588) occurred (point of sale).263 However, the first method, which had mainly been used for transatlantic routes, was not always followed264 and appears to have been abandoned. In Ryanair/Aer Lingus,265 the Commission concluded that the point-of-sale method was increasingly difficult to apply, given the growth of direct Internet sales (and thus the absence of a physical transaction at a bricks-and-mortar airline counter or travel agent). The Commission opted instead for the 50/50 method, considering that it adequately reflected the cross-border character of airline services and that it provided a simple and clear criterion. The Commission further considered that the place of departure was also a good proxy for determining where the service was provided and went on to conclude that, in that particular case,266 it was appropriate to split the two one-way flights of a round-trip ticket and to allocate the distinct revenue from each leg of the journey to the country from which that leg departed.267

(c)  The Relevant Date and Financial Accounts 5.204  The relevant date for establishing EU jurisdiction over a concentration is whichever is the earlier of the triggering event (namely the conclusion of the binding legal agreement, the announcement of the public bid, or the acquisition of a controlling interest) and the date of the (first) notification to either the Commission or a national authority (if the parties have made a notification on the basis of good faith or an announced intention).268 5.205  Next, it is necessary to identify the financial accounts that will be taken into consideration. Generally, the most accurate and reliable figures available are those contained in the compulsory audited accounts (under the legally applicable standard) of the closest financial year to the date of the transaction. Only exceptionally will the Commission accept management or provisional accounts (typically, if there is a major divergence between the last audited accounts and the final draft figures for the most recent year approved by the board of management).269 5.206  Finally, under certain circumstances the Commission may allow an adjustment to the audited figures to reflect permanent changes in the economic reality of the undertakings concerned (notably acquisitions, divestitures, or closure of businesses) that have (p. 589) occurred270 either after the period covered by the relevant account but before the pertinent date to establish jurisdiction or during the financial year for which the audited accounts have been drawn up. In such a situation, the full annual turnover generated by the businesses acquired or divested/closed is either added to or removed from the audited

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accounts. In contrast, adjustments will not be accepted to take account of temporary variations in turnover figures (eg a decrease in orders).271

Footnotes: 39

  Merger Regulation, Art 21(2); see also recital 17 to the Merger Regulation. To ensure that the exclusive jurisdiction of the Commission is respected, Member States are obliged not to apply their national competition legislation to such concentrations (Merger Regulation, Art 21(3) and recital 18). Furthermore, the Commission cannot apply other EU non-merger antitrust legislation, most notably Regulation 1/2003, to such concentrations (Merger Regulation, Art 21(1)). The territorial scope of application of the Merger Regulation and of the jurisdiction of the Commission extends, in practice, to the entire EEA. For a more general discussion of the territorial scope of application of the Merger Regulation, see J. Lübking and D. Dittert in Drauz and Jones, EU Competition Law (n 9), 39ff. 40

  Merger Regulation, recital 8.

41

  Merger Regulation, Arts 4, 9, and 22. See Section C.2.

42

  This requirement applies equally to transactions referred from Member States to the Commission pursuant to Arts 4 and 22 of the Merger Regulation. 43

  See Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, OJ 2008 C95/1 (‘Jurisdictional Notice’), para 5. Further to the two tests described therein, the concentration must have reached a sufficiently concrete and advanced stage before it can be notified: see Merger Regulation, Art 4 and recital 34—see further Section D.4. 44

  Jurisdictional Notice, paras 7, 8, and 92.

45

  Merger Regulation, Art 3(1) and (4).

46

  Merger Regulation, Art 3(5).

47

  The Merger Regulation still refers to ‘Community’ dimension; however, since the entry into force of the Treaty of Lisbon on 1 December 2009, the reference has to be understood as to ‘Union’ or ‘EU’ dimension. Note that the Commission’s jurisdiction does not ultimately depend on it being notified: if a concentration is implemented without notification, the Commission can: (a) require the undertakings concerned to notify it; (b) adopt interim measures appropriate to restore or maintain conditions of effective competition; and/or (c) impose fines or periodic penalty payments (Merger Regulation, Arts 8(5), 14, and 15). 48

  Merger Regulation, Art 1(2) and (3).

49

  Commission Consolidated Jurisdictional Notice under Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, OJ 2008 C95/1. This Notice replaces the previous quartet of jurisdictional Communications, namely: (a) Notice on the concept of concentration, OJ 2998 C66/5; (b) Notice on the concept of full-function joint ventures, OJ 1998 C66/1; (c) Notice on the concept of undertakings concerned, OJ 1998 C66/14; and (d) Notice on calculation of turnover, OJ 1998 C66/25. Formal guidance on all jurisdictional issues is thus consolidated in a single text, with the exception of referrals, which are the subject of a specific Notice. 50

  Case T-417/05 Endesa v Commission [2006] ECR II-2533, para 99.

51

  Endesa (n 50), para 99.

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52

  The Commission does not accept anonymous or merely theoretical consultations. The consultation must refer to a transaction that the parties intend to bring forward in a relatively short time; while the project may still not be at the stage where notification would be possible, it must be sufficiently advanced. Additionally, and importantly, the Commission does not provide advice to parties on how to structure their transaction in order for it to fall within the scope of application of the Merger Regulation, it only preliminarily assesses whether the operation, as designed by the parties, would fall under its jurisdiction. 53

  Consultations on jurisdiction must be filed using the Case Team Allocation Request form (see Section D.4(c)), which requires the identification of the undertakings involved, their country of origin, their role in the transaction, and turnover, as well as a brief description of their activities, the transaction, the relevant markets, and an indication of the prima facie complexity of the case. The parties may, at this stage, briefly present the jurisdictional issues of concern, but they will typically further develop these in a subsequent memorandum. The parties must provide the main elements and information that are likely to be relevant for the jurisdictional assessment (including the relevant draft contracts and other agreements, the statutes of the companies, their shareholding structure, voting rights and past attendance rates in the General Assembly, the composition and role of the board and other management bodies, and existing veto rights and scope thereof). The case team may request additional information from the parties, where necessary. 54

  A preliminary negative assessment of EU jurisdiction does not constitute a decision establishing lack of EU jurisdiction pursuant to Art 6(1)(a) of the Merger Regulation. Such an assessment is not binding on the parties, which may ultimately decide to notify their transaction and thus obtain a formal decision on jurisdiction (either a negative one, pursuant to Art 6(1)(a) or a positive one, together with an assessment on substance, further to Art 6(1)(b) or 6(1)(c)). However, this is typically not the case: generally, the parties at that point will abandon pre-notification discussions with the Commission and contact the competent Member State NCA with a view to submitting any possible national filings. As for positive assessment, the GC has indicated that the Merger Regulation does not lay down any specific procedure for establishing the EU dimension of a concentration (cf Endesa (n 50), para 72). See also Jurisdictional Notice, para 6. 55

  For an illustration, see Endesa (n 50), where the target in a hostile bid unsuccessfully requested the Commission to assume jurisdiction over a concentration that had been notified to the Spanish authorities. Importantly, there is no specific provision in the Merger Regulation requiring the Commission to ensure on its own initiative that any concentration that is not notified to it does, in fact, have an EU dimension. 56

  As there are no formal procedures in place for such complaints, there are no formalities set down for the information or level of detail that third parties should provide. Additionally, there is no deadline (informal or otherwise) for the Commission to come to a conclusion on the complaint. In principle, the Commission will inform the parties of the complaint (unless it is clearly unfounded) and, where appropriate, may require information from them; equally it may contact Member State NCAs in appropriate cases. However, it will respect justified requests for anonymity from the third party complainant. 57

  Endesa (n 50), para 100; see also Case C-170/02 P Schlüsselverlag J. S. Moser and Others v Commission [2003] ECR I-9889, paras 27 and 28. 58

  Endesa (n 50), para 100.

59

  Endesa (n 50), para 85.

60

  See Section D.6(e).

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61

  Merger Regulation, Art 3(1)(a) and (b).

62

  Jurisdictional Notice, Section I, paras 9 and 10.

63

  This third scenario may arise, in particular, where two or more undertakings, while retaining their individual legal personalities, contractually establish a common economic management (such contractual arrangements can also be reinforced by cross-shareholdings between the undertakings forming the economic unit) or the structure of a dual-listed company. A prerequisite is the existence of a permanent, single economic management, while other relevant factors may include internal profit and loss compensation or a revenue distribution between the various entities within the group, as well as their joint liability or external risk sharing. 64

  Case COMP/M.1673 VEBA/VIAG (2000).

65

  Case COMP/M.2681 Conoco/Phillips Petroleum (2002).

66

  Case COMP/M.6685 Ingram Micro/Brightpoint (2012).

67

  Case COMP/M.3071 Carnival Corp/P&O Princess II (2003).

68

  In Case COMP/M.2510 Cendant/Galileo (2001), an operation whereby Galaxy Acquisition, a wholly-owned subsidiary of Cendant, merged with and into Galileo, the latter company being the surviving corporation and becoming a wholly-owned subsidiary of Cendant, was treated as the acquisition of sole control by Cendant of Galileo (cf paras 1 and 5). In contrast, in Case COMP/M.1383 Exxon/Mobil (1999), an operation whereby a whollyowned subsidiary of Exxon merged with Mobil, with Mobil being the surviving corporation and Exxon holding 100 per cent of Mobil’s issued and outstanding voting securities, was treated as a merger (cf paras 1 and 5). 69

  Implementing Regulation, Art 11. ‘Other involved parties’ are largely treated equivalently to the ‘notifying parties’ for the purposes of the right to be heard and access to the file, but they are not the addressees of the merger decision. For a discussion of the differences in how ‘notifying parties’ and ‘other involved parties’ are treated during the review process, see Section D.2(d). 70

  Jurisdictional Notice, paras 16 and 17.

71

  Jurisdictional Notice, Section II.

72

  Jurisdictional Notice, paras 22 and 23. The Commission typically rules out the possibility that representatives of employees (and generally collectives other than shareholders) can be deemed to have control on the basis of national legislation ensuring their representation in corporate structures. Conversely, statutory or legal requirements concerning the appointment of independent members to the company’s organs or the obligation to act in the company’s interest do not exclude a finding of control on the basis of the general criteria of the Jurisdictional Notice. In Case T-282/02 Cementbouw Handel & Industrie v Commission [2006] ECR II-319, the Court concluded that the fact that the representatives of the two parent companies were not entitled to sit on the target’s managing board or that they were able to represent only a minority within its supervisory board did not preclude a finding of control, insofar as the composition of the decision-making bodies was ultimately decided by the said two shareholders (paras 70–74); the Court similarly considered that, although the Dutch Civil Code provided that the decisions of a cooperative company must be taken in the interest of that company, the persons who directly or indirectly had the voting rights in that company nonetheless had the power to adopt those decisions (para 79). 73

  Jurisdictional Notice, para 7.

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74

  Furthermore, an acquisition of control may result from the action of parties other than the acquirer: see para 5.61. 75

  As regards operations involving public and State-owned bodies, see further Section B. 3(b)(v). 76

  Jurisdictional Notice, para 12. In Case COMP/M.3762 Apax/Travelex (2005), a natural person acquiring joint control was not considered an undertaking concerned because he did not carry out any other economic activities. 77

  Merger Regulation, Art 3(3)(b), and Jurisdictional Notice, para 13. See Cementbouw (n 72), para 72. This is particularly the case where the formal holder of the rights is merely an acquisition vehicle. 78

  Case COMP/M.754 Anglo American Corp/Lonrho (1997).

79

  Cf paras 4, 11, 25, 26, and 28–45.

80

  The investment company usually exercises control by means of the organizational structure, eg by controlling the general partner of fund partnerships, or by contractual arrangements, eg advisory agreements, or by a combination of both. See Jurisdictional Notice, paras 14 and 15. 81

  eg Case COMP/M.2060 Bosch/Rexroth (2000), where the acquisition of control was brought about by a number of agreements, including a business lease. See also Case COMP/ M.5164 Msref/Crowne Plaza Wiesbaden Hotel (2008), where seven InterContinentalbranded hotels located in the EU were acquired through a combination of a purchase of shares and management contracts. 82

  While the Jurisdictional Notice does not establish a precise minimum period, the examples cited therein suggest that a period of at least eight to ten years is necessary (cf Jurisdictional Notice, fn 19). 83

  Art 3(2)(a) of the Merger Regulation explicitly indicates that a right to use the assets of an undertaking may constitute control. See Case COMP/M.3136 GE/Agfa NDT (2003), paras 7–12. 84

  Jurisdictional Notice, para 18. For an illustration, see Case COMP/M.940 UBS/Mister Minit (1997), para 14. 85

  See Jurisdictional Notice, para 19, which mentions, as an example of such purely financial agreements, the case of sale-and-lease-back transactions with arrangements for a buy-back of the assets at the end of the term. 86

  Jurisdictional Notice, para 20. See eg Case COMP/M.4368 Edison/Eneco Energia (2006), para 7. 87

  See Jurisdictional Notice, para 21.

88

  Jurisdictional Notice, paras 24–27.

89

  Case COMP/M.6853 Flextronics International/Certain Assets belonging to Motorola Mobility (2013), paras 6–8. The transaction concerned the acquisition of manufacturing assets for the production of mobile devices and tablets. 90

  Case COMP/M.3867 Vattenfall/Elsam and Energi E2 assets (2008), paras 4 and 8.

91

  Case COMP/M.6698 Cheung Kong Holdings/Cheung Kong Infrastructure Holdings/ Power Assets Holdings/MGN Gas Networks (2012), para 2. 92

  For an illustration, see Case COMP/M.2857 ECS/IEH (2002), paras 7–9. See also Case COMP/M.5840 Otto/Quelle Schweiz Assets (2010).

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93

  Jurisdictional Notice, para 24.

94

  Case COMP/M.2629 Flextronics/Xerox (2001), para 5.

95

  Case COMP/M.5727 Microsoft/Yahoo! Search Business (2010).

96

  See also Cases COMP/M.5366 Iberdrola Renovables/Gamesa (2008), where the assets transferred (which included several ongoing projects) were considered to constitute a business in the sector of the promotion and development of wind farms; and Case COMP/M. 6218 INEOS/Tessenderlo Group S-PVC Assets (2011), relating to the acquisition of assets representing the entire Suspension Polyvinyl Chloride (SPVC) business of Tessenderlo, which was also found to amount to a concentration. 97

  Merger Regulation, recital 20 and Art 3(1); Jurisdictional Notice, para 28.

98

  For an illustration, see Case COMP/M.5727 Microsoft/Yahoo! Search Business (2010), where a ten-year agreement was considered to bring about a lasting change of control in relation to the Internet search and search advertising market, which is characterized by rapid technological developments. 99

  Jurisdictional Notice, paras 29–35.

100

  Case COMP/M.3779 Pernod Ricard/Allied Domecq (2005), paras 6 and 7.

101

  Case COMP/M.2854 RAG/Degussa (2002), paras 9–13.

102

  Jurisdictional Notice, para 51. See Case COMP/M.1806 AstraZeneca/Novartis (2000), paras 5 and 6, which shows that internal restructuring carried out in connection with a concentration may nonetheless be of relevance in order to determine the scope of an operation. In that case, Novartis reorganized its non-US agrochemicals business and its non-US seeds business (which were transferred to a newly created company, Novartis Agribusiness), as well as its US agrochemicals and seeds business (which passed to a US corporation, Novartis US). Novartis’ animal health business was not included in the transaction. Novartis then demerged both Novartis Agribusiness and Novartis US, both of which merged into Syngenta. AstraZeneca then undertook an internal reorganization in order to divide its agrochemicals business from its retained business so that the former could be transferred to Syngenta. 103

  As a further consequence of this principle, the Commission does not consider that a State controls an undertaking simply because it holds prerogatives necessary for the protection of the public interest that it exercises in its role as a public authority rather than as a shareholder; see Jurisdictional Notice, paras 52 and 53. 104

  Case COMP/M.5549 EDF/Segebel (2009).

105

  Although the assessment was not conducted in order to establish jurisdiction, but to address allegations of potential coordination between the two companies in their strategic business decisions, it is generally relevant to the jurisdictional analysis regarding Stateowned undertakings. 106

  Case COMP/M.5549 EDF/Segebel (2009), paras 173–181. The Commission also concluded, in line with the Jurisdictional Notice, that the exercise of supervisory powers by the State did not exclude that EDF had the ability to set its strategy independently, since such powers were limited to the protection of interests analogous to those of a minority shareholder. The Commission also took into account its past decisional practice, where it had considered EDF and GDF Suez/Electrabel to be competing undertakings, as well as the business plans of EDF in Belgium and their potential consequences for the profitability of both companies. The Commission ultimately concluded that EDF could be regarded as a company with a power of decision independent of GDF Suez/Electrabel and thus an actual competitor of the latter. This conclusion was not put in question by the fact that a governmental agency (namely the Agence des Participations de l’Etat or APE) was

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responsible for managing the French State’s shareholdings in both EDF and GDF Suez/ Electrabel, since the role of the APE was clearly limited and did not have an impact on the commercial and business autonomy of the companies. 107

  Case COMP/M.5508 SoFFin/Hypo Real Estate (2009).

108

  The Commission concluded that SoFFin was to acquire sole control of Hypo Real Estate and that there was no holding arrangement, special provisions, or other safeguards in place that would ensure that the latter retained an independent power of decision posttransaction. In particular, there were no provisions that would ensure that Hypo Real Estate would, despite public ownership, autonomously determine its own strategy, business plan, and budget. Consequently, it was considered that Hypo Real Estate would be subject, after the merger, to coordination of its commercial conduct by the German State (with respect to other banks controlled by the latter) and would not constitute an economic unit with an independent power of decision (cf para 6). 109

  cf paras 5–25. See also Case COMP/M.5861 Republic of Austria/Hypo Group Alpe Adria (2010). 110

  Case COMP/M.6113 DSM/Sinochem/JV (2011).

111

  cf paras 8–16. See also Case COMP/M.6082 China National Bluestar/Elkem (2011).

112

  Sole control can also be acquired by purchase of assets, by contract, or by any other means: see para 5.57; see also Jurisdictional Notice, para 61. 113

  Jurisdictional Notice, para 54. Negative sole control is assessed using the same criteria as for assessing whether undertakings have joint control (the only difference being that the single controlling shareholder does not have to cooperate with other specific shareholders). These criteria are examined in paras 5.87–5.94. 114

  Jurisdictional Notice, paras 57 and 58.

115

  The main criterion is thus the percentage of the voting rights and not of the share capital. See eg Cases COMP/M.4709 APAX Partners/Telenor Satellite Services (2007), para 5; COMP/M.4516 Continental/Matador (2007), para 5; COMP/M.6020 ACS/Hochtief (2011), para 4; and COMP/M.6812 SFPI/Dexia (2013), paras 7 and 8. Where the company’s statutes require a supermajority for strategic decisions, a simple majority of the voting rights does not confer the power to determine strategic decisions, but typically will be sufficient to confer a blocking right (and hence negative control). Furthermore, under exceptional circumstances, a shareholder having a majority of the voting rights may not actually enjoy the possibility of unilaterally imposing its view (even in the absence of veto rights in favour of any other shareholder), which may lead to a finding of de facto joint control; this could be the case, eg, where the joint venture depends economically and financially on the minority shareholder or where only the latter has the required know-how for the operation of the joint undertaking, whereas the majority shareholder is a mere financial investor (see Jurisdictional Notice, para 78; for an illustration, see Case COMP/M.4085 Arcelor/Oyak/ Erdemir (2006), paras 9–14). 116

  Case COMP/M.5496 Vattenfall/Nuon Energy (2009), where although Vattenfall was initially to hold only 49 per cent of the shares in Nuon Energy, under the contractual arrangements stating the terms of the share purchase agreement, it had exclusive operational control of Nuon Energy because it had been granted a casting vote on the supervisory board (cf para 5). 117

  Case COMP/M.4225 Celsa/Fundia (2006), where Celsa acquired sole control of Fundia by way of contractual assignment from the legal owner of the right to manage the company. The assignment was effected through an irrevocable management agreement whereby decisive influence over Fundia was to be conferred by the owner (Bosian Time) upon Celsa. Under the agreement, Celsa had the sole ability to decide on, inter alia, Fundia’s business From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

plan, budget, and market behaviour. Furthermore, Celsa would solely appoint Fundia’s management team and outline the general policy to be followed by the management (cf para 6). See also Case COMP/M.3785 TPG/APAX/TIM Hellas (2005). 118

  Jurisdictional Notice, para 59.

119

  Case COMP/M.5121 News Corp/Premiere (2008).

120

  News Corp/Premiere (n 119), paras 5–10. For other examples, see: Cases COMP/M. 5469 Renova Industries/Sulzer (2009), para 5; COMP/M.6718 Toyota Tsusho/CFAO (2012), para 7; and COMPM.6866 Time Warner/CME (2013), para 6. 121

  At the time the Commission received the notification, the transaction concerned the acquisition by News Corp of a shareholding of approximately 24.2 per cent. In the notification, News Corp indicated that it expected to increase its share to approximately 24.9 per cent by mid-May 2008 at the latest. At the time the Commission decision was adopted, News Corp has acquired in total around 25 per cent of the shares in Premiere (cf para 4). 122

  The high attendance rate seems to have been caused by the fact that an extraordinarily high number of shareholders attended the meeting to be able to influence the course of the company for one last time before News Corp took control, as well as the fact that the agenda contained several items relating to capital measures. 123

  This holds true for the assessment of joint control as well as sole control.

124

  Jurisdictional Notice, para 60. See eg Cases COMP/M.5799 and COMP/M.5977 Faurecia/Plastal (2010). On 3 February 2010, Faurecia acquired the business and all operating assets of Plastal Germany and entered into an option agreement with the Plastal Group regarding all shares in Plastal Spain. The Commission, in its decision clearing the acquisition of Plastal Germany (Case COMP/M.5799), did not examine the Spanish transaction because the option was not binding on Faurecia. The obligation to notify the Spanish transaction did not arise until Faurecia exercised the call option for Plastal Spain, on 29 June 2010 (Case COMP/M.5977). 125

  Joint control is akin to negative sole control, in the sense that decisive influence arises in both cases through the possibility of creating a deadlock situation resulting from the rejection of proposed strategic decisions. See para 5.78. 126

  Jurisdictional Notice, paras 62 and 63. See eg Case COMP/M.6285 SARIA/Danish Crown/Daka (2012), where, according to a draft shareholders’ agreement, resolutions regarding certain reserved matters required a 2:3 majority of the votes in Daka’s general shareholder meeting in order to be adopted. As a result, the adoption of those resolutions would require the consent of both SARIA (with 51 per cent of Daka’s share capital) and Danish Crown (with 42.9 per cent), but not of any other shareholder in Daka (notably Tican (2.8 per cent), Scan (2.7 per cent), and Slagteriet Brørup (0.6 per cent)). 127

  Provided that no agreement between them breaks their equality (eg by giving one shareholder the right to appoint a majority of representatives in the undertaking’s management or a casting vote). Jurisdictional Notice, para 64. For an illustration, see Case COMP/M.3097 Maersk Data/Eurogate IT/Global Transportation Solutions (2003), para 5. 128

  See eg Case COMP/M.5979 KGHM/Tauron Wytwarzanie/JV (2012), where the joint venture, which was to be active in the generation and wholesale distribution of electricity, was considered as jointly controlled by its two parents, which were to hold equal stakes in the joint venture and were entitled to an equal number of general shareholders’ meeting

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votes and an equal number of representatives on the company’s board and supervisory board. 129

  It does not matter whether these veto rights are set out in the articles of association, are conferred by agreement between shareholders, or operate by means of a specific quorum required for decisions; see eg Case COMP/M.6789 Bertelsmann/Pearson/Penguin Random House (2013), where, according to a framework agreement between Bertelsmann and Pearson, the former had the power to appoint the majority of the members of the board, but certain reserved matters required the approval of Pearson (cf para 7); see also Case COMP/M.6459 Sony/Mubadala Development/EMI Music Publishing (2012), paras 12–17. Similarly, it does not matter whether the rights relate to voting at shareholders’ meetings, the board of directors, or any other board which has a right of approval over strategic decisions (eg a supervisory board); see eg Case COMP/M.6854 Cameron/Schlumberger/ Onesubsea (2013), where Schlumberger obtained a veto right over the approval of the annual financial plan and the strategic plan by the executive committee of the target (cf para 7). In line with the general approach of the Merger Regulation, it is not necessary to establish that the shareholder will actually make use of the decisive influence granted by the veto rights. 130

  See eg Case COMP/M.6314 Telefónica UK/Vodafone UK/Everything Everywhere/JV (2012). Each of the shareholders in the joint venture had a 33.3 per cent shareholding and the possibility of exercising decisive influence over it through the ability to veto decisions on the appointment of senior management, the determination of the budget, and the adoption of and amendments to the business plan, as well as market-specific rights. 131

  Jurisdictional Notice, paras 65–67. A finding of joint control is not incompatible with the fact that one of the co-controlling shareholders (typically the industrial partner) is in charge of the daily management of the company, while others play no role in that regard, as long as the latter retain the real possibility of contesting the decisions taken by the former (either through the use of their respective voting rights, the possibility of appointing representatives to the decision-making bodies, or their veto rights on strategic issues): see Jurisdictional Notice, para 81. 132

  Jurisdictional Notice, paras 69–72. See eg Case COMP/M.5830 Olympic/Aegean Airlines (2008), paras 15–20, which refers to choices of aircraft operated and seat capacity and decisions on entry on long-haul routes, each of which affects in a significant way the business model of an airline. 133

  Indeed, if the level of investments necessitating approval is extremely high, the veto right may be more akin to the normal protection of the interests of a minority shareholder. 134

  Jurisdictional Notice, paras 70, 71, and 73. See eg Cases COMP/M.1898 TUI Group/ GTT Holding (2000), para 6, and COMP/M.6459 Sony/Mubadala Development/EMI Music Publishing (2012), para 14. 135

  Occasionally, a majority shareholder may depend to such an extent on a minority shareholder that both may be deemed jointly to control the undertaking on a de facto basis. This is typically the case where the former is a financial investor and the latter is the industrial partner which contributes the necessary know-how for the operation of the business. See Jurisdictional Notice, para 78. 136

  By contrast, the mere fact that several investors have a shared interest in a positive return on their investment or that they acquired their respective shareholdings by concerted action is not, by itself, sufficient for a finding of joint control on the basis of a situation of dependency. See Jurisdictional Notice, para 79.

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137

  Jurisdictional Notice, paras 74–80. In such a case, the result of the transaction would be no acquisition of control. 138

  Jurisdictional Notice, para 82.

139

  Jurisdictional Notice, paras 83–90.

140

  Typically, these concentrations are unlikely to raise competition concerns and are thus treated under the rules of the simplified procedure. See Notice on Simplified Procedure, para 5(d). 141

  The entry of new shareholders may, however, remove a pre-existing situation of joint control (particularly one that existed only on a de facto basis), if it leads to the possibility of changing coalitions between minority shareholders. In such a case, the transaction would result in a change from joint control to no control, which is not notifiable. 142

  Provided that the exit of one or more controlling shareholders does not result in a change from joint to sole control. 143

  Provided that they do not result in a change of the respective powers of the controlling shareholders or in the control structure of the company. 144

  In this respect, it is illustrative to look at para 44 of the Jurisdictional Notice, which provides that the principle that several transactions can be treated as a single concentration does not apply to different legal transactions that will result in part in the acquisition of control over an undertaking and in part in the acquisition of a non-controlling minority stake in another (eg A acquires control over B and also acquires a minority, noncontrolling stake in C; even if both transactions are conditional upon the other, the latter does not constitute a concentration and will not be notified alongside the acquisition of B; both transactions will therefore not be treated as a single concentration). Indeed, it would not be in line with the general framework and purpose of the Merger Regulation if different transactions, even those linked by condition, could be assessed as a whole where only some of them lead to a change in the control of a given target. The limitations of the current regime (arising in this case from the narrow wording of Art 8(4) of the Merger Regulation) were also shown in the follow-up to the prohibition decision in Case COMP/M.4439 Ryanair/ Aer Lingus (2007), where the Commission could not require Ryanair to divest the (significant) minority shareholding that it had previously acquired in Aer Lingus (even if Ryanair’s acquisition of such minority shareholding and Ryanair’s subsequent proposal to acquire control of Aer Lingus through the acquisition of additional shares had been treated as one single concentration); the approach of the Commission was upheld by the Court in Case T-411/07 Aer Lingus v Commission [2010] ECR II-3691. In its June 2013 consultation document, the Commission raised the possibility of modifying Art 8(4) of the Merger Regulation in order to give the Commission the power to require the dissolution of partially implemented transactions declared incompatible with the internal market, which would bring this into in line with the scope of the suspension obligation under Art 7(4). 145

  See eg Cases COMP/M.1673 VEBA/VIAG (2000); COMP/M.3653 Siemens/VA Tech (2005); COMP/M.4153 Toshiba/Westinghouse (2006); COMP/M.5406 IPIC/MAN Ferrostaal (2009); and COMP/M.6541 Glencore/Xstrata (2012). 146

  In the context of recently proposed reforms, the Commission has compiled an interesting review of the economic literature on potential anti-competitive effects of acquisitions of minority shareholdings according to economic theory (see document cited in n 149). 147

  Arguably, Arts 101 and 102 TFEU could be used to intervene against anti-competitive structural links. However, the use of either provision to that effect presents major challenges. An intervention under Art 102 requires that the acquiring undertaking is already dominant. As regards Art 101, the circumstances under which a structural link

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could constitute an agreement that has the object or effect of restricting competition may not be easy to identify (consider, eg, the situation where a structural link is built up by the acquisition of a series of shares via the stock exchange—at what stage would Art 101 bite?). 148

  Other merger regimes include structural links in their scope of review. This is the case in Austria, Germany, and the UK in the EU, as well as the US, Japan, and Canada. 149

  On 25 June 2013, the Commission launched a public consultation on structural links: see Commission Staff Working Document, Towards more effective EU merger control (SWD(2013) 239 final) and its accompanying Annexes: Economic Literature on NonControlling Minority Shareholdings (‘Structural links’) and Non-controlling minority shareholdings and EU merger control. 150

  As is currently the case for spillover effects from the creation of full-function joint ventures, pursuant to Art 2(4). 151

  Although it can exercise those rights in preparation for the total or partial disposal of the undertaking, its assets, or of the securities. 152

  By contrast, a rescue operation by a syndicate of banks before or as a result of insolvency proceedings (involving, eg, the conversion of existing debt into equity) is generally considered to constitute a concentration. 153

  The insolvency proceedings concerning the Plastal Group (active in the engineering, production, and supply of thermoplastic-engineered plastic components for the automotive industry) are illustrative. In that case, the obligation to notify attached to the acquisitions by undertakings of the relevant businesses from the insolvency administrator, but did not attach to the prior acquisition of those businesses by the insolvency administrator in the context of the insolvency proceedings. See Cases COMP/M.5799, COMP/M.5977 and COMP/M.6537 Faurecia/Plastal (February 2010, June 2010, and February 2012). 154

  The conditions that such transactions must meet are set out in the Jurisdictional Notice, para 113. 155

  Jurisdictional Notice, paras 110–116.

156

  Merger Regulation, recital 20.

157

  See Jurisdictional Notice, para 62, 63, 68, 76 or 79.

158

  See also Jurisdictional Notice, para 92. Given their nature (namely, that they are jointly controlled by two or more undertakings), the substantive assessment of full-function joint ventures includes a dimension additional to the standard merger examination, in that, pursuant to Art 2(4) of the Merger Regulation, where such joint ventures have as their object or effect the coordination of the competitive behaviour of undertakings that remain independent (ie the parents), such coordination must be appraised in accordance with Art 101 TFEU. 159

  Jurisdictional Notice, paras 85–90.

160

  In this type of case, no business with a market presence is transferred to the joint venture and, therefore, such a transaction would not constitute a notifiable concentration by itself (see Jurisdictional Notice, para 24). 161

  Jurisdictional Notice, paras 24 and 106–108. See eg Case COMP/M.6763 VWFS/PON Holdings/PON Equipment Rental & Lease (2013). 162

  Jurisdictional Notice, paras 105 and 109. See Section B.4(d) for a detailed explanation of full functionality. For an illustration of an operation whereby a non-full-function joint

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venture becomes full function, see Cases COMP/M.2276 Coca-Cola/Nestlé/JV (2001) and COMP/M.5241 American Express/Fortis/Alpha Card (2008). 163

  Occasionally, such a decision (and thus the triggering event) may be in the hands of a third party, eg where a joint venture requires a licence in order to begin its activity on the market, which has to be granted by a public body. Once the decision has been taken in favour of the joint venture, the full-functionality criterion is fulfilled and a concentration arises. 164

  Merger Regulation, recital 20.

165

  See eg Case COMP/M.6321 Buitenfood/Ad Van Geloven Holding/JV (2012), where the parent companies contributed to the joint venture assets that they previously owned individually, bringing them under a holding company to be jointly controlled. 166

  See eg Case COMP/M.6112 Good Energies/NEIF/Newco (2011), where two undertakings acquired from a third party joint control of two solar park projects through a new holding company. See also Case COMP/M.6068 ENI/Acegasaps/JV (2011). 167

  The rule in para 91 of the Jurisdictional Notice is thus in line with the provisions of recital 20 to the Merger Regulation, which states that it is imperative to define the concept of a concentration in such a manner as to cover operations bringing about a change in the structure of the market. See para 5.112. 168

  The reference to third parties (in plural) should not be understood as implying that an acquisition from just one undertaking would not come within para 91. Such a narrow and overly formal reading of para 91 of the Jurisdictional Notice does not seem justified by any material consideration. Furthermore, Art 3(1)(b) of the Merger Regulation, quite obviously, also concerns acquisitions of control from a single seller. For an illustration, see Case COMP/M.6112 Good Energies/NEIF/Newco (2011). 169

  The Commission seems to have followed this approach in Case COMP/M.5422 StatoilHydro/St1/St1Avifuels (2008). The transaction involved the acquisition of joint control over St1 Avifuels (a subsidiary of St1) by StatoilHydro and ST1. The latter remained as a co-controlling shareholder, with 49 per cent of the voting rights and a veto right on the strategic decisions on the business policy of St1 Avifuels. The Commission’s decision does not contain any analysis of the full-functionality nature of St1 Avifuels (or the possible lack thereof): it merely states that the transaction constituted the acquisition of joint control over a pre-existing undertaking. 170

  See eg Case COMP/M.6554 EADS/STA/Elbe Flugzeugwerke JV (2012), where EADS Deutschland and Singapore Technologies Aerospace acquired joint control over Elbe Flugzeugwerke (EFW), a wholly-owned subsidiary of EADS Deutschland. The Commission took into consideration that EFW had been acting autonomously on the market since 1990, but it also conducted an assessment of whether EFW would perform on a lasting basis all the functions of an autonomous economic entity (cf para 9). 171

  Jurisdictional Notice, para 92.

172

  Cooperative joint ventures were those that had as their object or effect the coordination of the competitive behaviour of undertakings which remained independent, while concentrative joint ventures were defined as those performing on a lasting basis all the functions of an autonomous entity and not giving rise to the coordination of the competitive behaviour of the parties (either amongst themselves or between them and the joint venture). Only concentrative joint ventures were considered as concentrations under the 1989 Merger Regulation (cf Art 3(2) thereof; see also Notice on the distinction between concentrative and cooperative joint ventures: OJ 1994 C385/1). This approach, which limited the application of the Regulation to those cases were coordination could be excluded, proved to be narrow in scope and somewhat difficult to apply in practice. The

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distinction was abandoned and replaced by the current system as of 1 March 1998, with the amendments introduced by Council Regulation (EC) No 1310/97 of 30 June 1997 amending Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, OJ 1989 L180/1. 173

  See eg Case COMP/M.6093 BASF/Ineos/Styrene/JV (2011), where the proposed joint venture comprised all business functions including manufacturing, sales, and marketing and would operate in the market independently from its parent companies, performing the full range of activities normally performed by companies in the chemical industry. In contrast, in Case COMP/M.904 RSB/TENEX/FuelLogistic (1997), the Commission considered that the joint venture did not constitute a concentration because it did not perform on a lasting basis all the functions of an autonomous economic entity, insofar as the joint venture did not have the resources that would enable it to operate a business activity on a lasting basis on a market (cf paras 5–17). 174

  Jurisdictional Notice, para 93.

175

  Case COMP/M.2478 IBM Italia/Business Solutions/JV (2001).

176

  A similar example can be found in Case COMP/M.6151 Petrochina/Ineos/JV (2011).

177

  eg in Case COMP/M.6150 Veolia Transport/Trenitalia/JV (2011), the Commission took into account that, pursuant to the shareholders’ agreement, the joint venture would have its own dedicated management team (comprising a CEO, a CFO, and the chairman of the board as well as other key managers reporting directly to the CEO), as well as the staff necessary to run its services, including train drivers, technicians, and stewardesses. As regards the necessary assets, see Case COMP/M.6564 ARM/Giesecke & Devrient/Gemalto/JV (2012), where the joint venture was granted access to assets and rights relating to the relevant technology for developing and marketing security solutions for consumer electronic devices, including: (a) hardware and development software; (b) all know-how, trade secrets, techniques, information expertise, and proprietary knowledge; (c) business records; (d) claims; and (e) certain IP rights, including business trademarks and patents. The following cases provide further illustrations of the assessment of the presence of the necessary resources to operate in the market: Cases COMP/M.6315 Hochtief/Geosea/Beluga Hochtief Offshore JV (2011), COMP/M.6436 Volkswagen Financial Services/D’ieteren/Volkswagen D’ieteren Finance JV (2011), COMP/M.6477 BP/Chevron/Eni/Sonangol/Total/JV (2012), and COMP/M.6339 Freudenberg & Co/Trelleborg/JV (2012). 178

  Jurisdictional Notice, para 94.

179

  Jurisdictional Notice, para 95.

180

  Jurisdictional Notice, paras 95 and 96. The Jurisdictional Notice provides particular clarification on this point as regards joint ventures involved in the holding of real estate. However, it does not define the concept of ‘agent’. The general principles regarding agency under the Commission’s Vertical Restraints Guidelines may be of relevance in this regard (Guidelines on vertical restraints, OJ 2010 C130/1). 181

  Jurisdictional Notice, para 97.

182

  See eg Cases COMP/M.6439 Agrana/RWA/JV (2012) and COMP/M.6503 La Poste/Swiss Post/JV (2012). 183

  Factors that militate against a finding of arm’s length dealings include offering preferential prices or better contractual terms to the parent companies or giving priority to orders from the parents over those from third parties. See Case COMP/M.293 Philips/ Thomson/SAGEM (1993), para 14.

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184

  In Case COMP/M.4922 EMCC (2008) a joint venture established to provide congestion management services for cross-border electricity transmission systems by market coupling and secondary trading of transmission rights was found to be full function. The anticipated clients of the joint venture were both its shareholders and commercial capacity holders and traders. The joint venture would apply an equal charging methodology to the parents and to independent capacity holders/traders. Further, it was foreseen than more than 40–60 per cent of the joint venture’s revenue would be derived from sales to third parties. 185

  Jurisdictional Notice, paras 98–100. Outsourcing agreements, where an undertaking creates a joint venture with a service provider to carry out functions that were previously dealt with in-house, are generally considered as non-full function, unless significant third party sales are foreseen (the mere fact that the joint venture’s business plan does not exclude the provision of services to third parties is not sufficient in that regard). See eg Case COMP/M.2478 IBM Italia/Business Solutions/JV (2001), where the Commission considered as full function the joint venture created by Fiat and IBM Italia partly as an outsourcing operation, whereby Fiat aimed at rationalizing its IT spending, but also as a means for Fiat to expand its activities into the provision of IT services. 186

  See eg Case COMP/M.6477 BP/Chevron/Eni/Sonangol/Total/JV (2012).

187

  Jurisdictional Notice, paras 101 and 102. See Case COMP/M.6737 Ruukki/Capman/ Fortaco (2012). 188

  In Case COMP/M.5727 Microsoft/Yahoo! Search Business (2010), the Commission considered that a term of ten years was a sufficiently long period in the market for Internet search and search advertising, which was characterized by rapid technological developments. Furthermore, the Commission found that the events that would permit early termination of the agreement were unlikely to occur and could only take place after a significant period. The Commission also took into account the fact that, in the event of termination, it was not foreseen that employees would have to be returned to Yahoo and that Microsoft would maintain a licence to Yahoo’s core technology (although this would become non-exclusive). In Case COMP/M.6151 Petrochina/Ineos/JV (2011), the Commission found full functionality on the basis of an initial period of 15 years, in the markets for exrefinery, non-retail sales of refined oil products and trading of crude oil and refined products. 189

  Jurisdictional Notice, paras 103 and 104.

190

  Jurisdictional Notice, para 103.

191

  Jurisdictional Notice, para 105.

192

  See Case T-282/02 Cementbouw v Commission [2006] ECR II-319, paras 117–122. See also Jurisdictional Notice, paras 36 and 37. 193

  See Jurisdictional Notice, para 50.

194

  Cementbouw (n 192), paras 104–109.

195

  Jurisdictional Notice, paras 39 and 43. For an illustration, see Case COMP/M.6104 SAFRAN/SNPE Materiaux Energetiques/Regulus (2011), where the acquisitions by SAFRAN of 100 per cent of the share capital of SME and of 40 per cent of the share capital of Regulus were considered as interdependent both on a de jure basis (as they were subject to the same share and purchase agreement and one could not take place without the other) and from an economic point of view (as they served a common purpose, namely combining the activities of the parties with regard to their solid propulsion business).

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196

  See eg parallel cases COMP/M.3293 SHELL/BEB (2003) and COMP/M.3294 ExxonMobil/BEB (2003), concerning a de-merger scenario. 197

  Jurisdictional Notice, paras 41, 42, and 44. See eg Case COMP/M.6104 SAFRAN/SNPE Materiaux Energetiques/Regulus (2011), where the undertaking SAFRAN acquired control of the whole of the solid propulsion business of SNPE, through the acquisition of the whole of SME (a 100 per cent subsidiary of SNPE) and joint control of Regulus (a company jointly controlled by SNPE and a third party). The Commission considered that the two transactions concerned a single economic entity to be managed for a common commercial purpose, insofar as one purchaser was acquiring control of all SNPE’s solid propulsion activities, comprising a 100 per cent controlling stake in SME and a jointly controlling stake in Regulus, which operated a solid propellant plant. The Commission took into account the cooperation agreement signed by the parties and the existing clear economic link between the two parts of SNPE’s solid propulsion business. 198

  Jurisdictional Notice, para 44.

199

  Jurisdictional Notice, para 45. If these several (interdependent) legal transactions are required to take place in order to transfer the business, they constitute one concentration. 200

  Jurisdictional Notice, para 46. In this case, it is clear that one transaction will not take place without the other; see eg Case COMP/M.2926 EQT/H&R/Dragoco (2002). 201

  Jurisdictional Notice, paras 46 and 47. Where these transactions are conditional upon each other, the Commission takes into account the final outcome brought about by all of them together. For an illustration of a serial acquisition of sole control, see Case COMP/M. 1188 Kingfisher/Wegert/ProMarkt (1998). 202

  Jurisdictional Notice, para 48. See also recital 20 to the Merger Regulation. For practical reasons, the concentration is not limited to the acquisition of the final one decisive share giving control to the acquirer, which may be quite difficult to identify. 203

  A good example is provided by the sequence of transactions in Cases COMP/M.5799, COMP/M.5977 and COMP/M.6537 Faurecia/Plastal (February 2010, June 2010, and February 2012), whereby Faurecia acquired, first, the business and all operating assets of Plastal Germany; second, all shares in Plastal Spain; and, third, all assets of Plastal France. These three subsidiaries of Plastal supplied automotive equipment, notably thermoplasticengineered plastic components: Plastal Germany and Plastal Spain produced bumpers and front-end carriers and Plastal France bumpers, instrument panels, door trims, fenders, and spoilers. The three acquisitions were cleared in separate decisions. 204

  Jurisdictional Notice, para 50.

205

  Jurisdictional Notice, para 50.

206

  Examples of ancillary restraints include non-compete obligations which are imposed on the vendor in the context of the transfer of an undertaking, licence agreements transferring to the purchaser the IP rights or know-how necessary for the full exploitation of the assets transferred, transitory purchase and supply agreements, or non-compete obligations between the parent undertakings and a joint venture. 207

  See Merger Regulation, Art 6(1)(b), second subpara, Art 8(1), second subpara, and Art 8(2), third subpara. See also recital 21 to the Merger Regulation. To the extent that restrictions are directly related and necessary to the implementation of the concentration, the Merger Regulation alone applies, further to Art 21(1) thereof, and these restrictions are authorized by the merger clearance decision (in other words, they cannot separately be

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challenged under Art 101 or 102 TFEU). For other restrictions, Arts 101 and 102 (and relevant national competition rules) remain potentially applicable. 208

  Commission Notice on restrictions directly related and necessary to concentrations (Notice on Ancillary Restraints; OJ 2005 C56/24). 209

  See Notice on Ancillary Restraints, paras 5 and 6.

210

  For a detailed discussion on ancillary restraints in merger proceedings, see G. Conte in Drauz and Jones, EU Competition Law (n 9), 533ff. 211

  Jurisdictional Notice, para 8.

212

  The relevant economic resources are those of the corporate groups to which the undertakings concerned belong, rather than simply the resources directly involved in the concentration. See Merger Regulation, Art 5(4). 213

  Jurisdictional Notice, para 10.

214

  The GC has stated that the very foundation of the system of thresholds established by Art 1 of the Merger Regulation is to provide a simple and effective method for determining the competent authority. See Endesa (n 50), paras 132 and 180. 215

  A second corrective mechanism consists in the (post-notification) referral system, whereby one or more Member States can request the Commission to assess mergers that fall below the thresholds (Art 22 referrals), or conversely, a Member State can request that a concentration that has been notified to the Commission be transferred to its NCA (Art 9 referrals). See further Section C.2. 216

  Council Regulation (EC) No 1310/97 of 30 June 1997 amending Regulation (EEC) No 4064/89 on the control of concentrations between undertakings, OJ 1997 L180/1. 217

  For a practical illustration, see Case COMP/M.4439 Ryanair/Aer Lingus (2007), paras 14ff. 218

  Different versions of this ‘3+ rule’ were proposed and discussed when Art 1(3) was being drafted, but this option was not ultimately retained, notably because it was considered that a criterion based on (common) turnover thresholds would be easier to apply in practice than one based on the fulfilment of the diverse jurisdictional tests of the different EU Member States. A version of this ‘3+ rule’ was ultimately incorporated in the Merger Regulation, however, as one of the conditions for the pre-notification referral of cases to the Commission, pursuant to Art 4(5). 219

  In particular, a third corrective mechanism was introduced, with a new set of voluntary pre-notification referral mechanisms under Art 4(4) and (5). These pre-notification referral mechanisms have considerably enhanced the efficiency and jurisdictional flexibility of the EU merger control system. 220

  Art 1(5) of the Merger Regulation indicates that, following the report and on a proposal from the Commission, the Council may revise the thresholds and criteria of Art 1(3). See also recital 9 to the Merger Regulation. 221

  Communication from the Commission to the Council, Report on the functioning of Regulation No 139/2004 (COM(2009) 281 final, of 18 June 2009). Staff Working Paper accompanying the Report on the functioning of Regulation No 139/2004 (SEC(2009) 808 final/2 of 30 June 2009). 222

  The number of transactions notified under Art 1(2) typically represents 85–95 per cent of the total number of notifications in any given year.

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223

  This fact had actually already been acknowledged in the reform process leading up to the adoption of the additional thresholds under Art 1(3). 224

  Interestingly, the report concluded that Art 1(3) cases often affect markets that are wider than national and are as likely to raise competition concerns as those notified under Art 1(2). 225

  It is unavoidable that some transactions between large firms falling under the twothirds rule are capable of having a significant impact on market structures and on competition beyond the confines of a single Member State. Mergers involving national markets, particularly those with high concentration levels and entry barriers, may result in increased foreclosure effects with a clear cross-border impact. This is notably relevant for markets that are in the process of liberalization or where intra-EU barriers are being eroded. Furthermore, the geographic scope of such markets may be in the process of evolving towards a wider-than-national dimension. These considerations are well illustrated by some important cases in the energy sector (eg E.ON/Ruhrgas in Germany (Case B8-109/01) and Gas Natural/Endesa in Spain (Case N-05082)). 226

  Jurisdictional Notice, para 129. Para 131 of the Notice discusses the difference between the concept of ‘undertakings concerned’ and other terms used in the Merger Regulation and the Implementing Regulation to characterize the different actors involved in a concentration. 227

  Note that, for the acquiring undertakings, account must be taken of the overall turnover of the group to which they belong. 228

  Jurisdictional Notice, para 133.

229

  The seller of a stake in a company is thus an undertaking concerned only if it retains joint control over the latter. 230

  See Merger Regulation, Art 3(3)(a) and (b). However, even though the subsidiary is normally the ‘undertaking concerned’, the turnover of the group will be included in the threshold calculations. In this respect, the group is considered as a single economic unit and the different companies belonging to it cannot be considered as different undertakings concerned for jurisdictional purposes. The notification can be made by the subsidiary concerned or by its parent company. See Jurisdictional Notice, para 135. 231

  Jurisdictional Notice, para 145. Footnote 109 of the Notice provides an illustration of when such a distinction could be decisive for jurisdictional purposes. 232

  See eg Cases COMP/M.1035 Hochtief/Aer Rianta/Düsseldorf Airport (1997) and COMP/ M.4547 KKR/Permira/Prosiebensat.1 (2007). See Jurisdictional Notice, para 147. 233

  In Case COMP/M.6763 VWFS/PON Holdings/PON Equipment Rental & Lease (2013), the Commission considered that, although the acquirer was a full-function joint venture, the undertakings concerned were its parent companies, because they were the real players behind the operation, notably insofar as the operation consisted of the extension of the existing joint venture’s activities through the transfer of an existing business from one of the parent companies to the joint venture and the parent companies were considered to have played an important role in the initiation, organization, and financing of the operation (cf para 12). 234

  Hence, the existing and the new controlling shareholders will jointly have to notify the concentration, according to Art 4(2), first sentence, of the Merger Regulation. Occasionally, this may create practical difficulties (eg confidentiality, reluctance to assume all the reporting obligations of a notifying party), insofar as the pre-existing shareholders may not directly be part of the relevant transaction (eg where the exiting shareholder sells its stake to a third party). It could be argued that the wording of Art 4(2) of the Merger Regulation and para 144 of the Jurisdictional Notice does not necessarily preclude the Commission From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

from excusing a particularly unwilling shareholder that is not part of the commercial transaction at stake, from participating in the notification. To our knowledge, however, this situation has not yet occurred. 235

  See Merger Regulation, Art 5(2), first subpara. See eg Case COMP/M.6722 Frieslandcampina/Zijerveld & Veldhuyzen and Den Hollander (2003). 236

  See Merger Regulation, Art 5(2), second subpara. See eg the consecutive transactions in Cases COMP/M.5799 (2010), COMP/M.5977 (2010) and COMP/M.6537 Faurecia/Plastal (2012). 237

  The same rule applies where one undertaking contributes a pre-existing subsidiary or a business (over which it previously exercised sole control) to a newly created joint venture. The turnover of the contributed company or business is part of that of the initial parent company. 238

  See Jurisdictional Notice, paras 141 and 148–150.

239

  Turnover figures must be expressed in euros. For the conversion of amounts expressed in other currencies into euro, see Jurisdictional Notice, paras 204 and 205. 240

  The reference to turnover achieved in the normal course of business excludes financial or extraordinary income (eg income derived from the sale of businesses or of fixed assets). Aid granted to undertakings by public bodies, by contrast, has to be included in the calculation of turnover, if it is directly linked to the sale of products and the provision of services by the undertaking concerned. See Jurisdictional Notice, paras 161–163. 241

  Merger Regulation, Art 5(1). Concerning the deduction of rebates and taxes, see Jurisdictional Notice, paras 165 and 166. 242

  Art 5(3) and (4) of the Merger Regulation sets up specific rules for the calculation of the turnover of financial institutions and insurance companies, respectively. These provisions are further developed in the Jurisdictional Notice, paras 206–220. 243

  Jurisdictional Notice, para 159 and fn 116.

244

  Jurisdictional Notice, paras 157–160.

245

  See Merger Regulation, Art 5(2), first para.

246

  See Merger Regulation, Art 5(2), first para.

247

  The aim of Art 5(4) differs from that of Art 3(2), which defines the notion of control. As a general rule, the provisions of Art 5(4) reflect the particular need for certainty in the criteria used for calculating turnover (so that jurisdiction can be readily verified), while the question whether a concentration arises pursuant to Art 3 can be more comprehensively investigated. See Jurisdictional Notice, para 184. 248

  In the Staff Working Document, Towards more effective EU merger control, of 25 June 2013, the Commission raised the possibility of expanding Art 5(4) of the Merger Regulation, with a view to explicitly laying down the methodology for the calculation of a joint venture’s relevant turnover currently set out, following the Commission practice, in the Jurisdictional Notice. 249

  Merger Regulation, Art 5(4)(a).

250

  Merger Regulation, Art 5(4)(b).

251

  Merger Regulation, Art 5(4)(c).

252

  Merger Regulation, Art 5(4)(d).

253

  Merger Regulation, Art 5(4)(e).

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254

  Merger Regulation, Art 5(4)(b)(i)–(iv). The first three criteria are quantitative and relatively easy to apply (these powers may derive from de jure rights or result from a de facto situation); the fourth criterion, the right to manage the affairs of the company, is more infrequent in practice and typically relates to contractual arrangements enabling the parent, on a stable, de jure basis, to determine the strategic behaviour of an undertaking. See Jurisdictional Notice, paras 179–181. 255

  Jurisdictional Notice, para 178.

256

  See Jurisdictional Notice, para 187. Thus, the turnover of a joint venture controlled by three undertakings with shareholdings of 40, 30, and 30 per cent respectively would be split one-third each among the three shareholders, rather than apportioning a higher turnover to the shareholder with the largest shareholding. The rules of Art 5(4) have to be adapted in situations involving a change from joint to sole control, in order to avoid double counting of the turnover of the joint venture: Jurisdictional Notice, para 188. The Jurisdictional Notice also contains specific rules regarding the allocation of turnover in the case of investment funds (cf paras 189–191) and State-owned undertakings (cf paras 192– 194). 257

  Jurisdictional Notice, para 167.

258

  Jurisdictional Notice, para 168.

259

  Jurisdictional Notice, paras 168 and 181.

260

  eg in the case of a sale of mobile goods, such as a motor vehicle, to a final consumer, the place where the car is delivered to the customer is decisive even if the agreement was concluded via the phone or the Internet. 261

  As an example of a case where the service provider travels, see the situation where a non-European company provides specific aircraft maintenance services to a carrier in a Member State. The situation where a European tourist hires a car or books a hotel directly in the US provides an illustration of a case where the customer travels. Finally, the distribution in a Member State of a film made outside the EU illustrates the category of cases where a service is provided with neither the service provider nor the customer having to travel. 262

  Merger Regulation, Art 5(1), second subpara. Jurisdictional Notice, paras 195–203. Specific rules are provided for central purchasing organizations (cf para 198), call termination services by telecom companies (cf para 202), and financial institutions (cf para 210). 263

  See eg Cases COMP/M.130 Delta Airlines/PanAm (1991); COMP/M.157 Air France/ Sabena (1992); COMP/M.259 British Airways/TAT (1992); COMP/M.1354 SAir Group/LTU (1998); and COMP/M.1494 SAir Group/AOM (1999). 264

  See notably Cases COMP/M.616 Swissair/Sabena (II) and COMP/M.857 British Airways/Air Liberté. 265

  Case COMP/M.4439 Ryanair/Aer Lingus. The question of whether both Ryanair and Aer Lingus achieved a combined aggregate turnover of more than €100 million in at least three Member States and whether each of them achieved at least €25 million in these Member States, as required under Art 1(3)(b) and (c) of the Merger Regulation, depended on the method retained for the geographical allocation of the turnover of those undertakings. Ryanair had notified the merger to the Commission on the basis of the 50/50 methodology. Aer Lingus, in turn, proposed to use the place of departure of the customer (with return tickets treated as having only one place of departure, namely the place where the first leg

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of the journey began): if the latter method were used, the merger would not have had an EU dimension. 266

  However, this conclusion seems case-specific and therefore not necessarily of general validity. The Commission took into account the nature of the business activities of Ryanair and Aer Lingus, particularly the fact that neither sold traditional return tickets (whereby a return flight ‘bundle’ would be more advantageous than two one-way flights), but one-way tickets (simply summing up their individual prices in the case of simultaneous booking of tickets comprising a round trip, without any price or other advantages for the customer). 267

  Instead of treating both flights as one service and allocating the total revenue to the country where the place of departure of the original outbound flight was located, as Aer Lingus had proposed. 268

  Jurisdictional Notice, paras 154–156. See also Merger Regulation, Art 4(1), first and second subparas. 269

  Jurisdictional Notice, paras 169–171. See Endesa (n 50), paras 128, 131, 176, and 179.

270

  Changes ‘occurred’ are understood as transactions which have not only been signed but also closed (ie legally implemented with transfer of the legal title) or which constitute a pre-condition for the notified operation. 271

  Jurisdictional Notice, paras 156, 169, and 172–174. See Endesa (n 50), para 209.

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Part I General Principles, 5 Mergers, C Interaction with Member States and Third Countries Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): National Courts — Referral to and from member states — Procedure under the Merger Regulation — Notification — Pre-notification — Commission, referral to by parties or NCA — Co-operation between Commission and member states — International co-operation

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C. Interaction with Member States and Third Countries (1)  Introduction 5.207  This section deals with the interaction between, on the one hand, the EU merger control system and, on the other hand, the respective merger control jurisdictions of: (a) the EU Member States; (b) the European Economic Area (EEA) Contracting Parties which are not part of the EU (namely, Iceland, Lichtenstein, and Norway); and (c) other non-EEA countries.

(2)  Reallocation of Jurisdiction between the Commission and Member States (‘Referrals’) (a)  Purpose of the Referral System 5.208  As discussed in Section A.2(b), in the field of merger control, the Commission and the Member States NCAs do not have concurrent jurisdiction. Instead, a system of clearly defined competences applies, governed by the ‘one-stop-shop’ principle enshrined in Article 21(3) of the Merger Regulation. The delineation of competence is determined by the application of turnover thresholds, which are considered a proxy for the identification of the locus of possible effects on competition. The presumption is that if the thresholds are met, a merger would involve ‘significant structural changes, the impact of which on the market goes beyond the national borders of any one Member State’ and the Commission will have jurisdiction over the transaction.272 However, there may be instances where this may not be the case. In such instances, the referrals system operates to ensure that the best placed agency (whether the Commission or an NCA) obtains jurisdiction. 5.209  The Merger Regulation allows for a case to be referred from the Commission to NCAs and vice versa in four situations. Referrals from the Commission to one or more NCAs can be made prior to notification to the Commission under Article 4(4) or post-notification under Article 9. Referrals from NCAs to the Commission can be made prior to notification to the NCAs under Article 4(5) or post-notification under Article 22. 5.210  The possibilities for pre-notification referrals under Article 4(4) and (5) were included in the 2004 recasting of the Merger Regulation. Requests for referrals under these provisions are made by the parties to a transaction. Requests for referrals under Articles 9 and 22 are made by the NCAs.

(p. 590) (b)  Use of the Referral System Over Time 5.211  During the initial years following the introduction of the 1989 Merger Regulation, referrals were limited to truly exceptional circumstances. This can be seen as the intention of the Council and the Commission, which at that time considered referrals to be a lastresort mechanism where the interests of Member States would not otherwise have been protected.273 In recent years, however, referrals have become far more prevalent, for a number of reasons. First, the introduction of ‘pre-notification’ referrals allows parties to a concentration to ask for reallocation of a case before notification, giving them the ability to influence at an early stage which authority will ultimately assess the transaction. The increase in certainty that this brings has clearly been welcomed and parties have made considerable use of the possibility to request referrals. Secondly, increased cooperation between the Commission and NCAs has stimulated closer relationships and mutual recognition of their respective fields of expertise, making both referral requests and acceptances more likely. Thirdly, the transparency and predictability of the process increased once the Commission began to issue public versions of referral decisions, thus making it easier to anticipate when referral requests are likely to be accepted.

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5.212  A brief review of the statistics on referrals demonstrates how their use has evolved and how important a tool they have become for the operation of the EU merger control system. Figure 5.10 charts the progression of the number of accepted referral requests (partial and total, both to the Commission and to NCAs) as a proportion of total notifications of concentrations to the Commission. It is clear that the proportion of referrals increased significantly with the introduction of pre-notification referrals in 2004. This suggests that, in recent years, the European merger control system has become much more fluid in terms of allocation, with between 8 per cent and 15 per cent of cases reallocated each year. View full-sized figure

Figure 5.10  Proportion referrals/notifications 1990–2013* *

Up to November 2013

(p. 591) 5.213  As regards the relative importance of the different types of referrals, Figure 5.11, which charts the use of each type over time, also shows that pre-notification referrals requested by the parties account for the large increase in the number of referrals since 2004 and represent the clear majority of referral cases. View full-sized figure

Figure 5.11  Evolution of partial and total referrals over time 1990–2013* *

Up to November 2013

5.214  The relative importance of the different types of referral can also be seen from an examination of the numbers of requests made under each article and their ‘success rates’.274 As of November 2013, a total of 485 referrals had been requested, 446 of which had been either partially or totally granted (a total success rate of 92 per cent). The most common referral is a pre-notification referral from NCAs to the Commission under Article 4(5) of the Merger Regulation, which has been requested 261 times and accepted on 249 occasions (95 per cent success). The rarest referral is a referral under Article 22(3), made post-notification from NCAs to the Commission, which has been requested only 30 times and accepted in 27 of those cases (90 per cent success). Pre-notification referrals from the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Commission to NCAs (p. 592) under Article 4(4) have been requested on 91 occasions and granted partially or totally 87 times (95 per cent success). Post-notification referrals from the Commission to NCAs under Article 9 have been requested 103 times and partially or totally accepted in 83 instances (80 per cent success). 5.215  These statistics show that referral requests are generally likely to be accepted, indicating that the system functions effectively. Requests to refer a case post-notification from the Commission to NCAs have the lowest rate of success. This is understandable as the Commission will have already started its examination of the transaction and will require convincing reasons to conclude that another agency is better placed to review it. In any event, it is worth noting that the low success rate (relative to the other referral types) is mainly due to the high frequency of spontaneous withdrawals by the requesting NCA rather than to the formal rejection of requests,275 for instance in cases where the parties offer remedies in the proceedings before the Commission that remove competition concerns identified by the NCA in its request.276

(c)  Guiding Principles Applied when Considering Referral Requests 5.216  There are three general principles underpinning the application of the rules on referrals.277 5.217  First, referrals represent an exception to the primary allocation of jurisdiction (which is established by the application of the turnover thresholds) and should be made only when necessary to ensure that the authority best placed to review a concentration obtains jurisdiction. This stems from one of the EU’s fundamental principles, the principle of subsidiarity, according to which the EU will act in areas that do not fall within its exclusive competence only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States.278 The key question, therefore, is which authority is best placed to act. As regards merger referral requests, particular importance is given to the likely locus of possible competition effects (namely, the geographic area where it is likely that competition will be affected as a result of the transaction). In cases where competition effects are likely to be national or sub-national (regional or local), the most appropriate authority will normally be the NCA that has jurisdiction over the Member State where those competition effects are likely to be produced. In cases where competition effects are likely to be cross-border or where effects on a national market may spill over into a neighbouring market, the Commission will normally be best placed to act. Aside from the locus of competition effects, other factors that indicate whether an authority is particularly well placed to review a transaction are proven expertise when dealing with a certain sector (eg through previous merger reviews in that sector or involving the same parties) and the investigative and enforcement tools at its disposal. 5.218  In general, the principles on appropriateness of referrals apply to all four types of referral, even though the legal requirements and procedures differ on the basis of the type of referral involved. Table 5.4 outlines the most frequent elements taken into account in assessing whether it would be more appropriate for NCA(s) or the Commission to review a transaction.(p. 593) Table 5.4  Elements for assessing which authority should review a transaction

Factor

Favouring NCA jurisdiction

Favouring Commission jurisdiction

Relevant geographic market

National or narrower than national markets

Wider than national markets

Eg :

Eg: Case COMP/M.2738 GEES/Unison (2002) —Article 22 referral Case COMP/M.6773 Canon/IRIS (2013)— Article 22 referral

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Factor

Favouring NCA jurisdiction

Favouring Commission jurisdiction

Case COMP/M.1021 Compagnie Nationale de Navigation/SOGELFA (1997) —Article 9 referral Case COMP/M.4124 Coca-Cola Hellenic Bottling/Lanitis Bros (2006)—Article 22 refusal to refer Cross-border effects

Lack of effects on competition in Member States outside the scope of the national geographic market Eg:.

Investigative and enforcement powers

Expertise and efficiencies

Effects on competition in one Member State constituting a national market extend beyond the territory of that Member State

Case COMP/M.6822 Groupe Auchan/Real/ Real Hypermarket Romania (2013)— Article 4(4) referral

Eg:

Case COMP/M.5677 Schuitema/Super de Boer Assets (2010)—Article 9 referral

Case COMP/M.6191 Birla/Columbian Chemicals (2011)—Article 22 referral

No coordinated investigation required; prospect of proportionate and nonconflicting remedies which do not require coordinated approach; lack of jurisdiction on certain products at European level deriving from international agreements (eg EEA Agreement)

Coordinated investigation and/or remedial action needed to ensure consistent and efficient investigation in multiple jurisdictions and effective response to competition concerns; lack of national jurisdiction on certain markets because of national competition rules

Eg:

Eg:

Case COMP/M.2898 Le Roy Merlin/Brico (2002)—Article 9 partial referral

Case COMP/M.1383 Exxon/Mobil (1999) —Article 9 refusal to refer

Case COMP/M.6753 Orkla/Rieber & Søn (2013)—Article 4(4) partial referral

Case COMP/M.5828 Procter & Gamble/ Sara Lee Air Care (2010)—Article 22 referral

Specific expertise concerning local markets or simultaneous/previous investigations/inquiries in the sector concerned

Specific expertise in the sector concerned; cost and time delay resulting from the need for multiple Member State filings

Eg:

Eg :

Case COMP/M.6153 Anglo American/ Lafarge/JV (2011)—Article 4(4) referral

Case COMP/M.5020 Lesaffre/GBI (2008) —Article 22 referral

Case COMP/M.5776 Telecinco/Cuatro (2010)—Article 4(4) referral

Case COMP/M.6191 Birla/Columbian Chemicals (2011)—Article 22 referral

Case COMP/M.5549 EDF/Segebel (2009) —Article 9 refusal to refer

5.219  Secondly, the ‘one-stop-shop’ principle is central to all decisions concerning referrals. Fragmentation of a single case between multiple jurisdictions is generally to be avoided insofar as it generates a risk of conflicting outcomes and an increase in the administrative costs associated with the merger control process. Thus, referrals to more than one NCA under Article 4(4) or 9 will be made relatively exceptionally, notably only when a number of agencies are better equipped to deal with specific aspects of a case, with the result that (p. 594) competition in all markets is effectively protected. By contrast, referrals from NCAs to the Commission will not raise potential fragmentation concerns, as a general rule, as they can bring the benefits of the ‘one-stop-shop’ principle to transactions that would be subject to notification in a number of national jurisdictions.279 The same can be said for referrals from the Commission to one NCA, as only one authority would have jurisdiction to review the whole transaction after the referral.280

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5.220  Similarly, as regards Article 4(4) and Article 9 referrals, when it appears that NCAs would be in a better position to review a transaction, the Commission will normally prefer to avoid a partial referral and will refer the case in full to one single authority, in order to ensure respect of the ‘one-stop-shop’ principle.281 Partial referrals will be granted only where review by multiple authorities is appropriate, to the extent that the different parts of the case referred to NCAs can be ‘isolated’ from the rest of the case to the maximum extent possible. This is particularly likely to occur when a concentration affects national or local markets and does not give rise to cross-border effects. In these cases, it is possible (perhaps even likely) that the impact on competition will be different in the various affected markets. The risk of dissimilar outcomes in the different NCA reviews would therefore result from the nature of the markets, and in particular their geographic scope, and not the referral system as such. 5.221  Thirdly, the principle of legal certainty applies to referral requests. As a result, a concentration should be reallocated from its primary jurisdiction only when there are compelling reasons to do so, the assessment of which will be based on the principles described in Section C.2(c). Moreover, post-notification referrals will generally be avoided in cases where pre-notification referrals occurred.282 Lastly, in relation to pre-notification referrals, these should generally be granted only when compliance with the legal requirements provided for by Article 4(4) and (5) of the Merger Regulation is relatively straightforward and does not require an in-depth examination.

(d)  Operation of the Referral System in Practice 5.222  Referrals can be made from the Commission to NCAs and vice versa. Referrals from the Commission to one or more NCAs can be made prior to notification to the Commission under Article 4(4) or post-notification under Article 9. Referrals from NCAs to the Commission can be made prior to notification under Article 4(5) to the NCAs or postnotification under Article 22. 5.223  Table 5.5 summarizes the main features of the different types of referral.(p. 595) Table 5.5  Types of referral

Legal basis under the Merger Regulation

Requested by

Stage of request

Referral direction

Legal requirements

Commission discretion in assessing request

Article 4(4)

Notifying party

Prenotification

Commission to NCA(s)

Concentration may significantly affect competition in a distinct market within a Member State

Yes

Article 4(5)

Notifying party

Prenotification

NCAs to Commission

Concentration capable of being reviewed under laws of at least three Member States

No

Article 9

Member States

Postnotification

Commission to NCA(s)

Article 9(2)(a):

Article 9(2) (a): yes

concentration threatens significantly to affect competition in a distinct market within requesting Member State (which constitutes a

Article 9(2) (b): no

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Legal basis under the Merger Regulation

Requested by

Stage of request

Referral direction

Legal requirements

Commission discretion in assessing request

substantial part of the internal market) Article 9(2)(b): concentration affects competition in a distinct market within requesting Member State which does not constitute a substantial part of the internal market

Article 22

Member States

Postnotification but Member States without jurisdiction over the concentration can also request referral

NCA(s) to Commission

Concentration affects trade between Member States; and threatens significantly to affect competition within requesting Member State

Yes

(i)  Referrals from the Commission to One or More NCAs 5.224  The Commission may, upon the request either of a Member State NCA or of the parties to a concentration, refer a concentration that is notifiable under the Merger Regulation to the NCA of one or more Member States for investigation under the national competition rules of the relevant Member State(s). (i)  Pre-Notification Referrals Requested by the Parties (Article 4(4)) Overview

5.225  Article 4(4) of the Merger Regulation, introduced in the 2004 reforms, allows the parties to a concentration that is notifiable to the Commission to request the (p. 596) reallocation of the whole or part of the case to NCAs. Such referrals are now relatively common and can offer particular benefits, for example where the NCA has particular expertise on a specific market or is familiar with the parties’ activities. Furthermore, where the parties expect that the NCA will request a referral post-notification, pre-empting such a request would demonstrate a cooperative approach and speed up the overall regulatory approval process. Requirements for referral

5.226  Pursuant to Article 4(4) of the Merger Regulation:

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Prior to the notification of a concentration…, the [notifying parties] may inform the Commission, by means of a reasoned submission, that the concentration may significantly affect competition in a market within a Member State which presents all the characteristics of a distinct market and should therefore be examined, in whole or in part, by that Member State. This requires that two factors be shown. 5.227  First, the concentration must be one that may significantly affect competition in a given market. In this context, the parties need at least to show that there may be an effect on that market, but not that the effect will be detrimental to competition. Some guidance on the extent of the effect necessary is provided in the Notice on Referrals, which makes it clear that the existence of affected markets within the meaning of Form CO and Form RS (namely, horizontal overlaps above 15 per cent and vertical relationships where one party has at least 25 per cent in one of the relevant markets) will normally be sufficient.283 5.228  Secondly, the parties must demonstrate that the market where the transaction will produce an effect is a market within a Member State and presents all the characteristics of a distinct market.284 This means in practice that the parties will need to provide evidence of the geographic scope of the market and generally demonstrate that the scope of the market is national285 or narrower. 5.229  If the Commission determines that competition may be significantly affected within a distinct market which is national or narrower in scope, it has discretion whether to refer the whole or part of the case to the NCA. Factors relevant to the exercise of its discretion

5.230  In carrying out its assessment, the Commission will take into account the guiding principles described in Section C.2(c). It will look to determine the likely focus of any competition effects, the presence of spillover effects in other Member States, and the other guiding factors listed to determine which is the best-placed authority to deal with the case.286 In Koninklijke Ahold/Valk Holding,287 for instance, the Commission fully referred a concentration between two retailer groups active in the Netherlands to the Dutch NCA, as no overlap between the parties outside the Netherlands would have arisen and there were no affected markets at EEA, EU, or European Free Trade Assocation (EFTA) level. In SG Vetri/Zignago Vetro/Ardagh,288 the (p. 597) Commission referred to the Italian NCA a concentration between three glass makers since all the markets affected by the transaction would have been national or narrower, and the Italian Competition Authority was familiar with the industry and had recently published a report on glass recycling. As of September 2013, the Commission had never formally rejected an Article 4(4) request.289 5.231  In some cases, requests are made for referrals to more than one Member State or for partial referrals covering only certain markets. Despite the ‘fragmentation’ of the case, reallocation may be appropriate in such cases where there is no need for coordination in the investigation between different NCAs, where the competitive conditions in national or narrower markets differ significantly, and where no significant cross-border effects are present.290 Referral process

5.232  To request a referral under Article 4(4), the notifying party (or parties) must submit a reasoned submission (Form RS) to the Commission. Form RS is similar to Short Form CO, but contains additional sections in which the parties substantiate their request for referral. Form RS must be submitted prior to the notification of the concentration. As with

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submission of Form CO, the formal submission of Form RS comes at the end of a prenotification phase with the Commission.291 5.233  Once a completed Form RS has been received, the Commission informs all Member States of the request without delay and transmits copies of Form RS and enclosed documents. The Member State(s) concerned by the referral request has (have) 15 working days after receipt of the request to express agreement or disagreement. 5.234  If all the Member States concerned by the request object, no referral is made. If all the Member States concerned by the request agree or simply do not reply, the Commission assesses the referral request. If only some Member States concerned by the request object, the Commission assesses the referral request only in relation to the Member States that accepted the request (or have not replied). 5.235  The Commission must assess the referral request within 25 working days from the day of receipt of Form RS (which gives the Commission a minimum period of around ten days, since the Member States have 15 days after receipt of Form RS to provide their views). If the Commission does not act within the 25-working-day time limit, the request is considered to be accepted. (p. 598) 5.236  If the Commission concludes that a referral is appropriate, it informs the parties and the Member State(s) concerned. At that point, the parties are exempted from the obligation to notify to the Commission the transaction (or part of the transaction) that is covered by the referral, and the national competition rules will apply. 5.237  If a partial referral is granted, the review of the concentration will proceed in parallel before the different competition agencies. Even where coordination between the reviewing authorities may be possible in principle, the need for close coordination between different authorities would normally constitute an element militating in favour of the Commission retaining jurisdiction, and therefore potentially leading to the rejection of the referral request in the first place. 5.238  Article 4(4) decisions can be considered a definitive act with binding legal consequences for the parties and should therefore be appealable in a similar way to Article 9 decisions to refer or not to refer.292 The general rules of standing apply, including the status of privileged applicants of Member States. (ii)  Post-Notification Referrals Requested by an NCA (Article 9) Overview

5.239  Article 9 of the Merger Regulation, also known as the ‘German clause’, allows a Member State NCA to request the Commission to refer to that NCA the whole or part of a concentration that is notifiable to the Commission. Article 9 cases are relatively frequent and sometimes problematic. In EDF/Segebel, for instance, Belgium requested the referral of the acquisition of the Belgian electricity company Segebel by the French energy company EDF, amid seemingly protectionist concerns expressly voiced by the Belgian ministry for the economy. The Commission refused to refer the case.293 However, Article 9 cases often also show the advanced level of cooperation between the Commission and NCAs that has been achieved in recent years. In T-Mobile/Orange, for instance, the Commission and the Office of Fair Trading (OFT) cooperated very closely, with the UK authorities ultimately withdrawing a request for a referral under Article 9 of the Merger Regulation before the Commission issued a Phase I clearance decision with remedies.294 Requirements for referral

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5.240  Article 9 provides for referrals under two alternative situations, both of which are interpreted strictly in order to limit such referrals to exceptional circumstances.295 5.241  First, Article 9(2)(a) allows the referral of a concentration that ‘threatens to affect significantly competition in a market within [the requesting Member State], which presents all the characteristics of a distinct market’.296 5.242  This requires the NCA to show that: (a) there is a ‘real risk that the transaction may have a significant adverse impact on competition’, without however any prejudice to the final (p. 599) outcome of the investigation;297 and (b) the market affected by the concentration constitutes a distinct market within a Member State. In this respect, Article 9(7) lists a number of criteria which have to be taken into account, in particular ‘the nature and characteristics of the products or services concerned, the existence of entry barriers or of consumer preferences, appreciable differences of the undertakings’ market shares between the area concerned and neighbouring areas or substantial price differences’.298 5.243  In relation to Article 9(2)(a) cases, after the Commission has confirmed that the legal criteria are satisfied, it retains broad discretion whether to refer the case or to reject the NCA’s request and assess the case under the Merger Regulation (see for further detail, para 5.247). 5.244  Secondly, Article 9(2)(b) allows the referral of a concentration that ‘affects competition in a market within [the requesting] Member State, which presents all the characteristics of a distinct market and which does not constitute a substantial part of the internal market’. 5.245  Under Article 9(2)(b), a requesting NCA will have to show first that a concentration ‘is liable to have an impact on competition in a market’.299 This wording, which differs from the equivalent clause under Article 9(2)(a), suggests that the possible impact on competition required to obtain an Article 9(2)(b) referral can be more limited or less foreseeable than in the case of Article 9(2)(a). In practice, on the basis of the limited number of Article 9(2)(b) decisions issued by the Commission thus far,300 it appears that the test under this provision lies somewhere between the test under Article 9(2)(a) (real risk of a significant adverse impact) and that under Article 4(4) (may significantly affect competition), keeping in mind, however, that in Article 4(4) cases the Commission does not have any opportunity to carry out a market investigation and the level of detail in these decisions is therefore necessarily lower. The NCA must also show that the market affected by the transaction constitutes a distinct market within a Member State, and that such a market does not constitute a substantial part of the internal market. This will normally be the case for ‘markets with a narrow geographic scope, within a Member State’.301 Therefore, in general, the Commission will not consider markets as wide as a whole Member State to qualify for a referral under Article 9(2)(b). (p. 600) 5.246  If the Commission agrees with the NCA’s assessment under Article 9(2)(b), it must refer the whole or part of the case to the NCA; the Commission has no discretion with regard to Article 9(2)(b) referrals. Factors relevant to the exercise of the Commission’s discretion

5.247  Where the Commission is considering whether to exercise its discretion under Article 9(2)(a), factors which play a role include the scope of the relevant market, the need to carry out an analysis of cross-border and spillover effects in different Member States, the proven expertise of the reviewing authority in certain sectors, as well as the existence of pending cases involving the parties to the concentration or the same markets as those concerned by the concentration.302 The Commission’s discretion to refer is not, however, unlimited. In particular, the Commission cannot refer a case when it is clear that a referral would not safeguard or restore effective competition on the relevant markets. In this

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context, the Court’s review is limited to establishing whether the Commission committed a manifest error of assessment in its appraisal.303 Referral process

5.248  A Member State NCA may request a referral under Article 9 within 15 working days from the receipt of a copy of the notification of the concentration (these are circulated as a matter of course in all cases). There is no equivalent to Form RS for NCAs, which are therefore free to decide on the form of their request. 5.249  The Commission must take a decision on the referral request within 35 working days from the date of receipt of the notification of the concentration,304 except for cases where the Commission issues a decision pursuant to Article 6(1)(c) of the Merger Regulation to open an in-depth Phase II investigation. In such cases, the Commission has 65 working days from the date of notification of the concentration to either take a decision on the referral or to issue a statement of objections (SO).305 If, after opening proceedings, the Commission does not act, despite a reminder from the Member State concerned, the referral request is deemed to have been accepted. 5.250  While the Commission is considering the request, Article 19(2) of the Merger Regulation gives the Commission the power to obtain any information it may need from the NCA. In turn, Article 19(2) gives the Member State the right to access the file and to comment at every stage of the procedure until the Commission reaches a final decision. 5.251  If the Commission concludes that the referral request should be accepted, either in whole or in part, it will adopt a decision to refer and must inform the parties and the NCA. The NCA is then required to take action and decide upon the case without undue delay, in accordance with national law and under national timetables.306 In the case of partial referrals, the different authorities carry out their review in parallel, each process being independent from the others. Cooperation under the general framework provided for by the Merger Regulation is of course possible, when appropriate. (p. 601) 5.252  If, on the contrary, the Commission decides that it should retain jurisdiction over the concentration, it will adopt a decision rejecting the referral request and inform the parties and the NCA. Referral requests will impact on the timetable of the Commission’s review, given that the duration of the Phase I process is extended by ten working days even if the request is rejected in its entirety. 5.253  Both decisions to refer and decisions rejecting a referral request under Article 9 can be appealed to the General Court by the parties to the transaction. Third parties can appeal decisions to refer, but it is unclear whether they can appeal decisions not to refer.307 Further to the general principles for standing and the explicit provision of Article 9(9) of the Merger Regulation, Member States can always appeal referral decisions (either accepting or rejecting the referral request). Request by two (or more) Member States

5.254  The principles described in para 5.247 apply equally in cases where referrals are requested by two or more Member States. In CDC/Veolia Environment/Transdev/Veolia Transport,308 for instance, the Commission exercised its discretion to refer to France and the Netherlands those parts of a concentration in the transport industry affecting their respective national markets, while in Eurovia/Tarmac309 the Commission cleared a transaction in the aggregates sector with regard to the German and Polish markets, and referred parts of the concentration related to France and the Czech Republic to the respective competition authorities.

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(ii)  Referrals From One or More NCAs to the Commission 5.255  Member States may refer to the Commission concentrations that are not notifiable under the Merger Regulation, either of their own accord or at the request of the parties. (i)  Pre-Notification Referrals Requested by the Parties (Article 4(5)) Overview

5.256  Under Article 4(5) of the Merger Regulation, the parties to a concentration that has to be notified in at least three Member States may request the reallocation of the case to the Commission. This mechanism extends the advantages of the one-stop shop to cases that do not meet the Commission’s turnover thresholds but at the same time are subject to a number of mandatory filing requirements. The business community appears to have appreciated this opportunity to a significant extent, given that Article 4(5) referrals generally account for more than half of yearly referrals. Requirements for referral

5.257  Pursuant to Article 4(5) of the Merger Regulation: With regard to a concentration…which does not have a [Union] dimension…and which is capable of being reviewed under the national competition laws of at least three Member States, the [notifying parties] may, before any notification to the competent authorities, inform the Commission by means of a reasoned submission that the concentration should be examined by the Commission. 5.258  Thus, the following two elements must be demonstrated. First, the transaction must constitute a concentration within the meaning of Article 3. Secondly, the concentration must be capable of being reviewed under the national merger control laws of at least three Member States. In addition to demonstrating that the legal requirements under Article 4(5) are met, (p. 602) and in order notably to anticipate possible objections by Member States, the Form RS provides that parties should also indicate in Form RS why it is appropriate for the case to be reallocated from its primary jurisdiction (ie the NCA’s jurisdiction). Factors relevant to the assessment

5.259  The Commission has no discretion whether accept or reject a referral request under Article 4(5). The Commission only verifies that the legal requirements (ie the transaction is a concentration and it is capable of being reviewed by three of more Member States under national laws) are respected. 5.260  The guiding principles governing referrals are nonetheless still important insofar as they can influence whether Member States will object to a request for a referral. In Form RS, the parties should therefore include an assessment of the potential locus of the effects on competition, the scope of the geographic market, and the likelihood of cross-border effects caused by the concentration. As there is no legal requirement under Article 4(5) to show any impact on competition at any level, parties may argue that in spite of the lack of appreciable effects on competition in any possible market, the transaction should be assessed by the Commission due to the costs and time delay involved in notifying in separate jurisdictions.310 Process

5.261  As with Article 4(4) requests, a referral request under Article 4(5) must be made prior to the notification of the concentration (in this case to the NCAs) using Form RS.

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5.262  Once it has received Form RS, the Commission immediately transmits copies to all Member States. The Member State NCAs that have jurisdiction over the transaction have 15 working days from receipt of Form RS to express their disagreement to the referral. In the absence of objections from those Member States, the transaction is deemed to have an EU dimension and Member States can no longer apply their national competition law regimes. The objection by one of the Member States with primary jurisdiction over the concentration is sufficient to result in the rejection of the whole referral request. 5.263  The Commission has no discretion under Article 4(5), and does not issue a formal decision at the end of the process. It will simply inform the parties whether the request has been successful, normally by letter. 5.264  If the referral request is successful, the transaction acquires311 an EU dimension. The parties therefore engage in pre-notification discussions with the Commission resulting in the submission of a completed Form CO and commencement of the formal Merger Regulation time periods. The total timetable for review of the transaction is inevitably affected by the 15-working-day period previously granted to Member States to decide on the referral request. On the other hand, however, as the parties and the Commission will already have been involved in discussions during the referral process and the Commission will therefore have acquired some familiarity with the case, the duration of the Form CO pre-notification process may be shortened. Hence, the overall effect on the length of the review may not be significant. 5.265  Given that the Article 4(5) process does not result in the adoption of a formal Commission decision and that acceptance or refusal of the request is actually in the hands of the Member States (which, incidentally, do not need to provide reasons for their refusal), it is unlikely (p. 603) that the parties to a concentration or third parties could appeal a referral or a refusal to refer before the EU Courts. (ii)  Post-notification Referrals Requested by an NCA (Article 22) Overview

5.266  Article 22 of the Merger Regulation allows a Member State to request the Commission to assess under the Merger Regulation a concentration that lacks an EU dimension. This provision, also known as the ‘Dutch clause’, was originally introduced to give Member States that at the time of the enactment of the 1989 Merger Regulation did not have a national system of merger control (eg the Netherlands) a means of securing review for concentrations falling outside the scope of the Merger Regulation. In more recent years, Article 22 has also been used by Member States to refer concentrations that are not caught by existing national merger control legislation (eg because they do not meet the sometimes relatively high turnover thresholds at national level) by submitting an Article 22 request or joining a referral request introduced by a Member State with primary jurisdiction.312 5.267  As Article 22 has essentially been seen as a tool for the protection of competition in situations where the thresholds of the Merger Regulation are not triggered and national intervention is ineffective or impossible, it is not surprising that Article 22 cases have frequently led to either Phase II investigations or Phase I commitments.313 Requirements for referral

5.268  Article 22 provides that: One or more Member States may request the [EU] to examine any concentration… that does not have a [Union] dimension…but affects trade between Member States

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and threatens to significantly affect competition within the territory of the Member State or States making the request. 5.269  To meet these requirements, the Member State NCA requesting the referral must show first that the transaction is a concentration pursuant to Article 3. Secondly, the NCA must demonstrate that the concentration ‘is liable to have some discernible influence on the pattern of trade between Member States’. In this respect, the requirement is similar to the effect on trade concept in the context of proceedings under Article 101 or 102.314 In practice, the presence of significant trade flows between Member States and the potential regional (wider than national) or EEA-wide scope of the geographic market are factors that play an important role in the assessment.315 Thirdly, the concentration must also ‘threaten to significantly affect’ competition within the territory of at least one Member State making the request. In this respect, NCAs have to demonstrate, without prejudice to the outcome of the appraisal of the concentration, that ‘there is a real risk that the transaction may have a significant adverse impact on competition’.316 The wording used by the Notice on Referrals and the Merger Regulation is the same as that in Article 9(2)(a), which suggests that in principle the substantive test to be met in the case of Article 22 referrals is the same as that in Article 9(2)(a) (p. 604) cases. The main difference compared to Article 9(2)(a) cases appears to be that in Article 22 proceedings the Commission does not carry out any independent market investigation given that the concentration is not (yet) under its jurisdiction. The substantive assessment in its referral decision is therefore normally less detailed. 5.270  If the Commission receives referral requests from more than one Member State, it will normally decide individually on each referral request. Within the limits of the exercise of its discretion, the Commission remains free to accept or reject each request separately.317 Factors relevant to the assessment

5.271  The Commission has indeed discretion whether to accept referral requests under Article 22 and will take into account the general principles governing referrals in exercising its discretion. In particular, referral requests are more likely to be accepted in cases which require a cross-border assessment since the concentration will have effects on markets that are wider than national markets. The Commission has also sometimes accepted referral requests in cases where a number of national markets were concerned and a coherent investigation and outcome of the case was desirable.318 In SC Johnson/Sara Lee,319 for instance, the Commission considered it appropriate to accept requests to take jurisdiction over a concentration in the insecticides sector under Article 22 since the transaction might have given rise to competition concerns in a series of national markets, namely in France, Belgium, Italy, Greece, Spain, and the Czech Republic, and the coherent treatment of the case, regarding both the investigative efforts and eventually possible remedies, would therefore have been desirable. However, as a general rule, the Commission may be reluctant to accept referrals in cases where the markets are purely national (and, a fortiori, if the market are sub-national in dimension).320 Process

5.272  Member States may choose to apply for a referral under Article 22 either of their own volition or following a non-binding invitation to do so by the Commission. The Member State NCA wishing to ask for a referral must submit a request to the Commission within 15 working days from the date of notification of the concentration or, in cases where a notification is not required under national law, from the date when the transaction was made known to the NCA. As in the case of Article 9 requests, there is no equivalent to Form

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RS in Article 22 requests, and Member States are free to choose the form for their submission. 5.273  When the Commission receives a request pursuant to Article 22, it is required to inform, without delay, both the undertakings concerned and all other Member States of the request for a referral. At that point, the national time limits for all ongoing merger control proceedings (both from requesting and non-requesting Member States) are suspended. Within 15 working days of being informed of the referral request by the Commission, any other Member State can join the initial request.321 After the expiry of this period, the Commission has (p. 605) a further 10 working days to assess each request (ie the original request and any other request by joining Member States) and to come to a final decision whether it should accept jurisdiction.322 5.274  The suspensory obligation of Article 7 of the Merger Regulation applies from the date on which the Commission informs the undertakings concerned that a request has been made and to the extent that the concentration has not been already implemented. 5.275  Once the Commission has made its decision, it informs the Member States and the parties (normally on the same date as it adopts the decision). From that point, if the Commission has accepted the referral request, it obtains jurisdiction over the case for the territories of the Member State(s) that made or joined the referral request. Those NCAs can therefore no longer apply their own national competition rules and the procedural and substantive rules set out in the Merger Regulation apply. The Commission has discretion whether to request the parties to notify the transaction according to the normal procedure set down in Article 4(1) of the Merger Regulation. In cases where the Commission does not consider a new notification to be necessary, the time limit for the Commission’s review of the concentration starts on the day following that on which the Commission informed the parties that it had accepted the referral request. This is, however, unlikely to happen, as the Commission normally requires the parties to start pre-notification contacts aiming at submitting a complete Form CO. The formal submission of Form CO starts the clock afresh. 5.276  However, those Member State NCAs that have jurisdiction under their national rules and have not made or joined the referral request, or whose request has been rejected by the Commission, will continue to apply their own national merger laws to the transaction. Thus, Article 22 may lead to an exceptional situation where Member States and the Commission have concurrent jurisdiction on certain aspects of the same transaction. This could, at least in principle, give rise to a risk of conflicting assessments particularly when supranational markets are involved, given that the Commission and a number of competition authorities may have to review the effects of a transaction on exactly the same markets.323 In practice, however, concurrent review by the Commission and one or more NCAs under Article 22 has never given rise to any instances of clear inconsistency between national and EU proceedings.324

(e)  Evaluation and Reform of the Referral System 5.277  In 2009, the Commission published a report on the functioning of the Merger Regulation325 assessing the effectiveness and the potential scope for improvement of the current system of referrals. The report takes into account the period 2004 to 2008. (p. 606) 5.278  The Commission concluded that, overall, the referral system has been a success. As regards pre-notification referrals, the Commission noted that these have ‘considerably enhanced the efficiency and jurisdictional flexibility of merger control in the EU’. Pre-notification referrals have eliminated a significant number of parallel procedures, allowed the reallocation of cases to the most appropriate authorities, and generated little overall conflict between enforcement agencies, with only five requests for referrals refused by the Commission or Member States. The Commission also suggested that, in the future, there may be greater scope for the use of both Article 4(4) and (5) of the Merger Regulation. The Commission also expressed positive conclusions on the operation of postFrom: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

notification referrals under Articles 9 and 22, which it considers to have a different function from pre-notification referrals, insofar as the initiation of the request lies with the Member States or the Commission and not with the parties. 5.279  With regard to both pre-notification and post-notification referrals, however, the Commission reported concerns on the part of the business community in relation to the timing and perceived cumbersome nature of the referral process. The Commission recognized that there may be some room for improvement with respect to these concerns. 5.280  On 20 June 2013 the Commission launched its public consultation ‘Towards more effective EU merger control’, which included a number of proposals to streamline and shorten Article 4(5) and Article 22 referral procedures in merger cases. According to the Commission’s proposal, the new Article 4(5) mechanism would allow the parties to notify a transaction directly to the Commission, without the need to submit a separate Form RS. The Commission would then forward the notification to Member States, which would have 15 working days to object to the referral. If a Member State with primary jurisdiction objects within that time period, the Commission would have to adopt a decision stating that it is no longer competent; it would not have any discretion in that regard. As regards Article 22 referrals, the proposed text would allow the Commission to take jurisdiction for the whole of the EEA in the case of a referral request from only one Member State, provided that no Member State with primary jurisdiction objects. As a result, the current system where one Member State submits an initial request and the others are allowed to join the request would cease to exist. Moreover, only Member States with primary jurisdiction over a transaction could make a referral request. If any Member State with primary jurisdiction objects, it would keep jurisdiction, and both the Commission and the objecting Member State(s) would carry out the review in parallel. The other procedural requirements would largely remain unchanged, and the Commission would retain its discretion whether to accept Article 22 requests.

(3)  Member State Action on Non-Competition Grounds (a)  Introduction 5.281  The one-stop-shop principle established in Article 21(3) prohibits Member States from applying their national competition laws to concentrations that come within the jurisdiction of the Commission. It does not, however, extend to other national laws that may be applicable to concentrations, such as company law, taxation, rules on foreign investment, and financial rules. Article 21(4) governs the interaction between these types of laws and EU merger control. 5.282  Article 21(4) provides that ‘Member States may take appropriate measures to protect legitimate interests other than those taken into consideration by [the Merger] Regulation and compatible with the general principles and other provisions of [EU] law’.

(p. 607) (b)  Assessment of Legitimate Interests 5.283  Article 21(4) distinguishes between two types of interest: those that are automatically recognized as legitimate interests (‘recognized interests’), and those that require assessment on a case-by-case basis (‘non-recognized interests’).

(i)  Recognized Interests 5.284  Recognized interests are listed in the second paragraph of Article 21(4) and comprise public security, plurality of the media, and prudential rules. 5.285  Public security has traditionally been interpreted narrowly by the European Courts.326 It clearly includes internal and external military security,327 and has also been found to include security of supply in relation to a product that is of paramount importance for a Member State, particularly energy sources such as oil, gas, or electricity, as well as telecommunication services.328 Even in these cases, however, the Commission has adopted

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a strict interpretation, making clear that ‘public security may be relied on only if there is a genuine and sufficiently serious threat to a fundamental interest of society’ and that ‘In general, either appropriate regulation of general application or measures permitting an adequate specific reaction by public authorities to forestall a given threat…will be sufficient to safeguard this interest and will…be less restrictive’.329 5.286  Media plurality covers national legislation to prevent excessive concentration of control over newspapers, television broadcasters, and other forms of media.330 5.287  Prudential rules is a more amorphous category. Prudential rules are generally those that are designed to maintain control over certain sensitive categories of companies, such as listed firms or companies active in the banking, financial, and insurance sectors. These rules aim at ensuring transparency, contain requirements for those individuals who sit on the management board, issues of solvency, and similar matters,331 and are ‘normally confined to national bodies for the surveillance of banks, stockbroking firms and insurance companies’.332 5.288  The measures that a Member State wishes to adopt for the protection of a recognized interest must be necessary and proportionate.333 Provided these conditions are met, the measures can be taken without any need to notify them to the Commission or to receive approval for them from the Commission. In E.ON/Endesa, however, the Commission made it clear that a notification by the Member State will be required where there are ‘reasonable doubts’ whether (p. 608) national measures affecting a transaction genuinely aim to protect a recognized interest. The Commission also considers that a notification is appropriate where there are reasonable doubts that the Member States’ measures comply with the principles of proportionality and non-discrimination.334 In practice, these requirements should encourage Member States to contact the Commission in cases where the application of Article 21(4) is not straightforward, even if the interests to be protected appear to be in principle legitimate. 5.289  When an interest is a recognized interest, Member States can adopt more restrictive measures against the concentration than those adopted by the Commission, provided that the requirements of proportionality and non-discrimination are respected. On the other hand, Member States cannot impose less stringent conditions than those requested by the Commission, for instance by allowing the parties to implement a concentration which has been prohibited by the Commission.

(ii)  Non-Recognized Interests 5.290  If a Member State wishes to take measures to protect any public interest that does not amount to a recognized interest, it must first notify the Commission to obtain recognition of that interest before it can take the measure. 5.291  There are a number of conditions that must be met. First, the interest must be a ‘public interest’. Secondly, the Commission will assess the measure to determine if it is compatible with ‘the general principles and other provisions of Union law’. 5.292  The Commission has 25 working days from the notification to inform the Member State of its decision. A standstill provision applies and prohibits the Member State from implementing the measures before having obtained the Commission’s agreement. If a Member State infringes the notification or the standstill obligations, the Commission can issue a decision on the compatibility of the measure already adopted with Article 21(4) of the Merger Regulation and can order the Member State concerned to reverse the measure, with the option of bringing the Member State before the Court of Justice for failure to comply with its decision.335

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5.293  In practice, the Commission has consistently rejected requests from Member States to adopt measures to protect non-recognized interests. Interests successfully invoked by Member States under Article 21(4) have been those that could be considered as coming within the scope of recognized interests (notification having been made because there was some doubt about the interest’s classification). This has been the case in a variety of strategic sectors, such as in the water,336 energy,337 and banking industries.338

(p. 609) (4)  Concentrations in the Defence Sector 5.294  In principle, the Merger Regulation applies to all sectors of the economy. However, the application of the Merger Regulation is without prejudice to the application of specific rules contained in the Treaties relating to the defence sector, specifically the provisions of Article 346 TFEU. 5.295  Article 346(1)(a) provides that a Member State cannot be obliged to submit information that, if disclosed, would harm its security. Member States can invoke this provision with regard to Article 11 requests sent by the Commission in the context of merger investigations in the defence sector. 5.296  Article 346(1)(b) contains a relatively broad provision that a Member State may take measures necessary for the protection of the essential interests of its security in relation to the production of or trade in arms, munitions, and war material. These measures, however, must not adversely affect the conditions of competition in the internal market regarding products that are not intended specifically for military purposes. In the past, this procedure has been applied in a number of cases where Member States have instructed companies producing warfare equipment not to notify under the Merger Regulation the military aspects of certain transactions.339 In all these cases, the Commission reviewed at a later stage in the decision whether the application of Article 346(1)(b) was justified, and concluded that that was indeed the case. 5.297  In recent years, however, no exemption from the notification obligation has been sought under Article 346(1)(b). As a result, mergers in the defence sector are today generally notified and assessed by the Commission in the same way as mergers in other industries.340 This is of course without prejudice to Article 21(4) of the Merger Regulation, which allows Member States under certain conditions to take measures to protect their legitimate interests by imposing stricter conditions than those accepted by the Commission to clear a concentration in the defence sector (in such a case, defence interests being synonymous with the recognized interest of ‘public security’).

(5)  Cooperation Between the Commission and Member States 5.298  Beyond the referral mechanisms, in cases where the Commission reviews a concentration pursuant to the Merger Regulation, the system is designed to function in a way that ensures Member States are actively involved throughout the merger review process.

(a)  General Cooperation Obligations 5.299  There are a number of general obligations under the Merger Regulation and Implementing Regulation that impose on both the Commission and the Member States the requirement actively to cooperate in carrying out the functions under the Merger Regulation. 5.300  As regards the Commission, Article 19(2) of the Merger Regulation requires the Commission to carry out the procedures under the Regulation in close and constant liaison with Member State NCAs, which may express their views on those procedures. Article 19(1) requires (p. 610) the Commission to transmit copies of the formal notification of a concentration to each Member State NCA within three working days and copies of the most important documents lodged with or issued by the Commission as soon as possible.341 The

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Commission has not, to the knowledge of the authors, ever failed to meet this requirement. Further, where the Commission is carrying out interviews in person of individuals in the territory of a Member State (as opposed to at Commission premises or by telephone/email), the Commission must give advance notice to the Member State NCA and allow its officials to assist in the conduct of that interview if they so request.342 5.301  In relation to the Member States, the fundamental principle of cooperation between enforcement agencies is enshrined in recital 40 to the Merger Regulation, which states that ‘The competent authorities of the Member States should cooperate actively in the exercise of the Commission’s investigative powers.’ 5.302  To give effect to this obligation, the Merger Regulation imposes particular obligations on Member States as regards the provision of information and the carrying out of inspections. Article 11(6) requires Member States to provide the Commission, upon request, with ‘all necessary information to carry out the duties assigned to [the Commission] by [the Merger Regulation]’ (although, unlike for undertakings, there is no explicit provision for a penalty in the event of failure to do so). Articles 12 and 13 govern inspections, and provide that Member States can be required to carry out inspections on behalf of the Commission or together with Commission officials. Where the Commission is carrying out an inspection, officials of the Member State NCA can be required to assist the Commission, notably in the event of opposition to an inspection. In merger cases, however, inspections are used only rarely as an investigative tool.343

(b)  Cooperation During Specific Phases of an Investigation (i)  During the Referral Process 5.303  There are specific provisions under Articles 4, 9, and 19 of the Merger Regulation that govern cooperation between the Commission and Member State NCAs during the referrals process. These are discussed in detail in Section C.2.

(ii)  During Phase I 5.304  In addition to the potential for cooperation in relation to investigative measures (interviews, inspections, and requests for information) undertaken by the Commission, interaction between the Member State NCAs and the Commission in Phase I takes place at a number of key stages. 5.305  In particular, pursuant to Article 19(1) of the Merger Regulation, the Commission sends to the Member States a copy of the notification within three working days of receipt. In addition, where commitments are offered by the parties in Phase I, Article 19(1) obliges the Commission to transmit those to the Member State NCAs and Article 20(1) of the Implementing Regulation provides for consultation with the Member States on those commitments.

(iii)  During Phase II 5.306  Interaction between the Commission and Member States becomes particularly close during Phase II proceedings. (p. 611) 5.307  As well as the transmission of important documents during the process (including the SO) and the possibility of investigative steps, Member States play important roles in the stages leading up to any decision. Before adoption of a Phase II decision (normally following issue of an SO), Member States are invited to take part in the oral hearing under Article 18 of the Merger Regulation. In that context, Member States are permitted to intervene and ask questions. Additionally, as with commitments offered in Phase I, any Phase II commitments must be sent to the Member States for consultation.

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5.308  Before any final decision is taken in Phase II, Article 19 of the Merger Regulation obliges the Commission to consult and take ‘utmost account’ of the opinion of an Advisory Committee composed of one or two individuals appointed by each Member State. One of the Member States is appointed as rapporteur with the role of presenting the case to the other Member States. The members of the Advisory Committee review a preliminary draft of the Commission decision and can provide comments on the substantial and procedural matters dealt with by the Commission. The comments of the Advisory Committee are included in an Opinion, which is published at the end of the process, normally together with the nonconfidential version of the final Article 8 decision and the Final Report of the Hearing Officer. The Opinion contains the conclusions of the Advisory Committee and notes whether any Member States abstain from the vote or disagree with certain aspects or the conclusions of the Commission’s draft decision.344

(c)  Enhancing Cooperation Between Member States Through the ECN 5.309  In 2010, the Commission and NCAs established a merger working group (the Merger Working Group) within the European Competition Network. The objective of the Merger Working Group is to foster increased consistency, convergence, and cooperation among EU merger jurisdictions. In November 2011, the Working Group issued a document entitled ‘Best Practices on cooperation between EU National Competition Authorities in Merger Review’, which provides guidance on cooperation between NCAs in the case of mergers subject to the jurisdiction of two or more Member States.

(6)  Merger Control in the EEA Context (a)  The Scope of the Merger Control System under the EEA 5.310  The EEA Agreement is an international treaty signed by the EU, its Member States, and three EFTA States, namely Norway, Iceland, and Liechtenstein. It entered into force in January 1994 and establishes a system for merger control. Under Article 57(1) of the EEA Agreement, that system, as with the EU system, is based on the SIEC test. 5.311  Article 8(3) of the EEA Agreement states that the EEA Agreement applies only to the products listed under paragraphs (a) and (b) of that article. On its face, therefore, Article 8(3)345 would exclude from the scope of the EEA Agreement a number of products, mainly agricultural and fishery products. This would imply that the Commission does not have jurisdiction to assess the anti-competitive impact of mergers on these products within those EEA States (p. 612) which are not part of the EU (namely Iceland, Lichtenstein, and Norway).346 This interpretation seems to be supported by the Commission referral decision in Orkla/Rieber & Søn,347 where the Commission, within the context of an Article 4(4) referral decision, stated that ‘a number of products concerned by the proposed transaction fall outside the scope of the EEA Agreement and therefore the Commission’s jurisdiction.’348

(b)  Allocation of Jurisdiction Between the Commission and the EFTA Surveillance Authority 5.312  The EEA Agreement provides for the allocation of jurisdiction on the basis of two sets of thresholds. The first is that contained in Article 1(2) and (3) of the Merger Regulation. When these thresholds are met, a merger is considered to have an EU dimension. The second set of thresholds is provided by a combined interpretation of Article 57 of the EEA Agreement, Article 1(2) and (3) of the Merger Regulation, Protocols 21 and 24 to the EEA Agreement, and Annex XIV to the EEA Agreement. These thresholds are met when the turnover thresholds described in Article 1(2) or (3) of the Merger Regulation are

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exceeded within the territories of Iceland, Lichtenstein, and Norway instead of the EU territory. In these cases, the concentration will have an EFTA dimension. 5.313  Where a concentration has both an EU and EFTA dimension, Article 57(2) of the EEA Agreement provides that the Commission will have jurisdiction. These cases are dealt with by the Commission entirely under the substantive and procedural rules of the Merger Regulation. In such cases, the Commission’s review also takes into account the impact of the concentration under scrutiny on Iceland, Lichtenstein, and Norway. 5.314  By contrast, where a concentration does not have an EU dimension but does met the EFTA thresholds, the EFTA Surveillance Authority will have jurisdiction. In such cases, the one-stop-shop principle under the Merger Regulation does not apply, with the result that each Member State of the EU can also review the concentration in question under its own national competition laws. As of December 2012, no case with an EFTA dimension had been notified to the EFTA Surveillance Authority. 5.315  Protocol 24 to the EEA Agreement also established a system of referrals to and from Iceland, Liechtenstein, and Norway. The system is very similar to that under the Merger Regulation. However, there are some differences, notably in relation to pre-notification referrals from Iceland, Liechtenstein, and Norway to the Commission,349 post-notification referrals from Iceland, Liechtenstein, and Norway to the Commission350 and from the Commission to Iceland, Liechtenstein, and Norway,351 and the calculation of time limits.352

(p. 613) (c)  Cooperation Between the Commission and the EFTA Surveillance Authority 5.316  Protocol 24 to the EEA Agreement establishes a framework of cooperation between the Commission and the EFTA Surveillance Authority, in cases where the parties to a concentration have an EFTA turnover exceeding the thresholds provided therein or the concentration is liable significantly to impede effective competition in the EFTA territory, or in a significant part thereof. As with concentrations under the Merger Regulation, cooperation will also be required where an EFTA Member State requests referral of the concentration or part of it, and when it wishes to adopt measures for the protection of its legitimate interests. Naturally, cooperation is frequent in cases involving companies based in EFTA Member States or which would in any event significantly affect those countries. 5.317  The rules for cooperation under Protocol 24 are similar to those existing in relation to cooperation between the Commission and the EU Member States, particularly with regard to oral hearings, the Advisory Committee,353 and assistance in carrying out investigations. For the purposes of transmission of documents, the EFTA Surveillance Authority always acts as an intermediary between the Commission and the EFTA Member States.

(7)  International Cooperation in Merger Control (a)  Framework for International Cooperation 5.318  Bilateral agreements form the basis for international cooperation in the area of merger control. As of December 2013, the EU had entered into bilateral cooperation agreements with the US, Canada, Japan, the Republic of Korea, and Switzerland.354 These are based on five common principles: (a) each party shall notify enforcement activities that may affect the important interests of the other party; (b) the parties shall exchange information or consult each other, subject to the confidentiality of information provided during the course of an investigation; (c) each party shall assist the other in its respective enforcement activity; (d) each party shall take into account the important interests of the

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other (traditional comity); and (e) each party shall take action, upon the request of the other party, against anti-competitive practices in its own territory (positive comity). 5.319  Cooperation agreements can also be supplemented by agreements on comity and best practices documents (the most detailed and important of which is the EU–US Best Practices document). 5.320  As of December 2013, the Commission had also signed Memoranda of Understanding with Brazil, the Russian Federation, the People’s Republic of China, and India. 5.321  Finally, a number of international organizations, such as the International Competition Network (ICN) and the Organisation for Economic Co-operation and Development (OECD) provide platforms for the exchange of information and the development of ‘soft’ cooperation and peer-review practices.

(p. 614) (b)  Practical Aspects of International Cooperation in Merger Cases 5.322  International cooperation on merger cases takes place primarily at the level of the respective case teams, generally through correspondence and teleconferences rather than formal meetings. The hierarchies of DG Competition and other authorities are less frequently involved in the contacts regarding a particular case. 5.323  Competition authorities seized of jurisdiction over a transaction will normally try to establish contact as soon as they are aware that it will require approval in other jurisdictions. To this end, it is standard practice to request from the parties a ‘confidentiality waiver’ to enable discussions to take place.355 These are normally granted without delay (although the Commission cannot oblige parties to grant a waiver, doing so is generally seen as a sign of cooperation). Once the waivers are in place, the agencies exchange information in relation to the time frame of their respective investigations and the major procedural milestones, with a view of aligning as far as possible the timing of the procedures. 5.324  In most cases, intra-agency discussions will also concern specific substantive issues such as market definition or theories of harm. The ability to discuss and debate these issues is generally seen as constructive and advantageous to the authorities and parties. 5.325  Importantly, given that cooperating agencies will generally exchange information provided by the merging parties or third parties (subject to confidentiality and privilege issues), this can significantly increase the information available to an agency in carrying out its assessment. In some cases, joint gathering of evidence, for example through joint conference calls with market participants, takes place. This is particularly the case when the timing of the merger control reviews in the different jurisdictions is aligned. 5.326  Finally, inter-agency cooperation can be vital in respect of the design, implementation, and monitoring of remedies, particularly where the remedies necessary to address competition concerns in one jurisdiction may have effects in other jurisdictions. Close cooperation during the negotiation of remedies in cases where competition concerns raised by different authorities are similar may be particularly beneficial. This is openly acknowledged by the US–EU Best Practices on Cooperation in Merger Investigations, which states that ‘Cooperation is beneficial throughout the remedial process. Cooperating on the design of possible remedies may result in a single proposal for a remedial package to address concerns of both reviewing agencies.’356 In particular: Consistent with their confidentiality and/or non-disclosure obligations and their common objective of ensuring efficient outcomes, implementation, and monitoring of remedies, the reviewing agencies should seek to keep one another informed of remedy discussions with the parties and of other relevant developments with respect to remedies, to the extent the remedies may impact the other reviewing

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agency’s review. Where appropriate, and consistent with confidentiality and/or nondisclosure obligations, the reviewing agencies should share draft remedy proposals and participate in joint discussions with the merging parties, prospective buyers, and trustees.357 (p. 615) 5.327  For example, in the recent Cisco/Tandberg case,358 which concerned the acquisition by Cisco of Tandberg in the video communications solutions (VCS) sector and which was reviewed by both the Commission and the US Department of Justice, the Commission identified horizontal competition concerns due to interoperability issues with competitors’ products. To address this concern, Cisco committed, inter alia, to divest the rights attached to its proprietary Telepresence Interoperability Protocol to an independent industry body. The cooperation between the two agencies extended to sharing information and assessments regarding potential remedies.359 The Commission cleared the concentration—subject to commitments—in Phase I on 29 March 2010. On the same day, the Department of Justice also cleared the case due, in part, to the commitments made to the Commission.360

(c)  Statistics on International Cooperation 5.328  A brief review of the statistics on international cooperation is instructive.361 In the period 1 January 2007 to 30 September 2009, DG Competition cooperated with other jurisdictions in 61 cases, representing approximately 7 per cent of cases assessed during that period. 5.329  While this may appear to be low, the proportion of complex cases involving international cooperation is higher. As illustrated in Figure 5.12, out of 94 ‘significant or heavy cases’362 in the period 1 November 2008 to 31 January 2011, 53 involved only parties from inside the EU (‘EU mergers’), 18 had one party from the EU and one from a third country (‘mixed mergers’), while 23 included only parties from third countries (‘non-EU mergers’). DG View full-sized figure

Figure 5.12  Merging parties and international cooperation (p. 616) Competition cooperated with its non-EEA counterparts in a total of 27 cases (close to 30 per cent of the total of significant or heavy cases). Unsurprisingly, DG Competition cooperated with third countries in mainly ‘non-EU’ and ‘mixed mergers’ (in 19 of the 23 cases involving only parties from third countries and in six of the 18 cases involving one party from the EU and one from a third country). 5.330  On the basis of these figures, it can be concluded that the chances of cooperation between agencies taking place is higher for relatively complex cases, and increases further when at least one of the parties is not based in the EEA.

Footnotes: 272

  See Merger Regulation, recital 8.

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273

  Case T-119/02 Philips v Commission [2003] ECR II-1433, para 354.

274

  The ‘success rate’ is the proportion of requests that are accepted; requests that are not accepted may either be formally rejected or withdrawn. ‘Success rates’ in the area of referrals has to be treated with some caution, however. In general, decisions formally rejecting a referral request are rare. In addition, each specific referral type has different peculiarities. In relation to Art 4(5) referrals, the Member States (not the Commission) have the power to reject a referral request. The refusal of one of the Member States with initial jurisdiction over the transaction is sufficient to result in the rejection of the whole of the request. As regards Art 4(4) and Art 9 referrals, an appreciable number of requests are withdrawn without the need for the Commission to issue a refusal decision. For Art 4(4) referrals, eg, no rejection decision has yet been issued. Finally, an Art 22 request may (and often does) actually consist of a number of requests from different Member States, and a refusal by the Commission to accept a referral may be limited to one of those Member States (eg Case COMP/M.5828 Procter & Gamble/Sara Lee Air Care (2010)) or involve all the Member States requesting the referral (eg Case COMP/M.6502 London Stock Exchange Group/LCH Clearnet Group (2012)). 275

  As of December 2012, the Commission had issued only six decisions refusing an Art 9 request. 276

  See eg Case COMP/M.5650 T-Mobile/Orange (2010), OJ 2010 C108/4.

277

  Notice on Referrals, paras 8–14.

278

  See Art 5(3) TEU.

279

  Merger Regulation, recital 12. However, fragmentation remains possible in Art 22 referral cases, if not all the NCAs competent to review a transaction join in the referral request. 280

  See Joined Cases T-346/02 and T-347/02 Cableuropa et al v Commission [2003] ECR II-4259, para 186. 281

  Notice on Remedies, para 12. For a recent example, see Case COMP/M.6525 SESA/ DISA/SAE/JV (2012), where the Commission referred to the Spanish competition authority a number of markets on which it did not identify competition concerns, but which were vertically related to the markets for aviation fuel on which the Commission identified threats to competition, with the aim of avoiding fragmentation of the substantive assessment and of preserving the benefits of the ‘one-stop-shop’ principle. 282

  See Case COMP/M.6502 London Stock Exchange/LCH Clearnet (2012), where the Commission concluded that, since a procedure under Art 4(4) of the Merger Regulation had been requested by the notifying parties and rejected by the UK, a post-notification referral under Art 22 would not have been appropriate. 283

  Notice on Referrals, para 17 and fn 21.

284

  On the notion of ‘distinct market’, see Cableuropa (n 280).

285

  In this respect, the fact that a market covers the whole of a Member State does not necessarily mean that competition in other Member States would be affected, and therefore that a referral would not be appropriate. Relevant examples include the cases mentioned in para 5.230. 286

  Notice on Referrals, para 19.

287

  Case COMP/M.6588 Koninklijke Ahold/Valk Holding (2012), OJ 2012 C4300.

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288

  Case COMP/M.5737 SG Vetri/Zignago Vetro/Ardagh Glass/Ecosud (2010), OJ 2010 C2114. 289

  Although a number of Art 4(4) requests have been withdrawn by the parties who made the request. 290

  See eg Case COMP/M.5316 Strabag/Cemex (2008), where a concentration in the readymix concrete industry was referred to the Hungarian and Austrian competition authorities as the principal effects of the proposed transaction would be limited to the Austrian and Hungarian national markets and both competition authorities had dealt extensively with the relevant product markets in their previous decisions; Case COMP/M.6749 DIA/Schlecker (2012), where a concentration in the retail sector was referred to the Spanish and Portuguese competition authorities as the transaction would affect competition in a number of national or narrower markets in Spain and Portugal, and the Spanish and the Portuguese competition authorities had extensive experience in cases related to the relevant market in retail consumer goods; Case COMP/M.6753 Orkla/Rieber & Søn (2013), where the Commission granted a partial referral to Norway in relation to a number of national markets for food products, certain of which would have been excluded from the scope of its review because they did not come within the scope of the EEA Agreement, while keeping jurisdiction on other affected markets in Sweden and Denmark. 291

  During the pre-notification discussions, the parties can send a draft Form RS to the Commission for review and the Commission can ask questions to the parties. Formal submission normally takes place after the parties obtain the ‘green light’ from the Commission to submit Form RS. The process is not dissimilar from the standard prenotification in the case of Form CO. 292

  For a discussion of appealable acts, see Section G.2.

293

  Case COMP/M.5549 EDF/Segebel (2009), OJ 2010 C57/9. For a critical review of the referral in this case, see M. Kadar, ‘EDF/Segebel: A Member State’s Issue?’ [2010] 4 Revue de la Concurrence Belge 23. 294

  Case COMP/M.5650 T-Mobile/Orange (2010), OJ 2010 C108/4.

295

  See Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, para 354. 296

  See in this respect, Cableuropa, n. 280, where the GC held that the Commission correctly identified distinct markets in Spain for the provision of pay-TV services and upstream services and was correct to refer a merger between two media operators to the Spanish authorities under Art (9)(2)(a). 297

  Notice on Referrals, para 35. In practice, this requirement leads the Commission to verify the NCA’s arguments through a preliminary competition assessment which normally goes beyond the analysis of whether the transaction merely results in affected markets under Art 4(4). See eg Case COMP/M.6525 SESA/DISA/SAE/JV (2012), where the Commission engaged in a relatively detailed analysis of vertical links between the parties in the supply of fuel and services to airports before agreeing to refer the case to the Spanish authorities; and Case COMP/M.5996 Thomas Cook/Travel Business of Co-Operative Group/ Travel Business of Midlands Cooperative Society (2011), where the Commission looked into a number of horizontal relationships between the parties in the travel agency service sector in the context of a referral of the transaction to the UK. 298

  In Cableuropa, n. 280, paras 114–117, the GC confirmed that the notion of a ‘distinct market’ under Art 9(2)(a) is essentially the same as the notion of a ‘relevant market’, as the Commission is required to determine whether there is a distinct market ‘on the basis of,

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first, a definition of the market for the relevant products or services and, secondly, a definition of the geographical reference market within the meaning of [Article 9(7)]’. 299

  Notice on Referrals, para 39.

300

  See Cases COMP/M.5790 LIDL/Plus Romania/Plus Bulgaria (2010); COMP/M.5200 Strabag/Kirchner (2008); COMP/M.4522 Carrefour/Ahold Polska (2007); COMP/M.3905 Tesco/Carrefour (Czech Republic and Slovakia) (2005); COMP/M.3864 FIMAG/Züblin (2005); Case COMP/M.3669 Blackstone (TBG CareCo)/NHP (2005). 301

  Notice on Referrals, para 40.

302

  See Art 9 cases referred to in Table 5.4.

303

  Royal Philips Electronics (n 295), paras 341–358; Cableuropa (n 180), paras 172–204.

304

  This brings the total duration of a Phase I in the case of an Art 9 request to 35 working days. The Phase I duration is not further extended if the undertakings concerned submit remedies. 305

  See Notes on Council Regulation (EEC) No 4064/89 ‘Merger Control in the European Union’, European Commission, Brussels and Luxembourg 1998. If the Commission issues an SO, the referral request is considered to be tacitly rejected. 306

  See Merger Regulation, Art 9(6).

307

  See Section G.2. With respect to the standing of third parties, see Section G.3(b).

308

  Case COMP/M.5741 CDC/Veolia Environment/Transdev/Veolia Transport (2010).

309

  Case COMP/M.5803 Eurovia/Tarmac (2010).

310

  Notice on Referrals, paras 25–32.

311

  ‘Is deemed to have’, according to the Merger Regulation’s wording.

312

  See eg Case COMP/M.5828 Procter & Gamble/Sara Lee Air Care (2010).

313

  See eg the conditional clearance decisions in Case COMP/M.2698 Promatech/Sulzer (2002); COMP/M.3099 Areva/Urenco/ETC JV (2004); COMP/M.3136 GE/AGFA NDT (2003); COMP/M.3796 OMYA/Huber PCC (2006); COMP/M.5675 Syngenta/Monsanto (2010). 314

  Notice on Referrals, para 43 and fn 35.

315

  See eg Case COMP/M.6191 Birla/Columbian Chemicals (2011), where the Commission accepted a referral request under Art 22 on the basis of significant trade flows inside the EEA and between the EEA and third countries, and of the geographic scope of the markets for carbon black and related products, which had been considered in previous decisions as likely to be EEA-wide or at least national. 316

  Notice on Referrals, para 44.

317

  See eg Case COMP/M.5828 Procter & Gamble/Sara Lee Air Care (2010), where the Commission accepted referral requests from Germany, Belgium, Portugal, Spain, and the UK, and rejected the request from Hungary. 318

  Notice on Referrals, para 45.

319

  Case COMP/M.5969 (2011).

320

  See however Case COMP/M.6796 Aegean/Olympic (2013), where the Commission accepted an Art 22 referral request regardless of an apparent focus of the parties’ activities within one Member State (Greece). This might be due inter alia to the Commission’s

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expertise achieved when reviewing the previous merger attempt between these two companies (Case COMP/M.5830 Olympic/Aegean Airlines (2011)). 321

  The suspension to national time limits ends as soon as a Member State informs the Commission and the parties that it does not intend to request a referral. Once a Member State has so confirmed, the national time periods therefore begin to run again. 322

  If the Commission does not take a decision, it is deemed to have tacitly accepted (see Merger Regulation, Art 22(3)). 323

  The situation is different from that created by partial referrals under Arts 4(4) and 9 of the Merger Regulation, where only some aspects of a given transaction are referred by the Commission to NCAs. 324

  See eg Case COMP/M.2738 GEES/Unison (2002), which was approved unconditionally in Phase I after referral by seven Member States, and cleared by Portugal and Ireland which had not joined the referral request; and Case COMP/M.5828 Procter & Gamble/Sara Lee Air Care (2010), which was cleared by the Commission further to referral requests from five Member States, and cleared by a number of other jurisdictions. 325

  Report from the Commission to the Council on the operation of Regulation No 139/2004, 18 June 2009. See also the Commission Staff Working Paper accompanying the report, Thresholds and referral mechanisms. 326

  Cases C-503/99 Commission v Belgium [2002] ECR I-4809, para 47; C-483/99 Commission v France [2002] ECR I-4781, para 48; C-463/00 Commission v Spain [2003] ECR I-4581, para 72. 327

  Cases C-273/97 Sirdar v The Army Board and Secretary of State for Defence [1999] ECR I-7403, para 17; C-285/98 Kreil v Bundesrepublik Deutschland [2000] ECR I-69, para 15; C-186/01 Dory v Germany [2003] ECR I-2508, para 32. 328

  Cases C-72/83 Campus Oil and Others v Minister for Industry and Energy and Others [1984] ECR I-2727, para 34; C-503/99 Commission v Belgium [2002] ECR I-4809, paras 46– 48; C-463/00 Commission v Spain [2003] ECR I-4581, paras 71–73. 329

  Case COMP/M.4685 Enel/Acciona/Endesa (2005), paras 52 and 58. See also Case IV/M. 1616 BSCHA/A. Champalimaud (1999). 330

  A recent example of the application of Art 21(4) of the Merger Regulation in the media industry is the UK’s review under media plurality rules of the acquisition of BSkyB by News Corp. In this respect, see Case COMP/M.5932 News Corp/BSkyB (2010), paras 304–309. 331

  Case IV/M.759 Sun Alliance/Royal Insurance (1996), paras 16–17; Case COMP/M.2054 Secil/Holderbank/Cimpor (2011), para 52. 332

  Case IV/M.1616 BCH/A. Champalimaud (1999), paras 35–37.

333

  See Case COMP/M.4197 E.ON/Endesa (2006), para 56; Case COMP/M.4685 Enel/ Acciona/Endesa (2007), paras 23–25. 334

  Case COMP/M.4197 E.ON/Endesa (2006), para 56.

335

  See in this respect Case C-42/01 Portugal v Commission [2004] ECR I-6079, para 56, which clarifies that the Commission has the power to issue decisions pursuant to Art 21(4) since, if did not enjoy such power, this ‘would render the third subparagraph of Article 21(3) of the Merger Regulation ineffective by giving the Member States the possibility of easily circumventing the controls enacted by that provision’. See also Case C-196/07 Commission v Spain [2008] ECR I-41.

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336

  See Case IV/M.567 Lyonnaise des Eaux SA/Northumbrian Water Group (1995), where the Commission authorized the UK to apply its regulatory framework in the water sector, essentially to protect public security. 337

  Case COMP/M.4110 E.ON/Endesa (2006) and the judgment of the CJ on the same concentration, Case C-196/07 Commission v Spain [2008] ECR I-41. 338

  See Cases COMP/M.1799 BSCH/Banco Totta Y CPP/A. Champalimaud (2000); Case COMP/M.3894 Unicredito/HVB (2005) and Press Release IP/06/277 (8 March 2006). 339

  See Cases COMP/M.528 British Aerospace/VSEL (1994); COMP/M.724 GEC/Thomson (1996); COMP/M.820 British Aerospace/Legardère (1996); COMP/M.1258 GEC Marconi/ Alenia (1998); COMP/M.1438 British Aerospace/GEC Marconi (1999). 340

  See eg Cases COMP/M.6844 GE/Avio (2013) and COMP/M.6104 SAFRAN/SNPE Materiaux Energetiques/Regulus (2011). 341

  This obligation helps to understand the reason for the significant number of CD-ROM copies that the Commission requests the notifying parties to provide. 342

  Merger Regulation, Art 11(7).

343

  For an example of inspections used in a merger case, see COMP/M.6106 Caterpillar/ MWM (2011). 344

  See eg the Advisory Committee Opinion in Case COMP/M.6497 Hutchinson 3G Austria/ Orange Austria (2012). 345

  Art 8(3) of the EEA Agreement is part of the section on ‘Free Movement of Goods’. Thus, its applicability to the whole of the EEA Agreement, and in particular to competition rules and merger control, does not appear to be immediate. 346

  Obviously, the Commission always retains jurisdiction over the impact of mergers within the EU territory, even in the case of products excluded by the EEA Agreement. 347

  Case COMP/M.6753 Orkla/Rieber & Søn (2013).

348

  See also Case COMP/M.6850 Marine Harvest/Morpol (2013).

349

  The system is identical to the one described in Art 4(5) of the Merger Regulation, but for the fact that a referral requires that the concentration is notifiable in three EU Member States plus one of Iceland, Liechtenstein, and Norway. 350

  Iceland, Liechtenstein, and Norway can join an Art 22 request from an EU Member State but cannot submit a request in the first place. 351

  Under the EEA Treaty equivalent of Art 9(2)(b), the Commission maintains discretion to refer a concentration, even if the legal requirements are demonstrated. 352

  The time limits for Iceland, Liechtenstein, and Norway to respond to a referral request are calculated from the day when the EFTA Surveillance Authority receives the copy of the request, and not from the day when those countries receive copy of the request. 353

  Although one important difference is that pursuant to Art 5 of Protocol 24 to the EEA Agreement, EFTA Member States have no right to vote in Advisory Committees. 354

  The latter agreement has to be ratified by the Council and the European Parliament before entering into force. 355

  For an interesting discussion of the practice and practicalities of waivers, see I. Gotts, ‘Navigating Multijurisdictional Merger Reviews: Suggestions from a Practitioner’, (2013) 9(2) IBA Competition LJ 149.

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356

  US–EU Best Practices on Cooperation in Merger Investigations, para 19.

357

  US–EU Best Practices on Cooperation in Merger Investigations, para 18.

358

  Case COMP/M.5669 Cisco/Tandberg (2010) See also Case COMP/M.6944 Thermo Fisher Scientific/Life Technologies (2013). 359

  See Department of Justice Press Release, ‘Justice Department will not challenge Cisco’s acquisition of Tandberg—Justice Department and European Commission co-operate closely’ (29 March 2010). 360

  Department of Justice Press Release (n 359).

361

  The content in this section is adapted from the original article by T. Deisenhofer, ‘International Co-operation in Merger Cases—An EU Practitioner’s Perspective’ in P. Lowe and M. Marquis (eds), European Competition Law Annual: Merger Control in European and Global Perspective (Oxford: Hart Publishing, 2013). We would like to thank the author for his permission to make use of this material for the purposes of this publication. 362

  The data was gathered from DG Competition’s internal case management system and covers a sample of 94 decisions taken in such cases between 1 November 2008 and 31 January 2011. Within DG Competition, cases are classified as ‘significant’ when they require special attention from senior management. Cases are classified as ‘heavy’ if they require significant resources. During the reference period, the significant and/or heavy cases corresponded to approximately 13 per cent of all notified cases.

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Part I General Principles, 5 Mergers, D Merger Control Procedure Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Legal and soft-law instruments governing — Commission, referral to by parties or NCA — Merger decision appeals — Notification — Pre-notification — Initial (Phase I) investigation — Serious doubts (Phase II) investigations — Forms — Statement of objections — Hearings — Notice on Simplified Procedure — Withdrawal and disapplication — Interim measures — Fines/Penalties

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D. Merger Control Procedure (1)  Introduction 5.331  The Merger Regulation contains a comprehensive set of procedural provisions governing the life cycle of a merger case. This is further developed by Commission Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 (‘the Implementing Regulation’)363 and interpreted and explained in several Notices and other soft law instruments. Together, these instruments set out a well-defined and largely selfcontained procedural framework, characterized by (short) legal deadlines. The main steps and stages of the EU merger procedure are examined in Sections D.3–D.10. Is it useful first, however, briefly to consider the principal characteristics of the procedural framework, which reflect some of the underlying premises and objectives of EU merger control.

(2)  Principal Features of the Procedural Framework (a)  Underlying Rationale: Proportionate, Effective Control 5.332  The EU merger control regime is based on the fundamental premise that, while corporate reorganizations generally constitute positive market developments that are to be welcomed, they must be subject to the control necessary to ensure that they do not result in lasting damage to competition.364 This cautious but decisive approach to merger control permeates the procedural framework set up for its implementation and explains its main features. 5.333  First, the framework must be effective in ensuring that no concentration which may significantly impede effective competition in the internal market (or in a substantial part of it) is implemented. To help to ensure this, the Merger Regulation imposes on the merging parties the twin obligations of notifying the concentration to the Commission prior to its implementation365 and of suspending such implementation until the concentration has been declared compatible with the internal market.366 These twin obligations (notification and suspensory effect) are fundamental to the EU system of ex ante merger control. They ensure that no concentration which risks significantly impeding competition in the internal market is put in place and also avoid the rather complex process of ‘unscrambling’ the outcome of such a concentration. (p. 617) 5.334  If a concentration falls under the scope of the Merger Regulation, the Commission has sole competence to carry out the assessment of compatibility,367 without prejudice to the possible referral of the transaction to Member State NCAs.368 The Merger Regulation vests significant powers in the Commission, not only to ensure that the notification and suspension obligations are complied with,369 but also to allow it to obtain the necessary information adequately to assess the potential effects of a notified concentration.370 5.335  Secondly, fully to preserve the positive effects that these operations may bring about in terms of improving economic efficiency, promoting growth, and increasing consumer welfare, EU merger control aims to (a) be proportionate to the end pursued; (b) respect the legitimate interests of the different stakeholders, in particular the merging parties; and (c) avoid undue delays in the implementation of concentrations. 5.336  Thus, the Merger Regulation accommodates the merging parties’ legitimate interest in completing a concentration as soon as possible, by imposing strict legal deadlines on the Commission at several procedural stages, non-respect of which may ultimately result in the tacit authorization of the notified concentration.371 Further, the (relatively lengthy) in-depth examination phase (‘Phase II’) is limited to cases where the Commission has identified serious concerns that the concentration will have anti-competitive effects, and the Commission has an established practice of accepting remedies in Phase I cases to avoid going into Phase II in appropriate cases. Moreover, the framework contains safeguards to

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protect the rights of defence of the notifying parties and other involved parties, as well as giving consideration to the interests of third parties.372 5.337  The Merger Regulation guarantees close cooperation between the Commission’s services and the authorities of Member States373 and ensures the respect of professional secrecy,374 whilst allowing a significant level of transparency.375 Finally, oversight by the EU Courts ensures that the Commission complies with the obligations imposed on it.376

(b)  Binding Procedural Deadlines 5.338  One of the most distinctive features of the EU merger procedure is the imposition of binding legal deadlines on the Commission.377 The latter must adopt a decision within the relevant (p. 618) time limit, or the concentration is deemed to have been declared compatible with the internal market.378 5.339  The most important deadlines relate to the time limits within which the Commission must adopt its decision on the merits of the case, be it in Phase I (by authorizing the concentration, with or without remedies, or initiating proceedings) or in Phase II (by declaring the concentration compatible with the internal market, again conditionally or unconditionally, or declaring it incompatible and thus prohibiting it).379 5.340  Deadlines can only be extended (and for a limited number of working days) under very precise conditions (receipt of a referral request from a Member State, submission of remedies by the merging parties, and, in Phase II, at the request of or with the agreement of the notifying parties). Time limits can also exceptionally be suspended (eg in case of failure of the merging parties fully to respond to a request for information or to submit to an inspection) or even be completely reset (if the notification is declared incomplete).380

(c)  The Instruments of the Procedural Framework 5.341  The procedural provisions of EU merger control are set out in the Merger Regulation, developed in the Implementing Regulation, and interpreted and explained in several soft law instruments, which describe, in particular, the way in which the Commission exerts its powers and implements the procedural rules.381 Table 5.6 sets out the main instruments and procedural provisions relevant to the merger procedure. Table 5.6  Main instruments governing the merger procedure

Merger Regulation (Reg 139/2004)

Articles 4 and 6–22

Implementing Regulation (Reg 802/2004)

Articles 2–24 and Annexes I–IV

Notice on simplified procedure (2013)

Paragraphs 22–27

Notice on remedies (2008)

Paragraphs 77–94 and 97–127

Notice on case referrals (2005)

Paragraphs 46–82

Notice on access to file (2005)

Paragraphs 35–49

Best Practices on the conduct of merger proceedings (2004)

Paragraphs 5–49

Hearing Officer’s Terms of Reference (2011)

Articles 4–17

(p. 619) (d)  The Different Actors in EU Merger Proceedings 5.342  A number of different private and institutional entities, to varying degrees, play a role in the merger procedure.

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(i)  The Notifying Parties and Other Involved Parties 5.343  The undertakings most directly involved in the concentration logically play a leading role in this context. 5.344  The Merger Regulation and the Implementing Regulation seldom use the term ‘merging parties’.382 They refer instead to ‘notifying parties’ or to ‘undertakings concerned’ (by the concentration). However, these two concepts do not necessarily refer to the same person(s) or undertaking(s). 5.345  ‘Notifying parties’ refers to the person(s) or undertaking(s) submitting a notification and encompasses the parties to the merger or the person(s) or undertaking(s) acquiring control (eg the parent companies in the case of the creation of a joint venture).383 It follows that in the case of an acquisition of control by one undertaking of another, which is by far the most common type of transaction reviewed by the Commission, the purchaser is the sole notifying party.384 The notifying parties initiate the procedure, are obliged to submit all the necessary information to allow the adequate assessment of the transaction and, when appropriate, submit possible remedies to address potential anti-competitive effects. 5.346  The term ‘undertakings concerned’ is a concept established for the purpose of determining jurisdiction and refers to the undertakings participating in a concentration, including the undertaking over which control is acquired (the ‘target’ undertaking which is not a notifying party).385 5.347  A third notion frequently used in the Merger Regulation and Implementing Regulation is that of ‘other involved parties’, who also have the right to be heard during the merger procedure. This concept is distinct from that of the ‘notifying parties’ and includes both the seller and the target of an acquisition.386

(ii)  The Commission 5.348  The merger procedure involves multiple layers within the Commission,387 from the College of Commissioners and the Commissioner responsible for Competition (who are vested with the power to adopt merger decisions388) to DG Competition’s case team (who carry out the investigation). (p. 620) 5.349  Table 5.7 contains an overview of the legal basis for key merger decisions and the institutional level at which those decisions are adopted. Table 5.7  Decisions in merger cases and level of adoption (excluding referral decisions and decisions concerning State measures)

Legal basis (Merger Regulation)

Type of decision

Adoption

Article 6(1)(a)

Notified concentration does not fall within the scope of the Merger Regulation (lack of EU jurisdiction)

Commissioner for Competition

Article 6(1)(b)

Notified concentration does not raise serious doubts as to its compatibility with the internal market (unconditional clearance in Phase I)

Simplified procedure: Director General of DG Competition Normal procedure: Commissioner for Competition

Article 6(1)(b) and 6(2)

Notified concentration, as modified by remedies offered by notifying parties, does not raise serious doubts as to its

Commissioner for Competition

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Legal basis (Merger Regulation)

Type of decision

Adoption

compatibility with the internal market (conditional clearance in Phase I) Article 6(1)(c)

Notified concentration raises serious doubts as to its compatibility with the internal market (initiation of proceedings)

Commissioner for Competition

Article 6(3)

Revocation of a Phase I decision (clearance or lack of jurisdiction) if based on incorrect information (for which one of the undertakings is responsible or it was obtained by deceit) or if undertakings concerned commit a breach of an obligation attached to the decision

College of Commissioners

Article 7(3)

Derogation of the suspension obligation (authorization of early implementation of the concentration)

Commissioner for Competition

Article 8(1)

Notified concentration does not significantly impede effective competition in the internal market (unconditional clearance in Phase II)

College of Commissioners

Article 8(2)

Notified concentration, as modified by remedies offered by notifying parties, does not significantly impede effective competition in the internal market (conditional clearance in Phase II)

College of Commissioners

Article 8(3)

Notified concentration significantly impedes effective competition in the internal market (prohibition decision)

College of Commissioners

Article 8(4)

Separation or other restorative measures imposed on concentrations which have been prohibited and had already been implemented or on concentrations cleared in Phase II that have been implemented in breach of a condition

College of Commissioners

Article 8(5)

Adoption of interim measures appropriate to restore or maintain conditions of effective competition

Provisional interim measures: Commissioner for Competition Confirmation of interim measures: College of Commissioners

Article 8(6)

Revocation of a Phase II decision (clearance) if based on incorrect information (for which one of the undertakings is responsible or it was obtained by deceit) or undertakings concerned commit a breach of an obligation attached to the decision

College of Commissioners

Article 11(3)

Request for information by decision

Director General of DG Competition

Article 13(4)

Order to submit to an inspection

Director General of DG Competition

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Legal basis (Merger Regulation)

Type of decision

Adoption

Articles 14 and 15

Imposition of fines or periodic penalty payments

College of Commissioners, except for imposition of provisional periodic penalty payments which is adopted by the Commissioner for Competition

(p. 621) 5.350  Within DG Competition, multiple levels are involved in carrying out an investigation.389 5.351  The case team will be formed from staff belonging to the competent sector unit within the Merger Network.390 Most of the communication between the parties and the Commission will take place with the case team. A case team is composed of Commission officials,391 usually of different seniority and backgrounds (mainly lawyers and economists). The case manager, a senior Commission official often holding a management position (head of unit or deputy head of unit), leads the team and directs the development of the investigation. Each case team is also formed by two to six (or occasionally more) case handlers and a case assistant. In complex cases, a member of the ‘Merger Case Support and Policy Unit’ (Unit A2) will normally be part of the team to offer advice and support. 5.352  The Chief Economist and the Chief Economist Team (CET) play an important role in merger control proceedings. The Chief Economist assists DG Competition in the assessment of merger cases and in the development of policy instruments, gives advice to the Commissioner responsible for Competition and heads the CET. The latter is composed of approximately 20 trained economists (often with PhDs in industrial organization), who (p. 622) contribute to the competitive assessment (notably with quantitative analysis) and ensure the consistency of Commission decisions with economic principles. 5.353  Senior officials (Directors, Deputy-Director General responsible for mergers and Director General) of DG Competition oversee the development of investigations and take part in the decision-making process. In complex cases (notably those where, at some point, competition concerns are prima facie identified or cannot be excluded, which logically includes remedies cases and Phase II investigations), senior managers play a more active role, for instance by participating in state of play meetings with the parties and oral hearings. 5.354  The Cabinet of the Competition Commissioner and the hearing officers, attached to the Competition Commissioner, are kept informed of merger proceedings. The Cabinet will directly intervene in the more complex and high-profile cases. The hearing officers will be involved where procedural or rights of defence issues arise.392 5.355  Other Commission Directorates General and Services are also involved in the merger procedure, as the text of proposed merger decisions are circulated internally at Commission level through the so-called ‘inter-service consultation’. Consultation involves the Legal Service and the services responsible for the sector(s) affected by the transaction.393

(iii)  Third Parties 5.356  Various persons and undertakings other than the notifying parties and other involved parties participate in the merger procedure, either at their own initiative or, more commonly, following a request for information from the Commission. The most important and frequently involved of these are competitors (actual or potential), suppliers, and customers of the merging parties. Representatives of the employees and members of the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

administrative or management bodies of the undertakings concerned and consumer associations may also occasionally participate in the procedure. Third parties showing a sufficient interest are entitled, upon application, to be heard.394 The role of complainants has not been defined and institutionalized as such in the merger procedure395 but, in practice, any undertaking opposing a concentration can play a very active (p. 623) role, submitting allegations or studies on their own initiative and participating in the oral hearing.396

(iv)  Member State NCAs 5.357  Representatives of Member States are kept regularly informed of the development of merger investigations, receive a copy of the key documents (notably notifications and remedies’ proposals), and may express their views on the case at any stage.397 Cooperation with Member State NCAs takes place particularly in the following situations: (a) cases leading to a referral; (b) Phase I cases involving remedies; (c) Phase II proceedings and cases involving the imposition of fines (in both situations, notably through consultation with the Advisory Committee); or (d) cases involving the application of State measures that protect legitimate interests other than competition.

(v)  Non-EU Agencies 5.358  The competition authorities of the EFTA Member States and the EFTA Surveillance Authority regularly cooperate with the Commission in the enforcement of merger rules. International cooperation with non-EU agencies, either bilaterally (eg the US, Canada, China, or Korea) or multilaterally (eg within the ICN or the OECD), has increased significantly in importance.

(vi)  The EU Courts 5.359  The EU Courts (the General Court in the first instance and the Court of Justice on appeal) control the legality of the merger decisions adopted by the Commission (or its failure to act).398 The Court’s case law has undoubtedly been instrumental in the evolution of the EU merger control regime.

(3)  The Main Steps and Timetable for EU Merger Control Proceedings 5.360  Figure 5.13 presents an overview of the main procedural steps in the life cycle of a merger case and the relevant timetable (apart from the legal deadlines, the timing of all other events indicated in the figure is purely indicative and varies in each given case; account should also be taken of the possibility of extensions and suspensions of the relevant periods). 5.361  Under the Merger Regulation, all deadlines are expressed in working days399 (as opposed to weeks or months400). Time periods begin on the working day following the event to which the relevant provision of the Merger Regulation refers. A time period calculated in working (p. 624)

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View full-sized figure

Figure 5.13  Overview of the merger procedure: main steps and time (1)  AdCom = Advisory Committee (2)  Non-conf version = public version of decision (with business secrets and other confidential information redacted) (3)  MS = EU Member States (4)  OJ = Official Journal of the EU (5)  RFIs = requests for information (6)  SO = statement of objections (7)  WD = working day (8)  WD I-0 = day of notification (9)  WD I-1 = first working day of Phase I (working day 1 after notification) (10)  WD II-0 = initiation of proceedings (ie beginning of Phase II) (11)  WD II-35 = working day 35 of Phase II (working day 35 after initiation of proceedings) (12)  WD III-0 = day of adoption of decision on the compatibility or incompatibility of the concentration with the internal market days expires at the end of its last working day, while a period set in terms of a calendar date expires at the end of that day.401

(4)  The Pre-Notification Phase (a)  Introduction 5.362  Recital 11 to the Implementing Regulation requires the Commission to give the notifying parties and other involved parties, ‘if they so request, an opportunity before notification to discuss their project informally and in strict confidence’. Notwithstanding its informal (p. 625) nature and the lack of strict deadlines, the initial pre-notification phase plays a fundamental role in how the procedure develops for any concentration. •  It allows the undertakings concerned and the Commission to consider, as a preliminary matter, whether the proposed concentration falls within the scope of

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application of the Merger Regulation (thus largely pre-empting the risk of an Art 6(1) (a) decision). 402 •  It facilitates preparation of the notification form (Form CO) in the correct format and to an adequate level of detail (minimizing the risk of a decision of incompleteness and the consequent time delay for re-notification). 403 •  It allows the Commission services to begin familiarizing themselves with the undertakings and the relevant markets (which advances the preparation of the subsequent investigative measures). •  It can help to identify the main issues likely to arise in terms of market definition, substantive assessment, and possibly even potential remedies (which helps both sides better to prepare for the Phase I procedure: eg identifying whether economic studies may be needed). •  It provides the opportunity to explore where a referral to the NCA of one or more Member States may be appropriate. 404 •  It allows a discussion of potential requests for a derogation of the suspension obligation. 405 5.363  The importance, scope, and length of the pre-notification phase have considerably developed over the years, in line with the increased sophistication and complexity of the EU merger control assessment. In particular, given the very short deadlines of the Phase I procedure, a thorough discussion and preparation of the case in advance of the formal notification is the best way to ensure that the review process will be smooth and to avoid surprises. 5.364  Pre-notification contacts are recommended in all cases, even for seemingly nonproblematic concentrations. Indeed, they are also important in cases where the parties hope to avail themselves of the simplified procedure. This notwithstanding, in the framework of the Merger Simplification Package, adopted on 5 December 2013, the Commission has indicated that the parties may consider notifying a merger without engaging in pre-notification contacts where the operation does not give raise to horizontal overlaps and vertical links between the merging companies. 5.365  The Commission’s practice regarding pre-notification contacts is explained in some detail in DG Competition’s ‘Best Practices on the conduct of [EU] merger control proceedings’, which contains useful advice for undertakings.406

(b)  Timing of Pre-Notification Contacts 5.366  The Merger Best Practices indicate that contacts should preferably be initiated at least two weeks before the expected date of notification. However, as the pre-notification phase typically lasts longer (from several weeks to even a few months) depending on the complexity of (p. 626) the case, earlier contact is often required. As a rule, it is advisable to make contact with DG Competition as soon as the project of the concentration is sufficiently well advanced and defined, in order to facilitate planning of the case. 5.367  While stakeholders generally agree on the usefulness of these contacts ahead of the formal notification, the length of the pre-notification phase and the extent of the information required by the Commission services have been subject to some criticism of late,407 in particular in respect of cases that prima facie do not seem to present particular complexities. Although the Commission is not likely fundamentally to depart from its current practice, given the time pressures it faces in Phase I, it seems prepared to examine measures aimed at improving the pre-notification phase and easing somewhat the burden on the notifying parties.408 In particular, in the context of the Merger Simplification Package, the pre-notification process has been streamlined, by reducing the overall

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information requirements, identifying sets of information which may be waived at the request of the notifying parties and even recognizing a category of simplified cases (namely mergers that do not give rise to horizontal overlaps and vertical links between the merging companies) which can be notified without pre-notification contacts altogether.

(c)  Initial Contact and Request for a Case Team 5.368  Typically, the pre-notification phase begins when the merging parties inform DG Competition of their intended concentration and upcoming notification and request the appointment of a case team, in order to have specific interlocutors which whom to discuss the case. This is generally carried out by submitting a brief memorandum to the Merger Registry (a ‘Case allocation request’),409 although sometimes this is preceded by an initial contact to the management of the competent sectorial merger unit. The case allocation request must provide a succinct background to the transaction, a brief description of the relevant sector(s) and market(s) involved and of the likely impact of the transaction on competition, and an indication of the language of the case. 5.369  Case teams are designated in the weekly management meeting of DG Competition’s Merger Network (currently held on Mondays), generally at the proposal of the sectoral units.410 While management and staff normally belong to the relevant sectoral unit, reallocation within the Merger Network is not uncommon, depending on workload, previous experience, or linguistic requirements. 5.370  Informal discussions between the merging parties and the case team start as soon as the case team has been assigned. Pre-notification ‘kick-off’ meetings are common and often involve, in addition to the preliminary discussions on procedure and substance, a presentation of the products affected by the concentration (notably their characteristics and intended utilization), using physical samples or supporting audiovisual materials when appropriate. DG Competition generally recommends that both legal advisers and business representatives with a good understanding of the relevant markets are available for such discussions.

(p. 627) (d)  Confidentiality 5.371  Pre-notification discussions are held in strict confidence. Not only is the information submitted during these discussions protected by the professional secrecy obligation imposed on the Commission,411 but also the fact of the existence of pre-notification contacts is kept confidential. This is particularly relevant in cases where the proposed concentration has not yet been made public. Some highly market sensitive transactions may require additional protection: the Commission, at the request of the merging parties, will use code names (eg ‘Project X’) to refer to the transaction internally. This keeps knowledge of the identity of the parties within a limited circle of officials, further minimizing any risk of inadvertent disclosure. 5.372  The Commission may request waivers from the merging parties in order to exchange information with other merger authorities from non-EU jurisdictions at the pre-notification phase.412 Similarly, when the proposed transaction has already been made public, the Commission may request the agreement of the merging parties to contact other market players ahead of the notification, to commence discussion of the relevant markets and the concentration. This may be particularly useful in complex cases or in sectors where there are no recent or relevant precedents and the transaction may thus present novel issues of market definition. Pre-notification discussions with third parties may sometimes also be helpful in candidate cases for the simplified procedure, in order to confirm that there are no prima facie obstacles to allow the use of such procedure.

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(e)  Discussions on Jurisdiction 5.373  The parties and the Commission services alike have an interest in clarifying, as soon as possible, any jurisdictional issues. The parties may request informal guidance from the Commission as to whether their concentration falls within the scope of the Merger Regulation, through a so-called ‘consultation on jurisdiction’.413 Consultations on jurisdiction must directly relate to an actual, planned transaction and the undertakings concerned must submit sufficiently detailed background information for the Commission properly to assess the issue. Specific issues on jurisdiction may also be raised by the Commission services during the pre-notification discussions. As a result of this process, Article 6(1)(a) decisions finding a lack of EU jurisdiction over a notified concentration are extremely rare. 5.374  Where relevant, pre-notification contacts will also include discussions on the possibility of referrals to or from national EU jurisdictions.414 Merging parties are also requested to inform the Commission about ongoing or envisaged merger proceedings in non-EU jurisdictions and are generally requested to provide a waiver to allow such contacts to take place. Contacts and discussions on process and substance between the Commission and non-EU agencies are increasingly frequent.415

(p. 628) (f)  Discussions on Substance, Procedure, and Timing 5.375  Pre-notification contacts also provide the opportunity for the merging parties and the Commission to discuss issues of substance (eg product and geographic market definition, market structure and degree of concentration, possible theories of harm, countervailing factors, potential remedies, and likely efficiencies) and procedure (applicability of the simplified procedure, timing of the notification and possible derogations from the suspension clause). These discussions are not only useful in terms of preparing Form CO but also for identifying, at an early stage, the issues most likely to be relevant for the future assessment of the case and the best way to address them (eg investigative measures, evidence needed, economic studies).416 5.376  As regards substance, the parties are advised to disclose fully and frankly all information relating to potentially affected markets and possible competition concerns. They should also flag plausible alternative market definitions and must not fail to mention potential competition concerns even where they do not consider them compelling, since if these come to light at a later stage it may put a Phase I clearance at risk. In its Merger Simplification Package, the Commission has clarified that plausible alternative markets can be identified on the basis of previous decisions and judgments of the Union Courts and that, where no such precedents exist, they can be identified by reference to industry reports, market studies, and the companies’ internal business documents. 5.377  During the pre-notification discussion period, it is common to have a meeting (occasionally more than one) between the parties and the case team. Pre-notification meetings are normally preceded by substantive submissions from the merging parties (either in the form of a memorandum or a more or less completed draft Form CO), which allow for a more informed and comprehensive discussion. Any such submission will need to be provided sufficiently ahead of the expected meeting (at least three working days); the format and timing of such will be agreed between the merging parties and the case team. 5.378  Pre-notification contacts also include discussions on the timing of the formal notification. This should take account of merger filings in non-EU jurisdictions.417 Requests for a derogation from the suspension obligation418 should be discussed as early as possible.

(g)  Review of Draft(s) Form CO and Requests for Waivers

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5.379  In the interests of ensuring that Form CO is complete from the outset (and thereby avoiding a declaration of incompleteness), it is common practice for the notifying parties to provide a comprehensive draft Form CO for review during the pre-notification phase.419 The case team will normally provide comments on the draft within five working days (longer in the case of voluminous submissions). The feedback may be relayed by phone or consist of a written list of (p. 629) questions, comments, and requests for clarification or further development. It is not infrequent for successive rounds of drafts and comments to be exchanged during the pre-notification phase. 5.380  Notifying parties may request the Commission to waive the obligation to provide certain information required in Form CO. The Commission will agree if it considers that this information or documentation is not necessary for the examination of the case.420 Waivers are also possible in simplified cases.421

(h)  Submission of Internal Documents 5.381  The Commission normally requests the merging parties to submit, as early as possible, internal documents such as board presentations, surveys, analyses, reports, and studies discussing the proposed concentration, its economic rationale and competitive significance, or the market context in which it takes place. These provide the Commission with an early and informed view of the transaction and its potential competitive impact and are thus subject to a particularly careful review, notably in potentially complex cases. 5.382  For the parties, identifying and producing the required internal documents may prove to be a relatively cumbersome process, especially if the Commission requests access to several years’ worth of internal reports. The case team may explore with the parties, where appropriate, how best to limit this exercise to the most relevant documents (eg by defining filters or by initially requiring only samples of documents or lists of existing documents with a brief description thereof). Furthermore, in the Merger Simplification Package, the Commission has clarified that the most relevant internal documents are those that analyse the notified transaction in relation to alternative acquisitions and that documents that are completely unrelated to the said transaction do not have to be provided. In simplified cases, internal documents need only be submitted if the merger gives rise to horizontal overlaps or vertical links between the merging companies. 5.383  The case team may also require the parties to describe in detail their different organizational layers and internal bodies, as well as their internal reporting structures and reporting periods, in order to identify the most relevant documents.

(i)  Fact Finding: Contacts with Third Parties 5.384  In cases where the proposed transaction has already been made public, the Commission may request the agreement of the merging parties to contact competitors, suppliers, or customers, normally by means of pre-notification calls. The main purpose of these contacts is to allow the Commission’s services to familiarize themselves with the relevant market(s) at stake and obtain a very preliminary overview of how these third parties perceive the proposed transaction.

(j)  Green Light for Notification 5.385  Pre-notification contacts are not compulsory for the merging parties. Additionally, even where they take place, the parties are not formally required to wait for the go-ahead from the case team before notifying the concentration. However, merging parties generally do not file the notification before receiving the green light (see, however, at para 5.364, that a category of simplified cases may now be notified without pre-notification contacts). This is typically done informally by phone or email.

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(p. 630) 5.386  Although the Commission tries to accommodate the legitimate expectations of the notifying parties for a quick notification,422 they generally insist on the need for thorough pre-notification discussions and do not give the green light until they are confident that the draft Form CO is sufficiently complete. 5.387  There are no sanctions if the merging parties file the notification before they receive the agreement of the Commission. However, in such cases there may be a need for detailed requests for information at a later stage and an increased risk of a declaration of incompleteness.423

(5)  Notification of a Concentration (a)  Introduction 5.388  The formal administrative procedure starts with notification to the Commission, using Form CO (or its short-form version in simplified cases), once the triggering event for such notification has taken place424 but before the implementation of the concentration. At that point, the deadlines for the adoption of the decision start to run. Detailed rules govern the content and filing requirements of the notification.

(b)  Obligation to Notify and Standstill Obligation 5.389  According to Article 4(1) of the Merger Regulation, concentrations with an EU dimension must be notified to the Commission prior to their implementation. Article 7(1) reinforces and completes this obligation by providing that such concentrations shall not be implemented until they have been declared compatible with the internal market. 5.390  There are no exemptions from the obligation to notify. Where the Commission, pursuant to a complaint or otherwise, discovers that the parties to a concentration with an EU dimension have failed to notify it prior to its implementation, it will contact the undertakings concerned and urge them to notify.425 To date, where the Commission has done so, the parties have ultimately complied in all cases.426 If the parties were, however, ultimately to decide not to notify, the Commission will nonetheless have the possibility of assessing the concentration, as its jurisdiction over transactions stems from their nature as a concentration with an EU dimension, rather than the fact of notification.427 Furthermore, the Commission (p. 631) can impose fines for failure to notify a concentration prior to its implementation, either intentionally or negligently.428

(i)  Automatic Exceptions: Public Bids and Series of Transactions in Securities 5.391  Article 7(2) allows for limited circumstances in which the merging parties can implement a deal before the notification or the authorization of the concentration. First, an undertaking is allowed to carry out a public bid or a series of transactions in securities (including those convertible into other securities admitted to trading on a market such as a stock exchange) through which control is acquired from various sellers before notifying or receiving clearance for these transactions.429 To be permissible under Article 7(2), the concentration must be notified to the Commission without delay and the acquirer must not exercise the voting rights attached to the securities in question (or may do so only to maintain the full value of its investments, on the basis of an explicit derogation from the Commission).

(ii)  Ad Hoc Derogations at the Request of the Parties 5.392  In cases other than those described in para 5.391,430 Article 7(3) allows an undertaking to request from the Commission an ad hoc derogation from the standstill obligation. The request must be made by means of reasoned submission.431 The merger

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provisions do not set down a deadline for consideration of derogation requests, but they are always treated as a matter of urgency. 5.393  The Commission, in considering a request, primarily takes into account the effects of the suspension on one or more of the undertakings concerned by the concentration (notably, the risk of insolvency of the target undertaking)432 or on a third party433 and the threat to competition posed by the concentration.434 5.394  Decisions granting a derogation from the standstill obligation remain relatively exceptional.435 They are more likely to be granted in cases falling under the simplified procedure436 and are (p. 632) extremely unlikely to be granted if the concentration raises prima facie competition concerns.437 When granted, derogations are usually made subject to conditions and obligations in order to avoid harm to effective competition, such as conditions preventing the acquirer from exerting effective control over the target or taking action that would jeopardize its future viability.438 5.395  Where the Commission intends to reject the request or to require conditions, it gives the undertakings concerned the opportunity of making known their views either before taking its decision or, exceptionally, as soon as possible after having taken a provisional decision.439 In practice, the Commission may send the parties either an SO-type of document or a provisional decision imposing conditions and/or obligations (which can be modified further to the parties’ comments and becomes final if accepted by the parties). Most commonly, the Commission adopts the latter approach.

(iii)  Preventing Early Implementation 5.396  The Commission has a number of powers to ensure that the notification and suspension obligations are respected, including the imposition of penalties,440 the adoption of interim measures and, ultimately, a decision requiring the parties to separate.441 The validity of any transaction carried out in contravention of the suspension obligation is ultimately dependent on the Commission’s final decision on substance.442 5.397  The Commission’s published decisional practice is not very illustrative as regards what constitutes early implementation (or ‘gun jumping’). However, it appears that there is a sliding scale with, at one end, legitimate preparatory commercial steps (which are not a violation of the obligation) and, at the other, the transfer of the legal title and the legal and effective acquisition of control (which are a clear violation).443 Whether practices such as exchanges of information or coordination measures will constitute early implementation of the transaction depends on the particular circumstances of the case: the Commission is, in any event, likely to interpret the suspension obligation strictly. In cases where there is doubt whether (p. 633) a measure will constitute early implementation, it is advisable to discuss the issue with the Commission in advance of taking any such measure.

(c)  Consequences of Failure to Notify 5.398  The consequences of a failure to notify a concentration falling within the scope of application of the Merger Regulation are intrinsically linked to those of a violation of the suspension obligation, described in Section D.5(b).

(d)  Timing of Notification 5.399  The Merger Regulation does not impose a precise deadline for the notifying parties to file the notification.444 Rather, the Regulation provides that notification can take place following certain ‘triggering events’. These triggering events are: (a) the conclusion of the binding agreement;445 (b) the announcement of the public bid; or (c) the acquisition of a controlling interest.446 However, it must take place prior to implementation.447

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5.400  The Merger Regulation allows the parties to make a notification earlier than these ‘triggering events’ where the undertakings concerned demonstrate a good faith intention to conclude an agreement448 or, in the case of public bids, the parties have publicly announced an intention to make such a bid. Recital 34 to the Merger Regulation provides that the undertakings concerned can satisfy the Commission of their ‘good faith’ intention to enter into an agreement and demonstrate that their plan is sufficiently concrete by means, for example, of an agreement in principle, a memorandum of understanding, or a letter of intent signed by all undertakings concerned. 5.401  In both cases, the intended agreement or bid must result in a concentration with an EU dimension.449 5.402  The Merger Regulation does not provide for a ‘good faith’ provision (or any other early notification alternative) as regards the acquisition of a controlling interest. While this is probably explained by the fact that the acquisition of control is typically unilateral in nature,450 it may result in practical difficulties under certain circumstances.451

(p. 634) (e)  Notifying Parties 5.403  The type of transaction will determine which party or parties need to submit the notification. Generally, the notifying party is the person or undertaking acquiring control of the whole or parts of one or more undertaking(s).452 There will be more than one notifying party in legal mergers (all parties to the merger) or joint acquisitions of control (all parties acquiring control). However, the notifying parties will submit a single, joint notification.453 The creation of a full-function joint venture which is notifiable under the Merger Regulation follows the same rule as the acquisition of joint control over a pre-existing entity as regards who are the notifying parties and the need for joint notification (thus, the parents of the joint venture will be notifying parties and will submit a joint notification).

(f)  Submission of Form CO 5.404  Merger notifications must be made using the official Form CO set out in Annex I to the Implementing Regulation and must contain all the information and documents requested therein.454 Form CO is quite exhaustive and requires a considerable amount of information.455 The requirement to provide such extensive information up-front is the consequence both of the short deadlines in Phase I (which limit the scope of the investigation that can be realistically undertaken) and the requirement that the Commission adopts a formal and reasoned decision (in which the relevant markets must be defined—at least the different alternatives must be identified—and the competitive effects are to be examined). 5.405  Form CO requires detailed information on the parties to the transaction, the concentration itself, the relevant markets (both in terms of products and territories), the structure of competition (market shares, degree of concentration, structure of demand and supply, barriers to entry, and other market characteristics456), the overall context of the concentration (including how it will affect the interests of consumers and/or technical or economic process), and, if parties intend to introduce this claim, possible efficiencies brought about by the transaction. Detailed information is to be provided on all ‘affected markets’ (in a nutshell, markets where the parties have horizontal overlaps with a combined market share of over 20 per cent (15 per cent until 1 January 2004) and vertical relationships where the individual or combined market share is over 30 per cent (25 per cent until 1 January 2004) in either the downstream or the upstream market).457 (p. 635) Form CO also requires the parties to identify other markets in which the concentration may have an impact.458

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5.406  Form CO also specifies the supporting documentation that must be provided: particularly important are ‘section 5(4) documents’, namely studies and reports prepared by the merging parties in anticipation of the concentration and assessing its anticipated effects and prevailing market conditions. In particular, copies must be provided of all analyses, reports, studies, surveys, and any comparable documents which have been prepared by or for any member(s) of the board of directors, or the supervisory board, or other person(s) exercising similar functions (or to whom such functions have been delegated or entrusted), or the shareholders’ meeting, for the purpose of assessing or analysing the concentration with respect to market shares, competitive conditions, competitors (actual and potential), the rationale of the concentration, potential for sales growth or expansion into other product or geographic markets, and/or general market conditions. 5.407  Form CO requires the notifying parties to provide contact details for competitors, customers, and suppliers. While it may seem trivial, particular attention must be paid to preparing these contact details, as the Commission is particularly strict on the quality and accuracy of this information, given its practical importance for launching the market investigation. To this end, standard electronic contact sheets are provided by DG Competition, together with practical instructions for their completion.459 5.408  The Implementing Regulation contains a streamlined version of the standard form, to be used in simplified cases (‘Short Form’). In particular, undertakings using this form do not need to provide detailed information about the general conditions on and context of the relevant markets or on possible efficiencies. The required supporting documentation is also considerably more limited in scope. The simplified procedure is considered in detail in Section D.8. 5.409  Table 5.8 provides an overview of the information requested by Form CO and a comparison with other forms used in the EU merger procedure. In the context of the Merger Simplification Project launched in February 2013, DG Competition has updated and streamlined these forms, in particular by reducing the information requirements in Form CO, Short Form CO, and Form RS (referral request form). On 5 December 2013, the Commission adopted indeed a modification of the Implementing Regulation and its Annexes I to III to that effect. In particular, the threshold for the identification of ‘affected markets’, for which comprehensive information has to be submitted, has been increased from 15 to 20 per cent for horizontal overlaps and from 25 to 30 per cent for vertical relationships (as described in para 5.405).460(p. 636) Table 5.8  Forms used in EU merger control procedures

FORM CO

SHORT FORM CO

FORM RS

FORM RM

Purpose

Notification of a concentration pursuant to the Merger Regulation

Notification of a concentration under the simplified procedure

Reasoned submission for a pre-notification referral

Information to be submitted by the undertakings concerned when offering commitments

Legal basis and main texts

Article 3(1) and Annex I to Regulation 802/2004

Article 3(1) and Annex II to Regulation 802/2004 (see also Notice on Simplified Procedure)

Annex III to Regulation 802/2004 (see also Notice on Case Referral)

Annex IV to Regulation 802/2004 (see also Remedies Notice)

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FORM CO

SHORT FORM CO

FORM RS

Description of concentration

X

X

X

Information about parties

X

X

X

Details of concentration

X

X

X

Ownership and control

X

X

X

Supporting documentation

X

X

Market definitions

X

X

X

Information on (affected/ reportable) markets

X

X

X

General conditions in affected markets

X

Efficiencies

X

Cooperative effects of a joint venture

X

FORM RM

X

Details and reasons of the referral request Description, summary, and suitability of remedies

X

X

(p. 637) 5.410  The precise formalities to be followed as regards Form CO (languages, number of copies, format of notification, signature and mandates, registry and address for delivery, etc) are outlined in the Implementing Regulation and its Annexes.461 DG Competition’s website contains useful practical information in that regard.462 5.411  Notifications become effective on the date on which Form CO and accompanying documentation is received by the Commission, provided that they are complete and do not contain incorrect or misleading information.463 This is known as the ‘effective date’.

(g)  Incompleteness 5.412  Usually, pre-notification contacts culminating in the ‘green light’ for notification will ensure that Form CO is complete. However, in some circumstances it may become apparent after the notification that the information is incomplete or incorrect.464 The risk of incompleteness is obviously higher in cases where important substantive aspects of the case have not been adequately dealt with in the course of the pre-notification phase. In From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

submitting Form CO, it is up to the notifying parties and their advisers to ensure that the information has been carefully prepared and verified.465 5.413  According to Article 5(3) of the Implementing Regulation, material changes in the facts contained in the notification or new information coming to light, subsequent to the notification, which the parties know or ought to know and which would have had to be notified if known at the time of notification, must be communicated to the Commission without delay. If these changes or new information could have a significant effect on the appraisal of the concentration, the effective date may be postponed to the date on which the information is received by the Commission (in other words, the clock resets and starts afresh when the information is received).466 5.414  Where DG Competition discovers material omissions from Form CO after the formal notification, it will give the notifying parties an opportunity immediately to rectify such omissions before it issues a declaration of incompleteness. A short delay (typically one or two days) is permitted for that purpose. In cases where the omissions are such as to hinder the proper investigation of the proposed transaction (eg if the parties have failed to identify an affected market) or where the merging parties do not provide the requested information within the new deadline, the Commission will adopt a declaration of incompleteness. In such a case, the Phase I deadlines are reset and do not restart until the date when the Commission receives (p. 638) the complete information, at which point the notification becomes effective.467 In addition, notifying parties may be fined for submitting incorrect or misleading information, either intentionally or negligently.468

(h)  Publication of the Fact of the Notification 5.415  The Commission publishes without delay a brief notice in the Official Journal (C series) announcing the fact of the notification. The purpose of the Notice is to inform the business community and the public at large of the fact of the notification and to give interested third parties the possibility of submitting observations on the proposed concentration, typically within a ten-day period.469 5.416  The Notice identifies the undertakings concerned and their country of origin, gives a summary outline of the nature of the concentration (merger, acquisition of sole or joint control, or creation of a joint venture), and the economic sectors involved (the business activities, broadly defined, of the undertakings concerned; no precise indications are given at this stage about the likely definition of the relevant markets). It also indicates the date on which the notification was received and the case reference number.470 The Notice will state that the Commission has reached the preliminary view that the transaction falls within the scope of the Merger Regulation but will make clear that a final decision in that regard is reserved.

(6)  Phase I (a)  Introduction 5.417  The merger procedure is organized in two consecutive stages, Phase I and Phase II. During the Phase I procedure, the Commission investigates the concentration with a view to assessing whether it raises serious doubts as to its compatibility with the internal market. Where a concentration does not raise serious doubts or where remedies offered by the parties dispel such doubts, the concentration is authorized.471 If, on the contrary, serious doubts have been identified and remain, the Commission initiates Phase II proceedings.472 Only a handful of notifications each year are subject to Phase II proceedings.

(b)  Timetable and Deadlines

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5.418  The Commission has a maximum of 25 working days, beginning on the working day following receipt of a complete notification, to carry out its initial examination and adopt a decision determining whether the concentration has an EU dimension and, if so, either authorizing the concentration or opening Phase II proceedings.473 5.419  This period is extended to 35 working days where the Commission receives a referral request from a Member State (which must be made within 15 working days from the date of (p. 639) receipt of the copy of the notification474) or where the undertakings concerned offer commitments (which must be offered no more than 20 working days from the date of the notification475).476 5.420  Phase I time periods can be suspended in the event of failure of the merging parties fully to reply to a request for information ordered by decision477 or to inform the Commission of material changes in the facts contained in the notification, further also to a request by decision. They can also be suspended where one of the notifying parties or another involved party refuses to submit to an inspection or to cooperate in the carrying out of such an inspection. The suspension of the time limit begins on the working day following the date on which the event causing the suspension occurred and expires at the end of the day on which the reason for suspension is removed.478 Time periods may also be reset to zero where the notification is declared incomplete. 5.421  If the Commission fails to take a decision within the allotted period, the concentration is deemed to be approved. In the only case so far where the Commission seems to have (inadvertently) allowed the legal deadline to expire without adopting a decision, the assessment of the concentration was ultimately referred to the authorities of a Member State.479

(c)  Fact-Finding 5.422  Due to the pre-notification discussions and detailed Form CO, the Commission will have, at the outset of Phase I, detailed views and evidence provided by the notifying parties on the definition, structure, and functioning of the relevant markets. The Commission may also rely on (more or less recent) investigations and precedents in the same sector (its own or those from NCAs). In some cases, the Commission may have already been in contact with customers, competitors or suppliers during the pre-notification phase. 5.423  Nonetheless, the period available for carrying out the investigative steps in Phase I is very short (approximately the first ten to 15 working days of the total Phase I period480). As a result, the Commission will generally commence its investigative steps immediately after receiving the notification. The purpose of the investigation is to obtain from third parties the necessary information to verify, complete, and supplement the information provided by the notifying parties, and thus adequately assess the likely effects of the concentration. 5.424  In its market investigation, the Commission seeks qualitative and quantitative data and opinions from a wide array of market players, typically the parties’ actual and potential (p. 640) competitors, customers, and suppliers and other interested individuals, undertakings, or associations. 5.425  In order to gather this information, the Commission has a number of instruments in its investigative toolbox, namely written requests for information (generally sent these days by means of e-questionnaires),481 formal and informal interviews, inspections, site visits, studies, and surveys, and has been vested with powers to ensure it obtains accurate and complete information in a timely manner.482 By far the most commonly used instrument is the written request for information (RFI), often supplemented with follow-up calls to the respondents to clarify and supplement the information provided. Site visits are also

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relatively frequent, notably where the definition of the product market(s) does not appear to be entirely straightforward or is particularly important for the assessment of the case. 5.426  While no formal complaint procedure exists in merger cases, third parties may483 (and relatively often do) make substantive submissions contending that the notified transaction may give rise to competition concerns. Third parties (and, for that matter, also the notifying parties if they wish to submit additional information) should be mindful of the need to file any submission with sufficient time to allow the Commission properly to assess it and incorporate it in its analysis, particularly in cases of economic data and reports.

(d)  Where Competition Concerns are Identified 5.427  Where the market investigation reveals preliminary competition concerns (in other words, ‘serious doubts’ as to the concentration’s compatibility with the internal market within the meaning of Article 6(1)(c) of the Merger Regulation), the Commission gives sufficiently early warning to the merging parties so that they can submit additional information to dispel the concerns and/or submit remedies to address them. 5.428  To this end, the notifying parties will normally be offered the opportunity of attending a state of play meeting (SOP) before the expiry of week 3 (ie within 15 working days from the start of Phase I), at which the Commission will inform them of the preliminary result of the investigation. The Commission is represented by the case team and the competent sector Director and/or the Deputy-Director General for Mergers; the parties usually bring their internal representatives and legal and economic advisers. The SOP takes place in the premises of DG Competition in Brussels, although exceptionally it may be conducted over the phone. Typically, possible remedies will be discussed at this SOP.484 5.429  If the parties are keen to avoid Phase II, but are not capable of either dispelling or addressing the Commission’s concerns within the remaining Phase I period, they can withdraw their notification and re-notify once they have had time to prepare additional submissions or to explore the possibility of offering or improving possible remedies.485 In such a case, the clock will start afresh upon receipt of the new notification.

(p. 641) (e)  Decision 5.430  At the end of the Phase I investigation, the Commission must adopt one of the three alternative decisions.486 First, it can adopt an Article 6(1)(a) decision concluding that the notified concentration does not fall within the scope of the Merger Regulation and thus that the Commission has no jurisdiction to assess it. Secondly, it can adopt a decision under Article 6(1)(b), or Article 6(1)(b) in conjunction with Article 6(2), declaring the notified concentration compatible with the internal market, either as initially notified or following commitments.487 Thirdly, it can adopt an Article 6(1)(c) decision initiating proceedings where the concentration raises serious doubts as to its compatibility with the common market. The first two types of decision put an end to the merger procedure, while the third sends the case into the Phase II in-depth investigation.

(f)  Notification and Publication (i)  Notification To The Parties 5.431  Phase I decisions must be notified to the undertakings concerned without delay.488 On the day of adoption, a courtesy copy of the decision is sent by fax or email to the companies’ external counsel and, on the following working day, the Commission’s Secretariat General formally sends the original by courier to the addressees of the decision. Where the decision contains confidential information provided by one of several notifying parties or by the target, a redacted version of the decision will be necessary.489

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5.432  Phase I decisions are also notified to the competent authorities of the Member States and, if applicable, the EFTA Surveillance Authority.490

(ii)  Publication 5.433  Additionally, on the day it adopts the decision, the Commission’s practice is to publish a press release briefly describing the concentration and the companies involved, the focus of the investigation, and the main conclusions of its assessment (including whether it has decided to open Phase II proceedings).491 5.434  Decisions opening Phase II proceedings, pursuant to Article 6(1)(c) of the Merger Regulation, are not published. The Commission will publish a non-confidential version of other Phase I decisions. To this end, the notifying parties are requested to indicate to DG Competition all business secrets and other confidential information492 contained in the decision. This (p. 642) must typically be done within a period of seven days from receipt of the decision.493 Final responsibility for the preparation of the non-confidential version of the decision rests, however, with the Commission. 5.435  If there is a dispute as to confidentiality which cannot be resolved between the Commission and the undertakings concerned, the latter may refer the matter to the hearing officer.494 If the hearing officer finds that the information may be disclosed because it does not constitute a business secret or other confidential information or there is an overriding interest in its disclosure, he will state that finding in a reasoned decision. The decision will specify the date after which the information will be disclosed. The disclosure date shall not be less than one week from the date on which the hearing officer’s decision is notified to the undertaking, thus giving the undertaking the opportunity to appeal the decision of the hearing officer to the General Court and request interim measures to prevent the dissemination of the information at issue. 5.436  The non-confidential version of decisions declaring that a notified concentration does not fall within the scope of the Merger Regulation (Art 6(1)(a) decisions) and of decisions authorizing a concentration (Art 6(1)(b) decisions or Art 6(1)(b) decisions in conjunction with Art 6(2)) are published on DG Competition’s website, in the language of the procedure.495 A short Notice is also published in the Official Journal (C series), indicating where the decision can be found on DG Competition’s website.

(7)  Phase II: In-Depth Investigation (a)  Introduction 5.437  Phase II proceedings are initiated with the adoption of a decision pursuant to Article 6(1)(c) of the Merger Regulation and are concluded, except in cases where the notification is withdrawn and the concentration is abandoned, with the adoption by the College of Commissioners of a final decision on the merits of the case, pursuant to Article 8. The time period for Phase II proceedings runs from the working day following the date of adoption of the Article 6(1)(c) decision.496 5.438  During Phase II, the Commission carries out an in-depth examination of the notified concentration. The concerns that were identified in Phase I are exhaustively probed, with new rounds of investigative measures and, typically, with increased recourse to quantitative data and economic and econometric analyses. Where serious concerns remain, the Commission issues an SO. The notifying parties are then given access to the Commission’s file and may reply to the SO in writing and at the oral hearing. At any point during Phase II (up to working day number 65 after the initiation of proceedings),497 the merging parties may offer remedies to the Commission.

(p. 643) (b)  Procedural Safeguards in Phase II

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5.439  During the Phase II procedure, which is more formal in nature than Phase I, a number of particular safeguards exist to ensure that procedural rights are respected (in particular rights of defence).498 This is notably the case if an SO is issued, since the proceedings then become more adversarial. Different procedural rights are granted to three distinct categories of parties, namely: (a) the notifying parties; (b) other involved parties (the target and the seller); and (c) interested third parties.499 Furthermore, the Commission has adopted a number of measures to enhance the transparency of the process and has instituted different check and balances to ensure that the process is conducted in a fair, impartial and objective manner.

(c)  Timetable and Deadlines 5.440  The Commission is required to adopt its Phase II decision on the compatibility of the notified concentration with the internal market within 90 working days from the date on which proceedings were initiated.500 5.441  Under certain circumstances, the 90-working-day legal deadline is automatically extended and/or suspended. •  The deadline is extended to 105 working days if the undertakings concerned offer commitments on or after working day number 55 following the initiation of proceedings. 501 •  The deadline is also extended if: (a) the notifying parties make a request to that effect—this must be made within the first 15 working days of the initiation of proceedings; 502 or (b) the Commission, with the agreement of the notifying parties, extends the legal deadline on its own initiative—this can be done at any time. The total duration of these voluntary extensions (which are used frequently in practice and are known as ‘stop-the-clock’ mechanisms) cannot exceed 20 working days. 503 •  The legal deadline will be suspended if it becomes necessary for the Commission to request information by decision or to order an inspection, owing to circumstances for which one of the undertakings involved is responsible. 504 5.442  Aside from the possibility of suspension, which occur only in exceptional circumstances, Phase II proceedings may therefore last for a maximum of 125 working days. 5.443  In practice, the Commission typically aims to take the decision at the latest during the penultimate weekly meeting of the College of Commissioners before the legal deadline. This provides a buffer in the event that last-minute discussions within the College of Commissioners (p. 644) are necessary before adoption of the decision. The Merger Regulation, however, explicitly states that Phase II decisions must be taken as soon as any serious doubts have been removed (whether because the in-depth analysis has dispelled those concerns or because the notifying parties have presented remedies to address them).505 In practice, most Phase II decisions are taken close to or at the legal deadline; it is only in those cases where an SO is not issued that the Phase II decision can be adopted significantly in advance of the legal deadline. 5.444  According to Article 10(6) of the Merger Regulation, where the Commission fails to adopt its Phase II decision within the relevant period, the concentration is deemed to have been authorized. As yet, this has never occurred.

(d)  Initial Stage: Review of Key Documents, Reply to the Article 6(1)(c) Decision and State of Play Meeting

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5.445  Shortly after the initiation of proceedings (and, where appropriate, also later on an ad hoc basis506), the Commission gives the notifying parties access to the key documents obtained during its initial investigation, including substantiated complaints and other submissions of third parties running counter to the notifying parties’ own contentions, and economic studies, particularly those to which explicit reference has been made in the Article 6(1)(c) decision.507 Access to such documents is subject to the protection of confidentiality and business secrets (for a discussion of the steps taken to protect confidentiality and business secrets, see further Section D.7(i)508). When the file does not contain specific complaints, submissions or studies, the Commission may provide the notifying parties with a non-exhaustive (and generally anonymized) list of statements contained in third parties’ replies to the Phase I questionnaires and in the minutes of interviews with market players. 5.446  In the first two weeks (ie within ten working days) of the initiation of Phase II proceedings, the Commission will offer the notifying parties the possibility of a SOP. At this meeting, the timing of which is agreed with the parties, the Commission will inform the parties of the main competition concerns at that stage (which will have been spelled out in the Article 6(1)(c) decision), discuss important issues for the investigation (eg market definition questions), consider whether it would be useful to carry out economic studies (commissioned either by the Commission or the notifying parties), and discuss the indicative timetable of the proceedings and the possibility of any extensions of the legal deadline.509 The notifying parties generally provide, in advance of the meeting, a written submission with their comments on the Article 6(1)(c) decision.

(e)  In-Depth Investigation 5.447  The investigatory period of the Phase II proceedings typically lasts for approximately eight weeks (about 40 working days from the initiation of proceedings). The investigative steps that can be taken in Phase II are the same as those in Phase I. However, their scope is, in practice, much wider. •  Information requests are typically lengthier and more exhaustive and are sometimes sent to a wider array and larger number of market players. (p. 645) •  Comprehensive requests for economic data are issued to the notifying parties and sometimes also to third parties (eg the remaining competitors in an oligopolistic market). •  Economic and econometric studies are either developed by the Commission or submitted by the notifying parties or interested third parties, which is much less common in Phase I cases. •  Consumer surveys are also sometimes conducted.

510

•  Site visits to the manufacturing plants or other facilities of the parties, their competitors, or their customers or suppliers may also take place. 5.448  Where the Commission considers it desirable, in the interests of the investigation, it can organize triangular meetings involving the notifying parties and third parties, to hear their different (and often opposing) views as to key market data and characteristics and the effects of the concentration on competition in the markets concerned.511 So far, however, the use of triangular meetings appears to have been rather limited. 5.449  Given the importance that the gathering and assessment of economic evidence plays in a Phase II investigation,512 the Commission ensures that experienced economists take

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part in the investigation, often as part of the case team. The Chief Economist and the CET play a fundamental role in that regard, both in assisting and scrutinizing the investigation.

(f)  Where the Competition Concerns are Dispelled 5.450  Where the Commission considers that the serious doubts initially investigated have been dispelled,513 or the remedies submitted by the notifying parties in anticipation of an SO are sufficient and proportionate to address those concerns,514 it will prepare a decision declaring the notified concentration compatible with the internal market, pursuant to Article 8(1) or (2), respectively. The legal standard to clear the transaction where remedies are offered pre-SO is that the Commission no longer has ‘serious doubts as to the compatibility of the concentration with the internal market’ (thus tracking the standard for opening Phase II proceedings).

(g)  Where Competition Concerns Remain 5.451  Where, following the in-depth investigation, the Commission continues to have competition concerns about the transaction, it will issue an SO. Before doing so, the Commission will offer the notifying parties a SOP, at which it will inform them of its preliminary view on the outcome of the Phase II investigation and of the type of objections that are likely to be set out in the upcoming SO. The meeting may also be useful for the Commission to clarify certain issues and facts before it finalizes the SO.515

(p. 646) (h)  The Statement of Objections (i)  Purpose and Content 5.452  In accordance with the principle of respect for the rights of defence,516 the undertakings concerned must be given the opportunity to submit their comments on all the objections which the Commission proposes to take into account in its decision.517 To meet this requirement, the Commission issues an SO setting out its provisional findings of fact and law. 5.453  The SO, which normally builds on the content of the Article 6(1)(c) decision, contains the findings of the Commission’s in-depth investigation and its preliminary conclusions regarding market definition and anticipated anti-competitive effects. Where the parties have already submitted remedies which have been considered as insufficient, the SO will set out their shortcomings and uncertainties.

(ii)  Timing 5.454  The Commission addresses the SO to the notifying parties, in the form of a reasoned letter.518 No legal deadline has been established for the adoption of the SO, but the need for a number of follow-up steps before the final decision can be adopted implies that the SO must be sent at the very latest around eight weeks before the legal deadline for adoption of a final decision. The Commission generally strives to adopt it before that time, around working day number 35 to 40 from the initiation of proceedings, if no extensions or suspensions have taken place.

(iii)  Scope of the SO 5.455  The Commission can only base a decision (particularly, a prohibition decision) on objections on which the parties have been able to submit their observations and thus on those which were included in the SO.519 5.456  If, after the SO has been issued, the Commission intends to rely on additional objections (eg a different market definition, a new theory of harm or concerns about an additional product or geographic market), it must adopt a supplementary statement of objections (SSO), in order to allow the parties the opportunity to present their observations. However, the tight deadlines of the Phase II proceedings somewhat limit the possible use of SSOs. In cases where the Commission intends to rely on new evidence which simply

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corroborates the objections already raised in the SO, it will bring this to the attention of the notifying parties in a so-called letter of facts.520

(iv)  Other Parties 5.457  As well as the notifying parties, other involved parties are informed in writing of the Commission’s objections, generally by means of a non-confidential version of (p. 647) the SO. The Commission sets a time limit for the involved parties to submit their views in writing.521 5.458  Third parties showing a sufficient interest in the procedure are entitled, upon application, to be heard.522 If they apply in writing to be heard, the Commission informs them in writing of the nature and subject matter of the procedure and sets a time limit for them to make their views known.523 DG Competition may, in the interests of the investigation, provide such third parties with an edited version of the SO from which business secrets have been removed. In such cases, the SO is provided under strict confidentiality obligations and restrictions of use, which the third parties must accept prior to receipt.524

(i)  Access to File (i)  Purpose 5.459  Access to the Commission file is a key procedural guarantee aimed at ensuring the application of the principle of equality of arms and at protecting the rights of the defence. In merger proceedings, the Commission grants access to the file, if so requested, to the addressees of the SO, as well as to the other involved parties who have been informed of the objections, but not to third parties.525 5.460  Access to the file is given insofar as it is necessary for the notifying parties to reply to the objections raised in the SO.526 As regards other involved parties, access is given only as necessary for the purpose of preparing their comments.

(ii)  Timing 5.461  Typically, the file is made available to the notifying parties the day following the adoption of the SO.527 Further access is granted for documents received after that date (p. 648) and up until the consultation of the Advisory Committee (see Section D.7(k) for a discussion of the role of the Advisory Committee). Other involved parties are generally granted access later, but before the oral hearing.528

(iii)  Scope 5.462  Access is granted to the content of the Commission’s investigative file, consisting of all documents (irrespective of file type or storage medium) which have been obtained, produced, and assembled by DG Competition during the investigation, with the exception of internal documents, business secrets of other undertakings, or other confidential information.529 (i)  Internal Documents

5.463  The first category of non-accessible documents consists of internal Commission documents (eg drafts, opinions, memos or notes from the different Commission departments and services). These do not constitute part of the evidence which can be relied upon in the assessment of a case and therefore lack evidential value.530 5.464  Internal documents also include correspondence between the Commission and the NCAs or other public authorities of the Member States (or between the latter), the EFTA Surveillance Authority, or authorities of non-member countries, or internal documents received from the aforementioned public authorities. In certain circumstances, however, access is granted to documents originating from national authorities, notably where the

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latter contain allegations brought against the parties or that are potentially relevant to the parties’ defence with regard to the exercise by the Commission of its jurisdiction.531 5.465  Furthermore, minutes of meetings or phone conversations between the Commission and a person or undertaking, provided they have been agreed by the latter, will be made accessible after deletion of any business secrets or other confidential information.532 (ii)  Business Secrets and Confidential Information

5.466  The second category of (partially or totally) non-accessible documents consists of those containing business secrets and other confidential information. 5.467  ‘Business secrets’ are defined as information about an undertaking’s business activity the disclosure of which could result in a serious harm to the undertaking, such as technical and/or financial information relating to its know-how, methods of assessing costs, production secrets and processes, supply sources, quantities produced and sold, market shares, customer and distributor lists, marketing plans, cost and price.533 5.468  ‘Other confidential information’ is defined as other information the disclosure of which would significantly harm a person or undertaking (eg information that would enable the (p. 649) parties to identify complainants or other third parties who have a justified wish to remain anonymous, in order notably to avoid the risk of being exposed to retaliatory measures).534 This category also includes military secrets.

(iv)  Protection of Business Secrets and Confidential Information 5.469  Where documents contain information that falls into either category, access will be granted, where possible, to non-confidential versions of the original documents or, exceptionally, to summaries thereof. 5.470  In order to provide timely access to the file and to safeguard the protection of business secrets and other confidential information, preparatory measures are taken throughout the merger proceedings. In particular, the Commission requests that all submissions (whether by the notifying parties or third parties, at their own initiative or at the request of the Commission) during the procedure clearly identify any material which is considered to be confidential and that a separate non-confidential version is provided.535 5.471  Claims for confidentiality must be substantiated and can normally be made only in relation to information that belongs to the undertaking making the claim, not to information from any other source. Information which is already known outside the undertaking or the group or that has lost its commercial importance, for instance due to the passage of time, will not normally be considered confidential.536 5.472  Requests for anonymity may be granted where there is a perceived risk that an undertaking which is able to place very considerable economic or commercial pressure on its competitors or on its trading partners, customers, or suppliers will adopt retaliatory measures against those who participate in the investigation. 5.473  DG Competition provisionally accepts any claims for confidentiality which seem justified (it may, however, reverse its provisional acceptance at a later stage). When it considers that the claim is not justified, in whole or in part, it informs the undertaking in writing of its intention to disclose the information, giving reasons and setting a time limit for response. If, following submission of the response, there remains disagreement as to the confidentiality claim, the matter will be dealt with by the hearing officer.537 If the latter finds that the information may be disclosed because it does not constitute a business secret or other confidential information or because there is an overriding interest in its disclosure, that finding shall be stated in a reasoned decision, specifying the date after which the information will be disclosed (at the earliest, one week from the date of notification).538

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(p. 650) 5.474  The Commission has developed two additional procedures which can be used for the purpose of alleviating the burden of drawing up non-confidential versions of submissions: negotiated disclosure to a restricted circle of persons (a ‘confidentiality ring’) and the data room procedure.539 5.475  If a party considers, after having obtained access to the file, that it requires access to specific non-accessible information for the proper exercise of its right to be heard, it may submit a reasoned request to that end to DG Competition. Disagreements are ultimately resolved by the hearing officer.540

(v)  Use of the Information/Access to Documents 5.476  Access to the file is granted on condition that the information obtained will be used only for the purposes of judicial or administrative proceedings for the application of the EU competition rules at issue in the related administrative proceedings. While the Merger Regulation and the Implementing Regulation do not establish explicit sanctions for use outwith that purpose, where outside counsel has been involved in the use of information for a different purpose, the Commission may report that counsel to the relevant bar, with a view to possible disciplinary action.541 5.477  The specific right of access to file in merger proceedings is distinct from the general right of access to documents under Regulation 1049/2001,542 which is subject to different criteria and exceptions and pursues a different purpose.543

(j)  Reply to the SO and Oral Hearing (i)  Reply to the SO 5.478  The addressees of the SO, as well as other parties which have been informed by the Commission of its objections against the notified transaction, may (but are not obliged to) submit comments in writing, within the time limit set to that effect (typically, a period of two weeks).544 The Commission is not obliged to take into account submissions received after the expiry of the time limit.545 The addressees of the SO or other parties may seek an extension of the time limit by means of a reasoned request, made at least five working days before its expiry. If such a request is not granted (or not granted in full), the parties may refer the matter to the hearing officer, who will ultimately decide on the requested extension. (p. 651) In taking such a decision, the exercise of the right to be heard effectively has to be balanced against the need to avoid undue delay in proceedings.546 In General Electric, the General Court ruled that parties can invoke the brevity of the periods provided for them in the context of merger proceedings only insofar as those periods are disproportionate to the duration of the proceedings as a whole; in that respect, the Court ruled that a period of 12 working days to prepare a written response to the SO was not disproportionate.547 5.479  In their submissions, the parties may comment on all the facts and objections contained in the SO, attach any relevant documents as proof or in support of their allegations, and propose that the Commission hear particular persons who may corroborate their claims. The Commission forwards the submissions received to the Member States’ authorities and may also communicate non-confidential versions to other parties who have actively participated in the procedure.

(ii)  Oral Hearing (i)  Attendees

5.480  The notifying parties and other involved parties who have so requested in their written comments to the SO, are given the opportunity to develop their (counter) arguments in a formal oral hearing.548 The Commission may, where appropriate, also afford third parties who have shown a sufficient interest and who have so requested in their written comments the opportunity to participate in the hearing.549 The Commission may likewise invite any other natural or legal person to express its views at the hearing (eg particularly From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

significant competitors, customers, or suppliers of the parties which have not asked to participate, or sector or technical experts).550 The competent authorities of the Member States are invited to take part in any hearing, while representatives from competition authorities from third countries may also be invited as observers.551 However, the hearing is not public. It therefore, provides a relatively private forum where the parties can express and substantiate in detail their positions and arguments. (ii)  Preparation

5.481  The hearing officer is responsible for the preparation of the hearing, with the assistance of and in consultation with DG Competition. The hearing officer sometimes prepares a list of questions, which is sent in advance to the participants. He may also, in advance, indicate the areas for debate which, in his view, are central. In order to do so, the hearing officer may hold preparatory meetings with the case team and the persons invited to the hearing, and may ask the latter to identify in writing the essential content of their intended statements. The list of participants is made available in advance of the hearing.552 The hearing (p. 652) officer determines the date for the hearing (generally, around two weeks after the adoption of the SO), the duration and the place of the hearing, and decides whether new documents should be admitted and which persons should be heard on behalf of a party.553 (iii)  Conduct of the Hearing

5.482  The oral hearing is conducted in full independence by the hearing officer, who is entrusted with the task of contributing to the objectivity of the hearing itself and of any decision taken subsequently. During the hearing, all participants are given the opportunity to put forward their views as to the preliminary findings of the Commission and can ask questions (including the authorities of the Member States).554 5.483  Normally, the hearing starts with a brief introduction by the hearing officer, followed by a presentation by the case team summarizing the main objections to the transaction. The notifying parties are then given the opportunity to put forward their views, normally by means of presentations by their business, legal, and economic representatives. Questions may then be put to the notifying parties by all participants. Other involved parties and third parties present their views next, followed by another question session. Generally, notifying parties are invited to present their concluding remarks at the end of the hearing. 5.484  While each participant is normally heard in the presence of all other participants, certain parts of the hearing can be conducted in closed session with a reduced number of attendees (typically, each notifying party separately, or the target of the transaction), if this is necessary to ensure the protection of business secrets and other confidential information. 5.485  Exceptionally, if a question cannot be answered in whole or in part at the oral hearing, the hearing officer may allow a reply in writing within a set time; similarly, the hearing officer may allow a party the opportunity to submit further written comments after the oral hearing.555 (iv)  Post-Hearing Report

5.486  After the hearing, the hearing officer submits an interim report to the Commissioner responsible for Competition556 on the hearing and the conclusions the hearing officer has drawn with regard to respect for the effective exercise of procedural rights during the process thus far.557 Subsequently, the hearing officer will prepare his final report, which considers, inter alia, whether the draft decision contains objections in respect of which the parties have not had an opportunity to respond. The final report is submitted to the Competition Commissioner, the Director General for Competition, the director responsible, and the other competent services of the Commission, as well as the competent authorities of the Member States. The hearing officer’s final report is presented to the College of Commissioners together with the draft decision. Once the decision is adopted, the report (p.

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653) will be communicated together with the adopted decision to the addressees thereof and will be published in the Official Journal in a non-confidential version.558

(k)  The Post-SO/Oral Hearing Stage (i)  Final State of Play Meetings 5.487  Following the reply to the SO and the oral hearing, the Commission offers the notifying parties a SOP, at which it explains its position following consideration of the notifying parties’ written and oral submissions and indicates whether it intends to maintain some or all of its objections. If necessary, this meeting is typically also used to discuss the content, scope, and timing of possible remedy proposals. 5.488  An additional SOP is generally offered to the notifying parties before the Advisory Committee meets, in instances where discussion of proposed remedies or the results of the market test are deemed necessary. This meeting offers the parties the opportunity of formulating or putting forward improvements to their remedies proposal.559

(ii)  Peer Review Panel 5.489  The outstanding objections of the Commission and the remedies proposed by the notifying parties may be discussed within a scrutiny panel (the ‘Peer Review Panel’ or, as it is sometimes called, ‘Devil’s Advocate Panel’), whose function is to assist DG Competition and the Competition Commissioner in coming to a final view on the case and preparing the draft Article 8 decision.560 5.490  Panels are one of the checks and balances put in place to enhance the quality and effectiveness of the decision-making in merger cases.561 It is a purely internal procedure, with no access to or information provided to the parties. 5.491  Where a panel is convened, a peer review team is appointed, generally composed of three members, usually senior officials of DG Competition with significant experience in merger investigations and/or in the relevant sector. The members of the peer review team have access to the most important documents of the case file and can ask questions and request clarifications from the case team. 5.492  The panel meeting is organized and chaired by a manager of one of DG Competition’s horizontal units (the scrutiny officer), and is notably attended by the peer review team, the case team, and members of DG Competition’s management. During the panel meeting, the most significant issues of the case are discussed and debated. 5.493  Following the panel meeting, the peer review team reports to DG Competition’s Director General and to the Commissioner.

(iii)  Advisory Committee 5.494  The next step in the proceedings is consultation with the competent authorities of the Member States through the Advisory Committee on concentrations. This must take place before the adoption of any Phase II decision (and also before the adoption of a separation or revocation decision or a decision imposing interim measures).562 (p. 654) 5.495  The Advisory Committee is convened and chaired by the Commission. Approximately ten working days before the meeting, the representatives of the Member States are given a preliminary draft of the Article 8 decision, a summary of the case, and the most important documents in the file. 5.496  During the meeting of the Advisory Committee, the case and the draft decision are presented by a representative of a Member State (the rapporteur). Representatives of other Member States will subsequently intervene, offering their comments and proposals and asking questions to the Commission. The Advisory Committee then takes a vote on a number of questions prepared by the rapporteur, typically on the different elements of the Commission proposal (jurisdiction of the Commission, market definition, theories of harm, sufficiency and proportionality of remedies offered, and compatibility of the concentration From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

with the internal market), on the basis of which the opinion of the Advisory Committee is then drafted. 5.497  The opinion, which is signed by the members of the Advisory Committee at the end of the meeting, will be appended to the draft decision, communicated to its addressees together with the decision itself, and subsequently made public. While the opinion delivered by the Advisory Committee is not binding, the Commission is committed to taking it into the utmost account.563 5.498  The consultation of the Advisory Committee signals the end of the investigatory phase of the case. No new investigatory measures are taken after the Advisory Committee and new submissions by the notifying parties or third parties are, in principle, neither taken into account nor made the subject of access to the file. Notifying parties should be particularly mindful that last-minute modifications to proposed remedies must be received in sufficient time to allow not only for an adequate assessment by the Commission but also for proper consultation with Member States.564

(l)  Decision 5.499  Phase II proceedings conclude, except in cases where the concentration has been abandoned and the notification withdrawn, with the adoption of a decision pursuant to Article 8 of the Merger Regulation. 5.500  As regards the concentration’s compatibility with the internal market, there are three types of Article 8 decisions: (a) a decision declaring the notified concentration compatible with the internal market without commitments under Article 8(1); (b) a decision declaring the notified concentration compatible with the internal market with commitments under Article 8(2); or (c) a decision declaring the notified concentration incompatible with the internal market under Article 8(3).565 (p. 655) 5.501  The draft Article 8 decision is prepared by DG Competition Services and discussed with the Legal Service, as well as other associated Directorates General. The draft is ultimately submitted to the College of Commissioners for adoption. In this last stage, the Cabinet of the Commissioner responsible for competition and the Commissioner him/herself typically play an active role in eleventh hour discussions with other Cabinets or Commissioners. 5.502  Pursuant to Article 8(4), in cases where the concentration that is prohibited has already been implemented (be it in violation of the standstill obligation or lawfully pursuant to an exception to or a derogation from that obligation),566 the Commission may require the undertakings concerned to dissolve the concentration, in order to restore the situation prevailing prior to the implementation of the concentration.567 This will generally take place through the dissolution of the merger or the disposal of all the shares or assets acquired but, if necessary, the Commission may take any other measure appropriate to achieve such restoration.568 In addition, the Commission may order any appropriate measure to ensure that the undertakings concerned dissolve the concentration or take other restorative measures as required.569 These separation (or dissolution) decisions, which are, for obvious reasons, very rare, are generally taken in a separate decision, at the time of the adoption of the prohibition decision under Article 8(3).570 A separation decision may also be adopted by the Commission in cases where a concentration is approved with remedies and is later implemented by the parties in contravention of a condition attached to the decision.571

(p. 656) (m)  Notification and Publication

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5.503  The Article 8 decision is notified to the undertakings concerned and the competent authorities of the Member States without delay.572 In the case of the notifying parties, a courtesy copy is generally faxed or sent by email to their legal advisers on the day of adoption, while formal notification takes place a few days later by certified courier. Attached to the decision are the hearing officer’s final report and the opinion of the Advisory Committee.573 The notifying parties are requested to identify all business secrets and other confidential information contained in the decision so that the non-confidential version can be prepared.574 5.504  A (non-confidential) summary of the Article 8 decision, indicating the names of the parties and the main content of the decision, is published in the Official Journal in all official languages. A full (non-confidential) version of the decision is made available on DG Competition’s website, in the language of the case (English, French, and German versions are also generally available). A (non-confidential) version of the commitments adopted by the decision may be published on DG Competition’s website before the full text of the decision (while the public version is being prepared), in order to make information regarding the remedies public in view of their immediate and effective implementation.

(n)  Post-Decision Remedies Process 5.505  Where conditional clearance has been granted, the remedies must be implemented, which requires a number of additional steps. In a typical divestiture remedy, the process extends from the appointment of a trustee and the completion of the ring-fencing and holdseparate obligations, to the approval of the buyer of the divested business (see Section F.6).

(8)  The Simplified Procedure (a)  Overview and Rationale 5.506  Experience demonstrates that the majority of notified cases do not raise anticompetitive concerns. Certain types of concentration, in particular, are unlikely to raise any concerns in the absence of specific circumstances. As a result, in order to make EU merger control more focused and effective and to ease the burden on both the notifying parties and the Commission’s services, in 2000 the EU introduced a simplified procedure for the treatment of certain categories of cases. 5.507  The current Notice on the simplified procedure,575 adopted in 2013: (a) identifies the categories of cases suitable for the simplified procedure; (b) sets out the conditions under which the Commission will apply the simplified procedure; and (c) explains how the process is streamlined in such cases. (p. 657) 5.508  Use of the simplified procedure primarily affects the amount of information required from the notifying parties and the extent of the Commission’s investigation, as well as the scope of the reasoning of the (clearance) decision.

(b)  The Commission’s Discretion in Applying the Simplified Procedure 5.509  The Commission has some discretion in the application of the simplified procedure in an individual case. During the pre-notification stage, if the circumstances so warrant, the Commission can refuse to apply the procedure to concentrations that, in principle, fall within the general categories specified in the Notice. Post-notification, the Commission may ultimately decide to revert from the simplified to the normal procedure and thus launch an investigation and/or adopt a full decision. The Commission, in any event, will not apply the simplified procedure to concentrations that do not fall within the categories specified in the Notice.

(c)  Use of the Simplified Procedure in Practice

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5.510  The simplified procedure is widely used: simplified cases represent a large percentage of all cases notified to the Commission. As Figure 5.14 shows, cases treated under the simplified procedure have traditionally accounted for over 60 per cent of all cases cleared unconditionally in Phase I in any given year.576 Further to calls in recent years for the simplified procedure to be extended, the 2013 Notice enlarged its scope of application, in order to cover to a greater degree vertical relations or horizontal cases that do not bring about a significant addition of market share. Moreover, the 2013 Notice further streamlined the procedure, reducing the extent of information required.577 View full-sized figure

Figure 5.14  Evolution of the number of simplified cases 2000–2013* *

Up to November 2013

(p. 658) (d)  Impact of the Simplified Procedure on Deadlines 5.511  The simplified procedure is not, as such, an expedited (or fast-track) procedure. A concentration being reviewed under the simplified procedure remains subject to the general deadlines provided for in Article 10(1) of the Merger Regulation. There is, though, some scope for a faster overall process: the pre-notification phase can be generally shorter than for normal procedures (in some cases, parties may even decide not to engage in prenotification contacts) and the Commission will generally endeavour to adopt the clearance decision a few days in advance of the expiry of the legal deadline, particularly if the notifying parties so request. However, the Commission has limited scope for taking a decision significantly in advance of the legal deadline, not least because Member States have a period of 15 working days from receipt of a copy of the notification to request a referral of the case.578

(e)  The Scope of the Simplified Procedure: Categories of Suitable Cases (i)  Five Categories of Suitable Cases 5.512  The Commission has identified five categories of concentrations to which it may apply the simplified procedure. These categories apply alternatively, not cumulatively (ie fulfilling all of the criteria of any of the categories will in principle make a notified concentration eligible for the simplified procedure). 5.513  The first category (‘5(a) cases’) refers to the creation of, or acquisition of control over, a joint venture that has no or negligible (actual or foreseen) activities in the EEA. Activities are considered negligible where both the turnover of the joint venture (and/or the turnover of the contributed activities) in the EEA and the total EEA value of assets transferred are less than €100 million at the time of the notification. These are cases where the obligation to notify is triggered by the general scope of the activities of the parent companies rather than by the economic resources directly involved in the notified concentration.579

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5.514  The second category (‘5(b) cases’) covers those concentrations where two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking, and where none of the parties to the concentration (in this context, the ‘undertakings concerned’) are engaged in business activities in the same product and geographic market, or in a product market which is upstream or downstream of a product market in which any other party to the concentration is engaged. In other words, these are operations that do not bring about any horizontal overlap or vertical relationship between the merging parties. A vertical relationship normally presupposes that the product or service of the undertaking active in the upstream market constitutes an important input to the product or service of the undertaking active in the downstream market. 5.515  The third category (‘5(c) cases’) is a slightly less strict version of the previous category and covers concentrations that result in only a minor horizontal overlap and/or vertical relationship, but no affected markets. This category applies to mergers or acquisitions of (sole (p. 659) or joint) control where: (a) two or more of the parties to the concentration (‘undertakings concerned’) are engaged in business activities in the same product and geographical market (‘horizontal relationships’) provided that their combined market share is less than 20 per cent (it was 15 per cent under the 2005 Notice); or (b) one or more of the parties to the concentration is engaged in business activities in a product market which is upstream or downstream of a product market in which any other party to the concentration is engaged (‘vertical relationships’), provided that none of their individual or combined market shares are 30 per cent or more (it was 25 per cent under the 2005 Notice). 5.516  While the categories of cases under 5(b) and 5(c) do not mention conglomerate or spillover effects, the Commission is unlikely to adopt the simplified procedure in cases where one or more of the parties to the concentration individually holds a market share of 30 per cent or more in a product market which is closely related to a market where another party is active (ie neighbouring markets).580 Similarly, the Commission will not apply the simplified procedure if a risk of coordination is identified, pursuant to Article 2(4) of the Merger Regulation (spillover effects in joint venture situations).581 5.517  The fourth category (‘5(d) cases’) encompasses concentrations where a party acquires sole control of an undertaking over which it already had joint control. The Commission may, however, decline to apply the simplified procedure in such cases if the removal of the pre-existing disciplining constraints exercised by the potentially diverging incentives of the different co-controlling shareholders risks strengthening the joint venture’s strategic market position.582 5.518  The fifth category (‘6 cases’), introduced by the 2013 Notice, refers to cases where two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking, and both of the following conditions are fulfilled: (i) the combined market share of all the parties to the concentration that are in a horizontal relationship is less than 50 per cent; and (ii) the increment (‘delta’) of the Herfindahl-Hirschman Index (‘HHI’) resulting from the concentration is below 150. These are cases, thus, that present very small increments in market share. The Commission will, however, decide on a case-bycase basis whether, in the particular circumstances of the case at hand, even with such a small increase, the case should be examined under the normal first phase merger procedure. 5.519  For the purpose of the application of cases 5(b), 5(c), and 6 to an acquisition of joint control, relationships that exist only between the undertakings acquiring joint control outside the field of activity of the joint venture are not considered horizontal or vertical relationships. Those relationships may however give rise to coordination as referred to in Article 2(4) of the Merger Regulation. This clarification, introduced by the 2013 Notice, makes clear that the existence of overlaps or vertical relations between the parents in

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markets unrelated to those where the joint venture will be active does not prevent the concentration from being treated under the simplified procedure (the opposite conclusion was arguably possible under a narrow reading of the 2005 Notice).

(p. 660) (ii)  Exclusions 5.520  The Notice sets out a number of safeguards and exclusions from the simplified procedure. Essentially, the Commission will not apply the simplified procedure where: (a) it is difficult to define the relevant markets or to determine the parties’ market shares (eg when the parties are operating in new or developing markets);583 (b) novel legal issues of general interest are involved;584 (c) the concentration may increase the parties’ market power by combining technological, financial, or other resources;585 or (d) the markets are characterized by high entry barriers or a high degree of concentration or have other known competition problems. In general, the Commission is less likely to accept a proposed concentration under the simplified procedure if any of the special circumstances mentioned in para 20 of the Commission’s Guidelines on the assessment of horizontal mergers apply.586

(f)  Procedural Aspects 5.521  Typically, the notifying parties will signal to the Commission services at the outset of the pre-notification contacts that the case is a candidate for the simplified procedure.587 If they fail to do so, the Commission will normally flag this possibility to them. Once the possibility has been flagged, the Commission first ascertains whether the case falls among the categories of eligible cases. This involves, for 5(b), 5(c), and 6 cases, a preliminarily examination of the relevant market definition. Parties are in principle required to provide information on the basis of all plausible alternative market definitions, particularly in sectors where there is no clear precedent. The Commission normally requires, in that regard, that the conditions set out in paragraphs 5(b), 5(c), and 6 of the Notice are met under any of these plausible alternative market definitions. 5.522  Secondly, the Commission will consider whether any specific circumstances would militate against the use of the simplified procedure and, more generally, whether any risk of potential anticompetitive effects warrants investigation. This is all the more important since, normally, the Commission will not undertake any investigative measure once the case has been formally notified under the simplified procedure. 5.523  Finally, during the pre-notification stage, the Commission and the notifying parties will discuss precisely what information must be provided with the notification. If the Commission is satisfied that the concentration fulfils the criteria for the simplified procedure, it will waive the requirement for full-form notification and accept the use of the Short Form CO. This requires less detail than the normal Form CO, notably with respect to information regarding the general conditions in the relevant markets (eg the structure of supply and demand, entry, R&D, cooperative agreements, trade associations) and the overall market context and efficiencies.588 Individual waivers for the Short Form CO can also be discussed.589 (p. 661) 5.524  Once the concentration has been notified, the Commission publishes (in the Official Journal) a brief Notice that sets out the names of the parties to the concentration, their country of origin, the nature of the concentration, and the economic sectors involved, as well as an indication that, on the basis of the information provided by the notifying party, the concentration may qualify for a simplified procedure. The purpose of this Notice is to give interested parties the opportunity to submit observations, in particular on any circumstances that might require a full Phase I investigation.

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5.525  The Commission will also provide the Member States with a copy of the notification as soon as it is received. 5.526  At any point during the procedure, the Commission may decide to revert to the normal merger procedure. This is notably the case if a Member State590 or a third party expresses substantiated concerns about the notified concentration within the respective time limits laid down for such comments.591 In such cases, the Commission will launch an investigation and may require the notifying parties to provide a full Form CO. The Commission, when appropriate, may also declare the original notification incomplete.592 Where a notification is declared incomplete, the time periods will be reset to zero until a full notification (if necessary using the normal Form CO) is received; in other cases, the time periods will continue to run.

(g)  Decision 5.527  In simplified cases, the Commission normally issues a short-form decision. This contains only the information already published in the Official Journal at the time of notification and a statement that the concentration is declared compatible with the internal market because it falls within one or more of the categories described in the Notice (the applicable category or categories are explicitly identified). The decision does not contain any information about the precise relevant market definition(s) or any assessment of the effects of the concentration. 5.528  The Commission publishes a notice of the fact of the decision in the Official Journal, while the text of the decision itself is made available on DG Competition’s website.

(9)  Abandonment of a Concentration, Withdrawal and Re-submission of a Notification, Change of an Authorized Transaction (a)  Abandonment 5.529  Where the merging parties abandon their concentration, the Commission loses jurisdiction over the case and the merger procedure is closed. The evolution of the practice of the Commission and the Court’s case law, as well as a modification introduced in the Merger (p. 662) Regulation, have provided clarity for when a transaction is to be deemed to have been abandoned.593

(b)  Withdrawal of a Notification 5.530  A notification can be withdrawn during either Phase I or Phase II. However, in Phase II the Commission will require the merging parties to demonstrate that they have abandoned the concentration. In the absence of such a demonstration, the Commission will continue with its investigation and issue a final decision. By contrast, during the Phase I procedure the Commission generally accepts the withdrawal of the notification by the parties even when they do not abandon the concentration, as long as they do not take any steps to implement the transaction and declare their intention to re-submit a notification. Where the notification is withdrawn, the deadlines are reset and will not restart until a new notification is received. Phase I withdrawals, therefore, tend to be strategic, with the aim of obtaining additional time to gather the information necessary to convince the Commission of the absence of competition concerns or to prepare an offer of remedies, in both cases with the final objective of avoiding the opening of an in-depth investigation.

(c)  Change in the Transaction Structure 5.531  In some cases, the merging parties may decide to change the structure of the transaction that was authorized by the Commission. The original clearance decision will generally cover non-significant modifications (eg minor changes in shareholdings, changes in the offer price of the public bid or changes in the corporate structure that do not affect the relevant situation of control). By contrast, changes affecting the nature of the concentration (eg if an acquisition of control by one party over another is replaced by a From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

legal merger between the parties) will be considered to result in a new concentration and a new notification will be required.594

(10)  Particular Procedures 5.532  The Merger Regulation sets out a number of additional procedures aimed at ensuring the respect by the undertakings of their obligations under the Regulation and the effectiveness of the EU merger control regime. 5.533  These particular procedures include: (a) the adoption of interim measures appropriate to restore or maintain conditions of effective competition; (b) the revocation of a clearance decision or of a decision finding that the notified concentration falls outside the scope of the Merger Regulation; (c) the order to submit to an inspection and the request for information by decision; and (d) the imposition of fines or periodic penalty payments.595

(p. 663) (a)  Interim Measures (i)  General 5.534  The Merger Regulation entrusts the Commission with the power to take interim measures appropriate to restore or maintain conditions of effective competition, either before or after the adoption of its final decision on the compatibility or incompatibility of the concentration with the internal market.596 5.535  This power is available only in three well-defined scenarios, namely where a concentration: (a) has been implemented in contravention of the suspension obligation and has not yet been authorized or prohibited; (b) has been implemented in contravention of a condition attached to a (Phase I or II) clearance decision; or (c) has already been implemented and has been declared incompatible with the internal market.

(ii)  Conditions Necessary for the Imposition of Interim Measures 5.536  All three scenarios require that the concentration must have already been implemented; in the absence of implementation no measures should be necessary to restore or maintain effective competition. However, it appears that, in practice, the Commission does not have to wait for full implementation of the concentration; it can adopt interim measures where the merging parties have undertaken any implementing steps in violation of the suspension obligation set out in Article 7 of the Merger Regulation. This may be particularly relevant in cases where several transactions are deemed to constitute one single concentration (including cases of ‘parking transactions’)597 or in cases of acquisition of de facto control.598 5.537  Further, interim measures are only available where the implementation of the concentration has been or becomes unlawful, either because the merging parties have not respected the suspension obligation599 or have contravened a condition of the clearance decision or because the concentration has ultimately been prohibited. Given this condition, the adoption of interim measures may eventually be combined with the imposition of fines; moreover, compliance with a decision imposing interim measures may be enforced through the imposition of periodic penalty payments.600

(iii)  Scope of Interim Measures 5.538  The Merger Regulation is silent as to the precise measures that may be adopted on an interim basis. In principle, the only limitations seem to derive from the requirement that such measures must be appropriate to restore or maintain conditions of effective competition and from the general principle of proportionality (to be understood in this context as the need to balance the actual or potential harm to competition in the relevant

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markets and the effects of the envisaged measures on the merging parties and ultimately third parties). (p. 664) 5.539  Since the Commission has never imposed interim measures in a merger case, there are no examples that can be extracted from practice. However, it can be assumed that the most likely measures would be those aiming at preventing the acquiring undertaking from exerting control over (or obtaining commercially sensitive information from) the target or at preventing the amalgamation of the merging parties’ activities.601 5.540  Such measures could be either negative (eg prohibition of exerting voting rights, nominating board members or managers, selling of assets, exchanging information) or positive (eg nomination of a monitoring trustee, hold-separate or ring-fencing obligations, reporting duties). Structural measures, such as dissolution orders, do not seem to be excluded by the Merger Regulation, but appear a fortiori to be unlikely in practice.602

(iv)  Process 5.541  By way of derogation to the general rules in Article 18 of the Merger Regulation, interim measures may be taken provisionally, without the undertakings concerned being heard,603 provided that the Commission gives them the opportunity to make known their views as soon as possible after the adoption of its provisional decision and before the Commission takes the final decision (confirming, amending, or annulling its provisional decision).604

(b)  Revocation of a Clearance Decision 5.542  The Commission may revoke a clearance decision or a decision finding that a notified concentration falls outside the scope of the Merger Regulation in cases where such a decision was based on incorrect information (for which one of the undertakings is responsible or it was obtained by deceit) or where the undertakings concerned have committed a breach of an obligation attached to the decision.605 5.543  As yet, only one decision has ever been revoked: an unconditional clearance in Phase I, the Commission having discovered, further to a complaint, that an affected market had not been identified in the notification. After the revocation, the merging parties submitted a new notification of the transaction, which was cleared again, this time with commitments.606

(p. 665) (c)  Inspections and Requests for Information by Decision 5.544  The Commission may order undertakings and associations of undertakings to submit to inspections, although this is used infrequently in practice.607 The decision ordering the inspection must specify its subject matter and purpose and set the date on which it is to commence.608 The Commission must consult in advance the competent authority of the Member State in whose territory the inspection is to be conducted (see further Section C. 5(a) for liaisons with Member States in relation to inspections).609 5.545  The Commission may also require a person, an undertaking or an association of undertakings to provide information by decision (as opposed to by simple request for information).610 Such a decision has to state the legal basis and the purpose of the request, specify the information required and fix the time limit within which it is to be provided.611 Failure to reply or to provide complete information may lead to the imposition of fines or periodic penalty payments.612 5.546  In both cases, the decision must indicate the penalties that may be imposed on the recipient if it fails to comply and the right of the recipient to have the decision reviewed by the Court of Justice.

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5.547  The time periods for the assessment of the concentration may be suspended where, owing to circumstances for which one of the undertakings involved in the concentration is responsible, the Commission has had to request information by decision pursuant to Article 11 or to order an inspection by decision pursuant to Article 13.613

(d)  Imposition of Fines and Periodic Penalties (i)  Fines 5.548  The Commission may impose fines in cases of intentional or negligent breach of the obligations under the Merger Regulation. These relate to both procedural and substantive violations. 5.549  The most serious infringements of the Merger Regulation concern non-respect by the merging parties of their fundamental obligations, namely: (a) failure to notify the concentration prior to implementation;614 (b) implementation before the concentration has been authorized or after it has been prohibited;615 (c) failure to comply with a separation decision or a (p. 666) decision imposing interim measures;616 and (d) failure to comply with a condition or an obligation imposed by a clearance decision or a decision granting a derogation to the suspension obligation.617 In such cases, the amount of the fine may be up to 10 per cent of the aggregate turnover of the undertakings concerned. 5.550  The Commission may also impose fines, under certain circumstances, when the merging parties or third parties do not cooperate with the merger investigation. In particular, the following conduct may trigger liability: (a) supplying incorrect or misleading information (whether in the notification, in the reply to a request for information or, more generally, in any other submission);618 (b) supplying incomplete information or not supplying information within the required time limit in response a formal request for information;619 and (c) refusing to submit to an inspection ordered by decision or, during the inspection, producing the required records in incomplete form, refusing to answer questions, or giving incomplete, incorrect, or misleading answers or breaking the official seals affixed.620 These are typically considered to be less serious infringements, and the amount of the fine may not exceed 1 per cent of the aggregate turnover of the undertaking(s) concerned.621 5.551  In fixing the amount of the fine, the Commission shall have regard to the nature, gravity, and duration of the infringement.622 The more significant the potential effect on competition, the larger the fine. Similarly, the attitude of the undertakings concerned (whether the infringement was intentional or negligent or whether the undertaking cooperated with the Commission after the violation was discovered) may also ultimately affect the amount of the fine. The practice of the Commission seems also to have evolved in that regard. In 1998, in the first decision imposing a fine for failure to notify and to respect the standstill obligation, the amount of the fine was €33, 000.623 In 2009, a similar infringement triggered a fine of €20 million.624 While the circumstances may not have been identical, the increase in the amount of the fines undoubtedly evidences a tougher stance by the Commission regarding infringements, particularly those of a substantive nature. 5.552  In any event, decisions imposing fines in merger proceedings are relatively rare: as at 30 June 2013, the Commission had adopted only nine such decisions. 5.553  The limited use of the Commission’s fining power may be explained by the fact that the merging parties typically have every incentive to cooperate fully in the investigation of the case. As for third parties, their role in the procedure is less central; however, obtaining complete and correct information from third parties (notably from the few existing players in oligopolistic markets) may prove indispensable for the assessment of a concentration and

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the Commission may be increasingly inclined to use its powers to ensure that such information is submitted in a timely fashion.

(p. 667) (ii)  Periodic Penalty Payments 5.554  The Commission may impose periodic penalty payments to compel an undertaking to fulfil its obligations without delay. In particular, the Commission may use this means to induce an undertaking: (a) to supply complete and correct information or to submit to an inspection (if the Commission has so requested or ordered by decision);625 (b) to comply with an obligation imposed by a clearance decision or a decision granting a derogation to the suspension obligation;626 or (c) to comply with measures ordered by a separation decision or a decision imposing interim measures.627 5.555  In relation to the procedure for imposing periodic penalty payments, the final amount of the penalty is not determined until the undertakings have satisfied the obligation that the penalty is intended to enforce (until that moment the total period of the infringement is not known). In practice, the Commission therefore first imposes the periodic penalty payment on a provisional basis and, once the undertakings concerned have complied with their obligation, sets the definitive amount.628

Footnotes: 363

  OJ 2004 L133/1. Regulation 802/2004 was amended by Commission Regulation (EC) No 1033/2008 of 20 October 2008, OJ 2008 L279/3 and by Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013, OJ 2013 L336/1. 364 

Merger Regulation, recitals 3–5.

365

  Merger Regulation, Art 4.

366

  Merger Regulation, Art 7.

367

  Merger Regulation, Art 21. The EU merger control regime is based on an administrative system (decision by the Commission and subsequent control of its legality by the CJ), as opposed to a prosecutorial system (the agency must challenge the concentration before a court), prevailing in some other jurisdictions. 368

  Merger Regulation, Arts 4(4) and 22.

369

  Merger Regulation, Arts 14 and 15.

370

  Merger Regulation, Arts 11–13.

371 

Merger Regulation, Arts 6, 8, and 10.

372

  Merger Regulation, Art 18.

373

  Merger Regulation, Arts 4, 9, 12, 19, 21, and 22.

374

  Merger Regulation, Art 17.

375  376

Merger Regulation, Art 20.

  Merger Regulation, Arts 16 and 21(2) and, more generally, Art 263 TFEU.

377

  The main provisions on time limits are contained in Art 10 of the Merger Regulation and Chapter III (Articles 7–10) and Arts 19, 22, and 24 of the Implementing Regulation. Only in exceptional (and quite atypical) circumstances is the merger control procedure not subject to deadlines: this is the case, in particular, of Phase I and Phase II decisions reexamining a concentration after the revocation of the initial authorization, as well as of Phase II follow-up decisions where a concentration has been implemented in contravention

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of a condition (Merger Regulation, Art 6(3) and (4) and Art 8(7); see also Art 7(3), concerning decisions granting a derogation of the suspension obligation). 378

  Merger Regulation, Art 10(6). This legal presumption is without prejudice to the referral mechanism set out in Art 9. In the only case so far where the Commission (inadvertently) allowed the legal deadline to expire without adopting a decision, the assessment of the concentration was ultimately referred to the authorities of a Member State, namely Germany (cf Case COMP/M.330 MC Cormick/CPC/Rabobank/Ostmann (1993), para 79); the situation arose due to an error in the calculation of the legal deadlines. 379

  Other important time limits are imposed on the Commission and Member States’ authorities in the context of referral requests and for the authorization of State measures aimed at protecting legitimate interests other than competition. See Sections C.2 and C. 3(b). 380

  Merger Regulation, Art 10(1), (3), and (4). The suspension of time limits is further developed in Art 9 of the Implementing Regulation. 381

  All these texts can be found on the Commission webpage at . The Commission regularly publishes a comprehensive compilation of all EU texts relevant for merger control (‘EU Competition Law Rules Applicable to Merger Control’): see . 382

  The Merger Regulation only uses this concept in recital 25, while the Implementing Regulation merely makes passing references in para 1(7) of Annex I (Form CO), para 1(9) of Annex II (Short Form), and Section 1(6) of Annex III (Form RS). 383

  Merger Regulation, Art 4(2), and Implementing Regulation, Art 11(a).

384

  For the identification of the notifying parties in other types of transactions, see Section D.5(e). 385

  Jurisdictional Notice, Section II (Notion of undertaking concerned). The undertakings concerned are those whose respective turnover will be taken into consideration in order to establish whether a concentration has an EU dimension and falls thus within the scope of the Merger Regulation. See Section B.8(a). 386

  Implementing Regulation, Art 11(b).

387

  The functioning of the Commission is based on the principle of collegiality. All decisions of the Commission are taken by the College of Commissioners as a whole, subject to certain exceptions for ‘acts of management or administration’ which can be delegated to individual Commissioners. See further Table 5.7 for decisions in the context of merger control. 388

  The power to adopt certain merger decisions has also been delegated to the Director General of DG Competition. See further Table 5.7. 389

  The functional structure and organizational chart of DG Competition can be found at . 390

  The Merger Network includes the different sectoral merger units in DG Competition (currently B3: energy and environment; C5: information, communication, and media; D6: financial services; E4: basic industries, manufacturing, and agriculture; and F4: transport, post, and other services), as well as the horizontal merger unit (A2: merger case support and policy).

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391

  ‘Officials’ must be understood here as including detached national experts and contract and temporary agents working for DG Competition. 392

  Decision 2011/695 of the President of the European Commission of 13 October 2011, on the function and terms of reference of the hearing officer in certain competition proceedings, OJ 2011 L275/29. 393

  Most commonly, the Directorates General for Enterprise and Industry (ENTR), Economic and Financial Affairs (ECFIN), Health and Consumers (SANCO), Energy (ENER), Internal Market and Services (MARKT), and Mobility and Transport (MOVE). 394

  Merger Regulation, Art 18(4), and Implementing Regulation, Art 11(c). Members of the administrative or management bodies of the undertakings concerned or recognized representatives of their employees, as well as consumer associations (where the concentration concerns products or services used by final consumers) are in principle entitled to be heard, upon application. Competitors, suppliers, and customers who have actively participated in the investigation are normally also deemed to have a sufficient interest. According to Art 16 of the Implementing Regulation, third persons applying to be heard will be informed by the Commission in writing of the nature and subject matter of the procedure and will be given a time limit within which they may make known their views; at their request, the Commission may afford them the opportunity to participate in the formal hearing. 395

  The Merger Best Practices refer to complainants, identified as third parties who wish to express competition concerns as regards the transaction or to put forward views on key market data or characteristics that deviate from the notifying parties’ position (para 37), and provides for the possibility of inviting them to triangular meetings, together with the notifying parties and the Commission services (paras 38 and 39). The Court has recognized the obligation of the Commission to conduct a thorough and impartial examination of the complaints on jurisdiction made to it during the merger procedure and to provide reasoned answers to the complainant’s arguments: Case C-170/02 P Schlüsselverlag J. S. Moser and Others v Commission [2003] ECR I-9889, paras 27 and 28, and Case T-417/05 Endesa v Commission [2006] ECR II-2533, para 100. 396

  For an example of a very active complainant, see the role played by the Independent Music Publishers and Labels Association (Impala) in the Sony/BMG saga. Impala opposed from the outset the concentration whereby Bertelsmann and Sony Corporation of America were to merge their global recorded music businesses. After the Commission authorized this transaction (cf Case COMP/M.3333 Sony/BMG (2004)), Impala successfully challenged the legality of the Commission’s decision before the GC (Case T-464/04 Impala v Commission [2006] ECR II-2289). Further to this judgment, the Commission re-examined the concentration, with Impala playing again an active role (eg it suggested different theories of harm during the market investigation) and declared the transaction compatible with the internal market (Case COMP/M.3333 Sony/BMG II (2007)). Shortly thereafter, the CJ set aside the judgment of the GC and referred the case back to the latter (Case C-413/06 P Bertelsmann and Sony Corp of America v Independent Music Publishers and Labels Association (Impala) [2008] ECR I-4951). The GC ultimately decided that Impala’s actions against the 2004 and 2007 decisions had become devoid of purpose (Orders in Cases T-464/04 and T-229/08 respectively). 397

  Merger Regulation, Art 19.

398

  The EU Courts review the legality of merger decisions and have full jurisdiction in relation to the fines imposed by the Commission. They are also competent regarding actions for damages against the Commission concerning its implementation of the merger rules.

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399

  All days other than Saturdays, Sundays, and Commission holidays as published in the Official Journal before the beginning of each year (Implementing Regulation, Art 24). The website of DG Competition traditionally publishes, among other practical information, the Commission’s holidays for the current and following year: 400

  Deadlines under the 1989 Merger Regulation were expressed in weeks/months.

401

  As to the specific rules on the beginning and expiry of time limits and on the compliance with deadlines, see Arts 7, 8, and 10, respectively, of the Implementing Regulation. Time limits are met when, before the end of the relevant period, the Commission decision is adopted or the Member State informs the Commission in writing, makes or joins a request in writing, or informs the undertakings concerned, as the case may be. 402

  If the Commission services reach the preliminary conclusion that the transaction does not fall within the scope of the Merger Regulation, they inform the undertakings accordingly. At this point, pre-notification contacts are generally discontinued at EU level and the companies turn to the competent NCA(s), with a view to the submission of possible national filings. While companies remain free, irrespective of such a preliminary conclusion, to notify the transaction to the Commission (and thus obtain a formal decision on jurisdiction, either negative or positive, pursuant to Art 6(1)(a) and Art 6(1)(b), (c) respectively, of the Merger Regulation), in practice they hardly ever do so. 403

  Merger Regulation, Art 10(1).

404

  Merger Regulation, Arts 4(4) and 9.

405

  Merger Regulation, Art 7(3).

406

  Merger Best Practices, Section 3, paras 5–25.

407

  See eg G. Drauz, P. McGeown, and B. Record, ‘Recent Developments in EU Merger Control’ [2013] J Eur Comp L & Practice. 408

  See eg Vice-President Almunia, ‘Merger review: Past evolution and future prospects’, speech at the Conference on Competition Policy, Law and Economics, Cernobbio, 2 November 2012 (SPEECH 12/773). 409

  The template of, and instructions for completing, the case allocation request can be found at . 410

  Exceptionally, in cases presenting a particular (and duly justified) urgency, companies may contact the management of the relevant sectoral unit in order to try to accelerate this process and obtain a case team without delay. This could be the case, eg, if the parties intend to submit an urgent request for derogation from the suspension obligation. 411

  Merger Regulation, Art 17; Implementing Regulation, Art 18.

412

  A waiver is not required in order for the Commission to exchange information with Member States, even at the pre-notification stage. 413

  For a detailed discussion of such consultations, see Section B.1(c).

414

  Particularly, referrals pursuant to Art 4(4) and (5) of the Merger Regulation. See Section C.2. 415

  Such contacts are likely to enhance the efficiency of the authorities’ respective investigations, lessen the burden on the merging parties and third parties, and reduce the scope of divergent or incompatible outcomes. See, in that regard, the US–EU Merger Working Group Best Practices on Cooperation in Merger Investigations (October 2011). See, more generally, Section C.7. A template waiver authorizing contacts with other

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agencies can be found at . 416

  Pre-notification contacts may be used, in particular, to discuss the necessity or appropriateness, and if so the scope and format, of submitting quantitative data and the development of econometric models. Such exercises normally require careful and advance planning if they are to be ready in time. See Best Practices for the submission of economic evidence and data collection in cases concerning the application of Articles 101 and 102 TFEU and in merger cases (October 2011). For an illustration of the treatment of economic and econometric submissions, see Case COMP/M.4439 Ryanair/Aer Lingus (2007), paras 33–40. 417

  Effective cooperation between merger agencies worldwide is made easier if there can be at least some alignment of the timing of the various investigations in a case. This is not only true with regard to the substantive assessment of the case, but also concerning discussions on possible remedies and their subsequent implementation. Such an alignment is in the interests of both the agencies and the merging parties. 418

  Merger Regulation, Art 7(3). See Section D.5(b).

419

  The timing for submitting a draft is in the hands of the parties and will vary from case to case, depending, eg, on complexity and number of issues raised. 420

  Implementing Regulation, Art 4(2). Waivers usually refer to some of the information required on the general conditions in the affected markets and on the overall market context and efficiencies (Form CO, sections 8 and 9 respectively). 421

  In simplified cases, a Short Form CO is used, which already limits the scope of the information to be provided. 422

  In some cases, notifying parties may have a particular reason for wanting to notify quickly, be it because they have to implement the notification without delay (for financial, corporate, tax, or auditing reasons) or, in the case of parallel transactions in already concentrated markets, because they want to ensure their ‘priority’ position in the substantive assessment. For an illustration of the latter, see Cases COMP/M.6203 Western Digital Ireland/Viviti Technologies (2011) and COMP/M.6214 Seagate Technology/The HDD Business of Samsung Electronics (2011), where the Commission confirmed that it carries out its merger reviews on a strict priority order, based on the date of notification (ie the transaction notified first is assessed without regard to a transaction notified later; the latter, in contrast, is assessed taking into account the impact on the market of the first transaction). 423

  Merger Best Practices, para 22.

424

  Merger Regulation, Art 4(1). See Section D.5(d) for a discussion of ‘triggering events’.

425

  The Commission does not have the power to impose penalty payments on the undertakings concerned in order to compel them to notify, since this possibility is not foreseen in Art 15 (which governs penalty payments). See Section D.10(d). 426

  See eg Cases COMP/M.709 Telefónica/Sogecable/Cablevisión (1996), where the transaction was notified and later abandoned after the Commission decided to open Phase II proceedings, and COMP/M.2650 Haniel/Cementbouw/JV (CVK) (2002), where the operation was notified and ultimately cleared with remedies in Phase II. In that case, the parties appealed the Commission’s decision before the GC (and later the CJ), claiming notably that the Commission was not competent to examine the transaction under the Merger Regulation (see Cases T-282/02 Cementbouw Handel & Industrie v Commission

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[2006] ECR II-319, paras 23–164, and C-202/06 P Cementbouw Handel & Industrie v Commission [2007] ECR I-12129, paras 31–48). 427

  See U. von Koppenfels in Drauz and Jones, EU Competition Law (n 9), paras 6.48–6.51.

428

  Merger Regulation, Art 14(2)(a). See Section D.10(d).

429

  The exception covers acquisitions of shares from various sellers (known as ‘creeping bids’), but not the acquisition of a controlling shareholding from a single seller, even if it is followed by a public bid over the remaining shares. For an illustration, see Case COMP/M. 4730 Yara/Kemira GrowHow (2007), paras 6 and 7. Yara had acquired a 30 per cent shareholding in GrowHow from the State of Finland (which gave it control over the target) and later launched a public bid for the remaining shares. The Commission concluded that the Art 7(2) exemption was not applicable (in particular, that the acquisition of the 30 per cent shareholding was not to be considered as the first step of the public bid) and took the view that an infringement of the standstill obligation and of the notification requirement could not be excluded, but ultimately did not impose a sanction. See also Case COMP/M. 6850 Marine Harvest/Morpol (2013). 430

  Also in Art 7(2) cases where the acquirer intends to exercise the applicable voting rights to maintain the full value of its investments (eg in case where there is an urgent need to restructure the debt of the target or to proceed to the purchase of a business to complement or develop the latter’s scope of activities). 431

  Merger Regulation, Art 7(3). The parties may apply for the derogation at any time, either before or after notification. 432

  See eg Cases COMP/M.6215 Sun Capital/Polestar UK Print (2011) and COMP/M.6812 SFPI/DEXIA (2012). 433

  See eg Cases COMP/M.5384 BNP Paribas/Fortis (2008); COMP/M.5518 Fiat/Chrysler (2009); and COMP/M.5721 Otto/Primondo Assets (2009). 434

  See eg Case COMP/M.5590 3i Group/HIG Capital/Volnay (2009), paras 26–30. See also recital 34 to the Merger Regulation. 435

  At 30 November 2013, 111 derogations had been granted since 1991 (an average of less than five per year). Interestingly, since the start of the economic crisis in 2008, no significant increase in the number of derogations granted seems to have taken place (six derogations were granted in 2008, five in 2009, one in 2010, three in 2011, one in 2012, and none in the first eleven months of 2013), notwithstanding the fact that the crisis created numerous instances of companies experiencing serious financial difficulties, whose viability may have sometimes depended on them being acquired by a more solvent undertaking (or, in some cases, on their creditors exchanging debt for equity and thus acquiring control, prior to investing in the company). 436

  See eg Cases COMP/M.6137 Citigroup/Maltby Acquisitions (2011).

437

  In Case COMP/M.5969 SC Johnson/Sara Lee (2011), the Commission rejected a derogation request aimed at allowing the parties to execute the concentration outside the EEA; the Commission took into account that the transaction raised serious competition issues with respect to the supply of household insecticide products in a number of Member States (in fact, at the time of the derogation request, Phase II proceedings had already been initiated) and that, while the relevant markets were most probably national in scope, the Commission did not possess sufficient information to assess the extent to which the target’s activities within and outside the EEA were integrated. In general, in cases where prima facie competition concerns cannot be excluded at the outset, the Commission often encourages the merging parties, instead of requesting a derogation, to notify the

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transaction without delay and helps in speeding-up the pre-notification phase and the formal assessment of the case, in order to meet the timing constraints of the undertakings. 438

  See eg Cases COMP/M.3709 Orkla/Elkem (2005), where the derogation was subject to the condition that Orkla would not exercise any voting or other shareholder rights until the operation had been authorized, and COMP/M.5518 Fiat/Chrysler (2009), where Fiat was required to submit a complete notification to the Commission within ten working days of closing the transaction. 439

  See Art 18(1) and (2) of the Merger Regulation and Art 12(1) of the Implementing Regulation. For an illustration, see Case COMP/M.5969 SC Johnson/Sara Lee (2011), where the Commission adopted a provisional negative decision and gave SC Johnson one week from notification thereof to make known its views. 440

  Merger Regulation, Art 14(2)(a) and (b).

441

  Merger Regulation, Art 8(5) and (4), respectively.

442

  A transaction that is implemented in violation of the standstill obligation but is subsequently approved under the Merger Regulation is thus not invalid. The adoption of a clearance decision, however, does not preclude the possibility of imposing a fine on the undertaking(s) concerned for violation of Art 7 (Merger Regulation, Art 7(4), first subpara). This provision, however, does not affect the validity of transactions in securities, unless the buyer and seller knew or ought to have known that the transaction was carried out in contravention of the suspension obligation (Art 7(4), second subpara). 443

  See Case T-332/09 Electrabel v European Commission, not yet reported, Case COMP/M. 4730 Yara/Kemira GrowHow (2007), paras 6 and 7, and Case COMP/M.6850 Marine Harvest/Morpol (2013), paras 4–9. 444

  The 1989 Merger Regulation established a one-week deadline from the triggering event to file the notification, which in practice was seldom respected. In general, the prohibition on implementing a concentration before it has been authorized provides sufficient incentive for the merging parties to file the notification as soon as practicable. 445

  The Merger Regulation does not define what constitutes a ‘binding agreement’; it should probably be understood as an agreement enforceable on the parties or one whose breach brings about legal consequences, as opposed to a Memorandum of Understanding, a Letter of Intent, or any other preparatory document. 446

  Merger Regulation, Art 4(1), first para.

447

  Merger Regulation, Art 4(1), first para.

448

  See eg Cases COMP/M.6381 Google/Motorola Mobility (2012), paras 5–10, and COMP/ M.6717 Whirlpool/Alno (2012), para 7. 449

  Merger Regulation, Art 4(1), second para.

450

  Such an acquisition of control may take place by means of a purchase of shares from different shareholders and thus consist of a multitude of legal transactions. Contrary to the scenario of a contract with a single seller, it is not therefore the result of an agreed decision, but the unilateral action of the acquirer of control, and there is no way to establish ‘shared’ good faith. Contrary to public bids, there are no well-established procedural rules attaching legal consequences to the announcement of the intention to acquire control. 451

  In the Staff Working Document, Towards more effective EU merger control, 25 June 2013, the Commission raised the possibility of modifying Art 4(1) of the Merger Regulation with regards to mergers that are implemented by way of acquisition of shares via the stock exchange without a public takeover bid. The rationale of the proposal is double. On the one hand, if no public takeover bid is made or no such intention is publicly announced, the current rules do not allow for notification before the acquisition of control on the basis of a From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

‘good faith’ intention. On the other hand, the current rules do not allow for the implementation of control (notably the exercise of voting rights) once control has been acquired. The Commission seems to be considering the possibility of complementing the existing rules in order to introduce flexibility regarding the notification of these mergers. 452

  Merger Regulation, Art 4(2). Implementing Regulation, Art 2.

453

  According to Art 2(3) of the Implementing Regulation, joint notifications are to be submitted by a joint representative, who is authorized to transmit and receive documents on behalf of all notifying parties (the different parties will usually be represented by different firms, but a joint representative must be agreed upon). Joint notifications may create some practical difficulties in cases where one or several of the companies holding control pre- merger are not part of the notified transaction (or may even dislike it or oppose it for commercial reasons) and may be reluctant to be part of the merger procedure. 454

  Implementing Regulation, Art 4(1). For the practical formalities (including the number of copies of Form CO and relevant annexes), see Communication pursuant to Article 3(2) of Commission Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 (2) on the control of concentrations between undertakings, OJ 2006 C251/2. The updates and amendments to the provisions of this Communication can be found at 455

  In appropriate circumstances, the Commission can grant a waiver for some of the information. See Implementing Regulation, Art 4 (2). 456

  These concepts are explained in detail in the text of Form CO.

457

  Affected markets consist of relevant product and geographic markets (as well as plausible alternatives) on the basis of which, in the EEA territory: (a) two or more of the parties to the concentration are engaged in business activities in the same product market and where the concentration will lead to a combined market share of 20 per cent or more (‘horizontal relationships’); or (b) one or more of the parties to the concentration are engaged in business activities in a relevant market, which is upstream or downstream of a relevant market in which any other party to the concentration is engaged, and any of their individual or combined market shares at either level is 30 per cent or more, regardless of whether there is or is not any existing supplier/customer relationship between the parties to the concentration (‘vertical relationships’). See Section 6(3) of Form CO (Annex I of the Implementing Regulation, further to the changes introduced by Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013, OJ 2013 L336/1). 458

  See Section 6(4) of Form CO (Annex I of the Implementing Regulation).

459

  Merger Best Practices, paras 20 and 21.

460

  Commission Implementing Regulation (EU) No 1269/2013 of 5 December 2013 amending the Regulation (EC) No 802/2004 implementing Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, OJ 2013 L336/1, entered into effect on 1 January 2014. Under the new provisions, in cases that do not fall under the simplified procedure, merging firms would only have to submit detailed information for those markets where their share exceeds the (new) threshold for applying the simplified procedure. The Regulation also aims at ensuring that these forms provide enough information regarding the structure of the concentration and that the most important internal documents prepared by the undertakings concerned discussing the concentration are submitted. Further, the Commission will be able to adapt the format and the number of copies requested of submissions by notifying parties (eg notifications), other involved parties, and third parties, taking into account developments in information and communication technologies. For simplified cases, information requirements are tailored to the different case categories: eg a ‘super-simplified notification’ is introduced for joint ventures that are active entirely outside the EEA; for those cases, companies only need to From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

describe the transaction, their business activities, and provide the turnover figures that the Commission needs to establish jurisdiction. The information to be submitted in the Form RS is kept to a strict minimum, focusing on the crucial issues that the Commission and the Member States need to identify the best placed authority to undertake the review, such as the geographic scope of the relevant markets and the nature of the transaction. The Regulation also makes explicit that the right of access to the Commission’s file does not extend to correspondence between the Commission and NCAs and that the extension of the time period for adoption of a decision in Phase II also applies in circumstances where the undertakings concerned offer commitments less than 55 working days after the initiation of proceedings but submit a modified version thereof after working day 55. 461

  See, in particular, Implementing Regulation, Arts 2, 3, and 23 and Annexes I and II. See also, on the format of notifications and reasoned submissions, Communication pursuant to Article 3(2) of Commission Regulation (EC) No 802/2004, OJ 2006 C251/2. 462

  See .

463

  Implementing Regulation Art 5. Pursuant to Art 4(3) of the Merger Regulation, the Commission publishes the fact of the notification, specifying the date upon which it was received. 464

  eg if the notifying parties have failed to identify an affected market or a neighbouring market where potential conglomerate effects should be examined. Similarly, if the parties have not identified a subsidiary or a company in which they have a significant minority shareholding, that is active in an affected market, or if the market structure submitted by the parties (eg their market shares and those of their competitors) is largely and significantly incorrect. 465

  Merger Best Practices, para 20.

466

  This could be the case, eg, if a major competitor decides to exit the market, or if the notifying parties are awarded a new licence, patent, authorization, or contract that may significantly influence their future activities. It may also consist of an important change in the national regulatory framework in the relevant sector (eg the liberalization of regulated activities). 467

  Implementing Regulation, Art 5(2); Merger Best Practices, para 23; Merger Regulation, Art 10(1). 468

  Merger Regulation, Art 14. See Section D.10(d).

469

  This period is calculated in calendar days (as opposed to working days). Although submissions should reach the Commission within the deadline, the Commission will consider later submissions where practicable. 470

  Merger Regulation, Art 4(3), and Implementing Regulation, Art 5(5). Where the effective date of the notification is subsequently modified (eg when there are material changes in the facts contained in the notification or new information which may have a significant effect on the appraisal of the concentration is received by the Commission), a further notice is issued stating the later date. 471

  Merger Regulation, Art 6(1)(b) and (2).

472

  Merger Regulation, Art 6(1)(c).

473

  Merger Regulation, Art 10(1).

474

  Merger Regulation, Art 9(2). See Section C.2.

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475

  Implementing Regulation, Art 19(1). The notifying parties should allow some days for informal discussion of the content and form of any potential remedy with DG Competition before formally submitting remedies. 476

  Extensions pursuant, respectively, to Arts 9(2) and 6(2) of the Merger Regulation.

477

  This also includes cases where the Commission has requested information from a third party which has not been provided (or not in full) owing to circumstances for which one of the notifying parties or another involved party is responsible. Implementing Regulation, Art 9(1)(b). 478

  Merger Regulation, Art 10(4). The suspension of time limits is further developed in Art 9 of the Implementing Regulation. 479

  Case COMP/M.330 McCormick/CPC/Rabobank/Ostmann (1993), para 79.

480

  After this time, the case team has to carry out its assessment of all the information and evidence gathered (if necessary in consultation with other services within DG Competition), before proposing a line to take to DG Competition’s hierarchy, and ultimately bringing the case for decision to the Commissioner for Competition. Sufficient time has to be allowed for drafting the decision and for consulting the Legal Service and other associated services, before the decision can be formally adopted. 481

  According to Art 11 of the Merger Regulation, the Commission may require information by simple request or by decision. This distinction is particularly important with regard to the consequences of not replying within the time limit or of supplying incomplete information. See para 5.550. 482

  See notably Arts 11–15 of the Merger Regulation. For the consequences of a failure to comply with information requests, see para 5.550. As to the protection of business secrets, see Section D.7(i). 483

  Merger Best Practices, para 48.

484

  Merger Best Practices, para 33(a).

485

  Contrary to the situation that arises in Phase II proceedings, during Phase I the undertakings concerned do not need to demonstrate that they have abandoned the concentration before withdrawing the notification. See DG Competition’s Information note on Art 6(1)c, 2nd sentence, of Regulation 139/2004 (abandonment of concentrations). 486

  While the Commission could decide not to adopt any decision and let the concentration be declared compatible with the internal market by positive administrative silence, pursuant to Art 10(6) of the Merger Regulation, the practice of the Commission has always been to close every single case with a decision. Case COMP/M.330 McCormick/CPC/ Rabobank/Ostmann (1993) is the only case where the Commission (inadvertently) let the time period expire without adopting a decision pursuant to Art 6 of the Merger Regulation. 487

  For a discussion of commitments (remedies), see Section F.

488

  Merger Regulation, Art 6(5).

489

  In such cases, exceptionally, the decision may be notified only to the external counsel of the undertakings concerned, which in turn will prepare a version redacting the confidential information vis-à-vis the different notifying parties. A special power of attorney is required in order to do so. Parties may approach DG Competition for practical guidance in that regard. 490

  Merger Regulation, Art 6(5).

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491

  The latest press releases in merger cases can be found at 492

  For a discussion of what constitutes business secrets and other confidential information, see Section D.7(i). Merger decisions do not contain, in principle, confidential information obtained from third parties (when they exceptionally do contain such information, it is generally presented in an anonymized and/or aggregated manner). 493

  Confidential information is either completely redacted (and thus replaced by ‘[…]’) or, in case of market shares, replaced by ranges (eg ‘[10–20%]’; for practical guidance on the latter see Market share ranges in non-confidential versions of merger decisions, at ). 494

  Hearing Officers Decision (n 392), Art 8.

495

  Recital 42 to the Merger Regulation states that, in order to increase transparency, merger decisions which are not of a merely procedural nature should be widely publicized. Merger decisions can be found at as well as in Eur-Lex (). 496

  See Implementing Regulation, Art 7.

497

  Implementing Regulation, Art 19(2).

498

  Art 18(3) of the Merger Regulation states unambiguously that the rights of the defence shall be fully respected in Phase II proceedings. 499

  Implementing Regulation, Art 11. See Section D.2(d).

500

  Merger Regulation, Art 10(3), first subpara.

501

  Merger Regulation, Art 10(3), first subpara.

502

  eg in order to explore with the Commission the possibility of submitting remedies before the adoption of the SO, or to have additional time to prepare an economic submission aimed at dispelling the serious doubts identified in the Art 6(1)(c) decision. 503

  Merger Regulation, Art 10(3), second subpara.

504

  See Merger Regulation, Arts 11 and 13 and Implementing Regulation, Art 9. See also Case T-145/06 Omya v Commission [2009] ECR II-145, where the notifying party unsuccessfully argued that the Commission had misused its powers by adopting a decision pursuant to Art 11(3) of the Merger Regulation in order to secure an extension of the legal deadline (cf paras 98–111). 505

  Merger Regulation, Art 10(2).

506

  If new key submissions are received after this initial access to key documents but before granting access to the file. 507

  Merger Best Practices, paras 45 and 46.

508

  The process as regards initial access to key documents is less formalized than for granting access to the file. 509

  Merger Best Practices, para 33(b).

510

  eg in Case COMP/M.4439 Ryanair/Aer Lingus (2007), the Commission assigned an independent consultant to carry out a customer survey at Dublin airport to obtain a representative sample of responses from customers who departed from Dublin in relation to the routes on which both merging parties provided services (see Annex I of the decision). The questions were sent to Ryanair and Aer Lingus for consultation before the customer

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survey was carried out; the survey itself was also communicated to them after it was completed. 511

  Triangular meetings are voluntary, are normally chaired by senior DG Competition management, are carried out on the basis of an agenda established by DG Competition after consultation with all parties that agree to attend the meeting, and are generally preceded by a mutual exchange of non-confidential submissions. See Merger Best Practices, paras 38 and 39. 512

  See Best Practices: economic evidence (n 416).

513

  See eg Cases COMP/M.5907 Votorantim/Fischer/JV (2011) and COMP/M.6106 Caterpillar/MWM (2011). 514

  See eg Case COMP/M.5675 Syngenta/Monsanto’s Sunflower Seed Business (2010).

515

  Merger Best Practices, para 33(c). The meeting gives the parties advance knowledge about the future content of the SO, including the main theories of harm and the markets where objections will be raised. Issues of substance and process can be discussed during the meeting. 516

  The right of the parties concerned to be heard before the adoption of any individual decision adversely affecting them is a fundamental right of EU law recognized by the Charter of Fundamental Rights (see, in particular, Art 41 thereof). 517

  Merger Regulation, Art 18(1). An SO is required before taking any decision provided for in Arts 6(3), 7(3), 8(2)–(6), 14, and 15 of the Merger Regulation. The Commission can clear the transaction in Phase II without issuing an SO if the serious doubts are dispelled after its in-depth investigation or if the notifying parties submit adequate remedies in anticipation of the SO. 518

  Implementing Regulation, recital 12 and Art 13(2). The notifying parties are required to identify any business secrets contained in the SO. 519

  Merger Regulation, Art 18(3). See the judgments in Cases T-310/01 Schneider Electric v Commission [2002] ECR II-4071; T-464/04 Impala v Commission [2006] ECR II-2289; and C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951. 520

  The procedural rights which are triggered by the sending of the SO (see Section D.7(f) and (i)) apply mutatis mutandis where an SSO is issued, including the right of the parties to request an oral hearing. By contrast, the letter of facts gives undertakings only the opportunity to provide written comments on the new evidence within a fixed time limit. 521

  Implementing Regulation, recital 12 and Art 13(2).

522

  Applications to be heard from third parties claiming sufficient interest must be made in writing, explaining the applicant’s interest in the outcome of the procedure. The decision as to whether these third persons are to be heard is taken by the hearing officer, in accordance with the requirements of Art 18(4) of the Merger Regulation, after consulting the director responsible in DG Competition. Where the hearing officer considers that an applicant has not shown a sufficient interest, he will inform the applicant in writing of the reasons thereof, setting a time limit within which the latter may make known its views. If the applicant’s written submission does not lead to a different assessment, that finding shall be stated in a reasoned decision. The hearing officer shall inform the parties of the identities of any interested third persons that have been granted the right to be heard, unless such disclosure would significantly harm a person or undertaking. See Implementing Regulation, Arts 11 and 16, and Hearing Officers Decision (n 392), Art 5.

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523

  Implementing Regulation, recital 13 and Art 16(1). See also Merger Regulation, Art 18(4). 524

  Merger Best Practices, para 36.

525

  Merger Regulation, Art 18(3), and Implementing Regulation, Arts 13 and 17(1). The relevant framework for the exercise of the rights set out in these provisions is provided in the Commission Notice on the rules for access to the Commission file in cases pursuant to Articles [101 and 102 TFEU], Articles 53, 54 and 57 of the EEA Agreement and Council Regulation (EC) No 139/2004, OJ 2005 C325/7, complemented by the relevant provisions (in particular Chapter 4) of the Hearing Officers Decision (n 392). See also Merger Best Practices, paras 42–44. 526

  Access to the file is not granted in merger cases where an SO has not been adopted and, in any event, not until the SO is issued; Case T-210/01 General Electric v Commission [2005] ECR II-5575, paras 694–696. However, there is a possibility to access key documents at the beginning of the Phase II (see Section D.7(d)). 527

  Access to File Notice, para 26. Access to the file is normally granted by means of CDROM(s), DVD(s), or other electronic data storage devices, or, less frequently nowadays, through copies of the accessible file in paper form sent by mail or by inviting the undertakings to examine the accessible file on the Commission’s premises. The parties are also given an enumerative list of documents setting out the content of the Commission file, organized chronologically by date of receipt and indicating for each document, whether it is totally accessible, partially accessible, or non-accessible. Access is granted to evidence as contained in the Commission file, in its original form; the Commission is under no obligation to provide a translation of documents. See Access to File Notice, paras 44 and 45. 528

  Merger Regulation, Art 18(1) and (3); Implementing Regulation, Art 17(1); Access to File Notice, para 28. 529

  Implementing Regulation, Art 17(3) and Access to File Notice, para 33. Documents collected during the investigation which, following a more detailed examination, appear to be unrelated to the subject matter of the case, may be returned by the Commission to the undertaking(s) from which they were obtained and will no longer constitute part of the file. The Commission does not, however, seem to make use of this possibility very often during merger investigations. See also Access to File Notice, paras 8–10. 530

  Access to File Notice, para 12.

531

  eg referral submissions by a Member State under Art 9(2) of the Merger Regulation. Access to File Notice, paras 15 and 16. 532

  Access to File Notice, para 13. Such agreed minutes are part of the evidence that can be relied on by the Commission. 533

  See Access to File Notice, para 18.

534

  Access to File Notice, para 19. When disclosing information about natural persons, regard should be taken to Regulation (EC) No 45/2001 of the European Parliament and of the Council of 18 December 2000 on the protection of individuals with regard to the processing of personal data by the Community institutions and bodies and on the free movement of such data, OJ 2001 L8/1. 535

  Implementing Regulation, Art 18(2) and (3) and Access to File Notice, paras 35–38. The non-confidential version must be submitted, if possible, at the same time as the submission of the confidential version, although the Commission may set a deferred time limit to do so. The non-confidential versions and the descriptions of the deleted information must be prepared in a manner that enables any party to determine whether the information deleted

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is likely to be relevant for its defence and decide whether to request the Commission to grant access to the information claimed to be confidential. 536

  As a general rule, the Commission presumes that information pertaining to the parties’ turnover, sales, market-share data, and similar information which is more than five years old is no longer confidential. 537

  Access to File Notice, paras 22, 23, and 40–42.

538

  Hearing Officers Decision (n 392), Art 8. Where appropriate in order to balance the effective exercise of a party’s rights of defence with legitimate interests of confidentiality, the hearing officer may decide that parts of the file are made accessible to the party requesting access in a restricted manner. 539

  See Commission Notice on best practices for the conduct of proceedings concerning Articles 101 and 102 TFEU, OJ 2011 C308/6, paras 95–98. Although these provisions concern investigations under Arts 101 and 102, the processes described therein are also used in a similar manner in merger proceedings. 540

  Access to File Notice, para 47, and Hearing Officers Decision (n 392), Art 7.

541

  Access to File Notice, para 48. In the Staff Working Document, Towards more effective EU merger control, 25 June 2013, the Commission raised the possibility of amending the Merger Regulation to ensure, notably through the ability to impose sanctions, that parties and third parties that are given access to non-public commercial information of other undertakings exclusively for the purpose of the proceeding (eg through access to the file or being informed of the subject matter of the proceeding for the purpose of participating in an oral hearing) do not use or disclose such information for other purposes 542

  Regulation (EC) No 1049/2001 of the European Parliament and of the Council of 30 May 2001 regarding public access to European Parliament, Council and Commission documents, OJ 2001 L145/43. 543

  Access to File Notice, para 2. Third parties with no right to access to file under the merger rules may try to use Regulation No 1049/2001 to obtain the disclosure of documents in a merger file. However, for as long as the case is pending (either because the administrative procedure before the Commission is ongoing or because an appeal before the EU Courts has been lodged and has not yet been ultimately resolved), the Commission is entitled to refuse access on the basis of the exceptions contained in Article 4(2) and (3) of that Regulation. See Case C-404/10 P Commission v Editions Odile Jacob, not yet reported, partially setting aside the operative part of the judgment in Case T-237/05 Editions Odile Jacob v Commission [2010] ECR II-2245. 544

  Implementing Regulation, Arts 13(2), (3), and 16(1).

545

  Implementing Regulation, Art 13(2) in fine.

546

  See Hearing Officers Decision (n 392), Art 9.

547

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, paras 703–706.

548

  Implementing Regulation, Art 14(1) and (2); Hearing Officers Decision (n 392), Art 6(1). Unless the parties request them, the oral hearing will not be held. Aside from formal oral hearings, the Commission may, at other stages in the proceedings, afford the notifying parties and other involved parties the opportunity of expressing their views orally. 549

  The decision to afford interested third persons the opportunity to express their views at the oral hearing is taken by the hearing officer. See Implementing Regulation, Arts 11 and 16, and Hearing Officers Decision (n 392), Art 6.

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550

  Merger Regulation, Art 18(4), second sentence, and Implementing Regulation, Art 16. The Commission may also, in other cases, afford such third parties the opportunity of expressing their views orally. 551

  Implementing Regulation, Art 15, and Hearing Officers Decision (n 392), Art 6.

552

  From the Commission, the hearing is attended by the hearing officer and his team, the case team and representatives of DG Competition’s senior management, members of the Legal Service and other associated services, and, frequently also by a member of the Cabinet of the Competition Commissioner. Representatives of the companies are generally accompanied by their legal counsel and economic experts. 553

  Hearing Officers Decision (n 392), Arts 11 and 12.

554

  According to Art 15 of the Implementing Regulation, the statements made by each person during the hearing will be recorded. Upon request, the recording will be made available to the attendees, while ensuring the protection of business secrets and other confidential information. 555

  Implementing Regulation, Art 15, and Hearing Officers Decision (n 392), Arts 10, 12, and 13. 556

  A copy is provided to the Director General for Competition, to the director responsible, and to the other competent services of the Commission. 557

  Hearing Officers Decision (n 392), Art 14. The observations in this report concern procedural issues such as disclosure of documents and access to the file, time limits for replying to the SO, the observance of the right to be heard, and the proper conduct of the oral hearing. In addition to this report (and separately from it), the hearing officer may make observations on the further progress and impartiality of the proceedings, with the aim, in particular, of ensuring that in the preparation of the draft decision due account is taken of all the relevant facts, whether favourable or unfavourable to the parties concerned. 558

  Hearing Officers Decision (n 392), Arts 16 and 17.

559

  Merger Best Practices, para 33(d) and (e).

560

  Peer review panels may also be organized before the SO is issued.

561

  While peer review panels were used in the past, the formalization of this instrument took place during the term of Mario Monti as Competition Commissioner, in the context of a more broad reform of the conduct of merger investigations. 562

  Merger Regulation, Art 19(3). The meeting of the Advisory Committee is held around working day 75 after the initiation of proceedings (in cases where no extensions or suspensions have taken place). 563

  Merger Regulation, Arts 19(5)–(7) and 20; see also Implementing Regulation, recital 19. 564

  Art 1(1) of the Merger Regulation and Art 19(2) of the Implementing Regulation. Merger Best Practices, para 43; Notice on Remedies, paras 88 and 94. See also judgment of the GC in Case T-87/05 EDP v Commission [2005] ECR II-3745, paras 161ff. 565

  Regarding Phase II decisions adopted in cases where no SO has been issued, pursuant to Art 8(1) or (2) of the Merger Regulation, see Section D.7(f). For decisions imposing interim measures ex Art 8(5) of the Merger Regulation, see Section D.10(a). Finally, for revocation decisions pursuant to Art 8(6) of the Merger Regulation, see Section D.10(b). 566

  See Sections D.5(b) and D.5(c).

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567

  In Case T-411/07 Aer Lingus v Commission [2010] ECR II-3691, the Court rejected an application for annulment of a Commission decision rejecting Aer Lingus’s request to initiate proceedings under Art 8(4) of the Merger Regulation and to adopt interim measures under Art 8(5) thereof. The Court upheld the Commission’s conclusion that Ryanair’s minority shareholding in Aer Lingus could not be regarded as the partial implementation of a concentration capable of giving rise to a measure adopted on the basis of Art 8(4) and (5) if found to be incompatible with the internal market. 568

  Art 8(4), first indent, of the Merger Regulation. These other measures are notably appropriate where the restoration of the ex ante status quo is not possible through dissolution of the concentration. 569

  The Commission may, eg, impose an order to keep assets or business separate, appoint a monitoring trustee or impose additional ring-fencing and reporting obligations. 570

  Only four decisions have been adopted so far pursuant to Art 8(4) of the Merger Regulation, in Cases COMP/M.2416 Tetra Laval/Sidel (2003) (where Tetra was order to divest its shareholding in Sidel; the latter was to be divested as a going concern without any change in its status, scope, or range of activities which might weaken its effectiveness as a competitor in the relevant markets); COMP/M.2283 Schneider/Legrand (2002) (where Schneider was ordered to demerge from the Legrand Group without hiving off any individual businesses of the latter); COMP/M.890 Blokker/Toys ‘R’ Us (II) (1997) (where Blokker was ordered to transfer the relevant Toys ‘R’ Us assets, rights, and obligations to a wholly owned subsidiary and to divest itself of at least 80 per cent of the total share capital of the latter); and COMP/M.784 Kesko/Tuko (1997) (where Kesko was ordered to divest the daily consumer goods business of Tuko Oy; the Commission notably indicated that this business should be restored to the same competitive condition as it was before the concentration, which may require, inter alia, that any assets, tangible and intangible, relating to sales of daily consumer goods, were restored to Tuko Oy or, if necessary, were replaced at Kesko’s expense and that all contracts entered into by or on behalf of Tuko Oy or any other organ of the Tuko group, in relation to its activities in the sales of daily consumer goods, to the extent that they were assignable, were transferred). The decisions in Tetra Laval/Sidel and Schneider/Legrand were subsequently annulled, following the annulment of the respective prohibition decisions by the GC (see Cases T-80/02 Tetra Laval v Commission ECR (2002) II-4519 and T-77/02 Schneider Electric v Commission [2002] ECR II-4201, respectively). 571

  Merger Regulation, Art 8(4)(b). It is, however, necessary that the Commission had found in its initial decision pursuant to Art 8(2) that, in the absence of the condition, the concentration would fulfil the criterion for prohibition laid down in Art 2(3) of the Merger Regulation (or, in the cases referred to in Art 2(4) thereof, would not fulfil the criteria laid down in Art 101(3)), ie that absent the condition that has not be complied with, the concentration would significantly impede effective competition. In such cases, a decision pursuant to Art 8(3) of the Merger Regulation is not required before ordering the dissolution. See Section F. 572

  Merger Regulation, Art 8(8).

573

  Merger Regulation, Art 20(1), Implementing Regulation, Art 19(7), and Hearing Officers Decision (n 392), Art 17(3). 574

  Disagreements between Commission services and notifying parties about the precise extent of information and data to be deleted from the non-confidential version of the decision are not infrequent. Ultimately, the hearing officer resolves any outstanding dispute. See Hearing Officers Decision (n 392), Art 8(3).

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575

  Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004, adopted on 5 December 2013, OJ 2013 C366/5 (see also the corrigendum to para 7 of the Notice, OJ 2014 C11/6). This text replaces the 2005 Notice on simplified procedure, OJ 2005 C56/32. The 2013 Notice forms part of the Merger Simplification Project launched by DG Competition in February 2013, which was followed by a public consultation in March 2013. The Merger Simplification Project was based on a targeted ex post analysis of 850 merger cases notified in 2008–10, as well as on the general experience gained by DG Competition in the application of the Merger Regulation and the 2005 Notice on the simplified procedure. 576

  The percentage remains roughly similar if Phase I remedies decisions and Phase II decisions are also taken into consideration. It is expected that the extension of the scope of the simplified procedure brought about by the 2013 Notice will allow an additional 10 per cent of notified cases to fall under the simplified procedure (bringing the overall number of simplified cases up to around 60–70 per cent of all notified cases). 577

  See Press Releases IP/13/288 (27 March 2013) and IP/13/1214 (5 December 2013).

578

  Merger Regulation, Art 9(2). The Commission, admittedly, may be more inclined to grant a derogation of the standstill clause in simplified cases, since no threat to competition is deemed to arise, as long as the remaining conditions of Art 7(3) of the Merger Regulation are met. However, these derogations remain relatively exceptional. 579

  In the Staff Working Document, Towards more effective EU merger control, 25 June 2013, the Commission raised the possibility of actually excluding from EU jurisdiction concentrations that do not have any effect in the EEA, such as the creation of a full-function joint venture located and operating outside the EEA and that would not have any conceivable impact on markets in the EEA. Therefore, these concentrations would no longer have to be notified at all, instead of being notified under the simplified procedure as in the current system. 580

  Notice on the simplified procedure, para 13.

581

  Notice on the simplified procedure, para 15.

582

  Notice on the simplified procedure, para 16. See eg Cases COMP/M.1328 KLM/ Martinair (1999), where KLM, which already had joint control over Martinair, would have acquired sole control over the latter (the parties abandoned the concentration in Phase II), and COMP/M.2908 Deutsche Post/DHL (II) (2002), where Deutsche Post acquired sole control of DHL, which had until then been controlled jointly with Lufthansa. The Commission may also revert to a normal first phase merger procedure where neither the Commission nor the competent authorities of Member States have reviewed the prior acquisition of joint control of the joint venture. 583

  Notice on the simplified procedure, paras 8 and 12.

584

  Notice on the simplified procedure, para 8.

585

  Notice on the simplified procedure, para 13.

586

  Notice on the simplified procedure, para 11.

587

  The case allocation request requires the parties to identify whether the concentration is expected to be notified under the simplified procedure. 588

  Implementing Regulation, Art 3(1) and Annex II.

589

  eg some of the information required of reportable markets. In its Merger Simplification Project, DG Competition has proceeded to a further streamlining of Short Form CO.

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590

  The Notice provides that the simplified procedure will not be applied if a Member State requests the referral of a notified concentration pursuant to Art 9 of the Merger Regulation or if the Commission accepts a request from one or more Member States for referral pursuant to Art 22 thereof. However, the Commission may apply the simplified procedure to concentrations where, following a reasoned submission pursuant to Art 4(4), it decides not to refer the case to a Member State, or where the case is referred to the Commission pursuant to Art 4(5). Notice on the simplified procedure, paras 20–21. 591

  For Member States, the deadline is of 15 working days from receipt of the copy of the notification. In the case of interested third parties, their observations must reach the Commission no later than ten days after the date of the publication of the Notice of the notification in the Official Journal. 592

  See Implementing Regulation, Art 5(2). In such cases, the notification only becomes effective on the date on which the complete information is received by the Commission. 593

  Cases T-310/00 MCI v Commission [2004] ECR II-3253 and T-282/02 Cementbouw v Commission [2006] ECR II-319. Merger Regulation, Art 6(1)(c). Jurisdictional Notice, paras 117–121. See also DG Competition, Information note on Art. 6(1)c 2nd sentence of Regulation 139/2004 (abandonment of concentrations) at . 594

  Jurisdictional Notice, paras 122 and 123.

595

  While dissolution orders and other restorative measures pursuant to Art 8(4) of the Merger Regulation could also be considered as particular procedures, we have examined them when describing Phase II proceedings, since they are typically taken at the same time as a prohibition decision: see para 5.502. The present section also does not describe the procedure for adopting referral decisions and decisions concerning State measures, both of which are considered in Section C.2. 596

  Merger Regulation, Art 8(5). The power to adopt interim measures was not explicitly mentioned in the 1989 Merger Regulation. 597

  Parking transactions are those whereby an undertaking is acquired by an interim buyer (typically a bank) ‘on behalf’ of the ultimate acquirer, to which the business is subsequently sold. Under certain conditions, these transactions are considered as the first step of a single concentration comprising the lasting acquisition of control by the ultimate buyer. See Section B.5. 598

  See Section B.3(c)(ii).

599

  The Commission may not impose interim measures when the merging parties have legitimately implemented their concentration pursuant to the exception provided in Art 7(2) of the Merger Regulation for public bids and series of transactions in securities, for as long as the conditions set out in that provision are respected (notably, that the acquirer does not exercise the voting rights attached to the securities in question): see para 5.391. 600

  Merger Regulation, Arts 14(2)(b), (c), and (d) and 15(1)(d), respectively. As regards quantum, see further Section D.10(d). 601

  This is consistent with the practice of the Commission concerning the conditions attached to decisions granting derogation from the suspension obligation, pursuant to Art 7(3) of the Merger Regulation: see Section D.5(b). 602

  Given their nature, the Commission may be reluctant to impose structural interim measures before a prohibition, separation, or revocation decision has been adopted. Where

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necessary, such orders will typically be imposed in the corresponding final decision and not on an interim basis. 603

  Member States are not consulted either before the adoption of such a provisional decision. See Art 19(3) of the Merger Regulation. 604

  See Art 18(2) of the Merger Regulation and Art 13(1), second subpara, of the Implementing Regulation. Where the Commission has taken such a provisional decision without having given the notifying parties and other involved parties the opportunity to make known their views, it shall without delay send them the text of the provisional decision and shall set a time limit within which they may make known their views in writing. Once the parties have expressed their views, the Commission will take a decision annulling, amending, or confirming its provisional decision. If the parties do not send observations within the time limit, the Commission’s provisional decision becomes final. 605

  Merger Regulation, Arts 6(3) and 8(6).

606

  Cases COMP/M.1397 (1999) and COMP/M.1543 Sanofi/Synthélabo (1999). The Commission imposed fines of €50, 000 on each of the notifying parties, pursuant to Art 14(1)(b) of the 1989 Merger Regulation. 607

  Inspections can notably be ordered where the Commission has indications that the parties may have implemented the concentration before it has been cleared or may have provided misleading information in the notification or in response to requests for information, or withheld information relevant to the competitive assessment of the case. For an illustration, see Case COMP/M.6106 Caterpillar/MWM (2011). 608

  During an inspection, as well as the possibility of conducting a documentary search on the premises and ordering the production of records, the Commission may ask any representative or member of staff for explanations of facts or documents relating to the subject matter and purpose of the inspection and may record the answers. 609

  Merger Regulation, Art 13(4).

610

  For an illustration, see Cases COMP/M.3796 Omya/Huber PCC (2006), para 5, and COMP/M.5830 Olympic/Aegean Airlines (2011), para 5. In Omya/Huber, the notifying party unsuccessfully challenged the Art 11(3) decision, on the basis notably that the corrections requested therein (with regard to the information initially submitted) were not necessary for the assessment of the concentration and that the data initially provided were materially correct (Case T-145/06 Omya v Commission [2009] ECR II-145, paras 41–50 and 60–80 respectively). 611

  Merger Regulation, Art 11(3).

612

  Merger Regulation, Arts 14 and 15.

613

  See para 5.420.

614

  Merger Regulation, 14(2)(a).

615

  Merger Regulation, Art 14(2)(b) and (c).

616

  Merger Regulation, Art 14(2)(c).

617

  Merger Regulation, Art 14(2)(d).

618

  Merger Regulation, Art 14(1)(a), (b), and (c).

619

  A request made by decision adopted pursuant to Art 11(3) of the Merger Regulation. Merger Regulation, Art 14(1)(c). 620

  Merger Regulation, Art 14(1)(d), (e), and (f).

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621

  Merger Regulation, Art 14(1).

622

  Merger Regulation, Art 14(3).

623

  Case COMP/M.920 Samsung/AST (1997).

624

  Case COMP/M.4994 Electrabel/Compagnie Nationale du Rhône (2009), confirmed by the GC in Case T-332/09 Electrabel v European Commission, not yet reported. 625

  Merger Regulation, Art 15(1)(a) and (b).

626

  Merger Regulation, Art 15(1)(c).

627

  Merger Regulation, Art 15(1)(d).

628

  Merger Regulation, Art 15(2). The Commission may fix the definitive amount of the periodic penalty payments at a figure lower than that which was fixed under the provisional decision.

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Part I General Principles, 5 Mergers, E Substantive Assessment Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Substantive assessment — Market definition — Demand-side substitution — Supply-side substitutability — SSNIP test — Product market — Geographic market — Critical loss analysis — Technology — Horizontal mergers — Coordinated effects — Buyer power — Concentrations — Unilateral effects — Barriers to entry

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E. Substantive Assessment (1)  Main Elements of the Assessment under Article 2 of the Merger Regulation 5.556  Article 2(3) of the Merger Regulation provides the test for determining whether a merger should be prohibited: ‘A concentration which would significantly impede effective competition, in the common market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the common market.’629 It is instructive to break this test into its various components.

(a)  ‘A concentration’ 5.557  Detailed analysis of what constitutes a ‘concentration’ within the meaning of the Merger Regulation is contained Section B and is not repeated here. As regards the substantive assessment of concentrations, it is nonetheless worth noting that the boundary between benign transactions and those that could potentially be harmful to competition may not be fully aligned with the jurisdictional boundary determined by the legal definition of a concentration. Indeed, the Commission has, in the past, identified potential harm to competition arising from minority shareholdings in a competitor. 5.558  For instance, in Siemens/VA Tech,630 Siemens acquired VA Tech; however, at the time, it already held a minority stake in SMS Demag, a competitor of VA Tech in the market for metal plant building. In its assessment, the Commission concluded that, because of Siemens’s stake in SMS Demag, the transaction would weaken the competitive pressure exerted by SMS Demag on VA Tech and reduce the degree of effective competition in future bidding (p. 668) contests. Although Siemens had already agreed to sell back its shares to the parent of SMS Demag, the Commission approved the transaction only after a commitment by Siemens to transfer its rights as a shareholder to a trustee pending that divestiture.631

(b)  ‘which would’ 5.559  The assessment of a concentration is, of necessity, forward-looking. As summarized by the Court of Justice in Tetra Laval,632 the Merger Regulation requires a prospective analysis of how a concentration might alter the factors determining the state of competition, in order to establish whether it would give rise to a serious impediment to effective competition. This makes it necessary to envisage various chains of cause and effect with a view to ascertaining which are the most likely. 5.560  More precisely, the Commission must undertake a prospective comparative analysis of two versions of the future, namely what would happen if the merger were to be implemented and what would happen in the absence of the merger (the ‘counterfactual’). Identifying the difference between those two paths allows the Commission to determine the likely effects of a concentration. Often decisions contain little explicit analysis of the appropriate counterfactual, since as the Horizontal Merger Guidelines state: ‘In most cases, the competitive conditions existing at the time of the merger constitute the relevant comparison for evaluating the effects of a merger.’633 In some cases, however, the market is subject to foreseeable developments such as technological changes, expiry of patents, or imminent entry or exit. In such cases, the appropriate ‘counterfactual’ is not the preexisting competitive conditions on the market, but rather what those conditions would be taking into account as foreseeable developments.634 5.561  The prospective comparative analysis requires the Commission to ‘take into account any significant impediment to effective competition likely to be caused by a concentration’.635 As a result a situation post-merger with lack of competition should not result in a prohibition if the competitive situation absent the concentration would be equally bad. In such a case, (p. 669) the concentration could not be said to cause a significant

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impediment to competition. The failing firm defence (where the alternative to a concentration is the bankruptcy and exit of one of the parties, thus leading to a more concentrated market structure and reduction in competition) is a logical application of this. However, as will be discussed in more detail in Section E.6(d), such an argument will be accepted only in exceptional circumstances and only where the parties can clearly show the likelihood of harm under the counterfactual.

(c)  ‘impede effective competition’ 5.562  The question whether a concentration impedes effective competition clearly anchors the analysis to its effect on the process of competition. In terms of how the analysis is approached, the EU merger regime has steadily and increasingly focused on how a concentration may change the outcome of the competitive process from the standpoint of the customer. Article 2(1)(b) of the Merger Regulation requires the Commission to take into account ‘the interest of the intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to the consumers’ advantage and does not form an obstacle to competition’. 5.563  With the introduction of the Horizontal Merger Guidelines636 in 2004, the emergence of the effects-based approach and its strong focus on customers’ interests (as opposed to, eg, the interests of smaller competitors) became most explicit. In particular, the guidelines emphasize that ‘competition brings benefits to consumers’ and that the Commission will prohibit concentrations ‘that would be likely to deprive customers of these benefits’.

(i)  Intermediate and Ultimate Consumers 5.564  In some cases, the parties sell their products directly to the final consumer; however, this is relatively rare. In most cases, even those involving the manufacture of consumer goods, the immediate customers will be wholesalers or retailers. In such cases, even though they may operate several layers above the ultimate consumer, those intermediate customers are the relevant consumers for the purposes of the assessment. The assessment will therefore usually be restricted to analysing whether the immediate customers will be harmed by the transaction.637 In vertical mergers, the notion of customer is more complex, as a downstream competitor has the dual role of being a customer of the merged entity in the upstream market and a competitor of the merger entity in the downstream market. In such cases, as explained further in Section E.5(a)(ii), the Commission will assess a vertical merger predominantly for its effect on customers at the level immediately below the ‘lowest’ activities of the merged entity (namely, the level at which it no longer competes with other suppliers).638

(ii)  Concept of Consumer Welfare 5.565  The policy choice to focus on the interests of consumers aligns well with the economic concept of consumer welfare, which measures the level of benefit consumers extract from the competitive process.639 Using this as a measure of how a concentration affects competition means that not all potential benefits arising from the concentration are given weight; only those that reach consumers (intermediate or ultimate) (p. 670) will be taken into account. Benefits that accrue only to the parties, for example savings in fixed costs that are not passed on, will not be taken into account.640 5.566  In carrying out the assessment, a key indication of the impact on consumer welfare is whether prices will increase as a result of the transaction. However, the notion of consumer welfare goes beyond this and includes other factors that may also need to be taken into account.641 As noted in the Horizontal Merger Guidelines, the phrase ‘increase prices’ is often used as shorthand for ‘increase prices, reduce output, choice or quality of

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goods and services, diminish innovation, or otherwise influence parameters of competition’.642 5.567  While an assessment of the likely effects of a concentration on factors such as quality, choice, and innovation is subject to even greater uncertainty than an assessment of likely price changes, this does not mean they are less important. As Commissioner Almunia said in a speech in 2011: Preserving and boosting innovation must lie at the heart of competition policy in general, which poses a specific challenge in merger control, because it is harder to predict the likely evolution of markets in dynamic industries. The matter is further complicated by the need to disentangle a merger’s potential for efficiency and innovation from its potential for foreclosure and excessive market power. Some acquisitions may allow the development of new technologies; others may eliminate competition between rival technologies and may result in entrenching the dominance of a player. The rush to acquire control of strategic IPRs is an indication that competition in innovative markets is about more than just price and quality.643

(d)  ‘significantly’ 5.568  The Merger Regulation makes it clear that prohibition will only be justified where the concentration is likely to cause a significant impediment to effective competition. 5.569  In the theoretical world of economic modelling, there are two extremes. At one end, there is the model of perfect competition, where firms are infinitely small and where competition pushes prices down to the level of marginal cost of production. At the other extreme is the model of monopoly, where competition is completely absent and prices are set significantly above the cost of production. Within this span, any merger (even between two firms each holding 1 per cent market share), can be thought of as a step away from perfect competition and towards monopoly and unless it produce efficiencies, at least in theory, capable of increasing price on the market. (p. 671) 5.570  This raises the question of how much harm is required to produce a significant impediment to effective competition. This is to a large extent a question of a case-by-case appreciation, which makes it very difficult to determine a generally applicable boundary between significant and insignificant effects. 5.571  The small but significant non-transitory increase in price (SSNIP) test (see further Section E.2(c)) used to define the relevant market, focuses on whether a hypothetical monopolist would be able profitably to raise prices by a small but significant amount. In practice, a hypothetical price increase of 5–10 per cent is usually applied to indicate when a market (in terms of product and geography) is worthy of separate attention. It may be tempting to take this level as an indication of when a price increase is sufficient to cause concern. However, it is necessary to be cautious in this respect. First, the 5–10 per cent price increase used in the SSNIP test refers to what a hypothetical monopolist—free of any competitive constraints—could potentially do. Since the Commission may also intervene in cases where a merger does not lead to a monopoly, the 5–10 per cent price range can in certain respects be seen as a worst case scenario. Secondly, it is necessary to distinguish between the average price increase across the whole market and the price increase of the products sold by the merged entity. In Ryanair/Aer Lingus,644 the Commission had looked at prices on different routes over time and estimated that when Ryanair entered a route, Aer Lingus lowered its price by 7–8 per cent, when the market was assessed on the basis of citypairs, and about 5 per cent, on an airport-pair assessment. In its appeal of the prohibition decision, Ryanair argued that this number showed only an insignificant competitive

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constraint. The General Court disagreed. It stated that ‘a 7–8 per cent price influence appears significant at first sight’. It did not however provide more precise guidance.645 5.572  The Commission’s practice also suggests that it is ready to intervene against concentrations that are expected to produce market wide average price increases below 5 per cent. 5.573  In Unilever/Sara Lee,646 the Commission used economic modelling to estimate the likely price increases for deodorants on different markets. It found that, in Belgium, prices would go up by 1–2 per cent for male deodorants and by 5–6 per cent647 for non-male648 deodorants. Based on these estimates, and all the other types of evidence, the Commission concluded that the transaction was likely significantly to impede effective competition for non-male deodorants, but not for male deodorants. However, in Spain the predicted marketwide price increases were mostly slightly above 2 per cent649 (with price increases being above 5 per cent for some of the individual deodorant brands most affected by the merger). Here the Commission did find a significant impediment to effective competition both for male and non-male deodorants. 5.574  While these numbers are illustrative of the likely magnitude of when price increases may be deemed significant, it would be overly simplistic to mechanically transpose them to a (p. 672) different context and conclude that a 2 per cent market-wide price increase generally defines a bright dividing line. First, the model will inevitably be based on simplifications compared to the real market situation. The Commission may look at other types of evidence to seek to determine whether these simplifications are likely to over or underestimate the future price increase. Secondly, and related, estimated price increases are only one tool to assess the likely effects of the merger. The Commission’s ultimate assessment will take into account all other relevant evidence as to the potential impact of the concentration. The relative weight of the price estimates will depend both on how robust the model appears to perform and on how compelling the other types of evidence are deemed to be. 5.575  For example, in Unilever/Sara Lee the Commission based its findings on a variety of different factors, only one of which was the economic modelling of a predicted price increase. It also relied on internal documents from the parties, feedback from customers in each of the markets, the observed switching pattern of customers as tracked by Nielsen data, the market share of each of the brands etc. Where the Commission found a significant effect in some markets, this was based on the overall evidence, not only on the model. While the Commission clearly relied on the modelling results in its assessment, it made it clear that: ‘because of the statistical and modelling uncertainty, which is inevitable in such exercises, the interpretation has to be cautious, and the results should be nested into the collection of other qualitative and quantitative evidences that is available.’650 5.576  The reason for such caution as regards reliance on economic modelling stems from the limitations inherent in a modelling exercise. A model can in principle produce a very precise prediction, say, a 3.6321 per cent price increase, but precision is not the same as accuracy. A model will usually be unable to capture all relevant factors of a market structure, and the data on which it relies will often be imperfect. The modelling analysis should be very transparent about the inevitable shortcomings and simplifications encapsulated in the exercise and contain an analysis of the likely effects of those shortcomings. Often the Commission’s analysis will contain many modelling iterations, each producing different predictions, and the resulting range of possible price effects will be assessed.651

(e)  ‘in the common market or in a substantial part of it, ’

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5.577  The Merger Regulation does not allow the Commission to intervene unless the harmful effects occur in a substantial part of the internal market. It is difficult to extract a clear and simple bright line below which the Commission loses jurisdiction. However, the Commission’s Notice on case referrals provides some guidance, stating that: ‘it appears that such situations are generally limited to markets with a narrow geographic scope, within a Member State.’652 5.578  In Suiker Unie, the Court of Justice provided a broader range of factors that may be relevant: For the purpose of determining whether a specific territory is large enough to amount to ‘a substantial part of the common market’…the pattern and volume of the production and consumption of the said product as well as the habit and economic opportunities of vendors and purchasers must be considered.653 (p. 673) 5.579  However, in practice, this has not prevented the Commission from identifying competition concerns and accepting remedies in markets of even very limited economic scope.654 5.580  On the other hand, when the Commission refers a case back to the Member States, it sometimes does so on the grounds that the possible effects of the merger do not extend to a substantial part of the common market.655

(f)  ‘in particular as a result of the creation or strengthening of a dominant position.’ 5.581  The current form of the substantive criterion was introduced in 2004. Prior to 2004, a merger would be incompatible with the common market only if it ‘created or strengthened a dominant position as a result of which effective competition would be significantly impeded’. The rewording of the test maintained the concept of a dominant position, but relegated it from one of two necessary conditions to a particular example of how effective competition could be significantly impeded.656 5.582  Preserving the express use of the two concepts from the old test (albeit reordered) means that, in some respects, the guidance offered in older judgments remains applicable. However, case law prior to 2004 should not be extrapolated unfiltered to new cases, for two principal reasons. 5.583  First, since dominance is no longer a necessary condition for a transaction to be incompatible with the internal market, the absence of dominance is not per se sufficient to guarantee compatibility. Indeed, the very reason for changing the operative part of the test was to prevent so-called gap cases where a merger would harm competition without creating a dominant position.657 (p. 674) 5.584  Secondly, assessments under the old test—including those approved by the courts—in reality did not go through a two-pronged analysis in distinct steps where, first, dominance was established and, secondly, impediment to effective competition was analysed. In practice, the Commission conducted an integrated analysis, and in some cases seemed to place much greater emphasis on whether a merger created or strengthened a dominant position than whether effective competition would be significantly impeded as a result. 5.585  By way of illustration, one of the most high-profile cases prior to 2004, GE/ Honeywell,658 contains several sub-chapters on the ‘creation of a dominant position’ whereas the term ‘effective competition’ can be found only once in the entire decision, namely in its ultimate concluding paragraph.659 In its appeal against the decision, General Electric argued that the decision should be overturned because the Commission had forgotten the second limb of the test. The General Court disagreed. It found that, as a matter of principle, the test required two independent conditions to be fulfilled, but that did From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

not necessarily require two independent assessments; a finding of the creation or strengthening of a dominant position ‘may amount, in particular cases, to proof of a significant impediment to effective competition’.660 5.586  Based on this line of reasoning, it could in principle be argued that, under the new test set out in the Merger Regulation, the Commission could find a significant impediment to effective competition solely by establishing that a merger creates or strengthens a dominant position and arguing that the case at hand is one of the ‘particular cases’ covered by the quote from the Court in the previous paragraph. However, this is more a hypothetical concern than a practical one; since the adoption of the new test and the two sets of binding guidelines for assessing mergers, the Commission has consistently based findings of a significant impediment to effective competition on many factors in addition to the mere existence or creation of a dominant position.661

(2)  Definition of the Relevant Market 5.587  The definition of the relevant market plays a central role in merger control. The relevant market, with its delineation in terms of products and geography, outlines the arena of (p. 675) competition in which to apply the competitive assessment. Since the entry into force of the Merger Regulation, virtually all reasoned merger decisions have followed the two-step approach of first defining the relevant market in terms of products and geography and then proceeding with an assessment of the likely effects on competition within that market. 5.588  The Court of Justice has confirmed that ‘a proper definition of the relevant market is a necessary precondition for any assessment of the effect of a concentration on competition’.662 This is not surprising, given that the calculation of market shares is a determining factor for whether a concentration qualifies for treatment under the simplified procedure; determines which markets are reportable and which are ‘affected markets’ for the purpose of notification; and gives rise to ‘presumptions’ of dominance (above 50 per cent) or of lack of competition concerns (below 25 per cent).663 5.589  While market definition is a distinct exercise, it relies on many of the same factors as the competitive assessment.664 The market definition exercise seeks to identify the main competitive constraints facing the merged entity. The Market Definition Notice665 distinguishes at the outset between three types of competitive constraint: demand-side substitution, supply-side substitution, and potential entry. The competitive constraints that are taken into account when defining the relevant market are usually those that can constrain the parties within a relatively short time frame. Thus, while potential entry and reactions from suppliers that only occur with a long delay could be relevant for the subsequent competitive assessment, they should not be taken into account for the purpose of defining the relevant market. 5.590  In most cases where the concentration does not raise competition concerns, the Commission leaves the question of the exact market definition unanswered, by excluding the possibility of concerns under any possible hypothetical market definition.666 It can do so, either by sequentially going through the competitive assessment under a distinct selection of hypothetical markets or by identifying general features in the case that preclude competition concerns on any market (eg the lack of any substantial direct competition between the parties).

(a)  Relevant Product Market 5.591  The Market Definition Notice offers the following definition of the relevant product market: ‘A relevant product market comprises all those products and/or services which are

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regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use.’667 (p. 676) 5.592  The identification of the relevant product market usually entails distinct assessments of the competitive constraint arising from the actions of customers (the demand side) and other suppliers (the supply side).668

(i)  Demand-Side Substitution 5.593  According to the Market Definition Notice, ‘The assessment of demand substitution entails a determination of the range of products which are viewed as substitutes by the consumer.’669 5.594  For the analysis of the demand side, the most frequently used tools in the Commission’s toolbox are: analysis of functionality; evidence of customer switching in the past—in particular in reaction to changes in prices; views of customers and competitors;670 and marketing studies. Internal documents from the notifying parties can also show which products the parties consider to be substitutable for each other.671 A full discussion of the various factors assessed in market definition by reference to their evidentiary sources is contained in Section E.2(e). These factors apply to demand side product market definition and to other aspects of market definition.672

(ii)  Supply-Side Substitution 5.595  While demand-side substitution plays the most important role in market definition, supply-side substitution can also be relevant. As the General Court has noted ‘the mere fact that end users do not consider the different types and qualities…to be interchangeable does not show that those types and qualities belong to different markets, as the lack of interchangeability at the demand level is compensated for by interchangeability with regard to supply.’673 5.596  Supply-side substitution ‘means that suppliers are able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to small and permanent changes in relative prices.’674 5.597  The starting point of the Commission’s analysis will often be to establish whether suppliers generally offer the same range of products or whether some are limited to particular segments of the market. If certain segments of a market or certain types of products can only be supplied by a small subset of suppliers, this increases the likelihood that it will be necessary to define a relevant market by reference to those market segments or types of products. If, on (p. 677) the other hand, all or almost all suppliers can easily serve the same range of products, it may be appropriate to define the market to cover all these products, even if individual customers would not switch between the different types of products.675 5.598  To determine whether other suppliers could supply the products under consideration, the Commission assesses both current supply patterns and possible responses from competitors in the event of a price increase. In carrying out this assessment, the Commission will examine technical barriers to immediate switching, economic incentives to switch, and historical examples of switching behaviour. 5.599  The Market Definition Notice stipulates that supply-side substitution may be taken into account ‘in those situations in which its effects are equivalent to those of demand substitution in terms of effectiveness and immediacy’.676 It provides a practical example relating to paper; while different qualities of paper are not substitutable from a demand perspective, from a supply perspective, paper producers may be able to switch immediately between producing different qualities of paper. It goes on to state that ‘In the absence of

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particular difficulties in distribution…the Commission would not define a separate market for each quality of paper’.677 5.600  The Commission’s approach is illustrated by one of the most prominent recent cases, which involved two paper producers.678 In that case, the Commission referred to the paper example in the Market Definition Notice and noted that the assessment of whether supply-side substitution is ‘sufficiently strong to lead to two or more “demand-side markets” being added together’ depends not only on technical possibility but also on marketing and distribution issues. It went on to state that ‘incentives to switch production should also be carefully considered and should involve not only the supply-side costs of switching but also the effects that switching production would have on the prices in the various markets’. For carbonless paper, the Commission agreed to aggregate the market without distinguishing between different colours of paper, nor to distinguish on the basis of whether the coating of the receiving layer was on the back, front, or both sides of a sheet. However, as regards tracing paper, the Commission considered that it was necessary to distinguish between industrial and graphic tracing paper despite evidence of supply-side substitutability from a technical perspective. In this respect, the Commission relied on the fact that prices for the two types of tracing paper were substantially different and did not correlate, as well as the fact that prices were evolving in opposite directions and that the marketing and distribution of the two types of graphic tracing paper differs.679 5.601  This case illustrates that the Commission will look at more than just narrow technical production issues before accepting a wider market definition on the basis of supply-side considerations alone and that an argument for a wider market may be difficult to sustain if pricing evidence does not suggest that actual substitution is strong enough to ensure correlated prices.

(p. 678) (b)  Relevant Geographic Market 5.602  The Market Definition Notice provides the following definition of the relevant geographic market: The relevant geographic market comprises the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighbouring areas because the conditions of competition are appreciably different in those areas.680 5.603  The starting point for the Commission’s assessment is generally a straightforward identification of the areas actually supplied by different competitors. It is difficult to argue that competitive conditions are homogenous across two areas if the main competitors are not the same in those areas. 5.604  However, a finding that the main competitors are active across different areas does not in itself lead to the conclusion that competitive conditions are sufficiently homogenous to justify finding one single market. If the competitive strength of competitors differs across geographies, the likely impact of a merger will also be different. As the Market Definition Notice states, the Commission will ‘take a preliminary view of the scope of the geographic market on the basis of broad indications as to the distribution of market shares between the parties and their competitors, as well as a preliminary analysis of pricing and price differences at national and [EU] or EEA level’.681 5.605  The Commission may also take into account a wide variety of further factors. The Market Definition Notice mentions in particular factors such as current geographic pattern of purchases and past evidence of diversion of orders to other areas;682 comparisons of prices; basic demand characteristics such as national preferences; the need for a local presence or access to distribution to compete; costs associated with trading with companies located in other areas such as transport costs and restrictions arising from legislation or From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

from the nature of the relevant products; and regulatory barriers including quotas and custom tariffs. 5.606  A good illustration of the many factors that can inform the Commission’s assessment can be found in Syngenta/Monsanto, where the Commission found that the markets for commercialization of sunflower hybrids were national in scope. The factors on which the Commission relied included local distribution requirements and national distribution systems; national registration requirements for hybrids; the relevance of recommendations from national associations; the fact that volume discounts were offered on the basis of purchases within a country; the lack of evidence of price correlation between countries; no evidence of substantial trade flows across Member States, and big variation in market share from one country to the next.683

(i)  Defining the Geographic Market on the Basis of Location of Customers or Producers 5.607  A main function of defining the relevant market is to determine market shares. In most cases (p. 679) there will be transactions that cross the boundary of the market in that only either the seller (exports) or the buyer (imports) is located within the relevant geographic market. This raises the question whether the location of the seller or the buyer should determine if a transaction is counted as part of the turnover within the market and contribute to the calculation of market shares. 5.608  An example of a market definition where the basis is the location of the customer, is fast-moving consumer goods where markets often are defined as national due to factors such as national preferences towards brands, etc. In such a context, the location of the production of the products is not relevant, but rather the location of the customer. For the purpose of calculating market shares, imports into the country would count as part of the turnover in the relevant market. 5.609  An example of a market definition where the basis is the location of the supplier would be retail distribution. In supermarket mergers, market shares are usually calculated on the basis of sales from stores located within the territory defined as the relevant market without regard to whether the customers purchasing in those stores actually live within the area in question. 5.610  There is no direct and specific guidance on this issue in the Market Definition Notice.684 However, the more recent US Horizontal Merger Guidelines685 provide an interesting distinction between situations where markets should be defined on the basis of customer locations and situations where it would be on the basis of the location of the suppliers. In particular, they mention that when it is possible to offer different prices based on the location of the customer, it will be appropriate to define the market on the basis of the location of the customer. 5.611  A good and early example of this can be found in SCA/Metsä Tissue686 where the Commission provides that ‘the extent of the geographic market may thus be affected by the existence of customers in a certain area, which could be subject to price discrimination by a firm controlling most of the supply into such area’.687

(c)  The SSNIP Test and Critical Loss Analysis 5.612  The SSNIP test refers to whether it would be profitable for a hypothetical monopolist in a putative relevant market to impose a small but significant non-transitory increase in prices. The SSNIP test—or ‘the hypothetical monopolist test’ as it is often and perhaps more accurately, called—was employed for the first time explicitly in a Commission merger decision in 1992688 but was only formally embraced by the Commission in its

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Market Definition Notice as the conceptual algorithm underpinning the market definition exercise.689 (p. 680) 5.613  The SSNIP test takes as a starting point the narrowest possible hypothetical market in terms of products and geography and asks whether a hypothetical monopolist would profit from raising prices permanently by a small but significant amount (usually 5– 10 per cent). If customers in sufficient numbers would react to such an increase by substituting demand to alternatives outside the hypothetical market, the hypothetical monopolist would see its sales decline to such an extent that its profit would fall. Failing the SSNIP test would indicate that the hypothetical market is too narrow and that it is necessary to include (at least some of) the alternatives to which customers would switch. The SSNIP test will only be passed when the relevant market has been expanded sufficiently in terms of products and geography so that most customers have ‘nowhere to go’, in the sense that they would rather accept a price increase than switch to the (distant and inferior) alternatives outside the market. In this way, the SSNIP test ensures that the relevant market over which the subsequent assessment will be carried out, is worthy of attention. If even a hypothetical monopolist would not find it profitable to increase prices by a small significant amount, it seems hardly relevant to worry about the effect of a merger regardless of how close it may bring the market towards a monopoly. 5.614  In order to conduct a SSNIP test in practice, it is necessary to know the profit margin on the products being sold and how consumers would react to a price increase. For this reason, while the market definition exercise often includes some evidence relevant for these different components of the test, it is rare that the Commission explicitly carries out a precise calculation of a SSNIP test.690 5.615  If the profit margins are known, the SSNIP test can be ‘rephrased’ as a critical loss test: how many customers would have to be lost for a price increase to be non-profitable? The calculated critical loss can then be compared with the evidence available about how many customers would be expected to disappear in the event of such a price rise. In this respect, establishing the critical loss effectively amounts to an intermediate step towards answering the SSNIP question: if evidence about customer behaviour suggests that the number of customers likely to leave is smaller than the calculated critical loss, it can be concluded that it would be profitable to raise prices, and the SSNIP test is passed. 5.616  In the context of a merger case, a SSNIP test or a critical loss analysis should, as a general rule, be carried out on the basis of an increase from the prevailing prices.691 However, this may not be the case where potential competition concerns are raised. RCA/ MAV Cargo involved a merger between two nationally incumbent railway operators and is illustrative of this exception to the general rule. The question arose in the context of national markets whether road freight services should be considered a competitive constraint to rail freight. Evidence suggested that the railway prices reflected constraints from road freight. However, the Commission also considered that the lack of competition between rail operators meant that rail prices were higher than the competitive rail price. Due to the recent liberalization of the railway markets, it was expected that competition—in particular (p. 681) between the national incumbents—would increase in the future. Thus, rail prices could be expected to decrease in the future, and rail freight customers would find road transport even less of an alternative.692 However, including road freight in the relevant market would dilute the market shares to the point that the markets would not even be considered affected by the transaction (as market shares would fall below 15 per cent). This approach would thus hide the fact that since the merger allegedly removed an important potential competitor for rail freight, it could result in future prices not going down to the competitive level. As a result, the Commission considered that carrying out a

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SSNIP test without any further qualification could overestimate the actual substitutability of road and rail. 5.617  Extreme care is also needed when carrying out a critical loss analysis in markets where market-wide prices do not exist—for instance, because prices are set on the basis of individual negotiations. As the Commission stated in its Deutsche Börse/NYSE prohibition decision: The use of an average price and a single price increase across the board to calculate the critical loss is not consistent with the way in which a hypothetical monopolist would price in this industry. It is possible that a 5–10 per cent average price increase could profitably be achieved by increasing prices to certain customers.693

(d)  Price Discrimination Markets 5.618  In some markets, it is common for firms deliberately to try to charge different prices to different groups of customers for the same or very similar products. In such cases, the effect of a merger may be very different for each of the groups and it may therefore be necessary to split the competitive assessment for the different groups of customers.694 5.619  The Market Definition Notice addresses the issue of price discrimination explicitly, stating in paragraph 43 that: The extent of the product market might be narrowed in the presence of distinct groups of customers. A distinct group of customers for the relevant product may constitute a narrower, distinct market when such a group could be subject to price discrimination. This will usually be the case when two conditions are met: (a) it is possible to identify clearly which group an individual belongs to at the moment of selling the relevant products to him, and (b) trade among customers or arbitrage by third parties should not be feasible.695 5.620  While the quoted text is located in the section of the Market Definition Notice dealing with product market definition it is equally relevant for geographical market definition. Indeed, the most frequent application of price discrimination in practice is on the basis of location. In many cases where the Commission finds national markets despite the products being (p. 682) identical and internationally produced, the two conditions mentioned in the Notice are present.696 5.621  That said, there are also cases where separate markets are defined for customers buying essentially the same products within the same geographic area. For instance, in the energy sector the Commission usually distinguishes between sales to different groups of end-users.697 In many such cases, the Commission does not refer explicitly to the price discrimination conditions in the relevant market notice, but the underlying economic reasoning is the same.698 5.622  The requirement that there should be an absence of trade among customers (arbitrage) is important because a seller’s intention to maintain different prices to different groups of customers could be thwarted if someone acquires the relevant product at the low price intended only for one group of customers and sells it on to the group of customers that was supposed to pay a higher price. In the context of a case where price discrimination takes place between countries, such arbitrage would take the form of parallel imports.699 5.623  In Tetra Laval/Sidel, a key issue was whether separate markets should be defined because of price discrimination.700 In that case, the Commission defined separate markets for stretch blow moulding (SBM) machines according to end use (sensitive and nonsensitive products) relying specifically on paragraph 43 of the Market Definition Notice. The Commission found that ‘price is often negotiated on the basis of the specific needs of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

individual customer[s]’ and that the ‘SBM supplier will at the point of selling have very specific knowledge of how the machine will be used and for which end product’. As to arbitrage, the Commission found that it was ‘virtually impossible’, rebutting Tetra Laval’s arguments that arbitrage could take place via the second-hand market. The Commission also found that price discrimination had taken place in the past. The General Court dismissed the Commission’s market definition in a line of reasoning that relies inter alia on competition between different suppliers of SBM machines (rather than on arbitrage between different customer groups for the product in question as meant by the Market Definition Notice).701 The Commission subsequently (p. 683) appealed the General Court’s ruling on this issue. However, the Court of Justice dismissed the plea as inadmissible and thus did not clarify whether the Market Definition Notice correctly sets down the two conditions necessary for finding a separate market, including a lack of arbitrage.702 5.624  Nonetheless, this ruling has not discouraged the Commission from subsequently relying on an absence of arbitrage when identifying distinct relevant markets. For instance, in Inco/Falconbridge the Commission identified differences in price movements between Europe and North America and concluded: ‘This lack of correlation would suggest the absence of arbitrage between regions, demonstrating the existence of separate geographic market.’703 Similarly, in Norsk Hydro/Orkla/JV, the Commission took into account the significant price differences (10–20 per cent) in the market for aluminium extrusion between Norway and Sweden on the one hand and the remaining Member States on the other, as well as the absence of a trend showing that in recent years those price differences had been decreasing. The Commission concluded that ‘this appears to be incompatible with functioning price arbitrage across regions’, and also on this basis found that a separate market probably existed for Norway and Sweden.704 5.625  Moreover, the prohibition of the UPS/TNT Express transaction relied on the finding of a separate market for express services, which was based on the possibility of price discrimination between customers who would consider deferred services a suitable substitute and those who would not. The Commission found that service providers collected detailed information about customers, allowing them to identify those customers who would be unlikely to consider deferred services as an option and would therefore more easily accept a price increase in express services.705

(e)  Factors Relevant to Market Definition and Types of Evidence Relied On 5.626  All merger investigations involve the collection of opinions of the main participants in the market such as suppliers, competitors, and customers.706 These opinions are compared to the arguments submitted by the notifying parties and the resulting analysis forms the basis of the preliminary determination of the relevant market.707 The questions raised usually (p. 684) concern whether different products are interchangeable, which competitors exercise competitive constraints on each other, and how customers would react if prices of certain types of products were to increase by a small but significant amount. 5.627  When assessing the relevant market, the Commission also relies on a variety of types of evidence in addition to third party responses to questions. It does not follow a rigid hierarchy of different sources of information or types of evidence.708 It has been argued that non-technical evidence would not be valid unless backed up by technical evidence. However, the General Court rejected this argument, stating that: There is no need to establish such a hierarchy. It is the Commission’s task to make an overall assessment of what is shown by the set of indicative factors used to evaluate the competitive situation. It is possible, in that regard, for certain items of evidence to be prioritised and other evidence to be discounted.709

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5.628  The evolution towards using increasingly complex and sophisticated analytical tools applies to market definition as well as the subsequent effects analysis. As a result, older cases may be of somewhat limited precedential value. However, this does not mean that data intensive econometric analysis is always necessary (or possible) for the definition of the relevant market. As the Commission noted in Deutsche Börse/NYSE ‘All in all, it is concluded that conducting any empirical analysis, in particular for market definition purposes, would not have been meaningful given the lack of suitable data required for those purposes.’710 As a result, the Commission will seek to extract as much information as possible from the different qualitative and quantitative sources within the time available in order to make an informed assessment of the scope of the relevant product market.711 5.629  Paragraphs 5.630–5.655 discuss the various factors relevant to market definition and the types of evidence used by the Commission to assess these.

(i)  Views on Functionality 5.630  In assessing whether different products belong to the same market, the Commission will examine the extent to which the different products, due to their characteristics, are limited in terms of which type of consumer needs they can satisfy (scope for demand-side substitution on the basis of functionality). 5.631  To illustrate, in cases involving airlines the starting point for the market definition analysis is the functional need for customers to get from one specific point (Origin) to another (Destination). The Commission therefore generally defines city-pairs as the relevant market (Origin and Destination).712 However, within this framework the Commission will need to (p. 685) determine whether other means of transportation or connections operated from different airports within the origin or destination area fulfil the same functional need and thus belong to the same market. 5.632  In Air France/KLM,713 the Commission investigated whether high-speed Thalys trains between Paris and Amsterdam would be a substitute for air travel. At the time of the decision, the duration of the train journey (4 hours) was somewhat longer than the air flight (3 hours overall). Based inter alia on opinions from travel agencies and corporate customers, the Commission concluded that while the two different modes of transport were substitutable for non-time-sensitive passengers, this was not the case for time-sensitive passengers. This conclusion was backed up by a comparison of prices which found that prices for the train and the plane were comparable for economy-class tickets, whereas business-class passengers paid a much higher price for an air ticket than a train ticket. 5.633  In Lufthansa/SN Brussels,714 a similar situation arose in relation to a number of city pairs. Most interestingly for the Brussels–Frankfurt connection, the travel time by train was comparable to that of air transport. However, when the Commission conducted a consumer survey, they found that only 19 per cent of business passengers travelling by air had even looked at the fares and schedules offered by the train operator prior to booking their tickets. 5.634  The Commission usually considers that in instances where multiple airports serve a single point of origin or destination, such airports may be included in the same relevant market. In the Ryanair/Aer Lingus decision, the question whether secondary airports were suitable substitutes for main airports became quite important since, unlike Aer Lingus, a large part of Ryanair’s activities in Ireland were based at secondary airports. The Commission stated that secondary airports are likely to be prima facie in the same catchment area of a city if they are within 100 km or one hour of travel time of the city centre.715 This estimate was based on information obtained from the airports in relation to what they considered a reasonable catchment area when they sought to attract airlines.

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(ii)  Commercial Strategies and Marketing Material 5.635  The Commission may also look into how the parties have organized their commercial activities. Such an analysis can include both the organizational structure of the companies and the internal documents of the notifying parties. 5.636  Where suppliers have local sales organizations, this is often taken as an indication that competition is local. Dedicated sales teams for different types of customers or different types of products similarly speak in favour of distinct markets. In Philips/Indal, for example, the Commission appeared to attach great importance to the fact that a national distribution network was crucial for the success of a given producer of light fixtures. This was because local salesforces facilitated contact with local installers/wholesalers and public authorities, particularly by participating in public procurement opportunities, and local teams were more likely to be aware of the specific technical and regulatory requirements.716 (p. 686) 5.637  Evidence that companies tailor their commercial strategies (including the setting of prices) to a given geographical area or a given group of customers will indicate that competition varies from one area or group to the next. For example, in JCI/Fiamm, where the Commission found separate national markets, it observed that internal documents ‘show that competitive strategies are developed and implemented on a countryby-country’ basis.717 Similarly, when assessing whether secondary airports were suitable substitutes in the Ryanair case, the Commission also relied on the fact that Ryanair in its own marketing material proposed that its flights to secondary airports were direct alternatives to Aer Lingus flights from primary airports.718

(iii)  Analysis of Price Levels 5.638  Price is one of the key outcomes of the competitive process. Where pricing levels differ between products or geographic areas, this may indicate separate competitive processes, thus pointing to the possibility of separate markets. 5.639  Firms can often easily produce data showing whether they charge the same or different prices in different regions or to different groups of customers. While price differences—in particular, if they are not directly attributable to differences in cost—may indicate separate markets, there is often room for variations within a market—in particular, if the products sold are not homogenous, but come in different sizes or qualities.719 To assess whether price variation between regions or groups is large, it may be useful to compare it with the price variation within each region or group. 5.640  In JCI/Fiamm, the issue of the relevant geographic scope of the market for starter batteries was hotly contested. The Commission undertook an econometric analysis of the transaction data from the parties and found that the differences between prices in different countries could not be explained by factors such as transportation cost, order volume, or customer size. This contributed to the finding that there were separate national markets. 5.641  However, data as to pricing levels may not alone give the answer to the scope of the market, for two reasons. 5.642  First, it cannot immediately be deduced from identical price levels at a given time that two areas are interconnected. A monopolist in a country where customers have a low willingness to pay may sell at the same price level as a competitive oligopoly in another country where customers have a high willingness to pay. In such circumstances, the two markets should be considered separate markets despite the pricing similarities. 5.643  On the other hand, the fact that price levels differ between two areas or customer groups does not, on its own, prove that there is no competitive interaction between them.

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The source of the differences may be due to other factors, such as differences in distribution costs, taxes or exchange rate fluctuations. 5.644  In practice, it is thus unlikely that evidence regarding price levels on its own will be considered determinative for the definition of the market.

(p. 687) (iv)  Analysis of Price Correlation 5.645  When data is available, the Commission may look at how prices move over time, in order to remove any ambiguity remaining after a simple comparison of price levels at a given time. As the Commission stated in JCI/Fiamm: in principle…different price levels in themselves may not always be sufficient to conclude that markets are national. In certain circumstances, it may be relevant to assess the extent to which prices move in parallel and a finding of such parallel price movements could indicate a wider market. For instance, it would not be appropriate to maintain separate markets if price movements across countries were synchronous and the different price levels simply reflected differences in transportation costs.720 5.646  The analysis of price movements between two or more categories of products (price correlation analysis and stationarity tests721) can establish whether the substitution patterns on the supply and demand sides taken together are strong enough to warrant one combined relevant market. A strong correlation of prices between two areas or two product categories can be the result of either supply-side substitution or demand-side substation, or a combination of the two. 5.647  The basic premise is simple: if the price of product A is capable of moving independently from the price level of product B, an acquisition of market power in relation to A would be capable of generating an (independent) price increase within that product category. If, on the other hand, the prices of A and B are intrinsically linked, it would not make sense to analyse potential market power over A in isolation, because its price is ultimately determined in conjunction with B. 5.648  In the merger between Arjo Wiggens and M-real, price correlation analysis played an important role in the geographical delineation of the market for carbonless paper.722 The question was whether the market should be considered national or EEA-wide. The simple description of the competitive situation in different Member States did not allow the Commission to paint a clear picture. On the one hand, there was significant cross-border trade based (p. 688) on centralized production. On the other hand, there were significant differences in the strength of the different suppliers in different Member States. A previous cartel case had also uncovered that within the cartel, prices were fixed on a country-bycountry basis rather than EEA-wide. The Commission conducted a price correlation analysis based both on the merging parties’ prices and on market-wide prices. The results showed that prices moved in different directions over time in different countries, giving a strong indication that markets were national. 5.649  It is difficult to make a general statement on how strong the price correlation has to be (in numerical terms) to lead to a finding of a combined market. However, comparing the degrees of correlation to a benchmark from the same data may provide the answer in a given case. In ABF/GBI, the Commission relied in part on an analysis of price correlation between different regions to substantiate the national scope of the market for compressed yeast. In particular, the Commission measured how prices in each region correlated with prices in Madrid. By showing the intensity of correlation on a map, it clearly emerged that the regions where the correlations were the highest were the other regions of Spain,

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whereas prices in the regions in Portugal and France were much less correlated, thus supporting a finding of national markets. 5.650  Similarly in Arsenal/DSP, the parties argued that the geographic market for benzoic acid was worldwide. The price correlation analysis, however, showed that the prices in Europe had a very low correlation with prices in Asia, while prices were highly correlated amongst European countries. This contributed to the conclusion that the market for benzoic acid was not worldwide. 5.651  However, while a lack of price correlation will support a finding that markets are separate, the fact that prices have historically moved synchronously does not necessarily prove that they are intrinsically linked through demand- and supply-side substitution. The most obvious example is when prices move in parallel, not because of competitive interaction but because they share the same input and their final prices reflect the volatility of the cost of this input. For example, when Friesland Foods notified its merger with Campina, it submitted evidence that ‘nature’ and rindless cheeses should be considered to belong to the same market, inter alia, on the basis of price correlation evidence. The evidence was rejected by the Commission on the grounds that: Although these prices exhibit a certain level of long run co-movement, it should be recalled that milk is the most important ingredient for cheese and therefore a significant cost component. The prices of both ‘nature’ and rindless cheese therefore necessarily reflect changes in the price of milk, irrespective of whether or not these cheese types are substitutable on the demand or supply side.723 5.652  Similarly, in Marine Harvest/Morpol,724 the Commission rejected a price correlation study submitted by the notifying party showing allegedly high correlation between the price series of Norwegian and Scottish salmon, as the methodology used by the notifying party to calculate the correlation did not adequately address the problems of common price (p. 689) components and non-stationarity of the price series. In this case, it appears that common costs, and amongst others the cost of salmon feed, could have led to spurious correlation. The Commission found that once the methodological flaws in the notifying party’s study were corrected, the correlation analysis was not supportive of a single product market for both Scottish and Norwegian salmon. 5.653  If it can be established that the mechanism keeping prices in sync is trade flows representing either supply- or demand-side substitution, then evidence of price correlation will be a particularly strong indicator of an integrated market. This would occur if an increase in the price of product A relative to product B would prompt a reaction increasing trade between suppliers of B and customers of A. In Sovion/HMG,725 for example, the Commission found that there was a direct relationship between fluctuations in the pricing differential for pigs as between the Netherlands and West Germany and exports of pigs, inasmuch as an increase (or a decrease) in the difference between the two prices caused an increase (or a decrease) in exports of pigs from the Netherlands to Germany. This pointed towards a market definition that included parts of West Germany as well as the Netherlands. These findings were accepted by the Court.726

(v)  Event Analysis 5.654  In some cases, specific past events allow the Commission to analyse how market participants react, which can shed light on whether competitive conditions across different products or markets are the same. 5.655  The Commission may, for instance, use past events to determine consumers’ switching behaviour if their preferred supplier is unavailable. An illustrative case in this respect is Ineos/Kerling727 where the key question was whether the UK should be considered a separate market. After an in-depth investigation, the Commission concluded that the market was wider than national. Among the evidence relied on was an analysis of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

an Ineos plant outage in the UK. The Commission found that, during that period, the lost output from Ineos was captured more by imports from mainland Europe than from Kerling’s UK-based plants, and that Kerling’s margins did not increase.728 5.656  In Ryanair/Aer Lingus, the Commission’s detailed analysis of Aer Lingus’s price data showed that the previous entry of Ryanair on a city-pair (even via secondary airports) resulted in Aer Lingus lowering its prices. This indicated that Ryanair exerted a competitive constraint even if it operated from another airport and that those airports should be included in the relevant market.729

(f)  Market Definition for Merger Cases and Antitrust Cases are Similar but Distinct 5.657  The Market Definition Notice covers market definition for the purposes of both merger control and antitrust cases. But it would be a mistake mechanically to transpose an analysis (p. 690) of the relevant market from an antitrust case to a merger case and vice versa. There are important distinctions between antitrust enforcement and merger control which affect the mechanics of market definition.730 These distinctions arise primarily because of the prospective nature of merger control analysis, compared to the analysis of past behaviour in antitrust cases.731 5.658  To explain how the market definition exercise differs between an antitrust context and a merger context, it is illustrative to recall the cellophane fallacy, which derives its name from a famous US antitrust case732 in which Du Pont was accused of monopolizing the cellophane market under the Sherman Act. The US Supreme Court rejected the government’s monopolization claim essentially on the basis that the market had been defined too narrowly.733 The Supreme Court considered that the market was wider on the basis that it had observed competition between cellophane and other flexible wrapping materials and had thus concluded that Du Pont was constrained by these other materials. However, the constraint from other materials was the result of the fact that Du Pont (through its patent holdings and conduct) had acquired market power on the cellophane market and had raised prices to the monopoly level, at which stage some customers started to consider other wrapping materials as relevant alternatives. The Supreme Court thus committed an error of logic because the substitution it relied on was both preconditioned on, and a natural consequence of, the exercise of market power which was the subject of scrutiny. This error has since become known as the cellophane fallacy. 5.659  However, had the case concerned a prospective merger, the Supreme Court’s analysis would have been carried out on the correct basis. If Du Pont were to merge with the main supplier of the closest alternative wrapping product, it would be perfectly relevant to analyse the competitive constraints that existed at the time of the merger—irrespective of whether the prevailing prices reflected intrinsic market power. The best starting point for a merger analysis would thus have been the wider market. 5.660  In other words, antitrust cases and merger control reviews may reach different conclusions about the relevant market based on the same set of facts. This distinction is embedded in the Market Definition Notice which states that: Generally, and in particular for the analysis of merger cases, the price to take into account will be the prevailing market price. This may not be the case where the prevailing price has been determined in the absence of sufficient competition. In particular for the investigation of abuses of dominant positions, the fact that the prevailing price might already have been substantially increased will be taken into account.734

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(p. 691) (g)  Is Market Definition Really Necessary in an Effects-Based Analysis? 5.661  Few would deny that the definition of the relevant market and calculation of market shares provides a good starting point for the substantive analysis in most cases (establishing which activities are being investigated and which market players exercise competitive constraints on each other).735 However, the exact role it should play in the overall process of assessing mergers is subject to a long and on-going debate.736 5.662  The most vocal criticism of market definition as it is currently conducted, comes from those economists737 who argue that merger control, at least historically, has suffered from an excessive reliance on market shares in the competitive assessment and that there is an inherent risk that the exercise of defining the relevant market takes focus away from the competitive assessment rather than preparing the ground for it. 5.663  The most obvious example where this risk is present is when the market definition exercise creates the illusion of a clear boundary for the competitive assessment where none exists. This is most pertinent where the question arises whether a relatively remote substitute with very large sales should be included in the relevant market.738 Although a remote alternative is likely to play only a marginal role as a competitive constraint on the parties, its inclusion in the relevant market may dramatically dilute the market share of the merging parties. If the main focus of the case (either for the Commission or before the Courts) becomes whether to include such a distant alternative in the relevant market (regardless of the limited competitive constraint it poses), it is indeed fair to claim that the market definition exercise has failed in its purpose. 5.664  In some circumstances (where adequate data is available), methods exist which may allow the Commission to determine directly whether a merger would be harmful without having first to go through the exercise of defining the relevant market.739 For example, in Unilever/Sara Lee Body Care,740 the Commission found that male and non-male deodorants belonged to two separate markets. However, when the Commission carried out an econometric analysis, (p. 692) data on all deodorants was included in a single model. While the simulation results incidentally provided support for defining separate markets, the predicted price increases were wholly independent of any findings concerning the boundaries of the relevant market. 5.665  It would be an exaggeration to say that there has been an outright assault on market definition as a concept. But the trend is clearly towards putting market definition into its proper context and emphasizing that it is not an end in itself, but rather a tool for providing the framework for the analysis and facilitate an early screening of possible concerns.741 As the OECD recalled in 2011, the ultimate aim is to identify anti-competitive mergers: ‘Market definition is only an indirect aid in this process and if there are better approaches available in a particular case, then these should be used. This does not change the fact that market definition will remain central to most cases.’742

(3)  Analysis of the Effects of a Concentration 5.666  In assessing the effects of a concentration, the first question is whether the concentration (and thus the effects of the concentration) is horizontal or non-horizontal. Within these categories, the potential effects can be characterized as either coordinated or non-coordinated. This generates four different subcategories of potential effects, as shown in Table 5.9.

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Table 5.9  Typology of effects

Non coordinated

Coordinated

Horizontal

Non-horizontal

Unilateral effects (including traditional single-firm dominance)

Input foreclosure

Potential competition

Conglomerate effects

Tacit coordination (traditional collective dominance)

Vertically facilitated coordination

Customer foreclosure

(a)  The Move to a More Effects-Based Approach 5.667  The introduction of the revised Merger Regulation in 2004 clarified two important issues as regards the substantive assessment. First, it recognized explicitly that efficiencies could be used as a defence to an otherwise anti-competitive concentration. Secondly, it made clear that, even where it does not create or strengthen a dominant position, a concentration could cause harm to competition. These two developments were part of a wider trend towards what has been called a more effects-based approach to merger assessment. Other important milestones in this evolution were the appointment of a Chief Competition Economist and (p. 693) the publication of binding guidelines committing the Commission to focus its analysis on the effects the merger would have on consumers. 5.668  This does not mean that structural factors, such as the strength of the merged entity as measured by its market share, have become irrelevant, but rather that they increasingly have to share the limelight with other types of analysis.

(b)  Gravitation Towards Unilateral Horizontal Effects 5.669  With respect to cases where the Commission has found competition problems, it would be fair to say that since 2004 there has been a strong gravitation towards the category of horizontal non-coordinated effects. Whereas coordinated and non-horizontal effects were frequently the basis for prohibition decisions743 prior to the reform, all five prohibition decisions since 2004744 have had their main focus on non-coordinated effects from horizontal overlaps. Only seven Phase II cases have led to remedies clearly targeted at coordinated or non-horizontal issues.745 Two principal factors behind this trend can be identified. 5.670  First, the reform made it clear that it was possible to deal with so-called gap cases (cases where the concentration did not create a clearly dominant entity) under the rubric of non-coordinated effects. 5.671  Secondly, the Non-Horizontal Merger Guidelines raised the bar for finding a vertical merger to be harmful to competition, due both to the recognition in those guidelines of the strong role efficiencies may play in a vertical merger and to the fact that vertical integration will lead to a theory of harm only in specific circumstances (see further Section E.5).

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5.672  The gravitation towards unilateral horizontal effects cases can also be seen as a reaction to the guidance given by the EU Courts. In a string of judgments, the EU Courts (wholly or partially) overruled four high-profile prohibition decisions before the 2004 reform. In these judgments when the EU Courts took issue with the analysis that had led the Commission to prohibit a merger, they focused predominantly on areas other than noncoordinated (unilateral) effects resulting from horizontal overlaps. •  In Airtours/First Choice 746 the General Court overruled the analysis of coordinated effects and appeared significantly to tighten the requirements that the Commission must meet in order to prohibit a case on the basis of expected tacit coordination (at least compared to its previous judgments on collective dominance). (p. 694) •  In Tetra Laval/Sidel 747 the issue was the creation of a dominant position on the market for polyethylene terephthlate (PET) packaging equipment due to probable future leveraging from Tetra’s existing dominant position in the neighbouring market for carton packaging. •  Likewise, in General Electric/Honeywell 748 the General Court took issue with the Commission’s analysis of likely effects of non-horizontal input foreclosure of engine competitors resulting from bundling Honeywell’s sale of engine starters with financing services offered by GE Capital; however, it agreed with the Commission’s analysis of non-coordinated horizontal effects. •  Only in Schneider/Legrand 749 did the General Court also reproach the Commission’s analysis of classical horizontal overlap. However, even then, the Commission’s failure to provide sufficient reasoning for and/or its incorrect assessment of the merged entity’s strength related in large part to the analysis of the relationship between effects on a given national product market and the overall portfolio of brands and products across the EEA. On the French market, which was the main focus of the case, the General Court upheld the Commission’s substantive assessment and overturned the Commission’s decision on procedural grounds. 5.673  In comparison, the five prohibitions since the entry into force of the new Merger Regulation have all been based on non-coordinated effects arising from horizontal overlaps. 5.674  This does not mean that all cases falling outside the category of horizontal noncoordinated effects receive no scrutiny. For example, the Commission approved the Intel/ McAfee merger only after remedies were offered to address the Commission’s conglomerate concerns. IPIC/Man Ferrostaal and UTC/Goodrich are examples of cases that raised vertical concerns (also approved following the submission of remedies) and the Commission identified a risk of coordinated effects in ABF/GBI. However, the Commission’s recent practice signifies a recognition that unilateral horizontal effects are the most likely to result in consumer harm.

(c)  Increasingly Complex Assessments 5.675  Proponents of the effects-based approach argue that it has led to improved precision in European merger control by ensuring that the Commission is only likely to intervene in mergers that cause harm to consumers (and are therefore ‘bad’). While this may be true, it is also clear that the effects-based approach has made merger assessments more complex. 5.676  Since the 2004 reform and the appointment of a Chief Competition Economist in the Commission, decisions have increasingly relied on more complex types of economic-based evidence. In turn, notifying parties increasingly rely on economic consultants to produce evidence and engage with the economists of the European Commission.

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5.677  This has also led to longer decisions. Figure 5.15 shows the length of all Phase II decisions by the Commission, and demonstrates a telling trend. In the first years of merger control, decisions very rarely exceeded 100 pages; today they are rarely less than 200.(p. 695) View full-sized figure

Figure 5.15  Case complexity has increased 5.678  It should be noted, that this trend is not only a result of the economic assessment, but also a response to demands from the Court for the Commission to include more detailed reasoning in general. This is perhaps best illustrated by the fact that in Impala the General Court concluded that the Commission’s decision was ‘vitiated by inadequate reasoning and a manifest error of assessment in so far as the elements forming the basis of the Decision do not constitute all the relevant data that must be taken into consideration and are not sufficient to support the conclusions drawn from them.’750 While the Court of Justice subsequently overruled this conclusion, the Commission in the meantime reassessed the transaction. This time the length of the decision had grown to 334 pages as compared to the original 54-page decision in 2004. 5.679  In light of the increased workload involved in producing complex decisions, and the expected future strain on resources within the Commission, it is not surprising that VicePresident Almunia announced his intention to streamline processes and free up resources to handle such cases (intention which ultimately led to the adoption of the Merger Simplification Package on 5 December 2013: see para 5.14): I want to make notifications easier to cut the red tape and find faster and simpler ways to handle the cases that clearly pose no problems to competition. I intend to streamline the system so that we can focus on the cases that have a real impact on competition and consumers in the internal market and require complex analyses of the kind I’ve just mentioned.751

(4)  Horizontal Mergers (a)  Non-Coordinated Effects (Unilateral Effects) (i)  Market Share Thresholds 5.680  It is fair to say that market shares are the starting point for almost any substantive assessment. As the Horizontal Merger Guidelines state: ‘market shares and concentration levels provide useful first indications of the market structure and of the competitive importance of both the merging parties and their competitors’.752 5.681  In practice, market shares are used as a screen to determine whether a concentration can be cleared quickly or if it requires more careful consideration. (p. 696) (i)  Which Market Shares are Relevant for the Assessment?

5.682  Market shares are normally calculated on the basis of sales. In general, the Commission will request that parties provide their market shares based both on volume and value. Which method of calculation is deemed most informative will depend on the circumstances. As a rule of thumb, shares based on volume will be used in the case of homogeneous product markets, whereas shares based on value may provide a more accurate picture of the competitive landscape in the case of differentiated products (where

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the volume of products sold may not be very indicative of market power because of significant price differences between products in the same market). 5.683  A number of other indicators can constitute the basis for the calculation of market shares. In particular, shares of capacity may represent a reliable proxy for the assessment of market power in markets which are homogeneous and where capacity expansion is costly.753 Shares calculated on different bases may also be relevant depending on the specificities of individual sectors.754 (ii)  Market Shares Indicating a Lack of Substantive Concern

5.684  There are a number of different ways in which low market shares can remove the need for scrutiny or signify that the concentration does not raise substantive concerns. •  First, there is no obligation to include detailed information on markets in Form CO unless the parties’ combined market share exceeds 15 per cent. •  Secondly, recital 32 to the Merger Regulation provides that when the combined market share does not exceed 25 per cent, the transaction is likely to be compatible with the internal market. 755 •  Thirdly, the Horizontal Merger Guidelines offer an indicative safe harbour based on overall market concentration levels as measured by the HHI, which is closely linked to the market shares of the parties. A merger is unlikely to cause concern unless the resulting level of market concentration is high, and the merger contributes appreciably to the increase in that level. A higher increase is tolerated if the overall HHI concentration level is low, whereas for more concentrated markets, the indicative safe harbour will only be available for mergers that result in a smaller increase. 756 This is illustrated in Figure 5.16 . 5.685  The safe harbour comes with the caveat that there may be special circumstances where concerns could arise even below the thresholds. These special circumstances refer mainly to situations where market shares (and thus the HHI level) are not very informative or when competition is already weak. As regards the former, market shares are unlikely to be informative if, for instance, one party is a recent entrant or a disruptive maverick, if the parties are important innovators, or if there are significant cross-shareholdings between market players. In relation to the latter, prevailing competition is likely to be weak if there are indications of past or ongoing coordination or facilitating practices or where one party to the merger already holds more than 50 per cent market share.(p. 697) View full-sized figure

Figure 5.16  Safe harbour illustration

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5.686  It is important to stress that the fact that market shares or the HHI falls outside the safe harbour does not in itself indicate that the merger should give rise to concern.757 (iii)  Market Shares Indicating a Likelihood of Substantive Concerns

5.687  Conversely, consistent case law has established that a dominant position can be presumed from market shares exceeding 50 per cent: ‘although the importance of the market shares may vary from one market to another the view may legitimately be taken that very large market shares are in themselves, and save in exceptional circumstances, evidence of the existence of a dominant position.’758 The General Court has frequently relied explicitly on this presumption,759 including in General Electric, where it dismissed General Electric’s appeal in relation to the Commission’s findings on the corporate jet engine market where the combined market share exceeded 50 per cent. The General Court dismissed the appeal on the ground that General Electric would have had to show that there were exceptional circumstances to rebut the presumption of dominance, and that it had not done so.760 5.688  That said, after the reform of 2004, it is highly unlikely that the Commission would rely on a presumed finding of dominance in isolation as the basis for a final finding of a significant impediment to competition, not least because the Commission is obliged to follow the effects-based method laid out in its horizontal and non-horizontal guidelines.761 5.689  Judgments from the General Court post-2004 support this view. In Ryanair, although the General Court reiterated the presumption of the existence of dominance arising from high market shares, it stressed that the Commission’s decision had not been based solely on the combined market share which would result from the merger: The Commission examined, simultaneously, the statistics illustrating the situation on the markets affected by the concentration at a given point in time, and dynamic data indicating (p. 698) the likely evolution of those markets if the concentration were to be implemented. That approach is consistent with the analytical approach which the Commission must adopt when assessing the anti-competitive effects of a concentration, in which it examines how the notified concentration could change the factors which determine the state of competition on a given market in order to assess whether it would give rise to a serious impediment to effective competition.762 5.690  Similarly, when it upheld the Commission’s clearance of the Apollo/Akzo Nobel transaction from 2006, the General Court stated that ‘while it is necessary for the purposes of showing that there is a risk of collective dominance, to establish the existence of a significant collective market share, a significant collective market share is not in itself sufficient to prove that such collective dominance exists.’763

(ii)  Intervention Thresholds: Removal of a Significant Competitive Constraint 5.691  While market shares provide an important first screen (either indicating that a merger is unlikely to pose problems or establishing a rebuttable presumption of dominance), they are only the starting points for an effects-based assessment. 5.692  In this respect, it should be borne in mind that market shares are invariably linked to the way the relevant market has been defined and, as mentioned in Section E.2(g), market definition is rarely an exact science with a clear-cut answer.764 At the end of a first phase investigation, the Commission will, at a minimum, have gathered information as to the likely market shares under different hypothetical market definitions; whether there is a significant competitive overlap between the parties’ activities (ie whether they are close competitors for an important part of their sales) and whether customers and competitors have concerns about the transaction. The Commission’s decision on whether the

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concentration raises serious doubts and requires an in-depth Phase II investigation will be taken on the basis of an overall assessment of all these available indicators. 5.693  In practice, in considering whether to intervene in a concentration, the Commission will look at whether the merger leads to the removal of an important competitive constraint. The competitive pressure that prevents a given firm from exercising market power may come from a number of sources and, in particular, from a number of different competitors. A merger is likely to raise concerns if the combination removes a significant share of the existing competitive constraints on at least one of the parties to the merger. That is the case if the competitive pressure exercised by the merging partner is significant compared to the other remaining constraints. 5.694  If the competitive overlap between the parties is relatively small, intervention is only likely if the competitive constraints existing pre-merger are very weak. This would be the case if one of the parties already had significant market power or was dominant. If the competitive overlap is large, competition concerns can arise even in the absence of significant market power pre-merger. (p. 699) 5.695  Rather than focusing on precise market shares, it is often more informative to look at the number of significant competitors in the market. In practice, the Commission will in most instances not have any concerns about a reduction in the number of market players from five to four (or for any higher number of market players);765 it will look closely at mergers reducing the number of significant competitors from four to three; it is highly likely that it will have serious concerns if the merger reduces the number of players from three to two; and the likelihood of serious problems arising is extremely high if it is a merger resulting in a monopoly. Whether a particular case falls above or below the intervention threshold will, in addition, be based on the Commission’s perception of a number of different factors, such as the strength of entry barriers, the degree of dissatisfaction with the transaction expressed by customers, as well as whether customers dual-source. 5.696  The Commission’s practice in relation to a number of recent mergers in national mobile telephony markets illustrates that competition problems sometimes, but not always, arise when the number of significant competitors falls below four.766 5.697  T-Mobile/Orange involved the merger into a single joint venture of two of the five mobile network operators in the UK.767 While the combined venture would have a larger market share than the other operators, the Commission found that it would still face sufficient competition from the other three network operators, thus leaving four viable competitors on the market. However, the Commission reached this conclusion only after ensuring the full viability of one of the other three network operators, 3UK (as the latest entrant in the market, 3UK had a network with limited coverage and was dependent on network sharing and roaming agreements with T-Mobile and Orange). The Commission was concerned that the transaction would create the ability and incentive for the merged entity to terminate the agreements on which 3UK relied, and effectively reduce the number of viable competitors from five down to three. This risk triggered the Commission’s doubts about the transaction and resulted in the submission of remedies to preserve the viability of 3UK. 5.698  Hutchison 3G Austria/Orange768 involved the reduction from four to three competitors in the Austrian mobile market. The Commission cleared the merger only after an in-depth investigation and submission of a package of remedies. The remedy package consisted of the release of spectrum to facilitate new entry, as well as a commitment to

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provide wholesale access to the merged network, in order to improve competition among virtual network operators. 5.699  On the other hand, in T-Mobile/Orange Netherlands, the Commission accepted the reduction from four to three network operators without any remedies. The merger was between the two smallest of the four operators in the Netherlands. In addition, the Dutch market was characterized by the presence of a high number of virtual operators and service providers.

(iii)  Assessment of Effect: Additional Factors 5.700  While the combined market share and competitive overlap may suffice to raise serious doubts about the effects of a concentration, the purpose of opening an in-depth investigation is to further refine the analysis of whether (p. 700) the concentration will actually lead to a significant impediment to effective competition and thereby harm consumers. The key question for this purpose is the extent to which competition will be lost as a result of the merger through the removal of the competitive interaction prevailing between the parties prior to the transaction.769 5.701  In general terms, there is an obvious correlation between a high post-merger market share and a significant competitive overlap, on the one hand, and likely harm to consumers, on the other hand. 5.702  However, the combined market share and market share overlap may either overstate or understate the likely effects of the transaction, depending on whether additional factors are present. These additional factors include whether the concentration brings together particularly close substitutes (in differentiated product markets) in a context where repositioning is not easy; whether competitors have the capacity to counter any attempt to raise prices or reduce output (in homogenous product markets) by increasing output; whether dual-sourcing necessitates a larger number of suppliers in order for the market to remain competitive; whether the merged entity may have or obtain other means to restrict entry; and whether the transaction would lead to the creation of an entity with buyer power.

(iv)  Differentiated Product Markets: Closeness of Competition 5.703  In commodities markets, where products are homogenous and thus entirely substitutable for each other, there is no difference between the closeness of the competitive constraint imposed by producers on each other. In markets where each producer offers differentiated products with characteristics that distinguish them from those of competitors, however, the competition between products will vary in intensity. In such cases, the question is whether the merging parties have products that can be considered as particularly close substitutes. 5.704  Two products are particularly close substitutes if the consumer who is likely to be attracted to one, is also likely to be attracted to the other. By way of example, two high-end car brands are more likely to be found to be close substitutes than a high-end and a low-end brand. 5.705  The relevance of the closeness of competition between the merging parties is clear from a consideration of the forces that prevent firm pre-merger from being able profitably to raise prices above the existing level. While the higher prices would increase the profit margin made on sales to those customers who stay, they would also lead to a loss of sales, as some customers will turn to alternative products. A pre-merger profit-maximizing firm would not increase prices beyond the point where the loss from doing so (the drop in sales

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from customers who switch) is at least as big as the gain (the higher margin on staying customers). 5.706  Whether a merger will significantly change this balance of gains and losses depends on where the departing customers would go; most will pick the best alternative available on the market (taking into account the quality and price of each of the alternatives). The key question, therefore, is whether they would switch to a product of the merging partner. If so, these customers—who would have been lost in the event of a price increase prior to the merger—would not be lost to the combined group after the merger. 5.707  A merger between close substitutes will recapture a greater share of customers (who would leave in response to a price increase) than one between more distant competitors, since (p. 701) would remove a greater proportion of the constraint which prevented prices from rising prior to the merger. 5.708  For this removal of a competitive constraint to be important, it is not necessary for the concentration to involve the two closest substitutes in the market, but it is necessary that a significant share of the customers of one of the parties will consider the other party’s product to be the best alternative. The main factors and types of evidence particularly pertinent for an analysis of closeness of competition are considered in the following sections. (i)  Views of the Market Participants

5.709  To establish the closeness of competition between the products offered by the merging parties, the Commission may seek the views of customers and competitors (via questionnaires or interviews). In particular, the Commission may ask customers about which products they consider to be the most obvious alternatives to their current supplier. The views of competitors and customers may also be sought as to which of the different offerings in a market could satisfy a given functional demand. Additionally, the Commission may carry out an analysis of how different products are branded to establish whether they seek to appeal to the same consumer groups. 5.710  The Unilever/Sara Lee Body Care770 decision provides a useful illustration of the types of views sought by the Commission. In that case, the Commission considered the closeness of competition between different brands of deodorants offered by the parties. The Commission asked retailers and competitors to which customer groups different brands sought to appeal. The customers were not asked directly about their preference, but the Commission relied on switching data from consumer panels showing which brands consumers switched between. In each country, the replies and the switching data contributed to the analysis of whether the brands offered by Unilever were close substitutes to those sold by Sara Lee. 5.711  For instance, in Ireland in the market for male deodorants, Unilever had a market share of more than 70 per cent mainly from their brands ‘Lynx’ and ‘Sure’, while Sara Lee had less than 5 per cent with their brand ‘Sanex for Men’. Retailers stated that ‘Sanex for Men’ was not a close competitor to ‘Lynx’ and ‘Sure’. Whereas ‘Sanex for Men’ was positioned as a healthy choice, ‘Sure’ and ‘Lynx’ were oriented more towards efficacy and fragrance. Retailers thus pointed to brands other than ‘Sanex for Men’ as the closest alternatives to both ‘Lynx’ and ‘Sure’. In addition, a large proportion of ‘Sanex for Men’ was sold as roll-on whereas Unilever’s main brands were mainly sold in aerosol form. 5.712  For non-male deodorants, while Unilever held more than 60 per cent of the market, Sara Lee had between 5 and 10 per cent. However, for these products the investigation pointed towards the parties’ products being close substitutes. In particular, retailers

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explained that Unilever’s ‘Dove’ brand and Sara Lee’s ‘Sanex’ were close competitors. In addition, both brands were particularly strong in the roll-on segment. 5.713  The Commission thus concluded that, in Ireland, the transaction would lead to a significant impediment to effective competition for non-male deodorants, but not for male deodorants. (ii)  Internal Documents

5.714  The Commission frequently relies on internal documents, such as studies and reports prepared by the merging parties, in anticipation of the concentration and assessing its anticipated effects and prevailing market conditions (section 5(4) (p. 702) documents771). If the Commission finds that the parties have historically tracked each other’s conduct in the market very closely, this will be taken as an indication that they consider each other to be close and important competitors. If, on the other hand, the documents focus on other competitors, those other undertakings are likely to be seen as significant competitive constraints (both pre- and post-merger). (iii)  Bidding Data

5.715  In bidding markets, there is explicit competition for each customer (where only one competitor will win the contract) and a price that is specific to that customer. By collecting data from previous bidding competitions, the Commission can obtain a picture of the historical competitive interaction between the parties (and between the parties and other competitors). 5.716  The type of analysis that can be performed depends on the quality of the data available. Sometimes it is possible only to track whether the merging parties are frequent bidders for the same contracts. This may be sufficient to establish that the parties rarely or never participate in the same market segments (eg if the parties cater to distinct types of consumers, with one selling to large consumers and the other to small customers). In such a case, with very limited direct competition pre-merger, the concentration is unlikely to reduce the intensity of competition in future tenders. 5.717  In Nokia/Siemens,772 the Commission cleared the merger in Phase I inter alia based on an analysis of historic bids. According to the Commission, the ‘relatively low rate at which Nokia and Siemens were both present in the same tenders leads to the conclusion that Nokia and Siemens were not a significant competitive constraint on each other prior to the merger’. 5.718  Similarly, the Commission undertook a bidding analysis in the two recent Hard Disk Drive cases involving the four competitors Western Digital (WD)/Hitachi (HGST), and Seagate/Samsung. In relation to the 3.5-inch desktop market, the analysis showed that overall WD, Seagate, and HGST participated in most of the bids for Original Equipment Manufacturers (OEM) customers, whereas Samsung had the lowest participation rate. According to the Commission, this was ‘an indication that Samsung exerts a relatively weak competitive constraint on the other players. HGST was far more often present than Samsung, although these competitors have similar market shares.’773 Samsung and Seagate were thus found not to be particularly close competitors on this market. 5.719  In other cases, more detailed bidding data may be available. In GE/Instrumentarium, a relatively early case, the bidding data for each bid tracked not only who won but also who was the runner-up. This direct identification of the closest competitor in each bid was included in the analysis and helped the Commission to establish whether GE and Instrumentarium were particularly close substitutes. This turned out to be the case in some

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product markets (perioperative monitors) but not in others (critical care monitors, mobile carms, and analogue mammography devices).774 (iv)  Switching Data

5.720  Firms often keep track of the customers they win and lose over time. When they also track the supplier from which a customer was won or to which a (p. 703) customer was lost, such data may be informative in relation to which market players are close competitors.775 5.721  For fast-moving consumer goods, third parties such as Nielsen Consumer Panel and Retail Measurement collect information about consumers’ actual switching patterns. If a large share of consumers switch between the products of the two merging parties, this is an indication that the merger would remove direct competitive interaction. In Unilever/Sara Lee Body Care, for example, the Commission relied on Nielsen data to establish that the deodorants sold by Unilever (eg ‘Dove’ and ‘Rexona’) competed with Sara Lee’s primary brand ‘Sanex’. In particular, the Commission looked at how large a share of the consumers that switched between a Unilever deodorant and another deodorant switched to or from a Sara Lee brand. This share of switching was compared with the Sara Lee brands’ market shares. The data gave an indication of whether the parties’ market share figures were an over- or underestimate of the potentially harmful effects of the transaction. For example, on the Danish market 20–30 per cent of all ‘Dove’ users who switched to or from a nonUnilever brand switched from or to ‘Sanex’. Since Sanex’s share of sales was 10–20 per cent, this indicated stronger interaction between ‘Dove’ and ‘Sanex’ than market shares would suggest.776 (v)  Price Analysis

5.722  In some circumstances, it is possible to track the evolution of prices for the products of different suppliers. If it can be established that the prices for one party’s product are affected by changes in the competitive situation caused by the other party, this will be taken as an indication of competitive interaction between them. For example, in Ryanair/Aer Lingus, the Commission found that Aer Lingus’s prices were lowered when Ryanair entered a route. This was taken as evidence of direct competitive interaction. 5.723  In UPS/TNT, the Commission relied on empirical analysis showing that the prices offered by UPS and TNT had historically been higher in areas where the number of competitors was lower. These findings were used to predict the likely price increase resulting from the reduction in the number of competitors post-transaction. (vi)  Cross-Price Elasticities

5.724  If very rich datasets are available, it may be possible to analyse how sensitive the demand for one product is to price movements of another product. A high cross-price elasticity is present if a price increase for product A results in a large number of consumers switching to product B. If the producers of A and B merge, there is a risk that the merged entity would increase prices since, faced with an increase in the price of A, customers would instead purchase B. However, it is rarely possible to achieve estimates that are sufficiently robust to be relied on. 5.725  In Friesland/Campina, the European Commission attempted to use scanner data to estimate the cross-price elasticities of demand between Friesland and Campina’s products. The Commission in its SO used this information in support of the conclusion that they were each other’s closest substitutes on a number of markets; however, the parties pointed out that the estimations were flawed on methodological grounds. The Commission introduced modifications to take account of the criticism. The modifications improved the robustness of the (p. 704) estimation but the results were neither able to support nor reject the Commission’s claims in relation to the closeness of competition.777

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(vii)  Modelling the Market

5.726  In rare cases, the Commission may either build a simulation model of the market or rely on an existing model to simulate the effects of the transaction. For such an exercise to be meaningful, it is necessary to tailor the model closely to the specificities of the market. Furthermore, it is only possible to carry out such an exercise where sufficient data are available to allow for proper calibration of the model. 5.727  One of the first cases where this approach was used was Sydkraft/Graninge,778 which concerned an electricity merger in Sweden. The Commission relied on an existing model of the Scandinavian electricity market which contained detailed information about all the installed electricity capacity in the network. The model allowed the Commission directly to compare the level of hourly prices with the merger and without the merger. The analysis contributed to clearing the transaction in Phase I. 5.728  Another case in which the Commission explicitly sought to model the effect of the transaction was Oracle/Peoplesoft.779 The model in that case was designed to capture the individualised bidding process between different software suppliers competing for each corporate customer. The model was interesting inasmuch as it required relatively little data to generate useful predictions. However, it relied on the assumption that there were only three viable software suppliers for a given bid. The Commission eventually decided not to rely on the model since it could not reliably conclude that there were only three suppliers capable of supplying adequate software.780 5.729  In recent years, the use of econometric models has become more common. For example, the Commission also relied in part on a model estimate of the likely price increase in Unilever/Sara Lee Body Care. Although the modelling technique was different and proved more robust than that used in Friesland/Campina, the data sources were in both instances scanner data, which provide rich information about actual purchases and prices from supermarkets. As a general rule, in cases relating to horizontal non-coordinated effects, Phase II investigations are to the extent that adequate data are available, likely to involve econometric modelling—either at the initiative of the parties, the Commission, or third parties. This may even be the case in Phase I decisions when parties have submitted their own economic studies during the pre-notification stage.

(v)  Homogeneous Product Markets: Capacity 5.730  In markets where products are homogenous, the issue of closeness of competition plays a much less important role.781 In these cases, market shares and flexibility with respect to production capacity usually take centre stage. As stated by the Commission in a recent case, ‘market shares in capacity and output are a suitable proxy for market power in a homogenous market…where capacity is expensive.’782 The primary question is whether the merged entity will have the incentive to restrict output. The (p. 705) answer to this question is, of course, closely linked to whether the remaining competitors would and could counter such a strategy by expanding their output accordingly. 5.731  The theory of harm in such cases is that, since the merged entity will have an increased share of the overall market, it will also win a larger share of the overall benefits that would result from reducing output and thereby raising market prices. As the Horizontal Merger Guidelines state: ‘The merger increases the incentive to reduce output by giving the merged firm a larger base of sales on which to enjoy the higher margins resulting from an increase in prices induced by the output reduction.’783 Conversely, ‘when market conditions are such that rival firms have enough capacity and find it profitable to expand output sufficiently, the Commission is unlikely to find that the merger will…significantly impede effective competition’.784

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5.732  The recent Votorantim/Fischer decision contained an in-depth analysis of the capacity issue. In that case, the Commission cleared a transaction creating the EEA’s largest supplier of orange juice inter alia because the remaining competitors would be able to increase production to counter any post-merger attempt to increase prices by reducing output. This conclusion was based on the absence of any significant capacity constraints or bottlenecks in the production process (ie procurement of raw fruit, processing, storage, and transport) for the remaining major competitors. The Commission had also carefully established that orange juice was in fact a homogenous product and that customers could and did easily switch between different suppliers.785 5.733  Similarly, the Commission cleared the acquisition by UPM of Myllykoski (both paper manufacturers) inter alia on the basis that competitors had sufficient available spare capacity to counter potential price increases post-transaction.786 5.734  The mere existence of spare capacity, however, does not automatically imply that a merger would not lead to anti-competitive effects. The acquisition by Outokumpu of Inoxum (both stainless steel manufacturers) also took place in a context where the two main European competitors had spare capacity.787 However, the Commission was not convinced that this capacity would be used to constrain the combined entity post-transaction. According to the Commission, the competitive constraints posed by rivals on a merged entity depend not only on the level of their spare capacity (and therefore on their ability to offset a price increase), but also on whether these firms have the incentive to react aggressively to a post-merger price increase. In that case, the Commission inter alia found that, prior to the transaction the main competitors had not deployed their excess capacity to win market share, and that their incentives to expand output were not expected to change as a result of the transaction. The Commission therefore considered that rivals would probably find it more profitable to (p. 706) follow a price increase than to compete aggressively in the future. As a result, the Commission concluded that ‘Even in markets which are characterised by levels of spare capacity at the industry level such as in the present case a merger which leads to a substantial consolidation of production capacities can be expected to lead to significant non-coordinated effects.’788 Interestingly, the fundamental economic rationale underpinning this approach was also confirmed by an ‘independent expert opinion’ which was commissioned by the notifying party.789 5.735  In some cases, historic events provide an indication as to what would happen if output were to be reduced. In Arsenal/DSP, the Commission referenced a previous tightening of supply of benzoic acid in Europe due to the simultaneous shutdown of two factories. Based on the parties’ internal documents, the Commission established that the reduction in supply had not led to increased imports from Chinese suppliers. This contributed to the Commission’s conclusion that overseas competitors would not provide a sufficient competitive constraint on the parties should they decide to decrease output in order to raise prices.790

(vi)  Multi-Sourcing 5.736  As discussed in Section E.4(a)(ii), the overall number of significant competitors remaining post-transaction provides a good indicator for when a concentration may cause concern (and can be used as a rough intervention threshold). While it is rare to see the Commission raise concerns when there are more than three significant competitors remaining in the market, whether a reduction to three or two will be acceptable depends on the market circumstances. One of the factors that can increase the likelihood of intervention is when customers multi-source, as ‘customers that have used dual sourcing from the two merging firms as a means of obtaining competitive prices’ are particularly

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vulnerable to price increases post-merger.791 Of course, the extent of the vulnerability depends on the ease of switching to a new supplier. 5.737  Dual-sourcing markets may require a high number of credible competitors to ensure that there is competition to win contracts. The recent HDD cases (Seagate/Samsung and Western Digital/Hitachi) are instructive in this regard. Up until 2011, there were essentially four suppliers of 3.5-inch desktop HDDs and consumer electronic HDDs: Hitachi, Western Digital, Samsung, and Seagate. The OEMs which buy the HDDs generally award their purchases to between two and four suppliers in any given market. During the market investigation, most OEMs had confirmed that a minimum number of three suppliers are required in order to apply an effective multi-sourcing policy.792 Both transactions were notified to the Commission within a day of one another793 and, applying the ‘first come, first served’ rule,794 the Commission assessed the first (Seagate/Samsung) using the market situation prevailing pre-notification as the counterfactual, while the second (Western Digital/Hitachi) was (p. 707) assessed on the basis of a counterfactual assuming completion of the first. One of the factors in the Commission’s approval of Seagate/Samsung was that ‘With at least three suppliers, customers will retain sufficient possibilities to switch suppliers’.795 However, it raised objections to Western Digital/Hitachi ‘the ability of HDD customers to switch suppliers…would be significantly limited in a two-supplier scenario’.796

(vii)  Ability to Hinder Expansion 5.738  Firms may be in a position to have recourse to strategies that make it more difficult for competitors to expand or otherwise grow stronger. Such strategies may involve indirect control or influence over important inputs (including patents) or distribution channels. Similarly, where interconnection between different products is important, larger competitors can significantly influence the attractiveness of competitors’ products by either granting or denying interoperability.797 5.739  Irrespective of whether such conduct would be illegal under Article 102, these practices may play a role in the merger assessment because (a) the merger may influence the ability and incentive of the merged entity to deploy such strategies and (b) the strength of the remaining competition may be less vigorous due to the existence of those strategies. While these issues are more prevalent in the context of analysing non-horizontal effects, they may occasionally also be relevant for horizontal mergers. 5.740  The first Ryanair/Aer Lingus prohibition decision contains an example of how indirect control of an important input can restrict expansion by competitors. In that case, competitors voiced concerns to the Commission that the merged entity, due to its very large share of flights to and from Ireland, would obtain the ability to influence the Dublin airport authority in ways that could hinder entry and expansion of competitors (eg by influencing decisions about the expansion of airport capacity in ways that were particularly suitable for Ryanair’s own business model). In the Commission’s decision this was not treated as an independent theory of harm, but rather as a part of the analysis of post-merger entry barriers.798 5.741  In Lagadère/Natexis/VUP, the Commission looked at whether the merged entity could make distribution of books more difficult for competitors. At the time of the merger, books in France were predominantly distributed on a book-dispatching platform (Prisme), which was used across the industry. The Commission feared that the increased size of the merged entity could lead it to withdraw from the joint platform and set up its own distribution platform, thereby depriving Prisme of the critical scale necessary to provide cheap distribution for competitors.799

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5.742  The conditional approval of the Cisco/Tandberg transaction is an illustration of this concern in relation to interoperability. Tandberg was a vendor of videoconference solutions (VCS) and the parties had a substantial overlap in the market for dedicated-room VCS. The transaction would lead to a high share of this market. Due to the network properties of the products in question, the value to the customer of a VCS depends crucially on whether it can interconnect with the installed base of VCS already in use in the market. The Commission noted that the market was developing rapidly and that interoperability was going to increase (p. 708) in importance in the future since VCS, which was then used mainly intra- company, would also be increasingly used inter-company. 5.743  A new entrant would therefore be dependent on the ability to interconnect with existing VCS. As a result, an established dominant supplier may be able to prevent entry by denying or frustrating interconnection. The parties sought to convince the Commission that its concerns were unfounded, inter alia through the submission of economic analysis showing that the merged entity would not lose the incentive to interoperate. However, the Commission concluded that: In particular, it cannot be excluded that even though the merged entity may still have an incentive to develop interoperability with its main competitors, it could have an increased incentive to strategically restrict interoperability with new entrants or less important competitors, a strategy considered in some older internal technical documents from Cisco, which could be implemented in the absence of an adopted industry standard (or appropriate remedies).800 5.744  To obtain clearance, Cisco agreed to give royalty-free access to the TIP protocol necessary to interoperate with its product. In addition, it agreed to hand over control of TIP to an independent industry body thereby allowing market-wide participation in work on further updating of the protocol. 5.745  Depending on the market context, there may be other means of preventing competitors from gaining access to the market. For example, in the fast moving consumer goods sector, retailers and suppliers often have a multi-product relationship. Where manufacturers supply key products within product categories, they may have the ability to use cross-product rebates, bundling, or other mechanisms which could foreclose competitors.801

(viii)  Merger with a Potential Competitor 5.746  As a merger assessment is prospective in relation to the likely future effect a transaction will have on competition, the Commission must be concerned not only with mergers between existing competitors, but also with mergers between possible future competitors. 5.747  For a merger with a potential competitor to raise serious competition concerns, it is in principle necessary to show:802 •  that the potential competitor currently acts as a significant competitive constraint or there is a significant likelihood that, absent the merger, it would grow into an effective competitive force in the market in the foreseeable future; and •  that there is an absence of a sufficient number of other potential competitors to maintain the necessary competitive pressure after the merger. 5.748  The first criterion is unlikely to apply unless the actual level of competition is limited. It is difficult to imagine a situation where a potential competitor is a significant competitive constraint if there are already a number of actual competitors in the market. As such, it tends to be of greatest relevance in cases involving monopoly or near monopoly suppliers. The second criterion is unlikely to be fulfilled unless there is something special

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about the potential (p. 709) entrant involved in the merger. The theory of harm must explain why the transaction would remove a potential or future entrant that is of particular importance, as opposed to simply one of many potential entrants. 5.749  In other words, barriers to entry into the market must be high enough to exclude the existence of a host of other potential competitors, but low enough to make it possible or even likely that the party to the transaction will overcome the barriers. Usually this will be the case if the potential competitor already has advanced plans to enter, and/or is very strongly present either in an adjacent market from which entry is particularly easy or in a vertically related market (either as a customer or supplier) making entry particularly commercially relevant. 5.750  The most prominent case involving the analysis of potential competition is possibly the Commission’s decision to prohibit the merger between the two incumbent Portuguese gas and electricity suppliers, GDP and EDP.803 Both companies held a dominant position in their own respective markets and had strong incentives to enter into each other’s market.804 5.751  In relation to the potential entry by GDP into the electricity market, the Commission found that there was a strong economic rationale for entry, due to the fact that gas-powered electricity generation plants are the most efficient (other respondents confirmed that entry by gas producers into the electricity-generation market was common) and GDP had a secured gas supply. In addition, it was observed that GDP’s parent company, Galp, had already prior to the transaction invested in the gas-powered electricity-generation sector (in cooperation with EDP). The Commission found that GDP would ‘have enjoyed strong strategic advantages by comparison to foreign companies willing to enter the Portuguese [electricity] market such as the ownership of important gas facilities located in the same area allowing a direct, flexible and economical access to gas’.805 5.752  As regards potential entry by EDP into the gas market dominated by GDP, the Commission recognized the likelihood of other possible entrants into that market. It nevertheless considered that ‘EDP would be one of GDP’s most credible potential competitors absent the merger. Taking into account GDP’s strong dominant position, the elimination of such a significant potential competitor is likely to substantially increase the market power that this company would otherwise have’.806 This illustrates that the tolerance for the disappearance of a competitive constraint—even it is not the only one—is usually smaller, the stronger the degree of market power the other party holds prior to the transaction.807 (p. 710) 5.753  A more recent example where concerns arose due to the loss of potential entry from a geographical neighbouring market is RCA/MAV Cargo, which involved the acquisition by RCA (a State-owned Austrian-based railway company) of MAV Cargo (a Stateowned Hungarian-based freight company).808 The Commission found that RCA was a likely entrant in the Hungarian rail freight market where MAV was the incumbent.809 The market investigation had shown that the majority of customers and freight forwarders expected RCA to enter the Hungarian market absent the merger. In addition, there were a number of indications pointing towards potential entry, including that RCA had already entered other geographically neighbouring markets. More importantly, the Commission took into account internal documents describing RCA’s strategic plans for Central and South East Europe810 and the fact that it had already applied and obtained all the necessary licences and certificates for the Hungarian market, for which it had incurred significant costs. The application contained RCA’s own confirmation that it possessed adequate equipment (locomotives, rolling stock, and Hungarian locomotive drivers) and financial resources to enter the Hungarian market. Finally, RCA already had very successful freight-forwarding

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activities in Hungary, through which it had direct access to a large customer base and its parent company was already running passenger trains between Budapest and Vienna. 5.754  The merger was cleared in Phase I after RCA submitted a remedy package which included the removal of structural and contractual links between the merging parties and GySEV, a rail freight operator that serviced cross-border traffic between Austria and Hungary. The Commission considered that, as an independently competing operator with customers in both Member States, GySEV would have both the ability and the incentive to develop into an effective competitive constraint in the Hungarian market. As a result, the remedy addressed the second criterion in the Horizontal Merger Guidelines necessary for competition concerns to arise (the absence of a sufficient number of other potential competitors to maintain sufficient competitive pressure after the merger).

(ix)  Buyer Power Created by the Merger 5.755  The Horizontal Merger Guidelines stipulate that creation of buyer power through a merger may be beneficial to consumers if it allows the buyer to extract lower prices that would, at least partially, be passed on to consumers.811 However, the creation of buyer power may also have anti-competitive effects. 5.756  Essentially, there are two situations in which the creation of buyer power can contribute to a finding of anti-competitive effects:812 •  where the creation of bargaining power vis-à-vis suppliers contributes to the exercise of market power downstream by allowing the merged entity to foreclose rivals on a downstream market; and •  where the creation of bargaining power vis-à-vis suppliers causes harm on its own, even in the absence of downstream market power. This could occur where the merged entity (p. 711) reduces its purchase of inputs (thereby creating excess supply upstream and obtaining lower prices), which leads it then to reduce its own output (thereby causing consumer harm). 5.757  A good example of the first type of situation can be found in the Commission’s cases on supermarket mergers. Kesko/Tuko is an early case in which the Commission specifically analysed the market for procurement of consumer goods, on which the two merging supermarket chains were purchasers. The Commission found that the merger would increase the buyer power of the merged entity and that this ‘further reinforces the dominant position of Kesko on the [downstream] retail and cash & carry markets. In particular Kesko would be able to use its buying power to employ different strategies, the long-term effects of which would be to further weaken the position of its competitors.’813 5.758  Rewe/Meinl offers an example of the snowball effect underlying this concern: The more a food retailer buys, the more favourable as a rule are his buying conditions and hence the more chance he has of gaining a bigger share of the distribution market. This leads in turn to a further strengthening of his purchasing power. If a firm acquires a dominant position both in the distribution market and in the procurement markets, the combination of these two forms of market power enables it to squeeze existing competitors in the distribution market or to oust them completely from the market.814 5.759  In Rewe/Meinl, the Commission posited that the key distinguishing factor between good and bad buyer power is whether output will go up or down:

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The exercise of buyer power which leads to the securing of more…favourable purchase deal is not to be considered per se detrimental to the economy as a whole. Especially where the supplier side is itself highly concentrated and powerful, buyers are faced with effective competition in their own selling market and hence are compelled to pass on any savings to their own customers, buyer power can prevent monopoly or oligopoly profits from being earned on the supply side. However, if the powerful buyer himself occupies in his selling market a strong position which is no longer kept sufficiently in check by the competition, any savings can no longer be expected to be passed on to customers.815 5.760  Cases coming under the second category—where the merged entity has market power vis-à-vis suppliers without a similar degree of market power vis-à-vis its own customers—are relatively rare. However, there have been some examples in the agricultural sector, for instance in relation to food processing. It is much more difficult and costly to transport live animals for slaughter than it is to transport the meat after it has been processed. As a result, the geographic scope of the market in which the slaughterhouse is the buyer (the supply of live animals for slaughter) is usually much more narrow than the market in which the slaughterhouse acts as the seller (the supply of frozen, fresh, or processed meat). The same is true for raw milk/cheese markets. One consequence of this is that in a number of cases the Commission has assessed concentrations between slaughterhouses that have created significant buyer power in the upstream market, without concomitant market power downstream.816 (p. 712) 5.761  In such cases, buyer power is central to the theory of harm (unlike other cases, where it is one element among many). As the Horizontal Merger Guidelines point out, in such cases, the buyer may deliberately reduce its purchases in order to create excess supply and falling prices upstream and then as a consequence reduce its own downstream output.817 5.762  Friesland Foods/Campina is a recent decision and probably also the best guide to the probable future approach of the Commission. In that case, the Commission investigated whether the buyer power created by the merger would enable the merged entity ‘to obtain lower prices from farmers by reducing its purchase of raw milk, which would in turn lead to lower output also in the downstream markets and thus harm consumer welfare’.818 However, the Commission dismissed this hypothesis since the merged entity would be owned cooperatively by the supplying farmers (through farmers’ agricultural cooperatives). As such, it was not likely that it would exercise buyer power vis-à-vis its own members.819 5.763  Nevertheless, the Commission did require remedies in relation to the procurement of raw milk to ensure that buyer power could not be used to reinforce downstream market power (ie the first category mentioned in para 5.756). The remedies were designed to ensure that downstream competitors of the merged entity would not be foreclosed from access to raw milk.

(b)  Coordinated Effects (i)  Concept and History 5.764  For firms in a market, the process of competition is similar to what economists call the prisoner’s dilemma: each firm finds it in its own self-interest to charge low (competitive) prices, while the industry would be much more profitable as a whole if all the firms charged higher (monopoly) prices. In most markets, only the formation of explicit cartels would free firms from the straitjacket of competition. However, as the Horizontal Merger Guidelines state, ‘In some markets the structure may be such that firms would consider it possible,

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economically rational, and hence preferable, to adopt on a sustainable basis a course of action on the market aimed at selling at increased prices.’820 5.765  The analysis of a concentration under the heading of coordinated effects deals with the risk that it would either create these structures, and hence facilitate the emergence of coordination, or would further solidify already existing coordination. 5.766  Both before and after the 2004 reforms, has the Commission been both willing and able to address concerns arising out of the exercise of market power held by more than one undertaking? The Commission’s practice has moved from the examination of structural ‘collective dominance’ concerns under the 1989 Merger Regulation to the examination of (p. 713) ‘coordinated effects’ under the Horizontal Merger Guidelines. This change in terminology accords with the move to an effects-based approach. Sometimes the term tacit collusion, which is borrowed from the economic literature, is used to describe the same phenomenon. (i)  Collective Dominance Under the 1989 Merger Regulation

5.767  The 1989 Merger Regulation referred only to preventing the creation or strengthening of a dominant position, thereby creating a degree of controversy over whether the dominant position could be held collectively by several companies. When the Commission cleared conditionally the Kali&Salz/MDK/Treuhand transaction, it was challenged by France which objected to the expansion of the definition of dominance to cover collective dominance. The Court of Justice confirmed that this was covered by the concept of dominance and invoked the need to preserve the effet utile of the 1989 Merger Regulation. In other words, dominance also had to include collective dominance, otherwise the Regulation would be unable to preserve and maintain effective competition.821 5.768  The General Court also subsequently upheld the Commission’s decision in Gencor/ Lonrho, in which the collectively dominant firms did not have direct structural links between them. However, it struck down the Commission’s prohibition of Airtours’ attempt to take over First Choice on the basis that it was ‘vitiated by a series of errors of assessment as to factors fundamental to any assessment of whether a collective dominant position might be created’ (para 294). (ii)  The Airtours Benchmark

5.769  The Commission’s prohibition decision in Airtours/First Choice was (in terms of structure and level of detail) similar to the earlier decisions that the Court of Justice had upheld (eg Gencor/Lonrho and Kali&Salz/MdK/Treuhand). However, there were some important differences. First, the travel market assessed in Airtours involved products which a priori were less homogenous than those in the earlier cases (platinum and potash, respectively). Secondly, while the previous cases resulted in duopolies, Airtours was the first case where the collectively dominant position would be held by three firms. 5.770  In this context, the General Court subjected the Commission’s decision to a detailed scrutiny and provided a detailed framework for the analysis of collective dominance. In particular, it established that three conditions had to be met in order for a collective dominant position to exist: (a) sufficient market transparency to allow the firms to identify deviations from the common policy; (b) adequate deterrents to ensure an incentive not to depart from the common policy; and (c) means to ensure that the benefits of coordination are not jeopardized by the action of current and future competitors or consumers.821a (iii)  The SONY/BMG Jurisprudence

5.771  Since issuing the Horizontal Merger Guidelines, the General Court and the Court of Justice have both had occasion to bring the case law further forward through a number of appeals relating to the merger between Sony and Bertelsmann Music Group (BMG). The Commission investigated the merger under the 1989 Merger Regulation and cleared it

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despite having sent an SO to the parties alleging the strengthening of a collective dominant position.822 (p. 714) 5.772  The Commission’s clearance decision was at first instance successfully appealed by the Independent Music Publishers and Labels Association (Impala) before the General Court.823 However, the judgment by the General Court was subsequently successfully appealed to the Court of Justice by BMG and Sony.824 In parallel, the Commission reassessed the original merger and cleared it again, this time taking into account the guidance given from the first judgment of the General Court.825 5.773  In addition to a number of procedural aspects, the judgments illustrated that, while successful coordination requires a number of conditions (namely the Airtours criteria) to be simultaneously present,826 there are several ways in which these can be fulfilled and deduced from the evidence. Primarily because the coordination can be implemented in many different ways. This results in a fundamental asymmetry between the type of reasoning necessary for a finding of coordinated effects, as compared to the reasoning required for a clearance decision. A finding of coordinated effects requires the identification of a specific mechanism, while a lack of coordinated effects requires, in principle, the absence of any mechanism. Whereas the former requires the fulfilment of a number of specific and strict criteria, proving the absence of any mechanism can, as a matter of logic, be quite challenging. 5.774  The General Court concluded that the Commission had not shown that coordination could not take place. Conversely, the Court of Justice held that the General Court had not shown specifically how coordination could happen: It is true that the [General Court] referred…to the possibility of a ‘known set of rules’ governing the grant of discounts by the majors. However…the [General Court] itself acknowledged that Impala, the applicant before that court, ‘admittedly did not explain precisely what those various rules governing the grant of campaign discounts are’.827 5.775  The Sony/BMG jurisprudence thus shows that a theory of harm must be specific and fulfil the Airtours criteria. This is true both for the Commission when it raises concerns and for third parties if they wish to overturn a clearance decision by the Commission.

(ii)  Analytical Framework 5.776  In a market characterized by coordinated effects, the market strategies deployed by market participants are different from those in a market with unilateral effects. Coordination presupposes that firms set prices and output quantities with a view to not upsetting the other players (rather than setting them unilaterally as a profit-maximizing response to prevailing market conditions). (p. 715) (i)  The Airtours Criteria

5.777  The Airtours judgment provided the analytical framework for the necessary ingredients for an analysis of collective dominance.828 •  First, each member of the dominant oligopoly must have the ability to know how the other members are behaving in order to monitor whether they are adhering to the common policy. It is not enough for each member of the dominant oligopoly to be aware that interdependent market conduct is profitable for all of them, each member must also have the means of knowing whether the other operators are adopting and maintaining the same strategy. There must, therefore, be sufficient market transparency for all members of

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the dominant oligopoly to be aware, sufficiently precisely and quickly, of the way in which the other members’ market conduct is evolving. •  Secondly, the situation of tacit coordination must be sustainable over time; that is to say, there must be an incentive not to depart from the common policy on the market. The members of the dominant oligopoly can benefit from parallel conduct only if they all adhere to it. The notion of retaliation for conduct deviating from the common policy is thus inherent in this condition. In other words, for a situation of collective dominance to be viable, there must be an adequate deterrent to ensure that there is a long-term incentive in not departing from the common policy, which means that each member of the dominant oligopoly must be aware that competitive action on its part designed to increase its market share would provoke retaliation by the others, so that it would derive no benefit from its initiative. •  Thirdly, to prove the existence of a collective dominant position to the requisite legal standard, the Commission must also establish that the foreseeable reaction of current and future competitors, as well as of consumers, would not jeopardize the results expected from the common policy. (ii)  The Approach Under the Horizontal Merger Guidelines

5.778  The Airtours criteria also form the backbone of the approach set out in the Commission’s Horizontal Merger Guidelines. Here, rather than using the term ‘collective dominance’ the Commission refers to ‘coordinated effects’. While this change aligns well with the emphasis on effects rather than on dominant position on the market, it was not intended to signal a change in enforcement priorities (indeed some subsequent cases still refer to collective dominance). In addition to the three criteria mentioned in the previous paragraph, the Guidelines formally included a fourth, broader element, namely that the economic environment is conducive to coordinated behaviour. In this respect, a stable and less complex economic environment with few players and homogenous products is usually considered more prone to coordination. 5.779  The Commission’s approach to the assessment of coordinated effects involves two elements. •  In order for a theory of harm based on coordinated effects to be sufficiently precise, it must articulate how coordination would take place. 829 Coordination may take various forms. As the Horizontal Merger Guidelines state: In some markets, the most likely coordination may involve keeping prices above the competitive level. In other markets, coordination may aim at limiting production or (p. 716) the amount of new capacity brought to the market. Firms may also coordinate by dividing the market, for instance by geographic area or other customer characteristics, or by allocating contracts in bidding markets. 830 •  This hypothetical mechanism will then guide the subsequent analysis of the four necessary conditions for coordination (conducive economic environment, possibility of monitoring, existence of a credible deterrent mechanism, no possibility for third parties to jeopardize the coordinated outcome).

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5.780  The Court of Justice has stressed the importance of an approach that coherently combines these elements: ‘In applying [the four] criteria, it is necessary to avoid a mechanical approach involving the separate verification of each of those criteria taken in isolation, while taking no account of the overall economic mechanism of a hypothetical tacit coordination…’.831 For example, in a case where the alleged coordination mechanism is based on withholding capacity, the question of transparency must relate to the ability to monitor capacity. If the alleged coordination is based on coordinating prices, the question of transparency must relate to price monitoring. 5.781  Similarly, the criteria must be applied in an internally consistent manner. For example, if the monitoring of deviations is only possible after a certain delay, this must be reflected in the timing of any purported retaliation mechanism.

(iii)  Creating Coordination or Strengthening Existing Coordination 5.782  When assessing coordinated effects, it is important to distinguish between situations where the market appears to produce a competitive outcome pre-merger and those where the market is already characterized by coordinated conduct. In the first situation, the question is whether the merger would trigger a change in the market from unilateral towards coordinated conduct (similar to the creation of collective dominance). In the second, the question is whether the merger would strengthen the degree of coordination (similar to a traditional finding of strengthening of collective dominance). (i)  Creating Coordination

5.783  In Airtours, the Commission argued that the merger would create a collectively dominant position, as the target of the merger (First Choice) was the only remaining midsized company and its removal would further reduce the likelihood of effective competition.832 As recognized in the Horizontal Merger Guidelines, the reduction of the number of firms active in the market may, in itself, be a factor that facilitates coordination.833 5.784  Additionally, in cases where the merger would lead to coordination by creating a structure conducive to coordinated behaviour, the question of whether the merger removes a company that is important for the maintenance of competition (eg a ‘maverick’ player) may be particularly important.834 (p. 717) 5.785  When the market prior to the transaction is not already characterized by coordination, it is possible for the Commission to put forward in the same decision both a theory of harm-based non-coordinated effects and, in the alternative, one on coordinated effects. While it is not possible for both coordinated and non-coordinated effects to materialize simultaneously, it is possible for the Commission to have prospective concerns about both during its review of the merger. In other words, the Commission may be concerned that the merger creates the probability that coordination will emerge and at the same time maintain that, even if this probability were not to materialize, the merger would in any event lead to a reduction in competition and an increase in prices under a standard non-coordinated analysis of the market. 5.786  This occurred in 2006 in Linde/BOC835 where Linde had recently entered the wholesale market for helium (having acquired direct access to helium sources) and was competing aggressively to expand its position on the market. The Commission raised serious doubts regarding the compatibility of the transaction with the internal market, on the grounds that: (a) it would ‘with high probability lead to non-coordinated effects and would have a dampening effect on the price decrease which was expected absent the merger’; and (b) the ‘removal of Linde as a maverick and the combination of Linde’s and BOC’s sources after…the merger would therefore be likely to result in coordinated effects’.836 As regards the coordinated effects, the Commission stated that these ‘would result in a smaller total quantity and prices on the market higher than if they were dictated

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only by the individual, non-coordinated, profit-maximising behaviour of each individual competitor.’837 (ii)  Strengthening Coordination

5.787  An example of concerns that a merger would lead to strengthened coordination can be found in Sony/BMG, where the Commission’s SO alleged the strengthening of existing collective dominance. In that case, the General Court held that the Airtours criteria may ‘in the appropriate circumstances, be established indirectly on the basis of what may be a very mixed series of indicia and items of evidence relating to the signs, manifestations and phenomena inherent in the presence of a collective dominant position.’838 5.788  This means that the Commission may, and probably will continue to, attribute probative value to market data pointing to the general absence of competition due to coordination. However, since most data are open to interpretation and rarely capable of completely ruling out all explanations other than coordination, it seems unlikely that the Commission will completely sidestep the analysis of the Airtours criteria in specific cases. 5.789  In cases where coordination already exists, the focus must in any event also be on how the merger can make the existing coordination more robust or more effective. As a general rule, a (p. 718) reduction in the number of sellers will almost automatically contribute to making coordination more robust; there will be fewer firms to monitor and less likelihood that a firm will wish to deviate from a coordinated strategy. 5.790  However, the Horizontal Merger Guidelines provide that, in certain circumstances, a merger could in principle make coordination less stable. In particular, ‘efficiencies may increase the merged entity’s incentive to increase production and reduce prices, and thereby reduce its incentive to coordinate its market behaviour with other firms in the market.’839

(iv)  The Criteria for Coordination 5.791  The best available illustration of the factual elements on which the Commission relies is probably its decision in ABF/GBI.840 This was the first Phase II decision following the Court of Justice’s Impala judgment where the Commission intervened solely on the basis of coordinated effects. The Commission concluded that the transaction as notified would have led to coordinated effects in Spain and Portugal between the merged entity and the only large remaining competitor, Lesaffre, in the market for compressed yeast. The Commission closely followed the analytical framework set out in the Horizontal Merger Guidelines. (i)  Reaching Terms of Coordination (A Conducive Market Environment)

5.792  In ABF/GBI, the Commission found that prior to the merger, the market was already characterized by a very low degree of competition. In particular, the market already appeared to be divided geographically, with each supplier seemingly able to operate undisturbed within given areas. Further, there were previous findings of illegal collusive conduct in the market for yeast in France between Lesaffre (the remaining competitor in Spain and Portugal) and Gist-Brocade (which subsequently became GBI). In addition to these quite striking facts, the Commission outlined a number of factors that made the market conducive to coordination, including: •  the market was concentrated. Even prior to the merger, there were only three significant players in the market; •  sellers had small, frequent interaction with customers (the bakeries). This type of interaction is more conducive to coordination than markets where new

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orders are available infrequently and in lumps (as in the latter case, suppliers are more likely to compete for a specific order); •  demand elasticity was low. Coordination is more attractive if an increase in price is not countered by a strong drop in demand (and if a small price decrease to undercut a competitor is not rewarded with a large influx of new customers); •  the product was homogenous, thus reducing the complexity of what needed to be coordinated; •  the market was unlikely to be disturbed by innovation or new entrants. Stable mature markets are more conducive to coordination. In markets characterized by frequent product innovations, it may be more difficult to persuade customers to remain with the same supplier over time. Similarly, significant process innovations which would substantially reduce costs or increase production capacity for one market participant could also be disruptive. (p. 719) (ii)  Monitoring Deviations

5.793  For coordination to be possible, firms must be able to observe each other’s behaviour and verify whether other firms are adhering to the coordinated outcome rather than competing aggressively. The aspect of the competitor’s conduct that should be capable of being monitored depends on the way in which the alleged coordination would occur. 5.794  This was made clear by the Court of Justice in its judgment arising out of the Sony/ BMG appeal. In that judgment, the Court of Justice held that the Commission’s assessment of market transparency: should not be undertaken in an isolated and abstract manner, but should be carried out using the mechanism of a hypothetical tacit coordination as a basis. It is only if such a hypothesis is taken into account that it is possible to ascertain whether any elements of transparency that may exist on a market are, in fact, capable of facilitating the reaching of a common understanding on the terms of coordination and/or of allowing the competitors concerned to monitor sufficiently whether the terms of such a common policy are being adhered to.841 5.795  Both Airtours/First Choice (package holidays) and Sony/BMG (recorded music) involved heterogeneous products with highly individualized prices, which seemed impossible to monitor. 5.796  In Airtours/First Choice, the alleged type of coordination did not relate to price setting but to an overall restriction in the number of holidays that would be included in the brochure for the forthcoming season. The transparency issue was thus whether the players could, during the planning phase, monitor the capacity decisions of their competitors. 5.797  In Sony/BMG, the theory of harm being investigated related to coordination of prices offered to retailers. The Commission had concluded that, although it was possible to monitor the price points of albums in the catalogues, there was insufficient transparency of the discounts that record companies offered to retailers to allow coordination of aggregate prices.842 Without such transparency, there was no basis for coordinating aggregate prices. 5.798  When the Court of Justice overturned the General Court’s dismissal of the Commission’s reasoning, it also focused on the need to have a specific coordination mechanism in mind before it is possible to either confirm or dismiss transparency:

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the [General Court]…did not carry out its analysis of [the parts of the decision concerning market transparency] by having regard to a postulated monitoring mechanism forming part of a plausible theory of tacit coordination. It is true that the [General Court] referred…to the possibility of a ‘known set of rules’ governing the grant of discounts by the majors. However—as…to the question whether certain discount variations established by the (p. 720) Commission in the contested decision were liable to call into question the possibility of adequate monitoring of mutual compliance with the terms of any tacit coordination…the [General Court] was content to rely…on unsupported assertions relating to a hypothetical industry professional [and]…itself acknowledged that Impala, the applicant before that court, ‘admittedly did not explain precisely what those various rules governing the grant of campaign discounts are’.843 5.799  In ABF/GBI, the Commission found that transparency was facilitated by the relationship that the merging parties had with small distributors. These distributors, through their close contact with the customers, were easily able to detect if competitors were trying to encroach into partitioned market areas. The distributors could, in practice, channel information between the competitors. (iii)  Adequate Deterrent Mechanisms

5.800  Coordination presupposes that companies respond to a lack of competitive pressure from competitors, not by seeking the opportunities thus offered to them to win new business, but by returning the favour and not competing aggressively. For this to be sustainable, there must be a deterrent mechanism to prevent firms from giving in to the temptation to try to compete aggressively to win more business. 5.801  An explicit punishment mechanism would require companies, when confronted with a competitor that does not adhere to the coordinated outcome, to deploy specific retaliatory actions to hurt the deviator—actions which may well be costly to implement. One such possibility is the initiation of a price war.844 5.802  However, it is well established in economic theory that such explicit retaliation is not necessary to achieve a coordinated outcome; the mere threat of coordination breaking down may in some circumstances suffice as a deterrent. In ABF/GBI, the Commission considered that the risk of a breakdown of coordination was in itself sufficient to deter deviations and pointed, inter alia, to the fact that due to low demand elasticity, the profits from deviation would very quickly evaporate if additional volume had to be absorbed as a result of the breakdown of coordination. 5.803  The Commission also pointed to the fact that the parties had multi-market contacts. When parties meet and compete across different markets and in different products, it is more likely that they would wish to avoid upsetting the competitive balance by deviating from the coordinated outcome. This is because deviation could have negative ramifications going beyond the market in which the deviation occurred.845 5.804  On the other hand, lumpy, infrequent, and unpredictable demand may increase the temptation to deviate and reduce the scope for retaliation. In VNU/WPP, the Commission looked into the potential for future coordinated bidding behaviour between the three remaining suppliers on the market. However, it dismissed such a possibility inter alia on the grounds that tenders only occurred infrequently and that the contracts would differ in value: ‘Winning a new contract is, thus, a relatively rare and valuable opportunity, whereas opportunities for competitors to retaliate against an aggressive bidder are equally rare.’846 (p. 721) (iv)  Reactions of Outsiders

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5.805  Coordination will only be successful if non-coordinating firms or customers cannot jeopardize the outcome expected from the coordination. There are two aspects to this. First, it is necessary that other firms cannot enter the market in response to the higher prices. This requires inter alia the existence of entry barriers. 5.806  Secondly, it is also necessary to explain why firms that are already in the market but not participating in the coordination, would not seize the opportunity offered to them by the lack of competition to seek to win new business. This was a key factor in Airtours, where the General Court found that the Commission had not explained properly how smaller tour operators (of which there were many constantly entering and leaving the market) could not, as a group, counter reduced capacity or increased prices from the large coordinating tour operators.847 5.807  In markets where there is a firm which engages in particularly aggressive competitive conduct (eg due to it being a recent entrant or having an inferior market share), the role of that maverick will be important. Where a maverick will not participate in the coordination, and has a sufficiently strong influence on the market that it cannot be ignored by the others,848 its presence can jeopardize an attempt to achieve a coordinated outcome. Therefore, whether a concentration will lead to coordination will often depend on whether it involves the maverick. 5.808  In Linde/BOC, the Commission held that the removal of the recent entrant Linde (which acted as an aggressive maverick) would increase the risk of coordination effects.849 Conversely, in cases where mavericks are not party to the transaction, the Commission has dismissed the risk of coordination because the merger does not increase stability.850 5.809  In addition to new entrants or mavericks, customers may be able to render coordination difficult. In particular, if there are few or very large customers, they may be able to disturb the outcome planned by the coordinators for instance by threatening unilaterally to switch suppliers.851

(5)  Non-Horizontal Assessment (a)  Non-Coordinated Effects (Unilateral Effects) 5.810  It is generally accepted that non-horizontal mergers are less likely to lead to anticompetitive effects than horizontal mergers. The move away from a structural dominancebased (p. 722) approach to the more effects-based approach, has led to the widespread recognition of this principle and thus had a significant impact on the analysis of nonhorizontal mergers. The Non-Horizontal Merger Guidelines (issued in 2008) highlight two reasons why non-horizontal mergers are less likely to cause competition concerns:852 •  first, unlike horizontal mergers, they do not involve an immediate and direct loss of competition between firms in the same market (market shares do not increase in any given market); •  secondly, vertical and conglomerate mergers provide substantial scope for efficiencies. 5.811  The fact that the Commission has become more reluctant to intervene against nonhorizontal mergers can be seen from its recent practice. Shortly after the adoption of the Guidelines, the Commission assessed two transactions resulting in the vertical integration of the only two suppliers of navigable digital maps: Nokia/Navteq853 and TomTom/Tele Atlas.854 Despite complaints from other market participants, the Commission cleared both transactions unconditionally—albeit, only after two extensive, in-depth investigations.855

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5.812  This approach is also apparent from the wider enforcement statistics. While prohibitions under the 1989 Merger Regulation were often based on non-horizontal concerns, the Commission has not prohibited any merger on the basis of non-horizontal effects since the 2004 Merger Regulation was adopted. This does not mean that the Commission does not look closely at non-horizontal issues, but there is far lower risk that they will ultimately raise concerns. Since 2004,856 six cases that went into Phase II predominantly on the basis of non-horizontal concerns were unconditionally cleared.857 Seven other Phase II investigations resulted in clearance once remedies were offered to address non-horizontal concerns.858 Thus, almost half all Phase II investigations concerning potential non-horizontal effects have been cleared without remedies. In comparison, during the same period, of the cases that went into Phase II due to horizontal concerns, only around one-third were ultimately cleared without remedies.

(i)  Theories of Harm 5.813  In non-horizontal concentrations, there is no direct competition between the parties pre-merger and thus no loss of direct competition. Therefore, the natural starting point for a non-coordinated theory of harm in a horizontal merger does not apply in non-horizontal cases. Instead, the starting point for most non-horizontal theories of harm is foreclosure. (p. 723) 5.814  The Non-Horizontal Merger Guidelines define foreclosure as ‘any instance where actual or potential rivals’ access to supplies or markets is hampered or eliminated as a result of the merger, thereby reducing these companies’ ability and/or incentive to compete.’859 Where foreclosure results in the merged entity charging higher prices to its ultimate customers (ie the customers that are downstream of the merged entity) this is known as ‘anti-competitive foreclosure’. 5.815  Theories of harm based on foreclosure can be grouped into three categories: input foreclosure, customer foreclosure and conglomerate effects. Each has in common the preexistence of substantial market power in a given market and the concern that a merger will create a link to another market thus paving the way for the market power to be exercised in that second market. •  Input foreclosure relates to cases where market power is located upstream and the potential harm affects competitors downstream. •  Customer foreclosure refers to cases where market power is located downstream and the potential harm affects competitors upstream. •  Conglomerate effects relate to cases where market power is leveraged to a related market which is, strictly speaking, neither upstream nor downstream but closely linked, for instance because customers purchase or use the products from both markets together. The potential harm would occur on the closely linked market. 5.816  The theory of harm in each of the three categories differs in terms of the mechanism through which the market power ‘travels’ from the market on which it is already held to the other market. •  In an input foreclosure case, upstream market power may be used to harm competitors on the downstream market through the selling conditions that the merged entity offers to those downstream competitors. 860 •  In a customer foreclosure case, downstream market power may be used to harm competitors on an upstream market by influencing, for example through purchase conditions, which upstream producers gain access to customers in the downstream market and how.

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•  In a conglomerate setting, where there is no direct commercial relationship between the two markets, leveraging has to occur by other means. 861 One method of leveraging is through ‘technical tying’ where the product (which is the original source of market power) is designed so that it does not work well with the products of competitors in the adjacent market. Another method is ‘commercial tying’ where, if the two products are sold jointly to the customer, rebates or other pricing strategies make it more difficult for competitors in the adjacent market to sell their products. (p. 724) (i)  Example of Input Foreclosure: UTC/Goodrich862

5.817  A recent high-profile case where the Commission cleared a transaction following the submission of remedies to address vertical concerns was UTC’s takeover of Goodrich. 5.818  Both Goodrich and UTC manufactured a large number of different components necessary for the production of aeroplanes and helicopters including engines. UTC, through its subsidiary Pratt & Whitney, was also active in the production of jet engines for smaller aircraft. On this downstream market, several of its competitors (eg Honeywell and Williams) were dependent on Goodrich to obtain certain engine control parts. The Commission was concerned that the merged entity would have the ability and incentive to use these supply relationships to the detriment of Honeywell and Williams (and to the advantage of Pratt & Whitney). 5.819  Additionally, Pratt & Whitney was active on the downstream market for the production of jet engines for large commercial aircraft, where it competed with Rolls-Royce. Rolls-Royce relied on Goodrich to develop a new lean-burn fuel nozzle, which it would use in future tenders on that market. The Commission was concerned that the transaction could remove the incentive for Goodrich to make the development of this new product a success. 5.820  The first concern was solved by a structural remedy (UTC agreed to divest Goodrich’s business in engine controls for small aircraft engines) and the second was solved through a contractual arrangement (Rolls-Royce was offered an option to acquire Goodrich’s lean-burn fuel nozzle R&D project). (ii)  Example of Customer Foreclosure: Mobile Wallet Platform863

5.821  There is thus far no clear example of a customer foreclosure case in the Commission’s practice. However, Mobile Wallet Platform in effect involved concerns akin to customer foreclosure and is therefore instructive. This recent case involved the creation of a joint venture with the object of developing a so-called ‘mobile wallet’ platform to allow payments to be made via mobile phones. The main participants in the joint venture were the large mobile network operators, Telefonica UK, Vodafone UK, and Everything Everywhere (itself a joint venture owned by France Telecom and Deutsche Telekom). The joint venture would provide services to its parents and to third party mobile operators; it would not sell directly to consumers. A key issue was whether the joint venture’s parents would be able to use their positions on the retail mobile phone market to foreclose the joint venture’s rivals from being able to distribute mobile wallets to customers. 5.822  While the Commission did not formally classify its analysis as one of customer foreclosure,864 the potential strategies that it investigated involved foreclosing rival mobile wallet platforms from being successfully rolled out by preventing them from gaining access to the mobile phones of the final users of the platform. The Commission distinguished between two types of foreclosure: technical foreclosure and commercial foreclosure. 5.823  Technical foreclosure would entail preventing competing platforms from gaining access to the SIM cards of customers’ mobile phones. Access to the SIM card was vital because it (p. 725) could be the carrier of the so-called SE (secure element) needed to carry out the financial transaction safely. However, based on a technical analysis, the Commission concluded that the parents would most probably not have the technical ability to block or

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degrade competing mobile wallet applications from being downloaded, installed, or updated on a handset operating on their networks. 5.824  In relation to commercial foreclosure, the Commission analysed whether the parents could jointly foreclose competing mobile wallet competitors from access to the market, for instance by inducing mobile phone OEMs to block access for competing mobile wallet platforms to their devices, or by incentivizing independent retailers to market only mobile handsets that did not contain rival mobile wallets. 5.825  After a detailed assessment, analysing numerous commercial strategies, the Commission reached the conclusion that it was unlikely that the notifying parties would have the ability or the incentive to engage in such foreclosure, in part because other developers of alternative mobile wallet platforms, such as Google, would have strong countervailing strategies available. (iii)  Example of Conglomerate Effects: Intel/McAfee865

5.826  Intel / McAfee is a good illustration of a recent case where the Commission analysed whether market power could travel to another market which was related but not immediately upstream or downstream. Intel and McAfee were active in neighbouring markets and supplied complementary products. The concentration combined Intel’s dominant position in computer chip manufacturing and McAfee’s position as a major vendor of IT security software. Security solution vendors need access to specific information about Intel CPUs in order to be able to develop new solutions. 5.827  The Commission was concerned that post-merger other security solution vendors would suffer from a lack of interoperability with Intel CPUs and chipsets or that the parties would engage in technical tying between Intel CPUs and McAfee’s security solutions. The transaction was cleared with remedies after a Phase I investigation. 5.828  The remedies were designed inter alia to reduce the possibilities for leveraging Intel’s market power in CPUs into the security solutions market. In particular, Intel committed to ensure that vendors of rival security solutions would have access to all necessary information to use the functionalities of Intel’s CPUs and chipsets to the same extent as McAfee. Intel also committed not to impede competitors’ security solutions from running on Intel CPUs and chipsets. 5.829  The Commission was also concerned about possible effects on Intel’s competitors if McAfee solutions were no longer compatible with non-Intel CPUs and chipsets, and required remedies to ensure that McAfee would be compatible with other CPUs.

(ii)  Who is Entitled to Protection From the Potential Effects of Non-Horizontal Mergers? 5.830  When a company merges with either a supplier or a customer holding significant market power, it often causes concern among competitors. For example, when General Electric wanted to acquire Honeywell, Rolls-Royce—which sourced its engine starters from Honeywell—was concerned that its competitor General Electric would obtain control over (p. 726) an essential input. Rolls-Royce was also concerned when its competitor UTC acquired its supplier Goodrich. When McAfee was acquired by Intel, its competitors were worried that Intel’s dominant position in CPUs could be used to disadvantage them when competing with McAfee in providing computer security solutions. 5.831  However, the fact that a competitor may suffer harm is not in itself sufficient to justify a finding of significant impediment to effective competition. The Commission will only prohibit mergers that deprive customers of the benefits of competition.866

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5.832  The goal of protecting competition and customers, rather than competitors, requires particular precision in a vertical setting where several layers of the value chain are relevant. A third party confronted with a merger between his competitor and their supplier will be both a competitor and a customer to the merger entity. 5.833  The Non-Horizontal Merger Guidelines make clear that a complainant playing dual roles as both competitor and customer will not be entitled to direct protection: when intermediate customers are actual or potential competitors to the parties to the merger, the Commission focuses on the effects of the merger on the customers to which the merged entity and those competitors are selling. Consequently, the fact that a merger affects competitors is not in itself a problem. It is the impact on effective competition that matters, not the mere impact on competitors at some level of the supply chain.867 5.834  As a result, the Commission will assess a vertical merger predominantly for its effect on customers at the level immediately below the ‘lowest’ activities of the merged entity (namely, the level at which it no longer competes with other suppliers).868 5.835  This is not to suggest that the impact on competitors is irrelevant—the ability and incentive of the merged entity to harm competitors is a necessary condition for a finding that there will be a significant impediment to effective competition. However, it is not sufficient in itself. To illustrate the difference with horizontal mergers: if a car producer is harmed by the upstream horizontal merger between two suppliers of a given car component, the Commission would intervene if the harm is established and proven. However, if a car producer is harmed by a vertical merger between a competing car producer and an upstream component supplier, that harm will not in itself be sufficient to justify the Commission’s intervention. In such a case, it would also be necessary to establish that the car producers’ customers would be harmed (eg because the car producer would be forced to increase the price of its cars as a result of higher input costs).

(iii)  Framework for Analysing Foreclosure 5.836  The Non-Horizontal Merger Guidelines provide an overarching framework for analysing foreclosure cases by reference to three questions: (a) does the merged entity have the ability to foreclose? (b) does it have the incentive to foreclose? and (c) if it did foreclose, would that have a negative effect on customers?869 5.837  In practice, the three questions are intertwined. For instance, whether there is an incentive to foreclose depends on the effect the foreclosure would have on profits. This depends on (p. 727) whether the foreclosure will result in higher prices to consumers, which in turn depends on whether the merged entity actually has the ability to foreclose competitors.870 5.838  Although the Non-Horizontal Merger Guidelines address the questions of ability, incentive, and effect separately for each type of foreclosure (input foreclosure, customer foreclosure, and conglomerate effects) the analysis is substantially the same across foreclosure types. To avoid repetition, this section assesses the questions in a general way. As input foreclosure is the most common type of foreclosure investigated by the Commission, the illustrative examples relate to this type of foreclosure.

(i)  Ability to Foreclose 5.839  The ability to foreclose a competitor requires market power in relation to something that is important for that competitor’s ability to compete, such as an input into the product

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(input foreclosure) or access to the customer base, whether this is in a downstream market (customer foreclosure) or in a neighbouring market (conglomerate foreclosure). 5.840  The main examples of the ability to foreclose in an input foreclosure setting, are completely ceasing to supply the input, raising the price of the input, decreasing the quality of the input, or delaying deliveries. 5.841  What is key to the question of ability to foreclose regardless of the method, however, is that the strategy has a significant impact on the downstream competitor’s ability to compete. 5.842  In GE/Honeywell, the Commission analysed whether Honeywell’s supply of engine starters to Rolls-Royce could be used to reduce the competitive pressure that GE’s engines faced from Rolls Royce’s engines. However, the General Court dismissed this theory inter alia on the grounds that, since the price of an engine starter was insignificant compared to the price of an engine (an engine starter cost 0.2 per cent of the price of an engine), it was unrealistic to expect price increases of engine starters to influence engine competition without it clearly constituting an abuse of dominant position.871 While the Court did not exactly employ the terminology later adopted by the Non-Horizontal Merger Guidelines, it essentially found a lack of ability to foreclose its downstream rivals through engine starter prices. 5.843  In Itema Holding/BarcoVision, the Commission assessed the upstream product of optical sensors which went into the downstream production of winding machines used in the textile industry. While BarcoVision was an important supplier of sensors, windingmachine manufacturers could obtain supplies from at least one significant alternative supplier—Uster. Given the oligopolistic structure of the upstream market, the Commission found that Itema/BarcoVision could to some extent hurt competing winding-machine manufacturers by reducing the supply of sensors and leaving the manufacturers exposed to market power exercised by Uster. However, there was a limit to Uster’s market power, even if BarcoVision halted its supply, since over time winding-machine manufacturers could develop alternatives. As the price of a sensor only represented a small fraction of the overall cost of a winding machine, exposure to Uster’s market power would only have a very limited effect on winding-machine (p. 728) producers’ competitive situation downstream. This significantly restricted the integrated entity’s ability effectively to foreclose downstream competition.872 Distinction between situation of sole control and joint control

5.844  Since foreclosure involves foregoing profit at one level in order to gain additional profit at another level, the question whether all parts of the merged entity will be under the control of the same owners is important. If, after the transaction, other partners have joint control over some of the activities of the integrated company, these partners would also have to agree to engage in the foreclosure strategy. 5.845  In Advent/Maxam,873 Advent acquired 49.99 per cent of Maxam, the remainder being retained by a group of shareholders (the TDA Group). Advent already controlled Oxea, a chemical producer. Maxam was a diversified company with a number of divisions, including a chemical division. Maxam also participated in a joint venture called Cetpro (together with another entity, Yara) which produced chemical improvers for diesel fuel. 5.846  The complainants alleged that the merger would lead to customer foreclosure. To produce the chemical 2-EHN, Cetpro needed supplies of 2-EH and Advent (through Oxea) had a large share of the market for 2-EH. Its competitors argued that Cetpro would source its 2-EH supplies exclusively from Oxea, thereby foreclosing access to Cetpro for those

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competitors. The Commission did not consider this to be likely, in part because such a strategy: would need the consent of both the TDA shareholders (within Maxam) and Yara (within Cetpro). It cannot be assumed that the interests of the TDA shareholders and Yara will be aligned to those of Advent, as these shareholders will not gain any substantial benefit from Cetpro dealing exclusively with Oxea. On the contrary, it appears likely that both the TDA shareholders and Yara will have a strong interest in Cetpro continuing to (i) multi-source 2-EH in order to ensure security of supplies, and (ii) purchase 2-EH from the lowest cost supplier possible, which will not necessarily be Oxea.874

(ii)  Incentive 5.847  When the only objective of an independent input supplier is to earn as high a profit as possible on its own market, it will raise prices to the point where customers start to consider alternatives, but not so high that too many customers actually switch suppliers. However, following a transaction that combines the supplier with one downstream customer, the potential loss of some of the other customers may be less of a problem for the merged firm. To the extent that higher input prices provoke some customers either to leave the market completely or switch to an alternative, less ideal, supplier (eg more expensive or lesser quality), they will be a loss to the upstream unit. However, that will also have the effect of reducing downstream competition. While this was previously immaterial to the supplier, it would now count as a benefit for the downstream unit, and hence for the integrated firm. The benefits to the downstream unit may outweigh the losses to the upstream supply unit and the firm may consider it profitable overall to limit its supply of the input.875 (p. 729) 5.848  This mechanism is why a vertical merger may create the incentive to engage in foreclosure to raise rivals’ costs. The change in objectives which can result from vertical integration is at the heart of the analysis of whether the merged entity will have an incentive to carry out input foreclosure.876 5.849  To identify whether the merger would provide the incentive to foreclose inputs to rivals, it is necessary to compare the profit foregone upstream with the profit gained downstream.877 Such an assessment requires information about costs and profit levels in upstream, downstream, and neighbouring markets, as well as an understanding of how competitors and customers will react in the different levels. 5.850  In Nokia/NAVTEQ, for instance, the Commission estimated that a foreclosure strategy where Navteq withdrew as supplier from the upstream market, thereby leaving Nokia’s competitors exposed to Tele Atlas’s market power, would only be profitable for the merged entity if Tele Atlas increased its prices by more than 200 per cent as a result. Such a price increase was found to be unrealistic.878 5.851  When Google acquired Motorola Mobility,879 the question arose whether Google’s strong position as supplier of the Android operating system for mobile phones could have an impact on competition between Motorola Mobility and other suppliers of mobile phones. The issue was whether Google would have the incentive to increase prices of the Android operating system for Motorola’s competitors. The Commission dismissed this concern on the ground that it would not fit with Google’s business strategy. Google’s core business is search and advertising; it earns almost all its revenue from online advertising (including on mobile devices through the Android operating system). Google also earned high margins on Android. Motorola Mobility had only a 5 per cent market share of mobile devices and operated at a loss in that business. Google’s incentive was to focus on its higher margin Android business rather than favouring the Motorola Mobility business. Additionally, any favouring of Motorola Mobility would jeopardize mobile search and advertising revenues. From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Google therefore had a strong incentive to ensure widespread take-up of the Android platform in order to maximize the adoption of its search and advertising systems.

(iii)  Effect 5.852  Anti-competitive foreclosure will only occur where the foreclosure impedes effective competition and harms customers in the market below the lowest level where the merged entity competes.880 In other words, the foreclosure (whether input, customer, or conglomerate) must be capable of resulting in increased prices not only to competitors but also to customers. 5.853  This can occur in two situations. The first is where the competitors being foreclosed play a sufficiently important role on the market (either because of their number or aggressive (p. 730) competitive strategies) that their reaction to the foreclosure will increase the price to customers. The second is where the foreclosure increases barriers to entry to such an extent that potential competitors are deterred from entering.881 The possibility of deterring entry into neighbouring markets is particularly important in conglomerate cases, as the merged entity will only have the ability to increase prices if there are insufficient single-product players in each market to be an effective constraint or if such players are deterred from expanding into neighbouring markets.882 5.854  The assessment of the effect of a foreclosure strategy will also, of necessity, take into account countervailing factors, such as buyer power and efficiencies (eg distribution or inventory cost savings, increased investment incentives).883 Efficiencies: The Importance of the Elimination of Double Mark-Ups

5.855  As regards vertical concentrations, even if input or customer foreclosure leads to an increase in rivals’ costs, it does not automatically follow that customers in the market below the merged entity taken as a whole will suffer. While the higher input cost for downstream rivals will create upward pressure on downstream prices, the merger may also generate a force creating downward pressure on prices. This force is called the elimination of double mark-ups.884 5.856  The elimination of double mark-ups works as follows: prior to the vertical merger, the downstream firm will apply its own mark-up to the cost of the input when setting the price for the product. However, the cost of the input already includes the mark-up earned by the upstream seller. Thus, the final cost of the product includes two layered mark-ups. Extra sales generated from a price decrease in the final product will lead to a higher demand for that product and consequently for the upstream input. After a vertical merger, the integrated firm will take account of the fact that increased downstream sales will create profits both for the downstream unit and for the upstream unit. It will thus see a larger gain from extra sales than the standalone downstream firm did prior to the merger. The merger has thus created an incentive to reduce the downstream mark-up and thus the price of the final product in order to recoup that overall benefit.885 5.857  In TomTom/Tele Atlas, which involved vertical integration between an upstream supplier of digital maps (Tele Atlas) and a downstream supplier of portable navigation devices (PNDs) (Tom Tom), the Commission used a model to take account of the competing forces on prices. On the one hand, there would be upward pressure on the price of PNDs sold by TomTom’s competitors if they had to pay higher prices for the digital maps. On the other hand, there would be downward pressure on the price of PNDs sold by the merged entity resulting from the elimination of double mark-ups. The Commission’s model indicated that ‘the overall impact of the vertical integration of TomTom and Tele Atlas, taking into

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account the elimination of the double mark-up by the integrated company, would be a small decline in the average PND prices.’886 (p. 731) 5.858  The Commission reached a similar conclusion (albeit without appearing to engage in the same level of economic modelling) in Nokia/Navteq, which also involved the acquisition by a mobile phone manufacturer of a supplier of digital maps.887 5.859  In Itema Holding/BarcoVision, the Commission could not reliably estimate demand elasticities in the downstream market. Based on a highly stylized model, it was however possible for the Commission to establish that it would only be profitable for the merged entity to withdraw from the upstream market if it thereby provoked very substantial input price increases for its downstream competitors. Small upstream price increases would not generate sufficiently higher prices downstream, which was necessary, both for there to be a negative effect on customers and for the strategy to be profitable for the merged entity. Based on the evidence in the file, the Commission did not believe that price increases of that magnitude would occur.888

(iv)  The Diminished Role of Dominance in Non-Horizontal Cases 5.860  The effects based approach to assessing mergers has generally made it less likely that vertical and conglomerate mergers will be considered to cause competition concerns, as compared to the older, more structural, approach which focused on dominance. That said, there are two ways in which concerns are more likely to arise with an effects-based approach: first, it allows a finding that harm can arise even where dominance would not be created or strengthened and, secondly, it is possible for competition to be impeded within a shorter time than it would take for dominance to be created. (i)  Dominance is Not Necessary

5.861  The Non-Horizontal Merger Guidelines make it clear that although significant market power is necessary for anti-competitive foreclosure to occur, this does not have to amount to a dominant position.889 5.862  In UTC/Goodrich, the Commission concluded that the merger would cause harm through input foreclosure on two accounts: (a) Goodrich supplies of engine controls to Honeywell and Williams which competed with Pratt & Whitney (belonging to UTC) in the manufacture of small jet engines; and (b) Goodrich supplies of fuel nozzles to Rolls-Royce, which competed with Pratt & Whitney in the manufacture of large jet engines. 5.863  The Commission found that Goodrich’s engine customers were dependent on the inputs from Goodrich in order to compete and that, as a result, a foreclosure strategy may result in them being unable to respond to customer orders, with the consequence that customers’ choice of aircraft could be significantly reduced. However, this finding did not rely on or involve any prediction that the foreclosure would lead to the creation or strengthening of a dominant position in the engine markets. Indeed, the previous GE/ Honeywell decision had established that General Electric was dominant in relation to large jet engines. (ii)  Effects May Come Faster Than Dominance

5.864  Before the 2004 reforms, competition concerns had to be based on the creation of a dominant position. In some past cases, the creation of this dominant position would not have arisen immediately after the transaction, but only over time, as the foreclosure changed the competitive structure in the market. (p. 732) 5.865  This was the case in the Tetra Laval/Sidel prohibition. The Commission objected to the transaction inter alia on the ground that it feared Tetra Laval would leverage its existing dominant position in carton packaging into the market for PET packaging equipment, where Sidel had an appreciable, but far from dominant, position.890 Since it would take some time for the merged entity to achieve a dominant share of the market for PET packaging machines, the Commission had to apply a relatively long From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

timescale to its analysis. This greatly contributed to the Court of Justice calling for particular attention to be paid to the quality of evidence in conglomerate cases which involve consideration of lengthy timescales where chains of cause and effect are barely discernible, uncertain, and difficult to establish.891 5.866  Under the effects-based framework outlined in the Guidelines, it is not relevant if or when the parties obtain a market share commensurate with the creation of a dominant position. Instead, the focus is on if and when prices will rise. It is likely that the harm from foreclosure strategies will be felt relatively soon after the conduct begins, thereby removing the need to apply a particularly long timescale for the analysis. While the Commission will still have to produce a solid basis for the prediction that the merged entity will undertake leveraging, there is no reason per se to expect particularly long timescale for the alleged harm to arise in vertical or conglomerate settings compared to horizontal mergers.

(b)  Coordinated Effects 5.867  As with horizontal concentrations, vertical or conglomerate concentrations may give rise to coordinated effects between the merged entity and its competitors. The NonHorizontal Merger Guidelines discuss the possibility of coordinated effects in vertical and conglomerate cases, adopting the same framework of analysis as that set out for horizontal cases.892

(i)  Reaching Terms of Coordination 5.868  Vertical or conglomerate mergers may make the market structure more conducive to coordination in a number of ways; by foreclosing the market and leading to a reduction in the number of competitors, by increasing the degree of symmetry between firms on the market,893 by increasing market transparency, and/or by eliminating a maverick.

(ii)  Monitoring Deviations 5.869  A reduction in the number of competitors through vertical or conglomerate foreclosure or through a merger between companies active in upstream and downstream markets with different levels of transparency, may make it easier for firms actively to monitor each other’s actions and thus monitor deviations. Similarly, where vertical mergers give upstream producers control over final prices, they will be able to monitor deviations more effectively.

(p. 733) (iii)  Deterrent Mechanisms 5.870  If a vertically integrated company is an essential supplier to or customer of other competitors, it will be in a position to punish deviations more effectively. Conglomerate mergers may increase the extent and importance of multi-market competition, which would increase the scope and effectiveness of disciplining mechanisms across markets.

(iv)  Reactions From Outsiders 5.871  By increasing barriers to entry and making potential entry less likely/effective, a vertical merger can reduce the possibility of coordination being destabilized by the conduct of outsiders to the coordination. Equally, a vertical merger may involve the acquisition (and thus elimination) of a large/disruptive buyer, which would decrease the risk of destabilization. 5.872  Coordinated effects in non-horizontal concentrations are rare. One recent example is Telefónica UK/Vodafone UK/Everything Everywhere/JV,894 which provided an interesting dimension to the interplay between vertical effects and coordination. In this case, the question was not whether the vertical relationship created by the merger could facilitate traditional horizontal tacit coordination, but whether coordination, which was required to

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implement foreclosure, was possible. In other words, the coordination did not concern raising prices as such, but rather concerned jointly foreclosing a rival. 5.873  In assessing whether the parents to the joint venture (which together held 90.5 per cent of retail mobile revenues in the UK) would have the ability or incentive to engage in coordinated commercial foreclosure, the Commission assessed the likelihood of coordination by reference to the Airtours criteria but found that these were not met. In particular, coordinated commercial foreclosure would be complex to implement (as it would depend on bilateral negotiations between each of the parents), would be internally unstable as the gains from deviations may outstrip the cost of punishment, deviations would not be detected quickly and would likely be irreversible, and rivals would have countervailing strategies.895

(6)  Countervailing Factors 5.874  For a concentration to lead to a significant impediment to effective competition, it is necessary that any potentially anti-competitive effect from the transaction is not neutralized by the conduct of third parties. The principal ways in which actions on the part of third parties could counter the effects of a merged entity’s attempt to exercise market power are through the exercise of buyer power and the entry of new competitors. 5.875  Additionally, a concentration will not lead to a significant impediment to effective competition in situations where the negative effects are outweighed by countervailing positive effects (namely, through the creation of countervailing efficiencies) or where the alternative to the concentration is equal or greater harm to effective competition (namely, where the parties invoke the failing firm defence). 5.876  Each of these countervailing factors will be examined in turn.

(a)  Buyer Power 5.877  Where customers have strategies which they can deploy to prevent any increase in prices following a transaction, the upstream market power created by that transaction would (p. 734) be cancelled out by countervailing buyer power. In this respect, the Horizontal Merger Guidelines focus on the ‘the bargaining strength that the buyer has visà-vis the seller in commercial negotiations due to its size, its commercial significance to the seller and its ability to switch to alternative suppliers’.896 5.878  The increased focus on effects after the reforms in 2004 has clarified the role buyer power should play in the analysis. In 2003, the General Court’s BaByliss judgment (overturning the Commission’s decision to clear the SEB/Moulinex transaction) contained language which suggested that countervailing buyer power could not be used as defence: in so far as it consists in the assumption that retailers will be able to penalise any anti-competitive conduct by the new entity, amounts rather to saying that retailers will be able to prevent SEB-Moulinex from abusing its position, than to proving that the combined entity will not have a dominant position. Regulation No 4064/89 aims to prohibit the creation or strengthening of a dominant position, not the abuse of one.897 5.879  The explicit treatment of buyer power in the Horizontal Merger Guidelines made clear that it would not rely on this type of reasoning in cases under the new Regulation. The General Court in Sun Chemical Group subsequently approved a finding that countervailing buyer power could prevent a significant impediment to effective competition. In the judgment, the Court does not discuss the fact that it is deviating from the BaByliss position.

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While the judgment does refer back to BaByliss on several points, the first time it does so is to recall the general principle that the Commission is bound by its own guidelines.898 5.880  While not explicitly mentioned in the Guidelines, a good indicator of the existence of buyer power is when transaction prices are closely linked to the actual production costs of the seller. The existence of very high margins for the seller is difficult to reconcile with the argument that buyers, due to their power, are able to avoid high prices.899 In Mitsui/CVRD Caemi, the Commission noted that, ‘The high profit margins enjoyed by iron ore producers, when compared with the low profit margins achieved by customers…clearly indicate where the balance of power between suppliers and customers lie.’900 5.881  For buyer power to amount to a countervailing factor, it is not sufficient that customers had buyer power on the market before the transaction; buyer power must continue to exist following the reduction in competition resulting from the concentration. This may not be the case where the concentration removes one of the alternatives to which buyers could turn prior to the merger.901 5.882  In Kraft Foods/Cadbury, in relation to the Polish and Romanian chocolate market, the Commission did not dispute that, prior to the transaction, some of the supermarkets may have possessed significant countervailing buyer power. However, the removal of one of the two main chocolate bar suppliers considered to be the closest competitors in the market, (p. 735) meant that the Commission was not convinced that retailers would be able to exercise buyer power post-merger.902

(i)  The Exercise of Buyer Power 5.883  The Horizontal Merger Guidelines list a number of examples of how buyer power can be exercised. In particular, it lists three ways in which customers could credibly threaten to resort, within a reasonable time frame, to alternative sources of supply: (a) immediately switch supplier; (b) vertically integrate upstream; or (c) sponsor entry. In addition, the buyer could refuse to buy other products from the customer. A customer can exercise its buyer power by means of one of these strategies alone, or can combine different strategies. (i)  Immediately Switch Supplier

5.884  The ability for customers to resort to alternative suppliers is an integral part of the assessment of likely harm. As such, it is already taken into account in the assessment of whether the merger will lead to incentives to increase prices. However, in cases where the buyer side in the market is particularly concentrated, the buyer may have a commercial significance to the seller that makes the supplier more vulnerable to such a threat than its market share would suggest. In this respect, the analysis of buyer power may also include an analysis of the relative concentration on buyer side.903 5.885  The Commission’s decision in VNU/WPP,904 which concerned two suppliers of television audience measurement systems, is illustrative. In each country (with the exception of Poland), the parties’ customers had combined forces in a Joint Industry Committee (JIC) and organized the selection and purchase of those services thus confronting the suppliers with a national monopsony. Although the incumbent supplier for any given tender process would have a significant advantage over other potential bidders, the Commission found that JICs could structure the tender procedure in such a way as to ensure competitive bidding even when the number of potential suppliers was reduced to three after the transaction. (ii)  Vertically Integrate Upstream

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5.886  In some markets, customers can threaten to retaliate to an increase in price or deterioration in supply by making the product themselves. If an in-house alternative would be cost-effective and readily available within a short time frame, the merged entity may be unable to exercise market power. 5.887  The Commission’s Phase I clearance decision in Apollo/Akzo Nobel905 depended heavily on countervailing buyer power of this nature. Although the two suppliers would hold a combined 40–50 per cent market share, with the remaining suppliers each holding less than 20 per cent in the production of rosin resin, the Commission found that customers could exercise countervailing buyer power, in part owing to the somewhat unusual situation where some customers already had in-house production capacity. The decision was unsuccessfully appealed by the some of the allegedly strong buyers, allowing the General Court to provide further clarity on some issues related to buyer power. With respect to the threat to resort to alternative sources, the General Court stated that it: is not necessary in order to discourage anti-competitive conduct on the part of the merged entity, for such customers to withdraw entirely from the supplier in question. The possibility (p. 736) for the applicant to transfer a substantial part of their requirements to other suppliers may be regarded as a sufficient threat of losses for the merged entity to be capable of deterring it from pursuing such a strategy.906 5.888  Mergers in the fast-moving consumer goods sector often raise the question whether retailers have buyer power. One important feature of these markets is the emergence of private-label alternatives to branded goods. These private labels are designed and controlled by the retail chains and can be seen as an example of the customer integrating vertically upstream. The ability to introduce or expand private-label goods in competition with an upstream manufacturer could give retailers sufficient power to counteract an exercise of market power by the manufacturer(s). This conclusion would require that the consumers find the retailers’ products to be sufficiently close alternatives to the branded products so that the latter would have no scope to increase prices.907 (iii)  Sponsor Entry

5.889  The Horizontal Merger Guidelines provide that a sufficiently large customer may be able to sponsor entry or expansion by an upstream competitor, for example by committing to place large orders with that company.908 In Korsnäs/Assidomän Cartonboard,909 the Commission allowed a merger in a highly concentrated market for liquid packaging board in part due to buyer power. The largest buyer, Tetra Pak, purchased sufficient volumes to allow it to help a new entrant to establish in Europe if it wished to do so. Indeed, Tetra Pak had in the past been instrumental in developing new sources of supply of liquid packaging board.910 Neither Tetra Pak nor other customers complained about the transaction. (iv)  Refuse to Buy Other Products

5.890  The purchase and supply relationship may involve a number of products beyond those in relation to which the transaction will give the supplier market power. This raises the question whether an increase in market power for one product can be overcome by countervailing buyer power in the overall relationship. 5.891  In relation to fast-moving consumer goods sold in supermarkets, for example, suppliers may face ‘delisting’ over some or all of their products if they attempt to exercise market power. The delisting can relate to products other than the product for which the supplier has market power. However, when a retailer threatens to delist a given product, it

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risks facing the consequence that its own customers will then switch retailers.911 For this reason, the degree of concentration among retailers is also important for the assessment. (p. 737) 5.892  In Unilever/Sara Lee Body Care, the parties put forward buyer power arguments invoking, inter alia, delisting by retailers. For each country, the Commission looked at data for product penetration in supermarkets (weighted distribution). When a product appeared on the shelf in almost all supermarkets, this was taken as an indication that it was a so-called must-have product, thereby undermining the claim that it could be delisted by retailers.912

(ii)  Buyer Power Must Benefit All Customers 5.893  For buyer power to be accepted as the countervailing factor to the exercise of market power on the part of the supplier, it must benefit all customers in the market. It is not sufficient that, for instance, particularly large customers are shielded from potential price increases if there are no alternatives available for other customers. 5.894  In Procter & Gamble/Wella, which involved the supply of hair-care products, a buyer power argument was not accepted inter alia on the grounds that smaller retailers did not have buyer power (and that more generally buyer power was constrained vis-à-vis very strong brands).913 In Unilever/Sara Lee Body Care, the Commission similarly noted that ‘even if large retailers were to have some bargaining power, this is not the case for all retailers’.914 5.895  However, it is interesting to note that while size often matters, it may not always be to the benefit of the larger firms. For instance, in Ineos/Kerling, the Commission found that small UK customers buying commodity suspension PVC from either of the parties could easily find acceptable alternative suppliers abroad, whereas the larger customers needed a dedicated supplier nearby and argued that large volumes would be more difficult to procure and transport.915 5.896  Similarly, in 2003 the Commission found that the Alcan/Pechiney merger would create a dominant position in aluminium cartridges. The parties argued that Alcan and Pechiney each had a customer that accounted for half their sales and that these two customers could exercise considerable countervailing buyer power by threatening to switch supplier. However, the Commission dismissed this argument inter alia on the ground that it would be particularly difficult for the remaining competitors to absorb such large volumes.916 This leads to the slightly counter-intuitive situation that, in some cases, it may be the large buyers that lack buyer power. 5.897  When buyer power rests mainly with the largest customer, there may sometimes be reasons to believe that it can also benefit smaller buyers. In Enso/Stora, which involved a market structure with one large customer (Tetra Pak) and two smaller customers (Elopak and SIG Combibloc), this was discussed in some detail. The Commission recognized that while the two smaller buyers were still rather large, they would be in a weaker position than Tetra Pak and that the merger of the two suppliers would ‘shift the balance of power towards (p. 738) Stora Enso’. However, the Commission also took into account that the merged entity would have an incentive to avoid becoming ‘completely dependent on Tetra Pak and that for this reason, the buyer power of Tetra Pak “to a certain extent, spills over to Elopak and SIG Combibloc”.’917

(b)  Entry 5.898  Entry analysis constitutes an important element of the overall competitive assessment. As the Horizontal Merger Guidelines state: ‘When entering a market is sufficiently easy, a merger is unlikely to pose any significant anti-competitive risk.’918

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5.899  A recent case which illustrates this principle is J&J/Synthes,919 where the Commission considered that, despite very high market shares for several types of orthopaedic medical devices for the spinal area,920 the transaction would not result in a significant impediment to effective competition in relation to those products. The Commission held that this ‘is particularly so because barriers to entry and expansion…are not significant enough to prevent remaining and potential competitors from efficiently constraining the merged entity’.921

(i)  Types of Entry Barrier 5.900  The economic literature contains many definitions of what constitutes an entry barrier, but there does not appear to be an established consensus on which one is best suited to the context of merger control.922 One definition of entry barriers is that provided by the General Court in Cementbouw: the Court considers, first, and generally, barriers may consist in elements of various natures, in particular economic, commercial or financial elements, which are likely to expose potential competitors of the established undertakings to risks and costs sufficiently high to deter them from entering the market within a reasonable time or to make it particularly difficult for them to enter the market, thus depriving them of the capacity to exercise a competitive constraint on the conduct of the established undertakings.923 5.901  The Horizontal Merger Guidelines identify three different categories of entry barrier: (a) legal barriers,924 such as the need to obtain regulatory permissions; (b) technical barriers or advantages,925 such as those arising from scale economies or the ownership of IP rights or privileged (p. 739) access to essential inputs; and (c) barriers arising out of the incumbents’ established position on the market,926 such as brand loyalty or high switching costs.927

(ii)  Link Between Entry Barriers and Market Definition 5.902  There is a link between the market definition and entry analysis. If entry can occur at very short notice, it is usually taken into account as supply-side substitution in the context of market definition (see further Section E.2(a)(ii)). Supply-side substitution that would not occur sufficiently quickly to be taken into account at the stage of market definition may nonetheless be relevant for the assessment of entry at the substantive stage. 5.903  More broadly, when markets are defined relatively narrowly (eg when markets are segmented according to customer groups), it may be easier to enter from neighbouring segments. Indeed, in J&J/Synthes the combined entity would have very high market shares related to particular spinal devices in particular countries. However, those market shares were the result of the absence of certain large competitors which otherwise had broad coverage in terms of products and countries. The Commission was convinced that those competitors could relatively easily expand their geographical coverage to cover the concentrated markets if they so wished.928

(iii)  Conditions for Entry to be Sufficient Countervailing Factor 5.904  The Horizontal Merger Guidelines outline three conditions for entry to be considered a sufficient competitive constraint: ‘it must be shown to be likely, timely and sufficient to deter or defeat any potential anti-competitive effects of the merger.’929 (i)  Entry Must Be Likely

5.905  In many cases, the likelihood of entry can be established by analysing interviews and declarations from potential entrants. Usually, the merging firms will possess market intelligence which allows them to direct the Commission towards likely entrants. From this type of evidence, the Commission can establish whether any competitor has specific plans to enter the market in the near future. However, if it is necessary to perform the analysis in

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abstracto, the Commission must analyse the factors that determine the risk and costs associated with an entry attempt as well as the likely benefits should entry be successful. 5.906  In addition to the identification of the possible entry barriers listed in para 5.901, such an analysis may include an analysis of historical entry, market factors affecting whether entry would be attractive, and how the incumbents, and in particular the merged entity, may seek to defend their market position thereby deterring entry. History of entry

5.907  As stipulated in the Horizontal Merger Guidelines, ‘Historical examples of entry and exit in the industry may provide useful information about the size of entry (p. 740) barriers.’930 In practice, the historic pattern of entry is likely to be the most decisive element in the Commission’s assessment. If a market has been characterized by frequent and successful entry, it is fair to assume that barriers are (at least until the merger) surmountable. If past attempts at entry have been unsuccessful, it indicates that barriers are high, although not so high that no company would even attempt to enter.931 Lack of attempts of past entry is usually taken as an indication that barriers are high. 5.908  In a market without entry barriers, the mere threat of entry may in principle be sufficient to deter exercise of market power. In theory, an incumbent in such a market would unilaterally decide to charge competitive prices because it knows that any increase would promptly trigger entry of unconstrained outsiders eager to take up any opportunity to earn a profit.932 As a result, at least hypothetically, one could argue that lack of past entry is not a reflection of entry barriers but a result of competitive pricing among the incumbent(s). 5.909  In reality, however, there is a limited likelihood that arguments of this kind will be accepted unless backed up by very persuasive facts. Ryanair tried to bring forward reasoning along these lines but convinced neither the Commission nor the General Court. As the Court pointed out: the applicant’s argument that the lack of entry onto the routes which it operates out of Dublin shows that its fares and capacity are so competitive that no competitor considers that it would make sense to compete is not relevant for the analysis. Even if it were well founded, that argument refers to a competitive situation in which Aer Lingus is present as a competitor of Ryanair or represents the most likely potential competitor. However, it is not the current situation which is relevant at this stage of the analysis, but the situation which would result from the concentration on the routes dominated by Ryanair-Aer Lingus combined.933 Market characteristics affecting whether entry would be attractive

5.910  Entry is more likely to be profitable (and thus likely) in a market that is expected to experience high future growth or which has a large and attractive customer base. 5.911  In Panasonic/Sanyo,934 the Commission’s clearance, despite the fact that the merged entity would have market shares for portable rechargeable li-ion batteries of more than 70 per cent, took into account the fact that the market was rapidly growing and that new competitors had entered or were in the process of entering. 5.912  Conversely, if the market is one where demand is already outstripped by capacity, entry is unlikely to be attractive. For example, in Cementbouw, the General Court found that there (p. 741) ‘are also considerable excess capacities for sand-lime products, a fact which makes market entry an unattractive prospect.’935

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5.913  In Ryanair, the relatively small size of the Irish market was a factor taken into account by the Commission as evidence that it was not an attractive entry proposition. Reaction from incumbents

5.914  According to the Horizontal Merger Guidelines: for entry to be likely it must be sufficiently profitable taking into account the price effects of injecting additional output into the market and the potential responses of incumbents…[e]ntry is likely to be more difficult if the incumbents are able to protect their market shares by offering long-term contracts or giving targeted preemptive price reductions to those customers that the entrant is trying to acquire.936 5.915  A prominent example of an analysis of the possible strategic response of the incumbent is Ryanair/Aer Lingus. A very large number of the identified entry barriers related to the size and strength of the two merging incumbents. In particular, one of the barriers identified (and confirmed by the General Court) was the dissuasive effect of being met by aggressive retaliation from the merged entity. This was based inter alia on the fact that Ryanair had historically lowered its prices and increased capacity on routes where new entrants had tried their luck.937 (ii)  Entry Must Be Timely

5.916  In order to deter the exercise of market power, entry must be sufficiently swift and sustained. The Horizontal Merger Guidelines stipulates that ‘entry is normally only considered timely if it occurs within two years.’938 However, this is not a firm deadline that applies in all cases, it ‘merely provid[es] an analytical framework which [the Commission] may apply, further develop and refine in individual cases.’939 5.917  One factor that may allow the Commission to consider that entry over a timescale longer than two years would be sufficient, is when existing customers have already locked in purchase conditions for a long period and hence would be shielded from the effects of reduced competition until the conditions expired. In other situations where competitive interactions are few and far between, the entry horizon should be adapted accordingly.940 (iii)  Entry Must Be Sufficient

5.918  The requirement that entry must be sufficient, relates directly to the overall question of whether the entry is capable of defeating the harm to competition that the merger could cause. Unless the entry is sufficient, the harm will not be (p. 742) fully defeated.941 According to the General Court, ‘the relevant criterion is thus whether the entry onto the market of a new competitor is capable of preventing prices increasing above their level prior to the concentration.’942 Whether this is the case will depend heavily on the facts and circumstances at hand. 5.919  In Airtours, the Commission and the General Court had different assessments of what constituted sufficient entry. In its decision, the Commission noted that: To be sufficient to remove the threat of creation of a dominant position, entry must, clearly, be more than merely possible. Among other things, it must be sustainable, which, in markets such as this one, where scale is an important factor, means that it must be capable of being on, or quickly acquiring a sufficient scale to offer a real competitive challenge to the dominant suppliers. In the Commission’s view this is unlikely to be the case.943 However, the General Court disagreed and held that:

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what is important here is not whether there is scope for potential competitors to reach a sufficient size to compete on an equal footing with the large tour operators, but simply whether there is scope for such competitors to take advantage of opportunities afforded by the large operators restricting capacity.944 Rather than interpreting this as the Court applying a very low standard for countervailing entry (can they take advantage of the opportunities?) and the Commission applying a particularly high one (will the entrant be as strong as the incumbents?), a more reasonable interpretation would be to view it as a disagreement in the particular case of what would suffice to counter the alleged competitive harm. 5.920  This was in fact the line taken in the Horizontal Merger Guidelines issued subsequently, which stress that the key issue is whether the entry is ‘of sufficient scope and magnitude to deter or defeat the anti-competitive effects of the merger. Small-scale entry, for instance into some market “niche”, may not be considered sufficient.’945 In other words, the foreseeable entry must be capable of counteracting the likely harm expected from the merger. If, for instance, the likely harm from the transaction is expected at the high end of the market, entry by new suppliers at the low end will not be deemed sufficient.

(c)  Efficiencies 5.921  The commercial decision to merge with or acquire another company or to create a joint venture can be driven by many different motives, one of which may be the creation of synergies which would allow the combined entity to serve customers better, faster, or cheaper. This may particularly be the case when the transaction brings together complementary skills or production facilities. To the extent that a merger brings about such efficiencies and those efficiencies result in better, faster, or cheaper products being put on the market, they should not be ignored by a merger control system aiming to protect consumers’ interests. 5.922  The notifying parties may therefore argue that there are efficiencies linked to the merger which are sufficiently large to outweigh the possible negative effects. (p. 743) 5.923  The Guidelines highlight three necessary conditions for efficiencies to be taken into account as countervailing factors: (a) they must benefit consumers; (b) they must be merger specific; and (c) they must be verifiable.

(i)  Historic Treatment of Efficiencies: The ‘Efficiency Offence’? 5.924  The possibility for countervailing efficiencies to occur and the need for the Commission to take such efficiencies into account was not explicitly recognized until the revision of the Merger Regulation and the introduction of the Horizontal Merger Guidelines in 2004. Prior to that time, many observers had criticized the Commission’s treatment of efficiencies, arguing that it applied an ‘efficiency offence’. 5.925  Critics of the Commission’s approach under the old test argued that the strong focus on dominance—and its strong correlation with the size of the merged entity’s market share —made the analysis overly structural. As a result, the Commission appeared to take the view that a merger would be problematic simply because the merged entity would grow bigger or stronger and that it was more concerned with protecting competitors than competition. 5.926  An example of one such case is Vodafone Airtouch/Mannesmann,946 a cross-border telecoms merger which would have given the combined entity a large geographic footprint allowing it to offer a new type of seamless pan-European service. Competitors argued that the merged entity would be ‘in a unique position…to build an integrated network which will enable the quick implementation of the necessary technology to provide advanced seamless services on a large scale’947 and they therefore concluded that the merger would create a dominant position in the market for such services. As one critical observer dryly noted: ‘The

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European Commission, in effect, based its intervention on the tautological claim that should the new product be successfully launched, the merged entity would be dominant in the supply of that product.’948 5.927  The General Court has also on occasion applied reasoning that makes it susceptible to such criticism. In BaByliss, it overruled the Commission’s decision to clear the SEBMoulinex transaction and reprimanded the Commission for having: considered only the possibility of a price rise by SEB-Moulinex. However, the latter is capable of other types of anti-competitive behaviour. In particular, the concentration will enable SEB-Moulinex to make economies of scale and implement various rationalisation measures, thus generating a reduction in costs of which it could take advantage to reduce prices or allow retailers a bigger margin in order to increase its market share.949 (p. 744) 5.928  In response to this criticism, the Merger Regulation in 2004 essentially took two steps to avoid the potential pitfalls of the ‘efficiency offence’. First, it refocused the substantive test away from structural dominance to the concept of a significant impediment to effective competition. Secondly, recital 29 to the Merger Regulation explicitly asserted that it ‘is possible that the efficiencies brought about by the concentration counteract the effects on competition, and in particular the potential harm to consumers, that it might otherwise have’. The Horizontal Merger Guidelines went on expressly to endorse efficiencies as a ‘countervailing factor’ and outlined explicit conditions for when and how such efficiencies could counter the potential anti-competitive effects of an otherwise problematic merger. 5.929  The inclusion of the efficiency defence relied in part on the fact that Article 2(1)(b) of the Merger Regulation explicitly calls upon the Commission in its appraisal to take into account ‘the development of technical and economic progress provided that it is to consumers’ advantage and does not form an obstacle to competition’. It also brought the merger assessment closer in line with the application of Article 101(3), which allows agreements to be permitted, inter alia, if they ‘promote technical and economic progress, while allowing consumers a fair share.’ 5.930  The Commission’s assessment of efficiencies under the Merger Regulation in Ryanair/Aer Lingus was vigorously, though unsuccessfully, contested by Ryanair before the General Court.950 In its judgment, the General Court carried out a very detailed and thorough assessment of the Commission’s assessment in light of the Guidelines. As such, the judgment confirms that the Court has also come a long way since BaByliss.

(ii)  Recent Practice 5.931  The first case in which the Commission positively counted efficiencies to the benefit of a transaction was a three to two merger in the market for liquid packaging board— Korsnäs/Assidomän Cartonboard.951 By combining board machine facilities, the merger would allow the parties to operate in a more efficient way, for instance by running longer batches, thus reducing the time and costs associated with switching between specific types of board production. The Commission obtained evidence allowing it to conclude that these synergies were likely to be realized and also at least partly passed on to consumers. 5.932  Many subsequent horizontal merger cases have seen efficiency arguments being put forward, carefully analysed and rejected by the Commission. A recent and prominent rejection of efficiencies occurred in the Commission’s prohibition of Ryanair’s attempted takeover of Aer Lingus.

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5.933  Ryanair argued that the transaction would generate efficiencies by allowing it to apply Ryanair’s low-fare business model to Aer Lingus. The efficiencies included savings relating to staff costs, aircraft ownership costs, maintenance costs, airport charges, ground operational costs, and distribution costs. Ryanair argued that the efficiencies were mergerspecific since they could not be obtained by any alternative transaction or by the two companies individually in the absence of the concentration. Ryanair also claimed that the gains would be passed on to consumers in terms of reduced fares, greater frequency of flights, and more routes for passengers, and also in terms of better quality products and services. (p. 745) 5.934  The Commission took the view that Ryanair’s efficiency claims were not verifiable because they were in essence based on the general claim that Ryanair would be able to transfer its business model, and in particular the related cost levels, to Aer Lingus without having offset against this the downgrades in product characteristics and revenue. The Commission also concluded that the efficiencies were not merger-specific and, in any event, it was uncertain whether they would benefit consumers. 5.935  Finally, the Commission referred to point 84 of the Guidelines which states that ‘It is highly unlikely that a merger leading to a market position approaching that of a monopoly, or leading to a similar level of market power, can be declared compatible with the common market on the ground that efficiency gains would be sufficient to counteract its potential anti-competitive effects’. 5.936  The General Court upheld the Commission’s decision, including its efficiency analysis. When Ryanair re-notified the same transaction in 2013, the Commission again reached the same conclusion.952 5.937  In some recent cases, the Commission has accepted a subset of the claimed efficiencies relating to the more efficient operation of the combined entities, but concluded that those—in combination with other countervailing factors put forward by the parties— were in any event insufficient to counter the anti-competitive effects of the transaction. One example is UPS/TNT953 where the parties argued that the combination of their two delivery networks would lead to significant cost savings. The savings could be grouped into three categories: (a) ground transportation costs; (b) air network; and (c) management and administrative overheads. While the Commission accepted that the savings relating to the two first categories could benefit customers, the Commission did not find verifiable evidence that this would be the case for the reduction in management and administrative overheads. The Commission also found that there was not a sufficiently clear link between the savings in ground transportation costs and the market for express deliveries where the merger risked impeding effective competition. Therefore, the Commission could only take into account efficiencies relating to air transportation. These efficiencies were expected to materialize sufficiently soon after the implementation of the concentration and were unlikely to be achievable by means other than the planned concentration. The Commission calculated the part of the cost savings that would be passed on to consumers in the form of a price reduction and compared the figures with the price increases predicted by its priceconcentration model. The comparison showed that in many countries efficiencies passed on to customers would not outweigh the predicted price increases. This analysis was one of the elements used to identify the countries in which the transaction would be likely to raise competition concerns. 5.938  Efficiencies have in one recent case positively contributed to a clearance decision. In Nynas/Shell/Harburg Refinery,954 the Commission accepted a transfer of refinery capacity in Germany to Nynas despite this leading to very concentrated markets for naphthenic base and process oils and transformer oils. The Commission accepted a market outcome where Nynas would be the only producer in the EEA of some of these products mainly because (p. 746) it was convinced that the assets would close down absent the

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transaction. However, the Commission also emphasized that by acquiring the capacity Nynas would achieve significant reductions in variable costs for supplying additional costumers, and that these would to some extent be passed on to consumers. 5.939  The overall picture that emerges from the Commission’s recent practice is that for horizontal mergers it will require either unusual circumstances or a very compelling case before efficiencies on their own will suffice to countervail an a priori finding of significant impediment to effective competition. 5.940  However, in vertical cases the Commission has shown itself to be more receptive to efficiency arguments. This is not surprising in light of the fact that the Non-Horizontal Merger Guidelines explicitly list a number of examples of specific sources of efficiencies that are particularly likely to be relevant for vertical or conglomerate mergers.955 In TomTom/Tele Atlas and Nokia/Navteq, the Commission carried out an integrated assessment where some of the potential quantifiable benefits, such as the elimination of double mark-ups, played an important role in clearing the transaction. 5.941  In addition, the parties in TomTom/Tele Atlas argued that the merger would improve Tele Atlas’s map-creation process by providing feedback data from TomTom’s users. Although at least part of this data could possibly be exchanged between the parties through contractual means, the Commission accepted that the merger would bring ‘better maps— faster’.

(iii)  Criteria for an Efficiency Defence (i)  Efficiencies Must Benefit Consumers

5.942  Efficiencies can only be taken into account as a countervailing factor insofar as they benefit consumers. In practice, the Commission’s focus will be on whether the benefits will be passed on to the immediate customers of the merged entity. In this respect, ‘benefits’ should not be conceived narrowly as only encompassing lower prices. If the merger allows for improved products or services or if it will boost innovation, there is no reason to exclude such benefits from the analysis.956 As Vice-President Almunia explained in a speech in 2012, ‘We cannot accept efficiencies when their benefits are not transmitted to the economy in term of prices or innovation but are instead kept as private profits.’957 5.943  The Commission takes the view that the benefits must in principle accrue to the consumers in the market where the harm would occur.958 This is illustrated by the UPS/TNT assessment, (p. 747) where the Commission dismissed potential cost savings in the ground transportation network because there was insufficient link to the market for express deliveries. 5.944  The extent to which benefits will be passed on to consumers depends in part on their nature and in part on the competitive pressure that will remain on the merged entity. The Guidelines mention two specific factors that are important in this regard. 5.945  First, marginal cost savings are more likely to be passed on to consumers than fixed cost savings. Most economic models suggest that a firm’s pricing decisions are predominantly determined by the marginal cost of producing an extra unit and the likely reaction by customers. It will thus be easier to convince the Commission that efficiencies will translate into lower prices if they result in a reduction in marginal cost. In the context of assessing non-coordinated effects in differentiated goods markets, it has become increasingly frequent for the Commission or the parties to rely on the calculation of the socalled UPP index (upward pricing pressure). This index can be used to calculate how large the marginal cost saving from the merger would need to be in order to remove the incentive to raise prices. In a case where the parties can substantiate marginal cost savings of the

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magnitude indicated by a calculated UPP, they should in principle have a good chance of being able to claim sufficient pass-on to consumers. 5.946  In most cases, however, the obvious and most imminent cost savings arising from a merger relate to fixed costs (eg removal of duplicative headquarters or facilities). Since in most cases those types of savings will not provide any incentive for the firm to lower its prices, an argument that such types of savings would translate into consumer savings will be much more difficult to make.959 5.947  In Ryanair/Aer Lingus, many of the cost savings related to the overall fixed cost of operating the fleet, which Ryanair argued could result in the decision either to enter a new route or to remain on a route (both to the benefit of consumers). The Commission accepted in principle that to the extent that a reduction in operating costs would result in more departures on a given route, it would benefit consumers.960 However, since the claimed savings would simply bring Aer Lingus’s costs down to the level of Ryanair, this would not affect Ryanair’s route entry decisions, and would not therefore result in any increase in the number of departures by the combined entity as compared to the situation pre-merger. 5.948  One possible situation in which fixed cost savings are more likely to be passed on would be in mergers where the combined entity would face strong buyer power. If negotiations in such a context lead to price setting based on total cost rather than marginal cost, it should be (p. 748) possible convincingly to argue that total cost savings—including fixed cost savings—would be passed on. In Korsnäs/Assidomän Cartonboard,961 the main customer (Tetra Pak) yielded significant buyer power. While the efficiencies in this case were not standard fixed costs (they related to better integrated production planning), the fact that Tetra Pak was able to negotiate a price which was closely aligned to production costs helped the Commission to reach the conclusion that the cost savings that were likely to flow from the merger would be passed on. 5.949  Secondly, it is highly unlikely that efficiencies will be sufficiently large and sufficiently passed on to customers to counteract the potential harm if a merger leads to monopoly.962 This was clearly illustrated when the Commission prohibited Deutsche Börse’s attempt to take over NYSE Euronext, which it found would have created a de facto quasimonopoly in a number of markets. In the decision, the Commission explicitly stated that ‘any efficiencies, even if they were found to be verifiable, merger specific, and likely to benefit consumers, would have to be particularly substantial to outweigh the significant impediment to effective competition in the relevant markets.’963 5.950  While the Commission dismissed the bulk of the claimed efficiencies on the ground that they were not verifiable, it did acknowledge that a subset of the efficiencies, which were verifiable and merger-specific, would be passed on to consumers. For instance, the combination of the trading platforms would reduce customers’ IT costs and collateral requirements. However, given the limited size of these efficiencies, the potential benefits were found to be insignificant compared to the potential harm from the loss of competition. The issue of pass-on to consumers was thus replaced by the question whether the benefits would be clawed back by the merged entity.964 5.951  Similarly, in Outokumpu/Inoxum the Commission acknowledged the possible existence of some marginal cost synergies generated by the integration of the parties’ activities and the optimization of their stainless steel production process. Without ruling on the actual existence of these synergies, the Commission concluded that in any event the price increase resulting from the transaction, as initially notified, would have probably been far higher than any potential synergies.965 (ii)  Efficiencies Must Be Merger-Specific

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5.952  Just as anti-competitive effects only count against a merger if they are caused by the transaction, any counteracting benefits must equally be merger-specific. According to the Horizontal Merger Guidelines, efficiencies ‘are relevant to the competitive assessment when they are a direct consequence of the notified merger and cannot be achieved to a similar extent by less anticompetitive alternatives. In these circumstances, the efficiencies are deemed to be caused by the merger and thus, merger-specific’.966 5.953  This analysis requires that potential alternative means to achieve the efficiencies are identified and assessed. The Commission will only consider alternatives that are reasonably practical (p. 749) in the business situation faced by the merging parties and will take into account established business practices in the industry concerned. In TomTom/Tele Atlas, the parties claimed that the merger would allow Tele Atlas to improve the quality of its maps by providing feedback from TomTom users. The Commission assessed whether this would be possible without the merger and concluded that the non-integrated companies would find it difficult to write commercial contracts which would allow the use of TomTom’s data to the same extent. As a result, the efficiencies in this respect were merger-specific. 5.954  According to the Horizontal Merger Guidelines: it is for the merging parties to provide in due time all the relevant information necessary to demonstrate that there are no less anticompetitive, realistic and attainable alternatives of a non-concentrative nature (e.g. a licensing agreement, or a cooperative joint venture) or of a concentrative nature (e.g. a concentrative joint venture, or a differently structured merger) than the notified merger which preserve the claimed efficiencies. As such, the submitted efficiency claims should include a thorough assessment of possible hypothetical alternative means to achieve the benefits. 5.955  When considering whether the efficiencies could be achieved through other means, one possible alternative to be assessed is whether they could be achieved by the transaction modified by remedies. If the transaction would otherwise impede effective competition, such a remedy would be necessary to obtain clearance.967 In other words, if it is possible to conceive of a remedy that would resolve the anti-competitive effects while preserving the efficiencies, the efficiencies cannot be said to be merger-specific and cannot be invoked to remove the need for a remedy. (iii)  Efficiencies Must Be Verifiable

5.956  According to the Horizontal Merger Guidelines, efficiencies have to be verifiable such that the Commission can be reasonably certain that the efficiencies are likely to materialize, and be sufficiently substantial to counteract the merger’s potential harm to consumers.968 To the extent possible, they (and the resulting benefit) should therefore be quantified. 5.957  It seems reasonable to assume that when parties are considering a merger, they think carefully about how the combination may bring benefits and synergies. It would thus be a rare situation where the Commission is in a better position than the parties to foresee what those benefits may be.969 The Guidelines therefore stipulate that it is ‘incumbent upon the notifying parties to provide in due time all the relevant information necessary to demonstrate that the claimed efficiencies are merger-specific and likely to be realised’.970 (p. 750) 5.958  The Guidelines specifically identify the following as relevant evidence in this respect: internal documents used by management to decide on the merger; statements from management to the owners and financial markets about the expected efficiencies; historical examples of efficiencies and consumer benefit and pre-merger external expert studies on

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the type and size of efficiency gains, and on the extent to which consumers are likely to benefit. 5.959  The General Court in Ryanair held that an efficiency claim cannot be considered unverifiable solely on the ground that some of its assumptions cannot be independently verified by a third party, nor is it necessary that the efficiencies are substantiated by documents dated pre-merger (‘Business life does not always allow such documents to be produced in due time’). However, the General Court confirmed that it is for the parties to produce evidence that allows the Commission to ‘be reasonably certain that the efficiencies were likely to materialise and be substantial enough to counteract the concentrations’ potential to harm consumers’.971 In practice, however, the evidence would have to be very compelling if there were no contemporaneous documents to prove that the efficiencies were closely analysed as part of the preparation for the transaction. 5.960  The fact that the parties bear the burden of producing the evidence relevant to substantiate their efficiency claims raises the question of when that evidence must be submitted in order for the Commission to be able to take it properly into account. In Deutsche Börse/NYSE, the Commission made clear that there are limits to how late in the process evidence can be submitted: In this context, it is noted that the first detailed submission on efficiencies (namely, the five economic reports) was provided only 21 days after the initiation of proceedings, with subsequent supplemental submissions even later in the proceedings, with the last submission 90 working days after the initiation of proceedings—thus very late in the procedure. Given the lateness of the submissions together with the significant magnitude of the data provided, the highly complex nature of the submissions made, and the limited resources of the Commission to review the claims within the time constraints set out in Article 10 of the Merger Regulation, it is apparent that the efficiency claims had not been appropriately submitted.972

(d)  Failing Firm Defence 5.961  As a matter of principle, since mergers should only be prohibited if they cause a significant impediment to effective competition, it is not only necessary to establish what will happen if the merger is allowed to take place, but also what would happen if it is prevented. If the future competitive situation would be equally bleak regardless of whether the merger goes ahead, the merger cannot be said to cause a significant impediment to effective competition. The logical application of this principle is that, where the alternative to a concentration is the failure and exit of a competitor from the market, the Commission should approve the merger if consumers would be better off by allowing that competitor to remain on the market (albeit as part of another entity). 5.962  The first case in which this defence was invoked was Aerospatiale-Alenia/De Havilland in 1991; however, it was rejected by the Commission. The first successful invocation of the defence was in Kali & Salz where the Commission: came to the conclusion that after the proposed merger a dominant position on the German market for agricultural potash will be strengthened. However, it has also concluded that (p. 751) K + S’s dominant position would be reinforced even in the absence of the merger, because MdK would withdraw from the market in the foreseeable future if it was not acquired by another undertaking and its market share would then accrue to K + S; it can be practically ruled out that an undertaking other than K + S would acquire all or a substantial part of MdK. The

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merger is not therefore the cause of the reinforcement of a dominant position on the German market.973

(i)  Conditions Necessary for Failing Firm Defence 5.963  The possibility for invoking a failing firm defence is explicitly provided for in the Horizontal Merger Guidelines. The Guidelines list three conditions which are ‘especially relevant’ for the application of the failing firm defence: (a) financial difficulties would force the allegedly failing firm out of the market in the near future if it was not taken over by another firm; (b) there should be no less anti-competitive merger available; and (c) the assets would inevitably exit the market. 5.964  These conditions are inspired by, but not identical to, those applied in the analysis in Kali & Salz. In Kali & Salz, the Commission had accepted the failing firm defence on the basis of the first two factors and the fact that the market share belonging to the target would have accrued to the buyer even absent the merger. Although this last criterion had been explicitly endorsed by the General Court in France’s appeal of the Commission’s decision,974 it was abandoned in the next case where a failing firm defence was accepted (BASF/Eurodiol/Pantochim975). In that case, the Commission found instead that the production assets of the failing firm would exit the market, and this would result in shortage and price increases.976 This led to the introduction of the third criterion in the Horizontal Merger Guidelines, namely that the assets would leave the market absent the merger. 5.965  It is noteworthy that the three criteria in the Guidelines are described as being ‘especially relevant’, rather than cumulatively necessary. It is arguable, therefore, that these may not delineate necessary conditions for when parties can successfully convince the Commission to revise its assessment of the counterfactual. There are examples of cases where the three criteria are not all simultaneously met strictu sensu, but where the financial difficulties of one of the firms in the merger have nevertheless had a direct impact on the competitive assessment.977 5.966  The Commission’s approach in Olympic/Aegean saga is the most recent and perhaps clearest illustration of this point. In 2010, the Greek airline Olympic notified to the Commission its acquisition of rival Aegean.978 In this case, the Commission did not accept Olympic’s overall failing firm defence (having concluded that none of the three criteria were met).979 However, in its route-by-route analysis, the Commission did assess whether either of the parties would be likely to exit the route in the absence of the merger. On those routes where (p. 752) the Commission deemed exit by one of the parties in the near future to be the likely counterfactual, it concluded that the merger would not impede competition. The Commission ultimately prohibited the merger because of a significant impediment to effective competition arising on nine routes where exit by one of the parties would not have been likely. 5.967  In 2013, further to an Article 22 referral, Aegean again notified to the Commission its intention to acquire Olympic.980 This time, however, the Commission cleared the transaction unconditionally on the basis that Olympic would be forced to exit the market in the near future due to financial difficulties if not acquired by Aegean. Therefore, with or without the merger, Olympic would soon disappear as a competitor to Aegean. The Commission in particular found that: (a) Olympic was a failing firm and would go out of business soon; (b) there was no other credible purchaser other than Aegean interested in acquiring Olympic; and (c) the most likely scenario was that absent the transaction Olympic’s assets would leave the market completely. The Commission thus concluded that the merger caused no harm to competition that would not have occurred in any event.981

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(i)  Exit Due to Financial Difficulties

5.968  To meet this condition and directly affect the counterfactual, it should be established that the company is unlikely to meet its financial obligations in the near future. This will be the case if bankruptcy proceedings are ongoing or imminent. When no proceedings are ongoing this will usually require a close analysis of the financial situation of the company. (ii)  No Less Anti-Competitive Solution

5.969  It is necessary to establish what is likely to happen to the failing firm absent the merger. In this respect it is relevant to assess whether there are alternative scenarios involving a less anti-competitive solution than the acquisition. In cases where the notified acquisition is the result of a sales process revealing other potential buyers, the Commission may look to the alternative buyers to see if they constitute a relevant less anti-competitive alternative to the merger. 5.970  If there has not been a formal sales process prior to the notification, the parties should still demonstrate the efforts they have made to give alternative interested investors an opportunity to enter into negotiations to acquire the failing firm. (iii)  Exit From the Market

5.971  Even if there are no alternative interested buyers for the failing firm in its entirety (perhaps owing to its debt), it may be possible that, if the merger did not proceed, the productive assets could stay in the market after appropriate restructuring. In such a scenario, the merger would be assessed with this as the counterfactual. 5.972  This issue arose in relation to the acquisition of joint control by Johnson Controls and Robert Bosch over the automotive starter battery business of FIAMM.982 The parties raised the failing firm defence and were successful in convincing the Commission that the company was in financial difficulties and that there was no other less anti-competitive solution available (while the company was not yet in bankruptcy proceedings, it could point to its very difficult financial situation and a likely imminent insolvency proceeding under Italian law. In addition no other buyer had been found or could be found within a sufficiently short time). However, the Commission was not convinced that the production assets would (p. 753) exit the market. It considered that it was possible that individual assets could be bought by smaller firms in the course of the liquidation process and brought back to the market within a relatively short time. These smaller producers could thus supply the market to a certain extent with the result that customers could be better off in the absence of the merger. The Commission eventually cleared the merger subject to divestitures covering the countries where the transaction raised concerns.

(ii)  Failing Division 5.973  The failing firm defence in the form presented in the Guidelines deals with the scenario where one of the merging parties—usually the target—would cease to operate absent the merger. 5.974  The Guidelines do not explicitly deal with the scenario where the entire firm as such is not failing, but the activities in relation to which the competition concerns arise are likely to exit the market. However, there is no reason why the basic logic justifying the failing firm defence should not also apply for a failing division. In Nynas/Shell/Harburg Refinery,983 the Commission approved the acquisition by Nynas of Shell’s refinery assets in HamburgHarburg removing the only competing producer in the EEA and leading to a market share above 70 per cent in certain refinery products. In that case, the Commission considered that the alternative to the acquisition by Nynas would be closure of the facilities.

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5.975  As mentioned in paras 5.966–5.968, the Commission effectively allowed a failing route defence in Olympic/Aegean Airlines and appears to have allowed a failing division defence in Aegean/Olympic II. However, several earlier cases where the failing division arguments were unsuccessfully put forward984 suggest that the evidentiary burden required to convince the Commission is high; the notifying party cannot simply assert that if the merger is not allowed a given division will be shut down. In Bertelsmann/Kirch/ Premiere, the Commission argued that when a failing division defence was brought, as opposed to a failing firm defence, ‘particularly high standards must be set’.

(iii)  Parties Must Provide the Evidence 5.976  As with efficiencies, the Guidelines stipulate that it is ‘for the notifying parties to provide in due time all the relevant information necessary to demonstrate that the deterioration of the competitive structure that follows the merger is not caused by the merger’.985 5.977  In situations where the failing firm is already subject to bankruptcy proceedings, this constitutes compelling evidence that the firm is unlikely to continue as in the past. However, when bankruptcy proceedings are not ongoing or where the issue is a failing division scenario, there are no equivalent external sources that can make the claim credible. 5.978  As with the efficiency defence, an analysis of a likely future exit by one of the merging entities from a particular line of business would then inevitably be based on highly confidential information, which is predominantly in the possession of the parties. The Horizontal Merger Guidelines stress that it is for the parties to provide all the necessary information in due time to allow the Commission to make the assessment. In Olympic/ Aegean Airlines I, the Commission did not accept the conclusions of a study put forward by the parties regarding (p. 754) the counterfactual relying on the parties’ cost and revenue structure, both because it had concerns about the reliability of the underlying data and because it found the methodology applied to be flawed and reliant on unrealistic and unexplained assumptions. In response to criticism from the notifying party that the dismissal was based on ‘vague and generalised comments’ and that the Commission had not in the reply to the SO proposed an alternative method, the Commission noted that ‘due to the information asymmetry, the Commission cannot “put forward its own model with the data and assumptions it considers the most accurate and then give the parties the opportunity to comment on that model”.’986 5.979  In Newscorp/Telepiu, the Commission rejected the parties’ failing firm defence, in part on the basis that it had been raised late in the procedure, which ‘casts further doubt on the probative value of their claim’.987 It seems reasonable to assume that the financial difficulties that would underpin a failing firm defence would have been a central part of the sales process leading up to the transaction and that a duly completed Form CO would reflect this. While the Commission did not accept the parties’ last-minute arguments, it did (as stated in the press release announcing the conditional clearance decision) take into account ‘the chronic financial difficulties faced by both companies, of the specific features of the Italian market and of the disruption that the possible closure of Stream would cause to Italian pay-TV subscribers’. As a result, the Commission essentially accepted the creation of a monopoly on the Italian pay-TV market, and focused instead on ensuring through the remedies that the market remained open to future competitors.

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Footnotes: 629

  The test is formulated symmetrically in the sense that the Commission is equally under the obligation to make a positive and reasoned finding that a transaction will not lead to significant impediment to effective competition if it intends to approve a transaction. The Commission is under the obligation to collect cogent evidence to determine which of the two is the most likely outcome (see Case C-12/03 Commission v Tetra Laval [2005] ECR I-987, para 43). See more specifically Section G.6(b). 630

  Case COMP/M.3653 Siemens/VA Tech (2005).

631

  It is important to note that the Commission was able to address this issue because the acquisition of VA Tech fell within the Merger Regulation. If, however, instead of this deal, Siemens had sold its minority stake in SMS Demag to VA Tech the transaction would not have fallen within that Regulation as simple minority shareholdings do not constitute a concentration. As such, the Commission would not have been able to act despite the fact that the deal would have had the same structural effect on the market as the one that actually took place. Partly in response to such situations, the Commission recently launched a consultation on the possibility of expanding its jurisdiction to deal with the anticompetitive effects stemming from certain acquisitions of non-controlling minority shareholdings. See . See also Section B.3(f). 632

  Case C-12/03 Commission v Tetra Laval [2005] ECR I-987, paras 42–43.

633

  Horizontal Merger Guidelines, para 9.

634

  An early example can be found in Case JV.37 B SKY B/KIRCH PAY TV (1999), which was decided under the 1989 Merger Regulation, where the substantive test was the creation or strengthening of a dominant position. Prior to the transaction, KirchPayTV was virtually the only supplier of pay-TV services in Germany. However, the Commission considered that its dominance was likely to be undermined by its failure to raise the funds necessary to modernize its infrastructure. As a result, the appropriate ‘counterfactual’ to the transaction was that KirchPayTV would no longer have a dominant position on the market (see decision, para 50). In view of this, the parties had to offer remedies in order to secure clearance. This was because the Commission considered that the transaction would provide the resources that would result in KirchPayTV maintaining a dominant position on the market. The Commission’s reasoning was upheld by the Court in Case T-158/00 ARD v Commission [2003] ECR II-ECR II-3825. A more recent example can be found in Case COMP/M.6360 Nynas/Shell/Harburg Refinery (2013), where the Commission took as counterfactual the closure of the Harburg refinery assets as the most likely scenario in the absence of the proposed transaction. 635

  See Horizontal Merger Guidelines, para 2 (emphasis added).

636

  Similar wording can be found in the Non-Horizontal Merger Guidelines, para 10.

637

  It would not be practicable for the Commission to have to carry out an assessment of how harm could further ‘travel’ down through the supply chain to the ultimate consumer. 638

  See Non-Horizontal Merger Guidelines, para 16.

639

  Formally, individual consumer’s welfare can be measured as the difference between the value that a consumer attaches to a product or a service, and the price that the consumer paid to acquire it. 640

  There is a long-standing debate on whether the basis for competition policy should be consumer welfare or the so-called total welfare standard. A total welfare standard would include all benefits from the concentration (including those not passed on to consumers) and focus on allocative efficiencies. For an early contribution to this debate, see R. H. Bork, The Antitrust Paradox: A Policy at War With Itself (New York: Basic Books, 1978). For a From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

more recent contribution see K. Heyer, ‘Welfare Standards and Merger Analysis: Why Not the Best?’, March 2006, available at SSRN or http:// dx.doi.org/10.2139/ssrn.959454. 641

  One of the earliest cases where the Commission explicitly tried to measure the effect not only on prices but more broadly on customer welfare was Case COMP/M.3216 Oracle/ Peoplesoft (2004). In this case, the merger would result in the disappearance from the market of the Peoplesoft software. As such, the Commission considered that it would be inappropriate to reduce the analysis of the effects of the merger to price only. For more details, see eg C. Bengtsson, ‘Simulating the Effect of Oracle’s Takeover of PeopleSoft’ in P. van Bergeijk and E. Kloosterhuis (eds), Modelling European Mergers: Theory, Competition Policy and Cases (Cheltenham: Edward Elgar, 2005), 133–49. 642

  Horizontal Merger Guidelines, para 8.

643

  See http://europa.eu/rapid/press-release_SPEECH-11-561_en.htm.

644

  Case COMP/M.4439 Ryanair/Aer Lingus (2007).

645

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457, para 162. The fact that the GC did not refer to the 5 per cent increase could be taken as implicitly suggesting that an increase of this amount may not be significant. We do not think that this is a correct reading of the judgment, since the only issue the Court had to address was whether the claim was valid—this required it to address the 7–8 per cent estimate. In our view, it is not possible to say with any degree of certainty what the GC’s views were regarding this issue. 646

  Case COMP/M.5658 Unilever/Sara Lee Body Care (2010).

647

  Para 397 of the decision.

648

  Non-male refers to both female and gender-neutral deodorants.

649

  In the non-male market the merged entity would hold 40–50 per cent market share. In the male market the share would have been somewhat higher. 650

  Para 187 of the decision.

651

  See eg the economic annexes to decisions such as Case COMP/M.5046 Friesland/ Campina (2008) or Case COMP/M.5658 Unilever/Sara Lee Body Care (2010). 652

  Notice on Referrals, para 40.

653

  Suiker Unie et al v Commission [1975] ECR 1663, para 71. This case relates to Art 102 TFEU, which has a similar demarcation of jurisdiction. 654

  From a practical perspective, it is particularly important in these cases to ensure that a remedy offered to remove the Commission’s concerns is of sufficient size to be viable. 655

  In relation to referrals requested by an NCA post-notification (Art 9 referrals), the legal criteria for referring a case varies depending on whether the effects are restricted to an area which is smaller than a substantial part of the internal market. Art 9(2)(a) of the Merger Regulation allows the Commission to refer a case only if it ‘threatens to significantly affect competition’ in one or several markets. If, however, the markets in question do not constitute a substantial part of the internal market, Art 9(2)(b) in conjunction with Art 9(3) imposes on the Commission the referral of a case to a requesting Member State as soon as it ‘affect[s] competition’. Examples of cases invoking Art 9(2)(b) as the basis for a referral include Cases COMP/M.5200 Strabag/Kirchner (2008)—which threatened to affect the Erfurt regional market for asphalt mix and COMP/M.4522 Carrefour/Ahold Polska (2007)—which would affect local retail markets within Poland. See more in detail Section C.2(d)(i)(ii).

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656

  The first case where the new diminished role of dominance was made explicit was Siemens/Va Tech (2005) where the Commission after an in-depth investigation concluded that whether the merger would create a dominant position ‘may be left open’ since ‘at all events the merger would have a serious harmful impact on competition as a result of uncoordinated behaviour by firms. For these reasons there would be a significant impediment to effective competition’ (para 335). 657

  See to this effect recital 25 to the Merger Regulation: However, under certain circumstances, concentrations involving the elimination of important competitive constraints that the merging parties had exerted upon each other, as well as a reduction of competitive pressure on the remaining competitors, may, even in the absence of a likelihood of coordination between the members of the oligopoly, result in a significant impediment to effective competition.

The notion of ‘significant impediment to effective competition’ in Art 2(2) and (3) should be interpreted as extending beyond the concept of dominance, only to the anti-competitive effects of a concentration resulting from the non-coordinated behaviour of undertakings which would not have a dominant position on the market concerned. 658

  Case COMP/M.2220 General Electric/Honeywell (2001).

659

  This is also true for most other cases prior to 2004. There are usually a large number of paragraphs or separate sections devoted to establishing dominance, but no separate clearly distinct analysis of the second limb. Another high-profile case from the same period, Case COMP/M.2283 Schneider/Legrand (2001), does not even mention the term ‘impediment to effective competition’, but refers to the fact that the existence of a dominant position ‘with the effect of significantly restricting effective competition’, para 851. 660

  Case T-209/01 Honeywell v Commission [2005] ECR II-5527, para 87. A similar issue was litigated in the appeal of the Commission’s prohibition of the EDP/GDP merger (also a pre-2004 decision). The Court here followed a similar line: However, since the elements relied on in the contested decision to show that EDP’s and GDP’s dominant positions would be significantly strengthened and the elements showing that effective competition would be significantly impeded following the concentration are frequently identical, the mere fact that the Commission did not devote specific parts of the decision to examining the significant impediment to competition does not justify the conclusion that the Commission failed to have regard to the second criterion laid down in Article 2 (3) of the Merger Regulation. (Case T-87/05 EDP v Commission [2005] ECR II-3753, para 54). 661

  In Phase I decisions, where the Commission is only obliged to establish the existence of serious doubts as to the compatibility of the transaction with the internal market, it typically relies on a less complete body of evidence in which the presence of high market shares pointing towards dominance may play a relatively more significant role. 662

  See Joined Cases C-68/94 and C-30/95 France and Others v Commission (Kali & Salz) [1998] ECR I-1375, para 143. 663

  For a discussion of the role of market shares in the competitive assessment, see Section E.4(a)(i). 664

  As two commentators put it ‘we find it conducive to think of market definition analysis as the hors d’oeuvre and the competitive effects analysis the main course in the merger evaluation dinner.’ R. Gilbert and D. L. Rubinfeld, ‘Revising the Horizontal Merger Guidelines: Lessons from the US and the EU’ in M. Faure and X. Zhang (eds), Competition

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Policy and Regulation: Recent Developments in China, Europe and the US (Cheltenham: Edward Elgar, 2011). 665

  Commission Notice on the definition of relevant market for the purposes of [EU] competition law, OJ 1997 C372/5. 666

  See para 27 of the Market Definition Notice. This approach was expressly confirmed by the GC in Case T-374/00 Verband der freien Rohrwerke and Others v Commission [2003] ECR II 2275, para 110. 667

  Market Definition Notice, para 7.

668

  In Case T-177/04 easyJet v Commission [2006] ECR II-1931, para 99, the GC noted that demand-side substitutability ‘remains, in principle, the most effective assessment criterion’. 669

  Market Definition Notice, para 15.

670

  The most common way of collecting views of customers and competitors is to send questionnaires directly to the main customers and competitors of the merging parties. However, in some cases when customers are either individuals or very small entities, the Commission has relied on external consultants to carry out consumer surveys (see eg Case COMP/M.4439 Ryanair/Aer Lingus (2007), para 36). 671

  On the evidentiary value of internal documents, see eg Case T-342/07 Ryanair Holdings v Commission [2010] ECR II 3457, paras 130–138. 672

  Very often the same factor will be relevant to both demand-side and supply-side substitution. Eg when analysing product characteristics generally, a comparison of the functionality of different products is informative for understanding the possibility of demand-side substitution, while a comparison of production methods may inform the analysis of supply-side substitution. Similarly, reactions to price variations or shocks can be measured on the side of both customers and suppliers. Finally, some types of data contain combined information about both sides in the market (price correlation, market growth, etc). 673

  Case T-374/00 Verband der freihen Rohrwerke and Others v Commission [2003] ECR II-2275, para 133. At least at a theoretical level, there is a discrepancy between the approach applied by the Commission and that codified by the US agencies in their Horizontal Merger Guidelines, where supply-side substitution is not taken into account during market definition. 674

  Market Definition Notice, para 21.

675

  The US Horizontal Merger Guidelines refer to this as aggregating the market ‘as a matter of convenience’. Horizontal Merger Guidelines, US Department of Justice and the Federal Trade Commission, 19 August 2010, fn 8. 676

  Para 20.

677

  Market Definition Notice, para 22.

678

  Case COMP/M.4513 Arjowiggins/M-real Zanders Reflex (2008). See also Case COMP/ M.6101 UPM/Myllykoski and Rhein Papier (2001) which raised similar types of issues in the paper sector. 679

  Case COMP/M.4513 Arjowiggins/M-real Zanders Reflex (2008), recital 111.

680

  Market Definition Notice, para 8.

681

  Market Definition Notice, para 28.

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682

  See eg Joined Cases C-68/94 and C-30/95 France and Others v Commission (Kali & Salz) [1998] ECR I-1375, paras 143–151, which contain a review of the Commission’s analysis of trade flows, price differences, and transport costs. 683

  Case COMP/M.5675 Syngenta/Monsanto (2010), paras 119–131.

684

  Para 8 of the Market Definition Notice uses the expression ‘undertakings concerned are involved in the supply and demand of products or services…’. Para 60 in relation to calculation of market shares mentions that ‘market shares for each supplier can be calculated on the basis of their sales of the relevant products in the relevant area’. The wording retained by the Court is that the ‘relevant geographical market is a defined geographical area in which the product concerned is marketed…’ (Case T-374/00 Verband der freien Rohrwerke and Others v Commission [2003] ECR II-2275, para 141). 685

  Horizontal Merger Guidelines, US Department of Justice and the Federal Trade Commission, 19 August 2010. 686

  Case COMP/M.2097 SCA/Metsä Tissue (2001), OJ 2002 L57/1.

687

  SCA/Metsä Tissue (n 686), para 48. See also Case COMP/M.1672 Volvo/Scania (2000), OJ 2001 L143/74, para 233: ‘The ability of manufacturers to price discriminate between different geographic areas is a central element of defining the relevant geographic market.’ 688

  Case IV/M.190 Nestlé/Perrier (1992), OJ 1992 L356/1.

689

  The SSNIP test was first introduced in the US Horizontal Merger Guidelines in 1982.

690

  Recent cases where the precise results of SSNIP test calculations were either conducted by the Commission, or provided by the parties to the transaction include Cases COMP/M.5658 Unilever/Sara Lee (2010); COMP/M.6541 Glencore/Xstrata (2012); and COMP/M.6471 Outukumpu/Inoxum (2012). In both Cases COMP/M.5335 Lufthansa/SN Airholding (2009) and COMP/M.4734 Ineos/Kerling (2008) the Commission considered critical loss analysis, but ultimately had to rely on other types of evidence to define the relevant market. 691

  This is not necessarily the case in antitrust cases, see the discussion in Section E.2(f).

692

  As the Commission stated in the decision: Taking the possibility of a cellophane fallacy into account is particularly important in the case of mergers involving concerns regarding potential competition. In such mergers, current competitive constraints are sometimes weak, while possible future entry may provide them. If the possibility of a cellophane fallacy was not duly taken into account in potential competition cases, this may lead to overlooking the elimination of competitive constraints that could develop absent a merger. (Case COMP/M.5096 RCA/MAV Cargo (2008), fn 22)

693

  Case COMP/M.6166 Deutsche Börse/NYSE (2012), para 347.

694

  A good example of this is the definition of separate markets for supply of gas to different customer groups. See eg Case COMP/M.3440 ENI/EDP/GDP (2004), paras 206– 270. 695

  Market Definition Notice, para 43.

696

  In Case COMP/M.6266 J&J/Synthes (2012), the products in question were medical devices, which are developed and produced internationally and where regulatory barriers and transport costs within the EU are low. Nonetheless, the Commission assessed the merger between the two suppliers of medical devices on the basis of national markets, pointing inter alia to the fact that prices differed among Member States. Without explicitly framing the analysis as a question of arbitrage, it also pointed to factors such as national

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purchasing patterns and national reimbursement schemes, which would make arbitrage difficult (see paras 118–121). 697

  In Dong/Elsam/E2, the Commission distinguished between metered and unmetered customers, on the grounds that ‘It is easy to identify which of these groups a customer belongs to and there is no arbitrage possibility between them. These customer groups pay different prices, consume different products (metered/non-metered) and purchase in different ways (negotiation vs. standard purchases)’ (para 249). 698

  An early example is Case COMP/M.1293 BP/Amoco (1998), where the Commission found separate markets for polyisobutylene sold to the additives sector and sold to industrial customers. In particular, the Commission established that there were clear borders between the two segments and very limited sales from the additives sector to the industrial sector (para 25). It thus effectively established absence of arbitrage, without using the term. 699

  See eg Case COMP/M.4381 JCI/Fiamm (2007): the finding of national markets in the context of this case is based on the observation that the same supplier can and does charge different prices for the same product in different countries without such differences being countered by customers in the high price countries switching its demand to low price countries (that is to say, the absence of cross border arbitrage). (para 198)

700

  Case COMP/M.2416 Tetra Laval/Sidel (2003).

701

  As regards the possibility of determining exactly which group a given customer belongs to when he purchases an SBM machine and whether or not that customer may, at least currently within the EEA, be able to find a better price through arbitrage between the available suppliers, it is clear that those possibilities, if established would apply as much to SBM machines used for non-sensitive products as to those used to package sensitive products. The possibility for the merged entity to identify the group to which a customer belongs is due to the fact that many customers in the carton markets who will switch to PET will be current Tetra customers. However, this possible benefit, resulting from the ‘first-mover advantage’ which the merged entity will foreseeably have, does not preclude those customers from turning to other suppliers of SBM machines if they become dissatisfied with the conditions offered by the merged entity. (Case T-5/02 Tetra Laval v Commission [2002] ECR II-4381, para 268)

702

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, para 104.

703

  Case COMP/M.4000 Inco/Falconbridge (2006), para 218.

704

  Case COMP/M.6756 Norsk Hydro/Orkla/JV (2013), para 66.

705

  Case COMP/M.6570 UPS/TNT Express (2012).

706

  In Ryanair/Aer Lingus both companies sold most of their tickets directly to final customers via the Internet. That made the usual approach of soliciting the views of travel agencies through questionnaires inappropriate. Instead, the Commission appointed external experts to carry out an electronic customer survey at Dublin airport in order to learn whether they considered flights from different airports substitutable.

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707

  Since market participants will deliver a combination of facts and opinions in their replies, the Commission will cross-check them and interpret them in light of the strategic interests of the respondent in question, as is the case with submissions by the parties. 708

  Market Definition Notice, para 25.

709

  Case T-342/07 Ryanair Holdings v Commission [2010] ECR II 3457, para 136.

710

  Case COMP/M.6166 Deutsche Börse/NYSE (2012), para 251.

711

  As a broad rule, in-depth analysis is usually reserved for Phase II investigations (where the Commission has considerably more time). However, in some cases it may be possible also to carry out more sophisticated analysis even at the pre-notification stage. 712

  The Courts have confirmed this approach on several occasions. See Cases 66/86 Ahmed Saeed Flugreisen [1989] ECR 803, paras 39–41; T-2/93 Air France v Commission [1994] ECR II-323, paras 84 and 85; T-177/04 easyJet v Commission [2006] ECR II-1913, paras 54– 61. In the latter case, easyJet argued that the European Commission in its Air France/KLM (2004) decision (Case COMP/M.3280, OJ 2004 C60/5) had also failed to assess the effect on another market which it dubbed ‘leisure travel by air’. For these leisure passengers, ‘various destinations were interchangeable’. However, the Court rejected this argument on the ground that the applicant had not been specific enough: ‘In the absence of any more precise definition of the market for which the applicant contends, it is impossible for the Court to determine whether it was necessary for the Commission to consider it’ (para 59). 713

  Case COMP/M.3280 Air France/KLM (2004), OJ 2004 C60/5, recitals 69ff.

714

  Case COMP/M.5335 Lufthansa/SN Airholding (Brussels Airlines) (2009), para 15.

715

  See Case COMP/M.4439 Ryanair/Aer Lingus (2007), para 99.

716

  Case COMP/M.6357 Koninklijke Philips/Indal Group (2011).

717

  Case COMP/4381 JCI/FIamm (2007), para 200.

718

  Case COMP/M.4439 Ryanair/Aer Lingus (2007), para 90.

719

  eg in Case T-374/00 Verband der freihen Rohrwerke and Others v Commission [2003] ECR II-2275, para 145; the GC stated in the context of possible price differences of 10–15 per cent between countries in the market for hot-rolled wide strips, that ‘such an order of magnitude does not rule out the existence of a [Union] market’. 720

  Para 196. See also COMP/M.3605 Sovion/HMG (2004), where the Commission defined the geographical scope of the relevant markets for pigs and sows ready for slaughter on the basis of travel distances. The epicentre of the transaction was in the Netherlands, but the Commission’s approach led to a relevant market that included parts of West Germany based on the argument that pigs could reasonably travel up to 150 km. In addition to a large number of descriptive factual elements, the decision also relied on price analysis. According to the decision, although German prices for the purchase of live pigs are traditionally higher than Dutch prices, the two were closely connected inasmuch as they tended to move in parallel in the medium and long term. 721

  Stationarity tests are econometric techniques, which can establish whether two price series are linked, even if there are short-term variations between them. If the relative prices between, say, two regions over the long run consistently seem to revert to a given constant level, the test will find that relative price level is stationary over time. In Case COMP/M. 5907 Votorantim/Fisher (2011), the parties submitted a stationarity analysis showing that the relative price between apple juice and orange juice was stable, pointing towards a combined market. However, when the Commission used a longer time series, it reached the opposite result (paras 92–96). Other cases where the Commission used these types of techniques include Cases COMP/M.4000 Inco/Falconbridge (2000); COMP/M.4439 Ryanair/ Aer Lingus (2007) (see in particular Annex III to the decision, which contains an exhaustive From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

description of the potential limitations of this methodology); COMP/M.4513 Arjowiggins/Mreal Zanders Reflex (2008); COMP/M.5046 Friesland Foods/Campina (2008); and COMP/M. 5153 Arsenal/DSP (2009). For a detailed discussion of the Commission’s recent practice, see D. Donath, ‘The Use of Pricing Analysis for Market Definition Purposes: The Arjowiggens/M-real Canders Reflex and Arsenal/DSP Mergers’ Competition Policy Newsletter, issue No 1, 2009, p 41. 722

  Case COMP/M.4513 Arjowiggens/M-real Zanders Reflex (2008), OJ 2007 C267/50. See recitals 48ff for a methodological discussion: ‘At the same time, however, if strong price comovements over time are not found, this suggests that the competitive relationship between the two products is not particularly strong and thus they are not in the same product market’ (para 52). 723

  Case COMP/M.5046 Friesland Foods/Campina (2008), recital 513. Similarly, in JCI/ Fiamm, the co-movement of prices across countries was also attributed to the importance of fluctuation in raw material prices (in that case, lead). See para 198. 724

  See Case COMP/M.6850 Marine Harvest/Morpol (2013).

725

  Case COMP/M.3605 Sovion/HMG (2004).

726

  Case T-151/05 Nederlandse Vakbond Varkenshouders (NVV), Marius Schep, Nederlandse Bond van Handelaren in Vee (NBHV) v Commission, [2009] ECR II-1219. 727

  Case COMP/M.4734 Ineos/Kerling (2008), OJ 2008 C217/50, para 3.

728

  See eg the twin articles in the Competition Policy Newsletter, issue No 1, 2008: L. Bonova, D. Corriveau, K. Kloc-Evison, and E. Sepúlveda García, ‘Ineos and Kerling: Raising the Standard for Geographic Market Definition?’ and A. Amelio, M. de la Mano, and M. Godinho de Matos, ‘Ineos/Kerling Merger: An Example of Quantitative Analysis in Support of a Clearance Decision’. 729

  See M. de la Mano, E. Pesaresi, and O. Stehman, ‘Econometric and Survey Evidence in the Competitive Assessment of the Ryanair-Aer Lingus Merger’, Competition Policy Newsletter, issue No 3, 2007, pp 73–81. 730

  This is well explained eg in M. Motta, Competition Policy: Theory and Practice (Cambridge: Cambridge University Press, 2004), 3.2.1.2. 731

  Market Definition Notice, para 12.

732

  United States v Du Pont, 351 US 377 (1956).

733

  If cellophane was to be considered the relevant market, Du Pont would have held market share above 70 per cent, but if all flexible packaging materials were included in the relevant market, cellophane would only take up 20 per cent. 734

  Market Definition Notice, para 19. In the Staff Discussion Paper that eventually led to enforcement priority paper for exclusionary abuses under Art 102, this issue was discussed in detail. See DG Competition discussion paper on the application of Article 82 of the Treaty to the exclusionary abuses, December 2005, ch 3. 735

  See eg the quote from the CJ regarding the central role played by market definition (quoted at para 5.588). 736

  See for instance K.-U. Kuhn, ‘Reforming European Merger Review: Targeting Problem Areas in Policy Outcomes’, Michigan Law and Economics Research Paper no 02-01 (2002), where he states:

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It is, indeed, not very long ago that many competition lawyers would see the role of economists in merger cases exclusively as providing the desired market definition. Economic thinking has moved beyond this rigid procedure. The primary reason is that empirical research on the problem of market definition and the effects of mergers has made economists realize that the information needed to determine the unilateral effects of mergers requires as much or less information than an economically rigorous estimation of the market boundaries. This means that it is in principle no more difficult to estimate price effects of mergers directly, skipping the market definition step. 737

  See eg L. Kaplow, ‘Why (Ever) Define Markets?’ (2010) 124 Harvard L Rev 432.

738

  An example of this kind of debate can be found in the appeal by Spar Österreichische Warenhandels of the Commission’s decision to clear the acquisition by REWE of ADEG (both traditional supermarkets in Austria). The Commission had found that the transaction would lead to only moderate concentration (combining market shares of 29.7 and 5.4 per cent). The appellant argued that if hard discounters were excluded from the market, the combined market share would reach 45.8 per cent. While the factual basis for the parties’ argument is irreproachable, the argument essentially boils down to whether the basis for the assessment should be a narrow market with a high share (excluding the hard discounters) or a wide market with a low share (including the hard discounters). 739

  See eg J. Farrel and C. Shapiro, ‘Antitrust Evaluation of Horizontal Mergers: An Economic Alternative to Market Definition’ (2010) 10(1) The B. E. J Theoretical Econ, Art 9. 740

  Case COMP/M.5658 Unilever/Sara Lee Body Care (2010).

741

  In April 2010 the Department of Justice and the Federal Trade Commission put out for public consultation new draft Horizontal Merger Guidelines, see ). They explicitly state that ‘Market definition is not an end in itself: it is one of the tools the Agencies use to assess whether a merger is likely to lessen competition.’ In the final version (published in August 2010 and available at ), the Guidelines state: ‘The measurement of market shares and market concentration is not an end in itself, but is useful to the extent it illuminates the merger’s likely competitive effects.’ 742

  OECD Policy Roundtable, ‘Economic Evidence in Merger Analysis’, DAF/COMP (2011), 23 Background note p 44. 743

  Since Case COMP/M.1524 Airtours/First Choice in 1999 there have been nine prohibition decisions. Only four of which were predominantly horizontal non-coordinated effects cases: Cases COMP/M.1672 Volvo/Scania (2000); COMP/M.1741 MCI Worldcom/ Sprint (2000); COMP/M.2097 SCA/Metsä Tissue (2001); and COMP/M.2187 CVC/Lenzing (2001). 744

  Cases COMP/M.4439 Ryanair/Aer Lingus (2007); COMP/M.5830 Olympic/Aegean Airlines (2011); COMP/M.6166 Deutsche Börse/NYSE Euronext (2012); COMP/M.6570 UPS/ TNT Express (2013); and COMP/M.6663 Ryanair/Aer Lingus III (2013). 745

  Cases COMP/M.6410 UTC/Goodrich (2012); COMP/M.5675 Syngenta/Monsanto’s sunflower seed business (2010); COMP/M.4504 SFR/Tele 2 (2007); involved remedies clearly targeted at vertical concerns. Furthermore, three energy cases; Cases COMP/M. 4180 Gaz de France/Suez (2006); COMP/M.3868 Dong/Elsam/Energi E2 (2006); and COMP/ M3696 E.On/MOL (2005) involved infrastructure divestitures thereby providing vertical solutions to competition problems including potential competition. Similarly Case COMP/M. 6497 Hutchison 3G Austria/Orange Austria (2012) involved access to infrastructure to a

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competitor as part of a remedy package and Case COMP/M.4980 ABF/GBI (2008) was based on coordinated effects from a horizontal overlap. 746

  Case T-342/99 Airtours v Commission [2002] ECR II-2585.

747

  Case T-5/02 Tetra Laval v Commission [2002] ECR II-4381 and Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987. 748

  Case T-210/01 General Electric v Commission [2005] ECR II-5596

749

  Cases T-310/01 Schneider v Commission [2002] ECR II-4071 and T-77/02 [2002] II-4201. Damages was awarded in Case T-351/03 Schneider Electric v Commission [2007] ECR II-2237 but partially overruled on appeal in Case C-440/07 P [2009] ECR I-6413. 750

  Case T-464/04 Impala v Commission [2006] ECR II-2289.

751

  See speech available at . More details on the project are available at http:// ec.europa.eu/governance/impact/planned_ia/docs/ 2013_comp_006_merger_simplification_en.pdf. 752

  Horizontal Merger Guidelines, para 14.

753

  See eg Cases COMP/M.6471 IPIC/CEPSA (2011); COMP/M.6471 Outokumpu/Inoxum (2012); and COMP/M.6850 Marine Harvest/Morpol (2013). 754

  In addition to capacity, the Market Definition Notice explicitly refers to ‘the number of players in bidding markets, units of fleet as in aerospace, or the reserves held in the case of sectors such as mining’. 755

  See also Horizontal Merger Guidelines, para 18.

756

  Horizontal Merger Guidelines, paras 19 and 20.

757

  See Case T-405/08 Spar Österreichische Warenhandels v Commission, judgment of 7 June 2013, para 68. 758

  Case 85/76 Hoffmann-La Roche v Comm ission [1979] ECR 461, para 41.

759

  See eg Case T-102/96 Gencor v Commission [1999] ECR II-753, para 205, and Case T-221/95 Endemol v Commission [1999] ECR II-1299, para 134. 760

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, paras 571–572.

761

  See Case T-405/08 Spar Österreichische Warenhandels v Commission, judgment of 7 June 2013, para 58; Case T-114/02 BaByliss v Commission [2003] ECR II-1279, para 143; Case T-282/06 Sun Chemical Group v Commission [2007] ECR II-2149, para 55. 762

  Paras 43–44.

763

  Case T-282/06 Sun Chemical Group and Others v Commission [2007] ECR II-2149, para 126. 764

  As a result, a high market share is less likely to be a problem in a market that has been very narrowly defined and thus ignores some weaker competitive constraints than in a very wide market. Conversely, a low market share is less likely to be sufficient on its own to dispel competition doubts in a wide market with many potentially important sub-segments (in which constraints may be limited) than in a very narrowly defined market. 765

  For an example of a five to four merger raising competition concerns, see Case COMP/ M.6850 Marine Harvest/Morpol (2013). 766

  Wholesale mobile telephony markets are generally characterized by high entry barriers due, inter alia, to spectrum scarcity and very high investment costs.

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767

  The resulting company would be jointly controlled by Deutsche Telekom and France Telecom (the parents of T-Mobile and Orange, respectively). 768

  Case COMP/M.6497 Hutchison 3G Austria/Orange (2012).

769

  Horizontal Merger Guidelines, para 24.

770

  Case COMP/M.5658 Unilever/Sara Lee Body Care (2010).

771

  See para 5.406 for a discussion of Section 5(4) documents.

772

  Case COMP/M.4297 Nokia/Siemens (2006), para 87.

773

  Case COMP/M.6214 Seagate/HDD business of Samsung (2011), recital 403.

774

  Case COMP/M.3083 GE/Instrumentarium (2003).

775

  In Syniverse/BSG, the Commission cleared the transaction in Phase II only after a detailed analysis of closeness of competition, an element of which was an analysis of past switching by customers. The Commission found that customers rarely switched from BSG to Syniverse or vice versa; instead switches usually involved the third largest competitor Mach (Case COMP/M.4662 Syniverse/BSG (2007), para 81). 776

  Unilever/Sara Lee Body Care, para 511.

777

  Case COMP/M.5046 Friesland/Campina (2008). See econometric Annex 1 to the decision. 778

  Case COMP/M.3268 Sydkraft/Graninge (2003).

779

  Case COMP/M.3216 Oracle/Peoplesoft (2004).

780

  For more detail, see Bengtsson, ‘Simulating the Effect of Oracle’s Takeover of PeopleSoft’ (n 641), 133–49. 781

  An important exception are cases where geographic proximity between producer and customer is important—eg because transportation costs are very significant. In such cases, the Commission may carry out an analysis of geographical closeness of competitors. 782

  See Case COMP/M.6850 Marine Harvest/Morpol (2013), para 73.

783

  Horizontal Merger Guidelines, para 32.

784

  Horizontal Merger Guidelines, para 33.

785

  See J.-M. Carpi Badia, P. D’Souza, A. Seabra Ferreira, R. Thomas, M. Zięba, ‘Votorantim/Fischer/JV—Squeezing Oranges, Not Consumers’, Competition Policy Newsletter, issue No 3, 2011, p 14. The Commission’s investigation in another recent case in the fruit juice business led to similar conclusions. See in particular Case COMP/M.6439 AGRANA/RWA/JV (2012), concerning a joint venture mainly active in the production of apple juice, both concentrated and not from concentrate. 786

  Case COMP/M.6101 UPM/Myllykoski and Rhein Papier (2011), paras 98, 164, and 166. In addition, demand had been forecast to remain stable and a new type of recently introduced paper was also found to constrain the parties. 787

  Case COMP/M.6471 Outokumpu/Inoxum (2012).

788

  Outokumpu/Inoxum (n 787), para 395.

789

  Outokumpu/Inoxum (n 787), paras 400ff.

790

  Case COMP/M.5153 Arsenal/DSP (2009), para 239. Similar conclusions were reached in Outokumpu/Inoxum (n 787), where the Commission found that an increase of Asian

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imports further to the widening of the Europe/Asia price gap for stainless steel products would not be sufficient to constrain the merged entity from increasing prices in Europe. 791

  Horizontal Merger Guidelines, para 31.

792

  Recitals 327–328 of Case COMP/M.6214 Seagate/HDD business of Samsung (2011).

793

  Case COMP/M.6214 Seagate Technology/the HDD business of Samsung electronics (2011) and Case COMP/M.6203 Western Digital Ireland/Viviti Technologies (2011). 794

  This priority rule was based on the date of notification.

795

  Case COMP/M.6214 Seagate Technology/the HDD business of Samsung electronics (2011), para 429. 796

  Case COMP/M.6203 Western Digital Ireland/Viviti Technologies (2011), para 445.

797

  Horizontal Merger Guidelines, para 36.

798

  Case COMP/M.4439 Ryanair/Aer Lingus (2007), paras 701–708.

799

  Case COMP/M.2978 Lagadère/Natexis/VUP (2004).

800

  Case COMP/M.5669 Cisco/Tandberg (2010), para 81.

801

  One such issue discussed in Case COMP/M.3732 Procter & Gamble/Gillette (2005) was so called category managers. Some supermarkets make use of external category managers, which design the layout of the shelf space in the supermarket. When the category manager is a strong supplier within the category, this can be a source of concern with respect to smaller suppliers’ ability to get their products onto the shelves. 802

  See paras 58–60 of the Horizontal Merger Guidelines.

803

  Case COMP/M.3440 ENI/EDP/GDP (2004).

804

  The Commission’s assessment relied both on statements from other parties and an analysis of internal documents of the parties, much of which is not available in the public version of the decision. 805

  Case COMP/M.3440 ENI/EDP/GDP (2004), para 362.

806

  ENI/EDP/GDP (n 805), para 549. In Case COMP/M.3868 DONG/Elsam/Energi E2 (2006) the Commission looked at a similar type of vertical integration in Denmark. Here it did not find loss of competition on the downstream electricity markets, but it did consider that DONG’s dominant position on the gas markets would be strengthened due to the disappearance of potential entry by the electricity incumbents. 807

  It should be noted that the Commission’s prohibition was appealed and, while the Court upheld the Commission’s decision overall, it concluded that it was vitiated by an error of law as regards the assessment of the gas market. The Court found that the Commission had failed to take into account that the merger could not immediately create or strengthen a dominant position in a market that was characterized by a legal monopoly resulting from Portugal’s derogation from Art 28 of the Second Gas Directive (Case T-87/05 EDP v Commission [2005] ECR II-3753, paras 113–133). Nonetheless, the assessment carried out by the Commission remains instructive as to how the Commission assesses mergers involving potential competitors. 808

  Case COMP/M.5096 RCA/MAV Cargo (2008).

809

  The Commission also identified competition concerns with respect to the removal of MAV as a potential competitor in the Austrian rail freight market (where RCA was the uncontested incumbent) in the area of block rail services. While the Commission admitted that potential entry of MÁV Cargo on its own into the Austrian block rail freight market

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appeared rather unlikely, it nonetheless considered that such potential entry could not be excluded should MÁV Cargo be acquired by a rail company other than RCA. 810

  The details of which are redacted from the public version of the decision.

811

  Horizontal Merger Guidelines, para 62.

812

  Horizontal Merger Guidelines, para 61.

813

  Case COMP/M.784 Kesko/Tuko (1996), recital 153. The strategies to which the Commission alluded involve the use of leveraging negotiation power over branded goods suppliers and producers. The decision was unsuccessfully appealed by Kesko in Case T-22/97 Kesko v Commission. 814

  Case COMP/M.1221 Rewe/Meinl (1999) recital 55. See also Case COMP/M.1684 Carrefour/Promodes (2000). 815

  Case COMP/M.1221 Rewe/Meinl (1999), recital 71.

816

  See Case T-151/05 Nederlandse Vakbond Varkenshouders (NVV), Marius Schep, Nederlandse Bond van Handelaren in Vee (NBHV) v Commission ECR [2009] II-1219. The GC dismissed the farmers’ association appeal against the Commission’s decision to clear the merger between the two slaughterhouses Sovion and HMG. The association argued that the merged entity would obtain a dominant position vis-à-vis its suppliers; however, the judgment is not very detailed on the appellants arguments on how the dominant position would allegedly harm competition. 817

  This is the standard monopsonist model found in most economic textbooks as the mirror image of the monopolist. 818

  Case COMP/M.5046 Friesland Foods/Campina (2008), para 98.

819

  Para 103. In this respect the Commission’s approach in Friesland Foods/Campina differs from the analysis in Danish Crown/Vestjyske slagterier, which also concerned cooperatives owned by farmers. In that case, which predates the Horizontal Merger Guidelines, the Commission found that the merger would create a dominant position on the buyer side of the market and thereby reduce the choice for sellers (see Case IV/M.1313 Danish Crown/Vestjyske slagterier (1999), paras 114–120). 820

  Horizontal Merger Guidelines, para 39.

821

  See Joined Cases C-68/94 French Republic v Commission and C-30/95 Societe Commerciale des Potasses et de l’Azote (SCPA) and Others v Commission [1998] ECR I-1375, paras 168–170. 821a

  Case T-342/99 Airtours (n 746).

822

  Case COMP/M.3333 Sony/BMG (2007), OJ 2005 L62/30. The music market was characterized by a large number of individualized products (albums) and prices. As such, it shared some characteristics with the market for package holidays analysed in Airtours, but without the natural focal point of aircraft seat capacity, which was the crux of the alleged coordination in Airtours. While the Airtours assessment focused on coordinating capacity, the issue in Sony/BMG was rather whether, in particular, rebates on list prices could be coordinated. 823

  Case T-464/04 Impala v Commission [2006] ECR II-2289.

824

  Case C-413/06 P Bertelsmann and Sony v Impala, judgment of 10 July 2008.

825

  Case COMP/M.3333 Sony/BMG (2007).

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826

  There is, however, a curious tension between the GC’s judgment in Airtours and its judgment in Impala. In the former, the GC held that all three conditions needed to be met. In the latter, however, the GC overturned the Commission’s clearance decision once it had concluded that the market was transparent (the first condition under Airtours): ‘It follows from all of the foregoing that the complaint alleging insufficient reasoning for the finding relating to the transparency of the market is well founded, which in itself is reason to annul the Decision’ (para 325 of the judgment). Similarly, after having found errors of assessment in relation to retaliation, it concluded that since that assessment ‘constitutes an essential ground on which the Decision rests, the Decision must be annulled’. This approach could be read as suggesting that, on its own, the existence of transparency or a retaliation mechanism is sufficient for a finding of collective dominance. The Commission pointed out the problem with this approach during the appeal process, but since the Commission was not the appellant, if was unfortunately not clarified whether this is a flaw in the logic of the GCs judgment (see paras 184–188 in Case C-413/06 P Bertelsmann and Sony v Impala). 827

  Para 131 of the judgment.

828

  cf para 62.

829

  However, a fully-fledged analysis of the likely coordination scenario will not usually be possible in Phase I. In Case COMP/M.4753 Antalis/MA P (2007), the Commission dealt with the potential for coordination between the two remaining fine paper distributors in the UK which, after the transaction, would have comparable market shares accounting for approximately 75 per cent of the market and where respondents in the market investigation had raised concerns about the transaction. The distribution related to many different products, there were no price lists, and large rebates were offered by the distributors. However, the Phase I investigation did not allow the Commission to ‘clearly dispel the possibility of price transparency’. The parties decided to offer remedies in Phase I, which removed the need for an in-depth investigation of the issue. 830

  Horizontal Merger Guidelines, para 40.

831

  C-413/06 Bertelsmann and Sony v Impala, para 126.

832

  Case IV/M.1524 Airtours/First Choice (1999), para 158.

833

  See Horizontal Merger Guidelines, para 42.

834

  See Horizontal Merger Guidelines, para 42.

835

  Case COMP/M.4141 LINDE/BOC (2006). Similarly, in JCI/Fiamm, the Commission examined the risk of both non-coordinated and coordinated effects. It ultimately concluded that while the analysis of coordinated effects pointed towards some factors making coordination more likely after the merger, the evidence was not clear-cut in some areas (eg the ability to punish deviations was hampered by lack of sufficient free capacity). It thus concluded that: ‘the Commission has not found sufficiently convincing evidence to demonstrate that such coordinated effects are more likely than not to emerge’ (para 505). 836

  Case COMP/M.4141 LINDE/BOC (2006), paras 179 and 192.

837

  Para 180.

838

  Paras 250ff of the judgment in Case T-464/04 Impala v Commission [2006] ECR II-2289. This was confirmed by the CJ, which stated that ‘the investigation of a pre-existing collective dominant position based on a series of elements normally considered to be indicative of the presence or the likelihood of tacit coordination between competitors cannot therefore be considered to be objectionable of itself’ (Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 129).

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839

  Horizontal Merger Guidelines, para 82.

840

  COMP/M.4980 ABF/GBI (2008).

841

  Case C-413/06 Bertelsmann and Sony v Impala, judgment of 10 July 2008, para 126. In this respect, the CJ reiterated the importance of carrying out the assessment in the proper context, stating that the analysis of transparency: should not be undertaken in an isolated and abstract manner, but should be carried out using the mechanism of a hypothetical tacit coordination as a basis. It is only if such a hypothesis is taken into account that it is possible to ascertain whether any elements of transparency that may exist on a market are, in fact, capable of facilitating the reaching of a common understanding on the terms of coordination and/or of allowing the competitors concerned to monitor sufficiently whether the terms of such a common policy are being adhered to. 842

  Case COMP/M.3333 Sony/BMG (2007), OJ 2005 L62/30, para 80. The decision in Case COMP/M.5385 Avnet/Abacus (2009), which dealt with distribution of electronic components, provides another example of where a lack of transparency precluded coordination. In that case, the absence of transparency led the Commission to approve the transaction in Phase I. 843

  Case C-413/06 Bertelsmann and Sony v Impala, paras 130–131.

844

  See eg Case T-102/96 Gencor v Commission [1999] ECR II-753, para 281 referring to evidence of internal documents pointing to possible focused rhodium price wars. 845

  Case COMP/M.4980 ABF/GBI Business (2008), paras 202ff.

846

  Case COMP/M.3512 VNU/WPP/JV (2004), para 30.

847

  Case T-342/99 Airtours v Commission [2002] ECR II-2585, para 266: what is important here is not whether there is scope for potential competitors to reach a sufficient size to compete on an equal footing with the large tour operators, but simply whether there is scope for such competitors to take advantage of opportunities afforded by the large operators restricting capacity put onto the relevant market to below a competitive level.

848

  The maverick would be difficult to ignore if it is ready to supply a significant proportion of the quantities that the coordinating firms seek jointly to withhold from the market. 849

  Case COMP/M.4141 LINDE/BOC (2006), para 192.

850

  See eg Case COMP/M.4979 Acer/Packard Bell (2008), para 40: The leading PC vendors are unlikely to be able to reach a common understanding on the terms of coordination post-merger (there will remain numerous competitors, with asymmetric market shares, products are differentiated, the industry is very dynamic, none of the parties could be considered as an innovator or price maverick). There is no sufficient transparency (supply agreements are negotiated individually) and customers or competitors could jeopardize any coordination attempt.

851

  In Case COMP/M.3886 Aster 2/Flint Ink (2005), the Commission pointed to the ability of large customers to create intense price competition as a reason to dismiss concerns regarding coordination.

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852

  Non-Horizontal Merger Guidelines, paras 11–13.

853

  Case COMP/M.4942 Nokia/Navtec (2008).

854

  Case COMP/M.4854 TomTom/Tele Atlas (2008).

855

  For details about the cases and their implications for the Commission’s vertical merger assessment, see C. Esteva Mosso, M. Mottl, R. De Coninck, and F. Dupont, Digital Maps Go Vertical: TomTom/Tele Atlas and Nokia/NAVTEQ’, Competition Policy Newsletter, issue No 3, 2008, p 70. 856

  Figures as at March 2013.

857

  Cases COMP/M.4403 Thales/Finmeccanica/AAS/Telespazio (2007); COMP/M.4731 Google/Doublclick (2008); COMP/M.4854 TomTom/Tele Atlas (2008); COMP/M.4874 Itema Holding/Bacovision Division (2008); COMP/M.4942 Nokia/Navtec (2008); COMP/M.6314 Telefonica UK/Vodafone UK/Everything Everywhere/JV (2012). 858

  Cases COMP/M.6410 UTC/Goodrich (2012); COMP/M.5675 Syngenta/Monsanto’s sunflower seed business (2010); COMP/M.4504 SFR/Tele 2 (2007) involved remedies clearly targeted at vertical concerns. Furthermore, three energy cases, Cases COMP/M.4180 Gaz de France/Suez (2006); COMP/M.3868 Dong/Elsam/Energi E2 (2006); and COMP/M3696 E.On/MOL (2005) involved infrastructure divestitures thereby providing vertical solutions to competition problems including potential competition. Similarly Case COMP/M.6497 Hutchison 3G Austria/Orange Austria (2012) involved access to infrastructure to a competitor as part of a remedy package. 859

  Non-Horizontal Merger Guidelines, para 18.

860

  The most famous merger case involving input foreclosure is probably Case COMP/M. 2220 General Electric/Honeywell (2001). One of theories of harm in that case related to the market power Honeywell had because aircraft engine producers depended on it for their supply of engine starters. The Commission feared that this power could be used by the merged entity to hurt the aircraft engine producers that competed with General Electric. 861

  The most prominent case involving conglomerate effects is probably Case COMP/M. 2416 Tetra Laval/Sidel (2003). Tetra Laval already held a dominant position in the market for carton packaging. The Commission feared that the merged entity could leverage this market power to the neighbouring market for PET packaging equipment, eg by bundling carton and pet machines. 862

  Case COMP/M.6410 UTC/Goodrich (2012).

863

  Case COMP/M.6314 Telefónica UK/Vodafone UK/Everything Everywhere/JV (2012).

864

  The analysis of technical foreclosure was formally labelled input foreclosure because the access to the SIM card was treated as an input needed for the joint venture and competing platforms. The commercial foreclosure was termed indirect foreclosure because the foreclosing competing technologies from gaining access to customers would have to be achieved indirectly via third parties. 865

  Case COMP/M.5984 Intel/McAfee (2011).

866

  Horizontal Merger Guidelines, para 8.

867

  Non-Horizontal Merger Guidelines, para 16.

868

  See Non-Horizontal Merger Guidelines, para 16.

869

  Non-Horizontal Merger Guidelines, paras 32, 59, and 94.

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870

  To illustrate, in Case COMP/M.4874 Itema Holding/Barcovision division (2008) the Commission chose in its decision to examine together the incentives for the merged entity to foreclose as well as potential effects on wider prices. 871

  Case T-210/01 General Electric v Commission [2005] ECR II-5596, para 307.

872

  Case COMP/M.4874 Itema Holding/BarcoVision division (2008), para 70.

873

  Case COMP/M.6411 Advent/Maxam (2012).

874

  Advent/Maxam (n 873), paras 69–72.

875

  The same reasoning applies to customer foreclosure, but in that case the potential costs from not procuring products from upstream rivals (eg because they are more efficient than the upstream unit) are compared with the potential benefits from doing so (because the foreclosure would make upstream rivals less competitive and/or increase the costs for downstream rivals, thus allowing the merged entity to raise price in either the upstream or downstream markets). See Non-Horizontal Merger Guidelines, paras 68–71. 876

  For conglomerate cases, a similar mechanism applies: when a supplier of product A with market power ties product A to one particular product (B) in a neighbouring market, eg by changing its technical properties so that it only interconnects with B and not with B’s competitors, it will forego profit and sales of A, but probably boost sales of B. While this may not be an attractive strategy for a stand-alone supplier of A, it may be attractive for a conglomerate selling both A and B. See Non-Horizontal Merger Guidelines, para 105. 877

  In a case of customer foreclosure, the additional costs would be incurred downstream while the gained profits would accrue upstream. 878

  Case COMP/M.4942 Nokia/Navteq (2008), para 346.

879

  Case COMP/M.6381 Google/Motorola Mobility (2012).

880

  In vertical mergers, the likely effect of the concentration is assessed at the level immediately below the merged entity, ie the first level where the merged entity is not competing. 881

  See eg Non-Horizontal Merger Guidelines, paras 48–49.

882

  See Non-Horizontal Merger Guidelines, paras 111–113.

883

  See eg Non-Horizontal Merger Guidelines, paras 51–57. See Section E.6 for a general discussion of countervailing factors. 884

  See Non-Horizontal Merger Guidelines, para 55. An equivalent effect applies in relation to conglomerate concentrations involving complementary products (see Non-Horizontal Merger Guidelines, para 117). 885

  See Non-Horizontal Merger Guidelines, para 13.

886

  Case COMP/M.4854 TomTom/Tele Atlas (2008), para 243.

887

  Case COMP/M.4942 Nokia/Navteq (2008), paras 365–369.

888

  Case COMP/M.4874 Itema Holding/BarcoVision division (2008), para 76. For more details, see R. De Coninck ‘Economic Analysis in Vertical Mergers’, Competition Policy Newsletter, issue No 3, 2008, p 48. While the parties did not formally make an efficiency claim regarding the elimination of the double mark-up, the Commission assessed the incentives to foreclose both with and without this effect. 889

  Non-Horizontal Merger Guidelines, para 23.

890

  Sidel had less than 20 per cent of the market and Tetra had less than 10 per cent.

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891

  The analysis of a ‘conglomerate-type’ concentration is a prospective analysis in which first, the consideration of a lengthy period of time in the future and, secondly, the leveraging necessary to give rise to a significant impediment to effective competition mean that the chains of cause and effect are dimly discernible, uncertain and difficult to establish. That being so, the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a decision declaring the concentration incompatible with the common market is particularly important. (Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, para 44)

892

  See Non-Horizontal Merger Guidelines, paras 79–90 for vertical concentrations, paras 119–121 for conglomerates. For a discussion of the analytical framework for coordinated effects, see Section E.4(b). 893

  Alternatively, a vertical merger may reduce symmetry and thereby make coordination more difficult. 894

  Case COMP/M.6314 Telefónica UK/Vodafone UK/Everything Everywhere/JV (2012), para 40. 895

  Telefónica UK (n 894), paras 441–450.

896

  Horizontal Merger Guidelines, para 64.

897

  Case T-114/02 BaByliss v Commission [2003] ECR II-1279, para 362.

898

  Case T-282/06 Sun Chemical Group, Siegwerk Druckfarben and Flint Group v Commission [2007] ECR II-2153, para 55. 899

  See eg Case COMP/M.5658 Unilever/Sara Lee (2010), para 299. ‘In a negotiation context, the relative strength of the two sides should be reflected in the benefits that each party manages to earn on the specific product group over which they are bargaining’. 900

  See eg Case COMP/M.2420 Mitsui/CVRD Caemi (2001), para 203.

901

  Horizontal Merger Guidelines, para 67.

902

  Case COMP/M.5644 Kraft Foods/Cadbury (2010), paras 118 and 142.

903

  See eg Kraft Foods/Cadbury (n 902), where the Commission’s rejection of countervailing buyer power in relation to the market for chocolate bars in Poland referred inter alia to the lesser degree of concentration in the Polish retail market than in other countries. 904

  Case COMP/M.3512 VNU/WPP (2004).

905

  Case COMP/M.4071 Apollo/Akzo Nobel (2006).

906

  Case T-282/06 Sun Chemical Group and Others v Commission, para 214.

907

  With respect to deodorants, the Commission did not find that private-label deodorants were sufficiently credible alternatives to branded products for vertical integration to be a sufficient constraint. Case COMP/M.5658 Unilever/Sara Lee Body Care (2010), paras 246ff. 908

  Horizontal Merger Guidelines, para 65.

909

  Case COMP/M.4057 Korsnäs/Assidomän Cartonboard (2006).

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910

  Korsnäs/Assidomän Cartonboard (n 909), para 46. The analysis is largely commensurate with that in Case COMP/M.1225 Enso/Stora (1996) which looked at the same issue in the same market: The purchases of Tetra Pak represent the whole output of several board machines… it would have the option of developing new capacity with other existing or new suppliers, should the parties attempt to exercise market power. In addition, Tetra Pak, through close cooperation with the producers of liquid packaging board, has an intimate knowledge of the cost structure of the parties. (paras 90–91) 911

  This was discussed in some detail in Unilever/Sara Lee Body Care where Unilever provided evidence measuring consumer loyalty showing that consumers had higher loyalty to their supermarket brand than to their deodorant brand. The Commission noted that the figures: do not allow a conclusion as to how many consumers would switch retailers if their deodorant brand were not available. Second, even if customers were, on average, more loyal to their retailer than to the brand, there is a significant share of customers for which the loyalty for a brand is important. As switching customers would probably redirect their entire shopping basket to another retailer, the losses for the retailer could be significant even if a relatively smaller percentage of consumers would switch shops. (paras 255ff and 608) 912

  Case COMP/M.5658 Unilever/Sara Lee Body Care (2010), paras 791ff (for Spain).

913

  Case COMP/M.3149 Procter & Gamble/Wella (2003).

914

  Case COMP/M.5658 Unilever/Sara Lee Body Care (2010), paras 225ff.

915

  See eg L. Bonova, D. Corriveau, K. Kloc-Evison, and E. Sepúlveda García, ‘Ineos/ Kerling: Raising the Standard for Geographic Market Definition?’, Competition Policy Newsletter, issue No 1, 2008, p 61. 916

  Case COMP/M.3225 Alcan/Pechiney (2003), para 108.

917

  The decision therefore states: ‘On balance, the Commission considers that the buyers in these rather special market circumstances have sufficient countervailing buyer power to remove the possibility of the parties’ exercising market power.’ However, in that case the Commission also accepted a behavioural remedy related to prices whereby the parties offered a five-year price protection mechanism for smaller customers. 918

  Para 68.

919

  Case COMP/M.6266 J&J/Synthes (2012).

920

  The market reconstruction suggested, eg, that the merger would lead to a monopoly in the hypothetical market for vertebroplastry in the Czech Republic and for cervical artificial discs in Slovenia. It should be noted, however, that the turnovers in these markets were very small. 921

  Para 583.

922

  For a survey of the different definitions, see eg R. McAfee, M. Preston, M. Hugo, and M. A. Williams, ‘What is a Barrier to Entry?’, American Economic Review Papers and Proceedings, May 2004. See also the OECD Roundtable Report, ‘Barriers to entry’, 2005. 923

  Case T-282/02 Cementbouw v Commission [2006] ECR II-319, para 219.

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924

  eg international air traffic is subject to regulation which can significantly impede entry on a given route. In Case COMP/M.3280 Air France/KLM (2004), the Commission and third parties were concerned that regulatory measures could hinder new entry on a number of long-haul routes. The remedies offered to clear the takeover included submitted declarations from the competent authorities of France and the Netherlands assuring that such regulatory barriers would not be triggered on those long-haul routes (see para 155). 925

  In telecoms markets, the operation of mobile telephony networks requires exclusive access to radio spectrum. Lack of available spectrum is thus a barrier to entry. The remedies in Case COMP/M.6497 Hutchison 3G Austria/Orange Austria (2013) included a commitment to divest radio spectrum and additional rights to an interested new entrant in the Austrian mobile telephony market. The entrant would have the right to acquire spectrum not only from H3G but also additional spectrum at an auction planned in 2013 by the Austrian telecoms regulator. The latter would reserve spectrum for a new entrant in order to enable such an operator to build up a physical network for mobile telecommunication services in Austria. The new entrant would also benefit from privileged conditions for the purchase of sites for building up its own network in Austria. 926

  See eg Case COMP/M.4540 Nestle/Novartis (2007) in which the Commission found barriers to entry linked to the importance of having established brands. 927

  Horizontal Merger Guidelines, para 71.

928

  Case COMP/M.6266 J&J/Synthes (2012), paras 362–364.

929

  Horizontal Merger Guidelines, para 68.

930

  Horizontal Merger Guidelines, para 70.

931

  In its pleading before the GC, Ryanair pointed to many instances of route entry in the past. The Court did not accept this as sufficient evidence to contradict the Commission’s conclusion, pointing inter alia to the fact that many of the entry attempts had been unsuccessful (para 244). In its prohibition of the merger between Deutsche Börse and NYSE decision, the Commission looked in detail at past failed attempts of entry to bolster its finding of high entry barriers (Case COMP/M.6166 Deutsche Börse/NYSE (2012), paras 994ff). 932

  In economic theory, this is referred to as limit pricing. Economists have long been acutely aware of the limits to this type of arguments. In particular, it is not clear why the incumbent would have to set prices low even before entry occurs as opposed to simply lowering them once the new entrant has arrived. ‘If the entrant is a rational decision maker with complete information, pre-entry prices will not influence its entry decision, so the established firm has no incentive to practice limit pricing’ (P. Milgrom and J. Roberts, ‘Limit Pricing and Entry under Incomplete Information: An Equilibrium Analysis’ (1982) 50(2) Econometrica 443–59). 933

  Aer Lingus, para 249.

934

  Case COMP/M.5421 Panasonic/Sanyo (2009).

935

  Case COMP/M.2650 Haniel/Cementbouw/JV (CVK) (2002), para 101.

936

  Horizontal Merger Guidelines, para 69.

937

  The GC found that ‘the grounds set out in the contested decision are sufficient to establish how Ryanair’s past conduct is liable to dissuade potential competitors from entering a market on which it is present’ (Ryanair, para 287). 938

  Horizontal Merger Guidelines, para 74.

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939

  Horizontal Merger Guidelines, para 297.

940

  In Case COMP/M.6410 UTC/Goodrich (2012), the Commission had concerns about the merged entity’s ability and incentive to foreclose UTC’s engine rival Rolls-Royce in the upcoming tender for the next B777x aircraft. Although the B777x competition was several years into the future, Rolls-Royce was already developing a necessary lean-burn fuel nozzle for the engine together with Goodrich. The Commission was concerned that the merged entity could prevent Rolls-Royce from participating by disrupting the development project. As the Commission stated ‘even if Rolls-Royce would be able to resume the R&D project on lean burn with other suppliers, it would not be able to develop a lean burn engine in time to compete effectively for the B777X platform’ (para 600). 941

  Whether future entry would be profitable at the price level prevailing prior to the merger may thus become the theoretically relevant benchmark for whether entry is capable of defeating any price increase. 942

  Case T-342/07 Ryanair Holdings v Commission [2010] ECR II 3457, para 250.

943

  Case T-342/99 Airtours v Commission [2002] ECR II-2585, para 265.

944

  Airtours (n 943), para 266.

945

  Horizontal Merger Guidelines, para 75.

946

  Case COMP/M.1795 Vodafone Airtouch/Mannesmann (2002), OJ 2003 C300/10, para 3.

947

  As the Commission’s press release noted: ‘The Commission has received a significant number of complaints and found during the course of its investigation that other mobile operators would not be in a position to provide the same type of services on a pan-European basis’. 948

  C. Veljanovski, ‘The Economics of Law’, Institute of Economic Affairs, 2006.

949

  Case T-114/02 BaByliss v Commission [2003] ECR II-1279, para 360. However, the GC did not always take such an extreme approach. In 2006, the GC in easyJet v Commission suggested that the ability to sell at lower prices could be considered as contributing to strengthening a dominant position only if it paved the way for negative effects through subsequent anti-competitive conduct: ‘the ability as a result of the merger to offer passengers services at a better price could only constitute evidence of the creation or strengthening of a dominant position in limited cases, for example where the merged entity intends or has the capacity to operate a predatory pricing policy’ (Case T-177/04 easyJet v Commission [2006] ECR II-1973). Although the judgment was issued in 2006, it concerned the Air France/KLM decision, which was adopted under the 1989 Merger Regulation. 950

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457.

951

  Case COMP/M.4057 Korsnäs/Assidomän Cartonboard (2006).

952

  Case COMP/M.6663 Ryanair/Aer Lingus III (2013).

953

  See also Cases COMP/M.6166 Deutsche Börse/NYSE Euronext (2012) and COMP/M. 6471 Outokumpu/Inoxum (2012). 954

  Case COMP/M.6360 Nynas/Shell/Harburg Refinery (2013).

955

  See paras 54–57.

956

  Case COMP/M.3998 Axalto/Gemplus (2006) provides an example of a case where the Commission took efficiencies into account when concluding that the merger would not result in a decrease in innovation, at least partly on the basis of internal documents and

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third parties expecting the merger to result in ‘greater and faster innovation’ (para 53). However, as the Commission has stated, such dynamic efficiencies: are more difficult for the Commission to take into account in merger cases in particular due to their timing. The Horizontal Merger Guidelines explain that, in general, the later the efficiencies are expected to materialise in the future, the less weight the Commission can assign to them. The fact that dynamic efficiencies may be expected to take longer time to materialise than static efficiencies and are therefore inherently more uncertain may therefore—despite the fact that merger control is a prospective analysis—reduce the importance the Commission can give them in a merger case. (EU submission to OECD Policy Roundtable, ‘The role of efficiency claims in antitrust proceedings’, 2012, available at ) 957

  Almunia in a speech on 22 June 2012 at Chatham House, London, available at . 958

  Horizontal Merger Guidelines, para 79.

959

  However, in a comprehensive survey arguing for the introduction of efficiencies in merger control, three prominent economists concluded that: ‘In a dynamic setting, when new entry may occur, it may be possible that also fixed cost savings have an impact on prices. At this point, there has however been little theoretical work on this issue’; L.-H. Röller, J. Stennek, and F. Verboven, ‘Efficiency Gains From Mergers’ in F. Ilzkovitz and R. Meiklejohn (eds), European Merger Control: Do We Need an Efficiency Defence? (Cheltenham: Edward Elgar, 2006), ch 3. 960

  Paras 1146ff. Strictly speaking, this does not bring into question the principle that fixed costs are less likely to be passed on. Rather, it reflects that the Commission agrees that, for the purpose of deciding how much airline capacity to add on a given route, the cost of operating the aircraft should be considered a variable cost. This illustrates the general point that the distinction between variable and fixed costs depends on the timescale applied (the cost of operating the airline is a fixed cost within a given season and for the purpose of setting specific ticket prices, but is a variable cost between seasons where planes can be sold or reassigned to different routes). 961

  Case COMP/M.4057 Kornäs/Assidomän Cartonboard (2006).

962

  Korsnäs/Assidomän Cartonboard (n 961); para 84 of the Horizontal Merger Guidelines.

963

  Case COMP/M.6166 Deutsche Börse/NYSE Euronext (2012), para 1144.

964

  See eg paras 1234ff.

965

  Case COMP/M.6471 Outokumpu/Inoxum (2012).

966

  Horizontal Merger Guidelines, para 85.

967

  Para 85 of the Horizontal Merger Guidelines explicitly refers to ‘a differently structured merger’ as one of the possible alternatives to the merger which could render efficiencies non-merger specific. 968

  Horizontal Merger Guidelines, para 86.

969

  In Deutsche Börse/NYSE, the parties argued that the combination of the trading platforms of the two exchanges would allow users to save IT and access costs. However, since the users would not share information about their cost savings with the notifying parties, they argued that the Commission could and should have quantified these efficiencies through questionnaires. The Commission did not accept this argument and noted that it ‘can be reasonably expected that the Notifying Parties either independently or From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

with the support of external consultants or experts would normally evaluate the prospects of cost savings and synergies even before the transaction is implemented’ (Case COMP/M. 6166 Deutsche Börse/NYSE Euronext ([2012), paras 1167ff.)) 970

  Horizontal Merger Guidelines para 87. In some cases, a full analysis of the potential for efficiencies to give rise to benefits to consumers may require a combined analysis of confidential data that is held separately within the two merging firms. In such a situation— and particularly if a takeover is hostile—one cannot reasonably request the notifying party to be in possession of confidential data from the other party. 971

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457, paras 406–410.

972

  Case COMP/M.6166 Deutsche Börse/NYSE (2012), para 1152.

973

  Case IV/M.308 Kali-Salz/MdK/Treuhand (1993), para 94.

974

  The Commission’s decision, which also broke new ground in terms of the concept of collective dominance, was unsuccessfully appealed by France. Joined Cases C-68/94 French Republic v Commission, C30/95 Société Commerciale des Potasses et de l’Azote (SCPA) and Entreprise Minière et Chimique (EMC) v Commission [1998] ECR I-1375, p 116. 975

  Case COMP/M.2314 BASF/Eurodiol/Petrochim (2001).

976

  BASF/Eurodiol/Petrochim (n 975). As BASF was capacity-constrained, it would not have absorbed the share of the failing Eurodial and Petrochim. 977

  See eg Case COMP/M.2810 Deloitte & Touche/Andersen UK (2002), which related to the dissolution of Andersen Consulting in the wake of the Enron scandal. Here the Commission noted that a number of Andersen UK’s customers expressed the view that the merger between Deloitte & Touche and Andersen UK would be preferable to a situation whereby Andersen UK’s partners, teams, and expertise would be scattered. 978

  Case COMP/M.5830 Olympic/Aegean Airlines (2011).

979

  Deloitte & Touche/Andersen UK (n 977), para 2120.

980

  Case COMP/M.6796 Aegean/Olympic II (2013).

981

  See Press Release IP/13/927 (9 October 2013).

982

  Case COMP/M.4381 JCI/VB/FIAMM (2007).

983

  Case COMP/M.6360 Nynas/Shell/Harburg Refinery (2013).

984

  See eg Cases IV/M.993 Bertelmann/Kirch/Premiere (1998); IV/M.1221 Rewe/Meinl (1999); and COMP/M.2876 Newscorp/Telepiu (2003). 985

  Horizontal Merger Guidelines, para 91.

986

  Horizontal Merger Guidelines, paras 454–456.

987

  Case COMP/M.2876 Newscorp/Telepiu (2003), para 215.

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Part I General Principles, 5 Mergers, F Remedies Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Remedies in merger cases — Remedies, power to impose — Procedure under the Merger Regulation — Legal and soft-law instruments governing — Initial (Phase I) investigation — Serious doubts (Phase II) investigations

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F. Remedies (1)  Overview 5.980  Under the Merger Regulation, a concentration that ‘would significantly impede effective competition’ must be declared incompatible with the internal market and thus prohibited from taking place.988 Remedies (often referred to as ‘commitments’ or ‘undertakings’) are modifications to a notified concentration that are offered by the notifying parties with a view to rendering the concentration compatible with the internal market.989 Where the remedies offered by the notifying parties address the competition concerns identified by the Commission, the Commission will approve the concentration, such approval being conditional on the remedies, which will be attached to the clearance decision as conditions and obligations.990 As the approval is conditional upon the agreed remedies, failure to adhere to them can result in the clearance decision rendered void or being revoked and/or the concentration being dissolved (the precise consequences ultimately depend on whether the breach affects a condition or an obligation).991 5.981  Remedies can generally be categorized as either structural or behavioural. Broadly speaking, structural remedies, in particular divestitures of an overlap business, are preferred by (p. 755) the Commission for their effectiveness and ease of implementation. Remedies other than divestitures, such as access commitments (which are sometimes also considered structural in nature), supply or purchase obligations, or other behavioural remedies are less readily attractive but can be accepted if the parties can show that they are sufficient to address the Commission’s competition concerns (which, in practice, may not be easy). 5.982  As of November 2013, remedies were offered and accepted in relation to 228 concentrations in Phase I and 102 concentrations in Phase II. Remedy decisions reached a peak in 2000, with 26 Phase I and 12 Phase II conditional decisions. Whilst remedy decisions dropped in 2011 (with only five Phase I decisions and one Phase II decision, the lowest since 1996), the number of remedy decisions increased again in 2012, with nine Phase I remedy decisions and six Phase II remedy decisions. In 2013, remedies remained essentially constant, with only a slight decline in total figures compared to 2012 (ten Phase I decisions and two Phase II decisions, taking into account the period up to November 2013). As can be seen in Figure 5.17, which shows the evolution of Phase I and Phase II remedies decisions over time, Phase I remedies decisions after 1996 have always accounted for more than half the total remedies decisions each year. View full-sized figure

Figure 5.17  Phase I and Phase II remedies decisions 1990–2013* *

Up to November 2013

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5.983  The rules, processes, and principles applicable to the offer, assessment, and implementation of remedies are set down in a number of instruments, namely the Merger Regulation, Implementing Regulation, Notice on Remedies,992 Best Practice Guidelines,993 and Form RM.994 Table 5.10 sets out the most important legal provisions with regard to remedies in EU merger proceedings.(p. 756) Table 5.10  Main provisions on merger remedies

Subject

Phase

Legal basis

Article/Recital

General principles

Phase I and II

Merger Regulation

recitals 30 and 31

5.01

Phase I

Merger Regulation

Article 6(2)

5.01

Phase II

Merger Regulation

Article 8(2)

Time limits

Phase I

Merger Regulation

Article 10(1)

Implementing Regulation

Article 19(1)

Merger Regulation

Article 10(2) and (3)

Implementing Regulation

Article 19(2)

Phase II

Procedure for submission of commitments

Phase I and II

Implementing Regulation

Article 20

Breach of conditions

Phase I and II

Merger Regulation

Article 8(4)(b), (5)(b), and (7)(a)

Breach of obligations

Phase I

Merger Regulation

Article 6(3)(b)

Phase II

Merger Regulation

Article 8(6)

Phase I and II

Form RM

Additional references

Notice on Remedies Model Text for Divestiture Commitments Trustee Mandate

(2)  General Principles (a)  Roles of Notifying Parties and Commission 5.984  The initiative to offer remedies in merger control proceedings lies with the notifying parties; remedies cannot be unilaterally imposed by the Commission. The EU Courts have set down clearly that, to achieve conditional clearance for a concentration that has raised concerns, the onus is on the notifying parties to put forward remedies that are comprehensive and effective and to do so within the relevant time limit.995 5.985  Further to this, the notifying parties are required to provide the Commission with all the information necessary to allow an assessment of whether the remedies will be effective and sufficient to eliminate the competition concerns identified.996 In practice, this is achieved by (p. 757) use of the standard Form RM, supplemented by responses to any

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requests for information issued by the Commission pursuant to Article 11 of the Merger Regulation.997 5.986  For its part, once remedies have been offered, the role of the Commission is to assess whether they adequately address the competition concerns that have been identified, with a view to establishing whether the concentration can be declared compatible with the internal market. This means that the burden of proof to show that a merger is either compatible or incompatible with the internal market remains with the Commission (the submission of remedies does not shift the burden onto the parties). In addition to carrying out the substantive assessment of the concentration in light of the proposed remedies, throughout the procedure the Commission must ensure transparency and effective consultation with the Member States and interested third parties.998 5.987  This allocation of roles between the notifying parties and the Commission is consistent with their respective access to information. The notifying parties are in possession of the information required for a comprehensive assessment of the workability of the remedies, in particular the viability and competitiveness of the assets proposed for divestiture (if divestiture is required to address competition concerns).999 On the other hand, the Commission has access to the pool of information from its investigation, from Member States, and from third parties to reach a final conclusion on whether the remedies will be sufficient to render the concentration compatible with the internal market.

(b)  Attachment to Decision as Conditions or Obligations 5.988  To ensure that the parties comply with the remedies they have offered in a timely and effective manner, the Commission may attach to its clearance decision such conditions or obligations as it considers necessary to make them binding on the parties.1000 In practice, whenever remedies are considered necessary to resolve the competition concerns identified by the Commission, a combination of conditions and obligations will be attached so that the parties are bound by them. 5.989  The distinction between conditions and obligations roughly corresponds to the distinction between the substance of the remedy and the method of its implementation. The conditions attached to a decision are the modifications required to render the concentration compatible with the internal market, in other words the remedy itself (eg divestiture of a business). The obligations attached to a decision are the implementing steps necessary for the condition to be effectively met (eg the hold-separate and ring-fencing obligations to protect the viability, competitiveness, and marketability of the divested business). 5.990  The consequences of breach of remedies are examined in Section F.6(c). Briefly, breach of a condition will render the clearance decision automatically void,1001 while breach of an obligation may result in the Commission revoking the clearance decision (under Art 6(3)(b) of the Merger Regulation in relation to Phase I clearances or Art 8(6)(b) in relation to Phase II clearances). Where a clearance decision is void for breach of a condition or where (p. 758) the Commission issues a prohibition decision further to the revocation of a previous conditional clearance decision, the Commission may order dissolution of the concentration or any other measure appropriate to restore the situation prevailing prior to implementation of the concentration.1002 Under Article 14 of the Merger Regulation, the Commission may also impose fines on the undertaking’s failure to comply with remedies.

(c)  Distinction Between Remedies, ‘Take-Note’ Commitment, and Facts Taken Into Account

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5.991  There is a distinction between remedies and certain other submissions from the parties, namely ‘take-note’ commitments, and facts taken into account by the Commission. Of the three, only remedies are (a) modifications to the transaction submitted by the parties and accepted by the Commission, (b) which are attached to a clearance decision as conditions or obligations.

(i)  Take-Note Commitments 5.992  Take-note commitments are, as their name suggests, formal remedies that were submitted by the parties but were ultimately considered unnecessary to remove the competition concerns identified by the Commission.1003 This arises where formal remedies are offered to address preliminary competition concerns and those concerns have not been fully confirmed after a more in-depth Phase I or Phase II market investigation. In these situations, the Commission may invite the parties to withdraw the commitments before the adoption of the final decision1004 or simply ignore commitments and adopt an unconditional decision.1005 In rare cases, however, the Commission may also ‘take note’ of the commitments submitted by the parties without formally attaching them to the clearance decision.1006 On the basis of the Commission’s practice, this appears to be the case in particular where remedies formally proposed by the parties are not strictly required for the approval of the transaction, but where the Commission finds additional comfort in taking into account these remedies to clear a concentration. 5.993  When the Commission takes note of remedies, they are referred to in the decision, but no conditions or obligations relating to them are attached to the decision. As take-note commitments are not a condition for approval and no conditions or obligations arising out of them are attached to the decision, they are not considered to be binding on the parties. In Coca-Cola, the General Court held that take-note commitments referred to in a Commission decision that unconditionally cleared a merger between two bottlers had no binding legal effects ‘in the sense that a breach of [their] terms would not have affected the decision in any respect and would not have entailed its revocation’.1007 However, the language used by the General Court suggests that, if an analysis of the decision shows clearly that the Commission did, in fact, intend to rely on a take-note commitment, the commitment could, in those circumstances, produce binding legal effects.1008

(p. 759) (ii)  Facts Taken Into Account 5.994  By contrast to take-note commitments, facts taken into account are parties’ statements about future behaviour that have not been formally submitted to the Commission as potential remedies. They can include promises, pledges, informal commitments, letters, or agreements involving one or both parties which may or may not have been addressed to the Commission. In Google/Motorola Mobility, for instance, the Commission took into account, as part of the factual basis for its assessment, a FRAND commitment entered into by Motorola with third parties and Google’s statements to honour this commitment;1009 while in EADS/SSTL the Commission took into account a firewall agreement which would have ensured the independence of part of the target business from the competing business of the acquirer.1010 5.995  Facts taken into account are part of the body of evidence on which the Commission relies in approving a concentration. These pledges or informal commitments cannot be attached to the decision as conditions or obligations because they are not formally offered by the parties. In principle, a breach will not render the decision automatically void because of breach of a condition nor will it allow the Commission to revoke the decision for failure to comply with an obligation.

(iii)  Potential Remedy for Breach

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5.996  Nonetheless, it could be argued that where the Commission relies on facts taken into account in its clearance decision, and potentially take-note commitments, it does not have to rely solely on the goodwill of the parties in relation to their future behaviour. Indeed, the Commission’s position appears to be that a breach of promises/pledges made by the parties and relied on by the Commission could still result in revocation of the clearance decision. In Oracle/Sun Microsystems,1011 the Commission’s Phase II clearance decision was based inter alia on a public statement from the Oracle CEO who ‘pledged’ to continue to develop and support MySQL (an open-source software owned by the target, Sun Microsystems).1012 The Commission took the position that, although breach of the pledge would not allow the Commission to revoke the decision under Article 8(6)(b), the Commission would nonetheless be entitled to withdraw the decision under Article 8(6)(a) of the Merger Regulation, which provides for revocation of a clearance decision when it has been based on incorrect information for which one of the undertakings concerned is responsible or where it has been obtained by deceit. To date, this position has not been tested, although it appears to stem from a relatively uncontroversial reading of Article 8(6) (a).1013

(3)  Conditions That Remedies Must Meet 5.997  Different types of remedy can be offered by the parties. However, all must fulfil the same basic conditions of sufficiency, proportionality, and timely and effective implementation.

(p. 760) (a)  Remedies Must Eliminate the Competition Concerns 5.998  To be acceptable, remedies must entirely eliminate the competition problem found in the course of the Commission’s investigation.1014 The Commission assesses the sufficiency of a proposed remedy to eliminate the competition concerns on a case-by-case basis, and will consider all relevant factors relating to the proposal, ‘including, inter alia, the type, scale and scope of the remedy, judged by reference to the structure and particular characteristics of the market in which the competition concerns arise, including the position of the parties and other players on the market’.1015 5.999  Where a remedy does not fully address the competition concerns, the Commission has no choice but to prohibit the transaction.1016 As the burden of proof remains on the Commission, it will have to show, on the basis of the information provided by the parties and gathered in the context of the market investigation, that the transaction as modified by the remedies is not compatible with the internal market.1017

(b)  Remedies Must Be Proportionate 5.1000  Decisions taken by the Commission in merger control proceedings must satisfy the requirement of proportionality, one of the general principles of EU law.1018 It follows (and has been confirmed by the General Court) that, while remedies attached to a Commission merger decision must entirely eliminate competition concerns, they must also satisfy the proportionality requirement.1019 In easyJet, the General Court set out the requirements of proportionality as follows: the principle of proportionality requires measures adopted by [the Commission] not to exceed the limits of what is appropriate and necessary to attain the objectives pursued; when there is a choice between several appropriate measures recourse must be had to the least onerous, and the disadvantages caused must not be disproportionate to the aims pursued.1020

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5.1001  Thus, the Commission cannot accept remedies that are unnecessary. Where the parties offer remedies that, after investigation, turn out not to be required to address a competition concern, the Commission cannot attach them to the decision by means of conditions or obligations. Rather, as discussed at para 5.992, the Commission may invite the parties to withdraw the remedies, simply ignore them, or ‘take note’ of them without attaching them to the clearance decision as conditions and obligations. 5.1002  The Commission also cannot accept remedies that are disproportionate. This means that where there is a choice between different remedies that would be effective, the Commission must generally choose the one which is least onerous.1021 The parties can formally offer (p. 761) alternative remedies or engage in informal discussions with the Commission to understand which, among different possible alternatives, the Commission would be ready to accept as the least onerous. The Commission, however, cannot choose between two or more sets of remedies unless they have all been formally submitted by the parties. 5.1003  On the other hand, the principle of proportionality does not oblige the Commission to reject remedies that go further than strictly required to remove competition concerns. The General Court confirmed in Cementbouw that the Commission can accept overreaching remedies when these are the only suitable remedies submitted by the parties that entirely eliminate the competition concerns previously identified.1022 In that case, the parties submitted final remedies that went further than necessary, as they involved the dissolution of an entity that existed prior to the concentration and thus were not limited strictly to restoring the competitive situation that existed prior to the concentration. However, the General Court upheld the Commission’s acceptance of these remedies on the grounds that: (a) prohibiting the concentration when the parties had offered remedies that eliminated the competition concerns was not permitted; and (b) unilaterally imposing a more limited remedy than that offered by the parties was equally not permitted. Therefore, when the remedies offered by the parties eliminate the competition concerns, the Commission is entitled to accept them even if they go further than strictly necessary in order to do so. The General Court’s judgment was upheld on appeal. In her Opinion on the appeal, Advocate General Kokott stated that extraordinary circumstances would have to exist before it would be accepted that a Commission decision based on voluntary commitments given by the undertakings concerned was not compatible with the principle of proportionality.1023 5.1004  In practice, it is not exceptional for the Commission to accept remedies that may go beyond those that would strictly be required in the abstract to remove competition concerns. This may be the case, for instance, when a minimum critical size is required to ensure the viability or competitiveness of the divested business. An example of remedies going beyond the (geographic) scope of the Commission’s concerns is provided by McCain Foods Group/Lutosa Business, where the Commission had concerns in relation to branded food products in Belgium, and cleared the transaction inter alia conditional to the divestment of the Lutosa brand across the whole EEA, given that a divestment limited to Belgium would have hampered the integrity and coherence of the Lutosa brand and would therefore fail to provide incentives for the purchaser to invest in and develop the brand.1024

(c)  Remedies Must Be Capable of Effective Implementation 5.1005  Effective implementation requires: (a) that the remedies are capable of being implemented within a short period;1025 (b) that they represent a lasting and workable solution to the competition concerns raised in the course of the Commission investigation;1026 and (c) that they are capable of adequate monitoring.1027

(p. 762) (i)  Timely Implementation

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5.1006  If too long a period were to elapse between approval of the concentration and implementation of the remedies, the effectiveness of the remedies would be impaired (as harm to competition could occur in the meantime). As a result, the Commission requires that remedies are capable of implementation within a short period of time.1028 5.1007  Implementation is normally required to take place within a fixed period following adoption of the conditional clearance decision.1029 This has the benefit for the parties of allowing them to proceed with closing the transaction without having to have already completed all of the steps required to implement the remedy.1030 5.1008  The timing for implementation of remedies in a given case is normally considered highly confidential, especially in cases involving divestitures, and therefore it is not publicly disclosed. The deadline for implementation will be assessed on a case-by-case basis and will depend on the specific features and complexity of the remedy to be implemented. In general, in relation to structural remedies, the Commission considers a period of six months to be appropriate for the first divestment period (the time allowed for the parties to comply with the remedy before a divestiture trustee is granted a mandate to sell the business at no minimum price). An additional period of three months is also normally allotted for closing the transaction.1031 5.1009  In exceptional cases, the timing for implementation may be longer. In EDF/ Segebel, for instance, the Commission cleared an acquisition in the energy sector conditional, inter alia, on the commitment by EDF to either divest a project involving the development of a power plant or to invest itself in the project by 30 June 2012 (approximately two-and-a-half years after the clearance decision of 12 November 2009). When EDF requested an extension of the deadline to 31 December 2014 to implement the remedy, the Commission rejected the request but did grant an extension until 15 October 2012.1032

(ii)  Lasting and Workable Solution 5.1010  As the remedy must eliminate the competition problem created by the concentration, implementation of the remedy must lead to a market outcome sufficiently workable and lasting to ensure that the competition problem which was identified will not materialize.1033 For this reason, the Commission has a long-standing preference for divestiture remedies because it is normally safe to assume that the new commercial structures will be sufficiently workable and lasting to achieve this aim and, after divestment, the success of the remedy will not depend on the behaviour of the merged entity.1034 However, other types of remedies (eg access remedies or, exceptionally, (p. 763) behavioural remedies) will be considered acceptable in specific circumstances (see Sections E.5(e)–E.5(h)).1035 5.1011  In relation to how ‘lasting’ the effect of the remedies must be, the General Court in Ryanair stated that the Commission was correct to reject remedies that: had formal shortcomings such that it was unable to conclude, with certainty, that it would be possible to implement them and that the remedies resulting from them would be sufficiently workable and lasting to ensure that the impairment of effective competition which those commitments were intended to prevent would not be likely to materialise in the relatively near future’.1036 This does not mean that remedies that remove competition concerns only in the ‘relatively near future’ would generally be considered acceptable by the Commission (if both short and longer term concerns were raised, a remedy would have to address both to be considered adequate). With the exception of cases where the Commission’s substantive theory of harm relies on the behaviour of the merged entity in order for the competitive harm to arise (eg in vertical and conglomerate cases), divestitures will generally be considered as the only type of remedy capable of generating with a sufficient degree of predictability a lasting and From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

workable solution to the competition problem, insofar as they are capable of permanently solving the competition problem.

(iii)  Capable of Adequate Monitoring 5.1012  The Notice on Remedies states clearly that there has to be ‘an effective implementation and ability to monitor’ the remedies offered by the parties.1037 Again, divestitures are the preferred remedy, as they do not require ongoing monitoring following implementation. On the other hand, non-divestiture remedies ‘require effective monitoring mechanisms in order to ensure that their effect is not reduced or even eliminated by the parties’.1038 These remedies will therefore be accepted only if they can be adequately monitored. For example, in easyJet, the General Court upheld the acceptance of behavioural remedies (including frequency freezes, interline agreements, blocked-space agreements, and access to frequent flyer programmes) as those remedies were subject to supervision by a trustee responsible for monitoring their satisfactory discharge and the Commission’s decision put in place a fast-track procedure for resolving disputes relation to compliance with the remedies.1039 5.1013  The ability adequately to monitor the parties’ implementation of behavioural remedies is necessary to give the Commission the ability to identify any breach of the obligations attached to the decision and, if necessary, to revoke the decision.1040 In cases where the remedies offered by the parties are very complex or extensive, the Commission may have difficulty in monitoring the commitments or may need extensive monitoring provisions. According to the Notice on Remedies, extensive and complex remedies may be rejected in particular on grounds that they cannot be effectively monitored and that the lack of effective monitoring diminishes, or even eliminates, the effect of the commitments.1041 In Deutsche (p. 764) Bahn/EWS,1042 for instance, the Commission found that ‘the inherent difficulties of monitoring and enforcing a general commitment to a very specific and detailed Business Plan…would inevitably give rise to deviations from concrete figures and would require a case-by-case analysis of whether a particular deviation is justified or not’. To address the Commission’s doubts regarding the initial remedy package, the parties committed to more specific plans for the deployment of locomotives and personnel. Moreover, in Deutsche Börse/NYSE, the Commission rejected the parties’ remedies proposal and prohibited the concentration inter alia because the offered remedies would have been complex and too difficult to be monitored, to the extent that monitoring of part of their implementation would have required setting up a dedicated regulatory framework.1043

(d)  Remedies Must Not Lead to New Competition Concerns 5.1014  The General Court has held that the Commission ‘cannot…approve commitments which are contrary to the competition rules laid down in the Treaty inasmuch as they impair the preservation or development of effective competition in the [internal] market’.1044 The Notice on Remedies therefore provides that behavioural commitments will only be accepted if they do not risk leading to distorting effects on competition1045 and that, in relation to divestiture remedies, a purchaser will only be considered suitable if the acquisition of the business by that purchaser is not likely to create new competition problems.1046 In relation to the latter scenario, the Commission assesses the suitability of the purchaser in the context of the buyer approval process.

(4)  Remedies in Phase I and Phase II 5.1015  The Commission may accept remedies in either Phase I or Phase II. However, as the in-depth investigation is only carried out in Phase II, the Commission will have a less definitive view of the scope of the competition concerns in Phase I, and there could thus be a corresponding difference in the scope of the remedies necessary to address those

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concerns. Additionally, the precise procedural requirements and timings will depend on the stage at which the remedies are offered.

(a)  Phase I Remedies (i)  Substantive Requirements 5.1016  In Phase I, the remedies must be capable of ruling out the Commission’s ‘serious doubts’ regarding the competitive effect of the concentration within the meaning of Article 6(1)(c). This requires that the competition problem is readily identifiable and easy to remedy.1047 As a rule, therefore, the Commission will only accept remedies in Phase I where the competition problems are ‘so straightforward and the remedies so clear-cut that it is not necessary to enter into an in-depth investigation’.1048 The remedies must be squarely aimed at addressing the concerns identified in the initial investigation; in other (p. 765) words, they must be a ‘direct and sufficient response capable of clearly excluding the serious doubts’ that have been identified.1049 5.1017  In practice, remedies offered in Phase I will generally be scoped widely so that they are capable of eliminating all the Commission’s concerns, some of which may not have been completely fleshed-out during the initial Phase I investigation. For the parties, this involves a trade-off. On the one hand, they may need to offer remedies that, had the Commission carried out an in-depth investigation, would not have been necessary, either because: (a) a Phase II investigation would have revealed no competition problems; (b) the competition problems would have been more limited (eg concerns may have remained in relation to fewer products or geographic areas); or (c) the Commission may have concluded that a different and less intrusive type of remedy would have sufficed. On the other hand, offering sufficiently comprehensive Phase I remedies will give the parties an opportunity to close the merger control process within a short time frame, which may be particularly beneficial or even necessary from a commercial perspective. In recent years, Phase I has accounted for a significant majority of the total Commission remedies decisions (see Figure 5.17).

(ii)  Formal Requirements 5.1018  An offer of remedies must: (a) fully specify the substantive and implementing commitments entered into by the parties; (b) be signed by a duly authorized person; (c) attach all the relevant information necessary to allow the Commission to assess the feasibility, viability, competitiveness, and marketability of any assets proposed for divestiture, and their suitability to remove the competition concerns identified; and (d) attach a non-confidential version of the remedies for market testing with third parties.1050 5.1019  Remedies are offered using two different documents: a commitments document and a Form RM. 5.1020  The commitments document outlines the different undertakings entered into by the notifying parties. Where divestiture remedies are proposed, the Model Text for Divestiture Commitments and the Trustee Mandate provide useful templates for preparing submission to the Commission.1051 These should be adapted to the specific circumstances of the case and any deviation from the model text explained in the Form RM. The Model Text for Divestiture Commitments contains a schedule which is particularly important for the preparation of remedies submissions, insofar as it requires a precise description of the assets (physical and intangible, including key employees, customer portfolio, and IP rights) included in the divestment business. The Model Text for Divestiture Commitments can also be used and adapted in the case of non-divestiture commitments, although in such a case the amendments can be expected to be wide-ranging.

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5.1021  The Form RM which accompanies the commitments document will contain information on the content and suitability of the remedies and a number of specific questions designed to elicit sufficient information to assess divestiture commitments. The Commission may waive some of the requirements of the Form RM if the information is not necessary to allow it to assess the proposed remedies.1052 It is recommended to discuss the level of detail and scope of possible waivers with the Commission in the early stages of preparing the submission.

(p. 766) (iii)  Timing 5.1022  If the parties wish to offer remedies, they must do so within 20 working days after receipt of a complete notification (normally starting on the working day following formal filing, except in the case of incomplete notifications).1053 Once remedies have been submitted, the Phase I time limit is increased by ten working days, to 35 working days. Although notifying parties generally offer remedies following notification of the concentration, they can submit remedies on an informal basis during pre-notification discussions.1054 Alternatively, the remedies that have been discussed can be attached to the formal notification, in which case Phase I starts automatically with a 35-working-day deadline. 5.1023  Given the time constraints in Phase I, the Commission has stated that it ‘is particularly important for the parties to submit in a timely manner to the Commission the information required in the Implementing Regulation to properly assess the content and workability of the commitments and their suitability to maintain conditions of effective competition in the [internal market] on a permanent basis.’1055 Failure to do so may result in the Commission opening an in-depth Phase II investigation. In practice, Phase I remedies tend to be offered close to or on the 20-working-day deadline. However, as a general rule, the more complicated the remedies, the earlier they should be discussed and offered in the process. Similarly, in order to prevent the opening of a Phase II investigation, the parties should offer well-targeted and comprehensive remedies, and anticipate to the extent possible factors such as the Commission’s theory of harm and the reaction of market participants to the remedy.

(iv)  Assessment Process 5.1024  As there is limited time for the preparation and assessment of remedies in Phase I, the Commission will normally provide timely guidance to the parties on the type of concerns that have been identified and what a remedy designed to address those concerns would need to encompass. Aside from the possibility of pre-notification discussions, the Phase I SOP provide an important forum for these discussions, as indicated in the Merger Best Practices, at paragraph 33(a).1056 Aside from these formal meetings, the Commission is generally willing to discuss potential remedies with the parties at any stage in the first 20 working days of Phase I, to the extent that the results from the market investigation and the rest of the evidence in the file provide sufficient information for such a discussion to take place. 5.1025  Once the remedies have been submitted, the Commission will market test them with third parties. To this end, the Commission normally sends the third parties a copy of the non-confidential version of the commitments document, together with an ad hoc questionnaire to gather their views on the likely feasibility and effectiveness of the proposed remedies. The third parties to whom the questionnaire is sent are normally those who have already been involved in the initial investigation (ie customers, competitors, and suppliers to whom information requests regarding the competitive impact of the concentration have been sent), although different/additional addressees will be chosen if the circumstances so require (eg third parties affected by the remedies, such as a partner

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in a joint venture to be divested, or only the market participants active in the market concerned by the remedy). (p. 767) 5.1026  If remedies are submitted close to the end of the 20-working-day period, the Commission may have difficulty assessing the results of the market test in time to allow it to resolve its concerns with sufficient certainty to clear the transaction. Even though the Commission normally requests replies from market participants within short deadlines, the parties should submit remedies proposals in good time to allow the Commission to carry out a meaningful market test. An incomplete or unsatisfactory market test clearly risks the transaction being sent into Phase II. 5.1027  The Commission must also consult the Member States, which have the right under Article 19(2) of the Merger Regulation to express their views on remedies proposals. The Commission must send a copy of the remedies submission to the Member States ‘as soon as possible’1057 and will endeavour to do so. 5.1028  During the market test process, the Commission may, as well as obtaining views from third parties and Member States on the sufficiency of the remedies, also obtain further elements valuable for a substantive appraisal of the concentration (eg because information going to the substantive assessment is voluntarily offered by respondents).

(v)  Modifications 5.1029  If, taking into account the results of the market test and Member State consultation, the Commission considers that the remedies are not sufficient, it will immediately inform the parties. The parties can, in such an event, submit modifications to address the objections raised.1058 Given that Phase I remedies are designed to provide a clear-cut answer to a readily identifiable competition concern, only limited modifications can be accepted to the proposed commitments. Modifications, which will need to be submitted as an immediate response to the result of the consultations, may include clarifications, refinements, and/or other improvements designed to ensure that the commitments are workable and effective. 5.1030  The Commission makes it clear that modifications will only be accepted where the Commission has sufficient time to carry out a proper assessment of them within the Phase I deadline.1059 5.1031  As a general rule, modifications in the scope, duration, and obligations accessory to the commitments can be considered as limited modifications, whilst an entirely new remedy would probably not be considered as such, unless it is so clear-cut that no further investigation would be required. It is in any event unlikely that the Commission would accept remedies modifications submitted in the very last days of Phase I, especially if substantial.

(vi)  Outcome 5.1032  Clear-cut structural remedies, and in particular divestments, are normally considered as very good candidates for Phase I remedies. On the other hand, it is extremely rare for the Commission to accept a behavioural remedy at the end of a Phase I (p. 768) investigation.1060 In general terms, a positive market test, precedents in the same markets, and early and constructive engagement with the Commission are all factors that increase the chances that competition problems can be resolved through remedies in Phase I. 5.1033  If the result of the assessment is positive, with or without modifications, the Commission accepts the commitments and adopts an Article 6(1)(b) decision in conjunction with Article 6(2), clearing the concentration and attaching conditions and obligations to the decision. If the commitments are not sufficient to remove the serious doubts found during the course of the investigation, the Commission must adopt a decision pursuant to Article 6(1)(c) of the Merger Regulation and initiate Phase II proceedings. Finally, it cannot be excluded that the Commission will conclude that the transaction as originally notified would From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

not raise serious doubts, in which case the Commission will adopt an unconditional clearance decision under Article 6(1)(b) (in this respect, see Section F.2(c)).

(b)  Phase II Remedies (i)  Substantive Requirements 5.1034  Remedies in Phase II can be offered prior to the issue of an SO (while the in-depth investigation is ongoing) or post-SO (when the Commission has reached the preliminary view that the concentration will lead to an SIEC and has fully set out the reasons for this view in the SO). 5.1035  Phase II remedies offered prior to the issue of an SO must achieve the same objective as those offered in Phase I; they must be sufficient to address the Commission’s serious doubts.1061 The principles outlined in Section F.4(a) therefore apply equally to remedies at this stage of the Phase II process. 5.1036  However, if remedies are offered after the SO has been issued, they must be sufficient to address the SIEC, as elaborated on in the SO.1062 In practice, this implies that the scope of the remedies submitted after the issuance of a SO might be narrower than those offered in Phase I or in Phase II prior to the SO, as the parties can more readily and accurately identify the remedies that would resolve the competition issues that have been laid out and explained in the SO.1063

(ii)  Formal Requirements 5.1037  The Notice on Remedies provides that, to be accepted in Phase II, remedies must ‘address all competition concerns raised by the concentration’.1064 Other than this statement, which in principle requires the parties to provide a higher level of detail for Phase II remedies than would be required in Phase I (in order to address the specific issues raised in the SO), the formal requirements for Phase II remedies are the same as those for Phase I. The forms for submitting remedies are also the same as those for Phase I.

(iii)  Time Limits 5.1038  If the parties wish to submit remedies in Phase II, they must do so no more than 65 working days from the adoption of the Article 6(1)(c) decision initiating (p. 769) the proceedings. This period begins on the working day following the date on which the Article 6(1)(c) decision is adopted. Where the Phase II deadlines have been extended pursuant to Article 10(3) of the Merger Regulation (following a request from or with the agreement of the parties),1065 the period of 65 working days for the submission of remedies is automatically extended by the same number of working days as the extension. 5.1039  The impact on the timetable will depend on when the remedies are submitted. Remedies submitted before working day number 55 will not affect the 90-working-day time limit for issuing a final decision (subject to the possible extension noted in para 5.1038). When remedies are submitted after 55 working days from the initiation of the proceedings, the deadline for the Commission to issue the final decision is automatically extended by 15 working days, giving a total of 105 working days from the adoption of the Article 6(1)(c) decision. It follows that, if the parties are keen to have the procedure dealt with as quickly as possible, they will normally submit remedies before the issue of the SO1066 or in any event before 55 working days from the adoption of the decision initiating proceedings. 5.1040  Parties should also bear in mind that when they submit remedies in less than 55 working days and then submit modifications on day 55 or thereafter, the overall period will be extended to 105 working days.1067

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5.1041  The dynamics of the remedies discussion and submission process in Phase II vary slightly as compared to Phase I. First, timing becomes an even more crucial element, given the impact of the submissions on the Phase II time limits. Whilst the interests of the parties and the Commission may not necessarily be aligned (eg because the parties may wish to have a swift decision and the Commission may require more time to conclude its assessment), it is beneficial for both the Commission and the parties if the topic of timing of the submission is raised as soon as possible in the process. Secondly, the longer time allowed by Phase II allows the parties and the Commission to engage in more detailed discussions on the remedies. These discussions can take place through meetings, conference calls, different rounds of requests for information, and exchanges of draft commitments documents and Form RM.1068 However, although there is some additional time, parties must always bear in mind that remedies discussions may take a relatively long time. As such, the Commission normally encourages early proposals and discussions on possible remedies.

(iv)  Assessment Process 5.1042  In practice, the process for assessing remedies in Phase II is the same as in Phase I. However, the longer time allowed by Phase II may imply that the Commission will pay even greater attention to the market test and will have more opportunities to discuss the potential impact of the remedies with market players. In relation to consultation with Member States, this also takes place in the same fashion as in Phase I (ie after each remedy submission). Finally, the Oral Hearing and Advisory Committee may provide opportunities to discuss the remedies with the parties and the Member States, respectively.

(p. 770) (v)  Modifications 5.1043  As with Phase I remedies, the parties can submit modifications to the original remedies to address any shortcomings. As long as the 65-working-day deadline has not expired, the parties can modify the remedies without any constraint. 5.1044  The rules are different once the deadline for the submission of remedies in Phase II has expired. In these cases, although the Commission can accept modifications to existing commitments offered after the expiry of the 65-working-day time limit for the submission of remedies, it is normally not obliged to do so.1069 The Commission will only accept late modifications to remedies where it can clearly determine1070 that such remedies, once implemented, fully and unambiguously resolve the competition concerns identified and there is sufficient time for an adequate assessment by the Commission and for proper consultation with Member States.1071 In practice, late modifications may even be substantial, provided that they fully address the competition problems identified by the Commission.

(vi)  Outcome 5.1045  The Commission is required to adopt a clearance decision, with or without remedies, as soon as it appears that the serious doubts referred to in Article 6(1)(c) have been removed.1072 If remedies are successfully offered prior to the issue of the SO, the Commission will not issue an SO and will immediately adopt an Article 8(2) decision, if possible even some weeks in advance of the time limit of 90 working days from the initiation of proceedings. In UTC/Goodrich,1073 for example, the Commission issued its conditional clearance decision more than one month before the legal deadline. On the other hand, remedies offered post-SO will normally not lead to a clearance decision being issued much in advance of the Phase II deadline.

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5.1046  Where the Commission’s assessment concludes that the remedies do not eliminate the competition concerns that have been raised, the Commission must prohibit the concentration.

(5)  Types of Remedies (a)  Typology and Terminology 5.1047  Remedies are traditionally divided into structural remedies and behavioural remedies. Structural remedies are one-off remedies designed to restore the competitive structure of the market.1074 Behavioural remedies are ongoing remedies designed to modify or constrain the behaviour of the merging firms.1075 5.1048  The clearest form of structural remedy is the divestiture of a business. As a consequence, the term ‘structural’ is often used as a synonym for divestiture. Other structural remedies include the termination of long-term supply agreements or other types of links with competitors. Equally, it is possible to identify a category of remedies that are purely behavioural in nature insofar as they rely for their implementation exclusively or predominantly on the future conduct of the merged entity. These are often referred to as ‘conduct remedies’. (p. 771) 5.1049  In the area between divestitures and conduct remedies, there is some uncertainty whether other remedies should be classed as structural or behavioural.1076 For instance, remedies involving access to infrastructure, IT platforms and technologies, or those requiring the licensing of IP rights represent borderline categories, as they may include elements typical of both divestitures and conduct remedies.1077 These ‘hybrid remedies’ will be considered hereinafter as part of the broader category of ‘behavioural remedies’, which includes both hybrid remedies and conduct remedies.

(b)  Acceptability of the Various Categories 5.1050  The Commission has a long-standing preference for structural remedies; only structural remedies, in particular divestiture remedies, constitute a permanent solution to the competition concerns identified by the Commission and do not require medium or longterm monitoring.1078 Behavioural remedies will be accepted by the Commission where they are at least equivalent in effect to a divestiture.1079 This means, as a matter of principle, that the Commission will examine the remedies submitted by the parties on a case-by-case basis, without excluding a priori that non-structural remedies may constitute an adequate solution to the competition problem previously identified.1080 5.1051  In spite of the Commission’s declared preference for structural commitments, a recent study of the Commission’s remedy practice in the years 2000–10 showed that behavioural remedies accounted for a non-negligible proportion of the total remedies accepted by the Commission during that period, although the trend of these types of remedies in recent years has been declining.1081 Unsurprisingly, behavioural remedies are more common when non-horizontal, or only partially horizontal, competition problems are at stake.1082 5.1052  Hybrid remedies in particular (eg access remedies, licensing of IP rights, entering, modification, or termination of long-term agreements) have often been considered a suitable solution for specific competition concerns (horizontal and vertical), provided that they respected certain requirements (see further, Sections F.5(e) and F.5(f)).1083 (p. 772) 5.1053  By contrast, conduct remedies are rarely viewed as an effective solution for competition concerns, notably because they require constant monitoring to ensure compliance and their medium to long-term outcome is difficult to predict. In addition, such remedies frequently raise the risk that the merging parties, their customers, or competitors could be unreasonably constrained by the obligations imposed by the remedy, thus potentially distorting or harming the competitive structure of the market. Further, breaches

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of conduct remedies can only be detected after they have occurred, by which time harm to competition may already have taken place. Lastly, conduct remedies may not be able to deal with all the potentially anti-competitive effects of a merger.1084 A commitment not to increase prices, for instance, may not be able to eliminate other forms of anti-competitive effects resulting from a horizontal or vertical merger, such as a potential reduction in innovation or deterioration of quality in the products or services. 5.1054  Nonetheless, in certain circumstances conduct remedies may be acceptable, notably in relation to concentrations that raise conglomerate issues, where commitments to act (or refrain from acting) in a certain manner may effectively address concerns regarding possible leveraging conduct such as bundling or tying.1085

(c)  Divestiture of a Business (i)  Overview 5.1055  Divestitures constitute by far the most common type of remedy and also the archetype of structural remedies. They are viewed by the Commission as the benchmark for other remedies in terms of effectiveness and efficiency.1086 5.1056  The Commission’s practice for divestiture remedies has developed over time and in particular following an ex post study, published in 2005, of the design, implementation, and effectiveness of a large sample of remedies from 1996 to 2000 (the ‘Remedies Study’).1087 The most frequent flaw identified by the Remedies Study was the inadequate scope of a divested business, followed by issues relating to the carve-out of an existing business and problems with the interim preservation and hold-separate obligation pending implementation of the divestiture. The introduction of Form RM and the 2008 Notice on Remedies were designed to address these flaws, as were updated Model Texts on divestiture commitments and trustee mandates.1088 5.1057  In parallel, the Commission has progressively increased the level of scrutiny it applies to key elements of divestiture remedies. First, the 2008 Notice adds further detail and clarification in relation to the requirements for the scope and viability of the remedies, as well as the identity of a suitable purchaser, expanding inter alia on the conditions for the application of up-front buyer and fix-it-first solutions.1089 Secondly, the Commission pays particular (p. 773) attention to the preservation of the divested business in the interim period, particularly where the business being divested is carved-out of the parties’ existing activities. Finally, the monitoring trustee has been given a more central role and additional powers to oversee the divestment process.

(ii)  Purpose 5.1058  The purpose of a divestiture is generally to eliminate or reduce a horizontal overlap between the merging parties in such a way as to maintain the level of competition pre-existing in the market. Divestitures can also be an effective remedy for vertical and, in principle, conglomerate concerns, insofar as they eliminate the vertical or conglomerate relationship which gives rise to the competition problems.1090 5.1059  In order for a divestiture to be capable of resolving competition problems, it must concern a viable business that, if operated by a suitable purchaser, will be able to compete effectively with the merged entity on a lasting basis.1091 Furthermore, the Commission needs to be able to conclude with (the requisite degree of)1092 certainty that it will be possible to implement the divestiture and that it will be likely that the new commercial structures resulting from the implementation will be sufficiently workable and lasting to ensure that the significant impediment to effective competition will not materialize.1093 In practice, the Commission’s assessment of these criteria tends to overlap with the

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requirements of viability and competitiveness of the divested business which are dealt with in the following section.

(iii)  Divestiture of a Viable and Competitive Stand-Alone Business 5.1060  Only a viable and competitive business can be the object of an acceptable divestiture remedy. The two requirements are interconnected, in the sense that only a viable business can compete effectively with the merged entity on a lasting basis.1094 5.1061  A business is viable when it can operate on a stand-alone basis, meaning that once the divestiture is implemented, it can operate independently of the merging parties and is not reliant on them for the supply of input materials or for other forms of cooperation. It is not unprecedented for the Commission to reject remedies because of uncertainty regarding the viability of the divested business. For example, in Universal/EMI, a merger in the music industry between two large ‘majors’, the Commission expressed its doubts on the first remedy proposal inter alia on the basis that it would not have been viable. In particular, the Commission considered that the composition, quality, and lasting nature of the repertoire divested, together with the fact that the recorded music rights would have been limited to the EEA, would probably have affected the viability of the divested business. In order to address the Commission’s concerns, the parties offered a new remedy package, which included a large portfolio of worldwide recorded music rights. The final commitments represented approximately two-thirds of the target’s business in the EEA.1095 (p. 774) 5.1062  A business to be divested must also be transferred as a going concern.1096 The Commission generally favours divestments of a pre-existing company or group of companies, or of a business division.1097 5.1063  Unless the parties have entered into an agreement with the purchaser in advance of the Commission’s decision, the identity of the purchaser is not normally taken into account in assessing a remedy, and in particular whether a business can be viable and operate on a stand-alone basis.1098 5.1064  The divestiture remedy must include all assets and personnel which contribute to the current operation of the business and which are necessary to ensure that a viable and competitive business will be transferred.1099 Depending on the nature of the business concerned, these assets may include both tangible and intangible assets, personnel (including key personnel holding management positions), ongoing agreements with customers and suppliers, customer portfolios, and third party service agreements (eg electricity supply agreements). The parties are required to provide a detailed list of the assets of the business to be divested (both those that will be transferred, and will thus form part of the divested business, and those assets that will not be transferred).1100 5.1065  When it comes to implementation, the commitments document, including the schedule, needs to be interpreted in light of: (a) the Commission’s decision to which the commitments are attached as conditions and obligations; (b) the general framework of EU law, in particular in light of the Merger Regulation, and (c) by reference to the Commission Notice on Remedies.1101 As such, statements included in the commitments document, including those regarding the assets to be divested, which plainly go against the text of the decision or other sources of EU law cannot be used to change the substance of the commitments, for instance by allowing the parties to divest less than they had explicitly or implicitly proposed to the Commission. 5.1066  What constitutes a viable stand-alone business will depend on the features of the market where the competition concerns arise. The proto-typical example of divested business is that of a stand-alone business consisting of a production plant and related activities (sales, R&D, etc). However, the Commission has often accepted divestitures of ‘atypical’ businesses, such as frequency spectrum for mobile telecommunications in cases where these are justified by the particular features of the industries involved.1102 By

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contrast, the Commission tends to be sceptical of the viability of divestment packages containing only or predominantly IP rights. The divestiture of a brand or a trademark is normally accepted as a sufficiently viable solution only if the divested business will be immediately viable under the control of the new buyer.1103 (p. 775) This has happened, for example, where the brand to be divested constitutes the main basis for the generation of turnover.1104

(iv)  Carve-Out Divestitures 5.1067  Where the competition concerns do not justify the divestiture of the whole of a separate business, such divestiture of the whole could be considered as disproportionate. In such cases, it may be possible to structure a divestiture remedy by ‘carving-out’ the relevant business from the rest of the production unit and divesting only the carved-out part.1105 5.1068  Carve-outs are relatively frequent in the Commission’s practice.1106 However, carve-out divestitures can lead to specific problems in terms of how severable the business is from the overall unit to which it belongs. Where it would not be possible to carve out the relevant business (eg where the company structure does not include autonomous business units), divestiture of the whole of the business may be accepted as a proportionate remedy. Even where a carve-out may be structurally possible, other issues regarding the effectiveness of a carve-out divestiture may arise. For instance, the business may need access to raw materials that are manufactured by the business parts remaining under the control of the merging parties. The viability of the business may also be called into question if it is currently relying on specific synergies with the remaining part, as these would disappear once the divested business is separated. 5.1069  To address these shortcomings, the parties may offer to duplicate certain essential infrastructures or agree to enter into long-term agreements with the purchaser of the carved-out business. In Hexion/Huntsman, for instance, the parties committed to a number of raw material supply agreements and transitory arrangements to ensure that the sharing of a production site would not affect the viability of the divestment business. To eliminate any remaining uncertainty regarding the implementation of the remedies, the parties also offered an up-front buyer solution.1107 5.1070  A better solution to long-term agreements, and one more readily accepted by the Commission, is to implement the divestiture in the form of a ‘reverse carve-out’. A reverse carve-out means that the whole business unit is divested, with the exception of those parts of the business that the parties intend to keep (ie the parties carve-out the retained business from the divested business rather than vice versa).1108 In Munksjoe/Ahlstrom, for example, the divested business comprised an entire paper plant where all of target’s heavy weight abrasive paper backings and PRIP business was located. The merged entity, however, retained one paper machine, which was not used to manufacture abrasive paper backings or PRIP. In order to ensure the continuity of the merged entity’s activities at the site, the commitments also included a number of ancillary agreements between the purchaser and the merged entity. In addition, certain utilities (including the power plant and water facilities) were transferred to a joint venture to be jointly controlled by the purchaser of the divested business and the merged entity.1109

(p. 776) (v)  Alternative to Carve-Outs 5.1071  In very limited circumstances, the Commission may also accept that instead of carving out a business, the merged entity commits to produce certain goods for a third party under a toll manufacturing agreement. Toll manufacturing agreements have been accepted in exceptional cases where a carve-out would have been technically impossible because of the serious disruption of the remaining productive activities operated by the merged entity.1110 However, the Commission’s practice has been to accept such agreements only as part of a wider remedy package including other divestitures (ie where the From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

elimination of the competition concern would not depend solely on the toll manufacturing agreement). In normal circumstances, it is extremely unlikely that the Commission will accept toll manufacturing agreements as a replacement for divestiture per se.

(vi)  Alternative Divestitures: Crown Jewels 5.1072  If there is a reasonable doubt whether a divestiture remedy can be implemented (eg because the proposed divestment business would not be viable enough to attract suitable purchasers), the Commission cannot accept that remedy and risk nonimplementation. To address this, the parties can propose an alternative remedy (usually divestiture of an alternative business) that they will implement in the event that its preferred divestiture does not take place. To accept such an alternative, the Commission will require that the alternative divestiture does not raise any uncertainty in regard to its implementation and that it is at least as good as the preferred divestiture in terms of creating a viable competitor (although it will usually be even better than the preferred divestiture, given the need to respect the first requirement). Normally, such remedies will be wider in scope and more onerous for the parties (hence, ‘crown jewels’).1111 5.1073  In crown jewels cases, the parties normally commit to implement their preferred remedy within a first deadline (this deadline is placed before the expiry of the ‘first divestiture period’, after which the trustee is normally given the mandate to sell at no minimum price). If this period expires and the parties have not succeeded, the parties will have to sell the crown jewel within a second deadline, which normally accords with the end of the first divestiture period. In order to ensure the effectiveness of the remedy, both the preferred divestment assets and the crown jewel assets have to be ring-fenced and are subject to the same obligation for the seller to preserve the viability and competitiveness of the business. 5.1074  A good example of the crown jewel mechanism is provided by Teva/Ratiopharm, where the parties committed to divest part of Ratiopharm’s pharmaceutical business in the Netherlands or, alternatively, all tangible and intangible assets (including IP rights) that contributed to the operations of Ratiopharm in the Netherlands.1112

(vii)  Suitable Purchaser 5.1075  The identity of the purchaser will often be central to whether a divestiture remedy is capable of removing competition concerns. The purchaser must be able to operate the divested business as a competitive force on the market. (p. 777) (i)  Standard Requirements

5.1076  The Commission’s Notice on Remedies, sets out the following requirements that any purchaser must meet as a minimum:1113 (a)  the purchaser must be independent of and unconnected to the parties; (b)  the purchaser must possess the financial resources, proven relevant expertise, and the incentive and ability to maintain and develop the divested business as a viable and active competitive force in competition with the parties and other competitors; (c)  the purchaser must be likely to acquire the divested business without creating new competition problems 1114 or giving rise to a risk that the implementation of the commitments will be delayed. The purchase of the divested business may be a reportable concentration (either under the Merger Regulation) or at national level. Where the Commission considers that there may be difficulties in obtaining clearance for the acquisition or that regulatory

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approvals may significantly delay implementation of the divestiture, the purchaser will generally be found not to meet this standard requirement.

1115

5.1077  The requirements contained in the Notice on Remedies are standard, minimum criteria. The Commission can (and normally does) ask for additional requirements on a case-by-case basis depending on the specific features of the business concerned, for instance by requiring the suitable purchaser to be an industrial buyer (with particular expertise) rather than a financial operator.1116 (ii)  When a Suitable Purchaser Must Be Identified

5.1078  The Commission reserves the right to approve the purchaser proposed by the parties before the completion of the divestiture (which it does on the basis of the information provided by the parties as well as by the monitoring trustee). 5.1079  In the majority of cases, the merging parties are normally not required to identify the buyer prior to implementation of the concentration. Rather, the parties are required to enter into a binding agreement with a buyer approved by the Commission within a fixed time (usually between six and nine months)1117 from the adoption of the Commission decision clearing the concentration. This approach will be adopted in cases where the market test of the remedies indicates a sufficient level of interest from potential buyers with respect to the divested business. 5.1080  In cases where uncertainty exists with regard to the implementation or the possibility to find a suitable buyer, however, it may be required that: (a)  after the adoption of the merger decision but before implementation of the concentration, the parties enter into a binding agreement with a purchaser that has been approved by the Commission (‘up-front buyer’); 1118 or more onerously (p. 778) (b)  before adoption of the merger decision, the parties identify a purchaser for the business and enter into a binding agreement concerning the divestiture (‘fix-itfirst’). 1119 5.1081  In the first scenario, the parties cannot close the transaction before the buyer has been approved by the Commission; in the second scenario, the buyer must be approved at the same time that the concentration is authorized. Importantly, this means that in the case of fix-it-first remedies, the suitability of a purchaser is assessed during the course of the merger review proceedings, and not in a later second step as in all other cases.1120 5.1082  In recent years, ‘up-front buyer’ and ‘fix-it-first’ solutions have appeared prominently in the Commission’s assessment of remedies. For instance, the absence of an ‘up-front buyer’ mechanism in the proposed remedies appears to be one of the main reasons for the prohibition of the UPS/TNT Express deal.1121 In the same case, however, the Commission also seems to have rejected a ‘fix-it-first’ solution proposed by the parties because it was proposed only at a very late stage in the process and the proposed buyer did not appear to qualify as suitable. Another example is provided by Ryanair/Aer Lingus III, where the Commission rejected a ‘fix-it-first’ remedy proposal by Ryanair on the grounds that the proposed buyers would not have had the ability and incentive to compete with the merged entity, and that, in spite of its ‘fix-it-first features’, the remedy did not offer sufficient guarantees in terms of prompt implementation and workability.1122

(d)  Removal of Links with Competitors

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5.1083  When the Commission’s concerns arise from the possibility that links between the parties and competitors increase the likelihood of coordination or other forms of anticompetitive behaviour, removal of those links could be an acceptable remedy.1123 5.1084  Links with competitors normally consist of minority shareholdings in, or other forms of participation with, a competitor, or certain agreements such as long-term supply or cooperation agreements. The competitive concerns generated by these links are twofold. On the one hand, there is the possibility that the merged entity will have the ability and incentive to influence the behaviour of a competitor in such a way as to lead to coordination. On the other hand, the merged entity may have access to commercially sensitive information that would hinder effective competition in the markets concerned.1124 (p. 779) 5.1085  The removal of links with competitors can take various forms, but depending on the nature of the links they generally consist of the following. (a)  Divestiture of a minority shareholding in a competitor. 1125 In exceptional cases, the Commission will accept a less structural remedy than divestiture of a shareholding, namely comprehensive and permanent waiving of participation rights conferred by minority stakes (eg representations on the board, veto rights, and also information rights), 1126 provided that the financial gains arising out of the shareholding are not in themselves sufficient to influence the behaviour of the merged entity. 1127 These remedies remain rare and can be generally accepted only in cases where the theory of harm is at least partially based on the behaviour of the merging parties (and competitors) rather than on the structure of the market as such. (b)  Withdrawal from a joint venture.

1128

(c)  Termination of agreements with competitors. 1129 Such termination ‘will only remove the competition concerns if it is ensured that the product of a competitor will also be distributed in the future and exercise effective competitive pressure on the parties.’ 1130 As such, if the termination of a supply agreement risks resulting in the third party being forced to leave the market, this solution would not be considered as acceptable. 1131

(e)  Access Remedies 5.1086  Access remedies allow third parties to access key infrastructure, networks, technologies, IP rights, or essential inputs on a non-discriminatory and transparent basis. Access remedies will generally be aimed either at facilitating market entry by competitors or at ensuring that competition is not significantly impeded through foreclosure.1132 (p. 780) 5.1087  Where the access remedy is submitted in order to facilitate market entry, acceptance will be conditional on it being sufficiently clear that there will be actual entry of new competitors that would eliminate the SIEC.1133 If it cannot be concluded that the access remedy is likely to lead to new entry, or that entry will not be timely, the remedy will be rejected. In Olympic/Aegean Airlines, for instance, the Commission rejected a remedy proposal by the merging parties because the release of slots at certain non-congested Greek airports proposed by the parties would not have resulted in likely, sufficient, and timely entry.1134 With regard to the likelihood and sufficiency of entry, the market investigation in that case showed that the large majority of the carriers interviewed would not take advantage of the slot release caused by the remedy, inter alia because there were already sufficient slots available at the airports concerned. As for timeliness, the Commission found that, apart from a few small-sized carriers, there were no airlines planning to enter on the affected routes for the next four IATA seasons (two calendar years).

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5.1088  Where the access remedy is submitted in order to address foreclosure concerns, it will only be accepted where it can be concluded that the remedy will be effective and that competitors will probably use it so that foreclosure concerns will be eliminated. The Notice on Remedies provides that, in specific cases, it may be appropriate to link such a remedy with an ‘up-front buyer’ or ‘fix-it-first’ remedy in order to allow the Commission to conclude with the requisite degree of certainty that the commitment will be implemented (in other words, that the competitor(s) that will take advantage of the access remedy are identified upfront and/or have already signed a binding access agreement with the parties before the Commission makes its decision).1135 5.1089  More generally, as access remedies can be complex and will require terms for determining the conditions for access, specific arrangements are often required to monitor compliance with access remedies by means of arbitration clauses1136 or delegation of monitoring powers to national regulators.1137 5.1090  Although access remedies can be difficult to monitor and can give rise to disputes between the merging parties and the entrants, these remedies sometimes constitute a possible (and, more rarely, the only) solution to the competition problems. The type and specific design of an access remedy, as well as its concrete chance of solving competition issues and therefore of being accepted, will depend on the specificities of the industries at stake and the competition concerns identified by the Commission. In general, it can be said that access remedies have a higher chance of succeeding in industries with high barriers to entry, where the remedy will lower these barriers. Access remedies that have been accepted by the Commission (p. 781) include: access to infrastructure,1138 access to key technology and licensing,1139 access to technical interfaces1140 and interoperability protocols,1141 access to audiovisual content,1142 and access to essential inputs such as raw milk.1143

(f)  Commitments to Enter Into, Modify, or Terminate Long-Term Agreements 5.1091  In some cases, the competition problems identified by the Commission may derive not from combining the activities of the merging parties as such, but from the vertical relationships that one or both merging parties have with third parties. In these cases, entering into, modifying, or terminating existing long-term agreements may provide a suitable solution to the competition problem. 5.1092  Where a concentration gives rise to vertical foreclosure concerns caused by the integration of one party with another which has significant market presence in a given upstream or downstream market, a commitment to enter into a long-term agreement with third parties in regard to certain goods may be sufficient to address the concerns. For instance, in Piaggio/Aprilia the parties undertook to enter into long-term agreements with downstream competitors for the supply of a four-stroke engine for motorcycles in order to dispel the input foreclosure concerns of the Commission.1144 5.1093  Where the existence of long-term exclusive agreements, such as supply agreements, could give rise to foreclosure of the customer base (thereby limiting customer switching and strengthening the merged entity’s position), termination or modification of such agreements may be considered an appropriate remedy. In ENI/EnBW/GVS, for example, the parties committed to grant gas distributors the right to early termination of supply contract previously concluded with GVS, in order to allow those customers to source gas from competitors.1145 (p. 782) 5.1094  In other cases, a long-term exclusive supply agreement between one of the merging parties and an upstream producer may make the downstream position of the combined entity stronger (thereby creating horizontal concerns), especially where the agreement relates to scarce raw materials for input and the other party is itself integrated upstream. This was the case in Glencore/Xstrata, where the Commission cleared a merger

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between a commodities trader and a miner, conditional on the termination of a long-term exclusive agreement with a large zinc producer.1146

(g)  Conduct Remedies in Conglomerate Cases 5.1095  Where conglomerate mergers give rise to concerns such as the possibility for leveraging behaviour post-merger, the Commission may accept purely behavioural remedies instead of structural remedies. These conduct remedies normally consist of detailed commitments which ensure that the parties do not engage in exclusionary or abusive behaviour. Both the EU Courts and the Commission have acknowledged that conduct remedies are in principle able to prevent the type of behaviour necessary for conglomerate effects to occur.1147 Conduct remedies will, however, require strict monitoring and significant safeguards to ensure compliance,1148 which may be burdensome for the parties. In Intel/McAfee, for example, in order to dispel conglomerate concerns, the Commission accepted a comprehensive package of behavioural remedies including the commitment to ensure access to interoperability information for vendors of rival security solutions and the imposition of significant limitations on the merged entity’s ability to tie Intel’s CPUs and McAfee’s security solutions. The monitoring and enforcement provisions included a monitoring trustee, a fast-track dispute resolution mechanism, and a process to allow the Commission to approve standard texts for licence and warranty agreements with third parties.1149

(h)  Other Conduct Remedies 5.1096  In very exceptional cases, the Commission may accept a package of pure conduct remedies as a solution for certain specific competition concerns. Examples from the Commission’s practice include undertakings to pursue entry plans in a new market and to provide access to personnel training facilities to potential competitors,1150 and commitments not to discriminate against or weaken competitors in upstream and downstream markets.1151 5.1097  More usually, however, conduct remedies are accepted as part of a divestiture or other structural remedy package in order to ensure the viability of the divested business, to make the business more attractive to a potential buyer, or to make it easier to enter the market. This is normally the case for commitments to supply or purchase from the business1152 and commitments to facilitate market entry.1153

(p. 783) (6)  Implementation and Modification of Remedies PostDecision (a)  Implementation of Remedies (i)  Timing 5.1098  With the exception of ‘fix-it-first’ remedies discussed at para 5.1080, remedies are normally implemented within a fixed period after adoption of the decision. The parties are normally allowed a first period to implement the remedies (‘first divestiture period’), before a divestiture trustee is granted an irrevocable and exclusive mandate to implement the remedy, normally by disposing of the divestment business at no minimum price within a fixed deadline (‘trustee divestiture period’). The Commission normally considers a period of six months to be an acceptable first divestiture period and a period of three months to be an acceptable trustee divestiture period. 5.1099  The period for implementation normally begins from the date of the Commission’s decision clearing the concentration conditional on compliance with the remedies.1154

(ii)  Obligations of the Parties in the Interim Period

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5.1100  In the interim period between approval of the concentration and implementation of a divestiture remedy, the parties are obliged to take steps to preserve the viability, marketability, and competitiveness of the divested business.1155 In particular, the parties are required, in the interim period, not to withdraw assets, know-how, or key personnel from the divested business, or to neglect to carry out the daily business and thereby compromise its economic profitability in the medium and long term. 5.1101  In order to avoid any transfer of assets or information between the merged entity and the divested business or any undue interference with the divested business’s activities in the interim, ‘hold-separate’ and ‘ring-fencing’ provisions are normally included in the obligations attached to the decision. The objective of ‘hold-separate’ and ‘ring-fencing’ obligations is to ensure the legal and physical separation of the assets of the divested business from the remainder of the merging parties’ business. Typical ‘hold-separate’ and ‘ring-fencing’ obligations include the creation of information firewalls between the merging parties and the divestment business, and the separation of the divestment business from the central IT system of the merged entity.

(iii)  Hold-Separate Manager 5.1102  Immediately after the adoption of the Commission decision conditionally clearing the concentration, the parties have to appoint a hold-separate manager.1156 Unlike the monitoring trustee (see paras 5.1104ff), the Notice on Remedies does not foresee a specific appointment process (involving Commission approval) for the hold-separate manager. The monitoring trustee, however, is normally able to remove the hold-separate manager if he does not act in line with the commitments or otherwise endangers their timely and proper implementation. Given that the monitoring trustee reports to the Commission, it can thus be argued that the Commission has (in practice) the final word on the appointment and suitability of the hold-separate manager. (p. 784) 5.1103  The hold-separate manager supervises the parties’ compliance with ‘holdseparate’ and ‘ring-fencing’ obligations and is entrusted with the day-to-day management of the business in the interim period. The hold-separate manager needs to have ‘the necessary expertise’ and performs his tasks under the supervision of the monitoring trustee.

(iv)  Monitoring Trustee 5.1104  As soon as possible after adoption of the Commission’s decision, the parties must also appoint a monitoring trustee. The monitoring trustee supervises the parties’ compliance with the commitments and oversees the activity of the hold-separate manager.1157 The monitoring trustee must be proposed by the parties and is appointed by them to act as the ‘eyes and ears’ of the Commission throughout the divestiture period.1158 The Commission approves the monitoring trustee after an evaluation of the trustee’s qualifications, expertise, and independence.1159 As the monitoring trustee must be appointed as soon as possible, the parties will normally have to propose a suitable candidate within two weeks of the Commission decision conditionally clearing the transaction. The commitments document will also normally include a provision that a monitoring trustee has to be appointed before closing the deal.1160 As well as the identity of the trustee, the Commission approves the monitoring trustee’s mandate (which is submitted by the parties as part of the trustee proposal). 5.1105  If the monitoring trustee proposal by the parties is rejected by the Commission, the Commission will normally ask for a new proposal putting forward two candidate monitoring trustees. If the Commission also rejects the second proposal, it can nominate a new trustee, which the parties then have to appoint, together with a trustee mandate approved by the Commission.1161

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5.1106  The monitoring trustee reports to the Commission on the implementation of the remedies by means of regular reports. The parties are normally allowed to receive nonconfidential versions of these reports. The monitoring trustee reports on matters such as the status of the divestment process, the compliance of the parties with the ‘hold-separate’ and ‘ring-fencing’ obligations, the financial and industrial state of the divestment business, and any issues faced in the carve-out of the divestment business.

(v)  Proposal for a Suitable Purchaser 5.1107  It is up to the parties to find a potential buyer and to demonstrate that it meets the requirements for a suitable purchaser. Once such a potential buyer has been found and the parties have formally presented it to the Commission by means of a reasoned submission, the monitoring trustee submits to the Commission a reasoned opinion with regard to the suitability of the purchaser.1162 The ultimate decision on the suitability of the buyer is reserved to the Commission, which will carry out its assessment with respect to the purchaser’s proven expertise, financial resources, incentives to maintain and (p. 785) develop the business, and the remaining purchaser requirements. The approval or rejection of the purchaser is adopted by means of a decision.1163

(vi)  Divestiture Trustee 5.1108  To assist with, and ensure implementation of, the divestiture remedy, a divestiture trustee appointed by the parties and approved by the Commission can also be involved in the implementation process.1164 This occurs notably when the parties fail to divest the business within the agreed first divestiture period. In these cases, the divestiture trustee will take the lead in the divestment process. 5.1109  At the end of the first divestiture period, the divestiture trustee automatically receives an irrevocable and exclusive mandate to dispose of the business at no minimum price within the trustee divestiture period, under the supervision of the Commission.1165 By the end of the trustee divestiture period, the divestiture trustee has to propose a preferred buyer to the Commission. The buyer approval process is the same as in the case of a sale within the first divestment period. The divestiture trustee is normally allowed sufficient room for manoeuvre to include in the sale and purchase agreement such terms and conditions as it considers appropriate for an expedient sale, in particular customary representations, warranties, and indemnities.1166 5.1110  The divestiture trustee can be appointed at the beginning or even at a relatively late stage in the process. The parties are normally required to propose to the Commission a candidate divestiture trustee no later than one month before the expiry of the first divestment period.1167 The parties are generally obliged to support the divestiture trustee, to keep the trustee informed of all relevant information, and to cooperate with the trustee in the same way as is foreseen for the monitoring trustee.1168

(b)  Modification of Remedies Post-Decision 5.1111  A ‘review clause’ is normally included in the text of commitments approved by the Commission. This empowers the Commission to modify the remedies attached to the clearance decision, following a request from the parties showing good cause which is accompanied by a report from the monitoring trustee giving its assessment of the request.1169

(i)  Extension of First Divestiture Period 5.1112  The most common form of modification is an extension of the first divestiture period, giving the parties additional time to complete a divestiture. The Commission will accept a request for extension of the time limits for divestiture only if: (a) the parties request the extension at the latest one month before the expiry of the time limit for divestiture, save for exceptional circumstances;1170 (b) the parties were not able to meet the deadline for reasons outwith their responsibility; and (c) it can be (p. 786) expected that From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the parties will subsequently succeed in divesting the business within a short time frame.1171 All three conditions must be shown by the parties. 5.1113  The Commission assesses the request, taking into account a report of the monitoring trustee on the matter, and issues a decision granting or rejecting the request for extension. The Commission can also grant an extension for a period shorter than that requested by the parties.1172 In order to protect the confidential aspects of the duration of the first divestiture period, the Commission does not normally make extension decisions public. The same principles described in this section also apply to the extension of any other time period included in the commitments.

(ii)  Other Modifications Requested by the Parties 5.1114  In rare cases, the Commission can grant a modification or waiver of certain aspects of the obligations or conditions attached to the clearance decision, provided the parties show that exceptional circumstances occurred which justify the modification or waiver. If the modification or waiver concerns an essential element of the commitments, the Commission will normally adopt a new formal decision under the same legal basis as the original decision, after having conducted a new market test (if appropriate to the circumstances of the case).1173 5.1115  Modifications or waivers of remedies will generally not be granted for divestiture remedies, as these remedies tend to be implemented within a relatively short time frame and therefore it cannot reasonably be expected that the market circumstances will have changed to such an extent that the remedy would no longer be required, or would require amendment.1174 The case is different for remedies which are by nature ongoing over a number of years, such as access remedies. In these cases, for instance, the conditions for granting access may be subject to review. The Commission will normally accept modifications, in any event, only several years after its decision. In addition, the parties will have to show that market circumstances have changed significantly and on a permanent basis, or that the experience gained in implementing the remedy has shown that the objectives pursued by the remedy can be better achieved by the proposed amended commitments.1175

(iii)  Other Modifications Requested by the Commission 5.1116  In specific circumstances, where at the time of the adoption of the decision it is not possible to foresee all details and contingencies in relation to the implementation of remedies, the remedies package may include a broader review clause. This would empower the Commission to introduce limited modifications to the remedies submitted by the parties, normally after having heard the latter. Such modifications will be required if specific modalities of implementation in the remedies originally submitted by the parties are no longer capable of effectively removing the competition concerns. This type of clause was used in the context of an access remedy in DONG/Elsam/Energi E2, where the remedies allowed the Commission to request the parties (p. 787) to amend the modalities of their gas release programme further to comments from the monitoring trustee on the basis of feedback from companies participating in the programme.1176

(c)  Breach of Remedies 5.1117  As briefly described at Section F.2(b), the legal consequences of the breach of remedies by the undertakings concerned depend on whether the breach concerns an obligation or a condition attached to the clearance decision.

(i)  Breach of Obligations

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5.1118  Failure to comply with obligations may result in the Commission revoking its clearance decision.1177 If the original clearance decision was an Article 6(1)(b) decision, the Commission will either adopt a new Article 6(1)(b) decision (with or without remedies) or an Article 6(1)(c) decision opening Phase II proceeding. In the latter case, the Phase II proceedings will be initiated following the adoption of the new decision and will proceed as in any other Phase II case. If the original clearance decision was an Article 8(2) decision, the Commission will not re-do the Phase II investigation but will adopt a new final decision pursuant to Article 8(1) to (3) of the Merger Regulation. 5.1119  The Commission is not bound by any time limit for reaching the new decision in either scenario.1178 If the Commission prohibits the transaction as modified by the failure to implement remedies, it can then order the dissolution of the merger pursuant to Article 8(4). Pursuant to Article 8(4), the Commission can also order any restorative measures to achieve the re-establishment of the status quo ante to the extent possible, as well as any other appropriate measure to ensure that the undertakings concerned comply with the Commission’s instructions.

(ii)  Breach of Conditions 5.1120  Where the parties breach a condition, the basis for the original clearance decision no longer exists and the decision is automatically void. If the Commission had cleared the transaction pursuant to Article 6(1)(b) or Article 8(2) prior to the issuance of an SO, the Commission will adopt a new decision in accordance with Article 8(1) to (3) without being bound by the time limits of Article 10(3).1179 If the Commission issues a prohibition decision at the end of its review, it can order the dissolution of the concentration.1180 5.1121  If the original clearance decision was an Article 8(2) decision taken after the issuance of an SO, the Commission is empowered to order the dissolution of the concentration without being required to adopt an Article 8(3) decision beforehand.1181 5.1122  The Commission can also order any restorative measures to achieve the reestablishment of the status quo ante to the extent possible, as well as any other appropriate measure to ensure that the undertakings concerned comply with the Commission’s instructions.1182 In Aer Lingus, however, the General Court supported a Commission decision rejecting a request to (p. 788) order the divestment of a pre-existing minority shareholding held by Ryanair in Aer Lingus, on the ground that the acquisition of such a shareholding could not be considered as an implementation of the concentration which had been prohibited by the Commission, for the purposes of the application of Article 8(4).1183

(iii)  Fines 5.1123  Article 14(2) allows the Commission to impose fines on the undertakings concerned up to 10 per cent of their aggregate turnover for breach of a condition or obligation, whether intentional or negligent. 5.1124  To date, the Commission has never imposed a fine for breach of a commitment.

Footnotes: 988

  See Merger Regulation, Art 2(3).

989

  See Merger Regulation, recital 30.

990

  See Arts 6(1)(b) and 6(2) of the Merger Regulation as regards decisions in Phase I, and Art 8(2) of the Merger Regulation as regards decisions in Phase II. See also Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 555. 991

  For the consequences of breach of commitments, see further Section F.6(c).

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992

  Commission Notice on remedies acceptable under Council Regulation (EC) No 139/2004 and under Commission Regulation (EC) No 802/2004 (’Notice on Remedies’). 993

  Best Practice Guidelines on Divestiture, and the Commission’s Model Texts for Divestiture Commitments and Trustee Mandate under the EC Merger Regulation (‘Model Text for Divestiture Commitments’ and ‘Trustee Mandate’ respectively). Updated versions of both documents were published on 5 December 2013. 994

  Form RM relating to information concerning commitments submitted pursuant to Arts 6(2) and 8(2) of Regulation (EC) No 139/2004 (Annex IV of Implementing Regulation) (‘Form RM’). 995

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 52: The Commission is not responsible for technical or commercial gaps in the commitments in question (which led it to conclude that they were insufficient to permit it to approve the merger at issue); nor, more specifically, can those gaps be attributed to any unwillingness on its part to accept that other commitments, of a behavioural nature, might be effective. It was for the parties to the merger to put forward commitments which were comprehensive and effective from all points of view and to do so in principle before [the time limit for the submission of commitments].

996

  Case T-87/05 EDP—Energias de Portugal v Commission [2005] ECR II-3745, paras 64 and 105. In this case, EDP claimed that the Commission had wrongly relied on the presumption that it was for the parties to prove that their commitments eliminated the competition concerns identified by the Commission and thus misapplied a standard of control set out in para 6 of the Notice on Remedies. The Court found that the ‘Commission did not reverse the burden of proof which it bore in relation to its obligation to establish that the merger was incompatible with the common market. On the contrary, it sought to demonstrate why the merger should be prohibited in spite of the proposed commitments’ (para 73). 997

  See further, Section F.4 for a discussion of the process.

998

  Merger Regulation, recital 30.

999

  See Notice on Remedies, para 7.

1000

  See Merger Regulation, recital 30. See also Art 6(2) of the Merger Regulation for decisions in Phase I and Art 8(2) of the Merger Regulation for decisions in Phase II. 1001

  Merger Regulation, recital 31. See also Notice on Remedies, para 20.

1002

  Merger Regulation, Arts 8(4)(b) and 8(4)(a) respectively.

1003

  See eg Cases COMP/M.1879 Boeing/Hughes (2000) and COMP/M.1684 Carrefour/ Promodes (2000). 1004

  Notice on Remedies, para 84. See eg Case COMP/M.2074 Tyco/Mallinckrodt (2000), OJ 2000 C318/6. 1005

  Cases COMP/M.6348 Arla Foods/Allgäuland (2011) and COMP/M.6282 Unipapel/ Spicers (2011). 1006

  See eg Case COMP/M.3506 Celanese/Degussa/JV (2004), where the Commission took note of a commitment to maintain durable secure supplies to the customers of the merged entity in the market for butyric aldehyde, and Case IV/M.1225 Enso/Stora, where the

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Commission ‘noted’ that the parties submitted a number of structural and behavioural commitments in relation to their paper activities. 1007

  Joined Cases T-125 and T-127/97 Coca-Cola Company and Coca-Cola Enterprises v Commission [2000] ECR II-1733, para 106. 1008

  Coca-Cola (n 1007), para 104. On the basis of the Court’s conclusion in that paragraph, this seems to be the case when it results, on the basis of the evidence available in the file, in the Commission intending to make a clearance decision conditional upon the undertaking at issue (even if that intention is not explicitly stated in the final decision). 1009

  Case COMP/M.6381 Google/Motorola Mobility (2012).

1010

  Case COMP/M.5168 EADS/SSDL (2009).

1011

  Case COMP/M.5529 Oracle/Sun Microsystems (2010).

1012

  The characteristics of the IT and open-source software industry led the Commission to conclude that the statement in question was to a certain extent ‘self-enforcing’. This could have been central to the Commission’s willingness to rely on the pledge in its decision. 1013

  An equivalent provision applies under Art 6(3)(a) for decisions taken in Phase I.

1014

  Case T-282/02 Cementbouw v Commission [2006] ECR II-319, para 307. See also Merger Regulation, recital 30. 1015

  Notice on Remedies, para 12.

1016

  Notice on Remedies, para 6.

1017

  See Case T-87/05 EDP v Commission [2005] ECR II-3745, paras 65 and 72. See also para 6 of the Notice on Remedies. 1018

  See Case C-202/06 P Cementbouw Handel & Industrie v Commission [2007] ECR I-12129. 1019

  Merger Regulation, recital 30. See also Cases T-114/02 BaByliss v Commission [2003] ECR 1279; T-282/02 Cementbouw Handel & Industrie v Commission [2006] ECR II-319; T-177/04 easyJet v Commission [2006] ECR II-1931. 1020

  easyJet (n 1019), para 133.

1021

  See eg Case COMP/M.3680 Alcatel/Finmeccanica/Alcatel Space & Telespazio (2005), where the Commission concluded that a divestiture would have been ‘patently disproportionate’, and that a non-exclusive licence of know-how, manufacturing processes, and IP rights would have been sufficient to address its competition concerns. 1022

  Case T-282/02 Cementbouw Handel & Industrie v Commission [2006] ECR II-319, paras 308–312. 1023

  Opinion of AG Kokott in Case C-202/06 P Cementbouw Handel & Industrie v Commission [2007] I-12132, paras 69ff. 1024

  Case COMP/M.6813 McCain Foods Group/Lutosa Business (2013).

1025

  Notice on Remedies, para 9.

1026

  Notice on Remedies, paras 9–10.

1027

  Notice on Remedies, paras 13–14.

1028

  See Notice on Remedies, para 9.

1029

  The time period is generally specified by the parties as part of their commitment proposal.

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1030

  In some circumstances, however, the Commission will require implementation (or partial implementation) of the remedy prior to the completion of the transaction, by means of fix-it-first solutions or up-front buyer divestitures. See Section E.5(c). 1031

  Notice on Remedies, para 98. The Merger Remedies Study, however, refers to a period between six and nine months, see Chart 17, p 110. 1032

  Case COMP/M.5549 EDF/Segebel (2009); see also the Orders of the President of the GC in Case T-389/12 R Électricité de France v Commission (2012), not yet reported, and Case C-551/12 P(R) Électricité de France v Commission (2013), not yet reported, rejecting EDF’s application for interim measures after the Commission’s refusal to grant the extension requested by EDF. 1033

  See Notice on Remedies, para 10.

1034

  See Notice on Remedies, paras 15 and 17. See also Cases COMP/M.3868 DONG/ Elsam/Energi E2 (2006); COMP/M.3696 E.ON/MOL (2005); COMP/M.4314 Johnson&Johnson/Pfizer (2006); and COMP/M.4494 Evraz/Highveld (2007). 1035

  See Notice on Remedies, paras 17 and 69.

1036

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457, para 496 (emphasis added).

1037

  Notice on Remedies, para 13.

1038

  Notice on Remedies, para 13.

1039

  easyJet (n 1019), paras 181–188.

1040

  See easyJet (n 1019), para 189. See also Notice on Remedies, para 13.

1041

  Notice on Remedies, para 14.

1042

  Case COMP/M.4746 Deutsche Bahn/EWS (2007).

1043

  Case COMP/M.6166 Deutsche Börse/NYSE Euronext (2012).

1044

  Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, para 216.

1045

  Notice on Remedies, para 17.

1046

  Notice on Remedies, para 48.

1047

  Merger Regulation, recital 30.

1048

  Notice on Remedies, para 81; see also Case T-114/02 BaByliss v Commission [2003] ECR II-1279, para 169; Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, para 79; Case COMP/M.4137 Mittal/Arcelor (2006), para 175. 1049

  Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1442, para 79.

1050

  Notice on Remedies, para 79.

1051

  Best Practice Guidelines of 2 May 2003, and the Model Texts for Divestiture Commitments and the Trustee Mandate, available at . 1052

  Form RM, introductory section.

1053

  Implementing Regulation, Art 19(1). See also Notice on Remedies, para 78.

1054

  See Section D.4 for an examination of the pre-notification stage.

1055

  Notice on Remedies, para 82.

1056

  For a detailed discussion of Phase I SOPs, see Section D.6(d).

1057

  Merger Regulation, Art 19(1).

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1058

  Implementing Regulation, recital 17 and Notice on Remedies, para 83. See also Royal Philips Electronics (n 1049), paras 228–249; Cases T-114/02 BaByliss v Commission [2003] ECR II-1279, paras 129ff and T-158/00 ARD v Commission [2003] ECR II-3825, paras 386ff. It should be noted that certain paragraphs of these judgments appear to suggest that the Commission could even accept commitments (as opposed to modifications) submitted after the 20-working-day deadline. However, it practice it is difficult to conceive of the Commission doing so, given that in this scenario there would be very little time to carry out a proper assessment, market test, and Member States consultation within the remaining days of Phase I. 1059

  Notice on Remedies, para 83.

1060

  See, however, Case COMP/M.5984 Intel/McAfee (2011), where the Commission accepted a complex package of behavioural commitments in Phase I in order to address potential conglomerate effects in the IT sector. 1061

  Notice on Remedies, para 18.

1062

  Notice on Remedies, paras 18 and 91.

1063

  In cases where the parties do not, for commercial reasons, wish to offer rather broad remedies, they may choose to wait until the SO has been issued and the Commission’s concerns fully set out before offering remedies. They can then tailor those remedies to the specifically identified concerns. 1064

  Notice on Remedies, para 91.

1065

  See further Section D.7(c).

1066

  As discussed in subsection (vi), if remedies removing the competition concerns are submitted before the issue of an SO, the Commission will adopt a clearance decision as soon as practically possible, sometimes even a few weeks before the legal deadline. 1067

  Implementing Regulation, Article 19(2), and Notice on Remedies, para 89.

1068

  Generally, these drafts do not have any legal effect, as long as they do not comply with all the formal requirements for remedies submissions. 1069

  Notice on Remedies, para 94. See Case T-87/05 EDP v Commission [2005] ECR II-3745, paras 161ff. See also Case T-290/94 Kaysersberg v Commission [1997] ECR II-2137. 1070

  On the basis of its assessment of information already received during the course of the investigation, including the results of prior market testing, and without the need for any other market test. 1071

  Cases T-212/03 MyTravel v Commission [2008] ECR II-1967, paras 127–131 (annulled by the CJ in Case C-506/08 P Sweden v MyTravel (2011), not yet reported, but on different grounds) and EDP (n 1069), paras 162–163. 1072

  Merger Regulation, Art 10 (2).

1073

  Case COMP/M.6410 UTC/Goodrich (2012).

1074

  International Competition Network, ‘Merger Remedies Review Project—Report for the fourth ICN annual conference’, Bonn, June 2005, para 3.6. 1075

  ‘Report for the fourth ICN annual conference’ (n 1074), para 3.6.

1076

  See OECD, Directorate for Financial and Enterprise Affairs, Competition Committee, ‘Remedies in Merger Cases’, p 20 and OECD, Directorate for Financial and Enterprise Affairs, Competition Committee, ‘Roundtable on remedies and sanctions in abuse of dominance cases—Note by the European Commission’, paras 35–36.

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1077

  See eg Case T-177/04 easyJet v Commission [2006] ECR II-194, para 183. See also ‘Report for the fourth ICN annual conference’ (n 1074), para 3.18. See also Notice on Remedies, para 17, which suggests that granting access to key infrastructure or inputs constitutes a structural remedy. 1078

  See Notice on Remedies, para 15. See also Case T-102/96 Gencor v Commission [1999] ECR II-759, para 319. 1079

  See Notice on Remedies, para 61; Case T-102/96 Gencor v Commission [1999] ECR II-753, para 319; Case COMP/M.3680 Alcatel/Finmeccanica/Alcatel Alenia Space & Telespazio (2005); Case IV/M.877 Boeing/McDonnell Douglas (1997). 1080

  See Gencor (n 1079), paras 318–319; Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987 (Tetra Laval II); para 85, and easyJet (n 1077), para 182. 1081

  J. Menezes and E. Frot, ‘Les remèdes en France et en Europe: une analyse statistique sur la période 2000–2010’, available at . 1082

  In non-horizontal cases, the competition concerns are more likely to arise from the possible future conduct of the merged entity (eg refusal to supply vertical competitors or tying/bundling of products in neighbouring markets) and are therefore more likely to be addressable by behavioural remedies. 1083

  See eg Notice on Remedies, paras 63 and 65.

1084

  Notice on Remedies, para 17.

1085

  Case T-5/02 Tetra Laval v Commission [2002] ECR II-438, para 161, confirmed in Tetra Laval II (n 1080), paras 85–89. 1086

  Notice on Remedies, para 61.

1087

  Merger Remedies Study, Public version, DG COMP, European Commission, October 2005. 1088

  J. Luebking ‘Revision of the Notice on Merger Remedies’, Competition Policy Newsletter, issue No 2, 2007, p 6. 1089

  Considerations of up-front buyer and fix-it-first solutions have taken an increasingly important role in the Commission’s assessment of remedies in recent years, together with aspects related to the viability and competitiveness of the divestment business. All the prohibition decisions issued after 2008 contain extensive sections on commitments explaining the reasoning why the Commission concluded that the remedies proposed by the parties did not address the competition concerns. For a general discussion of the increased level of scrutiny of divestiture remedies, see n 1088: J. Luebking, ‘Revision of the Notice on Merger Remedies’. 1090

  Notice on Remedies, para 17.

1091

  Notice on Remedies, para 23.

1092

  The Notice on Remedies appears to be less strict than the GC, which simply used the wording ‘with certainty’ in its judgment in Case T-210/01 General Electric v Commission [2005] ECR II-5575. For risks affecting the ‘requisite degree of certainty’, see para 11 of the Notice on Remedies. 1093

  General Electric (n 1092), para 555.

1094

  Notice on Remedies, para 23.

1095

  Case COMP/M.6458 Universal Music Group/EMI Music (2012).

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1096

  Notice on Remedies, para 23.

1097

  Notice on Remedies, para 33.

1098

  Notice on Remedies, para 30. See also Case COMP/M.3916 T-Mobile Austria/tele.ring (2006); Case COMP/M.4000 Inco/Falconbridge (2006); and Commission Press release IP/ 13/167 in Case COMP/M.6663 Ryanair/Aer Lingus III (2013). 1099

  Notice on Remedies, para 25.

1100

  See Model Text for Divestiture Commitments, Section B and Schedule, and Notice on Remedies, para 27. 1101

  See introductory part of the Model Text for Divestiture Commitments.

1102

  See eg Case COMP/M.5650 T-Mobile/Orange (2010), OJ 2010 C108/4.

1103

  Notice on Remedies, paras 37 and 38.

1104

  See Case COMP/M.5721 Otto/Primondo Assets (2010), OJ 2010 C82/24, para 100 and Case COMP/M.5840 Otto/Quelle Schweiz Assets (2010), OJ 2010 C200/6, where in the context of online sales the divested business consisted of domain names, trademarks, and customer data collected in the course of previous business activity. 1105

  Notice on Remedies, paras 35 and 36.

1106

  See eg recent cases of industrial carve-out: Cases COMP/M.6756 Norsk Hydro/Orkla/ JV (2013); COMP/M.6682 Kinnevik/Billerud/Korsnaes (2012); and COMP/M.6576 Munksjoe/ Ahlstrom (2013). 1107

  Case COMP/M.4835 Hexion/Huntsman (2008).

1108

  Remedies Notice, para 35.

1109

  Case COMP/M.6576 Munksjoe/Ahlstrom (2013).

1110

  In Case COMP/M.5355 BASF/CIBA (2009), the Commission accepted toll manufacturing agreements for certain chemical products, namely dry strength agents, indanthrone blue, and di-methylamine, as part of a wider remedy package, including divestitures of assets, IP rights, personnel, and customers’ portfolios. Moreover, in Case COMP/M.4730 Yara/Kemira Growhow (2007) the Commission accepted as a suitable remedy a number of supply agreements for certain chemical products, together with the divestiture of some production, distribution, and sales assets. 1111

  Notice on Remedies, para 45.

1112

  Case COMP/M.5865 Teva/Ratiopharm (2010), OJ 2011 C7/5. See also Cases COMP/M. 1813 Industri Kapital (Nordkem)/Dyno ASA (2000); IV/M.2268 Pernod Ricard/Diageo/ Seagram Spirits (2001); COMP/M.3225 Alcan/Pechiney II (2003); COMP/M.3544 Bayer Healthcare/Roche (OTC business) (2004). 1113

  Notice on Remedies, para 48.

1114

  In particular, the purchaser must be reasonably expected to obtain all necessary approvals from the relevant regulatory authorities for the acquisition of the business to be divested. 1115

  Notice on Remedies, para 104.

1116

  Notice on Remedies, para 49. See eg Case COMP/M.6756 Norsk Hydro/Orkla/JV (2013), where the Commission stated that an important requirement for the approval of the purchaser for a specialty aluminium extrusions business would have been the purchaser’s proven expertise in the aluminium extrusion market or neighbouring markets.

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1117

  See Merger Remedies Study, Chart 17, p 110. However, the precise deadline is not made public, in order not to give potential buyers an undue advantage during the commercial negotiations with the merging parties. 1118

  See eg Case COMP/M.6203 Western Digital Ireland/Viviti Technologies (2011), where the merged entity committed not to close the transaction before concluding a binding agreement for the sale of hard disk drive (HDD) production assets; Case COMP/M.6497 Hutchison 3G Austria/Orange Austria (2012), where the remedy package included a commitment to enter upfront into an agreement to grant access to the merged entity’s network; and Case COMP/M.6857 Crane/MEI Group (2013), where the parties committed to complete divestiture of a number of productive assets in the field of payment systems to a suitable purchaser before closing the deal. 1119

  eg in Case COMP/M.3916 T-Mobile/Tele.ring (2006), OJ 2007 L88/44, the Commission accepted remedies consisting of UMTS frequencies and mobile communications sites divestitures by means of a binding framework agreement signed between the parties and a third purchaser before the adoption of the decision. Arguably, the fix-it-first solution provided the Commission with additional comfort that ‘sufficient guarantees have been given that the commitments will be effectively implemented and these commitments create the necessary conditions for [the purchaser] to exert…competitive pressure [in the markets concerned]’ (see para 154). 1120

  See Notice on Remedies, paras 30, 56, and 57.

1121

  Case COMP/M.6570 UPS/TNT Express (2013). See Press Release IP/13/68 and SPEECH/13/84. 1122

  Case COMP/M.6663 Ryanair/Aer Lingus III (2013).

1123

  Notice on Remedies, paras 58–60.

1124

  In this respect, see OECD, Directorate for Financial and Enterprise Affairs, Competition Committee, ‘Antitrust issues involving minority shareholding and interlocking directorates—Note by the European Commission’, 19 February 2008. 1125

  See eg Case COMP/M.5406 IPIC/MAN Ferrostaal (2009), OJ 2009 C114/8, where MAN Ferrostaal committed to divest its minority shareholding in Eurotecnica, a supplier of technology essential for its competitors in the market for melamine. As regards the level of shareholding in competitors that could be regarded as acceptable, see E. Moavero Milanesi and A. Winterstein, ‘Minority Shareholdings, Interlocking Directorships and the EC Competition Rules—Recent Commission Practice’, Competition Policy Newsletter, issue No 1, 2002, p 15, where the authors state that: ‘there are no automatic thresholds above which concerns will always be triggered or below which concerns can always be excluded. It will be necessary to analyse each transaction in its specific legal and economic context.’ The Commission’s practice in this respect may be subject to some important clarifications and developments in light of the recent initiative to expand the scope of the Commission’s merger review to cover acquisitions of minority shareholdings. 1126

  In Case COMP/M.4153 Toshiba/Westinghouse (2006), OJ 2007 C10/1, the parties committed to renounce veto rights in a joint venture and to put in place safeguards in order to avoid information directly related to expansion plans of a competitor (GE) being transferred through the joint venture. In Case COMP/M.3099 Areva/Urenco/ETC JV (2004), OJ 2006 L61/11, the parties offered a commitment to remove the parties’ veto rights in a joint venture, to reinforce the firewalls between the joint venture and the parents, and to provide information to the sector regulator in order to allow the latter to take corrective action.

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1127

  See Notice on Remedies, para 59.

1128

  eg Case COMP/M.5978 GDF SUEZ/International Power (2011), OJ 2011 C60/9, where the Commission’s concerns related to the possibility for the merged entity to access sensitive information by means of International Power’s participation in the T-Power joint venture. 1129

  In Case COMP/M.3779 Pernod Ricard/Allied Domecq (2005), OJ 2005 C196/2, the parties committed to terminate distribution agreements with competitors in relation to certain vodka brands. In Case COMP/M.4035 Telefónica/O2 (2006), OJ 2006 C29/14, the parties undertook to withdraw Telefónica’s membership in the FreeMove alliance which offered pan-European mobile communication services in competition with similar alliances such as O2’s Starmap. 1130

  Remedies Notice, para 60.

1131

  eg in Case COMP/M.6722 FrieslandCampina/Zijerveld (2013) the Commission assessed whether the transfer and potential termination of a significant part of a supply agreement would have affected the viability of the third party and concluded that this would not have been the case (see in particular para 281). 1132

  Notice on Remedies, paras 63 and 64.

1133

  easyJet (n 1077), paras 197ff.

1134

  Case COMP/M.5830 (2011).

1135

  Notice on Remedies, para 64.

1136

  As to the effects of arbitration clauses, see Case T-158/00 ARD v Commission [2003] ECR II-3825, paras 212, 295, and 352 and Case T-177/04 easyJet v Commission [2006] ECR II-1931, para 186. For an example, see Case COMP/M.6607 American Airlines/US Airways (2013), where in relation to slot release remedies a fast-track arbitration procedure would apply in the event that a prospective or new entrant had reason to believe that the parties were failing to comply with the requirements of the commitments vis-à-vis that party. 1137

  See Notice on Remedies, para 66. For an example, see Case COMP/M.4180 Gaz de France/Suez (2006), where the Commission cleared a transaction in the energy sector subject to divestments and other commitments including access remedies. According to the commitments, the Belgian regulators for energy and gas would have monitored, in cooperation with a trustee, compliance with the commitments, and in particular the conditions for access to the gas (including price). 1138

  See eg in the IT sector Case COMP/M.5121 News Corp/Premiere (2008), OJ 2008 C117/37, where the parties committed to grant third party access to Premiere’s satellite STBs under current terms and conditions. In the transport sector, see cases involving access to slots (eg Cases COMP/M.5440 Lufthansa/Austrian Airlines (2008), OJ 2008 C219/2 and COMP/M.5655 SNCF/LCR/Eurostar (2010), OJ 2010 C272/2), where the parties undertook to lower barriers in relation to access to railway station services, access to the non-Schengen area, access to maintenance services, and access to pathways. 1139

  See eg Case COMP/M.3680 Alcatel/Finmeccanica (2005), where the parties agreed to license telemetry tracking and control (TTC) and radar altimeter technology and to supply TTC equipment at prices not exceeding those charged for comparable equipment, subject to an arbitration clause for disputes concerning the pricing mechanism. 1140

  See Case COMP/M.3083 General Electric/Instrumentarium (2003), OJ 2005 C139/37, where the parties committed to keep open access to interfaces of existing and future

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therapy devices, patient monitors, and clinical information systems, and to provide interfacing information and data to third party suppliers as well as technical assistance. 1141

  In Case COMP/M.5669 Cisco/Tandberg (2010), OJ 2010 C36/9, the parties offered a complex set of remedies to ensure interoperability between video communications solutions end-points, including inter alia the creation of a source code library accessible on an opensource basis, the divestiture of trademarks and the assignment of the management of the updates of the interoperability protocol to an independent industry body. 1142

  See Case COMP/M.2876 Newscorp/Telepiù (2003), OJ 2004 L110/73, where the parties committed to grant third parties the right to distribute audiovisual content on an unbundled and non-exclusive basis. 1143

  See Case COMP/M.5046 Friesland/Campina (2008), OJ 2009 C75/21, where the Commission accepted as part of a complex package of remedies a commitment to provide downstream competitors of the merged entity with access to raw milk supplies. 1144

  Case COMP/M.3570 Piaggio/Aprilia (2004), OJ 2005 C007/5. See also Case COMP/M. 3868 DONG/Elsam/Energi E2 (2006), OJ 2007 L133/24, where the Commission accepted as a remedy a gas release programme that would have made natural gas available to third parties in Denmark. 1145

  Case COMP/M.2822 ENBW/ENI/GVS (2002), OJ 2003 L248/51.

1146

  Case COMP/M.6541 (2012).

1147

  See Case T-5/02 Tetra Laval v Commission [2002] ECR II-438, para 161, confirmed in Tetra Laval II (n 1072), paras 85–89; Notice on Remedies, paras 17 and 69. 1148

  Notice on Remedies, para 17.

1149

  Case COMP/M.5984 Intel/McAfee (2011), OJ 2011 C98/1.

1150

  Case COMP/M.4746 Deutsche Bahn/English Welsh & Scottish Railways Holdings (2007), OJ 2008 C125/6. 1151

  Case COMP/M.4504 SFR/Télé2 (2007), OJ 2007 L316/57.

1152

  See eg Case COMP/M.4000 Inco/Falconbridge (2006), OJ 2007 L72/18, where the parties undertook to offer the purchaser of the divested business the possibility of entering into a supply agreement for supply of nickel matte for a period of up to ten years. 1153

  This type of remedy is very common in the air transport sector along with slot release, see eg Case COMP/M.5440 Lufthansa/Austrian Airlines (2009), OJ 2008 C219/2. 1154

  As regards the period for implementation, any time lag between the Commission’s clearance decision and the closing of the transaction is generally irrelevant; the implementation of remedies is not predicated on or impacted by the closing. Of course, this is not true with regard to up-front buyer remedies, where closing cannot take place in the absence of previous implementation. 1155

  Notice on Remedies, paras 7 and 108.

1156

  Notice on Remedies, para 112.

1157

  Notice on Remedies, paras 111–112.

1158

  Notice on Remedies, paras 117–121.

1159

  Notice on Remedies, paras 123–127. With regards to the criterion of independence of the monitoring trustee, see Case T-452/04 Éditions Odile Jacob v Commission [2010] ECR II-4713 and Joined Cases C-553/10 P and C-554/10 P Commission and Lagardère v Éditions Odile Jacob, not yet reported, where the EU Courts annulled a Commission decision approving a proposed purchaser for a divested business on the ground that the monitoring trustee’s report on the proposed purchaser was drawn up by a trustee who did not meet the

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condition of independence specified in the commitments. The Courts took into account that the president of the monitoring trustee firm had also been appointed as a member of the board in a financial vehicle involved in the main acquisition. 1160

  Notice on Remedies, para 123, and Model Text for Divestiture Commitments, clause

19. 1161

  See Model Text for Divestiture Commitments, Section E.

1162

  Notice on Remedies, para 119.

1163

  The Commission does not normally make approval decisions publicly available. Formal negative decisions are rare; the notifying parties generally withdraw the buyer originally proposed (and present a new candidate) if the Commission raises concerns about the buyer’s suitability. Formal (and also informal/de facto) rejections can be challenged by the dismissed buyer candidate: see judgment of the GC in Case T-342/00 Petrolessence v Commission [2003] ECR II-1161. 1164

  The divestiture trustee may or may not be the same as the monitoring trustee, see Notice on Remedies, para 123. 1165

  Notice on Remedies, para 121.

1166

  Notice on Remedies, para 121.

1167

  Model Text for Divestiture Commitments, Section E. The rules for the appointment of the divestiture trustee are similar to those for the appointment of the monitoring trustee, see Notice on Remedies, paras 123–127. 1168

  Notice on Remedies, para 122.

1169

  See Notice on Remedies, paras 71–76 and Model Text for Divestiture Commitments, Section F. 1170

  Model Text for Divestiture Commitments, Section F, clause 34.

1171

  Notice on Remedies, para 72.

1172

  See Case COMP/M.5549 EDF/Segebel (2009), when EDF requested a prolongation of the deadline to implement the remedy until 31 December 2014; the Commission rejected the request but granted an extension but only until 15 October 2012. See also Orders of the President of the GC in Case T-389/12 R Électricité de France v Commission (2012), not reported, and Case C-551/12 P(R) Électricité de France v Commission (2013), not reported, rejecting EDF’s application for interim measures after the Commission’s refusal to grant the extension requested by EDF. 1173

  See for eg Cases COMP/M.1378 Hoechst/Rhone—Poulenc (2004); COMP/M.2876 Newscorp/Telepiù (2010); and COMP/M.950 Hoffmann-La Roche/Boehringer Mannheim (2011). 1174

  Notice on Remedies, para 73.

1175

  Notice on Remedies, para 74.

1176

  Case COMP/M.3868 DONG/Elsam/Energi E2 (2006), para B.1.24 of the Annex.

1177

  Merger Regulation, Arts 6(3) and 8(6).

1178

  Merger Regulation, Arts 6(4) and 8(7).

1179

  Merger Regulation, Arts 6(4) and 8(7).

1180

  Merger Regulation, Art 8(4).

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1181

  Merger Regulation, Art 8(4).

1182

  See eg Case COMP/M.2416 Tetra Laval/Sidel (2002), annulled by the GC in Case T-5/02 Tetra Laval v Commission [2002] ECR II-4281, and Case COMP/M.2283 Schneider/ Legrand (2002), annulled by the GC in Case T-77/02 Schneider Electric v Commission [2002] ECR II-4071. Both decisions were annulled due to the annulment of the underlying decisions prohibiting the mergers and not owning to any irregularities in the dissolution decisions. 1183

  Case T-411/07 R Aer Lingus v Commission [2010] ECR II-3691.

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Part I General Principles, 5 Mergers, G Judicial Review Claes Bengtsson, Josep Maria Carpi Badia, Massimiliano Kadar From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Judicial review — Revocation of decision — Statement of objections — Procedure under the Merger Regulation — Sanction, Commission's power of — Appeals to Court of Justice — Appeals to General Court — Burden and standard of proof

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G. Judicial Review (1)  Introduction 5.1125  Commission merger decisions are subject to the scrutiny of the EU Courts, namely the General Court and the Court of Justice, which are responsible for judicial review of such decisions in the first and second (final) instance, respectively. 5.1126  The EU Courts have wide jurisdiction to review the legality of acts (or failures to act) of the EU institutions and Member States. In the field of merger control, by far the most important of these are actions for annulment of Commission decisions before the General Court,1184 with the remaining categories having limited practical relevance.1185 Additional relevant categories are actions for damages1186 and the Court of Justice’s jurisdiction on appeal against the decisions of the General Court.1187 5.1127  There has in the past been some debate as to whether the EU Courts’ review of Commission decisions via actions for annulment was sufficient to ensure effective judicial review of Commission enforcement action in the merger field and full respect of the principles of due (p. 789) process.1188 However, the practice of the EU Courts, in particular through judgments such as Airtours,1189 Schneider,1190 General Electric,1191 and Ryanair1192 (at the General Court) and Tetra Laval1193 (Court of Justice), have demonstrated an ability and willingness thoroughly to review the Commission’s decisional practice which ought to assuage concerns in this respect. 5.1128  In general terms, the procedures and principles of judicial review of merger decisions are the same as those in other areas of EU law. However, there are a number of specificities in regard to merger cases. The following sections consider: (a) which acts in the merger control field can be reviewed; (b) who can institute judicial review proceedings against merger decisions before the EU Courts; (c) on what grounds an action for annulment can be based; (d) the procedure before the EU Courts, including interim measures and expedited procedures; (e) the scope of review; (f) the consequences of annulment; and (g) under which conditions damages can be obtained.

(2)  Types of Acts That Can Be Reviewed 5.1129  The basic jurisdictional rule under Article 263 TFEU is that the EU Courts have jurisdiction to review acts (other than recommendations and opinions) that are ‘intended to produce legal effects vis-à-vis third parties’. According to settled case law, an action for annulment can be brought in relation only to a ‘measure which produces binding legal effects such as to affect the interests of an applicant by bringing about a distinct change in his legal position’.1194 5.1130  In the field of merger control, decisions which reflect the final assessment of the Commission on the substance of a concentration clearly produce binding legal effects and can be the subject of an appeal. These are Phase I decisions pursuant to Article 6(1)(b) (unconditional clearance) and Article 6(1)(b) in conjunction with Article 6(2) (conditional clearance), as well as Phase II decisions pursuant to Article 8(1) to (3) (conditional or unconditional clearance and prohibition). 5.1131  Further, the EU Courts have confirmed that a number of decisions relating to jurisdiction to act under the Merger Regulation can constitute measures which produce ‘binding legal effects such as to affect the interests of an applicant by bringing about a distinct change in his legal position’. In this respect, Article 6(1)(a) decisions stating that a concentration does not fall under the Commission’s jurisdiction have been held to be

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challengeable.1195 Moreover, the EU Courts have clarified that positive referral decisions pursuant to Article 9 also constitute challengeable acts.1196 (p. 790) 5.1132  The case law also confirms that decisions requiring action to be taken by the parties or by Member States can be susceptible to appeal. Thus, decisions pursuant to Article 8(4) of the Merger Regulation requiring the parties to dissolve a concentration may be appealed.1197 Requests for information by decision1198 and decisions addressed to Member States pursuant to Article 21 of the Merger Regulation1199 are also subject to appeal. It appears that decisions ordering undertakings to submit to an inspection may be susceptible to challenge1200 and that, similarly, decisions accepting or rejecting a request for a derogation of the suspension obligation on the basis of Article 7(3) may be challengeable.1201 5.1133  In the area of commitments, decisions of the Commission to approve or reject a proposed buyer can also be appealed, as they affect the interests of an applicant by bringing about a distinct change in his legal position.1202 5.1134  By contrast, the EU Courts have consistently found that acts adopted in the course of the procedure that have only a preliminary or preparatory function do not create binding legal effects that affect the interests of an applicant by bringing about a distinct change in his legal position and do not, therefore, constitute challengeable acts. Preparatory acts include decisions to open Phase II proceedings pursuant to Article 6(1)(c)1203 and the issuance of an SO.1204 5.1135  Importantly, in deciding whether a decision produces binding legal effects, the EU Courts have held that the substance of an act prevails over its form. As a result, the EU Courts have accepted actions against an oral declaration by the spokesperson of the Commissioner responsible for competition stating that a concentration fell outside the scope of the Merger (p. 791) Regulation (in the absence of a written formal decision pursuant to Art 6(1)(a))1205 and an informal positioning of the Commission regarding a potential buyer of a divestment business in a remedies case (falling short of a formal rejection).1206 5.1136  The operative parts of Commission decisions together with the underlying reasoning are subject to judicial review. Other reasoning is only subject to review insofar as it has ‘binding legal effects such as to affect the applicant’s interests’.1207

(3)  Legal Standing in Actions for Annulment 5.1137  In merger cases, as in other actions before the EU Courts, there is a distinction between Member States, the Council, and the European Parliament (which always have standing) on the one hand, and natural or legal persons (who must demonstrate standing) on the other.

(a)  Member States, Parliament, and Council 5.1138  Pursuant to Article 263(2), Member States, the European Parliament, and the Council are ‘privileged applicants’, with unconditional legal standing to bring actions for annulment of EU acts.1208 As a result, they can always appeal the Commission’s merger decisions. However, such appeals are hard to foresee, with the possible exception of Member State challenges to either an Article 21 decision or, more unlikely, an authorization or prohibition decision.1209

(b)  Natural and Legal Persons

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5.1139  Article 263(4) provides that ‘Any natural or legal person may…institute proceedings against an act addressed to that person or which is of direct and individual concern to them…’ 5.1140  The case law establishes an additional requirement that the applicant have a legal interest in bringing proceedings. In other words: an action for annulment brought by a natural or legal person is admissible only in so far as that person has an interest in the contested measure being annulled. Such an interest exists only if the annulment of the measure is of itself capable of having legal consequences on the applicant’s position.1210 The parties to a concentration, for instance, do not seem to have an interest in appealing a General Court judgment annulling the Commission’s clearance of their concentration if, in the meantime, the Commission has already adopted a new decision clearing again the concentration and the deadline for the appeal of the second clearance decision has expired, the clearance thereby becoming ‘definitive’.1211 (p. 792) 5.1141  The combined application of Article 263(4) and the requirement to have an interest in appealing a decision implies that the requirements for standing will vary depending on whether a person (natural or legal) is an addressee of a decision or a third party. Addressees will have standing once they show that they have an interest in having a decision annulled; since this latter criterion is usually met by notifying parties (which are the addressees of most merger decisions), they will therefore have standing in almost all cases.1212 Third parties, in turn, must both have an interest in having a decision annulled and be directly and individually concerned by that decision. 5.1142  The requirement of ‘direct and individual concern’ is cumulative; third parties must show both conditions are met. To be of ‘direct’ concern to a person, an act ‘must directly affect the applicant’s legal situation and its implementation must be purely automatic and result from [Union] rules alone without the application of other intermediate rules.’1213 A person will be ‘individually’ concerned by a decision ‘if that decision affects them by reason of certain attributes which are peculiar to them or by reason of circumstances in which they are differentiated from all other persons’.1214 5.1143  The standing of various categories of persons in relation to merger decisions is set out in the following paragraphs.

(i)  The Notifying Parties 5.1144  The parties notifying a concentration will be the addressees of the Commission’s merger decisions.1215 Therefore, they will have standing once they can show an interest in having a decision annulled, a criterion which is met in most cases.1216 The General Court has held, for instance, that the notifying parties have an interest in having a prohibition decision annulled,1217 even if the transaction can no longer be implemented in the original form1218 or if the parties withdrew the notification and abandoned the transaction in the face of Commission concerns.1219 Furthermore, the EU Courts have accepted that the notifying parties may appeal a conditional clearance decision, notwithstanding the fact that the decision to offer remedies, and the scope of those remedies, ultimately lies with the notifying parties themselves.1220

(p. 793) (ii)  Other Parties to the Concentration 5.1145  The seller and the target of the transaction (‘other involved parties’, in the language of the Merger Regulation)1221 have been considered by the EU Courts as directly and individually concerned by a merger decision for the purposes of standing.1222 Typically, the target in a non-hostile transaction may attack a prohibition decision alongside the

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buyer.1223 An action by the target in a hostile bid against a clearance decision would presumably also be admissible.1224

(iii)  Third Parties 5.1146  The EU Courts have frequently considered the legal standing of competitors1225 and customers1226 of the parties to the concentration. As regards the requirement of ‘direct and individual concern’, it is normally relatively straightforward for customers and competitors to show a direct interest in challenging a Commission decision authorizing (conditionally or unconditionally) or prohibiting a merger, insofar as such decisions allow or prohibit the merging parties to put the concentration into effect, bringing about or preventing an immediate change in the situation in the market(s) concerned. However, the question whether these applicants are individually concerned by the decision can be more problematic. In this respect, the EU Courts have traditionally considered two factors, taken in conjunction, to be decisive: (a) the extent to which the applicant played an ‘active’ role in the merger proceedings; and (b) the degree to which the applicant’s market position would be affected by the concentration. Regarding the first criterion, it is met if the applicant has actively submitted complaints to the Commission during the merger procedure,1227 but this is not necessarily required in all cases.1228 The Courts have also traditionally taken into account the importance attached by the Commission to the applicant’s submissions.1229 Regarding the (p. 794) second criterion, the EU Courts’ focus is notably on whether the applicant is a customer, competitor, or potential competitor of the merged entity or would otherwise be affected by the transaction.1230 5.1147  As well as prohibition decisions and unconditional clearance decisions, the EU Courts have found third parties to have standing in relation to conditional clearance decisions. In particular, the Court of Justice has concluded that third parties affected by the remedies on which the Commission bases its authorization decision can be directly and individually concerned by that decision and have an interest in having it annulled.1231 5.1148  These principles also apply to appeals of other challengeable acts, such as certain referral decisions1232 and decisions on the implementation of commitments, such as the Commission’s decision approving the purchaser of a divested business.1233 5.1149  By contrast, the General Court has not accepted that the following categories of applicants have legal standing: (a) employees’ representatives of one of the parties to the concentration in an action for annulment of a conditional clearance decision, as these employees were not ‘directly’ affected by the concentration (although their express right under the Merger Regulation to participate in the administrative procedure was sufficient to establish ‘individual’ concern);1234 (b) minority shareholders of one of the parties to a concentration in an action for annulment of an Article 6(1)(a) decision, as these shareholders would not have been ‘directly and individually’ concerned by the decision;1235 and (c) a consumer association in an action for annulment of a Commission decision clearing a concentration and rejecting a referral request under Article 9 of the Merger Regulation.1236 5.1150  On the other hand, where third parties seek to appeal a Commission decision on the ground of infringement of their procedural rights, they will have standing for the purpose of examining whether those rights were protected during the administrative procedure regardless of whether they would meet the ‘direct and individual concern’ test in relation to the substantive (p. 795) decision. However, a procedural claim will not extend an applicant’s standing so that it can also bring pleas on substance if it has not demonstrated ‘direct and individual concern’ in relation to the substantive claim.1237

(4)  Grounds for Challenge

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5.1151  Under Article 263, an action for annulment can be brought before the EU Courts on grounds of: (a) lack of competence; (b) infringement of an essential procedural requirement; (c) infringement of the Treaties or of any rule of law relating to their application; or (d) misuse of powers.

(a)  Lack of Competence 5.1152  The Merger Regulation empowers the Commission to review concentrations (as defined by the Merger Regulation itself) that meet the thresholds for an EU dimension (or have been referred to it by Member States). Any review beyond these boundaries would be unlawful for lack of competence. A claim under this head is most likely to be brought on the basis of the jurisdictional rules under the Merger Regulation, for instance with regard to the calculation of the relevant turnover thresholds, a finding of the acquisition of control, or the full-function nature of a joint venture.1238 Lack of competence can also be raised by the EU Courts on their own motion, given that it constitutes a matter of public policy; however, this has never arisen in practice in the field of merger control.

(b)  Infringement of an Essential Procedural Requirement 5.1153  An action for annulment of a Commission decision can be brought on the ground that, in reaching that decision, the Commission breached a rule of procedure contained in the Treaties or in secondary legislation (eg the Merger Regulation). As with lack of competence, breach of an essential procedural requirement can be raised as a ground of challenge by the EU Courts of their own motion (although this does not seem to have ever happened in merger cases). 5.1154  It appears from the case law that only a ‘clear’ or ‘substantial’ breach of the applicant’s procedural rights would lead the EU Courts to annul a merger decision on the ground of breach of essential procedural requirements.1239 Such a breach typically occurs where the applicant’s right effectively to make its position known is negatively affected. 5.1155  The most frequent claim of violation of an essential procedural requirement is that the Commission has inadequately stated the reasons for its decision (in breach of Art 296 TFEU).1240 According to the Court of Justice: the statement of reasons required by Article [296] must be appropriate to the measure at issue and must disclose in a clear and unequivocal fashion the reasoning followed by the institution (p. 796) which adopted the measure in question in such a way as to enable the persons concerned to ascertain the reasons for the measure and to enable the competent [EU] Court to exercise its power of review. The Court of Justice clarified, however, that it is not necessary for the reasoning to go into all the relevant facts and points of law, since account has to be taken not only of the wording of the decision but also of its context and the legal rules governing the matter in question. The Commission is also not required to define its position on matters which are plainly of secondary importance or to anticipate potential objections to its position. Lastly, the degree of precision of the statement of the reasons for a decision must be weighed against practical realities and the time and technical facilities available for making the decision, particularly in the context of merger proceedings.1241 5.1156  Breach of an essential procedural requirement can also be made out on the basis that the Commission has given the parties incomplete or insufficient access to the file.1242 Pursuant to Article 18(1) of the Merger Regulation, the Commission is under an obligation to provide access to the file to allow the addressees of an SO to examine evidence in the Commission’s files, in order to allow them effectively to express their views on the conclusions reached by the Commission. Access to certain documents can, however, be denied.1243 The Commission may be required to prepare non-confidential versions of these documents, in order to reconcile the opposing interests of access to the file and protection

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of legitimate business secrets. Even if the rights of the defence in merger proceedings are not dissimilar to those in the context of Articles 101 and 102, their application may reasonably have to be adapted to the necessity for speed, which characterizes the general scheme of the Merger Regulation. 5.1157  Failure to respect the parties’ rights of defence will also amount to a breach of an essential procedural requirement. A frequent claim in this respect is that the Commission’s final decision varies from the SO and that the parties were not given the right to be heard in relation to those elements of the final decision that were not set out in the SO.1244 In Schneider I, the General Court made it clear that a final Article 8 decision does not necessarily need to replicate the SO.1245 However, the SO ‘must contain an account of the objections cast in sufficiently clear terms to achieve the objective ascribed to it by the [EU] regulations, namely to provide all the information the undertakings need to defend themselves properly before the Commission adopts a final decision.’1246 According to the General Court, parties must be granted the opportunity to respond to the Commission’s objections in their reply to the (p. 797) SO and in the oral hearing. Parties must also be provided with an opportunity to submit, properly and in good time, remedies proposals that are sufficiently extensive to address the competition problems identified by the Commission. Where some of the objections relied upon by the Commission in a final decision have not previously been communicated to the parties in the SO, these opportunities are not offered and the inclusion of such objections in the final decision therefore amounts to an infringement of the parties’ rights of defence, and may be sufficient to cause the annulment of the decision.1247 5.1158  More generally, in Bertelsmann the Court of Justice stated that ‘compliance with the rights of the defence prior to the adoption of any decision which may impact adversely on the undertakings concerned is imperative in procedures for the control of concentrations.’1248 5.1159  Other claims based on infringement of essential procedural requirements which have been brought before the EU Courts include: (a) failure to comply with the obligation to cooperate with the national authorities;1249 (b) violation of the principle of good administration;1250 (c) violation of the time limits provided for by Article 10(3) of the Merger Regulation;1251 and (d) acceptance of belated submission of commitments.1252 5.1160  While the principles governing challenges on procedural grounds are similar for all applicants (parties to the concentration or third parties alike), in practice their scope differs, insofar as it is necessarily linked to their respective rights in the merger procedure (with correspondingly greater scope for review on the basis of a potential breach of the parties’ rights). 5.1161  The Commission has strived to ensure that its conduct of merger investigations is fully in line with the EU Courts’ judgments on procedural irregularities and parties’ rights of defence. First, the Commission developed and codified its practice by issuing guidelines and best practices on procedure that follow and build on the precedents of the EU Courts.1253 Secondly, the role of the hearing officer has become progressively more important and appears to be gradually expanding; the 2011 Terms of Reference grant the hearing officer new powers to that effect.1254 Finally, a number of more pragmatic aspects of the Commission’s daily enforcement action, which may not be fully visible to the outside world, have also been influenced by the EU Court precedents. For example, the Commission has adopted an electronic management process for access to file in merger proceedings, which has been designed notably to ensure that the parties’ rights of defence are fully respected.

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(p. 798) (c)  Infringement of the Treaties or of Any Rule of Law Relating to Their Application 5.1162  This ground is relied on where a decision is challenged on the basis that the Commission erred in relation to the substantive rules applicable to merger control. Unlike the previous grounds, this can only be raised as a ground of challenge by applicants and not by the EU Courts of their own motion. Challenges to the Commission’s application of the substantive test in Article 2 of the Merger Regulation have been made with respect to horizontal1255 and non-horizontal effects.1256 The EU Courts have, through challenges based on this ground, substantively developed the field of EU merger control in key areas such as horizontal unilateral1257 and coordinated1258 effects, vertical1259 and conglomerate1260 effects, as well as with reference to the assessment of remedies,1261 joint ventures,1262 and ancillary restraints.1263 The criteria set down by the EU Courts in relation to these areas have been included in the relevant Commission guidelines and notices, and today form an important part of the framework for the assessment of concentrations used by the Commission.

(d)  Misuse of Powers 5.1163  This ground of challenge refers to cases where an administrative authority has used its powers for a purpose other than that for which they were conferred. A decision may amount to a misuse of powers only if it appears, on the basis of objective, relevant, and consistent factors, to have been taken for such a purpose.1264 Where more than one aim is pursued by a decision, the fact that an improper aim is pursued alongside proper aims does not necessarily render the decision invalid, as it does not nullify the main aim.1265 Misuse of powers has to be invoked by the applicants and cannot be raised by the EU Courts on their own motion. It constitutes a relatively uncommon ground for annulment in merger control.1266

(p. 799) (5)  Procedure (a)  General 5.1164  Proceedings before the General Court include a written phase and an oral phase. 5.1165  Proceedings are initiated through an application for annulment of the Commission merger decision. Pursuant to Article 263, appeals against Commission decisions must be filed within two months and ten days after publication or notification of the decision to the applicant. In the absence of publication or notification, the time limit starts on the date on which the decision became known to the applicant. 5.1166  In its application, the applicant must set out: (a) the name and address of the applicant; (b) the designation of the party against whom the application is made; (c) the subject matter of the proceedings and a summary of the pleas in law on which the application is based; (d) the form of order sought by the applicant; and (e) where appropriate, the nature of any evidence offered in support.1267 The case law confirms that an action is admissible only if the essential facts and law are apparent from the text of the application. An application may be brief, but it must be coherent and comprehensible.1268 5.1167  The main points of the application are published in a notice in the Official Journal. The General Court’s Registrar sends the application to the other party to the case (the defendant, in this case the Commission), which then has a period (normally two months) within which to submit a defence.1269 Typically, a second round of pleadings follows this first exchange, with the applicant filing a reply, followed by a rejoinder by the defendant.1270

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5.1168  During the oral phase, a public hearing is held. In advance of the hearing, the judge-rapporteur succinctly summarizes, in a report for the hearing, the facts relied on and the arguments of each party. The hearing starts with the presentations of the lawyers for the parties, followed by questioning from the judges to the parties’ counsel. The judges then deliberate on the basis of a draft judgment prepared by the judge-rapporteur. The judgment is ultimately rendered at a public hearing. 5.1169  The confidentiality of information contained in the application may be protected, although the EU Courts are entitled to disregard applications for confidential treatment.1271 Recipients of confidential information disclosed during Court proceedings are under a general obligation to use this information solely for the purpose of those proceedings and are not allowed to disclose the information to third parties.1272

(p. 800) (b)  Interim Measures 5.1170  An appeal of a Commission merger decision does not automatically suspend the implementation of the decision in question. Articles 278 and 279 TFEU allow for the applicant to request the President of the Court to order the suspension of implementation of a contested decision or any other suitable interim measure.1273 5.1171  Requests for interim measures are unlikely to play a significant role in actions for annulment of prohibition decisions, but may be more relevant in actions against conditional or unconditional clearance decisions or decisions concerning the implementation of remedies.1274 5.1172  Requests for interim measures are admissible only if the applicant is challenging that measure in proceedings before the Court. In its application, the plaintiff needs to state the subject matter of the proceedings, the circumstances giving rise to urgency, and the pleas of fact and law establishing a prima facie case for the interim measures applied for.1275 5.1173  Protective interim measures may be granted if the following cumulative conditions are met: (a) the request is made in the context of a prima facie case for the annulment of the contested decision; (b) the measures are necessary in order to prevent the occurrence of a situation likely to cause serious and irreparable damage to the applicants, or intolerable damage to the public interest; and (c) urgency is proven.1276 5.1174  Third parties usually find it difficult to obtain interim orders to suspend the implementation of a Commission merger decision. In principle, interim orders should only be granted where a failure to do so might expose applicants to ‘a situation liable to endanger their very existence’.1277

(c)  Expedited Procedure 5.1175  The expedited procedure1278 consists in a fast-track appeal designed to deal with cases of a particularly urgent nature.1279 The expedited procedure is well suited to the need for speed of merger proceedings and has been successfully applied in a number of cases.1280 (p. 801) 5.1176  The expedited procedure is available for those cases where the urgency and particular circumstances of the case so require. Article 76a of the Rules of Procedure of General Court allows the applicant or defendant in a case before the General Court to request an expedited procedure. The application must be made by means of a separate document lodged at the same time as the application initiating the proceedings or the defence.

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5.1177  The expedited procedure has important consequences for the process before the General Court. In particular: (a) cases under expedited procedure receive priority; (b) the period for lodging the defence is halved and reduced to one month; (c) the written procedure is limited to a single exchange of pleadings (application and defence); other pleadings (replies, rejoinders, and observations on applications to intervene) may be lodged only if the General Court so allows; and (d) more emphasis is placed on oral hearings.

(d)  Appeals from the General Court to the Court of Justice 5.1178  Any party that has been unsuccessful in full or in part before the General Court can bring an appeal, limited to points of law, before the Court of Justice. Member States and EU institutions can also bring an appeal, even if they did not participate in the earlier procedure before the General Court. 5.1179  The appellants can bring actions on the grounds of lack of competence of the General Court, breach of procedure before it which adversely affects the interests of the appellant, and infringement of EU law by the General Court.1281 5.1180  Although factual matters cannot be appealed to the Court of Justice, the latter can consider, as a matter of law, whether the General Court applied the correct criteria in its appraisal of the facts and the evidence, whether it applied the correct legal characterization of the facts and evidence, and whether it drew the correct legal conclusions from them (socalled ‘dénaturation des faits’).1282 5.1181  Appeals give the Court of Justice the possibility of ruling on questions of principle, which can be particularly significant for the development of merger case law and affect future enforcement action by the Commission.1283

(6)  The Scope of Review (a)  Introduction 5.1182  Applications to annul Commission decisions are not full-merits appeals. The EU Courts do not have the jurisdiction to substitute their assessment for that of the Commission. The EU Courts’ review of Commission decisions is ‘limited to ascertaining compliance with the rules governing procedure and the statement of reasons, the substantive accuracy of the facts and the absence of manifest errors of assessment or misuse of powers.’1284 That said, these are broad limits which allow the EU Courts considerable scope to undertake in-depth reviews of Commission merger decisions; and the EU Courts have not hesitated to do so. (p. 802) 5.1183  The EU Courts enjoy unlimited jurisdiction to review fines and periodic penalty payments imposed by the Commission. Thus, not only can the EU Courts annul the fine, but they can also set the amount at the level they consider to be appropriate.1285

(b)  Burden of Proof 5.1184  Although Article 10(6) of the Merger Regulation deems a concentration to be compatible with the internal market if the Commission fails to take a decision within the prescribed period,1286 the Court of Justice in Bertelsmann made it clear that ‘it cannot be inferred from the [Merger] Regulation that there is a general presumption that a notified concentration is compatible with, or incompatible with, the [internal market]’.1287 Thus, although some commentators have stated that mergers are presumptively legal,1288 the case law confirms that, for the purposes of the assessment under the Merger Regulation, mergers are not presumed to be either legal or illegal. 5.1185  In a series of important judgments, the EU Courts have declared that the burden of proof in merger proceedings lies on the Commission, whether it issues a clearance or prohibition decision. In General Electric, the General Court held that is for the Commission in each case ‘to form a clear opinion’1289 on whether a merger is more likely than not to be compatible or incompatible with the internal market and, in Kali & Salz, the Court of Justice From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

held that the Commission must establish ‘with a sufficient degree of certainty’1290 whether a concentration raises or does not raise anti-competitive effects. The burden of proof on the Commission is therefore symmetrical, in the same fashion as the substantial test of Article 2 of the Merger Regulation.1291 5.1186  The same principles are applicable for the burden of proof in decisions granting clearance conditional on remedies, as the General Court has held that ‘a concentration modified by commitments is subject to the same criteria as an unmodified concentration.’1292 5.1187  An exception to this general principle arises in cases where the parties claim that countervailing efficiencies outweigh competition concerns. In these cases, the burden of proof shifts from the Commission to the notifying parties and they must provide all the relevant information necessary to demonstrate that the claimed efficiencies meet the conditions set out in the Horizontal Merger Guidelines.1293 The same applies to the ‘failing firm defence’, (p. 803) in which case it is for the parties to provide in due time all the relevant information necessary to demonstrate that the deterioration of the competitive structure that follows the merger is not caused by the merger, insofar as such competitive structure would deteriorate to at least the same extent in the absence of the merger.1294

(c)  Standard of Proof 5.1188  The standard of proof to which the Commission is held is the ‘balance of probabilities’. This means that the Commission will always have to establish whether, on the basis of the evidence available, a given concentration is more likely than not to result in a significant impediment to effective competition. In this context, the Court of Justice has drawn attention to the ‘essential function of evidence, which is to establish convincingly the merits of an argument or, as in the present case, of a decision on a merger.’1295 The evidence relied on by the Commission must be ‘factually accurate, reliable and consistent but also…[must contain] all the information which must be taken into account in order to assess a complex situation and…[be] capable of substantiating the conclusions drawn from it’.1296 5.1189  In cases where the Commission relies on elaborate economic theories of harm, particularly where these are predicated on behavioural rather than structural factors, such as in coordinated effects1297 and conglomerate effects1298 cases, it could be argued that the Commission may be held to a relatively higher standard of proof. The Court of Justice in Tetra Laval ruled out, however, that a different standard of proof applied; it nonetheless ultimately upheld a General Court judgment which had provided that the Commission should provide ‘convincing evidence’ that the transaction would ‘in all likelihood’ create or strengthen a dominant position.1299

(d)  Standard of Review: The Margin of Appreciation 5.1190  Although the Commission bears the burden of proof as regards merger decisions and must show that the evidence on which it relies is sufficient to prove its case to the requisite standard, the prospective nature of merger assessments does require some recognition on the part of the reviewing court. Thus, the EU Courts have consistently granted a ‘margin of appreciation’ for the complex economic assessment that the Commission carries out in its forward-looking appraisal of concentrations under Article 2 of the Merger Regulation. The recognition of a certain level of discretion for these assessments has traditionally resulted in a standard of review based on whether the Commission committed a ‘manifest error’ in its assessment.

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5.1191  However, as confirmed by the General Court in General Electric, there is an essential difference between an appraisal of an economic nature and factual matters and findings.1300 With respect to the former, the EU Courts’ role is confined to ensuring compliance with the rules of procedure and the statement of reasons, as well as the substantive accuracy of the facts (p. 804) and the absence of manifest errors of assessment or misuse of power.1301 By contrast, the EU Courts carry out a ‘full review’ of the facts on which a decision is based. In this respect, the Court of Justice has stated that its review covers the correctness, completeness, and reliability of these facts.1302 In a less subtle fashion, the General Court has held that, in relation to questions of fact, the Commission has no margin of assessment.1303 5.1192  It follows from these points that the distinction between facts and economic appraisal is in principle central to the degree of review that the EU Courts will exercise, insofar as ‘With regard to the findings of fact, the review is clearly more intense, in that the issue is to verify objectively and materially the accuracy of certain facts and the correctness of the conclusions drawn in order to establish whether certain known facts make it possible to prove the existence of other facts to be ascertained’.1304 In practice, however, it is not always straightforward to draw the dividing line between ‘facts’ and ‘economic appraisal’, given that, by their nature, the latter will always be based on the former, while the identification of economic facts normally involves some degree of assessment. The case law of the EU Courts suggests that, in the field of merger control, the different elements of the Commission’s substantive assessment will generally be considered as a part of its economic appraisal. In any event, the Commission’s ‘margin of appreciation’ regarding economic assessments does not mean that the EU Courts will refrain from thoroughly reviewing the Commission’s assessment and its interpretation of the economic evidence. 5.1193  As set out by the Court of Justice in Tetra Laval, Whilst the Court recognises that the Commission has a margin of discretion with regard to economic matters, that does not mean that the [EU] Courts must refrain from reviewing the Commission’s interpretation of information of an economic nature. Not only must the [EU] Courts, inter alia, establish whether the evidence relied on is factually accurate, reliable and consistent but also whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of substantiating the conclusions drawn from it.1305 5.1194  Ryanair1306 provides a clear example of the extent to which the EU Courts will review economic matters in merger proceedings. In that case, the General Court’s review encompassed the econometric evidence used by the Commission to support its case (notably a price regression analysis), as well as a critique of this analysis and the economic studies submitted by the parties in the proceeding.1307

(e)  Full Jurisdiction Over Fines and Periodic Penalty Payments 5.1195  Article 16 of the Merger Regulation gives the EU Courts unlimited jurisdiction to review decisions in which the Commission has fixed a fine or periodic penalty payments; it may thus cancel, reduce, or increase the fine or periodic penalty payment imposed.1308 The practical importance of this provision is relatively limited because the possibility of imposing fines (p. 805) and periodic penalties set out in Articles 14 and 15 of the Merger Regulation has not been frequently used in practice. Decisions imposing fines, in fact, play a marginal role, when compared with the exercise by the Commission of its power to prohibit a concentration or require commitments.

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5.1196  Nonetheless, penalties for breach of the Merger Regulation are not unknown and can be significant.1309 In Electrabel,1310 the General Court confirmed a €20 million fine issued by the Commission against Electrabel for infringement of the standstill obligation under Article 7(1). In its judgment, the General Court stated that an infringement of the standstill obligation can be considered to be a serious breach of the Merger Regulation inter alia in view of the hefty fines foreseen therein for such infringement. In confirming the penalty, the General Court found that the characterization of the breach as serious was not affected by whether it was intentional or negligent, the (absence of any) adverse impact on competition, or the complex assessment required to establish ‘control’.1311

(7)  Consequences of Annulment (a)  Introduction 5.1197  Article 10(5) of the Merger Regulation provides that ‘Where the Court of Justice gives a judgment which annuls the whole or part of a Commission decision…the concentration shall be re-examined by the Commission with a view to adopting a decision pursuant to Article 6(1).’ 5.1198  To date, all of the merger decisions quashed by the EU Courts have been annulled in their entirety. However, as expressly indicated in Article 10(5), the EU Courts can in principle also annul part of a merger decision. In Kali & Salz, the Court of Justice stated that in order for a partial annulment of certain commitments attached to a clearance decision to be possible, the commitments have to be clearly severable from the rest of the decision, without the substance of the decision being altered. In that case, it was not possible to sever the commitments and therefore the whole operative part of the decision under appeal had to be annulled.1312 For all practical purposes, the likelihood of partial annulments of merger decisions (eg annulling a condition in a clearance decision while upholding the authorization of the concentration) seems rather remote, insofar as it is difficult to envisage that the Court would proceed to such a partial annulment without replacing the assessment of the Commission with its own. 5.1199  Conversely, it is often the case that a merger decision is built on several ‘pillars of reasoning’, each of which is sufficient in itself to justify the operative part of the decision. In these cases, the decision can be annulled only if each of the pillars is vitiated by an illegality. Therefore, an error or other illegality which affects only one of the pillars of reasoning is not sufficient to justify annulment of the decision.1313

(p. 806) (b)  The New Examination 5.1200  Following the annulment of a Commission decision, the notifying parties are required under Article 10(5) to submit a new notification without delay in cases where the original notification became incomplete owing to intervening changes in market conditions or in the information provided to the Commission. Where there are no such changes, the notifying parties must certify that fact without delay. 5.1201  The Commission must then re-examine the concentration. The stage at which this new review commences is the Phase I stage.1314 Article 10(5) provides that the Phase I period starts the day after receipt of the new (complete) notification, or the confirmation that a new notification is not required. 5.1202  In light of previous uncertainty regarding the factual basis on which the reexamination takes place,1315 the Merger Regulation explicitly provides that the concentration will be examined in light of current market conditions. Thus, the reexamination will take into account any new market developments since the time of the contested (annulled) decision.

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(8)  Actions for Damages (a)  Introduction 5.1203  Although the Merger Regulation does not provide for damages as a means of redress, there is a general possibility to obtain damages pursuant to Article 340(2) TFEU, which provides that ‘In the case of non-contractual liability, the Union shall, in accordance with the general principles common to the laws of the Member States, make good any damage caused by its institutions or by its servants in the performance of their duties.’ 5.1204  The EU Courts have elaborated a three-step test which must be satisfied in order for damages to be awarded: (a) the institution’s conduct must be unlawful; (b) harm must have been suffered; and (c) there must be a causal link between the conduct and the damage pleaded.1316 Non-contractual liability of EU institutions only arises if all three conditions are fulfilled.1317

(b)  Unlawful Conduct 5.1205  Only an unlawful act or conduct can give rise to damages. According to settled case law, only sufficiently serious breaches of a rule of law intended to confer rights on individuals can give rise to non-contractual liability.1318 Ultimately, the test is whether the institution has (p. 807) ‘manifestly and gravely disregarded the limits on its discretion’.1319 In this context, the EU Courts take into account the complexity of the situation being regulated, difficulties in the application or interpretation of the texts, and the margin of discretion available.1320 5.1206  For substantive breaches of Merger Regulation provisions, the General Court has explicitly recognized that non-contractual liability can potentially arise from such a breach.1321 However, the annulment of a merger decision is not, in itself, sufficient to demonstrate ‘unlawful conduct’. In MyTravel (which followed the annulment of the Airtours/ First Choice decision),1322 the General Court stated that: equating, without further analysis, the annulment established in Airtours v Commission with a sufficiently serious breach within the meaning of Bergaderm, would risk compromising the capacity of the Commission fully to function as regulator of competition, a task entrusted to it by the [Treaties], as a result of the inhibiting effect that the risk of having to bear the losses alleged by the undertakings concerned might have on the control of concentrations.1323 The General Court therefore assessed whether in that specific case the conduct of the Commission during the procedure amounted to a sufficiently serious breach to constitute ‘unlawful conduct’ and concluded that it did not do so. The complexity of the assessment in the case of coordinated effects, the ‘objective constraints inherent in the control of concentrations’ (in particular, the need for a prospective analysis and the short legal deadlines) as well as the broad discretion enjoyed by the Commission in maintaining control over competition policy, all played a role in the General Court’s reasoning.1324 Given the nature of the General Court’s ruling on the Commission’s substantive assessment, the refusal of the Court of Justice to award damages would suggest that the chances of success in claims based on substantive breach are rather low. 5.1207  Unlawful conduct may also arise because of a breach of the relevant procedural provisions.1325 This is the case, most importantly, with regard to violations of the notifying parties’ rights of defence. In particular, in Schneider III, the General Court recognized that the failure by the Commission to include in the SO one of the grounds which formed part of the subsequent prohibition decision amounted to ‘a manifest and serious disregard by the

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Commission of the limits to which it is subject’ and it was therefore sufficient to be considered as a sufficiently serious breach to amount to unlawful conduct.1326 5.1208  The case law of the EU Courts therefore suggests that it may be easier for applicants successfully to claim damages in relation to a serious breach of procedural rules than for a violation of the substantive provisions. In light of the more limited margin of discretion afforded to the Commission in procedural matters, this is understandable.

(p. 808) (c)  Harm 5.1209  The second condition is that actual harm must have been suffered by the claimant. Any damages will be assessed by reference to this. In Schneider III, for example, the Commission was ultimately ordered to make good the loss represented by the expenses incurred through participation in a merger proceeding resumed after the annulment of a previous prohibition decision by the General Court (the harm consisting essentially of lawyers’ and other advisers’ fees).1327 The Commission’s liability for damages will also cover interest calculated on the basis of the period between the date of materialization of the loss and the date of delivery of the judgment establishing the obligation to make good the damage suffered by the applicant, in addition to default interest for the period between that judgment and full payment of the compensation.1328

(d)  Causal Link 5.1210  Finally, the non-contractual liability of an EU institution arises only if there is a causal link between the unlawful conduct of that institution and the harm suffered. The issue of the causal link in merger control was explored by the EU Courts in Schneider III, where the Court of Justice annulled a judgment of the General Court insofar as it awarded damages for the compensation of two-thirds of the loss claimed by Schneider as a result of the reduction in the transfer price of Legrand (its target). Schneider had sold Legrand to a third party while the re-examination of the merger (resumed after the annulment of the original prohibition decision) was still ongoing. Schneider sold Legrand at a price which was significantly lower than the price it had originally paid. It claimed compensation for that difference. The Court of Justice held that Schneider had itself decided to sell its stake in Legrand before the conclusion of the resumed merger control proceedings, which could have led to the (conditional) clearance of the transaction. As such, there was no causal link between the loss in the transfer price of Legrand and the Commission’s unlawful conduct in the original merger control process.1329

Footnotes: 1184

  Art 263 TFEU. See also Art 277. It is worth noting that, in any event, only about 1 per cent of Commission merger decisions have been so far subject to appeal before the EU Courts (see A. Renshaw and J. Blockx, ‘Judicial Review of Mergers in the EU’, The Antitrust Bulletin, Vol 58, Nos 2 and 3/Summer–Fall 2013, 495). 1185 

Under Art 267 TFEU, national courts can make references to the CJ for preliminary rulings on the interpretation or validity of EU law, a situation unlikely to arise in the merger field unless an interpretation of the jurisdictional provisions of the Merger Regulation is material to a case allocation challenge or, potentially, if the implementation of obligations imposed on a Member State in a decision adopted by the Commission pursuant to Art 21(4) of the Merger Regulation is challenged before a national court. Similarly, while the CJ has jurisdiction under Art 265 for actions for failure to act by an EU institution, under Art 10(6) of the Merger Regulation a concentration is deemed compatible if the Commission fails to take a decision within the time limits, rendering the need for an action under Art 265 unnecessary for the notifying parties. However, there may be a residual role for such actions where the Commission fails to deal with third party complaints on jurisdiction, see Case C-170/02P Schlüsselverlag J. S. Moser et al v Commission [2003] ECR I-9903, paras From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

27–30. Finally, under Arts 258 and 260, infringement proceedings against Member States can be brought. However, given that the Merger Regulation applies to businesses rather than Member States, these are rare. Nonetheless, they may be necessary where a Member State fails to comply with a Commission decision under Art 21 of the Merger Regulation in relation to national measures unlawfully applied to a concentration with an EU dimension (a decision which, incidentally, does not require that the Commission previously brings the alleged infringement before the CJ pursuant to Art 258 TFEU); see eg Case C-196/07 Commission v Spain [2008] ECR I-41. 1186

  Art 268 TFEU.

1187

  Art 256 TFEU.

1188

  See eg Whish and Bailey, Competition Law (n 16), 891; T. Reeves and N. Dodoo, ‘Standards of Proof and Standards of Judicial Review in European Commission Merger Law’ (2005) 29(5) Fordham Int’l LJ 1034. 1189

  Case T-342/99 Airtours/Commission [2004] ECR II-1785.

1190

  Case T-310/01 Schneider Electric v Commission [2002] ECR II-4071.

1191

  Case T-210/01 General Electric v Commission [2005] ECR II-5575.

1192

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457.

1193

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987.

1194

  See eg Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, para 62. 1195

  Case T-3/93 Air France v Commission [1994] ECR II-121, paras 43–60 and Case T-87/96 Assicurazioni General and Unicredito v Commission [1999] ECR II-203, paras 41– 43. 1196

  Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, paras 267– 289; Joined Cases T-346/02 and T-347/02 Cableuropa et al v Commission [2003] ECR II-4251, paras 49–50. For decisions rejecting a referral request under Art 9 of the Merger Regulation, however, the GC has ruled that an interested third party is not entitled to challenge such decisions. In Case T-224/10 Association belge des consommateurs testachats v Commission [2011] ECR II-7177, paras 74–85, the GC declared an appeal inadmissible for lack of legal standing inter alia on the ground that the applicant’s procedural rights and judicial protection were not in any way jeopardized by the nonreferral decision. The GC also rejected the argument that the applicant should be able to challenge the decision rejecting the referral on the ground that it precluded the investigation of the merger (and the subsequent avenues of legal redress against the merger decision) from being determined by the law of a Member State, and not by EU law. While it is not entirely clear whether such actions may be admissible if the applicant is one of the notifying parties or other involved party, the reasoning of the GC in this judgment would seem to preclude this possibility. Decisions rejecting a referral request can, in any event, be appealed by any Member State, pursuant to Art 9(9) of the Merger Regulation. 1197

  Case T-77/02 Schneider Electric v Commission [2002] ECR II-4201 and Case T-80/02 Tetra Laval v Commission [2002] ECR II-4519. 1198

  Case T-145/06 Omya v Commission [2009] ECR II-145.

1199

  An implicit confirmation of this could be seen in the Order of the President of the GC in Case T-65/08 R Spain v Commission [2008] ECR II-69.

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1200

  By analogy with antitrust proceedings, see Case T-23/09 Conseil national de l’Ordre des pharmaciens (CNOP) and Conseil central de la section G de l’Ordre national des pharmaciens (CCG) v Commission [2010] ECR-5291 and Case T-135/09 Nexans France and Nexans v Commission (2012), not yet reported. 1201

  There do not appear to have been any cases involving appeals of decisions pursuant to Art 7(3) of the Merger Regulation. However, as these are final decisions on requests for derogations, it seems that they could be subject to appeal, at least in case of actions by one of the undertakings concerned against a negative decision. 1202

  Case T-342/00 Petrolessence et al v Commission [2003] ECR II-1163, paras 36–42 and Case T-452/04 Éditions Odile Jacob SAS v Commission [2010] ECR II-4713, confirmed by the CJ in Joined Cases C-553/10 P and C-554/10 P Commission et al v Case Éditions Odile Jacob SAS (2012), not yet reported. 1203

  Case T-48/03 Schneider Electric v Commission [2006] ECR II-111, paras 79–87. See also Order of the CJ in C-188/06 P Schneider Electric v Commission [2007] ECR I-35, paras 64–73. 1204

  See, in the antitrust area, Case C-60/81 IBM v Commission [1981] ECR 2639. There is no reason to believe that the position would be different with respect to mergers, notably in view of the views expressed by the CJ in Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, paras 61–77, as to the provisional nature of the SO and the similarities between antitrust and merger control proceedings. 1205

  See in this respect, Case T-3/93 Air France v Commission [1994] ECR II-121.

1206

  Case T-342/00 Petrolessence et al v Commission [2003] ECR II-1163, paras 36–42.

1207

  See Joined Cases T-125/97 and T-127/97 Coca-Cola Company and Coca-Cola Enterprises v Commission [2000] ECR II-1733, para 79. 1208

  Art 263(3) TFEU also provides that the Court of Auditors, the European Central Bank, and the Committee of the Regions have standing ‘for the purpose of protecting their prerogatives’. However, it appears difficult, if not impossible, to identify a situation where this would arise in a merger context. 1209

  A rare example is provided by Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, where France appealed a merger decision clearing the concentration between the German companies Kali & Salz and Mitteldeutsche Kali conditional on commitments, which included the termination of structural links consisting of commercial agreements and a joint venture with the French company SCPA. 1210

  Case T-102/96 Gencor v Commission [1999] ECR II-753, para 40.

1211

  Opinion of AG Kokott in Case C-413/06 Bertelsmann and Sony v Independent Music Publishers and Labels Association (Impala) [2008] ECR I-4951, paras 79–87. 1212

  See para 5.1143.

1213

  See eg Joined Cases T-346/02 and T-347/02 Cableuropa et al v Commission [2003] ECR II-4251, para 49. The GC considered that the Commission decision referring the examination of the concentration to the Spanish competition authorities was capable of having direct and automatic effects on the legal position of the applicants (which were competitors of the merging parties). In particular, by determining the criteria for the assessment of the concentration and the procedure and possible sanctions applicable to it, the referral decision altered the applicants’ legal situation by depriving them of: (a) the opportunity of having the Commission review the lawfulness of the concentration pursuant to the Merger Regulation; (b) the procedural rights which they derived from the said Regulation; and (c) the possibility of bringing an annulment action before the GC against the decision on the merits of the concentration. Those effects were direct because the

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contested decision required no additional implementing measure in order to render the referral effective. 1214

  The seminal judgment in that regard is Case 25/62 Plaumann v Commission [1963] ECR 95, concerning an action for annulment of a decision authorizing Germany partly to suspend customs duties applicable to certain fresh fruit imported from third parties (see p 107). 1215

  Occasionally, third parties may also be the addressees of a merger decision, such as where the Commission requests information by decision or imposes fines (eg if a third party has supplied incorrect or misleading information). 1216

  For one of the rare cases where this condition may not be met, see para 5.1140. See also Section G.2, which deals with the requirement that the contested act must be challengeable. 1217

  See Case T-22/97 Kesko v Commission [1999] ECR II-3775, paras 55–65.

1218

  See Case T-102/96 Gencor v Commission [1999] ECR II-753, paras 40–46.

1219

  See Case T-310/00 MCI v Commission [2004] ECR II-3253.

1220

  See C-202/06 P Cementbouw Handel & Industrie v Commission [2007] ECR I-12154.

1221

  See Section D.5.

1222

  eg see Case T-209/01 Honeywell v Commission [2005] ECR II-5527.

1223

  Honeywell (n 1214).

1224

  To our knowledge, there are no precedents for such actions. Case COMP/M.4439 Ryanair/Aer Lingus (2007), however, illustrates the role that the target of a hostile bid may play in subsequent litigation over a merger decision. In the aftermath of the Commission’s (first) prohibition decision of Ryanair’s attempted bid over Aer Lingus, the latter challenged the Commission’s rejection of its request to order, pursuant to Art 8(4) of the Merger Regulation, the divestment of the minority shareholding that Ryanair held in Aer Lingus (Case T-411/07 Aer Lingus Group v Commission [2010] ECR II-3691). 1225

  Case T-3/93 Air France v Commission [1994] ECR II-121, paras 79–82; Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, paras 49– 58; Case T-156/98 RJB Mining v Commission [2001] ECR II-339, paras 76–81; Case T-114/02 BaByliss v Commission [2003] ECR II-1279, paras 89–100; Case T-158/00 ARD v Commission [2003] ECR II-3825, paras 60–95; Case T-177/04 easyJet v Commission [2006] ECR II-1913, paras 32–37. With particular reference to referral decisions, see Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, paras 268–300, and Joined Cases T-346/02 and T-347/02 Cableuropa et al v Commission [2003] ECR II-4251, paras 47– 82. By contrast, see Order of the GC in Case T-350/03 Wirtschaftskammer Kärnten and best connect Ampere Strompool v Commission [2006] ECR II-68, where the GC dismissed an appeal of a merger decision on the basis that the applicant was not individually concerned by that decision. 1226

  Case T-374/00 Verband der freien Rohrwerke and Others v Commission [2003] ECR II-2275, paras 46–56 and Case T-282/06 Sun Chemical Group and Others v Commission [2007] ECR II-2149, paras 49–53. 1227

  See Case T-156/98 RJB Mining v Commission [2001] ECR II-339, paras 76–81; Case T-114/02 BaByliss v Commission [2003] ECR II-1279, para 91–95; and Case T-158/00 ARD v Commission [2003] ECR II-3825, paras 64–76. Mere participation in the market investigation has been consistently seen by the EU Courts as insufficient to establish individual concern. In this respect, see Order of the GC in T-350/03 Wirtschaftskammer

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Kärnten and best connect Ampere Strompool v Commission [2006] ECR II-68 (summary publication), paras 45–53. 1228

  See Case T-177/04 easyJet v Commission [2006] ECR II-1913, para 36, where the applicant responded to Commission’s requests for information, provided its views and replied to questions on commitments, and participated in a conference call with the Commission. 1229

  Case T-156/98 RJB Mining v Commission [2001] ECR II-339, para 80 and Case T-158/00 ARD v Commission [2003] ECR II-3825, para 67. 1230

  See Case T-114/02 BaByliss v Commission [2003] ECR II-1279, paras 96–100; Case T-158/00 ARD v Commission [2003] ECR II-3825, paras 77–79; Case T-177/04 easyJet v Commission [2006] ECR II-1913, para 37; Order of the GC in T-350/03 Wirtschaftskammer Kärnten and best connect Ampere Strompool v Commission [2006] ECR II-68 (summary publication), paras 54–63; and Case T-224/10 Association belge des consommateurs testachats v Commission [2011] ECR II-7177, paras 32–34. 1231

  Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, paras 49–75. 1232

  See Case T-119/02 Royal Philips Electronics v Commission [2003] ECR II-1433, paras 267–289, where the GC concluded that a competitor of the merging parties had direct and individual concern and granted standing to appeal a decision referring part of a concentration pursuant to Art 9(2)(a) of the Merger Regulation. In particular, the applicant had direct concern given that the referral decision excluded the application of the Merger Regulation in favour of national competition law, inter alia depriving the applicant of its procedural rights under the Merger Regulation. As for individual concern, the applicant submitted observations which were taken into account by the Commission in its decision, and was one of the main competitors of the merging parties. 1233

  Case T-452/04 Éditions Odile Jacob SAS v European Commission [2010] ECR II-4713.

1234

  Case T-96/92 CCE de la Societe Generale des Grandes Sources et al v Commission [1995] ECR II-1213 (‘Perrier’), paras 30–47. 1235

  Case T-83/92 Zunis Holding et al v Commission [1993] ECR I-1169, paras 34–38.

1236

  Case T-224/10 Association belge des consommateurs test-achats v Commission [2011] ECR II- II-7177, paras 32–35. The GC notably concluded that the persons represented by the applicant were affected by the clearance decision only by reason of their objective and abstract status as energy consumers (all electricity and gas consumers residing within the geographic market in question would be affected in the same way); since those persons were not individually concerned by the clearance decision, such a status could not be attributed to the applicant as an association set up to promote their collective interests. 1237

  See in these respects Case T-96/92 CCE de la Société Générale des Grandes Sources et al v Commission [1995] ECR II-1213, paras 46 and 47 and Case T-224/10 Association belge des consommateurs test-achats v Commission [2011] ECR II-7177, para 29. 1238

  See eg Case C-202/06 P Cementbouw Handel & Industrie v Commission [2007] ECR I-12154, paras 31–48. 1239

  Case T-96/92 CCE de la Societe Generale des Grandes Sources et al v Commission [1995] ECR II-1213, paras 46 and 47 and Case T-224/10 Association belge des consommateurs test-achats v Commission [2011] ECR II- 7177, para 29. 1240

  Among the many examples, see Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, paras 166–183.

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1241

  Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, paras 166–168. 1242

  See eg Case T-210/01 General Electric v Commission [2005] ECR II-5575.

1243

  In particular to documents or parts thereof containing other undertakings’ business secrets, internal Commission documents, any information enabling complainants to be identified where they wish to remain anonymous, and information disclosed to the Commission subject to an obligation of confidentiality. See Section D.7(i). 1244

  eg Case T-310/01 Schneider Electric v Commission (Schneider I) [2002] ECR II-4071, paras 421ff. 1245

  This was confirmed in Bertelsmann, where the CJ held that the SO is a document of a provisional nature, and ‘the Commission is not obliged to maintain the factual or legal assessments set forth in that document. On the contrary, it must give as reasons for its ultimate decision its final assessments based on the situation existing at the time the formal proceedings are closed’. See Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, paras 61–77. The applicants had claimed that the GC had committed an error of law in using the SO as a benchmark for evaluating the substance of the contested decision, in contravention of their rights of a defence. 1246

  See Schneider I (n 1236), para 440.

1247

  Schneider I (n 1236), paras 437–465.

1248

  Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 88. 1249

  Joined Cases C-68/94 and C-30/95 French Republic and Société commercialle es potasses et de l’azote (SCPA) and Entreprise minière et chimique (EMC) v Commission [1998] ECR I-1375, paras 77ff. 1250

  Case T-156/98 RJB Mining v Commission [2001] ECR II-337, paras 83ff.

1251

  Case T-310/01 Schneider Electric v Commission (Schneider I) [2002] ECR II-4071, paras 74ff. 1252

  Case T-114/02 BaByliss v Commission [2003] ECR II-1279, paras 119ff.

1253

  See the Access to File Notice and the Best Practices on the conduct of [EU] merger control proceedings. 1254

  Hearing Officers Decision (n 392). In particular, the hearing officer’s role has been strengthened with regard to safeguarding the effective exercise of procedural rights of undertakings in the context of the Commission’s powers of investigation pursuant to Art 14 of the Merger Regulation, which empowers the Commission to impose fines. The hearing officer has also been attributed with specific functions in relation to claims for legal professional privilege in inspections pursuant to Art 13 of the Merger Regulation or in the context of investigatory measures in proceedings that can result in the imposition of fines. Decisions from the hearing officer are generally preparatory acts and therefore cannot be appealed on their own, but presumably they can be reviewed by the EU Courts in the context of appeals of final merger decisions (see by analogy Order of the President of the GC in Case T-457/08 R Intel Corp v Commission [2009] ECR II-12, para 57). 1255

  Among many examples, see Case T-342/07 Ryanair v Commission [2010] ECR II-3457; Case T-342/99 Airtours v Commission [2004] ECR II-1785; and Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951.

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1256

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987 and Case T-210/01 General Electric v Commission [2005] ECR II-5575. 1257

  See eg Case T-310/01 Schneider Electric v Commission (Schneider I) [2002] ECR II-4071 and Case T-342/07 Ryanair v Commission [2010] ECR II-3457. 1258

  Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375; Case T-102/96 Gencor v Commission [1999] ECR II-753; Case T-342/99 Airtours v Commission [2004] ECR II-1785; and Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951. 1259

  Case T-210/01 General Electric v Commission [2005] ECR II-5575.

1260

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987 and Case T-210/01 General Electric v Commission [2005] ECR II-5575. 1261

  Case T-342/00 Petrolessence et al v Commission [2003] ECR II-1163; Case T-87/05 EDP v Commission [2005] II-3745; and Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987. 1262

  Case T-87/96 Assicurazioni General and Unicredito v Commission [1999] ECR II-203.

1263

  Case T-251/00 Lagardère and Canal+ v Commission [2002] ECR II-4825.

1264

  Case C-331/88 Fedesa and Others [1990] ECR I-4023, para 24 and Case C-400/99 Italy v Commission [2005] ECR I-3675, para 38. 1265

  Case 2/54 Italy v High Authority [1954] ECR 37, 54 and Case T-266/97 Vlaamse Televisie Maatschappij v Commission [1999] ECR II-2329, para 131. 1266

  Among the rare examples where this claim has been raised are: Case T-87/05 EDP v Commission [2005] ECR II-3745, paras 86ff, where the applicant claimed that the Commission misused its powers under the Merger Regulation by requiring commitments aimed at the liberalization of the electricity and gas markets in Portugal; the GC, in rejecting this claim, found that the Commission acted wholly within the framework of and pursued the objectives of the Merger Regulation; and Case T-417/05 Endesa v Commission [2006] ECR II-2533, para 258, where the GC considered unfounded claims by the applicant as to the existence of a number of procedural and substantive irregularities which according to the applicant would have implied a misuse of powers, clarifying that even if the alleged errors were genuine they would not constitute proof of misuse of powers. 1267

  Art 44(1) of the Rules of Procedure of the GC.

1268

  Case T-151/05 Nederlandse Vakbond Varkenshouders (NVV) v Commission [2009] ECR II-1219, para 60. 1269

  The defendant may instead decide to file an objection of inadmissibility, requesting the GC to dismiss the action as not admissible, without entering into the substance of the case. 1270

  Any person or undertaking proving an interest in the outcome of a case, as well as the Member States and other institutions of the EU, may request to intervene in the proceedings. The intervener submits a statement in intervention, supporting or opposing the claims of one of the parties, to which the latter may then respond. In some cases, the intervener may also submit its observations at the oral hearing. 1271

  Arts 5 and 6 of the Instructions of the Registrar of the GC.

1272

  Case T-11/99 Firma Leon Van Parys v Commission [1999] ECR II-1355 and Case T-174/95 Svenska Journalistförbundet v Council [1998] ECR II-2289.

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1273

  See also Art 9(9) of the Merger Regulation, Arts 83–89 of the Rules of Procedure of the CJ, and Arts 104–110 of Rules of Procedure of the GC. 1274

  For examples of interim measures requests in merger proceedings, see Case T-88/94 R Société Commerciale des potasses et de l’azote & Enterprise minière et chimique v Commission [1994] ECR II-401; Case T-411/07 R Aer Lingus v Commission [2008] ECR II-411; and Case T-417/05 Endesa v Commission [2006] ECR II-2533. 1275

  See Art 83 of the Rules of Procedure of the CJ and Art 104 of the Rules of Procedure of the GC. 1276

  Case 792/79 R Camera Care v Commission [1980] ECR 119, paras 14 and 18; Case T-44/90 La Cinq v Commission [1992] ECR II-1, para 28; Case C-149/95 P (R) Commission v Atlantic Container Line and Others [1995] ECR I-2165, paras 26–27; Case T-184/01 R IMS Health v Commission [2001] ECR II-3193, para 52; and Case T-411/07 R Aer Lingus v Commission [2008] ECR II-411, paras 116–135. 1277

  Case T-96/92 R Comité Central d’Entreprise de la Société Générale des Grandes Sources and Others v Commission [1992] ECR II-2579, para 40. In this case, the risk of redundancies caused by a restructuring plan following a merger authorized by the Commission was held not to be a direct consequence of the Commission’s decision. 1278

  See Art 23a of the Statute of the CJEU, Art 76a of the Rules of Procedure of the GC, and Arts 133–136 of the Rules of Procedure of the CJ. 1279

  See Information Note regarding the amendment of the Rules of Procedure of the [GC] with a view to expediting proceedings; K. Fountoukakos, ‘Judicial Review and Merger Control: The CFI’s Expedited Procedure’, Competition Policy Newsletter, issue No 3, 2002, p 7. 1280

  In several instances, the GC has proved able to make a ruling within one year or less from a Commission merger decision. See eg Case T-310/01 Schneider Electric v Commission [2002] ECR II-4071 (Commission decision: 10 October 2001—GC judgment: 22 October 2002); Case T-5/02 Tetra Laval v Commission [2002] ECR II-4381 (Commission decision: 30 October 2001—GC judgment 25 October 2002); EDP (Commission decision: 9 December 2004—GC judgment: 21 September 2005); and Case T-417/05 Endesa v Commission [2006] ECR II-2533 (Commission decision: 15 November 2005—GC judgment: 14 July 2006). 1281

  See Art 256 TFEU and Art 58 of the Statute of the CJ.

1282

  Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 29. 1283

  See eg Case C-12/03 P Commission/Tetra Laval [2005] ECR I-987.

1284

  See eg Case T-282/06 Sun Chemical Group and Others v Commission [2007] ECR II-2149, para 60. 1285

  See paras 5.1195 and 5.1196.

1286

  According to the CJ, this provision ‘is…an exception to the general scheme of the Regulation, which is laid down in particular in Articles 6(1) and 8(1), according to which the Commission is to rule expressly on the concentrations which are notified to it’. See Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 49. 1287

  Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 48. 1288

  See N. Levy, European Merger Control Law: A Guide to the Merger Regulation (London: LexisNexis, 2013), section 20–05.

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1289

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 61.

1290

  Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, para 246. 1291

  In Airtours, the GC stated that ‘where the Commission takes the view that a merger should be prohibited…it is incumbent upon it to produce convincing evidence thereof’ (Case T-342/99 Airtours v Commission [2004] ECR II-1785, para 63). However, this should not be read as imposing on the Commission a higher burden of proof in prohibition decisions in relation to clearance decisions, but simply as requiring the Commission, in all cases, to back up its merger decisions with sufficiently conclusive evidence. As indicated in para 5.1185, later judgments have confirmed the symmetrical nature of the burden of proof in merger cases. 1292

  Case T-87/05 EDP v Commission [2005] II-3745, para 61.

1293

  Horizontal Merger Guidelines, para 87.

1294

  Horizontal Merger Guidelines, para 91.

1295

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, para 41.

1296

  Tetra Laval (n 1287), para 39.

1297

  Case T-342/99 Airtours v Commission [2004] ECR II-1785 and Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951. 1298

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987 and Case T-210/01 General Electric v Commission [2005] ECR II-5575. 1299

  Case T-5/02 Tetra Laval v Commission [2002] ECR II-4381, para 155 (upheld by the CJ in Case C-13/03 P Commission v Tetra Laval [2005] ECR I-1113, paras 37–41). 1300

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 62.

1301

  See eg Case T-177/04 easyJet v Commission [2006] ECR II-1913, para 44.

1302

  Case C-413/06 P Bertelsmann and Sony Corp of America v Impala [2008] ECR I-4951, para 69. 1303

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 490.

1304

  Opinion of AG Tizzano in Case C-12/03 Commission v Tetra Laval [2005] ECR I-987, para 86. 1305

  Case C-12/03 P Commission v Tetra Laval [2005] ECR I-987, para 39.

1306

  Case T-342/07 Ryanair v Commission [2010] ECR II-3457.

1307

  Ryanair (n 1298), paras 164, 170, and 178.

1308

  See also Art 261 TFEU.

1309

  For a discussion of the Commission’s practice with regard to fines in merger control proceedings, see Section D.10(d). 1310

  Case T-332/09 Electrabel v European Commission, not yet reported.

1311

  Electrabel (n 1302), paras 229–260.

1312

  Joined Cases C-68/94 and C-30/95 France et al v Commission (Kali & Salz) [1998] ECR I-1375, paras 251–259. 1313

  Case T-210/01 General Electric v Commission [2005] ECR II-5575, para 43.

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1314

  The 1989 Merger Regulation did not explicitly address the question of the stage at which the review of a concentration should start following the annulment of a clearance or a prohibition decision. This issue was raised in Schneider II, notably in view of the fact that the GC’s judgment and accompanying press release in Schneider I annulling the Commission prohibition decision were not entirely conclusive as to whether the new review should begin again in Phase I or at the stage of issuing an SO (see in this respect Case T-351/03 Schneider Electric v Commission [2007] ECR II-2251, paras 230 and 248). Given the uncertainties, Art 10(5) of the Merger Regulation is explicit as to the point from which the new review takes place. 1315

  See Case IV/M.308 Kali+ Salz/MDK/Treuhand (1993).

1316

  Case 26/81 Oleifici Mediterranei v EEC [1982] ECR 3057, para 16 and Case T-383/00 Beamglow v Parliament and Others [2005] ECR II-5459, para 95. 1317

  Case C-146/91 KYDEP v Council and Commission [1994] ECR I-4199, para 81 and Case T-170/00 Förde-Reederei v Council and Commission [2002] ECR II-515, para 37. 1318

  Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291, paras 42– 43; Case C-282/05 Holcim (Deutschland) v Commission [2007] ECR I-2941, para 47; Case T-351/03 Schneider Electric v Commission [2007] ECR II-2237, paras 129–132; and Case T-212/03 MyTravel Group v Commission [2008] ECR II-1967, para 43. 1319

  Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291, paras 42 and 43 and Case C-282/05 P Holcim (Deutschland) v Commission [2007] ECR I-2941, para 47. 1320

  Case C-352/98 P Bergaderm and Goupil v Commission [2000] ECR I-5291, para 40 and Case C-282/05 P Holcim (Deutschland) v Commission [2007] ECR I-2941, para 50. 1321

  Case T-351/03 Schneider Electric v Commission [2007] ECR II-2251, para 129 and Case T-212/03 MyTravel Group v Commission [2008] ECR II-1967, para 39. 1322

  Case COMP/M.1524 Airtours/First Choice (1999).

1323

  Case T-212/03 MyTravel Group v Commission [2008] ECR II-1967, para 42.

1324

  MyTravel Group (n 1315), paras 76–85 and 94–96.

1325

  Case T-351/03 Schneider Electric v Commission [2007] ECR II-2251, para 129.

1326

  Schneider Electric (n 1317), paras 145–157.

1327

  Case C-440/07 P Commission v Schneider Electric [2010] ECR I-73, paras 212–217.

1328

  Case T-351/03 Schneider Electric v Commission [2007] ECR II-2251, paras 340–346.

1329

  Case C-440/07 P Commission v Schneider Electric [2010] ECR I-73, paras 197–209.

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Part I General Principles, 6 Article 106—Exclusive or Special Rights and other Anti-Competitive State Measures, A Introduction José Luis Buendia Sierra From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): State undertakings — Undertakings — Exclusionary abuse — Effect on trade between member states — State and competition law

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A. Introduction (i)  Competition Law Normally Deals Only With the Behaviour of Undertakings 6.01  Competition law has traditionally dealt with anti-competitive behaviour of undertakings. The private or public nature of ownership is irrelevant in that respect. In principle both public (ie State controlled) and private undertakings are subject to competition rules.

(ii)  State Defence Doctrine 6.02  The normal competition rules (ie Arts 101 and 102—former Arts 81 and 82 of the EC Treaty and previously Arts 85 and 86 of the EEC Treaty) only apply to the autonomous behaviour of undertakings. Such rules can only be infringed (and the undertaking held responsible) when the behaviour is the result of an autonomous decision (p. 810) of the undertaking. The autonomous character of the behaviour is not excluded by mere persuasion or encouragement from the State. However, binding State measures imposing particular behaviour on an undertaking do exclude such autonomy of decision. In principle, a State-imposed behaviour cannot constitute an infringement of normal competition rules by the undertaking. The undertaking may invoke this ‘State defence doctrine’ to avoid antitrust liability when the behaviour is imposed by law. This lack of liability on the part of the undertaking is to some extent compensated for by State liability under Article 106(1) (former Art 86(1) EC and previously Art 90(1) EEC).1

(iii)  State Liability Under Competition Law 6.03  Although competition law has traditionally been regarded as dealing only with the behaviour of undertakings, it is obvious that State measures imposing anti-competitive behaviours may easily undermine the effectiveness of the competition rules addressed to undertakings. This has led the Court of Justice (following the example of the US Supreme Court) to establish a doctrine that allows for a limited application of antitrust rules to State measures which force or induce undertakings to behave anti-competitively.

Footnotes: 1

  See para 6.59.

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Part I General Principles, 6 Article 106—Exclusive or Special Rights and other Anti-Competitive State Measures, B Application of Articles 4(3) and 3(3) TEU and Articles 101 and 102 TFEU to AntiCompetitive State Measures José Luis Buendia Sierra From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): State and competition law — Application of EU competition rules — Treaty of Lisbon — Exclusionary abuse — Effect on trade between member states

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B. Application of Articles 4(3) and 3(3) TEU and Articles 101 and 102 TFEU to Anti-Competitive State Measures (i)  Initial Position (Broad Interpretation) 6.04  This doctrine was based on the combined application of former Article 3(g), Article 10, and Articles 101 and/or 102 of the EC Treaty (previously Arts 3(g), 5, and 85/86 EEC) and was established in Inno/ATAB.2 Following the entry into force of the Lisbon Treaty these provisions are now Articles 4(3)3 and 3(3)4 of the Treaty on European Union (TEU) and Articles 101/102 of the Treaty on the Functioning of the European Union (TFEU). The basic reasoning was as follows: Article 4(3) TEU prevents Member States from adopting measures depriving TFEU rules of their effet utile. Article 3(3) TEU establishes undistorted competition as one of the main EU goals and Articles 101 and 102 prohibit anti-competitive behaviour by undertakings. Taken together, all these provisions were interpreted by the Court of Justice as prohibiting Member States from depriving competition rules of their effet utile by adopting measures that would allow the undertakings to ignore the limits imposed by Articles 101 and 102.5 At one point, this case law seemed to imply that every State measure producing restrictive effects on competition would have effects (p. 811) similar to those of a cartel (or to those of an abuse of a dominant position). As a consequence, every State measure producing restrictive effects on competition would be contrary to former Articles 3(g), 10, and 81 (or 82) of the EC Treaty, even in the absence of any behaviour by the undertaking. This would mean that every measure taken by the State having an impact on the price or the quantity of goods or services would be prohibited. Such an approach would have greatly reduced the ability of Member States to intervene in the economy.

(ii)  Court Narrows Interpretation 6.05  Although the theoretical implications of this doctrine were far-reaching, its practical impact has been much more limited. The reasons are twofold. First, the Court of Justice has subsequently interpreted this effet utile in a restrictive way. According to this more restrictive case law, which originated in 1993 with the Meng, Reiff, and Ohra cases, a mere anti-competitive effect cannot in the absence of behaviour of undertakings mean that the State measure is contrary to Articles 4(3) and 3(3) TEU and Articles 101/102 TFEU.6 Only those State measures that impose or induce anti-competitive behaviour by undertakings, reinforce the effects of anti-competitive behaviour, or delegate regulatory powers to private operators can be considered as violating these provisions. This very strict test dramatically reduces the scope of application of Articles 4(3) and 3(3) TEU and Articles 101/102 TFEU as regards anti-competitive State measures.7

(iii)  Impact of the Lisbon Treaty 6.06  In theory, it could be argued that the recent removal of former Article 3(1)(g) EC by the Treaty of Lisbon has now put a definitive end to this case law (to the extent that it still exists after the 1993 judgments). However, according to the tables of equivalences, which are legally binding, former Article 3(1) EC has not disappeared; rather it has been replaced, in substance, by Articles 3 to 6 TFEU. One can still see its substance in Article 3(1)(b) TFEU, which defines as an exclusive EU competence ‘the establishing of the competition rules necessary for the functioning of the internal market’. Moreover, the logic of the effet utile rule was primarily based on the combination of former Article 10 EC, the substance of which still exists in the new Article 4(3) EU, with the obligations contained in Articles 101 and 102 TFEU, which have not been modified. Article 3(1)(g)EC was just a kind of toile de fond, reinforcing the reasoning. For this reason, some of the effet utile judgments did not even mention it. Accordingly, the possibility of the EU Courts applying today the effet utile case law does not seem to be affected by the Treaty of Lisbon. One may like or dislike the current precarious state of health of this case law and its limited practical relevance, but it is hard to say that this has caused noticeable problems to the functioning of (p. 812) EU From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

competition law. In any event, this situation existed many years before the arrival of this Treaty and is therefore totally unrelated to the latter.8 6.07  Moreover, this case law on Articles 4(3) and 3(3) TEU and Articles 101/102 TFEU has not provided significant added value to EU law. The reason is that EU competition law, contrary to many other competition systems (such as US antitrust), has always had specific provisions dealing with the most significant anti-competitive State measures, such as State aids or exclusive rights. The need for ‘creative’ jurisprudence was therefore much less marked and its re-definition in a restrictive way has meant that it has had, in practice, a very limited impact.

(iv)  Application of Articles 106, 107, and 108 to Anti-Competitive State Measures 6.08  EU competition law therefore includes not only Articles 101 and 102, the rules addressed to undertakings, but also Articles 106, 107, and 88 (former Arts 90, 92, and 93), the rules addressed to the Member States. Articles 107 and 108 deal with one of the more characteristic instruments for State intervention in the market: State aids. State aids fall outside the scope of this chapter but its importance as a limit to State action can hardly be exaggerated.9 The other provision, Article 106, refers to exclusive rights granted by the State in favour of certain undertakings and also to other kinds of restrictive State measures related to public or privileged undertakings. This provision also contains a limited exception from competition and other TFEU rules in favour of services of general economic interest. Finally, Article 106 also provides for a special procedure. These three dimensions of Article 106 are examined in this chapter.

Footnotes: 2

  Case 13/77 Inno v ATAB [1977] ECR 2115, paras 31–33.

3

  Art 4(3) TEU (former Art 10 EC and originally Art 5 EEC) currently reads: Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties. The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union. The Member States shall facilitate the achievement of the Union’s tasks and refrain from any measure which could jeopardise the attainment of the Union’s objectives.

4

  Art 3(3) TEU currently reads: ‘The Union shall establish an internal market…’. This provision has to be read in parallel to Protocol 27 to the TEU which states that ‘the internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted…’ 5

  The leading cases of the CJ were: Case 229/83 Leclerc v Au Blé Vert [1985] ECR 1; Case 231/83 Cullet [1985] ECR 305; Case 123/83 BNIC v Clair [1985] ECR 391; Joined Cases 209–213/84 Nouvelles Frontières [1986] ECR 1425; Case 311/85 Vlaamse Reisbureaus [1987] ECR 3801; and Case 267/86 Van Eycke [1988] ECR 4769. For some of the literature on the subject, see F. Castillo de la Torre, ‘State Action defence in EC Antitrust Law’ (2005) 28 World Comp 407–31; Y. Galmont and J. Biancarelli, ‘Les réglementations nationales en matière de prix au regard du droit communautaire’ [1985] RTDE 299; G. Marenco, ‘Le Traité CEE interdit-il aux Etats membres de restreindre la concurrence?’ [1986] CDE 294– 5; P. Pescatore, ‘Public and Private Aspects of Community Competition Law’ in 1986

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Fordham Corp L Inst (1987), 381–430; R. Joliet, ‘Réglementation étatiques anticoncurrentielles et Droit communautaire’ [1988] CDE 363–82. 6

  Case C-2/91 Meng [1993] ECR I-5797, para 14; Case C-185/91 Reiff [1993] ECR I-5847, para 14; and Case C-245/91 Ohra [1993] ECR I-5851, para 10. This case law has been largely confirmed in many subsequent judgments, eg Case C-35/99 Arduino [2002] ECR I-1529; Case C-309/99 Wouters [2002] ECR I-1577; Case C-198/01 CIF [2003] ECR I-8055; Case C-94/04 Cipolla [2006] ECR I-11421; Case C-446/05 Doulamis [2008] ECR I-1377. 7

  N. Reich, ‘The “November Revolution” of the European Court of Justice: Keck, Meng and Audi Revisited’ (1994) 21 CML Rev 459–92; B. Van Der Esch, ‘Loyauté fédérale et subsidiarité: à propos des arrêts du 17 novembre 1993 dans les affaires C-2/91 (Meng), C-245/91 (Ohra) et C-185/91 (Reiff)’ [1994] CDE 536; A. Bach, ‘Judgments of the Court, Cases C-185/91 Reiff, C-2/91 Meng and C-245/91 Ohra’ (1994) 21 CML Rev 1357–74. 8

  See J. L. Buendia Sierra, ‘Writing Straight with Crooked Lines: Competition Policy and Services of General Economic Interest in the Treaty of Lisbon’ in A. Biondi, P. Eeckhout, and S. Ripley (eds), EU Law after Lisbon (Oxford: Oxford University Press, 2012), ch 17. 9

  See L. Hancher, T. Ottervanger, and P. J. Slot, EU State Aids (London: Sweet & Maxwell, 2012), for a general overview of State aid rules.

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Part I General Principles, 6 Article 106—Exclusive or Special Rights and other Anti-Competitive State Measures, C Article 106(1): State Measures in Respect of Public or Privileged Undertakings José Luis Buendia Sierra From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): Article 106(1) TFEU — Undertakings — State undertakings — Article 102 in combination with Article 106(1) — Article 101 in combination with Article 106(1) — Economic or commercial activity — Dominant position — Exclusionary abuse — Effect on trade between member states — State monopolies — Direct effect of Community law

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C. Article 106(1): State Measures in Respect of Public or Privileged Undertakings (1)  Addressees and Regulatory Content 6.09  Article 106(1) (former Art 90(1)) provides: In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in this Treaty, in particular those rules provided for in Articles 18 and 101 to 109. Article 106(1) is only addressed to Member States.10 As interpreted by the Court of Justice, this provision prohibits Member States from adopting or maintaining in force any measures contrary to the Treaty: •  when such measures benefit public undertakings or undertakings to which Member States grant exclusive or special rights; or •  when these undertakings are the instrument used by the Member State for the implementation of the measures. 11 (p. 813) Article 106(1) is also interpreted as applying to the granting of exclusive rights to any undertaking when such a grant is contrary to another article of the TFEU.12 State measures which are related to public or privileged undertakings only fall under Article 106(1) if they are ‘contrary to the rules contained in this Treaty, in particular those rules provided for in Articles 12 and 101 to 89’. This means that Article 106(1) is not entirely selfcontained, and cannot be applied alone. In order to establish a specific obligation for Member States, the provision must always be applied ‘in combination with’ another rule of the TFEU. This implies that Article 106(1) has a multiplicity of legal content with different spheres of application.

(2)  State Measures 6.10  Whilst Articles 101 and 102 refer to the behaviour of undertakings, Article 106(1) refers to State measures. A State measure is an act undertaken by a public entity in its role as a public authority. However, the distinction between State measures and behaviour of undertakings cannot be based solely on the private or public nature of the entity. Even if private entities cannot, as a general rule, adopt State measures, public entities may undertake economic activities. In this case, the commercial activities of the public entities are clearly subject to Articles 101 and 102, even if fulfilled directly by a public body.13 It is therefore necessary to differentiate between the different acts of public entities, that is, between ‘State measures’, to which Article 106(1) may apply, and the ‘behaviour of public undertakings’, to which Articles 101 and 102 may apply. (i)  Formal Criteria Are Not Decisive in Defining ‘State Measures’

6.11  It is very tempting to rely solely on formal criteria to make the distinction referred to previously. According to this approach, public law instruments would be examined under Article 106(1) and private law instruments under Articles 101 and 102.14 This has the advantage of being a rather simple and easy-to-use criterion. It is also a reasonably realistic one. After all, State measures are normally adopted through laws, acts, regulations, administrative rules, or other instruments of public law. Private law contracts are normally used by public entities when exercising a commercial activity. (p. 814) (ii)  The Function of the Act is the Decisive Factor in Defining ‘State Measures’

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6.12  However, although the form of the relevant instrument is an important factor, it cannot be the sole factor. EU law has always been reluctant to rely on formal criteria in order to define the scope of its different provisions. The reason for this reluctance is that, very often, the different Member States use different legal instruments to achieve the same results. In order to be credible, EU law must be able to apply similar rules to situations that are similar from a substantive point of view. This means that the criterion of the private or public law form of the relevant act must be complemented with another criterion: that of its functional nature. An act whose function is to regulate the marketplace from the perspective of the public interest would be a ‘State measure’.15 This would be the case even if adopted under the form of a private law contract.16 An act of a purely commercial nature would fall under Articles 101 and 102 even if adopted under a public law form.17 (iii)  The Form of the Act Creates a Presumption, But Its Function is the Decisive Criterion in Defining It as a ‘State Measure’

6.13  It follows from this that the functional nature of the act—rather than its form—should, at least in theory, be the decisive criterion in determining the borderline between Article 106(1), on the one hand, and Articles 101 and 102, on the other hand. In practice, however, a private law form will create a strong presumption that one is dealing not with a State measure but with the ‘behaviour’ of a public undertaking. It would nevertheless still be possible—but not easy—to destroy this presumption by relying on the regulatory nature of the act. (iv)  State Measures May Be Adopted By Any Type of Public Authority

6.14  State measures can be adopted by any public entity of a Member State provided that the entity is invested with some kind of public authority role. Local or regional authorities, for instance, can adopt State measures like national authorities.18

(3)  Related to Public or Privileged Undertakings 6.15  In order to fall under Article 106(1), a State measure must have a link with one or more ‘undertakings’ (ie entities exercising an ‘economic activity’). In principle, this undertaking must be either a ‘public undertaking’ or an ‘undertaking to which the Member State grants exclusive or special rights’. These different concepts, and the precise nature of this link between the measure and the undertaking, are examined in the following sections.

(a)  ‘Economic Activity’ (i)  Article 106(1) Applies to State Regulation of Economic Activities 6.16  Article 106(1) only applies if the State measure relates to one or more entities that engage in an ‘economic activity’. The State measure itself must of course have a regulatory nature, but the activity, which is being regulated by that measure, must be of an economic nature. In other words, Article 106(1) applies to State regulation of economic activities. Regulatory measures relating to non-economic activities (eg ‘exclusive rights’ in respect of national defence, public security, etc) are not covered by Article 106(1).

(p. 815) (ii)  Definition of ‘Economic Activity’ 6.17  The existence of an ‘economic activity’ is a prerequisite for the application, not only of Article 106(1), but of any competition rule. This notion embraces all activities of a commercial or industrial nature. Unfortunately, the borderline between economic and noneconomic activities is particularly difficult to draw in the public sector. Indeed, the State provides its citizens with many ‘services’ in areas such as utilities, health, social security, education, or defence and it is not always easy to determine which ones are ‘economic’ (and whose regulation is therefore subject to Art 106(1)) and which ones are not. Utilities, such as telecommunications, energy, transport, or postal services, are nowadays clearly considered as economic activities. However, other public sector activities, such as health,

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social security, or education, have traditionally had a less clear status. This makes it necessary to find rational criteria by which to differentiate between the two groups.

(iii)  Criteria Used By the Court of Justice 6.18  In its Höfner judgment, the Court of Justice seemed to imply that any activity that may conceivably be exercised by a private undertaking should be considered as an economic activity, irrespective of its actual mode of financing.19 This seems a rather objective and simple criteria: it is in principle enough to show that the activity has been or is being fulfilled by private undertakings in another geographical area.20 6.19  The problem with such interpretation is that it perhaps construes the concept of economic activity too widely. Indeed, it implies that activities such as health or social security are ‘economic’ and should therefore, in principle, be subject to the competition rules. 6.20  However, the Court of Justice did not want to go that far. It therefore excluded certain sectors from the scope of ‘economic activities’. Such exclusions are based on a rationale not entirely consistent with the logic used in Höfner, even though the judgments may pay lip service to this logic. 6.21  For instance, the Poucet judgment made clear that ‘compulsory social security systems’ cannot be considered as economic activities.21 The reason for this seemed to be the mode of financing, based on ‘solidarity’ amongst contributors. Subsequent judgments explained that the exclusion of the ‘economic’ character of a given system of social security requires a detailed analysis of the ‘solidarity’ elements that are present in its financing mechanisms.22 Social security systems based on a capitalization model, of voluntary membership and whose perceptions are proportional to the contributions of each member, are considered ‘economic’. 6.22  Case law has sometimes relied on other, less apposite, criteria such as the exercise of public prerogatives,23 the pursuit of objectives of general interest,24 or the fact that the activity is subject to the control of the State.25 These criteria have introduced a certain degree of confusion into the definition of economic activity. Indeed, it seems obvious that certain (p. 816) entities may fulfil what is materially an economic activity while at the same time exercising certain public prerogatives. This latter fact cannot in itself deprive the activity of its ‘economic’ character or the entity of its ‘entrepreneurial’ nature.26 Case law subsequently made clear that the fact that an entity is vested with public powers for the exercise of part of its activities does not prevent it from being considered an ‘undertaking’ for the remainder of its activities, since each activity has to be analysed on its own merits.27 It is also clear that there cannot be a contradiction between the ‘economic’ nature of an activity and the fact that it pursues ‘objectives of general interest’. Otherwise Article 106(2) would serve no purpose. Finally, the mere fact that an activity is subject to State control cannot be decisive in its qualification as ‘economic’, since—by definition—all ‘public undertakings’ are fulfilling economic activities while subject to the control of the State. As will be explained, case law rather relies on the intensity of State control only as one of the factors to be taken into account among others in order to decide whether the entities managing social security schemes are ‘undertakings’.28 6.23  Apart from these few debatable judgements, recent case law appears to have finally arrived at definitions of ‘economic activity’ and ‘undertaking’ that are reasonably clear and practical. According to this case law, the concept of ‘undertaking’ covers any entity engaged in economic activity, regardless of the legal status of the entity or way in which it is financed. An ‘economic activity’ is an activity consisting of offering goods and services on a given market.29 The underlying logic is pure Höfner logic: any activity that may be fulfilled by a private undertaking must be considered ‘economic’ in nature. This can be established,

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for instance, by showing that the activity is actually being or has been fulfilled by private undertakings in another geographical area. 6.24  As an exception to this general concept, case law has excluded from the scope of ‘economic activities’ compulsory social security systems to the extent that they are based on the principle of ‘solidarity’. In the same sense, the entities managing such systems are also excluded from the notion of ‘undertakings’ provided that they are subject to sufficiently intense control by the authorities of the State.30 Such exclusion is rather a deliberate choice by the Court than a logical extension of the general concept. Similarly, the case law has also excluded workers from the notion of ‘undertakings’.31 The Court might perhaps in the future use this same approach to exclude other sensitive sectors, such as national systems of compulsory education. 6.25  One should not forget that merely classifying an activity as ‘economic’ does not automatically imply an obligation to open up that activity to competition. Issues such as ‘solidarity’ in the financing or the character of ‘general interest’, even if they do not exclude the ‘economic’ nature of the activity, may justify the application of the exception set out in Article 106(2).32

(p. 817) (iv)  ‘Public’ Undertaking 6.26  Article 106(1) applies, first, to State measures having a link with one or more ‘public undertakings’. The concept of a public undertaking embraces all undertakings that are subject to the dominant influence of the public administrations of a Member State (at national, regional, or local level).

(v)  Definition of Public Undertaking 6.27  The Commission has defined ‘public undertaking’ as any undertaking in which the public administrations may exercise, directly or indirectly, a dominant influence.33 This dominant influence may be the result of ownership, financial participation, or the rules governing the undertaking. Dominant influence is presumed when the public administrations, whether directly or indirectly, control either the majority of the capital of the undertaking, or the majority of the places on the governing or controlling bodies of the undertaking. This concept of ‘dominant influence’ is closely connected with the concept of ‘control’ under the Merger Regulation.34

(vi)  A Separate Legal Entity is Not Necessary 6.28  Public undertakings are often organized as autonomous entities with distinct legal personalities. However, this is not always the case. A public administration can also be considered as a public undertaking to the extent that it is directly involved in the operation of an economic activity.35

(vii)  Public Undertakings After Privatization 6.29  The ‘public’ character of undertakings has rarely been controversial in the past, but privatization may have changed this. Even if privatization normally implies that a ‘public undertaking’ becomes a ‘private undertaking’, this is not always the case. In some cases, the government loses ownership but retains a ‘golden share’ in the privatized company. Case law makes clear that such mechanisms are likely to conflict with TFEU rules on establishment.36 Moreover, the powers connected with this ‘golden share’ may in some cases be so important as to lead to ‘dominant influence’ by the public authorities. In such a scenario, a privatized undertaking may well remain a ‘public undertaking’ at least from the point of view of Article 106(1).

(viii)  ‘Privileged’ Undertakings

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6.30  Article 106(1) also applies to State measures concerning ‘undertakings to which Member States grant exclusive or special rights’. These ‘privileged’ undertakings may be public or private.37 This means that Article 106(1) may well apply to State measures concerning a particular kind of private undertaking. What characterizes these undertakings is the granting by the Member State of ‘special or exclusive rights’. It is therefore necessary to examine these concepts.

(p. 818) (b)  Exclusive Rights (i)  Notion of ‘Exclusive Right’ 6.31  An ‘exclusive right’ is the right granted by a State measure to one undertaking to engage in an economic activity on an exclusive basis. The legal notion of ‘exclusive right’ roughly corresponds to the popular notion of ‘monopoly’. 6.32  The definition of exclusive rights means that, for each economic activity and in a given territory, there is a single beneficiary: a monopolist.38 It is also possible for exclusive rights to be granted in parallel to different undertakings provided that they operate in different territories.39 In this case, each of the operators is a monopolist within its reserved territory. However, when the activity is reserved to more than one competing undertaking, the State has not granted an exclusive right, but ‘special’ rights.40

(ii)  Exclusive Right and Dominant Position are Different Things 6.33  Some judgments of the Court of Justice41 and some decisions of the Commission42 suggest that the mere existence of an exclusive right automatically puts its holder in a dominant position. However, it is submitted that no such automatic link exists. The concept of an exclusive right is closely connected to but independent from the concept of ‘dominant position’ under Article 102. The existence of an exclusive right depends entirely on legal factors. The existence of a dominant position depends on a number of economic factors. It is true that in most cases the protection from competition granted by the exclusive right puts the undertaking in a dominant position, as the Court stated in Télémarketing,43 but this is not always the case. The key question, as the Court explained in Bodson,44 is whether the scope of the exclusive right embraces a substantial part of a market which is ‘relevant’ from an economic point of view.45 If so, the exclusive right will lead to a dominant position on that market (and Art 102 may apply). If this is not the case, the holder of the exclusive right may not have attained a dominant position within the meaning of Article 102. In any event, contrary to some interpretations, it is clear that the mere existence of an exclusive right does not automatically imply the existence of a dominant position.46

(iii)  Exclusive Rights are Created by State Measures 6.34  In order to fall under Article 106(1), the exclusive right must be created by a State measure.47 This means that it must be granted by a public administration acting in its role as a public authority. Exclusive rights granted by a public undertaking acting as an economic operator do not fall under Article 106(1) but (p. 819) under Article 101. For instance, in Almelo an exclusive purchase contract between a local council (acting in its capacity as undertaking in charge of distribution of electricity) and a regional distributor was examined within the framework of Article 101.48 The Commission seems to consider that Article 106(1) only applies if the exclusive right is granted through law, administrative regulation, or other act with a public law form.49 However, although State measures normally have a public law form, this is not essential. An exclusive right granted by a public authority through a private law contract may fall under Article 106(1) if its regulatory rather than commercial function can be proved.50 Sometimes exclusive or special rights may even be the de facto consequence of the simultaneous application of various State measures which do not seem to confer prima facie any exclusivity.51

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(iv)  Need for a Discretionary Decision by the State 6.35  The granting of the exclusive right must be the result of a discretionary decision by the public authority. This may consist in an artificial limitation of the number of players to a single one and/or in the discretionary choice of the single operator when a natural monopoly exists. In both cases, the undertaking may feel an obligation towards the public authority whose discretionary decision is at the origin of its monopoly position. This may give the public authority some influence over the behaviour of the undertaking. This is not the case in respect of patents and other intellectual property (IP) rights, which are granted automatically once the various legal conditions are fulfilled. The Court of Justice considers that IP rights are not ‘exclusive rights’ within the meaning of Article 106.52 6.36  As explained later,53 exclusive rights have a dual role within Article 106(1). On the one hand, the provision refers to State measures concerning undertakings to which Member States have previously granted exclusive rights. On the other hand, Article 106(1), as interpreted by the Court of Justice, also applies to the original granting of an exclusive right to an undertaking.

(v)  Special Rights 6.37  The concept of ‘special rights’ and its relationship with that of ‘exclusive rights’ had been rather controversial in the past. The controversy arose in 1991 when the Court of Justice condemned the Commission for its failure to differentiate between these categories.54 6.38  Following that judgment, in 1994 the Commission provided a definition of ‘special rights’ which now appears in Directive 2002/77/EC.55 The Commission includes in this definition two different kinds of rights. ‘Special rights’ are, first, rights to engage in an economic activity in a given territory granted by a State measure only to a limited number of undertakings. If (p. 820) the legal notion of ‘exclusive right’ finds a parallel in the popular notion of ‘monopoly’, these ‘special rights’ roughly correspond with the popular notion of ‘oligopoly’. Special rights of this kind only exist if there is a discretionary decision by the public authority. This may consist in an artificial limitation of the number of players and/or in the discretionary choice of the operators. In principle, no special rights within the meaning of Article 106(1) exist when the access to an activity (eg a profession) is restricted to those fulfilling certain predetermined conditions, provided there is no limitation on the number of operators.56 Nevertheless, some judgments refer to this kind of situation as special or exclusive rights and, even if they do not apply directly Article 106(1), they often examine such regulations under the free movement rules.57 6.39  Secondly, the Commission also considers as ‘special rights’ the legal advantages granted by State measures to only some of the undertakings that are active in a market which is, in principle, open to competition. In this second scenario, public authorities do not restrict the number of operators but give some of them other legal privileges implying a competitive advantage. An example of this kind of special right is the right granted to some telecommunication operators to manage the numbering system in a Member State. Another example of special rights is the power granted to one undertaking to give consent for certain activities of its competitors.58 The qualification of these rights as ‘special rights’ means that Article 106(1) would continue to apply as regards these undertakings, even if they no longer enjoy either exclusive rights or special rights of the first category. In other words, Article 106(1) will continue to be applicable in sectors that have been liberalized but that are still subject to an intense degree of regulatory intervention. 6.40  The same logic probably lies behind the Ambulanz Glöckner judgment, which substantially modified the landscape as regards the concepts of exclusive and special rights. Indeed, in this judgment the Court established a common definition embracing both exclusive and special rights. In so doing, the Court goes back to the initial situation where

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both concepts were considered synonyms. The (new) concept of ‘special or exclusive right’ refers to situations where: (a)  a legislative measure; (b)  confers protection on a limited number of undertakings; (c)  which may substantially affect the ability of other undertakings to engage in the economic activity in question in the same geographical area under substantially equivalent conditions. 59 6.41  From a substantive point of view, this new definition merely combines within a single concept the cases previously caught by the notions of exclusive rights and special rights. The only new element is the requirement of a ‘legislative measure’. This is a surprising new feature. Previous case law merely required a ‘State measure’ without specifying that it had to be necessarily of a ‘legislative’ nature. Also Advocate General Jacobs in his Opinion in Ambulanz Glöckner had merely required a grant by the Member State authorities. It is submitted that this line is more consistent with the functional logic behind Article 106.

(p. 821) (c)  The Connection Between the Measure and the Undertaking (i)  Types of Connection Required by Article 106(1) 6.42  Article 106(1) only applies to State measures that have some kind of connection with public or privileged undertakings. General measures affecting all undertakings (public and private—privileged or not) in the same manner do not fall within Article 106(1). 6.43  However, the precise nature of the connection required by Article 106(1) is not explained. Article 106(1) merely says that ‘in the case of’ these undertakings, Member States shall neither adopt nor maintain in force measures contrary to the rules of the Treaty. As interpreted by the Court of Justice and the Commission, this means that a State measure falls under Article 106(1): (a)  when such measures benefit public undertakings or undertakings to which Member States grant exclusive or special rights; and/or (b)  when these public or privileged undertakings are the instrument used by the Member State for the implementation of the measures; and/or (c)  when the measure consists of the granting or maintenance in force of an exclusive right.

(ii)  State Measures Which Benefit the Undertaking 6.44  Most State measures fall under Article 106(1) because they benefit a public undertaking or an undertaking to which a Member State grants exclusive or special rights. The granting of an exclusive right to an undertaking, for instance, obviously benefits that undertaking.60

(iii)  State Measures Which Use the Undertaking as an Instrument 6.45  This kind of beneficial effect is not essential in order for Article 106(1) to apply, however. The provision also applies to measures that use public or privileged undertakings as instruments by imposing on them certain kinds of behaviour, even when the measures do not benefit the undertakings in question. For instance, in Corsica Ferries, the Court of Justice found that Article 106(1) applied to a measure imposing on an undertaking having an exclusive right for ‘pilotage’ services in the port of Genoa a system of tariffs, which discriminated according to the national or foreign origin of each transport service.61 This

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discrimination was not necessarily beneficial for the undertaking which had the exclusive right but was nevertheless found to be an Article 106(1) State measure.

(iv)  State Measures Granting an Exclusive Right 6.46  As shown previously, the general rule is that State measures fall under Article 106(1) when such measures benefit public undertakings or undertakings to which Member States grant exclusive or special rights and/or when these undertakings are the instrument used by the Member State for the implementation of the measures. However, State measures consisting of the granting or maintenance in force of exclusive rights fall under a particular regime. (p. 822) 6.47  It was thought by some commentators that exclusive rights would only be considered State measures falling under Article 106(1) when they were granted to either a public undertaking or to a private undertaking to which a Member State had previously granted an exclusive or special right. However, the Court of Justice has interpreted Article 106(1) as also applying to the original granting of an exclusive right to an undertaking, even if the undertaking in question is neither a public undertaking nor a private undertaking to which Member States had previously granted an exclusive right.62 In Port of Genoa, for instance, the Court found that the only exclusive right granted to a private undertaking, the company of dockers, fell under Article 106(1).63 In La Crespelle, the exclusive rights granted to various private undertakings were also examined under Article 106(1).64

(v)  The Dual Role of Exclusive Rights Within Article 106(1) 6.48  This approach means that the exclusive right may be, in respect of Article 106(1), both the State measure and/or the element that makes the undertaking fall under that provision. Indeed, exclusive rights play a dual role within Article 106(1). On the one hand, the provision refers to State measures concerning undertakings to which Member States have previously granted exclusive rights. On the other hand, Article 106(1), as interpreted by the Court of Justice, also applies to the original granting of an exclusive right to an undertaking. The original granting of an exclusive right is a ‘State measure’ under Article 106(1) even if the undertaking in question is neither a public undertaking nor a private undertaking to which Member States have previously granted an exclusive right.

(vi)  General Measures Do Not Fall Under Article 106(1) 6.49  Article 106(1) only applies to State measures to the extent that these measures are connected—in one of the previously mentioned ways—with public or privileged undertakings. When such a link or connection does not exist (because the measure applies in the same way and with similar effects to all of the undertakings in a particular sector), the measures are ‘general’ measures to which Article 106(1) does not apply.65 Even if the notion of ‘exclusive or special rights’ is potentially very wide, it certainly does not embrace everything. The fact that Article 106(1) is not applicable in certain cases does not exclude the possible application of the combined application of Articles 101 and 4(3) or, more likely, of other provisions of the TFEU, such as the rules on establishment and free movement.

(4)  Contrary to Another Provision of the TFEU 6.50  State measures which are related to public or privileged undertakings only fall under Article 106(1) if they are ‘contrary to the rules contained in this Treaty, in particular those rules provided for in Articles 18 and 101 to 109’. This means that Article 106(1) cannot be applied alone—in order to establish a specific obligation for Member States—but must always be applied ‘in combination with’ another rule of the TFEU. Article 106(1) is therefore a ‘règle de renvoi’ whose legal content depends on that of the rule which is applied in combination with it.

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6.51  This implies that Article 106(1) has a multiplicity of legal content with different spheres of application. As a result, a State measure may in some cases violate both Article 106(1) (p. 823) in combination with Article 102, and Article 106(1) in combination with Article 3466 or with Article 56.67 In other cases, a State measure may be compatible with Article 106(1) in combination with Article 102 while being incompatible with Article 106(1) in combination with Article 34 or 56,68 or vice versa.69 6.52  It is therefore necessary, in order to analyse the legal content of Article 106(1), to distinguish between its application in combination with the antitrust rules and its application in combination with the free movement rules.

(5)  Article 106(1) in Combination with the Competition Rules Addressed to Undertakings 6.53  Article 106(1) not only reminds Member States of their obligation to respect the rules of the TFEU that are addressed to them, but also prohibits Member States from adopting measures contrary to Articles 101 and 102, rules that in principle are addressed not to the Member States but to undertakings. As Articles 101 and 102 have as their object the behaviour of undertakings and not State measures,70 their application to Member States through Article 106(1) in some cases requires an adaptation of their logic.71 In other words, when applied in combination with Article 106(1) as regards State measures, the contents and scope of Articles 101 and 102 are not necessarily the same as when those articles are directly applied to the behaviour of undertakings.

(a)  Article 106(1) in Combination with Article 102 6.54  The precedents from the Court of Justice and the doctrine of the European Commission indicate that a State measure concerning a public or privileged undertaking will infringe Article 106(1) in combination with Article 102 when the following conditions are met: (a)  the undertaking is in a dominant position on a market which is relevant from an economic point of view and which embraces a substantial part of the common market; (b)  the measure: —  either actually leads the undertaking to behave in such a way as to abuse its dominant position, —  or has the potential to lead the undertaking to behave in such a way as to abuse its dominant position, —  or produces effects similar to those of an abusive behaviour; and (c)  the effects of the abuse or the effects of the State measure are capable of affecting intra-Union trade.

(i)  Dominant Position 6.55  For Article 106(1) to apply in combination with Article 102, the public or privileged undertaking must be in a dominant position in a market which is relevant from an economic point of view and which embraces a substantial part of the internal market. This dominant position may well be the result of State measures, such as an exclusive right, but the mere existence of an exclusive right does not automatically imply the existence (p. 824) of a dominant position.72 The notion of ‘dominant position’ is an economic one. In principle, this concept does not vary when Article 102 is applied in combination with Article 106(1). It is true that in most cases the protection from competition granted by the exclusive right puts the undertaking in a dominant position, as the Court said in Télémarketing,73 but this is not always the case. The key question, as the Court explained in Bodson,74 is whether the scope of the exclusive right embraces a substantial part of a market which is ‘relevant’ from an From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

economic point of view. If so, the exclusive right will imply a dominant position on that market. If that were not the case, Article 106(1) might not be applied in combination with Article 102.75 In practice, however, both the Court of Justice and the Commission often presume the existence of a dominant position from the existence of an exclusive right.76 It is submitted that it should be possible to reverse that presumption with economic analysis showing that, despite enjoying the exclusive right, the undertaking is not in a dominant position. This is even more the case when we are dealing not with exclusive rights but with special rights that do not necessarily exclude all competition.77

(ii)  State Measures Leading to Actual Abusive Behaviour of the Undertakings 6.56  Article 106(1) in combination with Article 102 applies first to State measures that lead, or may lead, a public or privileged undertaking to behave in such a way as to abuse its dominant position. Any behaviour which would normally be considered as an abuse contrary to Article 102 if spontaneously adopted by a dominant undertaking, will fall under Articles 106(1) and 102 when it is imposed or induced—even potentially—by a State measure.

(iii)  Different Types of Abuse 6.57  Among the more typical abuses under Articles 106(1) and 102 are those related to prices. Price regulation is a common instrument for State intervention in the utilities sector, where the presence of public undertakings or undertakings with exclusive or special rights is also normal. The tariffs applied by these undertakings are often established and/or approved by the public authorities. In some cases these State-approved tariffs may lead the undertaking to engage in discriminatory,78 excessive,79 and/or predatory pricing which, if adopted spontaneously, would infringe Article 102. If this is the case, the State-approved tariff would infringe Article 106(1) in combination with Article 102. In principle, the substantive criteria for determining the discriminatory, excessive, or predatory character of a price are the same, irrespective of whether Article 102 is applied alone or in combination with Article 106(1). 6.58  Other typical abuses under Articles 106(1) and 102 are those implying a ‘refusal to deal’ resulting, not from an autonomous behaviour of the monopolist, but from a State measure. A typical example is the refusal to grant access to an ‘essential facility’ such as the refusal to grant a ferry operator access to a port.80 The conditions qualifying this kind of abuse were (p. 825) clarified in the Bronner judgment.81 In principle, the notion of ‘abuse’ should be the same in cases where Article 102 is applied in combination with Article 106(1) as in cases in which Article 102 is applied alone.82

(iv)  Only the State is Responsible for State-Imposed Abuses 6.59  It has always been accepted that Article 106(1) in combination with Article 102 prohibits Member States from obliging their public or privileged undertakings to abuse their dominant position.83 One should keep in mind that Article 102 taken in isolation can only be infringed (and the undertaking held liable) when the behaviour is the result of an autonomous decision of the undertaking. In principle, a State-imposed behaviour cannot constitute an infringement of normal competition rules by the undertaking.84 Thus, by interpreting Articles 106(1) and 102 as an obligation upon Member States to refrain from imposing abusive behaviour on their public or privileged undertakings, the lack of liability of the undertaking under Article 102 is compensated for by the liability of the State under Articles 106(1) and 102.

(v)  Both the State and the Undertaking are Liable for State-Induced Abuses 6.60  In general, Article 106(1) in combination with Article 102 prohibits Member States from legally obliging public or privileged undertakings to abuse their dominant position. However, in the absence of a binding obligation to abuse, it is generally agreed that Article 106(1) in combination with Article 102 also prohibits Member States from merely inducing their public or privileged undertakings to abuse their dominant position. Of course, the mere presence of State inducement does not exclude either the autonomous character of From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

the behaviour of the undertaking or its potential liability under Article 102.85 This might at most be considered as a mitigating factor in the establishment of fines.86 These non-binding inducements may, however, have a very severe anti-competitive impact on the market. It is therefore logical to establish in these cases two parallel potential liabilities: one for the State under Articles 106(1) and 102 for having induced the undertaking to abuse; and one for the undertaking under Article 102 for having responded when it was not bound to do so.87

(vi)  State Inactivity 6.61  Some authors even suggest that the simple inactivity of the Member State when faced with abusive behaviour by a public or privileged undertaking should be enough for Article 106(1) in combination with Article 102 to apply.88 However, nothing in (p. 826) the case law of the Court of Justice or in the practice of the Commission suggests that a mere failure to prevent an abuse triggers the responsibility of the Member State.89

(b)  State Measures Affecting the Structure of Competition and Leading to Potential Abusive Behaviour of Undertakings (i)  No Requirement for Actual Abuse 6.62  Even if some kind of positive action by the Member State is always required for Article 106(1) to apply, such positive action need not be related to one specific abuse. Article 106(1) also applies as regards State measures affecting the structure of the market if the resulting structure leads an undertaking to abuse. This means that, for Articles 106(1) and 102 to apply, there is no obligation to establish first that an actual abuse has been committed. What is required is establishment of the fact that the State measure is such that it could lead an undertaking to abuse. Of course, being able to prove that actual abuses have been committed will help to establish that a measure leads an undertaking to abuse, but it is not an absolute requirement. In the RTT judgment, the Court of Justice stated clearly that Articles 106(1) and 102 may apply even in the absence of actual abuses.90 The MOTOE judgment rightly states that these provisions are infringed if the special or exclusive rights give rise to a ‘risk’ of an abuse of a dominant position.91 However, even if there is clearly no need to prove the existence of any actual abuse, the DEI judgment requires at least identification of the hypothetical abuse that the State measure is allegedly inducing the undertaking to commit.92

(ii)  The Granting of Regulatory Powers to an Undertaking 6.63  There is broad consensus that Article 106(1) in combination with Article 102 is violated when a Member State entrusts an undertaking active in a competitive market with regulatory tasks. The undertaking entrusted would normally be a public undertaking but could also be a private undertaking.93 Such a measure—which qualifies as a ‘special right’ in some judgments94 —creates for the undertaking a conflict of interest between its regulatory mission and its commercial objectives. As a regulator of the marketplace, the undertaking can easily use its regulatory powers to inflict competitive disadvantages on its competitors. The combination of the granting of a substantive regulatory power with the objective situation of a conflict of interest will inevitably lead the undertaking to abuse its dominant position. The accumulation of commercial and regulatory functions in the same entity is therefore incompatible with Articles 106(1) and 102.95 This incompatibility does not occur if the regulatory functions in question only consist in a role of formal verification.96 Some late judgments also suggest that the incompatibility may perhaps also be avoided if the decisions of the undertakings are subject to the control of the public authorities or to subsequent review.97

(p. 827) (iii)  The ‘Bundling’ of Regulatory and Commercial Activities

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6.64  Thus Article 106(1) in combination with Article 102 prohibits the ‘bundling’ of, on the one hand, the regulatory functions of the State and, on the other hand, the entrepreneurial activities of the State. In other words, public undertakings must be ‘independent’ from the bodies that regulate their markets and vice versa. The key question is the degree of separation necessary to achieve such ‘independence’. The Court of Justice has already made clear that two directorates within the same administration cannot be considered as being independent.98 This implies at least that a mere functional unbundling within a single entity (public undertaking or administration) is not enough to fulfil the obligation of independence. The Commission considers that the independence requirement is fulfilled, first, where a former public undertaking belongs to private shareholders and not to the State. It is obvious that, in such a situation, the exercise of regulatory functions by the public administration does not raise any concern about conflict of interest. The requirement is also fulfilled where the State keeps its financial interest in the commercial undertakings but transfers the regulatory functions to a body ‘independent from the relevant Ministry’.99

(iv)  The Granting of an Exclusive Right 6.65  The granting of an exclusive right is a positive State measure that may, in some circumstances, ‘lead’ the undertaking to abuse its dominant position. In a way, this might be seen as a wide interpretation of the notion of inducement: by assuring a dominant position through the granting of an exclusive right, the State would ‘induce’ the undertaking to abuse that dominant position. However, not every exclusive right necessarily leads the beneficiary to abuse. The Court of Justice has restricted this reasoning by also requiring some additional circumstances to be present.

(v)  The Demand Limitation Doctrine 6.66  First, an exclusive right is found to ‘inevitably lead’ the undertaking to abuse when the undertaking is not in a position properly to satisfy existing demand for that type of service. This demand limitation doctrine was established in Höfner.100 The issue was that the exclusive rights enjoyed by the German federal office for employment placed that entity in a dominant position in the executive recruitment market. However, the entity was clearly not capable of satisfying the existing demand in the market for that type of activity. Article 102(b) defines as abusive the behaviour of undertakings which consists in ‘limiting production, markets or technical development to the prejudice of consumers’. The fact that an activity is reserved to an entity which is not in a position to carry it out will necessarily lead to abuses of this type being committed. In such circumstances, the grant of exclusive rights would be contrary to Articles 106(1) and 102. This ‘demand limitation doctrine’ can also be found in other judgments101 and decisions.102 It is interesting to underline that the exclusion of the complainants from the market in all these cases was the result of the State measure, not of the hypothetical abuse which was, rather, of a exploitative nature.103

(p. 828) (vi)  The Conflict of Interest Doctrine 6.67  As previously explained, the RTT case made clear that Article 106(1) in combination with Article 102 is violated when a State measure creates a situation of conflict of interest between the regulatory mission entrusted to an undertaking and its commercial objectives.104 However, this is not the only kind of conflict of interest that may occur. A conflict of interest may also be created between two different commercial activities of a single undertaking. This approach was established in ERT,105 which concerned the Greek television monopoly. The Greek authorities had granted ERT the exclusive right both to broadcast programmes produced by itself and programmes produced abroad. It was obvious that in such a situation the monopoly would logically tend to prefer the programmes which it had produced over programmes produced by other Member States. This would constitute an abuse of a dominant position contrary to Article 102. As the judgment stated, Article 106(1) prohibits the granting of an exclusive right to retransmit television broadcasts to an undertaking which has an exclusive right to transmit broadcasts,

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where those rights are liable to lead that undertaking to infringe Article 102 by virtue of a discriminatory broadcasting policy which favours its own programmes. 6.68  In ERT, the circumstance which led the beneficiary of the exclusive rights to act in an abusive manner was the existence of a conflict of interest. Although the grant of the exclusive rights did not legally oblige the undertaking benefiting from them to discriminate in favour of its own programmes, it is obvious that the temptation would be very difficult to resist in practice. The grant of exclusive rights to an undertaking with such a conflict of interest creates a structure favouring abusive behaviour. This ‘conflict of interest doctrine’ was subsequently relied upon in the Raso judgment.106

(vii)  Presumption of Causal Link 6.69  In very rare cases, the Court of Justice has concluded, on the basis of the gravity and repetition of particular abuses, that they were an inevitable consequence of the existence of an exclusive right. The judgment in Port of Genoa is the clearest example.107 The undertaking Sidelurgica had applied to Merci, holder of exclusive rights for the organization of dock works, for a ship to be unloaded in the port of Genoa. Various problems arose, including a strike in the dock work company, Compagnia, as a result of which delays occurred and Sidelurgica suffered losses. In the subsequent litigation, the question arose as to the compatibility of the exclusive rights enjoyed by Merci and Compagnia with Articles 106(1) and 102. The Court listed no fewer than four types of abuse which had occurred (demanding payment for unrequested services, charging excessive prices, engaging in discriminatory pricing, and not using technologically advanced unloading equipment). The surprising point was that the Court moved from the existence of these abuses of a dominant position to the conclusion that the abuses were the result of the exclusive rights without examining the causal relationship.108 It seems that the variety, seriousness, and repeated nature of the abuses led the Court to the presumption that the very structure of the market (p. 829) (the operation of exclusive rights) favoured the commission of abuses and for that reason was incompatible with Articles 106(1) and 102.

(viii)  Effects Similar to Those of Abusive Behaviour 6.70  In principle, according to traditional case law, Article 106(1) in combination with Article 102 also applies—at least in the circumstances described later—to some State measures having effects similar to those of abusive behaviour, even in the absence of any actual or potentially abusive behaviour by the undertaking. As we will see, this case law now seems to be contested by the DEI judgment.109

(ix)  The Doctrine of the Extension of a Dominant Position 6.71  This doctrine holds that the grant to an undertaking, which is already dominant in one market, of exclusive rights in another adjacent but distinct market is contrary to Articles 106(1) and 102, unless the grant can be objectively justified. 6.72  The doctrine of the extension of a dominant position was used for the first time in the framework of Articles 106(1) and 102 in RTT.110 In this judgment, the Court considered that an exclusive right was contrary to Articles 106(1) and 102 not because it resulted in real or potential abuse of a dominant position, but rather because it produced a similar effect to such abuse. 6.73  The undertaking GB-Inno-BM had imported and sold telephones in Belgium without having them approved by RTT, the public telecommunications operator. The Court appears to have assumed that RTT had not decided independently to exclude competitors but rather that such exclusion was a direct consequence of the legislation. The Court also appears to have identified RTT’s power to approve its competitors’ telephones with a true exclusive right for the sale of terminals. RTT, which already enjoyed a monopoly in the operation of the network, thus received a second exclusive right from the State, for the sale of telephones. On this basis, it was considered that there was an extension of RTT’s dominant

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position from one market to another. The extension was not the result of abuses committed by RTT but was instead due to the State granting RTT the exclusive power to approve competitors’ telephones. Such extension by law of a dominant position is illegal not because it induces or favours abuse, but rather because it produces effects identical to those which would be produced by abusive behaviour contrary to Article 102.111 6.74  In this way, on the basis of effects rather than behaviour, the Court established its doctrine of the extension of a dominant position. This doctrine, which was used again by the Court of Justice in its 1992 judgment concerning the telecommunications services Directive112 and in the 2001 judgment Ambulanz Glöckner,113 has come to play a key role in the liberalization process. (p. 830) 6.75  Of course, apart from exclusive rights other State measures may extend the dominant position of a public or privileged undertaking, thus falling under Article 106(1) in combination with Article 102. As the 2003 Connect Austria case shows, this may be the case, for instance, of national regulatory measures imposing, all other things being equal, higher licence fees on newcomers than on incumbent operators.114 In all these cases, the extension of the dominant position from one market to another was the result, not of any (actual or potential) abusive behaviour, but directly from a State measure. If that State measure was considered to breach Article 106(1) and 102 it was because it produced the same effects as would have been produced by an abuse of the leveraging type. In other words, these judgments did not claim that the exclusive or special rights were leading the undertaking to commit that abuse; the exclusive or special rights were making it unnecessary (and even impossible). They were not encouraging the abuse, they were replacing it. The majority of recent Commission decisions based on Article 106(3) have also applied the same approach.115 6.76  However, this case law now seems to be contested by the DEI judgment.116 In this judgment, the General Court reads this case law in a different manner and finds that it does require proof of abusive behaviour—not necessarily actual but at least potential. Since the Commission’s decision did not establish the abuse but relied only on the effects, it was, according to the General Court, in breach of the Treaty. This reasoning seems clearly contradictory to the case law, which—as explained previously—constructed the extension of dominance theory on the basis of the similarity between the effects of the exclusive or special right with those that would have been produced by an abuse of the leveraging type if the undertaking had chosen to act in such a way. It was, however, very clear that these judgments did not, in any event, expect the undertaking to engage in the said abuse.117 If, as DEI states, the judgments sometimes refer to the possibilities offered by the new dominant position to engage in abusive behaviour, this obviously does not refer to the extension of dominance as such, but to other subsequent hypothetical abuses.118 In this regard, DEI merely states the obvious: that the new dominant position makes the abusive behaviour possible. If taken at face value, this would mean that any exclusive or special right creating a dominant position automatically leads to abusive behaviour and is therefore in breach of Articles 106(1) and 102. For this reason, DEI also seems rather formalistic. Indeed, the judgment itself concedes that the mere possibility of future potential abuse would have been sufficient to satisfy the legal test.119 Since the Commission decision did not explore this issue, at least in an explicit manner, it had to annul it. It seems rather obvious, however, that a State measure extending the dominant position from one market to a neighbouring one has, at the very least, the (p. 831) potential to lead to abusive behaviour. Therefore, the judgment seems to say that it was only the lack of an explicit reference to this obvious consequence that led to the annulment. If that is the case, the difference with the traditional effects-based approach would be non-existent. The future

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Court of Justice judgment on the appeal120 will hopefully clarify the application of Articles 106(1) and 102 to the extension of a dominant position.

(x)  The Automatic Abuse Doctrine 6.77  The previously mentioned precedents clearly show a tendency towards interpreting Articles 106(1) and 102 as restricting the ability of Member States to grant or maintain exclusive or special rights. The initial presumption of compatibility of exclusive rights had suffered so many exceptions that it seemed about to be reversed. Indeed, in Corbeau the Court of Justice seemed to consider that, even in the absence of these circumstances, an exclusive right would automatically lead the beneficiary to abuse, therefore falling under Articles 106(1) and 102.121 The Court has subsequently retreated from this position, at least in theory. 6.78  In the Corbeau case, Paul Corbeau provided services consisting in the collection and delivery of mail in the city of Liège, Belgium. Despite the services offered being superior to those of the State postal service, the charges were slightly lower. Belgian legislation imposed on the Régie des Postes a universal obligation to ensure basic postal services throughout the Belgian territory at a uniform tariff. In exchange, the Régie des Postes was granted an exclusive right over postal services without distinguishing between basic postal services and more profitable services such as courier services. The Régie des Postes started criminal proceedings against Paul Corbeau for breach of the exclusive rights and the matter was referred to the Court of Justice. 6.79  In the judgment, the Court did not regard it as necessary to look for even the slightest hint of abusive behaviour. It limited itself to stating the obligation of Member States not to compromise the effect utile of Article 102. It is submitted that this expression has to be understood as a general reference to the effects theory. Without ever reaching any specific conclusions as to what the obligations of Member States are under Article 106(1), the Court surprisingly went on to examine the scope of the exception contained in Article 106(2).122 While the reasoning may be scant, the conclusion the Court reached was clear: if the grant of exclusive rights was only permitted under Article 106 to the extent that it came within the exception contained in Article 106(2), that meant that in principle all grants of exclusive rights were contrary to Article 106(1) unless they were objectively justified.123 6.80  Corbeau was simply the final consequence of the effects theory. If the role of Article 102 was to prevent the distortion, restriction, or elimination of competition caused by the behaviour of undertakings, a State measure which totally eliminated competition would have the same (p. 832) effect, if not worse, as that behaviour. Since the behaviour of undertakings would have been contrary to Article 102, such State measures were contrary to Article 106(1) in conjunction with Article 102. 6.81  The overall effect of Corbeau was simply to reverse the burden of proof. Until Corbeau, the starting point had been that exclusive rights were prima facie legal (Sacchi124). They would only be contrary to Articles 106(1) and 102 if it was shown that they led undertakings to engage in abusive behaviour (Höfner, ERT, and Port of Genoa125) or if they constituted an extension of a dominant position (RTT, Telecommunications Services126). Following Corbeau, exclusive rights were presumed to be illegal, unless they could be objectively justified or unless they were necessary to guarantee the effective carrying out of a project of general economic interest. The effect of Corbeau was simply to bring the approach in relation to Articles 106(1) and 102 into line with that concerning free movement. That is, restrictions on trade and free competition were in principle prohibited unless they existed because of mandatory requirements of general interest and they respected the principle of proportionality.

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(xi)  The La Crespelle Case 6.82  The automatic abuse doctrine established in Corbeau was subsequently abandoned by the Court of Justice. In October 1994 the judgment in La Crespelle heralded a change of approach.127 A local monopolist brought proceedings against the La Crespelle centre for breach of its exclusive right artificially to inseminate cattle. According to the judgment, while the legislation in question authorized the insemination centres freely to establish their charges, it did not encourage them to charge exorbitant prices. Therefore it could not be concluded that such legislation led undertakings to abuse their dominant positions. This last statement involved a radical change of direction in the interpretation of the expression ‘led to abuse’. Until that moment, the case law had suggested that if a monopoly ‘facilitated’ the possibility of abuse, that was sufficient to constitute ‘leading’ the undertaking to abuse. Given that all monopolies, by definition, facilitate the charging of abusive prices, the logical conclusion was that all monopolies were prima facie contrary to Articles 106(1) and 102. This was the position taken in Corbeau. However, faced with a similar situation in La Crespelle, the Court reacted in a different way and held that the presence of possible abuses deriving from the exercise of the exclusive right could not automatically be imputed to the mere existence of the exclusive right. The fact that the monopolist had abused its dominant position by demanding excessive prices could justify the application of Article 102 to such behaviour, but could not on its own lead to an action against the Member State under Articles 106(1) and 102. Such action would only be justified if a causal relation between the State measure and the abuse were demonstrated.128

(xii)  More Recent Cases 6.83  However, La Crespelle was apparently not the last word of the Court on this issue. Indeed, the Dusseldorp (1998) and Deutsche Post (2000) judgments relied again on the ‘automatic abuse’ doctrine.129 These judgments used an approach very (p. 833) similar to that used in Corbeau: the exclusive right is implicitly presumed incompatible unless justified as necessary for an objective of general interest. 6.84  The more recent Sydhavnens judgment (2000) aims to strike a delicate balance between both approaches.130 The Court started with the presumption of legality of the exclusive rights and with the ‘behaviour theory’ in line with the approach used in La Crespelle. The conclusion was that the exclusive right at stake did not infringe Articles 106(1) and 102. Despite this finding, the Court went on to examine whether the exclusive right was acceptable under the exception foreseen in Article 106(2) for services of general economic interest. This second analysis corresponds with the approach used in Corbeau, Dusseldorp, and Deutsche Post. However, such an approach comes as a surprise: if the exclusive right does not infringe Articles 106(1) and 102 it is hard to understand why it is necessary to examine its justification under Article 106(2). 6.85  The language of the more recent Court of Justice cases on Articles 106(1) and 102 seems to show a certain preference for the ‘behaviour theory’ without however rejecting the alternative ‘effects theory’ (and certainly not the ‘extension of dominance’ theory).131 However, even if the Commission has continued to rely on the ‘effects theory’ in the majority of the few decisions it has adopted, the General Court judgment in DEI seemed for the first time to embrace the behaviour theory as the only way correctly to apply Articles 106(1) and 102.132 It remains to be seen whether the Court of Justice will confirm this new case law in the appeal judgment.133

(xiii)  The Current Status Quo 6.86  It follows from the previous description that the case law (at least that of the Court of Justice) has not yet made a clear choice between the ‘effects theory’ and the ‘behaviour theory’. On the one hand, as explained in para 6.85, the language used in most of the recent judgments relies on the ‘behaviour theory’. Similarly, different recent judgments rely on

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constructions based on the behaviour of the operator, such as the ‘demand-limitation’ or ‘conflict of interest’ doctrines.134 6.87  On the other hand, even some of these judgments rely on the extension of dominant position which, as explained in para 6.75, is simply an application of the ‘effects theory’.135 Other judgments seem to rely directly on the ‘effects theory’.136 6.88  One may conclude that (with the theoretical exception of the ‘automatic abuse theory’) all the approaches developed by the case law for the joint application of Articles 106(1) and 102, as described here, are still accepted by the Court of Justice. Thus, the granting of regulatory powers to one of the players in the market or the granting of exclusive rights to an undertaking unable to satisfy demand, are likely to infringe Articles 106(1) and 102. The same may be said of granting exclusive rights to an undertaking in a situation of conflict of interest or to (p. 834) an undertaking previously dominant in a neighbouring market. The General Court, for its part, seems only to contest this later scenario in its DEI judgment, currently under appeal.137 6.89  This situation may not be entirely satisfactory from a theoretical point of view but does not cause substantial problems in practice. The reasons are twofold. On the one hand, the scope of the prohibition of Articles 106(1) and 102 resulting from the accumulation of these approaches is, in fact, rather wide. On the other hand, the scope of the prohibition of Article 106(1) in combination with the free movement rules is even wider. Indeed, as we will discuss later, these provisions have an impact on exclusive and special rights equal to (if not even greater than) the hypothetical effects of the application of the ‘automatic abuse’ theory under Articles 106(1) and 102. This, without having to face the legal and economic complexities involved in applying Article 102. It is therefore not surprising that the Commission and the EU Courts increasingly prefer to avoid the difficult debate on Article 106(1) combined with Article 102 and choose instead the ‘shortcut’ of Article 106(1) in combination with the free movement rules.138 This suggests that the higher ‘deference’ that the recent case law on Article 106(1) seems to show towards Member States, may be little more than an optical illusion. To put it briefly, what Article 106(1) cannot do with its right hand (Art 102), it does with its left hand (the free movement rules). 6.90  Therefore, after all, the current legal situation is not far from that resulting from Corbeau: exclusive and special rights are presumed to be illegal, unless they can be objectively justified or unless they are necessary to guarantee the effective carrying out of a project of general economic interest. The legal treatments of the restrictions on trade and free competition have now converged: they are both prohibited in principle unless they existed due to mandatory requirements of general interest and they respect the principle of proportionality. The Commission now presents this convergence as logical in its policy statements and this appears to be uncontroversial with the Member States. This may explain why the consolidation of the case law on Articles 106(1) and 102 coincided with a development in the case law on the exception contained in Article 106(2) (examined later in this chapter).

(xiv)  Effect on Intra-EU Trade 6.91  For Article 106(1) to apply in combination with Article 102, the effects of the abuse or the effects of the State measure should be capable of affecting intra-EU trade.139 It is not necessary to prove that trade has actually been affected, mere potential effect is sufficient for the condition to be fulfilled.140 This mirrors the fact that a mere potential abuse would be enough in order to show that Articles 106(1) and 102 have been infringed. However, purely hypothetical or speculative effects would not satisfy that criterion.141 It is necessary to have a certain degree of probability of such effects and to show that such effects would not be insignificant.142 The case law suggest that the actual or (p. 835) potential abusive

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behaviour capable of restricting trade within the internal market, even if restricted to a single Member State, is likely to be considered to fulfil this condition.143 6.92  The condition of the State measure having effects on intra-EU trade is objective: it does not prevent an undertaking from invoking Articles 106(1) and 102 in respect of a measure of its own Member State.144

(c)  Article 106(1) in Combination with Article 101 6.93  In theory, Article 106(1) may apply in combination with the prohibition of anticompetitive agreements between undertakings contained in Article 101 (former Art 85). In practice, however, there are very few examples so far of such application in the case law of the Court of Justice and in the practice of the Commission. 6.94  The most obvious situation in which Article 106(1) could in theory apply in combination with Article 101 would be a State measure inducing one or more public or privileged undertakings to agree between themselves and/or with other undertakings to restrict competition. However, there are no examples of such a ‘compulsory cartel’ in the case law or in the practice of the Commission. 6.95  In Ahmed Saeed, the Court of Justice found that Article 106(1) in combination with Article 101 applied to the approval by a Member State of tariffs agreed by two air carriers operating on a given route as a result of a bilateral treaty.145 This suggests that Articles 106(1) and 101 combine to prohibit Member States from adopting measures reinforcing the effects of anti-competitive agreements in which at least one public or privileged undertaking takes part. 6.96  An analogy with the case law of the Court of Justice in respect of Articles 4(3) and 3(3) TEU and Articles 101/102 TFEU suggests that Article 106(1) in combination with Article 101 would also prohibit State measures that either impose or induce anticompetitive agreements in which at least one public or privileged undertaking takes part.146 6.97  Clearly, for Articles 106(1) and 10 to be applicable the agreement at stake must be an agreement between two or more undertakings. An agreement between a public authority and an undertaking does not fall within the scope of Article 101 and cannot therefore trigger the combined application of Articles 106(1) and 101.147

(p. 836) (6)  Article 106(1) in Combination with the Treaty Rules Addressed to the Member States (a)  The Double Function of Article 106(1) 6.98  Article 106(1) can also be applied in combination with the rules of the Treaty that are addressed to the Member States, such as the rules on free movement of goods, the rules on freedom to provide services, and the rules on freedom of establishment. When applied in combination with these rules, Article 106(1) may play two different roles. First, it serves as a reminder to Member States that these rules must also be respected when adopting measures concerning public or privileged undertakings. Secondly, Article 106(1) prevents Member States from using their public or privileged undertakings as instruments to circumvent the application of these rules.

(i)  Article 106(1) as a ‘Reminder’ of Prohibitions 6.99  As stated previously, when applied in combination with the rules of the Treaty addressed to the Member States, Article 106(1) reminds them that these rules must also be respected when adopting measures concerning public or privileged undertakings.148 From a substantive point of view, this reminder is totally redundant. Whether applied in combination with Article 106(1) or not, the measures in question would in any event infringe the rules of the Treaty. The value-added provided by Article 106(1) is of a procedural nature. When the State measures are contrary to one of the rules of the Treaty From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

addressed to the Member States but also have a link with a public or privileged undertaking so as to fall under Article 106(1), this opens up the possibility of using the special procedures established in Article 106(3).

(ii)  ‘Lifting the Veil’ 6.100  Although Article 106(1) is in principle addressed to the Member States, it also has some impact on public and privileged undertakings. Thus, Article 106(1) in combination with the rules of the Treaty addressed to the Member States prohibits behaviour of public or privileged undertakings that, if engaged in directly by the State, would infringe the rules of the Treaty addressed to the Member States. This simply means that Member States cannot do indirectly (through their influence over these undertakings) what they cannot do directly (through the behaviour of public authorities). Article 106(1) allows one to ‘lift the veil’ of apparent autonomy of the undertaking in order to attribute to the Member State responsibility for the acts of the undertaking that do not fit with entrepreneurial logic. 6.101  It is well known that if a public undertaking transfers funds to another undertaking, those funds may be State aids within the meaning of Article 107(1), even if they come from a public undertaking and not directly from the Member State.149 This same logic may apply, by virtue of Article 106(1), in relation to other rules addressed to the Member States. For instance, if a public or privileged undertaking follows a ‘buy national’ policy which is irrational from a purely entrepreneurial point of view, the Member State may be found responsible for this behaviour under Articles 106(1) and 28.150 (p. 837) 6.102  A good example of the attribution to a Member State of responsibility for the behaviour of a public undertaking can be found in Transmediterranea. In 1987 the Commission adopted a decision, based on former Articles 90(1) and 7 of the EEC Treaty (now Art 106(1) and 18 TFEU), against a Spanish law obliging transport operators to give discounts only to Spanish nationals on trips to the Canary and Balearic islands.151 After the repeal of these legal provisions, a public undertaking called Transmediterranea started offering similar discounts in favour of nationals. The undertaking claimed that these were the result of an autonomous commercial decision and therefore immune from the former Article 7, which was a rule addressed solely to the Member State. The Commission found, however, that this behaviour could not be explained on a commercial basis, only on a governmental one. It therefore concluded that the behaviour of Transmediterranea constituted a new State measure contrary to former Articles 90(1) and 7.152 6.103  Having examined in general terms how Article 106(1) functions in combination with the rules of the Treaty addressed to the Member States, it is now necessary to examine how the provision works in combination with each particular category of rules.

(b)  Article 106(1) in Combination with the Rules on Free Movement of Goods: Articles 34 and 37 6.104  Measures taken by a Member State that restrict access to its markets for goods imported from other Member States will often conflict with the rules of the Treaty on free movement of goods.153 When this type of restrictive State measure is linked with a public or privileged undertaking, the rules of the Treaty on free movement of goods will apply in combination with Article 106(1), and the special procedures of Article 106(3) may be used. 6.105  When considering the Treaty rules on free movement of goods, a distinction must be drawn between the general regime based on Article 34 TFEU (former Art 28 EC and previously Art 30 EEC) and the special regime under Article 37 (former Art 31 EC but originally Art 37 EEC) applying to State monopolies of a commercial character.

(i)  The General Regime: Measures of Equivalent Effect and Article 34

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6.106  Article 34 TFEU prohibits so-called ‘measures of equivalent effect to quantitative restrictions on imports’. This notion was originally interpreted by the Court of Justice, notably in Dassonville, in a very broad manner, including all State measures restricting imports irrespective of their discriminatory or non-discriminatory character.154 According to the Cassis de Dijon doctrine, only measures that are equally applicable to both national and foreign products and that are necessary to guarantee certain ‘mandatory requirements’ may avoid falling under the prohibition contained in Article 34.155 6.107  The interpretation of Article 34 was subsequently restricted by the Court of Justice in its Keck judgment.156 The Court distinguished between two groups of measures. In relation (p. 838) to measures concerning the characteristics of products (composition, packaging, labelling, etc), nothing changed: measures that restrict imports, even if they are non-discriminatory, can only avoid prohibition under Article 34 if they are necessary to guarantee ‘mandatory requirements’.157 The change came when considering measures related to the circumstances in which the products are traded (the so-called ‘selling arrangements’ or ‘modalités de vente’): irrespective of their restrictive effect, these measures only fall under Article 34 if they discriminate, in law or in fact, against imported products.158 Of course, the borderline between measures concerning the characteristics of products and measures related to the circumstances in which the products are traded is not at all easy to draw and has led to intense debate among authors.159 In fact, the more recent case law has introduced a more far-reaching interpretation of Article 34 including for measures seen as ‘selling arrangements’: it seems that the test is no longer based on discrimination but on substantial obstacles preventing market access of imported goods.160 6.108  Although a more detailed analysis of Article 34 is beyond the scope of this book, but it is in any event clear that State measures relating to public or privileged undertakings dealing in goods will in many cases fall under the prohibition of Article 34. It also follows from the case law that State measures relating to public or privileged undertakings and restricting exports may enter into conflict with Article 35 TFEU (former Art 34 EC).161 Such State measures may assume various forms: obligations to purchase, special rights, etc. 6.109  In principle, exclusive rights relating to goods can also be considered ‘measures of equivalent effect’ contrary to Article 28162 and there are plenty of examples of this in the case law of the Court of Justice and in the practice of the Commission, both before163 and after164 Keck. However, the application of this rule must take into account the existence of a specific provision, Article 37, which applies to State measures concerning the functioning of State monopolies of a commercial character. Although the precise borderline between Articles 28 and 37 is difficult to determine (because of the hesitations of the Court of Justice on this issue),165 it seems clear that exclusive rights will in many cases have to be examined under Article 37.166

(p. 839) (ii)  The Special Regime: State Monopolies and Article 37 6.110  Article 37 provides: 1. Member States shall adjust any State monopolies of a commercial character so as to ensure that no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of Member States. The provisions of this Article shall apply to any body through which a Member State, in law or in fact, either directly or indirectly supervises, determines or appreciably influences imports or exports between Member States. These provisions shall likewise apply to monopolies delegated by the State to others.

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2. Member States shall refrain from introducing any new measure which is contrary to the principles laid down in paragraph 1 or which restricts the scope of the Articles dealing with the prohibition of customs duties and quantitative restrictions between Member States. 3. If a State monopoly of a commercial character has rules which are designed to make it easier to dispose of agricultural products or obtain for them the best return, steps should be taken in applying the rules contained in this Article to ensure equivalent safeguards for the employment and standard of living of the producers concerned. Article 37 TFEU corresponds with former Article 31 EC, which corresponded in its turn with Article 37 EEC with a few minor changes.167

(iii)  ‘State monopolies of a commercial character’ 6.111  The concept of ‘State monopolies of a commercial character’ has traditionally been interpreted in a very restrictive and formalistic way, referring only to public undertakings that have been conferred, by law, with exclusive rights for the production, commercialization, importing, and/or exporting of goods. A careful reading of the two paragraphs of Article 37(1) shows, however, that the concept embraces all situations in which a Member State can influence imports or exports through an undertaking. What is essential is, on the one hand, the existence of an undertaking (the ‘monopoly’)168 which can appreciably169 influence the import or export of goods170 between Member States.171 This ability to influence may result from exclusive rights for import172 or export, from exclusive rights over other activities (commercialization, production, etc), from (p. 840) special rights,173 or simply from the existence of a dominant position.174 The other essential element for a State monopoly to exist is that the Member State175 should either control the undertaking (in this case it would be a public undertaking) or have an appreciable influence on its behaviour. This influence can be presumed when the undertaking is a private undertaking that has been granted exclusive or special rights by the State.176 This concept of ‘monopolies delegated by the State to others’ under Article 37(1), in fine, corresponds to the notion of privileged undertakings under Article 106(1).

(iv)  Obligations Contained in Article 37 6.112  Once the concept of ‘State monopolies of a commercial character’ is defined, it is necessary to determine the obligations that Article 37 imposes on Member States. A distinction must be made, in that respect, between obligations that apply during the transitional period and those that apply thereafter.177 Former Article 37 EEC contained some provisions that were applicable only during the transitional period. As the transitional period has ended, these provisions have become redundant and they are not included in the new Article 37 TFEU (and this was also the case with Art 31 EC).

(v)  Obligations During the Transitional Period 6.113  During the transitional period, former Article 37 EEC contained (a) an obligation for Member States to progressively adjust their State monopolies of a commercial character; (b) a provisional exemption from other Treaty provisions; and (c) an obligation to maintain a position of standstill as regards new restrictive measures. 6.114  The progressive adjustment of State monopolies is the main obligation arising from former Article 37(1) EEC during the transitional period. This provision obliged Member States to ‘progressively adjust’ their State monopolies ‘so as to ensure that when the transitional period has ended no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States’. The ‘adjustment’ was presented in this provision as a process that had to take place during the transitional period, in order to achieve a result by the end of that period. This result was ‘to

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ensure that…no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States’. The precise meaning of this obligation of non-discrimination will be discussed later. It is necessary first to focus on how this process of adjustment had to be managed. Ideally, the adjustment should have been effected by the Member State in a progressive way. However, former Article 37 left Member States with a wide margin of discretion in determining the rhythm and the manner in which the adjustment had to take (p. 841) place.178 The Commission could only formulate nonbinding recommendations in relation to these questions. What was essential was that the result of non-discrimination was achieved by the end of the transitional period. Prior to that point, the obligation progressively to adjust the monopolies did not have direct effect.179 6.115  Former Article 37 provided a transitory exception during the transitional period. The definitive regime applying to monopolies only applies at the end of the transitional period.180 6.116  Article 37(2) (and former Art 31) contains a standstill clause which prohibits Member States from adopting new discriminatory or restrictive measures during the transitional period. This standstill obligation has direct effect.181

(vi)  Obligations After the Transitional Period 6.117  Once the transitional period has ended, Article 37 obliges Member States ‘to ensure that no discrimination regarding the conditions under which goods are procured and marketed exists between nationals of the Member States’. This obligation has direct effect.182 The precise content of this obligation is to some extent still controversial, as it depends on how the notion of ‘discrimination’ is interpreted183 and also on the interpretation given to the expression ‘to ensure that no discrimination exists’. 6.118  State measures that directly discriminate against imported goods are clearly prohibited by Article 37(1). This is the case in respect of measures imposing quantitative limits on imports, by monopoly, discriminatory fiscal measures,184 or measures fixing the price of products in such a way as to discriminate against imports.185 6.119  Discriminatory behaviour of the monopoly in relation to imported goods, even in the absence of an explicit State measure, also seems to fall under Article 37(1),186 although this interpretation is controversial.187 6.120  Exclusive rights granted to a State monopoly are clearly affected by Article 37. However, the precise impact of the provision is still to some extent controversial. Some commentators have argued in the past that, since Article 37 did not require the abolition of State monopolies but only adjustment, this meant that any exclusive rights that they held were legal. It is clear that even if the provision does not impose the elimination of all exclusive rights, it does require the elimination of exclusive rights having a discriminatory character.188 The question is how to determine which exclusive rights are discriminatory and which are not. (p. 842) 6.121  Since the Manghera case,189 the Court of Justice has held that exclusive rights over the activities of importing,190 exporting,191 and/or the wholesale distribution192 of goods are per se discriminatory and therefore contrary to Article 37. 6.122  Much less clear is the status of exclusive rights over sales at the retail level. The Franzén judgment suggests that such exclusive rights do not fall under Article 37 if the monopoly is organized in such a way as to avoid discrimination between national and foreign goods.193 However, this approach seems incompatible with the traditional interpretation of Article 37 and also with three other judgments adopted by the Court of Justice on the same day.194 Indeed, Franzén ignores the fact that Article 37 not only bans discrimination between national and foreign goods but also discrimination between national and foreign operators and customers. A retail monopoly, by preventing foreign producers from reaching the customers of that Member State directly and by preventing national From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

consumers from reaching foreign operators directly, clearly discriminates between national and foreign operators and customers. It is therefore submitted that exclusive rights for sales at the retail level should also be considered contrary to Article 37.195 6.123  It has traditionally been thought that exclusive rights in respect of the production of certain types of goods do not fall under Article 37 due to their ‘industrial’ (as opposed to ‘commercial’) character.196 This highly questionable interpretation has never been either confirmed or denied by the Court of Justice. It seems clear, however, that, even if these exclusive rights of production were not caught by Article 37, they may fall under other provisions (such as Art 49 (former Art 52)).

(vii)  The Borderline Between the General and Special Regimes 6.124  In principle, Article 37 only applies to State measures (eg exclusive rights) that are closely ‘linked’ with the existence and the functioning of a monopoly. Measures that do not have such a close link are considered to be ‘detachable’ or general measures that are subject to Article 28.197 6.125  This dual regime is not always applied in a coherent way. First, the distinction between ‘linked’ and ‘detachable’ measures is not clear. In addition, the Court of Justice has in the (p. 843) past often applied Article 28 in relation to exclusive rights, which are the measures most closely ‘linked’ with the existence and the functioning of a monopoly.198 Thankfully, these ambiguities have a rather limited practical impact. The reason is that the prevailing interpretation of Article 37 as prohibiting discrimination between national and foreign operators and customers makes this provision very similar in substance to the prohibition contained in Article 28.

(c)  Article 106(1) in Combination with the Rules on Freedom to Provide Services and on Establishment: Articles 49 and 56 6.126  State measures that restrict the provision of services by undertakings established in other Member States will often conflict with Article 56 TFEU (former Art 49 EC and previously Art 59 EEC), the Treaty rule on freedom to provide services. State measures that restrict the establishment of undertakings coming from other Member States will often conflict with Article 49 TFEU (former Art 43 EC and previously Art 52 EEC), the Treaty provision on freedom of establishment.199 When restrictive State measures of this type are linked with a public or privileged undertaking, the Treaty rules on freedom to provide services and establishment will apply in combination with Article 106(1), and the special procedures of Article 106(3) may be used. This combined application has been used in different Commission decisions and EU Court cases.200 However, in other instances the Court of Justice has assessed the national measures directly under Article 49 or 56 without applying Article 106(1) in an explicit manner.201

(i)  Article 106(1) in Combination with Article 56 6.127  Article 56 TFEU, as interpreted by the Court of Justice, prohibits Member States from adopting measures that unduly restrict the provision of cross-border services by undertakings established in other Member States. Of course, this provision clearly prohibits restrictions having a discriminatory character, either in law or in fact, against foreign service providers and in favour of national ones. However, in accordance with case law, Article 56 also prohibits non-discriminatory but clearly restrictive State measures. Indeed, since the Mediawet judgment it is clear that State measures restricting the provision of services which, on their face, apply equally to both foreigners and nationals fall under Article 56 unless they can be justified as necessary to guarantee certain ‘mandatory requirements’.202

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6.128  Exclusive rights in the field of services would normally impede the access of foreign service providers to the relevant national market for services.203 Special rights may also restrict (p. 844) market access for foreign undertakings. Such exclusive or special rights would only be compatible with Article 56 if they could be proven to be proportional.204 Even if Article 56 TFEU remains in theory applicable across the board, it is now necessary also to look to the 2006 Services Directive, which implements the former provision in many (but not all) sectors.205

(ii)  Article 106(1) in Combination with Article 49 6.129  Article 49 obliges Member States to authorize the establishment within their territories of undertakings from other Member States on the same terms that apply to their own nationals. This means that, unlike Article 56, Article 49 in principle only seems to prohibit explicitly restrictive State measures that discriminate against foreigners.206 6.130  However, over time the case law has substantially enlarged the scope of this provision also to embrace non-discriminatory measures that nevertheless restrict market access. From early on, the Court of Justice interpreted the concept of discrimination in this context in a very broad manner and accordingly embraced not only formal but also material discrimination. Therefore, even measures that on their face apply equally to both nationals and foreigners were considered discriminatory if they in fact made establishment more difficult for foreigners than for nationals.207 The more recent case law has clearly moved the relevant legal test from the existence of discrimination to the existence of restrictions on market access, whether or not discriminatory.208 6.131  In a similar manner, exclusive rights were at first tolerated as compatible with the freedom of establishment. Indeed, they were initially considered to be non-discriminatory measures, as (apart from the monopolist) all national and foreign undertakings were treated on an equal footing.209 The Court of Justice subsequently made clear that a measure that discriminated in favour of a single national undertaking (and therefore against all the other undertakings, national and foreign) was also considered to be a discriminatory restriction of establishment contrary to Article 49.210 6.132  Therefore, it is now clear, in particular given the evolution in the case law mentioned in paras 6.130–6.131, that the granting of an exclusive right to a national undertaking would normally fall under Article 49. The application of this provision may be excluded, however, (p. 845) when the Member State can prove that the selection of the undertaking that benefits from the exclusive right has been made in an objective and transparent way.211

(iii)  Obligation to Select the Operator of a Public Service Concession Through a Competitive Tender 6.133  According to recent case law, Article 106(1) in combination with Articles 49 and 56 preclude a public authority from awarding a public service concession to an undertaking without first putting it out to tender. In other words, these provisions oblige Member States to use competitive tenders when awarding a public service concession to an undertaking.212 In accordance with the in-house rule, this obligation exists unless the award is granted to an undertaking entirely controlled by the public authority granting the concession and that undertaking carries out the essential part of its activities with the controlling authority.213 Even with this limited in-house exception, this interpretation of Article 106(1) in combination with Articles 49 and 56 has profound implications. Indeed, in the past the award of public service concessions had been deliberately left outside the public procurement Directives, due to the political opposition of various Member States which wanted to retain full freedom in their choice of the undertakings running concessions. Despite this absence from secondary law, the Court of Justice finally interpreted primary law as implying precisely this tendering obligation.214 This interpretation of Articles 106(1), 49, and 56 is probably one of the most important developments in EU law in recent years

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and one that has opened many opportunities for undertakings in the public services sector within the EU.

(iv)  Need for a Cross-Border Element 6.134  Article 106(1) in combination with Articles 49 and 56 only applies in principle to situations where a cross-border element exists. This is the case where an undertaking wants to establish in another Member State, or wants to provide services to customers residing in that Member State and is prevented from doing so by the existence of an exclusive or special right. In theory, in contrast to the way that Article 106(1) operates in combination with Article 102, Article 106(1) in combination with Articles 49 and 56 cannot normally be invoked by a national against a measure adopted by the authorities of his own Member State.215 However, these provisions may have an indirect impact whenever national law protects its nationals from ‘reverse discrimination’.216

(7)  Direct Effect 6.135  Article 106(1) when applied in combination with Article 102, 28, 37, 49 or 56 has direct effect.217 It can therefore be applied not only by the Commission but also by national courts.

Footnotes: 10 

Case C-41/90 Höfner [1991] ECR I-2015, para 16; Case C-320/91 Corbeau [1993] ECR I-2533, paras 10–12. 11 

See J. L. Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (Oxford: Oxford University Press, 1999), chs 4–6; and F. Blum and A. Logue, State Monopolies under EC Law (Chichester: Wiley, 1998). Different collective works have dealt with Art 86: Various, ‘Concorrenza tra settore pubblico e privato nella CEE’, Colloquio di Bruxelles della ‘Ligue Internationale contre la concurrence déloyale’, 5–6 March [1963] RDI anno XII 1– 256; Various, L’entreprise publique et la concurrence. Les articles 90 et 37 du Traité CEE et leurs relations avec la concurrence, Semaine de Bruges 1968 (Bruges: De Temple, 1969); Various, ‘Equal treatment of public and private enterprises’, 1978 FIDE Congress in Copenhagen [1978] FIDE Copenhagen vol 2; Various, ‘Le processus de libéralisation d’activités économiques et de privatisation d’entreprises face au Droit de la concurrence’, XVI Congrès de la FIDE [1994] FIDE Rome iii. Among the individual contributions, see R. Joliet, ‘Contribution à l’étude du régime des entreprises publiques dans la CEE’ [1965] AFDL i 23–92; G. Marenco, ‘Public Sector and Community Law’ (1983) 20 CML Rev 495– 527; J. Temple Lang, ‘Community Antitrust Law and Government Measures relating to Public and Privileged Entreprises: Article 90 EEC Treaty’ in 1984 Fordham Corp L Inst (1985), 543–81; H. Papaconstantinou, Free Trade and Competition in the EEC. Law, Policy and Practice (London/New York: Routledge, 1988); L. M. Pais Antunes, ‘L’Article 90 du Traité CEE—Obligations des Etats Membres et pouvoirs de la Commission’ [1991] RTDE ii 187–209; D. Edward and M. Hoskins, ‘Article 90: Deregulation and EC Law. Reflections Arising from the XVI FIDE Conference’ (1995) 32 CML Rev 157–86; R. Kovar, ‘Droit communautaire et service public: esprit d’orthodoxie ou pensée laïcisée’ [1996] RTDE xxxii (ii) 215–42, xxxii (iii) 493–533. 12

  Paras 6.46–6.47.

13

  Case C-393/92 Almelo [1994] ECR I-1517, para 31.

14

  In Case C-18/93 Corsica Ferries [1994] ECR I-1825, para 43, the CJ applied Art 106 to an act as commercial in nature as a tariff. The criterion used was obviously formal.

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15

  Case 30/87 Bodson [1988] ECR 2479.

16

  eg local authorities in Germany usually grant public service concessions to electricity distributors by means of private law contracts. It is submitted that these concessions should be treated as State measures to the extent that their aims are to regulate the marketplace from a perspective of public interest. 17

  Case 41/83 British Telecommunications [1985] ECR 873, paras 19–20.

18

  Bodson (n 15); Case C-323/93 La Crespelle [1994] ECR I-5077.

19

  Case C-41/90 Höfner [1991] ECR I-2015, paras 20–22.

20

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, para 20; Case T-128/98 Aéroports de Paris [2000] ECR II-3929, para 124. 21

  Cases C-159 and 160/91 Poucet [1993] ECR I-637, paras 17–19.

22

  Case C-67/96 Albany [1999] ECR I-5751, paras 77–87; Cases C-115–117/97 Brentjens [1999] ECR I-6025, paras 77–87; Case C-219/97 Drijvende [1999] ECR I-6121, paras 67–77; Cases C-180–184/98 Pavlov [2000] ECR I-6451, paras 108–119; Case C-218/00 Cisal di Battistello Venanzio [2002] ECR I-691, paras 31–42; Cases C-264/01, etc AOK Bundesverband [2004] ECR I-2493, paras 45–66. 23

  Case C-364/92 Eurocontrol [1994] ECR I-43, paras 24–30.

24

  Case C-343/95 Calí [1997] ECR I-1547, paras 22–23.

25

  Case C-218/00 Cisal di Battistello Venanzio [2002] ECR I-691, paras 43–45.

26

  Case C-82/01 P Aéroports de Paris [2002] ECR I-9297, para 74.

27

  Case C-49/07 MOTOE [2008] ECR II-4863, para 25–26.

28

  Case C-437/09 AGR2 [2011] ECR I-973, paras 45–46 and 53–65; Case C-350/07 Kattner [2009] ECR I-1513, para 43. 29

  Cisal di Battistello Venanzio (n 25), paras 22–23; Ambulanz Glöckner (n 20), para 19; Cases C-180–184/98 Pavlov [2000] ECR I-6451, paras 74, 75, and 108–119. 30

  Case C-350/07 Kattner [2009] ECR I-1513, para 43. An example where lack of sufficient control led the CJ to qualify the entity as an ‘undertaking’, can be seen in AGR2 (n 28), paras 45–46 and 53–65. 31

  Case C-22/98 Becu [1999] ECR I-5665, paras 21–30.

32

  See paras 6.131ff. See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 1.141–1.201, for a detailed study of the concept of ‘economic activity’. 33

  Art 2(b) of Commission Directive 2006/111/EC on the transparency of financial relations between Member States and public undertakings as well as on financial transparency within certain undertakings, OJ 2006 L318/17. 34

  Art 3(2) of Council Regulation (EC) No 139/2004 on the control of concentrations between undertakings, OJ 2004 L24/1. 35

  Case 118/85 Commission v Italy (transparency) [1987] ECR 2599, para 11.

36

  Case C-98/01 Commission v UK [2003] ECR I-4641; Case C-463/00 Commission v Spain [2003] ECR I-4581; Case C-503/99 Commission v Belgium [2002] ECR I-4809; Case C-367/98 Commission v Portugal [2002] ECR I-4731; Case C-483/99 Commission v France [2002] ECR I-4781; Case C-212/09 Commission v Portugal [2011] ECR I-10889.

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37

  The expression ‘privileged enterprises’ was used by Temple Lang, ‘Community Antitrust Law and Government Measures relating to Public and Privileged Enterprises’ (n 11), 543– 81. 38

  Case C-203/96 Dusseldorp [1998] ECR I-4075, para 58; Case T-260/94 Air Inter [1997] ECR II-997, paras 120–121. See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), ch 1, for a detailed study of the concept of ‘exclusive right’. 39

  Case 30/87 Bodson [1988] ECR 2479; Case C-323/93 La Crespelle [1997] ECR I-5077, para 17. 40

  However, Case C-209/98 Sydhavnens [2000] ECR I-3743, paras 53–54, used the expression ‘exclusive rights’ to refer to the rights granted to three undertakings for the fulfilment of the same activity in the same territory. It is submitted that the correct qualification in such case should have been ‘special rights’. 41

  Case C-41/90 Höfner [1991] ECR I-2015, para 28; Case 260/89 ERT [1991] ECR I-2925, para 31; Case C-179/90 Port of Genoa [1991] ECR I-5889, para 14; Case C-18/93 Corsica Ferries [1994] ECR I-1783, paras 39–41; Case C-323/93 La Crespelle [1997] ECR I-5077, paras 17 and 24; Cases C-180–184/98 Pavlov [2000] ECR I-6451, paras 124–126; Case C-475/09 AGR2 [2011] ECR I-973, para 67. 42

  British Telecommunications, OJ 1982 L360/36, para 26.

43

  Case 311/84 Télémarketing [1985] ECR 3261, para 16.

44

  Case 30/87 Bodson [1988] ECR 2479, paras 26–29.

45

  This was the approach followed by the GC in Case T-128/98 Aéroports de Paris [2000] ECR II-3929, paras 147–151. 46

  Case C-250/05 UPC [2007] ECR I-11135, para 21.

47

  The notion of ‘State measure’ was examined at paras 6.10ff.

48

  Case C-393/92 Almelo [1994] ECR I-1517, paras 30–31.

49

  See the definition of ‘exclusive rights’ contained in Art 1(5) of Commission Directive 2002/77/EC on competition in the markets for electronic communications networks and services, OJ 2002 L249/21. A similar definition appears in Art 2(f) of Directive 2006/111/EC. 50

  eg it is submitted that electricity concessions in Germany could be treated as State measures, despite their private law form, to the extent that the aim of the granting authorities is to regulate the market from a public interest perspective. 51

  Case C-160/08 Commission v Germany [2010] ECR I-3713, para 110.

52

  Case 13/77 Inno v ATAB [1977] ECR 2115, para 41.

53

  See paras 6.46–6.48.

54

  Case C-202/88 Terminal equipment for telecommunications [1991] ECR I-1223, paras 45–47; Cases C-271, 281 and 289/90 Telecommunications services [1992] ECR I-5883, paras 28–32. 55

  This definition of ‘special rights’ is currently contained in Art 1(6) of Directive 2002/77/ EC, but it originally appeared in Directive 94/46/EC on satellite communications, OJ 1994 L268/15 (no longer in force). A similar definition appears in Art 2(g) of Directive 2006/111/ EC. 56

  Inno v ATAB (n 52), para 41; Case C-327/12 SOA [2013] not yet reported, para 42.

57

  Case C-451/03 Servizi Ausiliari Dottori Commercialisti [2006] ECR I-2941.

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58

  Case C-49/07 MOTOE [2008] ECR I-4863, para 43.

59

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, para 24.

60

  The Commission has even recently stated that the granting to an undertaking of an exclusive right having an economic value may imply a State aid within the meaning of Art 107(1)—at least when this is done free of charge and without a competitive tender (Communication from the Commission on the application of the EU State aid rules to compensation granted for the provision of SGEI, OJ 2012 C8/4, para 33). However, this statement does not seem to have any real support in the case law or in the Commission’s practice (J. L. Buendia Sierra and M. Muñoz de Juan, ‘Some Legal Reflections on the Almunia Package’ [2012] 2 Eur State Aid Law Quarterly 63). 61

  Case C-18/93 Corsica Ferries [1994] ECR I-1783.

62

  Case C-203/96 Dusseldorp [1998] ECR I-4075, paras 53–63.

63

  Case C-179/90 Port of Genoa [1991] ECR I-5889, para 2.

64

  Case C-323/93 La Crespelle [1997] ECR I-5077, paras 15–22.

65

  Temple Lang, Community Antitrust Law and Government Measures’ (n 11), 552; Pais Antunes, ‘L’Article 90 du Traité CEE’ (n 11), 200. 66

  Port of Genoa (n 63), paras 21 and 24; Case C-18/88 RTT [1991] ECR I-5941, paras 28 and 36. 67

  Case 260/89 ERT [1991] ECR I-2925, paras 26 and 38.

68

  La Crespelle (n 64), paras 22 and 29.

69

  Case C-41/90 Höfner [1991] ECR I-2015, paras 34 and 40.

70

  See Section A.

71

  Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), chs 4 and

5. 72

  See para 6.33.

73

  Case 311/84 Télémarketing [1985] ECR 3261, para 16.

74

  Case 30/87 Bodson [1988] ECR 2479, paras 26–29.

75

  Case C-250/06 UPC [2007] ECR I-11135, para 21.

76

  Höfner (n 69), para 28; ERT (n 67), para 31; Port of Genoa (n 63), para 14; Corsica Ferries (n 61), paras 39–41; La Crespelle (n 64), paras 17 and 24; British Telecommunications, OJ 1982 L360/36, para 26; Case C-163/96 Raso [1998] ECR I-533, para 25; Dusseldorp (n 62), para 60; Case C-437/09 AGR2 [2011] ECR I-973, para 67. 77

  MOTOE (n 58), paras 29–42.

78

  Corsica Ferries (n 61), para 43; Case C-242/95 GT Link [1997] ECR I-4449; Zaventem, OJ 1995 L216/8. 79

  Port of Genoa (n 63), para 19; GT Link (n 78).

80

  Rødby, OJ 1994 L55/52.

81

  Case C-7/97 Bronner [1998] ECR I-7791.

82

  However, according to certain authors, the notion of ‘abuse’ is defined more loosely in cases where Art 102 is combined with Art 106(1). See D. Gerard, ‘State Action and the

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Limits of Competition—A Global Perspective’ in I. Lianos and D. Sokol (eds), The Limits of Antitrust: a Global Perspective (Stanford, NJ: Stanford University Press, 2013). 83

  Bodson (n 74), para 33.

84

  Case T-65/99 Strintzis Lines [2003] ECR II-5433, paras 119–122.

85

  Strintzis Lines (n 84), paras 119–122. See also Temple Lang, ‘Community Antitrust Law and Government Measures’ (n 11), 558. 86

  Strintzis Lines (n 84), para 171. See also Commission Guidelines on setting fines imposed pursuant to Article 23(2)(a) of Regulation No 1/2003, OJ 2006 C210/2, para 29. 87

  A. Pappalardo, ‘Measures of the States and Rules of Competition of the EEC Treaty’ in 1984 Fordham Corp L Inst (1985), 527–8. 88

  I. Hochbaum, ‘Commentaire de l’Article 90 du Traité CEE’ in J. Thiesing, H. Schröter, and I. Hochbaum, Les ententes et les positions dominantes dans le Droit de la CEE, updated translation of the 2nd German edn 1974 (Paris: Editions Jupiter/Editions de Navarre, 1977), 284; P. Mathijsen, ‘Egalité de traitement des entreprises dans le Droit des Communautés européennes’ in Various, Equal Treatment of Public and Private Enterprises, vol 2 (Copenhagen: FIDE, 1978), 11.4; A. Deringer, ‘Equal Treatment of Public and Private Enterprises: General Report’ in Equal Treatment of Public and Private Enterprises, ch 1, 1.19; A. C. Page, ‘Member States, Public Undertakings and Article 90’ [1982] EL Rev 24; C.D. Ehlermann, ‘Managing Monopolies: The Role of the State in Controlling Market Dominance in the European Community’ [1993] 2 Eur Comp L Rev 65–6. 89

  Temple Lang, ‘Community Antitrust Law and Government Measures’ (n 11), 559.

90

  Case C-18/88 RTT [1991] ECR I-5941, paras 23–24; Case C-163/96 Raso [1998] ECR I-533, para 31. 91

  MOTOE (n 58), paras 50.

92

  Case T-169/08 DEI [2012], not yet reported, para 86. This judgment is currently under appeal (Case C-553/12 P) and the recent Opinion of AG Wathelet recommends its annulment. 93

  MOTOE (n 58), para 52; Case C-67/96 Albany [1999] ECR I-5751, paras 116–121.

94

  MOTOE (n 58), para 43.

95

  Case C-202/88 Terminal equipment for telecommunications [1991] ECR I-1223, paras 48–52; RTT (n 90), paras 25–28; Cases C-46/90 and C-93/91 Lagauche [1993] ECR I-5267; Case C-69/91 Decoster [1993] ECR I-5335; Case C-92/91 Taillandier [1993] ECR I-5383. 96

  Albany (n 93), paras 112–117.

97

  MOTOE (n 58), para 52.

98

  Case C-69/91 Decoster [1993] ECR I-5335, para 21.

99

  Commission Communication on the status and implementation of Directive 90/388/EEC on competition in the markets for telecommunications services, OJ 1995 C275/2, see p 10. 100

  Case C-41/90 Höfner [1991] ECR I-2019.

101

  Cases C-180–184/98 Pavlov [2000] ECR I-6451, para 127; Albany (n 93), para 95. See also Case C-437/09 AGR2 [2011] ECR I-973, paras 69–73, in which the Court finds—not without some hesitation—that the conditions are not fulfilled. 102

  Dutch Courier Services, OJ 1990 L10/47, paras 14–15; Spanish Courier Services, OJ 1990 L233/22, para 11.

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103

  It is therefore surprising to see that this factor was considered in AGR2 (n 101), para 71, as one of the reasons allegedly excluding the application of Arts 106(1) and 102. The Court may have had some doubts about this conclusion, since it also looked at the possible application of the justification under Art 106(2). 104

  Case C-18/88 RTT [1991] ECR I-5941.

105

  Case 260/89 ERT [1991] ECR I-2925.

106

  Raso (n 90), paras 28–31.

107

  Case C-179/90 Port of Genoa [1991] ECR I-5889.

108

  The Court limited itself to stating that: it appears from the circumstances described by the national court and discussed before the Court of Justice that the undertakings enjoying exclusive rights in accordance with the procedures laid down by the national rules in question are, as a result, induced either to demand payment for services or to commit the rest of the abuses mentioned above. (Port of Genoa (n 107))

109

  DEI (n 92), paras 86 and 118. This judgment is currently under appeal (Case C-553/12 P) and the recent Opinion of AG Wathelet recommends its annulment. 110

  Case C-18/88 RTT [1991] ECR I-5941. This theory had previously been used by the Commission in its two decisions based on Art 106 concerning courier postal services in the Netherlands and Spain. 111

  Arguably the facts in the RTT case could have allowed the Court to construct the infringement as a conflict of interest case rather than as an extension of dominance case. The former could have been based on the inducement to undertake an abusive behaviour (a refusal to accept terminals of RTT’s competitors). Instead, the Court chose to see the case as an extension of dominance produced, not by any behaviour of the undertaking, but by the granting of what was de facto considered as a special or exclusive right the effects of which were similar to those of an abuse. On that basis, the recent DEI judgment underlines what the Court could have said in order to ignore what it did say (DEI (n 92), paras 103–109). 112

  Cases C-271, 281 and 289/90 Telecommunications Services Directive [1992] ECR I-5868, paras 35–36. 113

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, paras 40–43.

114

  Case C-426/99 Connect Austria [2003] ECR I-5197, paras 80–95; Commission Decisions in GSM Italy, OJ 1995 L280/49 and in GSM Spain, OJ 1995 L76/19. 115

  Commission Decision of 20 October 2004 K(2004)4001/3 (not published in the OJ) on the German postal legislation relating to mail-preparation services in particular the access of self-provision intermediaries and consolidators to the public postal network and related tariffs; Commission Decision of 7 October 2008, OJ 2008 C322/10 (summary publication) on the Slovakian postal legislation relating to hybrid mail services; Commission Decision of 5 March 2008, OJ 2008 C93/3 (summary publication) on the maintaining in force by the Hellenic Republic of rights in favour of Public Power Corporation SA for the extraction of lignite. The latter decision was annulled by the GC in DEI (n 90). 116

  DEI (n 92), paras 85–118. This judgment is currently under appeal (Case C-553/12 P) and the recent Opinion of AG Wathelet recommends its annulment. 117

  This obvious situation was also present in DEI (n 90), paras 89 and 92. However, in this case the GC—wrongly—uses this in order to deny the infringement of Arts 106(1) and 102.

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118

  DEI (n 92), paras 111 and 117.

119

  DEI (n 92), para 86.

120

  Case C-553/12 P. The recent Opinion of AG Wathelet recommends the annulment of the judgment of the GC. 121

  Case C-320/91 Corbeau [1993] ECR I-2533.

122

  Art 106(2) reads: Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interest of the Union.

123

  It is therefore no coincidence that this new approach coincided with a new emphasis on the exception under Art 106(2), which would permit, inter alia, exclusive rights which are indispensable to ensuring objectives of general economic interest being permitted. 124

  Case 155/73 Sacchi [1974] ECR 409.

125

  Case C-41/90 Höfner [1991] ECR I-2015; Case 260/89 ERT [1991] ECR I-2925; Case C-179/90 Port of Genoa [1991] ECR I-5889. 126

  Case C-18/88 RTT [1991] ECR I-5980; Cases C-271, 281 and 289/90 Telecommunications services [1992] ECR I-5883. 127

  Case C-323/93 La Crespelle [1997] ECR I-5077.

128

  Case C-387/93 Banchero [1995] ECR I-4663.

129

  C-203/96 Dusseldorp [1998] ECR I-4075, paras 53–68; Cases C-147 and 148/97 Deutsche Post [2000] ECR I-825, paras 39–41. 130

  Case C-209/98 Sydhavnens [2000] ECR I-3743.

131

  Case C-49/07 MOTOE [2008] ECR I-4863, paras 48–53; Case C-437/09 AGR2 [2011] ECR I-973, paras 68–72. 132

  Case T-169/08 DEI [2012], not yet reported, paras 103–119.

133

  Case C-553/12 P. The recent Opinion of AG Wathelet recommends the annulment of the judgment of the GC. 134

  Case C-163/96 Raso [1998] ECR I-533, paras 28–31; Case C-67/96 Albany [1999] ECR I-5751, para 95; Cases C-180–184/98 Pavlov [2000] ECR I-6451, para 127; MOTOE (n 132), para 52; AGR2 (n 132), para 69. 135

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, para 40.

136

  Deutsche Post (n 129), paras 39–41; Dusseldorp (n 129), paras 53–68.

137

  Case C-553/12 P. The recent Opinion of AG Wathelet recommends the annulment of the judgment of the GC. 138

  See eg the Commission Decision of 10 May 2007 on the special rights granted by the French Republic to La Banque Postale, Caisses d’Epargne and Crédit Mutuel for the distribution of the livret A and livret bleu. See also Case C-410/04 ANAV [2006] ECR I-3303, para 23; Case C-220/06 APERMC [2007] ECR I-12175, para 77; Case C-347/06 ASM Brescia [2008] ECR I-5641, paras 61–69.

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139

  Case 30/87 Bodson [1988] ECR 2479, paras 24–25.

140

  Höfner (n 125), paras 32–33; Port of Genoa (n 125), para 20.

141

  MOTOE (n 131), para 39.

142

  Ambulanz Glöckner (n 135), paras 47–49; MOTOE (n 131), para 39, specifies that: such an effect on trade between Member States can be assumed only if it is possible to foresee with a sufficient degree of probability, on the basis of a set of objective legal and factual elements, that the behaviour in question may have an influence, direct or indirect, actual or potential, on trade between Member States in such a way as might hinder the attainment of a single market between Member States.

See the Opinion of AG Kokott at paras 62–76, for a detailed analysis of this condition. 143

  MOTOE (n 131), paras 39–42.

144

  Case C-320/91 Corbeau [1993] ECR I-2533; MOTOE (n 131), paras 39–42; and see L. Hancher, ‘Case C-320/91, Corbeau’ (1994) 21 CML Rev 114. 145

  Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 803, paras 47–58.

146

  Opinion of AG Van Gerven, point 23, Port of Genoa (n 125).

147

  Ambulanz Glöckner (n 135), para 27.

148

  Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 6.06–6.13; Temple Lang, ‘Community Antitrust Law and Government Measures’ (n 11), 550. 149

  See, however, Case C-482/99 France v Commission (Stardust) [2002] ECR I-4397, which requires additional elements showing the ‘imputability’ of the conduct to the State. 150

  Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 6.02–6.05; IInd Report on Competition Policy, 1972, para 129; Vth Report on Competition Policy, 1976, para 275. 151

  Spanish Transport Tariffs, OJ 1987 L194/28.

152

  XXIst Report on Competition Policy, 1991, para 334.

153

  See C. Barnard, The Substantive Law of the EU: The Four Freedoms (3rd edn, Oxford: Oxford University Press, 2010); P. Oliver et al (eds), Oliver on Free Movement of Goods in the European Union (5th edn, Oxford: Hart Publishing, 2010); Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 6.14–6.115 for a general overview. 154

  Case 8/74 Dassonville [1974] ECR 837, para 5.

155

  Case 120/78 Cassis de Dijon [1979] ECR 649, para 8.

156

  Cases C-267 and 268/91 Keck [1993] ECR I-6097.

157

  Keck (n 156), para 15.

158

  Keck (n 156), paras 16–17.

159

  Reich, ‘The “November Revolution” of the European Court of Justice’ (n 7); A. Mattera, ‘De l’arrêt Dassonville à l’arrêt Keck: l’obscure clarté d’une jurisprudence riche en principes novateurs et en contradictions’ [1994] RMUE i 153. 160

  Case C-110/05 Commission v Italy (trailers) [2009] ECR I-519.

161

  Case C-209/98 Sydhavnens [2000] ECR I-3743, paras 31–43; Case C-205/07 Gysbrechts [2008] ECR I-9947.

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162

  M. Van Der Woude, ‘Article 86: “Competing for Competence”’ (1991) EL Rev Competition Law Checklist 72. 163

  Commission Directive 88/301/EEC on competition in the markets for telecommunication terminal equipment, OJ 1988 L131/73, para 3, confirmed by the CJ in the judgment of Case C-202/88 Terminal equipment for telecommunications [1991] ECR I-1223, paras 33–39; Case C-179/90 Port of Genoa [1991] ECR I-5889, para 21. 164

  Cases C-277, 318 and 319/91 Ligur Carni [1993] ECR I-6621, paras 35–38, Case C-323/93 La Crespelle [1997] ECR I-5077, paras 28–29. 165

  This question is analysed in this section at paras 6.124 and 6.125.

166

  See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), ch 3. On the doctrine see in L’entreprise publique et la concurrence (n 11): P.-A. Franck, ‘Les entreprises visées aux articles 90 et 37 du Traité CEE’, 44; C. A. Colliard, ‘Régime de l’Article 37 du Traité CEE: les aspects juridiques’, 143; and R. Franceschelli, ‘Rapport sur l’Article 37 du Traité CEE (présenté le 26 octobre 1967 à la Ligue Internationale contre la concurrence déloyale)’, 481. See also G. C. Rodriguez Iglesias, El régimen jurídico de los monopolios de Estado en la Comunidad Económica Europea (Madrid: Instituto de Estudios Administrativos, 1976); F. Burrows, ‘State Monopolies’ [1983] YEL 25–47. 167

  The Treaty of Amsterdam repealed paras 3, 5, and 6 of former Art 37 EEC as those paragraphs had become redundant once the transitional period ended. Paras 1, 2, and 4 of former Art 37 EEC became paras 1, 2, and 3 of Art 31 EC. The only substantive change was the elimination of the word ‘progressively’ and of the reference to the transitional period, which had become redundant. Following the Lisbon Treaty, this provision has been ‘lucky’ enough to recover its original number: Art 37 TFEU. 168

  Art 37 also applies to situations where the State influences imports through a greater number of undertakings: Case 30/87 Bodson [1988] ECR 2479, paras 12–14. 169

  Complete control over imports or exports is not necessary for Art 37 to apply. In Case C-347/88 Greek oil monopoly [1990] ECR I-4747, para 41, the CJ found that control over 65 per cent of imports implied an appreciable influence. 170

  In principle, Art 37 only applies to goods not to services: Case 155/73 Sacchi [1974] ECR 409, para 10; Case 271/81 Mialocq [1983] ECR 2057, para 8; Case 30/87 Bodson [1988] ECR 2479, para 10; Case C-17/94 Gervais [1995] ECR I-4353, para 35; Case C-6/01 Anomar [2003] ECR I-8621, paras 57–61. However, Art 37 may apply to cases where an undertaking can appreciably influence the trade in certain goods because it has a monopoly over certain services: Mialocq, para 10; Gervais, paras 36–37. A monopoly over funeral services, eg, might in some cases allow the undertaking to influence the trade in coffins: Bodson, para 10. Electricity is considered a good, not a service, and therefore electricity monopolies are subject to Art 37, as confirmed by the Court in Case C-393/92 Almelo [1994] ECR I-1517, para 28; and Case C-158/94 Italian electricity monopoly [1997] ECR I-5789, para 17. 171

  Imports coming directly from third countries are not covered by Art 37: Case 91/78 Hansen [1979] ECR 935, para 19. 172

  Case C-157/94 Dutch electricity monopoly [1997] ECR I-5699, para 20.

173

  Dutch electricity monopoly (n 172), paras 17–18.

174

  This clearly results from the text of Art 37(1), second para. However, the CJ seems reluctant to admit it: Case 271/81 French artificial insemination monopoly [1983] ECR 2079, paras 14–18; Case C-393/92 Almelo [1994] ECR I-1517, paras 29–32. Most commentators also restrict the application of Art 37 to de jure monopolies: Franck, ‘Les entreprises visées aux articles 90 et 37 du Traité CEE’ (n 166), 47; Rodriguez Iglesias, El régimen jurídico de los monopolios de Estado en la Comunidad Económica Europea (n 166), From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

32; J.-E. De Cockborne, ‘Les monopoles nationaux à caractère commercial’ in Various, Commentaire Mégret, 2nd edn, Editions de l’Université de Bruxelles, 1992, 313. 175

  The concept of Member State is not restricted to the national government and includes all the public authorities of the country (regional governments, local councils, etc): Bodson (n 170), para 13. 176

  Dutch electricity monopoly (n 172), para 20. Opinion of AG Roemer, point 63, Case 82/71 SAIL [1972] ECR 119. 177

  The transitional period ended on 31 December 1969 for the original Member States; on 31 December 1977 for the UK, Ireland, and Denmark; on 31 December 1985 for Greece; on 31 December 1991 for Spain; and on 31 December 1992 for Portugal. No transitional period for the free movement of goods was foreseen in subsequent enlargements (except for a three-year transitional period for the Austrian tobacco monopoly). 178

  Case C-361/90 Portuguese alcohol monopoly [1993] ECR I-95, paras 12–18.

179

  Case C-76/91 Caves Neto Costa [1993] ECR I-117, para 8.

180

  Case 45/75 Rewe [1976] ECR 196, para 24; Case 86/78 Peureux I [1979] ECR 897, para 31. 181

  Case 6/64 Costa v ENEL [1964] ECR 585.

182

  Rewe (n 180), para 4.

183

  M. G. Ross, ‘Article 37—Redundancy or Reinstatement’ (1982) 7(4) EL Rev 281–99.

184

  Case 13/70 Cinzano [1970] ECR 1089; Case 91/75 Miritz [1976] ECR 217; Rewe (n 180). 185

  Case 91/78 Hansen [1979] ECR 935; Case 78/82 Italian tobacco monopoly [1983] ECR 1955. 186

  Case C-438/02 Hanner [2005] ECR I-4551, para 38; Hansen (n 185), para 14; Ist Report on Competition Policy, 1971, para 196; De Cockborne, ‘Les monopoles nationaux à caractère commercial’ (n 174), 322 and 342. See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 3.117–3.126. 187

  The CJ seemed to reject this interpretation in other cases: Case 30/87 Bodson [1988] ECR 2479, para 14; Case C-393/92 Almelo [1994]1 ECR I-1517, paras 29–32. 188

  Rodriguez Iglesias, El régimen jurídico de los monopolios de Estado en la Comunidad Económica Europea (n 166), 87–8. 189

  Case 59/75 Manghera [1976] ECR 91.

190

  Manghera (n 189), paras 9–13; Case C-347/88 Greek oil monopoly [1990] ECR I-4747, paras 42–44; Case C-157/94 Dutch electricity monopoly [1997] ECR I-5699, paras 15 and 17; Case C-158/94 Italian electricity monopoly [1997] ECR I-5789, paras 23 and 32; Case C-159/94 French electricity and gas monopolies [1997] ECR I-5815, paras 33, 39, and 40. 191

  Italian electricity monopoly (n 190), paras 24 and 25; French electricity and gas monopolies (n 190), paras 34 and 35. 192

  Greek oil monopoly (n 190), paras 43, 44, and 56.

193

  Case C-189/95 Franzén [1997] ECR I-5909, paras 37–66.

194

  Dutch electricity monopoly (n 190), paras 21–23; Italian electricity monopoly (n 190), paras 23 and 32; French electricity and gas monopolies (n 190), paras 33 and 38–40.

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195

  See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 3.162–3.172. AG Léger followed this same line in his Opinion in Case C-438/02 Hanner (n 186), paras 62 and 115. However, the Court maintained the Franzén approach at para 35. 196

  This is the dominant opinion: R. C. Beraud, ‘L’aménagement des monopoles nationaux prévu à l’Article 37 du Traité CEE à la lumière des récents développements jurisprudentiels’ [1979] RTDE iv 586; F. Wooldridge, ‘Some Recent Decisions Concerning the Ambit of Article 37 of the EEC Treaty’ [1979] LIEI i 120; Oliver, Oliver on Free Movement of Goods (n 153), 320; Mattera, ‘De l’arrêt Dassonville à l’arrêt Keck’ (n 159), 36; M. Bazex, ‘L’entreprise publique et le Droit européen—Public Enterprise and European Law’ [1991] RDAI—IBLJ iv 471. 197

  Hansen (n 195), para 9; Case 86/78 Peureux I [1979] ECR 897, paras 35–37; Case C-387/93 Banchero [1995] ECR I-4661, para 29; Franzén (n 193), paras 35–36. 198

  Greek oil monopoly (n 190); Case C-202/88 Terminal equipment for telecommunications [1991] ECR I-1223, paras 33–43; Case C-323/93 La Crespelle [1994] ECR I-5077, paras 28– 39. 199

  See Barnard, The Substantive Law of the EU (n 153); G. Marenco, ‘The Notion of Restriction on the Freedom of Establishment and Provision of Services in the Case-Law of the Court’ [1991] 11 YEL 111–50. See also Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 6.116–6.275. 200

  See eg Case C-410/04 ANAV [2006] ECR I-3303, paras 15–33; Commission of 10 May 2007 (not published in the OJ) on the special rights granted by the French Republic to La Banque Postale, Caisses d’Epargne and Crédit Mutuel for the distribution of the livret A and livret bleu. 201

  See eg Case C-250/06 UPC [2007] ECR I-11135, paras 13–51.

202

  Case C-353/89 Mediawet [1991] ECR I-4069, paras 14–19; Case C-288/89 Stichting Collectieve Antenne Gouda [1991] ECR I-4007, paras 10–15; Case C-124/97 Läärä [1999] ECR I-6067, paras 29–30; Case C-6/01 Anomar [2003] ECR I-8621, para 65. However, more recent case law seems to exclude non-discriminatory measures from Art 49: Cases C-544 and 545/03 Mobistar [2005] ECR I-7723, para 31. 203

  Case 352/85 Bond van Adverteerders [1988] ECR 2085, paras 24–26; Case C-3/88 Commission v Italy (data services) [1989] ECR 4035, paras 8–9; Case C-353/89 Mediawet [1991] ECR I-4069, para 25; Case 260/89 ERT [1991] ECR I-2925, paras 19–26. 204

  Commission v Italy (data services) (n 203), paras 10–11; Mediawet (n 203), para 42; Stichting Collectieve (n 202), para 24; Läärä (n 202), para 33; Case C-451/03 Calafiori [2006] ECR I-2941, paras 33–37. In the gambling sector, the margin of discretion of Member States is wider (Case C-275/92 Schindler [1994] ECR I-1039; Case C-67/98 Zenatti [1999] ECR I-7289; Case C-6/01 Anomar [2003] ECR I-8621, paras 73–87; Case C-42/07 Santa Casa [2009] ECR I-7633) but still subject to certain limits (see Case C-243/01 Gambetti [2003] ECR I-13031, paras 65–76). 205

  European Parliament and Council Directive 2006/123/EEC on services in the internal market, OJ 2006 L376/36. The Directive excludes many sectors from its scope and, in particular, it excludes its application to SGEIs. 206

  Marenco, ‘Le Traité CEE interdit-il aux Etats membres de restreindre la concurrence?’ (n 5), 111–28. There are, however, some judgments concerning nondiscriminatory restrictions: Case 107/83 Klopp [1984] ECR 2971; Case 96/85 Commission v

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France [1986] ECR 1475; Case 143/87 INASTI [1988] ECR 3877. See also Greek Insurances, OJ 1985 L152/25. 207

  Commission v Italy (data services) (n 203), paras 8–9.

208

  Case C-55/94 Gebhard [1995] ECR I-4165.

209

  Case 6/64 Costa v ENEL [1964] ECR 1141; Case 90/76 Van Ameyde [1977] ECR 1091, paras 26–30. 210

  Commission v Italy (data services) (n 203), paras 8–9; Case C-243/01 Gambetti [2003] ECR I-13031, para 48; Case C-451/03 Calafiori [2006] ECR I-2941, paras 34–35. 211

  See Case C-458/03 Parking Brixen [2005] ECR I-8585, according to which Arts 49 and 56, and the principles of equal treatment, non-discrimination, and transparency, preclude a public authority from awarding a public concession without putting it out to tender. 212

  Case C-458/03 Parking Brixen [2005] ECR I-8585, para 52; Case C-410/04 ANAV [2006] ECR I-3303, para 23. 213

  Parking Brixen (n 212), para 62; ANAV (n 212), para 24.

214

  The retroactive effects of this interpretation were, however, avoided by the CJ in Case C-347/06 ASM Brescia [2008] ECR I-5641, paras 70–71. 215

  Case C-41/90 Höfner [1991] ECR I-2015, paras 35–41; Case C-17/94 Gervais [1995] ECR I-4353, paras 23–28; See also Case C-212/06 Government of Communauté française and Gouvernement wallon v Gouvernement flamand [2008] ECR I-1683. 216

  Case C-451/03 Calafiori [2006] ECR I-2941, paras 28–29.

217

  Temple Lang, ‘Community Antitrust Law and Government Measures’ (n 11), 544; Case C-179/90 Port of Genoa [1991] ECR I-5889, para 23.

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Part I General Principles, 6 Article 106—Exclusive or Special Rights and other Anti-Competitive State Measures, D Article 106(2): Services of General Economic Interest and Other Public Interest Objectives José Luis Buendia Sierra From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): State and competition law — Undertakings — Public undertakings — State undertakings — Regulatory framework, information technologies — State monopolies — Burden and standard of proof — Exclusionary abuse — Effect on trade between member states

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(p. 846) D. Article 106(2): Services of General Economic Interest and Other Public Interest Objectives 6.136  The strict regime contained in Article 106(1) in relation to anti-competitive State measures must be balanced by the exceptions foreseen in the Treaty for those restrictions that may be justified by public interest objectives. Article 106(2) (former Art 86(2) EC and previously Art 90(2) EEC), in particular, may allow derogation from the prohibitions contained in Article 106(1) when this is necessary for the maintenance of a ‘service of general economic interest’ (often referred to by the acronym ‘SGEI’ or by the expression ‘public service’) that has been entrusted by the State to one or more undertakings.218 6.137  Article 106(2) provides that: Undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly shall be subject to the rules contained in this Treaty, in particular to the rules on competition, in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them. The development of trade must not be affected to such an extent as would be contrary to the interest of the European Union. This provision aims to find a balance between the EU objective of market integration, on the one hand, and national public service objectives, on the other hand. These sets of objectives are not necessarily in conflict: the opening of certain activities to competition has often led to lower prices and increased choice for consumers. However, such conflict may arise in certain cases. The possibility of conflict increases with the progress of market integration and explains the increased importance of Article 106(2) TFEU in recent years from an obscure provision rarely applied to the object of hot legal and political debate. The application of Article 106(2) also has to take into account the existence of other provisions also related to SGEI, in particular Article 14 and Protocol 26 to the TFEU, which are examined in paras 6.222–6.227.

(1)  The Undertakings to which Article 106(2) Relates 6.138  Article 106(2) refers to certain ‘undertakings’. This means that to be able to rely on the exception, the entities in question must carry out ‘economic activities’. In principle, two different types of undertaking are capable of coming within the scope of Article 106(2): first, those undertakings entrusted with the management of services of general economic interest and, secondly, those undertakings which are revenue-producing monopolies.

(p. 847) (i)  Undertakings 6.139  As explained in paras 6.17–6.25, the EU competition rules only apply to ‘undertakings’, that is, to entities which carry out ‘economic activities’. In the same way, only those exclusive rights concerning the exercise of economic activities come within the scope of Articles 37 and 106(1). Accordingly, it is only in respect of these exclusive rights and in relation to the carrying out of economic activities that the exception contained in Article 106(2) can possibly apply. 6.140  The case law of the Court of Justice has always distinguished between non-economic activities (not subject to the competition rules) and activities of general economic interest (subject to the competition rules but capable of falling within Art 106(2)). In this context, it is necessary to point out that the criteria employed to distinguish between economic and non-economic activities do not coincide with those used to decide which economic activities must be considered to be of general economic interest. The analysis of the possible application of Article 106(2) presupposes that it is beyond doubt that the activity in question is ‘economic’ in nature. If an activity is non-economic, Member States are free to

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grant or maintain exclusive rights without the need to justify them in the context of Articles 37 and 106.219

(ii)  Undertakings Entrusted With the Operation of Services of General Economic Interest 6.141  Article 106(2) refers first to those undertakings to which a public authority has entrusted the operation of a service of general economic interest. The scope of Article 106(2) is defined by the role of the undertakings in question and not by their public or private nature. Both public and private undertakings come within this provision.220 6.142  The types of undertakings referred to in Article 106(2) do not necessarily coincide with the types of undertakings set out Section C.3.221 However, it is clear that exclusive/ special rights and/or the public ownership of many of the undertakings included in Article 106(1) are explained by the fact that they are undertakings to which tasks of general economic interest have been entrusted under Article 106(2). 6.143  There are two parts to this definition which cause problems: the meanings of ‘entrusted’ and the content of public service. Each will be examined in turn.

(iii)  Services of General Economic Interest 6.144  The concept of ‘services of general economic interest’ contained in Article 106(2) is an EU law concept. A service of general economic interest is a service of an economic nature the provision of which to the general public is considered essential, which justifies a degree of intervention by the public authorities in order to show that a given service is actually provided and to control the conditions under which it is provided. 6.145  Article 106(2) specifies that the general interest must be of an economic nature. This requirement is frequently omitted by the Court of Justice in its judgments which appears to indicate that the Court considers the adjective ‘economic’ to be redundant, adding nothing in the context of Article 106(2). ‘General interest’ and ‘general economic interest’ thus appear to be (p. 848) the same.222 The economic nature of the general interest protected must be broadly defined to include, for example, cultural activities.223 6.146  One can distinguish between ‘services of general interest’ and ‘services of general economic interest’. The former category includes the provision of any service considered of general interest by the public authorities, regardless of whether it is of an economic nature. The latter category forms part of the former and only includes the provision of services of an economic nature.224 The competition rules, and in particular Article 106(2), only apply to this latter category. 6.147  A service or benefit offered only to certain undertakings or economic sectors cannot in principle be considered to be of ‘general’ interest. To come within this definition, the service must concern general economic activity.225 The Court suggested that this was the case in BRT II, when affirming that a copyright management undertaking ‘to which the State has not assigned any task and which manages private interest, including intellectual property rights protected by law’ is not an undertaking entrusted with a task of general economic interest.226 In principle, an SGEI should be addressed mainly to private citizens, although undertakings may also benefit from it, and they normally do. Indeed, traditional SGEIs in sectors such as electricity, postal services, telecommunications, and so on are as important for undertakings as for private citizens, if not more so. It has been debated whether services that are directly addressed only to undertakings may be considered to be SGEIs. It is submitted that providing a service or infrastructure to undertakings may sometimes be the best way of indirectly disseminating the benefit to the whole of society. This approach has found support in a number of cases.227

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6.148  Regional policy and, in particular, the correction of regional imbalances can be considered to be tasks of general interest, although limited to certain geographical areas.228 The same applies to actions directed at certain disadvantaged groups of people. The essential point is that the considerations upon which such actions are based are of a general nature, although their application in practice is logically directed at certain groups. 6.149  It follows that the concept of ‘services of general economic interest’ roughly corresponds to the concept of ‘public service’ used by certain Member States.229 The Court of Justice has also (p. 849) sometimes used both terms as though they are synonymous.230 The fact that Article 106(2) does not actually refer to ‘public service’ is probably due to the desire to emphasize the fact that it is an EU law concept, and as such it need not correspond exactly to the concept of public service employed in some Member States.231 6.150  Stating that the concept of ‘services of general economic interest’ is an EU concept in no way implies that deciding which general economic interest services a given Member State can offer to its citizens is a matter for the EU authorities. Normally this would only be the case in areas in which EU harmonization of the public service objectives has taken place, such as telecommunications or postal services. However, in the absence of EU harmonization, this is clearly a task for the public authorities of the Member State in question. In this scenario, the public authorities of each Member State are, in principle, free to decide which public services they wish to guarantee for their citizens, without those services necessarily having to coincide with those offered in other Member States. The Member States have a large margin of discretion in this area. The discretion is certainly not absolute, but—as Protocol 26 to the TFEU makes clear—in principle it can only be contested by the EU institutions in the case of ‘manifest error’.232 The Treaty itself makes clear that the large degree of discretion of Member States in defining SGEIs is even wider in the public broadcasting sector.233 6.151  Even if the margin of discretion given to the Member States is clearly large, the EU concept of ‘services of general economic interest’ should still be understood as a maximum standard beyond which Member States cannot go. If this were not the case, a Member State might artificially set a concept of public service overly wide with the sole objective of giving excessive protection to a certain operator. The concept therefore acts as the final barrier preventing the exception of Article 106(2) from being abused by Member States.234 This is clear from judgments of the Court of Justice such as Port of Genoa (port activities which were the object of a legal monopoly)235 and BRT II (the management of copyrights).236 6.152  The following activities have been considered by the EU Courts or by the Commission to be SGEIs, at least in certain circumstances (the list is not exhaustive): certain port services,237 (p. 850) the establishment and operation of a public telecommunications network,238 water distribution,239 the operation of television services,240 electricity distribution,241 the operation of certain transport lines,242 employment recruitment,243 basic postal services,244 the mainten- ance of a postal service network in rural communities,245 regional policy within a Member State,246 pension funds,247 certain airport services,248 waste management,249 ambulance services,250 health services,251 etc. 6.153  In general, the Court of Justice and the Commission have, as far as possible, avoided stating clearly that a given activity is or is not an SGEI. Frequently, it is assumed, for the sake of argument, that an activity has such a nature in order for it then to be shown that in any event the application of the Treaty provisions would not endanger the fulfilment of its task.252 Despite the changes in primary law and case law referred to in para 6.150, the

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Commission has sometimes challenged the genuine SGEI character of the schemes put in place by Member States.253 6.154  Moreover, the concept of SGEI is a dynamic concept, capable of changing over time according to factors such as technological advances, the state of EU integration, or variations in society’s perception of the needs which must be covered by the State. In other words, what is considered today to be an SGEI may be considered differently in the future and vice versa.254

(iv)  Entrustment 6.155  In order for Article 106(2) to apply to an undertaking, it is necessary for the management of an SGEI to have been entrusted to it by a public authority.255 In this context, public authorities can be of a national, regional, or local nature.256 The entrustment normally implies the imposition of certain obligations on the undertaking operating the SGEI.257 (p. 851) 6.156  The public entity that grants the task in question to an undertaking must do so in the exercise of its functions as a public authority258 and may be carried out by an act of the State in the exercise of its prerogative power;259 either via a legal provision260 and/or via another public law instrument (regulation, public law contract, grant, etc).261 6.157  Whether an SGEI under Article 106(2) can be entrusted to an undertaking by means of a simple private law contract is debatable.262 Without doubt, in such cases the State does not exercise its prerogative powers, but this does not necessarily mean that it does not act in the exercise of public authority functions. It is perfectly possible and even normal for a public authority, in the exercise of its everyday administrative functions, to make use of private law instruments. 6.158  Conversely, if a public entity enters into a contract governed by private law with an undertaking for the purpose of carrying out of an economic activity, it is not, by definition, acting in the exercise of its public authority functions. Such a contract could not come within the meaning of Article 106(2).263 6.159  In principle, if a public authority merely authorizes the exercise of certain activities this does not in itself mean that the activity has been ‘entrusted’ within the meaning of Article 106(2).264 Equally, the fact that certain activities undertaken by private initiative obtain the express approval of the public authorities does not automatically mean that they have been ‘entrusted’ either.265 ‘Entrustment’ under Article 106(2) may, however, occur following a suggestion by an operator. The important element is the underlying positive decision by the public authority to consider an activity as being ‘of general interest’.266 6.160  The assignment of the task must be to one or more specific undertakings in an individualized manner.267 6.161  The assignment by the public authority of a task of general interest to an undertaking is a different act from the possible grant of an exclusive right to that undertaking.268 Of course, in many cases both acts will be carried out in parallel and the function of the exclusive right will be to allow the task to be properly fulfilled. Nevertheless, it is necessary to distinguish clearly between them.269

(p. 852) (v)  Revenue-Producing Monopolies 6.162  Apart from undertakings entrusted with SGEIs, Article 106(2) also refers to another category of undertakings: revenue-producing monopolies. There is a general consensus, however, that exclusive rights the only objective of which is the generation of revenue would in principle never be justified under Article 106(2).270 This is because revenueproducing monopolies would normally fail to satisfy the proportionality test, as there are less restrictive means available for obtaining such revenue, such as fiscal measures.271 It is

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probably for this reason that Article 106(2) has not been invoked or used for many years in relation to revenue-producing monopolies.

(2)  Article 106(2) as an Exception Applicable to the Behaviour of Undertakings and to State Measures 6.163  Articles 101 and 102 are provisions addressed to undertakings; as such, they apply directly not only to private but also to public undertakings. The point of departure is therefore that these provisions apply to all undertakings. Article 106(2), however, expressly provides for a limited exemption: Articles 101 and 102 will only apply to the behaviour of an undertaking that has been entrusted with an SGEI to the extent that their application does not endanger the fulfilment of the undertaking’s specific role. It follows from this that Article 106(2) can be invoked by these undertakings in the context of procedures based on Articles 101 and/or 102.272 6.164  Despite some early doubts,273 it is now clear that the exception provided for in Article 106(2) can also apply to State measures (eg exclusive or special rights) that conflict with certain rules of the Treaty addressed to the Member States,274 such as Article 106(1) in combination with Article 34, 37, 49, 56, or 102.275 6.165  The relationship of Article 106(2) with the rules on State aids (Arts 107 and 108) has been controversial in the past. According to certain case law, subsidies granted in consideration of additional costs incurred as a result of public service obligations were State aids the compatibility of which had to be examined under Article 106(2).276 Other judgments indicated that such subsidies were not considered to be State aids within the meaning of Article 107(1), so that the exemption of Article 106(2) would have no role to play as regards State aids.277 The Altmark judgment took an intermediate approach: the judgment considered that non-aid character can only be accepted for public service compensations granted in accordance with certain strict conditions.278 This judgment appeared to suggest that many public service (p. 853) compensation schemes imply State aids. Therefore it is now clear that the exception provided for in Article 106(2) can also apply to State aids. Indeed, the vast majority of Commission decisions applying Article 106(2) are currently adopted in the area of State aid. Also, the judgments reviewing these decisions constitute an interesting addition to the case law on this provision. 6.166  The detailed conditions of application were clarified with the adoption in 2005 of a Commission decision addressed to all Member States under Article 106(3) dealing with public service compensation (ie aids granted by Member States to compensate undertakings in charge of services of general economic interest for the additional costs resulting from those duties).279 This decision was part of the so-called ‘Monti package’. It was replaced in 2012 by a new decision belonging to the so-called ‘Almunia package’.280 Both decisions specify that certain types of compensation (those below a certain threshold and fulfilling certain conditions) are considered State aid but are declared compatible with Article 106(2) and also exempted from the notification obligation of Article 108. Apart from these Article 106(3) decisions, the Commission also adopted, in the context of both packages, other instruments concerning SGEI and, in particular, various communications explaining its approach in relation to those cases falling outside the scope of the decision and which must therefore be examined on an individual basis.281 Even if the Commission only adopted the ‘Almunia package’ for its application in the State aid area, it contains some useful elements that could also illustrate the Commission’s interpretation of Article 106(2) as a derogation from other Treaty rules.

(3)  Conditions for the Application of Article 106(2)

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6.167  It should be kept in mind that Article 106(2), as with any exception, should—at least in theory—be interpreted strictly.282 The Commission is under no obligation to apply this rule ex officio; it would only be forced to examine it if the rule is invoked by the Member State or by the undertaking in during proceedings.283 Clearly, the mere invocation of Article 106(2) by a Member State or an undertaking does not automatically mean that the exception will be applied. This would only occur if all the conditions set out in the provision are fulfilled. The (p. 854) first condition, that an SGEI must have been entrusted by the State to one undertaking, has already been examined. The other two conditions are that the restriction must be proportionate (or necessary) and that the interest of the EU must be respected.

(i)  The Necessity of the Measure 6.168  Article 106(2) only applies to the extent that the restriction is necessary for the fulfilment of the relevant purpose of general economic interest. In other words, the exception will only apply if the proportionate character of the restriction can be proved. Thus, the legality of many State measures or behaviour of undertakings will depend on the interpretation given to that condition. Clearly, this fact makes its interpretation extremely controversial.

(ii)  The Proportionality Principle 6.169  The proportionality test contained in Article 106(2) is no different from those existing in other areas of EU law. The proportionality test is considered to be fulfilled when the following three elements are proved:284 (a)  that a causal link exists between the measure and the objective of general interest; (b)  that the restrictions introduced by the measure are balanced by the benefits to the general interest; and (c)  that the objective of general interest cannot be achieved through other less restrictive means. 6.170  The question of causation is relatively simple and objective. In order to be protected by Article 106(2) an exclusive right must contribute in some way to carrying out a task of general economic interest. The second element is confused in practice with the last requirement of Article 106(2) concerning the interest of the EU, which will be analysed at para 6.214. The main problems arise in connection with the question of necessity (the objectives cannot be achieved by less restrictive methods). 6.171  The functioning of the proportionality test in the field of Article 106(2) which has just been described, is identical to that employed in the field of free movement of goods. However, there is at first sight an important difference in content between mandatory requirements and Article 36 TFEU (former Art 30 EC but originally Art 36 EEC), on the one hand, and the exception contained in Article 106(2), on the other. 6.172  Indeed, the Court has always maintained that the exceptions contained in Article 36 cannot be used to safeguard interests of an economic nature. The same is probably true of mandatory requirements, the exception first laid down in Cassis de Dijon.285 In order to be covered by these exceptions, the requirements or interests protected by the State measure in question must be of a non-economic nature. The Court has held that a Member State cannot evade its obligations under the Treaty on the pretext of economic problems caused by the elimination of barriers to intra-EU trade.286 However, restrictive national regulations

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can sometimes be justified to protect the health of consumers or the protection of the environment, these being non-economic interests. 6.173  Putting to one side the terminology employed, in reality the objective of guaranteeing certain public services to citizens is not, in this sense, an objective of an economic nature. Such (p. 855) an objective is perfectly comparable to that of other interests contemplated in Article 30 or in the (open) list of mandatory requirements recognized by the Court: the protection of health, the protection of the environment, and so on. If the case law relating to both types of exception is carefully examined, it can be seen that the differences which exist are not based on the objectives but on the means employed in order to justify such objectives. In other words, the difference stems from the criteria employed to evaluate proportionality in the two different fields. 6.174  Traditionally, in the field of Article 36 and of mandatory requirements, the Court has only tended to admit State measures which have been indispensable to achieve the aim (of a non-economic nature) pursued by the Member State in question. A monopoly is normally the most restrictive possible measure and therefore it will only be allowed if another less restrictive type of measure is insufficient to guarantee the desired objective. However, in the field of Article 106(2), the Court has over the years left open the possibility of a more flexible interpretation.

(iii)  The Old Approach: A Strict Interpretation of the Proportionality Test 6.175  The traditional approach to Article 106(2) came within the strict interpretation of the proportionality principle, similar to that employed in the field of Article 36 and of mandatory requirements. Thus, only those restrictions which are indispensable in order to achieve an objective of general interest will be allowed. Accordingly, faced with a particular measure the question which must be asked is whether other less restrictive measures exist by which that end could be achieved. If such measures exist, Article 106(2) cannot be relied upon.287 Not surprisingly, the exception contained in this article was rarely found to apply at the time.

(iv)  The Need for a More Flexible Interpretation 6.176  This strict interpretation of the principle of proportionality is no longer valid, at least as regards the legality of exclusive rights. Indeed, if the majority of exclusive rights breach, in principle, Articles 37 and/or 106(1) the question of whether they can find support in Article 106(2) becomes crucial. This question, in turn, forms part of the bigger question of the proportionality of the exclusive right in relation to the objectives of general interest which are adduced. The legality or illegality of the majority of exclusive rights will depend on how this principle of proportionality is interpreted. This explains the hesitancy and the ambiguity of the two EU Courts as well as the see-saw nature of the case law. It also explains the Commission’s approach, the academic attention, and the intense political interest caused by an apparently simple legal question. 6.177  In order to be protected by Article 106(2), exclusive rights can refer to different types of tasks of general economic interest. The need to ensure supplies can be invoked to justify exclusive rights to import gas or electricity, the protection of public health can be invoked to justify exclusive rights for the retail sale of alcoholic products, and so on. Different legitimate objectives of general interest are capable of being invoked to justify exclusive rights. However, without doubt the most typical objective, and also the one which creates the most problems, is the obligation to provide a universal service.

(v)  Universal Service as a Justification for Exclusive Rights 6.178  The aim of the obligation to provide a universal service is to guarantee the access of all citizens, wherever their place (p. 856) of residence, to certain essential services at a reasonable price.288 In many cases, the State requires the establishment of a uniform tariff throughout the whole of its territory. In these cases, the undertaking enjoys an exclusive

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right in exchange for taking on a series of obligations of universal service which are imposed on it by the State. For example, it used to be general practice for electricitydistribution companies to receive a monopoly in exchange for agreeing to offer electricity to all consumers, wherever they were located, at a uniform rate. The same occurred with postal services. 6.179  In such a situation, consumers located in densely populated urban areas paid a much higher price for the supply of the product or service in question than the actual cost to the company. On the other hand, the price paid by consumers in rural areas did not cover the costs incurred by the company in guaranteeing them access to the product or service in question. 6.180  If the monopoly did not exist, other undertakings would offer their services to consumers located in the areas where prices were higher than costs. These competitors would thus take the best clients away from the monopoly and make the continued supply to rural areas at the prices previously offered more difficult. Accordingly, the monopoly is necessary to ensure the economic stability of the undertaking which guarantees the fulfilment of the public service objective. This approach is commonly known by its French sobriquet écremage: newly arrived competitors cream off the best clients in urban areas leaving the ordinary milk for the monopoly. In English, this practice is known as ‘cherrypicking’: the best cherries are picked off by the competition leaving the less appetising ones for the old monopoly. 6.181  This argument starkly illustrates the choice between a strict interpretation and a more flexible interpretation of the principle of proportionality. The supporters of a strict interpretation argue that the grant of exclusive rights is not indispensable for ensuring the existence of a universal service. If a Member State wishes to guarantee a universal service it can always grant to the operator subsidies which compensate it for the losses it makes from operating the service. This mechanism would permit the existence of competition in profitable sectors with the maintenance of a universal service.289 The supporters of a more flexible interpretation argue that the elimination of an exclusive right would make the maintenance of a universal service much more difficult, by ruling out the possibility of the undertaking financing these requirements itself and by obliging the undertaking to have recourse to external financing from the State. 6.182  In order for the exception contained in Article 106(2) to apply, the question is therefore whether there is a realistic alternative to the exclusive right or whether it would be sufficient for the alternatives which exist to be much more difficult to organize. It is clear that this is not a black-and-white choice; instead, there is a certain degree of flexibility which the Commission and the EU Courts have exploited over time. 6.183  In the field of the free circulation of goods, the Court had previously firmly rejected the écremage argument (according to which a monopoly is necessary to ensure the economic stability of the undertaking which guarantees the objective of general interest being pursued). (p. 857) Thus, in Campus Oil the Court stated that a less restrictive alternative than a monopoly was available: the grant of State aid.290 In a similar context, the Court could have been expected to interpret restrictively the exception contained in Article 106(2).291

(vi)  The Corbeau Case 6.184  When faced with the same dilemma in later cases concerning the application of Article 106(2), the Court appears to have taken a different approach. In Corbeau, the Court of Justice openly accepted the écremage argument for the first time. The Court held that the exception contained in Article 106(2) can justify a State measure which consists in the

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grant of an exclusive right to an undertaking if this is necessary for the undertaking to be able to offer a universal service in acceptable economic conditions.292 6.185  The facts of the case were that Mr Corbeau, a Belgian citizen, offered a service which consisted of the collection and delivery of post within the city of Liège, Belgium. He charged slightly less than the Régie des Postes (the State postal service) but offered a superior service (collection from sender’s address, quicker delivery, etc). The Belgian legislation imposed on the Régie des Postes a universal obligation to ensure the provision of basic postal services at a fixed rate throughout Belgian territory. In return, the Régie des Postes was granted a monopoly over postal services, without distinguishing between basic services and additional services such as courier services. The Régie des Postes took the view that Corbeau was skimming off a considerable part of its ‘cream’ and, as a result, brought criminal proceedings against him for infringement of the exclusive rights contained in the Belgian legislation. The Belgian court referred the question of whether the Belgian legislation was compatible with Articles 106 and 102 to the Court of Justice for a preliminary ruling. 6.186  Faced with these facts, the Court of Justice accepted for the first time the écremage argument: The starting point of such an examination must be the premise that the obligation on the part of the undertaking entrusted with that task to perform its services in conditions of economic equilibrium presupposes that it will be possible to offset less profitable sectors against the profitable sectors and hence justifies a restriction of competition from individual undertakings where the economically profitable sectors are concerned. Indeed, to authorize individual undertakings to compete with the holder of the exclusive rights in the sectors of their choice corresponding to those rights would make it possible for them to concentrate on the economically profitable operations and to offer more advantageous tariffs than those adopted by the holders of the exclusive rights since, unlike the latter, they are not bound for economic reasons to offset losses in the unprofitable sectors against profits in the more profitable sectors.293 6.187  In the following paragraph, the Court of Justice clarified that financial resources needed to compensate non-profitable sectors of activity did not necessarily have to come from general economic interest activities. An activity which was objectively distinct from the service of general economic interest which is to be guaranteed could be monopolized if that were necessary for the economic stability of the latter service:(p. 858) However, the exclusion of competition is not justified as regards specific services dissociable from the service of general interest which meet special needs of economic operators and which call for certain additional services not offered by the traditional postal service, such as collection from the senders’ address, greater speed or reliability of distribution or the possibility of changing the destination in the course of transit, in so far as such specific services, by their nature and the conditions in which they are offered, such as the geographical area in which they are provided, do not compromise the economic equilibrium of the service of general economic interest performed by the holder of the exclusive right.294 Thus, faced with the écremage problem, the Court accepted the principle that it was possible to create monopolies in activities which were not of general economic interest if

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such monopolies are necessary, at a given time, to guarantee the economic stability of other activities which are of general economic interest.

(vii)  The Almelo Case 6.188  In Almelo,295 the Court of Justice again accepted the écremage argument as justifying certain restrictions on competition. However, unlike Corbeau, the restrictions in question were not of a legal origin but were the result of the independent behaviour of undertakings entrusted with the management of a public service. 6.189  In the context of litigation in the Netherlands between various local electricitydistribution companies and a regional distribution company, the former companies queried whether the exclusive purchasing and sale clauses contained in the supply contracts entered into by each of them with the regional distributor were compatible with EU competition law. Although the legislation in force in the Netherlands at the time did not establish any monopoly or any type of restriction on the import of electricity, the effect of these clauses was to make the direct import of electricity from other Member States by the local companies impossible. The national court referred the matter to the Court of Justice for a preliminary ruling on the compatibility of the contractual restrictions with EU competition rules. 6.190  Having found that the clauses in question infringed Articles 101(1) and 102, the Court of Justice went on to examine whether the undertaking responsible for the infringement could invoke the exception contained in Article 106(2). The Court of Justice, after reiterating the application of the proportionality principle, went on to suggest that this principle had to be interpreted with a certain degree of flexibility: The Restrictions on competition from other economic operators must be allowed in so far as they are necessary in order to enable the undertaking entrusted with such a task of general interest to perform it. In that regard, it is necessary to take into consideration the economic conditions in which the undertaking operates, in particular the costs which it has to bear and the legislation, particularly concerning the environment, to which it is subject.296 6.191  In recent cases, such as the AGR2 judgment in 2011, concerning certain exclusive rights in the health-care insurance sector where there is also a risk of écremage, the Court has reiterated the need for flexibility when applying the proportionality principle in the context of Article 106(2): In that regard, it must be borne in mind that it follows from the case-law that it is not necessary, in order for the conditions for the application of Article 106(2) TFEU to be fulfilled, that (p. 859) the financial balance or economic viability of the undertaking entrusted with the operation of a service of general economic interest should be threatened. It is sufficient that, in the absence of the exclusive rights at issue, it would not be possible for the undertaking to perform the particular tasks entrusted to it, defined by reference to the obligations and constraints to which it is subject, or that maintenance of those rights is necessary to enable the holder thereof to perform tasks of general economic interest which have been assigned to it under economically acceptable conditions.297 6.192  Thus, in Almelo, the Court appears to accept that the universal distribution of electricity needs to be organized as a monopoly, otherwise the profitable sectors would be creamed off by the competition and the operator entrusted with providing the universal service would not be able to maintain its economic stability. The question whether less restrictive alternatives exist is barely discussed. The reason for this is that in Almelo the problem is examined not from the perspective of the Member State but from that of the operator (the same also occurred in AGR2), and certain solutions which are open to From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

Member States are not available to the operators. Thus, in organizing the universal service, a Member State can contemplate alternatives such as external financing through subsidies, the financing of sectors through a universal service fund, or internal financing supported by exclusive rights. However, in the absence of State intervention, the operator has far less room for manoeuvre.

(viii)  Other Cases 6.193  In the Monopolies of Electricity and Gas judgments, the Court of Justice reiterated that it is incumbent on the Member State which wishes to rely on Article 106(2) to prove that all the conditions for that provision to apply exist. The Court nevertheless marked certain limits to this burden of proof, pointing out that the Member State does not have to show positively that there is no other imaginable (by definition, hypothetical) measure which would permit the fulfilment of the tasks. In these cases, the Court held that the Member States had sufficiently explained the problems that would result if the exclusive rights to import were eliminated. On the other hand, the Commission had limited itself merely to submitting legal arguments without having attempted to answer the economic arguments put forward by the Member States.298 6.194  In Ambulanz Glöckner, the Court introduced some interesting nuances.299 The case examined the compatibility of a State measure granting exclusivity for non-urgent patient transport to an entity previously entrusted with exclusivity for emergency ambulance services. The Court considered that this measure was an extension of dominant position contrary to Articles 106(1) and 102. The Court also examined whether it could be justified under Article 106(2) and noted, in that respect, that both activities—urgent and non-urgent ambulance services—were different but closely related. On the other hand, the extension of the exclusivity also to cover non-urgent services made it possible to assume both activities in conditions of economic equilibrium. Both elements pointed towards accepting the application of Article 106(2). However, the Court introduced a new limit to the application of this provision: However, as the Advocate General explains in point 188 of his Opinion, it is only if it were established that the medical aid organisations entrusted with the operation of the public (p. 860) ambulance service were manifestly unable to satisfy demand for emergency ambulance services and for patient transport at all times that the justification for extending their exclusive rights, based on the task of general interest, could not be accepted.300 6.195  This judgment seems to transfer to the application of Article 106(2) the demand limitation doctrine initially set out by the Höfner judgment within the framework of Article 106(1) in combination with Article 102. Indeed, Ambulanz Glöckner seems to imply that the inability of a monopolist to meet demand not only produces a prima facie infringement of Articles 106(1) and 102 but excludes the possibility of justifying the exclusivity under Article 106(2). In other words, the judgment suggests that, in order to be covered by the exception of Article 106(2), undertakings entrusted with services of general economic interest must operate with a minimum level of efficiency.301 6.196  Hence, the precedents from the Court of Justice cannot be interpreted as a blanket statement that where a universal service exists this automatically implies that the exclusive rights which are granted in order to finance such a service are legal. In Corbeau and Ambulanz Glöckner, the Court clearly marked out the limits of the possibility of allowing exclusive rights over activities other than the basic service. In neither judgment did the Court of Justice actually decide the legality of the exclusive rights in question.

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6.197  The question of the legality of an exclusive right justified by a universal service can only be answered in light of the different circumstances of each sector and of each specific case. This is also shown by the case law of the General Court.

(ix)  Case law of the General Court 6.198  In FFSA,302 the General Court rejected an appeal against a Commission decision. In this decision, the Commission declared, on the basis of Articles 107 and 106(2), that tax exemptions granted to the French public undertaking La Poste were compatible with the Treaty, since they amounted to compensation for the undertaking taking on public interest obligations.303 The obligations consisted in the maintenance of non-profitable offices and postal services in rural areas. Proceedings had been commenced as a result of complaints by various insurance undertakings, which considered that the tax exemptions favoured La Poste, which was an undertaking active in the insurance services market as well as enjoying a monopoly in postal services. 6.199  In this case, the Commission undertook an analysis of the economic cost which such tasks entailed and quantified the impact of the advantages received. Having done so, the Commission reached the conclusion that the advantages were outweighed by the costs involved and accordingly the tax exemptions were compatible with the Treaty. The Court agreed with the overall analysis carried out by the Commission and emphasized the fact that the Commission enjoyed a great deal of discretion under Article 106. 6.200  In the judgment in Air Inter,304 the General Court had the opportunity fully to analyse the interpretation of the principle of proportionality of Article 106(2) when the provision is invoked in order to justify exclusive rights. (p. 861) 6.201  Once again, the case involved an appeal against a Commission decision. The decision in question was made under powers granted to the Commission by one of the regulations concerning the liberalization of air transport, Regulation 2408/92, which concerned the access of EU airline companies to intra-EU air routes.305 The origin of the proceedings was a complaint presented to the Commission by the private airline company TAT against the French government, which had refused TAT the right to operate between Orly airport in Paris and Toulouse and Marseille airports. The reason given by the French government for its refusal was the existence of exclusive rights over such routes, which had been granted to the public undertaking Air Inter. In its decision, the Commission declared that such exclusive rights were incompatible with the EU rules relating to the liberalization of air transport and obliged France to grant the rights sought by TAT.306 6.202  The French public undertaking Air Inter claimed that it was prejudiced by the loss of its exclusive rights over the routes in question and appealed. One of the arguments relied on by Air Inter was that the exclusive rights in question were justified by Article 106(2). Thus, Air Inter carried out a general interest task, which consisted in its contribution to the opening up of a large number of French cities and regions in the context of regional development, based on a cross-subsidy of tariffs, which enabled it to finance approximately 20 unprofitable domestic air routes due, essentially, to the profitability of the Paris– Marseille and Paris–Toulouse routes. Citing Corbeau and Almelo, Air Inter defended the legality of these exclusive rights as measures which were proportionate to the general interest objective pursued.307 In other words, the General Court was faced with a variant of the écremage argument. 6.203  In its judgment, the General Court reiterated that as an exception, Article 106(2) ‘must be strictly interpreted…and its application is not left to the discretion of the Member State which has entrusted an undertaking with the operation of a service of general

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economic interest’.308 Thereafter, the General Court reaffirmed, with surprising strength, the strict interpretation of the principle of proportionality underlying Article 106(2): The application of those articles could, however, be excluded only in as much as they ‘obstructed’ performance of the tasks entrusted to the applicant. Since that condition must be interpreted strictly, it was not sufficient for such performance to be simply hindered or made more difficult.309 6.204  In addition, the Court reiterated very clearly the principle that the burden of proving the proportionality of the exclusive right was on the party invoking the exception contained in Article 106(2). The Court considered that in this particular case the burden of proof had not been discharged. Air Inter had limited itself to merely stating that the loss of the exclusive right would make it impossible to fulfil its task, without quantifying either the cost of the task or the additional income which allegedly resulted from the operation of the exclusive right. The Court emphasized once again the need for an economic analysis to be carried out when evaluating the possibility of applying the exception. Further, the Court highlighted the (p. 862) difference between means and ends, a distinction essential for the correct application of the principle of proportionality within the field of Article 106(2):310 In any event, the domestic air network system combined with the internal crosssubsidy system to which the applicant refers in support of its case did not constitute an aim in themselves, but were the means chosen by the French public authorities for developing the French regions. The applicant has not argued and still less established that, following the entry into force of Regulation No 2408/92, there was no appropriate alternative system capable of ensuring regional development and in particular of ensuring that loss-making routes continue to be financed.311 6.205  Article 106(2) recognizes in principle the legitimacy of the ends of public service but subjects the means to those ends to an examination of proportionality. The legal consequences of this can be very significant. For example, in Air Inter if the maintenance of the compensation system of tariffs between different airline routes had been accepted as an end in itself, perhaps it would have been possible to demonstrate (obviously backed up by the appropriate figures) the necessity of the exclusive rights. 6.206  Nevertheless, the most important question is in fact a different one: whether other means of achieving regional policy goals and the maintenance of non-profitable routes exist. The answer is ‘yes’. The EU rules concerning the air transport sector (Regulation 2408/92) provide that loss-making routes which are declared to be of general interest cannot be financed through the grant of exclusive rights over other profitable routes.312 Instead, they would have to be directly subsidized by the State in accordance with the Regulation. With those arguments in mind, the General Court declared that Article 102(2) could not be applied to justify the exclusive rights enjoyed by Air Inter.

(x)  Need for an Economic Analysis 6.207  It follows from the case law that even if the proportionality test is applied in a flexible way, an economic analysis will be necessary in order to apply the exception in Article 106(2). This analysis should be conducted as follows:313 •  the net cost of providing a universal service must be evaluated in an objective manner; 314 •  the economic advantages inherent to the State measure in question must also be evaluated; •  the two figures should then be compared;

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(p. 863) •  due account must be taken of State aids and other advantages also received by the undertaking as compensation for the universal service cost. 315

(xi)  The Dynamic Character of Proportionality 6.208  The proportionality of the means used to perform a role of general economic interest must be evaluated according to the circumstances at the relevant time. An exclusive right may have been fully justified in the past, but following developments of a technological, economic, legal, social, or other nature, may cease to be justified in the future.316 For example, starting in the mid-1990s, the Commission began to change its approach to the telecommunications sector. Once universal coverage of the telecommunication networks was assured, the justification for voice telephony monopolies disappeared. For that reason, following a review of the situation in the sector, the Commission decided to modify its Directives in order to liberalize the services;317 after which universal telecommunications services had to be assured without exclusive rights. Cross-subsidization (ie from longdistance to metropolitan calls) was no longer be sustainable (thus leading to the rebalancing of tariffs by incumbents) and universal telecommunication services had to be financed by other mechanisms, more neutral from a competitive point of view. The net cost of providing a universal service had to be calculated in an objective way: the provider of the universal service could, for instance, be compensated for the net costs with money coming from a ‘universal service fund’. Such a fund could be established with contributions from all the operators active in the market and the contributions calculated following an objective and non-discriminatory method. This example illustrates the dynamic character of the exemption contained in Article 106(2).

(xii)  Different Approaches Depending on the Sector 6.209  The General Court, in Air Inter, rejected the application of Article 106(2) to justify exclusive rights in the air transport sector. The undertaking invoked the ‘cherry-picking’ argument to defend its exclusive rights over some profitable air routes which were allegedly used to cross-subsidize other non-profitable routes (a universal service-type of argument). The Court, however, relying on a strict interpretation of the proportionality test, suggested that there were less restrictive means than exclusive rights to achieve the objective of integrating the territory.

(xiii)  The Strict Approach and the Flexible Approach 6.210  The previous examples show that, when evaluating the legality of exclusive rights for the provision of universal services, Article 106(2) has sometimes been applied in a traditional, strict way and sometimes in a more flexible way. It is submitted318 that this apparent inconsistency can be explained by taking into account two factors: the traditional or newly created character of the universal service in question, and the presence or lack of EU intervention in the sector. 6.211  A more flexible approach is followed in relation to existing exclusive rights that have traditionally served to finance a classical universal service.319 When EU Directives accept certain (p. 864) exclusive rights in one sector, any further exclusive or special right will be examined under the strict approach (and would be presumed to be prohibited).320 The ‘acquired rights’ approach no longer applies once the Commission uses its discretionary powers under Article 106(3) to opt for the stricter approach,321 or when other EU legislation liberalizes the sector.322 Of course, the greater flexibility implicit in the ‘acquired rights’ approach should not normally benefit newly created (or extended) exclusive rights or newly designed universal service obligations.

(xiv)  Universal Services and Other Services of General Economic Interest

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6.212  Universal service is the most typical justification for exclusive rights, but exclusive rights may be justified for reasons other than universal service.323 It is only one among the various kinds of SGEIs to which Article 106(2) refers. In principle, there is nothing to prevent a Member State from establishing exclusive rights for the provision of other types of (non-universal) public service. It is submitted that in all these cases the proportionality test under Article 106(2) must be applied strictly.324

(xv)  Examples of Measures Considered Non-Proportional 6.213  The application of the proportionality test has led the EU Courts on many occasions to deny the application of Article 106(2) to exclusive or special rights or to other State measures initially presented as necessary for the functioning of the SGEI. In particular, measures implying unnecessary restrictions or discriminations have often failed the test.325

(xvi)  The Interest of the EU 6.214  The second sentence of Article 106(2) makes clear that, for the exemption to apply, the development of trade must not be affected in a manner contrary to the EU interest. The majority view is that this is not an additional condition, but merely a clarification concerning the proportionality requirement contained in the previous sentence.326 According to this view, Article 106(2) as a whole has direct effect and national courts can directly apply the exemption without a previous decision by the Commission.327 (p. 865) 6.215  It is submitted that there is also another plausible interpretation: that direct effect is restricted only to the first sentence of Article 106(2).328 This would mean that national courts are competent to apply the exemption for national measures which they consider to be proportionate. However, the Commission would retain exclusive competence to declare, subject to the review of the Court of Justice, that the ‘interest of the Union’ is being infringed. The second sentence of Article 106(2) would therefore be ‘an exception to the exception’.

(4)  Invocation of Article 106(2) and Burden of Proof 6.216  Article 106(2) is an exception. This means that it can only be applied to a case if it is invoked by the Member State or by the undertaking which is in charge of the SGEI.329 Neither the Commission nor the EU Courts can be obliged to apply this provision ex officio. 6.217  In principle, those invoking the exception have the burden of proving that all the conditions of Article 106(2) are fulfilled.330 The Member State and/or the undertaking would have to prove that a role of general economic interest had been entrusted to the undertaking and that the measure or behaviour concerned was proportionate. This is logical, as these elements fall within their sphere of knowledge. It would be absurd to require the Commission to prove the lack of proportionality of a measure whenever anyone invoked Article 106(2). Such an approach would transform the provision into a quasiautomatic scapegoat. However, the Court of Justice has to an extent slightly altered the issue of the burden of proof, by making clear that the Commission is obliged to respond to the legal and economic arguments put forward by the State or undertaking.331

(5)  Relationship between Article 106(2) and Other Exceptions (i)  ‘Mandatory Requirements’ Within the Framework of Article 106(2) 6.218  Under the Cassis de Dijon doctrine, general measures falling within the rules on free movement can only be justified on the basis of ‘non-economic’ objectives, such as the protection of human health, culture.332 Economic objectives, such as the promotion of national industry, were clearly not admissible. The only Treaty exception allowing

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‘economic’ objectives to be taken into account was Article 106(2) (objectives of general ‘economic’ interest). 6.219  Furthermore, Article 106(2) has traditionally been interpreted as referring only to objectives of an ‘economic’ nature.333 According to this view, the notion of objectives of ‘general economic interest’ did not include ‘non-economic’ objectives. 6.220  Today it is obvious that many restrictions concerning public or privileged undertakings (and therefore falling within Art 106(1)) may be justified for non-economic reasons, such as the protection of public health (this may be the case of alcohol monopolies) or the promotion (p. 866) of culture (television monopolies). The Court of Justice has made clear that these restrictions can also, in some cases, benefit from the exception in Article 106(2).334 This means that these non-economic objectives (or ‘mandatory requirements’) may also be objectives of general interest under Article 106(2). Strictly speaking, therefore, the adjective ‘economic’ used in this provision refers to the means (a commercial activity) and not necessarily to the objectives.

(ii)  Article 101(3) 6.221  It follows from the Eurovision case that the exception provided by Article 106(2) may overlap from a substantive point of view with the exemption that the Commission may grant on the basis of Article 101(3) (former Art 85(3)).335 A notifying party may therefore invoke Article 106(2) within the framework of a notification to the Commission under Article 101(3).

(6)  Relationship between Article 106(2) and Article 14 6.222  Article 14 TFEU reads: without prejudice to Article 4 of the Treaty on the European Union or to Articles 93, 106 and 107 of this Treaty and given the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion, The Union and the Member States, each within their respective powers on the basis of principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions. The European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall establish these principles and set these conditions without prejudice to the competence of Member States, in compliance with the Treaties, to provide, to commission and to fund such services. 6.223  Article 14 TFEU replaces former Article 16 EC (which was previously Art 7D EEC), a provision introduced in 1997 by the Treaty of Amsterdam. Article 14 has two parts. It is submitted that the first phrase (the one introduced by the Treaty of Amsterdam) is nothing but a reiteration of the principles already contained in Article 106(2). The second phrase (the one introduced by the Treaty of Lisbon) contains a new legislative competence that will be analysed in the last part of this chapter. 6.224  Apart from Articles 14 and 106(2), the TFEU also includes Protocol 26 on ‘Services of general interest’ which reads: THE HIGH CONTRACTING PARTIES, WISHING to emphasise the importance of services of general interest, HAVE AGREED UPON the following interpretative provisions, which shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union:

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Article 1  The shared values of the Union in respect of services of general economic interest within the meaning of Article 14 of the Treaty on the Functioning of the European Union include in particular: —  the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest as closely as possible to the needs of the users; (p. 867) —  the diversity between various services of general economic interest and the differences in the needs and preferences of users that may result from different geographical, social or cultural situations; —  a high level of quality, safety and affordability, equal treatment and the promotion of universal access and of user rights.

Article 2  The provisions of the Treaties do not affect in any way the competence of Member States to provide, commission and organise non-economic services of general interest. 6.225  The Charter of Fundamental Rights of the European Union also includes a provision, Article 36, on ‘Access to services of general economic interest’ which currently reads as follows: The Union recognises and respects access to services of general economic interest as provided for in national laws and practices, in accordance with the Treaties, in order to promote the social and territorial cohesion of the Union.336 6.226  It is submitted that these provisions do not modify the substance of Article 106(2) but rather reaffirm the logic behind the provision while underlining its importance.337 Indeed, the formula used in Article 14 (‘…the Union…shall take care that such services (of general economic interest) operate on the basis of principles and conditions which enable them to fulfil their missions’) does not seem different in content from the formula used in Article 106(2) (‘…services of general economic interest…shall be subject to the rules contained in this Treaty…in so far as the application of such rules does not obstruct the performance, in law or in fact, of the particular tasks assigned to them…’). Moreover, the text of Article 14 makes clear that this provision is without prejudice to Article 106, and Article 36 of the Charter uses the formula ‘in accordance with the Treaties’. Moreover, the principles contained in Protocol 26 are in line with the existing case law of the EU Courts. 6.227  The experience of recent Intergovernmental Conferences suggests that the relationship between SGEIs and EU competition law will remain controversial. The reason is that Article 106(2) is the result of a difficult balancing exercise between very different ideas of the role that the State should play in the markets (interventionist vs liberal). This provision is thus the point of contact between two ‘tectonic plates’ moving in opposite directions, so that regular seismic movement is to be expected. Since these underlying differences remain, the likelihood of the Member States agreeing on a substantial modification of Article 106(2) appears rather limited. This explains why the new Treaty provisions adopted so far in this area are mere reformulations of the same basic principles.

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Footnotes: 218

  See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), ch 8. For discussion of the underlying theory see: Various, ‘Concorrenza tra settore pubblico e privato nella CEE’ (n 11); Hancher, ‘Case C-320/91, Corbeau’ (n 144), 105–22; A. Wachsmann and F. Berrod, ‘Les critères de justification des monopoles: un premier bilan après l’affaire Corbeau’ [1994] Revue trimestrielle de droit européen, 39–61; Kovar, ‘Droit communautaire et service public’ (n 11); D. Simon, ‘Les mutations des services publics du fait des con-traintes du Droit communautaire’ in R. Kovar and D. Simon (eds), Service public et Communauté européenne: entre l’intérêt général et le marché, Actes du colloque de Strasbourg, 17–19 octobre 1996 (Paris: La Documentation Française, 1998) 65; J. L. Buendia Sierra, ‘La Communication sur les services d’intérêt général en Europe et la politique communautaire de concurrence’ in Kovar and Simon, Service public et Communauté européenne, 461–73. K. Lenaerts, ‘Les services d’intérêt général et le Droit Communautaire’ in Conseil d’ Etat, Rapport public 2002—Collectivités locales et concurrence (Paris, 2002), 425–37. 219

  Commission Communication concerning services of general interest in Europe, OJ 1996 C281/3, para 18. 220

  Case 127/73 BRT II [1974] ECR 318, para 20; Case 172/80 Züchner [1981] ECR 2030, paras 6–7. Commission Communication concerning services of general interest in Europe, para 10. 221

  Case T-289/03 BUPA [2008] ECR II-81, para 179.

222

  Case C-393/92 Almelo [1994] ECR I-1520–1521, paras 46, 47, and 49.

223

  Case 155/73 Sacchi [1974] ECR 430, para 14.

224

  Commission Communication concerning services of general interest, para 10.

225

  This was the view of AG Dutheillet de Lamothe in his Opinion in Case 10/71 Puerto de Mertert [1971] ECR 739. See also Papaconstantinou, Free Trade and Competition in the EEC (n 11), 88. Against this see the Opinion of AG Roemer in Case 82/71 SAIL (milk wholesale markets) [1972] ECR 147 and the Opinion of AG Reischl in Case 52/76 Benedetti [1976] ECR 192. 226

  BRT II (n 220), para 23. The same theory was supported by the Commission in two cases on copyright management companies (Commission Decision 71/244/EEC GEMA, OJ 1971 L134/27, para III.2; Commission Decision 81/1030/EEC GVL, OJ 1981 L370/58, paras 67–68). 227

  Case 10/71 Port of Mertert [1971] ECR 730, para 11; BUPA (n 221), paras 186–187.

228

  Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 853, para 55; Case T-260/94 Air Inter [1997] ECR II-997, para 140. See also Papaconstantinou, Free Trade and Competition in the EEC (n 11), 88. 229

  This was the position of the majority of participants in the 1963 Brussels Coloquium, ‘Concorrenza tra settore pubblico e privato nella CEE’ (n 11), Joliet pointed out that this EU concept was French-inspired in ‘Contribution à l’étude du régime des entreprises publiques dans la CEE’ [1965] AFDL i 86. See also Kovar, ‘Droit communautaire et service public’ (n 11), 241. 230

  Case C-18/88 RTT [1991] ECR I-5980, para 22; Case C-393/92 Almelo [1994] ECR I-1520–1521, paras 47 and 49.

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231

  This was the position of the majority of participants in the 1963 Brussels Coloquium ‘Concorrenza tra settore pubblico e privato nella CEE’ (n 11): Hartmann (70ff), Franceschelli (85 and 240), Delvaux and Faber (156ff), Snoy and D’oppuers (247ff). Others also agreeing with this position were L. Ferrari-Bravo, ‘Les articles 90 et 37 dans leurs rélations avec un régime de concurrence non falsifiée. Les incidences des règles de concurrence et de l’article 222 sur les possibilités de nouvelles nationalisations ou socilisations de secteurs économiques’ in L’entreprise publique et la concurrence (n 11), 424 and Deringer, ‘Equal treatment of public and private enterprises’ (n 88), 1.25. 232

  See eg Case T-289/03 BUPA [2008] ECR II-81, paras 166–169; Case T-17/02 Fred Olsen [2005] ECR II-2031, para 216; Case T-106/95 Fédération Française des Sociétés d’Assurances (FFSA) v Commission, [1997] ECR II-229, paras 99, 108, and 192. 233

  Protocol 29 to the TFEU on the System of Public Broadcasting in the Member States. See also Case T-442/03 SIC [2008] ECR II-1161, paras 196–204. 234

  Page, ‘Member States, Public Undertakings and Article 90’ (n 88), 29–30; Kovar, ‘Droit communautaire et service public’ (n 11), 233; Simon, ‘Les mutations des services publics du fait des con-traintes du Droit communautaire’ (n 218), 19. 235

  Case C-179/90 Port of Genoa [1991] ECR I-5931, para 27. See also the interesting judgment of the EFTA Court in Case E-9/04 The Bankers’ and Securities’ Dealers Association of Iceland v ESA [2006] EFTA Court Report 42, para 77. 236

  Case 127/73 BRT II [1974] ECR 318, para 23.

237

  Case C-266/96 Corsica Ferries [1998] ECR I-3949, para 45; Case 10/71 Port of Mertert [1971] ECR 730, para 11. See also the Opinion of AG Dutheillet De Lamothe in the same case. 238

  Case 41/83 Italy v Commission (‘British Telecom’) [1985] ECR 888, paras 29–33; Case C-18/88 RTT [1991] ECR I-5979, para 16. 239

  Commission Decision 82/371/EEC Navewa-Anseau, OJ 1982 L167/48, para 66.

240

  Case 155/73 Sacchi [1974] ECR 430, paras 14–15; Case T-442/03 SIC [2008] ECR II-1161. 241

  Commission Decision 91/50/EEC IJsselcentrale, OJ 1991 L28/43, para 40; and Case C-393/92 Almelo [1994] ECRI-1520, para 47. 242

  Case 66/86 Ahmed Saeed Flugreisen [1989] ECR 853, para 55.

243

  Case C-41/90 Höfner [1991] ECR I-2017, para 24.

244

  Case C-320/91 Corbeau [1993] ECR I-2568, para 15.

245

  Case T-106/95 FFSA [1997] ECR II-229, paras 108 and 192.

246

  Case T-260/94 Air Inter [1997] ECR II-997, para 140.

247

  Case C-67/96 Albany [1999] ECR I-5751.

248

  Community guidelines on financing of airports and start-up aid to airlines departing from regional airports, OJ 2005 C312/1, para 34. 249

  Case C-209/98 Sydhavnens [2000] ECR I-3743, para 75.

250

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089.

251

  Case T-289/03 BUPA [2008] ECR II-81.

252

  See eg Case-160/08 EC v Germany (ambulances) [2010] ECR I-3713.

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253

  See eg the Commission Decision of 10 May 2007 (not published in the OJ) on the special rights granted by the French Republic to La Banque Postale, Caisses d’Epargne and Crédit Mutuel for the distribution of the livret A and livret bleu, paras 158–161. 254

  RTT (n 238), para 16. See also the Commission Communication concerning services of general interest, para 29. 255

  Cases T-204 and 270/97 EPAC [2000] ECR II-2267, paras 125–128.

256

  Commission Decision 82/371/EEC Navewa-Anseau, OJ 1982 L167/48, para 65.

257

  BUPA (n 251), para 188.

258

  Franck, ‘Les entreprises visées aux articles 90 et 37 du Traité CEE’ (n 166), 39; Papaconstantinou, Free Trade and Competition in the EEC (n 11), 83. 259

  BRT II (n 236), para 20; Case 172/80 Züchner [1981] ECR 2030, para 7.

260

  Case 10/71 Port of Mertert [1971] ECR 730, para 11.

261

  Case C-159/94 Electricity and Gas Monopolies—France [1997] ECR I-5815, para 66.

262

  This was the position of Joliet, ‘Contribution à l’étude du régime des entreprises publiques dans la CEE’ (n 11), 82–83 and Papaconstantinou, Free Trade and Competition in the EEC (n 11), 83. 263

  Case C-393/92 Almelo [1994] ECR I-1517, para 31.

264

  Commission Decision 81/1031/EEC GVL, OJ 1981 L370/58, para 66; Kovar, ‘Droit communautaire et service public’ (n 11), 234. 265

  Commission Decision 85/77/EEC Uniform Eurocheques, OJ 1985 L35/48, para 29.

266

  Case 17/02 Fred Olsen [2005] ECR II-2031, paras 186–189.

267

  French electricity and gas monopolies (n 261), paras 69–70.

268

  Kovar, ‘Droit communautaire et service public’ (n 11), 234.

269

  Kovar, ‘Droit communautaire et service public’ (n 11), 239 clearly distinguishes between both questions and suggests that the confusion is, in many cases, deliberate, since ‘defending public service often includes defending monopolies’. See also Simon, ‘Les mutations des services publics du fait des con-traintes du Droit communautaire’ (n 218), 9. 270

  Franck, ‘Les entreprises visées aux articles 90 et 37 du Traité CEE’ (n 166), 39; Papaconstantinou, Free Trade and Competition in the EEC (n 11), 90; R. Wainwright, ‘Public Undertakings under Article 90’ in 1989 Fordham Corp L Inst (1990), 249. 271

  This position was adopted by the Commission in Recommendation 62/1500 French tobacco monopoly, OJ 1962 48; and Recommendation 62/1502 French matches monopoly, OJ 1962 48. 272

  Case C-393/92 Almelo [1994] ECR I-1517, paras 33–50; Case 41/83 British Telecommunications [1985] ECR 873, paras 28–35. 273

  Case 72/83 Campus Oil [1984] ECR 2727, para 19.

274

  Case C-157/94 Dutch electricity monopoly [1997] ECR I-5699, paras 27–31; Case C-158/94 Italian electricity monopoly [1997] ECR I-5789, paras 38–44; Case C-159/94 French electricity and gas monopolies [1997] ECR I-5815, paras 44–50. 275

  Case T-289/03 BUPA [2008] ECR II-81.

276

  Case T-106/95 FFSA [1997] ECR II-233, para 172; Case T-46/97 SIC [2000] ECR II-2125; Case C-332/98 CEFL [2000] ECR I-4833, paras 27–32.

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277

  Case C-53/00 Ferring [2001] ECR I-9067, paras 27–33.

278

  Case C-280/00 Altmark [2003] ECR I-7747, paras 87–94.

279

  Commission Decision 2005/842/EC on the application of Article [106(2) TFEU] to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of services of general economic interest, OJ 2005 L312/67. 280

  Commission Decision 2012/21/EU on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of SGEIs, OJ 2012 L7/3. 281

  Community framework for State aid in the form of public service compensation, OJ 2005 C297/4. This text was replaced in 2012 by the EU framework for State aid in the form of public service compensation, OJ 2012 C8/15. As regards the interpretation of the notion of State aid in the SGEI context, see also the Communication from the Commission on the application of the EU State aid rules to compensation granted for the provision of SGEIs, OJ 2012 C8/4. For a detailed analysis of the application of Art 106(2) to State aid, see J. L. Buendia Sierra, ‘Finding the Right Balance: State Aid and Services of General Economic Interest’ in EC State Aid Law: Liber Amicorum Francisco Santaolalla (Alphen aan den Rijn: Kluwer, 2008), ch 10; D. Grespan, ‘Services of General Economic Interest’ in W. Mederer, N. Pesaresi, and M. Van Hoof (eds), EU Competition Law. Vol. IV: State Aid (Deventer: ClaeysCasteels, 2008); Buendia Sierra and Muñoz de Juan, ‘Some Legal Reflections on the Almunia Package’ (n 60), 63; J. L. Buendia Sierra and J. M. Panero Rivas, ‘The Almunia Package: State Aid and Services of General Economic Interest’ in E. Szyszczak and J. W. van de Gronden (eds), Financing Services of General Economic Interest (The Hague: Asser Press, 2013), ch 7, p 125. 282

  Case 127/73 BRT II [1974] ECR 313, paras 20–21; Case T-260/94 Air Inter [1997] ECR II-997, para 135; Case T-128/98 Aéroports de Paris [2000] ECR II-3929, para 227. 283

  Air Inter (n 282), para 138.

284

  J. Schwarze, European Administrative Law (London: Sweet & Maxwell, 1992), 854; G. de Búrca, ‘The Principle of Proportionality and its Application in EC Law’ [1993] YEL xiii 113. 285

  Case 120/78 Cassis de Dijon [1978] ECR 649.

286

  Case 72/83 Campus Oil [1984] ECR 2727, para 35.

287

  Navewa-Anseau, OJ 1982 L167/39, para 66; British Telecommunications, OJ 1982 L360/36, para 41; Case C-18/88 RTT [1991] ECR I-5941, para 22. 288

  Commission Communication concerning services of general interest in Europe.

289

  The serious budgetary difficulties currently experienced by many Member States may imply that they simply cannot consider the alternative of giving subsidies. Therefore, they would probably now be more inclined towards alternatives such as granting exclusive or special rights. 290

  Campus Oil (n 285), paras 45–46 (esp the end of para 46); in fact, the measure in question in that case was even less restrictive than a monopoly (the oil product distributors were obliged to buy some of their supply from the national refinery). 291

  Case 172/82 Used Oils [1983] ECR 567, para 15; and the Opinion of AG Rozes in the same case [1983] ECR 581, para 3. 292

  Case C-320/91 Corbeau [1993] ECR I-2568-2569, paras 15–18.

293

  Corbeau (n 292), paras 17–18.

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294

  Corbeau (n 292), para 19 (emphasis added).

295

  Case C-393/92 Almelo [1994] ECR I-1520-1521, paras 46ff.

296

  Almelo (n 295), para 49 (emphasis added).

297

  Case C-437/09 AGR2 [2011] ECR I-973, para 76.

298

  Case C-159/94 Gas and Electricity Monopolies—France [1997] ECR I-5815, paras 90– 107; Case C-158/94 Electricity Monopoly—Italy [1997] ECR I-5789, paras 46–60; Case C-157/94 Electricity Monopoly—Netherlands [1997] ECR-I 5699, paras 48–64. 299

  Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, paras 55–65.

300

  Ambulanz Glöckner (n 299), para 62.

301

  The majority of judgments, however, do not embrace this interpretation: Cases T-568 and 573/08 Métropole TV [2010] ECR II-3397, paras 136–139. 302

  Case T-106/95 FFSA [1997] ECR II-229, paras 117–199.

303

  Commission Decision, OJ 1995 C262/11 concerning proceedings applying Art 93 of the EC Treaty—State Aid NN135/92, competition activities of French La Poste. 304

  Case T-260/94 Air Inter [1997] ECR II-997, paras 129–141.

305

  Council Regulation (EEC) No 2498/92 concerning the access of [Union] airline companies to intra-[Union] routes, OJ 1992 L240/8. 306

  Commission Decision 94/291/EEC concerning proceedings applying Council Regulation (EEC) No 2498/92, OJ 1994 L127/32. 307

  Air Inter (n 304), paras 129–130.

308

  Air Inter (n 304), para 135.

309

  Air Inter (n 304), para 138.

310

  Air Inter (n 304), paras 138–139.

311

  Air Inter (n 304), para 140.

312

  These rules are currently contained in Regulation (EC) No 1008/2008 on common rules for the operation of air services in the [Union], OJ 2008 L293/3. 313

  Case C-222/08 Commission v Belgium [2010] ECR I-9017; Case C-334/03 Commission v Portugal [2005] ECR I-8911, para 33; Air Inter (n 304), paras 138–140. 314

  In principle, the only relevant cost in the application of Art 106(2) is the actual cost incurred by the undertaking, irrespective of its level of efficiency. The compensation for the costs of a highly efficient operator may under certain conditions not even be considered State aid; see Case C-280/00 Altmark [2003] ECR I-7747, para 93. Moreover, Case C-475/99 Ambulanz Glöckner [2001] ECR I-8089, para 62, could be interpreted as suggesting that Art 106(2) could not be used to justify the compensation of costs of highly inefficient operators. The majority of judgments, however, do not embrace this interpretation: Cases T-568 and 573/08 Métropole TV [2010] ECR II-3397, paras 136–139. The Commission also considers that all the costs actually incurred by the SGEI can be considered as compatible with Art 106(2), even those going beyond the level of costs of an efficient operator (see Commission Decision 2012/21/EU on the application of Article 106(2) TFEU to State aid in the form of public service compensation granted to certain undertakings entrusted with the operation of SGEI, OJ 2012 L7/3).

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315

  Case C-222/08 Commission v Belgium [2010] ECR I-9017, para 86; Commission Decision of 7 October 2008, OJ 2008 C322/10 (summary publication) on the Slovakian postal legislation relating to hybrid mail services. 316

  Case C-18/88 RTT [1991] ECR I-5941, para 16.

317

  Commission Directive 96/19/EC on full competition in telecommunications, OJ 1996 L74/13, paras 13–24. 318

  See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), paras 8.238–8.243 for more details. 319

  This was the case of the postal and electricity monopolies at the time of the Corbeau and Almelo cases. 320

  Case C-220/06 APERMC [2007] ECR I-12175, paras 80–88; Commission Decision of 20 October 2004 K(2004)4001/3 (not published in the OJ) on the German postal legislation relating to mail preparation services in particular the access of self-provision intermediaries and consolidators to the public postal network and related tariffs; Commission Decision of 7 October 2008, OJ 2008 C322/10 (summary publication) on the Slovakian postal legislation relating to hybrid mail services. 321

  This is the case in the telecommunication sector.

322

  This is the case in the air transport sector.

323

  Case T-289/03 BUPA [2008] ECR II-81; Commission Communication on ‘Services of General Interest in Europe’, OJ 1996 C281/3; Kovar, ‘Droit communautaire et service public’ (n 11), 242 and 515. 324

  See Buendia Sierra, Exclusive Rights and State Monopolies Under EC Law (n 11), para 8.244; V. Hatzopoulos, ‘L’Open Network Provision (ONP) moyen de la dérégulation’ [1994] Revue trimestrielle de droit européen, 87 and 96. 325

  Case C-1/12 Técnicos de Contas (2013), not yet reported, para 107; Case C-212/09 Commission v Portugal (GALP) [2011] ECR I-10889, paras 91–96; Case C-543/08 Commission v Portugal (Golden Shares) [2010] ECR I-11241, paras 93–96; Case C-160/08 Commission v Germany [2010] ECR I-3713, paras 125–130; Case C-438/02 Hanner [2005] ECR I-4551, paras 37–41; Case C-463/00 Commission v Spain (Golden Shares) [2003] ECR I-4581, paras 82–83. 326

  Wainwright, ‘Public Undertakings under Article 90’ (n 270), 251; Wachsman and Berrod, ‘Les critères de justification des monopoles’ (n 218), 53; Case C-202/88 Terminal equipment for telecommunications [1991] ECR I-1223, paras 11–12. 327

  However, Art 106(2) probably does not have direct effect when invoked in the context of State aid, on which the Commission normally has the power to decide on compatibility (see Case C-451/03 Servizi Ausiliari Dottori Commercialisti [2006] ECR I-2941, para 71). 328

  This position was defended by AG Van Gerven in Case C-179/90 Port of Genoa [1991] ECR I-5889, paras 26–28; and by the GC in Case T-16/91 Rendo [1992] ECR II-2417. The CJ, however, refused to endorse the position in its appeal judgment, Case C-19/93P Rendo (appeal) [1995] ECR I-3319, paras 18–19. 329

  Zaventem, OJ 1995 L216/8, para 20; GSM Italy [1995] OJ L280/49, paras 26–27; GSM Spain, OJ 1997 L76/19, para 30. 330

  Case 155/73 Sacchi [1974] ECR 409, para 15; Case 41/83 British Telecommunications [1985] ECR 873, para 33; Case T-260/94 Air Inter [1997] ECR II-997, para 138.

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331

  Case C-157/94 Dutch electricity monopoly [1997] ECR I-5699, paras 48–64; Case C-158/94 Italian electricity monopoly [1997] ECR I-5789, paras 46–60; Case C-159/94 French electricity and gas monopolies [1997] ECR I-5815, paras 90–107. 332

  Case 120/78 Cassis de Dijon [1979] ECR 649, para 8.

333

  Opinion of AG Tesauro in Case C-320/91 Corbeau [1993] ECR I-2531, para 14.

334

  Case C-18/88 RTT [1991] ECR I-5941, para 22.

335

  Cases T-528/93, etc Eurovision [1996] ECR II-649, paras 114–126.

336

  OJ 2012 C326/391.

337

  Case T-289/03 BUPA [2008] ECR II-81.

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Part I General Principles, 6 Article 106—Exclusive or Special Rights and other Anti-Competitive State Measures, E Article 106(3): Procedural Rules Applying to Anti-Competitive State Measures José Luis Buendia Sierra From: Faull & Nikpay: The EU Law of Competition (3rd Edition) Edited By: Jonathan Faull, Ali Nikpay, Deirdre Taylor (Assistant Editor) Previous Edition (2 ed.) Content type: Book content Product: Oxford Competition Law [OCL] Published in print: 01 March 2014 ISBN: 9780199665099

Subject(s): State and competition law — Article 106(3) TFEU — Undertakings — Public undertakings — State undertakings — Enforcement and procedure — Exclusionary abuse — Effect on trade between member states

From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

E. Article 106(3): Procedural Rules Applying to AntiCompetitive State Measures 6.228  Article 106(3) (former Art 86(3)EC and previously Art 90(3) EEC) provides: The Commission shall ensure the application of the provisions of this Article and shall, where necessary, address appropriate directives or decisions to Member States. Thus, Article 106 contains in its third paragraph procedural rules for the application of the substantive provisions contained in the first two paragraphs. Article 106(3) gives the (p. 868) Commission, on the one hand, the power to adopt decisions declaring that a Member State has infringed Article 106(1) and obliging the Member State to put an end to the infringement. On the other hand, it also gives the Commission the power to adopt Directives with binding effect on all Member States, in order to specify the obligations contained in Article 106(1) and/or to prevent future infringements of the obligations.338

(1)  Article 106(3) Decisions (i)  General Issues 6.229  Article 106(3) gives to the Commission the power to adopt decisions declaring that Article 106(1) has been infringed and obliging the Member State to put an end to the infringement. This procedure constitutes an exception to the general procedure of Article 258 TFEU (former Art 226 EC and previously Art 169 EEC), in which it is up to the Court of Justice to declare that the Treaty has been infringed, but is not a revolutionary idea. Indeed, the Commission has similar powers as regards anti-competitive behaviour of undertakings (Arts 101 and 102)339 and in relation to State aids (Arts 107 and 88). This suggests a design giving the Commission similar powers to react quickly against all restrictions of competition, irrespective of their public or private origin.340

(ii)  Analogy With Other Procedures 6.230  There is no supplementary text that specifies Article 106(3) procedure in greater detail. The obvious temptation is to turn to the analogy with other procedures, such as the antitrust procedure,341 the Article 258 procedure,342 or the arguably more relevant State aids procedure.343 However, these analogies must be used with care, taking due account also of the differences between these rules and Article 106.

(iii)  Discretionary Character of the Procedure Under Article 106(3) 6.231  Even if the Commission always has the ability to act (ex officio or following a complaint) on the basis of Article 106(3), the provision does not oblige the Commission to commence infringement proceedings whenever a violation of Article 106(1) comes to light. In principle, case law suggests that the Commission has a wide margin of discretion in this respect.344 (p. 869) 6.232  A 2002 judgment of the General Court in the max.mobil case put into jeopardy this well-established line of jurisprudence.345 This judgment restricted the margin of discretion of the Commission by stating that the Commission was obliged to examine complaints based on Article 106 in a diligent and objective manner. This implied, on the one hand, that, after an analysis of the complaint, the Commission must at least indicate why it considered that there was (or there was not) an infringement and whether it considered it necessary to intervene. On the other hand, judicial review on these two points (and in particular on the opportunity to intervene) would in any case be minimal and limited to manifest errors.346

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6.233  However, on appeal in 2005 in the max.mobil case,347 the Court of Justice overruled the finding of the General Court on the basis that, contrary to what occurs in the field of Articles 101 and 102, the Commission’s refusal to act under Article 106 is not susceptible to judicial review under Article 263, especially because that particular act could not be regarded as producing a legal effect. This confirms that the Commission enjoys a wide margin of discretion when deciding whether to initiate proceedings against a Member State for breach of Article 106(1). This discretion greatly limits the chances for individuals who are complaining about such infringements to appeal successfully against a Commission’s decision. 6.234  Following the 2005 max.mobil judgment, the Commission used this margin of discretion to reject, almost systematically, all complaints based on Article 106. As a consequence, the number of Commission decisions based on Article 106(3) has fallen dramatically over recent years. The Commission has apparently made an implicit policy choice not to enforce actively Article 106(1) in individual cases. The reasons for such a choice seems difficult to understand, since it is clearly incoherent with the enforcement in the other areas of competition law, including the equally sensitive area of State aid. Such a distinctive feature of Article 106 cases is perhaps a consequence of a conception of Article 106(3) procedures as much closer to Article 258 procedures than to procedures based on Articles 101, 102, or State aid cases. It is doubtful whether this view is shared and perhaps the large margin of discretion given by the Court of Justice to the European Commission should be reconsidered.348 6.235  The margin of discretion also exists in relation to the choice between the different procedures.349 The Commission is not obliged to use Article 106(3) to act against infringements of Article 106(1): the option to use the Article 258 procedure still remains, although Article 106(3) would normally be preferred due to its nature.

(p. 870) (iv)  Lodging of Complaints and Ex Officio Cases 6.236  The Commission may act ex officio or following a complaint. Complaints and ex officio cases based on Article 106 are registered and examined during a preliminary phase, during which the Commission may request additional information from the complainant or from the Member State. At the end of the preliminary phase, the Commission decides whether an infringement procedure should be opened and informs the complainant of its decision.

(v)  Dismissal of Complaints 6.237  The Commission has, in principle, a wide margin of discretion in deciding whether to open an infringement procedure under Article 106(3). The Commission may therefore reject a complaint not only on substantive grounds, but also on opportunity grounds (because the case is considered as non-priority). The General Court, in max.mobil, considered that the Commission may react to a complaint based on Article 106 by adopting a decision refusing to take action.350 However, the Court of Justice rejected this approach in its 2005 judgment on the appeal. According to which, such letters cannot be regarded as having legal effect and cannot be the subject of an action for annulment.351 6.238  Of course, persons and undertakings wishing to complain about an alleged infringement of Article 106(1) always have the right to invoke the direct effect of this provision before the national courts. This right is totally independent of the possibility of filing a complaint with the Commission and—legally speaking—it is not affected by the outcome of such a complaint. 6.239  The opportunities for complainants to react to an implicit or explicit refusal by the Commission are much less clear. Traditionally it was considered that complainants did not have locus standi either to bring an Article 263 (former Art 230) annulment action against the Commission’s refusal to open a procedure352 or to bring an Article 265 (former Art 232) action against the Commission’s failure to act following a complaint based on Article From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

106.353 According to the Court of Justice, such actions could only be introduced in ‘exceptional situations’.354 6.240  The max.mobil judgment of the General Court wisely seemed to interpret these ‘exceptional situations’ very widely. According to this approach, a complainant could attack the Commission’s refusal to act or its lack of action if the complaint referred not to measures of general application but to specific measures favouring a competitor.355 6.241  However, on appeal in max.mobil,356 the Court of Justice overruled the General Court’s judgment on the basis that the Commission’s refusal to act under Article 106 is not susceptible to judicial review under Article 263. This confirms that the Commission enjoys a wide margin of discretion when deciding whether to initiate (or, much more often, not to initiate) proceedings against a Member State for breach of Article 106(1). In view of the resulting passivity by the institution in the area of Article 106 cases, it is submitted that such margin (p. 871) is perhaps too wide. As explained in para 6.234, a distinctive feature of Article 106 cases seems to be the consequence of a probably misguided analogy with Article 258 procedure cases. An analogy with State aid would probably have been more appropriate.357 It is submitted in any event that the large margin of discretion currently granted by the Court of Justice to the Commission should probably be reconsidered.358

(a)  The Infringement Procedure (i)  Interim Measures 6.242  The infringement procedure is normally opened by a letter of formal notice. However, an analogy with the antitrust procedure359 suggests that it should be possible for the Commission to adopt interim measures in cases where there is clear urgency and a serious and irreparable risk for the complainant or for the general interest.360

(ii)  Letter of Formal Notice 6.243  The Court of Justice in its Dutch PTT case made clear that, before the adoption of an Article 106(3) decision, the Commission must inform the Member State of its intention and the supporting legal reasoning and give the Member State the opportunity to make observations.361 These requirements arise as a result of the rights of defence of the Member State. This communication normally takes the form of a letter of formal notice addressed by the Commission to the Member State and must clearly identify the State measures that are the subject of controversy and warn explicitly of the possibility of a future Article 106(3) decision.

(iii)  The Rights of the Member State and of the Undertaking that Benefits from the Measure 6.244  According to the Dutch PTT case, as the Member State is the sole addressee of an Article 106(3) decision, it is also the only party that has rights of defence within the framework of the procedure.362 The undertaking that benefits from the State measure does not have such a right of defence, merely a right to be heard.363 This right implies a right to be informed of the position of the Commission and a right to make comments to the Commission.364 However, the undertaking does not have a right to know the comments made by the Member State nor a right to receive a copy of the complaint.365

(iv)  End of the Procedure Without a Formal Decision 6.245  The infringement procedure may conclude without a formal decision. This happens when the Member State decides to put an end to the infringement before the adoption of a decision, and also when the Commission changes its mind as a result of the comments made by the Member State. The Commission is not bound within the framework of Article 106 to adopt a formal decision stating that (p. 872) the provision has not been infringed. Therefore, contrary to the situation in relation to State aid control, there is normally no ‘positive’ Article 106 decision. This means that, even if the Commission decides not to

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pursue a case, it always has the possibility of changing its opinion at a later time and opening proceedings and, ultimately, adopting an Article 106(3) decision.366

(v)  The Formal Decision and Its Effects 6.246  If the dispute remains after the answer to the letter of formal notice, the Commission may adopt a formal decision based on Article 106(3). As explained in paras 6.231–6.241, the Commission retains a wide margin of discretion to decide whether to adopt a decision. The Commission has so far adopted 20 decisions of this type concerning infringements of Article 106(1) combined with other provisions of the Treaty.367 Decisions adopted under the legal basis provided by Article 106(3) have also been issued by the (p. 873) Commission for taking note of remedies proposed by a Member State following up a previous Article 106(3) decision and making such commitments binding within a certain time frame.368 6.247  An Article 106(3) decision is a decision within the meaning of Article 288 TFEU. As such, it must contain a statement of its legal basis and of the steps requested to be taken by the Member State. When a choice exists for the means to put an end to an infringement, the Commission has the power to request one specific means rather than another.369 An Article 106(3) decision is notified by the Commission to the recipient Member State, and takes effect from the date of notification.370 In accordance with the Treaty, there has never been a legal obligation to publish in the Official Journal the text of Article 106(3) decisions addressed to individual Member States (see Art 297(2) TFEU). Despite this, until 2002 the Commission published the integral text of these decisions in the Official Journal. Unfortunately, subsequent decisions have either not been published in the Official Journal or have been published only in a summary form.

(vi)  Binding Effects 6.248  Article 106(3) decisions, as with other decisions, are binding on the Member States to which they are addressed.371 This means that their direct effect can probably be invoked before a national court once the deadline has expired without the measures being implemented.372

(vii)  Action for Annulment Against an Article 106(3) Decision 6.249  If the Member State disagrees with the decision, it has to bring an action for annulment under Article 263 before the Court of Justice within two months of its notification. An Article 263 action may also be introduced before the General Court by third parties that are directly and individually affected by the decision (eg the undertaking that benefits from the State measure in question) within two months of becoming aware of the decision (ie two months from notification or of publication, depending on the case).373 In principle, an action for annulment does not suspend the binding nature of the decision, although the Member State may ask the Court to adopt an interim suspension374 which would only be granted if the usual conditions for interim measures (fumus boni iuris, urgency and balance of public and private interests) are fulfilled. If no action is brought within those two months or if the action is rejected by the Court, the decision becomes final and its legality cannot be further challenged unless there are devices available such as to declare it non-existent.375

(p. 874) (viii)  Action for Failure to Implement an Article 106(3) Decision 6.250  Once the deadline given to the Member State expires without the decision having been correctly implemented (and unless the Court has adopted an interim suspension), the Commission may open an Article 258 action against the Member State for failure to respect the decision. The Commission is obliged to send a letter of formal notice followed by a reasoned opinion to the Member State before bringing the case to the Court of Justice. It must be stressed that the substance of the case (the legality of the decision) cannot be

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further argued at this stage (unless there are devices available such as to seek a declaration of non-existence).376 6.251  As well as facing the intervention of the Commission and the EU Courts, a Member State that has been found to be in breach of its EU obligations under Article 106 may face actions from particular bodies seeking indemnities under the Francovich doctrine.377

(2)  Article 106(3) Directives (i)  Preventive Functions of Article 106(3) Directives 6.252  The Commission is entrusted with a duty of vigilance in relation to the respecting by Member States of the Treaty rules and of Article 106 in particular. In view of this duty, Article 106(3) grants the Commission not only powers to act against concrete infringements but also preventive powers for future infringements. Indeed, apart from the power to adopt individual decisions addressed to a Member State, Article 106(3) also gives to the Commission the power to adopt Directives with binding effect on all Member States. 6.253  Article 106(3) does not refer to ‘regulations’; however, in theory under Article 106(3) the Commission may also adopt decisions addressed not to one individual Member State but to all Member States. The nature of such ‘horizontal’ decisions would be very similar to that of Directives, both having binding effect on Member States. The main difference would be that decisions automatically have ‘direct effect’ while Directives only have such effect in certain circumstances. The references made in this chapter to ‘Directives’ may be understood to be also applicable to this type ‘horizontal decision’. The Commission used this type of decisions both in the Monti package378 and in the Almunia package379 in order to declare as compatible aid, certain support measures as regards SGEIs. 6.254  The aim of Directives is to prevent future infringements of the obligations contained in Article 106(1). Unlike individual Article 106(3) decisions, the Directives based on this provision do not have a repressive function: they do not constitute a declaration that actual infringements have been committed.380 6.255  The prevention of future infringements is achieved in two ways. First, the Commission may use an Article 106(3) Directive to create instrumental obligations aimed at making possible the detection of future infringements. Secondly, the Commission may also use an Article (p. 875) 106(3) Directive to specify the meaning and extent of the obligations that already exist under Article 106(1) and/or of the exception under Article 106(2). This means that under Article 106(3), the Commission has certain quasi-legislative powers, even if it is subject to strict limits and under the legal control of the Court of Justice. This raises delicate legal and political issues.

(ii)  Article 106(3) Directives as Instruments for Detecting Future Infringements 6.256  The most obvious example of the use of Article 106(3) Directives as instruments for detecting future infringements is the ‘transparency’ Directive, originally adopted in 1980 and subsequently modified at various times.381 This Directive creates an obligation on Member States to set up transparent accounting systems reflecting, on the one hand, the financial relationships between the public administrations and public undertakings and, on the other hand, the costs and revenues that can be ascribed to the different activities performed by the undertakings.382 The idea was to make possible the detection of State aids to public undertakings. The obligation to set up transparent accounts did not exist prior to the adoption of the Directive and was created as a new obligation ancillary to the State aid rules. Thus, the new obligation was a means of guaranteeing that existing rules were respected. A further development, introduced by Directive 2000/52/EC and modified by Directive 2005/81/EC, consists of the obligation to maintain separate accounts for those undertakings enjoying special or exclusive rights or entrusted with the operation of SGEIs

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and that carry on other activities. The Court of Justice confirmed in 1982 that Article 106(3) gave the Commission the power to adopt such preventive measures.383

(iii)  Article 106(3) Directives as Instruments for ‘Specifying’ the Provisions of the Treaty 6.257  Article 106(3) Directives may also be used to ‘specify’ the meaning and extent of the obligations that already exist under Article 106(1).384 The first example of this approach was the ‘telecom terminals’ Directive, in which the Commission ‘specified’ that the exclusive rights granted to the telecommunications operators for the import and commercialization of terminal equipment were incompatible with Article 106(1) in combination with Article 34, 37, 56, or 102.385 On the basis of this ‘specification’, the Directive obliged Member States to abolish these exclusive rights. A similar approach has been used in many other Article 106(3) Directives386 and the Court of Justice fully confirmed the legality of this approach in (p. 876) 1991 and 1992.387 These instruments have been consolidated into two texts, which are those currently in force: Commission Directive 2002/77/EC on competition in the markets for electronic communications networks and services and Commission Directive 2008/63/EC on competition in the markets in telecommunications terminal equipment.388 6.258  The ‘specification’ function of Article 106(3) is not restricted to ‘obligations’ imposed on Member States; it may also be used to ‘specify’ the meaning and extent of the exception provided by Article 106(2) for SGEIs. In this respect, in 2005 the Commission adopted a horizontal decision under Article 106(3) to deal with public service compensation (ie aids granted by Member States to compensate undertakings in charge of SGEIs for the additional costs resulting from those obligations). This instrument specifies that certain types of compensation (those below a certain threshold and fulfilling certain conditions) would be considered compatible with Article 106(2) and would be exempted from the notification obligation of Article 108.389 6.259  In situations where a Treaty obligation can be implemented in different ways, the power to ‘specify’ these obligations implies a power to impose on Member States one specific means of implementation.390

(3)  Legal Regime of Article 106(3) Directives (i)  The Exclusive Competence of the Commission 6.260  The Commission has exclusive competence to adopt Article 106(3) Directives and total discretion for when to use that power. Although the Treaty does not require the intervention of any other institution, in practice the Commission normally consults the European Parliament, the Member States, and the (p. 877) interested parties. Often, a draft Article 106(3) Directive is published first in the C series of the Official Journal to invite comments from institutions and bodies which may wish to intercede. The Directive is only adopted by the Commission after taking into account the results of that consultation.391

(ii)  Limits to the Commission’s Competence 6.261  Irrespective of this policy of searching for consensus, from a legal point of view the Commission has sole responsibility for the adoption of Article 106(3) Directives. However, the power to adopt Directives under Article 106(3) is not a general legislative competence but a precisely defined competence which is exercised under the legal control of the Court of Justice. Some of the limits on the regulatory power of the Commission are examined in the following paragraphs.

(iii)  Article 106(3) Directives Cannot Deal With the Autonomous Behaviour of Undertakings

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6.262  In principle, the target of Article 106(3) Directives must be State measures, not the behaviour of undertakings.392 Moreover, these State measures must be connected in one way or another with public or privileged undertakings or with public services (ie falling within Art 106(1) or 106(2)).

(iv)  Formal Limits to the Commission’s Power under Article 106(3) 6.263  The power that Article 106(3) grants to the Commission of creating obligations (either preventive or mandatory) must be exercised using a binding legal form, that is, a Directive or a decision. The use of non-binding instruments, such as a communication, would undermine legal certainty and would be illegal.393 6.264  An Article 106(3) Directive has all the characteristics of a normal Directive within the meaning of Article 288 TFEU (former Art 189) and must contain a clear legal basis.394 In accordance with Article 297(1), the Directive will be published in the L series of the Official Journal and will enter into force 20 days after its publication, unless otherwise specified.

(v)  Binding Effects 6.265  Article 106(3) Directives are obligatory for the Member States to which they are addressed. This obligatory effect is independent of the obligatory effect of the Treaty rules on which the Directive is based.395

(vi)  Lack of Direct Effect 6.266  In principle, Directives are not directly applicable but require the adoption of implementing measures at national level. However, provisions having an unconditional and sufficiently precise content may be recognized as having direct effect once the deadline has expired without their being implemented.396

(vii)  Relationship Between Directives Under Article 106(3) and Harmonizing Directives 6.267  Even though the Court of Justice has repeatedly confirmed its legal validity, (p. 878) the quasi-legislative competence that Article 106(3) gives to the Commission has been the subject of political controversy. Those powers, however, fit well with the logic of the TFEU where the provisions addressed to the Member States, such as Article 106, are not of a programmatic nature but are, rather, directly obligatory rules. This makes it difficult to distinguish between ‘creating law’ and ‘applying existing law’. Article 106 Directives simply testify to this ambiguity.

(viii)  Article 106(3) Overlaps With Other Treaty Provisions 6.268  The competence of the Commission under Article 106(3) has always coexisted with the legislative competences of the Council of Ministers and the European Parliament under Article 114 TFEU (former Art 95 EC and previously Art 100A EEC) and many other provisions. The Court of Justice has confirmed that certain matters may be regulated either by a Directive of the Council and the Parliament or by a Directive of the Commission.397 This happens in particular in the case of liberalization of the utilities sectors.

(ix)  Article 106(3) Overlaps with Article 14 6.269  The Lisbon Treaty introduced in Article 14 TFEU (former Art 16 EC and previously Art 7D EEC) a new EU legislative competence for the Council of Ministers and the European Parliament to legislate for SGEIs. Article 14 currently reads: without prejudice to Article 4 of the Treaty on the European Union or to Articles 93, 106 and 107 of this Treaty and given the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion, The Union and the Member States, each within their respective powers on the basis of principles and conditions, particularly economic and financial conditions, which enable them to fulfil their missions. The From: Oxford Competition Law (http://oxcat.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. Subscriber: National Law University Orissa; date: 11 January 2021

European Parliament and the Council, acting by means of regulations in accordance with the ordinary legislative procedure, shall establish these principles and set these conditions without prejudice to the competence of Member States, in compliance with the Treaties, to provide, to commission and to fund such services.398 6.270  At first sight, Article 14 leaves the European Parliament and the Council room to adopt new rules on SGEIs, for instance laying down a new EU legal framework. However, the use of Article 14 is subject to the Commission’s monopoly of initiative and as yet it has shown no interest in making use of it. In theory, this new competence—as with the previously existing competences of the Council and the Parliament—may at some point overlap with the Commission competence under Article 106(3). However, the text of Article 14 (‘without prejudice to…Article 106…of this Treaty’) confirms what the previous case law had already told us, that both legal bases overlap and that they may well coexist.399

(x)  The Dissuasive Role of Article 106(3) 6.271  The political implications of this overlapping of competences are delicate. The participation of the European Parliament in the legislative procedure under Article 114 gives to the relevant Directives a democratic legitimacy that does not exist in the case of Article 106(3) Directives. This clearly reduces, from a political point of view, the margin of discretion of the Commission in choosing the appropriate legal basis for its liberalization Directives. This may explain the restraint shown by the (p. 879) Commission in its use of Article 106(3) Directives: so far this instrument has only been used in the area of financial transparency between Member States and public undertakings and in the telecommunications sector. The Commission has not used this legal basis in the liberalization of the electricity, gas, air transport, railway, or postal sectors. It would be a mistake, however, to think that Article 106(3) has not played any part in these liberalization processes. It is clear that the mere possibility of the Commission adopting an Article 106(3) Directive has had an influence on the attitudes of the actors in the legislative process. It is submitted that this ‘dissuasive’ role of Article 106(3) is an essential factor in achieving a balanced EU approach to libe