By: Yonathan A. Pahlevi
Note: Article 85 EEC Treaty, which then renumbered as Article 81 EC
Treaty, is now Article 101 TFEU.
Article 101(1) TFEU provides that 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
internal market are prohibited within the EU.
In order to analyze whether an agreement has its object or effect
the prevention, restriction or distortion of competition within the internal
market, it is important to first take a look at the wording of Article 101(1)
TFEU. The use of “or” between object and effect shall be interpreted that they
are alternative (not cumulative). This view is supported by the ECJ in the STM
case[1].
Furthermore, in Consten and Grundig case[2]
the ECJ held that, for the purpose of applying Article 85(1) EEC Treaty, there
is no need to take account of the concrete effects of an agreement once it
appears that it has its object the prevention, restriction or distortion of
competition. Then the question is: what if an agreement, although it has as its
object the prevention, restriction or distortion of competition within the
internal market, has an insignificant effect on the market? Is it still
regarded as appreciably restrict competition even though the competition itself
is not affected?
The ECJ held that in order to come within the
prohibition imposed by Article 85 EEC Treaty, the agreement must affect trade
between states and the free play of competition to an appreciable extent.[3]
The wording of Article 101 TFEU itself does not state the requirement of the
effect on competition or trade that should be appreciable. The appreciability
is a concept that was built in the case law. This concept was first accepted by
the ECJ in Völk and Vervaecke case.[4]
The Court said that an agreement falls outside the prohibition in Article 85
EEC Treaty when it has only an ‘insignificant’ effect on the markets, taking
into account the weak position which the persons concerned have on the market
of the product in question.
Chapter I Point 1 of the de minimis Notice[5]
states that the CJEU has clarified that the provision set in Article 81(1) EC
Treaty is not applicable where the impact of the agreement on intra-Community
trade or on competition is not appreciable. As in Pedro IV Servicios
case, the ECJ has held that an agreement will be caught by the prohibition laid
down in Article 81(1) EC Treaty only if its object or effect is “perceptibly”
to restrict competition within the common market and it is capable of affecting
trade between Member States.[6]
As also in Ziegler v Commission case, the General Court confirmed that
agreements which restrict competition by object infringe Article 101 TFEU only
if they have an appreciable effect on competition and on inter-State trade.[7]
It is important to be noted that the ECJ held that the appreciability is not
merely in the matters of affecting competition but also trade between Member
States. If there is no effect on trade between Member States, then it will be
regarded as purely internal situation and Article 101 TFEU does not apply.
According to those cases, it is clear that the concept of
appreciability is a condition for the application of Article 101(1) TFEU. In
the de minimis Notice, The Commission tries to quantify, by set certain
conditions and percentages with the help of market share thresholds, what are
not likely to be an appreciable restriction of competition within the meaning
of Article 81(1) EC Treaty. Those percentages and conditions are mentioned in
Chapter II Points 7, 8 and 9 of the Notice. The conditions are so much related
to the market share of undertakings. In order to calculate the market share, it
is necessary to determine the relevant market. This consist of the relevant
product market and the relevant geographic market.[8]
The Notice also provides what it calls as ‘hard core restrictions’
of competition law in Point 11, means that the de minimis conditions set
in Points 7, 8 and 9 do not apply to agreements containing any of the hard core
restrictions set, such as agreements which have as their object the fixing
prices, the limitation of production or sales, or the allocation of markets or
customers.
However, it is uneasy to exactly measure the applicability, as could
be seen that not all problems are solved by the publication of the Notice. There
are still problems arise, such as whether or not the de minimis also
applies to agreements which has its object the prevention, restriction or
distortion of competition within the internal market, or whether or not
competition authorities able to pursue anti-competitive agreements under the
market share thresholds set out in the Notice.
An interesting view related to the appreciability was given by the
Advocate General J. Kokott in the Expedia case.[9]
In her opinion, Kokott dismissed that the Member State’s competition authority
is bound to follow the de minimis Notice. She observed that the Notice
merely expresses the Commission’s view of the law and is said in terms not to
be binding on domestic courts or authorities. Nevertheless, those authorities
and courts must consider the Commission’s assessment, as set out in the notice,
of what constitutes an appreciable restriction of competition and must give
reasons which can be judicially reviewed for any divergences.[10]
Still, that authorities are not prohibited from pursuing anti-competitive
agreements under the market share thresholds set out in the Notice. Kokott made
the point that an assessment of whether an agreement appreciably restricts
competition depends on the general economic and legal context of the agreement
at hand.[11]
Furthermore, she stated: “These different requirements regarding
proof arise from the fact that restrictions of competition ‘by object’ are
regarded, by their very nature, as being injurious to the proper functioning of
normal competition. Agreements with an anti-competitive object are recognised
as having harmful consequences for society. They can hardly be regarded as de
minimis infringements. On the contrary, it must be presumed that
undertakings which enter into an agreement with an anti-competitive object
always intend an appreciable effect on competition, irrespective of the size of
their market shares and turnover.”[12]
This view was supported by the ECJ in the same case, stated in
Paragraph 37 that an agreement that may affect trade between Member States and
that has an anti-competitive object constitutes, by its nature and
independently of any concrete effect that it may have, an appreciable
restriction on competition.
To sum up, the appreciability is a condition for the application of
Article 101 TFEU. Regarding the interpretation of the appreciability, all
competition authorities and courts of Member States shall refer to the de
minimis Notice, in the matter of their sincere cooperation duty under
Article 4(3) TEU. Still, they may be able to pursue anti-competitive agreements
under the market share thresholds set out in the Notice.
[1] Société Technique Minière (L.T.M.) v
Maschinenbau Ulm GmbH (M.B.U.) Case 56-65. The Court stated: “The fact that
these are not cumulative but alternative requirements, indicated by the
conjunction “or”, leads first to the need to consider the precise purpose of
the agreement, in the economic context in which it is to be applied.”
[2] Établissements Consten S.à.R.L. and
Grundig-Verkaufs-GmbH v Commission of the European Economic Community, Joined
cases 56-64 and 58-64.
[3] Béguelin Import Co. v S.A.G.L. Import Export, Case 22-71, see
paragraph 16.
[4] Franz Völk v S.P.R.L. Ets J. Vervaecke, Case 5/69.
[5] The Commission Notice on agreements of minor importance which do
not appreciably restrict competition under Article 81(1) of EC Treaty (de
minimis) (OJ 2001 C368/13). The Commission first made an effort to
interpret the concept of de minimis with its 1970 Notice concerning ‘Decisions
and concerted practices of minor importance which do not fall under Article
85(1) of the Treaty’, which stated that agreements whose effects on trade
between Member States and on competition are negligible did not fall under the
ban of Article 85(1), which only applies if the agreements ‘have an appreciable
impact on market conditions, that is if they appreciably alter the market
position, in other words the sale and supply possibilities, of
non-participating firms and of consumers’. See D.G. Goyder, EC Competition
Law, Second Edition, Clarendon Press-Oxford, 1993, page 108.
[6] Pedro IV Servicios SL v Total España SA, Case C-260/07. See
paragraph 68, quotation added.
[7] Ziegler SA v European Commission, Case T-199/08.
[8] The definition of a relevant market for the purpose of EU competition
law should be referred to OJ C 372, 9.12.1997, p.5.
[9] Expedia Inc. v Autorité de la concurrence
and Others, Case C-226/11.
[10] AG’s Opinion on the Expedia case, paragraph 39.
[11] Ibid, paragraph 41.
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