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59 Cards in this Set

  • Front
  • Back
What articles address competition policy
101 and 102
what is prohibited action in connection with competition
Actions having object or effect of preventing, restricting or distorting competition
Does negative effect on the marker must be shown to prove the breach of Articles 101 and 102?
No need to show actual effect, if anticompetitive object can be deducted from the agreement, it is per se illegal, no need to show negative effect
Case Consten and Grundig
Is potential anti-competative effect is sufficient to show breach of Section 101 and 102
Potential effect is sufficient, but there must be a degree of probability which is objectively grounded in facts and law STM case
Parallel Traders - analysis whether restriction on conduct is restriction on competition
Referred to concerted activities
What is Block Exemptions
Block exemptions regulations are exemptions adopted by commission for particular category of agreement, setting closes that are permitted and that are prohibited
What is the difference between "Rule of Reason" approach and "Two Stage Approach"
Two state approach: First infringement of Rule 101, than effect
"Rule of reason" approach analysis pro and anticompetitive consequences before a finding of infringement is made
Two stage approach affirmed in Metropole Television Case
What exemptions are allowed under Article 101
The exemptions that produce positive effect
What is horizontal anticompetitive agreements and terms
two or more undertakings at the same level of supply and distribution-share markets, collusive tendering, agree limit production, fix prices
Vertical -different level of supply and distribution
Where two-step approach was reaffirmed by Commission
Guidelines on the Application of Article 81 (3)
1. Assessment whether undertaking has anticompetitive object or effect; 2) to determine whether pro-competative effect outweight anticompetitive effect. Balancing test
What is selective distribution?
What is the effect of selective distribution?
Selective distribution restricts supply to re-sellers that meet certain criteria.
Restricts intra brand competition
What criteria must be satisfied for selective distribution be outside the scope of Section 101
Case Metro v Commission (apply Rule of Reason")
To be outside the scope, must:
1. be justified by nature of the product;
2. critaria for selection must be objective, quantative and proportionate
3. are apply in non-discriminatory way to all potential applicants
What questions the commission suggest to ask for determining whether the agreement infringes Article 101
in Guidance on Application of Article 81(3) Commission formulates the following two question:
1. Does the agreement restrict actual or potential competition that would have existed without the agreement, if so the agreement infringes
2. Does the agreement restrict actual or potential competition that would have existed in the absence of contractual restrain
Approach of considering agreement in its actual legal and economic context
What is the de minimum rule or appreciable effect
Established by Court in Volk. Certain breaches of Article 101 will be disregarded if the companies involved are relatively small and the effect of their activities on the overall competitive situation on the market is negligible
Market share of the undertakings involved 10% for horizontal, 15% for vertical, 10% for mix, or where impossible to determine
What is Hard Core Restrictions
Restrictions which makes de Minimum rule inapplicable regardless the marker share of undertakers in the cases of fix prices or share of the marker, limitations of output or sales, allocations of markers or customers. Di Minimum marker threshold does not apply
When de minimis marker threshold does not apply
To hard core restrictions regardless of the market share if:
1. fixing prices;
2. limit output or sales;
3. The allocation of marker
What agreement is generally de minimis
The agreement between small and medium size enterprises
What are the legal consequences of a breach of Article 101
1. Liability for fines
2. Agreement is void and unenforceable prospectively and retrospectively.
Costen and Grundig case -the agreement is not necessarily void if offended clause can be deleted. Whether the clause is severable is question of national law
If there are possibility of exemption for agreements, decisions or concerted practices with infringe article 101
Yes. If agreements, decisions or concerted practices meet all four requirements:
Two positive requirements and two negative requirements
What are positive and negative requirements for exception for agreements, decisions or concerted practices
Positive requirements:
1. It contribute to improving the production of distribution of goods or to promoting technical or economic progress
2. Consumers receive a fair share of resulting benefit (profit for companies not benefit to consumers)
Negative Requirements
1. The restriction of competition must be indispensable for the achievement of improvement or progress-must me a causal link
2. It is not put the parties in the position to eliminate competition in respect of substantial part of the production in question
What is a new system of enforcement applied since May 1, 2004
Article 101 is directly effective, national competition authority, court or tribunal can grant individuals exceptions
What is block exemptions for vertical agreements
Block exceptions for specific categories of the agreements such as: exclusive distribution agreements, purchasing agreements and franchise agreements. Block exemptions are in the form of regulations and have legal force
What approach represent block exemption regulation
market oriented, economic based approach, in which eligibility for exemption is based on a marker share threshold. Allows the companies which do not have market power (less than 30 percent of the marker) to benefit from safe haven
What is safe haven
eligibility for block exemption for the companies with small market power (less than 30%)
What are hard core restrains to safe haven
as with de minims some clauses are excluded from safe haven
what sales are allowed to be restricted under vertical distribution agreement as block exemption
Regulation permits the supplier to restrict active sale outside of the territory for distribution (by setting branches outside the territory), but prohibits restrictions on passive sale (filing the orders fro the customers)
what compromised is achieved by block exemption of restrictions in distribution agreement
compromise between the need to grant a degree of territorial protection to distributor and the need to ensure competition between distributor (parallel trade)
What are key features of Regulation 2790/99
Cap of 30% market share on the availability of the block exemption, above 30% cap, an individual exemption can be applied for
set list of hard core restrictions such as 1. imposition of fix or minimum resale prices; 2. export bans; 3. restrictions on passive sales
forbid direct or indirect non-compete clause, however, such clause does not make all agreement unillegible for exemption
What block exemptions are available for horizontal agreements
block exemptions for research and development agreements (importance for small and medial size companies)
block exemption for specialization agreement
What is parallel competencies
Right to enforce infringement provides enforcement power to a singe National Competition Authority (NCA), to several NCA in parallel or to Commission
Who is responsible to assess whether the agreement/activities are compatible with EU competition rule
Undertakes (under regulation 1/2003
What criteria applies to decide whether the company has a dominant position under Artcile 102 (abuse by the company in a dominant position)
1. Need to ascertain the relevant market (extent of the product and geographic market)
2. to assess the undertaking's power on the market -market share
What is the significance of the case 56 and 58/64 Consten and Grundig [1966] ECR 299
significance fir EU competition policy, leading case in which the court laid down key principles for interpretation of article 101 -meaning of object or effect, application to vertical restrains and intra-branch competition, approach to four requirements for exemption under Artcile 101, sever ability of retractive clause, interpretation of requirements for effect of trade
What is the significance of the case 27/76 United Brand [1978] ECR 619
Leading case on interpretation of article 102. Defines concept of relevant market, dominant position and abuse and the approach to excessive pricing, refusal to supply
What is the significance of the case 48/69 ICI v Commission (Dyestuffs) (1972)
leading case on concerted practice, definition, evidence, availability of oligopoly defense
What is the significance of the joined cases 116-117, 125-129 A. Ahlstrom Osakeyhitio v Commission 1988 ECR 5193 (wood pulp)
leading case on the evidential value of parallel conduct for proving concerted practice. Issue whether conscious collusion is required, not merely parallelism. Is there plausible alternative explanation. Leading case on the extra-territorial jurisdiction of the EU commission in competition matter
what is the old style block exemptions compare to new style
Under old style block exemptions most vertical agreements (exclusive distribution) are treated as infringing but exempted. Gave very broad power to Commission to grant exemption.
New style-block exemption regulation 2790/99, still hard core restrains, but generally is economic based approach, narrowing the scope of article 101 by providing safe haven to the companies which do not have market power
Which case addresses the issue of interdependance of undertakers
ICI (Dyestuffs) case re concerted practice
what is the key question re relevant product market
(in connection with dominance in the meaning of section 102)
which product is this product in competition with. Is the product is widely defined in is unlikely that a particular undertaker will be dominant
Which products are within one product market
(Case United Barnds)
Products within one product market are those that are interchangeable by consumers by reasons of their characteristics, price and intended use
(In United Barnds -are bananas interchangeable with other fruits or bananas fulfill special consumer need and are a product market on their own
What does it mean cross-elasity of supply
can suppliers of other product quickly and easily switch to making the other products
What methodology is used to define relevant market for the purpose of ruling on dominancy
1. Whether the product is within a one product market interchangeable by consumers;
Bananas, United brands
2. Cross Elasticity of Supply -can supplier quickly and easily switch to making a product in question;
3. Sustainability of Demand - if there is a small non-transitory increase in price, will so many costumers switch to another product so that the price rase will have been unprofitable
What is a key question re relevant geographic area
Over what geographic area are producers in competition with each other. Some market are global (like platinum) other are local (perishable goods)
What is relevant geographic market
The relevant geographic market is the area in which available and accessible substitutes to the product exist
United Brands "the area where objective conditions of competitions are the same for all traders"
What is the leading case on the definition of dominance
United Brands

Defines dominance: position of economic strength,
What market share is dominant
1. Market share of 50% is dominant (Chemie)
2. Market share has to be compare with shares of other companies on the market British Airways case (BA is dominant with 39.5 %, when closes competitor has only 5.5%
What factors should be considered in connection with barriers to entry the market
1. Legal Provisions Tetra Pak
2. Superior technology United Brands
3. Deed pocket United Brand
4. Economies of scale, vertical integration and well developed distribution system United Brands
5. Product differentiations, brand image United Brands
Example of dominant undertaking case
Hoffman-La Roche
Under Article 102 what is substantial part of common market
Part of member state is substantial Case Suiker Unie -Southern Germany is sufficient
What is Collective Dominance
The undertaking in the group linked in a such way that they adopt the same conduct on the market Compain Maritame Beldge - as a collective entity, abuse of collective dominance position is breach of article 102
Is Parallel Behavior by an Oligopoly Legal under articles 101 and 102
It is leal under article 101, but may be scrutinize under article 102 to see whether it constitute collective dominance
Sample of the case of vertical collective dominance
Irish Sugar, vertical collectove dominance between Irish Sugar and distributor of sugar
Definition of abuse of collective dominance
Hoffman-La Roche case:
behavior which has effect of hindering the maintenance of the degree of competition still existing on the market or the growth of that competition
What is competition on the merits
Normal competition activity such as:
1. offering better quality product;
2. lower the price than your competitor
competition on the merits is not abuse
Is dominance illegal
No. Abuse of dominance is violation of Article 102
Are there any exemptions to Article 102
No, there are no exemptions but certain conduct which may be amount to abuse may be objectively justified
What are the types of dominance abuse
1. Excessive price (needs to show super profit)
2. Predatory pricing - price cut designed to drive out the competition Akzo case - charge less than variable cost to drive away the competitors
Selecting pricing Irish Sugar
Fidelity Discount
Tying -Microsoft case -bundling products -windows and windows media player
Refusal to Supply for punishing or prevent for using materials in competitive product
Refuse to supply essential facilities like a copyright license
what is essential facility doctrine
in Mediaprint case the court found that to show refuse to supply essential facility as dominance abuse the facility must be indispensable -it must be shown that it makes impossible or unreasonably difficult to compete without access to the facility
what are conditions to abuse of dominant conduct in the case of refusal to grant license
IMS case -refusal to supply intellectual property rights:
1. the refusal prevents the emergence of a new product for which there is a potential consumer demand
2. the refusal was unjustified
3. it would exclude any competition on the secondary market
(was followed in Microsoft case)