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59 Cards in this Set
- Front
- Back
What articles address competition policy
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101 and 102
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what is prohibited action in connection with competition
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Actions having object or effect of preventing, restricting or distorting competition
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Does negative effect on the marker must be shown to prove the breach of Articles 101 and 102?
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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 |
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Is potential anti-competative effect is sufficient to show breach of Section 101 and 102
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Potential effect is sufficient, but there must be a degree of probability which is objectively grounded in facts and law STM case
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Parallel Traders - analysis whether restriction on conduct is restriction on competition
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Referred to concerted activities
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What is Block Exemptions
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Block exemptions regulations are exemptions adopted by commission for particular category of agreement, setting closes that are permitted and that are prohibited
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What is the difference between "Rule of Reason" approach and "Two Stage Approach"
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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 |
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What exemptions are allowed under Article 101
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The exemptions that produce positive effect
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What is horizontal anticompetitive agreements and terms
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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 |
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Where two-step approach was reaffirmed by Commission
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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 |
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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 |
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What criteria must be satisfied for selective distribution be outside the scope of Section 101
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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 |
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What questions the commission suggest to ask for determining whether the agreement infringes Article 101
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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 |
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What is the de minimum rule or appreciable effect
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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 |
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What is Hard Core Restrictions
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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
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When de minimis marker threshold does not apply
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To hard core restrictions regardless of the market share if:
1. fixing prices; 2. limit output or sales; 3. The allocation of marker |
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What agreement is generally de minimis
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The agreement between small and medium size enterprises
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What are the legal consequences of a breach of Article 101
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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 |
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If there are possibility of exemption for agreements, decisions or concerted practices with infringe article 101
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Yes. If agreements, decisions or concerted practices meet all four requirements:
Two positive requirements and two negative requirements |
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What are positive and negative requirements for exception for agreements, decisions or concerted practices
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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 |
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What is a new system of enforcement applied since May 1, 2004
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Article 101 is directly effective, national competition authority, court or tribunal can grant individuals exceptions
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What is block exemptions for vertical agreements
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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
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What approach represent block exemption regulation
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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
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What is safe haven
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eligibility for block exemption for the companies with small market power (less than 30%)
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What are hard core restrains to safe haven
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as with de minims some clauses are excluded from safe haven
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what sales are allowed to be restricted under vertical distribution agreement as block exemption
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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)
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what compromised is achieved by block exemption of restrictions in distribution agreement
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compromise between the need to grant a degree of territorial protection to distributor and the need to ensure competition between distributor (parallel trade)
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What are key features of Regulation 2790/99
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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 |
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What block exemptions are available for horizontal agreements
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block exemptions for research and development agreements (importance for small and medial size companies)
block exemption for specialization agreement |
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What is parallel competencies
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Right to enforce infringement provides enforcement power to a singe National Competition Authority (NCA), to several NCA in parallel or to Commission
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Who is responsible to assess whether the agreement/activities are compatible with EU competition rule
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Undertakes (under regulation 1/2003
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What criteria applies to decide whether the company has a dominant position under Artcile 102 (abuse by the company in a dominant position)
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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 |
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What is the significance of the case 56 and 58/64 Consten and Grundig [1966] ECR 299
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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
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What is the significance of the case 27/76 United Brand [1978] ECR 619
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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
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What is the significance of the case 48/69 ICI v Commission (Dyestuffs) (1972)
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leading case on concerted practice, definition, evidence, availability of oligopoly defense
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What is the significance of the joined cases 116-117, 125-129 A. Ahlstrom Osakeyhitio v Commission 1988 ECR 5193 (wood pulp)
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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
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what is the old style block exemptions compare to new style
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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 |
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Which case addresses the issue of interdependance of undertakers
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ICI (Dyestuffs) case re concerted practice
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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
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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 |
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What does it mean cross-elasity of supply
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can suppliers of other product quickly and easily switch to making the other products
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What methodology is used to define relevant market for the purpose of ruling on dominancy
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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 |
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What is a key question re relevant geographic area
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Over what geographic area are producers in competition with each other. Some market are global (like platinum) other are local (perishable goods)
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What is relevant geographic market
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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" |
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What is the leading case on the definition of dominance
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United Brands
Defines dominance: position of economic strength, |
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What market share is dominant
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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% |
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What factors should be considered in connection with barriers to entry the market
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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 |
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Example of dominant undertaking case
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Hoffman-La Roche
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Under Article 102 what is substantial part of common market
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Part of member state is substantial Case Suiker Unie -Southern Germany is sufficient
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What is Collective Dominance
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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
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Is Parallel Behavior by an Oligopoly Legal under articles 101 and 102
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It is leal under article 101, but may be scrutinize under article 102 to see whether it constitute collective dominance
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Sample of the case of vertical collective dominance
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Irish Sugar, vertical collectove dominance between Irish Sugar and distributor of sugar
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Definition of abuse of collective dominance
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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 |
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What is competition on the merits
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Normal competition activity such as:
1. offering better quality product; 2. lower the price than your competitor competition on the merits is not abuse |
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Is dominance illegal
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No. Abuse of dominance is violation of Article 102
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Are there any exemptions to Article 102
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No, there are no exemptions but certain conduct which may be amount to abuse may be objectively justified
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What are the types of dominance abuse
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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 |
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what is essential facility doctrine
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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
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what are conditions to abuse of dominant conduct in the case of refusal to grant license
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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) |