Essential EU Competition Law in Charts

Essential EU Competition Law in Charts

First Reprint

Christa Tobler Jacques Beglinger Wessel Geursen

Companion website: http://competition-webcompanion.eur-charts.eu EUR-Charts – The EU Law in Charts Project

Essential EU Competition Law in Charts First Reprint

Christa Tobler Jacques Beglinger Wessel Geursen

Lap- és Könyvkiadó Kft. BUDAPEST, 2012

HVG-ORAC Publishing House Ltd., 1137 Budapest, Radnóti M. u. 2., Hungary.

Telephone: + 36 1 340-2304 Website: www.hvgorac.hu © Christa Tobler, 2012 © Jacques Beglinger, 2012 © Wessel Geursen, 2012 © HVG-ORAC Lap- és Könyvkiadó Kft., 2012

ISBN: 978-963-258-118-7 First Reprint 2012

Printed in Hungary by PRIMERATE KFT.

All charts were made with OmniGraffle Professional, the diagramming software by the Omni Group, Seattle WA, USA; www.omnigroup.com

All rights reserved. No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system without prior permission from the publisher.

Webcompanion: http://competition–webcompanion.eur-charts.eu

PREFACE The idea behind this book is for in-house lawyers and practitioners, officers in European or national public administration and students to benefit from a comprehensive set of charts illustrating the “core” of EU competition law together with a brief companion text that relates back to the charts. This concept was developed through the combined professional experience of the authors, in both legal practice and in academia.

Visualising law, as we have attempted to do in this book by means of charts, provides a very different perspective. It gives an idea of what the blueprint of the edifice of Union law would look like. Not unlike architecture, the basic concepts seem misleadingly simple but the challenge lies in establishing the connections between the concepts. That is what this book seeks to achieve. At the same time - like “real” blueprints - any picture of the law is an abstract simplification, and is no substitute for conventional methods of study. Just like an architect who needs to know his or her building materials and to use them properly, a lawyer needs to know the law, and needs to know how to interpret and apply general rules and principles to a specific case.

The charts contained in this book serve several different, though largely overlapping purposes.

Firstly, the charts are intended as a learning tool. Most people tend to understand (and memorise) more easily complex or abstract concepts if presented with some form of visual aid. For those who have previously studied EU competition law, perhaps as part of the typical curriculum of a law degree, and are in need of a refresher course, a concise and systematic overview of the current state of EU competition law condensed into chart form mapping out developments and changes in the law will prove a very useful and handy resource, a “vade mecum” perhaps. For non-lawyers or students taking courses in EU competition law for the first time, charts are an excellent way of getting a broad overview of the various topics before going into the detail of the relevant principles, case law and secondary legislation, thus making learning more effective.

Secondly, these charts can be applied as a presentation tool. Whether explaining an issue of EU competition law to a client, making a presentation before the board of directors of a company, or lecturing EU competition law in a university, visual tools can be extremely useful, and especially so in the (often complex) field of EU competition law.

The overall structure of this book is designed to guide the (uninitiated) reader towards a specific legal issue through “topic charts” and “decision trees”. In this way, the core of the body of primary EU competition law, secondary EU competition law, and case law of the European Court of Justice becomes accessible in a quick and practical way. For practitioners and academics who already possess specialised knowledge of EU competition law the decision trees can be used to provide a comprehensive checklist.

This project would not have been possible without the help of many people. Regarding the contents of the charts, we are particularly grateful to Mr. Friso van Harinxma, Head of Legal at Shell Nederland Ver­ koopmaatschappij, as well as to Christa Tobler’s colleagues at Leiden University for their help, notably Prof.

Piet Jan Slot and Ms. Elsbeth Beumer. Furthermore, we benefited from the personal advice of several officials of competition authorities.

We are also thankful to many friends active in law firms and corporate legal departments who through their continuous critical review and feedback on the draft work were instrumental in making this book despite its academic ambition into what is hopefully “easy reading” for busy international lawyers. We are particularly grateful to Mr. Daniel de Feydeau, General Counsel Group Law at Schindler, as well as to Ms. Daphne Yong-d’Hervé, Senior Policy Manager of the ICC Commission on Competition, for providing and helping to obtain expert input.

Helpful comments on the substance of the charts were also received from people who did other important work for the project. We were fortunate to have Mr. Stephen Moran, barrister-at-law from Ireland, as our language editor. He had a tough job in ensuring the proper use of the English language in this work and in checking that the text indeed expresses what it is supposed to express. Moreover, being proficient in the book’s subject matter himself, his contribution went far beyond proofreading. For additional language advice, we are grateful to Ms Sheena Bruce from Leiden University.

On the production side, we would most particularly like to thank our assistant Mr Samuel Schweizer, who dedicated many hours to the fine-tuning of the graphic work and the tables and also supported the works with his legal knowledge. We are extremely grateful to Dr. Ádám Frank of the publishing house HVG-ORAC 5

Preface

in Budapest for taking on the challenge of publishing this book despite the many challenges attributable to its special nature, including in particular the printing of documents prepared with complex software, rather than printing straight text as in most books.

Finally, we are grateful for the support of Leiden University’s research institute, the E.M. Meijers Instituut voor Rechtwetenschappelijk Onderzoek, for agreeing to be associated with the publication of this book.

The book was developed within the framework of the EUR-Charts Project (http://www.eur-charts.eu) and reflects the state of law on 1 January 2011. It is supplemented by its companion website, which comprises a number of exercises as well as a comprehensive set of reference legal texts which are available for download and also informs about updates and corrigenda.

Readers who wish to benefit from a broad embodiment of charts on the full range of topics of EU law are referred to the book “Essential EU law in Charts” and its companion booklet “Essential EU Law in Text”, both published in 2010 also with HVG-ORAC under the EUR-Charts Project.

We would like to dedicate this book to our respective families.

January 2011 Christa Tobler Leiden and Basel

Jacques Beglinger Zurich

Wessel Geursen Amsterdam and Ermelo

Note on the First Reprint 2012: This book was first printed in January 2011 to provide readers at an early stage with a version of the Charts that would incorporate the changes brought about by the revision of the block exemption regime under EU competition law on the conduct of undertakings. Such was the demand for the original print that the need arose for this reprint. We have used this opportunity to correct a number of typographical errors that appeared in the original. For updates and any future corrigenda, we would refer the reader to the companion website to this book on http://www.competition-webcompanion.eur-charts.eu. In the future, the companion website will also include additional exercises and suggested solutions.

Christa Tobler Leiden and Basel

6

Jacques Beglinger Zurich

Wessel Geursen Amsterdam and Ermelo

NOTE TO USERS Essential EU Competition Law in Charts consists of two parts, one being the printed book in front of you, the other an integrated online companion website on the internet, http://competition-webcompanion.eurcharts.eu. The first and main part of the book is dedicated to EU competition law which, in practise, is a particularly important aspect of EU economic law. The second part of the book provides information on background and context, i.e. on the place of competition law in the larger EU legal system and on the system of EU law. Readers who have an interest in learning more about EU law in general may wish to consult the books “Essential EU Law in Charts” and “Essential EU Law in Text”, both of which are also part of the EUR-Charts Project (http://www.eur-charts.eu).

The companion website, http://competition-webcompanion.eur-charts.eu, provides the reader with (i) information about updates and corrigenda, (ii) a selection of important legal reference texts which are available to download, (iii) access to the other legal texts referenced in the book via comprehensive link lists and (iv) a number of exercises .

In order to maximise their utility, the charts contained in this booklet should be read in conjunction with the relevant legislative provisions and case law as mentioned therein. All of these materials are easily available on and accessible through the internet. Throughout the charts, cases are referred to merely by case name, and secondary legislative measures only by the measure’s number. Following the charts, this book contains a list of legislative and other measures as well as of cases. In this list, further information is provided which can be used to locate the measure or case on the internet.

As far as secondary law is concerned, when indicating a measure that has been searched by submitting, for example, the document’s natural number, the database “EUR-Lex” (http://eur-lex.europa.eu) provides not only the document’s text but also bibliographical information. Under that heading, the reader will see whether a given measure is still in force (“end of validity: 99/99/9999” indicates that the measure is still in force) or whether it has been corrected or amended since its adoption.

As was noted in the preface, this book reflects the state of the law on 1 January 2011. However, it is well known that EU law is a particularly dynamic kind of international law. New decisions of the Court of Justice are continuously being released as is new or revised secondary law and even, though to a lesser extent, revised Treaty law. For an easy way to find recent decisions of the Court: go to the website of the Court of Justice (http://www.curia.eu), under “case law”, “search form”, submit an empty search mask (i.e. return an empty search line) except for the number of cases to be shown; this will return the requested number of the most recent decisions.

We hope that with this information the reader will find working with our charts easy and useful.

Finally, as part of our effort to achieve legal accuracy we would appreciate and indeed welcome any comments or criticisms pertaining to this work from interested readers (via http://www.eur-charts.eu). On the same website, readers are also invited to register for the EUR-Charts newsletter which will inform the reader of the latest developments regarding the EUR-Charts Project and its books.

7

OUTLINE TABLE OF CONTENTS Preface Note to users Outline table of contents Table of contents Table of abbreviations PART ONE: I.

1.

2.

3.

4.

II.

1.

2.

3.

4.

PART TWO:

I. 1.

2.

3.

4.

II.

1.

2.

3.

EU COMPETITION LAW Charts: EU competition law (Arts. 101 - 109 TFEU) [C-Charts] Introduction and overview Conduct of undertakings 2.1 Art. 101 TFEU: collusive conduct 2.2 Art. 102 TFEU: abuse of a dominant position 2.3 Enforcement of Arts. 101 and 102 TFEU 2.4 Merger control 2.5 Undertakings with a special position under national law Mixed situations State aid Explanatory text: EU competition law (Arts. 101 - 109 TFEU) Introduction and overview Conduct of undertakings State conduct Exercises and legal analysis

BACKGROUND AND CONTEXT: COMPETITION LAW AS PART OF THE EU LEGAL SYSTEM Charts: competition law as part of the EU legal system [B-Charts] From the European Communities to the European Union The place of competition law in today’s EU legal system Adoption of secondary EU competition law General elements of the enforcement of EU law Explanatory text: competition law as part of the EU legal system The development of EU law The place of EU competition law in the EU legal system Enforcement of EU law

Tables Annex: Legislative materials Index

8

[Companion website]

ESSENTIAL COMPETITION LAW IN CHARTS

CHART PAGE

Preface

5

Note to users

7

Outline table of contents

8

Table of contents

9

Table of abbreviations

12

PART ONE: EU COMPETITION LAW

13

I.

Charts: EU Competition Law (Arts. 101 - 109 TFEU) [C-Charts]

13

1. Introduction and overview Free competition and distortion of competition in EU law EU competition law: an overview

C1 C2

18 19

2. Conduct of undertakings What is an undertaking?

Conduct of undertakings: the relevant market Comparison of Arts. 101 and 102 TFEU

C3 C4 C5

20 21 22

C6 C7

23 24

2.1.1 Art. 101(1) TFEU Undertakings’ conduct under Art. 101(1) TFEU Effect on trade between the Member States Appreciability of the effect on trade Object or effect in relation to competition The de minimis rule regarding effect on competition Hardcore restrictions Result: two distinct issues of appreciability Examples mentioned in Art. 101(1) TFEU

C8 C9 C10 C11 C12 C13 C14 C15

25 26 27 28 29 30 31 32

2.1.2 Exemptions from Art. 101(1) TFEU Exemptions from Art. 101(1) TFEU Block exemptions: the general pattern Block exemptions: vertical agreements Block exemptions: specialisation agreements Block exemptions: research and development agreements Block exemptions: technology transfer agreements Individual exemption under Art. 101(3) TFEU

C16 C17 C18 C19 C20 C21 C22

33 34 35 36 37 38 39

2.1.3 Selected issues within the scope of Art. 101 TFEU Agency agreements Franchise agreements Merger and acquisition agreements Joint venture agreements Intellectual property rights

C23 C24 C25 C26 C27

40 41 42 43 44

2.1 Art. 101 TFEU: collusive conduct Decision tree: collusive conduct of undertakings (Art. 101 TFEU) Art. 101 TFEU: an overview

9

Essential competition law in charts

2.2 Art. 102 TFEU: abuse of a dominant position Decision tree: abuse of a dominant position (Art. 102 TFEU) Art. 102 TFEU: an overview The relevant market Dominance: decisive power in the relevant market The abuse of a dominant position

C28 C29 C30 C31 C32

45 46 47 48 49

2.3 Enforcement of Arts. 101 and 102 TFEU Enforcement of Arts. 101 and 102 TFEU Application of Arts. 101 and 102 TFEU: allocation of competences Initiatives for action by the Commission Powers of investigation of the Commission Commission proceedings Finding of the Commission

C33 C34 C35 C36 C37 C38

50 51 52 53 54 55

2.4 Merger control Decision tree: merger control Scope of the Merger Regulation Merger control procedure Phase 1: examination of the notification Phase 2: appraisal of mergers Ancillary restraints

C39 C40 C41 C42 C43 C44

56 57 58 59 60 61

2.5 Undertakings with a special position under national law Art. 106 TFEU: undertakings with a special position under national law Services of general economic interest

C45 C46

62 63

3. Mixed situations Mixed situations: Art. 4(3) TEU, Protocol No 27 and Arts. 101 or 102 TFEU

C47

64

4. State aid Decision tree: state aid (Art. 107 TFEU) Art. 107 TFEU: an overview The term “state aid�

Effect on trade and on competition Derogations Compensation for public service obligations and state aid System of prior notification and examination of aid State aid control procedure

C48 65 C49 66 C50 67 C51 68 C52 69 C53 70 C54 71 C55 72

II.

Explanatory text: EU competition law (Arts. 101 - 109 TFEU)

73

1. Introduction and overview 2. Conduct of undertakings 2.1 General remarks 2.2 Collusive conduct: Art. 101 TFEU 2.3 Abuse of a dominant position: Art. 102 TFEU 2.4 Enforcement of Arts. 101 and 102 TFEU 2.5 Merger control under Regulation 139/2004/EC 2.6 Undertakings with a special position under national law: Art. 106 TFEU 3. State conduct 3.1 Art. 4(3) TEU, Protocol No 27 and Arts. 101 or 102 TFEU 3.2 State aid control under Arts. 107 TFEU et seq.

4. Exercises and legal analysis [Companion website]

73 74 74 74 76 77 77 78 78 78 79 80

PART TWO:

I.

BACKGROUND AND CONTEXT: COMPETITION LAW AS PART OF THE EU LEGAL SYSTEM

81

Charts: competition law as part of the EU legal system [B-Charts]

81

1. From the European Communities to the European Union Three European Communities The EU before the Lisbon revision The Lisbon revision 10

CHART PAGE

B1 B2 B3

83 84 85

Essential competition law in charts

CHART PAGE

The EU following the Lisbon revision Important Treaty revisions

B4 B5

86 87

B6 B7 B8 B9

88 89 90 91 92 93 94 95 96 97

2.

The place of competition law in today’s EU legal system Three fundamental texts of equal value Aims and values of the European Union The nucleus of substantive EU law “Overarching” substantive law

3.

Adoption of secondary EU competition law Secondary measures (or legal acts) of the Union Conferral of powers on the EU Division of competence between the EU and its Member States Legal basis provisions Specifically: the consultation procedure Specifically: the ordinary legislative procedure (codecision, Art. 294 TFEU)

B10 B11 B12 B13 B14 B15

4.

General elements of the enforcement of EU law National courts and the ECJ: cooperation and division of tasks Procedures and arguments: an overview Specifically: the action for annulment Specifically: the preliminary ruling Jurisdiction of the different levels of the ECJ

B16 98 B17 99 B18 100 B19 101 B20 102

II.

Explanatory text: competition law as part of the EU legal system

103

1. The development of EU law 1.1 From the European Communities to the European Union 1.2 The Lisbon revision 1.3 Growing membership, language versions of EU law and web-based information 1.4 A practical issue: renumbering of the Treaties 2. The place of EU competition law in the EU legal system 2.1 Competition law as part of the greater body of EU law 2.2 Primary and secondary competition law 2.3 Adoption of secondary measures 3. Enforcement of EU law 3.1 Cooperation between national courts and the ECJ 3.2 Enforcement on the level of the national courts 3.3 Enforcement on the level of the ECJ

103 103 104 104 104 104 104 105 106 107 107 108 108

Tables I. Treaties, Charter of Fundamental Rights, Protocols and Declarations II. Secondary EU law III. Commission decisions and reports IV. „Soft law“ (communications, notices, guidelines etc.)

V. Other documents VI. Case law of the Court of Justice of the European Union

110 110 110 111 112 114 114

Annex: Legislative materials 119 Primary law: competition articles in the TFEU (Arts. 101 - 109 TFEU) 119 Secondary law: Regulation 1/2003/EC on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty 121 Secondary law: Regulation 139/2004/EC on the control of concentrations between undertakings (Merger Regulation) 129 Legal reference texts to download

[Companion website]

Index 139

11

ABBREVIATIONS AG Advocate(s)-General Art. (Arts.) Article(s) BER Block exemption regulation C C series (Official Journal: resolutions, recommendations, guidelines and

opinions/information/preparatory acts/notices/announcements) CC Conciliation Committee CFI Court of First Instance (previous name of the General Court) CFSP Common Foreign and Security Policy CJ Court of Justice COM Commission Document CST Civil Service Tribunal EAEC European Atomic Energy Community (Euratom) EC European Community, European Communities; in relation to Treaty articles (pre-Lisbon):

EC Treaty ECB European Central Bank ECHR European Convention on Human Rights ECJ European Court of Justice (Court of Justice of the European Union) ECR European Court Reports ECSC European Coal and Steel Community EEC European Economic Community e.g. Latin: exempli gratia (for example) EP European Parliament et seq.

Latin: et sequentia (and the following) etc. Latin: et cetera (and others) EU European Union; in relation to Treaty articles (pre-Lisbon): EU Treaty FRAND Fair, reasonable and non-discriminatory GC General Court i.e.

Latin: id est (that is) incl. including IPR Intellectual Property Right(s) JV Joint venture L L series (Official Journal: legislation) M&A Mergers and Acquisitions NB Latin: nota bene (pay attention, take notice) NCA national competition authorities n.y.r. not yet reported OJ Official Journal of the European Union PJCCM Police and Judicial Cooperation in Criminal Matters R&D Research and Development SMEs Small and medium-sized enterprises SSNIP Small but Significant Non-transitory Increase in Price TEU Treaty on European Union (post-Lisbon) TFEU Treaty on the Functioning of the European Union (post-Lisbon) UK United Kingdom of Great Britain and Northern Ireland UN United Nations U.N.T.S. United Nations Treaty Series v Latin: versus (against)

12

PART ONE

PART ONE: EU COMPETITION LAW I. Charts: EU Competition Law (Arts. 102 - 109 TFEU) [C-Charts]

CHART PAGE

1 Introduction and overview

Free competition and distortion of competition in EU law The EU is based on the principle of an open market economy with free competition.

EU competition law aims to ensure that competition in the internal market is not distorted.

C1

18

EU competition law: an overview EU competition law addresses the conduct of undertakings and also of the Member States. Together, Arts. 101, 102 and 106 TFEU and the Merger Regulation form a comprehensive system of competition rules for undertakings. Art. 107 TFEU prohibits state aid. Other competition rules exist for specific areas.

C2

19

What is an undertaking?

For the purposes of EU competition law, the term “undertaking” is very broad. It encompasses any and every entity that performs an economic activity.

C3

20

The relevant market In the examination of the conduct of undertakings under EU competition law, the relevant market plays an important role.

C4

21

Comparison of Arts. 101 and 102 TFEU Even though they regulate different situations, Arts. 101 and 102 TFEU may apply simultaneously.

C5

22

Decision tree: collusive conduct of undertakings (Art. 101 TFEU)

C6

23

Art. 101 TFEU: an overview Art. 101 TFEU prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices, if these may affect trade between Member States and if they have as their object or effect the prevention, restriction or distortion of competition.

C7

24

Undertakings’ conduct under Art. 101(1) TFEU The conduct prohibited by Art. 101(1) TFEU includes three forms of coordinated action between two or more undertakings (“collusive conduct”).

C8

25

Effect on trade between the Member States Conduct prohibited by Art. 101(1) TFEU must have an actual or potential effect on inter-state trade within the EU.

C9

26

Appreciability of the effect on trade Art. 101(1) TFEU does not cover conduct which has an insignificant effect on interstate trade.

C10

27

Object or effect in relation to competition The conduct prohibited by Art. 101(1) TFEU must have as its object or effect the prevention, restriction or distortion of competition within the internal market.

C11

28

2 Conduct of undertakings

2.1 Art. 101 TFEU: collusive conduct

2.1.1 Art. 101(1) TFEU

13

Part One: EU COMPETITION LAW

CHART PAGE

The de minimis rule regarding effect on competition Art. 101(1) TFEU does not cover conduct which has an insignificant effect on competition.

C12

29

Hardcore restrictions Where a conduct is characterised as a hardcore restriction, it will not be exempt under the de minimis rule even if the undertakings concerned do not reach the relevant thresholds.

C13

30

Result: two distinct issues of appreciability Under Art. 101(1) TFEU, the concept of appreciability is relevant in two distinct contexts, and with two different tests. One concerns the effect on trade between Member States whereas the other concerns the distortion of competition.

C14

31

Examples mentioned in Art. 101(1) TFEU Art. 101(1) TFEU mentions examples of conduct that may prevent, restrict or distort competition. This list is not exhaustive.

C15

32

Exemptions from Art. 101(1) TFEU In certain situations and under certain conditions, the prohibition of Art. 101(1) TFEU does not apply. EU law provides for two types of so-called “exemptions from Art. 101(1) TFEU”, namely for individual exemptions and for block exemptions.

C16

33

Block exemptions: the general pattern In the context of block exemptions, agreements are exempt from Art. 101(1) TFEU where they fall within the scope of the relevant block exemption regulation and where they comply with all conditions as set out. In other cases, individual exemption may be possible under Art. 101(3) TFEU.

C17

34

Block exemptions: vertical agreements The block exemption regulation on vertical agreements applies to agreements between undertakings at different levels in the production or distribution chain. A vertical agreement is exempt if it complies with the terms of Regulation 330/2010/EU.

C18

35

Block exemptions: specialisation agreements The block exemption regulation on specialisation agreements concerns horizontal agreements (i.e. agreements between companies active on the same product market) under which undertakings agree to specialise in the production of certain products and to refrain from producing those products and to purchase them from the other party. A specialisation agreement is exempt if it complies with the terms of Regulation 1218/2010/EU.

C19

36

Block exemptions: research and development agreements The block exemption regulation on research and development (“R&D”) concerns agreements under which undertakings (also competitors) agree to pursue joint or paid-for R&D. An R&D agreement is exempt if it complies with the terms of Regulation 1217/2010/EU.

C20

37

Block exemptions: technology transfer agreements The block exemption regulation on technology transfer agreements concerns agreements under which undertakings (also competitors) license technology. A technology transfer agreement is exempt if it complies with the terms of Regulation 772/2004/EC.

C21

38

Individual exemption under Art. 101(3) TFEU In order to benefit from an individual exemption under Art. 101(3) TFEU, the conduct of undertakings needs to fulfil the conditions laid down in Art. 101(3) TFEU.

C22

39

C23

40

2.1.2 Exemptions from Art. 101(1) TFEU

2.1.3 Selected issues within the scope of Art. 101 TFEU Agency agreements Genuine agency agreements do not involve two independent undertakings and therefore fall outside the scope of Art. 101(1) TFEU. 14

Part One: EU COMPETITION LAW CHART PAGE

Franchise agreements Essential elements of a franchise agreement are considered to be inherent restrictions and are as such not covered by Art. 101(1) TFEU.

C24

41

Merger and acquisition agreements Agreements on mergers or acquisitions (“M&A”) of undertakings may fall under Art. 101(1) TFEU. If the M&A qualifies as a concentration with a Union dimension, the Merger Regulation applies. In addition, the M&A agreement may contain supplementary clauses restricting competition, which fall under Art. 101(1) TFEU.

C25

42

Joint venture agreements Joint venture (“JV”) agreements may fall under Art. 101(1) TFEU. In the case of JV agreements on a full-function JV with a Union dimension, the Merger Regulation applies. In the latter case, supplementary clauses may fall under Art. 101(1) TFEU.

C26

43

Intellectual property rights Following the life cycle of an intellectual property right, issues related to it may fall under various parts of EU competition law.

C27

44

Decision tree: abuse of a dominant position (Art. 102 TFEU)

C28

45

Art. 102 TFEU: an overview Art. 102 TFEU prohibits the abuse of a dominant position within the internal market by an undertaking (or two or more undertakings forming an economic entity for these purposes) in so far as it may affect trade between Member States.

C29

46

The relevant market The existence of dominance is determined by the undertaking’s power in the relevant market, which in turn is defined in terms of products, geography and time.

C30

47

Dominance: decisive power in the relevant market Whether or not an undertaking enjoys a dominant position in the relevant market will normally depend on a number of factors, including in particular the undertaking’s share in the relevant market.

C31

48

The abuse of a dominant position The abuse of a dominant position consists of conduct outside the limits of normal competition which weakens competition either in the market where dominance was established or in an adjacent market.

C32

49

Enforcement of Arts. 101 and 102 TFEU According to Art. 105 TFEU, the Commission is the main body in charge of ensuring the application of Arts. 101 and 102 TFEU. To some extent, Regulation 1/2003/EC has brought about decentralisation.

C33

50

Application of Arts. 101 and 102 TFEU: allocation of competences Under Regulation 1/2003/EC, the Commission, the national competition authorities (NCAs) and the national courts generally share the competence to apply Arts. 101 and 102 TFEU. The exclusive competence to apply the equivalent provisions of national law rests with the national competition authorities and the national courts.

C34

51

Initiatives for action by the Commission The Commission may decide to investigate possible breaches of Arts. 101 and 102 TFEU based on its own initiative, as a consequence of a complaint or based on information provided by possible infringers.

C35

52

Powers of investigation of the Commission In investigating cases of alleged or suspected breaches of Arts. 101 and 102 TFEU, the Commission may request information, take statements and carry out inspections.

C36

53

2.2 Art. 102 TFEU: abuse of a dominant position

2.3 Enforcement of Arts. 101 and 102 TFEU

15

PART ONE

Part One: EU COMPETITION LAW

CHART PAGE

Commission proceedings Commission proceedings concerning Arts. 101 and 102 TFEU follow certain procedural rules.

C37

54

Finding of the Commission In concluding its investigation, the Commission will issue a decision.

C38

54

Decision tree: merger control

C39

56

Scope of the Merger Regulation Since 1989, the EU (then: the EEC) has had specific secondary legislation on the control of mergers between undertakings as exercised by the Commission. This legislation applies only to certain types of mergers. Other mergers may fall under the Treaty rules or under national competition law.

C40

57

Merger control procedure Under the Merger Regulation, merger control is carried out by the Commission. Planned mergers must be notified to the Commission. A concentration must not be implemented until it has been declared compatible with the internal market by the Commission.

C41

58

Phase 1: examination of the notification In the first phase of merger control proceedings, the Commission examines whether the notified concentration falls under the Merger Regulation and whether it raises serious doubts as to its compatibility with the internal market.

C42

59

Phase 2: appraisal of mergers Under the Merger Regulation, concentrations are approved if they would not significantly impede effective competition in the internal market or in a substantial part of it.

C43

60

Ancillary restraints A Commission Decision declaring a concentration compatible with the internal market also covers restrictions which are directly related and necessary to the implementation of the concentration (ancillary restraints). Such restrictions are, therefore, not covered

by Art. 101(1) TFEU.

C44

61

Art. 106 TFEU: undertakings with a special position under national law Art. 106 TFEU addresses the situation under EU law of undertakings with a special position under national law.

C45

62

Services of general economic interest In the case of undertakings performing services of a general economic interest, the various rules of EU law only apply conditionally.

C46

63

C47

64

Decision tree: state aid (Art. 107 TFEU)

C48

65

Art. 107 TFEU: an overview Under Art. 107 TFEU, state aid in any form whatsoever which distorts or threatens to distort competition is incompatible with the internal market in so far as it affects trade between Member States.

C49

66

2.4 Merger control

2.5 Undertakings with a special position under national law

3 Mixed Situations

Mixed situations: Art. 4(3) TEU, Protocol No 27 and Arts. 101 or 102 TFEU Where measures taken by the Member States render ineffective the EU competition rules that are applicable to undertakings, the Member States may be held responsible under Art. 4(3) TEU, Protocol No 27 and Arts. 101 or 102 TFEU, read in conjunction with one another.

4 State aid

16

Part One: EU COMPETITION LAW CHART PAGE

The term “state aid�

State aid is a financial benefit granted selectively by the State or through State resources.

C50

67

Effect on trade and on competition In order to be prohibited under EU state aid law, the state aid must have an appreciable effect on trade between Member States and on competition.

C51

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PART ONE

Derogations C52 69 State aid that falls under a derogation mentioned in Art. 107(2) and (3) TFEU is not prohibited. In the field of transport, Art. 93 TFEU allows for specific derogations.

Undertakings with a special position under national law may be able to rely on Art. 106(2) TFEU. Compensation for public service obligations and state aid Compensation for public service obligations does not fall under Art. 107(1) TFEU provided that the conditions defined by the ECJ in the important Altmark (2003) decision are met.

C53

70

System of prior notification and examination of aid Under Art. 108 TFEU, state aid control is carried out by the Commission. In principle, aid must not be paid unless the Commission has found it to be compatible with the internal market.

C54

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State aid control procedure State aid is reviewed by the Commission.

C55

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1. Introduction and overview

Chart C1

Free competition and distortion of competition in EU law

Topic: The EU is based on the principle of an open market economy with free competition. EU competition law aims to ensure that competition in the internal market is not distorted.

Starting point: Free competition as part of the EU's economic credo

Art. 119 TFEU: The economic policies of the EU and of the Member States are "conducted in accordance with the principle of an open market economy with free competition".

Aim of EU competition law: Ensuring that competition in the internal market is not distorted

Protocol No 27: "the internal market includes a system ensuring that competition is not distorted" According to the ECJ, EU competition law: • Aims at "effective competition" (or workable competition), rather than at perfect competition; Metro (1977); • Is designed to protect not only the immediate interests of individual competitors or consumers but also to protect the structure of the market and thus competition as such; T-Mobile (2009).

Functional link with free movement EU competition law and EU law on free movement are functionally linked: • For EU competition law to apply, the conduct in question must have a (potential) effect on trade between Member States (so-called "inter-state" or "internal market element"; see Chart C7, Chart C29, Chart C49).

• EU competition law and free movement law can apply simultaneously; e.g. Essent Netwerk (2008), Presidente del Consiglio (2009).

Parallel application of EU competition law and national competition law of the EU Member States

National competition law and EU competition law apply in parallel, since they both consider restrictive practices but from different points of view; Manfredi (2006).

Regarding EU law: The inter-state or internal market element determines whether EU law applies; Consten and Grundig (1966), Belasco (1989). Purely internal cases do not fall under EU competition law.

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1. Introduction and overview

Topic: EU competition law addresses the conduct of undertakings and also of the Member States. Together, Arts.

101, 102 and 106 TFEU and the Merger Regulation form a comprehensive system of competition rules for undertakings. Art. 107 TFEU prohibits state aid. Other competition rules exist for specific areas.

The nucleus of EU competition law

Rules (primarily) aimed at undertakings; see Chart C3

Substance

Procedure

Art. 101 TFEU: Agreements, decisions by associations, concerted practices

Art. 102 TFEU: Abuse of a dominant position

See Chart C5, Chart C6

See Chart C5, Chart C28

Rules aimed at the Member States

Regulation 139/2004/EC: Merger control by the Commission

Art. 106 TFEU: Undertakings with a special position under national law

Art. 107 TFEU: State aid

See Chart C39

See Chart C45

See Chart C48

• Regulation 1/2003/EC (formerly: "Regulation 17" of 1962); • Regulation 773/2004/EC.

• Regulation 139/2004/ EC; • Regulation 802/2004/ EC.

No specific legislation on enforcement, as Art. 106 TFEU applies together with other provisions.

See Chart C33 et seq.

See Chart C41

See Chart C45

• Art. 108 TFEU; • Regulation 659/1999/ EC; • Regulation 794/2004/ EC. See Chart C55

Examples of specific areas where secondary law exists • Agriculture; • Insurance; • Professional services;

• Transfer of technology; • Transport; • Energy;

• Postal services; • Telecommunication.

Legal basis provisions for secondary law in the field of competition • • • • •

Art. 103 TFEU, regarding Arts. 101 and 102 TFEU; Art. 106(3) TFEU, regarding Art. 106(1) and (2) TFEU; Art. 109 TFEU, regarding Arts. 107 and 108 TFEU; Legal basis provisions for specific areas; e.g. Arts. 42 and 43 TFEU (agriculture); The general legal basis provisions of Arts. 114 and 115 TFEU: for other issues.

Renumbering of the most relevant articles through Treaty revisions: Post Maastricht: Post Amsterdam: Post Lisbon:

Art. 85 of the EC Treaty Art. 81 EC Art. 101 TFEU

Art. 86 of the EC Treaty Art. 82 EC Art. 102 TFEU

Art. 90 of the EC Treaty Art. 86 EC Art. 106 TFEU

Art. 92 of the EC Treaty Art. 87 EC Art. 107 TFEU

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PART ONE

Chart C2

EU competition law: an overview

2. Conduct of undertakings

Chart C3

What is an undertaking?

Topic: For the purposes of EU competition law, the term “undertaking” is very broad. It encompasses any and every entity that performs an economic activity.

The term "undertaking" under Arts. 101 TFEU et seq.

• No legal definition in the TFEU of the term "undertaking"; • Therefore defined by the ECJ; • To some extent also defined by the Commission; see Commission Consolidated Jurisdictional Notice (2008), C.II.

Case law definition • "Every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed"; e.g. Höfner (1991), Wouters (2002), AOK (2004), FENIN (2006), MOTOE (2008); • "A unitary organisation of personnel, tangible and intangible elements which pursues a specific economic aim on a long-term basis"; Shell (1992).

Thus: • The economic entity offers goods or services on a given market and does not have a purely social goal. No specific intention to earn profits is required.

• The focus is on the entity's economic activity, rather than on the entity as such. One entity may constitute an undertaking in respect of certain activities, but not in respect of others.

• Undertakings may be either legal persons (public or private) or natural persons.

Positive examples:

Negative examples:

• Production and trading companies such as United Brands, which produces and distributes the Chiquita Bananas brand; United Brands (1978); • Non-profit making bodies engaging in economic activities such as an old age insurance scheme based on the principle of capitalisation and on investments; Sociétés d'Assurance (1995); • Opera singers; Commission Decision RAI/Unitel (1978); • Consultants or commercial advisors; Commission Decision Reuter/BASF (1976); • Inventors; Tepea (1978); • Public placement offices or employment agencies entrusted under the legislation of a Member State with the operation of a service of general economic interest; Job Centre (1997); Höfner (1991).

• Organisations representing e.g. management or labour (trade unions) when they pursue social policy objectives; Albany (1999); • Organisations that manage social security schemes, which fulfil an exclusively social function, if entirely based on solidarity and non-profit making; Poucet (1993), AOK (2004); • Organisations which purchase goods without subsequently using them for an economic activity; FENIN (2006); • Public bodies collecting dues in the context of essential state functions such as environmental protection; Calì (1997).

Note: The field of application of Arts. 101 and 102 TFEU is not limited to undertakings established within the EU. Rather, these provisions apply to any conduct that (potentially) distorts competition within the EU and (potentially) affects trade between the Member States; Tepea (1978), Woodpulp (1988).

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