European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

There is an important proviso in Article 101(3) TFEU; under no circumstances can an agreement benefit from an exemption when it affords the undertakings concerned with the possibility of eliminating competition in respect of a substantial part of the products in question. A prohibition threshold is thus determined, beyond which exemption can never be granted, even if the agreement in question meet …

No elimination of competition

There is an important proviso in Article 101(3) TFEU; under no circumstances can an agreement benefit from an exemption when it affords the undertakings concerned with the possibility of eliminating competition in respect of a substantial part of the products in question. A prohibition threshold is thus determined, beyond which exemption can never be granted, even if the agreement in question meets the other conditions of exemption.

Although the provision clearly ties the possibility to eliminate competition to the agreement, in fact the assessment is carried out in the light of the economic power of the undertakings party to that agreement i.e. by looking to their market share and this requires a definition of the market concerned. An analysis of the practices of the supervisory authorities shows that decisions finding the existence of the possibility of eliminating competition relate, in principle, to agreements where the parties jointly control over 70% of the market and more often than not, they will have a market share of somewhere between 80% and 90% of the market concerned . However, the scope of the economic power threshold thus defined is relative . In the Commission's view, the detention of a market share of substantially less than 70% may in some cases lead to an elimination of competition. On the other hand, it is possible that even when exceeding that threshold, an agreement can qualify for an exemption. Factors taken into account are derived either from corporate behavior, or from the structure of the market .

The Commission sometimes tempers the scope of the prohibition threshold by conducting a qualitative assessment of the importance of the restriction based on the intrinsic characteristics of the agreement. In many decisions, the EU authorities offset the findings of the size of the market share controlled by members of the cartel, by taking into account the degree of harmfulness of the provisions in the agreement. Even if an agreement groups together undertakings controlling virtually all of a market, the Commission considers that it does not lead to an elimination of competition where the provisions of the agreement do not totally prevent the members from acting independently . Such is the case when the agreement leads to a differentiation of existing products , where there is no absolute territorial protection , where operators are free to set their own prices , or where the market remains freely accessible to third parties . Thus, with regard to an agreement having as its object the organizing of exclusive fairs and bringing together most members of a profession, the Commission concluded that there was no elimination of competition, noting that the exhibition in that case only took place every two years and that participants could, under certain conditions, get authorization to exhibit elsewhere the same year the fair took place . Likewise, the Commission considers that the replacing of an exclusive supply clause by a commitment to cover 25% of requirements is sufficient to prevent the risk of eliminating competition even though the members of the pool in question control 80% of the market concerned . Conversely, it considers that an absolute territorial protection clause, which prohibits dealers and wholesalers established outside a territory from selling products covered by exclusivity on that territory, would eliminate competition regardless of the market position of the undertakings concerned .

In certain decisions, the EU authorities have mitigated the scope of the conclusions on the size of the market share of parties by taking into account the degree of market concentration on which the agreement operates. The Commission has thus emphasized that two undertakings controlling under 25% of a market do not have the possibility of eliminating competition, both because their own economic power is limited and because, besides the presence of around 25 small producers on that market, there are several operators able to exercise effective competition, one of whom holds a market share amounting to almost twice that of the cartel . Similarly, far from fostering an elimination of competition on the market under consideration, the Commission believes that an agreement can lead to a reduction in the degree of market concentration when it reduces the consequences of the asymmetry of size of the respective undertakings operating in that market . On the other hand, the EU authorities take the view that an agreement involving only undertakings with little power tends to eliminate competition when it occurs on a highly concentrated market and is part of a cumulative effect . The exemption is granted for an agreement on a market on which a sufficient number of strong competitors persist  with the equivalent level of know-how , an assured financial capacity  and retains the faculty to act autonomously , but refused for a price agreement between competing producers leading to the suppression of a substantial part of the products in question, due to the concentrated market structure comprising 29 producers, of which 19 are associated with one another through financial links .

The mutual vertical agreement between competitors does not eliminate competition when it is not a substitute for existing competition but focuses on the development of a new service . Applying the “youthful industries” theory  to competition law, the Commission sometimes accepts that, on a new product market, the actual competition may be eliminated to allow undertakings that would not have otherwise been able to gain access, to penetrate and become competitors when the agreement comes to an end; in that case the temporary concentration of the market becomes the means of its future de-concentration .

Going beyond the context of the market concerned by the agreement, the Commission has sometimes extended its analysis to related markets, taking into consideration the fact that commercial partners of cartel members may exert a certain countervailing power to the agreement. It has thus found that an agreement between providers controlling between 70% and 80% of a market does not amount to an elimination of competition where “on the demand side, there is a tight market structure” .

Finally, the significance of forms of competition affected is sometimes likely to modify the assessment. Where price competition is totally eliminated in respect of a part of the products at issue, the Commission will examine whether, “other forms of competition - stocking, specialization, service offered and ordering facilities”  are not likely to offset this assessment, even though the parties to the agreement are undertakings controlling around 70% to 80% of the market concerned. More generally, the EU authorities take the view that the maintenance of competition through quality could, for certain types of products, offset an elimination of price competition provided, however, that this is not total .

See Commission Decision No 74/292/EEC of 15 May 1974, Agreements between manufacturers of glass containers, LawLex200500005280JBJ; No 75/358/EEC of 3 June 1975, Stoves and Heaters, LawLex200500005282JBJ: overall turnover of over 90 %; No 78/59/EEC of 2 December 1977, Centraal Bureau voor de Rijwielhandel, LawLex200400002402JBJ; No 78/571/EEC of 12 June 1978, SNPE-LEL, LawLex200400002602JBJ; No 78/670/EEC of 20 July 1978, Fedetab, LawLex200500004087JBJ; No 80/234/EEC of 5 December 1979, Rennet, LawLex200400002413JBJ; No 82/123/EEC of 25 November 1981, VBBB/VBVB, LawLex200400002419JBJ: market share of between 70 and 80% depending on the market; No 82/506/EEC of 15 July 1982, SSI, LawLex200400003541JBJ; No 86/399/EEC of 10 July 1986, Roofing felt, LawLex200500003986JBJ: price and market-sharing agreement between competing producers who together hold a predominant position on the various national markets, including 88% of the German market; see also Commission Decision No 84/381/EEC of 12 July 1984, Carlsberg, LawLex200500004390JBJ; No 1999/474/EC of 16 June 1999, Scottish and Newcastle, LawLex200400002630JBJ: exemption of beer supply contract containing exclusive purchasing and non-compete obligations, where the supplier, who held only 28 to 29% of the market in question, had no possibility of eliminating competition.

Commission Notice No 2004/C 101/08, OJ C 101 of 27 April 2004, Guidelines on the application of Article 81(3) [now 101(3) TFEU] of the EC Treaty, at pt 109.

Commission Decision No 77/100/EEC of 21 December 1976, Junghans, LawLex200400003544JBJ; No 85/559/EEC of 27 November 1985, Ivoclar, LawLex200400002433JBJ.

Commission Decision No 71/222/EEC of 28 May 1971, FN/CF (not available in English). 

Commission Decision No 82/71/EEC of 17 November 1981, Langenscheidt/Hachette, LawLex200500004078JBJ.

Case 26/76, Metro v Commission [1977] ECR 1875, LawLex200400002980JBJ, para 50; Case 75/84, Metro v Commission [1986] ECR 3021, LawLex200500004031JBJ, para 41. 

Commission Decision No 88/330/EEC of 5 May 1988, Bayer/BP Chemicals, LawLex200500004470JBJ: existence of a significant number of strong competitors among European producers.

Commission Decision No 88/143/EC of 22 December 1987, Rich Products/Jus-rol, LawLex200500005329JBJ: existence of similar manufacturing processes used by competing producers.

Commission Decision No 85/559/EEC of 27 November 1985, Ivoclar, LawLex200400002433JBJ.

Commission Decision No 91/481/EEC of 30 July 1991, IATA Cargo Agency Programme, LawLex200500004644JBJ; No 96/454/EC of 24 June 1996, Banque Nationale de Paris - Dresdner Bank, LawLex200500005366JBJ.

Commission Decision No 75/497/EEC of 15 July 1975, IFTRA rules for producers of virgin aluminium, LawLex200400002388JBJ.

Commission Decision No 96/454/EC of 24 June 1996, Banque Nationale de Paris - Dresdner Bank, LawLex200500005366JBJ; No 2003/300/EC of 8 October 2002, IFPI "Simulcasting", LawLex200400003533JBJ.

Commission Decision No 75/497/EEC of 15 July 1975, IFTRA rules for producers of virgin aluminium, LawLex200400002388JBJ; No 1999/421/EC of 26 January 1999, P&O Stena Line, LawLex200400002619JBJ: no risk of elimination of competition when the market is characterized by low entry barriers in terms of financial cost to businesses already present in the sector and, by the purchasing power held by big customers.

The "youthful industries" theorists recommend the maintenance of trade barriers to support infant industries needing sufficient shelter before they are able to achieve the economies inherent in mass production and become competitive (P. A. Samuelson, Economics: an Introductory Analysis ).

See, inter alia, Commission Decision No 76/248/EEC of 23 December 1975, United Reprocessors GmbH, LawLex200400002390JBJ. 

Commission Decision No 72/291/EEC of 26 July 1972, Papier mince (not available in English), OJ L 182 of 10 August 1972, 24. 

Commission Decision No 82/123/EEC of 25 November 1981, VBBB/VBVB, LawLex200400002419JBJ.

Case 26/76 Metro v Commission [1977] ECR1875, LawLex200400002802JBJ.

Commission Decision No 2002/746/EC of 5 July 2002, AuA/Lufthansa, LawLex200200003467JBJ: possibility for potential competitors to obtain the traffic rights necessary on major routes despite the establishment of a joint venture between two competing airlines to coordinate resources, networks and flight schedules and create a joint frequent-flyer program.

Commission Decision No 93/496/EEC of 9 June 1993, State aid procedure C 32-92, LawLex200400002490JBJ; No 96/454/EC of 24 June 1996, Banque Nationale de Paris - Dresdner Bank, LawLex200500005366JBJ: the improvement of cross border payment systems by creating a new product excluding the risk of the elimination of competition resulting from the exclusive global cooperation agreement between two major competing universal banks established in separate countries; No 2003/300/EC of 8 October 2002, IFPI "Simulcasting", LawLex200400003533JBJ: a reciprocal vertical agreement between competitors focusing on the development of a new service.

Commission Decision No 85/559/EEC of 27 November 1985, Ivoclar, LawLex200400002433JBJ; No 1999/6/EC of 14 December 1998, Sicasov, LawLex200500004747JBJ: exemption from the requirement for licensees not to directly export the certified seed outside a Member State where an indirect export remains possible.

Commission Decision No 85/559/EEC of 27 November 1985, Ivoclar, LawLex200400002433JBJ; No 89/512/EEC of 19 July 1989, Dutch banks, LawLex200400002449JBJ; No 90/25/EEC of 20 December 1989, Concordato Incendio, LawLex200400002458JBJ: on the recommendations of an association of insurance companies which leaves to members the freedom to set their tariff rates in respect of their own loading rates, or to depart from the recommendations provided that they notify any changes; No 91/480/EEC of 30 July 1991, IATA Passenger Agency Programme, LawLex200500004643JBJ.

Commission Decision No 80/917/EEC of 9 July 1980, National Sulphuric Acid Association, LawLex200500005316JBJ: opportunity for members of a purchasing pool to obtain supplies from other sources of up to 75% of their requirements; No 2004/139/EC of 23 October 2003, REIMS II renotification, LawLex200500004528JBJ: an agreement on the cost of distribution services for incoming cross border mail, exclusive to public or private postal operators providing a compulsory universal service, can only qualify for exemption if third party postal operators in competition with the latter have access to terminal dues under non-discriminatory conditions.

Commission Decision No 74/433/EEC of 25 July 1974, Frubo, LawLex200400003278JBJ; No 79/37/EEC of 7 December 1978, EMO, LawLex200500004627JBJ.

Commission Decision No 80/917/EEC of 9 July 1980, National Sulphuric Acid Association, LawLex200500005316JBJ.

European Competition Law

73. No elimination of competition

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Les décisions de justice citées dans ce paragraphe :

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73. No elimination of competition

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Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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