Global Competition Law - Vogel Global Competition Network

Global Competition Law

A Practitioner’s Guide

Published in 2012ISBN 978-2-915029-51-2

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Global Competition Law

Louis VogelFounding Partner, Vogel & Vogel

Professor of law, Panthéon-Assas / Sorbonne University

Global competition law

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TAbLe of conTenTS

Preface

Part 1 EU & Member States

Chapter 1 European Union ........................................................................................................9

Chapter 2 Austria ........................................................................................................................83

Chapter 3 Belgium ......................................................................................................................93

Chapter 4 Bulgaria ......................................................................................................................103

Chapter 5 Croatia ........................................................................................................................113

Chapter 6 Cyprus ........................................................................................................................123

Chapter 7 Czech Republic .........................................................................................................131

Chapter 8 Denmark ....................................................................................................................139

Chapter 9 Estonia ........................................................................................................................142

Chapter 10 Finland .....................................................................................................................161

Chapter 11 France .......................................................................................................................169

Chapter 12 Germany ..................................................................................................................183

Chapter 13 Greece ......................................................................................................................195

Chapter 14 Hungary ...................................................................................................................205

Chapter 15 Ireland ......................................................................................................................213

Chapter 16 Italy ...........................................................................................................................221

Chapter 17 Latvia ........................................................................................................................231

Chapter 18 Lithuania ..................................................................................................................241

Chapter 19 Luxembourg ............................................................................................................251

Chapter 20 Malta ........................................................................................................................255

Chapter 21 The Netherlands .....................................................................................................265

Chapter 22 Poland ......................................................................................................................273

Chapter 23 Portugal ....................................................................................................................281

Chapter 24 Romania ...................................................................................................................291

Chapter 25 Slovak Republic .......................................................................................................301

Chapter 26 Slovenia ....................................................................................................................309

Table of conTenTs

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Chapter 27 Spain .........................................................................................................................317

Chapter 28 Sweden .....................................................................................................................327

Chapter 29 United Kingdom .....................................................................................................337

Part 2 Other Countries

Chapter 30 Argentina .................................................................................................................357

Chapter 31 Australia ...................................................................................................................365

Chapter 32 Brazil ........................................................................................................................377

Chapter 33 Canada .....................................................................................................................387

Chapter 34 Chili ..........................................................................................................................399

Chapter 35 China (People’s Republic of ).................................................................................405

Chapter 36 Colombia .................................................................................................................413

Chapter 37 Iceland ......................................................................................................................421

Chapter 38 India ..........................................................................................................................429

Chapter 39 Israel .........................................................................................................................435

Chapter 40 Japan .........................................................................................................................445

Chapter 41 Liechtenstein ...........................................................................................................459

Chapter 42 Mexico ......................................................................................................................467

Chapter 43 Morocco ...................................................................................................................473

Chapter 44 New Zealand ...........................................................................................................479

Chapter 45 Norway .....................................................................................................................487

Chapter 46 Russia .......................................................................................................................495

Chapter 47 Singapour .................................................................................................................503

Chapter 48 South Africa ............................................................................................................511

Chapter 49 South Korea .............................................................................................................521

Chapter 50 Switzerland ..............................................................................................................529

Chapter 51 Turkey .......................................................................................................................539

Chapter 52 Ukraine .....................................................................................................................547

Chapter 53 USA ..........................................................................................................................555

Appendix Websites of the Competition Authorities ............................................................589

Preface

As its name suggests, Global Competition Law is a Practioner’s Guide. Its aim is not to present a scientific and exhaustive table of most of the world’s competition laws, in particular those of the European Union and its Member States, but rather to present their salient aspects by providing the practitioner with an overview of their structure and most characteristic elements.

For that reason, the plan employed is the same for all countries, with a few adjustments sometimes required because of the specific nature of the laws in question; the rules relating to unfair conduct do not feature, except where they are integrated into the country’s competition law, and those relating to anticompetitive practices (restrictive agreements and abuse of dominant position or monopoliza-tions) are examined first, followed by those pertaining to the control of concentrations.

Although Global Competition Law is primarily a practical guide, it also provides some general insights with regard to future developments.

Firstly, it is clear that the world of competition law is today divided into two groups, correspon-ding to two different conceptions of competition.

The European model continues to see competition law as an instrument in the service of the State or its institutions, and this is reflected in the fact that the administrative authorities are generally competent in the first instance, that administrative repression is prevalent and that private actions remain rare. These rules of enforcement exist in parallel with the somewhat rigid substantive rules – but which are easy to apply - generally based on the principle of prohibition/exemption.

This construction can also be explained by efficiency considerations, with the detection and punishment for infringements entrusted to the same authorities, whereas the ordinary courts in Europe are ill-equipped and in general the judges have little training in competition issues.

In contrast, the American model places competition within society itself: courts and private parties play the essential role, and appear to operate as veritable “private prosecutors” demanding the impo-sition of sanctions, notably by way of punitive damages. The rules are more flexible and allow more room for assessment on the merits; restrictive agreements are not prohibited – subject to exceptions - but assessed in the light of a rule of reason; not only abuses of dominance but all acts of monopoli-zation are sanctioned i.e. all behaviors resulting in the creation of such position.

Looking at the facts, however, we see that the European systems have become appreciably more relaxed and the European guidelines are looking more and more like those in force in the US, especially in the field of merger control. On the other hand, the European laws do have a serious disadvantage in that they confuse the functions of investigation and judgment and there is a relatively weaker protection of the rights of defense than in the American model.

In addition, with the increase in covert anticompetitive behavior, the effectiveness of adminis-trative law enforcement has now been called into question and the application of competition law increasingly left to the parties themselves; it is no coincidence that the European Commission is planning to introduce class actions in competition law or that there has been such a rapid develop-ment of leniency programs within European countries.

It is likely that in the future, the European systems will become more judicial-based, using specia-lized courts before which private parties and administrative authorities can bring their actions. Correlatively, political control, particularly in the area of mergers, will see its influence decline, although the European-based laws will never seek to defend competition or favor efficiency for their own sakes and will continue to pursue extra-competitive objectives such as the protection of jobs, the environment, or simply, the public interest.

A change in the European model seems predictable in the short term. This reform must not be limited to importing a few American characteristics to the existing institutions. If, in the future, private parties can more easily claim compensation for harm suffered, there is no reason, other than to punish the perpetrators of anticompetitive practices twice, for the State to continue to impose very heavy administrative fines in order to repair the “damage to the economy”, as it is formulated under French law.

As Global Competition Law demonstrates, a legal system forms a whole: in order to improve it, it is not enough to merely incorporate the «good parts» from somewhere else; a whole new balance must be struck.

Louis Vogel

Paris, October 2012.

Part 1

eU & MeMber StateS


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ChaPtEr 1

EUrOPEan UniOn

Section 1 anticompetitive practices

Sub-section 1 Substantive rules

I. Context and scopeA. Context

Treaty provisions 1.01Sectoral regulations 1.02 European Economic Area 1.03

B. ScopeExtraterritorial application 1.04Effect on trade between Member States 1.05Scope ratione personae 1.06Scope ratione materiae 1.07

II. Restrictive agreementsA. The prohibition

Scope 1.08 a) Restriction on competition

Existence of competition likely to be restricted 1.09Relevant market 1.10Object or effect 1.11Appreciability 1.12

b) ConcertationAgreements 1.13Decisions of associations of undertakings 1.14Concerted practices 1.151.16. Complex infringements

c) Several undertakingsIntra-group agreements 1.17 Representation and subcontracting agreements 1.18

B. Rule of reason and exemptions a) Rule of reason

Does the rule of reason still exist? 1.19

b) Individual exemptionsScope 1.20 The European Commission’s assessment 1.21

c) Block exemptionsContext 1.22Vertical restraints 1.23 Horizontal restraints 1.24

C. Types of restraintsa) Horizontal restraints

Definition 1.25b) Vertical restraints

Definition 1.26 III. Abuse of dominance

The prohibition 1.27A. Dominant position

Concept of dominance 1.28 a) Relevant market

Definition 1.29 Product market 1.30Geographic market 1.31

b) Indicators of individual dominanceMarket share criteria 1.32 Other factors 1.33

c) Collective dominanceWhich connecting factors? 1.34

B. Abusea) The concept of abuse

From abusive exploitation to abusive exclusion 1.35 b) Types of abuse

Behavior constituting abuse 1.36

Sub-section 2 Enforcement

Context 1.37I. Enforcement authorities

The European Commission 1.38 The national authorities 1.39The national courts 1.40

II. Enforcement proceedingsA. Complaints and investigations

Complaints and ex officio enforcement 1.41

Investigations 1.42Rights of defense 1.43

B. Proceedings before the CommissionInitiation of proceedings 1.44

a) Written phaseCommitments 1.45 Settlement 1.46Statement of Objections 1.47

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b) Oral phaseHearings 1.48

C. Interim reliefConditions 1.49

D. Enforcement by national courtsNullity 1.50 Damages 1.51

III. SanctionsCease and desist orders 1.52Fines 1.53 Leniency 1.54

IV. AppealsAppeals against decisions of the Commission 1.55 Appeals to the Court of Justice 1.56

Section 2 Mergers

Context 1.57 I. Substantive rulesA. Scope

Concept of concentration 1.58Thresholds 1.59

B. Relationship with national lawsReferral system 1.60 Exceptions to EU jurisdiction 1.61

C. Control criteriaThe test 1.62

a) Competitive analysisThe relevant market 1.63Non-coordinated effects 1.64 Countervailing effects 1.65 Coordinated effects/Collective dominant position 1.66Failing company defense 1.67

b) Efficiency gains

Scope 1.68II. EnforcementA. Enforcement proceedingsa) Merger notification

Mandatory notification 1.69Suspension of a concentration 1.70

b) Proceedings before the CommissionTwo-stage procedure 1.71 Preliminary examination (Phase 1) 1.72 In-depth examination (Phase 2) 1.73 The decision 1.74

C. Conditions/SanctionsCommitments - Divestiture 1.75Fines 1.76

D. AppealsJurisdiction 1.77Right to appeal 1.78

Section 3 State aids

I. Substantive rulesContext 1.79

A. Prohibited AidConcept 1.80 Transfer of State resources 1.81 Advantage conferred on the recipient 1.82 Selectivity 1.83Restriction on competition 1.84Effect on trade between Member States 1.85

B. Compatible aida) The Treaty

Aids that are automatically compatible 1.86Aids that may be deemed compatible 1.87

b) ExemptionsBlock exemption 1.88 Individual exemptions 1.89

C. TypesRegional aid 1.90Sectoral aid 1.91 Horizontal aid 1.92

II. EnforcementContext 1.93

A. Enforcement authoritiesEU authorities 1.94National authorities and courts 1.95

B. Enforcement proceedingsMandatory notification 1.96 Preliminary examination 1.97Initiation of a formal investigation procedure 1.98Commission decision 1.99Recovery of illegally granted aids 1.100 Appeals 1.101


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Section 1 AnTICOMPETITIVE PRACTICES

Sub-section 1 SuBSTAnTIVE RuLES

i. Context and scope

a. Context

1.01. treaty provisionsThe basic European Union competition rules are found in the Treaty on the Functioning of the

European Union (TFEU) at Articles 101 and 102, which lay down a prohibition against restrictive agreements and abuse of dominance respectively. Article 106 is also of interest since it extends the scope of competition law to public undertakings, where its application does not prevent such under-takings from carrying out the functions assigned to them. Those provisions were supplemented by a number of block exemption regulations on horizontal and vertical agreements and their guidelines and by procedural regulations enabling their implementation.

1.02. Sectoral regulationsSome sectors may be referred to as “specific” as competition law does not apply to them at all or

does not apply with the same intensity as elsewhere, either because of political reasons, of the econo-mic conditions of the sector or as part of the liberalization scheme of sectors which had been State monopolies.

1º) Defense industriesArticle 346(1)(b) TFEU provides that, “any Member State may take such measures as it considers

necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes”. The Council has drawn up a list of the products to which the pro-visions of paragraph 1(b) apply. Like any exception, Article 346 must be strictly interpreted; where products can have both a civil and military use, the competition rules will apply.

2º) AgricultureArticle 39 TFEU provides that the enforcement of competition rules should not prevent the

objectives of the common agricultural policy from being attained. Applying that principle, Article 42 provides that, “the provisions of the Chapter relating to rules on competition shall apply to produc-tion of and trade in agricultural products only to the extent determined by the European Parliament and the Council”. According to Regulation No 1184/2006 of 24 August 2006, the prohibition of restricted practices shall not apply to “agreements, decisions and practices as form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article [39] of the Treaty”.

3º) TransportArticle 100(1) TFEU provides that transport by rail, road and inland waterway are governed by

Title VI of the Treaty and Article 100(2), that the Treaty confers upon the European Parliament and the Council, acting in accordance with ordinary legislative procedure, the power to decide “ap-propriate provisions for sea and air transport”. Regulation No 17/62 had excluded the transport sector from its scope of application and made each type of transport subject to specific regulations. Regulation No 1/2003 has only left the substantial provisions of those specific regulations and has removed specific procedural rules. The Commission’s current policy consists in progressively putting an end to exemptions in the field of transports and in adopting directives for the liberalization of the sector.

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4º) Electricity and gasBoth the electricity and gas directives (respectively Dir. No 2003/54 and No 2003/55 of 26 June

2003) lay down the principle of the distinction between undertakings which own transmission or storage facilities from transmission system operators, which involves, for vertically integrated under-takings, distinguishing between entities. The opening up of competition between electricity and gas suppliers has been total for undertakings since 1 July 2004, and for other users since 1 July 2007. Network access must be non-discriminatory, and the effective function of the market is ensured by independent regulatory authorities.

5º) Postal and electronic communicationsThe objective of the telecommunications directives (Common regulatory framework Dir. No

2002/19, 2002/21 and 2002/22 of 7 March 2002 and Dir. No 2002/77 of 16 September 2002) is to guarantee equal access by all operators to the various telecommunication services and networks. To that end, the national regulatory authorities must identify in particular the markets on which opera-tors “with significant market power” are active (former incumbent operators) and which have specific obligations aimed at facilitating third parties’ access to the network. The opening up to competition must be carried out whilst maintaining a universal service, which must be permanently provided at all points in the territory at affordable prices for the benefit of all users.

1.03. European Economic areaIn 1992, the European Communities and the Member States of the European Free Trade

Association (EFTA) signed the Agreement on the European Economic Area, which came into force on 1 January 1994. The purpose of this agreement was specifically to establish the free movement of goods, persons, services and capital between the signatories, and to set up a system of undistorted competition. Iceland, Norway and Lichtenstein are the only remainaing members of the EEA.

Articles 53, 54 and 59 of the EEA Agreement reproduce Articles 101, 102 and 106 of the TFEU. Most of the Community regulations, notices and guidelines on competition have been transposed into the EEA. The EEA competition rules, which are implemented by the EFTA Surveillance Authority, may be directly relied upon in the national courts of the Member States of the European Union.

Article 56 of the EEA Agreement lays down the rules of allocation of jurisdiction between the Commission and the EFTA Surveillance Authority. Where only trade between Member States of the EU is affected, the Commission has exclusive jurisdiction. The same principle applies for the EFTA Surveillance Authority where only trade between EEA or EFTA States is affected. If trade between EU and EEA Member States is affected, the Commission has jurisdiction to apply the two sets of rules where the turnover of the undertakings concerned in the territory of the EFTA is less than 33% of their turnover in the EEA.

B. Scope

1.04. Extraterritorial applicationEU law provides its own definition of its spatial scope of application. Article 101 prohibits agree-

ments between undertakings having as their object or effect the restriction of competition “within the internal market” and Article 102 prohibits the abusive exploitation of a dominant position “wit-hin the internal market or in a substantial part of it”. The applicability of the Treaty provisions thus depends on a constituent part of the infringement being located on the EU territory. The type of the link that has to exist between the anticompetitive practice and the Union has been laid down in the case law. Although in the past the courts seemed to favor the “effects theory”, otherwise known as the principle of objective territoriality, the EU authorities now appear to lean more towards the “implementation theory”.

1º) Effects theory


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Article 101 TFEU is applied where the effects of alleged restrictive agreements or practices by undertakings are felt within the Union. The fact that some of those undertakings are based outside the Union is irrelevant. Conversely, the provision does not apply to agreements between underta-kings only producing effects on exterior markets. While the EU authorities regularly confirm their concurrence with the effects theory, they seem rather reluctant to implement it, both because the international scope of the doctrine is too broad and perhaps also because the political influence of the Union - which is not a State, but an international organization - is insufficient.

2º) Single economic entity theoryEU competition law is, in theory, only applicable if there is a link between the EU and the agree-

ment or practice at issue. According to the terms of Articles 101 and 102 TFEU, the link results from anticompetitive effects produced on the territory making up the internal market. However, when the external undertakings have subsidiaries on the EU territory, the anticompetitive beha-vior, as well as the restrictive effects, are located in the Union and in those circumstances the EU authorities do not need to refer to the effects theory: the unlawful behavior is first attributed to the subsidiaries and then to the parent company established elsewhere. However, in order to do this, a relationship of control must be established and that control must be effective. The single economic entity theory has the advantage of avoiding the implementation difficulties related to the extraterri-torial application of competition law.

3º) Implementation theoryThe control authorities now seem to replace the “effects” criterion with the more restrictive “im-

plementation” theory, as it avoids all the subjective assessments that they would have to make in order to qualify the effect. For EU competition law to apply, it is not necessary that the behavior of the undertaking is fully realized within the EU territory, but it is not enough either that anticompe-titive effects are produced on it. The anticompetitive behavior must have been implemented in the internal market. The implementation or “qualified behavior” criterion requires that a chronological and material distinction be made between the different acts making up the anticompetitive behavior: only a definite act, binding in its scope, is relevant to trigger the jurisdiction of the Union in respect of enterprises located in non-Member countries.

1.05. Effect on trade between Member States.Articles 101 and 102 TFEU apply to practices or behavior which “may affect trade between Member

States”. The Commission has adopted Guidelines on the effect on trade concept contained in Articles 101 and 102 of the Treaty (No 2004/C 101/07 of 27 April 2004), setting out the principles developed by the EU Courts and providing guidance on its application in frequently occurring situations.

The concept of “trade between Member States” implies that there must be cross-border economic activity involving at least two Member States. However, the fact that a restrictive agreement relates only to the marketing of products in a single Member State is not sufficient to exclude the possibi-lity that trade between Member States might be affected. Articles 101 and 102 TFEU also apply to practices which only produce an effect on a part of a Member State, provided however that the effect on trade flows is appreciable. Measures intended to isolate the market of a Member State are, by their nature, likely to affect trade. This is true of agreements or practices which have as their object the obstruction of the entry on the market by competitors established on the territory of other Member States, prohibiting exports or behavior relating to products imported from another Member State or intended for export. Finally, the concept of “trade” also encompasses cases where the agreements and practices affect the structure of competition on the market: any strategy for the elimination of a competitor, which operates on the EU market, may fall within the scope of the EU rules of compe-tition, even if its activity is essentially in exports.

To establish an “effect on trade between Member States”, the following two conditions must be fulfilled:

- there must be a reasonable probability of effect: the courts may evaluate such probability on the basis of factors which taken individually, would not necessarily be decisive (e.g. the type of agree-

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ment or practice, the nature of the products concerned, the position and size of the undertakings in question) and taking account of the economic and legal context (e.g. the existence of a regulation). Agreements or practices, the object of which is the partitioning of the markets affect trade between Member States by their very nature: it is not necessary to verify that there has been any actual effect. The same is true of practices designed to eliminate a competitor established in a Member State.

- there must be a direct or indirect influence on trade flows between Member States: the effect on trade test is usually fulfilled even if, for the time being, no restriction of competition has been esta-blished. Likewise, it is of no relevance that the agreement or practice leads to a considerable increase in trade between Member States or is limited to diverting trade from the direction it would normally have taken.

Finally, the effect on trade between Member States must also be “appreciable”. According to the Commission’s Guidelines, agreements are not capable of appreciably affecting trade between Member States where: i) the aggregate market share on any relevant market within the Union affec-ted by the agreement does not exceed 5%, and ii) turnover of the undertakings concerned in the case of horizontal agreements, and of the supplier in case of vertical agreements, does not exceed EUR 40 million. A presumption of appreciability affects those agreements or practices which, by their very nature are likely to affect trade between Member States, where the abovementioned thresholds are exceeded. The assessment of the appreciable effect must be carried out in respect of the context and take account of the legal and economic framework of the restriction of competition. Also, in the case of vertical agreements, the possible existence of similar agreements likely to produce a cumulative effect should be examined.

1.06. Scope ratione personaeArticles 101 and 102 TFEU apply to undertakings, i.e. entities which carry out an economic

activity on the market. An undertaking can be a natural person or a legal person, a body governed by public law, a person governed by private law, a non-profit making establishment or a grouping with no legal personality.

1.07. Scope ratione materiaeCompetition rules cover all production, distribution and service activities. Following Articles

101 and 102 TFEU combined with Article 3(b) TFEU et 4 TEU, a Member State may not take or maintain in force any measures, whether legislative or regulatory, which may render ineffective Articles 101 and 102. Furthermore, Article 106 TFEU provides that Member States may not enact or maintain in force any measure contrary to the rules of the Treaty in the case of public underta-kings and undertakings granted exclusive or special rights. However, undertakings entrusted with the operation of services of general economic interest or having the character of a revenue-producing monopoly are excluded from the scope of application of competition rules for “the performance, in law or in fact, of the particular tasks assigned to them” (Article 106(2) TFEU). The derogation does not apply if the development of trade is affected to such an extent by the practices adopted by the undertaking entrusted with the operation of a service of general economic interest, as would be contrary to the interests of the Union.

ii. restrictive agreements

a. the prohibition

1.08. ScopeArticle 101(1) TFEU declares as “incompatible with the internal market: all agreements between

undertakings, decisions by associations of undertakings and concerted practices […] which have


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as their object or effect the prevention, restriction or distortion of competition within the internal market […]”. This general principle is illustrated by a non-exhaustive list of examples. Agreements are prohibited when they: i) directly or indirectly fix purchase or selling prices or any other trading conditions; ii) limit or control production, markets, technical development, or investment; iii) share markets or sources of supply; iv) apply dissimilar conditions to equivalent transactions with other tra-ding parties, thereby placing them at a competitive disadvantage; v) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

a) Restriction on competition

1.09. Existence of competition likely to be restrictedThe EU authorities traditionally consider that there can be no restriction on a market where

competition is already eliminated entirely independently of the action of the participants in an agree-ment. This is the case when the play of competition is eliminated by the effects of measures taken by public authorities. Even where an agreement is by its nature manifestly contrary to Article 101 TFEU, it can only be penalized if the law has allowed a sufficient degree of competition to subsist on the market. In effect, in spite of the public intervention, where there remains an area of existing or potential competition on the market in question or on a neighboring market, the agreement may be caught by Article 101(1) TFEU.

1.10. relevant marketThe supervisory authorities traditionally consider that, by its mere existence, an agreement implies

that the parties intend to coordinate or consolidate their monopoly power. So defining the relevant market is not as important in the law on restrictive agreements as it is for the rules on dominant posi-tions. An anticompetitive practice may, solely in respect of its object, be caught by the prohibition. It will therefore be unlawful without any need to first define the relevant market.

However, the obligation to define the market is binding on the Commission where it is impos-sible, without such definition, to determine whether the restrictive agreement significantly affects competition and trade between Member States. Apart from this scenario, the definition of the mar-ket is a prerequisite for the assessment of the economic power of a cartel, which is directly related to the market share held by its participants. Definition of the relevant market may also be required to determine the amount of the individual sanction, particularly in cases of complex cartels.

1.11. Object or effect Article 101(1) TFEU prohibits agreements for which “the object or effect” is to restrict compe-

tition. The alternative, i.e. object or effect, has a twofold significance and is interpreted both pro-cedurally and substantively. Firstly, it is not necessary for the supervisory authorities to wait for a restrictive action to have produced its effect to trigger the prohibition, and the rule applies regardless of the nature of the practice at issue. In certain cases, it can have a specific meaning: some practices are judged so anticompetitive that they justify to be prohibited per se, i.e. automatically. EU case-law traditionally finds that price fixing or market allocation agreements fall under that category.

1.12. appreciabilityInsofar as restrictions on competition must be such as to produce an effect on the market, the EU

authorities generally find that only hindrances that are large or “appreciable” enough concern com-petition law. Drawing inspiration from its decision-making practice, the Commission set forth an “appreciability threshold” in its 22 December 2001 Notice.

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According to the Notice, agreements between undertakings that affect trade between Member States do not appreciably affect competition within the meaning of Article 101(1): a) if the aggregate market share held by the parties to the agreement does not exceed 10% on any of the relevant mar-kets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors on any of these markets (agreements between competitors); or b) if the market share held by each of the parties to the agreement does not exceed 15% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors on any of these markets (agreements between non-competitors).

The Commission has added two exceptions to those thresholds: i) the thresholds are brought down to 5% when, on the market in question, competition is restricted by a cumulative foreclosure effect from parallel networks of similar agreements, whether those agreements be horizontal or ver-tical. The cumulative foreclosure effect is only probable if more than 30% of the market in question is covered by similar agreements ; ii) exceeding the specified thresholds (5%, 10% and 15%) for two consecutive calendar years by two points has no restrictive effect.

The Notice is not applied when the agreement in question contains a hardcore restriction. For agreements between competitors this relates to restrictions having as their object the setting of prices for the sale of products to third parties; limitation of output or sales; the allocation of markets or customers market or customer sharing. For agreements between non-competitors, the following are considered to be hardcore restrictions: the restriction of the buyer’s ability to determine its sales prices without prejudice to the possibility of setting or recommending a maximum sales price; ter-ritorial or customer restrictions with the exception of active sales to exclusive territory or exclusive customer group, restriction of sales to end users by a wholesaler, restriction of sales by members of a selective distribution system to non-certified distributors, and the restriction of the buyer’s ability to sell components for the manufacture of the same type of goods as those produced by the supplier; restricting members of a selective distribution system from conducting active or passive sales with end users; restricting of cross-supplies; restricting sale of spare parts.

b) Concertation

1.13. agreements Under Article 101, an agreement is a meeting of minds by which at least one of the participants

renounces its autonomy of behavior on the market. The form of the agreement is irrelevant. It may be bilateral or multilateral, written or verbal, express or tacit. It is not necessary that the agreement constitute a legal and binding contract according to national law, nor that it be legally binding with regard to the parties and that it be subject to sanctions by enforcement proceedings, if the partici-pants consider themselves legally, factually or morally bound to adopt the behavior determined by them. The consent given by the parties must be actual and free.

1º) Actual consentA unilateral declaration of intent does not constitute an agreement and the existence of an agree-

ment cannot be deduced from the simple fact that wholesalers know of their supplier’s intention to reduce deliveries and obstruct parallel imports. Such unilateral expressions of intent must be distin-guished from those acts which are only unilateral in appearance. The fact that a supplier includes clauses that restrict competition in its general terms of sale, or that on invoices the words “export prohibited” systematically figure, constitutes an agreement insofar as repeatedly ordering from the source without complaining about such conditions, establishes the customer’s tacit acceptance.

Similarly, a supplier’s definition of its distribution policy may be considered at least implicitly accepted by its distributors. Simply belonging to a network, in the early case law, implied approval by the distributors of the general policy of the manufacturer or supplier. Now, measures adopted by the developer of network relative to contractual relations with resellers only lose their unilateral character if the consent of the latter is established. Consent requires an unequivocal offer sent by the head of network, which can be seen as part of continuous contractual relations governed by a pre-established general agreement, and the actual implementation of the supplier’s policy by the network members.


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2º) Free consentIt is presumed that, whether the consensus necessary for an agreement to be established is implied

or not, the participants have freely given their consent to it. There can be no consensus when the cooperation stems from a public regulation or its implementation and the parties are unable to derogate from it. Prior notification, approval or ratification of the agreement by the administrative authorities does not alter the fact of the existence of the agreement. The fact that the cooperation was encouraged or introduced directly by the national authorities does not justify the setting up of agreements in violation of EU competition rules either.

Similarly, an agreement is not formed when participants are acting under the threat of economic injury from the private sector, provided, however, that they are unable to resist such pressures. Such is the case for undertakings in a position of economic dependence pressured to adopt behavior that goes against their own interests. If the agreement is found to exist, the EU authorities take into account the extent of the willingness to participate in the concertation for some of the undertakings when assessing the level of fines. Free consent has long been assumed in the context of distribution networks. Pressure exerted on distributors did not prevent agreements being found to exist. Only express opposition from the distributors receiving instructions were likely to reverse the presumption of an agreement. Now the agreement between the distributor and the head of a network can no lon-ger be established without proof of the communication and implementation of the alleged restrictive policy by network members.

1.14. Decisions of associations of undertakingsThe fact that a decision - a unilateral act - comes from an “association of undertakings”, i.e. a

grouping of independent economic entities is enough for collusion to be inferred. The legal form of the association is irrelevant in that respect. It does not have to have a lucrative purpose or be endowed with legal personality. It is of no matter that it brings together natural persons or corporate bodies, or groups together other associations of undertakings, or is involved in the implementation of a public service mission. Neither the membership of an economic operator to a strictly regulated profession, nor the intellectual, or specialized or technical character of the service provided prevents application of the EU competition rules. For an association or an association of associations to be caught by Article 101(1) TFEU, it does not have to have its own commercial activity: it is enough that the res-trictive effects covered by the Treaty provision are likely to occur due to the activity of its members.

1.15. Concerted practicesAs well as dealing with anticompetitive agreements and decisions of associations of undertakings,

Article 101 TFEU also specifically targets concerted practices although it does not define what they are. Concerted practices are the result of the coming together of two constituent factors joined by a link of causality, i.e. a generating factor - coordination between the parties realized through contact between them, and an outcome - the cooperation resulting from the coordination and consisting in a modification of the normal conditions of the market. A concerted action neither implies a conclusive or premeditated agreement nor necessarily the proof of parallel behavior. It must be distinguished from simple parallel behavior devoid of any element of concertation, even though it constitutes a strong indication thereof. In contrast to the more structured nature of an agreement, the concept of a concerted practice does not require the working out of a “plan”, but includes varied forms of “contact” made, - even mere conversations or negotiations - the anticompetitive purpose of which is sufficient to characterize the practice regardless of its concrete effects.

1.16. Complex infringementsSome concerted practices and agreements, which fall within the framework of a general agree-

ment, embodied in particular by a series of meetings between competing undertakings, are charac-terized as a single “complex infringement” which can be classified as an agreement and a concerted

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practice. The dual classification is not understood as requiring, simultaneously and cumulatively, proof that each of those factual elements presents the constituent elements both of an agreement and of a concerted practice; a complex infringement refers to a complex whole comprising a number of factual elements some of which can be characterized as agreements and others as concerted practices.

For an undertaking to be held liable for an overall agreement, it must be established that it consented to the overall plan, covering all the elements characterized in the infringement and was prepared to accept the risks; or that it participated directly during the period under consideration in all the elements of the agreement; or, if it was only directly involved in one or a few elements, it knew or must have known that its participation in some elements of the agreement was part of a compre-hensive plan the extent of which it was aware. An undertaking can only escape liability by publicly distancing itself from the cartel, since its presence at meetings suggests support for the object of the discussions and that it will act accordingly. The concept of public distancing is interpreted res-trictively: the undertaking must make it clear that it is distancing itself from the cartel, notably by denouncing it to the authorities. It must also demonstrate that it had indicated to its competitors that it was participating in those meetings in a spirit that was different from theirs.

c) Several undertakings

1.17. intra-group agreementsThe EU courts rapidly positioned themselves in favor of excluding from the scope of application

of Article 101 TFEU the internal behavior of a corporate group. They first required that agree-ments or practices be “…concerned merely with the internal allocation of tasks as between the un-dertakings” for Article 101 to be declared not applicable to them (Cases 15 /74, Centrafarm BV, LawLex200400003277JBJ). The General Court (Case T-102/92 Viho, LawLex200500004965JBJ), as confirmed by the Court of Justice (Case C-73/95, P Viho, LawLex200500005135JBJ), declared itself in favor of the immunity of intra-group agreements vis-à-vis the competition rules in the Viho judgment, and dispensed with that condition. While such an agreement may “contribute to preser-ving and partitioning the various national markets” and, “in so doing, thwart one of the fundamental objectives to be achieved by the common market”, it does not fall within the scope of application of Article 101(1) TFEU when concluded within one economic unit; i.e. between a parent company and its 100% controlled subsidiaries. The holding of the controlling power by the parent company over the subsidiary is, however, not enough to remove an intra-group agreement from the scope of Article 101; the parent company must also actually exercise that power. This is interpreted broadly insofar as the Court has stipulated in that case that the absence of autonomy of the subsidiaries must be assessed with regard to their ability to “[determine] their course of action in the market”.

1.18. representation and subcontracting agreementsThe Commission, in its Vertical Restraints Guidelines (No 2010/C 130/01), declares Article

101(1) not to be applicable to agency agreements under which the agent is vested with the power to negotiate and/or conclude contracts on behalf of another person (the principal), either in the agent’s own name or in the name of the principal, on condition that the agent does not bear the financial or commercial risks, is not the owner of the contract goods and does not supply any of the contract services itself. If contract-specific risks are incurred by the agent, it will be enough to conclude that the agent is an independent distributor. The Guidelines set out a list of criteria which must be taken into account in determining that the agent bears no financial or commercial risk. The inclusion of certain terms in the contract will be an indication of the agent’s dependence: limitations on the ter-ritory in which the agent may sell these goods or services, the customers to whom he may sell the goods or services, fixing the prices and conditions at which the agent must sell or purchase these goods or services. However, even if the principal bears all the risks, the agreements may still facilitate collusion, inter alia when a number of principals use the same agents while collectively excluding others from using these agents, or when they use the agents to collude on marketing strategy or to exchange sensitive market information.


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The Commission also considers Article 101(1) to be inapplicable to subcontracting agreements where the subcontractor “is not an independent supplier in the market” (Notice of 18 December 1978 concerning subcontracting agreements). This is especially so where the performance of the sub-contracting agreement involves the use by the subcontractor of industrial property rights, technical knowledge or manufacturing processes owned by the contractor. However, insofar as the subcontrac-tor is in principle an independent undertaking, only the provisions justified by the relationship of dependency existing between the subcontractor and the contractor are able to escape the prohibition.

B. rule of reason and exemptions

a) Rule of reason

1.19. Does the rule of reason still exist?Since the end of the 1970s EU law has developed an approach to assessment that is extremely

favorable to certain restrictions on competition and this has become known as the rule of reason, after the American rule of reason doctrine. Identical in its principle, the scope of the rule of reason is very different to its American counterpart, since it is not of general application but is limited to certain specific cases. The rule of reason grants preferential treatment to some anticompetitive prac-tices by only assessing their effects within the context of Article 101(1) TFEU, and thereby remo-ving the need to first subject practices to the rule before being able to obtain an exemption on the basis of Article 101(3). This shortcut is however only possible where it is very clear that the harm to competition found is offset by the beneficial effects of the agreement and also on the condition that the agreement contains no obvious restrictions of competition such as price-fixing, market-sharing or the control of outlets.

The General Court appeared to be putting the brakes on any development of the rule of reason when it asserted that, “the existence of such a rule has not, as such, been confirmed by the EU courts” (Case T-112/99, M6, LawLex200500003906JBJ). According to the Court, recognition of the rule of reason would call into question the rules prescribed by Article 101 and the provision in paragraph 3 would lose much of its effectiveness. However, the Court’s assertion does not reflect the reality of the matter, as there is no doubt that such a rule has been consecrated by the EU authorities who have not hesitated to exonerate restrictions on competition on the basis of the theory of ancillary restraints, in the case of proof of an unavoidable necessity, where the agreement was in fraud of public interest or where its economic balance was positive.

b) Individual exemptions

1.20. ScopeArticle 101(3) TFEU provides that paragraph 1 of the same may be declared inapplicable where

four cumulative conditions - two positive and two negative - are met. The agreement must (i) contri-bute to improving the production or distribution of goods or to promoting technical or economic progress, (ii) while allowing consumers a fair share of the resulting benefit (iii) without imposing on the undertakings concerned restrictions which are not indispensable to the attainment of those objectives, and (iv) not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

The Commission published Guidelines relative to the application of Article 101(3) setting out a system for the application of the provision (No 2004/C 101/08) based on the economic approach introduced and developed in the new generation regulations. The guidelines restate that, by virtue of Article 1 of Regulation No 1/2003 of 16 December 2002, no prior decision is necessary to proceed to a finding of the inapplicability of Article 101(1), where all the conditions of paragraph 3 have been met.

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1.21. the European Commission’s assessmentAny undertaking wishing to benefit from the Article 101(3) exemption must provide proof that it

fulfills the four cumulative conditions. 1º) Economic progressUnder Article 101(3), the provisions of paragraph 1 are not applicable in the case where any agree-

ment contributes to “improving the production or distribution of goods or to promoting technical or economic progress”. Although not expressly mentioned, services are also covered by this provision.

Many agreements between competitors (research and development, specialization, cooperation, joint venture etc.) can lead to improvements in productivity (cost efficiency gains). The same is true when the agreement promotes the introduction of a new product or technology onto the market, enables the entry or the development of a new operator, or reduces production costs and increases productivity thanks to a concentration of production or research, the extending of lines (asset inte-gration, economies of scale or of scope) or the elimination of loss-making production. The produc-tive advantage may also be qualitative (qualitative efficiency gains) and consist, among other things, in an extension of the range, an improvement in quality, standardization of products, minimum coverage against insurance claims, faster commercialization of new global services, an improvement of cross-border payment facilities, a more frequent service or the provision of special services. Finally, improvements may result from a better organization of production or a better adaptation of produc-tion in relation to demand (coordinating investments to avoid the creation of excessive production capacities, reduction of overcapacity, or better use of existing capacity).

In theory, vertical agreements (exclusive distribution or supply, selective distribution, franchises) improve distribution by creating quantitative or qualitative efficiency gains. Exclusive or selective distribution agreements lead to a better organization of the network, enable distributors to maintain larger stocks and encourage promotion drives. Often implementation by the distributor of an after-sales and warranty service are conditional upon the existence of such agreements. An exclusive pur-chase/supply agreement leads to improved sales planning, reduces distribution costs and facilitates product promotion and market penetration. Franchise agreements enable the franchisor to establish a network with limited investment and the franchisee to access the market more easily.

2º) Benefit to the consumerAn agreement may only qualify for an exemption on condition that it, “[allows] consumers a fair

share of the resulting benefit”. That requirement means that the contribution to economic progress should not be assessed uniquely from the point of view of the undertakings involved - usually manu-facturers - but must also take into account the effects of the agreement relative to the demand from client undertakings or final consumers. Thus, to obtain an exemption, it is not enough that the agree-ment creates productivity gains, those gains must also lead to an actual or potential drop in prices or to the introduction of new products onto the market, to the improvement of products or conditions of distribution, to the extension and densification of networks…

3º) Indispensable nature of the restrictionIf the objective of the restriction is to improve production or distribution of goods or to promote

economic progress, it qualifies for the exemption provided in Article 101(3) where it is not only indispensable to the attainment of such objective but also necessary. This condition means that not only should the restrictive agreement itself be reasonably necessary, but that the individual restric-tions of competition that flow from the agreement must also be reasonably necessary for the attain-ment of the efficiencies.

4º) No elimination of competitionUnder no circumstances can an agreement benefit from an exemption when it affords the underta-

kings concerned the possibility of eliminating competition in respect of a substantial part of the pro-ducts 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


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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.

c) Block exemptions

1.22. ContextExemptions may be granted by means of regulation under Article 101(3), which states that the

provisions of paragraph 1 of Article 101 may be declared inapplicable in the case of certain “catego-ries” of agreement.

This block exemption option has been widely used by the Commission. By authority of the Council (Regulation No 19/65 of 2 March 1965), several regulations have been adopted in the areas of distribution and intellectual property. The Commission has also put into effect the Council’s authorization (Regulation No 2871/71 of 20 December 1971) in respect of standardization, research and development and specialization agreements. All those regulations had common characteristics. First of all, they often made the exemption conditional upon the participating undertakings not exceeding certain thresholds of economic power. Secondly, they usually made a distinction between three types of contractual provision: black clauses, white and gray clauses. Black clauses prevented the grant of a block exemption. White clauses were those that did not adversely affect competition. Gray clauses related to all provisions which are restrictive of competition but could qualify for a block exemption. Gradually, these regulations were deemed too cumbersome, too authoritative and, finally, too “legalistic”.

Aware of the difficulties raised by the traditional rules, which were sometimes comparable to actual standard-form contracts, the EU authorities decided to develop more flexible rules on exemp-tions and get rid of the white and gray clauses and the famous “all or nothing” rule (according to which a non-exempted anticompetitive clause could cause the exemption to be refused) and replaced them with economic power thresholds, calculated by market shares, and below which the agreement is exempted. Today, the regulations no longer establish lists of exempted clauses, but merely identify clauses which will prevent the exemption even if the market share thresholds are not exceeded. Black clauses deprive the agreement in its entirety of the benefit of the exemption. Red clauses cannot qua-lify for an exemption relative to a determined obligation but do not call into question the exemption for the overall agreement.

1.23. Vertical restraints On 22 December 1999, Regulation No 2790/1999 relating to vertical agreements was adopted

and was later supplemented by guidelines. This regulation constituted the first culmination of the reform of the rules of competition undertaken by the Commission to improve legal certainty for businesses and lighten the workload of the EU authorities. The scope of the regulation was very wide as it applied to virtually all vertical agreements, i.e. all agreements between undertakings located at different levels of the production and distribution chain having as their object the buying, selling or resale of certain goods and services. It replaced exemption Regulations No 1983/83 on exclusive dis-tribution, No 1984/83 on exclusive purchasing and No 4087/88 on franchises, covering agreements relating to goods and services not intended for resale and bringing selective distribution - which was previously covered by the rule of reason - within its scope. Only motor vehicle distribution agree-ments were excluded, as they were covered by Regulation 1400/2002. This regulation offered more freedom for businesses. The return to contractual freedom was nonetheless a factor of legal uncer-tainty. To evaluate the lawfulness of their agreements, undertakings had to refer to the guidelines, although, as the Court of Justice has reiterated, they have no legal value.

Regulation No 2790/1999 was replaced by Regulation No 330/2010 on 20 April 2010. The pro-vision sets a double market share threshold. To benefit from exemption, the supplier and the distri-butor each must hold a market share that does not exceed 30%, and the distributor’s market share is calculated on the market for the contract goods or services in question (Guidelines No 2010/C

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130/01, point 23), on condition that agreements contain no black clauses (minimum and fixed resale price clause, clause granting absolute territorial protection, clause prohibiting cross-supplies between selective distributors, etc.: Art. 4) and that they respect certain requirements (conditions relating to contractual and post-contract non-compete obligations, prohibition of a selective clubs of brands by suppliers: Art. 5). In other words, the regulation lays down a presumption of legality of those agreements. Above that threshold, there can be no presumption that a vertical agreement will usually give rise to objective advantages which will compensate the disadvantages which it creates for com-petition, and there is no presumption that such an agreement is either caught by Article 101(1) or that it fails to satisfy the conditions of Article 101(3). The Commission’s position becomes also more flexible towards hardcore restrictions. Although the anticompetitive nature of the agreement may be presumed where it contains such restrictions, such a presumption is now rebuttable (Guidelines, point 47). Exemption will be granted if it is established that including a black clause in the agree-ment results in efficiency gains and that the conditions laid down in Article 101(3) TFEU are fulfil-led. The prohibition of retail price maintenance is no longer absolute. According to the Guidelines, resale price maintenance may not result in restricting competition and may lead to efficiencies (point 223). Although restrictions on the sales made over the Internet remain prohibited, the Commission recognizes to selective distribution network suppliers the right to impose quality standards for the use of the Internet site just as for a shop or for advertising. The supplier may thus require the distri-butor to have a traditional shop or a showroom before selling over the Internet.

If any of the undertakings party to the agreement has more than 30% of market share, it will only be able to qualify for an individual exemption, which is now retroactive and runs from the conclusion of the agreement. Where the regulation is not applicable, the guidelines should enable undertakings to verify the compatibility of their agreement with the provisions of Article 101(1) TFEU.

The Commission gave up the idea of purely and simply substituting the new general regulation for the Motor Vehicle Regulation No 1400/2002, which expired on 31 May 2010 and proposed to apply different legal rules for distribution (extension of the Motor Vehicle Regulation for three years, then implementation of the General Regulation) and the aftermarket. In the new Motor Vehicle Regulation No 461/2010 of 27 May 2010, the Commission has adopted an original solution which consists in submitting, for the main part, aftermarket to the conditions of the General Regulation No 330/2010 and to provisions specific to the motor vehicle industry. In other words, agreements relating to the aftermarket must, in order to benefit from a block exemption, fulfill the conditions described in Regulation No 330/2010 and not contain any of the hardcore restrictions listed in Article 5 of Regulation No 461/2010.

1.24. horizontal restraintsThe Commission has also revised the texts relating to horizontal agreements (Regulation No

2658/2000 on specialization agreements and Regulation No 2659/2000 on research and develop-ment agreements), replacing them in 14 December 2010 by two new regulations: Regulation No 1217/2010 on research and development agreements and Regulation No 1218/2010 on speciali-zation agreements, supplemented by new Guidelines on horizontal co-operation agreements (No 2011/C 11/01). Like their predecessors, these regulations lay down a presumption of legality of agreements between competitors below a market share threshold of 25% for R&D agreements and 20% for specialization agreements. Horizontal agreements are not presumed to be in violation of Article 101(1) just because they exceed those thresholds. The new texts also determine which restric-tions are not exempted. These are black clauses for specialization agreements: price-fixing, limiting output or sales, market sharing and the setting of quotas; for research and development agreements: clauses restricting the activities of the parties, non-compete clauses, price fixing and market sharing.

The guidelines apply to agreements which do not fall within the scope of the regulations, and to certain other types of cooperation between competitors (e.g. grouped purchases, joint marketing). As with vertical restraints, they should allow the parties to assess the compatibility of agreements with Article 101(1), taking account of the economic context, the market power of the parties as well as structural factors, and to measure the effect of cooperation between undertakings. As horizontal


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agreements can frequently entail exchanges of information, they are now handled specifically in the guidelines, which lay down general principles of assessment.

C. types of restraints

a) Horizontal restraints

1.25. DefinitionHorizontal restraints generally result from agreements or practices implemented by undertakings

located at the same level on the market. Such agreements may, by the mere fact of their existence, undermine competition when they relate to competitive data such as prices or quantities. This is why they are subject to a more severe assessment by the competition authorities than vertical agreements, which are concluded between non-competing undertakings, and do not generally appear to be anti-competitive. The degree of seriousness of the harm to competition varies according to the agreement involved. One guideline emerges however: the stronger the integration between the parties, the greater the chances that their agreement will result in efficiency gains.

1º) Price-fixing agreementsArticle 101(1)(a) TFEU expressly prohibits agreements which, “directly or indirectly fix purchase

or selling prices or any other trading conditions”. Such agreements or practices are particularly se-rious because pricing freedom is an essential component of free competition. Price-fixing agreements are considered to be the most harmful. Their obviously anticompetitive object suffices to establish their unlawfulness, without any need to consider their real effects. The object of the agreement may be price itself - minimum or maximum imposed prices, price alignment between competitors, com-missions, common price lists, royalties -, or related matters such as product or service costs, margins or discounts.

2º) Market-sharing agreementsMarket-sharing agreements, which tend to preserve the position of established undertakings and

are usually set up by dominant undertakings, often market leaders or the beneficiaries of an exclusive deal, fall almost always under the purview of Article 101 TFEU. Effectively, the sharing of markets or clientele limits users’ choice and causes increases in prices, and even reductions in production. It is not necessary to assess the actual impact of such agreements on the market for them to be caught by Article 101.

3º) BoycottsBoycotts consist in the elimination of a competitor by calling for measures of collective retaliation

or by organizing a collective refusal to contract by application of an exclusivity clause. The imple-menting of a commercial policy reserving products or services to authorized customers in order to combat parallel trade can also characterize a boycott. Boycotts are amongst the most serious infrin-gements of the rules of competition because they lead to the elimination of a competitor from the market. The anticompetitive character of such practices can be established purely from their object.

4º) Information exchangesInformation exchanges are not in themselves contrary to the rules of competition. To be prohi-

bited, their object or effect must be to restrict competition. EU case law has established a distinction between anticompetitive exchanges of information per se and those caught by the prohibition insofar as they underpin another anti-competitive arrangement, e.g. market sharing. Exchanges of informa-tion on price or relating to any other strategic information are prohibited as they alter the normal perception of operators of the competitive conditions on a market and result in excessive transpa-rency. Any exchange of information that relates to confidential, specific and current data, takes place with a certain regularity and frequency, concerns a limited number of operators and occurs on a highly concentrated market, is very likely to fall foul of the Article 101(1) prohibition.

The Guidelines on horizontal cooperation agreements (No 2011/C 11/01), enshrining the case law in the matter, have laid down general principles for the assessment of information exchanges.

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They make a distinction between exchanges which take place directly between competitors and indi-rect exchanges that go through a common agency or a third party. Common practice in many compe-titive markets, exchanges of information can generate efficiency gains notably by resolving problems of information asymmetry or by permitting undertakings or consumers to make cost savings. They produce restrictive effects where they lead to greater market transparency and enable undertakings to be aware of the market strategies of their competitors. They can also lead to collusion on the market, and permit undertakings to monitor deviations or limit entries on the market. They are also likely to cause market foreclosure and lead to anticompetitive foreclosure on the same market. For an infor-mation exchange to be likely to have restrictive effects on competition, the companies involved in the exchange have to cover a sufficiently large part of the relevant market. In any event, restrictions that go beyond what is necessary to achieve the efficiency gains generated by an information exchange do not fulfill the conditions of Article 101(3) TFEU.

5º) Professional organizationsMeetings between competitors within a professional organization are clearly likely to encourage

practices contrary to Article 101(1) TFEU. Specifically, the conditions for admission to these orga-nizations may limit or prevent access to the market concerned. In application of the rule of reason, a procedure for admission to, or exclusion from a professional organization is not in itself anticom-petitive. For an admission procedure to be lawful, selection must be based on criteria of a qualitative nature, applied without discrimination and must not prevent some undertakings from gaining access to the market.

Professional organizations generally regulate the relations between their members and between their members and their customers. Such rules are likely to generate restrictions of competition. Codes of conduct set by a professional organization are tantamount to unlawful decisions of an asso-ciation of undertakings if they limit the freedom of action of its members. However, in application of the rule of reason, the restriction on competition has an indispensable character when the proper exercise of the profession is conditional upon it.

6º) Agreements on commercial termsAgreements on commercial terms between competitors fall under the Article 101(1) prohibition

where they lead to a serious distortion of competition, particularly when they limit the quantity of goods or services available on the market. General terms and conditions fall within the scope of application of the Guidelines on horizontal cooperation agreements (2011/C 11/01) where they lay down standard terms and conditions of sale or purchase of goods or services between competitors or consumers for substitute products.

7º) Agreements to limit productionAccording to traditional economic theory, the direct consequence of limiting production is an

increase in prices to the detriment of users. Thus, agreements purporting to limit production are, apart from exceptional cases, considered to be particularly dangerous to competition. This is the case where competing producers put in place production bans, jointly fix the volumes to be produced or delivery quotas, or control or limit production capacity, investments or sources of supply.

8º) Joint marketing agreementsAgreements between competitors for the joint organization of the sale, distribution or promo-

tion of their products must, according to the Guidelines on horizontal cooperation agreements (No 2011/C 11/01), be assessed in the context of the provisions on horizontal agreements. Then, where the cooperation is authorized, the vertical consequences must be assessed according to the rules on vertical restraints. The guidelines also distinguish between joint marketing agreements and those where commercialization is linked to other forms of cooperation, i.e. joint production and in that case the assessment is based on the latter aspect. Joint commercialization agreements are only subject to the provisions of Article 101(1) TFEU if the combined market share of the parties exceeds 15%. The Commission takes into account in its assessment the degree of market concentration and mar-ket share held. A high level of concentration often leads the parties to exchange information about prices and marketing strategy to reduce uncertainty.


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9º) Joint selling agreementsJoint selling agreements between competing producers have the effect of restricting competition,

particularly where they imply a concerted intention not to compete in markets or where they insti-tute a de facto monopoly on the market. On the other hand, a cooperation agreement is not restric-tive of competition when it relates to non-competing specialized goods, or where the restriction is indispensable.

10º) Joint purchasing agreementsCooperation between competing buyers can significantly reduce competition by the creation of a

buyer power. According to the Commission, the existence of such market power is excluded when the parties hold a combined share of less than 15% both on the buying and the selling markets. Above that figure, the effect on competition will depend on the level of market concentration and the exis-tence of any countervailing power from big suppliers (Guidelines No 2011/C 11/01). Furthermore, Article 101(1) does not, in principle, apply to agreements between undertakings not operating on the same downstream market. Its applicability is certain, however, if the grouping of purchases is the means to disguise a prohibited agreement such as a price fixing or market sharing agreement. Where the grouped purchase is based on both horizontal and vertical agreements, a two-step analysis is car-ried out; firstly the horizontal agreement is assessed, and, if that agreement may be authorized, the vertical agreement is then examined in the light of the specific rules for vertical agreements.

11º) Agreements on standards/certificationStandardization agreements have as their objective the definition of technical requirements, or the

current or future quality of products, production processes or methods. According to the Commission, standardization agreements produce their effects on three possible markets, i) the product market(s) to which the standard(s) relates, ii) the service market for standard setting, and iii) the distinct market for testing and certification (Guidelines No 2011/C 11/01, at point 261). Conditions for obtaining the necessary standard or certification can constitute a barrier to entry. Such agreements are not contrary to Article 101 TFEU if the selection criteria used are likely to ensure the compliance of candidate undertakings without going beyond what is strictly necessary to do so. Therefore, an agreement on standards or certification must, in order to be lawful, be open and transparent and must not exclude, without objective justification, non-certified undertakings offering equivalent gua-rantees, nor limit technical development, production and sale through licensing agreements.

In order to prevent IPR holders from making the implementation of a standard difficult by refu-sing to license, or by requesting unfair or unreasonable fees, the Commission now requires partici-pants wishing to have their IPR included in the standard to provide an irrevocable commitment in writing to offer to license their essential IPR to all third parties on fair, reasonable and non-discrimi-natory terms. The “FRAND” (fair, reasonable and non-discriminatory) commitment must be given prior to the adoption of the standard and undertakings assess for themselves whether their terms fulfill the FRAND commitment.

12º) Production agreementsAccording to Regulation No 1218/2010, joint production agreements are those where two or more

parties agree to produce certain products jointly. Such agreements can escape the ban, if they have no other purpose than to allow undertakings to rationalize their production or to prevent undertakings from taking on production for which they are not competitive, while at the same time enabling each of them to offer their customers a full range of products. The legality of such agreements is subject to the condition that they do not lead to coordination of the behavior of the parties in their capacity as suppliers. The agreements must not set prices for products supplied by the parties on the market, limit production or allocate markets or groups of customers. A cooperation agreement between com-peting producers is unlawful if it would automatically lead to an exchange of information relating to the state of stocks, current production, production forecasts, orders received, and forecasts of trends in demand.

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13º) Specialization agreementsSpecialization agreements may be unilateral or reciprocal and Regulation No 1218/2010 of 14

December 2010 covers both types. The agreement is exempted on condition that the combined market share of the participating undertakings does not exceed 20% of the relevant market. The block exemption applies to ancillary restrictions such as exclusive purchase and/or supply obligations. The regulation lays down those black clauses which are not covered by the exemption - the fixing of prices, the allocation of markets or customers or the limitation of production. The Commission however deems that agreements on specialization can contribute to the improvement of production or distribution of products and services if the parties have complementary skills, assets or activities.

14º) Research and development agreementsArticle 1 of Regulation No 1217/2010 on research and development agreements defines such

activity as “the acquisition of know-how relating to products or processes and the carrying out of theoretical analysis, systematic study or experimentation, including experimental production, tech-nical testing of products or processes, the establishment of the necessary facilities and the obtaining of intellectual property rights for the results”. Article 101 does not apply to R&D agreements when the parties pursue either joint research and development of products or processes and joint exploi-tation of the results of that research and development, or either of those activities in isolation. The exemption also applies to provisions contained in research and development agreements which do not constitute the primary object of such agreements, but are directly related to and necessary for their implementation. Where the parties are not in competition with one another, the exemption is granted for the entire duration of the research and development activity and for joint exploitation of the results it continues to apply for a period of seven years from the time the contract products are first put on the market within the internal market. If the undertakings are competing undertakings, the regulation lays down a threshold beyond which exemption is not automatic. The combined market share of the participating undertakings must not exceed 25% of the relevant market for the products capable of being improved or replaced by the contract products. At the term of the agree-ment or the 7 year period the parties still enjoy the benefit of the exemption as long as market share does not exceed 25%.

All the parties must, in any event, have access to the results of the joint research and development for the purposes of further research or exploitation. Any joint exploitation must relate to results which are protected by intellectual property rights or constitute know-how, which substantially contribute to technical or economic progress. Furthermore, the results must be decisive for the manufacture of the contract products or the application of the contract processes. Undertakings charged with manufacture by way of specialization in production must be required to fulfill orders for supplies from all the parties. The regulation lists a certain number of “black clauses” not covered by the block exemption and “red clauses” which lead to refusal of the exemption for specific obligations without refusing exemption for the contract as a whole.

15º) CooperativesThe setting up of a cooperative association can constitute a means of influencing the commercial

behavior of participants in defiance of the free play of the competition, due to both the principle of “coo-perative loyalty”, which is generally applied, and the objects of the cooperative. Assessment is carried out in the light of a rule of reason: the restrictions imposed by the statutes, designed to ensure the loyalty of members, must not exceed what is necessary to ensure the smooth operation of the cooperative.

16º) Joint venturesThe creation of a joint venture, to which several undertakings entrust a part of their activity and

whose leadership is ensured by them on an equal footing, falls under the category of both restrictive agreements and concentrations. Traditionally, a distinction is made between cooperative joint ven-tures - liable to be caught by Article 101 TFEU - and concentrative joint ventures, which depend on the rules on concentrations. According to Article 3(4) of Regulation No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, “The creation of a joint venture per-forming on a lasting basis all the functions of an autonomous economic entity shall constitute a concentration within the meaning of paragraph 1(b)”.


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A joint venture can be likened to a restrictive agreement between its parent companies when the scale of the assistance provided by them at every stage of its operations is not limited to the normal start-up phase. This would be the case for a joint undertaking without the necessary resources to exercise a sustainable economic activity, which is dependent on its parent companies and operates on the market in a manner similar to that of a joint sales agency and where there is no transfer of assets to the jointly-owned company and where the parent companies have not withdrawn from the market. Conversely, the creation of a joint venture which does not affect the independence of its members outside its area of application, where the membership criteria are objective and open to all, which contains no exclusivity obligations and does not prevent the entry on the market of potential competitors, is not contrary to Article 101(1) TFEU. Likewise, the agreement is not prohibited when the undertakings involved would not have been able to enter the market alone and the ope-ration is likely to increase competition by creating a new competitor in a rapidly expanding market segment or when it promotes the entry of a new operator onto a recently liberalized market charac-terized by strong pressure from the incumbent operator.

Any restrictions related to the creation and successful operation of a joint venture are ancillary restraints contained within the joint venture agreement. In order to be lawful, they must be indis-pensable and not go beyond the requirements of the creation of the joint venture. Restrictions can include: non-compete obligations, preferential clauses, “most favored nation” provisions, exclusive distribution or purchase obligations, the granting of exclusive licenses or post-contractual restraints.

b) Vertical restraints

1.26. DefinitionVertical restraints generally result from agreements between operators located at different stages

of the economic process. Such restraints are found in distribution agreements and are treated with a certain amount of indulgence insofar as, contrary to horizontal agreements, they lead in principle to an increase in inter-brand competition. In addition, whereas in horizontal relationships, the market power of one of the undertakings may encourage its competitors to adopt anticompetitive behavior, in vertical relationships, market power is theoretically neutralized. When the market is not concen-trated and there are a large number of operators, one may consider that vertical restraints do not pro-duce any negative effects. In fact, vertical restraints only give rise to difficulties from the competition point of view, where inter-brand competition is insufficient.

1º) General terms and conditions of sale and cooperation agreementsVertical agreements, which have as their object the fixing of the general terms and conditions of

sale, do not produce negative effects on competition if they preserve the freedom of the distributor and are not discriminatory. Manufacturers influencing the commercial policies of resellers, is tolera-ted when it is part of the normal functioning of a distribution network (franchises, selective distribu-tion, exclusive distribution, exclusive purchase), but does not extend to permitting the imposition of a minimum price. Resale price maintenance clauses constitute restrictions which are excluded from exemption within the meaning of Regulation No 330/2010. The application of dissimilar condi-tions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage is also prohibited by Article 101(1) TFEU. Likewise, terms and conditions of sale may not contain export ban clauses that have the effect of isolating the market of each Member State and removing the prices applied in each of those markets from competition in one or several other Member States.

2º) Exclusivity obligationsAn exclusivity obligation forces one of the parties, through explicit contractual provisions or by its

practical effects, to use only the other party for all, or virtually all, its needs. It is harmful to competi-tion as it supplants the other competitors in favor of one operator or produces a market-partitioning effect. However, an exclusivity obligation may produce efficiency gains of a quantitative (reduction of costs), or of a qualitative (increase in the quality of products or services) nature.

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3º) Exclusive purchaseAn exclusive purchase agreement obliges the buyer to obtain its supplies exclusively from one

given supplier, with one contracting party agreeing to purchase specified products for the purposes of resale only from that undertaking, or from any undertaking designated by it for the distribution of its products (subsidiary or third party). Although exclusive purchase agreements do not in them-selves constitute anticompetitive agreements, they may be anticompetitive by their effects where they restrict the access to the market for the supplier’s competitors. Before Regulation No 2790/1999 was adopted, exclusive purchase agreements were covered by Regulation No 1984/83 of 22 June 1983. The purchase exclusivity could only be exempted on condition that it was limited to five years. The regulation also contained special provisions relating to service-stations and beer supply contracts. For beer purchase the duration of agreements could vary according to the product concerned (ten years for the supply of certain beers; five years for certain beers and certain other drinks). Purchase exclu-sivity for service-stations could not exceed ten years. Regulation No 2790/1999 and the guidelines pertaining to it put an end to those specific provisions and contained rules governing all agreements between undertakings at different levels of the production and distribution chain, relating to the conditions under which the parties may purchase, sell or resell certain goods or services.

Neither Regulation No 2790/1999 nor Regulation No 330/2010 which replaces it expressly concerns exclusive purchase arrangements. They are covered by the non-compete obligations under Article 1, and defined as, “any direct or indirect obligation causing the buyer not to manufacture, purchase, sell or resell goods or services which compete with the contract goods or services, or any direct or indirect obligation on the buyer to purchase from the supplier or from another undertaking designated by the supplier more than 80% of the buyer’s total purchases of the contract goods or ser-vices and their substitutes on the relevant market, calculated on the basis of the value of its purchases in the preceding calendar year”. Non-compete obligations can be direct or indirect. They can take the form of a prohibition on distributors from buying competing products or of an exclusive pur-chase obligation, or conversely, they can be in the form of a prohibition on the supplier from doing business with the distributor’s competitors. The duration of such obligations is limited to five years. Obligations which duration is indefinite or exceeds five years are not covered by the block exemption regulation (Guidelines on vertical restraints, at point 66). A non-compete obligation which is tacitly renewable beyond a period of five years is to be deemed to have been concluded for an indefinite duration. A limit of the duration is, on the other hand, not required when the buyer resells the goods or services from premises or land of which the supplier is the owner or tenant, provided that the du-ration of the clause does not exceed that of the occupation of the premises. Beer purchase contracts are in this category. Purchase agreements may benefit from an individual exemption if they meet the cumulative conditions set out in Article 101(3).

4º) Exclusive distributionAn exclusive distribution agreement is one in which, “the supplier agrees to sell his product only

to one distributor for distribution in a particular territory”. The exclusivity the supplier must provide is essential in differentiating between exclusive and selective distribution. The exclusive distributor, unlike the authorized reseller, benefits from a veritable monopoly to sell the products on the contract territory. However, the exclusivity enjoyed by the exclusive distributor is not absolute: immune from the active sales of other distributors in the network on its territory, he is exposed to their passive sales. Finally, while by definition, the selective distributor is banned from selling outside the network, the exclusive distributor is not subject to such restrictions on its sales, except when the network head has opted for a combination of exclusive and selective distribution.

Exclusive distribution is exempted by the Block Exemption Regulation No 330/2010 when neither the supplier’s nor the seller’s market share exceeds 30%, even if combined with other non-hardcore vertical restraints, such as a non-compete obligation limited to five years, quantity forcing or exclusive purchasing. Exclusive distribution may only be combined with selective distribution provided that active and passive selling is not restricted anywhere. The exemption does not apply in cases of black clauses, such as the imposing of minimum prices or restrictions by territory or customer. However, the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer is authorized, where such a restriction does


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not limit sales by the customers of the buyer. Applicability of the block exemption is also subject to certain conditions designed to guarantee access to the market and prevent collusive behavior. For a post-contractual non-compete obligation to be valid, it must be limited to a period of one year from termination of the agreement and to the premises and land from which the buyer has operated during the contract period; it must also relate to goods or services which compete with the contract goods or services and be indispensable to protect know-how. A non-compete obligation in an exclusive dis-tribution agreement, often in the form of an exclusive purchase obligation, cannot exceed five years or be of an indefinite duration if its concerns more than 80% of the distributor’s total purchases from the supplier (Article 1) or from an approved undertaking (Article 5(a)). The duration can be extended where the goods or services are sold by the buyer from premises and land owned by the supplier. An agreement that falls foul of Article 101(1) TFEU and to which a block exemption cannot apply, may still be exempted individually on the basis of Article 101(3). Agreements containing provisions qualified as hardcore restrictions have little chance of being individually exempted. This applies to agreements prohibiting passive sales or obstructing parallel imports. Similarly, exclusivity for certain wholesalers that only supply particular retailers and exclude ordinary retailers and department stores for the distribution of products with no specific characteristics cannot be exempted.

5º) Selective distributionArticle 1(e) of Regulation No 330/2010 defines selective distribution as, “a distribution system

where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria and where these distributors undertake not to sell such goods or services to unauthorized distributors”. The supplier may directly select retailers or simply designate wholesalers or importers to select retailers. Given the limits to its anticompeti-tive effects, this type of distribution has always been subject to favorable treatment from the control authorities. Indeed, such a system is less harmful than agreements conferring territorial exclusivity and partitioning national markets. In addition, limiting the number of resellers by selection is offset by an improvement of the service for the final user. The system imposes a ban on resale outside of the network. Unlike exclusive distribution, limiting the number of resellers in selective distribution leads to the application of selection criteria relating to the nature of the product and not to an allocation of territories.

Within selective distribution qualitative and quantitative selective distribution must be distinguished. Qualitative selective distribution consists in authorizing distributors solely on the basis of selection cri-teria that are objectively necessary to the distribution of the product in question, such as the training of sales staff, the services provided at the point of sale, or the assortment of products sold. As a general rule, purely qualitative selective distribution is not caught by Article 101(1) TFEU because, provided that three conditions are met (the type of distribution is justified by the quality of the products, dis-tributors are selected on the basis of objective criteria and the proportionality criterion is respected), it does not produce any adverse effect on competition. The quantitative selection of candidates for entry to a selective distribution network is more restrictive if other restrictions are added, such as the imposition of a minimum or maximum level of sales or a direct limitation on the number of authorized resellers. A certain amount of quantitative selection in a selective distribution network is, however, allowed. It can in effect be justifiable to limit the number of resellers in order to adapt the network to the conditions relative to the meeting of the supply and the demand. Likewise, the supplier’s legitimate concern to control the density and geographic distribution of its network can lead to prohibiting autho-rized distributors from operating from a non-authorized place of establishment.

The type of selection is of little significance below the 30% threshold, and the agreement bene-fits from the presumption of legality set out in the block exemption regulation on condition that it contains no black or red clauses. The presumption of legality only comes into play if authorized dis-tributors can actively sell to each other and to final consumers. A restriction on active or passive sales to end users, professionals or consumers is prohibited by the regulation (Article 4). Cross-supplies between network distributors must also be allowed (Article 4(d)). Where neither the supplier nor the distributor has a 30% market share, the regulation allows the combining of exclusive and selective distribution and the imposition of the distributor’s location, subject to the freedom to carry out active and passive sales, when these agreements do not produce cumulative effects leading to restriction of

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competition. When the system in question is not within the scope of the rule of reason and exceeds the 30% threshold, it may be able to benefit from an individual exemption. Useful directions can be found in the guidelines.

6º) Motor vehicle distributionMotor vehicle distribution law is heavily marked by the sector-specific block exemption regula-

tions that were successively adopted to define the conditions of exemption of distribution agreements in this sector. In principle, the sole purpose of the regulations is to lay down the conditions to qualify for a block exemption but in practice they laid down the contractual structure of networks in the sector and even the content of contracts. The Commission acknowledged the specificity of the auto-mobile sector by adopting Regulation No 123/85. Ten years later it revised the law with Regulation No 1475/95. Its attitude vis-à-vis this mode of distribution has remained unchanged since then and it went on to adopt a third sector-specific exemption regulation, No 1400/2002 of 31 July 2002, instead of including motor vehicle distribution within the single block exemption regulation on vertical agreements.

Regulation No 1400/2002 remained influenced by the premise that competition could be impro-ved by the strengthening of the autonomy of distributors and by multi-branding. Certain principles were affirmed: no combined exclusive/selective distribution, the establishment of wholly multi-brand sales, separation of the link between sales and after-sales, the strengthening of the protection of distributors, and the faculty to create spin-off companies in the whole of the internal market, the imposition of a purely qualitative selective distribution for after-sale. The regulation defined a number of prohibited clauses, qualifying them either as hardcore restrictions (or black clauses) or red clauses. Automobile distribution was ultimately subject to a much more stringent set of rules than sectors governed by the general regulation on vertical restraints.

Since the regulation expired on 31 May 2010, the Commission adopted a new Motor Vehicle Regulation No 461/2010 on 27 May 2010, which came into force on 1 June 2010 and will expire on 31 May 2023. However, the new text provides two different systems for sale and after-sale services. Agreements providing for repair and maintenance services and distribution of spare parts must fulfill both the requirements for exemption under the general system (Regulation No 330/2010) and the more specific requirements laid down in the Motor Vehicle Regulation (Article 4). In effect, the aim is to free after-sale services and allow repairers to have access to spare parts bearing other brands while maintaining the possibility for manufacturers to require that repairs be made within their network where they are covered by the guarantee of which they bear the cost. From 1 June 2010 to 1 June 2013, the sale or resale of new motor vehicles remains subject to Regulation No 1400/2002. From 1 June 2013, Regulation No 330/2010 will apply to them. Manufacturers should thus have more freedom in the organization of the network and distribution costs should be lower.

7º) FranchisesFranchises, which used to be subject to a very detailed specific regulation (Regulation No 4087/88),

are now barely mentioned in Regulation No 330/2010 and only indirectly within a definition of know-how and the rules covering post contractual non-compete clauses which are indispensable to protect know-how transferred by the supplier to the buyer. Likewise, the Guidelines on Vertical Restraints only briefly touch on developments relating to franchises. They are defined as the granting of a commercial method, consisting of, “licenses of intellectual property rights relating in particular to trademarks or signs and know-how for the use and distribution of goods or services” together with, “commercial or technical assistance”.

According to the regulation, most obligations found in franchise agreements can be considered as necessary for the protection of intellectual property rights or to maintain the common identity and reputation of the franchised network and therefore fall outside the scope of Article 101(1) TFEU. Such agreements also, “usually contain a combination of different vertical restraints concerning the products being distributed, in particular selective distribution and/or non-compete and/or exclusive distribution or weaker forms thereof ”. Clauses purporting to impose resale prices, prohibit parallel sales or passive sales are hardcore restrictions - known as black clauses - and lead to the whole of the agreement being excluded from the benefit of the block exemption. Post contractual non-compete


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obligations, or for the duration of the agreement are classified as red clauses in the regulation: their validity is subject to certain conditions, which, unless they are fulfilled, exclude the clause in question from the benefit of the exemption. Territorial exclusivity can only be limited in its scope: it can only be combined with the selection of distributors (and thus a resale outside the network prohibition) if active and passive sales are not restricted, except for location clauses, which suppliers may still impose on distributors. Franchise agreements can qualify for an individual exemption where they neither fit the application of a rule of reason nor Regulation No 330/2010.

iii. abuse of dominance

1.27. the prohibitionArticle 102 TFEU prohibits “any abuse by one or more undertakings of a dominant position

within the internal market or in a substantial part of it”. A dominant position can be individual or collective since the text indicates “one or more undertakings”. According to the letter of the Treaty, only the abuse of a dominant position is prohibited but not the dominant position itself. However, from an economic viewpoint, it is market power and consequently the dominant position that needs to be kept in check; the abuse is relevant insofar as it reveals such a position. In practice, the purpose and the requirement for control have been inversed; initially (according to the legal texts) a dominant position was the requirement for an abuse to be subjected to control. Then (according to case law) the abuse became the condition for control that in fact related to the dominant position. Sanctions were no longer triggered by abusive behavior, which could be avoided by complying with the legal rules, but rather by the market situation, which might be inevitable. Therefore, control was gradually losing its prescriptive character when a same behavior could be held to be either abusive or lawful depending on the size of the undertaking and the structure of the market. Lastly the courts reverted to a position which would ensure more legal certainty for undertakings. All behavior by a dominant undertaking is not abusive. In order to be prohibited, behavior must be abnormal, i.e. beyond what is necessary to protect the legitimate interests of the undertaking in question. The economic criterion has then been re-introduced within the test for proportionality itself. Initially assessed with regard to the intrinsic characteristics of the dominant undertaking’s behavior - certain practices at the time being considered as abusive per se -, exceeding its legitimate interest is now assessed based on the effects of the undertaking’s behavior on the market.

a. Dominant position

1.28. Concept of dominanceArticle 102 TFEU does not provide a definition of a dominant position. Legal commentators

usually distinguish two different definitions of a dominant position. The first, known as “static”, looks first to the state of the market and identifies a position of dominance from the absence of competition. The second is called “dynamic” and does not directly refer to the market situation but defines the dominant position in terms of an economic power, with the market share held by the undertaking remaining an essential criterion but not constituting an exclusive indication thereof. EU law employs the dynamic definition. The Commission defines the dominant position of an undertaking as follows: “a firm or group of firms would be in a position to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers” (Notice No 97/C 372/03 of 9 December 1997 on the definition of relevant market).

The dominant position of an undertaking is simply the legal translation of its market power, which itself is a reflection of the degree of elasticity of supply and demand: the more consumer demand is insensitive to variations in price (inelasticity of demand) and the more difficult it is for other offerors to adapt their production to meet the same need (inelasticity of supply) then the greater the market power of the undertaking in question will be. This is directly related to the market share held by that undertaking. Elasticity of supply and demand will be weaker the greater the market share of the

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undertaking, as consumers will find it more difficult to turn to other products in cases of prices rises instigated by the monopoly-holder. In other words, the market share held by the undertaking is an indirect means of measuring elasticity. It is therefore not surprising to have elasticity mentioned in the definition of the relevant market.

a) Relevant market

1.29. DefinitionThe concept of relevant market implies that effective competition can exist between the products

that are part of it and this presupposes a sufficient degree of interchangeability in terms of use for all the products included in same market. According to the Notice on the definition of relevant market (No 97/C 372/03), a product market “comprises all those products and/or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use”. The degree of interchangeability and substitutability is assessed accor-ding to the characteristics of the products concerned (performance, price…) as perceived by users.

This descriptive approach is sometimes supplemented by an econometric analysis with the test for cross elasticity of demand being most often used out of the available methods. This test consists in measuring the relationship between price fluctuations of one product against the sales of another. Two products may be considered as substitutes when a rise in price of one product results in the rise in sales of the other product. The Notice therefore indicates that the assessment of demand-side substitution entails first an analysis of the characteristics of products or services and their intended use, and the study of the substitution effect on the market in a recent past that can exist in particular in the event of a small price variation of approximately 5% to 10% (test referred to as SSNIP - small but significant and non-transitory increase in price). If SSNIP is profitable, this means that the demand is inelastic and that a distinct product market has been identified. If not, the product market must be widened. SSNIP is in fact barely applied as the supervisory authorities would rather use the traditional descriptive method. In certain cases, there is no market price. Furthermore, if the under-takings in question have a certain monopoly power, they will apply prices greater than the competi-tion price, which will lead competition authorities to include in the market definition products that are in fact non-substitutable (theory referred to as “Cellophane Fallacy” after the name of a famous case that the Supreme Court of the United States ruled in 1956).

Compared to elasticity of demand, supply elasticity, which enables the measurement of the capa-city of other suppliers to meet the demand for goods supplied by the alleged dominant undertaking, has always been regarded by EU authorities as a complementary factor in defining the relevant market. According to the Notice, substitutability may be analyzed from the supply-side when its effects are equivalent to demand-side substitutability in terms of immediacy and effectiveness. Two products will be considered as substitutable from the supply side where suppliers are able to redirect their production from one type of product to another, by simple adaptation, without incurring risk or unsustainable costs. When passing from one type of production to another necessitates heavy investments or a revisal of strategy or there are barriers to entry, such as legal or technological requi-rements, the products in question belong to distinct markets.

A market is defined in three dimensions: product, space and time. Rarely addressed in decisions the temporal market is assessed for the time the facts took place. Although the Commission must carry out an evaluation of the structure of the market and of the state of competition at the time it takes its decision, it is not under any obligation to analyze the relevant market in every case.

1.30. Product marketThree sets of criteria are generally used to identify a product market: nature of the product or

service, conditions of use and method of commercialization. 1º) Nature of product or service


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The technical characteristics, prices and conditions of production are the main identification cri-teria upheld by the supervisory authorities.

For the EU authorities, the attributes of a product are an essential factor when defining the market concerned. Products have little interchangeability where their technical differences create clearly dis-tinct conditions of demand. Where a same product has different functions, only its primary function must then be considered. Other than technical characteristics, the quality of the service provided is a differentiating factor. When defining the products or services, the EU authorities are not restricted to purely objective characteristics. Thus, the image of a product or a service may create an attachment rendering the product specific. Likewise taste factors can cause the competition authorities to distin-guish a product even though other products have similar technical characteristics. Complementary products or services may belong to the same market or to different markets, as the case may be. When the supply and demand stem from different operators and are related to specific products or services, the different stages of the same economic process constitute distinct markets. In the specific case of a secondary market complementary to a primary market, an undertaking may be in a dominant position regarding its own products where the market of the secondary product is a captive market. Such is the case where access to the secondary market is prohibited to third party undertakings due to the fact that the dominant undertaking holds an intellectual property right.

The price may be a characteristic of the product or service and can be used to measure substitu-tability. Criteria of non-substitutability upheld by the EU authorities include the quality/price ratio, difference in prices of products, existence of higher profit margin ratios or more advantageous prices. Nevertheless price is sometimes revealed to be a notably inadequate indicator. Where one of the products at issue is a monopoly product, its price is bound to be higher than it would be in a situa-tion of normal competition. Two products that are non-substitutable in principle can thus become substitutable due to the exercising of market power.

According to the Court of Justice, products belong to distinct markets where they are individua-lized, not only by the mere fact that they are used for a purpose, but by particular characteristics of production which make them specifically suitable for such purpose.

2º) Conditions of useThe supervisory authorities consider that the definition of the market should entail a concrete

and objective assessment of the choices made by purchasers. The characteristics of a product aside, consumer behavior determines the limits of a market. A product market can be characterized from the existence of a specific, constant and regular potential demand from consumers. Products having similar objective characteristics may belong to distinct markets because they correspond to different uses. Competition authorities less frequently consider that technically different products might be-long to the same market due to their mere use.

The conditions of use can enable the grouping together of different product families produced within a same market or to define groups of users at a same level of the economic process. Therefore, new tyres and retreaded tyres are not substitutable in terms of use, as hauliers systematically avoid fitting retreaded tyres to the front of their tractor units or to trucks carrying dangerous goods, to avoid any incident on the journey that might delay delivery. Each form of milk packaging is a dis-tinct market because consumers do not consider the various types of milk as substitutable and do not equally use each packaging.

3º) Methods of commercializationThe EU authorities sometimes find, from the specificity of the distribution channel, the existence

of a separate product market. The Commission could therefore deduce from the method of distribu-tion of ice cream a distinction between ice cream for immediate consumption and soft ice cream, the commercialization of which requires facilities and more personnel.

1.31. Geographic marketThe EU authorities rely on a set of objective criteria when defining the geographic market concer-

ned. One criterion is the nature of the product or service. Generally, transport costs are the essential

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factor for spatial delineation of the market as they restrict the ability to sell beyond a certain geo-graphic radius, particularly in the case of cumbersome goods or those of a low intrinsic value. The greater their absolute or relative value compared to the price of the product, the higher the market power of the undertaking. Location of the operators and customers of the undertaking in question also plays an important part in delineating the geographic area concerned. Lastly, the definition of the geographic market also takes into consideration the existence of regulatory barriers. Taking a broad approach, the competition authorities underline that the geographic market must conform to the area in which, for economic operators, objective conditions of competition for the product or service are “similar” or “sufficiently homogeneous”. Homogeneity exists from the supply side where, in a defined area, the characteristics of products, the administrative regulation, the offerors and the degree of maturity of the market are identical or the volume of exchanges and level of substitutability of supply are high. As for the demand, the competition authorities consider in particular consumer behavior, the organization of distribution, the structure of the demand, supply policies and level of imports. The fact that there is no difference in prices between products within a given geographic area is regarded as an essential indication of the homogeneity of that area. In some cases the EU authorities will include a socio-psychological assessment in order to better evaluate the inelasticity characterizing a given market. Thus, consumers’ language and cultural preferences, local customs and users’ consumption habits, may constitute factors defining the geographic market.

Article 102 TFEU prohibits any abuse of a dominant position within the internal market or in a substantial part of it. The “substantial part” is in fact a very contingent notion: the region of a Member State or a town or a neighborhood can be considered as a substantial part of the internal market if they are of economic importance to the internal market as a whole. Theoretically there is no minimum geographic scope.

b) Indicators of individual dominance

1.32. Market share criteriaAlthough the Court of Justice considers that the position held by an undertaking on the market

only constitutes, in theory, a “factor” of the dominant position, it judges that “among these factors a highly important one is the existence of very large market shares” (Case 85/76, Hoffmann-La Roche). Once the market share of an undertaking reaches a certain level, it can suffice as an indicator of a dominant position. By contrast, possession of a limited market share is interpreted as meaning that there is no dominant position. Between these two extremes, market share is only considered a relative factor of dominance that needs to be supported by other factors. A market share greater than 50% for several years is generally sufficient for a finding of dominance. The same goes for a market share between 40% and 45% if supported by other factors. According to the Commission, domi-nance is not likely if an undertaking’s market share is below 40%.

Where an undertaking is in a situation of monopoly, whether in law or in fact, the EU authorities seem to be satisfied with this fact alone to find the existence of a dominant position. However, the concept of dominance is not limited to monopoly but extends to assumptions of quasi-monopolies. Except in exceptional cases, extremely high market shares constitute in themselves evidence of a dominant position.

1.33. Other factorsOther than monopoly or quasi-monopoly situations, the undertaking’s predominant market share

is considered as an insufficient condition in itself and must be supplemented by other factors to esta-blish the dominant position.

1º) Market structureThe intensity of competition on a market and the possibility for competitors to enter the market

are essential criteria for defining a dominant position. Absence of potential competition and main competitors’ insignificant countervailing power may confirm the existence of a dominant position.


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The inability of the main competitors to compete fully and effectively, plus the barriers to entry existing on the relevant market, is sufficient to qualify as market leader an undertaking holding an average market share.

2º) Undertaking’s structureFactors corroborating a dominant position retained by the competition authorities include market

leadership, classification as incumbent operator and brand image. Disproportionate financial means between an operator and its competitors or facility in obtaining supplies may also be factors in the assessment of a dominant position. Belonging to a group, which itself is an indication of dominance confers financial strength on an undertaking. The holding of intellectual property rights or special or exclusive rights are also factors pointing to a position of dominance. The same is true where the undertaking distributes its products widely over the whole territory, where it has a vast and highly sophisticated commercial organization or a very diverse and varied product range. Lastly, an underta-king that achieves economies of scale, is vertically integrated, has technological lead or keeps its par-tners in a position of dependence is likely to hold a pro-eminent position on the market in question.

3º) BehaviorCertain types of behavior could only be adopted if the undertaking had sufficient economic power

to impose them on other players on the market or would be pointless unless the party in question was in a dominant position. Some contractual conditions can be imposed only by an undertaking in a dominant position. Generally an abuse may be an indicator of dominance. Instead of being regarded as an indicator of a dominant position, the behavior of an undertaking is sometimes considered to be the cause of dominance. Being in a position of exclusive or nearly-exclusive supplier is thus a factor of dominance.

4º) PerformanceEU competition law is extremely hesitant about using the criteria of performance. Although the

EU authorities traditionally find that the maintenance of a market share can reveal a dominant position, the progressive decrease in such market share is not sufficient to disprove the existence of a dominant position insofar as the market share remains very high. Likewise, falls in prices are not necessarily inconsistent with the existence of a dominant position insofar as they may result from a price policy freely adopted and not attributed to the pressure of competition. EU authorities even consider that a reduced profit margin or even losses for a time are not incompatible with a dominant position, just as large profits may be compatible with a situation where there is effective competition..

c) Collective dominance

1.34. Which connecting factors?Collective dominance traditionally implies the finding of links between undertakings enabling

them to adopt a same conduct on the market. At first, the concept of links between undertakings was rather strictly construed and only covered links drawn from the corporate structure of the under-taking, like the existence of joint managers or cross shareholding. The concept of link has gradually slackened to be reduced to mere “connecting factors”: commercial links, such as exclusive supply commitments or systematic exchanges of products between the undertakings in question, or even purely “economic” links, such as patent licensing agreements, may now constitute such links.

In this very broad conception of link, the behavioral condition naturally becomes decisive: any link between undertakings suffices to establish a collective dominant position where it allows the adoption of a joint commercial strategy. The object of the control is therefore gradually moving away from the relations existing between the undertakings in question, to the market on which these undertakings appear as a “single entity”.

To what extent can a collective dominant position be a result of the structure of the market? To date, the EU authorities do not seem to have transposed the principle laid down in the Gencor judg-ment (Case T-102/96, LawLex200500004258JBJ) regarding mergers, to abuse of dominant position. In that judgment, the EU court clearly asserted that collective dominance could be an instrument

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of control of oligopolistic market situations: “there is nothing, in principle, to prevent two or more independent economic entities from being united by economic links in a specific market and, by vir-tue of that fact, from together holding a dominant position vis-à-vis the other operators on the same market”. However, it added “that conclusion is all the more pertinent with regard to the control of concentrations”… than with regard to abuse of dominant position. The reason is simple. The control of concentrations is a purely structural control whereas control of abuse of dominance is behavioral by its nature. However, as part of a behavioral control one should not be satisfied with merely an “unintentional” link resulting from the structure of the market through identifying the economic link to the relationship of inter-dependence existing between the members of an oligopoly.

B. abuse

a) The concept of abuse

1.35. From abusive exploitation to abusive exclusionThe Treaty does not define the concept of abuse. Analyzing case law reveals that the competition

authorities distinguish two different conceptions of abuse that do not exclude each other but coexist in the decision-making practice or in case law. Illegal actions conducted to the detriment of deter-mined economic agents with whom the dominant undertaking is in contact, which can be called “abusive exploitation”, are distinct from acts regarded as illegitimate because they undermine the structure of competition, which constitute “exclusionary abuse”.

The source of illegality is different for each type of abuse. In the case of abusive exploitation, the abuse flows from elements that are intrinsic to the action of the undertaking. It lies in an act of exploi-tation that the undertaking can only adopt by using its dominant position. The examples provided in Article 102 TFEU (imposing prices, unfair trading conditions, supplementary obligations clauses, discriminatory practices, limiting technical and commercial development) correspond to this case. By contrast, exclusionary abuse is any behavior that produces an exclusionary effect. The intention of the dominant undertaking is no longer at the heart of the matter; what is under scrutiny is exclusively the consequences of its behavior on the market. Behavior that would be lawful when adopted by a non-dominant undertaking becomes illegal in the case of a dominant undertaking. Quite logically then, the question of the causal relationship that should exist between dominant position and the abuse is regarded as being of no relevance. Whereas “abusive exploitation” is an abusive behavior as to its source, “exclusionary abuse” is an abusive behavior as to its effect.

The Commission has tried to rationalize its assessment of abuse of dominance and adopted a Notice intended to be used as guidance when applying Article 102 to abusive exclusionary conduct (No 2009/C 45/02). In this document, the Commission says that it will from now on adopt a fully economic approach, based on the effects of conduct at issue with a view to protect competition - and therefore consumers -, but not competitors. The demarcation line between dominant position and abuse is the-refore strongly reduced since, jointly with direct evidence of the exclusionary strategy, factors directly related to dominance, such as the position of the undertaking suspected of dominance, of competitors, of customers or suppliers, barriers to entry and mobility factors, the impact of abuse or performance criteria, are taken into consideration to find the abuse. The dominant undertaking will be able to jus-tify its conduct by demonstrating that it is objectively necessary or that it produces efficiencies which outweigh its restrictive effects. To demonstrate the reality of efficiencies, the dominant undertaking must establish with a sufficient degree of probability and on the basis of verifiable evidence that four cumulative conditions are fulfilled: i) the efficiencies result from the conduct in question; ii) there are no less anti-competitive alternatives to the conduct that are capable of producing the same efficiencies; iii) the efficiencies outweigh any negative effects on competition and consumer welfare in the affected markets; iv) current or potential competition is not entirely eliminated.


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b) Types of abuse

1.36. Behavior constituting abusePractices coming under the heading of Article 102 TFEU include:- Charging abusive prices: strategies of excessively high or excessively low prices; offers causing

margin squeeze (for example where the difference between the retail prices charged by an under-taking in a dominant position and the wholesale prices it charges its competitors for comparable services is negative, or insufficient to cover the product-specific costs of the dominant opera-tor providing its own retail services on the downstream market: Case T-271/03, Deutsche Telekom, LawLex200800001085JBJ); predatory pricing (the EU authorities, following the example of US courts, consider that prices below the average variable costs must be abusive: a dominant undertaking has no reason to charge such prices other than to eliminate competitors, and then to subsequently raise its prices by taking advantage of its monopolistic position, since each sale generates a loss, namely the total amount of the fixed costs and part of the variable costs: Cases C-62/86, Akzo Chemie BV, LawLex200400002915JBJ and C-333/94, Tetra Pak, LawLex200400002897JBJ; however, unlike US case-law, EU authorities apply no recoupment standard).

- Rebates or benefits causing exclusion: tied discounts, fidelity or market share rebates, “top-slice” rebates, turnover, target or border rebates, financial or commercial advantages such as rewards or priority deliveries. Indeed, while offering rebates genuinely based on the transactions in question, for example quantity bought or rebates granted in return for advertising is legal, offering rebates that work to prevent the client from receiving supplies elsewhere is considered as abusive.

- Refusal to sell or to provide a service or refusal to provide an “essential facility”, i.e. without access to which competitors cannot provide services to their customers (facilities are regarded as essential when they are not interchangeable and, by reason of their special characteristics, there are no viable alternatives available to potential competitors of the undertaking holding them, which are thereby excluded from the market: Joined Cases T-374/94, T-375/94, T-384/94, T-388/94, European Night Services, LawLex200400002947JBJ).

- Tied sales or services: tied sale of complementary products or services, granting of bonus having a tied-sales effect or preferential tariffs in case of acceptance of ancillary tied service.

- Discriminatory commercial terms, in particular applying a preferential tariff or different com-mercial fees, reducing during a period of shortage its supplies to a customer not only substantially but also proportionately to a much greater extent than in relation to its other customers or refusing to conclude management contracts with artists who are nationals of other Member States.

- Foreclosure strategies: price alignment, bringing an action before the courts with the aim of ha-rassing a competitor, product purchases or swaps, monopolization of advertising media, takeover bid, cross subsidies, co-optation within a collective dominant position or pressures on public authorities.

- Abusive clauses: exclusivity or non-compete clauses, English clauses (a clause which allows an undertaking to require or obtain from its customers that they inform it of more favorable compe-ting offers they receive in order for it to adjust its prices), unfair clauses reserving the advantages of the contract to the dominant undertaking and imposing charges on its customers. Such clauses are anti-competitive per se but only insofar as they are aimed at unfairly binding customers, producing a foreclosure effect for almost all their needs or limiting the choices of the end-user.

- Abusively asserting intellectual property rights, such as the refusal to grant a license for a product or service essential to the activity in question.

- Reducing production or development unless a substantial share of the demand remains satisfied.

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Sub-section 2 EnfORCEMEnT

1.37. ContextOne of the tasks of the Union is to ensure that competition is not distorted to the detriment of the

public interest, individual undertakings or the consumer. To achieve this objective, the EU authorities have developed a series of procedural rules, the purpose of which is to ensure the efficient application of competition legislation and the applicable sanctions in the event of the violation of those rules. Thus, the Council adopted Regulation No 17/62 entitled First Regulation implementing Articles 85 and 86 of the Treaty [now Articles 101 and 102 TFEU] on 6 February 1962. The regulation formed the general framework for the rules of competition procedure until 2004. This procedure involved two successive but distinct phases. The first phase consisted of a preliminary investigation which was designed to allow the Commission to gather the necessary information and documentation to establish the existence of the infringement. If the evidence warranted it, the Commission sent the undertaking a Statement of Objections, which led to the second phase. At the end of the procedure the Commission would address an order to the parties to cease the infringing behavior or would impose a fine. The regulation also clarified the Commission’s role in the application of Articles 101 and 102 and determined the relationship between national and EU law. However, the system set up under Regulation No 17 was designed for a Community composed of six Member States at a time when the control of competition was new to both the Member States and to the businesses operating within them. A system of centralized control was needed as a number of Member States had no competition authority to apply Articles 101 and 102. Regulation No 1/2003 of 16 December 2002, on the implementation of the rules on competition laid down in Articles 101 and 102 of the Treaty repealed and replaced Regulation No 17/62. The aim of the regulation is both to simplify and decentralize the application of EU law in the European Union.

Regulation No 1/2003 set up what is known as a system of legal exception to enable direct applica-bility of the competition rules by empowering the competition authorities and courts of the Member States to dismiss the case without the need for notification. This decentralized scheme, which confers an essential role on the national authorities, includes the creation of a network of competition autho-rities to ensure a certain degree of unity in the application of EU law thanks to the close association between the various authorities. The Commission and the authorities of the Member States now enjoy parallel jurisdiction for the application of the EU competition rules.

i. Enforcement authorities

1.38. the European CommissionThe Commission, like the Council and the Court of Justice is charged with ensuring the achie-

vement of the tasks entrusted to the Union (Article 13 TFEU). The Commission, as the adminis-trative authority responsible for the implementation and development of EU competition policy, must ensure the competition rules are applied and thus contribute to the establishment of a system of undistorted competition. The Commission actually has three tasks: investigation, decision-ma-king and the imposing of sanctions. To bring an Article 101 or 102 infringement to an end, it may hand down a decision that may or may not include the imposition of a fine, after having gathered the necessary evidence establishing the existence of a legitimate interest for such action. It may order interim measures and also has the power to order corrective behavioral or structural measures or to make the commitments proposed by undertakings binding upon them. It may also render decisions declaring Articles 101 and 102 inapplicable, particularly in respect of agreements or practices for which there are no jurisprudential or administrative precedents.

According to the system of parallel jurisdiction put in place by Regulation No 1/2003, all EU competition authorities have the power to apply Articles 101 and 102 and the Commission no longer has exclusive jurisdiction. Cases are handled within the network of competition authorities, either (i) by a single competition authority, (ii) by several authorities acting in parallel or, (iii) by the


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Commission (Regulation No 1/2003, Article 11). A particular authority will usually be considered as well placed to handle a case where the agreements or practices at issue substantially affect compe-tition on its territory.

The Commission, in its Notice No 2004/C 101/03 of 27 April 2004, sets out two criteria that will virtually always establish its own jurisdiction. It is particularly well placed to handle a case, on the one hand if the anticompetitive practice in question produces effects on competition in more than three Member States and, on the other, where the case is closely related to other EU provisions that are exclu-sively, or more efficiently applied by the Commission, or if the Union interest requires the Commission to adopt a decision for the development of EU competition policy. Such would be the case where a new competition issue arises or where the efficient application of the rules demands its intervention. Except for multi-State cases, the Commission now only examines cases having a particular significance for the Union due to the novelty of the issue raised, its economic impact or its political importance. If the Commission considers itself competent, it may examine a case of its own initiative. Initiation by the Commission of proceedings for the adoption of a decision relieves the competition authorities of the Member States of their competence to apply Articles 101 and 102 TFEU.

Finally, the Commission retains exclusive competence to hold Articles 101 and 102 inapplicable. Article 10 of Regulation 1/2003 in effect provides that where the EU public interest so requires, the Commission, acting on its own initiative, may by decision find that Article 101 of the Treaty is not applicable to an agreement, a decision by an association of undertakings or a concerted practice either because the conditions of Article 101(1) are not fulfilled, or because the conditions of Article 101(3) are satisfied.

1.39. the national authoritiesRegulation No 1/2003, which gives national authorities an increased involvement in the applica-

tion of the EU competition rules, does not define the concept of authorities of the Member States. Article 5 of the regulation only sets out the powers conferred on them. This lack of legal definition can be explained by the diversity of situations within the European Union. In some Member States, one body investigates cases and takes all types of decisions. In other Member States, the functions are divided between two bodies, one which is in charge of the investigation of the case and another, often a college, which is responsible for deciding the case. Finally, in certain Member States, prohibition decisions and/or decisions imposing a fine can only be taken by a court with another competition authority acting as prosecutor and bringing cases before that court.

According to the Court of Justice, the concept of “authorities of Member States” refers to the admi-nistrative authorities in most Member States entrusted with the task of applying domestic legislation on competition, subject to the review of legality carried out by the competent courts, or else the courts to which, in other Member States, that task has been especially entrusted, not including the criminal courts whose task is to punish breaches of the law (Case 209/84, Asjes, LawLex200500004113JBJ).

The authorities of Member States, together with the European Commission, form part of the network of authorities (the European Competition Network - ECN), set up under Regulation No 1/2003. The functioning of this network, which is responsible for the application of EU competition law, must entail close cooperation between the competition authorities of the Member States and the Commission. The Commission Notice No 2004/C 101/03 of 27 April 2004 on cooperation within the network of competition authorities sets out the rules for the allocation of cases and the mechanisms of cooperation and assistance. In the context of Regulation No 1/2003, two situations must be distinguished. If the Commission is the first authority to initiate proceedings with a view to taking a decision under the regulation, the national authorities are relieved of their competence to deal with the case. If one or several national authorities have informed the Commission that they are acting on a case, the Commission may only initiate proceedings after consulting with that national competition authority within the two months initial allocation period. After the allocation phase, the Commission will, in principle, apply Article 11(6) only if one of the following situations arises: (i) network members envisage conflicting decisions in the same case; (ii) network members envisage a decision which is obviously in conflict with consolidated case law; (iii) proceedings in the case are

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unduly long; (iv) there is a need to adopt a Commission decision to develop EU competition policy; or (v) the national competition authority or authorities concerned do not object.

The principle of precedence of EU law dictates that the national authorities must apply the EU competition rules, which are of direct effect. Regulation No 1/2003 enshrines the obligation for the competition authorities and courts of the Member States to apply EU law where they apply national competition law to agreements and practices which may affect trade between Member States. The need to ensure that conditions of competition are homogenous within the internal market makes it impossible for a practice to be prohibited under national law if it is not prohibited under EU law. The national authorities are bound to comply with this rule of convergence: they cannot take decisions on agreements, decisions or practices under Article 101 or Article 102 which would run counter to the decision adopted by the Commission (Regulation No 1/2003, Article 16).

Article 5 of the regulation defines the extent of the competence of the national authorities in ap-plying the EU competition rules. Acting on their own initiative or on a complaint, they may (i) order that an infringement be brought to an end; (ii) order interim measures; (iii) accept commitments; (iv) impose fines, periodic penalty payments or any other penalty provided for in their national law. They may also decide that there are no grounds for action. The corollary of the obligation to ensure that European competition law is applied effectively is the possibility for national authorities to par-ticipate, as defendants or respondents, in proceedings which challenge their decision.

1.40. the national courtsRegulation No 1/2003 gives the national courts greater involvement in the application of the EU

competition rules but does not define the concept of national courts; Article 6 merely sets out their powers. According to the Commission Notice on the cooperation between the Commission and the courts of the EU Member States (No 2004/C 101/04), “the courts of the EU Member States (herei-nafter ‘national courts’) are those courts and tribunals within an EU Member State that can apply Articles 101 and 102 TFEU and that are authorized to ask a preliminary question to the Court of Justice pursuant to Article [267 TFEU]”. To determine whether a body making a reference is a court or tribunal for the purposes of Article 267 TFEU depends on a number of factors, such as whether the body is established by law, whether it is permanent, whether its jurisdiction is compulsory, whe-ther its procedure is inter partes, whether it applies rules of law and whether it is independent in respect of the executive branch.

Acting as EU courts of general jurisdiction, the national courts are bound to apply the precedence and direct effect of the EU rules. Points of law based on EU law - which are matters of public policy - must therefore be raised ex officio by the court where they do not involve that court going beyond the ambit of the dispute defined by the parties themselves and relying on facts and circumstances other than those on which the party with an interest in application of those provisions, bases his/her claim. Article 6 of Regulation No 1/2003 gives full powers to the national courts to apply Articles 101 and 102 of the Treaty. The courts of the Member States are competent to “apply” Articles 101 and 102 TFEU - which covers the power to dismiss a case and to assess whether acts adopted by EU institutions comply with the Treaty and with measures adopted to give the Treaty effect, to the extent that these acts have direct effect. In addition, the national courts have exclusive jurisdiction to implement Article 101(2) which states: “Any agreements or decisions prohibited pursuant to this article shall be automatically void”. Actions for damages that may result from a restrictive agreement or abuse of a dominant position are subject to national law.

Article 15 of Regulation No 1/2003 establishes the framework for cooperation between the natio-nal courts and the EU authorities. Likewise, the Notice on the cooperation between the Commission and the courts of the EU Member States recalls that where a national court comes to a decision before the Commission does, it must avoid adopting a decision that would conflict with a decision contemplated by the Commission. Article 16 of the regulation in effect consolidates settled case law, bringing the interpretation of the courts in line with that of the Commission. The court must not only take into account decisions already taken in application of the EU competition rules, but also those decisions that will be rendered in cases where the Commission has initiated proceedings


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and must thereby suspend its own proceedings until the Commission has rendered its final decision. Finally, if a national court has doubts as to the compatibility of the practice at issue with the EU competition rules it may, in accordance with Article 267 TFEU, refer a question to the Court of Justice for a preliminary ruling.

ii. Enforcement proceedings

a. Complaints and investigations

1.41. Complaints and ex officio enforcementArticle 7 of Regulation No 1/2003 states that the Commission may find the existence of an

infringement to Article 101 and 102 TFEU either acting on a complaint or on its own initiative (ex officio). The Commission has several means of obtaining information for establishing the existence of an infringement at its disposal:

- complaints: individuals or legal persons considering themselves to be the victims of a violation may file a complaint where the practice complained of constitutes a threat to their interests or affects their business on the market concerned. The rules governing the submission of complaints can be found in the Commission’s Notice on the handling of complaints (No 2004/C 101/05). Complaints not respecting those rules, or submitted anonymously or by a person with no legitimate interest in bringing proceedings may serve to alert the Commission as to probable violations of the EU com-petition rules and lead it to open proceedings on its own initiative. In its Best Practices for antitrust procedures, the Commission underlines that the submission of a complaint by a person who has a legitimate interest gives that person certain rights in the course of the procedure;

- information can be provided by the national authorities of Member States or by the authorities of third countries with cooperation arrangements with the Commission;

- sector investigations under Article 17 of Regulation No 1/2003 by which the Commission ga-thers information from particular undertakings in a sector of the economy, with a view to establishing a presumption of infringement of Articles 101 and 102 TFEU.

The Commission is under no obligation to investigate every complaint brought before it nor, a fortiori, to take a definitive decision within the meaning of Article 288 TFEU with regard to the existence or non-existence of an alleged infringement of Articles 101 or 102 TFEU. The EU authority has a wide discretion and is entitled to give differing degrees of priority to the complaints brought before it in respect of competition cases (see Notice No 2004/C 101/05 of 27 April 2004). Determining priority allows it not only to fix the order in which it will examine complaints, but also to reject a complaint for lack of sufficient EU interest. The Notice on the handling of complaints sets out a non-exhaustive list of criteria, held relevant in the case law for the assessment of the EU interest. Thus, the Commission must take account, inter alia, of the possibility for the complainant to bring an action to assert its rights before national courts, the seriousness and the persistence of infringements, the lack of effect on the functioning of the internal market, the probability of esta-blishing the existence of the infringement and the scope of the investigation required to do so, the fact that the infringement has ceased and the commitment by undertakings to modify their conduct. The fact that the infringement has ceased is not a relevant criterion in itself for rejecting a complaint on the ground of lack of EU interest. The practice at issue must have ended and have no persistent anticompetitive effects.

Where the Commission considers that there are insufficient grounds for pursuing the complaint, it is obliged under Article 7 of Regulation No 773/2004 to inform the applicant and grant a deadline for the latter to submit its written observations. The submission of written observations in the time-limit set by the Commission confers on the complainant a right to obtain a final decision by the Commission. Where the Commission’s position remains unchanged after examination of the com-plainant’s written comments, it rejects the complaint by decision pursuant to Article 7 of Regulation No 773/2004. The decision rejecting the complaint can be subject to an action before the EU courts.

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A decision rejecting a complaint does not definitively rule on the existence or non-existence of an infringement of the EU competition rules. National competition authorities can apply Article 101 and 102 TFEU to the same facts taking into account the factual and legal elements contained in the Commission’s decision. In contrast, the decision to reject the complaint prevents complainants from requiring the reopening of the investigation unless they put forward significant new evidence.

1.42. investigationsTo ensure the application of Articles 101 and 102 TFEU, the Commission is empowered to carry

out a preliminary investigation before initiating proceedings (Regulation No 1/2003, Articles 18, 19 and 20). In application of the discretionary powers principle, the Commission alone can decide to initiate an investigation and may freely choose the investigative measure to be taken. Requests for information and inspections are independent investigative procedures. The Commission may, due to the autonomous nature of those measures, use them as it wishes. It can resort to one and/or the other in the order it considers the best suited to the search for evidence of the alleged violation.

1º) Requests for informationArticle 18 of Regulation No 1/2003 empowers the Commission to “require undertakings and

associations of undertakings to provide all necessary information”. The procedure for requesting information takes part in two stages. The first stage consists in a simple request for information being sent to the undertaking or the association of undertakings suspected of infringing the rules, giving them the opportunity to fulfill their obligation to cooperate voluntarily. In the second stage, the Commission, by way of formal decision, requires the information to be supplied, providing penalties for failure to comply. The second stage is only instigated where the first stage has been carried out unsuccessfully. A passive reaction by the undertaking concerned is deemed sufficient to constitute a failure to comply with its obligation to actively cooperate with the investigation; there is no require-ment that the undertaking manifestly obstruct the Commission in the carrying out of its task.

2º) InspectionsArticle 20 of Regulation No 1/2003 authorizes the Commission to “conduct all necessary inspec-

tions of undertakings and associations of undertakings”. Empowered agents conduct the inspection by means of an authorization or a decision, the order of which they can freely chose depending the needs of the inquiry, and are assisted by officials of the competition authority of the Member State in whose territory the inspection is to be conducted. Pursuant to Article 22(2) of the same regulation, the Commission may request the competent authorities of the Member States to undertake on their territory the inspections it considers to be appropriate or it has ordered by decision.

The relevant authority of the Member State in whose territory the inspection is to be conduc-ted is either informed in advance, for an inspection ordered by authorization, or consulted, if the Commission adopts a formal decision. The national authorities concerned must assist the Commission in the carrying out of its duties. Where an undertaking opposes an inspection the Member State concerned must afford them the necessary assistance, to enable it to conduct the investigation by requesting, where appropriate, the assistance of the police or of an equivalent enforcement authority (Article 20(6)). The assistance of the national authority is not subject to the refusal to cooperate of an undertaking submitted to an inspection: the mere possibility of opposition is sufficient.

Each Member State sets forth the conditions in which the assistance of national authorities is provided to the Commission’s officials. If the national rules make the granting of assistance sub-ject to the authorization from a judicial authority, such authorization must be applied for, even as a precautionary measure (Article 20(7)). Where an authorization is necessary, the national judicial authority controls that the Commission’s decision is authentic and that the coercive measures are proportionate having regard to the subject matter of the inspection (Article 20(8)). The judicial authority considers whether the measures of constraint envisaged are arbitrary or excessive in relation to the subject matter of the inspection. However, it cannot call into question the necessity for the inspection required by the Commission, substitute its own assessment for that of the Commission,


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or demand that it be provided with the information in the Commission’s file (Article 20(8)). The lawfulness of the Commission’s decision is subject to review only by the Court of Justice.

Authorized officials have wide powers of investigation which were reinforced notably by Regulation No 1/2003. Under Article 20(2) of the regulation, officials are authorized to:

- enter any premises, land and means of transport of undertakings and associations of under-takings (Pursuant to Article 21, searches can even be conducted, under certain conditions, in the homes of directors, managers and other members of staff of the undertakings concerned);

- examine the books and other business records, irrespective of the medium on which they are stored;

- take or obtain in any form copies of or extracts from such books or records;- seal any business premises and books or records for the period and to the extent necessary for

the inspection;- ask any representative or member of staff of the undertaking or association of undertakings for

explanations on facts or documents relating to the subject matter and purpose of the inspection and record the answers.

1.43. rights of defense For the implementation of the rules on competition, the rights of defense can in principle only

be claimed after notification of the Statement of Objections (Regulation No 773/2004). However, the information and investigation processes may be decisive in providing evidence of the unlawful nature of the conduct engaged in by undertakings for which they may be liable. It has therefore been found necessary to recognize rights of defense to undertakings to offset the Commission’s exorbitant powers of investigation. The EU courts refuse to directly assess the lawfulness of an investigation procedure under the provisions of the European Convention on Human Rights (ECHR) on the grounds that they are not an integral part of EU law. However, they recognize the special significance of the Convention in respect of fundamental rights and Article 6(2) of the EU Treaty accordingly indicates that the Union shall respect fundamental rights as guaranteed by the ECHR.

1º) Right to be heardThe right of the undertaking, to make known its views during the procedure on the truth and

relevance of the facts and circumstances alleged and on the documents used by the Commission to support its claim that there has been an infringement of the Treaty is a fundamental principle of EU law. Although Article 27(1) of Regulation No 1/2003 recognizes the Commission’s duty to hear the interested party only in the context of legal or administrative procedures for the termination of an infringement, the Commission must always give the undertaking the opportunity to comment before imposing on it any fine based on Article 23 or periodic penalty payment based on Article 24.

2º) Duty of fairnessThe Commission is subject to a duty of fairness when searching for evidence. It must inform the

undertaking concerned of the subject matter of the investigation, in particular by clearly indicating the presumed facts which it intends to investigate, so the persons heard do not make any mistakes in respect of the scope of the statements they make and which could be used against them.

3º) Right not to testify against oneselfPursuant to Article 2 of Regulation No 1/2003, the burden of proving an infringement of Articles

101 and 102 TFEU rests on the Commission. Therefore, the defendant cannot, under Article 14(3)(g) of the International Covenant on Civil and Political Rights, be compelled to testify against him-self or to confess guilt. The Commission may not compel an undertaking to provide it with answers which might involve an admission on its part of the existence of an infringement. Regulation No 1/2003 also establishes, in the recitals, the right not to give evidence against oneself: “undertakings cannot be forced to admit that they have committed an infringement”, to which it sets a limit: “but they are in any event obliged to answer factual questions and to provide documents, even if this information may be used to establish against them or against another undertaking the existence of

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an infringement”. Indeed, an undertaking under investigation has a duty of active cooperation and cannot claim an absolute right of silence. It must furthermore bring evidence that it was compelled by the Commission to contribute to incriminating itself and show the existence of actual interference with its rights.

4º) Principle of proportionalityThe protection against arbitrary or disproportionate intervention by the public authorities is a ge-

neral principal of EU law. Any intervention by the public authorities in the private sphere of any per-son, whether natural or legal, must have a legal basis and be justified on the grounds laid down by law. In the context of a preliminary investigation, observance of that principle prevents the Commission from making demands which are disproportionate to what is required to efficiently carry out its duties. Observance of the principle of proportionality involves the obligation for the Commission to state the reasons for its decisions. The undertaking must know what it is accused of in order to be able to answer completely and accurately to it. Furthermore, the obligation to state reasons imposes on the Commission the requirement to only demand disclosure of such information as may enable it to investigate putative infringements which justify investigation and must be set out in the request. There must be a correlation between the information requested by the Commission and the putative infringement. Furthermore, the undertaking cannot pursuant to its duty of active cooperation, be compelled to collect information from third parties. Such a burden would be disproportionate.

5º) Principle of inviolability of the homeIn the EU legal order, the existence of such a right must be recognized as a principle common

to the laws of the Member States in regard to the private dwellings of natural persons. To oppose to the right of access in their premises by officials of the Commission, undertakings attempted to claim this fundamental right of defense. However, the Court of Justice refused to extend to business premises the principle of inviolability of the home. It only recognizes a right to the protection of business premises against the intervention by the public authorities if it is arbitrary or disproportio-nate. Regulation No 1/2003 indirectly confirms this case law as it now authorizes inspections in all premises where the Commission suspects that books or other business records may be kept, inclu-ding the homes of directors, managers and other members of staff.

6º) Professional secrecyProfessional secrecy is expressly protected by Article 28 of Regulation No 1/2003. It prohibits,

firstly, the use of such information for a purpose other than that for which it was requested and, secondly, the disclosure of information that is confidential by nature. This secrecy obligation, which is based on Article 339 TFEU, is imposed upon officials of the Union, the Commission, and the relevant authorities of the Member States and their officials and representatives. It covers both confi-dential information and business secret. Such rights, e.g. the right to assistance are covered as of the preliminary investigation stage.

Some information is confidential due to the origin of its source. Such is the case of written com-munications between a lawyer and a client, provided that it is exchanged for the purposes and in the interests of the client’s rights of defense and it emanates from a lawyer that is structurally, hie-rarchically and functionally independent. This protection stems from the fundamental right for any person to have the possibility to freely consult with his/her lawyer. Insofar as the confidentiality of this type of communication complies with legal principles and concepts common to the Member States, it is a general principle of EU law.

B. Proceedings before the Commission

1.44. initiation of proceedings When the Commission considers that the facts found during the investigation are sufficient to

justify legal action, it may decide to initiate proceedings. According to Article 2 of Regulation No 773/2004, this decision may take place at any point in time, but no later than the date on which a preliminary assessment of the competition concerns expressed by the Commission, or a Statement of


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Objections or a request for the parties to express their interest in engaging in settlement discussions is issued, or the date on which a notice of commitments offered by the parties under Article 9 of Regulation No 1/2003 is published, whichever is the earlier.

The concept of the initiation of proceedings is particularly important since it is the starting point of the adversarial procedure. From the notification of the Statement of Objections, the rights of defense of the undertakings are fully respected and, pursuant to Article 27 of the regulation, those undertakings can be heard on the matters to which the Commission has taken objection. The ini-tiation of the proceedings produces one further effect: it deprives the national authorities having jurisdiction from the right to apply Articles 101 and 102 TFEU. When the Commission initiates the administrative procedure, those authorities must suspend their ruling until a decision is adopted (Regulation No 1/2003, Article 11(6)).

The adversarial proceedings initiated consist of two phases: a written phase and an oral phase, in which both the undertakings involved and any third parties participate. The initiation of proceedings does not produce any other effect. As it is a preliminary measure, no action for annulment can be brought against it.

a) Written phase

1.45. CommitmentsThe commitment procedure referred to in Article 9 of Regulation No 1/2003 makes it possible

for undertakings concerned by the competition concerns contained in the preliminary assessment of the Commission - which intends to adopt a decision requiring that an infringement be brought to an end - to offer commitments likely to resolve those concerns. The Commission may, by decision, make those commitments binding on the undertakings. The decision which concludes that there are no longer grounds for action by the EU authority may be adopted for a specified period. First, the Commission must publish a concise summary of the case and the content of the commitments or of the proposed course of action. Interested third parties then have a minimum of one month to submit their observations (Regulation No 1/2003, Article 27(4)). The undertakings concerned have a right to be heard on the essential elements resulting in the imposed commitments. The Commission does not have to give the reasons why it finds the commitments to be insufficient. It may, pursuant to its decision-making autonomy, choose between a decision requiring the undertaking to bring an end to the infringement (Regulation No 1/2003, Article 7) and a decision imposing commitments (Article 9). However, when it makes a decision under Article 9, the compliance with the principle of propor-tionality imposes that it reviews whether less onerous measures are possible.

Article 9 establishes a limited list of cases where the proceedings can be reopened at the Commission’s own initiative or on request; this involves cases where: i) there has been a material change in any of the facts on which the decision was based, ii) the undertakings concerned act contrary to their commitments, iii) the decision was based on incomplete, incorrect or misleading information provided by the parties.

1.46. SettlementThe objective of the settlement procedure is to allow the parties that are ready to acknowledge

their infringement to accelerate the procedure. Settlement principally concerns unjustifiable restric-tive agreements but not abuse of a dominant position and vertical restrictions. The option of settle-ment is not a right for the parties; the Commission has a broad margin of discretion to determine which cases may be suitable to explore the parties’ interest to engage in settlement discussions. It decides whether it is appropriate to ask the parties to engage in settlement discussions and may dis-continue them at any time if the efficiency of the proceedings is threatened. The procedure consists of several steps.

After initiating the proceedings, the Commission may set a time-limit of two weeks for the par-ties to indicate in writing that they are prepared to engage in settlement discussions (Regulation No

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773/2004, Article 10(a)). When the parties agree to engage in discussions with the Commission, it can decide to pursue bilateral contacts. The EU authority submits to the parties the envisaged objec-tions, the evidence in its possession, the non-confidential versions of documents accessible from the file and a range of likely fines. When an informed decision is reached after discussions regarding the scope of the objections and the estimation of the amount of potential fines, and if the Commission considers that efficiencies will be achieved by a settlement procedure, it will grant a time-limit of at least 15 working days for the parties to hand in a settlement submission that reflects the progress made in the discussions.

The settlement submission serves as formal request to settle. It should contain an acknowledg-ment in clear and unequivocal terms of the parties’ liability for the infringement and an assessment of the fine the parties foresee. Furthermore, the parties must confirm that they have been sufficiently informed of the Commission’s objections, that they have been given sufficient opportunity to make known their views, and that they will not request access to the file or to be heard again in oral hearings unless the Commission does not reflect their settlement submissions in the Statement of Objections and the decision. Finally, the undertakings agree to receive the Statement of Objections and the final decision. The submissions are revoked if the Commission does not reflect their content in the Statement of Objections and the final decision. The parties cannot initiate the revocation.

Even in the context of the settlement procedure, the Commission must notify a Statement of Objections to the parties as this is a mandatory step before the final decision. The parties are requi-red to respond within a time-limit of at least two weeks if the Statement reflects the content of their submissions and thus confirm their intention to follow a settlement procedure. However, the Commission is not bound to include the content of the submissions in its Statement of Objections. In such a case, the acknowledgments provided by the parties in the submission are withdrawn from the proceedings and cannot be used in evidence against them. A time-limit is granted to the parties to present their defense anew if they so request.

After consultation of the advisory committee, the final decision is adopted without any other procedural step once the parties have confirmed in their reply to the Statement of Objections their commitment to settle. The Commission has a decision-making autonomy and the final decision may therefore depart from the settlement submission or the Statement of Objections. Should the Commission opt to follow that course, it will inform the parties and notify to them a new Statement of Objections in order to allow for the exercise of their rights of defense.

The decision sets the fine and determines the undertaking’s cooperation level to justify the amount of that fine. As a reward for their participation in the settlement procedure, the parties may benefit from a reduction of 10% in the amount of the fine. This reduction is added to the reduction awarded for leniency if those undertakings, having applied for it are involved in a settled case.

1.47. Statement of ObjectionsThe Commission informs the parties concerned of the objections raised against them (Regulation

No 773/2004, Article 10). The Statement of Objections is a mandatory preparatory step before the adoption of any final decision. It determines the Commission’s decision and mentions the provisions pursuant to which it can rule. Therefore the objections must be notified to all undertakings whose interests are perceptibly affected by the Commission’s decision in order to give them the opportunity to submit their observations.

The Statement of Objections must indicate the essential facts on which the Commission bases its case, and how it assesses those facts. This Statement may be succinct as long as it is clear and allows the addressee, during the administrative procedure, to make known in an effective manner its views on the truth and relevance of the facts and circumstances relied on. The Statement of Objections must be individually adapted for each of the addressees. It must set out the behavior and evidence directly relating to them and contain a detailed description of the infringements by stating, for each of them the evidence on which the Commission relies. In order for the Statement of Objections to allow the addressee to exercise its rights of defense, the Commission must annex the incriminating and exculpatory documents it intends to use, and should also include those it considers as being


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neutral. Documents that were not mentioned in the Statement of Objections cannot be regarded as admissible evidence. When the Commission intends to impose a pecuniary sanction, it must set out in the Statement the main factual and legal criteria justifying the imposition of a fine, such as the gravity and duration of the alleged infringement and whether that infringement was committed intentionally or negligently, but it is under no obligation to explain the way in which it will use each of those elements in determining the level of the fine. It may also inform the parties only of the pos-sibility of imposing a fine upon them without giving any indications as to the level envisaged. The Statement of Objections sets a time-limit for the parties concerned to submit their written submis-sions, which cannot be less than four weeks and can be extended upon reasoned request (Regulation No 773/2004, Article 17).

The administrative procedure must be fully adversarial. The undertaking receiving the Statement of Objections should give its views on the conclusions which the Commission has reached. Thus the Commission must make available to the undertakings concerned all documents, whether in their favor or otherwise, save where business secrets of other undertakings, the internal documents of the Commission or other confidential information are involved. Access to the file also complies with the need to apply the principle of equality of arms, which is binding on the Commission competition proceedings. According to that principle, the knowledge which the undertakings concerned have of the file should be the same as that of the Commission. In its Notice of 13 December 2005, the Commission sets the context of the exercise of the right of access to the file laid down in Articles 27 of Regulation No 1/2003 and 15 of Regulation No 773/2004.

b) Oral phase

1.48. hearingsIn order to respect the rights of defense, each undertaking or association of undertakings concer-

ned must be given the opportunity to be heard on the objections that the Commission intends to raise in the final decision. The right to be heard means the opportunity for the undertakings concerned of submitting not only written, but also oral observations. The Commission may therefore organize hearings in addition to the written stage of the procedure. The opening of those hearings is however not automatic and must be requested by the undertakings and persons concerned in their written submissions. This applies to the parties to whom objections have been addressed (Regulation No 773/2004, Article 12), complainants (Article 6) or third parties, showing a sufficient interest (Article 13). The Commission may also afford to any other person the opportunity of orally expres-sing its views.

C. interim relief

1.49. ConditionsWhen the infringement of competition rules is clear, it may, when requested by a third party affec-

ted by the behavior, be necessary to paralyze its effects specifically by adopting interim measures in the course of the proceedings. Article 8 of Regulation No 1/2003 provides: “In cases of urgency due to the risk of serious and irreparable damage to competition, the Commission, acting on its own ini-tiative may by decision, on the basis of a prima facie finding of infringement, order interim measures”. The decision applies for a specified period of time and may be renewed if necessary. The admissibi-lity of an application for interim measures is subject to the fulfillment of two cumulative conditions: a prima facie infringement and serious and irreparable damage. The measures are provisional in that they cannot prejudge the final decision or neutralize in advance its effects.

1º) Prima facie infringementIn order for interim measures to be granted, the practices concerned must prima facie constitute a

breach of the competition rules in respect of which a penalty could be imposed by a decision of the Commission. It must be shown that there is particular likelihood of the existence of an infringement.

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Exceeding, at first sight, the limits allowed by the provisions of EU law, or the existence of serious doubts may establish the likelihood of the prima facie infringement.

2º) Urgency/Serious and irreparable damageArticle 8 of Regulation No 1/2003 also requires evidence of a serious and irreparable damage

that it is urgent to bring to an end. Interim measures can be taken only in cases of proven urgency in order to prevent the occurrence of a situation likely to cause serious and irreparable damage to the party applying for their adoption or intolerable damage to the public interest. The condition relating to urgency is not an autonomous condition but a component of the condition relating to the risk of a serious and irreparable damage. The purpose of interim measures is the preventing of any serious and irreparable damage to the claimant’s interests before any ruling on the main action can be handed down. The damage is irreparable when it cannot be remedied by any decision to be adopted by the Commission upon the conclusion of the administrative procedure. Such is the case when the undertaking might disappear from the market or when the conduct in question leads to a significant competitive disadvantage that might produce a long-lasting effect on the competitor’s position in the market concerned.

3º) ProportionalityThe measures must be restricted to what is required and must not create any more significant

damage than that they are intended to prevent. The Commission cannot, in a decision relating to interim measures, order what it cannot explicitly impose in a final decision. The Commission may only adopt measures limited to returning to the previous situation until a final decision is given. Those measures must not cause the undertaking subject to them a serious and irreparable damage. The scope of the protective measures must therefore be reduced when they are not proportionate to the objective to be achieved.

D. Enforcement by national courts

1.50. nullityThe automatic nullity provided for in Article 101(2) is absolute. Any individual may claim it,

even where he is a party to a restrictive agreement. It applies only to those parts of the agreement which are subject to the prohibition or to the agreement as a whole if those parts do not appear severable from the agreement itself. If the incompatible clauses are severable from the agreement, the consequences of the automatic nullity for all other parts of the agreement are governed by the applicable national law. Lastly, if clauses are not void as a result only of the entry into force of a new exemption regulation, their non-compliance may lead the national court to declare those clauses void where they do not meet the conditions for exemption.

1.51. DamagesThe Commission has a strictly defined decision-making power. It has the power to order interim

measures, issue injunctions, or pecuniary sanctions, but has no competence to indemnify the victims of anticompetitive practices. Where the victim wishes to seek compensation for the harm suffered he/she will have to refer the matter to the national courts. Any person is entitled to claim compen-sation for the harm caused by a contract or conduct liable to restrict or distort competition where there is a causal link between the harm and the infringing practice, provided that it did not take a significant part in the distortion of competition. Compensation must include not only the actual loss but also the loss of profit plus interest. In order to assess the harm, the national court which has jurisdiction must consider the parties’ economic and legal context, their bargaining power and their respective conduct. Therefore it should verify whether the extra cost borne by the customer, who is a victim of the restrictive agreement, has not been transferred to its own customers.


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iii. Sanctions

1.52. Cease and desist ordersAccording to Article 7 of Regulation No 1/2003, the Commission may by decision require the

undertakings and associations of undertakings concerned to bring to an end the infringement esta-blished. The finding of an infringement must be stated in the decision ordering the infringement to be brought to an end. The decision to bring the infringement to an end must be in relation to the infringement which has been established. The EU authority may impose structural or behavioral remedies upon the parties, but those remedies must be proportionate to the infringement committed and necessary to effectively bring it to an end. The charges imposed must not exceed what is appro-priate and necessary to re-establish compliance with law and bring the infringement to an end.

The Commission may order undertakings to take or refrain from taking certain action with a view to bringing the infringement to an end. Article 7 of Regulation No 1/2003 indicates that structural remedies can only be imposed where there is no equally effective behavioral remedy. An order to take or refrain from taking some action must not breach the principle of freedom of contract. Although the Commission may order a renegotiation or termination of contracts where the elimination of the restrictive effects of the practice depends on it, it is not empowered to order the conclusion of an agreement or to prohibit concluding future agreements. The Commission may also order an under-taking to provide copyright information, to supply goods, or to disclose prices.

Lastly, the Commission may order the parties to bring an end to certain acts or practices, or to refrain from adopting similar conduct in the future. It can prevent an undertaking in a dominant position from granting any discount that is not justified by any objective consideration. An injunc-tion, by its preventive nature, does not depend on the situation of the undertakings concerned at the time when the decision was adopted.

1.53. FinesThe Commission may by decision impose fines on undertakings or associations of undertakings

which, intentionally or negligently, infringe Articles 101 or 102, or contravene a decision ordering interim measures or making a commitment binding (Regulation No 1/2003, Article 23).

1º) Amount of finesIn order to determine the amount of the fine, the Commission analyses several criteria based on

factors designed, first of all, to set the general level of the fines to be imposed on the participants in the restrictive practice and, secondly, to achieve a balance depending on the specific situation of each participant. The Commission has a wide margin of discretion when assessing the deterrent aspect of the fine and is not obliged to apply a precise mathematic formula. It has the power not to impose a fine at all or merely a symbolic fine or, on the contrary, to raise the general level of fines. The fact that it may have penalized certain types of infringement in the past with fines of a particular level cannot prevent it from raising that level within the limits indicated in Regulation No 1/2003 if that is neces-sary to ensure the effectiveness of EU competition policy. Although the Guidelines on the methods of setting fines (Notice No 2006/C 210/02 of 1st September 2006) do not prejudge the assessment of the fine by the EU courts, which have unlimited jurisdiction to increase or decrease the fine, by contrast, the Commission is required to adopt the calculation method laid down in them. However, it is able to depart from them where the particularities of a given case or the need to achieve deter-rence justify the imposition of a symbolic fine.

In determining the basic amount of the fine, the Commission takes the value of the sales of goods or services of the undertaking concerned to which the infringement directly or indirectly relates in the relevant geographic market during the last year of its participation in the infringement. Where the perpetrator of the infringement is an association of undertakings, it retains the value of the sales of the various members. The basic amount is related to a proportion of the value of the sales, depen-ding on the degree of gravity of the infringement, multiplied by the number of years of participation in the infringement. That proportion may be lower than, or equal to 30% depending on the nature

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of the infringement, the combined market shares of all the parties concerned, the geographic scope of the infringement, and whether or not the infringement has been implemented.

The Commission increases or decreases the fine in respect of the conduct of each undertaking. The guidelines draw up a list of aggravating and mitigating circumstances. The amount of the fine will be raised in case of aggravating circumstances such as a repeated offense, a refusal to cooperate or obstruction during the investigation, the continued participation in the infringement after the Commission’s inspections, the role of leader or instigator, the adoption of measures of reprisals. The amount of the penalty will be reduced if the Commission finds mitigating circumstances. Such is the case where the infringement terminated as soon as the Commission first intervened provided that the undertaking could have not reasonably known its conduct was an infringement and that the cartel was not secret, where the undertaking had adopted a passive or follow-my-leader role, only partially participated in the cartel, had not applied the agreements, or cooperated effectively with the Commission, where the infringement had been authorized or encouraged by the public authorities or the regulations of a Member State or committed in exceptional circumstances.

The maximum amount of the fine is set, for each undertaking or association of undertakings par-ticipating in the offense, at 10% of the total turnover achieved in the preceding business year. Where the infringement of an association relates to the activity of its members, the fine cannot exceed 10% of the sum of the total turnover achieved by each member active on the market concerned. The final amount of fine must not exceed that 10% limit but the intermediary amount at the various steps of the calculation may be higher.

2º) Limitation periods Article 25 of Regulation No 1/2003 sets the limitation period for the imposition of penalties at

five years, reduced to three years in the case of infringement of provisions concerning requests for information or the conduct of inspections. Time begins to run on the day on which the infringement is committed or, in the case of continuing or repeated infringements, on the day on which the infrin-gement ceases. Any action taken by the Commission or by the competition authority of a Member State for the purpose of the investigation or proceedings in respect of an infringement shall interrupt the limitation period insofar as the action has been notified to at least one undertaking or association of undertakings having participated in the infringement. Such is the case where there has been: a request for information, inspections, the initiation of proceedings, or a Statement of Objections has been sent. The interruption also applies for all the undertakings that participated in the infringe-ment, including those which are not identified as such in the Statement. Each interruption shall start time running afresh. The limitation period shall expire at the latest on the day on which a period equal to twice the limitation period has elapsed without the Commission having imposed a fine or a periodic penalty payment. Lastly, the limitation period is suspended as long as proceedings are pending before the Court of Justice.

The enforcement of Commission decisions imposing a fine, penalty or periodic penalty payment is also subject to a limitation period of five years which begins to run on the day on which the deci-sion becomes final (Regulation No 1/2003, Article 26). It may be interrupted either by notification of a decision varying the original amount or refusing an application for variation, or by an action designed to enforce payment. It is suspended for so long as time to pay is allowed or enforcement of payment is suspended pursuant to a decision of the Court of Justice.

1.54. Leniency According to the Commission, it is in the EU’s interest that undertakings which cooperate with

it benefit from a favorable treatment. The collaboration of an undertaking in the detection of a cartel has an intrinsic value. A decisive contribution to the opening of an investigation may justify the granting of immunity from any fine, on condition that certain requirements are fulfilled. The cooperation by undertakings during the procedure may also to a certain extent justify a reduction in the amount of the fine. The Commission has therefore established a leniency system to take account of the level of cooperation of the undertaking in assessing the amount of the fine. The Notice of 8 December 2006 (No 2006/C 298/11) benefits from acquired experience to define the context for


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rewarding cooperation by undertakings which are parties to secret cartels. However, the leniency policy is clearly a matter of the Commission’s discretion, and it is not required to take into conside-ration the cooperative conduct of an undertaking during the administrative procedure when fixing the fine.

The first undertaking to submit information and evidence which will enable the Commission to carry out an inspection or to find an infringement may be granted immunity from fines. Immunity is granted only if several cumulative conditions are fulfilled. The undertaking must be the first to sub-mit to the EU authority a statement giving a detailed description of the alleged cartel, the name and address of the undertaking submitting the immunity application as well as the names and addresses of all undertakings participating or having participated in the infringement, and any contempora-neous evidence it has in its possession. These components must not already been in hands of the Commission, which must not already have sufficient evidence. The undertaking must further: i) cooperate genuinely, fully, on a continuous basis and expeditiously, from the time it submits its application throughout the administrative procedure, ii) end its involvement in the cartel following its application, iii) not have destroyed, falsified or concealed evidence of the cartel nor disclosed the fact that it intended to cooperate. Immunity cannot be granted to the leader or instigator of a cartel, which may only claim a reduction of fine. An undertaking wishing to benefit from leniency may either apply for a marker which protects its place in the queue for immunity applications, or imme-diately proceed to make a formal application which enables it to benefit from conditional immunity from fines, as the case may be. If, at the end of the procedure, the undertaking fulfils all the condi-tions, it will benefit from immunity. Otherwise, it will be granted no favorable treatment.

An undertaking which discloses the existence of a cartel but does not meet the conditions to benefit from immunity may be eligible to benefit from a reduction in the fine. For such purpose, it must provide the Commission with evidence of the cartel which represents significant added value with respect to the evidence already in the Commission’s possession. Information provided to the Commission must facilitate its task in the search for evidence and the finding of an infringement.

The Commission has determined various levels of reduction relative to the position of the under-takings in coming forward and the date on which they provided the evidence required: i) reduction of 30-50% for the first undertaking; ii) reduction of 20-30% for the second undertaking, iii) maxi-mum reduction of 20% for the others. An additional reduction may be granted if the added value of information provided so justifies.

iV. appeals

1.55. appeals against decisions of the CommissionIn accordance with Article 263 TFEU, any natural or legal person may bring an action for an-

nulment against the decisions addressed to that person or against those which, although in the form of a regulation or a decision addressed to another person, is of direct and individual concern to the former. The action must be brought within two months of the publication or notification of the measure to the applicant, or, in the absence thereof, of the date on which it came to the applicant’s knowledge. This last date is subsidiary to the first two.

Only decisions that unambiguously order a measure that produces legal effects affecting the inte-rests of the persons concerned by modifying their legal situation and that is imposed upon them may be subject to an action for annulment. A tacit refusal decision cannot be challenged. The failure to answer a request for disclosure of documents or for interim measures cannot give rise to an action for annulment. Such is also the case of the temporary position under Article 7 of Regulation No 773/2004 or of the mere expression of a written opinion by an EU institution. By contrast, a letter rejecting the complaint which puts an end to the investigation, sets out the Commission’s position and closes the file has binding legal effects.

The EU judicature has a limited power of judicial review due to the Commission’s discretionary power in the area of competition. As a principle, the court must confine itself to an examination of

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the relevance of the facts and of the legal consequences which the Commission deduces therefrom. A judicial review must take account of the complex evaluations made by the Commission on economic matters. It may however also verify whether there is any manifest error of assessment or abuse of power. As regards fines, the EU court enjoys unlimited jurisdiction (Regulation No 1/2003, Article 31). The General Court may in particular cancel or reduce the fine.

If the action is well founded, the General Court declares the contested act void (Article 264 TFEU). The annulment decision has absolute authority. If the decision of the Commission has more than one addressee, it can be annulled only in respect of the parties to the dispute and continues to be binding on the addresses that did not bring an action for annulment.

1.56. appeals to the Court of JusticeAn appeal may be brought against a decision of the General Court by lodging an application at

the Registry of the General Court or of the Court of Justice. The General Court decision subject of the appeal must be annexed to the application. The appeal may seek to set aside, in whole or part, the decision of the General Court, or the same form of order as that sought at first instance. The subject-matter of the proceedings is the same as before the General Court. That does not mean that the applicants may confine themselves to reproducing the arguments and pleas in law submitted to the General Court. An appeal is to be limited to points of law, since the Court of Justice cannot substitute its assessment for that of the General Court. It must thus indicate precisely the contested elements of the decision which the appellant seeks to have set aside, and also the legal arguments specifically advanced in support of the appeal.

Section 2 MERGERS

1.57. ContextStarted at the end of the 1970s, the first European regulation on the control of concentrations was

not adopted until 21 December 1989 and came into force on 21 September 1990. Unlike the ECSC Treaty, the EC Treaty did not provide for merger control. This deficiency is generally explained by the fact that, in the 1950s and 1960s, the Common market economy was not particularly concen-trated in sectors other than coal and steel, especially when compared to its biggest competitors, in particular the United States. The adoption of an EU regulation conflicted with the wishes of the Member States to retain their own prerogatives in an area regarded as essential from the economic or competition policy point of view. When the merger control regulation was in preparation power struggles prevailed over technical concerns to such an extent that what may have been the more efficient result was often sacrificed for what appeared to be more acceptable to those concerned. The willingness to make compromises, which was manifest regarding the determination of the scope of control, was also apparent when it came to defining the conditions of the exercise of that control.

The merger control reform took place in 2004 with Regulation No 139/2004, which came into force on 1 May 2004 at the same time as Regulation No 1/2003. The main objective of the reform was to give Europe legislative provisions appropriate to the future enlargement of the Union while avoiding cumulative controls. According to the recitals, the new regulation was to permit “effec-tive control of all concentrations in terms of their effect on the structure of competition in the Community and to be the only instrument applicable to such concentrations”.

The “one-stop shop” principle, in place as from 1989, already made it possible for undertakings party to a concentration with EU dimension to avoid notifying their merger in the various Member States which could be concerned: for such mergers, the EU’s jurisdiction was in effect exclusive. In 1997, new thresholds were added to the initial thresholds in order to include concentrations less substantial as to their absolute value but having a significant impact in at least three Member States. The drafters of the 2004 Regulation went even further; now, undertakings which are parties to a merger that does not have an EU dimension (for which the Commission has therefore no jurisdic-


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tion), but which is capable of being reviewed by the national authorities of at least three Member States, may also ask to benefit from the Commission’s one-stop shop mechanism.

As well as extending the scope of application of the control, Regulation No 139/2004 has modified the substantial assessment of concentrations: the creation or strengthening of a dominant position becomes only one scenario amongst several of the restriction of competition; efficiencies brought about by the concentration, which were not mentioned in the previous version, can now counteract the effects on competition.

i. Substantive rules

a. Scope

1.58. Concept of concentration According to Article 3(1) of Regulation No 139/2004, a concentration is deemed to arise where a

change of control on a lasting basis results from:a) the merger of two or more undertakings or parts of undertakings, orb) the acquisition, by one or more persons already controlling at least one undertaking, or by one

or more undertakings, of direct or indirect control of the whole or parts of one or more other under-takings, whether by purchase of securities or assets, by contract or by any other means.

1º) MergersArticle 3(1) of the regulation includes all merger transactions within its scope of application.

However, it no longer includes, as the 1989 Regulation did, a provision that the merger must take place between two previously independent undertakings and therefore no longer excludes, at least in theory, intra-group mergers from its scope of application;

- merger by creation of a new company : the merger takes place when two or more undertakings come together to create a new undertaking and disappear as separate legal entities;

- merger by absorption: a merger may result from the absorption of one undertaking by another, the latter retaining its legal identity while the absorbed undertaking ceases to exist as an independent legal entity;

- merger/division: the regulation applies to cases of de-mergers or divisions of joint ventures even if the division transaction was imposed by law;

- de facto merger: even if it does not fulfill the required legal conditions, a transaction may be clas-sified as a merger where it leads to the same economic result; may be qualified as de facto mergers: the combining of the activities of previously independent undertakings, which results in the creation of a single economic unit; the existence of a single, permanent economic management of inde-pendent entities; concluding combination agreements pursuant to which the constituent companies function collectively as a single economic unit.

2º) Acquisition of controlArticle 3(1) (b) of the regulation defines a concentration as the acquisition of control of one or

more undertakings, by one or more persons already controlling an undertaking, or by one or more undertakings. As a principle, control is therefore acquired by persons or undertakings which hold or benefit from rights that confer control. However, the acquisition of control may be indirect: the actual power to exercise the rights that are conferred upon by a controlling interest may be held by an undertaking which is not the official holder of such rights. Control acquired by undertakings over another undertaking may be granted to their exclusive shareholder, their majority shareholders, or shareholders having joint control although they cannot sit on the board of directors of the target undertaking, where those undertakings comply in any event with the decisions of those shareholders. Other criteria, such as shareholdings, contractual relations, sources of financing or family links, may be taken into consideration in order to establish the existence of indirect control.

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The Jurisdictional Notice (No 2008/C 95/01 of 10 July 2007) lists several means of control. An undertaking’s decisive influence on another may therefore be exercised by acquisition of shares, of assets, or by contract. In order to confer control, the contract must lead to a similar control of the management and the resources as in the case of acquisition of shares or assets and must be characte-rized by a very long duration (without any possibility of early termination for the party granting the contractual rights).

The control arising out of the possibility of exercising decisive influence over an undertaking’s business may be exercised for the whole of another undertaking or only part of it. A permanent change of control over assets, to which a turnover may be attributed, constitutes a concentration. Likewise, the outsourcing with the transfer of exclusive control over some production assets, and related personnel to an undertaking or a transfer of eligible customers in consideration of a remune-ration obtained through a share in the profits falls within the scope of merger control.

To fall within the scope of merger control, the transaction must lead to a lasting change in the control of the undertaking and the market structure. A temporary change of control is insufficient. The issue of the lasting change of control is raised in the case of concentrations taking place in seve-ral stages. Where undertakings group together with the aim of purchasing another undertaking and conclude an agreement to allocate the purchased assets between them, only the second transaction constitutes a concentration since the allocation of assets must be effective within six months fol-lowing their acquisition. By contrast, where a first purely transitional stage, and within a relatively short time frame, during which three operators acquire the whole share capital of an undertaking, is followed by a second stage during which one of those operators sells its shares to the other two at the end of a given time period, there is a single concentration with acquisition of joint control by the two remaining shareholders.

The transaction resulting in the sole control of an undertaking by another, in consideration of the acquisition of the aggregate capital, constitutes a concentration. The Jurisdictional Notice makes a distinction between sole control on a de jure basis, which arises out of the acquisition of a majority of the voting rights, from sole control on a de facto basis, exercised by the main minority shareholder, given the level of its shareholding, the previous voting patterns at shareholders’ meetings and the position of other shareholders.

There is joint control where the parent companies are required to agree upon the strategic deci-sions of the controlled undertaking. It does not matter whether the share in the capital of the joint venture is equally or unequally allocated. According to the Jurisdictional Notice, joint control of an undertaking may result from equality in voting rights or representation in decision-making bodies, the existence of veto rights, in particular where they go beyond the normal protection of the minority shareholders’ interests, or the joint exercise of voting rights, in particular where the parent companies are required to cooperate on strategic decisions. The existence of joint control over the target com-pany may also derive from decision-making procedures existing within that target.

Regulation No 139/2004 not only covers concentrations that grant sole or joint control, but also concentrations that lead to a change of control. This is the case where there is a change from sole control to joint control or, conversely, from joint control to sole control following the merger.

3º) Full-function joint ventureAccording to Article 3(4) of Regulation No 139/2004, “the creation of a joint venture performing

on a lasting basis all the functions of an autonomous economic entity shall constitute a concentration within the meaning of paragraph 1(b)”. In order to be subject to merger control, the joint venture must, according to the Jurisdictional Notice, be a “full-function” joint venture. The coordination of the parents’ conduct no longer has any impact on the classification of the joint venture itself, as was the case under the previous Merger Regulation, but may be assessed by the Commission as part of merger control, under Article 101 TFEU.

To be “full-function”, the joint venture must “have a management”, have “access to sufficient re-sources”, perform “on a lasting basis all the functions of an autonomous economic entity” and “play an active role on the market” independently of its parent companies ( Jurisdictional Notice, at points 91 et seq.). If those conditions are fulfilled, the joint venture falls within the scope of merger control,


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and any coordination is assessed under the rules on restrictive agreements. Where the conditions are not fulfilled, the creation of a joint venture is assessed under Article 101 TFEU.

4º) Ancillary restrictionsArticle 6 of Regulation No 139/2004 provides that, “A decision declaring a concentration compa-

tible shall be deemed to cover restrictions directly related and necessary to the implementation of the concentration”. The Commission has adopted a Notice on ancillary restraints (No 2005/C 56/03 of 5 March 2005), aimed at allowing undertakings to assess whether their agreements are ancillary. Only restrictions directly related and necessary to the concentration follow the main transaction; others may possibly fall within Articles 101 or 102 TFEU.

To be directly related to the implementation of the concentration, the restriction must be closely linked to the concentration and must be economically related to the main transaction. It must be intended to allow a smooth transition between the former and the new undertaking structure after the concentration. The ancillary restraint must also be necessary, i.e. in the absence of that restraint, the transaction could not be implemented or could only be implemented under more uncertain conditions. Necessary restrictions are in principle aimed at protecting the value of the goods transfer-red or retained by the seller, or maintaining the supply or outlets, facilitating the transfer of business or enabling the startup of the new entity. Finally, the restraint must not exceed what is necessary to implement the concentration in terms of duration and scope of application.

1.59. thresholdsThe thresholds defined in the Merger Regulation do not represent an indication of how harm-

ful the concentration is but above all constitute a criterion of allocation of jurisdiction. Only large concentrations which have an EU dimension fall within the scope of jurisdiction of the EU autho-rities.

Article 1(2) of Regulation No 139/2004 defines two series of positive thresholds which, if excee-ded, result in finding that the concentration has an EU dimension, and, on the other hand, a negative threshold which, if exceeded, results in excluding the EU dimension.

A concentration has an EU dimension where cumulatively: i) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 5,000 million; and ii) the aggregate EU wide turnover of each of at least two of the undertakings concerned is more than EUR 250 million.

Where a concentration does not meet these thresholds, it has nevertheless an EU dimension where cumulatively: i) the combined aggregate worldwide turnover of all the undertakings concerned is more than EUR 2,500 million; ii) in each of at least three Member States, the combined aggregate turnover of all the undertakings concerned is more than EUR 100 million; iii) in each of at least three Member States, the aggregate turnover of each of at least two of the undertakings concerned is more than EUR 25 million; and the aggregate EU-wide turnover of each of at least two of the undertakings concerned is more than EUR 100 million.

Even if those thresholds are exceeded, a transaction does not have an EU dimension where each of the undertakings concerned achieves more than two-thirds of its aggregate EU-wide turnover within one and the same Member State.

B. relationship with national laws

1.60. referral systemFor a uniform application of EU law, the Commission, acting under the supervision of the EU

courts, has exclusive jurisdiction to implement Regulation No 139/2004. All concentrations which exceed certain thresholds must be notified to the EU authority. However, like Regulation No 1/2003, Regulation No 139/2004 provides for a referral system which makes it possible to re-attribute cases to the most appropriate authority. Commission Notice 2005/C 56/02 of 5 March 2005 defines the

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conditions under which cases are to be referred. The case must be re-attributed to the authority which is the most appropriate for dealing with the merger in particular having regard, to the tools and expertise available to it, the likely locus of any impact on competition resulting from the merger and the risk of conflicting decisions. Fragmentation of cases through referral should be avoided so as to maintain a one-stop-shop to the greatest extent possible.

The parties may submit a request for referral before any notification (Regulation 139/2004, Article 4(4) and Article 4(5)). Post-notification referrals are submitted by the Member States, on their own initiative or upon invitation of the Commission (Regulation 139/2004, Articles 9 and 22).

1º) Pre-Notification ReferralsWhen contemplating a pre-notification referral of an EU-wide concentration to a Member State,

the parties must lodge a reasoned submission after having first verified whether the referral is likely to be decided with regard to the criteria described in the Notice on Case Referral. Two requirements must be fulfilled to implement the referral laid down in Article 4(4) of Regulation No 139/2004: the concentration must (a) significantly affect competition in a market or markets, (b) which must be within a Member State and present all characteristics of a distinct market. The parties are not required to establish that the effect on competition is likely to be an adverse one but should mention the markets affected. They must also show that the geographic markets in question are national or narrower than national in scope. If coordinated investigations and remedial action are required, this may be an obstacle to the re-attribution of the case to a national authority.

Referral of examination of a concentration to the Commission may also be requested by the par-ties where a concentration, which is not of an EU dimension, is notified to the authorities of at least three Member States (Article 4(5)). The request for referral is admissible only if no Member State having jurisdiction to deal with the concentration has expressed disagreement. The Commission is in the best position to examine such a concentration where the affected market or markets are wider than national or the main economic impact is connected to such markets.

2º) Post-Notification ReferralsArticle 9 of Regulation No 139/2004 establishes referral before the authorities of a Member State

which derogates to the principle of the Commission’s exclusive jurisdiction to examine concentra-tions with an EU dimension. Within fifteen working days of the date of receipt of the copy of the notification of the transaction to the EU authorities, a Member State may request referral to its own supervisory authorities. Two cases must be distinguished: i) either the concentration threatens to affect significantly competition in a market within that Member State, which presents all the cha-racteristics of a distinct market, ii) or the concentration affects competition in a market within that Member State, which presents all the characteristics of a distinct market and which does not consti-tute a substantial part of the internal market. In the first case, should the Commission consider that there is a distinct market and that the threat of impact on competition is real, it may refer the whole or part of the case to the national authorities with a view to the application of their own competition laws. In the second case, if the legal criteria have been met, it is required to make the referral. Within the meaning of Article 9(7), the “distinct” geographic market shall mean the market in which the conditions of competition are sufficiently homogeneous and which can be distinguished from those existing in the neighboring areas. The Commission takes a decision to refer or not to refer within twenty-five days from notification where it has not initiated proceedings. Where it has initiated pro-ceedings, the time period is sixty-five days if it has not taken the preparatory steps in order to adopt the measures aimed at safeguarding or restoring effective competition. Referral to the competent authorities of the Member State is deemed tacitly adopted where no decision is taken within that time period. The national competent authorities may take only the measures strictly necessary to safeguard or restore effective competition on the market concerned.

According to Article 22(1) of Regulation No 139/2004, a concentration which does not have an EU dimension may be referred to the Commission at the request of one or more Member States where it threatens to significantly affect competition within their territory while affecting trade between Member States. Once the referral has been made, the Member State can no longer control the Commission’s conduct of the investigation or define the scope of the Commission’s investiga-


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tions. The only limit to the Commission’s intervention is a geographic limit. The Commission may take the measures strictly necessary to the restoration of competition only on the territory of the Member States having requested its intervention.

1.61. Exceptions to EU jurisdictionUnder the pressure of the Member States, the EU authorities have accepted to give up their exclu-

sive jurisdiction with respect to certain concentrations having an EU dimension to allow the States to “take appropriate measures to protect legitimate interests other than those taken into considera-tion by this Regulation” (Article 21(4)). This limit to the EU jurisdiction is strictly regulated. The measures taken by the States must be compatible with the general principles and other provisions of EU law. Three categories of interests are automatically regarded as legitimate interests: public security, plurality of the media and prudential rules. All other interests must be submitted to the Commission, which alone can decide whether they are compatible with EU law.

C. Control criteria

1.62. the testArticle 2(3) of the regulation lays down a clear prohibition of concentrations which restrict com-

petition: “A concentration which would significantly impede effective competition, in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, shall be declared incompatible with the [internal market]”. There are no other provisions in the regulation granting the Commission any power of exemption: where the control thresholds are exceeded and where it is found that competition is significantly impeded, the concen-tration is incompatible. This is put into perspective by Article 2(1) of the regulation which sets out the various factors to be taken into consideration when appraising a concentration. Along with purely competitive factors aimed at appraising the market power of the undertakings concerned - market position, economic and financial power, alternatives available to users, access to supplies or markets, existence of legal or other barriers to entry, supply and demand trends for the relevant products and services, interests of the intermediate and ultimate consumers - the regulation also refers to, “the development of technical and economic progress” provided that this development is to consumers’ advantage and does not form an obstacle to competition. The Commission did not immediately seize the opportunity offered by the regulation to substitute a truly economic balance for the purely competitive balance laid down in Article 2(3). Initially, the additional efficiency that a concentration was likely to bring about either represented an unfavorable factor in the appraisal (since it was likely to strengthen a situation of dominance), or was mentioned only as an indication. This position has been modified with the adoption of the Guidelines on the assessment of horizontal mergers (No 2004/C 31/03 of 5 February 2004), which now provide, “[the Commission] may decide that, as a consequence of the efficiencies that the merger brings about, there are no grounds for declaring the merger incompatible with the [internal market] pursuant to Article 2(3) of the Merger Regulation”. The balance established by the Commission is not static as the parties may modify their transaction in the course of the control. A negative competitive analysis may now be offset both by the efficien-cies attached to the transaction and by the corrective measures proposed by the parties.

In its initial version, the Merger Regulation prohibited the creation or strengthening of a domi-nant position as a result of which competition would be significantly impeded. Now, prohibition directly refers to the impediment to competition, and the creation or strengthening of a dominant position - which is still specifically mentioned - represents only one case among others of the impe-ding of competition. Analysis in terms of effects has therefore progressively tended to substitute analysis in terms of structure. Consequently, even though the market share of undertakings party to the concentration still plays an essential role, other criteria are now taken into consideration. In the Guidelines on the assessment of horizontal and non-horizontal mergers (No 2008/C 265/07 of 18 October 2008), the Commission therefore takes into account the degree of concentration of the

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market on which the transaction takes place. It considers that it is rather unlikely for a horizontal merger to raise competition issues on a market where the post-merger HHI is less than 1,000, or between 1,000 and 2,000 with a delta below 250, or above 1,000 with a delta below 150. In case of non-horizontal mergers, the same goes where the post-merger HHI is less than 2,000. Within this conception, factors likely to favor non-coordinated or unilateral effects (price increase by reduction of quantities produced) may be directly assessed, independently of any reference to a dominant posi-tion, which represents only a means to produce them. The Guidelines on horizontal concentrations set out a non-exhaustive list of such factors:

- parties have large market shares;- parties are close competitors;- customers have limited possibilities of switching supplier;- competitors are unlikely to increase supply if prices increase;- the merged entity is able to hinder expansion by competitors due, in particular, to control over

the supply of inputs or distribution possibilities, to control over a patent or brand, or to an additional financial strength;

- the merger eliminates an important competitive force, such as an undertaking selling innovative products, even if its market share is relatively small.

In current decision-making practice, definition of the market remains the first step of the com-petitive analysis. For the second step, the factors favoring unilateral effects are weighed up with mitigating factors such as the customers’ buying power or the relative level of entry barriers to esta-blish the competitive balance of the concentration. Where the transaction takes place on a concen-trated market, the Commission assesses the possible existence of coordinated effects. Lastly, the EU authorities apply the failing company theory in the specific case of concentration aimed at acquiring undertakings failing to meet their payments.

a) Competitive analysis

1.63. the relevant marketAccording to the Commission, a product market “comprises all those products and/or services

which are regarded as interchangeable or substitutable by the consumer, by reason of the products’ characteristics, their prices and their intended use” (Notice No 97/C 372/03 of 9 December 1997). The degree of interchangeability or substitutability is assessed in view of the characteristics of the products concerned (performances, price…) as viewed by users.

This descriptive approach is sometimes supplemented by an econometric analysis. Among the existing methods, the EU authorities mainly resort to the quantitative test of cross elasticity of demand, which consists in calculating the existing ratio between the price variation of a product and the sales of another. Where the price increase of a product results in raising the sales of another, these two goods are substitutable, and the degree of substitutability varies according to the rate of cross elasticity. According to the Notice on the definition of relevant market, “the question to be answered is whether the parties’ customers would switch to readily available substitutes [product market] or to suppliers located elsewhere [geographic market] in respect to a hypothetical small (in the range 5% to 10%) but permanent relative price increase in the products and areas being considered” (SSNIP - small but significant and non-transitory increase in price - test). According to that method, a market may be defined as the smallest set of products and territories for which an undertaking would find it profitable to impose a 5% to 10% price increase, should it be the only undertaking to offer these products. In defining the relevant market, the EU authorities refer less to supply-side substitutability which they use as additional assessment factor. According to the Notice on the definition of relevant market, substitutability may be analyzed from the supply-side where it produces effects equivalent to those of demand substitutability in terms of effectiveness and immediacy. Two products or services must be regarded as substitutable from the supply side where suppliers are able to switch production to the relevant products or services without incurring significant additional costs or risks: where


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substitution requires significant investments, considerable time or strategic revisions, substitutability will not be found.

Three sets of criteria are generally used to identify a market of products or services: the nature of the product or service, its conditions of use and its marketing method. The geographic market assessed in respect of the hindrance to competition is defined as, “the area in which the undertakings concerned are involved in the supply and demand of products or services, in which the conditions of competition are sufficiently homogeneous and which can be distinguished from neighboring areas because, in particular, conditions of competition are appreciably different in those areas”. The defi-nition of the geographic market must take account “of the nature and characteristics of the products or services concerned, of the existence of entry barriers or of consumer preferences, of appreciable differences of the undertakings’ market shares between the area concerned and neighboring areas or of substantial price differences” (Regulation No 139/2004, Article 9).

1.64. non-coordinated effectsNon-coordinated effects are the consequence of horizontal or non-horizontal mergers, and a

same transaction may, according to the aspects at issue, fall simultaneously within both categories. Horizontal mergers are transactions carried out between actual or potential competitors on the same market. Non-horizontal mergers may be either vertical or conglomerate. Vertical mergers involve operators operating at different levels of the production chain whereas conglomerate mergers bring together undertakings which are not in the same market or in an upstream and downstream market and often involve suppliers of complementary products or products that belong to the same product range.

1º) Horizontal mergersHorizontal mergers harm competition as they increase the market power of the undertakings

which carry them out, i.e. their power to increase prices and reduce output. The market power of the new merged entity will vary according to the combined market shares of the parties to the tran-saction and the structure of the market on which it is carried out. Apart from the significance of the market share controlled by the parties, the EU authorities also assess the effect of the transaction on the structure of the market as a whole. A concentration may result in the ousting of an operator or in a gap being created between market operators, where the new entity only faces small rivals, not part of large groups or having limited resources, which, in all cases, would be unable to exercise a countervailing power. Financial strength, a technological lead, capacity or advertising investments, range or portfolio effects, the existence of exclusive agreements or agreements entered into on a long term basis, an approval or accreditation process, the holding of patents, widely known brands, or exclusive rights, privileged access to resources, constitute for the new entity many competitive advan-tages likely to make it more difficult for competitors to enter the market. The supervisory authorities also take into account all factors likely to accentuate the anticompetitive impact: the existence of regulatory barriers, excess or limited capacity, a mature or transparent market, inelasticity of supply or demand or homogeneity of the products concerned. For more detailed rules, practitioners should refer to the Commission’s Guidelines on the assessment of horizontal mergers (No 2004/C 31/03).

2º) Vertical mergersIn the context of vertical mergers, input foreclosure arises where the new entity would be likely

to restrict access to the products or services that it would have otherwise supplied if the merger had not taken place. The risk for competition relates to the effects on prices of increases in input costs for rivals on the downstream market. Input foreclosure may, inter alia, consist of: i) purchase restrictions, increases in the prices charged to rivals on the downstream market, or the existence of less favorable conditions to access to that downstream market than those prevailing without the concentration; ii) use by the new entity of technologies which are not compatible with rivals’ technologies or refusal to grant licenses; iii) degradation of the quality of input supplied. The foreclosure effect may arise only if input is significant for the product concerned on the downstream market and if the vertically integrated entity has a substantial market power on the upstream market. Incentive to foreclose depends on the level of profitability of such strategy. Adverse effect on competition is significant

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where elimination concerns either undertakings which play a major role on the downstream market, or potential competitors faced with barriers to entry.

A merger between a supplier and one of its major customers on the downstream market may lead to customer foreclosure, i.e. to foreclosing the upstream market to current or potential competitors who will no longer have access to a sufficient customer-base. Customer foreclosure may take various forms. It can result in the new entity adopting a preferential, exclusive, even speculative purchasing policy which allows the manufacturer to win contracts which it would not have obtained without the concentration, or in attempts to remove interoperability of its production platform with competing products or using its certification power as leverage for the sale of its own products. Furthermore, in case of economies of scale, customer foreclosure is likely to deter the entry of potential competitors on the upstream market the attractiveness of which in terms of revenue will be limited. Foreclosure may raise competition concerns only if the concentration concerns a customer which has a subs-tantial market power on the downstream market. Competition is not significantly affected where competitors have possible supply alternatives.

Finally, vertically integrated undertaking’s access to sensitive information, in particular through its participation in the board of directors of undertakings which are customers of the downstream division, is likely to enable the downstream division to make more competitive bids, to foreclose access of its competitors to the customer base, to adjust the positioning of its own products on the market, to offer better conditions than those offered to the competitor that has become its customer and thus to confer upon it a decisive competitive advantage. However, this is not the case where the data collected on competitors are known too late to use them for submitting better offers.

3º) Conglomerate mergersAs conglomerate concentration will generally bring together parties active on markets of comple-

mentary goods and services, the effects of a conglomerate concentration are most often considered by economists to be neutral or even beneficial to competition. The new entity may however seek, through leveraging, to exploit its position and resort to tied or bundled sales, which are likely to reduce competitive pressure. Engaging in tied or bundled sales - which consists in submitting offers linking different products and/or services that the competitors of the new entity are unable to carry out - is likely to give that new entity a significant advantage. Several conditions must be fulfilled for a bundling strategy to be capable of foreclosing the market. The new entity must use its dominance on a market as leverage on the market of a complementary product; competitors must not be able to offer any commercial response, and the entity must be able to implement unilateral price increases in the long term. A pure bundling strategy, which consists in the merged entity obliging its customers to purchase a “weak” product together with a “must stock” product, is more likely to succeed only where the products in question are highly complementary in demand, and where only offering a wide range of products is insufficient to fulfill that condition. The practice also is of no commercial benefit where it results in the merging parties losing substantial business from single-product purchasers. For more detailed rules, practitioners should refer to the Commission’s Guidelines on the assessment of non-horizontal mergers (No 2008/C 265/07).

1.65. Countervailing effectsIn their assessment, the EU authorities take account of the market characteristics that may miti-

gate the anticompetitive impact of a concentration:- legal or administrative regulations like public procurement procedures which may guarantee the

opening up of access to a defined type of market;- buyer power or, more widely, negotiating power of the partners of the new entity; - existing or potential competition; - inexistent or low entry barriers; - economic conditions for the functioning of the market: significant growth rate of the market or

high level of elasticity of demand are factors which mitigate the anticompetitive effect.


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1.66. Coordinated effects/Collective dominant positionA merger in a concentrated market may lead to the creation of a collective dominant position and

increase the likelihood of coordinated behavior between undertakings active on the market, which can adopt a joint line of action and raise prices, even without entering into an agreement or resorting to a concerted practice. Is an oligopolistic market situation sufficient to generate a collective domi-nant position independently of any behavioral condition? The General Court answered clearly in the affirmative: “There is no reason whatsoever in legal or economic terms to exclude from the notion of economic links the relationship of interdependence existing between the parties to a tight oligopoly within which, in a market with the appropriate characteristics […], those parties are in a position to anticipate one another’s behavior and are therefore strongly encouraged to align their conduct in the market, in particular in such a way as to maximize their joint profits by restricting production with a view to increasing prices” (Case T-342/99, Airtours, LawLex200203474JBJ).

According to the Commission’s Guidelines on horizontal mergers (No 2004/C 31/03), coordina-tion may take various forms, such as keeping prices above the competitive level, limiting production or the amount of new capacity brought to the market, dividing the market by geographic area or by other customer characteristics, or allocating contracts in bidding processes. The source of coordi-nation may either be found in the capital, financial or commercial links between the undertakings concerned, like for abuse of dominant position, or be directly deduced from the market structure.

Some market structures are more favorable than others to coordinated behavior. This is the case where cost structures are similar, there is symmetry of positions, the market is mature or has excess capacity and the demand is inelastic. Three conditions must be fulfilled for a possible coordination or - which amounts to the same thing - for a finding of a collective dominant position: (i) sufficient market transparency and product homogeneity for all members of the dominant oligopoly to be able to find out, sufficiently precisely and quickly, how the other members’ conduct is evolving in order to monitor whether they are adopting the same common policy, (ii) an incentive for members of the oligopoly not to depart from the common policy with the setting-up of retaliatory or deterrent mechanisms and (iii) the impossibility for current or future competitors or consumers to jeopardize the results expected of the common policy due to lack of countervailing power.

1.67. Failing company defenseThe “failing company defense” was introduced in American antitrust law by the decision of the

Supreme Court, Citizen (394 US 131, 1969) and was taken up for the first time in the US by the 1992 Merger Guidelines. An anticompetitive merger under US law may be exempted from the pro-hibition laid down in Article 7 of the Clayton Act if the defendant brings evidence that the target company runs the risk of failing to meet its payments and cannot be reorganized and that there is no less prejudicial alternative in terms of competition (repurchase by a less powerful or non-competing undertaking).

Although the reasoning underlying the failing company theory may sometimes be dubious, it is not part of an exemption or takeover-based analysis but of a purely competition-orientated analysis: due to the difficulties of the target undertaking which would have disappeared from the market in any event, the causal link between the merger and the harm to competition is broken. In its Guidelines on the assessment of horizontal mergers, the Commission lays down, as a basic require-ment for the compatibility of the concentration, that any deterioration of the competitive structure after the merger must not be caused by the merger.

Admitting the “failing company defense” is subject to three conditions:- the acquired company would in the near future have been forced out of the market in the absence

of the merger;- there is no less anti-competitive alternative purchase;- the failing undertaking would inevitably be forced out of the market in the absence of the mer-

ger; the inevitable nature of the disappearance of the assets is established where the acquired under-taking’s market share would be taken over by the acquiring undertaking in case of disappearance of

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the purchased undertaking, and this condition must be assessed over a reasonable period correspon-ding to the lifetime of the products on the relevant market and the takeover must be the direct result of the transaction.

The failing company defense must be dismissed where it is not established that the inevitable di-sappearance of an undertaking would allow the purchasing company, in the absence of a takeover as part of a merger, to acquire the same market share while, by contrast, the notified transaction would strengthen its dominant position by allowing it to use the potential of a new formula.

b) Efficiency gains

1.68. ScopeThe Merger Regulation does not include any possibility of exemption for reasons not related to

competition. Article 2(1)(b) provides that the Commission must take into account in its appraisal, “the development of technical and economic progress provided that it is to consumers’ advantage and does not form an obstacle to competition”. However, the notion of technical and economic pro-gress is only one of the factors considered in the appraisal presented as having the exclusive aim of measuring the impact of the merger on competition. The Commission has now established in both its Guidelines on the assessment of horizontal (No 2004/C 31/03) and non-horizontal mergers (No 2008/C 95/01), the efficiency gains theory.

Like in US law, the theory is based on the idea that the positive effects of a merger in terms of eco-nomic efficiency are in certain circumstances sufficient to make up for the anticompetitive effects it may produce. In this way, although a horizontal merger reduces the number of undertakings present on a market and facilitates oligopolistic collusions and interdependency, it also enables the underta-king initiating the merger to reach an optimum size more rapidly and to achieve economies of scale which can then be passed on to consumers. While a vertical or conglomerate merger may eliminate competitors at each stage of the economic process and reduce or suppress all potential competition, it can allow the parties to save on business costs, improve research or finance their activities on neighboring markets. Efficiency gains relate to all of the synergies the new entity is able to achieve post-merger. Such efficiencies may be quantitative (reducing production costs, achieving econo-mies of scale, new manufacturing techniques) or qualitative (new products, improved products etc.). Those efficiencies are taken into account where three cumulative conditions are fulfilled: they benefit consumers, are merger-specific and verifiable. The Commission, without expressly defining the term, also demands that efficiencies be “timely” i.e. that they should not occur too far in the future.

ii. Enforcement

a. Enforcement proceedings

a) Merger notification

1.69. Mandatory notification Article 4(1) of Regulation No 139/2004 provides that, “Concentrations with a Community di-

mension […] shall be notified to the Commission prior to their implementation and following the conclusion of the agreement, the announcement of the public bid, or the acquisition of a controlling interest”.

The notification is carried out using a Form CO as described in the Annex of Regulation No 802/2004. The requested information not only concerns the merging parties (ownership and control, personal and financial links, affected markets…) but more generally tends to determine the condi-tions of competition in the relevant markets (structure of supply and demand, market entry, research and development, cooperative agreements, trade associations, conglomerate aspects, worldwide context, efficiencies).


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1.70. Suspension of a concentrationIn order to guarantee the efficiency of the prior notification obligation without paralyzing the acti-

vity of the undertakings concerned for too long a period, the regulation provides for the suspension of the concentration for a relatively short period - in principle, one month; according to Article 7(1) of Regulation No 139/2004, it cannot be implemented either before its notification or until it has been declared compatible following the preliminary examination or control on the merits. The dea-dline for suspension of the concentration may be extended indirectly where the information provided in the notification is incomplete, as the regulation provides that the notification is effective only on the day of receipt of the complete information. The principle of suspension of the concentration has two derogations: one is automatic and specifically relates to public bid, at least as long as the acquirer does not exercise the voting rights attached to the securities; the second is subject to a decision of the Commission which, must “[…] take into account inter alia the effects of the suspension on one or more undertakings concerned by the concentration or on a third party and the threat to competition posed by the concentration”.

b) Proceedings before the Commission

1.71. two-stage procedureThe control exercised is before-the-fact and carried out within a very short time frame. Following

a preliminary examination under which most notified mergers are cleared (phase 1 examination), the Commission decides whether the concentration comes under the heading of the regulation and raises “serious doubts”. If it decides that it does, it then has to decide, by way of a more in-depth examination, its compatibility with the internal market (phase 2 examination).

1.72. Preliminary examination (Phase 1)According to Article 6(1) of Regulation No 139/2004, “the Commission shall examine the noti-

fication as soon as it is received”. This preliminary examination must take place within a period of twenty-five working days beginning on the working day following that of the receipt of a notifica-tion. That period is increased to thirty-five working days where the Commission receives a request from a Member State in accordance with Article 9(2) of the regulation or where the undertakings concerned offer commitments with a view to obtaining a compatibility decision following the pre-liminary examination. It may be extended indirectly if the information provided in the notification is incomplete (Article 10). Lastly, in the absence of a notification, no time period is applied: the Commission may thus act at any time for a concentration which is not notified and which takes place after the entry into force of the regulation and is not covered by the statute of limitation. After the preliminary examination, the Commission may choose between three attitudes:

- it finds that the transaction does not fall within the scope of the regulation and takes a decision of inapplicability;

- or it considers that the transaction does not raise serious doubts as to its compatibility with the internal market and takes a compatibility decision which, beyond the main transaction, also concerns the ancillary restraints;

- or it considers that the transaction falls within the scope of the regulation and raises serious doubts as to its compatibility; in such a case, it takes a decision to initiate proceedings, which opens phase 2.

The compatibility decision may take place after the parties have brought modifications to a tran-saction raising serious doubts in view of the regulation, and may make it subject to conditions and obligations in order to ensure that the commitments taken by the parties are complied with. The Commission may revoke a decision of compatibility or incompatibility where it is based on incorrect information, where it has been obtained by deceit or where the undertakings commit a breach of an obligation attached to the decision.

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If the Commission takes no decision within the set time period, the transaction is deemed to be compatible with the internal market. The same rule applies for the time period in which the final decision must be adopted.

1.73. in-depth examination (Phase 2)Following a decision to initiate proceedings which opens phase 2, the Commission must proceed

to the Statement of Objections and organize the hearing of the interested undertakings, namely the merging parties, in order for them to submit their observations.

1º) Statement of ObjectionsWhere the Commission intends to take a decision on the substance of a case, it addresses its

objections in writing to the notifying parties and informs other involved parties (Regulation No 802/2004, Article 13). It sets a time-limit within which they may inform the Commission of their written comments. The Statement of Objections is not solely intended to spell out the complaints to which the undertaking to which it is addressed has to answer but also to give it the chance to propose corrective measures. In all events, the Commission bases its decisions only on those objections for which the parties involved have been able to make known their views.

2º) Right to be heardThe Commission must give the persons and undertakings concerned the opportunity, at every

stage of the procedure, of making known their views on the objections against them (Regulation No 139/2004, Article 18). Article 14 of Regulation No 802/2004 specifies the rules applicable to the hearing of the notifying parties. The notifying parties who have so requested in their written comments, may thus be heard by the Commission in a formal oral hearing, where the EU authority intends either to take a final decision, or to impose a fine. The right to be heard falls within the scope of the Commission’s initiative at other stages of the procedure. Other involved parties may be heard under the same conditions.

3º) Right of access to the fileArticle 17 of Regulation No 802/2004 grants a right of access to the file to the parties to whom the

Commission has addressed a Statement of Objections, for the purpose of enabling them to exercise their rights of defense. This right cannot be exercised before service of a Statement of Objections. The principles governing the right of access to the file in competition proceedings apply in merger cases.

1.74. the decisionThe Commission issues a favorable decision - either because it finds that the concentration is in

principle compatible, or because the modifications brought by the undertakings concerned to the transaction may make it compatible - within not more than 90 working days of the date on which the proceedings are initiated (Regulation No 139/2004, Article 10(3)) Such a decision may include conditions and obligations (Articles 8(1) and 8(2)). By contrast, its decision will be unfavorable if it finds that the concentration is incompatible or if the concentration has already been implemented although it is incompatible or has been implemented in contravention of a condition laid down in the decision (Articles 8(3) and 8(4)): the dissolution or any other appropriate measures restoring the previous situation may in this case be ordered.

C. Conditions/Sanctions

1.75. Commitments - DivestitureEU merger control very often consists in the proposal by the parties of commitments to modify

the transaction so as to render it compatible with the internal market. Such modifications are now qualified as “remedies” (Notice No 2008/C 267/01). The Merger Regulation itself actually only pro-vides that, “the Commission may attach to its decision [declaring a concentration compatible with


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the internal market] conditions and obligations intended to ensure that the undertakings concerned comply with the commitments they have entered into vis-à-vis the Commission with a view to modifying the original concentration plan” (Articles 6 and 8). In order to be accepted, the commit-ments must eliminate the competition concerns raised by the Commission and be comprehensive and capable of being implemented effectively within a short period of time.

Structural commitments are generally thought to be more effective due to their effects on the structure of the market and are traditionally favored by the Commission over behavioral commit-ments, although undertakings usually propose the latter. According to the Commission, divestitures are the most effective form of commitment as they are the best way of ensuring the emergence of new competitors or of consolidating the position of the current competitors of the new entity. They are easy to implement as they do not require monitoring after the fact. Divested assets must consti-tute viable and competitive activities. The purchaser must be appropriate, which means a viable and independent operator with no connection to the parties to the merger, and must have the financial resources, proven expertise and incentive to maintain and develop the divested business as a viable and competitive force in competition with the parties and other competitors.

Behavioral commitments occur more rarely as they often require constant monitoring by the com-petition authorities. Such commitments are usually adopted either if transfers are not possible or where the harm to competition caused by the operation does not have a structural origin. Behavioral commitments, according to the Commission, must be at least equivalent in their effects to a divesti-ture and must be limited in their duration.

The parties may submit commitments during the two phases of the procedure. Unlike commit-ments submitted during phase 2, the object of phase 1 commitments is not to prevent the creation or strengthening of a dominant position. They must constitute a direct and sufficient response capable of clearly excluding the serious doubts expressed by the Commission. The commitments offered by the parties during phase 1 must be submitted to the Commission within twenty working days from the date of receipt of the notification. Those submitted to the Commission during phase 2 must be sent within sixty-five working days from the date on which proceedings were initiated.

Where the Commission finds that a concentration has already been implemented and that concentration has been declared incompatible with the internal market, or has been implemented in contravention of a condition, it may:

- require the undertakings concerned to dissolve the concentration.- order any other appropriate measure to ensure that the undertakings concerned dissolve the

concentration or take other restorative measures as required in its decision. When a concentra-tion that has already been implemented is found to be incompatible with the internal market, the Commission may therefore require the assignment of all the assets of the target company to a viable independent competitor with the requisite expertise and financial resources, that has no links to the group at the origin of the operation.

1.76. FinesIn case of contravention of an obligation, of implementation of a concentration declared incom-

patible or failure to comply with any measure restoring competition, in particular a de-merger order, the Commission may impose fines not exceeding 10% of the aggregate turnover of the undertakings concerned. It may also impose periodic payment penalties not exceeding 5% of the average daily aggregate turnover of the undertaking or association of undertakings concerned within the meaning of Article 5 of Regulation No 139/2004 for each working day of delay in order to compel under-takings to comply with an obligation, or to implement measures intended to restore competition. The Commission may also impose a fine on undertakings which fail to comply with their prior notification obligation or which do so after the deadline (Regulation No 139/2004, Articles 14(1) and 14(2)).

The amount of the fine is fixed having regard to the nature and gravity of the infringement, which may have been committed negligently or intentionally. According to the Commission, the absence

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of prior notification is a serious infringement since the undertaking which implements a concen-tration without obtaining prior authorization unilaterally eludes the requirement of ex ante control and weakens the EU legal order. However, no fine should be imposed for late notification of the concentration where the legal status of the transaction is difficult to qualify and where the agreement in question has been submitted to the Commission under Article 101 TFEU in good faith.

D. appeals

1.77. JurisdictionThe review of a decision is in theory brought before the Court of Justice which has unlimited

jurisdiction (Regulation No 139/2004, Article 16). In fact, pursuant to the Council decision of 24 October 1988 instituting a Court of First Instance of the European Communities (now the General Court), the General Court (as a component of the Court of Justice having jurisdiction to rule on actions for annulment, for failure to act or for damages brought by natural or legal persons) has jurisdiction to rule on any actions that undertakings initiate against Commission decisions under the supervision of the Court of Justice. The General Court also has jurisdiction to order the suspension of the operation of the contested act or to order interim measures.

1.78. right to appealAn action may be initiated against Commission decisions which are not mere preparatory ins-

truments (decision to initiate proceedings, Statement of Objections…) but actions for annulment against decisions not producing any binding legal effects are inadmissible (decisions confirming compatibility and finding the existence of a dominant position, and commitments upon which the compatibility of the concentration were not conditional).

An action may be brought against any contested decision by the undertakings taking part in a concentration or by any third party concerned which demonstrates a violation of a legitimate inte-rest. In addition to competitors of the participating undertakings and persons whose interests are concerned by the commitments, it seems that all entities which are not parties to the proceedings but whose legal position is modified by the decision and, in particular, by the conditions and obligations attached to that decision, should also be included. This is the case of certain indirect competitors or employees’ representative organizations - provided that the decision has an effect on their status or on the exercise of their prerogatives and duties - or candidates for their purchase.

The actions brought by interested parties may have different subject-matters:1º) Suspension of operationAccording to the general rules of Articles 278 and 279 TFEU, the EU judicature may order

that the implementation of the contested act be suspended. It must be established, prima facie, that the application for suspension has legal basis and that there is a serious and irreparable harm. The risk of irreversible alteration of the current conditions of access to the market resulting from the Commission decision which imposes the parties’ withdrawal from a joint venture justifies the adop-tion of a suspension of operation. By contrast, this is not the case of the risk of job losses which could result from a transfer of assets or the loss of profit that would result from the exclusion from the divesting procedure.

2º) Action for annulmentAny measure producing legal effects which is binding on, and capable of affecting the interests of

the applicant by bringing about a distinct change in his legal position is an act which may be chal-lenged within the meaning of Article 263 TFEU. Where, in principle, a compatibility decision does not have an adverse effect on the notifying parties, the absence of such effects resulting in the inad-missibility of the action for annulment cannot however be automatically deduced from it. Likewise, the decision by which the Commission changes, against the applicants’ interests, its assessment on the ancillary restrictions related to a transaction previously approved, or the adoption of an incompa-


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tibility decision where the notifying parties had declared that they would withdraw their notification before its adoption, is an act which may be challenged. In the field of merger control, the review of Commission decisions by the EU judicature is limited to formal and procedural aspects. Therefore, the General Court cannot substitute its own assessment for that of the Commission.

3º) Action for failure to actTo be admissible under Article 265 TFEU, an action for failure to act must be brought by a person

having an interest to initiate proceedings. It assumes that the EU authority has an obligation and that it has failed to fulfill it, following a request to act. Therefore, the Commission cannot choose not to take account of complaints from undertakings which are not party to a concentration capable of having an EU dimension, and must undertake a diligent and impartial examination of the com-plaints. A letter from the Commission which states that it does not have jurisdiction due to lack of EU dimension in response to an operator’s complaint of a violation of its obligation to take a deci-sion on a concentration approved by a national authority, amounts to defining its position within the meaning of Article 265 TFEU.

4º) Action for damagesThe Commission may incur non-contractual liability following the annulment of an incompati-

bility decision on a concentration. Three cumulative conditions must be fulfilled to initiate an action for damages in order to be compensated for the loss suffered: the conduct attributed to the institution must be unlawful, actual damage must have been suffered and there must be a causal link between the conduct and the damage (Article 340(2) TFEU). The mere fact that the incompatibility decision taken by the Commission has been annulled by the General Court for errors of assessment does not per se demonstrate that there has been a sufficiently serious breach of a rule of law intended to confer rights on individuals, as such a rule would result in limiting the exercise of merger control.

Section 3 STATE AIDS


1.79. ContextState aid measures create unequal competition and are liable to result in dysfunctions of the mar-

ket. However, it would be inconceivable to totally prohibit them in mixed economies as they repre-sent a major instrument of industrial policy or town and country planning and, at the purely eco-nomic level, they may be a means of solving market failures. Articles 107 to 109 TFEU establish a control on those State aid measures which create distortions of competition and affect trade between Member States. Article 107 lays down a general principle of incompatibility of aids with the internal market, and includes exemptions according to their purpose which allow aid to be held compatible. Article 108, supplemented by Regulation No 659/1999 of 22 March 1999 sets out the applicable procedural rules.

The monitoring of State measures has been reinforced since the setting-up of the single market and is currently the subject matter of a modernization policy by the Commission. The EU authority adopted an action plan for the period 2005-2009, which was to reduce the number of aids awarded on the one hand and, on the other, to encourage States to grant aids more aimed at creating lasting jobs and improving the competitiveness in industry in accordance with the objectives of the Lisbon Strategy for Growth and Jobs. The Commission has not yet modified the definition of State aid but has rationalized its legal treatment. Regulation No 800/2008 of 6 August 2008 defines the rules for general compatibility: it exempts any aid scheme meeting all its conditions, and individual aid granted under that scheme.

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a. Prohibited aid

1.80. ConceptThere is no legal definition of State aid. According to the case law of the Court of Justice and the

Commission’s decision-making practice, State aid is defined as the decision of a Member State by which, in pursuit of its own economic and social objectives, it gives undertakings or other persons resources or procures for them advantages intended to encourage the attainment of those objectives. Four elements must be fulfilled to characterize a State aid: (i) an intervention by the State or through State resources (ii) which confers an advantage on (iii) certain undertakings by (iv) distorting com-petition and (v) affecting trade between Member States.

1.81. transfer of State resourcesArticle 107(1) TFEU prohibits “any aid granted by a Member State or through State resources in

any form whatsoever”. To be classified as a State aid, the measure must be attributable to the State. The concept of State is broadly interpreted and includes intra-State entities - decentralized, fede-rated, regional or other - of the Member States. It also includes public or private bodies designated or established by the State. Imputability to the State however assumes a control by that State, which can be inferred from structural or behavioral indicators.

Aid, within the meaning of Article 107 TFEU, must be granted through State resources in any form whatsoever. It assumes a direct or indirect increase, even temporary, in the financial costs of the State or a drastic reduction in its resources. It is not necessary that the funds derive directly from the State budget: it is sufficient that the capital come from public funds intended for economic interven-tion. Besides, State resources may be passed on by State guidance of the investment behavior of pri-vate investors. The existence of public control is sufficient to confer a classification as State resources on private funds. It is not necessary for the means transferred to be the permanent assets of the State. It is sufficient for the funds to be available to it.

The transfer must, directly or indirectly, cause the State to bear an additional financial burden. A tax concession may thus characterize a transfer of State resources where it represents a loss of tax revenue. The transfer of State resources may consist in the allocation of funds by the public authority and also in the waiver of revenues, even if this is on a temporary basis. An aid cannot be assessed without taking into account the method by which it is financed as this forms an integral part of the measure.

1.82. advantage conferred on the recipientThe concept of aid is an objective concept based on the economic concept of advantage irrespec-

tive of its legal form. Article 107 TFEU does not distinguish between the measures of State inter-vention concerned by reference to their causes or aims but defines them in relation to their effects. The concept of advantage is determined in relation to other undertakings in the same Member State and not to undertakings in other Member States.

In the 1980s, the Commission developed a test - the private investor test or market economy investor test - in the context of acquisitions of holdings by the State in the capital of undertakings in difficulty. Those holdings were classified as aids where the State had adopted behavior which was different from that of a private investor, guided by prospects of profitability in the long term or, at least, within a reaso-nable period of time. After its establishment, that assessment method was rapidly extended to all other economic transactions in which the State could take part - loans or guarantees, purchases or sales - the investor test being extended to that of private operator or market economy operator.

A second test appeared in the 1990s in the case of undertakings in charge of a general interest mission. The EU authorities first considered that the funding of a public service obligation did not amount to aid, and then they ruled that although it constituted an aid, it could benefit from a dero-gation under Article 106(2) TFEU, before reverting to their initial position based on a rule of reason. Now, pursuant to the Altmark decision (Case C-280/00, LawLex200300003647JBJ), the classifica-


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tion as State aid must be excluded where the public funding does no more than offset the financial burdens relating to the performance of public service obligations. Article 106(2) TFEU only applies where the conditions of the Altmark decision are not fulfilled.

Under the new rules laid down by the SGEI (Services of General Economic Interest) package adopted on 20 December 2011, consisting in a Communication (No 2012/C 8/02), a Decision (No 2012/21), a revised Framework for assessing large compensation amounts granted to operators outside the social services field (No 2012/C 08/03), and a de minimis Regulation (No 360/2012), all social services become exempted from the obligation of notification to the Commission, regardless of the amount of the compensation received. Other SGEIs are exempted provided the compensation amount is less than EUR 15 million a year.

1.83. SelectivityTo classify as an aid, the advantage has to favor “certain undertakings or the production of cer-

tain goods”. An advantage which benefits one or more undertakings, unlike others in a comparable factual or legal situation, is identified as an aid, unless the differentiation is inherent in the nature or general economy of the collection system in question.

1º) Advantage granted to certain undertakingsOnly undertakings, i.e. autonomous entities exercising an economic activity independent of their

legal status and financing method, are liable to benefit from a State aid within the meaning of Article 107(1) TFEU. The classification as State aid assumes that the advantage granted is selective. In other words, it should favor a single undertaking or certain undertakings or the production of certain goods to the detriment of free and undistorted competition. A measure does not therefore fall within Article 107 where it is given to an indefinite number of recipients who are not individually identi-fied. By contrast, an aid is selective where the conditions imposed to benefit from a measure which is apparently general are in fact satisfied by one operator only. The presence of one criterion of selection is sufficient for the condition of selectivity to be fulfilled. Lastly, the selective nature of a measure may follow not only from the conditions of granting of the advantage but also from the discretionary power of the Administration granting it. The sole fact of having a discretionary power is sufficient to classify the measure as selective, even without arbitrary application and without consideration for possible actions offered to the beneficiary in order to challenge the grant.

2º) Advantage independent of the nature or general scheme of the collection system Article 107 does not distinguish by reference to the causes or aims set out in the State measure.

The alleged fiscal nature or social aim of the measure in issue therefore cannot in principle shield it from the prohibition. However, the concept of State aid does not refer to State measures which differentiate between undertakings and which are, therefore, prima facie selective where that diffe-rentiation arises from the nature or the overall structure of the system of charges of which they are part. Thus, an advantage may be justified by the nature and general scheme of the system where it is aimed at offsetting an alteration in the legal framework or unequal treatments, or where, in the tax field, the selective nature of provisions is justified by their purpose - the protection of the envi-ronment, provided that the effectiveness of the system in terms of protection of the environment is shown. By contrast, tax concessions which do not seem to mitigate any unequal treatment are most often deemed unjustified. The selective character of the tax system may further be justified by legal provisions, where the purpose of those provisions is not to escape the EU provisions on State aids.

1.84. restriction on competitionPursuant to Article 107(1) TFEU, State measures constitute prohibited aids “where they “distor[t]

or threate[n] to distort competition”. Any State measure which strengthens the position of bene-ficiary undertakings in relation to competitors is likely to constitute a prohibited aid. To assess the existence of a State aid, the Commission is not required to check the real effect of the measure on competition. A merely potential effect is sufficient to classify the measure as State aid. It is not

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either necessary to delimitate the relevant market. The EU authority, which conducts its analysis in a dynamic perspective, may further rely upon assessment criteria arising after the adoption of a plan to grant or alter aid.

Like for restrictive practices, the Commission has fixed a de minimis ceiling below which an aid should not be considered, in principle, as falling under Article 107 TFEU. Regulation No 1998/2006 of 15 December 2006 excludes from the scope of the prohibition and exempts from the notifica-tion requirement aids granted to any one undertaking, which do not exceed EUR 200,000 over any period of three years (EUR 100,000 in the road transport sector). However, some sectors, such as the acquisition of transport vehicles, agriculture, fisheries and aquaculture, and export aids, do not fall under the text.

1.85. Effect on trade between Member StatesAs for restrictive practices or abuse of a dominant position, the classification as State aid requires

that trade between Member States is likely to be affected. This condition cannot be dissociated from the restriction of competition condition with which it is generally examined.

Effect on intra-Union trade does not assume that there has been effective participation in intra-Union trade stricto sensu. Aid may affect trade between Member States although 90% of the pro-duction of the recipient undertaking is exported outside the European Union. The risk of trade between Member States being affected therefore results from the interdependence of markets on which EU undertakings operate. Furthermore, the granted aid, which can allow the recipient to withdraw from non-profitable third markets, creates a risk that its activities be redirected towards the internal market. Likewise, the fact that the activity of the recipient undertaking is limited to only one Member State does not prevent intra-Union trade from being affected.

The effect on trade between Member States must be significant. The significance results from several factors being met; such factors, taken alone, would not be necessarily decisive. However, the finding of a State aid does not require a significant effect on intra-EU trade where the de minimis aid threshold is exceeded. To assess the significant effect on trade between Member States, the EU authorities take into account the market share of the recipient undertakings, the cumulative effect resulting from the multiplication of successive aids granted to the same undertakings, the strengthe-ning of the export capacity, intensity of competition on the market, vulnerability of the market due to stagnant demand, unused production capacity and steady decline in employment or the number of incompatibility decisions already adopted by the EU competition authorities in the same sector.

B. Compatible aid

a) The Treaty

1.86. aids that are automatically compatible Article 107(2) TFEU deems three specific and very limited types of aid to be automatically com-

patible with the internal market: aid having a social character granted to individual consumers, aid intended to rectify damage caused by natural disasters or other extraordinary occurrences, and aid granted to certain disadvantaged areas of the Federal Republic of Germany. The Commission may have to supervise those aids but its task is limited to check whether they meet the legal definition. In effect, they are interpreted narrowly and the Commission must authorize them where the conditions of granting are met.

1.87. aids that may be deemed compatibleArticle 107(3) TFEU lists a number of aids that might be subject to facultative exemptions left to

the Commission’s discretion:- aid with a regional purpose,


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- aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State,

- aid to facilitate the development of certain economic activities or of certain economic regions,- aid to promote culture and heritage conservation..Lastly, in fine, the article provides for the possibility for the Council to hold compatible other

categories of aids by decision and on a proposal from the Commission.To facilitate individual assessment, the Commission has classified State aids by category - regional

aids, sectoral aids, horizontal aids -, and published guidelines specifying their conditions of compa-tibility with the internal market. Furthermore, it has adopted a general block exemption regulation which enables the Member States to grant aids without prior notification where the conditions laid down in the document are met.

b) Exemptions

1.88. Block exemption The Commission has adopted a general block exemption regulation regarding State aids

(Regulation No 800/2008 of 6 August 2008), which came into force on 30 August 2008, and super-sedes the four regulations which governed the matter and extends the categories of aids covered. The regulation exempts any aid scheme which fulfils the conditions it lays down and any individual aid granted under that scheme complying with the exemption rules. Aids which do not fall within the scope of application of the regulation remain subject to the obligation of prior notification and might benefit from individual exemption.

Almost all economic sectors are concerned. The objective of the regulation is the economic deve-lopment of Europe, in particular in the field of employment, competitiveness and environmental protection. It covers regional aid, SME investment and employment aid, aid for the creation of enterprises by female entrepreneurs, aid for environmental protection, aid for consultancy in favor of SMEs and SME participation in fairs, aid in the form of risk capital, aid for research, development and innovation, training aid, and aid for disadvantaged or disabled workers. In accordance with the Lisbon strategy, the regulation increases the intensity (aid amount expressed as a percentage of eligible costs) of the aid in favor of SMEs since it covers twenty six categories of aid. A special addi-tional amount may be granted to them if larger undertakings benefit from similar aid.

By contrast, aid to export-related activities, aid contingent upon the use of domestic over imported goods, regional aid favoring determined sectors of economic activity in production or services, ad hoc aid to larger undertakings, aids to undertakings in difficulty… are excluded from the scope of application of the regulation.

Aid schemes, individual aid and any ad hoc aid which fulfils all the conditions of the regulation are exempted, without prior notification, provided they contain an express reference to the regulation, by citing its title and publication reference in the Official Journal of the European Union (Regulation No 800/2008, Article 3). The conditions for exemption are divided into two categories: conditions common to all aid and conditions specific to various categories of aid.

The regulation applies only to transparent aid, such as grants and interest rate subsidies, loans, guarantee schemes, under certain conditions, fiscal measures providing for a cap. Capital injections and risk capital measures are not concerned (Regulation No 800/2008, Article 5). It lays down individual notification thresholds for each individual or ad hoc aid (Article 6). Where the grant equivalent exceeds that threshold, the regulation cannot be applied. In determining whether the threshold is reached, account is taken of the total amount of public support measures for the aided activity or project, regardless of the sources. The accumulation of aid is possible only if it does not lead - by partial or total overlapping- to an intensity or amount of aid higher than the threshold set by the regulation for the aid in question. The regulation only exempts aid which has an incentive effect (Article 8).

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Investment aid is subject to particular treatment. Article 12 specifies the concept of eligible cost. This consists of: an investment in tangible and/or intangible assets relating to the setting-up of a new establishment, the extension of an existing establishment, diversification of the output of an establish-ment into new additional products or a fundamental change in the overall production process of an existing establishment; the acquisition of the capital assets directly linked to an establishment, where the establishment has closed or would have closed had it not been purchased, and the assets are bought by an independent investor; intangible assets used exclusively in the undertaking receiving the aid, which constitute amortizable assets and are purchased from third parties under market conditions, wit-hout the acquirer being in a position to exercise control; employment directly created by an investment project where it is created within three years of completion of the investment, with observance of a net increase in the number of employees in the establishment concerned, compared with the average over the previous 12 months and the employment is maintained during a minimum period of five years in the case of large enterprise and a minimum period of three years in case of SMEs.

1.89. individual exemptions To check whether an aid may benefit from an exemption under Article 107(3) TFEU, the

Commission has a discretionary power. However, that power is subject to two conditions. Firstly, the aid must be necessary to reach one of the objectives of the Treaty. Second, the control of compatibi-lity is exercised not only in the interest of the State dispensing the aid, but also in the EU interest.

C. types

1.90. regional aidUnder Regulation No 800/2008, regional aid is designed to promote the economic, social and ter-

ritorial cohesion of Member States and the Union as a whole. More particularly it tends to develop the most disadvantaged regions by supporting investment and job creation in a sustainable context, the setting-up of new establishments, the extension of existing establishments, the diversification of the output into new additional products or a change in the production of an existing undertaking. An aid which complies with the map approved by the Commission for each Member State for the granting of regional aid is compatible with the internal market and is not submitted to the notifica-tion requirement.

The Guidelines on national regional aid for 2007/2013 set the criteria applied by the Commission to assess the compatibility of regional aid over a limited period. They apply to every sector of activity apart from the fisheries sector and the coal industry. Compatible regional aid is generally granted in the form of a multi-sectoral aid scheme as part of a regional development strategy which pursues clearly defined objectives. The total population coverage of assisted regions in the Union must be substantially less than that of unassisted regions.

1.91. Sectoral aidSensitive sectors which are particularly vulnerable, with structural overcapacity, or even declining,

are subject to specific rules so as to coordinate and direct public interventions. In the form of direc-tives or regulations, provisions follow a common frame: after reminding the essential characteristics of EU regulation on State aid, and the specificities of the sector in view of, inter alia, a possible com-mon policy, they set out various eligible types of aid and the conditions for granting them. Having a limited duration of application, those provisions are extended, replaced or repealed by the EU authorities depending on the development of the sector.

Special rules have therefore been provided for aid in favor of the agriculture, fisheries, steel, shipbuilding, textile and clothing, synthetic fibers, motor vehicle, transports and coal industries, which are expressly excluded from the scope of application of the Block Exemption Regulation No 800/2008. Due to their common characteristics and in order to limit the propagation of sectoral aid,


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the Commission has adopted a “Multisectoral framework on regional aid for large investment pro-jects” which applies to the synthetic fibers, motor vehicle and steel industries but provides for a trial period before the integration of other sectors.

1.92. horizontal aid1º) Rescue aidThe fact that inefficient undertakings disappear is a normal situation in a market economy. State

rescue aid producing major distortion effects, the principle of prohibition is the rule. However, the granting of rescue aid to firms in difficulty may be considered to be legitimate under certain condi-tions set forth by the Guidelines No 2004/C 244/02 of 1 October 2004 on State aid for rescuing and restructuring firms in difficulty. The major objective of rescue aid is to keep an ailing firm afloat for the time needed to work out a restructuring or a liquidation plan. It must be necessary “to correct disparities caused by market failures or to ensure economic and social cohesion”. Rescue aid is an exceptional aid which consists of liquidity support in the form of loan guarantees or loans. It must be temporary and reversible. According to the ‘one time, last time’ principle, rescue aid should be granted only once.

2º) Restructuring aidA restructuring consists in the completion of “a feasible, coherent and far-reaching plan to restore

a firm’s long-term viability” (Guidelines No 2004/C 244/02). It must not only settle the losses of the recipient undertaking but also tackle the reasons for those losses. The granting of a restructuring aid may be justified where it does not promote a single undertaking but an economic activity and that its survival contributes to the maintenance of a competitive market structure. The restructuring aid can only benefit to undertakings in difficulty defined as those which are unable to “stem losses which, without outside intervention by the public authorities, will almost certainly condemn it to going out of business”. Under the guidelines, any restructuring aid should be authorized only if the advantages of the undertaking’s survival offset the distortions of competition it causes and where there are com-pensatory factors in favor of competitors.

3º) Aid for environmental protectionState aid for environmental protection must tend, by implementing the ‘polluter pays principle’,

to outweigh the negative effects of the economic activity on the environment. They are governed by Articles 17 et seq. of the Block Exemption Regulation No 800/2008. Aid for environmental protec-tion which enables undertakings to go beyond EU standards or to increase the level of environmental protection in the absence of such standards is compatible with the internal market and is exempt from the notification requirement. The Guidelines No 2008/C 82/01 of 1 April 2008 on State aid for environmental protection supplement the scheme and are applied to all measures notified to the Commission either because the measure is not covered by the Block Exemption Regulation or be-cause the regulation imposes an obligation to notify aid individually, irrespective of the sector taken into consideration. They constitute one of the instruments to implement the European Council’s action plan relating to environmental protection.

4º) Investment and employment aidEmployment aid falls within Block Exemption Regulation No 800/2008 where it is granted in

favor of SMEs and concerns either employment directly created by an investment project or as part of a regional aid - provided that the notification threshold of EUR 7.5 million per undertaking per investment project is not exceeded - or disadvantaged and disabled workers - provided that it does not exceed EUR 10 million per undertaking per year. The conditions of compatibility of employ-ment aid for disadvantaged and disabled workers are fixed in Articles 40 through 42 of Regulation No 800/2008.

5º) Aid to SMEsSmall and medium-sized enterprises (SMEs) may benefit from State aid since they actively take

part in the economic life, create jobs and play a decisive role in terms of social stability and economic drive. Pursuant to Regulation No 800/2008, the compatibility of an aid depends on its transparency

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and its incentive character. Aid granted to SMEs are considered to have an incentive effect if, before work on the project or activity in question, the beneficiary has submitted an application for the aid to the Member State concerned. The beneficiary must be an SME, which is defined having regard to staff headcount and financing thresholds. It must be an autonomous entity.

6º) Aid for research and development and innovationAid for research, development and innovation can contribute to economic growth, strengthening

competitiveness and boosting employment. State aids which pursue those objectives are therefore compatible with the internal market. They fall within the Block Exemption Regulation No 800/2008 or, where that regulation does not apply, the Framework No 2006/C 323/01 of 30 December 2006 on State aid for research and development and innovation.

7º) Training aidTraining aid has favorable effects where training increases the number of skilled workers, improves

the competitiveness of EU industry and plays an important role in the EU employment strategies. General training must be distinguished from specific training. General training involves the acquisi-tion of recognized, certified, exportable knowledge of an undertaking whereas specific training limits the acquisition of knowledge to the employee’s position in the undertaking which is not transferable from one undertaking to another. The specific training aid intensity cannot exceed 25% of the eli-gible costs, compared with 60% for a general training aid.

8º) Aid to promote the execution of an important project of common European interest or to remedy a serious disturbance in the economy of a Member State

A project can be classified as an important project of European interest, within the meaning of Article 107(3)(b) TFEU only where it forms part of a transnational European program supported jointly by a number of governments of the Member States or arises from concerted action by them to combat a common threat such as environmental pollution.

Aid to remedy a serious disturbance in the economy of a Member State must concern a distur-bance which affects the economy of a Member State and not merely that of one of its regions or areas. Thus, the unification, which has had negative effects on the German economy, alone is not sufficient to apply the exemption provided for in Article 107(3)(b) TFEU.

Article 107(3)(b) TFEU has experienced a new life with the financial crisis of fall 2008 by ena-bling the Commission to mitigate its requirements regarding State aid control in order to guarantee the economic boosting without having to apply the enhanced rules applicable to aid for undertakings in difficulty. It has adopted a series of provisions intended to set guidance on the treatment of State measures in the financial sector for purposes, in particular, to save impaired assets and to recapitalize the financial institutions in difficulty. It has also set a temporary framework for State aid measures to support access to finance in the current economic crisis for a limited duration.

ii. Enforcement

1.93. ContextArticle 108 TFEU defines the control procedure of State aid by distinguishing between existing

aid and new aid. Existing aid is subject to constant review; new aid is subject to an obligation of notification to the Commission. The provisions of the Treaty are supplemented by a procedural regulation (Regulation No 659/1999 of 22 March 1999) which, while repeating the classification of Article 108, supplements it by distinguishing depending on whether the aid is a notified, existing, unlawful or misused aid.

The Commission provides, in its State aid action plan (Notice No SEC(2005)795 of 7 June 2005), a modernized control procedure which should allow a reduction in the time frame for treatment of cases. The Block Exemption Regulation of 6 August 2008 falls within that framework by exempting from the obligation of prior notification any new aid which meets the criteria of exemption it lays down.


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a. Enforcement authorities

1.94. EU authoritiesThe Commission is responsible, with the Member States, for keeping under constant review all

systems of existing aid (Article 108(1) TFEU). It must further be informed of any plans to grant or alter aid (Article 108(3) TFEU). Assessing the compatibility with the internal market of an aid mea-sure falls exclusively within the jurisdiction of the Commission, which has a margin of discretion. The jurisdiction of the Commission is only limited by the jurisdiction of national courts, which have exclusive power to order the recovery of an unlawful aid for non-compliance with Article 108(3) TFEU due to the direct effect of the prohibition.

The Council of the European Union, which has a residual power, may, acting unanimously, decide that an aid which a State has granted or intends to grant is compatible with the internal market, even if the conditions of Article 107 TFEU or the regulations provided for in Article 109 TFEU are not fulfilled, where exceptional circumstances justify it (Article 108(2)(3) TFEU). This power is exceptional in relation to the Commission’s power and must be interpreted strictly. If an application is made to the Council, the procedure before the Commission is suspended. The Commission has exclusive jurisdiction again where the Council has not made its attitude known within three months of the application. Once the procedure has ended, the Council has no jurisdiction to decide on a Member State’s application.

1.95. national authorities and courtsThe national authorities are not responsible, within the framework of their jurisdiction ratione

materiae, to decide on the compatibility of State aid, which is part of the exclusive jurisdiction of the Commission.

The procedural rules laid down in Article 108(3) TFEU on the obligation to inform beforehand the Commission of any plans to grant or alter new aid, have direct effect and may be invoked before national courts, which are not required to stay proceedings or declare that they lack jurisdiction where the Commission, to which the matter has also been referred, has not yet given a final decision as to whether the State measure constitutes State aid. In effect, national courts are required to uphold the individual rights arising out of the provisions of the Treaty. Therefore, they have to remedy the consequences of the unlawfulness of an aid implemented before a final decision on compatibility or to refuse to apply a national provision relating to the principle of res judicata which prevents the recovery of an unlawful State aid which has been found to be incompatible with the internal market in a decision which has become final.

While the assessment of the compatibility of aid measures with the internal market falls within the exclusive jurisdiction of the Commission, subject to review by the Court of Justice, the national courts may intervene to interpret and apply the concept of aid in order to determine whether State aid introduced without observance of the preliminary examination procedure provided for in Article 108(3) TFEU, ought to have been subject to that procedure. Moreover, a dispute concerning the recovery of the aid, in particular with respect to the findings of fact contained in the decision or in the light of the precise quantification of the actual advantage to be recovered, falls within the jurisdiction of the national court. In particular, it may suspend a recovery decision where it entertains serious doubts as to its validity, provided that there is urgency, that it takes due account of the interests of the Union and that, in its assessment of those conditions, it complies with any decisions of the Court of Justice or the General Court ruling on the lawfulness of the measure or an application for provisional measures seeking similar interim relief at EU level.

In its Notice No 2009/C 85/01 on the enforcement of State aid law by national courts, the Commission specifies that the national courts may not only prevent the payment of unlawful aid and order its recovery, regardless of its compatibility, but also order the payment of illegality interest, grant damages for competitors and other third parties and order interim measures. A national court’s supervisory power remains however limited. It must uphold the claim for recovery of non-notified

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aid unless, due to exceptional circumstances, the recovery is inappropriate. Likewise, it may suspend recovery orders and grant interim relief only if it has serious doubts as regards the validity of the EU act, if there is urgency in order to avoid serious and irreparable damage and taking due account of the EU interest. Lastly, a national court can only assess whether the conditions for exemption are met where the case pending before it concerns the applicability of a Block Exemption Regulation or an existing or approved aid scheme.

B. Enforcement proceedings

1.96. Mandatory notification1º) Distinction between new aid and existing aidPursuant to Article 1 of Regulation No 659/1999, an existing aid is defined as all aid which is (i)

in force when a Member State joins the European Union, (ii) authorized by the Commission or by the Council, (iii) deemed to have been authorized or (iv) deemed to be an existing aid, as well as any aid which, when put into effect, did not constitute an aid but became and aid due to the evolution of the internal market. The same goes for an aid which constitutes the strict and foreseeable application of the conditions laid down in a decision approving the general aid scheme. The Commission cannot initiate the contentious procedure and order suspension of an existing aid upon mere doubts as to the compliance of that aid. A notified new aid eventually acquires the capacity as existing aid when the Commission has notified its decision late. According to Article 108(1) TFEU, existing systems of aid are subject to constant review by the Commission, which may propose to the Member States any appro-priate measures required by the progressive development or by the functioning of the internal market.

Article 1 defines negatively new aid as all aid, that is to say, aid schemes and individual aid, which is not an existing aid, including alterations to existing aid. The modification must be substantial. This is the case of modifications introduced to an existing aid scheme which are not purely formal or administrative, but are likely to affect the evaluation of the compatibility of the aid measure with the internal market, such as the simplification of the procedure for granting the aid and the widening of the criteria for receipt of aid, or an increase in the original budget. The classification of new aid is of major interest both for the State dispensing the aid and for the recipient, since only the new aid is subject to the prior notification requirement with resulting standstill effect while waiting for the Commission decision.

Regulation No 659/1999 introduces in relation to Article 108 two new categories of aid. The concept of unlawful aid concerns any new aid put into effect in contravention of Article 108(3) TFEU. This is either a new aid put into effect without having been previously notified, or an aid which has been notified but put into effect before having been authorized or deemed so. It is subject to specific provisions in the procedural regulation which confer additional powers on the Commission (Articles 10 to 15).

A misuse of aid is an aid used by the beneficiary in contravention of a positive decision taken pursuant to Article 4(3), Article 7(3) or Article 7(4). Thus, the use by a holding company of aid measures intended only for its subsidiaries in difficulty constitutes a misuse of aid. The concept is applied broadly by the EU authorities who include the misuse of aid by a third party operator in the misuse of aid by the beneficiary. However the Commission must establish that the aid was used in breach of the national rules governing the scheme in question or supplementary conditions accepted by the Member State as part of approval of that scheme.

2º) Prior notification requirementThe Member States must notify any plans to grant new aid to the Commission (Article 108(3)

TFEU; Regulation No 659/1999, Article 2). The purpose of this obligation is to enable the Commission to review, in sufficient time and in the general interest of the Union, any plan to grant an aid. The aid cannot be put into effect before the Commission has taken a final decision authori-zing it (Regulation No 659/1999, Article 3). The prohibition on implementation has a direct effect which extends to all aid which has been implemented without being notified and, in the event


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of notification, operates during the preliminary period up to the final decision. Where the State breaches its obligation to suspend the implementation of the measure, the Commission has the power to issue an interim decision requiring that State to suspend immediately the payment of the aid and the right, while pursuing its substantive examination, to refer the matter to the Court of Justice pursuant to Article 107(3) TFEU. The national court may also decide the nullity of the aid granted in violation of the obligation of prior notification for the period prior to the notification of the compatibility decision.

1.97. Preliminary examination The Commission examines the notification as soon as it is received (Regulation No 659/1999,

Article 4). The Commission has a two-month period from the receipt of a complete notification to decide, after a preliminary examination, whether the measure in dispute is compatible with the internal market or whether it raises doubts justifying the initiation of formal proceedings.

The preliminary investigation procedure is closed by means of a decision of the Commission which finds either that the notified measure does not constitute aid, or that it does not raise serious doubts as to its compatibility. The decision not to raise objections puts an end to the investigation procedure on a proposed aid. Unless revocation, the aid will therefore be considered to be exis-ting. The decision is notified to the Member State concerned (Article 25) and a summary notice published in the Official Journal.

Where the Commission has not taken a decision within the two-month period, the aid is deemed to have been authorized and the Member State may implement it after giving the Commission prior notice thereof. The absence of decision has the same effect regarding the nature of the aid as the decision not to raise objections: the new aid is classified as existing aid.

1.98. initiation of a formal investigation procedureThe Commission is likely to open a formal investigation procedure where, after a preliminary

examination, it finds that doubts are raised as to the compatibility with the internal market of a notified measure (Regulation No 659/1999, Article 4), where it contemplates to revoke a decision for incorrect information provided (Article 9), in case of misuse of aid (Article 16) or annulment of its decision by the EU courts.

The evidence of the existence of serious difficulties may be established by “reference to a body of consistent evidence” assessed on the basis of elements of fact and of law existing at the time when the measure was adopted. The excessively long duration of the preliminary stage, the absence of precise data on the overcapacity of the sector concerned or the competition context, the fact that the contemplated measure was preceded by measures classified as unlawful aid, or the existence of letters between the Member State concerned and the Commission showing that the latter had at first clas-sified the measure as aid are indications of serious difficulties.

The Commission is not required to comply with a minimum period during its formal investi-gation procedure, but should as far as possible endeavor to adopt a decision within a period of 18 months from the opening of the formal investigation procedure (Article 7). The decision to initiate the procedure must summarize all relevant issues of fact or law, include a preliminary assessment of the proposed measure and set out the reasons resulting in the Commission having doubts as to the compatibility of the measure with the internal market (Article 6). While the Commission is required to clearly express its doubts as to the compatibility of the aid when it opens a formal investigation procedure, the applicant of the aid is responsible for dispelling those doubts.

Any Member State and any person, undertaking or association of undertakings whose interests might be affected by the granting of aid, in particular the beneficiary of the aid, competing under-takings and trade associations, may be classified as interested party (Article 1) likely to be invited by the Commission to submit comments within a period which may not exceed one month. The

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Member State concerned has a period of one month, which may be extended in duly justified cases, to reply to the comments (Article 6).

1.99. Commission decisionThe formal investigation procedure is closed by means of a Commission decision, which finds

either that the measure does not constitute aid, or that the aid is compatible (‘positive decision’) or compatible subject to conditions (‘conditional decision’), or, lastly, that the measure is not compa-tible with the internal market (‘negative decision’). The Commission must take a decision as soon as doubts as to the compatibility with the internal market are removed. The regulation specifies that the EU authority should as far as possible endeavor to adopt a decision within a period of 18 months from the opening of the procedure, which may be extended by common agreement between the Commission and the Member State concerned (Regulation No 659/1999, Article 7).

Where the Commission finds that the doubts as to the compatibility of the notified measure with the internal market have been removed, it adopts a ‘positive decision’, which must specify which exception under the Treaty has been applied. To that decision conditions may be attached which enable the Commission to consider an aid compatible with the internal market (Article 7).

1.100. recovery of illegally granted aidsPursuant to Regulation No 659/1999, the Commission has the obligation to order the recovery of

unlawful or incompatible aid. Where it adopts a negative decision, the Commission decides that the Member State concerned must take all necessary measures to recover the aid from the beneficiary, unless the recovery would be contrary to a general principle of EU law. The recovery decision is sub-ject to a limitation period of ten years, beginning on the day on which the unlawful aid is awarded to the beneficiary either as individual aid or as aid under an aid scheme, and may be interrupted by any action taken by the Commission or by a Member State, acting at the request of the Commission, with regard to the unlawful aid. The recovery is meant to restore the situation as it existed on the market prior to the granting of the aid in question. The aid must be recovered from the actual bene-ficiary, which needs not be the undertaking having received the funds but can be that which retains the competitive advantage when repayment is requested. In application of the principle of procedural autonomy, the recovery of aid is made in compliance with the national rules - either material rules or rules of procedure or form, including those relating to the burden of proof.

1º) Member States’ execution obligationThe State granting the aid must, without delay and in accordance with the procedures under its

national law allowing the immediate and effective execution of the Commission’s decision abolish the unlawful aid entirely or, at least, officially inform the Commission of the measures of abolishment adopted. For that purpose, it must use all the legal means available under its own legal system. The State concerned must comply with the recovery decision under penalty of being sued in accordance with Article 108(2) TFEU, which allows the Commission to directly refer the matter to the Court of Justice without resorting to the pre-litigation phase of an action for a declaration of failure to fulfill Treaty obligations (Regulation No 659/1999, Article 23). It may however plead that it is absolutely impossible for it to implement the decision where it encounters unforeseen and unforeseeable diffi-culties to implement the recovery. The fact that implementation is impossible is strictly interpreted.

2º) Beneficiary’s repayment obligationThe recovery of an unlawful State aid must not be contrary to the principle of legal certainty.

The Commission must make sure during the procedure that it does not mislead the beneficiaries on the nature of the aid granted to them. It is required to take into consideration on its own initiative the exceptional circumstances that provide justification for it to refrain from ordering the recovery of unlawful aid schemes where such recovery is contrary to a general principle of EU law, such as respect for the legitimate expectation of beneficiaries. The beneficiary may rely on a legitimate expectation that a State measure is lawful, in particular where it bears a close resemblance to an aid


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scheme authorized by the Commission in another Member State. By contrast, where the procedure provided for in Article 108 TFEU was not followed or where the decision not to raise any objections was challenged in due time before the Court, then annulled by it, the beneficiary of aid could not entertain any legitimate expectation that the aid was lawful.

The purpose of a decision to recover unlawful State aid is to annul all advantages unduly received by the beneficiary in order to restore the normal conditions of competition. The beneficiary must therefore repay not only the amount of the aid but also the interest received, which is the equivalent of the financial advantage arising from the availability of the funds in question, free of charge, over a given period.

1.101. appealsPursuant to Article 263 TFEU, the Court of Justice reviews the legality of acts of the Commission.

Since its creation in 1988, the General Court exercises that review in the first instance.1º) Challengeable actsAs a principle, all Commission decisions on State aid may be subject to action for annulment:

decision not to raise any objections, decision to initiate the formal procedure, insofar as it implies to classify aid as existing or new aid, suspension decision, decision proposing to adopt appropriate measures and final decision. By contrast, an applicant is not entitled to claim the annulment of a decision to institute proceedings for failure to fulfill obligations insofar as that decision is of concern only to the Member State to which it is addressed. The Court reviews the nature of the act, not its form. To be classified as a challengeable act, the act must adopt unequivocally a measure which pro-duces legal effects affecting the interests of the parties concerned by bringing about a change in their legal position and which is binding on them. Accordingly, the Commission’s letters merely supplying information do not constitute actionable measures. Likewise, acts purely confirmatory and prepa-ratory measures are inadmissible on that basis. Lastly, although it has legal effects, a compatibility decision does not adversely affect the State to which it is addressed and which should therefore not bring an action.

2º) Interest in bringing proceedingsPursuant to Article 263(4) TFEU, only natural or legal persons to whom a decision is addressed or

those who are directly and individually affected by that decision are entitled to institute proceedings. The Member States, having granted the aid or not, have always standing to bring proceedings, inclu-ding against a positive decision. Any other applicant must, by contrast, bring evidence of a direct and individual interest in bringing proceedings. This is the case of the recipient of the aid and its com-petitors. The beneficiaries of an unlawful aid, who were fully identifiable when the incompatibility decision was adopted, are individually concerned by virtue of this capacity alone.

The question is more complex for competing undertakings. The capacity as undertaking com-peting with the beneficiary, whose interests could be affected, is sufficient to give it standing to challenge a compatibility decision taken on conclusion of the preliminary phase, where due to the absence of initiation of a formal procedure it was not given the opportunity to assert its rights. By contrast, the capacity as competitor is insufficient to show an interest in bringing proceedings where the decision was adopted on completion of the formal investigation phase. The beneficiary’s competitor must then justify - given the extent of its possible participation in the procedure and the significant effect on its market position - circumstances which distinguish it individually just as in the case of the person addressed.

Lastly, a professional association, which constitutes one of the interested parties listed in Article 1 of Regulation No 659/1999, can be recognized an own interest in bringing proceedings where it has the capacity as negotiator, within an economic meaning, in the sector concerned or it represents undertakings whose action would have been individually admissible, or a collective interest associa-ted to its participation in the proceedings.

If the action is well founded, the challenged measure is declared to be void. The annulment deci-sion has absolute authority. The institution who took the annulled act is required to give all the

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effects to its annulment, which implies to take the necessary measures to fully apply the decision. The Commission who had one of its decisions annulled must necessarily restart its review when the unlawfulness takes place.


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ChaPtEr 2

aUStria


I. Substantive rulesA. Context and scope

Context 2.01 Scope 2.02

B. Restrictive agreementsThe prohibition 2.03Exemptions 2.04

C. Abuse of dominanceDominant position 2.05 Abuse 2.06

II. EnforcementA. Enforcement authorities

The Cartel Court (Kartellgericht) 2.07The Federal Competition Authority (Bun-deswettbewerbsbehörde) 2.08

The Federal Competition Prosecutor (Bundeskartel-lanwalt) 2.09The Competition Commission (Wettbewerbskommis-sion) 2.10The Social partners 2.11

B. Enforcement proceedingsComplaints and investigations 2.12Proceedings before the Cartel Court 2.13Interim relief 2.14 Enforcement by ordinary courts 2.15

C. SanctionsCease and desist orders 2.16 Fines 2.17 Leniency 2.18

D. AppealsAppeals against decisions of the Cartel Court 2.19

Section 2 Mergers

I. Substantive rulesConcept of concentration 2.20 Thresholds 2.21 Control criteria 2.22 Control of media-sector mergers 2.23


The FCA and the Cartel Court 2.24B. Enforcement proceedings

Merger notification 2.25 Proceedings before the Cartel Court 2.26

C. Conditions/Sanctions Conditions and commitments - Divestiture 2.27 Fines 2.28

D. AppealsAppeals against decisions of the Cartel Court 2.29



a. Context and scope

2.01. ContextAustrian competition law is governed by the Austrian Cartel Act 2005 (Kartellgesetz 2005 - KartG

2005), which came into effect on 1 January 2006. Its provisions cover restrictive agreements, abuse of dominance and mergers and enforcement procedure. The Competition Act (Bundeswettbewerbsgesetz - WettbG), introduced on 1 July 2002, establishes the Austrian Competition Authority, and sets out its powers and jurisdiction. As is the case in Germany, unfair competition in Austria is treated under a separate Act dealing specifically with that area (Gesetz gegen den unlauteren Wettbewerb – UWG). The Cartel Act 2005 contributed to a unification of Austrian competition legislation with EU law.

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2.02. ScopeWith regard to its territorial scope, the Act applies to anticompetitive conduct occurring on the

Austrian territory. The Cartel Act also extends to conduct that takes place outside Austria insofar as such conduct affects the market in Austria. The Cartel Act applies to companies and individuals. Under Section 2(2), the provisions regarding anticompetitive agreements and abuse of dominance do not apply to retail price-fixing agreements in the publishing and press sector, to certain restrictions on com-petition between members of cooperatives, to restrictions in the banking and the agriculture sectors.

B. restrictive agreements

2.03. the prohibitionThe Cartel Act 2005, which entered into force on 1 January 2006, brought Austrian cartel law in

line with EU law. Thus, Section 1(1) of the Cartel Act is almost identical to the prohibition provided for in Article 101 TFEU: it prohibits agreements between undertakings, decisions by associations of undertakings and concerted practices that have as their object or effect the prevention, restric-tion or distortion of competition. Section 1(2), which sets out examples of prohibited practices, repeats the wording of Article 101 TFEU. Section 1(4) also prohibits restrictive recommendations (Empfehlungskartelle) to observe fixed prices, price limits, calculation guidelines, trade margins or discounts, which intend to or have the effect of restricting competition. However, recommendations that are expressly non-binding and which are not enforced through economic or other pressure are not covered by the prohibition.

Agreements, decisions by associations of undertakings, concerted practices and cartel recommen-dations are prohibited per se by Section 1(1). Where the implementation of a restrictive agreement is prohibited, the agreement is void according to Section 1(3).

Cartels are considered de minimis (Bagatellkartelle) pursuant to Section 2(2), if at the time of their formation, they cover:

- a share of less than 5% of the entire domestic market;- a share of less than 25% of a relevant domestic market.

2.04. ExemptionsPursuant to Section 2(1) individual exemptions are possible provided four conditions are fulfil-

led. Those conditions are practically the same as under EU law: the contribution to improving the production or distribution of goods or to promoting technical or economic progress; a fair share for consumers of the resulting benefit; the non-imposition on the undertakings concerned of restrictions which are not indispensable to the attainment of these objectives; and the agreement shall not enable the undertakings concerned to eliminate competition in respect of a substantial part of the products in question.

Pursuant to Section 3(1) of the Cartel Act, the Minister for Justice may adopt regulations exemp-ting certain categories of agreements from the prohibition. The EU block exemption regulations may be used as an interpretative guide to apply the exemptions contained in Section 2 of the Act.

C. abuse of dominance

2.05. Dominant positionIn considering whether an undertaking is dominant on the relevant market, the authorities look to

see if it is exposed to significant competition from other undertakings and whether it has a superior market position taking account of factors such as financial strength, relations to other undertakings, access to supply and sales markets and barriers to accessing the market (Section 4(1)). If customers or suppliers are dependent on the maintenance of the business relationship to avoid severe business


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disadvantages, this may also lead to a finding of market dominance regardless of the undertaking’s market share (Section 4(3)).

The Competition Act describes three situations in which market dominance is presumed and the burden of proof thus shifts to the undertaking to demonstrate that it is not dominant. (Section 4(2)). First, an undertaking is presumed to be dominant where it has a market share of at least 30%. Alternatively, there is a rebuttable presumption that an undertaking is dominant where it has a market share of more than 5% and it is exposed to competition by not more than two competitors. Finally, dominance is also presumed where an undertaking has a market share of more than 5% and is one of the four largest undertakings that together have a share of the market of at least 80%.

2.06. abuse Holding a dominant position is not prohibited per se. Section 5(1) includes a non-exhaustive list

of conduct that constitutes an abuse of dominance, such as imposing unreasonable prices or business terms, restricting sales to the detriment of consumers, and other conduct paralleling the examples in Article 102 TFUE. Resale below cost was added to the list of abusive practices in the 1999 amendments to the previous Cartel Act. In cases involving below-cost selling, the burden of proof is on the dominant undertaking to demonstrate either that the sale was not below cost or that it was objectively justified.

ii. Enforcement


2.07. the Cartel Court (Kartellgericht)The Vienna Court of Appeal acts as the Cartel Court and in such capacity has jurisdiction over

the entire federal territory. When acting as the Cartel Court, the benches of the Vienna Court of Appeal consist of one presiding judge and one additional judge, as well as two experts who are not professional judges. Half of the expert judges on a panel are from the Federal Chamber of Labor, and half from the Federal Chamber of Commerce or, where appropriate, from the Chamber of Agriculture. Where there is a tied vote, the vote of the presiding judge prevails. The presiding judge takes decisions regarding interlocutory orders acting alone, but only if all parties agree can the presiding judge take final decisions acting alone.

Appeals from the Cartel Court go to the Austrian Supreme Court acting as the Supreme Cartel Court. An appeal from a decision taken by the presiding judge acting alone is heard by a three-judge panel of the Supreme Court. When exercising cartel jurisdiction, the panels of the Supreme Court consist of one presiding judge, two additional judges, and two expert lay judges. The Supreme Cartel Court is required under the Cartel Act to draft a report on the activities of the Cartel Court and Supreme Cartel Court each year and transmit it to the Federal Minister for Justice.

2.08. the Federal Competition authority (Bundeswettbewerbsbehörde)The role of the Federal Competition Authority (FCA), created, in 2002 is to guarantee the pro-

per functioning of competition law in Austria. It is authorized to carry out investigations of alle-ged restrictions on competition and may provide administrative assistance to the Cartel Court, the Supreme Cartel Court and the administrative authorities involved in the area of competition law. The Authority has also residual competence for the application of EU competition rules in Austria and is required to assist the European Commission when carrying out investigations in Austria. Finally, the Authority can choose, sua sponte, to participate in actions before the Cartel Court, even where it is not the party bringing the action.

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2.09. the Federal Competition Prosecutor (Bundeskartellanwalt)The role of the Federal Competition Prosecutor (FCP) is to represent the public interest in com-

petition law proceedings before the Cartel Court. The FCP is independent from the Cartel Court. The FCP is subordinated in competition matters to the Federal Minister of Justice, and is assisted by a Deputy Prosecutor. The Federal Competition Prosecutor and Deputy are appointed by the Federal Austrian President upon nomination by the Federal Government, for a period of five years during which they can only be removed for cause (mental or physical incapacity, or misconduct).

2.10. the Competition Commission (Wettbewerbskommission)The Competition Commission was established in 2002 with the Federal Competition Authority

as an advisory body.The role of the Competition Commission is to be commissioned by the Federal Competition

Authority or by the Federal Minister of Economics to prepare expert opinions on general competi-tion issues.

The Commission is made up of eight members, each having a substitute member appointed for them. A chairperson is elected among the Commission’s members. The Commissioners are nomina-ted by the Federal Minister of Economics for a renewable four-year term. The Austrian Economic Chamber, the Federal Chamber of Labor, the Austrian Trade Union Federation and the Presidential Conference of Chambers of Agriculture each nominate a member.

2.11. the Social partnersUnder Austrian law, although no longer considered as “official parties”, the Social partners

continue to play an important role in competition actions before the Cartel Court. The Chamber of Commerce of Austria, the Federal Chamber of Workers and Employees and the Presidential Conference of the Chambers of Agriculture are entitled to offer opinions in any competition law proceeding. The Social partners are required to submit an expert opinion within their sphere of acti-vity to the court where requested, within the period fixed by the court.


2.12. Complaints and investigationsUpon application, the Cartel Court can order the undertakings involved to stop the abuse of a do-

minant position. The entities with a right of application include the official parties, any undertaking with a legal or economic interest, associations representing the economic interests of affected under-takings, the chambers of commerce and specified federal agencies (Federal Competition Authority and Federal Competition Prosecutor).

2.13. Proceedings before the Cartel CourtIn proceedings before the Cartel Court or Supreme Cartel Court, cartels must have an appointed

representative. The cartel representative must be resident in Austria. A simple majority of cartel mem-bers is sufficient to appoint or revoke the appointment of a representative. If the Cartel Court is not notified of the appointment of a representative within a set period, the Cartel Court will appoint one.

The information to be included in an application to the Cartel Court for authorization is set out in the Cartel Act for cartels and abuse of dominance. A hearing shall be held upon request of a party. Hearings are public, unless the public is excluded by application for the purposes of safeguarding trade or business secrets.

The Act does not establish a fixed time-limit for proceedings; rather, the presiding judge is autho-rized to establish a reasonable time-limit and has the power to extend time-limits already granted.


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Parties may submit commitments which can terminate the proceedings.

2.14. interim reliefThe Cartel Court has authority to prohibit by preliminary injunction the implementation of a car-

tel. The issuance of a preliminary injunction can be made contingent on the provision of reasonable security in certain cases. The opposing party has an opportunity to be heard prior to the issuance of a preliminary injunction. An appeal from an injunction does not have suspensive effect, unless such a request is granted by the Cartel Court after weighing up the interests involved.

2.15. Enforcement by ordinary courts Contract disputes, including those involving cartel agreements, are heard in the first instance

by provincial capital trial courts exercising jurisdiction in civil matters. The panel for commercial matters exercises jurisdiction in cases where the matter cannot be heard by a judge sitting alone. In Vienna, however, the Vienna Commercial Court has exclusive jurisdiction over civil disputes invol-ving cartels. The Cartel Act provides that even where agreed in the cartel agreement that disputes arising therefrom would be subject to arbitration, nevertheless, jurisdiction always exists in the civil courts. Arbitration panels are required to notify parties of this right to have the matter heard by a civil court. Lastly, when an order of the Cartel Court has become enforceable, applicants can seek a writ of execution implementing the order from the district court where the liable party is subject to jurisdiction.

An action for judicial assistance against boycotts seeking specific performance or a declaratory judgment may also be brought before the civil courts, where an action on the same subject has been filed within the Cartel Court. A civil suit may only be brought, however, within four weeks of the application to the Cartel Court.

Claims for damages have to be brought before the ordinary courts.

C. Sanctions

2.16. Cease and desist ordersThe Cartel Court can order the undertakings to bring an immediate end to the infringement.

2.17. FinesIllegally implementing a cartel is punishable by a fine of up to 10% of the aggregate turnover of the

respective undertaking achieved in the last business year (Section 29). Abusing a dominant position or failing to respect an order regarding abuse of a dominant position, or contravening Articles 101(1) or 102 TFUE is punishable by fines in the same amount.

Providing false or incomplete information in competition law proceedings is punishable by fines amounting to 1% of the aggregate turnover of the respective undertakings achieved in the last busi-ness year. Failure to comply with provisions regarding appointment of a representative is punishable by fines of EUR 140 – EUR 1,400.

In imposing fines, the Cartel Court is required by the Cartel Act to consider the seriousness and duration of the violation, the illegal profits made, the degree of fault, and the economic capacity of the undertaking involved (Section 30). The Cartel Court may also require the undertaking(s) in question to publish the decision imposing fines at its own expense. The Federal Competition Authority and the Federal Competition Prosecutor are entitled to apply to the Cartel Court for an order imposing fines, subject to a statute of limitations period of three years.

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2.18. LeniencyThe leniency program is regulated by Sections 11(3) to 11(6) of Competition Act and Section

36(3) of the Cartel Act. The leniency program allows immunity from fines for an undertaking that entered into a cartel agreement subject to four conditions: the undertaking seeking immunity must end its participation in the cartel; it must inform the FCA of the infringement before the FCA has knowledge about it; it must cooperate genuinely, fully, on a continuous basis and expeditiously, from the time it submits its application throughout the administrative procedure; it must not have coerced any other party into the cartel. If the FCA has already been informed of the cartel, the undertaking may still be eligible for a reduced fine if all other conditions are fulfilled.

D. appeals

2.19. appeals against decisions of the Cartel CourtAccording to Section 39 of the Cartel Act, the parties can appeal against the Cartel Court’s deci-

sions. Appeals from orders of the Cartel Court are made to the Supreme Court acting as the Supreme Cartel Court (Kartellobergericht) in second and last instance. Appeals to the Supreme Cartel Court are ordinarily heard by a panel composed of one presiding judge and two additional judges and two expert lay judges. Enlarged panels of the Supreme Cartel Court consist of seven judges and four lay judges. The period for bringing an appeal is four weeks from receipt of the Cartel Court decision. The other parties can, within four weeks after service of the appeal, file a reply to it.

Section 2 MERGERS


2.20. Concept of concentrationA concentration is defined in Section 7 as the acquisition of an undertaking, in whole or in part,

whether by merger, acquisition of shares, contract or any other manner of obtaining a controlling influence over another business. The acquisition of shares is deemed a concentration if an interest of 25% or more or of 50 % or more is thereby achieved (Section 7). Likewise, where at least half of the members of the managing executive board or supervisory board are identical there is a concentration. Finally, a joint venture may be considered as a concentration pursuant to Section 7 when it fulfills all the functions of an independent economic entity on a lasting basis.

2.21. thresholds An application for registration with the Cartel Court must be made where, cumulatively in the

prior fiscal year, the undertakings involved have either a combined worldwide turnover of EUR 300 million, a combined national turnover of EUR 30 million and at least two undertakings involved each have a worldwide turnover of EUR 5 million.

However, even where these thresholds are met, notification is not required if one of the underta-kings concerned has achieved, on the Austrian market, a turnover exceeding EUR 5 million, and the combined aggregate worldwide turnover of the other undertakings concerned does not exceed EUR 30 million.

The undertakings concerned for thresholds purposes are, in any event, the acquirer and the tar-get as well as all entities that are affiliated; the seller only qualifies as “undertaking concerned” if he continues to hold an interest in the target of more than 25%.


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2.22. Control criteriaWhere an examination has been sought, the Cartel Court will eventually issue a decision decla-

ring either that no concentration exists, that the concentration will create or strengthen a dominant position and is thus prohibited, or that the concentration is not prohibited.

Even where a concentration may create or strengthen a dominant position, the Cartel Court may nevertheless authorize it where the advantages to competition that will result from the concentration may outweigh the disadvantages, or the concentration is necessary to improve the international com-petitiveness of the businesses involved and is justified by national economic interest (Section 12(2)).

2.23. Control of media-sector mergersA concentration comes under the heading of a media concentration if at least two undertakings

involved are media businesses or media services within the meaning of Section 1 of the Media Act, media support businesses, or businesses that directly or indirectly hold an interest of at least 25% in a media business, media service, or media support business. For purposes of the Cartel Act, media businesses include publishing houses, printers, advertising brokers, large-scale distributors of media products and film rental businesses. If only one of the businesses involved in the concentration is a publishing house, printer or advertising broker, and one other business involved in the concentration holds an interest of at least 25% in a media business, media service or media support business, the concentration will likewise be deemed a media concentration.

For purposes of determining whether a media business satisfies the above thresholds, for which it is required to apply for registration with the Cartel Court, the actual turnover proceeds of a media business or media service are multiplied by 200, and the turnover proceeds of a media support busi-ness are multiplied by 20. The Cartel Act requires the Cartel Court to prohibit a media concentra-tion where the concentration is expected to impair media diversity. Nevertheless, even where applica-tion of the usual standards would require that the concentration be prohibited, the Cartel Court may authorize a media concentration where necessary to improve or preserve the international competi-tiveness of the businesses involved and the concentration is justified by national economic interest.

ii. Enforcement


2.24. the FCa and the Cartel CourtThe scheme for the control of concentrations in Austria lays in the Cartel Act 2005. The Competition

Act also contains some relevant procedural rules. Several institutions are involved in merger control: notifications have to be made to the Federal Competition Authority (Bundeswettbewerbehörde) which are then forwarded to the Federal Cartel Prosecutor (FCP, Bundeskartellanwalt).


2.25. Merger notificationWhere the applicable thresholds are met, notifications have to be made with the Federal

Competition Authority (Bundeswettbewerbehörde) which are then forwarded to the Federal Cartel Prosecutor (FCP, Bundeskartellanwalt). The FCA and the FCP, referred to as the “official parties” (Amstparteien), may apply for an in-depth investigation (second phase proceedings) before the Vienna Appellate Court acting as Cartel Court (Oberlandesgericht Wien als Kartellgericht), which is the decision-making authority.

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Any of the undertakings involved may make an application for registration. According to the Merger Notification Form published by the FCA, the information to be included in an application comprises inter alia information about the structure of the business, turnover on the relevant mar-kets, and the respective market shares of the undertakings concerned.

The FCA publishes excerpts from the application for registration immediately upon receipt the-reof. Undertakings whose interests are affected by the concentration may submit written complaints to the FCA within two weeks after publication, and this right must be indicated in the publication. Implementation of a concentration is prohibited until obtaining formal clearance.

The filing fee is set at EUR 1,500; in case of phase 2 proceedings, the Cartel Court may impose an additional sum of up to EUR 30,000.

2.26. Proceedings before the Cartel CourtThe official parties (Federal Competition Authority; Federal Competition Prosecutor) have four

weeks after the notification to assess the operation and decide whether to apply for an in-depth exa-mination of the concentration (phase 2). Competition Commission may formally recommend the Federal Competition Authority to apply for an in-depth investigation.

If an in-depth investigation is not required, the merger is cleared.In case of an in-depth investigation, an order prohibiting a concentration may not be issued later

than five months from receipt of a complete application. If the Cartel Court has not prohibited a concentration within this five-month period, upon the expiration thereof it must immediately issue an order authorizing the concentration.

An application can be made to the Cartel Court for a declaration that an unauthorized concen-tration has been implemented. Such applications can be made by official parties, any undertaking having a legal or economic interest or any association of undertaking whose economic interests are affected by the concentration, Chambers of Commerce and certain federal agencies.


2.27. Conditions and commitments - DivestitureThe Cartel Act prohibits implementation before clearance in the case of mergers subject to merger

notification. Until clearance, the merger is void (which means that it does not create any obligations for the parties), prohibited and subject to fines.

Alternatively, the Cartel Court can approve the concentration subject to conditions. These condi-tions may thereafter be revoked or modified upon application.

2.28. FinesFines are imposed by the Cartel Court. Unauthorized implementation of a merger that requires merger notification is subject to fines

of up to 10% of the combined worldwide turnover in the last business year of the undertakings in-volved (Section 29). Violating a prohibition on a concentration, or failing to comply with conditions imposed on a concentration may lead to similar fines. The filing of incorrect or incomplete merger notifications is subject to fines of up to 1% of the combined worldwide turnover in the last business year of the undertakings involved. The amount of the fine depends on the seriousness and the dura-tion of the infringement of the Cartel Act, on the enrichment resulting from the violation and on the economic capability of the undertaking (Section 30).


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D. appeals

2.29. appeals against decisions of the Cartel CourtDecisions of the Cartel Court are subject to appeal by the official parties and all notifying par-

ties within four weeks from service of the decision. The appeal is heard by the Supreme Court as Supreme Cartel Court (Oberster Gerichtshof als Kartellobergericht).

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ChaPtEr 3

BELGiUM



Context 3.01Scope 3.02


C. Abuse of dominanceThe prohibition 3.05Dominant position 3.06Abuse 3.07


The Directorate-General for Competition, the Compe-tition Service and the Competition Prosecutors 3.08The Competition Council (Conseil de la concurrence) 3.09

The Competition Commission (Commission de la concurrence) 3.10Other authorities 3.11

B. Enforcement proceedingsComplaints and investigations 3.12 Proceedings before the Competition Council 3.13Interim relief 3.14Enforcement by ordinary courts 3.15

C. SanctionsCease and desist orders 3.16Fines 3.17Leniency 3.18

D. Appeals Appeals against decisions of the Competition Council 3.19Appeals against decisions of the sectoral regulatory authorities 3.20

Section 2 Mergers

I. Substantive rulesContext 3.21Concept of concentration 3.22Thresholds 3.23Control criteria 3.24

II. EnforcementA. Enforcement proceedings

Merger notification 3.25Proceedings before the Competition Council 3.26

Authorization by the Council of Ministers 3.27B. Conditions/Sanctions

Conditions and commitments - Divestiture 3.28Fines 3.29

C. AppealsAppeals against decisions of the Competition Council 3.30Appeals against decisions of the Council of Minis-ters 3.31




3.01. ContextCompetition law in Belgium was initially governed by the Act of 5 August 1991, “On the Protection

of Economic Competition”, which came into force on 1 April 1993. The Act repealed the law of 27 May 1960 on the abuse of dominance, and established the basis of Belgian competition law. With the adoption of this Act, Belgian competition law was largely in-line with the principles of EU competi-tion law. This law was amended by two coordinated acts in 1999. Belgian law then entered a second phase of evolution bringing it into line with European competition legislation which had been signi-

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ficantly revised in the first few years of the new millennium. Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules of competition law laid down in Articles 101 and 102 TFEU was first transposed by Royal Decree of 25 April 2004 into national law. Then in 2006 Belgian competition law underwent a complete overhaul with a view to the creation of a new, finan-cially independent competition authority and to the pursuit of harmonization, in particular with regard to Regulation No 139/2004 of 20 January 2004 on the control of concentrations between undertakings. Two laws of 10 June 2006, one of which instituted the Competition Council (Conseil de la concurrence) and the other relative to the protection of economic competition (the LPCE Act of 2006), published in the Belgian Official Gazette on 29 June 2006 and coordinated by a royal decree issued on 15 September 2006, came into force on 1 October 2006. The 2006 LPCE law was followed by fourteen implemen-ting decrees, the last of which is dated 10 August 2009. It repeals and replaces the Act of 5 August 1991 and constitutes the current state of Belgian competition law governing restrictive agreements, and abuse of dominant position (classified as restrictive practices under Article 4 LPCE) and concentra-tions. In addition, the national competition authorities must assess restrictive practices that may affect trade between Member States in light of Articles 101 and 102 TFEU.

3.02. ScopeThe prohibition only applies to practices that restrict or distort competition on the relevant

Belgian market or a substantial part thereof. Restrictive agreements or abusive practices must result from undertakings directly or indirectly exercising their activity on the Belgian market regardless of their place of establishment. According to Article 1 of the LPCE, competition law applies to undertakings i.e. any natural or legal person pursuing an economic objective in a sustainable manner. Thus, the Act is broad in its scope: the form of the undertaking, whether it is public or private, or its nationality or method of financing are of little relevance.


3.03. the prohibition Article 2(1) of the LPCE is almost identical to Article 101 of the TFEU. It establishes a prohibi-

tion against all agreements between undertakings, all decisions by associations of undertakings and all concerted practices, the aim or consequence of which is to prevent, restrict or distort significantly competition in the Belgian market concerned or in a substantial part of that market. Thus, restric-tions of competition that are considered de minimis do not come within the prohibition.

According to Article 2(2), any agreements or decision prohibited pursuant to this article are auto-matically void.

3.04. ExemptionsUnder the previous law, undertakings had to notify their agreements to qualify for an individual

exemption. In compliance with European law, the 2006 LPCE Act removed the obligation to notify. Now, Belgian undertakings must assess their agreements with regard to competition law and they can be automatically exempted if they fulfill all the conditions of exemption. The prohibition does not apply if the conditions of Article 2(3) of the Act or the conditions of Article 101 (3) TFEU are met (Article 5 LPCE).

For an individual exemption to be granted, according to Article 2(3) the following test must be satisfied:

- the practice must contribute to improving the production or distribution of goods or to promo-ting technical or economic progress or enable small and medium-sized undertakings to assert their competitive position in the market concerned or internationally;

- consumers must receive a fair share of the resulting benefit;

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- the practice must not involve the imposition of restrictions that are not indispensable to the attainment of the objectives;

- the practice must not allow the undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

Article 5 of the LPCE provides that the prohibition does not apply to agreements for which Article 103(3) TFEU has been declared applicable by a regulation of the EU Council or an EU Commission decision.

This is also the case for “agreements, decisions of associations of undertakings and concerted practices which do not affect trade between Member States or which do not restrict, prevent or distort competi-tion in the common market and which would have been protected by a regulation within the meaning of the first clause, if they had affected such trade or restricted, prevented or distorted this competition”.

Lastly, the final paragraph of Article 5 lays down that certain categories of restrictive agreement may be exempted by royal decree pursuant to Article 50 LPCE.


3.05. the prohibitionArticle 3 of the Act regarding abuse of dominance is based on the wording of Article 102 TFEU.

It prohibits, without the need for a prior decision to that effect, any abuse by one or more underta-kings of a dominant position within the Belgian market or in a substantial part thereof. There are no derogations to the prohibition on abuse of dominance.

3.06. Dominant positionDefining the relevant market and assessing dominance are carried out in accordance with the

applicable principles under EU competition law. Article 1 of the LPCE defines a dominant position as “the position enabling an undertaking to impede effective competition by giving it the ability to behave independently to a significant extent of its competitors, customers or suppliers”. Under case law it is generally considered that a dominant position is the result of a conjunction of a number of criteria, which individually would not be pertinent. The first criterion assessed is generally relative to the existence of a large market share.

3.07. abuseOnce dominance is found to exist, for the prohibition to come into play there must be an abuse.

Article 3 of the law sets out a non-exclusive list of prohibited conduct including: directly or indirectly imposing unfair trading conditions, limiting production, markets or technical development, applying dissimilar conditions to equivalent transactions or making the conclusion of contracts subject to acceptance of unrelated terms. The evaluation of whether a term is fair depends upon whether the discriminated party would have accepted it had the other party not been in a dominant position and had real competition existed.

ii. Enforcement


3.08. the Directorate-General for Competition, the Competition Service and the Competition Prosecutors

Under Article 1 of the LPCE of 2006, the Belgian Competition Authority refers to the Competition Council, the Directorate-General for Competition established within the Federal Public Service

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Economy, SMEs and Small firms and traders (Classes moyennes) and Energy each acting in accor-dance with its powers as defined in the Act.

According to Article 34 LPCE, “The Directorate-General for Competition shall be responsible in particular for:

1º detecting and examining the practices referred to in chapter II, under the authority of the College of Competition Prosecutors (Auditorat) and the designation of officials of the Directorate-General to participate in inspections carried out by officials of the European Commission, laid down in Regulation No 1/2003 concerning the implementation of the rules of competition as laid down by Articles 101 and 102 TFEU;

2º representing Belgium, on the Minister’s authority and subject to Article 21, in European and international competition organizations;

3º preparing, implementing and evaluating economic competition policy in Belgium;4º preparing Belgian legislation and regulations on economic competition.” The Directorate-General for Competition with its staff of 50 public servants is empowered to take

investigatory measures (searches and seizures etc.), assists the Auditorat officers (witness testimonies, hearings before the Council etc.) and carries out sectoral or general investigations.

3.09. the Competition Council (Conseil de la concurrence)The Competition Council is an administrative tribunal, which is divided into chambers and is

empowered to take decisions regarding mergers (Article 57), individual exemptions (Article 52), and the existence of anticompetitive practices (Article 48) on the basis of reports drawn up by the College of Competition Prosecutors in collaboration with the Directorate-General for Competition.

By virtue of Article 79 LPCE, the Competition Council is also empowered to hear, in the cases determined by the act, appeals against the decisions of sectoral regulatory authorities.

The Council participates in meetings between the jurisdictional authorities and in other European and international meetings (Article 21 LPCE).

The Competition Council is made up of a General Assembly composed of “councillors”, a “College of Competition Prosecutors” (Auditorat - investigating officers – formerly rapporteurs) composed of one prosecutor-general, prosecutors and deputy prosecutors, and a “registry” (former secretariat of the Council) (Article 11).

The General Assembly of the Competition Council is made up of 12 councillors appointed for a six year renewable term. The president, the vice-president and four other members of the Competition Council hold full-time positions. When the president of the Competition Council considers that, in order to ensure the unity of case law, a case must be dealt with by the General Assembly, the president orders the case to be referred to the Assembly (Article 23). The General Assembly of the Council determines on an annual basis the composition of the chambers and chooses their presidents (Article 19), rules on challenges against councillors and investigators (competition prosecutors) (Article 18), issues opinions (Articles 7, 9, 18, 19, 23, 26, 30 and 50 LPCE), and establishes the specific simplified notification rules for the notification of concentrations (Article 9).

The College of Competition Prosecutors or Auditorat (previously called the Corps des rapporteurs), was established as part of the Competition Service by the 1999 amendment to the Act (Article 14). Since the entry into force of the LPCE Act of 2006, the competition prosecutors have been part of the Competition Council. They are made up of at least six and at most ten members, including a prosecutor-general, competition prosecutors and deputy competition prosecutors (Article 25). Their tasks are defined in Articles 29, 61 and 76 LPCE. The role of competition prosecutors is specifi-cally: receiving complaints and requests for interim measures regarding anti-competitive practices; heading and organizing investigations and ensuring the implementation of decisions taken by the Competition Council; drawing up and submitting the reasoned report to the Competition Council; investigating matters for which the decision of the Council or its president is the subject of an appeal to the Court of Appeal.

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The registry fulfills the role of secretariat of the Competition Council. It is responsible for no-tifying the Council’s decisions and receiving complaints, and for notifications and appeals against decisions of the sectoral regulatory authorities (Articles 67 and 80).

3.10. the Competition Commission (Commission de la concurrence)The Competition Commission is established within the Central Council for the Economy. It is

an advisory body empowered to issue opinions, on its own initiative or on request of the Minister for Economic Affairs or the Competition Council, on all general matters of competition policy (Article 42 LPCE). This Commission represents the opinions of workers, and the industrial, agricultural, trade and crafts sectors, as well as consumers. It is not an organ of the Competition Council.

3.11. Other authoritiesThe Minister for Economic Affairs may, inter alia, ask the competition prosecutors to investigate

violations of Articles 2(1), 3, 9(1), or in the event of non-compliance with a decision taken by virtue of Articles 9(5), 52, 53, 58 or 59; (Article 44 LPCE)), require the Competition Service to carry out sector-specific investigations (Article 47), and submit requests to the College of Competition Prosecutors for interim measures (Article 62) or refer a decision of the Competition Council to the Brussels Court of Appeal for judicial review (Article 76).


3.12. Complaints and investigationsComplaints and requests concerning anticompetitive practices are brought before the College of

Competition Prosecutors. There is a five year prescription period as regards the subject matter of any investigation (Article 88). The following may request that an inquiry be carried out:

- interested parties bringing complaints;- the Minister for Economic Affairs, the Minister for Small Firms and Traders (Ministre des

Classes moyennes), a public body or other specific public institution charged with the control or super-vision of an economic sector or the Competition Council itself where they have reason to believe that an anticompetitive practice is being carried out;

- the Brussels Court of Appeal (Cour d’appel de Bruxelles) in the context of an appeal against a decision of the Council.

The investigation of cases by the College of Competition Prosecutors may be ex officio at the request of the Minister or the General Assembly of the Council with a view to obtaining a royal decree exempting categories of agreements, decisions and concerted practices pursuant to Article 50.

In carrying out their investigation, the investigating officers may gather all information necessary to their inquiry and undertakings must communicate the information within the deadlines set out in the request. Failure to do so may result in the imposition of daily fines under Article 64(4).

According to Article 44, investigations are carried out by the investigating officers and public servants of the Directorate-General for Competition. They are empowered to collect information or documen-tary material, require written and oral testimony and depositions, and search the premises of an under-taking or the homes of executives and staff. They may also affix seals and make on-the-spot seizures.

3.13. Proceedings before the Competition Council.After the investigation, the College of Competition Prosecutors submits a reasoned report to the

Chamber of the Council, which includes the investigation report, the grievances and a proposed decision accompanied by the investigation file and a list of the documents comprising the file (Article 45(4)). It

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provides a copy of the report to the undertakings whose activities have been investigated and the registry informs the persons having submitted the complaint that the report has been filed (Article 48).

The president of the Chamber then sets the deadlines for the submission of the written observa-tions and replies by the investigation officers and the parties. The parties may submit commitments.

3.14. interim reliefPursuant to Article 62, the complainant, the Minister for Economic Affairs or the minister with

responsibility for the sector concerned may submit an application to the College of Competition Prosecutors for interim measures in order to have the restrictive practice under investigation suspended.

The president of the Council or the councillor delegated by him/her grants interim relief if there is an urgent need to avoid a situation likely to cause serious, imminent and irreparable damage to undertakings whose interests are affected by such practices or likely to harm the general economic interest. The president of the Council may impose the periodic penalty payment of up to 5% of ave-rage daily turnover in order to ensure compliance with the interim measures adopted in accordance with Article 62 (Article 66).

3.15. Enforcement by ordinary courtsThe courts may declare that agreements prohibited under the Act are void, and make findings

regarding abuse of a dominant position. In application of Article 74, “Any judgment or ruling given by the courts relating to cases concerning the legitimate nature of a competition practice within the meaning of this act shall be notified to the Directorate-General for Competition, the Competition Council, the Federal Public Service Chancellery and, if the judgment or ruling concerns the applica-tion of European competition law, to the European Commission within eight days at the request of the registrar of the competent jurisdiction”.

Where the outcome of the litigation depends on the interpretation of the LPCE, the court hea-ring the case may stay the proceedings and refer a question to the Court of Cassation for a prelimi-nary ruling. The court having referred the question and any other court called upon to rule on the same case must comply with the ruling given by the Court of Cassation (Article 73).

C. Sanctions

3.16. Cease and desist orders The Competition Council may order undertakings to cease carrying out a practice that has been

established as restrictive (Article 52(1)).

3.17. FinesIn application of Article 63, the Chamber of the Council may impose on each of the undertakings

and associations of undertakings found to have committed restrictive practices, fines not exceeding 10% of their turnover. In addition, it may, by the same decision, at the request of the competition prosecutor, impose on each of the undertakings and associations of undertakings concerned periodic penalty payments for non-compliance with its decision, of up to 5% of the average daily turnover, determined in accordance with the criteria referred to in article 86, per day of non-compliance, with effect from the date fixed by it in its decision.

In addition, fines of up to 1% of turnover may be handed down against undertakings where, deliberately or by negligence, they provide inaccurate or misleading information at the time of a notification or in response to a request for information, provide incomplete information or provide information outside the prescribed deadlines, or if they prevent or impede the investigations speci-fied in Article 44 as well as the inquiries referred to in Article 47.

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3.18. LeniencyThe LPCE also introduced a leniency procedure (Article 49) which may grant total or partial

immunity from fines to any undertaking having cooperated in the investigation. To obtain immu-nity, the undertaking having been involved together with others in an anticompetitive practice must contribute to proving the existence of the prohibited practice and to identifying the participants, “inter alia by providing information which the competition authority did not have before, by delive-ring the evidence of a practice prohibited by Article 2 of which the existence had not yet been esta-blished, or by admitting the prohibited practice”. As a consequence of the action of this undertaking, the Chamber of the Council adopts a leniency declaration which specifies the conditions applying to any envisaged exemption, after the undertaking concerned has submitted its observations.

D. appeals

3.19. appeals against decisions of the Competition Council In application of Article 75, the decisions of the Competition Council and its president may

be appealed with full jurisdictional powers before the Brussels Court of Appeal except where the Council rules on appeals against decisions of the sectoral regulatory authorities. Appeals must be lodged, under penalty of being automatically void, in the form of a signed application with the registry of the Brussels Court of Appeal within 30 days after notification of the decision (Article 76). An appeal does not suspend the decisions of the Council, or those of its president.

Appeals to the Court of Cassation against judgments pronounced by the Court of Appeal may also be lodged by the Minister for Economic Affairs, without the latter having to demonstrate an interest or without having been a party before the Competition Council or the Brussels Court of Appeal (Article 78).

3.20. appeals against decisions of the sectoral regulatory authorities. Pursuant to Article 79, the Competition Council hears appeals against the decisions of the sec-

toral regulatory authorities. Appeals must be lodged, under penalty of being automatically void, in the form of a signed application with the registry of the Competition Council within 30 days after notification of the decision, or for the other interested persons with effect from 30 days after the publication of the decision or, if it is not published, after they learn of it. Appeals do not suspend the decisions of the sectoral regulatory authorities (Article 80).

The Court of Cassation rules on appeals against decisions of the Competition Council pursuant to article 79 LPCE. The Competition Council must comply with the ruling of the Court of Cassation on the point of law on which it has ruled (Article 81).

Section 2 MERGERS


3.21. ContextThe principal aim of the 2006 LPCE Act is the transposing of EC Regulation No 139/2004 into

Belgian law. Now, a merger is declared admissible provided that it does not result in a significant obstacle to effective competition being created in the Belgian market or in a substantial part of that market, in particular through the creation or strengthening of a dominant position, which, like under EU law, no longer constitutes the sole criterion for authorization of the concentration. The LCPE also institutes a simplified procedure for the notification of concentrations (Article 61).

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3.22. Concept of concentrationAccording to Article 6 of the LPCE, concentration refers to any change of control of an underta-

king on a lasting basis, control of an undertaking being the possibility of exerting decisive influence on its activity.

Mergers, take-over bids and joint ventures come under the heading of business concentrations (Article 6). According to Article 6(2), a joint venture is considered a concentration where it performs on a lasting basis all the functions of an autonomous economic entity.

3.23. thresholdsArticle 7 of the Act governing concentrations applies to concentrations where certain turnover

thresholds are met. The aggregate turnover of the parties must exceed EUR 100 million and at least two of the undertakings must each have a turnover of EUR 40 million.

3.24. Control criteriaA concentration is deemed non-permissible when it does significantly impede effective compe-

tition in the Belgian market or in a substantial part thereof, in particular through the creation or strengthening of a dominant position. In examining the admissibility of the concentration, the com-petition authority must take into account: “1º the need to maintain and develop effective competi-tion in the national market having regard in particular to the structure of all the affected markets and the real or potential competition of undertakings located within or outside Belgium; 2º the position in the market of the undertakings concerned and their economic and financial power, the alterna-tives available to suppliers and users, their access to supplies or markets, any legal or other barriers to entry, supply and demand trends for the relevant goods and services, the interests of intermediate and ultimate consumers, and the development of technical and economic progress provided that it is to consumers’ advantage and does form an obstacle to competition” (Article7).

Where the creation of a joint venture constituting a concentration has as its object or effect the coordination of the competitive behavior of independent undertakings, such coordination is ap-praised in accordance with the criteria set out in Article 2 (on restrictive agreements), with a view to establishing whether or not the operation is permissible. For the purposes of that assessment, the following must be taken into account: “1º whether two or more parent companies retain to a significant extent, activities in the same market as that of the joint venture, or in a market which is downstream or upstream from that of the joint venture or in a neighboring market closely related to this market; 2º whether the coordination which is the direct consequence of the creation of the joint venture affords undertakings concerned the possibility of eliminating competition in respect of a substantial part of the products or services in question”.

When justified by the general interest, the Council of Ministers may authorize at its own initiative or at the request of the parties, the implementation of a concentration declared non-permissible by the Council. The Council of Ministers may also overturn totally or in part any conditions and obliga-tions imposed by the Competition Council. In its assessment and in the grounds for its decision, the Council of Ministers takes into consideration in particular the general interest, national security, the competitiveness of the sectors concerned with regard to international competition, and the interests of consumers and the employment market (Article 60).

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ii. Enforcement


3.25. Merger notificationUnder Article 9 LPCE, concentrations which exceed the quantitative thresholds must be notified

to the College of Competition Prosecutors before their implementation and after the conclusion of the agreement or proposed agreement. In the event of a take-over bid or public offer of exchange, the parties can notify a proposed agreement provided that they declare explicitly that they intend to conclude such an agreement (Article 9(1)). Concentrations consisting of a merger or the acquisition of joint control are notified jointly by the parties. In all other cases, the notification is submitted by the person or undertaking having acquired control of all or part of one or more undertakings.

3.26. Proceedings before the Competition CouncilA competition prosecutor designated by the prosecutor general handles the investigation of

the case as soon as the notification is received. He/she may be assisted by public servants of the Directorate-General for Competition. The competition prosecutor submits the reasoned report and the file to the Council within 25 working days with effect from the day after the day when the noti-fication is submitted to the College of Competition Prosecutors. The 25 working day time-limit may be extended by five working days, where the competition prosecutor considers that effective competition in the Belgian market or in a substantial part of it, would be significantly impeded, in particular by the creation or strengthening of a dominant position, and where commitments have been presented in accordance with Article 56 to remedy this.

If a concentration falls within the scope of the Act, the Competition Council may either decide that the concentration is admissible (phase 1) or, where there are serious doubts as regards admis-sibility, initiate the proceedings provided for by Article 59 (phase 2). The decision must be taken within 40 working days from the day after the date of receipt of the notification. The concentration is deemed admissible if the Competition Council has issued a decision during this period (Article 58). If a phase 2 review of the concentration is launched, the competition prosecutor must submit an additional report, which is also sent to the parties concerned. If the Competition Council has not issued a decision within 60 days of the decision to initiate proceedings, the concentration is deemed admissible (Article 59).

Article 9(3) LPCE provides that the General Assembly of the Competition Council may lay down specific simplified rules for the notification of concentrations. Simplified notification is desi-gned for concentrations which will be cleared or for those that will normally be cleared without an in-depth examination. Thus, by virtue of Article 58(2(2º)) LPCE a concentration must be declared admissible where the undertakings concerned do not jointly control more than 25% of any relevant market for the transaction, whether it concerns horizontal or vertical relationships. Most frequently this procedure is used for concentrations that do not result in a significant obstacle to effective com-petition being created in the Belgian market or in a substantial part of that market.

Where the simplified procedure is used, the competition prosecutor submits to the notifying par-ties a letter declaring the concentration admissible within 20 working days. This letter is considered as a decision of admissibility of the Council. If the conditions of admissibility are not met, or if there are any serious doubts as to its admissibility, the competition prosecutor submits another letter brin-ging the simplified procedure to an end.

3.27. authorization by the Council of MinistersWithin 30 days of notification of a decision of the Competition Council, the Council of Ministers

may authorize a concentration for general interest reasons which outweigh the risk of competi-tion being undermined as recorded in the decision of the Competition Council (Article 60). If the

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Council of Ministers fails to reach a decision within this period, it is deemed not to have granted the necessary authorization.

B. Conditions/Sanctions

3.28. Conditions and commitments - DivestitureThe Competition Council’s decision authorizing a concentration may be accompanied with

conditions and commitments. Where a concentration is prohibited, the Competition Council may require de-merger of the

undertakings, separation of the assets of the group, the cessation of joint control or any other mea-sures it deems appropriate (Article 59, §7).

3.29. FinesBy virtue of Article 65, fines of up to 10% of turnover may be imposed on undertakings imple-

menting concentrations before they have been cleared or which do not comply with prohibition or conditional authorization decisions. In application of Article 64, the chamber of the Competition Council hearing the case may impose a fine of up to 1% of its turnover on any undertaking providing inaccurate or misleading or incomplete information. The chamber of the Council may, by the same decision, impose periodic penalty payments for non-compliance with its decision of up to 5% of ave-rage daily turnover, per day of non-compliance, with effect from the date fixed by it in its decision. It may also impose this type of penalty in respect of non-compliance with a de-merger order.

C. appeals

3.30. appeals against decisions of the Competition CouncilAppeals against decisions of the Competition Council may be lodged before the Brussels Court of

Appeals within 30 days of notification or publication of the decision in the Belgian official gazette and on the Competition Council website. The Court of Appeals rules with full jurisdictional powers on the admissibility of concentrations and, if applicable, the sanctions imposed (Article 75).

Appeals against judgments of the Brussels Court of Appeal may be brought before the Court of Cassation pursuant to Article 78 LPCE.

3.31. appeals against decisions of the Council of MinistersDecisions of the Council of Ministers in the field of concentrations may be brought before the

Council of State (Conseil d’Etat) for judicial review within 30 days following notification. The Council of State rules on matters relating to concentrations and reviews the legality of the decisions that are the subject of the appeal. In the event that the disputed decision is annulled, the Council of Ministers has a new deadline to reach a decision (Article 77).


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Section 1 anticompetitive and unfair practices




C. Abuse of dominanceDominant position 4.05Abuse 4.06

D. State aidContext 4.07Scope 4.08

II. EnforcementA. Enforcement authority

The Commission on Protection of Competition 4.09B. Enforcement proceedings

Proceedings before the Commission on Protection of Competition 4.10Interim relief 4.11Enforcement by ordinary courts 4.12


D. AppealsAppeals against the Commission’s decisions 4.16

Section 2 Mergers



Merger notification 4.21

Proceedings before the Commission on Protection of Competition 4.22

B. Conditions/SanctionsConditions and commitments - Divestiture 4.23Fines 4.24

C. AppealsAppeals against decisions of the Commission for the Protection of Competition 4.25

Section 1 AnTICOMPETITIVE AnD unfAIR PRACTICES



4.01. ContextThe Law on the Protection of Competition (LPC) in force in the Republic of Bulgaria was enac-

ted in 1998 and replaces the earlier Competition Act of 1991. The Act was amended in 1999, 2002, 2003 and finally in 2008. The Act is based on Article 19 (2) of the Bulgarian Constitution, which guarantees all Bulgarian citizens and economic entities equal conditions as regards the carrying out of economic activities, preventing abuse of monopolistic positions and acts of unfair competition whilst at the same time guaranteeing consumer protection. The Bulgarian authorities have put in place a competition law regime based on the EU model setting out similar prohibitions and enfor-cement techniques. The Law on the Protection of Competition aims at protecting and promoting competition and free initiative in the economic sphere (Article 1). The Competition Act includes provisions governing unfair competition, in addition to those governing traditional competition law matters such as abuse of dominance and restrictive agreements. Any action or inaction in the per-

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formance of economic activities that contravenes good-faith commercial usage and impairs or might impair the interests of competitors in their relations with each other or in their relations with consu-mers is considered to be unfair competition and is prohibited under Article 29 of the LPC.

Articles 30 to 37 of the LPC prohibit several specific unfair practices, including, inter alia, dama-ging a competitor’s reputation, giving misleading impressions, passing off, unfairly attracting a com-petitor’s clients and disclosing industrial and trade secrets.

4.02. ScopeThe Act applies to any undertaking carrying out activities that restrict or may restrict or distort

competition within the Republic of Bulgaria, whether these activities take place inside or outside of Bulgaria. National and local governments and undertakings to which the State has assigned public service obligations are also covered. On the other hand, industrial and intellectual property rights or activities which might restrict competition outside of Bulgaria are expressly excluded from the provisions of the Act (Article 2(2) of the LPC).

As regards monopolies, Article 19 of the LPC expressly authorizes monopolies granted to the State in accordance with the Constitution. All other kinds of monopolies are prohibited under the Act.


4.03. the prohibitionArticle 15 of the LPC prohibits agreements, decisions and concerted practices which have as

their object or effect the prevention, restriction or distortion of competition. In particular, the Act prohibits agreements aimed at fixing prices, allocating markets, limiting output, applying different conditions to equivalent transactions and subjecting the conclusion of contracts to supplementary obligations unrelated to the main purpose of the contract (tying).

Further, pursuant to Article 15(2), any agreements and decisions referred to in paragraph 1 of the same Article are considered void.

Contracts that have a de minimis effect on competition are expressly excluded from the prohibition in Article 15 of the LPC. The de minimis threshold is said to apply where the aggregate market share of the undertakings entering into the agreement does not exceed ten percent of the relevant market, where the participants are competitors and fifteen percent of any of the relevant markets, where the participants are not competitors (Article 16 (2) of the LPC).

4.04. ExemptionsUpon notification, individual exemptions from the prohibition in Article 15 of the LPC may be

granted pursuant to Article 17 of the LPC on the grounds that the agreement, decision or practice contributes to improving the production of goods, the provision of services, technical or economic progress, or competitiveness on external markets. At the same time, as under EU law, the agreement, decision or practice must also allow consumers a fair share of the resulting benefit, not impose ines-sential restrictions and not afford the possibility of eliminating competition on a substantial part of the relevant market.

The Commission also has the authority to adopt decisions establishing categories of agreements that may benefit from a block exemption. For example, on 10 April 2001 the Commission adopted a block exemption decision (Decision No 44) exempting certain categories of agreements from the Article 15 prohibition, as long as they satisfy the requirements laid down in Article 17 of the LPC. This decision closely parallels the provisions of EU Commission Regulation No 2790/1999 on ver-tical restraints [now replaced by Regulation No 330/2010]. Two other block exemption decision have been adopted on specialization agreements and on R&D agreements (Decision No 118 of 8 July 2003).


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4.05. Dominant positionA dominant position exists where an undertaking has the potential for interfering with competi-

tion as a result of being able to act independently of its competitors, suppliers or purchasers.

4.06. abuseAn undertaking enjoying a position of dominance is prohibited from imposing unfair prices,

limiting output, applying different conditions to identical contracts with regard to certain trading partners or conditioning contracts on the acceptance of supplementary obligations or conditions that are unrelated to the main contract and refusing without justification to supply goods or provide services to actual and potential competitors (Article 21 of the LPC).

The Act does not contain any exemption for the abuse of a dominant position.

D. State aid

4.07. ContextThe Act originally contained provisions controlling State aid in Article 20. These provisions have

been repealed by the Act of 7 March 2002, Official Journal No 28 of 19 March 2002. This Act was later replaced by the State Aid Act published in the Official Journal No 86/24 in October 2006.

The State Aid Act became effective as from the date of entry into force of the Treaty of Accession of the Republic of Bulgaria to the European Union. This Act regulates the conditions and terms of control of State aid as well as the procedures for determining their compatibility with the principles of free competition.

4.08. Scope Article 3 of the State Aid Act specifies that permissible aids are those that have a social character

and are granted to individual consumers and are non-discriminatory as regards to the origin of the products concerned, or aids that are intended to compensate the damage caused by a natural disaster or other exceptional occurrences.

According to Article 4 of the State Aid Act, “aid can be declared compatible with free competition where it:

- promotes economic development in areas where the standard of living is abnormally low or where there is serious unemployment;

- promotes the execution of an important project of common European interest or that remedies a serious disturbance in the economy of the Republic of Bulgaria;

- facilitates the development of certain business operations or of certain economic sectors, insofar as such aid does not adversely affect trading conditions to an extent contrary to the common interest;

- promotes culture and heritage conservation where such aid does not affect trading conditions and competition in the Community to an extent that is contrary to the common interest”.

Pursuant to Article 4(5) of the State Aid Act, “aid can be allowed by decision of the Council acting by a qualified majority on a proposal from the Commission”.

Under Article 5 of the State Aid Act, the Minister of Finance is the national authority responsible for the supervision, transparency and coordination of state aids at the central, regional and municipal level, with the exception of the aid schemes and individual aids in agriculture and fisheries (both of which the Minister of Agriculture and Forestry is responsible for).

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Each aid-granting authority must submit to the Minister of Finance the necessary information concerning the State aids, administered by it in conformity with the EU Treaty and the Act (Article 6 (1) of the State Aid Act).

ii. Enforcement

a. Enforcement authority

4.09. the Commission on Protection of Competition Pursuant to Article 4 of the Law on the Protection of Competition, the Commission on Protection

of Competition is an independent body with its headquarters in Sofia. It consists of seven mem-bers, including a chairperson, two deputy chairpersons and four members chosen by the National Assembly for five-year terms.

The Commission is in charge of:- establishing infringements under the LPC well as under Article 101 or 102 TFEU;- imposing sanctions as provided for in the LPC;- establishing that no infringement under the Act has been committed or there are no grounds for

taking action for committed infringements under EU law;- cooperating with the European Commission and the other competition authorities of the

Member States of the European Union;- issuing the authorizations as provided for in the LPC;- and proposing to the competent state authorities and local government bodies, to revoke or

amend administrative acts, issued by them, that have or may lead to the prevention, restriction or distortion of competition.


4.10. Proceedings before the Commission on Protection of CompetitionPursuant to Article 38 of the LPC, proceedings before the Commission on Protection of

Competition are initiated on:“- 1. a decision of the Commission; - 2. a request from a prosecutor;- 3. an application by the persons, whose interests have been affected or threatened by an infrin-

gement of this Law;- 4. an application for immunity from sanctions;- 5. an application by the persons whose interests have been affected by acts which have been

issued contrary to this Law.- 6. a notification of a concentration between undertakings;- 7. a request of a national competition authority of a Member State of the European Union or of

the European Commission- 8. a request for opinion of a state authority, including an authority of the executive branch or of

local government”;With regard to the application by a person whose interests have been affected (Article 38(3)

above), Article 71 of the LPC specifies the explicit requirements for its content. Applications are required to be quite detailed, written in Bulgarian, and they will not be accepted if they are anony-mous. In carrying out the inquiry, the Chairperson of the Commission assigns a member to be the


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reporting inspector with responsibility for conducting the procedure and appoints a case team from the administration, which performs the investigation (Article 44(1) of the LPC).

Inspections are conducted by the Commission’s officials, assisted by the police, following autho-rization by a judge from the Administrative Court in Sofia (Article 51 (1) of the LPC). The collec-tion of evidence is conducted in the presence of representatives of the undertaking or association of undertakings (Article 52(1) of the LPC).

Pursuant to Article 55(3) of the LPC, “Any material indicated to contain production, trade or other secret protected by law, may be disclosed and used by the Commission in case it is essential as evidence to the alleged infringement or in order to secure the right of defence of the respondent”.

After closing the investigation, the case team presents a report to the supervising member of the Commission, which must contain the factual and legal analysis of the case as well as a proposal concerning the manner of conclusion of the proceedings (Article 57(1) of the LPC).

Under Article 73(2) of the LPC, after being informed of the submission of the report, “The Chairperson shall issue an order scheduling a closed sitting of the Commission within 14 days as of the completion of the investigation, at which the further course of proceedings shall be decided”.

If the Commission establishes, at the closed sitting, that the proposal of the case team for esta-blishing an infringement under Article 15 of the LPC or 101 of the TFUE is well-grounded, the Commission adopts a ruling to submit a Statement of Objections for the alleged infringement to the defendant (Article 74(1) of the LPC).

Under Article 76(1) of the LPC, the parties and the interested third parties have a right of access to the file as well as the right to be heard by the Commission in an open sitting, before it takes a decision on the merits.

The defendant may propose to undertake commitments (Article 75(1) of the LPC). But the Commission may not adopt commitments decisions in cases of serious infringements of the law, i.e. infringements which may affect considerably and on a lasting basis the competitive environment in respect of a significant part of the national market (Article 75(3) of the LPC).

4.11. interim reliefPursuant to Article 56 (1) of the LPC, if, during an investigation, “there is sufficient evidence of

an infringement, in urgent cases where there is a risk of serious and irreparable damage to compe-tition, the Commission may, at its own initiative or on request of the persons whose interests are affected or threatened by the infringement, order the immediate termination of the practice by the undertaking or the association of undertakings, or impose other necessary measures, taking into account the objectives of this Law”.

Under Article 56(2) of the LPC, the ruling on interim measures of the Commission “shall be subject to appeal under the procedure set forth in Article 64, paragraph (2)”.

4.12. Enforcement by ordinary courtsCivil damages actions may be brought before civil courts. The Commission’s decision establishing

the infringement is binding on the civil court.

C. Sanctions

4.13. Cease and desist ordersIn its decision, which is issued after the hearing, the Commission has the authority to order the

termination of infringements, including by imposing the relevant behavioral and/or structural mea-sures to restore competition (Article 77(4) of the LPC).

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4.14. FinesUnder Article 99 of the LPC, “(1) In case of infringement of the provisions of this Law, where

the act does not constitute a crime, administrative penal liability shall be borne. (2) The pecuniary sanctions and fines under this Law shall be imposed by a decision of the Commission which shall be subject to appeal before the Supreme Administrative Court in respect of its legality under the procedure set forth in the Code of Administrative Procedure”.

Violations of the prohibition on anticompetitive agreements and abuse of a dominant position (Articles 15 and 21 of the LPC) are punishable by a pecuniary sanction “in an amount not excee-ding 10% of the total turnover in the preceding financial year on an undertaking or an association of undertakings” (Article 100 (1) of the LPC).

In addition to the fines imposed on undertakings, individuals who have violated the LPC are sub-ject to fines of BGN 500 to 50,000 (EUR 254.79 to EUR 25,478.82) (Article 102 (1) of the LPC).

Persons who fail to submit in time the evidence requested or fail to supply complete, accurate, trustworthy and not misleading information shall be liable to a fine of BGN 500 to 25,000 (EUR 254.79 to EUR 12,739.41) (Article 102 (2) of the Act).

Under Article 100 (4) of the LPC “in determining the amount of the pecuniary sanction the gra-vity and duration of the infringement shall be taken into account as well as the circumstances mitiga-ting or aggravating the liability. The exact amount of the sanction shall be determined in compliance with a methodology adopted by the Commission published in the web-page of the Commission”.

Pursuant to Article 100 (5) of the LPC, “The Commission shall impose periodic pecuniary sanc-tions on an undertaking or association of undertakings to the amount of up to 5 percent of the ave-rage daily turnover in the preceding financial year for each of failure to comply with:

- a decision of the Commission ordering the termination of an infringement, including by impo-sing the appropriate behavioral or structural remedies (…);

- a ruling of the Commission, imposing interim measures (…);- a decision of the Commission to approve commitments undertaken (…)”.

4.15. LeniencyThe LPC gives those undertakings participating in a secret cartel, which reveal to the Commission

their cartel activity and provide the required evidence, the opportunity to be granted immunity from fines or to benefit from a significant reduction of the fines for infringements of competition rules committed by them.

The above-mentioned opportunity and the specific conditions for its application have been defi-ned in Article 101 of the LPC as well as in the Programme on immunity from fines or reduction of fines and the Rules on its application adopted by CPC Decision No. 112 of 10 February 2009.

All applications for immunity from fines or reduction of fines and the information and evidence enclosed relating to one and the same alleged cartel, shall be reviewed and assessed in the consecutive order in which they were received and registered in the Commission.

The final immunity from fines or reduction of fines shall be granted to undertakings with a final decision adopted by the Commission at the end of the proceedings in accordance with the overall analysis of all evidence and the extent to which the undertaking has met all conditions in the course of the proceedings.

D. appeals

4.16. appeals against the Commission’s decisionsCommission decisions may be appealed to the Supreme Administrative Court within fourteen

days of their being notified (Article 64(1) of the LPC).


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Section 2 MERGERS


4.17. ContextAs part of its application for EU membership and the adoption of the Community acquis,

Bulgaria sought to introduce a control of concentrations based on the EU model into its law with the Competition Act.

4.18. Concept of concentration A concentration is deemed to occur where there is a merger of two or more independent under-

takings or where one or several persons already controlling one or more undertakings acquire direct or indirect control over one or more undertakings or parts thereof. Control is defined as the possi-bility of exercising a decisive influence on an undertaking, including the right to exercise a decisive influence on the composition, voting or decisions of the decision-making bodies of the undertaking, or the right to use part or all of an undertaking’s assets (Article 22 of the LPC).

The creation of a joint venture that performs all of the functions of an autonomous entity on a lasting basis constitutes a concentration where it does not lead to coordination of the competitive behavior of the controlling undertakings, or between them and the joint venture.

On the other hand, a concentration is not considered to exist where a financial institution tempo-rarily holds securities with a view to reselling them. However, for this exception to apply, any voting rights must be exercised solely to maintain the full value of the investment and not to determine the competitive behavior of the undertakings (Article 23 of the LPC).

4.19. thresholdsPursuant to Article 24 of the LPC, “Concentrations shall be subject to mandatory prior notifica-

tion to the Commission where the aggregate combined turnover of all undertakings participating in the concentration in the territory of the Republic of Bulgaria in the preceding year exceeds BGN 25 million (EUR 12,8 million), and;

1. the turnover of each of at least two of the undertakings participating in the concentration in the territory of the Republic of Bulgaria during the preceding financial year exceeds BGN 3 million (EUR 1,5 million), or;

2. the turnover of the undertaking – subject to acquisition in the territory of the Republic of Bulgaria during the preceding fiscal year exceeds BGN 3 million (EUR 1,5 million)”.

Where the concentration involves partial acquisition of an undertaking, the turnover related to that part is taken into consideration.

For the purpose of calculating turnover, the economic group to which the respective undertaking belongs is regarded as one affected undertaking concerned. The turnover of the undertaking participa-ting in the concentration is calculated in accordance with the provisions of the Article 25 of the LPC.

4.20. Control criteriaIn deciding whether to authorize a concentration, the standard applied is whether the concentra-

tion results in the creation or strengthening of a dominant position that would significantly impede effective competition on the relevant market. However, even where this would clearly be the result of a concentration, the Commission may nevertheless authorize it if:

- it modernizes production or the economy as a whole, - it leads to an improvement in market structure,

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- it attracts investment, - it increases competitiveness on external markets, - it creates jobs, - it is in the interests of consumers, and - more generally, it has positive aspects that outweigh any negative impact it has on competition

in the relevant market (Article 26(2) of the LPC).

ii. Enforcement


4.21. Merger notification Concentrations that meet the threshold for notification must be notified to the Commission on

Protection of Competition prior to being implemented (Article 24(2) of the LPC). The contents of the required notification are set out at Article 79 of the LPC.

The filing fee is set at BGN 2,000 (EUR 1,000).

4.22. Proceedings before the Commission on Protection of CompetitionWithin 25 working days of receipt of notification, the Commission is required to issue a decision that: - finds that the concentration does not come within the scope of Article 24 of the LPC, - authorizes the concentration pursuant to Article 26(1) of the LPC, or- authorizes the concentration, taking into account the changes, proposed by the participants in

the concentration;- launches an in-depth investigation as set out in Article 83 of the LPC.In its review, the Commission takes into consideration the following elements: - the market position of the parties in the relevant market before and after the concentration;- their financial and economic power;- their access to supplies of and markets for respective goods and services, and- legal or other barriers to market entry.If serious doubts exist regarding the effect of a concentration on competition, the Commission

will open an in-depth investigation. The investigation must be completed within four months, and completion of the proposed concentration is suspended until the Commission issues a decision under Article 89 of the LPC authorizing or prohibiting the concentration.


4.23. Conditions and commitments - DivestitureAuthorization of a merger may be given on condition that certain requirements are met. The

Commission may order the immediate termination or notification of actions relating to a concentra-tion which seriously affect the interest of trading parties or consumers.

4.24. FinesThe range of fines in concentration cases is similar to that in anticompetitive practices cases.In addition to the fines imposed on undertakings, individuals who have violated the LPC are sub-

ject to fines of BGN 500 to 50,000 (EUR 255 to EUR 25,475) (Article 102(1) of the LPC).


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C. appeals

4.25. appeals against decisions of the Commission for the Protection of CompetitionDecisions regarding concentrations may be appealed to the Supreme Administrative Court

(Article 64 of the LPC). On the other hand, the decision to open an in-depth investigation because a concentration raises serious doubts as to its effect on competition is not subject to appeal (Article 82(7) of the LPC).


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D. State aidContext 5.07


The Council of the Croatian Competition Agency 5.08The CCA’s Expert team 5.09

B. Enforcement proceedings Complaints and investigations 5.10Proceedings before the Competition Council 5.11Interim relief 5.12Enforcement by ordinary courts 5.13


D. AppealsAppeals against the Croatian Competition Agency’s decisions 5.17

Section 2 Mergers



The Croatian Competition Agency 5.22The Administrative Court 5.23

B. Enforcement proceedingsMerger notification 5.24Proceedings before the Croatian Competition Agency 5.25

C. Conditions/SanctionsConditions and commitments - Divestiture 5.26Fines 5.27

D. AppealsAppeals against decisions of the Croatian Competition Agency 5.28




5.01. ContextThe first Competition Act in Croatia, heavily influenced by EU and US competition laws, was

adopted in 1995 and the Croatian Competition Authority (CCA) established in 1997. Harmonization with the EU acquis was enhanced by the 2001 Stabilization and Association Agreement signed between Croatia and the EU, a framework for EU negotiations with the Western Balkan countries, all the way to their eventual accession. The 1995 Competition Act was replaced in 2003 (OG 122/03) to further improve the harmonization process. However, the CCA’s limited powers hindered effec-tive enforcement of competition law in Croatia. To remedy this issue and strengthen the CCA, a new Competition Act (OG 79/09) was adopted in 2009 and came into force on 1st October 2011, shaped

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on the basis of EU Regulation 1/2003. Meanwhile, the EU and Croatian leaders signed Croatia’s EU Accession Treaty on 9 December 2011. Subject to ratification of the Treaty by all the Member States and Croatia, Croatia will officially become a Member State on 1 July 2013.

5.02. Scope The Act applies to all forms of distortion of competition by undertakings within the territory of

the Republic of Croatia or outside its territory, if such practices take effect in the territory of the Republic of Croatia. The concept of undertaking encompasses companies, sole traders, tradesmen and craftsmen, State authorities and local and regional self-government units and all other natural or legal persons, such as associations, sports associations, institutions, copyright and related rights holders and similar, as long as they directly or indirectly are engaged in a production and/or trade in goods and/or provision of services and thereby participate in economic activity. Such undertakings are covered by the provisions of the Act irrespective of their legal form or ownership structure, form of financing and intent or effect to make profit, notwithstanding their place of establishment or resi-dence within the territory of the Republic of Croatia or outside its territory. Finally, the Act also ap-plies to undertakings which are entrusted with the operation of services of general economic interest, those having the character of a revenue-producing monopoly, or, which are by special or exclusive rights granted to them allowed to undertake certain economic activities, insofar as the application of the Act does not obstruct, in law or in fact, the performance of the particular tasks assigned to them and for the performance of which they have been established.

By contrast, the Act does not apply to labor relations between employers and employees, or to the relations that are covered by collective agreements between employers and labor unions.


5.03. the prohibitionArticle 8 of the Croatian Competition Act, which deals with “prohibited agreements”, is modeled

on Article 101(1) TFEU. It prohibits all agreements whose object or effect is to distort competition in the relevant market. A non-exhaustive list of the types of prohibited agreements is provided, inclu-ding agreements aimed at price fixing, limiting production, sharing markets, discriminating between undertakings and tying. Agreements are defined as “contracts, particular provisions thereof, implicit oral or explicitly written down arrangements between undertakings, concerted practices resulting from such arrangements, decisions by undertakings or associations of undertakings, general terms of business and other acts of undertakings which are or may constitute a part of these agreements and similar, notwithstanding the fact if they are concluded between undertakings operating at the same level of the production or distribution chain (horizontal agreements) or between undertakings who do not operate at the same level of the production or distribution chain (vertical agreements)”.

Pursuant to Article 8(4), prohibited agreements, where they do not fulfill the conditions for an individual or block exemption, are void.

Article 11 establishes a de minimis rule for restrictive agreements, the parties to which, together with their controlled undertakings as defined in Article 4, have an insignificant common market share and do not contain hardcore restrictions of competition. The conditions with which such agreements must comply and the restrictions or provisions they may not contain, as well as the mar-ket share thresholds for horizontal or vertical agreements were laid down by the Government, upon proposal of the Agency, in the Regulation on Agreements of Minor Importance (OG 9/2011).

5.04. Exemptions Since the adoption of the 2009 Act, negative clearance is no longer available and undertakings are

required to conduct a self-assessment of their agreements. Thus, under Section 8(3), agreements are exempted from the prohibition set in paragraph 1 where:


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- they contribute to improving the production or distribution of goods and/or services, or to pro-moting technical or economic progress;

- while allowing consumers a fair share of the resulting benefit; - they do not impose unnecessary restrictions on the parties; and - they do not afford the possibility of eliminating competition for a substantial part of the market

concerned. The burden of the proof that those conditions are gathered lies on the parties to the agreement.Article 10 of the Competition Act provides for the adoption of block exemption regulations by the

Government, upon proposal of the Agency. Pursuant to this provision, block exemption regulations were enacted in the following sectors or areas:

- horizontal agreements (OG 072/2011)- vertical agreements (OG 37/2011)- distribution and servicing of motor vehicles (OG 37/2011)- transport sector (OG 78/2011)- insurance sector (OG 78/2011)- technology transfer agreements (OG 9/2011).However, if the Agency finds that a particular agreement, in itself or due to the cumulative effect

with other similar agreements in the relevant market, does not comply with the conditions set out in Article 8 paragraph (3), it may withdraw the application of the block exemption concerned.


5.05. Dominant positionArticle 12 presumes the existence of a dominant position where an undertaking has the ability,

through its market power, to act in the relevant market to a considerable extent independently of its actual or potential competitors, consumers, buyers or suppliers. Such position is conditional on the undertaking (i) having no significant competitors in the relevant market, and/or (ii) holding a significant market power in relation to its actual or potential competitors. Factors taken in account are the undertaking’s market share and the period of time in which this market position has been held, its financial power, access to sources of supply or to the market itself, connected undertakings, legal or factual barriers for other undertakings to enter the market, the capability to dictate market conditions considering its supply or demand, and the capacity of foreclosure against competitors by redirecting them to other undertakings.

The Article sets a presumption that an undertaking holding more than 40% of the market share in the relevant market may hold a dominant position. It also considers collective dominance, which it defines as the fact for two or more legally independent economic entities to act to a considerable extent independently of their competitors and/or customers and/or consumers on the relevant market.

5.06. abuseArticle 13 sets out a non-exhaustive list of practices that are considered abusive when carried

out by an undertaking holding a dominant position. Behavior coming under this heading includes imposing unfair sales or purchase prices or other unfair trading conditions; limiting production, markets, or technical development to the prejudice of consumers; applying dissimilar conditions to equivalent transactions and making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject-matter of such contracts.

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D. State aid

5.07. ContextAs part of the 2001 Stabilization and Association Agreement with the European Union, Croatia

was under the obligation to align its legislative framework with the relevant EU State aid rules. State aid control in Croatia is governed by the State Aid Act of 2005 (OG 140/2005), the Regulation on State Aid (OG 50/2006) and the Ordinance on the form and content and manner of data collection and keeping the register of state aid (OG 2/2010). As part of Croatia’s international obligations, the Act conferred authority on the Croatian Competition Agency to monitor and implement State aid rules, a role that the European Commission will overtake from Croatia’s accession to the EU. In the implementation of state aid control, in addition to the abovementioned rules, the CCA also applies the EU acquis on State aid regarding specific types and categories of aid transposed into the Croatian legislation in the form of decisions adopted by the Government of the Republic of Croatia and regu-larly updated in line with the revisions of the relevant EU rules.

ii. Enforcement


5.08. the Council of the Croatian Competition agency The 1995 Act established a competition agency having the status of an autonomous administra-

tive authority. Its responsibilities and powers are currently regulated by the Competition Act (OG 79/09) which covers its activities in the area of antitrust and merger control, and the State Aid Act (OG 140/05). The Croatian Competition Agency (CCA) is managed by a Competition Council composed of five members, one of whom is the President of the Council appointed by the Croatian Parliament on the proposal of the Government of the Republic of Croatia, for a five-year renewable term. The Council issues all decisions in its sessions, with the consent of a majority of at least three votes, whereby no member may abstain. The president of the Council organizes and runs the ope-rational activities of the CCA and is responsible for its expert performance. The members and the president of the Council perform their duties professionally.

Pursuant to Article 30 of the Competition Act, the Council’s activities include:- proposing the adoption of subordinate legislation to the Government;- making decisions on the basis of which the CCA initiates and carries out compatibility assess-

ment proceedings and proceedings involving the imposition of fines in respect of infringements of competition rules;

- promoting activities relating to competition advocacy and understanding of the benefits of com-petition and raising awareness on the role and significance of competition law and policy;

- issuing opinions on the compliance of proposed draft laws and other legislation with the Act.

5.09. the CCa’s Expert team The CCA is also composed of an Expert team which includes the five members of the Competition

Council and case-handlers who are lawyers or economists. Under Article 32, the expert team per-forms administrative and professional activities relating to competition issues. Those include:

- carrying out preliminary investigations with the view to defining possible competition concerns on the basis of which it will initiate proceedings;

- proposing to the Council adoption of a decision on the initiation of proceedings;- carrying out proceedings in individual cases establishing distortion of competition and procee-

dings relating to imposition of fines;


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- drawing up drafts of closing decisions.


5.10. Complaints and investigationsInvestigations may be initiated in response to a complaint from a natural or legal person, a pro-

fessional association, an economic interest group, an association of undertakings, a consumer asso-ciation, the Government, central administration authorities, or local and regional self-government units. In any case, the complainant does not hold the status of a party to the proceedings, but may ask to be heard as witness. Therefore, the proceedings are always deemed to be initiated ex officio by the CCA (Article 38(1)). When it decides to instigate proceedings, the CCA takes a procedural order on institution of the proceedings, which is not amenable to appeal and is served to the party against which the proceedings are directed. The concerned party has between 8 and 30 days to reply to the order and comply with the information requests it may contain.

For the collection of data, the CCA is empowered to request in writing: the submission of all necessary information or the making of oral statements and the inspection of business premises, im-movable and movable assets, business books, databases and other documentation (Article 41). Since the 2009 Competition Act, the CCA may also conduct surprise inspections of business premises and even of the homes of directors, managers and other members of the staff of the undertaking, upon production of a warrant issued by the Administrative Court. During surprise inspections, agents of the CCA may enter and inspect any premises, land and means of transport at the seat of the under-taking against which the procedure is being carried out as well as in any other location where the undertaking concerned performs its business activities; examine the books and other records related to the business, irrespective of the medium on which they are stored; take or obtain in any form copies of or extracts from such books or records, irrespective of the medium on which they are stored; seize the necessary documentation and retain it as long as it takes to make photocopies where due to technical reasons it is not possible to make photocopies during the inspection; seal any premises and/or books or records for the period and to the extent necessary for the inspection; ask any repre-sentative or member of staff of the undertaking for explanations on the facts or documents relating to the subject-matter and purpose of the inspection and record the answers; ask any representative or member of staff of the undertaking to submit a written statement on the facts or documents relating to the subject-matter and purpose of the inspection and set the deadline in which this statement must be submitted. However, Article 45 specifies that communications between the undertaking concerned and its lawyers are excluded from the surprise inspection to the extent they constitute confidential or privileged information.

5.11. Proceedings before the Competition CouncilAfter the agents have drawn up the inspection report, to which the undertakings can submit

comments, the CCA issues a written Statement of Objections, allowing the parties to express their views on all relevant facts and circumstances of the case. They may submit their comments within one month and access to case files upon written request.

Before the Statement of Objections is notified, a party to the proceedings may offer commitments to the CCA, designed to eliminate competition concerns and restore effective competition. If such commitments are deemed satisfactory by the CCA, it will give notice of its intention to accept them and publish a summary of the case and the main content of the proposed commitments on its website. Interested parties may submit written replies within twenty days. If the Agency is still satis-fied with the commitments it will by means of a decision make them binding on the undertakings concerned during a specified time period (Article 49).

As a rule, if the proceedings establish a distortion of competition, hearings will be held to allow the parties as well as the complainant, if he/she so requires, to make their views known.

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Under the previous Competition Act, the CCA had no jurisdiction to impose fines. For this purpose, it had to file an action before a misdemeanor court. However, as the CCA’s decision esta-blishing the infringement could be challenged at the same time before the Administrative Court, misdemeanor courts would stay their judgment on fines until the Administrative Court had ruled, which could make the statute of limitations lapse. The 2009 Competition Act now empowers the CCA to directly impose fines. Article 52 sets the fine proceedings: after establishing the offense, the CCA must communicate to the undertaking concerned a Statement of Facts detailing the facts and their legal assessment and inviting the undertaking to present any additional evidence and to submit a defense in writing within a time period of 15-30 days. A hearing is also conducted, after which the Council decides on the imposition of the fine and determines its amount. Then the CCA closes the proceedings.

5.12. interim reliefBefore issuing any decision, the CCA may order interim relief pursuant to Article 51 in cases of

urgency due to the risk of serious and irreparable damage to competition if it finds prima facie evi-dence of the existence of anti-competitive acts prohibited by law which must be removed immedia-tely. The decision on interim measures may suspend all actions of the undertaking concerned, insist on meeting of particular conditions or impose other measures reasonably necessary to eliminate the risk and damage to competition. The duration of such measures may not as a rule exceed a period of six months.

5.13. Enforcement by ordinary courtsDamages claims relating to infringements of the Competition Act fall under the jurisdiction of

the commercial courts (Section 69(2)).

C. Sanctions

5.14. Cease and desist ordersUnder Article 9 on prohibited agreements, the CCA, after establishing the offense, may determine

the terms and measures for the removal of adverse effects of the prohibited agreement. Pursuant to Article 14 on abuse of a dominant position, the Agency may immediately order the cessation of any abusive practices adopted by the undertaking and impose the measures and conditions for the remo-val of adverse effects of such practices. In the case of abuse, the Agency may also impose structural and/or behavioral remedies, with a clear preference shown for the latter.

5.15. FinesArticles 61 and 62 of the Act distinguish between severe infringements and less severe infringements. Severe infringements include concluding a prohibited agreement or abusing a dominant position.

Offenders incur a fine not exceeding 10% of their total turnover in the last year for which financial statements have been completed.

Less severe infringements include failing to act in compliance with the Agency’s requests for information in the course of investigation proceedings and opposing the inspections ordered by the Administrative Court.

Finally, the CCA can impose a fine ranging from HRK 10,000 (EUR 1,330) to HRK 100,000 (EUR 13,330) to undertakings not party to the proceedings but failing to comply with information requests made during the investigation.

Article 64 and the Regulation on the method of setting fines (OG 129/2010) set a method for determining the amount of fines very similar to the EU’s own method.


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5.16. LeniencyCroatia had no leniency program before its 2009 Competition Act. Now, Article 65 provides that

the CCA may grant immunity from fines to a cartel member who is the first to come forward and inform the Agency on the existence of a cartel, supplying evidence which will enable the Agency to initiate proceedings in connection with the alleged cartel, or to the first cartel member who submits information and evidence which will enable the Agency to find an infringement in connection with the alleged cartel in previously initiated proceedings where the Agency had no sufficient evidence to adopt a decision, i.e. to detect the existence of a cartel. However, immunity from fine may not be granted to the undertaking which was the originator or instigator of the cartel.

Undertakings which disclose their participation in a cartel without meeting the conditions for immunity may be eligible to benefit from a reduction of the fine, if they provide the CCA with evi-dence which represents significant added value with respect to the evidence already in the Agency’s possession and which substantially contribute to the closure of the proceeding concerned.

The criteria for the immunity from and reduction of fines were further developed in line with the criteria arising from the application of competition rules in the EU by the Regulation on immunity from fines and reduction of fines (OG 129/2010).

D. appeals

5.17. appeals against the Croatian Competition agency’s decisionsDecisions by which the CCA establishes infringements to the Competition Act and imposes

fines may be appealed in administrative proceedings to the Administrative Court of the Republic of Croatia within thirty days from the receipt of the decision (Article 67). The Court may only consider claims regarding misapplication or erroneous application of substantive provisions of competition law; manifest errors in application of procedural provisions; incorrectness or incompleteness of the facts of the case or inappropriateness of the fine.

Although such claim postpones the enforcement of the CCA’s decision, the appeal is deemed urgent (Article 69(1)).

Section 2 MERGERS


5.18. ContextRules applicable to merger control in Croatia can be found in the 2009 Competition Act (Articles

15 et seq.) and in the Regulation on notification and assessment of concentrations (OG 38/2011), which stipulates the rules for notification of concentrations and the criteria for the assessment of the compatibility of concentrations between undertakings in the proceedings carried out by the Croatian Competition Agency.

5.19. Concept of concentrationArticle 15 of the Competition Act provides that a concentration consists in a change of control on

a lasting basis which may result from a merger between two or more independent undertakings or the acquisition by one or more undertakings of control or decisive influence over one or more other undertakings in particular by acquisition of the majority of shares or share capital, or by obtaining the majority of voting rights, or in any other way in compliance with the provisions of the Company Law and other rules.

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The creation of a joint venture by two or more independent undertakings performing on a lasting basis all the functions of an autonomous economic entity also constitutes a concentration within the meaning of Article 15.

On the other hand, Article 15(5) also enumerates the type of transaction where no concentration is deemed to occur. Thus, there is no concentration within the meaning of the Act where a bank, financial institution or insurance company temporarily (no longer than 12 months) holds securities with a view of reselling them only to maintain the value of an investment; where undertakings part of the same group perform restructuring and reorganization transactions within that group; or where control is acquired by a liquidator for purposes of winding up an undertaking.

5.20. thresholdsPursuant to Article 17, a concentration is subject to control where the consolidated aggregate

turnover of the undertakings concerned exceeds HRK 1 billion (EUR 133,300,000) in the financial year preceding the concentration, where at least one of the parties has its seat and/or subsidiary in the Republic of Croatia and the total turnover of at least two parties to the concentration achieved on the Croatian territory, amounts to at least HRK 100 million (EUR 13,330,000).

Specific rules apply to the calculation of the turnover of banks and other financial institutions, including insurance and re-insurance companies (Article 18).

5.21. Control criteriaUnder the 2003 Competition Act, concentrations were prohibited where they had the effect of

creating or strengthening a dominant position. The 2009 Competition Act puts Croatian Law in line with the EU criteria: from now on, the creation or strengthening of a dominant position is only a criterion among others of an incompatible concentration, the substantive test being whether the transaction significantly impedes effective competition in the market.

In the Regulation on notification and assessment of concentrations (OG 38/2011), the Government set out the criteria derived from EU Law according to which the CCA will assess transactions: a) the structure of the relevant market; actual and potential competitors in the relevant market; supply and demand structure in the relevant market and their trends, prices, risks, technical, economic and legal conditions necessary to enter or to withdraw from the relevant market; b) market shares and market position, market and financial power, and business activities of the undertakings operating in the relevant market, possible changes in business operations and business plans of the parties to the concentration following the implementation of the concentration, alternative sources of supply for the buyers after the implementation of the concentration; c) distribution channels, transportation or distribution costs, specialization in production, innovation in technology, lowering of prices of goods and/or services, and other benefits for other undertakings and/or consumers directly deriving from the implementation of concentration.

ii. Enforcement


5.22. the Croatian Competition agencyPursuant to Article 17 of the Competition Act, concentrations must be notified to the CCA. As

an exception, the CCA may initiate the assessment of compatibility of a concentration ex-officio if the participants do not report the concentration and in the case of revocation or amendment of the decision on the merger, or in the case of determining the measures after the implementation of an incompatible concentration (Article 38(2)). The CCA clears, with or without conditions, or prohi-bits concentrations (Article 58(1)(5)).


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5.23. the administrative CourtThe Administrative Court of the Republic of Croatia has jurisdiction over administrative appeals

against decisions of the CCA.


5.24. Merger notificationPursuant to Article 17, concentrations which meet the thresholds established by the Act must

be notified to the CCA. Prior notification must be submitted to the Agency for assessment before the implementation of the concentration in question, following the conclusion of the contract on the basis of which control or decisive influence has been acquired by the controlling undertaking, or following the publication of the invitation to tender. By way of derogation from those rules, the parties to the concentration may submit a notification to the Agency even before the conclusion of the contract or publication of the invitation to tender, if, in good faith, they provide evidence of the proposed conclusion of the contract or announce the invitation to tender.

Notification has a suspensory effect: implementation of a notified concentration is permitted only after the expiry of the time period allocated for the CCA’s assessment, in other words, after the receipt of the final decision of the Agency on compatibility or conditional compatibility of concen-tration referred to under Article 22(7). However, under exceptional circumstances, the CCA may grant a waiver upon reasoned request.

The Regulation on notification and assessment of concentrations (OG 38/2011) provides in its appendices two notification forms, similar to the EU Form CO and Short form CO: a standard notification form and a short notification form for mergers which raise no competition concerns.

5.25. Proceedings before the Croatian Competition agencyAssessment of a merger begins immediately after the receipt of the complete notification and

may be divided into two phases, if necessary. Harmless concentrations are cleared on phase 1, within thirty days of the receipt of the complete notification, either by formal decision, or where no decision is issued within this timeframe (Article 22(1)).

However, where the Agency finds that the implementation of the concentration could signifi-cantly impede effective competition in the relevant market, it may initiate phase 2 proceedings by taking a procedural order on the initiation of the proceedings for the assessment of compatibility of the concentration concerned. Within three months the CCA must take a decision either clearing the concentration, or declaring it conditionally compatible, provided that certain measures are observed and conditions met or declaring it incompatible and therefore prohibited (Article 22(7)).


5.26. Conditions and commitments - DivestitureArticle 22(4) empowers the CCA to inform the parties to a concentration that the transaction may

be declared compatible only after necessary obligations and conditions are fulfilled. The notifying parties are granted a maximum of thirty days to propose adequate commitments (whether behavio-ral and/or structural measures) and other conditions in order to remove the negative effects of the concentration concerned. Such commitments may be proposed by the notifying parties as early as in the prior notification of the concentration.

Where the parties to a transaction implement a concentration that the CCA declared incompa-tible or a concentration that they did not notify, the Agency may, in addition to imposing fines, order that the shares or interest acquired be transferred or divested; or prohibit or restrict the exercise of voting rights related to the shares or interest in the undertakings parties to the concentration, and

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order the joint venture or any other form of control by which a prohibited concentration has been put into effect to be removed (Article 24).

5.27. FinesImplementation of a prohibited concentration is punishable by a fine of up to 10% of the total

turnover achieved in the last year for which financial statements have been completed (Article 61). Failure to notify a concentration or providing incorrect or misleading information is punishable

by a fine of up to 1% of the total turnover achieved by the undertaking concerned in the last year for which financial statements have been completed.

D. appeals

5.28. appeals against decisions of the Croatian Competition agency CCA decisions on mergers are amenable to administrative appeal only before the Administrative

Court of the Republic of Croatia within thirty days of that decision being notified.


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6.01. ContextCompetition in Cyprus is governed by the Protection of Competition Law of 2008 (“the

Competition Act”), which replaced the previous Protection of Competition Law of 30 November 1989. The new Act was designed to harmonize Cypriot law with the system put in place by EU Regulation No 1/2003. The provisions of the Act are largely based on the competition model in force in the European Union. The Competition Act applies to restrictive trade agreements and practices, and abuse of dominance. Moreover, the Act establishes a Commission for the Protection of Competition so as to allow for an efficient application of its provisions.

ChaPtEr 6

CyPrUS





C. Abuse of dominanceAbuse of a dominant position 6.05Abuse of economic dependency 6.06

D. State aidScope 6.07


The Commission for the Protection of Competition 6.08The Service of the Commission 6.09

B. Enforcement proceedingsComplaints and investigations 6.10Proceedings before the Commission for the Protection of Competition 6.11Interim relief 6.12Enforcement by ordinary courts 6.13

C. SanctionsCease and desist orders 6.14Fines 6.15Leniency 6.16Criminal sanctions 6.17

D. AppealsAppeals against the decision of the Commission 6.18

Section 2 Mergers



The Commission for the Protection of Competition 6.23The Minister of commerce 6.24

B. Enforcement proceedingsMerger notification 6.25Proceedings before the Commission for the Protection of Competition 6.26

C. Conditions/SanctionsConditions and commitments – Divestiture 6.27Fines 6.28

D. AppealsAppeals against decisions of the Commission for the Protection of Competition 6.29

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6.02. ScopeThe Act applies to practices outside Cyprus if their object or effect is to restrain competition in

Cyprus.It applies to undertakings which are defined as “any natural or legal person which exercises finan-

cial or trade activities irrespective of whether such activities are profitable or not; […] it includes any undertaking governed by private or public law where the State may exercise, directly or indirectly, due to ownership, financial participation or pursuant to the provisions governing it, decisive influence”.

Pursuant to Section 7 of the Act, the following are not considered as coming within the provisions of the law:

- agreements relating to wages and terms of employment and working conditions;- undertakings entrusted with the operation of services of general economic interest or having the

character of a state monopoly, to the extent that the application of the Act would prevent the achie-vement of the objective assigned to them by the State.


6.03. the prohibitionUnder Section 3 of the Act, “any agreement between undertakings or associations of undertakings,

all decisions by associations of undertakings and any concerted practices having as their object or effect the elimination, restriction or distortion of competition (…) shall be prohibited.” The Section goes on to provide a non-exhaustive list of such activities including, inter alia, agreements directly or indirectly fixing prices, restricting production, markets or technical development or investments, applying different terms to similar transactions or tying. Agreements prohibited pursuant to Section 3(1) are considered void ab initio (Section 3(2)).

6.04. ExemptionsAny such restrictive agreements or category thereof may be permitted, no prior decision by the

Commission being required, where it fulfills certain requirements, namely that it:- contributes to improving the production or distribution of goods or to promoting technical or

economic progress, while allowing consumers a fair share of the resulting benefit;- does not impose on the undertakings concerned restrictions which are not indispensable to the

attainment of these objectives; and- does not afford such undertakings the possibility of eliminating competition in respect of a subs-

tantial part of the product in question.Provision is also made for block exemptions which are granted pursuant to an Order of the Council

of Ministers after the prior reasoned opinion of the Commission for the Protection of Competition is given. Under the previous Act, between 1997 and 2003, the Council of Ministers issued 11 block exemption orders. Some were carbon copies of EU regulations (in the insurance, road transport, air transport, maritime transport, liner shipping consortia and agricultural sectors). Block Exemption No PI-365/2000 sets out the general rule applicable to vertical agreements and concerted practices and is inspired by EU Regulation No 2790/1999 (replaced by Regulation No 330/2003).


6.05. abuse of a dominant positionPursuant to Section 6(1) of the Act, “any abuse by one or more undertakings of a dominant posi-

tion within the internal market or a substantial part of it in respect of a product shall be prohibited.” As with the corresponding provision under EU competition law, the Section lists a number of dif-


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ferent activities considered particularly abusive including price fixing, tying, or applying different terms to similar transactions.

6.06. abuse of economic dependencyPursuant to Section 6(2), “any abuse by one or more undertakings, of a relationship of economic

dependence where an undertaking stands compared to that or those undertakings, which is either a client, supplier, producer, representative, distributor or commercial collaborator, shall be prohibited, even as far as a specific kind of products or services is concerned, and it does not have an equal alter-native solution.” A non-comprehensive list of prohibited cases of abuses follows: imposing unfair trading conditions, applying discretionary treatment, interrupting trade relationships by assumption or transfer of the activities developed in these trade relationships in a way that essentially effects competition or suddenly and inexcusably interrupting a long-term trade relationship.

D. State aid

6.07. ScopeThe Public Aid Control Law entered into force on 30 April 2001 and was followed by several

implementing regulations on aids to SMEs, research and development, professional training, rescue and restructuring of firms in difficulty, aids in the form of guarantees, environmental protection, sales of land and buildings by public authorities, and regional aids. The Law was amended on 29 April 2004 by the State Aid Control (Amendment) Law of 2004. As from 1 May 2004, EU State aid law is directly applicable in Cyprus and the main role of the Commissioner for State Aid Control is to monitor its implementation by the Republic of Cyprus.

ii. Enforcement


6.08. the Commission for the Protection of Competition The Commission for the Protection of Competition is established pursuant to Part III of the Act,

Section 8 et seq. The Commission has jurisdiction to investigate violations of Sections 3 and 6 of the Act and make decisions pursuant to complaints and applications. The Commission is made up of five members presided over by a Chairman. Appointments to the Commission last for a period of five years and are only renewable once.

6.09. the Service of the CommissionThe Commission has its own Service whose functions include acting as the Secretariat of the

Commission, maintaining a Register of Complaints and ex-officio Investigations of the Commission and a Register of Decisions on collusions or practices, collecting the information necessary for the Commission to exercise its functions under the Act, introducing complaints and submitting recom-mendations to the Commission and issuing the necessary communications and publications pur-suant to the Act.

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6.10. Complaints and investigationsComplaints may be filed by any interested party having a legitimate interest (Section 35) or the

Commission may act on its own initiative. The Commission alone is empowered by Section 23 to investigate infringements of Sections 3 and 6.

Pursuant to Sections 30 and 31, in carrying out its activities, the Service of the Commission has the power to:

- request information from undertakings, associations of undertakings or other natural or legal persons;

- enter any office, premises, land and means of transport of undertakings with the exception of residences;

- inspect books and other professional documentation irrespective of the medium on which they are stored;

- take copies or excerpts of books or professional documents;- seal business premises and any book or professional document for the period or extent necessary

for the inspection;- require on-the-spot oral clarifications.Inspections may be conducted without prior notification except for investigations in any premises,

land and means of transport not covered by Section 31, which must be conducted under a duly rea-soned judicial warrant. The undertaking may consult its lawyer during the operations.

6.11. Proceedings before the Commission for the Protection of CompetitionWhen during the preliminary investigation, the Commission finds that an infringement of the

provisions of the Act is likely, it will initiate the proceedings. Section 17 describes the proceedings before the Commission.

A written statement must be served to the undertakings concerned informing them of the objec-tions raised against them and of a time-limit to submit their written observations. The undertakings may request a hearing in order to further develop their written observations, which the Commission may approve or reject. The Commission is not bound to communicate to the undertaking concerned the whole file but only those documents on which it intends to base its decision, with the exception of business secrets.

Pursuant to Section 18(1), the Commission’s decisions must be duly reasoned, communicated to every undertaking or association of undertakings involved and be published in the Official Gazette of the Republic.

Pursuant to Section 24(e), “where the Commission intends to issue a decision requiring that an infringement be brought to an end and the undertakings or associations of undertakings involved offer commitments to meet the concerns expressed by the Commission in its preliminary assess-ment, the Commission may make those commitments binding on the undertakings or associations of undertakings”.

The Commission can also, on its own initiative, impose any behavioral or corrective term or mea-sure it may deem fit for the bringing to an end of the ascertained infringement (Section 24(c)).

6.12. interim reliefPursuant to Section 28, the Commission has the power to order temporary measures, whether on

its own initiative or on application of an interested party where:- a reasonably strong prima facie case of an infringement of Sections 3 or 6 or of Articles 101 and

102 TFEU exists;


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- it is an emergency case; and- there is a serious risk of irreparable damage to the interests of the person making the application

or to the public interest.The remedy of interim relief under Section 28 is only available where proceedings pursuant to

the Act have been undertaken. However, under Section 40(2), a person who has suffered damage resulting from a breach of Sections 3 or 6 “shall have the right to apply to the Court for making an injunction order to obstruct the continuance of the contravention of Sections 3 and/or 6 […] and/or of Articles [101 and 102 TFEU].”

6.13. Enforcement by ordinary courtsPursuant to Section 40(1) of the Act, any person who suffers loss as a result of an act committed in

contravention of Sections 3 or 6 of the Act or of Articles 101 and 102 TFEU has the right to bring an action for the harm suffered. In this respect, the text provides, in the case of follow-on actions, that a final decision of the Commission or of another Competition Authority or of the European Commission ascertaining the infringement constitutes a rebuttable presumption about the truth of its context.

C. Sanctions

6.14. Cease and desist orders Where the Commission finds that there has been an infringement of Sections 3 or 6, it may order

that the behavior be terminated within a fixed time-limit (Section 24(b)).

6.15. FinesPursuant to Section 24(a), the Commission may impose a fine, according to the gravity and dura-

tion of the infringement of an amount not exceeding 10% of the total turnover of the undertaking or of the total turnover of every undertaking member of the infringing association of undertakings in the year during which the infringement took place.

Where an undertaking refuses to cooperate with an investigation under Section 31, it may be given a single fine of up to EUR 85,000 as well as a daily fine of up to EUR 17,000. Moreover, where an undertaking provides false information or fails to otherwise properly address a Commission request for information, the Commission may impose a fine of up to EUR 85,000. The Commission’s power to impose pecuniary sanctions is subject to the statute of limitations provisions set out at Section 41 of the Act, which provides for a limitation period of three years for infringements of provisions concerning requests for information or the conduct of inspections, and of five years in the case of all other infringements.

Moreover, the Commission may impose a daily fine up EUR 85,000 in the case of continuing infringements where a cease and desist order has been issued, or where undertakings do not comply with the commitments they endorsed under paragraphs (c) or (e) of Section 24.

6.16. Leniency On 1 February 2003, the Commission for the Protection of Competition launched a cartel immu-

nity and fine reduction program, which was very similar to the EU scheme, but not binding on the Commission. The Competition Act of 2008 now contains a specific provision relating to leniency according to which: “the Commission may exempt and/or reduce the amount of the administrative fine which would have been imposed on an undertaking or association of undertakings […] if the said undertaking or association of undertakings co-operates and/or gives such assistance or proof which will assist the Commission to prove the infringement”. A Regulation setting out the criteria for leniency was published in the Official Gazette on 11 November 2011.

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6.17. Criminal sanctionsPursuant to Part VIII, Sections 36 to 39 of the Act, any person who omits to comply with or acts

in contravention of a decision of the Commission issued pursuant to any of Sections 23 to 25, or pur-suant to Section 28 ordering the taking of interim measures, commits a criminal offense punishable with a sentence of imprisonment not exceeding two years or with a fine not exceeding EUR 340,000 or with both such penalties. Furthermore, contravention to the duty to secrecy imposed by Section 33 is punishable with imprisonment not exceeding one year or with a fine not exceeding EUR 3,500 or with both such penalties.

D. appeals

6.18. appeals against the decision of the CommissionDecisions of the Commission may be appealed to the Cypriot Supreme Court no longer than 75

days from the date of the decision.

Section 2 MERGERS


6.19. ContextIt is only in the relatively recent past that the Cypriot Parliament has decided to enact a speci-

fic piece of legislation dealing with concentrations. The relevant Act was adopted in 1999 and as is the case with the general competition law Act, discussed above, the provisions of the Control of Concentrations between Enterprises Law No. 22(1)/99 (as amended by laws No L107(I)/99, L154(I)/00), hereinafter “the Concentration Act”, are modeled on the corresponding EU law pro-visions prevailing at the date of their adoption (Regulation No 4064/89). Thus, at present, Cypriot Law is not in conformity with current Regulation No 139/2004.

6.20. Concept of concentration Pursuant to Section 4 of the Concentration Act, a concentration is deemed to arise whenever:- two or more previously independent undertakings merge;- one or more undertakings or one or more persons already controlling at least one undertaking

acquire, directly or indirectly, whether by purchase of securities or assets, by agreement or otherwise, control of the whole or parts of one or more other enterprises; or

- a joint venture is permanently established that carries out all the functions of an autonomous economic entity.

Control is said to be constituted by “rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possi-bility of exercising decisive influence on an enterprise” (Section 4(3)).

6.21. thresholds Pursuant to Section 3 of the Act, only concentrations of “major importance” are subject to the

provisions of the law. To be of major importance it is necessary that the following thresholds be met:- the aggregate turnover achieved by at least two of the participating enterprises exceeds, in rela-

tion to each one of them EUR 3,417,202;- at least one of the participating enterprises is engaged in commercial activities within Cyprus;


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- a minimum of EUR 3,417,202 out of the combined aggregate turnover of all the participating enterprises relate to the supply of goods or services within Cyprus.

Pursuant to Section 8 of the Concentration Act, the Minister of Commerce, Industry and Tourism has the discretionary power to declare any concentration not meeting these thresholds to be none-theless a concentration coming within the provisions of the Act and thus subject to a notification requirement.

6.22. Control criteriaPursuant to Section 10 of the Concentration Act, a concentration falling within the scope of the

provisions of the Act and which creates or strengthens a dominant position is considered incompa-tible with the conditions of the competitive market and prohibited under the Act. In making their appreciation, the control authorities are required to take the following into account:

- the structure of the affected markets;- the market position of the participating undertakings;- the economic power of the participating undertakings;- the existence of alternative sources of supply;- supply and demand trends;- entry barriers;- the interests of intermediate and final consumers (Section 12). Pursuant to Section 36 of the Act, “prior the decision of the Commission referred to in Section

18,” the Minister may “declare by a reasoned Order that a notified concentration is considered as being of major public interest as regards the effect it may have on economic and social development, technical progress or employment or the supply of goods and services necessary for the public secu-rity of the Republic as a whole or of territories thereof.” Thereafter, and as in the case of Section 8 Ministerial interventions, the Commission is required to submit the terms of its decision adop-ted pursuant to Sections 18 or 26, which decisions the Minister can either approve or refer to the Council of Ministers for approval.

ii. Enforcement


6.23. the Commission for the Protection of CompetitionConcentrations are notified to the Service of the Commission for the Protection of Competition, but

actual decisions as to their compatibility are taken by the Commission for the Protection of Competition.

6.24. the Minister of commerceThe Minister of Commerce, Industry and Tourism along with the Council of Ministers plays a

discretionary role pursuant to Sections 8 and 36 of the Act, and may empower the Commission to investigate the merger.


6.25. Merger notificationUnder Section 13, concentrations of major importance have to be notified to the Service in wri-

ting not more than one week from the date a relevant agreement is concluded, a relevant offer of purchase or exchange is publicized, or a controlling interest is acquired, whichever occurs first.

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Notification may be made jointly or separately by those parties participating in the Act or by a sole party acquiring control.

6.26. Proceedings before the Commission for the Protection of CompetitionThe Service investigates the case then draws up a report which it communicates to the Commission

for the Protection of Competition, setting out its reasoned opinion as to whether the concentration should be declared compatible (phase 1). Thereafter, the Commission decides whether to allow the merger or to launch a full inquiry (phase 2), with the latter usually being decided within one month of receipt of the notification (Section 20). Pursuant to Section 18, the Commission must examine the competitive status of a concentration as soon as it receives notification and decide to launch a full investigation where it considers that the notified operation comes within the scope of the Concentration Act and raises serious doubts as to its “compatibility with a competitive mar-ket.” Second stage investigations last for a period of four months and are brought to an end by a Commission decision that takes into consideration a report from the Service (Section 26). A positive decision clears any restrictive agreement directly related to and necessary for the implementation of the merger.


6.27. Conditions and commitments – DivestiturePursuant to Section 26, the Commission may declare a concentration compatible or incompatible

with the requirements of the competitive market. However, the Act specifically makes provision at Section 27 for carrying out “negotiations, hearings or discussions with interested parties” presumably so as to allow the parties to remove the more anticompetitive effects of any merger they have plan-ned. Where a merger is permitted on the basis of wrong or misleading information, or where the parties fail to respect a condition to which the merger was subject, the Commission may order the partial or complete dissolution of the concentration (Section 42).

6.28. FinesThe following fines are imposable by the Commission:- a fine of up to EUR 85,430 for failure to notify accompanied by a daily fine of EUR 8,543 for

each day of continued infringement;- a fine of up to EUR 85,430 for the supply of false or misleading information;- a fine of up to EUR 51,258 for failure to supply requested information;- a fine of up to 10% of the total turnover of the participating enterprises in the financial year

immediately preceding the concentration where a concentration is implemented without complying with a condition imposed by the Commission or without approval of the notified concentration or where an undertaking fails to respect a dissolution order of the Commission adopted pursuant to Section 42. A daily fine of EUR 8,543 is also applicable for each day of continued non-compliance;

- a fine of up to EUR 1,708 and/or six months imprisonment for failure to respect the confiden-tiality requirements of the Act.

D. appeals

6.29. appeals against decisions of the Commission for the Protection of CompetitionDecisions of the Commission may be appealed to the Cypriot Supreme Court.


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The Office for the Protection of Competition 7.08B. Enforcement proceedings

Complaints and investigations 7.09Proceedings before the Office 7.10Interim relief 7.11Enforcement by ordinary courts 7.12


D. AppealsAppeals against the Office’s decisions 7.16Appeals against the Chairperson’s decisions 7.17.

Section 2 Mergers



Enforcement authority 7.22Merger notification 7.23

Proceedings before the Office for the Protection of Competition 7.24


C. AppealsAppeals before the Office 7.27Appeals against decisions of the Office 7.28




7.01. ContextCompetition in the Czech Republic is governed by the Consolidated Act on the Protection of

Competition which corresponds to the Act No 143/2001 on the Protection of Competition (“the Competition Act”) entered into force on 1 July 2001 as amended by various Acts. This Competition Act is largely inspired by EU competition law provisions and the principal reason behind its adop-tion was to harmonize Czech competition law with the EU model of competition control as the Czech Republic was to accede to the EU on 1 May 2004. The Act No 143/2001 is still the main source of Czech competition law. The Act applies to the field of restrictive agreements, abuse of dominance and merger control. The Office for the Protection of Competition is the Czech compe-tition authority.

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7.02. ScopeThe Protection of Competition Act applies to undertakings, which are broadly defined as natural

or legal persons, their associations or associations of such associations and other groupings, even in the instance that such associations and groupings are not legal persons whether they are profit-ma-king or not insofar as they take part in or affect competition through their activities (Article 2(1)). The Act governs the activities of undertakings whether on Czech soil or not, if they lead to a distor-tion of competition within the territory of the Czech Republic. The Act covers all sectors of the eco-nomy, applying equally to public and private undertakings, but adopts the approach of Article 106 TFEU, as regards undertakings entrusted with the operation of services of general economic interest.


7.03. the prohibitionArticle 3 prohibits agreements, decisions and concerted practices that may distort competition.

The Article contains a list of activities considered illegal under the Act, including price fixing, limi-ting production, dividing markets and tying. The Act also specifically prohibits group boycotts. In general only the specific provision of an agreement that offends the Act is prohibited and not the whole agreement, except where the clause cannot be severed from the rest of the contract. Further, pursuant to Article 4(3), agreements granting industrial or intellectual property rights are prohibited where the extent of the restriction imposed is excessive in light of the protection necessary for the proper functioning of the agreement.

An amendment to the Competition Act of 1 September 2009 abolished Article 6 which contai-ned a de minimis provision. Therefore, the rule is not explicit anymore, but remains effective (see the Notice of the Office for the Protection of Competition on agreements of minor importance which do not appreciably restrict competition). The Office holds the view that agreements should not be prohibited pursuant to Article 3 (1): if the aggregate market share held by the parties to the agree-ment does not exceed 10% on any of the relevant markets affected by the agreement (horizontal agreement); or if the market share held by each of the parties to the agreement does not exceed 15% on any of the relevant markets affected by the agreement (vertical agreement).

7.04. ExemptionsPursuant to Article 3 (4) of the Competition Act, the prohibition does not apply to agreements,

which concurrently:- contribute to improving the production or distribution of goods or to promoting technical or

economic progress while allowing consumers a fair share of the resulting benefit,- do not impose on the undertakings restrictions which are not indispensable to the attainment of

the objectives pursuant to letter a),- do not afford the undertakings the possibility of eliminating competition in respect to a substantial

part of the market of goods, the supply or purchase which constitutes the objective of the agreement.Pursuant to Article 3(1), the prohibition on agreements, decisions and concerted practices that

may distort competition ceases to apply if the Office for the Protection of Competition has granted an exemption by implementing regulation. Article 26 empowers the Office to do so. EU block exemptions apply directly in the Czech Republic even if trade between Member States is not affec-ted. However, the Office may also grant block exemptions to other categories of agreements, pro-vided it is proved that the distortion of competition to which the block exemption would lead is outweighed by benefits to other market participants, in particular consumers.

Article 26 also empowers the Office to withdraw (even with respect to a particular undertaking) – by decision or decree – the benefits of a general exemption, if an agreement no longer meets the conditions of exemption as laid down in Article 3(4).


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Pursuant to Article 20a, by its decision, the Office may also withdraw the benefit of an EU block exemption from an individual undertaking if the agreements in a particular case have effects that are incompatible with Article 101(3) TFEU in the territory of the Czech Republic or in a part thereof, which has all the characteristics of a distinct geographic market.


7.05. Dominant positionA dominant position is deemed to exist where one or more undertakings have the necessary mar-

ket power to allow them act independently of other undertakings to a significant extent. Article 10 lists factors that guide the competition authorities in analyzing market power, e.g. barriers to market entry, the vertical integration level of the undertakings, the market share of the undertakings and of their immediate competitors, and the economic and financial power of the undertakings. The practice of the Competition Office reveals that the most important indicator of dominance is market share and in this respect, the Act sets out a rebuttable presumption that an undertaking with a mar-ket share of below 40% will not be considered dominant.

7.06. abuseWhere an undertaking is in a position of dominance, conduct that constitutes an abuse of that

position includes enforcing unfair conditions, tying, predatory pricing, terminating or limiting pro-duction, and refusing access to essential facilities where otherwise feasible (Article 11).

D. State aid

7.07. ContextWith effect from the date of accession of the Czech Republic to the EU, the competence to assess

the compatibility of State Aid with the internal market was taken over by the European Commission. The Office remains an advisory, monitoring and consultative body in the field of State aid.

ii. Enforcement


7.08. the Office for the Protection of Competition The Office for the Protection of Competition is responsible for supervising compliance with the

Act and taking decisions on exemptions. Application of the Act is carried out by the Office, which is wholly independent in its decision-making process. Located in Brno, the Office began its activities on 1 November 1996 and is the only national regulatory institution since Regulation No 1/2003. It is headed by a Chairperson appointed for a six-year term, renewable once. The organization of the Office and its scope of competence are set out in Act No 273/1996 on the Competences of the Office as amended by Act No 187/1999, Act No 359/2004, Act No 626/2004 and Act No 264/2006.


7.09. Complaints and investigationsUnder Article 21 of the Act, proceedings may be initiated by the notification of an agreement

for approval, or by the Office ex officio. The conduct of proceedings is governed by a combination of

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general administrative provisions set out in the Act No 71/1967 on Administrative Proceedings and by the provisions of the Competition Act.

Over the course of an investigation, both undertakings and Government administrative entities are required to provide the Office with accurate information and documents. In turn, the Office must identify the subject matter and purpose of the investigation and advise concerned parties that failure to cooperate is punishable by fine. Strict time-limits govern the proceedings under the Act, and generally the Office’s powers are similar to those of the European Commission under Regulation No 1/2003. Thus, the Office has the authority to enter any premises, land and means of transport, to examine books and records, take copies or ask for on-the-spot oral explanations. Where an applicant has requested an investigation, the Office is required to notify the applicant in writing of its accep-tance, rejection or referral of the complaint to another body.

7.10. Proceedings before the OfficeA third party with rights or obligations that could be significantly affected by a decision of the

Office may ask to be granted status as a party to the proceedings (Article 21a(1)). Where the Office deems it necessary, or upon the request of a party, the Office may hold hearings prior to taking a final decision. The Administrative Code applies in proceedings before the Office. Interested third parties must declare an intention to exercise their rights as parties involved in the proceedings. If they do so, they have the right to submit written opinions to be read during the hearing. However, involved parties have no right to adjust the scope of or terminate the proceedings. Under the general provisions of the Administrative Procedure Act, the proceedings must be completed within 30 days and in complicated cases within 60 days. In the event even the 60-day period is not sufficient for the Office to terminate the proceedings, the period may be extended by the Chairperson of the Office.

The Office can decide to terminate proceedings if the commitments offered by the parties are considered sufficient.

The Office maintains a cartel register of agreements that have been finally approved, or have had an exemption prolonged or revoked. In addition to the name and address of the business, the register includes a document regarding the agreement, the effective date and duration of the exemption and any conditions upon which it was granted. The cartel register is open to the public.

7.11. interim reliefIn application of Article 43 of the Act No 71/1967, the Office may order preliminary measures

ordering that the parties perform an action or abstain from an action. Preliminary measures may be annulled as soon as the reasons for their implementation cease to exist. Otherwise, the measures cease to be effective from the date of the final decision.

7.12. Enforcement by ordinary courtsIn addition to lodging a complaint before the Competition Office, an undertaking which has

suffered damage as a result of anticompetitive behavior may also bring an action before the courts requesting damages for injury suffered and a cessation of that behavior. Such actions are heard by the appropriate regional court.

C. Sanctions

7.13. Cease and desist orders The Office is expressly empowered to prohibit the future performance of prohibited agreements

(Article 7), and to prohibit continued abuse of a dominant position (Article 11(2)).


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7.14. FinesViolation of the prohibition on agreements restricting competition (Article 3(1)), implementing a

concentration contrary to Article 18(1), or abusing a dominant position (Article 11(1)), is punishable by fines of up to CZK 10 million (EUR 316,000) or 10% of net turnover for the prior calendar year (Article 22a).

Intentional or negligent failure to provide requested information to the Office, or the communi-cation of false information, is punishable by a fine of up to CZK 300,000 (EUR 9,500) or 1% of the net turnover achieved by the undertaking in the last accounting period. Failure to appear at a hearing or obstructing proceedings is likewise punishable by a fine of up to CZK 100,000 (EUR 3,163).

More generally, in cases of failure to pay the abovementioned fines, the Office may impose further “remedial measures”.

7.15. Leniency In 2001, the Competition Office introduced a leniency program in order to discourage prohibited

cartel practices. Leniency provides for total immunity from fines or for fine reduction of up to 50%. An undertaking that is the first to provide the Office with relevant information, documents, evi-

dence, or witnesses on the existence of an agreement that infringes the Competition Act, and of which the Office was not aware or about which the Office has not yet acquired sufficient evidence, may be awarded immunity if four conditions are met: the undertaking must submit all the relevant informa-tion, documents and evidence available that proves the existence of a prohibited agreement; the under-taking must put an end to its prohibited conduct by the time it provides such information at the latest; the undertaking must not have coerced other undertakings to join in the prohibited behavior; and the applicant must not have destroyed, falsified or concealed evidence relevant to alleged cartel or disclosed its intention to submit application or a part of intended application, except having done this to any other competition authority, at a time when contemplating making leniency application.

Fine reduction may be obtained where an undertaking provides the Office with information, documents and evidence that constitute crucial evidence for establishing the existence of a prohibited agreement and puts an end to its behavior. An undertaking may apply for a reduction of 30 to 50% where it is the first to provide the relevant information. If the undertaking is the second to provide information, it can apply for a fine reduction of 20 to 30%. Any other undertaking that provides information may obtain a fine reduction of up to 20%.

An undertaking that confirms the Office findings after an investigation may also benefit from a 20% reduction of its fine.

D. appeals

7.16. appeals against the Office’s decisionsProceedings before the Office can be divided in two. Decisions are first taken by operative depart-

ments of the Office, and then may subsequently be appealed before the Chairperson of the Office in the fifteen days following notification of the decision.

7.17. appeals against the Chairperson’s decisionsIt is possible to bring an action for judicial review within the two months following receipt of the

Chairperson’s decision, pursuant to the provisions of Act No 150/2002 on the Administrative Court Code, which has been in force since 1 January 2003. Moreover, when bringing an appeal, a party may request that the application of the decision be suspended. Normally such a request will be granted if the party demonstrates that the enforcement of the Chairperson’s decision would cause it irreparable harm, the acquired rights of third parties would not unreasonably be affected, and the suspension would not be contrary to public policy.

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The Chairperson’s decision is first appealable before the administrative regional court, and then, on points of law, before the Higher Administrative Court.

Section 2 MERGERS


7.18. ContextThe control of concentrations is provided for under Section IV of the Act. The control instituted

thereunder is in accordance with EU law.

7.19. Concept of concentration The Act defines a concentration as the transformation of one or more undertakings that were

previously independent (Article 12). It includes the acquisition of an undertaking, or part thereof, by purchase, acquisition of stock or other interest, or any other means allowing direct or indirect control over another enterprise. The creation of a joint venture that assumes all of the functions of an independent economic entity on an ongoing basis is also deemed to be a concentration, whereas the temporary holdings of banks and control by office holders in cases of bankruptcy and liquidation proceedings is not.

7.20. thresholds A concentration must be notified to the Office where certain turnover thresholds set out in the

Act are met. If the total net turnover of all undertakings concerned achieved in the last accounting period in the

market of the Czech Republic exceeds CZK 1,5 billion (EUR 58,735,000) and each of at least two of the undertakings concerned achieved in the market of the Czech Republic in the last accounting period a net turnover exceeding CZK 250 million (EUR 9,790,000) or, if the net turnover achieved in the last accounting period in the market of the Czech Republic, at least by one of the parties to the merger, by the acquired enterprise or a substantial part thereof, by the undertaking, over whom the control is acquired, or by at least one of the undertakings establishing a joint venture is higher than CZK 1,5 billion (EUR 58,735,000) and at the same time the worldwide net turnover achieved in the last accounting period by another undertaking concerned exceeds CZK 1,5 billion (EUR 58,735,000), the concentration must be notified to the Office.

The Act contains a statutory definition of turnover at Article 14 pursuant to which the aggregate turnover of a company is said to include subsidiaries, parent companies and jointly controlled firms. Pursuant to Article 14(4), where a concentration involves the acquisition of part of an undertaking, only the turnover of that part is taken into account with regard to the seller.

7.21. Control criteriaPursuant to Article 17 of the Act, only concentrations that create or strengthen a dominant posi-

tion as a result of which effective competition is hindered may be prohibited. In deciding whether there is an impediment to competition, the Office is required under the Act to consider “the neces-sity of preserving and further developing effective competition, the structure of all affected markets, the market shares and economic and financial power of the parties to the concentration, legal and other barriers to entry by other undertakings into the relevant market, the alternatives available to suppliers and users of the parties to the concentration, the development of supply and demand on the affected markets, the needs and interests of consumers, and research and development provided that it is for the advantage of the consumer and does not form an obstacle to effective competition.”


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ii. Enforcement


7.22. Enforcement authoritiesThe authority primarily responsible for concentration control in the Czech Republic is the Office

for the Protection of Competition. As with regular competition law matters, the Office is completely independent in its decision-making process.

7.23. Merger notificationNotification must be filed, either jointly or by the acquiring company as appropriate, prior

to conclusion of the agreement establishing the concentration or prior to acquisition of control over another undertaking in any other way. The concentration notification must also contain substantiation, documents certifying the facts decisive for the concentration and the requisites set out by the implementing legal regulation. The application must be submitted in the Czech language.

The Office may exempt undertakings from the ban on implementing a concentration pending approval if suspending the operation may cause the undertakings or third parties material damage or other significant detriment.

Finally, the Office for the Protection of Competition has issued an “expository standpoint concer-ning obligatory notification of concentrations realized abroad”, according to which the Act applies to the actions of undertakings abroad only if they distort or may distort competition in the territory of the Czech Republic. The Office considers that if the combined market share of the undertakings concerned by a merger does not reach, either before or after the operation, a 10% threshold in any relevant market in the territory of the Czech Republic, and it is not required to notify due to other circumstances (e.g. the fact that at least two of the parties to the concentration have subsidiaries in the Czech republic), the concentration is not subject to mandatory notification.

The filing fee is set at CZH 100,000 (EUR 3,900).

7.24. Proceedings before the Office for the Protection of CompetitionThe Office for the Protection of Competition is responsible for taking decisions regarding concen-

trations. Upon receipt of notification, if the Office determines that the concentration does not require appro-

val, it issues a decision to that effect within thirty days of the initiation of proceedings. Alternatively, the Office may issue a decision within thirty days, advising the parties that it is continuing procee-dings because of serious doubts as to whether the concentration poses a significant impediment to competition. If the Office fails to respond within this period, the concentration is deemed approved.

In the event that the Office advises the parties that it is continuing the proceedings, it must issue a decision within 5 months of the initiation of proceedings. In the event that the Office fails to issue a decision on the concentration by the end of the stipulated period, the concentration is deemed to have been approved.

The Office announces the initiation of concentration approval proceedings in the Commercial Journal upon receipt of the concentration notification, and establishes the period within which ob-jections to the concentration may be filed.

Restrictive agreements that are directly related and necessary to its implementation are evaluated at the same time as the merger itself.

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7.25. Conditions and commitments - DivestitureWhere the Office finds that a concentration has been implemented without notification, it may

impose penalties including divestment of all or part of the enterprise acquired. Further, in its decision authorizing a merger, the Office may attach conditions and restrictions to preserve effective compe-tition or to make the approval itself conditional on the fulfillment of commitments that the merging parties have made before or during the proceedings.

The Office may revoke a concentration decision where the parties were responsible for providing false or incomplete information, where the decision was obtained by deceit, or where the underta-kings breach conditions attached to the decision.

7.26. FinesFinalizing a concentration without having obtained approval or failing to notify a concentration

where required is punishable by a fine of up to either 10% of net turnover in the previous calendar year or 10 million Czech crowns (EUR 316,000). Remedial measures may be imposed where the parties fail to respect an order imposing a fine.

C. appeals

7.27. appeals before the OfficeThe decisions of the Office regarding concentrations may be appealed before the Office itself

within 15 days from the notification of the decision.

7.28. appeals against decisions of the OfficeFollowing the Act No 150/2002, the Office decision may be first appealed before an administrative

regional court (the District Court in Brno) and, thereafter, before the Higher Administrative Court.


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8.01. ContextCompetition Act No 384 was adopted by the Danish Parliament on 10 June 1997 and ente-

red into force on 1 January 1998. One year after it was put into effect, the 1999 Report of the Competition Council stressed that the Danish economy still suffered from competition problems, due to inadequacies of the Danish legislation. The Report cited, for example, the fact that merger control was not handled by the Competition Act, but by way of ministerial order. In response to this

ChaPtEr 8

DEnMarK





C. Abuse of dominanceThe prohibition 8.05Negative clearance 8.06



The Competition Council (Konkurrenceradet) 8.08The Competition Authority (Konkurrence Styrelsen) 8.09

The Competition Appeals Tribunal (Konkurrencean-kenævnet) 8.10The Minister for Economic and Business Affairs 8.11

B. Enforcement proceedingsComplaints and investigations 8.12Proceedings before the Competition Council 8.13Interim relief 8.14Enforcement by ordinary courts 8.15


D. AppealsAppeals against decisions of the Competition Council 8.19Appeals against decisions of the Competition Appeals Tribunal 8.20

Section 2 Mergers



The Competition Council 8.25The Competition Authority 8.26The Minister for Economic and Business Affairs 8.27

B. Enforcement proceedingsMerger notification 8.28Proceedings before the Competition Council 8.29


D. AppealsAppeals against decisions of the Competition Council 8.32Appeals against decisions of the Competition Appeals Tribunal 8.33

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and other critiques, amendments were introduced to better align Danish competition law with the laws in force in the rest of the EU.

The Consolidated Competition Act No 687 of 12 July 2000, based on the 1997 Competition Act as amended by Act No 416 of 31 May 2000, which entered into force on 1 October 2000, sets out the principles of competition law currently in effect in Denmark. For the first time, merger control and fines for abuse of dominance have been included in the legislation.

Later, Act No 426 of 6 June 2002, which entered into force on 1 August 2002, also amended the competition regime of Denmark by increasing the fines for violations of the 1997 Act and the inves-tigative powers of the Competition Council.

Finally, the Competition Act was consolidated by several acts, No 785 of 8 August 2005, No 523 and 572 of 6 June 2007. It was also amended a few times by Section 6 of Act No 375 of 27 May 2008, Section 162 of Act No 1336 of 19 December 2008 and Act No 495 of 12 May 2010. Thus, competi-tion in Denmark is now governed by the Consolidated Competition Act No 1027 of 21 August 2007 as amended as of 1 October 2010, which fully entered into force on 1 January 2011.

The Consolidated Competition Act includes provisions regarding restrictive agreements and abuse of dominance, and establishes schemes for merger control and State aid.

8.02. ScopeThe Competition Act applies when the Danish market is affected, and thus applies to underta-

kings located abroad that engage in anticompetitive practices affecting the Danish market.It encompasses any business activity, whether public or private, defined broadly as any economic

activity in a market for goods or services, whether profitable or not.Before the 2002 amendments, the Competition Council had no jurisdiction to act against an anti-

competitive agreement or conduct that was a consequence of public regulations. Now, the Council may issue a statement and make recommendations to the relevant minister and to the Minister for Economic and Business Affairs. The relevant minister, after consultation with the Minister for Economic and Business Affairs, must respond to the Council within four months.

Labor relations are excluded from the coverage of the Competition Act.


8.03. the prohibition The prohibition on restrictive agreements of Section 6(1) corresponds to the prohibition in Section

101 TFEU. Agreements between undertakings, decisions of associations of undertakings or concer-ted practices between undertakings that have as a direct or indirect object or effect the restriction of competition are prohibited. Such agreements are considered void ab initio and are thus unen-forceable between the parties or with regard to third parties. A non-exhaustive list of prohibited agreements is set forth in Section 6(2), including price fixing, market sharing, discrimination etc. Section 6 applies to joint ventures which coordinate the behavior of the participating undertakings.

Section 7 formerly decided that the prohibition set out in Section 6 did not apply to pricing agreements. Thus, the competition authorities did not apply it to resale prices. Following the 2002 amendment, the general prohibition of Section 6 applies to both the sale and the resale of goods or services and covers resale price maintenance.

Section 7(1) provides an exception for agreements of minor importance. Whether an agreement is minor is calculated by reference to both turnover and market share. Thus, an agreement is minor where the undertakings involved have an aggregate annual turnover of less than 1 billion Krone (EUR 135 million) and an aggregate market share of less than 10%, or an aggregate annual turnover of less than 150 million Krone (EUR 20 million), irrespective of their market shares. This exception does not, however, apply to agreements on price fixing, market share, bid rigging etc. or to cases where multiple agreements cumulatively restrict competition within an economic sector. An amendment passed on 29


141

May 2002 states that the exception does not apply to both the sale and the resale of goods and services. An executive order on the calculation of turnover in the Competition Act No. 808 of 14 August 2009 provides further details regarding calculation of turnover for purposes of this Section.

8.04. ExemptionsAn individual exemption from the prohibition on restrictive agreements can be granted pur-

suant to Section 8. Alternatively, a non-intervention statement may be issued relative to restrictive agreements (Section 9). However, individual exemption or a non-intervention statement may be denied where the agreement, decision or concerted practice may appreciably affect trade between the Member States of the European Union. Applications for exemption should be notified to the Competition Council. In determining whether to exempt an agreement, the Competition Council considers the criteria in Section 8, which parallel the criteria in Section 101 of the TFEU.

The Minister for Economic and Business Affairs has authority to issue regulations regarding block exemptions (Section 10(1)). Several block exemptions were enacted in Denmark that parallel the EU block exemptions, including exemptions regarding vertical agreements and concerted prac-tices, agreements in the insurance sector, research and development agreements, motor vehicle servi-cing and distribution agreements, specialization agreements and technology transfer agreements. An additional exemption in Denmark, which is not based on an EU block exemption, covers cooperative agreements in the area of retail trade. The Competition Council has issued guidelines regarding the block exemption of cooperation agreements in the retail trade and guidelines concerning all other group exemption regulations.


8.05. the prohibitionSection 11 prohibits the abuse of a dominant position by one or more undertakings. As in many

jurisdictions, the mere existence of a dominant position is not punishable, only its abuse. Like Section 102 of the TFUE, Section 11 establishes a list of practices that may constitute abuse, for example, imposing unfair purchase or selling prices or other unfair trading conditions, limiting production, discriminating between trading parties or imposing supplementary obligations as preconditions to the conclusion of a contract. The concepts of dominance and abuse are interpreted in accordance with the practice of the Commission and the Court of Justice.

Section 5 a(1) of Act provides that the relevant market shall be determined based on examination of demand substitutability, supply substitutability and potential competition. The Council is autho-rized to use external experts in making this evaluation.

8.06. negative clearanceThe Competition Council may, upon notification by the parties, issue a negative clearance stating that

the conduct alleged to be an abuse of dominance does not come within the prohibition (Section 11(5)).

D. State aid

8.07. ScopeUnlike the competition laws of many other UE Member States, the Danish Competition Act

sets out specific rules governing the area of State aids. According to Section 11a, the Competition Council may order the termination or the repayment of aid granted from public funds to businesses when the aid distorts competition or is contrary to public regulation, up to five years after payment. The Competition Council may issue negative clearance orders regarding State aid. In 2000, the Competition Council issued guidelines on anticompetitive State aid.

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ii. Enforcement


8.08. the Competition Council (Konkurrenceradet)The Competition Council is the principal body enforcing the Competition Act. It may take cases

on its own initiative, upon notification or complaint, or when cases are referred to it by the European Commission or other competition authorities of the European Union.

The Competition Council is made up of a Chairman and 17 members, appointed by the Minister for Economic and Business Affairs, in both cases for a four-year term. The Chairperson and eight of the members must be completely independent of commercial and consumer-related interests. One of these members has special insight into government enterprise activity. According to specific directions given by the Minister for Economic and Business Affairs, 7 members are appointed on the recommendation of trade organizations, one member is appointed on the recommendation of consumer organizations, and one member with special insight into public enterprise activity upon recommendation from Local Government. The members of the Council are appointed on the basis of their personal and professional qualifications and they must act independently when carrying out their duties.

8.09. the Competition authority (Konkurrence Styrelsen)The Competition Authority is the secretariat of the Competition Council and attends to the day-

to-day enforcement of the Act on behalf of the Competition Council. It is an independent agency under the Ministry for Economic and Business Affairs. In accordance with Regulation No 862 of 5 September 2000, the Competition Authority is made up of 18 members, appointed by the Minister for four-year terms.

Any assistance rendered to the European Commission pursuant to EU competition regulations is to be provided by the Competition Authority (Section 24(3)). In providing such assistance, the Competition Authority has powers of investigation including, subject to certain conditions, the power to examine records, take copies, ask for on-the-spot explanations and enter premises. The Competition Authority is also authorized to disclose confidential information to the competition authorities of other countries when such information is necessary to enforce the competition rules of those countries (Section 18a).

8.10. the Competition appeals tribunal (Konkurrenceankenævnet)The Competition Appeals Tribunal consists of a Chairman, who must be qualified for the position

of Supreme Court judge, and four other members of whom two are legal experts and two are eco-nomics experts. All of them are appointed by the Minister for Economic and Business Affairs and must be independent of commercial interests. Rules on the activities of the Tribunal are established in Ministerial Order No 1032 of 17 December 1997.

8.11. the Minister for Economic and Business affairsThe Minister is empowered by the Act to establish rules in several areas including calculation of

turnover (Section 12(4)), block exemptions (Section 10(1)), repayment of State aid (Section 11a(4)), notification of mergers (Section 12b(3)), and whether entities form part of the same undertaking (Section 5(2)).


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8.12. Complaints and investigationsThe Competition Council may take up cases on its own initiative, upon notifications by the parties

to an agreement or upon receipt of a complaint. Upon receipt of a complaint, the Council decides whether its raises sufficient grounds to justify an investigation.

Investigations are governed by Section 18 of the Act. Upon authorization given by a court order, the Competition Authority may access premises and means of transport, search documents and make copies. The 2002 amendment added that the Competition authority may access externally stored data and remove information in order to copy it, upon authorization given by a court. The Competition Authority must return the seized information within three working days.

8.13. Proceedings before the Competition CouncilThe Competition Council cannot take direct action regarding anticompetitive conduct which

results from public regulation. Before taking any action, the Council must obtain a decision from the authority that is responsible for the regulation. The relevant Government minister must reply to any such request within four weeks (Section 2(4)).

Where a hearing of the parties is held, the hearing must comply with the Act on Public Administration. In such cases, the parties have access to the entire draft decision. Parties have at least three weeks to submit a response to the draft decision (Section 15a). The Competition Council may request any information, including inter alia business records and electronic data, necessary for its decision (Section 17).

Commitments can be submitted to the Competition Council.

8.14. interim reliefAlthough the Competition Act has no specific provision relating to the granting of interim relief,

injunctions may be sought under Section 642 of the Administration of Justice Act. Such remedy is only available when: i) the disputed acts infringe the claimant’s rights, ii) the other party is about to perform the disputed acts, iii) awaiting the outcome of ordinary legal proceedings would cause irreparable harm. In addition, the claimant must prove or render probable his right to the issuing of the injunction.

8.15. Enforcement by ordinary courts Danish courts have general jurisdiction over any action for damages, including suits for damages

for infringements of the Competition Act. Cases may be brought before the city courts, or may be brought in the first instance before the High Court where the amount in controversy exceeds 500,000 Krone (EUR 67,500). In other cases, a case may be brought before the Maritime and Commercial Court in Copenhagen.

C. Sanctions

8.16. Cease and desist ordersThe Competition Council may issue orders for the termination of infringements of the Competition

Act. According to Section 16(1), these orders may include the total or partial termination of the res-trictive practice, specified price or profits calculation rules, the obligation for the undertakings to sell to specified buyers in the usual conditions for such sales, or that access be granted to an infrastructure facility that is essential to market a product or service.

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8.17. FinesThe 2002 amendment aligned the fines imposed under Danish law with those of other European

countries. The size of the fine depends on the gravity and the duration of the infringement. The competition authorities are not empowered to impose fines. Only the courts are competent to levy such fines, following public prosecution. Indeed, fines for violations of the Competition Act are of criminal nature and set out in Part 5 of the Danish Criminal Code. Therefore, the amount of the fines imposed under section 22 of the Danish Competition Act is to be fixed in consideration of the general provisions of Part 10 of the Criminal Code as well as the turnover generated by the legal person in the last year preceding the passing of the judgment or the notice of a fine. Minor infringe-ments will be fined 10,000 to 400,000 Krone (EUR 1,350 to 54,000); serious infringements, 400,000 to 15 million Krone (EUR 54,000 to 2,000,000); very serious infringements, 15 million Krone (EUR 2,000,000) or more.

Fines may be imposed on any party that, intentionally or through gross negligence fails to com-ply with an order or request for information, or supplies the Competition Authority, Competition Council or Competition Appeals Tribunal with incorrect or misleading information.

When a party fails to comply with a condition or order of the Competition Council, or to submit requested information, the Competition Council may impose daily or weekly periodic penalty pay-ments (Section 22). No such fines can be imposed when an agreement has been notified in order to obtain an individual exemption.

8.18. LeniencySection 23a) provides for leniency for an undertaking having entered into a cartel agreement. The

leniency program allows a withdrawal of the charge under certain conditions: before an investiga-tion, it must give the authorities specific grounds to initiate a control; after the investigation, it must enable the authorities to establish an infringement. In both cases, withdrawal of the charge shall be granted only if the applicant fully cooperates, ends his participation in the cartel, and has not coerced any other party into the cartel.

A reduction of the fine is also possible when the applicant submits information that constitutes significant added value to the case and respect the three previously mentioned conditions. First applicant may obtain a reduction of 50%, second applicant can hope for 30%. Subsequent applicants may have a reduction up to 20%.

D. appeals

8.19. appeals against decisions of the Competition CouncilThe Competition Appeals Tribunal has exclusive jurisdiction over appeals against decisions of the

Competition Council listed in Section 19(1). Such appeals may be lodged within four weeks after notification of the decision, although the Competition Appeals Tribunal has discretion to accept untimely appeals (Article 20(2)).

Decisions not to investigate pursuant to Section 14(1) cannot be appealed. Appeals do not ordi-narily have a suspensive effect, with the exception of appeals from orders regarding disclosure of information pursuant to Section 13(4), unless specifically granted by either the Competition Council or the Competition Appeals Tribunal. Appeals may be lodged by both the parties to the case and, except in merger cases, by others demonstrating an individual and substantial interest in the case (Section 19(2)(ii)).

8.20. appeals against decisions of the Competition appeals tribunalDecisions of the Competition Appeals Tribunal may be appealed to the courts within eight weeks

after service of the decision (Article 20(3)). Upon expiration of this period, the decision of the


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Competition Appeals Tribunal is final. The Supreme Court has final jurisdiction in cases brought before the courts.

Section 2 MERGERS


8.21. Context The Danish Competition Act did not include any provisions regarding merger control until the

2000 amendments. The law of 31 May 2000 introduced a definition of mergers and a full-fledged pre-merger review procedure. Merger guidelines were also issued in 2000.

8.22. Concept of concentration According to Section 12a, a merger occurs where two or more previously independent underta-

kings merge, where one or more undertakings acquire direct or indirect control of all or part of ano-ther undertaking, or upon creation of a joint venture functioning as an autonomous economic entity on a lasting basis. Control is defined as contract rights or agreements or in other ways which will, either separately or in combination, make it possible to exert decisive influence on the operations of an undertaking.

On the other hand, no merger arises where financial institutions or insurance companies tempo-rarily hold securities, or where a receiver is appointed (Section 12a(4)). When the creation of a joint venture which constitutes a merger also has as its object or effect the coordination of the competitive behavior of undertakings that remain independent, such coordination shall be evaluated in accor-dance with the provisions on restrictive agreements (Section 12c(3)).

8.23. thresholdsUnder the Competition Act of 2000, mergers are covered where certain turnover thresholds are sa-

tisfied. The Act applies to mergers where the aggregate annual turnover in Denmark of all undertakings involved is more than 900 million Krone (EUR 120 million) and the aggregate annual turnover in Denmark of each of at least two of the undertakings concerned is more than 100 million Krone (EUR 13 million), or where the aggregate turnover in Denmark of at least one of the undertakings involved is more than 3.8 billion Krone (EUR 510 million) and the aggregate world-wide turnover of at least one of the other undertakings concerned is more than 3,8 billion Krone (EUR 510 million).

8.24. Control criteriaMergers that will not significantly impede effective competition, in particular due to the creation

or strengthening of a dominant position, must be approved (Article 12c).

ii. Enforcement


8.25. the Competition CouncilThe Competition Council determines whether a merger is approved or prohibited. The

Competition Council is also consulted when the Minister for Economic and Business Affairs esta-blishes rules regarding notification of mergers and calculation of turnover.

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8.26. the Competition authorityNotification of a merger is made to the Competition Authority, which acts as the secretariat of the

Competition Council.

8.27. the Minister for Economic and Business affairsThe Minister establishes regulations regarding the calculation of turnover for purposes of merger

control, and notification of mergers. In this regard, with respect to mergers the Minister has issued a regulation on the calculation of turnover in the Competition Act No 808 of 14 August 2009, and the Executive Order on the Notification of Mergers No 976 of 13 August 2010.


8.28. Merger notificationMergers satisfying the applicable thresholds cannot be put into effect until approved by the

Competition Council (Section 12c(5)). Mergers must be notified by one or more of the participating undertakings to the Competition Authority within one week after the conclusion of the agreement establishing the operation. Notification may be filed electronically, in full or simplified form, using Annexes 1 or 2 of the Executive Order on the Notification of Mergers No 976 of 13 August 2010. Not later than ten days after receipt of notification, the Competition Authority must communicate to the parties whether the notification is complete (see Executive Order on the Notification of Mergers No 976 of 13 August 2010). If not, the parties are informed in writing of the time-limit for submit-ting additional information. In the case of a simplified notification, the Competition Authority may inform the notifying party that supplementary information is needed or that the merger must be notified by a submission of a full notification form.

8.29. Proceedings before the Competition CouncilThe procedure for merger cases is divided into two phases. In phase 1, the Competition Council

has 25 working days from receipt of a complete notification to determine whether to approve the merger or, alternatively, to extend the period for 90 working days for the phase 2 investigation procedure (Section 12d). A merger can only be prohibited after having been subject to the phase 2 procedure.

The Competition Council may also approve a proposed merger before the obligation to notify is triggered. In such cases, publication of the notification or approval of a merger may be postponed to a later date (Section 12c(7)).


8.30. Conditions and commitments - DivestitureMergers may be approved subject to conditions and obligations intended to eliminate negative

effects of the merger on competition (Section 12e).With regard to mergers, where an operation has been implemented prior to receiving approval,

the Competition Council may, by means of a decision, require the undertakings or assets brought together to be separated, or the cessation of joint control or any other action that may be appropriate in order to restore conditions of effective competition (Section 12g)

The Competition Council may also revoke its approval of a merger where incorrect information has been supplied or where the parties fail to comply with a condition or obligation ordered by the Competition Council (Section 12f ).


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8.31. FinesFines may be imposed on any party who, intentionally or by gross negligence, neglects to notify

a merger or implements a merger despite the existence of a prohibition to the contrary. Fines vary from DKK 10,000 to 400,000 (EUR 1,300 to 54,000) for less serious offenses, DKK 400,000 to 15 million (EUR 54,000 to 2 million) for serious offenses and above DKK 15 million (EUR 2 million) for very serious offenses.

D. appeals

8.32. appeals against decisions of the Competition CouncilThe Competition Appeals Tribunal has sole jurisdiction to hear appeals against decisions of the

Competition Council in merger cases.

8.33. appeals against decisions of the Competition appeals tribunalDecisions of the Competition Appeals Tribunal may be brought before the ordinary courts within

eight weeks from the date that the decision has been communicated to the parties concerned.


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ChaPtEr 9

EStOnia


I. Substantive rules A. Context and scope



C. Abuse of dominance The prohibition 9.05Undertakings having exclusive rights or controlling essential facilities 9.06

D. State aidContext 9.07Scope 9.08State aid proceedings 9.09


The Competition Authority (Konkurentsiamet) 9.10The Ministry of Economic Affairs and Communica-tions 9.11The State Prosecutor’s Office and the criminal courts 9.12

B. Enforcement proceedings Complaints and investigations 9.13Proceedings before the Competition Authority 9.14Interim relief 9.15Enforcement by ordinary courts 9.16

C. SanctionCease and desist orders 9.17Fines 9.18Leniency 9.19Criminal sanctions 9.20

D. AppealsAppeals against the Competition Authority’s decisions 9.21

Section 2 Mergers

I. Substantive rules Context 9.22Concept of concentration 9.23Thresholds 9.24Control criteria 9.25

II. Enforcement A. Enforcement proceedings


Proceedings before the Competition Authority 9.27B. Conditions/Sanctions

Conditions and commitments – Divestiture 9.28Fines 9.29

C. AppealsAppeals against the Competition Authority or courts of first instance decisions 9.29




9.01. ContextCompetition law in Estonia is governed by the Competition Act of 5 June 2001, which entered

into force on 1 October 2001 and replaced the previous Competition Acts of 1993 and 1998. The substantive rules of the Act are based on Articles 101 and 102 TFUE. The Act was amended several times in 2002 so as to ensure compliance of Estonian competition legislation with the relevant EU competition rules. Sections 50, 51 and 52 develop the notion of unfair competition which under its terms involves the publication of misleading information, the presentation of the same for publica-tion or for disparagement of a competitor or the products of a competitor as well as the misuse of

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confidential information obtained through an employee or representative of a competitor. Pursuant to Section 53 “the existence or absence of unfair competition shall be ascertained in a dispute between parties held pursuant to civil procedure.”

9.02. ScopeThe Competition Act is broad in its scope of application, encompassing all anticompetitive acts,

unfair practices and State aids occurring at national level as well as the activities of foreign based undertakings having an effect in Estonia. Pursuant to Section 1(1) of the Act, its scope extends to a wide variety of activities, from the mining of natural resources to the manufacture of goods or the provision of services. The provisions concerning undertakings apply to companies that perform functions in public law and to the State and local governments if they participate in a goods market. Where the matter under consideration concerns a credit institution, investment broker or insurance undertaking, the authority responsible for competition control is the applicable sector-specific regu-lator. Restrictive agreements in the agricultural sector only fall under the prohibition if competition is substantially restricted.


9.03. the prohibitionSection 4 of the Competition Act prohibits agreements, concerted practices and decisions by

associations of undertakings which are harmful to competition. The wording of the Section is very similar to that of Article 101 TFUE. It consists of a general prohibition followed by an open list of practices deemed to be anti-competitive. This includes price fixing, limiting or controlling produc-tion, markets, market share or supply sources, exchanging information that restricts competition, applying dissimilar conditions to equivalent transactions with other trading parties, or tied selling. Pursuant to Section 8 any agreement or decision that violates Section 4 is void unless it complies with Section 5 of the Act or it has been exempted.

Agreements, concerted practices or decisions are not considered anticompetitive if they are of minor importance. According to Section 5(2), agreements are considered of minor importance if the combined market share of the undertakings involved does not exceed 15% in the case of a vertical agreement, 10 % in the case of a horizontal agreement or 10% in the case of an agreement which has the characteristics of both types of agreement.

9.04. ExemptionsWhere it can be demonstrated that agreements, practices or decisions prohibited under Section

4 have positive effects and create benefits for consumers, without imposing restrictions that are not indispensable or eliminating competition, the Director General of the Competition Board may grant an exemption at the request of an undertaking. Section 6 sets out conditions similar to those under EU law, governing the granting of an exemption.

In order to obtain an exemption, an application must normally be submitted to the Estonian Competition Board (ECB) before entry into force of an agreement, commencement of a concerted practice or adoption of the relevant decision. An application for exemption may also be submitted within the six months after an agreement enters into force or a decision is adopted. However, such agreements or decisions or parts thereof restricting competition are considered void until the exemp-tion is granted (see Procedure for Submission of Applications for Exemption, Regulation No 2 of 6 November 2002, RTL2 2002, 128, 1866).

Pursuant to Section 7(1), the Estonian Government may establish block exemptions by adopting a regulation on the proposal of the Minister of Economic Affairs and Communications. Under the Act, block exemptions are granted for a fixed period of time and should list the scope of the sub-ject-matter to which the block exemption applies, clauses which may not be included in agreements


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seeking to qualify for exemption, and the terms which must or may be included in any such agree-ments. Undertakings holding a dominant position are not allowed to benefit from the provisions of a block exemption, nor can block exemptions be applied to markets on which competition is virtually non-existent. Pursuant to the new law, the Estonian Government adopted several block exemption regulations on 18 June 2002, namely Regulations No 195 and No 196 on vertical and horizontal agreements respectively (RT I 2002, 52, 330 and 331) and more recently, Regulation No 197 of 30 December 2010 “Grant of Permission to Enter into Specialization Agreements which Restrict or May Restrict Free Competition (RT I, 04.01.2011,11), Regulation No 60 of 27 May 2010 “Grant of Permission to Enter into Vertical Agreements which Restrict or May Restrict Free Competition” (RT I 2010, 23, 112) and Regulation No 66 of 3 June 2010 “Grant of Permission to Enter into Motor Vehicle Distribution and Servicing Agreements which Restrict or May Restrict Competition” (RT I 2010, 28, 149).


9.05. the prohibitionSection 13 of the Act defines an undertaking in a dominant position as one which accounts for at

least 40% of the turnover in a particular product market or whose position enables it to operate in a market independently of competitors, suppliers and buyers to an appreciable extent. Undertakings that have special or exclusive rights or that control essential facilities are also considered as coming within the provisions of the Act (Section 13(2)).

The mere fact of an undertaking enjoying a dominant position on the market is not in itself pro-hibited under Estonian competition law, but abusing such a position is unlawful. Section 16 of the Act sets out a non-exhaustive list (similar to that in Article 102 TFUE) of practices considered as constituting abuse.

9.06. Undertakings having exclusive rights or controlling essential facilitiesSections 14 and 15 of the Act define special exclusive rights and essential facilities respectively: - special or exclusive rights are rights the State or local Government grant to an undertaking that

enable it to have a competitive advantage over other undertakings in a goods market or to be the only undertaking in the market (Section 14);

- an undertaking controls essential facilities if it owns, possesses or operates a network, infrastruc-ture or any other essential facility which other persons cannot duplicate or which are economically inexpedient to duplicate but without access to which or the existence of which it is impossible to operate in the goods market (Section 15).

Pursuant to Section 18, an undertaking with special or exclusive rights or in control of an essential facility must:

- permit other undertakings to have access to the network, infrastructure or other essential facility under reasonable and non-discriminatory conditions;

- maintain separate records on revenue and expenditure related to each product or service on the basis of consistently applied and objectively justified principles of calculation which shall be clearly specified in the internal rules of the undertaking.

The undertaking may however refuse to grant other undertakings access to the network, infras-tructure or other essential facility if the refusal is based on objective reasons, including:

- the safety and security of the equipment connected with the network, infrastructure or other essential facility or the efficiency and security of the operation of these;

- the maintenance of the integrity or the inter-operability of the network, infrastructure or other essential facility;

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- the non-conformity with established standards or rules of the equipment to be connected to the network, infrastructure or other essential facility;

- the lack of technical and financial capability of the undertaking applying for access;- the absence of permit of the undertaking applying for access;- the necessity to ensure data protection.

D. State aid

9.07. ContextThe State aid provisions of the Act are set out in Chapter 6, pursuant to which State aid is consi-

dered as any financial advantage granted by State, city or rural Government that threatens or actually distorts competition.

9.08. ScopePursuant to Section 31 of the Act, State aid may only be granted if it is compatible with the public

interest. This category includes: State aid of a social character as long as it is awarded in a non-dis-criminatory manner with regards to the goods concerned, State aid of minor importance, aid promo-ting economic development in specific areas, aid promoting cultural development, and aid granted in response to a disturbance in the economy or a natural disaster.

An undertaking providing services of general interest is an undertaking to which the state or a local government has assigned the duty to provide a service of general interest which is not available on the market and the provision of which the State or the local government considers necessary. Services of public interest shall be defined and the duty to provide such services shall be established by legislation or a contract.

Pursuant to Section 33 of the Act, de minimis aid is deemed to be the aid specified in Article 2 of Commission Regulation (EC) No 1998/2006 on the application of Articles 87 and 88 of the EC Treaty on de minimis aid. However, this provision cannot apply to export aid, aid to substitute for imports and aid granted to the transportation sector (Article 30(3)).

The provisions of Section 33 apply directly, so it is not necessary to notify the aid and apply for permission. De minimis aid shall be granted pursuant to the procedure provided for in Commission Regulation No 1998/2006/EC.

9.09. State aid proceedingsThe grantor of State aid submits the notice on State aid complying with the Commission

Regulation (EC) No 794/2004 with all necessary information in writing and by electronic means through the web application prescribed by the European Commission to the Ministry of Finance for review. If the notice on state aid complies with the requirements, the grantor of State aid must forward this together with all necessary information through the web-application prescribed by the European Commission to the Permanent Representation of the Republic of Estonia to the European Union, which forwards it to the European Commission. If the grantor of State aid fails to submit the required information in the notice on State aid, the notice does not comply with the require-ments or there are deficiencies in the notice or information submitted together with it, the Ministry of Finance has the right to request the submission of additional information from the grantor of State aid or to make a proposal to supplement the notice within 20 working days as of the receipt of the notice. The grantor of State aid submits the additional information requested by the European Commission in the course of processing the notice on State aid by electronic means via the Ministry of Finance to the Permanent Representation of the Republic of Estonia to the European Union, which forwards it to the European Commission.


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State aid covered by block (group) exemption is deemed to be the aid specified in Article 1 of Council Regulation (EC) 994/98 on the Implementation of Articles 92 and 93 of the Treaty es-tablishing the European Community to certain categories of horizontal State aid, with regard to which the European Commission has adopted the corresponding block exemption regulation. It is not necessary to submit the notice on State aid specified in Section 34 of this Act to the European Commission, in order to grant State aid covered by block exemption. The legislation or the draft legislation on the basis of which individual State aid is granted or an aid scheme is implemented and, if necessary, description of the aid proving the compliance of the planned State aid with the conditions laid down in the relevant group exemption regulation of the European Commission is submitted to the Ministry of Finance together with the notice on block exemption. If the notice on block exemption complies with the requirements, the grantor of State aid forwards this to the Permanent Representation of the Republic of Estonia to the European Union, which forwards it to the European Commission.

Sections 43 of the Act provides for the recovery of incompatible aids. If the European Commission or the European Court of Justice has forwarded a decision that unlawful State aid or misused State aid has to be recovered by the beneficiary of the State aid, this decision shall be forwarded to the grantor of unlawful State aid or misused State aid. The grantor of State aid is required to demand recovery of the state aid with interest pursuant to the decision of the European Commission or the European Court of Justice.

Ministry of Finance provides assistance, if necessary, to the European Commission as regards supervision over the State aid and on-site inspections (Section 49).

ii. Enforcement


9.10. the Competition authority (Konkurentsiamet)The Estonian Competition Authority (ECA) was established on 21 October 1993 and is res-

ponsible for the administration and enforcement of the competition rules and corresponding regula-tions. The statutes of the Estonian Competition Authority changed in 2008. Headed by a Director General, the Authority performs the directing function and exercises State supervision within the scope of the functions provided by law, applies enforcement powers of the State and prosecutes offenses in the following areas: 1) competition; 2) fuel and energy; 3) electronic communications and postal services; 4) distribution of railway infrastructure capacities. The structure of the Authority includes the following divisions: - the Competition Division; - the Railway and Energy Regulatory Division; - the Communications Regulatory Division.

The principal tasks of the Competition Division include monitoring compliance with the Competition Act and the corresponding regulations, investigating, evaluating and authorizing agreements and contracts that restrict competition, analyzing cases of abuse of dominance, exami-ning different markets and making proposals for improving their competitive conditions, preparing measures to facilitate competition, making proposals for the adoption or amendment of legal acts, cooperating with the competition authorities of the Member States of the European Union and the European Commission in the application of the EU competition rules pursuant to the conditions and procedure established by the legislation of the European Union, organizing training in compe-tition law issues and disseminating competition-related information. The Competition Authority is responsible for the application of Articles 101 and 102 TFEU within the meaning of Article 35 of Council Regulation 1/2003 and, if necessary, assists the European Commission in competition supervision and performance of on-site inspections.

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9.11. the Ministry of Economic affairs and CommunicationsThe Authority is accountable to the Minister of Economic Affairs and Communications, who

guides and coordinates its activities and exercises supervisory control over the Authority pursuant to the procedure provided by legislation.

The Minister of Economic Affairs and Communications is responsible for proposing the adoption of block exemptions pursuant to Section 7(1) of the Act.

9.12. the State Prosecutor’s Office and the criminal courts.Sections 399 to 402 of the Estonian Penal Code set out criminal sanctions for certain competition

infringements. If misdemeanour offenses are to be handled by the Competition Authority (Sections 731 and 735 to 737 of the Competition Act), the Prosecutor’s Office has jurisdiction to investigate other offenses such as cartels and to take action to criminal courts for the imposition of criminal penalties.


9.13. Complaints and investigationsPursuant to Section 631 of the Competition Act, applications filed with the Competition Authority

for the commencement of administrative proceedings must be in writing. Documentation available to the person submitting the application must be annexed to the application. Although anonymous applications will not be reviewed (Section 632(3)), the complaint may require that the applicant’s name be not disclosed to other persons (Section 631(3)). An application may also not be exami-ned where it is clearly unjustified or an action concerning the same matter has been filed with the European Commission or the competition authority of another Member State or a decision of the European Commission or of the competition authority of another Member State concerning the same matter has entered into force.

The Competition Authority may also start administrative proceedings ex-officio, pursuant to its prerogatives on the supervision of competition (Section 57).

Since 1st September 2002, the Competition Authority is in charge of carrying out pre-trial inves-tigations. Under Section 57, it may by way of reasoned request, ask any legal or natural person, inclu-ding State agencies, to submit information necessary for the performance of its functions involving the analysis of competitive situations. Such information must be submitted within not less than ten calendar days following the request. The Competition Authority may also request written explana-tion to be provided. Finally, people may be summoned to the Competition Authority within not less than ten calendar days. Moreover, pursuant to Section 59(1) of the Act, the Competition Authority can require an undertaking to submit original documents, drafts or other materials for inspection. The Authority may carry out an inspection of the buildings, rooms and means of transport at an undertaking’s place of business without prior warning or special permission (Section 60(1)). During the course of an inspection, the officers of the Competition Authority may also examine data or databases kept in electronic form on computer or request that employees of an undertaking give explanations concerning the issues under investigation.

9.14. Proceedings before the Competition authority1°) Administrative proceedingsThe investigations may result in administrative proceedings ending up either with the dismissal

of the case, the issuing of an injunction (‘precept’) or the inflicting of a fine in the case of misde-meanor offenses. The rules detailing the conduct of administrative proceedings can be found in the Administrative Procedure Act of 6 June 2001.

Pursuant to Section 37 of said Act, everyone has the right, in all stages of administrative procee-dings, to examine documents and files, if such exist, which are relevant in the proceedings and which


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are kept with an administrative authority. In addition, Section 40 provides that the administrative authority must, before issuing any administrative act or taking any measures which may damage the rights of an undertaking, grant the latter a possibility to provide his or her opinion and objections in a written, oral or any other suitable form.

2°) Criminal proceedingsWhere the Competition Authority deems it has collected sufficient evidence to substantiate cri-

minal proceedings, it will issue a summary of the pre-trial proceedings and send it to the Prosecutor’s Office. The issue will then be tried by the competent criminal court, under the rules of the Code of Criminal Procedure

9.15. interim reliefUnder Section 62 of the Act, the Competition Authority may issue an injuction (‘precept’) espe-

cially where a natural person or an undertaking: abuses a dominant position; violates a prohibition against agreements, practices or decisions restricting competition; or fails to comply with the obliga-tions of undertakings with special or exclusive rights or in control of essential facilities.

The injuction may require the person or undrtaking to perform an action; refrain from a prohi-bited action; terminate or suspend activities which restrict competition; or restore the situation prior to the offense.

If the undertaking fails to comply with the injuction, the Competition Authority may impose a penalty payment of up to EUR 3,200 on natural persons and up to EUR 6,400 on undertakings.

9.16. Enforcement by ordinary courtsSection 78 of the Act provides that parties who have suffered damage to their property or other

types of harm resulting from practices prohibited under the Act are entitled to compensation accor-ding to the rules of civil procedure.

C. Sanctions

9.17. Cease and desist ordersCease and desist orders may be issued pursuant to Section 62(2) of the Act.

9.18. FinesNon-compliance with an ECA order may be sanctioned by a fine of up to EUR 3,200 for natural

persons and up to EUR 6,400 for legal entities (Section 62(3)). A legal entity that refuses or fails to submit the necessary documents or information on time, submits false information, or submits documents or information in a manner which does not permit the proper exercise of the Authority’s supervisory role is punishable by a fine of up to EUR 3200 (Section 731).

9.19. Leniency According to the Penal Code, Code of Criminal Procedure and Competition Act Amendment

Act in force since 27 February 2010, the person that is involved in anti-competitive agreements, concerted practices or decisions of association of undertakings set out as punishable in Section 400 of the Penal Code, may submit a leniency application to the Competition Authority in order to be released from liability or to obtain a significant reduction of the fine (Section 781).

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9.20. Criminal sanctionsThe Competition Act was amended in 2002 as a result of the adoption of the new Penal Code.

From 1 September 2002, all competition offenses are considered criminal in nature. In the case of abuse of dominance, company board members who establish unfair trading conditions, or limit pro-duction, services, markets, technical developments or investments thereby harming consumers, or engage in activities involving the abuse of a dominant position in a market are punished by a fine or by detention (Section 742).

In the case of restrictive agreements or concerted practices, a company board member who violates a prohibition against agreements, decisions or concerted practices thereby harming competition, or enters into an agreement, makes a decision or engages in concerted practices requiring an exemp-tion without obtaining such an exemption, or violates the conditions of the exemption is punished by a penalty payment of up to EUR 3200 on natural persons and up to EUR 6400 for legal persons (Section 62(3)).

Concerning essential facilities and exclusive rights, a company board member who denies other undertakings access to a network, infrastructure or other essential facility under reasonable and non-discriminatory conditions, or engages in other activities which violate the obligations imposed by law on legal entities with special or exclusive rights or essential facilities shall be punished by a fine or detention (Section 744).

Where any of the acts described above are attributed to the company itself, the punishment is pecuniary in nature.

D. appeals

9.21. appeals against the Competition authority’s decisions The decision of the first instance court inflicting a fine may be appealed before the Tallinn court

of appeal either on the merits or for breach of procedural requirements.

Section 2 MERGERS


9.22. ContextMergers are governed by Chapter 5, Sections 19 to 29 of the Competition Act which provide for

an administrative review of concentrations exceeding certain defined thresholds. As with EU merger law, Estonian law is based on a system of mandatory ex ante notification. Several regulations and gui-delines were adopted after the new Competition Act came into effect. Among others, these included the Guidelines for submission of notices of concentration, Regulation of the Minister of Economic Affairs and Communications No 69 of 17 July 2006 (RTL 2006, 59, 1062), and the Guidelines for Calculation of Turnover of Parties to Concentration, Regulation of the Minister of Economic Affairs and Communications No 68 of 17 July 2006 (RTL 2006, 59, 1061).

9.23. Concept of concentrationA concentration is said to occur where: - either two or more previously independent undertakings merge within the meaning of the

Estonian Commercial Code;- one or several undertakings (or one or several natural persons already controlling at least one

undertaking) acquire control over another undertaking or a part thereof.


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Operations that meet this definition set out in Section 19(1) are not considered concentrations for the purposes of the Act if they are carried out as part of an internal restructuring of a group of under-takings (Section 19(5)). Further, in accordance with Section 21(2), a concentration is not subject to control where it involves credit institutions, financial institutions, insurers or securities brokers, whose normal business activities include transactions and dealing in securities, which on their own or on others’ behalf, acquire a share in an undertaking with a view to reselling it. However, for this exception to apply, the voting rights attached to the securities may only be exercised with a view to preparing the sale thereof, and any such sale must occur within one year of the date of acquisition.

Merger law applies to the creation of joint ventures performing their activity on a lasting and independent basis.

If a joint venture has as its object or effect the coordination of the behavior of undertakings which influences or is likely to influence competition, compliance of such activity with the conditions pro-vided in subsection 4(1) and subsection 6(1) is also appraised. The appraisal is based, above all, on the following:

1) whether two or more undertakings who have created a joint venture will continue, to a material extent, their activities in the same goods market as the joint venture, or in the previous or following affected market, or in another market connected to such goods market, 2) whether the coordination of behavior which is the direct result of the creation of the joint venture gives the undertakings which created the joint venture an opportunity to eliminate competition in the goods market or a signifi-cant part thereof.

9.24. thresholdsA concentration is subject to control by the Competition Authority if, during the previous fi-

nancial year, the aggregate turnover in Estonia of the parties to the concentration exceeded EUR 6,391,200 and the aggregate turnover in Estonia of each of at least two parties to the concentration exceeded EUR 1,917,350.

9.25. Control criteriaA concentration will be prohibited if it is likely to significantly restrict competition in the goods

market, principally by creating or strengthening a dominant position (Article 22(3)).According to Section 22(1), the assessment of a concentration is based on the need to maintain

and develop competition, taking into account the structure of the market and the existence of actual and potential competition, including:

- the market position of the parties to the concentration and their economic and financial power;- the existence of entry barriers; - supply and demand trends;- the interests of the buyers, sellers and end consumers.

ii. Enforcement


9.26. Merger notification Where the thresholds are met, the Competition Authority must be notified of a concentration

subject to control before the entry into force of the concentration in conformity with the terms provi-ded in Sections 26 and 27 of this Act, and after: 1) entry into a merger agreement or performance of a transaction or other act for acquisition of parts of the undertaking ; 2) performance of a transaction or other act for acquisition of control; 3) performance of a transaction or other act for acquisition of

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joint control ; 4) announcement of a public bid for securities (Section 25(1)). Before notification of a concentration, a State fee for processing the notice must be paid pursuant to the procedure provided by the State Fees Act. The notification must include data concerning the turnover of the parties and all other relevant information necessary for the Authority to assess the effect on competition. There is no official form similar to EU form CO to be filled by the parties to a merger, but the Guidelines for submission of notices of concentration established by the Minister of Economic Affairs and Communications set out a full list of the information to be supplied (see also Section 26 of the Act). The filing fee is set at EUR 1.917,34.

Parties may not implement a transaction before the Competition Authority has cleared the concentration.

9.27. Proceedings before the Competition authorityIn accordance with Section 27 of the Act, the Competition Authority has 30 calendar days to

make a decision either authorizing the concentration or initiating a second stage investigation. In the absence of a decision from the Competition Authority within 30 days of receipt of notifica-tion, the concentration is considered authorized (Section 27(5)). Under Phase 2 proceedings, the Competition Authority has four months to reach a decision. If the Competition Authority does not notify its decision within the four-month term, the concentration is deemed to be authorized.

The Competition Authority has the same powers of investigation in merger proceedings as it enjoys in the area of anticompetitive conduct. Thus, it may demand information from all natural and legal persons, and from State and local Government agencies. Moreover, interested parties, i.e. third parties with a legitimate interest, have the right to submit opinions and objections to the Authority within 7 calendar days after the publication of a notice announcing a concentration noti-fication. Pursuant to Section 28(5), at the request of the parties or where considered necessary by the Authority, an oral hearing of the parties may be held.


9.28. Conditions and commitments – DivestitureThe Competition Authority can prohibit the concentration or make approval dependent on the

performance of conditions and obligations directly related to the concentration, taking into account the parties’ proposals (Section 27(3)).

Under Section 29 of the Act, the Competition Authority may revoke a decision to grant permis-sion to merge where the parties have submitted false, misleading or incomplete information or the concentration has been implemented in breach of a term or other condition specified in the Act or in the decision granting permission. Withdrawn permission does not deprive the parties to the concentration of their right to submit a new notification application to the Competition Authority.

Moreover, pursuant to Section 62 of the Act, the Competition Authority may issue an order pro-hibiting the implementation of a concentration that is subject to control and for which clearance has not been received, or for which a decision prohibiting concentration has been taken.

9.29. FinesFailure to give notice of a concentration, implementation of a concentration without permission,

and the violation of a prohibition on concentration or the terms of the merger authorization is punishable by a fine of up to 300 fine units or by detention. The same act, if committed by a legal person, is punishable by a fine of up to EUR 32,000.

Failure by the parties to respect a Competition Authority’s order may lead to a penalty of up to EUR 3,200 for natural persons and EUR 6,400 for legal entities (Article 62(3)). The penalty may be imposed repeatedly until the order is complied with.


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C. appeals

9.30. appeals against the Competition authority or courts of first instance decisionsThe decisions of the Authority may be reviewed by the Tallinn Administrative Court. The deci-

sions of the Tallinn Administrative Court may in turn be reviewed by the Supreme Court.


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10.01. ContextThe Act on Competition Restrictions came into force in 1992 (Act No 480/1992), repealing

a previous Act from 1988. Two separate Acts passed in 1992 included provisions establishing the Finnish competition authorities. Later, an Act of 2001 created the Market Court, a new authority with jurisdiction in competition law matters which replaces the Competition Council and the former Market Court. More recently, Competition Act No 948/2011 came into force on 1 November 2011. It repeals the 1992 Act, which remains only applicable for cases pending before the Market Court and the Supreme Administrative Court at the date of its entry into force.

ChaPtEr 10

FinLanD







The Finnish Competition Authority (Kilpailuvirasto) 10.07The Market Court (Markkinaoikeus) 10.08

The Provincial State Office 10.09B. Enforcement proceedings

Complaints and investigations 10.10Proceedings before the FCA 10.11Proceedings before the Market Court 10.12Interim relief 10.13Enforcement by ordinary courts 10.14

C. SanctionsCease and desist order 10.15Fines 10.16Leniency 10.17Criminal sanctions 10.18

D. AppealsAppeals against decisions of the FCA 10.19Appeals against decisions of the Market Court 10.20

Section 2 Mergers




Proceedings before the FCA 10.26Proceedings before the Market Court 10.27


C. AppealsAppeals against decisions of the FCA or the Market Court 10.30

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10.02. Scope The Competition Act covers restrictive practices, abuses of dominance and mergers that affect

competition in Finland. The Act applies to all undertakings, defined broadly in Section 4 to include private and public entities or natural persons who engage in economic activity. Agreements concer-ning the labor market are excluded from the scope of the Act, and agreements concerning agricultu-ral production are covered only to a limited extent.


10.03. the prohibitionSection 5 of the Act is very similar to Article 101 TFEU: agreements between undertakings, deci-

sions by associations of undertakings and concerted practices which have as their object the signifi-cant prevention, restriction or distortion of competition or which result in a significant prevention, restriction or distortion of competition are prohibited. A non-exhaustive list of prohibited practices includes price fixing, limitation of production, market sharing, applying dissimilar conditions at a competitive disadvantage, and imposing conditions unrelated to the subject of the contract.

In addition to the prohibitions against specific types of restrictive agreements and practices, the Act includes a general prohibition applying to anticompetitive conduct even resulting from an agree-ment, statute, decision or other legal act or arrangement (Section 8).

There is no de minimis threshold, and in all cases the Finish Competition Authority (FCA) has discretion over whether to impose a fine or not, even when the case is of minor importance. The FCA points out that, in practice, it may impose a fine, for example when competition restraint is of minor importance but has relevance in principle. However, Section 12(3) of the Competition Act provides that a penalty payment may not be imposed if the conduct is deemed to be minor.

10.04. ExemptionsUnder Section 6, a practice may benefit from an individual exemption if four cumulative condi-

tions are met. The agreement between undertakings, decision by an association of undertakings, or concerted practice must contribute to improving the production or distribution of goods or to promoting technical or economic progress, allow consumers a fair share of the resulting benefit, not impose on the undertakings concerned restraints which are not indispensable to the attainment of these objectives and not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

Moreover, the FCA uses block exemptions and guidelines established by the EU authorities as a source of interpretation.


10.05. Dominant positionA dominant position is defined in Section 4(2) and is deemed to exist where one or more underta-

kings or association of undertakings, who, either within the entire country or a given region, hold an exclusive right or other dominant position in a specified product market so as to significantly control the price levels or terms of supply of that product, or who, in some other corresponding manner, influence the competitive conditions on a given level of production or distribution.

10.06. abuseAs in most EU Member States, holding a dominant position is not prohibited per se, only the

abuse of such a position is prohibited. Section 7 includes a non-exhaustive list of practices that are


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deemed abusive when engaged in by a dominant undertaking, including imposing unfair prices or trading conditions, limiting production to the prejudice of consumers, applying dissimilar and unfair conditions to trading partners, and imposing conditions which have no connection with the subject of the contract.

ii. Enforcement


10.07. the Finnish Competition authority (Kilpailuvirasto)The FCA operates under the control of the Ministry of Trade and Industry. It is made up of one

Director General, assisted by two directors, appointed by the Council of State. Other personnel and civil servants are appointed by the Director General.

The FCA examines competition restrictions and takes measures to eliminate them and their harmful effects. It handles exemptions and monitors and investigates competition conditions.

The FCA also follows the preparation of the economic legislation and issues statements about questions related to its field.

10.08. the Market Court (Markkinaoikeus)Under the Act on the Market Court (Act No 1527/2001), effective 1 March 2002, jurisdiction

over all competition law and procurement matters previously handled by the Competition Council has been transferred to a new Market Court. In addition, the new Market Court also assumes the responsibilities of the former Market Court. The new Market Court is made up of one Chief Judge and Market Court judges, assisted by expert members and “referendaries”.

Upon the recommendation of the FCA, the new Market Court may prohibit the implementation of a restrictive agreement and impose a penalty payment (Section 12). It also hears appeals against certain decisions of the FCA.

10.09. the Provincial State OfficeThe Provincial State Office, under Article 2 of Decree No 66/1993 on the Finnish Competition

Authority, must operate under the guidance of the FCA in issues involving the protection of sound economic competition.


10.10. Complaints and investigationsThe FCA may initiate proceedings following a complaint or sua sponte. The FCA is empowe-

red to conduct investigations in order to ensure compliance with the Act or the EU competition rules. In so doing, it may enter any business premises, storage areas, land and vehicles possessed by the undertakings concerned (Section 35). The investigating officers have the right to examine all correspondence, financial accounts, computer files and any other business documents. They also may demand on-the-spot oral explanations and take copies of the documents to be investigated. Finally, they may request police assistance.

Under certain conditions, and after authorization by the Market Court, the FCA may also inspect other premises (Section 36). Cooperation with the European Commission regarding inspections is also provided by the Competition Act.

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10.11. Proceedings before the FCaIf the FCA considers that a competition restriction has harmful effects, the FCA may issue a

temporary injunction or obligation, and can also order the undertakings to terminate the restraint on competition, or force it to supply a product (Section 8 and 9). If an interim measure is issued, the FCA must make a decision on the principal issue or on a proposition of a penalty payment within 60 days.

Parties may offer commitments and the FCA can close the case by making them binding on the parties.

10.12. Proceedings before the Market CourtThe Market Court imposes any eventual penalty payment, on proposal from the FCA. It also

authorizes or prohibits inspections by the FCA.Where an interim order has been imposed by the FCA, the Market Court determines whether

such interim relief remains in effect during the proceedings before the Market Court (Section 45(2)).In order to enforce an order requiring undertakings to terminate infringing conduct, the Market

Court may impose a periodic penalty payment (Section 46).

10.13. interim reliefWhen the implementation of a competition restriction must be prevented as a matter of urgency,

the FCA may issue an interlocutory injunction to that effect. The FCA may also temporarily oblige an undertaking to supply products to another undertaking on the usual terms.

10.14. Enforcement by ordinary courtsSection 20 provides that an undertaking that intentionally or negligently violates a decision of the

Market Court, or infringes Sections 5 or 7, can be required to compensate another undertaking for the harm caused. Claims for damages must be introduced before a general court within ten years from the date that the victim knew or should have known of the harm, or one year from the date of a final decision of the Market Court in the case.

C. Sanctions

10.15. Cease and desist orderPursuant to Section 9 of the Competition Act, where a restriction on competition comes within

the prohibition set out at Sections 5 or 7, the FCA may prohibit the application of the agreement or corresponding practice, order an undertaking to terminate the conduct in question and if appropriate oblige the offending undertaking to deliver the product to another undertaking on terms equal to those offered other undertakings. The Market Court can impose a penalty payment to ensure the application of such measures.

10.16. FinesFines are imposed by the Market Court, upon proposal from the FCA. Infringement of the prohi-

bition on restrictive agreements or abuse of dominance is punishable by a fine, which cannot exceed 10 per cent of the turnover of the undertaking concerned during the year in which the undertaking was last involved in the infringement. Where the infringing practice is deemed to be of minor importance, or imposition of a fine is not justified, no fine need be imposed (Section 12(1)).

In order to secure the application of an injunction or the supply of information or documents, the Act provides for the imposition of conditional fines decided by the Market Court. Proceedings


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concerning conditional fines are covered by the Finnish Act on Conditional Fines (1113/1990) (Section 46 (3)).

10.17. LeniencySection 14 et seq. provide for a leniency program regarding cartels, including those containing

hardcore restrictions.Immunity may be granted when an undertaking produces information or evidence, on the grounds

of which the FCA may conduct an inspection, or when following an inspection, delivers information or evidence, on the grounds of which it can establish the infringement to rules regarding the prohi-bition of cartels.

Reduction of the fine is possible when the undertaking submits evidence of significant value, and prior to the FCA receiving the information from other sources. The fine may be reduced in the following way: 30-50% for the first to submit the information, 20-30% for the second, and up to 20% in other cases.

In any case, conditions for the benefit of the leniency program are very strict: the applicant must cease its participation immediately, fully cooperate with the FCA, not destroy the evidence, before or after the submission, and keep documents and its participation to the program confidential. Moreover, it is not possible to obtain leniency when the undertaking has exerted pressure on another to participate in a cartel.

In cases other than cartels, the FCA may also grant a reduction of the fine and the Market Court may impose a lower penalty if the undertaking has significantly assisted the FCA during the investigation.

10.18. Criminal sanctionsThe submission of false information or notification to the FCA, the Market Court or the Provincial

State offices is punished by a fine or imprisonment as prescribed by Chapter 16, Section 8 of the Penal Code. A violation of business secret confidentiality is punished in accordance with the Finnish Criminal Act.

D. appeals

10.19. appeals against decisions of the FCaWith limited exceptions, decisions of the FCA may be appealed to the Market Court in accor-

dance with the Finnish Administrative Judicial Procedure Act. Decisions of the FCA providing interim measures or authorizing an inspection cannot be appealed (Section 44).

10.20. appeals against decisions of the Market CourtDecisions of the Market Court under the Competition Act may be appealed before the Supreme

Administrative Court (Section 44). Filing an appeal will not suspend enforcement of a decision of the Market Court, unless the Supreme Administrative Court rules otherwise.

Section 2 MERGERS


10.21. ContextMerger control provisions were first incorporated into the Competition Act in 1998. They are

now provided in the 2011 Competition Act.

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10.22. Concept of concentrationSection 21 of the Act defines a concentration as occurring when:- control referred to in Companies Act No 1336/1997, or a corresponding actual control is acquired;- the whole or part of the business operations of an undertaking is acquired;- two or several undertakings merge;- a joint venture is established, provided that it performs all the functions of an autonomous

economic unit on a lasting basis. The Act specifies, however, that the concentration control provisions do not apply to internal

arrangements within a group of companies.

10.23. thresholdsThe Act applies to concentrations that satisfy two turnover thresholds: the combined turnover of

the parties must exceed EUR 350 million, and the turnover of at least two of the parties generated in Finland must exceed EUR 20 million for both (Section 22).

Section 24 of the Act describes the manner in which turnover is calculated for the purposes of the merger regulation, which is completed by the decision of the Council of State on the calculation of turnover of the parties to a concentration of 1 September 2011. The turnover of the buyer’s whole group is taken into account and, on the seller’s side, the turnover relating to the target of the acquisition.

10.24. Control criteria In evaluating a proposed concentration, the standard is whether it may significantly impede effec-

tive competition in the Finnish markets or a substantial part thereof, in particular as a result of the creation or strengthening of a dominant position.

In the electricity sector, the Market Court may ban a concentration, upon proposal from the FCA where it leads to a combined share of transmission operations in excess of 25% nationally (Section 25(2)). Alternatively, the FCA may negotiate conditions rather than proposing to the Market Court that a concentration in any sector or in particular in the electricity sector meeting this market share be prohibited.

ii. Enforcement


10.25. Merger notification Where the thresholds in Section 22 are satisfied, the proposed concentration must be notified

to the Finnish Competition Authority following the acquisition of control, the announcement of a public bid, or the decision to merge or create a joint venture (Section 23). The duty to notify is incumbent on the acquiring party, or in cases of a merger or joint venture, on all parties to the concentration (Section 23(3)). The parties may not, in principle, implement the concentration before the final decision or approval.

10.26. Proceedings before the FCaSection 26 creates a two-stage procedure before the Finnish Competition Authority. Within one

month of receipt of a notification that is complete, the FCA must determine whether further inves-tigation is required. If the FCA fails to issue a decision within this one-month period, the concen-tration is deemed approved.


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Where the FCA indicates that further investigation is required, it has a further three months to make a proposal to the Market Court to prohibit the concentration. This period may be extended by the Market Court to a total of five months (Section 26(2)). Alternatively, if the harmful effects on competition can be avoided by including conditions, the FCA negotiates such conditions and can order that the parties follow the conditions or be subject to a fine (Section 25 and 28). If the FCA fails to issue any decision within the established period, the concentration is deemed approved (Section 26(2)).

10.27. Proceedings before the Market CourtPursuant to the Act on the Market Court (No 1527/2001), competition law matters previously

handled by the Competition Council, including prohibiting concentrations, are handled by the new Market Court. Within three months of receiving a proposal from the Finnish Competition Authority regarding a proposed concentration, the Market Court must issue a decision (Section 29). In the absence of any decision from the Market Court during this period, the concentration is deemed approved.


10.28. Conditions and commitments - DivestitureUpon proposal of the FCA, the Market Court may ban or order a merger to be dissolved or attach

conditions on the implementation of the merger (Section 29(2)). Further, where the parties have supplied false or misleading information that has had a substan-

tial effect on a concentration decision, upon proposal from the FCA and notwithstanding any prior decision, the Market Court may order the concentration to be dissolved, ban the concentration, or attach conditions (Section 30). The same sanctions may be imposed where a concentration has been put into effect in breach of Section 25 or 27, i.e. without complying with attached conditions or prior to final authorization.

10.29. FinesBreach of the obligation to notify a concentration in a timely manner, or implementing a concen-

tration without final authorization in violation of Sections 25 and 27, is punishable by a penalty payment. If the competition restriction and the circumstances so warrant, the fine may be increased but it cannot exceed 10% of the previous year’s turnover of the undertaking concerned and, where a fine is unjustified or the breach is minor, no fine need be imposed.

The FCA can impose periodic penalty payment in order to enforce conditions that have been imposed on a proposed concentration (Section 46). The Market Court can likewise impose conditio-nal fines in order to enforce prohibitions, injunctions or conditions, and it is the Market Court that orders payment of such conditional fines.

C. appeals

10.30. appeals against decisions of the FCa or the Market CourtDecisions of the FCA in concentration matters can be appealed to the Market Court, with the

exception of decisions pursuant to Section 25 and the imposition of conditions, or pursuant to Section 26(1) deciding that further investigations are required. Appeals in concentration matters from the decisions of the Market Court are made to the Supreme Administrative Court.

In the Sonera Oyj case, the Supreme Administrative Court issued a decision on 4 July 2002 clarifying that even third parties can bring an appeal of a decision of the FCA authorizing a merger before the Market Court (at that time, the Competition Council), where such third parties demons-trate a sufficient legal interest.

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ChaPtEr 11

FranCE





C. Abuse of dominanceAbuse of a dominant position 11.05Abuse of economic dependency 11.06Abusively low pricing 11.07Exemptions 11.08

D. unfair practicesDefinition and regime 11.09Price fixing and sales below cost 11.10Abuse of dependence 11.11


The Competition Authority (Autorité de la concurrence) 11.12

The Minister of the Economy and the Directorate for competition (DGCCRF) 11.13The Commission for the Review of Trade Practices 11.14

B. Enforcement proceedingsComplaints and investigations 11.15Proceedings before the Competition Authority 11.16Interim relief 11.17Enforcement by ordinary courts 11.18

C. SanctionsCease and desist orders 11.19Fines 11.20Leniency 11.21Criminal sanctions 11.22Sanctions in the case of unfair practices 11.23

D. AppealsAppeals against the decisions of the Competition Authority 11.24Appeals against judgments 11.25

Section 2 Mergers



Merger notification 11.30Proceedings before the Competition Authority (Phase 1) 11.31

Proceedings before the Competition Authority (Phase 2) 11.32The decision of the Authority 11.33Intervention by Minister of the Economy 11.34

B. Conditions/Sanctions Conditions and commitments - Divestiture 11.35Fines 11.36

C. Appeals Appeals against decisions of the Competition Authority and of the Minister of the Economy 11.37

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11.01. ContextFrench competition law is governed by Book IV of the Commercial Code (CC), entitled “Pricing

freedom and competition”, codified by Ordinance No 2000-912 of 18 September 2000, which repea-led the Ordinance of 1 December 1986 on pricing freedom and competition. Title II deals with anticompetitive practices, Title III with merger control and Title IV with price transparency and restrictive practices (unfair practices). The prohibition against unfair practices in the Commercial Code is to be distinguished from actions against unfair competition based on Article 1382 of the Civil Code. In 2001, competition law was completely overhauled by the NRE (Nouvelles Régulations Économiques [new economic regulations]) law which sought to step up the fight against anticom-petitive and unfair practices – in particular through a major increase of the amount of fines and the implementation of a leniency program for “repenting” undertakings – and to reinforce the control of concentrations by the introduction of an obligation of prior notification and a two-speed procedure according to the complexity of the case.

The rules on restrictive practices have been twice revised, first by the Dutreil Law of 2 August 2005, and then the Chatel law of 3 January 2008, which while attempting to promote free competi-tion, has tied up commercial negotiations in formality.

The latest general reform of competition law was through the adoption of the law on the moder-nization of the economy of 4 August 2008, finalized by the Ordinance of 13 November 2008 which, inter alia, repealed the per se prohibition of discriminatory practices and transformed the Competition Council into the Competition Authority (Autorité de la concurrence) with additional powers.

11.02. ScopeFrench law is applicable throughout the French territory and to activities of foreign undertakings

that have an anticompetitive effect on the French market. Restrictive agreements are prohibited even if made directly or indirectly via a company, belonging to a group, which is established abroad. On the other hand, anticompetitive practices relative to exports do not fall within the scope of applica-tion of Article L420-1, except if the actual or potential effect of the anticompetitive behavior, even in respect of exports, is to compromise the profitability and durability of the activity of businesses on the national territory. French law is broad in its scope, since it applies to “all production, distribution and service activities, including those carried out by public entities, especially within the framework of public utility concessions” (Article L410-1 CC).

Specific economic sectors are regulated by special authorities such as the Telecommunications and Posts Regulatory Authority (Arcep), the Audiovisual Council (CSA), the Commission for the Regulation of Energy (CRE), which must initiate proceedings before the Competition Authority for matters of abuse of dominant position and anticompetitive practices that they are aware of in their respective sectors. For its part, the Competition Authority will solicit the (non-binding) opinion of the Arcep or the CSA when applying the competition rules to the sectors concerned.


11.03. the prohibitionArticle L420-1 CC prohibits agreements, whether express or tacit, concerted actions, covenants

or coalitions that have as their object or which may have the effect of preventing, restricting or


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distorting freedom of competition on a market. The Article draws-up a list of prohibited practices: restrictions on market access, price restraints, limits on production and market sharing are all pro-hibited. Exclusive dealing, selective distribution and franchises, although potentially anticompeti-tive, are allowed once they comply with established case law which considers such agreements by application of a rule of reason. According to Article L420-3 CC, any contract or clause involving anticompetitive practices is void.

Article 24 of Ordinance No 2004/274 of 25 March 2004 set out a de minimis rule in French competition law by introducing new Articles L464-6-1 and L464-6-2 to the Commercial Code. This de minimis rule is largely inspired by EU rules stated in the Notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the EC Treaty [101(1) TFEU], 2001.

Pursuant to the new rules, the Competition Authority may order a non-suit where the aggregate market share of the undertakings concerned does not exceed:

- 10% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors on any of these markets;

- 15% on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors on any of these markets.

Exceptions involving hardcore restrictions of competition are set out at Article L464-6(2). The de minimis rule does not apply to price-fixing agreements, agreements limiting production or sales, or allocating markets or customers, or imposing bans on passive sales. Selective distribution is the sub-ject of two specific provisions. In order for the de minimis rule to apply, distributors acting as retailers must not be subjected to sales restrictions except those requiring an authorized place of sale, and cross-deliveries have to be allowed whether at the same or at a different level of the market.

The Ordinance of 13 November 2008 sets an appreciability threshold for less serious cases (micro-practices) below which it recognizes the Minister of the Economy’s power to issue specific injunc-tions. Where the anticompetitive practice affects a market that is regional in dimension and is not likely to affect trade between Member States, the individual turnover of the undertakings does not exceed EUR 50 million and the cumulative turnover is less than EUR 100 million, the Minister of the Economy can order the undertakings in question to cease the infringing behavior and impose on them a fine of an amount not exceeding EUR 75,000 or 5% of the last known turnover for France, whichever is smaller.

11.04. ExemptionsArticle L420-4 CC establishes two exemptions to the Article 420-1 prohibition. These are in fact

rarely applied because the French control authorities apply in most cases the prohibition in the light of a rule of reason, which then makes use of exemption irrelevant. The exemptions are granted by the Competition Authority. The first exception concerns practices resulting from the enforcement of a legislative or a regulatory text. The scope of exemption in Article L420-4, I, 1º is now appreciably tempered by EU case law, as any measures eliminating the practical effect of Articles 101 and 102 TFEU violates EU law. The second is granted where the activity in question contributes to efficiency. Agreements seeking an individual exemption must further economic progress while reserving a fair share of the resulting profits for the consumer. Furthermore, they must not enable the undertakings concerned to eliminate competition for a substantial portion of the products in question and may only impose those restrictions on competition as are indispensable for the achievement of the objec-tive sought (Article L420-4, I, CC).

The same provision (Article L420-4, II, CC) also provides for the adoption of block exemptions. Certain categories of agreements or individual agreements may be exempted by way of decree sub-ject to approval by the Competition Authority, in particular when they improve the management of SMEs. Up until now, only two block exemption decrees have been adopted and both apply to the agricultural sector. The first concerns agreements by recognized inter-professional organizations concerning specific products under an official quality label; the second concerns agreements adopted

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in order to remedy a crisis resulting from a negative economic situation. In both cases, agreements must be notified to the ministers concerned prior to implementation, and can only include certain restrictions listed in the decrees (Decrees No 96-499 and No 96-500, of 7 June 1996, JORF 11 June 1996).


11.05. abuse of a dominant positionOnly the actual abuse of a dominant position on a market or a substantial part thereof is prohi-

bited (Article L420-2-1º CC). Thus, dominance in itself is not prohibited. Moreover, the abuse must have as its object or effect the restriction of competition. The law however fails to define what a dominant position is. According to the Competition Authority, “a dominant position is the situation in which an undertaking is able to evade the conditions of the market and can, to a significant extent, act without taking account of the behavior and reaction of its competitors” (Competition Council decision No 06-D-12, 6 June 2006, LawLex200600001371JBJ, pt. 25). Abundant case law provides the necessary indications of how to determine if an undertaking is dominant or not. Market share, although important, may not be sufficient in every case to determine dominance. Other elements, such as market structure, the height of entry barriers or the maturity of the relevant market, are also taken into account. Generally speaking, a market share of 50% is considered sufficient to establish dominance in a relevant market, where other corroborating evidence exists.

A dominant position can be held by one undertaking or by a group of undertakings, in which case we talk about a collective dominant position. Traditionally, the competition authorities would require, for several undertakings on the same market to be considered as being in a collective domi-nant position, that there be structural and behavioral links between those undertakings (Competition Council decision No 93-D-42, 19 October 1993, LawLex200202459JBJ). The Competition Authority now would appear to take a more flexible approach as it accepts that under certain conditions a collective dominant position may be inferred solely from the fact that the market is oligopolistic in nature even where there is no structural link between the undertakings (Competition Council decision No 07-D-08, 12 March 2007, LawLex20070000313JBJ).

The CC provides a non-exhaustive list of abuses: refusals to sell, tying arrangements, discrimina-tory conditions or wrongful termination of commercial relations. However, case law has added many other examples such as predatory pricing, abuse of essential facilities, exclusive dealing, etc.

11.06. abuse of economic dependencyAs under German law, French law has established a prohibition on the abuse of economic de-

pendency (Article L420-2-2º CC). Dependency occurs when one undertaking is dependent on ano-ther where the latter is an important customer or supplier of a particular product or service and where no equivalent client exists. The undertaking benefiting from the dependency does not need to be dominant on the market in question. Several cumulative criteria have been established by case law as regards the definition of a situation of dependency: the share of the dominant undertaking in the turnover of its partners, the established nature of its brand or retail banner, the existence of alterna-tive solutions and the reason behind the economic dependency (Court of Appeal of Paris, 12 July 1990, LawLex200202634JBJ). When the dependency results from a deliberate choice of an undertaking, the prohibition does not apply (Court of Cassation, 3 March 2004, LawLex20040000604JBJ). The list of abuses set out in the CC also refers to economic dependency. In general, abuse may result from any behavior that would not have been adopted by an undertaking had it not had a dependent partner. Only a few cases have been submitted to the authorities and only a few have ended up with the impo-sition of fines as the proof of the absence of alternatives is difficult to establish (Court of Cassation 12 Jan. 1999, LawLex200202660JBJ and 11 Jan. 2000, LawLex200203163JBJ). The NRE Law slightly changed Article L420-2, 2º by removing the need to prove that the abuse of economic dependency has an effect on the market. It also removed the requirement that the dependent undertaking must


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prove that it had no equivalent solution. However, the Competition Authority continues to insist on the condition relative to the absence of alternative solutions (Competition Council decision No 03-D-42, 18 August 2003, LawLex200300003459JBJ; 04-D-36, 23 July 2004, LawLex200400001940JBJ).

11.07. abusively low pricing Article L420-5 CC deals with abusively low pricing, which is comparable to predatory pricing,

and has traditionally been prohibited when it constitutes an abuse of a dominant position. It pro-hibits retail price offers to consumers that are abusively low in relation to production, processing and marketing costs. However, the pricing policy must have as its object or potential effect the elimination of an undertaking or one of its products from a market or preventing an undertaking or product from entering the market. This provision is to be distinguished from the provision on abuse of a dominant position, because such a position is not required, and from the provision on below-cost sales, which is referred to in another Article and which does not apply to processed products. It has been invoked several times before the Competition Council, without success, as it is difficult to establish the anticompetitive object or effect on the market as is required under the law. The “consumer” has been judged as being a private person or a company without experience in the field concerned, contracting for their personal use (Competition Council opinion No 03-A-14, 25 July 2003, LawLex200300004214JBJ). To determine if a price is abusively low, the production, processing and marketing costs must be taken into account.

11.08. ExemptionsThe exemptions set out in Article L420-4 CC apply to the abuse of a dominant position or of

economic dependence, but not to abusively low pricing.

D. Unfair practices

11.09. Definition and regimeFrench law defines as unfair several practices, so-called restrictive practices (as distinguished from

anticompetitive practices) that may constitute a restraint on competition, although not falling under the heading of restrictive agreements or abuse of dominance. Such practices are prohibited per se without any reference being made to market effect, with the exception of discriminatory practices which were no longer held unlawful per se from the adoption of the LME Law. The provisions are exclusively enforced before the civil courts and some violations may give rise to criminal sanctions. The Competition Authority has no jurisdiction as regards unfair practices. By contrast, the Minister of the Economy and/or the General Director for Competition have the same investigatory powers with regard to restrictive practices than those they have with respect to anti-competitive practices.

11.10. Price fixing and sales below costSales below cost are prohibited by Article L442-2 and are also considered a criminal offense.

Maximum resale price maintenance is lawful provided that the prices are not similar to imposed prices or do not amount to disguised minimum prices. Direct or indirect minimum price-fixing is, on the other hand, considered a criminal offense (Article L442-5 CC).

11.11. abuse of dependence Practices such as the charging of abusive listing fees, abusive delisting, abusively long payment

terms, abusive ending of commercial relations, etc. give rise to a per se civil tort action according to Article L442-6 CC. A tort action may be brought before a civil or commercial court by any interested parties, by the public prosecutor’s department, by the Minister of the Economy or by the

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President of the Competition Authority, when the latter becomes aware that such a restrictive prac-tice has occurred with regard to matters that come within its jurisdiction.

Under Article L442-6, I, paragraph 2, the practice of imposing or attempting to impose on the other party obligations leading to a substantially unbalanced situation in the commercial relationship is prohibited. The provision instigates a real control over abusive clauses in contracts between profes-sionals. The significant imbalance in the rights and obligations of the parties is the criterion for the existence of abuse, as in consumer law. And in fact, the first decisions rendered on the basis of the new law borrow from consumer law when defining the criteria characterizing a significant imbalance by assessing each clause from the point of view of reciprocity.

ii. Enforcement


11.12. the Competition authority (Autorité de la concurrence)The Competition Council, which was re-named the Competition Authority (Autorité de la concur-

rence) by the LME Law, is an independent administrative body that has both decision-making and advisory functions. It is made up of 17 members nominated for five years. Six members must be former members of high level administrative or judicial jurisdictions, 5 must be chosen due to their competence in competition, consumer or economic matters and 5 must have worked in the produc-tion, distribution, craft industry or services sectors. The President is appointed according to his/her competencies in law and economics on the advice of the parliamentary commissions competent in competition matters.

The Competition Authority is assisted by a chief case-handler (rapporteur général) and a team of investigating officers/case-handlers (rapporteurs) who carry out inquiries into matters coming before the Authority. The Ordinance of 13 November 2008 makes a clear separation between the investi-gative and the decision-making powers within the Authority and the rapporteur général’s investigative powers have been increased.

11.13. the Minister of the Economy and the Directorate for competition (DGCCrF)The 2008 LME law and Ordinance transfer competencies in matters of competition law to the

Competition Authority. Despite these recent reforms, the Minister of the Economy has not lost all his prerogatives, since he may direct investigations, file for a cease-and-desist order for certain restrictive practices, refer cases on cartels and abuses of dominance to the Authority and has gai-ned exclusive decisional power in cases of anticompetitive micro-practices (Article L464-9). As for mergers, the Minister still enjoys a subsidiary decision-making power on public interest grounds (Article L430-7-1 CC). Finally, the Minister has at his disposal the DGCCRF (Directorate for Competition, Consumer Affairs and the Repression of Fraud), a civil service body with special inves-tigative powers.

In relation to price transparency and restrictive practices, only Article L442-6 on abuse of de-pendence specifically lists the Minister as one of the persons able to take a legal action. However, the Minister can also act under Article L470-5, whatever the restrictive practice or transparency rule concerned.

In order to reinforce the prohibition on restrictive agreements, the NRE Law empowers the Minister of the Economy to go to civil or commercial courts to request the cessation of certain acti-vities or the voidance of illicit clauses. The Minister can also take actions on behalf of an actual vic-tim, asking the courts to order restitution of undue payments or hand down civil fines of up to EUR 2 million or up to three times the unduly paid amount as assessed by the court (Article L442-6, III).


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11.14. the Commission for the review of trade PracticesCreated by the NRE Law, the role of the Commission is to monitor commercial dealings, invoi-

cing and contracts between producers, suppliers and resellers and act as an observatory on the same, and to formulate recommendations and respond to questions on commercial or advertising docu-ments and practices. The Commission is made up of a National Assembly representative, a senator, members of the judiciary, of the agricultural, manufacturing, supply and resale sectors, and 4 govern-mental representatives.

Matters may be referred to the Commission by the Minister of the Economy or any other Minister in charge of the sector concerned, the Competition Authority president, any legal entity, or any ma-nufacturers, suppliers or resellers who consider themselves victims of an unfair commercial practice or any court requiring a legal opinion on practices brought before it under Article L442-6 of the Commercial Code.

The Commission should be seen as a compromise between a quasi-judicial body, like the Competition Authority, and a simple observatory. Although its opinions and recommendations are not legally binding, they may have an influence on court decisions and may facilitate negotiated sett-lements in disputes between manufacturers, suppliers or resellers.


11.15. Complaints and investigations Cases involving the infringement of the provisions on anticompetitive practices may be referred

by the Minister of the Economy, interested undertakings or professional and consumer advocacy groups to the Competition Authority for investigation. The Authority also may initiate proceedings sua sponte.

The right to order an investigation based on suspicions or complaints belongs to the Competition Authority, the Minister of the Economy and/or the Director of the DGCCRF (Directorate General of Competition, Consumer Affairs and the Repression of Fraud), who have the discretionary power to initiate an investigation. The investigating officers may have access to the premises or other loca-tions, request the transmission of accounts, invoices and all other professional documents and make a copy of them, by any means, and collect, either by way of summons or on the spot, information and evidence. Without prejudice to professional secrecy, the investigators have access to any documenta-tion or information held by government or local authorities’ services.

Search and seizure activities must be authorized by an order of the juge des libertés et de la detention [liberties and custody judge] of the Tribunal de Grande Instance having jurisdiction where the premises to be visited are located. Search and seizures may only be ordered upon request of the Minister of the Economy or of the rapporteur général to the Competition Authority (Article L450-4 CC).

11.16. Proceedings before the Competition authority Since the enactment of the NRE Law, the investigatory phase is conducted by the rapporteur géné-

ral of the Competition Authority (formerly conducted by its President).After the issuing of a Statement of Objections, the parties have a two-month time-limit to submit

their comments. The report of the Authority, which is an objective statement or evaluation of com-petition issues involved, is then notified to the parties, to the Government Commissioner and to the ministers concerned. The parties must submit their answer within two months.

For cases of minor importance, the rapporteur général of the Authority may decide to initiate a simplified procedure, after the issuing of the Statement of Objections but without the submission of a report (Article L463-3 CC). On the contrary, if the Authority believes that the facts alleged do not fall within the scope of its jurisdiction or that the evidence is not sufficient, it may declare in a reasoned report, that the action is rejected. When the Authority believes that the facts justify

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the application of criminal sanctions, it refers the case to the public prosecutor. However, this rarely occurs in practice.

Since the Ordinance of 4 November 2004 on the adapting of certain provisions of the Commercial Code to European competition law, Article L464-2, I, of the Commercial Code offers the faculty to offer commitments in order to put an end to the competition concerns. The undertaking which agrees to the commitments procedure does not have to admit having committed anticompetitive practices. Serious restrictive agreements such as cartel and certain abuses of dominance are usually excluded from the commitments procedure. In effect, the commitments procedure does not cover cases where the breach of the economic public order requires the imposition of a pecuniary sanction.

Furthermore, under the terms of Article L464-2, III, if a company or organization does not dis-pute the reality of the objections notified, the Authority may hand down a reduced fine. If the undertaking also undertakes to modify its behavior in the future, the rapporteur général may ask the Competition Authority to take this into account in the setting of the sanction. This procedure differs from that of Article L464-2, I, which gives the parties the opportunity to submit commitments to the Competition Authority before the Statement of Objections has been notified to them.

11.17. interim reliefDuring the proceedings, the Competition Authority may issue interim injunctive relief, if the

practices seriously and immediately harm the economy, the sector concerned, consumer interests or the interests of the plaintiff. However, it is not bound by the measures requested by the plaintiffs and may order any measure that it deems necessary (Art. L464-1 CC). In the matter of unfair practices, the judge may also order interim relief, sometimes referred to as a preliminary competition injunc-tion when aimed at discriminatory practices (L442-6 CC).

11.18. Enforcement by ordinary courtsThe civil and criminal aspects resulting from competition law infringements may be brought

before a commercial or civil court. Depending on the provision infringed, the jurisdiction of the courts can be either exclusive, or concurrent with that of the Council. The NRE law added a special provision (Article L420-7) putting in place a specialization of courts for anticompetitive practices. Thus, in application of Decree No 2005-1756 of 30 December 2005, the commercial or grande ins-tance courts in Marseille, Bordeaux, Lille, Fort-de-France, Lyon, Nancy, Paris and Rennes became the only courts with jurisdiction to hear, respectively proceedings relating to traders or artisans or other persons. In all cases the Paris Court of Appeal is the relevant appellate court. Article L470-6 of the Commercial Code gives full jurisdiction to the national courts to apply the European com-petition rules. Only the court may decide that a contract is void. The Competition Authority is not competent in such a case. Nullity may be total or in part.

Anticompetitive practices may be the subject of an action for damages before the courts.According to Article L442-6, II, clauses or contracts providing for retroactive rebates, listing fees

prior to any ordering or prohibiting the transfer of a debt to a third person are considered null and void.Ordinary courts have exclusive jurisdiction as regards unfair practices. In such a case, the Minister

of the Economy, who is empowered to bring actions before the courts, and the public prosecutor may request the repayment of the sums illegally paid and bring an action for damages in lieu of the victims.

C. Sanctions

11.19. Cease and desist ordersAccording to Article L464-2 CC, the Competition Authority may order the cessation of anti-

competitive practices within a certain time-limit, modify or withdraw a specific clause in a contract.


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11.20. FinesThe amount of fines has been significantly raised by the NRE law.The Authority may impose a fine immediately as regards the conduct complained of. Further

failure to respect an injunction ordered by the Authority may also be the subject of a fine. The fine may be up to 10% of the highest worldwide pre-tax turnover during one fiscal year preceding the one where the prohibited practices have been implemented. If the offending party is not an undertaking, the maximum fine is EUR 3 million (Article L464-2, I, CC).

If a simplified procedure has been initiated, the penalties cannot exceed EUR 750,000 for each offending party (L464-5 CC).

11.21. Leniency The NRE law introduced a leniency program for prohibited agreements and abuses of dominance,

similar to those existing under EU and US law (Article L464-2, IV, CC). It is aimed at encouraging parties to an anticompetitive practice to freely report their practices to the authorities in order to get a 50% fine reduction. Moreover, when a party to a restrictive agreement agrees to help the competi-tion authorities to identify the other participants, it can get partial or total immunity.

The exoneration is granted by the Authority on the request of the rapporteur général or the Minister of the Economy.

Two situations can be distinguished: cases where the Authority has no information and cases where it already has information. In the first case, a conditional immunity is granted to the first undertaking to provide evidence that the Authority did not previously have in its possession and which is sufficient to establish the suspected infringement and proceed with the investigation. In the second case, total exemption will be granted if three conditions are fulfilled: the undertaking must be the first to provide sufficient information to establish the alleged infringement, the Competition Authority does not dispose of sufficient evidence at the time of the leniency application, and no other undertaking has obtained a conditional opinion granting immunity.

11.22. Criminal sanctionsInfringement by a natural person of the provisions on anticompetitive agreements and abuse of

dominance, with the exception of abusively low pricing, may be punished by up to four year’s impri-sonment and a fine of EUR 75,000 (Article L420-6 CC).

11.23. Sanctions in the case of unfair practicesBesides nullity and damages, the NRE law introduced a new sanction for the infringement of the

provisions on unfair practices. The Minister of the Economy and the Public Prosecutor have been vested with special powers to require reimbursement for unduly received sums, as well as to request civil fines of up to EUR 2 million, which may, since implementation of the LME law of 2008, be increased by up to three times the amount of the unlawfully received payment.

Infringements of the provisions on below-cost selling (Article L442-2 CC) are also punishable by a fine of EUR 75,000 for natural persons, and EUR 375,000 for legal entities (Article 131-38 of the Criminal Code). This fine may be raised to half the advertising expenditure where an advertisement, regardless of its form, indicates a price lower than the real purchase price. When there is a repeat of the same offense within two years, the maximum fine for natural persons is doubled. Repeat infrin-gements within two years by legal entities are fined ten times the fine for natural persons.

Minimum price fixing is a criminal offense penalized by a fine of EUR 15,000 (Article L442-5 CC).

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D. appeals

11.24. appeals against the decisions of the Competition authorityThe Paris Court of Appeal has exclusive jurisdiction for judicial review of the Authority’s decisions.

An appeal must be brought within one month of the adoption of the decision by the Competition Authority (L464-8 CC), except where the decision concerns interim measures. In that case the appeal must be lodged before the Paris Court of Appeal at the latest ten days after notification of the Authority’s decision (L464-7 CC). The Paris Court of Appeal may uphold, modify in part or reverse the decision of the Council. It may classify the infringements differently, increase or reduce the administrative fine. Appeals on points of law may then be brought by the parties to the action before the Court of Cassation (Cour de cassation) within a month of the judgment of the Paris Court of Appeal.

11.25. appeals against judgmentsActions relating to unfair practices are brought before the commercial or civil courts. These deci-

sions may be appealed before the court of appeals having jurisdiction over the court of first instance. Appeals on points of law against the judgment of the court of appeals may be taken to the Court of Cassation.

Section 2 MERGERS


11.26. ContextMerger review is governed by Title III of the CC. It provides for an administrative review of

concentrations exceeding certain defined thresholds. Unlike EU law, French law did not require prior notification. The NRE Law significantly changed the rules in force before May 2001, by intro-ducing pre-merger control by way of compulsory notification by the parties. The thresholds have also been modified. The LME Law of 4 August 2008 amends the merger control provisions of the Commercial Code in two ways. In terms of substance, new Article L430-2 CC lays down specific rules for mergers in the supermarket distribution sector. The new provisions also revise the condi-tions under which overseas operations are controlled. Previously limited to the distribution sector, their scope of application is now extended to all operations reaching the appreciability thresholds, irrespective of the sector involved.

In terms of form, all merger control proceedings now fall under the jurisdiction of the Competition Authority. Prior, the power of decision belonged to the Minister of the Economy. He/she does howe-ver retain one important power; after being informed of the Authority’s decision, the Minister has 5 days in which to request an in-depth review of the transaction if one has not already been carried out, and 25 days to address undecided points on public interest grounds other than those relating to maintenance of competition, e.g. industrial development, the competitiveness of the undertakings in question or the creation or protection of jobs.

11.27. Concept of concentration In order to fall within the scope of the provisions, the merger must constitute a concentration,

which is defined by Article L430-1 CC (which is similar to Article 3 of EC Merger Regulation No 139/2004): a concentration is deemed to arise where two or more previously independent underta-kings merge, or one or more persons already controlling at least one undertaking, or one or more undertakings acquire, whether by purchase of securities or assets, by contract or by any other means, direct or indirect control of the whole or parts of one or more other undertakings. The creation of a


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joint-venture exercising for a lasting period all the functions of an autonomous economic entity also constitutes a merger pursuant to Article L430-1, II CC.

11.28. thresholdsAccording to Article L430-2 CC, the authorities can only review operations involving underta-

kings that together achieve a consolidated worldwide pre-tax turnover of EUR 150 million, provided that at least two of the entities involved have an individual turnover of at least EUR 50 million. The aforementioned thresholds must be calculated pursuant to the provisions of Article 5 of EC Merger Regulation No 139/2004.

Merger control in the French overseas territories (DOM/COM - overseas departments / over-seas communities) is now wider in scope. It is no longer only limited to operations predominantly concerning the retail sector but now applies to all operations which fulfill the following conditions:

- the combined aggregate worldwide turnover exclusive of tax of all the undertakings or groups of natural persons or legal entities involved in the merger is greater than EUR 75 million,

- the combined aggregate turnover exclusive of tax achieved in France by at least two of the com-panies or groups of natural persons or legal entities concerned is greater than EUR 15 million or EUR 7,5 million in the retail sector,

- the operation does not come within the scope of Council Regulation No 139/2004.

11.29. Control criteriaThe role of the Competition Authority is to analyze whether the operation falls within the scope

of the law and its effect on competition. Article L430-6 CC provides for a kind of rule of reason, according to which the harm to competition may be compensated for by a sufficient contribution to efficiency. The harm to competition may be inter alia the creation or strengthening of a dominant position or, since May 2001, the creation or strengthening of buyer power putting suppliers in a state of economic dependency.

ii. Enforcement


11.30. Merger notificationSince May 2001, it is mandatory for mergers that fall within the scope of the competition rules

to be notified to the Competition Authority. The operation cannot be implemented before the Competition Authority has authorized it (Article L430-3 CC).

A list of the information it is necessary to notify is set out in Annex I of the implementing decree. The Annex states in particular that undertakings must give an indication of the affected markets where the market share of the undertakings concerned is 25% or greater.

11.31. Proceedings before the Competition authority (Phase 1)Under Article L430-5 CC, the Competition Authority must issue its decision in respect of a

merger operation within 25 working days of the date it received the completed notification. During this time, the parties to the merger may propose commitments with a view to rendering the concen-tration compatible with the competition rules. If the Authority receives commitments, the deadline is extended by 15 working days. If no decision is issued within the 25 working-day period – or the extended period – the merger is deemed authorized. The Authority may authorize the merger, sub-ject to conditions and obligations or, if it considers that the concentration is likely to adversely affect

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competition, it can initiate an in-depth examination under the conditions set out in Article L430-6 CC (Phase 2).

Decisions are published on the Competition Authority’s web site.

11.32. Proceedings before the Competition authority (Phase 2)According to Article L430-6 CC, during the course of the in-depth examination, the Authority

will assess whether any harm to competition is likely as a result of the creation or strengthening of a dominant position or the creation or strengthening of a buyer power putting the suppliers into a position of economic dependency. The assessment of the contribution to efficiency takes place at this stage of the procedure. The in-depth examination phase must not exceed 65 working days as of its initiation, following the 25 working days (that may be extended) granted to the Authority to rule on the concentration pursuant to Article L430-5 CC. Like in phase 1, commitments may be offered by the undertakings at this stage.

11.33. the decision of the authorityThe Competition Authority may, pursuant to the terms of Article L430-7 CC, prohibit the mer-

ger, modify it or authorize it by reasoned decision.If none of the above decisions is announced, the Authority will inform the Minister of the

Economy thereof. The concentration is tacitly authorized at the end of the period allowed for the Minister to preempt the case.

11.34. intervention by Minister of the EconomyBefore merger control proceedings were transferred to the Competition Authority under the

terms of the LME law, the Minister of the Economy was in charge of proceedings. He/she now only has residual powers which allow him/her to take over proceedings at the end of the preliminary or the detailed examination phase. New Article L430-7, I, CC deals with the Minister’s intervention.

The Minister of the Economy may, within 5 working days of the receipt of the Authority’s deci-sion or from the date he was informed thereof, request the opening of a detailed investigation where the Authority has not made any decision within the 25-day period from full notification.

The Minister also has the power to preempt the case for reasons of public interest where, at the end of the detailed examination, the Authority takes one of the decisions provided for in Article L430-7 CC or when it fails to take a decision within the period of sixty-five working days (which may be extended) from the initiation of the in-depth examination phase. The “general interest rea-sons others than the maintenance of competition” likely to compensate for the harm to competition are, inter alia, industrial development, the competitiveness of the undertakings at issue with regard to international competition or the preservation of jobs.


11.35. Conditions and commitments - DivestitureThe Authority may, by way of order, prohibit the implementation of the concentration, modify

the operation or order the parties to take any measure necessary to ensure or restore sufficient com-petition. It may also make the execution of the operation subject to the fulfillment of requirements ensuring a sufficient contribution to the economy so as to offset any negative effect on competition.


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11.36. FinesThe failure to notify a merger or to comply with the Authority’s orders and the supply of false

information is punishable by a fine up to 5% of pre-tax turnover in France. If the offending party is not an undertaking, the maximum fine is EUR 1,5 million. Daily coercive fines may also be imposed until the order is complied with. Under Article L464-2, II, to which Article L430-8 CC refers, this fine cannot exceed 5% of average daily turnover per day late as of the date specified.

C. appeals

11.37. appeals against decisions of the Competition authority and of the Minister of the Economy

According to Article R311-1 of the Code of Administrative Justice, the Council of State (Conseil d’Etat) is competent to hear appeals for abuse of its power against the decisions of both the Competition Authority and of the Minister of the Economy in concentration cases. Appeals may be brought within two months of publication of the Ministerial decision in the official register.

All decisions on the authorization or prohibition of a concentration, and also some related deci-sions - in particular in the field of publication or the approval of a suitable purchaser of the assets to divest - are open to appeal within a two-month period. The Council of State examines the legal basis and lawfulness of the act and carries out a comprehensive review of the decision.


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ChaPtEr 12

GErMany






D. Other restrictive practicesBelow cost sales 12.07Boycott 12.08

II. Enforcement A. Enforcement authorities

The Federal Cartel Office (Bundeskartellamt) 12.09The Federal Minister for the Economy (Bundesministerium für Wirtschaft or BMWI) 12.10

The State cartel authorities (Landeskartellbehörden) 12.11The State Courts of Appeal (Oberlandesgerichte) 12.12Other authorities 12.13

B. Enforcement proceedingsContext 12.14Complaints and investigations 12.15Proceedings before the Federal Cartel Office 12.16Interim relief 12.17Enforcement by ordinary courts 12.18


D. Appeals Appeals against decisions of the cartel authorities 12.22. Appeals against decisions of the Court of Appeal 12.23.

Section 2 Mergers



Merger notification 12.28Proceedings before the Federal Cartel Office 12.29

Proceedings before the Minister 12.30B. Conditions/Sanctions


C. AppealsAppeals against decisions of the Federal Cartel Office and of the Federal Minister for the Economy 12.33




12.01. ContextCompetition law in Germany is governed by the law entitled “Act against Restraints of Competition”

(Gesetz gegen Wettbewerbsbeschränkungen - GWB). The last version was published on 15 July 2005 and entered into force on 1 July 2005 replacing the Law of 26 August 1998. The main objective of this revision was to bring the German law on cartels fully into line with European Union law. The Law of 15 juillet 2005 has subsequently been amended several times but merely on specific points.

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The GWB is concerned with horizontal and vertical agreements, abuse of dominance, discrimi-natory practices, mergers and public tenders. Competition law in Germany is regulated solely by federal law but it is enforced by both State and federal agencies.

Unfair competition is dealt with in a separate act (Gesetz gegen unlauteren Wettbewerb - UWG).

12.02. ScopeSection 130(2) GWB applies the “effects theory” in German competition law, whereby the pro-

visions of the GWB are considered to apply to all restraints of competition having an effect within Germany, even if they took place outside the German territory.

The GWB provides for special rules for certain sectors of the economy. The 2005 reform subs-tantially reduced the number of sectors having their own specific rules. For example, banking, insu-rance and sporting competitions no longer have their own special regime. Only sections 28 and 30 GWB provide for specific rules for agriculture and the sale of periodicals. In addition to the GWB, special laws govern the energy sector (electricity and gas) and airport services. In any event, it should be recalled that the benefit of an exemption under the GWB no longer applies where European Union competition rules apply to these areas. In order to facilitate the deregulation of specific sectors, special competition rules setting up independent regulatory authorities have been enacted including, for example, a regulatory authority for telecommunications and postal services (see the Telekommunikationsgesetz - TKG), which exercises special control over abuses in these sectors. The actions of such regulatory authorities take priority over the provisions of the GWB.

Under German law, as is the case with European Union law, the term undertaking, i.e. Unternehmen is given a very broad interpretation and can include any economic activity from self employed or freelance operators to public undertakings performing a function in the general interest.


12.03. the prohibitionSince the 2005 reform, German law has treated horizontal agreements and vertical restrictions in

the same way. Prior to the 2005 reform, German law distinguished between cartels and vertical res-traints. Unlike cartels, vertical restraints were not considered void in principle and were only subject to control where they were clearly shown to be abusive. In its most recent version, Section 1 GWB repeats word for word the content of Article 101(1) TFEU, excluding the condition pertaining to trade between Member States. Thus, all horizontal and vertical agreements, regardless of whether or not they affect trade between Member States, are caught by the same prohibition, which is identical to the Article 101(1) TFEU prohibition. Under Section 1 GWB, agreements between competing undertakings, decisions by associations of undertakings and concerted practices which have as their object or effect the prevention, restriction or distortion of competition are prohibited. The most serious restrictions amongst those referred to in Section 1 GWB, are agreements on price-fixing, production quotas and the sharing of customers or markets. Also included are resale price mainte-nance and information exchanges between competitors. Pursuant to Article 134 of the Civil Code, agreements leading to a violation of Article 19 are considered void and without effect.

In interpreting the scope of the prohibition in Section 1, the German courts have applied a de minimis test requiring an appreciable effect on competition for the prohibition to be triggered (spür-bare Marktbeeinflussung). In this regard, the courts generally consider that if the total market share of the undertakings participating in a cartel is less than 5%, there is no appreciable effect on com-petition. The 2005 reform introduced the de minimis rule into the law. Section 3 GWB provides that Section 2(1) exemption (see below) applies specifically to horizontal agreements between com-petitors and to decisions of associations of undertakings which have as their object rationalization through cooperation, do not in any essential way affect competition on the market and improve the competitive ability of small or medium-sized undertakings.


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12.04. ExemptionsThe former law contained a list of specific exemptions in Sections 2-8 of the GWB, notably for spe-

cialization and rationalization agreements. The 2005 law repealed this list. The former law also had a more general rule providing for exemptions under Section 7, the criteria of which was similar to Article 101(3) TFEU. The 2005 law replaced Section 7 by new Section 2(1) which takes up verbatim the conditions for exemption generally accepted under Article 101(3) TFEU. Section 2(1) GWB now pro-vides: “agreements between undertakings, decisions by associations of undertakings or concerted prac-tices, which, while allowing consumers a fair share of the resulting benefit, contribute to improving the production or distribution of goods or to promoting technical or economic progress, and which do not 1) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives, or 2) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question, shall be exempted from the prohibition of Section 1.” The former law made the exemption subject to a notification to the Federal Cartel Office (Bundeskartellamt) and in certain cases an authorization from that body. However, coming into line with Regulation No 1/2003, the 2005 law completely renounced the system of notification to and authorization from the authorities and established the legal exception system.

In addition, Section 2(2) GWB makes the European block exemption regulations expressly appli-cable in internal law, even in cases where the agreements at issue do not affect trade between Member States: Regulations of the Council or the Commission of the European Union on the application of Article 101(3) TFEU to certain categories of agreements, decisions by associations of undertakings and concerted practices (block exemption regulations), apply mutatis mutandis.


12.05. abuse of a dominant positionGerman law, like EU law, does not seek to challenge the mere existence of a dominant position;

rather, it prohibits the abuse of this position (Section 19 GWB). The prohibition is automatic and does not require a decision of the Federal Cartel Office to bring it into effect.

The law sets out a definition of dominance: an undertaking is considered dominant if it has no competitors, is not exposed to any substantial competition or has an extremely strong market posi-tion compared to its competitors. Section 19(2)2 GWB provides criteria by which dominance may be assessed: market share, financial power, access to supplies or markets, links with other underta-kings, or the ability to shift supplies or demand to other goods.

A dominant position may be held by one undertaking, or collectively by a number of undertakings, insofar as no substantial competition exists between them with respect to certain kinds of goods or commercial services and they jointly satisfy the conditions of Section 19(2)1 GWB.

A dominant position may be presumed under Section 19(3) GWB by reference to the market share of an undertaking. This Section provides that a market share of one third is considered a domi-nant position for one undertaking, of 50 percent for three or fewer undertakings, or a combined share of two thirds for five or fewer undertakings.

Section 19(4) provides four examples of abuse of a dominant position. Abuse occurs when the dominant undertaking:

- interferes with the ability of another undertaking to compete in a manner affecting competition in the market without objective justification;

- imposes payment or other business terms which differ from those that would very likely arise if effective competition existed. This is a form of price cap regulation. To prove that a price is excessive, one has to compare it with that of a “comparable market”. However, this requirement has made it impossible to prove that a price is excessive because the courts consider price comparisons invalid;

- imposes less favorable payment or other business terms compared to those of similar purchasers in comparable markets, unless there is an objective justification;

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- refuses to allow another undertaking access to its own network or other infrastructure facilities in exchange for adequate remuneration. The reason of the introduction of the essential facilities doctrine by Section 19(4) 4 GWB (amendment of 1999) was to improve competition, particularly in the German telecommunications and energy markets. However, the essential facilities doctrine is not considered to apply “if the dominant undertaking demonstrates that for operational or other reasons such (…) use is impossible or cannot reasonably be expected” (Section 19(4)).

Section 20(1) GWB prohibits market-dominating undertakings and exempted cartels from ap-plying unfair treatment to an undertaking, that is, treatment that is unjustifiably different from the treatment accorded similar undertakings.

Section 20(3) GWB also prohibits dominating undertakings from using their market position to cause other undertakings to grant them preferential terms without any objective justification. This prohibition also applies to undertakings on which SMEs are economically dependent.

Finally, Sections 20(1) and 20(4) GWB prohibit market dominating undertakings from using their dominant position to directly or indirectly hinder another undertaking in an unfair manner.

12.06. abuse of economic dependencySection 20 GWB prohibits an undertaking in a dominant position, legal cartels or undertakings

which set retail prices from directly or indirectly hindering in an unfair or discriminatory manner another undertaking where such treatment cannot be objectively justified. The prohibition also applies to those undertakings upon which SMEs are in a position of dependency as regards the supply of goods or services.

A dependent undertaking is one that does not have the possibility of resorting to other undertakings to perform its economic activity. In defining whether a state of dependency exists, the authorities first attempt to define the relevant market in order to consider whether within this market there are other undertakings to which the SMEs in question can turn. Dependency frequently arises where a distribu-tor must have access to a particular brand or product if the distributor is to viably remain in the market in question (sortimentsbedingte Abhängigkeit). It can also arise in industries such as the manufacturing of motor vehicles, including cases where a supplier adapts its production process to the specific needs of one manufacturer (unternehmensbedingte Abhängigkeit). This occurs, for example, where a supplier concentrates its efforts on making one sole part for an automobile manufacturer.

D. Other restrictive practices

12.07. Below cost salesPursuant to Section 20(4), as amended in 1999, the sale of goods or services below cost is consi-

dered unfair when it is not occasional in nature and is without justification. This Section is aimed at protecting SMEs from the activities of dominant undertakings.

12.08. BoycottSection 21(1) GWB forbids undertakings from inducing other undertakings to refuse to sell to

or purchase from other undertakings with the intention of unfairly harming those undertakings. In order for Section 21 to apply, two criteria must be satisfied: there must be at least three undertakings involved and the boycott must be between businesses, not between a business and consumers.

Section 22 prohibits recommendations which have as their object or effect the circumvention of the prohibitions set out in the GWB. To be prohibited under Section 22, the recommendation must be made with the aim of influencing the conduct of end consumers. Furthermore, the prohibition does not apply to SMEs, and does not cover non-binding price recommendations in the case of branded goods (Section 23).


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12.09. the Federal Cartel Office (Bundeskartellamt)The Federal Cartel Office is the most important of the German competition authorities. According

to Section 51 GWB, it is a high federal independent authority, although it reports to the Minister for the Economy. It has general jurisdiction to enforce the GWB over practices that involve more than one Land (region). It has exclusive competence to review price-fixing practices, mergers and to enforce EU law.

12.10. the Federal Minister for the Economy (Bundesministerium für Wirtschaft or BMWI)

The Federal Minister for the Economy has exclusive competence to exempt illegal agreements on the basis of the public interest or general economic interest.

12.11. the State cartel authorities (Landeskartellbehörden)The Länder cartel authorities are responsible for the enforcement of competition law when

federal markets are not at issue. The Minister for the Economy for each of the 16 Länder is res-ponsible for enforcement.

12.12. the State Courts of appeal (Oberlandesgerichte)The State Courts of Appeal not only hear appeals against the decisions of State cartel authorities;

pursuant to Section 83 GWB, they also have jurisdiction for judicial proceedings concerning admi-nistrative offenses decided by the State cartel authorities.

12.13. Other authoritiesThe federal Länder introduced the Kommission zur Ermittlung der Konzentration im Medienbereich,

an independent regulatory authority in charge of controlling media concentration in the market for private television companies to better protect the rights of freedom of information and opinion. This media-specific concentration control and that of the GWB can be implemented concurrently.

Finally, a Monopoly Commission (Monopolkommission) exists to provide opinions on the general economic situation and the application of the GWB, as well as comments on decisions of the Federal Cartel Office in cases involving mergers or abuse of a dominant position (Section 44 GWB).

As the Monopoly Commission is not considered as a true cartel authority pursuant to the terms of the GWB, in carrying out its functions it does not have the right to require undertakings to provide information. However, so as to ensure that it is not prevented from carrying out its role, the Federal Statistical Office, under Section 47 is required to supply it with statistics concerning business (manu-facturing industry, crafts, foreign trade, taxes, transport, etc.).


12.14. ContextThere are two types of enforcement proceedings. One of them is administrative in nature: the

adjudication procedure (Verwaltungsverfahren) set out in Sections 32 and 54 – 62 GWB and the fining procedure (Bußgeldverfahren) found in Section 81 GWB. Both provide for the imposition of

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administrative fines and are enforced by both the Federal Cartel Office and the Länder authorities. There is also a “civil procedure” (Section 33 GWB), exclusively enforced by the courts.

The GWB does not provide for criminal sanctions. However, in 1997, amendments were added to the Criminal Code that introduced provisions expressly addressing bid rigging.

12.15. Complaints and investigationsUnder Section 54, the Federal Cartel Office may institute proceedings ex officio or upon appli-

cation. Thus, parties recognized as having a right to apply for an exemption for example, may start proceedings before the Cartel Office. More generally, parties having a personal interest (subjektives Recht), in a matter arising under the Act, may apply to the Cartel office to instigate proceedings.

In carrying out investigations, the cartel authorities have vast powers of inquiry. According to Section 57 GWB, they may conduct any investigation and collect any evidence required, through inspection, recorded testimony of witnesses and questioning of experts. Cartel authorities may make searches when authorized by order of the local court and seize objects of importance to the investi-gation. As provided in Section 59 GWB, competition authorities may enter the offices of underta-kings, request information and the surrender of documents, and inspect business documents on the premises of the undertaking during business hours.

German law guarantees the right to silence for suspected persons, and protects, within certain limits attorney- client correspondence.

The final written decision of the cartel authorities must contain a statement of reasons (Section 61 GWB). Decisions are published in the Federal official gazette, in either paper or electronic version.

Pursuant to Section 50, where the EU Commission wishes to carry out an investigation in Germany pursuant to its powers under Article 20 of Regulation No. 1/2003, the Federal Cartel Office is the authority designated to assist it.

12.16. Proceedings before the Federal Cartel OfficeUnder Section 54(2), the recognized parties to proceedings before the Federal Cartel Office are:- the party(ies) who have instituted the proceedings;- cartels, undertakings, trade and industry associations or professional organizations against which

the proceedings are directed;- party(s) whose interests may be substantially affected by the decision, including consumer asso-

ciations.Under Section 55, if a party considers that the Federal Cartel Office lacks jurisdiction, it can request

a preliminary ruling on this question from the Federal Cartel Office itself. The issue of jurisdiction must be raised at this preliminary stage. A decision relating to jurisdiction may be contested on appeal concurrently with the decision on the merits. However, if jurisdiction has not been contested before the Federal Cartel Office, it can no longer be accepted as grounds for appeal.

Pursuant to Section 56, parties to the action have the right to be heard and where appropriate representatives of interested business circles may also be given an opportunity to comment.

The Federal Cartel Office can accept commitments submitted by the parties or terminate procee-dings by way of settlement if the parties admit their participation in the anti-competitive conduct. In return, the Federal Cartel Office may grant them a reduction of fine which can go up to 10%.

12.17. interim reliefPursuant to Section 60, the Federal Cartel Office may issue a preliminary injunction to regulate

matters on a temporary basis until a final decision is adopted. However, the power to issue injunc-tions is restricted to certain decisions as outlined in Section 60.


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12.18. Enforcement by ordinary courtsPrivate actions for damages and injunctive relief are covered by Section 33 GWB. Private party

enforcement actions regarding discriminatory or restrictive practices, abuse of a dominant position or abuse of economic dependency can be brought without previously filing with the Federal Cartel Office.

District courts (Landgerichte) have exclusive jurisdiction over actions for damages. However, pur-suant to Section 90 GWB, the district courts must keep the Federal Cartel Office informed regar-ding such proceedings and the Federal Cartel Office may participate in the proceedings.

C. Sanctions

12.19. Cease and desist ordersThe GWB provides for administrative sanctions in the form of cease and desist orders. Section

32 of the GWB generally empowers the competition authorities to prohibit all behavior contrary to the GWB.

Moreover, victims of the behavior or any association of undertakings demonstrating a legal interest can request an injunction as regards the prohibited behavior and seek damages where such injunction is not respected (Section 33 GWB).

12.20. FinesAdministrative fines are ordered when an administrative offense is committed. Violation of the

prohibition on horizontal restraints, on vertical restraints, on abuse of dominance, abuse of economic dependency and the failure to provide correct information are all considered administrative offenses. Serious administrative offenses are punished by a fine of up to EUR 1.000,000. For undertakings, the fine can even go up to 10% of the annual global world turnover of the undertaking or the group forming an economic unit. In order to be subject to a fine, the offense must have been committed willfully or negligently. In 2006, the FCO published guidelines on the calculation of fines (accessible on the website of the Office). As with fines imposed by the European Commission in case of infrin-gement of Articles 101 or 102 TFEU, the calculation is made in two stages. A basic amount is first calculated, depending on the severity and duration of the offense, then, taking account of the factors which may lead to an increase or a decrease, the final amount is fixed.

Procedures applicable to administrative offenses are set out in the Administrative Offenses Act (Gesetz über Ordnungswidrigkeiten-OWiG). Further, continued violation of the decision of the Federal Cartel Office prohibiting a cartel agreement gives the latter the right to appropriate any illegal gains resulting from such practice following the adoption of the decision (Section 34 GWB).

12.21. LeniencyThe Federal Cartel Office’s leniency program is very close to that of the European Commission.

The notice on leniency can be consulted on the Office’s website. The Federal Cartel Office esta-blished that no fine will be imposed on a member of a hardcore cartel if, before an investigation has been initiated, that member is the first to offer information that makes a decisive contribution to uncovering the cartel. Subsequent cooperating members may have their fine reduced by 50%, as the public interest in liquidating a cartel may be greater than the interest in imposing penalties on an individual cartel member.

Recently, in response to a referral for a preliminary ruling by the Bonn Court of Appeal in the Pfleiderer judgment of June 2011, the European Court of Justice declared that European law did not in principle object to third party access to information gathered by the Federal Cartel Office in a leniency procedure for the purposes of justifying a damages action before the ordinary courts. However, the Court of Justice indicated that in each particular case, a balance has to be made between the necessity to protect the data collected during the administrative procedure and the need to bring

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evidence in support of the action for damages. Ultimately, in the case at issue, the Bonn Court of Appeal did not allow the request by the third parties to access the information provided on the occa-sion of the leniency procedure.

D. appeals

12.22. appeals against decisions of the cartel authoritiesAppeals against decisions of land cartel authorities (Beschwerdeverfahren) are heard by the Court

of Appeal (Oberlandesgericht) for the district in which the competition authority has its seat (Section 63(4) GWB), except for appeals against a decision of the Federal Cartel Office or the Minister for the Economy, which are made to the Court of appeals for the district in which the Federal Cartel Office has its seat. Since the Federal Cartel Office moved from Berlin to Bonn in 1999, appeals are made to the Court of appeals of Düsseldorf.

Appeals against administrative proceedings have a suspensive effect (Section 64 GWB). However, the cartel authority may order the immediate enforcement of the decision even before an appeal is filed if required by the public interest or by the prevailing interest of a party (Section 65 GWB). The Court of Appeal may nonetheless restore the suspension of enforcement pending appeal. Appeals may be based on new facts and evidence.

Appeals from decisions imposing an administrative fine are covered by both the Administrative Offenses Act and the Code of Criminal Procedure. Whether to reopen proceedings regarding a cartel authority decision imposing an administrative fine is determined by the Courts of Appeal of the district in which the cartel authority sits.

12.23. appeals against decisions of the Court of appealAppeals on points of law from orders of the Court of Appeal may be made to the Federal Supreme

Court (Bundesgerichtshof - BGH) where the Court of Appeal grants leave to do so (Section 74(1) GWB). The Court of Appeal must grant leave where the matter is of fundamental importance or is necessary to develop the law or ensure uniformity (Section 74(2) GWB). If the Court of Appeal refuses leave, it must state the reasons for doing so and that decision is subject to separate appeal. Appeal may be made to the Federal Supreme Court without leave where there is a procedural defect (e.g., the court was not properly constituted, the decision does not contain a statement of reasons, etc.) (Section 74(4) GWB).

Section 2 MERGERS


12.24. ContextGermany has a wealth of experience in matters of merger control. The merger control provisions,

added in 1973, put into place a preventive system of control. Mergers are governed by Chapter VII of the GWB (Sections 35 to 47). Currently, just under a thousand operations are notified to the FCO each year.

In August 2011, the German government published a reform bill for the provisions of the GWB relative to concentrations. The strong points of the bill are the adoption of the criterion of substantial impediment of effective competition in a market or a substantial part of a market (SIEC test: subs-tantial impediment of effective competition), the derogation to the suspension in cases of takeover bids, the acceptance of behavioral commitments and the calculation of the EUR 5 million threshold. The Federal Cartel Office gave its opinion on the bill on 30 November 2011. The reform should enter into force in early 2013.


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12.25. Concept of concentrationThe GWB defines a concentration as: a) the acquisition of all or a substantial part of the assets of another undertaking (Section 37(1)

No 1) ; b) the acquisition of direct or indirect control by one or several undertakings of the whole or parts

of one or more other undertakings by which decisive influence can be exercised on the activities of an undertaking (Section 37 (1) No 2);

c) the acquisition of shares in another undertaking that allows the acquiring undertaking to enjoy 50 % or 25 % of the capital or voting rights of the acquired undertaking (Section 37(1) No 3); and

d) any other combination enabling one or several undertakings to directly or indirectly exercise a competitively significant influence on another undertaking (Section 37(1) No 4).

Inspired by the European Merger Regulation (Article 3, § 1-b), in its 1998 reform, the German legislature extended the notion of concentration to the acquisition of control (see b) above). This addi-tion provides a flexible general rule (Auffangtatbestand) ensuring that all types of concentration, and especially newly created entities, come within the scope of the German merger control. Control is said to exist where it is possible for an undertaking to exercise a decisive influence on another undertaking by contract rights or other means. The definition of control is therefore almost identical to the notion of dependence within the meaning of Section 17 of the Joint Stock Corporation Act (Aktiengesetz).

Nevertheless, the more traditional specific definitions of the notion of concentration, listed above, e.g. the acquisition of assets, shares and even the existing general rule (see d) above) continue to apply.

As regards concentration by the acquisition of assets, a substantial part of the assets must be acqui-red. This provision aims to bring minority participation, which does not confer a decisive influence within the meaning of Section 37(1) No 2, within the scope of the merger control provisions.

Pursuant to Section 37(1) No 3, the German authorities apply a test employing two thresholds. Where an undertaking acquires an interest of more than 25%, notification is required. Where an interest of less than 25% is acquired, notification may nevertheless be mandatory where, including any interest formerly acquired, the undertaking thereby obtains a total interest greater than 50%.

For cases where a participation of 24,9% is acquired – a so called qualified minority participation in competitors – the GWB provides, at Section 37(1) No 4, a means of exercising control where one undertaking exercises a significant influence over another undertaking through legal corporate means. For the Federal Cartel Office, competitively significant influence is considered to exist whe-never a participation of 20% is established.

In the case of consecutive mergers, even if the requirements of a concentration are met, a concen-tration is not deemed to arise if the undertakings can establish that the mergers do not result in a substantial strengthening of the existing legal relationship between the undertakings (Section 37 (2)).

Joint-ventures that fulfill the requirements of Section 37 are subject to merger control, in particular where undertakings acquire together a stake greater than 25% in the capital of the joint venture. But, unlike what is provided for in the European merger control regulation, it is not necessary that joint control exists or that the joint venture fulfills all the tasks of an autonomous economic entity. If the joint venture contains any cooperative element, it may also fall under the provisions of Section 1 GWB.

12.26. thresholdsAccording to Section 35(1) 1 and 2 of the GWB, the Act applies if, in the last business year

preceding the concentration, the combined aggregate worldwide turnover of all the undertakings concerned was more than EUR 500 million, and if in Germany the turnover of at least one under-taking concerned was more than EUR 25 million and that of another undertaking concerned was

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more than EUR 5 million. The 5 million threshold for another undertaking concerned was added by Article 8 of the Law of 17 March 2009 (BGBL 550).

Previously, a merger between two German companies had to be notified when the thresholds of EUR 550 million and 25 million were reached regardless of the turnover of the second German company party to the concentration. Now the concentration is only subject to notification if the tur-nover of that second undertaking is of at least EUR 5 million. This has resulted in quite a significant decrease in the number of notifications.

Section 36(2) 1st sentence ensures that dependent undertakings within the meaning of Section 17 of the Joint Stock Corporation Act (Aktiengesetz) and group companies (Konzernunternehmen) within the meaning of Section 18 of the Joint Stock Corporation Act are considered as one single economic entity with respect to the application of the merger provisions. Dependence is established by reference to corporate law principles.

In its second sentence, Section 36(2) introduces the so called “plurality of mother companies rule” (Mehrmütterklausel) by which each parent undertaking is considered to be dominant, if it is collaborating with several undertakings in order to exercise jointly a significant influence on another undertaking within the meaning of Section 17 of the Joint Stock Corporation Act.

The method for calculating turnover is defined in Section 38. In this regard, the provision distin-guishes between economic sectors: only 75% of the turnover shall be taken into account in the sector of trade in goods, where concentrations are considered to be less anticompetitive. With respect to undertakings involved in the publication, production and distribution of media, twenty times the amount of actual turnover shall be taken into account, because of the existence of many small local markets which it is considered necessary to protect.

Section 35(2) provides two exceptions to the application of merger control. Firstly, the merger control provisions do not apply where the merging undertaking is not subject

to control by another undertaking and has a turnover of less than €10 million. This de minimis rule does not apply, however, in the field of newspaper markets.

Next, the merger control provisions also do not apply where the market concerned involves a sales volume of less than EUR 15 million in the last calendar year (de minimis market rule – Bagatellmarktklausel). Initially, the threshold of EUR 15 million implied that many new markets because of their low turnover benefited from the application of the de minimis rule. Thus, in order to prevent this, the German legislature in 1980 restricted this de minimis exception to markets of at least five years.

Thereafter, as part of an increasing recognition of regional and local markets, the Federal Cartel Office created the so called Bündeltheorie. Pursuant to this theory, which has been approved by the BGH, where two or more markets are neighboring and essentially identical they are considered one market. The Bündeltheorie thus limits the application of the de minimis market rule (Bagatellmarktklausel).

Furthermore the merger control system only applies if the concentration in question has an effect on the domestic market within the meaning of Section 130 (2).

12.27. Control criteriaSection 36(1) GWB prohibits a concentration that is expected to result in the creation or streng-

thening of a dominant position, unless the participating undertakings establish that the concen-tration will also lead to improvements in the level of competition, and that these improvements outweigh the disadvantages of dominance.

However, abandoning the dominant position criterion in favor of a new criterion similar to that of the European Commission has recently been under discussion. Concentrations which would “signifi-cantly impede effective competition, in the market or in a substantial part of it” would be prohibited.


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12.28. Merger notificationNotification of a merger to the Federal Cartel Office, prior to it being put into effect, is compul-

sory once a merger comes within the scope of the merger provisions of the GWB (Section 39(1), GWB). A notification must contain the information listed in Section 39(3).

The filing fee which is determined by the Federal Cartel Office cannot exceed EUR 100,000.

12.29. Proceedings before the Federal Cartel OfficeAccording to Section 40, the Federal Cartel Office may not prohibit a notified merger unless,

within one month after receipt of the notification, it informs the parties to the concentration that it has initiated a second stage inquiry. A reasoned decision in such second stage proceedings must be issued within four months of receipt of the complete notification or the concentration is deemed to have been cleared. Usually, the undertakings that are planning a merger engage in informal contact with the Federal Cartel Office before the formal notification in order to try and ensure that the merger is cleared at first inquiry stage.

A notified concentration may be put into effect after the one-month period under Section 40(1) has lapsed and where the Federal Cartel Office has not initiated the second stage proceedings. Once the four-month period under Section 40(2) has lapsed, or if the Federal Cartel Office has cleared the concentration, the latter may be put into effect.

Section 41 GWB poses the principle of the suspension of the merger operation until the end of the control procedure. It explicitly prohibits undertakings from implementing a concentration until the period of between one and four months fixed by Section 40 has expired or until the concentration has been authorized by the Federal Cartel Office. The Federal Cartel Office imposes fines of up to 10% of the turnover on undertakings which implement a concentration without having notified it or without having obtained authorization.

Legal acts in defiance of the principle of suspension are null and void. Unlike the European regulation, the GWB contains no exception in favor of public takeovers. Generally, in the case of a takeover bid, the initiators launch the offer on condition of having obtained an authorization for the proposed merger.

The investigations by the Federal Cartel Office are in two phases: the preliminary phase (phase 1) and the more in-depth phase of the procedure (phase 2). However 95% of concentrations are authorized at phase 1.

While decisions rendered at Phase 1 shall take the form of simple administrative letter, authoriza-tion decisions, authorization with conditions or refusals to authorize taken in phase 2 must be fully reasoned and published.

Concentrations that are subject to control under the Act and that have been examined by the Federal Cartel Office according to the merger control procedure must again be notified to the Federal Cartel Office once they are put into effect (Section 39(6), GWB). Failure to comply with this obli-gation is an administrative offense according to Section 81(1) No 4.

12.30. Proceedings before the MinisterThe Federal Minister for the Economy may authorize a concentration prohibited by the Federal

Cartel Office if, in a specific case, the restraint of competition is outweighed by advantages to the economy as a whole, or if the concentration is justified by an overriding public interest (Section 42 GWB). An authorization may be granted subject to conditions and obligations.

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12.31. Conditions and commitments - DivestitureClearance may be granted subject to conditions and obligations. A concentration that has been put

into effect and that is subsequently prohibited or has its clearance revoked must be dissolved (Section 41(3) GWB).

12.32. FinesWhoever willfully or negligently fails to correctly or completely submit pre-merger notification

is considered to commit an administrative offense. Further, the willful or negligent violation of the prohibition on putting a concentration into effect constitutes an administrative offense giving rise to fines of up to EUR 500,000 or three times the profit accruing to the undertaking as a result of the violation (Section 81(1) No 1 GWB).

C. appeals

12.33. appeals against decisions of the Federal Cartel Office and of the Federal Minister for the Economy

Appeals against the merger decisions of the Federal Cartel Office rendered in Phase 2 and of the Federal Minister for the Economy are exclusively brought before the Court of Appeal in whose dis-trict the Federal Cartel Office has its seat (since 1999, the Düsseldorf Court of Appeal). The appeal procedure is similar to that applicable to anticompetitive practices.


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ChaPtEr 13

GrEECE





C. Abuse of dominanceAbuse of a dominant position 13.05


The Competition Commission 13.06

B. Enforcement proceedingsComplaints and investigations 13.07Proceedings before the Competition Commission 13.08Interim Relief 13.09Enforcement by ordinary courts 13.10


D. AppealsAppeals against decisions of the Competition Commission 13.15 Appeals against decisions of the Athens Administrative Court of Appeals 13.16

Section 2 Mergers



Merger notification 13.21Proceedings before the Competition Commission 13.22


C. AppealsAppeals against decisions of the Competition Commission 13.25Appeals against decisions of the Athens Administrative Court of Appeals 13.26




13.01. Context At the time that Greece became the tenth Member State of the European Union in 1977, the

Greek parliament adopted Law No 703/77 “on the Control of Monopolies and Oligopolies and the Protection of Competition”. The Competition Act has been subsequently reformed by several further Acts. Act No 1934/91 introduced for the first time in Greece national legislation governing concentrations. In 1995, Act No 2296/95 further modified the merger control scheme and reinstated the decision-making powers of the Competition Commission, which had previously been weakened by a Ministerial decree transferring primary authority in competition law matters to the Minister of the Economy. Another amendment, Act No 2837/00 (FEK 178/A of 3.8.00) increased the merger

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control thresholds such that only large concentrations are covered, and granted the Competition Commission status as an independent regulatory agency with financial autonomy. On August 2005, Amendment No 3373/2005 was adopted in order to harmonize the national antitrust legislation with EU competition law, especially with Council Regulation (EC) No 1/2003. This Act introduces inter alia a leniency program in antitrust enforcement and changes the merger control procedure with the establishment of a two-stage procedure (Phase 1 and Phase 2), it also provides the necessary mecha-nisms for a decentralized enforcement for EU competition law, but does not follow the main inno-vation of Regulation No 1/2003, which consisted in the abolition of the antitrust notification and authorization system, and the introduction of a system of legal exception. Thereafter, Amendment No 3784/2009 abolished negative clearance and the prohibition of abuse of economic dependence (Section 2a, Law 703/77) that had been added in 1991, then repealed by Law No 2837/2000, then reintroduced by Law No 3373/2005. Abuse of economic dependence now forms part of the Unfair Competition Act (Section 18a, Law 146/1914) and is no longer controlled by the Competition Commission, but by the civil courts. In April 2011, Law No 3959/2011 on the Protection of Free Competition replaced Law No 703/77. The new competition act abolished inter alia the notification system for agreements and the post-merger notification procedure, and aligned the level of the fine for infringement of competition law with that of the EU system.

13.02. ScopeThe Competition Act applies to all restrictions of competition that have effects within Greece,

even if the conduct occurs outside of Greece and/or is engaged in by undertakings that are not esta-blished in Greece (Section 46).

The Competition Commission enforces national and EU Competition rules in all sectors, ex-cept the telecommunications and postal services markets. The National Telecommunications and Post Commission (EETT) is responsible for safeguarding competition in the industries under its jurisdiction, applying the special rules of the telecoms legislation. The sectoral regulator thus replaces the Competition Commission concerning competition issues in this sector. There is no formal link between the Commission and the Competition Commission, although there is a well-established informal relationship. An independent administrative authority, called the Regulatory Authority for Energy (RAE), regulates all sectors of the energy market (Electricity, Natural Gas, Oil Products, Renewable Energy Sources, Cogeneration of Electricity and Heat) and cooperates with the Competition Commission which ensures the enforcement of competition law in these sectors.


13.03. the prohibition Section 1 of the Competition Act prohibits any agreements, decisions and concerted practices

which have as their object or effect the prevention, restriction or distortion of competition. Just as in Article 101 TFEU, Section 1 of the Greek Competition Act includes a non-exhaustive list of practices that come within the prohibition, including price fixing, allocating markets, controlling production, applying dissimilar conditions to equivalent transactions or making an agreement condi-tional upon the acceptance of unrelated terms. According to Section 1(2) of the Competition Act, any agreements, decisions or concerted decisions that breach Section 1(1) are null and void.

13.04. ExemptionsThe Greek Competition Act provides for two types of exemptions from the prohibition in Section

1(1): individual and block exemptions. An individual exemption may be granted where all of the four conditions set forth in Section 1(3) are satisfied. That is, the agreement or practice must contribute to improving the production or distribution of goods or technical or economic progress and allow consumers a fair share of the benefit. At the same time, it must not impose restrictions which are not


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indispensable to obtaining such objectives, nor allow an undertaking to eliminate competition in a substantial part of the relevant market.

Before the adoption of Act No 3959/2011, undertakings had to notify their agreements to benefit from an individual exemption. Now, in line with Regulation No 1/2003, Greek undertakings must assess their own agreements with regard to the competition rules. If they comply with the conditions for exemption, they are automatically exempted (Section 3).

Law No 703/77 authorized the Competition Commission to declare certain categories of agree-ments or concerted practices valid, wholly or in part. Now, Section 1(4) of the new Greek Competition Act only provides that EU block exemption regulations are applicable even if the practices do not affect trade between Member States.


13.05. abuse of a dominant positionSection 2 of the Competition Act, which essentially mirrors Article 102 TFEU, prohibits the

abuse of a dominant position held by one or more undertakings on the Greek market or a substantial part thereof. The Act does not provide a statutory definition of the term “dominant position”. As in EU law, merely holding a dominant position is not prohibited under the Greek Competition Act. Section 2 includes a non-exhaustive list of practices that may be considered abusive including price fixing, limiting production, consumption or development, applying dissimilar conditions to equiva-lent transactions or making an agreement conditional on acceptance of unrelated terms.

The old Competition Act provided that undertakings could apply for a negative clearance as regards behavior potentially coming within the scope of the Section 2 prohibition. Now, the abuse of a dominant position is prohibited without the need for a prior decision to that effect (Section 3(3)).

ii. Enforcement


13.06. the Competition Commission Since the Competition Act was first enacted in 1977, the balance of power between the Competition

Commission and the Minister for the Economy has repeatedly shifted. Thus, in 1982, Ministerial Decision B-3/395 transferred exclusive competence for taking final decisions from the Competition Commission to the Minister for the Economy. Some commentators believed this power was abused, and criticized Decision K-6 1051/83, for example, as an instance where the Minister’s power was used to benefit the State. In the 1991 amendments, therefore, the Competition Commission was granted authority to take final decisions in competition law matters, except with respect to concen-trations where its decision can be overturned by the Minister. Following the enactment of Law No 2837/00, the Competition Commission became independent of administrative surveillance by the Minister, and was independently funded from a special levy.

The new Competition Act preserves the status of the Competition Commission as an independent administrative authority supervised by the Minister for Economy, Competition and Shipping, and its dualist structure, comprising the Directorate General for Competition, responsible for conduc-ting investigations and the Board, the decision-making body of the Authority.

The Board of the Competition Commission is composed of eight members including the President, the Vice-President, four full-time case-handlers and two substitute members. According to Section 12, they are persons of recognized standing who are distinguished by their scientific trai-ning and professional capacity in the legal and economic sector, especially in matters of competition. The President and the Vice president are selected by the Parliament while the other members are

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chosen by the Minister for the Economy for a renewable five-year term (Section 12). Decisions are taken by majority vote and in cases of a tie the President’s vote prevails (Section 15).

Section 14 enumerates the duties of the Competition Commission, including, inter alia, determi-ning whether there is a breach of Sections 1 and 2 of the Act, taking any essential regulatory measure aimed at creating conditions of effective competition, according to the procedure of Section 11, imposing fines and other penalties as stipulated in specific provisions, taking interim measures, and cooperating with the EU Commission and other international bodies.


13.07. Complaints and investigations The Competition Commission may consider whether there has been an infringement of Sections

1(1) and (2) sua sponte, upon complaint, or in response to a request from the Minister of economy (Section 25).

Under Section 36, any natural person or legal entity may submit a complaint to the Competition Commission regarding an infringement of Sections 1(1) or 2. Civil servants and employees of public undertakings are required to report such infringements if this information becomes known to them and can be fined for failing to do so (Section 36(6)). Within 12 months of the date that a complaint is lodged, the Competition Commission must issue a decision. This period can be extended by not more than two months when further investigation is required (Section 15).

In making an investigation, the Commission President or the Vice President, Director General, Director or employee of the Directorate General for Competition are entitled to obtain all neces-sary information by sending a written request to undertakings, associations of undertakings, public authorities or any other natural or legal persons (Section 38). Persons who are not required to sup-ply information under Section 212 of the Code of Criminal Procedure are also exempt from the obligation to supply information under Section 25 of the Competition Act, provided certain other obligations are fulfilled.

Officials of the Directorate-General for Competition have the same investigation powers as tax inspectors (Section 39). Thus, Competition Committee officials may examine all books and re-cords, carry out investigations in the premises of the undertaking or association, conduct house searches in conformity with Section 9 of the Constitution, and remove evidence. The President of the Competition Commission must provide written authorization to conduct an investigation, spe-cifying the subject-matter of the investigation and penalties for failure to cooperate. The official res-ponsible for the investigation must make a report, a copy of which must be sent to the undertakings or associations concerned. Where necessary, the assistance of the police may be sought (Section 39).

13.08. Proceedings before the Competition CommissionWhere an application or complaint has been submitted to the Competition Commission, the per-

sons who have done so have an opportunity to be heard (Section 15(9)). They may appear personally or be represented by an attorney, and must be given forty-five days advance notice of the hearing. Parties against whom a procedure before the Competition Commission has been initiated likewise have an opportunity to be heard after receiving forty-five days’ notice.

Where it finds an infringement, the Competition Committee may address a decision requiring the undertakings to end the infringement, and/or imposing a fine or penalty or may require that the necessary behavioral or structural remedies be implemented to end the infringement (Section 25(1)). Within 12 months of the date that a complaint is lodged, the Competition Commission must issue a decision (Section 15). Decisions of the Competition Commission are served by the Secretariat on the persons entitled to appeal (Section 15(11)).

Pursuant to Section 25(6) of the Competition Act, where the Commission presumes, in the course of investigations carried out of its own initiative or at the request of the Minister for the Economy,


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that there have been infringements of Sections 1 and 2, and where the undertakings concerned offer commitments to address those competition concerns, it may, by way of decision, make the commit-ments binding on the undertakings and end the proceedings. Proceedings may nevertheless be re-opened if the undertakings concerned fail to respect their commitments, or if there is a substantial change in the facts on which the decision was based, or if the decision was in fact based on incom-plete, inaccurate or misleading information provided by interested undertakings.

13.09. interim reliefSection 14 of the Competition Act authorizes the Competition Commission to provide interim

relief, either on its own initiative, or upon the request of the Minister for the Economy. In determi-ning whether to award such relief, the Competition Commission considers whether an infringement of Sections 1 or 2 is probable and, if so, whether there is an urgent need to prevent imminent and irreparable damage to the complainant or to the public interest. The Competition Commission must resolve a request for interim relief within not more than fifteen days, provided that interested parties have had an opportunity to be heard (Section 25(5)).

13.10. Enforcement by ordinary courtsUnder Section 35, the Greek civil courts have jurisdiction to rule on the infringement of Sections

1 and 2 of Act No 3959/2011.

C. Sanctions

13.11. Cease and desist ordersWhere the Competition Commission finds an infringement of Sections 1(1) or 2, it may require

the undertakings concerned to end the infringement and refrain from committing it in the future (Section 25(1) b). A failure to comply with such a cease and desist order is punishable by fines.

13.12. Fines Infringements of the prohibition on restrictive agreements and abuse of dominance are punishable

by a fine of up to 10% of the turnover of the undertaking during the financial year in which the offense was committed, or the preceding year (Section 25(2)a). In exercising its discretion regarding the amount of the fine, Section 25 requires the Competition Commission to consider both the gra-vity and the duration of the infringement. The Competition Commission published guidelines on the amount of fines in May 2006. Failure to comply with an order of the Competition Commission regarding an infringement of Sections 1 and 2 is punishable by a daily fine of up to EUR 10,000 for each day of non-compliance.

13.13. Leniency A leniency program has been in place in Greece since 2006. In November 2011, the Competition

Commission introduced a revised leniency program (Decision No 526/IV/2011). Total immunity or reductions from fines are available to natural persons or undertakings who contribute significantly to the detection and establishment of the cartel. For natural persons in particular, the granting of total immunity from fines also absolves them from criminal liability, while the granting of a fine reduction is regarded as a mitigating circumstance, thus resulting in the imposition of a reduced sanction pur-suant to Section 83 of the Penal Code.

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13.14. Criminal sanctionsAccording to Section 44(1), “Anyone entering into an agreement or implementing a concerted

practice in breach of Article 1 or Article 101 TFEU, shall be punished by a fine of between fifteen thousand (15,000) euros and one hundred and fifty thousand (150,000) euros (…). If the act of the first paragraph refers to companies that are among the actual or potential competitors, a penalty of imprisonment of at least two years and a fine of between one hundred thousand (100,000) and one million (1,000,000) Euros”. Abuse of a dominant position is punished by a fine of between EUR 30,000 and EUR 300,000 (Section 44(2)).

D. appeals

13.15. appeals against decisions of the Competition CommissionDecisions of the Competition Commission may be appealed to the Athens Administrative Court

of Appeals within 60 days of having been served (Section 30). The right of appeal can be exercised by the undertakings or associations against which the decision was issued, by the person who submit-ted a complaint, by the State acting through the Minister for the Economy or by third parties with a sufficient legal interest (Section 30(3)). Enforcement of the decision is not ordinarily suspended during the period for appeal or where an appeal is brought, but the Administrative Court of Appeal in Council may stay execution, wholly or partially or subject to conditions, where sufficient grounds exist. The Athens Administrative Court of Appeals must hear the matter within three months from the day the appeal was filed (Section 32(2)).

13.16. appeals against decisions of the athens administrative Court of appealsDecisions of the Athens Administrative Court of Appeal may be appealed by a writ of error to

the Council of State (Section 32). In addition to the parties, the Chief Commissioner of State for the Athens Administrative Court of Appeal is entitled to appeal even if the Commissioner was not a party to the prior proceedings. The Council of State must hear the matter within three months (Section 30(2). Whether execution of the challenged decision is stayed is determined according to Section 52 of Presidential Decree No 18/1989.

Section 2 MERGERS


13.17. ContextProvisions controlling concentrations were first introduced in Greece in 1991. At that time, the

Minister for the Economy had sole competence relatively to concentrations. The failure to require the Minister for the Economy to take decisions within specified time-limits, and the failure to esta-blish a general notification requirement for concentrations of a certain size were among the factors creating widespread dissatisfaction with the scheme. In response, the 1995 amendments in Act No 2296/95, established two notification procedures. A simplified procedure was created for small-scale concentrations, and a more detailed notification requirement for concentrations exceeding esta-blished turnover thresholds. Specific time-limits were introduced and a Competition Committee was created with primary decision-making authority. The low thresholds and the post-merger noti-fication requirement for all concentrations ultimately left the Commission unable to meet statutory deadlines. Thus, Act No 2837/00 was adopted, abolishing the two-tier notification procedure and increasing thresholds for notification. Thereafter, Amendment No 3373/2005 established a two-stage procedure (Phase 1 and Phase 2). Since the coming into force of Law No 3959/2011, the post-merger notification procedure is abolished.


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Merger control is slightly more complicated where the operation is to be implemented in a regu-lated sector, as other formalities are required by the regulatory authority of the sector in addition to those required under the Competition Act. The media sector, governed by Act No 3592/2007, notably contains special provisions relative to the calculation of the undertakings’ turnover and market share.

13.18. Concept of concentration Section 5 of the Competition Act defines a concentration as arising in three situations. First, a

concentration arises where two or more previously independent undertakings merge (Section 5(2)). Next, a concentration arises where one or more persons already controlling at least one undertaking or one or more undertakings acquire direct or indirect control of the whole or parts of one or more undertakings. In this context, “control” is defined in Section 5(3) as the possibility of exercising a decisive influence, such as acquiring ownership, or acquiring rights which confer a decisive influence on voting. Control extends not only to the holders of such rights, but also to persons whom, while not holding such rights, have the power to exercise the rights deriving therefrom.

The third situation in which a concentration arises is upon the creation of a joint venture which is an independent economic entity and does not lead to the coordination of the competitive behavior of the parent companies, or between the parent companies and the joint venture (Section 5(5)).

On the other hand, no concentration arises where a credit or other financial institution, or insu-rance company temporarily holds securities with a view toward reselling them (Section 5(6)). In order to come within this Section, the financial institution must not exercise the voting rights with a view toward influencing the competitive behavior of the undertaking, and may exercise the voting rights only to prepare the disposal of the securities. A financial institution holds securities tempora-rily, where it does so for less than one year, though this period may be extended for a reasonable time where disposal was not reasonably possible within the period set.

13.19. thresholdsThe notification requirement is triggered where an undertaking meets the thresholds for turnover

provided by Section 6(1). Where the combined turnover of the undertakings involved equals EUR 150 million and the turnover in Greece of at least two undertakings involved each exceed EUR 15 million, the concentration must be notified to the Competition Commission. The criteria for calcu-lating turnover are set forth in Section 10. In the media sector, Law No 3952/2007 provides specific turnover thresholds of EU 50 million and EUR 5 million.

13.20. Control criteriaThe Competition Act provides that the Competition Commission must prohibit a concentration

where it may impede competition in the national market, or a substantial part of it, particularly be creating or strengthening a dominant position (Section 7(1)). The Act lists factors to be considered in determining the likelihood of a significant impediment to competition, including inter alia the structure of the relevant markets, actual or potential competition from within Greece or outside it, barriers to entry, the market position of the undertakings involved and their financial power, their access to supplies or markets, the alternatives available, the evolution of supply and demand, and the interests of intermediate and final consumers (Section 7(2)).

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ii. Enforcement


13.21. Merger notificationA concentration must be notified to the Competition Commission within thirty days after the

conclusion of the agreement or the publication of the tender or exchange or acquisition of a control-ling interest in cases where established thresholds are satisfied (Section 6(1)). Where a merger agree-ment is involved, each of the undertakings concerned must notify the concentration. In all other cases, only the person, undertaking or group acquiring control of the whole or part of another under-taking is required to notify the concentration (Section 6(3)). A concentration subject to the pre-merger notification requirement cannot be implemented until the Competition Commission issues a decision, except in the case of public offer, or acquisition in stock market trading holding, if the concentration is notified within the thirty-days period and the acquirer does not exercise the voting rights associated with the securities concerned or does so only to maintain the full value of those investments and with the Commission’s permission (Section 9(2)). According to Section 9(3), the Competition Commission may also, upon request, dispense with the obligations set out in paragra-phs 1 and 2 in order to avoid serious damage to one or more firms involved in the merger or to third parties (Section 9(3)). The filing fee is set at EUR 1,100.

13.22. Proceedings before the Competition CommissionOnce notification is submitted to the Competition Commission, it examines the proposed concen-

tration. Where a finding is made that the proposed concentration is not covered by the Competition Act, i.e. it does not meet the thresholds for notification or is not a concentration for the purposes of the Act, the President of the Competition Commission issues a decision including such finding within one month of receipt of notification (Section 8(2)). If the notified concentration, although falling within the scope of paragraph 1 of Section 6, does not raise serious doubts as to the compa-tibility thereof with the requirements of operation of competition in individual markets concerned, the Competition Commission, in a decision issued within one month of notification, approves the merger (Section 8(3)). In both those cases the proceedings will terminate at Phase 1.

However, if the notified concentration raises serious doubts as to its compatibility with competi-tion in the individual markets concerned, the President of the Competition Commission shall ini-tiate the process of full investigation of the concentration and inform the undertakings of its decision within one month of notification (Phase 2). Firms can make modifications to the merger or propose commitments so as to remove any serious doubts as to the compatibility of the operation with com-petition in the individual markets concerned.

Phase 2 takes approximately ninety days. If, on expiry of that deadline, the Commission has not yet come to a decision, the concentration is considered as authorized (Section 9(6)). The decisions and opinions of the Competition Commission under the provisions of the Competition Act are published in the Gazette and posted on the Internet (Section 47).


13.23. Conditions and commitments - DivestitureThe Competition Commission may either simply authorize the merger (Section 9(6)), or au-

thorize it with conditions attached (Art 9(8)). It may also take the necessary measures to restore effective competition where the concentration has been implemented without prior notification or where the undertakings concerned have failed to comply with the commitments taken or imposed (Section 8(10)). Where a concentration has been implemented in breach of the Competition Act the Competition Commission prohibits it or may order the undertakings to de-merge or the assets


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to be separated and the cessation of joint control (Section 9(4)). Failure to comply with an order of the Competition Commission imposing such measures is punishable by a fine.

13.24. FinesOnce a proposed concentration has been notified, it cannot be put into effect until the Competition

Commission has issued a decision. A breach of this prohibition is punishable by a fine of at least EUR 30,000 and up to 10% of the aggregate turnover in the Greek market of the undertakings concerned (Section 9(1)). The violation of the prior notification requirement is punishable by the same (Section 6(4)). In addition, criminal penalties of between EUR 15,000 and EUR 150,000 may be imposed on any natural person acting individually or as the legal representative of an undertaking, in violation of Sections 5 to 10 of the Competition Act (specifically in the event of failure to notify a concentration: Section 44 (1)). Failure to comply with a decision of the Competition Commission ordering the separation of assets or the cessation of joint control is punishable by a fine of up to 10% of the aggregate turnover of the participating undertakings and penalties of up to EUR 10,000 per day of non-compliance may also be imposed (Section 9(4)b).

C. appeals

13.25. appeals against decisions of the Competition CommissionDecisions of the Competition Commission regarding concentrations may be appealed to the

Athens Administrative Court of Appeals within 60 days of receipt of the decision (Section 30).

13.26. appeals against decisions of the athens administrative Court of appealsAs in the case of anticompetitive agreements, pursuant to Section 32 of the Act, the judgment

of the Administrative Court of Appeals of Athens may be submitted to the Council of State, the highest administrative court in Greece.


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ChaPtEr 14

hUnGary





C. Abuse of dominanceThe prohibition 14.05


The Hungarian Competition Authority (Gazdasági Versenyhivatal) 14.06The courts 14.07

B. Enforcement proceedingsComplaints and investigations 14.08Proceedings before the Hungarian Competition Authority 14.09Interim relief 14.10Enforcement by ordinary courts 14.11

C. SanctionsCease or desist orders 14.12Fines 14.13Leniency 14.14Criminal sanctions 14.15

D. AppealsAppeals against decisions of the HCA 14.16

Section 2 Mergers




Proceedings before the HCA 14.23B. Conditions/Sanctions


C. AppealsAppeals against decisions of the HCA 14.26




14.01. ContextIn 1990, Hungary adopted its Competition Act modeled largely on German law. In 1996, seeking to

harmonize its competition law regime with Union Law in light of its application for European Union accession, the 1990 Act was replaced by the Prohibition of Unfair and Restrictive Market Practices Act of 1996. Further amendments to the Act have been adopted almost every year up to the final amend-ment in 2009, and the current consolidated version has been effective since 1 April 2010. The Act regu-lates unfair and deceptive practices, in addition to competition matters such as anticompetitive prac-tices and concentrations. In Chapters II and III, Sections 2 to 10, the Competition Act establishes a prohibition against unfair competition as well as a prohibition against unfair manipulation of consumer choice. Section 2, Chapter II, sets out a general prohibition against unfair practices, whilst subsequent provisions set out specific protections for the reputation or credibility of competitors and of business

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secrets, and prohibitions against bid ridding and imitation. Chapter III on the unfair manipulation of business decisions sets out at Section 8(1) a general prohibition on deceiving consumers. Section 8(2) establishes a list of types of behavior – e.g. making false declarations, failing to provide goods that meet legal requirements or creating false impressions – all of which are considered as creating a presumption of deception. To establish deception, Section 9 sets out that the meaning of terms customarily accepted in business are to be taken as a guide when establishing whether the information is capable of mislea-ding. In the same way, the undue restriction of trading parties’ freedom of choice is prohibited (Section 10). Chapter IV prohibits agreements restricting economic competition, whereas Chapter V prohibits abuse of a dominant position. The goals of the Competition Act are the protection of public/consumer interest, freedom of economic competition and efficiency.

14.02. ScopeThe scope of the Act extends to the market practices of undertakings carried out abroad where

such practices have effects in Hungary (Section 1). The Act applies to natural and legal persons and any other economic operators, regardless of their form, including Hungarian branches of underta-kings domiciled abroad and public enterprises.

Sectoral regulation, such as the Electronic Communication Act XL of 2001 or the Electricity Act CX of 2001, provides for cooperation between the Hungarian Competition Authority, which is empowered to apply the Competition Act, and the sectoral regulators. Before adopting a decision, the Office must obtain advice from the relevant regulatory authority.


14.03. the prohibitionThe provisions of the Act prohibiting anticompetitive agreements (Chapter IV) largely paral-

lel the equivalent EU Law provisions. Section 11 prohibits agreements or concerted practices that actually or potentially prevent, restrict or distort competition. The Section includes a non-exhaustive list of prohibited agreements and practices in particular price fixing, limiting production, allocating markets, hindering market entry and making the conclusion of an agreement subject to unrelated conditions (tying).

Pursuant to Section 13, agreements of minor importance, determined by reference to market share, are not prohibited. This de minimis rule applies to agreements between participating underta-kings whose joint market share does not exceed 10% of the relevant market provided that their object is not to fix prices or share markets between competitors. However, the de minimis rule may not apply where competition is significantly prevented, restricted or distorted by the cumulative effect of agreements between undertakings.

14.04. ExemptionsThe criteria for granting an individual exemption, pursuant to Section 17, are essentially the

same as those found in EU law. Thus, an individual exemption is available, upon application, for agreements that contribute to improved production or distribution, technical or economic progress, improved competition or the protection of the environment. However, the agreement must allow consumers a fair share of the benefit, not exceed what is necessary to achieve its goal and not create the potential for excluding competition in respect of a substantial part of the products concerned (Section 17(1)). The burden of proof of the individual exemption rests on the person claiming the benefit of exemption.

Under the Competition Act, the government, rather than the Competition Authority, is responsible for adopting regulations regarding block exemptions. However, in exercising this function, the govern-ment has to take into account the criteria laid down in Section 17(1). Moreover, if, as a result of the


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cumulative effect block exempted and other similar agreements have on the relevant market, the provi-sions of Section 17(1) are no longer satisfied, the block exemption no longer applies.

Pursuant to Section 96 of the Competition Act, the government updated the block exemption regulations concerning specialization agreements (Regulation No 53/2002) and research and deve-lopment agreements (Regulation No 54/2002) in the spring of 2002. Furthermore, a general vertical restraints block exemption regulation has been adopted (Regulation 55/2002), replacing the exis-ting block exemption regulations for exclusive distribution and purchase agreements and franchise agreements. Finally, that regulation was also replaced by Regulation No 205/2011 which came into force on 22 October 2011. This regulation aims to be consistent with the new EU Regulation No 330/2010. Generally, the Hungarian competition authorities clearly follow developments at EU level closely. Besides these new regulations, block exemption regulations also exist in the fields of motor vehicle distribution (Regulation No 19/2004), insurance (Regulation 18/2004) and techno-logy transfer (Regulation No 86/1999).


14.05. the prohibitionSection 22 defines a dominant position as one situation where one or more undertakings are “able to

pursue their economic activities to a large extent independently of other market participants substan-tially without the need to take into account the market reactions of their suppliers, competitors, custo-mers and other trading parties when deciding their market conduct”. In assessing whether a dominant position exists, factors to be considered include the existence and strength of market entry barriers, the financial strength of an undertaking, the structure of the relevant market and comparative market shares.

The notion of relevant market is defined in the Act. Under Section 14, the market is one on which other goods could reasonably be substituted for the product in the context of its intended use, price and quality. In this regard, both demand and supply side substitutability are considered (Section 14(2)). The geographic market is defined as the area outside of which the consumer is unable to purchase goods or the seller is unable to sell goods, or only able to do so on less favorable terms (Section 14(3)).

An undertaking holding a dominant position is prohibited, pursuant to Section 21, from abusing such position, in particular by setting unfair prices or terms, limiting production or development, refu-sing business dealings without justification, withdrawing goods from circulation, discriminating against certain trading parties, setting low prices to drive out competition, hinder without justification market entry in any other manner or creating unduly disadvantageous market conditions for competitors.

ii. Enforcement


14.06. the hungarian Competition authority (Gazdasági Versenyhivatal)The Hungarian Competition Authority (HCA) is the authority responsible for enforcing the

Competition Act (Section 33(2)). Pursuant to Section 45 of the Competition Act, the jurisdiction of the HCA extends to “all cases relating to competition supervision that are not within the exclusive competence of the courts.” It is headed by a President, appointed for a renewable six-year term by the President of the Republic upon nomination by the Prime Minister.

The HCA is divided into a decision-making body, the Competition Council, headed by a vice-president of the HCA and members, including investigators. According to Section 48 of the Act, decisions of the Competition Council are taken by a panel of three members or sometimes five when deemed necessary and appropriate. The Chair of the Competition Council is responsible for, inter

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alia, organizing the activities of the Competition Council, drawing up the operational rules of the Council and ensuring publication of Council decisions. The investigators are responsible for the day-to-day running of investigations.

14.07. the courtsActions may also be brought in the county or metropolitan court by the HCA where it consi-

ders that a public administrative decision violates the freedom of economic competition, and where the public administrative institution in question has refused to revoke or amend the decision when requested. Such proceedings are conducted in the County Court or the Budapest Metropolitan Court (Section 85).


14.08. Complaints and investigationsInvestigations and proceedings are governed by the specific provisions of the Competition Act and more

generally by the provisions of Act IV of 1957 on the General Rules of Public Administrative Proceedings. Competition supervision proceedings are commenced on application or may be initiated ex officio,

or where a case is referred to the HCA by a court due to its lack of jurisdiction. Moreover, any person may make a complaint or an informal complaint to the HCA in respect of an alleged conduct in relation to which the HCA has power to proceed (Chapter IX). Within 60 days of receipt of the notification, the HCA must either take steps to open an investigation, or issue a decision forwarded to the complainant indicating why no investigation is justified (Section 43/H (8)). Complaints must be lodged in writing on a properly completed form issued by the HCA. It is possible for complai-nants to request that their identity not be revealed. Parties under investigation are to be notified of suspected violations of the law and of relevant facts so as to allow them to make an informed state-ment concerning the matter under inquiry.

In carrying out their role, investigators of the HCA are entitled, subject to authorization by the courts, to enter any premises, vehicles or land used for business activities in order to carry out on-the-spot investigations and request oral or written explanations. Investigators are further entit-led, pursuant to Section 65, to make copies of documents or take possession of original documents. Investigators may request the assistance of the police where necessary. Although investigators do have the right to have access to documents containing business secrets, access to State and trade secrets, given their particularly sensitive nature, are governed by separate regulations.

Pursuant to Section 67(4), no investigation may be started where five years have elapsed since the infringement of provisions regarding agreements, abuse of a dominant position and mergers.

After completing an investigation, investigators prepare a report for submission to the HCA toge-ther with supporting documents. Parties may file objections regarding any irregularities in the inves-tigation procedure within three days of their occurring (Section 81).

14.09. Proceedings before the hungarian Competition authorityUpon receipt of the report by the investigator, the HCA may either terminate proceedings where

no liability is established or return the files to the investigator for further clarification (Section 72). Thereafter, where appropriate, the HCA may schedule a hearing, allowing the parties sufficient time to prepare their defense and access to the file.

Where in the course of proceedings started ex officio, parties offer commitments to ensure compliance of their practices with the Competition Act and if the public interest can be safeguarded, the HCA can render the commitments binding on the parties and terminate the proceedings.


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14.10. interim reliefThe HCA may, upon recommendation by an investigator of the HCA, order that interim measures

be taken pending a decision on the merits (Section 72(1)(c)).

14.11. Enforcement by ordinary courtsThe local county court or the Budapest Metropolitan Court have jurisdiction over suits initiated

by parties that have suffered harm as a result of a violation of the Act (Section 88(4)).

C. Sanctions

14.12. Cease or desist orders The HCA is empowered to order that an undertaking refrain from conduct violating the Act, and

impose conditions or obligations aimed at restoring competition.

14.13. FinesThe maximum fine that may be imposed for a violation of the Competition Act is 10% of an

undertaking’s net turnover in the preceding financial year (Section 78). Factors relevant to setting the fine include the gravity of the violation, the duration of the unlawful situation, the benefit gained by the infringement, whether it is a repeated violation and the level of cooperation of the undertaking during the proceedings.

Enforcement fines of up to a maximum of 50,000 forints (EUR 195) per day may also be ordered for failure to comply in a timely manner with a final decision. That fine can be increased up to 100,000 forints (EUR 395) one on one occasion (Section 90). Such fines may be imposed on both the undertaking and the individual charged with managing the undertaking.

14.14. LeniencyThe new Competition Act provides for a leniency program, at Section 78/A. The Competition

Council handling the case grants immunity from, or reduces, the fine imposed on those undertakings disclosing to the HCA a cartel, including in the case of hardcore restrictions.

The first person to apply can seek immunity if the evidence produced allows the HCA to obtain a judicial authorization to carry out investigative measures, to prove the infringement, when the HCA could not obtain these elements without the evidence submitted.

Undertakings that provide evidence of the infringement that constitutes significant added value to the HCA (but not such as to obtain immunity) can expect a reduction of 30-50% for the first applicant, 20-30% for the second, and up to 20% for the subsequent.

In any case, an applicant for leniency must end its involvement in the cartel immediately, coope-rate genuinely, fully and on a continuous basis with the HCA, but will not be eligible if it took steps to coerce other undertakings to participate in the infringement.

14.15. Criminal sanctionsThe Act does not provide for criminal sanctions, but any penalties imposed under the Act are

without prejudice to criminal sanctions that may be available under other legislation (Section 93).

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D. appeals

14.16. appeals against decisions of the hCaAppeals against a decision of the HCA may be submitted to the HCA within thirty days of noti-

fication of the decision. Further appeals are then transferred to the Metropolitan Court within thirty days of receipt of the claim (Section 83). The Metropolitan Court may overrule a decision of the HCA, and no further review of the Court’s decision is possible.

Section 2 MERGERS


14.17. ContextControl of mergers in Hungary is carried out pursuant to Chapter VI of the Competition Act.

The system of control is similar to that under EU law, i.e. a prior notification requirement for under-takings meeting certain defined thresholds.

14.18. Concept of concentration Pursuant to the terms of the Competition Act, a concentration exists where two previously

independent undertakings merge or one undertaking or a part thereof is integrated with another. Alternatively, a concentration also exists where one or more undertakings jointly acquire direct or indirect control of another undertaking in whole or in part (Section 23).

Direct control is defined as having ownership interests that entitle a party to exercise the majority voting rights, appoint a majority of the executive officials, or that give it, by contract or in fact, a decisive influence on decision-making. On the other hand, indirect control is said to exist where an undertaking exercises control over one undertaking by virtue of its control over another. Winding up and dissolution activities are expressly excluded from the definition of a concentration.

The creation of a joint venture which is able to perform on a lasting basis all the functions of an independent undertaking constitutes a concentration.

14.19. thresholds The threshold for those concentrations requiring notification is set forth in Section 24. Notification

is required where the aggregate net turnover of all undertakings involved in a concentration exceeds 15 billion forints (a little more than EUR 58,500,000) and the net turnover of each of at least two of the groups of undertakings concerned in the preceding business year combined with the net turnover of the undertakings jointly controlled by undertakings members of the respective group of under-takings and other undertakings was more than five hundred million forints (EUR 197,000). Inter-company sales are expressly excluded from the statutory definition of turnover set forth in Section 27.

14.20. Control criteriaThe test for approval of a concentration is whether a concentration creates or strengthens a

dominant position that hinders competition on the relevant market. In evaluating the effect of the concentration, the Act directs the HCA to consider both the competitive advantages and disadvan-tages presented by the operation. Aspects that should be examined include the structure of the rele-vant market, ease of entry into the market and the effect of the concentration on competition in the market. In addition, legislation directs the HCA to consider the market position of the undertakings concerned and the effect of the concentration on suppliers and consumers (Section 30).


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ii. Enforcement


14.21. Merger notificationAn application for merger authorization must be submitted within thirty days of the conclusion of

the contract or acquisition of controlling rights (Section 28). It is the obligation of the direct parti-cipants or the acquirer, as the case may be, to apply for authorization. The merger agreement is not valid until it has been authorized by the HCA. The filing fee is set at forints 4 million (EUR 14,300) in case of phase 1 proceedings and at forints 12 million (EUR 43,000) in case of phase 2 proceedings.

14.22. Proceedings before the hCaUpon receipt of notification of a concentration, the HCA begins its appraisal of the proposed

concentration. Pursuant to Section 48, a decision on the merits of a concentration is made by the HCA, sitting as a panel of five members. The review process normally takes 120 days, and may be extended by a maximum of 60 days. Where authorization clearly may not be refused (phase 1), the decision is taken within 45 days, which can be extended one time by 20 days (Section 63).

The authorization granted to a concentration covers all restrictive agreements necessary to its implementation.


14.23. Conditions and commitments - DivestiturePursuant to Section 30, in order to reduce the negative effects a concentration might have, the

HCA may subject its approval to the performance of certain conditions. It may also, as part of its decision, require the “divestiture of certain parts of the undertakings or certain assets or the relin-quishment of control over an indirect participant, setting an appropriate time-limit for the carrying out of these requirements.”

If the HCA determines that a concentration has been implemented without the required autho-rization, it has authority under the Act to impose sanctions in order to restore effective competition, including separation or divestiture of the merged undertakings or relinquishment of joint control (Section 31).

Further, pursuant to Section 32, a decision authorizing a concentration may be revoked where:- the undertaking(s) involved breached a condition on which the approval was based;- it was based on misleading information.

14.24. FinesThe maximum fine that may be imposed for failure to notify a concentration, pursuant to Section

79, is 200,000 forints (EUR 780) per day. More generally, the maximum fine that may be imposed under the Act is 10% of the total net turnover of the undertaking in the preceding year (Section 78).

C. appeals

14.25. appeals against decisions of the hCaAppeals against decisions of the HCA regarding concentration matters can be taken to the

Metropolitan Court within thirty days of receipt of the decision (Section 83).


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ChaPtEr 15

irELanD





C. Abuse of dominanceThe prohibition 15.05Exemptions 15.06


The Competition Authority 15.07

The Director of Public Prosecutions 15.08The courts 15.09

B. Enforcement proceedingsCivil enforcement 15.10Criminal enforcement 15.11Interim relief 15.12

C. SanctionsCease and desist orders 15.13Leniency 15.14Criminal sanctions 15.15

D. AppealsCivil cases review 15.16Criminal cases review 15.17

Section 2 Mergers



The Competition Authority 15.22B. Enforcement proceedings


Proceedings before the Competition Authority 15.24C. Conditions/Sanctions

Conditions and commitments - Divestiture 15.25Criminal sanctions 15.26

D. AppealsAppeals against decisions of the Competition Authority 15.27




15.01. ContextIrish competition law is governed by the Competition Act 2002, the Competition (Amendment)

Act 2006 and and the Competition (Amendment) Act 2012. The Competition Act 2002 replaced the Competition Act 1991 and the Competition (Amendment) Act 1996. On 1 January 2003, the Competition Act repealed the Mergers and Takeover Act 1978. A statutory instrument known as the Restrictive Practices (Groceries) Order of 1987 was also repealed in 2007.

The Competition Authority has responsibility for enforcing Irish Competition Law.

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15.02. ScopeIrish competition law not only applies to anticompetitive arrangements between undertakings that

are based in Ireland but also grants the Irish Competition Authority jurisdiction over the anticompe-titive activities of foreign undertakings that have an effect on the domestic market. The Competition Act is broad in its scope of application and encompasses all anticompetitive behavior by underta-kings, whether public or private.


15.03. the prohibition Section 4 of the Competition Act 2002 mirrors Article 101 TFEU and prohibits all agreements

between undertakings and decisions by associations of undertakings which have as their object or effect the prevention, restriction or distortion of competition in trade in any goods or services in the State or any part of the State.

This includes agreements which fix prices, limit or control production or markets or share markets or sources of supply, as well as practices such as the application of dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage. The prohibition set out in Section 4 also applies to practices such as tying, i.e. the attaching of supple-mentary obligations to a commercial contract where such obligations have nothing to do with the subject-matter of the contract.

15.04. ExemptionsPrior to the adoption of the Competition Act 2002, it was possible to receive from the Competition

Authority a “license” or a “certificate”. A certificate was awarded where the notified agreements were deemed not to restrict competition. A license was awarded where the agreement was considered to restrict competition but where its pro-competitive aspects outweighed its anticompetitive effects. The Authority also had the power to adopt category certificates and category licenses which opera-ted on much the same basis as EU block exemption regulations. The 2002 Act has reduced the role of the Competition Authority in the exemption procedure.

Under the new regime, provision is no longer made for the express granting of individual exemp-tions. From now on, any agreement complying with the conditions set out at Section 4(5) is auto-matically considered to benefit from an individual exemption. Under subsection (5), to receive an exemption, an agreement must contribute to improving the production or distribution of goods or provision of services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit and must not:

- (a) impose on the undertakings concerned terms which are not indispensable to the attainment of those objectives,

- (b) afford undertakings the possibility of eliminating competition in respect of a substantial part of the products or services in question.

Thus, since the coming into force of the 2002 Act ( July 2002), applications for individual exemp-tion are no longer made to the Competition Authority and in practice, undertakings will now have to make this analysis themselves, instead of relying on the decision of the Authority.

The Authority retains the power to issue Category Certificates. The Competition Authority pre-viously adopted Category Licenses in respect of exclusive purchasing of motor fuels, exclusive distri-bution, exclusive purchasing of cylinder liquid petroleum gas (LPG) and franchising. However, fol-lowing the example of the EU authorities, it has replaced most of these licenses by a single Category Certificate and License applicable to all forms of vertical restraints. This latter includes non-exclu-sive and exclusive distribution agreements, exclusive purchasing agreements, franchising and selec-tive agreements and combinations thereof (Section 4, Article 4(3)).


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Apart from the possibility of an exemption under Section 4, Section 6 sets out acceptable defenses where it is alleged that an agreement is contrary to the prohibition on restrictive agreements. These defenses include, inter alia:

- that the agreement was covered by an individual exemption or the provisions of an EU block exemption regulation in force at the time;

- that the agreement was entered into pursuant to a direction given by a statutory authority.


15.05. the prohibitionSection 5 prohibits the abuse of a dominant position. As is the case under EU law, Section 5 does

not prohibit a dominant position per se – solely its abuse. Under Irish law, a firm is considered domi-nant once it is able to act independently of its customers or rivals. There is considered to be no breach of the Act where one firm’s vigorous but fair competition puts a less efficient rival out of business.

Section 5 of the 2002 Act sets out a list of practices which may constitute an abuse:- directly or indirectly imposing unfair purchase or selling prices or other unfair purchase or selling

prices or other unfair trading conditions;- limiting production markets or technical development to the prejudice of consumers; - applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage;- making the conclusion of contracts subject to the acceptance by other parties of supplementary

obligations which have no connection with the subject of such contracts.

15.06. ExemptionsThere is no provision made for exempting established abuse of dominance. However, Section 7 of

the Act does establish an acceptable defense where an abuse of dominance results from a direction made by a statutory authority.

ii. Enforcement


15.07. the Competition authority Under the Competition Act, the Competition Authority is given the power to administer compe-

tition law and investigate breaches thereof. The Authority is made up of a Chairman, three members and a secretariat. The Competition Authority’s work is divided into six separate divisions, each one headed by a member of the Authority.

The primary role of the Authority is to conduct investigations into anticompetitive activities. It is also responsible for carrying out market studies, publishing notices and liaising with other regulatory authorities. Further, under Section 33 of the Act, it must submit a strategic plan to the Minister for Enterprise, Trade and Employment every three years. The plan should set out the key objectives of the Authority and outline how it intends to achieve these aims, specifying the resources it will use.

Actions by the Competition Authority may be either criminal or civil in nature. The Authority does not normally institute criminal proceedings itself but makes recommendations to the Director of Public Prosecutions to institute such proceedings. In relation to civil issues, the Authority may institute proceedings seeking the imposition of a fine or a declaration in respect of alleged breaches of Sections 4 and 5. An action may be brought against an undertaking or against its directors, officers or managers.

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15.08. the Director of Public ProsecutionsOn the recommendation of the Competition Authority, the Director of Public Prosecutions will

bring criminal proceedings in relation to breaches of the Competition Act. Actions by the Director of Public Prosecutions are brought, pursuant to Section 11 of the Act, in the Central Criminal Court. The Director has exclusive competence to bring actions concerning indictable offenses, though the Authority itself can institute summary proceedings.

15.9. the courtsThe civil actions are brought before either the Circuit Court or the High Court. Indictable crimi-

nal offenses are brought before the Central Criminal Court.


15.10. Civil enforcementCivil actions concerning breaches of Sections 4 and 5 of the 2002 Act may be brought either by

the Competition Authority or by interested third parties.When deciding whether or not to bring civil proceedings, the Authority will take into account

the harm that a particular type of behavior may have on consumers or smaller businesses weighed against any public benefit of bringing proceedings. The Authority will also take into account whether the courts have previously found that a particular practice has the effect of preventing, restricting or distorting competition or that it is considered to constitute abuse of a dominant position.

Parties demonstrating the necessary standing may always bring a private action for damages or alter-natively seeking interim relief or a declaration. Actions brought by third parties are initiated before the Circuit Court or the High Court. An action for damages may be brought, either against the underta-king in question or against its directors, officers or managers. While Irish courts operate on the assump-tion that damages are available as a remedy to an aggrieved third party for breaches of competition law it is not clear whether a breach of Sections 4 or 5 would be classed as a breach of statutory duty, a tort, or else a breach of a right guaranteed by the Irish Constitution. When bringing an action under this heading, an individual may seek damages, exemplary damages, an injunction or a declaration. Section 8 of the Competition (Amendment) Act 2012 enhances follow-on actions by providing that a court’s finding that there has been an infringement of competition rules may be used as evidence in subsequent actions for damages.

15.11. Criminal enforcementCriminal actions are brought by either the Competition Authority or the Director of Public

Prosecutions. For the sake of providing guidance for business, the Authority has stated that it will prepare a file

for the Director of Public Prosecutions that will treat the following types of conduct as criminal:- agreements, decisions or concerted practices directly or indirectly fixing purchase or selling prices;- agreements, decisions or concerted practices to limit production;- agreements, decisions or concerted practices to stay out of markets, geographically defined or

otherwise;- agreements, decisions and concerted practices among competitors to refuse to deal with third

parties; - agreements, decisions or concerted practices to divide sources of supply with competitors.The Competition Act 2002, grants the Competition Authority partial responsibility for bringing

criminal proceedings for breaches of the Competition Act as regards minor or summary offenses. For


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more serious offenses, the Director of Public Prosecutions may bring indictment proceedings against the directors, officers or managers of the undertaking in question.

15.12. interim reliefPursuant to Section 14(5) of the Act, any person who is aggrieved in consequence of any agree-

ment, decision, concerted practice or abuse may require the Circuit Court or the High Court to provide relief by way of injuction or declaration.

C. Sanctions

15.13. Cease and desist ordersFrequently injunctions are sought in place of damages. The principles governing injunctions are

the same as those found in any common law system, namely the application of a three-stage test in which court considers (a) whether there is a fair question to be tried, (b) whether damages would be an adequate remedy, (c) the balance of harm.

15.14. LeniencyA cartel immunity programme is set forth in Competition Authority’s Notice of 20 December 2001.

15.15. Criminal sanctionsThe penalties for indictable offenses are up to EUR 5 million or up to 10% of the offending un-

dertakings annual turnover whichever is the greater. For less important summary offenses, penalties are up to a maximum of EUR 5,000. Jail terms up to 10 years and fines may be applied concurrently.

Further, daily fines may be also imposed in the sum of EUR 300 per day in the case of summary offenses and EUR 40,000 in the case of indictable offenses. No jail term may be imposed for conti-nuing contraventions.

The new Competition Act 2002 (Sections 6, 7 and 8 of the Act) has increased from two years to five years imprisonment the maximum criminal sanctions for natural persons convicted of a serious anticompetitive offense. The three ‘hardcore’ offenses to which the new sentences apply are price fixing, bid rigging and market control, i.e. the artificial restriction of supply so as to keep prices up. Jail terms for minor offenses are set at a six month maximum.

D. appeals

15.16. Civil cases reviewIn civil cases, appeals from the Circuit Court lie to the High Court, and from the High Court to

the Supreme Court on points of law.

15.17. Criminal cases reviewAll criminal proceedings whether initiated by the Competition Authority or by the Director of

Public Prosecutions can be appealed to the Criminal Court of Appeal, and thereafter to the Supreme Court on points of law.

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Section 2 MERGERS


15.18. ContextUnder the Competition Act 2002, the responsibility for deciding on mergers (with the exception

of media mergers) has been transferred from the Minister for Trade, Enterprise and Employment to the Competition Authority. A detailed presentation of the new rules can be found in Notice N/02/004 of 16 December 2002.

15.19. Concept of concentrationUnder the new Competition Act, a merger is said to occur where:- two or more previously independent undertakings merge;- one or more undertakings acquire control of another or a part of it;- one undertaking acquires another’s business so that the acquiring business effectively replaces the

acquired undertaking in that line of business. Once the control thresholds are triggered, it is necessary to notify the operation of concentration

within one month of the conclusion of the agreement to merge or of making a public bid. Even mer-gers not meeting the thresholds may, pursuant to Section 18(3), be notified to the Authority. Under Section 19, a notified merger cannot be put into effect until the Competition Authority has given its decision. Failure to respect this requirement is considered to render the merger void.

Control can be acquired either as a matter of law or as a matter of fact. In the latter case, the autho-rities look to see if there was an acquisition of a decisive influence by the acquiring undertaking over the acquired undertaking. In this regard, the new regime is heavily influenced by EU merger control.

Finally, the creation of a joint venture to perform, on an indefinite basis, all the functions of an autonomous economic entity constitutes a merger (Section 16).

15.20. thresholdsUnder the Competition Act 2002, the jurisdiction of the Competition Authority will be activated

where:- the world-wide turnover of each of two or more of the undertakings involved in the merger or

acquisition is not less than EUR 40,000,000;- each of two or more of the undertakings involved in the merger or acquisition carries on business

in any part of the island of Ireland, and;- turnover in the State of any one of the undertakings trading in the State is at least EUR 40 million.Mergers meeting these criteria will have to be notified to the Competition Authority. Interestingly, under Section 18(5) of the Competition Act 2002, the Minister can specify that

certain classes of merger require notification to the Competition Authority, regardless of their size. Also, the Minister retains partial responsibility for the appraisal of media mergers.

15.21. Control criteriaUnder the new Competition Act, the substantive test to be applied to mergers will be to establish

whether the merger would lead to a substantial lessening of competition.In assessing the state of the market in relation to the merger, the Authority applies the Herfindahl

Hirschman Index (HHI) as an indicator (see Guidelines for merger analysis). Previously, the Minister considered a wide number of factors pertaining to the common good.


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ii. Enforcement


15.22. the Competition authorityOn 1 January 2003, control of mergers passed from the Minister for Trade, Enterprise and

Employment to the Competition Authority (with the exception of media mergers, which will re-main partly in the control of the Minister).


15.23. Merger notificationUnder Section 18 of the Competition Act, notification must be made within one month of an

offer capable of acceptance having been made once the control thresholds are triggered. An EUR 8,000 fee must accompany the notification.

Under Section 19, a notified merger cannot be put into effect until the Competition Authority has handed down its decision.

15.24. Proceedings before the Competition authorityOnce the Competition Authority is notified of an operation of concentration it must either:- clear the merger on the grounds that it does not substantially lessen competition in markets for

goods and services within the State; or- open a Section 22 full investigation, which may last up to four months. After the full investigation is carried out, the Authority must:- clear the merger;- prohibit the merger; or- subject its clearance to commitments entered into by the parties.In the course of the merger investigation, the Competition Authority may:- consider submissions made by the public or the undertakings concerned by the merger;- consider measures that may cancel out the anticompetitive effects of the merger;- require the submission of further information from the undertakings involved. In carrying out its duties, the Authority pursuant to Section 31 of the Competition Act 2002, may

summon witnesses on oath. Further, investigating officers, under Section 45 of the Act, will have the power to enter premises

where authorized by a District Court warrant and may seize any documents or interview persons connected to the matter under investigation.


15.25. Conditions and commitments - DivestitureUnder Section 20(1)(b), the control authorities may enter into discussions with undertakings in-

volved in a concentration with “a view to identifying measures which would ameliorate any effects of the merger.” In this regard, Section 20(4) provides for the making of commitments which become binding on the parties where permission is given by the control authorities in lieu of same.

Pursuant to Section 19(2), a notifiable merger that is put into effect without receipt of a ruling on its status by the control authorities is void.

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15.26. Criminal sanctionsUnder the Competition Act, failure to notify a merger will, on summary grounds be the subject of

an EUR 3,000 fine, and an EUR 250,000 on indictment. Further, daily fines of EUR 300 and EUR 25,000 may be imposed under the heading of continuing contraventions.

D. appeals

15.27. appeals against decisions of the Competition authority Under Section 24 of the Competition Act, 2002, appeals against decisions of the Competition

Authority may be brought before the High Court.


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16.01. ContextThe legal supervision of competition issues is a relatively recent phenomenon in Italian law. Italy

was one of the last Member States to adopt its own competition regime and until 1990 had no competition rules of its own. Italian competition law is now governed by the Competition and Fair Trading Act, Law No 287 of 10 October 1990 (“the Competition Act”). The Act provides for the establishment of a Competition Authority responsible for administering and enforcing competition rules. The Act brings Italian law in line with EU rules on competition while recognizing the supre-macy and scope of application of European law. In this context, the Competition Act at Section 1(4) specifically provides that its provisions “shall be interpreted in accordance with the principles

ChaPtEr 16

itaLy





C. Abuses of dominanceAbuse of a dominant position 16.05Abuse of economic dependency 16.06


The Competition Authority (Autorità Garante della Concorrenza e del Mercato) 16.07

B. Enforcement proceedingsComplaints and investigations 16.08Proceedings before the Authority 16.09Interim relief 16.10Enforcement by ordinary courts 16.11



Section 2 Mergers



The Competition Authority 16.20The Government 16.21

B. Enforcement proceedingsMerger notification 16.22Proceedings before the Competition Authority 16.23


D. AppealsAppeals against decisions of the Authority 16.26Appeals against decisions of the Regional Administrative Court 16.27

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of European Community competition law.” Important changes have been introduced by the adop-tion of Law No 57 of 5 March 2001 and by the Decree-Law called the Bersani Decree of 4 July 2006 converted into Law No 248 of 4 August 2006, including conferring additional powers on the Competition Authority.

The question of unfair practices is dealt with separately under Italian law. Decree No 114 of 31 March 1998 empowers the Ministry of Industry and Commerce to prohibit certain restrictive prac-tices considered detrimental to consumers. Sales below costs are also prohibited under Decree No 114 of 31 March 1998 as well as under section 2598, No 3 of the Civil Code. Limited exceptions to the prohibition on below-cost selling exist under Law No 80/1980 in cases of sales promotions, end of season clear outs and sale of obsolete products.

16.02. ScopeItalian competition law applies to the activities of foreign undertakings that have an effect on the

Italian market. Pursuant to Section 1(1), the provisions of the law only apply to agreements and abuses of dominance which fall outside the scope of Articles 101 and 102 TFEU.

The Italian Competition Act has a broad scope of application embracing all sectors of the Italian economy, both public and private. Public enterprises and State-controlled firms are fully subject to the Competition Act’s basic prohibitions (Section 8.1). Pursuant to a provision that parallels the EU treaty, those prohibitions do not apply to firms that by law provide “services of general economic interest” or operate in a monopoly situation, to the extent that such exemption is indispensable to perform their specific, assigned tasks (Section 8.2).

The Italian Competition Authority was given exclusive jurisdiction on antitrust issues in banking by Law No 262/2005 and by section 2 of Legislative Decree No 303 of 29 December 2006. Following a popular referendum, Article 23 bis of Legislative Decree No 112 dated June 25,2008, containing “Urgent provisions for economic development, simplification, competitiveness, stabilization of public finance and fiscal equalization” was abrogated by a Presidential Decree No 113 of July 18, 2011.


16.03. the prohibitionSection 2 of the Competition Act is a carbon copy of Article 101 TFEU, prohibiting “agreements

between undertakings which have as their object or effect the appreciable prevention, restriction or distortion of competition within the national market or within a substantial part thereof.” The prohibition includes, but is not limited to, agreements that fix prices or impose other unfair trading conditions, limit production, allocate markets, apply dissimilar conditions to equivalent transactions, or condition conclusion of a contract on acceptance of unrelated terms. By application of Section 1(4) of the Act, de minimis practices in the sense of EU law can be excluded from the scope of the prohibition.

16.04. ExemptionsWhere an agreement is prima facie anticompetitive (and is thus contrary to the prohibition contai-

ned in Section 2 of the Act) it may still be eligible for an individual or block exemption under Section 4, if the agreement would lead to substantial benefits for consumers. Section 4 provides that “[I]n assessing such improvements, the need to guarantee undertakings a necessary level of international competitiveness shall be taken into account, in particular, increases in production, improvements in the quality of production or distribution, or technical and technological progress.” A request for an exemption is notified to the Authority, which should issue its decision within 120 days. It is worth noting that there have been no block exemptions issued so far.


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C. abuses of dominance

16.05. abuse of a dominant positionThe aim of Section 3 of the Act is to prohibit the abuse of a dominant position by one or more

undertakings. An undertaking is said to be dominant where it accounts for the majority of sales in a particular market and is therefore able to act independently of its competitors, customers and consumers. Although market share is an extremely important factor in evaluating whether an entity is dominant, elements such as market structure, the height of entry barriers and the maturity of the relevant market will also be taken into account.

As in EU law, the mere fact of being in a dominant position is not prohibited; the position must actually be abused. Section 3 of the Act sets out a list of some of the primary practices that may constitute abuse of a dominant position. These prohibited practices are the same as those listed in Section 2 regarding anticompetitive agreements.

In Italy, the majority of cases alleging abuse of a dominant position have been resolved on grounds that the alleged behavior fell outside the scope of Section 3 of the Competition Act. However, recent cases have ended with the imposition of substantial fines.

16.06. abuse of economic dependencyLaw No 57 of 5 March 2001, amending Law No 192 of 18 June 1998, has introduced mea-

sures granting the Competition Authority jurisdiction in certain cases involving abuse of economic dependency. Prior to this amendment, the ordinary civil courts had sole jurisdiction in this area. Section 9(3) of the law of 1998 now provides that the Authority “may issue the warnings and impose the penalties provided by Section 15 of Law No 287 of 10 October 1990 against any company or companies found liable for abuse of economic dependence”. However, this Section does not define what constitutes abuse of economic dependence, and this may have a detrimental effect on the effi-ciency of its application.

ii. Enforcement


16.07. the Competition authority (Autorità Garante della Concorrenza e del Mercato)The Italian Competition Authority is an autonomous body established by Section 10 of the

Competition Act. In addition to ensuring compliance with the Competition Act, the Competition Authority also has responsibility for enforcing legislation on misleading advertising (Legislative Decree No 74 of 25 January 1992, as amended by Legislative Decree No 67 of 25 February 2000). The Competition Authority is composed of a Chairperson and four members, each of whom is appointed for a non-renewable seven-year period. In addition, a Secretary General, appointed by the Minister of Industry upon recommendation from the Chairperson of the Authority, is responsible for overseeing operations. The work of the Authority is divided between several separate directorates coming under headings including: basic industry and energy, food and pharmaceuticals, manufactu-ring and transport and communications.


16.08. Complaints and investigationsSection 12 of the Act confers on the Authority the right to initiate investigations in certain defined

circumstances. According to its provisions, the Authority may receive complaints from public autho-rities or other interested parties, including consumer organizations. Furthermore, the Authority may

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instigate general investigations on its own initiative or at the request of the Minister for Trade and Industry or the Minister of State Shareholdings in certain areas of business where it appears com-petition is being impeded. Upon receipt of a complaint, the Authority shall analyze the information in its possession and conduct an investigation to ascertain whether there has been anticompetitive conduct pursuant to Sections 2 and 3 of the Act.

Section 14(2) of the Competition Act provides that the Authority may ask undertakings and indi-viduals to supply any information in their possession and disclose any relevant documents. Where it deems necessary, the Authority may carry out on-site inspections of an undertaking’s books and records and make copies of company documents. The Authority may seek the assistance of the Guardia di Finanza (Customs and Excise Police) or any other Government agency during the course of its inspection. It also has the right to consult experts on any matter of relevance to the investiga-tion. The rules of procedure in relation to competition law investigations are set out in Presidential Decree No 217 of 30 April 1998.

16.9. Proceedings before the authorityIn the event of an alleged breach of Sections 2 or 3, the Authority must notify the undertakings

concerned that an investigation is being opened. Parties under investigation are entitled to make representations and to see any documents relating to the investigation that are not confidential. They are sent a Statement of Objections at least 30 days before the end of the investigation in which the alleged infringements are presented. Parties may make submissions during the course of the investi-gation, and at the conclusion of the investigation they are summoned to the final hearing before the Authority.

By Decree Law 223/2006, the Italian Competition Authority was empowered to accept commit-ments offered by the undertakings (Section 14 ter of the Competition Act).

The Italian Competition Authority has issued a Note regarding procedures for applying the new Section 14 ter of the Competition Act available on its website.

16.10. interim reliefDecree Law 223/2006 converted, with modifications, by Law No 48 of 4 August 2006 introduced

into the Competition Act a new Section 14 bis on interim measures providing that:“In urgent cases where there is a risk of serious, irreparable damage to competition, the Authority

may, where a cursory examination reveals the existence of a contravention, decide ex officio that inte-rim measures must be adopted.”

A notice regarding the implementation of the new Section 14 bis is available on the website of the Italian Competition Authority.

16.11. Enforcement by ordinary courtsIn addition to the Competition Authority, the Italian national courts also have a role in the enfor-

cement of competition law. Annulment proceedings, claims for damages and petitions for emergency measures relating to infringements of the provisions of Titles I to IV must be filed before the Court of Appeal having jurisdiction over the district.

C. Sanctions

16.12. Cease and desist orders Where a breach of the competition rules is established, the Authority may order the undertakings

concerned to remedy the infringement and impose a fine. In cases of repeated non-compliance with the Authority’s orders, an undertaking may be ordered to suspend its activities for up to 30 days.


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16.13. FinesThe Law No 57 of 5 March 2001 brought about changes in the area of fines. Section 15 of the

Competition Act now provides that the Authority may impose fines of up to 10% of an undertaking’s annual turnover. This means that the fines imposed for violations of the act will be higher than in the past.

Where an undertaking fails to refrain from an anticompetitive practice after being ordered to do so by the Authority, a fine of up to 10% of its turnover may be imposed. Alternatively, where a fine has already been imposed, that fine may be doubled, up to a maximum of 10% of the undertaking’s annual turnover (Section 15).

16.14. LeniencyDecree Law 223/2006 converted, with modifications, by Law No 248 of 4 August 2006 has intro-

duced a new subsection 2-bis in Section 15 containing the following provision:“The Authority, in conformity with EU law, will use a general provision of its own to define the

cases in which, based on assistance by companies under investigation in ascertaining infringements of competition rules, the fine may either not be levied or may be reduced in cases foreseen by EU law”.

The Italian Competition Authority has by its Resolution No 16472 dated 15 February 2007 adop-ted a Notice on the non-imposition and reduction of fines (which was later modified by Resolution No 21092 of May 6,2010).

Pursuant to Paragraph 2 of the Notice, “The Authority shall not impose the fines provided by section 15(1) of Law No 287/90 for infringements of section 2 of Law No 287/90 or Article 81 of the EC Treaty [now 101 TFEU], to the undertaking who is the first to submit voluntarily to the Authority information or evidence as to the existence of an agreement pursuant to paragraph (1) of this Notice, provided that the following cumulative conditions are met:

a) in the opinion of the Authority, with reference to the nature and the quality of the elements submitted by the applicant, such information or evidence is decisive for the finding of an infringe-ment, possibly through a targeted inspection;

b) the Authority did not already have sufficient information or evidence to prove the alleged infringement;

c) the other conditions attached to leniency pursuant to paragraph (7) of this Notice are met”.According to Paragraph 4 of the Notice, “Undertakings which provide the Authority with evi-

dence of an infringement pursuant to paragraph (1) of this Notice may qualify for a reduction, nor-mally not exceeding 50%, of the fines which would otherwise be imposed under section 15(1) of Law No 287/90 for infringements of section 2 of Law No 287/90 or Article 81 of the EC Treaty [now 101 TFEU]. In order to qualify, the submitted evidence must significantly strengthen, by its very nature or its level of detail, the evidence already in the possession of the Authority, thereby appre-ciably contributing to the Authority’s ability to prove the alleged infringement. The other conditions attached to leniency pursuant paragraph (7) of this Notice must also be met”.

Paragraph 5 of the Notice sets out the criteria that the Italian Competition Authority will take into account “in order to determine the appropriate level of reduction of the fine” which are listed as follows:

“a) the timeliness of the cooperation provided by the undertaking, in relation both to the stage of the proceedings and the level of cooperation provided by other undertakings;

b) the evidentiary value of the material submitted”.Pursuant to Paragraph 7 of the Notice, an applicant for leniency must cumulatively fulfill the

following conditions:“a) the applicant must immediately end its involvement in the alleged cartel following its appli-

cation pursuant to paragraph (8) of this Notice. However, the Authority can request or allow the undertaking not to suspend some of its activities in the agreement, whenever this is deemed neces-sary to preserve the integrity of the Authority’s inspections;

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b) the undertaking must cooperate fully and on a continuous basis with the Authority throughout the proceedings, and in particular it must:

- promptly provide the Authority with all relevant information and evidence that came into its possession;

- remain at the Authority’s disposal to answer promptly to any request that may contribute to the establishment of the relevant facts;

- take any action to ensure that its current employees - and, as far as possible, its former employees - can be summoned and heard by the Authority if necessary;

- refrain from destroying, altering or concealing any relevant information or evidence;- refrain from disclosing to anyone the fact or the content of a leniency application before the

Authority has notified the statement of objections pursuant to Section 14 of Presidential Decree No 217 of 30 April 1998, unless otherwise agreed by the Authority;

c) when contemplating the filing of a leniency application, the undertaking must not inform anyone of such intention, except other competition authorities”.

D. appeals

16.15. appeals against decisions of the Competition authorityAppeals against administrative measures fall within the exclusive jurisdiction of the administra-

tive courts. Such appeals must be filed before the Latium Regional Administrative Court in Rome (Tribunal Amministrativo del Lazio). Further appeals from such decisions can be brought before the Supreme Administrative Court, the Council of State (Consiglio di Stato).

Section 2 MERGERS


16.16. ContextMergers are regulated under Sections 5-8 and Sections 16-19 of the Italian Competition Act.

Mergers that satisfy certain thresholds will fall within the scope of the Act. In recent years, there has been a dramatic increase in the number of concentrations notified to the Italian Competition Authority reflecting a greater awareness among Italian companies of the importance of the merger control rules.

Section 20 of the Competition Act was amended by Law No 262/2005 and by Section 2 of Legislative Decree No 303 of 29 December 2006. It now contains special provisions regarding insu-rance companies and banks. In cases involving mergers in insurance companies, according to Section 20(4) of the Competition Act, the Italian Competition Authority must wait to hear the opinion of Istituto per la Vigilanza sulle Assicurazioni Private e d’Interesse Collettivo (ISVAP), “which shall be issued within 30 days of receiving the documentation on which the measure is based. If the opinion is not issued within 30 days, the Authority (…) may adopt the measures for which it is empowe-red. The deadline for the procedure for which the opinion is requested shall be suspended until the Competition Authority receives the opinion of ISVAP, or at all events until the expiry of the deadline by which this opinion is required to be submitted”.

In relation to operations to acquire the control of banks, pursuant to Section 20(5) of the Competition Act, the Italian Competition Authority assesses the competitive status of the market, and the Italian Central Bank evaluates the existence of good and prudent bank governance. Pursuant to Law No 262/2005, these two authorizations become part of a single final act, which is to be issued within 60 days of the submission of the required information to the relevant authorities.

According to Section 8, undertakings which by law are entrusted with the operation of services of general economic interest or which operate on the market in a monopolistic situation are not subject


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to the Competition Act. However, prior notification must be given to the Authority of the incorpo-ration of such undertakings or of the acquisition of a controlling interest in such undertakings.

16.17. Concept of concentration The Act defines a concentration as occurring in three situations: when two or more undertakings

merge, or when one or more persons already controlling one or more undertakings acquire direct or indirect control of the whole or part of one or more undertakings (whether through the acquisition of shares or assets, by contract or by any other means), or when two or more undertakings create a joint venture by setting up a new company. Under Section 5.3, operations (e.g. joint ventures) which have as their main object or effect the coordination of the actions of independent undertakings do not constitute concentrations.

16.18. thresholdsNotification of a concentration is required prior to implementation where certain thresholds for

turnover are met. These figures are adjusted each year to take account of inflation. Notification is required where the combined domestic turnover of the parties involved exceeds EUR 474 million, or where the total domestic turnover of the target party exceeds EUR 47 million.

In the case of banks and insurance companies, this figure is set at a tenth of the bank’s resources or of the premiums received by the insurance company.

Pursuant to Section 26 of the Legislative Decree No 28 of January 22, 2004, prior notification is required “whenever in any one of the main towns within film distribution zones (Rome, Milan, Turin, Genoa, Padua, Bologna, Florence, Naples, Bari, Catania, Cagliari and Ancona) an under-taking would hold a market share larger than 25 percent of the turnover from film distribution to cinemas and, simultaneously, more than 25 percent of the operating movies theatres”.

16.19. Control criteriaSection 6 of the Act prohibits mergers that create or strengthen a dominant position on the do-

mestic market with the effect of appreciably eliminating or restricting competition on a lasting basis. In order to assess the anticompetitive effect of a concentration, the Authority takes into account factors such as the possibilities of substitutability of a product available to suppliers and users, the market position of the undertakings concerned, the access conditions to supplies or markets, the structure of a relevant market, the competitive conditions of the domestic industry, barriers to entry of competing undertakings on a specific market and the evolution of supply and demand for the relevant goods or services.

The Council of Ministers may, at the proposal of the Minister for Trade and Industry, establish general criteria to be followed by the Authority when waiving merger prohibitions in cases relating to the process of European Integration where major general interests of the national economy are involved. Where concentrations involve entities or undertakings from countries that do not protect the independence of bodies, or do not impose clauses having effects similar to those in relation to acquisitions by Italian undertakings or entities, or that apply discriminatory provisions, the Prime Minister may within 30 days of the notification and acting on a resolution of the Council of Ministers, prohibit the concentration on the grounds that it is contrary to essential national economic interests.

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ii. Enforcement


16.20. the Competition authorityThe Italian Competition Authority is solely responsible for the supervision and control of mergers.

16.21. the GovernmentAlthough the Competition Authority generally has complete authority over the control of concen-

trations, it informs the Minister for Trade and Industry of the concentrations under investigation. Section 25 of the Act grants the Government certain powers in circumstances where the national interest is considered at stake.


16.22. Merger notificationSection 16 of the Act provides that concentrations must be notified to the Authority if the aggre-

gate of the turnover in Italy of all of the undertakings concerned exceeds the established thresholds (see above). The pre-merger notification form specifies instances in which undertakings are not obliged to submit notification. This includes: transitional acquisitions of shares in firms by banks or financial institutions, cooperative joint ventures and intra-group mergers. There is no requirement to notify mergers involving parties that do not carry out an economic activity or mergers that do not affect domestic markets. As of 1 January 2013, the filing fee for merger notifications is eliminated. Companies will have to pay an annual fee regardless of any notification or pending case before the authority. The new annual fee for 2013 must be paid in advance by 30 October 2012.

16.23. Proceedings before the Competition authority Section 16.4 of the Act provides that the Competition Authority has 30 days to decide whether

or not to conduct an investigation into a proposed merger pursuant to the provisions of Section 14. Where it receives notification of a concentration that does not require investigation, the Authority shall inform the Prime Minister and the Minister for Trade and Industry of its conclusions on the matter within thirty days.

During its investigation, the Authority may order the undertakings concerned not to implement the concentration pending its decision.


16.24. Conditions and commitments - DivestitureWhen a merger is deemed to create or strengthen a dominant position with the effect of elimina-

ting or restricting competition, the Authority may prohibit it. If the concentration has been imple-mented before being authorized, the Authority may require measures to be taken in order to restore conditions of effective competition. Alternatively, the Authority may authorize the merger upon condition that measures are taken to prevent anticompetitive effects.

16.25. FinesUndertakings that fail to comply with the prior notification requirements may be fined up to one

per cent of their turnover in the previous financial year.


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The implementation of a concentration in violation of a prohibition, or the failure to comply with the Authorities’ orders aimed at restoring effective competition, is punishable by a fine from one to ten per cent of the turnover of the undertakings concerned.

The Italian Competition Authority may fine anyone who refuses or fails to provide the informa-tion or exhibit the documents without justification during the investigations, by an amount of up to EUR 25,822 rising to EUR 51,645 in the event that they submit untruthful information or docu-ments, in addition to any other penalties provided by current legislation.

D. appeals

16.26. appeals against decisions of the authorityAppeals against decisions of the Authority regarding mergers fall within the exclusive jurisdiction

of the administrative courts. They must be filed, within 60 days of notification of the decision, before the Latium Regional Administrative Court.

16.27. appeals against decisions of the regional administrative CourtAppeals against decisions of the Latium Regional Administrative Court must be filed before the

Council of State.


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17.01. ContextCompetition law in Latvia is governed by the Latvian Competition Act (“the Competition Act”)

adopted on 22 April 2004, replacing the former Latvian Competition Act of 1 January 2002. The Competition act has since been modified by several amendments (13 March 2008, 14 November 2008, 18 June 2009 and 1 December 2009). It brings Latvia’s competition legislation more into line with EU rules in the area. The Competition Act encompasses all anti-competitive arrangements (restrictive agreements and abuses of dominance) and unfair competition. A special regulation deals with State aids.

In the wording of Section 18 of the Competition Act, “Unfair competition is activity the result of which violates normative acts or the fair practice of business activity and has created, or could create, the prevention, restriction or distortion of competition.” Section 18(3) lists the following behavior as being potentially unfair:

ChaPtEr 17

LatVia





C. Abuses of dominanceAbuse of a dominant position 17.05Abuse of a dominant position in the retail markets 17.06


II. Enforcement

A. Enforcement authoritiesThe Competition Council (Konkurences Padome) 17.08The Executive Directorate 17.09


C. SanctionsCease and desist orders 17.14Fines 17.15

D. AppealsAppeals against decisions of the Competition Council 17.16

Section 2 Mergers




Proceedings before the Competition Council 17.22B. Conditions/Sanctions


C. AppealsAppeals against decisions of the Competition Council 17.25

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- imitating a legal name or distinctive marks thereby misleading clients as to the identity of the market operator;

- imitating a name, packaging etc., thereby misleading clients as to the origin of the goods in question;

- supplying false information as regards the situation or products of a competitor;- acquiring and using a third party’s business secrets without its consent;- negatively interfering with competitors’ employees.

17.02. ScopeThe Competition Act applies to acts between undertakings that are based in Latvia, as well as the

activities of foreign undertakings which have an effect on the national market.The provisions of the law apply to both natural and legal persons doing business in Latvia, as well

as to any form of registered or unregistered group of undertakings. The Competition Act also applies to State bodies, local authorities and local Government institutions, although only where such insti-tutions are acting in the context of a private law relationship.


17.03. the prohibitionSection 11 of the Competition Act prohibits all agreements between undertakings which have as

their object or effect the prevention, restriction or distortion of competition in any goods or services within the territory of Latvia. When a restrictive agreement is prohibited, it is considered null and void (Section 11(1)).

Included under this heading are agreements which:- fix prices; - limit or control production, markets, technical development or investment; - share markets or supply sources; - attach supplementary obligations to commercial contracts which have nothing to do with the

subject of the contracts; - determine the participation or non-participation in competitions or auctions or concern the

provisions for such actions (inactions), except for cases when the competitors have publicly announced their joined tender and the purpose of such tender is not to hinder, restrict or distort competition;

- apply dissimilar conditions to equivalent transactions with other undertakings, thereby placing them at a competitive disadvantage; or

- force a competitor to leave the market or render the entry of a potential competitor into the relevant market difficult.

Section 11(4)(1) of the Act provides that the Cabinet of Ministers may issue regulations accor-ding to which individual agreements, decisions and concerted activities of undertakings need not be notified if their impact on competition is insignificant. However, it would appear that no de minimis regulation in this area has been adopted.

17.04. ExemptionsWhere an agreement has anticompetitive effects and is considered contrary to Section 11(1) of

the Competition Act, it may still be beneficial to the economy and therefore merit an exemption from the prohibition. Section 11(2) of the Competition Act outlines the circumstances in which the Competition Council may, upon application, grant an exemption, namely where it determines that the agreement:


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- promotes improvements in the production or sale of goods; and - promotes economic progress, thereby benefiting consumers. - does not impose terms on the undertakings involved that are not indispensable to attaining its

objectives; and- does not afford the undertakings involved the possibility of eliminating competition in respect

of a substantial part of the products or services in question.Markets participants, prior to entering into an agreement, as well as prior to the entry into effect

thereof, are entitled to submit to the Competition Council a notification regarding the relevant agree-ment.

According to Section 11(4)(2) of the Competition Act, the Cabinet of Ministers may adopt regu-lations exempting certain groups of agreements, decisions and concerted activities of undertakings from the prohibition set out in Section 11(1).

The following Regulations have notably been adopted pursuant to the current Competition Act, on 29 September 2008:

-Regulation No 797 on the Non-subjection of Certain Vertical Agreements to the Prohibition of the Agreement Specified in Section 11, Paragraph One of the Competition Act;

-Regulation No. 798 on the Horizontal Co-operation Agreement Exemption from the Agreement Prohibition Specified in Section 11, Paragraph one of the Competition Act;

The Competition Act contains transitional provisions concerning regulations adopted pursuant to former Competition acts.


17.05. abuse of a dominant positionA former Act of 1997 defined a dominant position as the exceptional economic position of a

market participant whose market share exceeds 40%, thereby allowing it to act independently of its customers or competitors to an appreciable extent.

The Competition Act of 2002 changed these provisions, putting Latvian law more in line with EU rules. Section 13 of the current Competition Act provides that any market participant who is in a dominant position is prohibited from in anyway abusing that position in the territory of Latvia. As in Article 102 TFEU, Section 13(1) gives a non-exhaustive list of behavior that can be considered as abusive:

- refusing to enter into transactions with other market participants or amending the provisions of a transaction without an objectively justifiable reason;

- restricting the amount of production, the sale of goods, or market or technical development without an objectively justifiable reason and to the detriment of consumers;

- directly or indirectly imposing unfair purchase or selling prices or other unfair trading provisions;- imposing supplementary obligations that have no connection with the subject of the contract on

contracting parties;- applying dissimilar conditions in equivalent contracts with other trading partners, thereby

placing them at a competitive disadvantage.

17.06. abuse of a dominant position in the retail marketsA new concept of dominance in the retail markets has been introduced into Latvian law by several

amendments to the Competition Act adopted on 18 March 2008.According to Section 13(2) of the Competition Act, an undertaking would be considered domi-

nant on a retail market, if having regard to its purchasing power and the dependence of the suppliers in the relevant market, the undertaking has an ability to apply or force, directly or indirectly, on

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suppliers unfair or unreasonable terms and conditions or payments, and it may prevent, restrict or distort competition on any relevant market in Latvia for a sufficiently long period of time.

Section 13(2) of the Competition Act contains a list of abuses of dominant position on a retail market, which is an exhaustive list, contrary to the list of abuses of Section 13(1). These abuses concern prohibited behaviors relating to the return of products, payments, penalties, etc.

This new concept of abuse of dominant position on a retail market comes in addition to the general prohibition of abuse of dominant position. Therefore, where a behavior could be prosecuted both under the prohibition of Section 13(1) (general abuse of dominant position) and under the new concept of Section 13(2), it will be prosecuted as a breach of the general prohibition of abuse of a dominant position and as such, it will be subject to the highest penalties.

D. State aid

17.07. ContextThe Competition Act does not contain any provision regarding State aids. Latvian State aid

management system can be found in the law on Control of Aid in Commercial Activity (hereinafter the “Aid Control Law”) in force since January 2003.

The Aid Control Law which has been amended on several occasions (1 April 2004, 19 October 2006, 11 October 2007, 3 July 2008 and 8 April 2009) introduces the provisions of the principal European Directives and Regulations in the area of State aid into Latvian law.

Latvian State aid control procedures are applicable to State aid measures in all sectors except where the aid is planned or is provided for activities concerning agricultural products which are referred to in Annex 1 of the Treaty, fishery products, as well as forestry, except in the cases specified in the Aid Control Law.

Several regulations dealing with specific procedural and technical aspects of the Aid Control Law have been adopted by the Cabinet of Ministers and deal with the declaration of small and medium size enterprises, granting and gathering data on de minimis aid, etc.

The central role is allocated to the Latvian Ministry of Finance. The Aid Control Law defines the responsibility of the Ministry of Finance to carry out initial assessments of planned aid programs and individual aid projects before their notification to the European Commission. This applies also to amendments planned for existing aid programs and individual aid projects planned under EU block exemption regulations. The Ministry sends notifications regarding information associated with aid programs or individual aid projects to the European Commission. The Ministry of Finance also sends summary information to the Commission regarding aid which has been provided in accor-dance with the conditions in Commission Regulation No. 68/2001, No. 70/2001, No. 2204/2002, No. 363/2004, No. 364/2004 and No. 1628/2006 and other Commission Regulations issued on the basis of Council Regulation No. 994/98. Finally, the Ministry of Finance prepares an annual report on aid provided for commercial activities.

ii. Enforcement


17.08. the Competition Council (Konkurences Padome)The Competition Council is established pursuant to Section 4 of the Competition Act. The

composition and the functioning of the Competition Council are specified in the Competition Act and in Regulation No 795 “By-law of the Competition Council” (adopted on 29 September 2008). It has the power to administer competition law and investigate breaches thereof. The Council is under the supervision of the Ministry for the Economy. It is composed of its Chairperson and two other


235

members appointed for a five-year term by the Cabinet of Ministers on the recommendation of the Minister for the Economy.

The duties of the Competition Council include inter alia, implementing measures designed to prevent infringements of competition rules; informing the public of competition issues; and coope-rating, where required, with foreign competition authorities (Section 6).

The Competition Council is entitled to take a decision if not less than two members of the Competition Council have voted in favor of it (Section 5(6).

Competition Council’s decisions are binding on market participants and shall be implemented voluntarily.

17.09. the Executive DirectorateThe Executive Directorate, formerly known as the Competition Bureau, is a division of the

Competition Council. The role of the Executive Directorate, pursuant to Section 9 of the Competition Act, is that of a secretariat for the Competition Council with duties including: the examination of submissions received by the Competition Council; the carrying out of investigations into possible infringements of the law; and the preparation of draft Competition Council decisions on ending infringements under the law and imposing fines on parties deemed liable.


17.10. Complaints and investigationsThe Executive Directorate may decide to conduct investigations into alleged breaches of the

Competition Act on its own initiative, upon receipt of a notification or pursuant to complaints of parties that have a vested interest in the matter. Persons that have suffered or could suffer harm as a result of the alleged breach of the Competition Act are considered as having a vested interest, as are persons actually involved in such a breach. Interestingly, Section 8(6) of the Competition Act speci-fically provides that the Cabinet of Ministers or the Minister for the Economy or any other person may not issue any instructions to the Competition Council as regards the initiation of investigations or the adoption of decisions.

After receipt of the submission, the Competition Council has to take a decision regarding the initiation or non-initiation of a case not later than 30 days after the receipt of the submission. The Competition Council may refrain from initiating a case if the information contained in the submis-sion is incomplete, if additional information has not been submitted in the time period specified by the Competition Council or in the presence of a minor violation (substantial harm to competition has not been caused or cannot been caused thereby (Section 23(4)).

Similarly, according to Section 7(3) of the Competition Act, “The Competition Council, when deciding on the initiating of a case or when taking a decision in the case that has been initiated, is entitled to determine whether the actions taken by the market participant have caused or have the capacity of causing detrimental effect to competition”.

In carrying out its investigative duties, the Executive Directorate may request any information that it deems necessary from any person, including information containing business secrets (Section 9(5)(1). The officers of the Executive Directorate have important powers of investigation (Section 9) and are entitled to inspect and make copies of undertakings’ documents.

Section 9.3 provides that an official of the Executive Directorate shall notify every person in rela-tion to whom investigatory activities are performed of his or her rights when commencing the said activities. These rights are mentioned in Section 9.3(2) and include the right:

- to be present, to express his or her comments and requests;- to use the assistance of a counsel or any other type of legal aid;- to propose that the information to be provided be assigned the status of restricted access information;

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- to become acquainted with the procedural action report; and- to submit a complaint regarding the action of the official of the Executive Directorate to the

Chair of the Competition Council.Section 23 of the Competition Act states the information which has to be included in the

complaint submitted to the Competition Council. The complaint must contain documentarily justi-fied information regarding:

- the persons involved in the possible violation;- the evidence on the possible violation;- the norms of the Competition Act which have possibly been violated;- the measures which have been performed to terminate the violation prior to the receipt of the

submission by the Competition Council.

17.11. Proceedings before the Competition CouncilAfter the initiation of a case, the Competition Council first collects the information necessary for

the adoption of a decision.Section 27 of the Competition Act states that “The Competition Council shall take a decision

within six months from the day of initiation of a case”. If, due to objective reasons, it is not possible to observe this six months time period, the Competition Council may extend it for a period up to one year (from the day of the initiation of a case).

The Competition Council may also extend the six months time period by a justified decision if prolonged fact-establishing is required.

The undertakings concerned with the process may have access to the case file at any time during the investigation, express their own point of view and submit additional information (Section 26(7)).

The Competition Council may terminate the proceedings if the market participants offer commit-ments that prevent the restriction of competition.

17.12. interim reliefPursuant to Section 30, where there is evidence of a possible infringement of European Union

competition law and non-termination of this infringement may cause significant and irreversible harm to competition, the Competition Council may take interim measures.

By decision, the Competition Council may require market participants to perform specific activities or prohibit specific activities within a specified time period. A decision regarding interim measures is in effect until the moment wihen a final decision in the case is no longer able to be contested.

Interim measures may be appealed before an administrative district court within one month from the day they come into effect. The court must examine the application within 14 days. However the appeal does not suspend the effect of the decision.

17.13. Enforcement by ordinary courtsPursuant to Section 21, violations of the Competition Act give rise to compensation for losses

caused to undertakings or parties to a contract.

C. Sanctions

17.14. Cease and desist ordersThe Competition Council must try to achieve the cessation of a breach of the Act through nego-

tiation before notifying the breach. If the breach has not ceased, the Council then takes a decision on cessation.


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17.15. FinesIf the Competition Council considers that a violation of Section 11(1) of the Competition Act

was committed by the market participants under investigation, it may impose a penalty of up to 5% of their net turnover during the previous financial year, but in any case not less than 250 lats (EUR 357 - Section 12(2)). Where the fine is imposed pursuant to Section 12(3) of the Competition Act, the maximum and minimum are doubled, with a ceiling of 10% of the turnover, and a lower limit of 500 lats (EUR 715).

If the legally imposed obligations have not been complied with, the Competition Council is entit-led, inter alia, to increase the fines specified in Section 12(2) and (3) up to the maximum amounts prescribed in those two Paragraphs.

According to Section 14 of the Competition Act, as regards cases of abuse of dominance, the amounts of the fines that can be imposed vary with the type of abuse committed and whether it is a first-time violation or not (Section 14 (1), (2) and (3). For example, for any first time violation of the prohibition of Section 13(1) (abuse of a dominant position), the Competition Council is allowed to impose upon market participants a fine up to 5 per cent of their net turnover for the previous financial year each, but not less than 250 lats (EUR 357) each. Concerning the violation of the new concept of abuse of domi-nant position on a retail market, market participants can be fined up to “only” 0.05 per cent of the net turnover for the previous financial year each, but not less than 250 lats (EUR 357) each.

Where an undertaking refuses to comply with a decision of the Council, the penalty may be increased to 10% of the undertaking’s annual turnover, but the fine shall be not less than 500 lats (EUR 715) each.

According to Paragraph 4 of Section 14, “The Cabinet shall issue regulations regarding the proce-dures by which fines are specified […]”. This has been done with Regulation No 796 (adopted on 29 September 2008) regarding “Procedures for the Determination of Fines for the Violations provided for in Section 11 Paragraph 1 and Section 13 of the Competition Act”.

D. appeals

17.16. appeals against decisions of the Competition CouncilDecisions of the Competition Council may be appealed before the courts, in accordance with the

procedures prescribed in regulatory enactments, within a period of one month from the day when such decision came into effect. This applies to all decisions taken by the Competition Council except for those regarding the initiation of a case and the extension of the time period for the taking of a decision.

Section 2 MERGERS


17.17. ContextMerger control is regulated under Sections 15-17 of the Competition Act.

17.18. Concept of concentrationPursuant to Section 15(1) of the Act, a concentration is defined as:- the merging of two or more independent undertakings in order to become a single market player, - the joining of one undertaking to another;

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- the situation where one or more legal or natural persons temporarily or permanently acquire decisive influence over another undertaking, or acquire the assets (a portion thereof or all the assets) of another undertaking or the right to use them.

17.19. thresholdsPursuant to Section 15(2) of the Act, a concentration must be notified to the Competition Council

where the participants’ combined turnover during the previous financial year was not less than 25 million lats (EUR 35,7 million) and the total market share of the participants in the merger in the particular market exceeds 40%.

Under certain circumstances, the notification shall not be submitted, for example if the turnover of one from two participants in the merger for the previous financial year has not exceeded 1,5 million lats (EUR 2,09 million).

17.20. Control criteriaAccording to Section 16(3), mergers which create or strengthen a dominant position or which

significantly prevent, restrict or distort competition in a market are prohibited.

ii. Enforcement


17.21. Merger notificationParties to a merger reaching the thresholds set out in Section 15(2) of the Competition Act must

notify their operation to the Competition Council. Regulation No 800 on the Procedures for the Submission and Examination of a Full-form and Short-form Notification regarding a Merger of Market Participants, in addition to providing rules on calculation of the undertakings’ turnover and on the content of a short-form and full-form notification, determines who has to perform this noti-fication obligation.

The Competition Act declares that a merger for which prior notification is mandatory but which has not been notified is illegal.

If none of the participants in the merger operates in a single relevant market or in a market that is vertically related thereto, or if the combined market share of the market participants involved in the merger does not exceed 15%, parties are entitled to submit a short-form merger notification (Section 15 §2(2). However, the Competition Council is entitled to require a full form notification if it deter-mines that additional investigation of the notification is necessary.

Section 16(6) of the Competition Act authorizes the Council to issue a decision on a merger which was not notified even though it should have been.

17.22. Proceedings before the Competition CouncilRegulation No 800 (adopted on 29 September 2008) prescribes the procedures by which a full-

form and short-form notification regarding a merger of market participants shall be submitted and examined by the Competition Council, as well as the conditions for the calculation of turnover of market participants.

A concentration may not be implemented or be registered in the Latvia Enterprise Registry before the Competition Council has issued a decision on the proposed merger.

In accordance with Section 16(1) of the Competition Act, the Competition Council must approve, approve with conditions, refuse to allow a concentration or decide to launch an investigation within one


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month from the receipt of a full-form or short-form notification report. If, within 45 days from the date of submission of the merger notification report, a market participant does not receive a response from the Competition Council, the operation is presumed to have been approved (Section 16(1).


17.23. Conditions and commitments - DivestitureThe Competition Council may prohibit a merger. Merger operations requiring authorization

do not take effect unless the Competition Council has adopted a favorable decision. According to Section 16(3), the Council may however permit mergers that create or strengthen a dominant posi-tion or that restrict competition by setting binding conditions for the merging parties.

17.24. FinesSection 17(1) of the Competition Act provides that failure to notify a concentration may lead

to the imposition of a fine of up to 1,000 lats per day (EUR 1,430), counting from the day when notice should have been given. Where a concentration is implemented contrary to the decision of the Competition Council, the latter may also impose a daily fine of 1,000 lats (EUR 1,430) on the offending undertaking (Section 17(2) of the Act).

It should be noted that the payment of a fine does not release the market participants concer-ned from the obligation to fulfill the provisions of the Competition Act and the decisions of the Competition Council.

C. appeals

17.25. appeals against decisions of the Competition CouncilSection 8(2) of the Competition Act provides that decisions of the Competition Council may be

appealed before the Regional Administrative Court in accordance with the prescribed legal proce-dures within a period of one month from the day when such decision came into effect.


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18.01. ContextCompetition control is a relatively recent phenomenon in Lithuania. Following the restoration of

independence, the Lithuanian Parliament enacted a Competition Act in 1992, which was to pave the way for the more complete Competition Act of 1999 (“the Competition Act”). The Competition Act was then significantly amended in 2004 in order to reflect the entry of Lithuania in the European Union, and in particular the modifications brought byRegulation No 1/2003. The purpose of the Act is to promote freedom of competition for all undertakings in Lithuania. The provisions of the Act are drafted in conformity with EU competition law.

Sections 16 and 17 of the Act deal with the question of unfair competition. Pursuant to Section 16, undertakings are “prohibited from performing any acts contrary to honest business practice if

ChaPtEr 18

LithUania







II. Enforcement

A. Enforcement authorityThe Competition Council (Konkurencijos taryba) 18.08



D. AppealsAppeals against actions of investigating officers 18.17Appeals against decisions of the Council 18.18

Section 2 Mergers




Proceedings before the Competition Council 18.24B. Conditions/Sanctions


C. AppealsAppeals against a decision of the Competition Council 18.27

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such acts may be detrimental to the competitive potential of another undertaking.” Such acts include, inter alia:

- unauthorized use of a name or mark;- the supply of misleading information;- disclosure of commercial secrets;- passing off;- look-alikes.Paragraph 4 of Section 16 specifies that persons who have acquired knowledge of commercial

secrets as a result of their work or relations with a company cannot use this information within a period of one year after the end of their contractual relations or employment, unless an agreement or a law provides otherwise. Section 17(4) authorizes the Competition Council to impose sanctions, following an investigation, for acts of unfair competition which violate the “interests of a number of undertakings or consumers.” A fine of up to 3% of the gross annual income in the preceding business year may be imposed for acts of unfair competition investigated by the Competition Council.

18.02. ScopePursuant to its terms, commercial activities among undertakings, which have as their object or

effect the prevention or restriction of competition within the national market are prohibited. These prohibitions not only apply to domestic undertakings but also to undertakings based in foreign States, where their activities have a negative anticompetitive effect on the Lithuanian market (Section 2(2)).

The Lithuanian Competition Act has a broad scope of application embracing all sectors of the Lithuanian economy both public and private. The Act defines an ‘undertaking’ as an enterprise, combination of enterprises, institution, organization, or other legal or natural person which perform or may perform economic activities in the Republic of Lithuania or whose acts affect or whose inten-tions, if realized, could affect economic activity in Lithuania.


18.03. the prohibitionUnder Section 5 of the Competition Act, agreements between undertakings which have as their

object or effect the prevention, restriction or distortion of competition are prohibited, including agreements which:

1) directly or indirectly impose prices of certain goods or other conditions of purchase or sale;2) share markets on a territorial basis, according to groups of suppliers or buyers or in any other way;3) fix production or sale volumes for certain goods, as well as restrict technical development or

investment;4) apply dissimilar conditions to equivalent transactions with individual undertakings, thereby

placing them at a competitive disadvantage;5) subject the conclusion of contracts to the other parties’ acceptance of supplementary obligations

which, according to their commercial nature or purpose have no direct connection with the subject of the contract.

The wording of the Section is very similar to the wording of Article 101 TFEU. Agreements listed in subparagraphs (1) to (4) will always be regarded as restricting competition when concluded between competitors (Section 5 (2)).

Resolution of the Competition Council No 1 of 13 January 2000 as amended by Resolution No 1S-172 of 9 December 2004 sets out market share thresholds below which agreements, because of their de minimis effect, are not judged as in breach of the Competition Act. Under the terms of the Resolution, the Section 5 prohibition will not apply where the aggregate share of the relevant market


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held by the undertakings does not exceed 10% for horizontal and mixed agreements and where the individual market shares of the undertakings does not exceed 15% for vertical agreements.

In case the restrictive effect is caused by the cumulative impact of agreements imposing similar restrictions upon competition, the Section 5 prohibition will not apply where the relevant market shares do not exceed 5%.

The de minimis rules do not apply to hard-core restrictions.

18.04. ExemptionsSections 6 and 8 provide for individual exemptions with respect to agreements prohibited pursuant

to Section 5. The Competition Act only provides for exemptions to apply to agreements that have beneficial effects, i.e. where such agreements promote technical or economic progress, or improve the production or distribution of goods, with substantial benefits for consumers. In assessing whe-ther agreements may be considered exempt, the authorities should also require that the agreement: imposes no restrictions on the activities of the contracting parties which are not necessary for rea-ching the purported objectives, and does not afford the contracting parties the possibility to restrict competition on a large share of the relevant market.

Agreements complying with the conditions set forth above are effective from the moment of their conclusion without any prior decision by the Competition Council. In case of a dispute concerning the compliance with these conditions, the burden of proof rests upon the party to the agreement benefiting from the exemption.

The Competition Council also has the right to pass regulations and define groups of agreements as well as conditions under which the agreements shall be deemed to be in compliance with the conditions of Section 6.

By its Resolution No 1S-132 of 2 September 2004, the Competition Council established that agreements satisfying the conditions laid down by the European Council and Commission for the granting of a block exemption should be considered as satisfying the conditions of Section 6 of the Competition Act and repealed all the existing regulations granting block exemptions. Since then, the various European Union block exemption regulations apply to internal agreements. However, when applying the conditions provided by EU law, amounts of annual turnover in Euros are reduced by ten times.


18.05. Dominant positionAccording to Section 3(11), an undertaking holds a dominant position where, on a relevant mar-

ket, it does not directly face competition, or its position enables it to act independently of competi-tors, customers and consumers. According to the Act, for undertakings not engaged in retail trade, a presumption of dominance is said to exist where an undertaking has a market share of not less than 40%, or where, a group of three or less undertakings jointly holds 70% or more of the relevant mar-ket. In the same way, for undertakings engaged in retail trade, a presumption of dominance is said to exist where an undertaking has a market share of not less than 30%, or where a group of three or less undertakings jointly holds 55% or more of the relevant market.

Competition Council Resolution No 52, adopted on 17 May 2000 provides more “Explanations on the Competition Council concerning definition of the dominant position”.

18.06. abusePursuant to Section 9 of the Act, holding a dominant position is not in itself prohibited, only the

abuse of such position is. Section 9 of the Act sets out a list of some of the main practices which may constitute an abuse, such as:

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244

- directly or indirectly imposing unfair purchase prices or other unfair trading conditions;- limiting trade, production or technical development to the prejudice of consumers;- applying dissimilar conditions to equivalent transactions with certain undertakings, thereby pla-

cing them at a competitive disadvantage;- subjecting the conclusion of contracts to other parties’ acceptance of supplementary obligations which

by their nature or according to business usage have no connection with the subject of such contracts.Section 9 is modeled on Article 102 TFUE; as with EU law, the prohibition against abuse of

dominance is absolute and prohibited behavior will not be exempted.

D. State aid

18.07. ContextSince Lithuania’s accession to the European Union, the European Commission has taken over the

competence of assessing the compatibility of State Aid with Union Law. Pursuant to Section 48 of the Competition Act, the Competition Council solely acts as a coordi-

nating institution in matters related to State aid subject to the European Union State aid rules, and in particular:

performs expert examinations of State aids projects subject to Union Law;submits conclusions and recommendations to State aid providers;accumulates information on State aid granted to undertakings of Lithuania and submits such

information to the European Commission and other concerned institutions.

ii. Enforcement


18.08. the Competition Council (Konkurencijos taryba)In Lithuania, the duty to ensure that all undertakings comply with the Act lies with the Competition

Council. Pursuant to Section 19 of the Act, the Competition Council controls the compliance of undertakings and public and local authorities with the provisions of the Act and investigates cases in this regard.

The Council is made up of a Chairperson and four members nominated by the Prime Minister and appointed by the President for a period of six years (Section 20).


18.09. Complaints and investigations Pursuant to Section 23 of the Act, the Competition Council has the right to investigate where it

considers that an infringement of the Act may have taken place. Pursuant to Section 24 of the Act, the right to request an investigation into restrictive practices is vested in:

- undertakings whose interests have been violated due to restrictive practices;- entities of public administration;- associations and unions representing the interests of undertakings and consumers.The Competition Council has the right to start investigations on its own initiative upon adoption

of a justified decision to this effect (Section 24(2)).The Council must examine a request for investigation within 30 days of its submission. However,

under Section 25, the Council may refuse to start an investigation if:


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- the facts of the case indicate that there is no substantial damage to competition;- the investigation of the facts shows that the case does not fall within the jurisdiction of the

Competition Council;- the facts specified in the application have already been investigated and a resolution has already

been adopted on the issues;- the applicant has failed to provide, within the time period set by the Competition Council, the

data and documents required to initiate an investigation;- there are no data available allowing to reasonably suspect an infringement of the law.Section 26 provides that the officers of the Competition Council are empowered to:- enter and carry out checks in any premises, land and means of transport used by the undertaking;- enter and carry out checks in other premises, land and means of transport, if reasonable suspicion

arises that documents or any other evidence necessary for investigation are held in such premises, land or means of transport;

- examine and take away copies of its books, documents and records;- seal the premises used by the undertaking wherein documents are held;- get oral and written explanations from persons connected with the activity of the undertakings

under investigation; - get data and documents or copies thereof relating to the economic operations of the undertaking

under investigation from other undertakings, as well as from entities of public administration;- carry out an inspection (audit) of the economic activity of the undertaking;- seize any documents and Sections having evidential value in the investigation of the case;- enlist the assistance of specialists and experts in carrying out the investigation;- acting in compliance with the procedure established by law, use technical means for investigation

purposes;Search and seizure must be authorized by a warrant of a Higher Administrative Court judge.An investigation may not last more than five months from the date it was launched. The Council

may extend this period by up to three months by way of a reasoned decision (Section 25(6)).

18.10. Proceedings before the Competition CouncilUpon completion of an investigation, the officers of the Competition Council may either decide

to discontinue their investigation or propose further proceedings. Pursuant to Section 30, interested parties must be informed of this decision in writing. Where it has been decided to continue the proceedings, the Council holds a hearing at which the applicant, the alleged offending undertaking, other undertakings demonstrating a direct interest in the matter, and designated experts (Section 35) all have the right to be heard. The Council may subsequently adopt a resolution imposing penalties, closing the case or remanding it for further investigation.

18.11. interim relief In certain cases where irreparable harm is threatened, and if there is sufficient evidence that an

infringement of the Competition Act has taken place, the Competition Council may, pursuant to Section 28, take interim measures where this is deemed necessary in order to prevent substantial or irreparable damage from being caused to other undertakings or to the public interest. Interim relief may take the form of ordering an undertaking to cease an illegal activity, or ordering performance of certain actions where the failure to perform would result in serious damage to other undertakings or to the public interest. Before adopting a resolution to apply interim measures, the Competition Council must give the undertaking an opportunity to provide explanations.

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18.12. Enforcement by ordinary courtsSection 46 provides that an undertaking which commits acts prohibited under the Act may be

held liable for harm caused to another undertaking or to an individual.

C. Sanctions

18.13. Cease and desist ordersUpon establishing that an undertaking has infringed the Competition Act, the Competition Council

has the right to place the undertaking under an obligation to end the illegal activity and to take steps to restore the previous situation or to eliminate the consequences of infringement (Section 40).

Upon authorization of the Highest Administrative Court judge, the Council may adopt a resolu-tion ordering suspension of the following: import/export operations, bank operations, or a license to engage in certain activities (Section 40(2)).

18.14. FinesWhere it has been shown that an undertaking has engaged in conduct prohibited under the Act,

Section 40 provides that the Competition Council may impose fines on undertakings. Pursuant to Section 41, a fine up to 10% of the gross annual income on the preceding business year may be imposed for acts such as being involved in a prohibited agreement, or abusing a dominant position.

A fine up to 1% of the gross annual income in the preceding business year may also be imposed for providing incorrect or incomplete information or for not providing information required over the course of an investigation and for obstructing Competition Council officers in the performance of their duties.

Daily penalties of up to 5% of the average gross daily income in the preceding business year may be imposed for each day the infringement continues.

In setting the amount of the fine to be imposed, the Council shall have regard to the gravity of the infringement, the duration of the infringement, the role of the undertaking in the infringement, as well as any other mitigating or aggravating circumstances (Section 42).

The payment of a fine must be made within 3 months after the date of receipt of the Council resolution. It may be postponed by up to six months upon justified request (Section 44).

18.15. Leniency Under Section 43, an undertaking party to a restrictive agreement may be exempted from the

imposition of fines where the undertaking provides information prior to the beginning of an inves-tigation, is the first of the undertakings involved to do so, and cooperates with the Competition Council in the course of the investigation. However, if the undertaking has been the initiator of the infringement, the leniency regime does not apply. Section 43 is implemented by Resolution No 1591 of 6 December 2004 of the Government of the Republic of Lithuania and Resolution No 1S-27 of 28 February 2008.

18.16. Criminal sanctionsFailure to respect the provisions of the Competition Act is only considered to create an adminis-

trative liability as regards infringing undertakings (Section 45).


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D. appeals

18.17. appeals against actions of investigating officersUnder Section 27(1) illegal actions of investigating officers can be appealed to the Competition

Council. A complaint must be brought within 10 days of the date of the acts which are the subject of the appeal. The Competition Council must take a decision within 10 days of receipt of the compliant.

18.18. appeals against decisions of the CouncilThe Highest Administrative Court is the body competent to hear appeals against decisions of the

Council. Parties must lodge their complaint within 20 days of notification of the Council’s decision. According to Section 38 of the Act, undertakings as well as other persons who believe that their rights under the Competition Act have been violated are entitled to appeal. The appeal does not work to suspend the decision of the Council, unless the Court decides otherwise.

Section 2 MERGERS


18.19. ContextMergers are governed by Chapter 2, Section 3 of the Lithuanian Competition Act. Only concen-

trations meeting certain defined thresholds are considered to fall within the scope of the Act.

18.20. Concept of concentration According to Section 3(14) a concentration is deemed to arise where:- two or more previously independent undertakings merge into a new undertaking, or are joined

to an undertaking which continues its operations, or - one and the same natural person or persons already controlling one or more undertakings, or one

or more undertakings, by agreement, jointly set up a new undertaking or gain control over another undertaking by acquiring an enterprise or part thereof, all or part of the assets of the undertaking, shares or other securities, voting rights, by contract or by any other means. Following Competition Council Resolution No 45 of 27 April 2000 on “approval of the procedure for submission and exa-mination of notification on concentration and of calculation of aggregate turnover” as amended by Resolution No 1S-4 of 13 January 2005, a joint venture which has all the functions of an auto-nomous economic entity, is engaged in regular operations, and has sufficient financial and other resources to perform its activity on a lasting basis is considered as a fully-functioning joint venture. A fully-functioning joint venture is considered as an undertaking participating in a concentration (point 6.1.2 of the Resolution).

18.21. thresholdsThe Act applies to concentrations where the combined aggregate income of the undertakings

concerned in the business year preceding concentration is more than 30 million litas (EUR 8,688,600) and the aggregate income of each of at least two undertakings concerned in the business year prece-ding concentration is more than 5 million litas (EUR 1,448,000).

If a party to a concentration is a foreign undertaking, its aggregate turnover is calculated as the sum of income received from the sale of its products in the Lithuanian market. The Act contains special provisions for calculating the annual income of credit institutions, insurance and invest-

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ment undertakings (Section 10(3)). Indications on aggregate turnover calculation can be found in Resolution No 45.

18.22. Control criteriaWhere the parties implement a concentration without notifying the authorities or without getting

their permission, they may be required under Section 40(1-2) of the Act, where the concentration leads to the establishment or strengthening of a dominant position or a substantial restriction of competition in a relevant market, to carry out actions restoring the market to its situation prior to the merger operation or eliminating the consequences thereof.

ii. Enforcement


18.23. Merger notificationSection 11 of the Act provides that an intended concentration must be notified to the Competition

Council prior to its implementation and after the submission of a proposal to conclude the agreement, or the acquisition of the rights of ownership or of disposal of certain assets. The notification must include comprehensive details relating to the concentration. Unless they are informed to the contrary, parties to the concentration must await the Council’s decision before taking any action to carry out the merger (Section 12). Notifications are submitted according to a standard form, annexed to the Competition Council Resolution No 45 of 27 April 2000 “on approval of the procedure for submission and examination of notification on concentration and of calculation of aggregate turnover”.

The notification includes registration data of the undertakings participating in the concentration, reasons, objectives and description of the concentration, annual financial accounts of each participating undertaking for the last three preceding years, purchase and sale volumes of each participating under-taking for the last three preceding years, information on the enterprises owned by the undertakings concerned, and data on the competitors, purchasers and suppliers of the participating undertakings.

Where a concentration occurs in the banking or other credit institutions sector, the Bank of Lithuania’s finding must also be supplied to the Competition Council.

Following the publication of the notification in Lithuania’s Official Journal, interested parties may send comments to the Competition Council. According to Resolution No 45, interested parties are, besides the notifying parties, natural or legal persons whose interests are affected by the concentra-tion and public and local authorities.

18.24. Proceedings before the Competition CouncilIf a notification does not comply with the legal requirements, the Council informs the under-

takings concerned. It then must issue its decision within one month (Phase 1) either allowing the concentration, permitting its implementation subject to certain conditions and obligations, refusing its implementation or ordering further investigation. Pursuant to the provisions of Section 15, where there are reasonable grounds to believe that a concentration has been put into effect in violation of the provisions of the Act or in breach of the resolutions of the Council, further investigations may be carried out following the rules of Sections 31-37 of the Act (Phase 2).

The Competition Council then has three months to examine the concentration notification. In the event that the Council fails to issue a decision after those four months, the concentration may proceed without fear of penalty.

Pursuant to Section 22 of the Act, the undertakings concerned have a right to protection of com-mercial secrets.


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18.25. Conditions and commitments – DivestitureAfter the control, the Competition Council carries out its appreciation and may ask the notifying

party to:- respect or perform specified conditions and commitments before realizing the concentration, or

alternatively- restore market conditions to their pre-concentration situation.The Competition Council may authorize specific restrictions of activity which are directly related

and necessary to implement the concentration.

18.26. FinesThe Council may impose fines on undertakings found to be in breach of these provisions. Such

undertakings may receive fines up to 10% of the gross annual income in the preceding business year for infringements of the Act such as carrying out a notifiable concentration without comple-ting prior notification; continuing to implement a concentration without respecting the suspension period, infringing the conditions or mandatory obligations relating to the concentration. According to Section 41(3) of the Competition Act, fines up to 1% of the gross annual income in the preceding business year may be imposed for providing incorrect or incomplete information or for not providing information in a concentration notification.

Finally, a daily fine up to 5% of the average gross daily income may be imposed for failure to pro-vide notification of an intended concentration within the legal time-limits.

C. appeals

18.27. appeals against a decision of the Competition CouncilAppeals against decisions of the Competition Council may be filed before the Highest

Administrative Court. A written complaint must be lodged within 20 days of the delivery or the publication of the Council’s decision. Unless the Highest Administrative Court decides otherwise, the appeal has no suspensive effect.

Upon investigation of the complaint, the court may: - reject the complaint;- revoke the Council’s resolution or its individual Sections; - remand the case to the Council for supplementary investigation; - amend the resolution on concentration, on the application of penalties or on interim measures.


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ChaPtEr 19

LUxEMBOUrG




19.01. ContextCompetition law in Luxembourg is governed by the Act of 17 June 1970 on Restrictive Commercial

Practices, which was last amended in 1993. Due to the relatively small size of the Luxembourg eco-nomy, very few competition act cases have been handled.

Competition law in Luxembourg was reformed by the Act on competition of 17 May 2004. This act replaced the Commission on Restrictive Commercial Practices by a Competition Council with responsibility for applying the competition laws of both Luxembourg and the EU. Procedural rules and the provisions on fines (leniency) were amended in order to bring Luxembourg’s competition regime more in line with EU rules.

The Act of 17 May 2004 was recently repealed and replaced by the Act of 23 October 2011 on competition, published in the Mémorial (official gazette) of 28 October 2011. The new Act comes into force on 1 February 2012. It reorganizes the Luxembourg competition authority and grants it more autonomy and greater powers. In addition it brings the leniency procedure introduced by the 2004 act into line with the leniency program developed by the European Competition Network. It governs restrictive agreements and abuse of dominance but does not contain any provisions explicitly relating to merger control.





C. Abuse of dominanceThe prohibition 19.05


The Competition Council (Conseil de la concurrence) 19.06




Section 2 Mergers

Absence of national legislation 19.15

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19.02. Scope The 2011 Act is applicable throughout the territory of Luxembourg and aims to prohibit the acti-

vities of undertakings that have an anticompetitive effect on the domestic market. Article 1 of the Act stipulates that it applies “to all activities of the production and distribution of

goods and the provision of services including those of entities governed by public act”.A number of sectors of activity in Luxembourg (electricity, gas, postal services, telecommunica-

tions, financial services and insurance) are governed by regulatory authorities. Article 19 of the Act authorized the competition authority to require from the sectoral regulators, and all other public authorities and establishments, information, including confidential information, necessary for the establishment of an infringement of the rules of competition.


19.03. the prohibitionArticle 3 of the 2011 act prohibits all agreements between undertakings, decisions of associations

of undertakings and concerted practices having as their object or effect the prevention, restriction or distortion of competition on a market. The agreements, decisions or concerted practices prohibited by virtue of these provisions are automatically void.

19.04. ExemptionsIndividual or block exemptions may be granted to undertakings without it being necessary for

undertakings to first notify their agreements. To benefit from such exemption undertakings must verify that the conditions for exemption are met.

Article 4 of the 2011 Act provides for an exemption for agreements or category of agreements, decisions or category of decisions by associations of undertakings or concerted practices or category of concerted practices which “contribute to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit”.

Article 6 authorizes the competition authority to withdraw the benefit of the block exemption in application of Article 29(2) of EC Regulation No 1/2003.


19.05. the prohibitionThe prohibition in Article 5 on the abuse of dominance mirrors the provisions of Article 102

TFEU. Article 5 prohibits “any abuse by one or more undertakings of a dominant position” in the market and goes on to provide a non-exhaustive list of practices that may constitute abuse.

ii. Enforcement


19.06. the Competition Council (Conseil de la concurrence)The 2004 Act established two competition bodies: the Competition Council (Conseil de la concur-

rence), an independent administrative authority invested with decision-making, investigative and sanctioning powers; and the Competition Inspectorate (Inspection de la concurrence), a department acting under the Ministry of Economy and Foreign Trade, responsible for investigating anticompe-


253

titive practices. The 2011 Act has merged those two bodies; now the Council alone can investigate and sanction practices restricted under Articles 3 to 5 of the 2011 Act. However, in application of the principle of the separation of powers of the investigative and the judicial function, Article 7(4) of the 2011 Act provides that the advisor in charge of the investigation “does not share, in the cases in which he assumed these functions, the deliberations made and the decisions taken by the Council […]”.

The Council is a collegial body composed of four councilors, i.e. a President, three councilors and five substitute councilors appointed by the Grand Duke for a seven-year renewable period (Article 7).


19.07. Complaints and investigationsProceedings may be initiated either by the Council ex officio or at the request of any natural or legal

person showing a legitimate interest in such an application, or at the request of the Minister (Article 10). The investigators designated by the Council are police officers. They carry out all inspections necessary for the establishment of the infringements at issue by the undertakings or association of undertakings (searches and seizures etc.).

The Council may require that the undertakings and association(s) of undertakings disclose all information relevant to the accomplishment of its task (Article14). In addition it is empowered to collect statements (Article15) and appoint experts (Article18).

19.08. Proceedings before the Competition Council When the councilor appointed to lead the investigation finds elements liable to fall within the

scope of competence of the Competition Council, he/she sends a registered letter with acknowledg-ment of receipt to the undertakings concerned stating the objections brought against them (Article 25). They then have a period of at least one month to respond. In not less than two months following the notification of the objections, the parties attend a hearing before the Council to present their point of view on the objections raised against them (Article 26).

If the Council intends to adopt a decision ordering the infringing behavior to cease and where the undertakings concerned offer commitments able to address the competition concerns of the designa-ted councilor, the Council may decide to discontinue proceedings and to make those commitments binding on the undertakings. The proceedings may however be re-opened subsequently if the under-takings fail to comply with their commitments or if the decision is based on inaccurate, incomplete or misleading information provided by the parties (Article 13).

19.09. interim reliefFrom the date of referral to the Council, where the practice complained of is liable to cause serious

and irreparable harm to economic public policy or to the complainant undertaking, the President may, after hearing the parties, order interim measures. The measures must be proportionate to the situation observed and strictly limited to what is necessary to address the emergency. They may also include coercive fines (Article 12).

19.10. Enforcement by ordinary courtsAs in other EU Member States, third parties that consider that they have suffered a loss as a result

of an unactful agreement or conduct in breach of the competition rules have a right to seek damages in the judicial courts Magistrates Court (Tribunal de paix), District Court (Tribunal d’arrondisse-ment), Court of Appeal (Cour d’appel) and Court of Cassation (Cour de cassation).

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C. Sanctions

19.11. Cease and desist ordersWhere, in the context of adversarial proceedings, the Council finds the existence if a violation of

the provisions of Articles 3 to 5 of the 2011 act, it may, by way of decision, order the undertakings concerned to put an end to those violations (Article 11).

19.12. FinesThe decision may include a fine for an anticompetitive practice of up to a maximum of 10% of

the worldwide turnover before tax of the undertaking concerned. By application of Article 20, the Council may impose on undertakings having provided information which is inaccurate, incomplete or late, coercive fines of up to 5% of their turnover. The Council may also, pursuant to Article 22, impose a coercive fine of up to 5% of average daily turnover in order to compel the undertaking concerned to cease the infringing behavior, provide within the required time complete information required by way of decision, or to force it to comply with the commitments given.

19.13. Leniency Article 21 allows the Council to exempt, in part or in full, any undertaking cooperating in the

investigation having participated in a restrictive agreement. However, total immunity is excluded for undertakings having forced other undertakings through their economic power, or by any other means, to participate in the alleged cartel.

D. appeals

19.14. appeals against decisions of the Competition CouncilArticle 28 of the 2011 Act provides for the right of appeal to the unlimited jurisdiction of the

Administrative Tribunal (Tribunal administratif) against Council decisions rendered as a full bench. Judgments of the Administrative Tribunal in matters relating to competition may be appealed to the Administrative Court (Cour administrative).

Section 2 MERGERS

19.15. absence of national legislationThe Luxembourg Act on Restrictive Commercial Practices does not contain any provisions expli-

citly relating to merger control. Where the EU act thresholds are satisfied, or upon request by the Luxembourg authorities (the so-called “Dutch clause”, see Article 22, EC Merger Regulation No 139/2004), mergers may be controlled under European act. Alternatively, a merger that creates or strengthens a dominant position could potentially be controlled under the 2011 Act by applying Article 5 relating to abuse of a dominant position. Likewise, a merger agreement with an anticom-petitive effect could also potentially be controlled pursuant to Article 3 of that Act.


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ChaPtEr 20

MaLta




20.01. ContextThe Competition Act of 1994 (also known as Chapter 379 of the Laws of Malta referred to as “the

Competition Act”) regulates competition in Malta and provides for the establishment of fair conditions for trade and commerce. Since its adoption, the law has been amended on a number of occasions, by Acts XXVIII of 2000, Act IV of 2003 and III of 2004 and most recently in 2007 by a Legal Notice No 425 thereby bringing it more into line with EU competition law provisions. Indeed, in this context, the White Paper on Fair Trading of November 1993 provides that “the Act is intended to create a modern system consistent with the European Union rules establishing a framework for effective competition in








The Office for Fair Competition (Uffiėėju tal- Kompetizzjoni Ġusta) 20.08The Commission for Fair Trading (Kummissjoni għall-Kummerė Ġust) 20.09

B. Enforcement proceedingsComplaints and investigations 20.10Proceedings before the Office for Fair Competition and the Commission for Fair Trading 20.11Interim relief 20.12Enforcement by ordinary courts 20.13

C. SanctionsCease and desist orders 20.14Criminal sanctions and administrative fines 20.15

D. AppealsAppeals against decisions of the Office for Fair Competition 20.16

Section 2 Mergers




Proceedings before the Office for Fair Competition 20.22

B. Conditions/SanctionsConditions and commitments - Divestiture 20.23Criminal sanctions 20.24

C. AppealsAppeals against the decision of the Director of the Office for Fair Competition 20.25

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Malta.” Maltese competition law applies to agreements that restrict competition, to abuse of a domi-nant position and to concentrations. Special legislation deals with State aids.

20.02. ScopeThe Act covers all restraints on competition which have the effect of restricting competition

within Malta or any part thereof. The Act applies to all sectors of the Maltese economy; however, the Minister of Commerce may exempt activities from the provisions of the Act that are carried out by public undertakings or other undertakings that have been granted special or exclusive rights (Section 30).


20.03. the prohibitionRestrictive agreements are defined as agreements between undertakings or any decision by an

association of undertakings and any concerted practice between undertakings which have as their object or effect the prevention, the restriction or the distortion of competition in Malta. The pro-hibition applies to both horizontal and vertical agreements and restrictions on both inter and intra brand competition.

Section 5(1) of the Competition Act sets out a list of prohibited practices, including agreements that: - directly or indirectly fix purchase or selling prices or other trading agreements or;- limit or control production, markets, technical development or investment or; - share markets or other supply sources or;- impose the application of dissimilar conditions to equivalent transactions with other parties

outside such agreement, thereby placing them at a competitive disadvantage or;- make the conclusion of contracts subject to acceptance by the other parties of supplementary

conditions, which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Pursuant to Section 5(2) of the Competition Act, agreements or decisions prohibited in accor-dance with Section 5(1) that restrict competition are considered ipso jure null and unenforceable.

Section 6(1) of the Competition Act provides that certain agreements having only a negligible or minimal effect on competition, i.e. agreements of minor importance, are not considered as coming within the scope of the prohibition. There are no stated thresholds. Pursuant to Section 6(2), in determining the minimal effect of an agreement “consideration shall be given to all relevant circums-tances including the aggregate share of all the undertakings concerned”. However, under Section 6(3), the exception set out in Section 6(1) is not deemed to apply where “in a relevant market com-petition is restricted by the cumulative effect of parallel networks of similar agreements established by several undertakings”.

20.04. ExemptionsIn its Section 5(3), the Competition Act explicitly provides for the exemption of certain agree-

ments falling within the prohibition set out in Section 5(1), namely where such agreements contri-bute to improving the production or distribution of goods or to promoting technical and economic progress while allowing consumers a fair share of the resulting benefit. However, such agreements must not impose restrictions which are not indispensable to the attainment of these objectives on the undertakings concerned, nor afford them the possibility of eliminating or significantly reducing competition in respect of a substantial part of the products to which the agreement, decision or concerted practice refers.


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Individual exemptions under Section 8 may be given by the Minister, after consultation of the Director of the Office for Fair Competition following an application by the parties.

Exemptions under Section 8 of the Competition Act may also be granted through the adoption of block exemptions, i.e. exempting categories of agreements, decisions and concerted practices from the prohibition of Section 5. Block exemption regulations are adopted by the Commerce Minister upon consultation with the Director of the Office for Fair Competition. Block exemptions are lar-gely modeled on EU block exemptions. The following block exemptions have been adopted:

- on vertical agreements and concerted practices (No LN 271/01, which came into force on 1 November 2001 but was then allowed to expire;

- on horizontal agreements (No LN 175/02) of 2002;- on technology transfer agreements (No LN 176 of 2002) was then allowed to expire;- on research and development agreements (No LN 177 of 2002);- and on specialization agreements (No LN 178 of 2002).


20.05. Dominant positionUnder Section 9(1) of the Competition Act, any abuse by one or more undertakings of a dominant

position within Malta or any part of Malta is prohibited. As is the case under EU law, dominance in itself is not prohibited, merely its abuse.

The Commission of Fair Trading has quoted with approval the definition given to this concept by the European Court of Justice i.e. that dominance is defined as “a position of economic strength held by one or more undertakings which enables it or them to prevent effective competition being maintained on the relevant market by affording it or them the power to behave, to an appreciable extent, independently of its or their competitors, suppliers and ultimately of customers.”

An individual or collective market share of 40% or more is said to create a presumption of domi-nance under Section 9(3) of the Competition Act. However, depending on the specificities of the market, a market share of below 40% may also give rise to a finding of dominance.

20.06. abuseUnder Section 9(2) of the Competition Act, one or more undertakings is/are deemed to abuse of

a dominant position, where it or they, inter alia:- directly or indirectly impose an excessive or unfair purchase or selling price or other unfair tra-

ding conditions or;- charge prices which are below the average variable cost price of a product in order to drive rival

competitors out of the market or;- limit production, markets or technical development, thereby harming consumers or;- refuse to supply goods or services, indiscriminately in order to eliminate a trading party from the

market to the prejudice of consumers or;- apply dissimilar conditions, including price discrimination to equivalent transactions with dif-

ferent trading parties, thereby placing any or some of the trading parties at a competitive disadvan-tage or;

- make the conclusion of contracts subject to the other party’s acceptance of supplementary obli-gations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

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D. State aid

20.07. ScopeProvisions on State aids are not contained in the Competition Act. However, subsidiary legislation

No 325-07 of 30 April 2002 (Legal Notice 103 of 2002) is applicable.Section 3 of the Legal Notice 103 of 2002 mirrors Section 107 TFEU: State aid that distorts or

threatens to distort competition within the relevant market by favoring certain undertakings or the production of certain goods or the provision of certain services is prohibited.

Legal Notice 103 of 2002 also refers to the Business Promotion Act of 5 July 1988, amended in 2003, 2004 and in 2007. The monitoring of State aids is done by a special administrative body: the State Aid Monitoring Board, established under Section 57 of the Business Promotion Act further to Legal Notice 210 of 2004. Section 58 of the Business Promotion Act establishes the functions of the Board which are wide but, at the same time, not clearly defined.

ii. Enforcement


20.08. the Office for Fair Competition (Uffiėėju tal-Kompetizzjoni Ġusta)Section 3 of the Competition Act provides for the establishment of an Office for Fair Competition.

The Office, which is headed by a Director General, has the following functions: - to advise undertakings, associations of undertakings and the public on matters concerned with

fair trading practices and procedures under the Act and;- to advise and make proposals and recommendations to the Commerce Minister in relation to

any matter concerning the exercise of his functions under the Act and;- to carry out all the functions and duties assigned to it under this Act related to the investigation

determination and suppression of restrictive practices and;- generally to exercise the powers conferred upon it under the Act, and as may be assigned to it by

the Commerce Minister, within the context of the Act. The Office for Fair Competition is a government department which plays an essentially investigative

role but also monitors markets in Malta and advises the Commerce Minister in competition matters.

20.09. the Commission for Fair trading (Kummissjoni għall-Kummerė Ġust)Section 4 of the Competition Act provides for the Commission for Fair Trading. This Commission

is an independent administration tribunal made up of a Chairman and two other members. Members of the Commission are appointed by the President, on the advice of the Prime Minister,

for a renewable three-year term. The Chairman must be a Magistrate and the two other members, an economist and Certified Public Accountant. The Minister responsible for justice appoints a public officer to be secretary of the Commission The secretary has mutatis mutandis the same powers and duties as the Registrar of Courts, and takes instructions from the Chairman in all circumstances that the said registrar in accordance with the Code of Organization and Civil Procedure is to take instructions from a magistrate presiding a particular court.

The Commission has powers equivalent to the Civil Court and in coming to its decisions, the Commission is required to refer to the decisions and the interpretation given by EU competition authorities when applying equivalent EU competition law provisions.

Decisions of the Commission for Fair Trading are not appealable but they are reviewable on grounds of judicial review.


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20.10. Complaints and investigationsInvestigations by the Office for Fair Competition may be initiated ex officio, at the written request

of a complainant or at the request of the Commerce Minister. The decision to open an investigation is subject to review by the Commission for Fair Trading (Section 14 of the Competition Act).

Pursuant to Section 12(1) of the Competition Act, it is the duty of the Director of the Office for Fair Competition to ensure that the provisions of the Act are respected and “to gather information that may be necessary for him or the Commission to carry out their functions”. Thus, the Director has the power, in the course of an investigation, to request that any person furnish him with any information or document in his possession which he has reason to believe is relevant to the matter under investigation. However, this right to request documentation does not extend to the disclosure of information subject to a duty of professional secrecy (Section 12(3) of the Competition Act).

Where authorized under warrant issued by the Chairman of the Commission, the Director, for the purposes of investigations under Section 12, may “enter into and search any premises and any other place, or search any means of transport where he has reason to believe that information rela-tive to the investigation may be found, and in the course of any such search may seize any object or document, or order the non-removal of any object from any such premises”. In the course of any such investigations, the Director may request the assistance of the police (Section 12(6) of the Competition Act) and where the search involves a residential dwelling, a police officer with the rank of inspector or higher must accompany the Director.

Under Section 12(10) of the Competition Act, any information disclosed or found by the Director during an investigation “shall be secret and confidential”.

20.11. Proceedings before the Office for Fair Competition and the Commission for Fair trading

Under Section 13(1) of the Competition Act, if, after carrying out an investigation, the Director considers that the provisions of the Competition Act have been breached, the Director will draw up a report and serve a copy on the undertaking(s) concerned.

Pursuant to Section 12 A(2) of the Competition Act, this report is also sent to the Commission where “a serious infringement has taken place due to the gravity and duration of the agreement”. Thereafter, the Commission may declare the behavior to be contrary to the Competition Act.

20.12. interim reliefPursuant to Section 15(1) of the Competition Act, the Commission may order interim relief at

the request of the Director, or an undertaking or complainant acting through the Director, as regards behavior that is under investigation, if “it is urgently necessary to avoid a situation likely to cause serious, immediate and irreparable prejudice to the interests of any undertaking, or harm the general economic interest”.

When making any such request, the Director must supply the Commission with a reasoned report stating why such measures are necessary. A copy of the report must be sent to the undertakings involved.

Relief granted pursuant to Section 15 takes effect immediately and remains in force for a period of three months, renewable for up to a maximum period of one year.

20.13. Enforcement by ordinary courtsSection 27 of the Competition Act recognizes the right of third parties to bring an action before

the courts of civil jurisdiction concerning behavior in breach of Section 5 and/or Section 9 of the Competition Act. Where a party makes any such allegation, the court in question must, except where

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the allegation is accepted by the party(ies) concerned, stay the matter and refer it to the Commission for a decision on the substance of the allegation.

C. Sanctions

20.14. Cease and desist ordersUnder Section 13(1) of the Competition Act, “on issuing a decision finding an infringement under

article 12A(1), the Director shall cause a copy of the decision to be delivered on the undertaking or association of undertakings concerned by registered post or such other documented delivery as the Director may deem fit, and he may together with such decision issue a cease and desist order whereby he orders it or them, as the case may be, to cease and desist immediately from participating in such agreement, decision, practice or conduct, and, or a compliance order setting behavioural or structural remedies addressed to it or them, as the case may be, for the purpose of bringing the infringement to an immediate and effective end”.

Pursuant to Section 13(2) of the Competition Act, “The power to issue a cease and desist order or a compliance order in cases of infringements as defined in article 12A(2) [serious infringement] and (3) [infringement to EU law] shall rest solely with the Commission”.

20.15. Criminal sanctions and administrative finesBehavior by undertakings contrary to the provisions of the Competition Act is subject to penalties

which are criminal in nature. Under the provisions of the Competition Act, the Commission may declare acts to be illegal but only the criminal courts may impose fines.

This general rule does not prevent the Commission from imposing fines of an administrative nature where for example, a party fails to respect a cease and desist order. Under Section 21(1) of the Competition Act, where an undertaking comes within the prohibitions set out at Sections 5 and 9 respectively (or makes any act contrary to a cease and desist order or a compliance order), a fine of between 1% and 10% of the annual turnover of the undertaking(s) involved is imposed. However, this fine cannot be less than EUR 6, 988.12.

Furthermore, Section 22 A provides for a periodic fine of not less than EUR 232.94 and not more than EUR 2,329.37 for each day during which the offense persists.

Finally, pursuant to Section 23 of the Competition Act, any person who gives false information in the course of an investigation is punishable by a fine of not less than EUR 232.94 and not more than EUR 2,329.37 and/or to a period of imprisonment of between 3 – 6 months.

D. appeals

20.16. appeals against decisions of the Office for Fair CompetitionUnder Section 13(A) of the Competition Act, the undertaking(s) concerned may, within 15 days

of the notification of the decision issued by the Director, request him to submit that decision for review by the Commission. The Director is obliged to comply with such request.

Petitions for review do not, except under exceptional circumstances, suspend the Director’s decision.


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Section 2 MERGERS


20.17. ContextNo provision for the control of concentrations is included in the Competition Act. Instead, the

control of concentrations is carried out by way of a separate regulation, adopted pursuant to Section 32 of the Act, entitled Regulations on Control of Concentrations, LN 294 of 2002 (the Merger Regulation) as amended by LNs 299 of 2002 and 49 of 2007. A schedule regarding the concentra-tion notification form is annexed to the Merger Regulation.

20.18. Concept of concentrationUnder Section 2(d) of the Merger Regulation, a concentration is said to occur when:- two or more previously independent undertakings merge or;- one or more persons, already controlling at least one undertaking, acquire, whether by purchase

of securities or assets, by contract or by other means, direct or indirect control of the whole or parts of one or more other undertakings.

The creation of a joint venture that performs all the functions of an autonomous economic entity on a lasting basis is also considered to constitute a concentration. Under Section 4(3) of the Merger Regulation, to the extent that the creation of a joint venture constituting a concentration has as its object or effect the coordination of the competitive behavior of undertakings that remain inde-pendent, such coordination shall be appraised in accordance with the criteria of Section 5 of the Merger Regulation with a view to establishing the lawfulness of the operation under these provisions.

Moreover, as under EU law, a credit institution or an insurance company, the normal activities of which include transactions and dealings in equities for their own account, may, without giving rise to a concentration for the purposes of the Merger Regulation, temporarily hold equity securities which they have acquired in an undertaking with a view to reselling them, where they do not exercise the voting rights attached thereto for the purpose of determining the competitive behavior of that undertaking.

Pursuant to Section 2(e) of the Merger Regulation, control is defined as the possibility of exerci-sing a decisive influence on an undertaking, in particular:

- through ownership or the right to use all or parts of the assets of an undertaking or;- through rights or contracts which confer a decisive influence on the composition, voting or deci-

sions of the organs of an undertaking “provided that even persons or undertakings not holding such rights or entitled to such rights under the contract concerned are deemed to have acquired control if they have the power to exercise the rights deriving therefrom”.

20.19. thresholdsWhether occurring in Malta or outside Malta, the undertakings concerned are covered by the

Merger Regulation when in the preceding financial year the aggregate turnover in Malta exceeded EUR 2,329,373.40 and each of them had a turnover in Malta equivalent to at least 10 percent of the combined aggregate turnover of the undertakings concerned.

20.20. Control criteriaUnder Section 4 of the Merger Regulation, concentrations that might lead to a substantial lesse-

ning of competition in the Maltese market or part thereof are prohibited. In making this appraisal, the Director takes into account, inter alia:

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- “the need to maintain and develop effective competition on the Maltese market in view of, among other things, the structure of all the markets concerned and the actual or potential competi-tion from undertakings located either within or outside Malta;

- whether the business, or part of the business, of a party to the concentration has failed or is likely to fail;

- the nature and extent of development and innovation in a relevant market;- the market position of the undertakings concerned and their economic and financial power, the

alternatives available to suppliers and users, their access to supplies or markets, any legal or other barriers to entry, supply and demand trends for the relevant goods and services, the interests of the intermediate and ultimate consumers, and the development of technical and economic progress pro-vided that it is to consumers’ advantage and does not form an obstacle to competition”.

Under Section 4 (4), “Concentrations that bring about or are likely to bring about gains in efficien-cy that will be greater than and will offset the effects of any prevention or lessening of competition resulting from or likely to result from the concentration shall not be prohibited if the undertakings concerned prove that such efficiency gains cannot otherwise be attained, are verifiable and likely to be passed on to consumers in the form of lower prices, or greater innovation, choice or quality of products or services”.

ii. Enforcement


20.21. Merger notificationConcentrations meeting the thresholds must be notified to the Director of the Office for Fair

Trading within 15 days after the conclusion of the agreement or the announcement of the public bid, or acquisition of a controlling interest under Section 5(1) of the Merger Regulation.

Pursuant to Section 5(2) of the Merger Regulation, a concentration must be notified by “the per-son or undertaking acquiring control of all or parts of one or more undertakings, but where it consists of a merger or the acquisition of joint control it shall be notified jointly by the parties to the merger or by those acquiring joint control.”

The notification is then published by the Director in the Government Gazette and in local newspapers.Under Section 7(1) of the Merger Regulation, a concentration shall in principle not be put into

effect before its notification and until it has been declared lawful. However, pursuant to Section 7(3), the Director may grant a derogation from the obligation to suspend the concentration.

The filing fee is set at EUR 163.06.

20.22. Proceedings before the Office for Fair CompetitionUnder Section 9(1), a decision as to the compatibility of a concentration must be taken within 6

weeks from the receipt of a valid notification. This period is extended to two months where, after the notification of the concentration and not later than the end of the fifth week following receipt of the notification, the undertaking(s) concerned submit commitments alleviating the anticompetitive nature of the operation.

The simplified merger control procedure shall apply to categories of concentrations that are dee-med not to raise serious doubts as to their legality in terms of the provisions of the Merger Regulation.

Pursuant to Section 12 of the Merger Regulation, provision is made for a simplified procedure where:

- “two or more undertakings acquire joint control of a joint venture, provided that the joint venture has no, or negligible, actual or foreseen activities, within the territory of Malta because the turnover


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of the joint venture and/or the turnover of the contributed activities is less than EUR 698,812.02 in the territory of Malta and the total value of assets transferred to the joint venture is less than EUR 698,812.02 in the territory of Malta”.

- “two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking, provided that none of the parties to the concentration are engaged in business activities in the same product and geographical market, or in a product market which is upstream or downstream of a product market in which any other party to the concentration is engaged”;

- “two or more undertakings merge, or one or more undertakings acquire sole or joint control of another undertaking and two or more of the parties to the concentration are engaged in business activities either in the same product and geographical market and their combined market share is less than 15% or in a product market which is upstream or downstream of a product market in which any other party to the concentration is engaged and their combined market share is less than 25%”.

Where the Director of the Office for Fair Competition considers a concentration to come within one of the three cases listed above, he is required to “issue a short-form decision declaring the concentration lawful in terms of the provisions of these regulations within four weeks from the date of notification” (Section 12(4)).


20.23. Conditions and commitments - DivestitureThe Director of the Office for Fair Competition may condition his/her approval of the operation

on the undertakings’ compliance with certain conditions and obligations insuring that the underta-kings concerned comply with the commitments they have entered into (Section 6(2) of the Merger Regulation).

Where an illegal concentration has already been implemented, the Director may require the un-dertakings or assets brought together to be separated or the cessation of joint control or any other action that may be appropriate in order to restore conditions of effective competition (Section 8(4) of the Merger Regulation).

20.24. Criminal sanctions Failure to notify a concentration or supplying incorrect information in a notification application

or in response to a subsequent request for information is punishable by a fine of not less than EUR 232.94 and not more than EUR 2,329.37 and/or to a period of imprisonment of between 3 and 6 months (Section 23 of the Competition Act).

Undertakings that fail to comply with the conditions for a decision to lift the merger suspension, or with a decision allowing a concentration to proceed or put into effect a concentration which authorization has not been received, or undertakings that implement a prohibited concentration may be punished by a fine of that “shall not be less than six thousand and nine hundred and eighty-eight Euros and twelve cents (6,988.12)” (Section 21 of the Competition Act).

Finally, a periodic fine of not less than EUR 232.94 and not more than EUR 2,329.37 can be imposed for each day during which the offense persists i.e. continued failure to supply correct infor-mation in a notification application or in response to a subsequent request for information, failure to submit to an investigation ordered, failure to comply with the conditions for a decision to lift the merger suspension, or a derogation allowing a concentration to proceed or to apply the measures ordered by a decision of the Director (Section 14 of the Merger Regulation).

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C. appeals

20.25. appeals against the decision of the Director of the Office for Fair Competition Under Section 18(1) of the Merger Regulation, within 15 days of notification of the Director’s fi-

nal decision, the undertakings involved may refer the matter for review to the Commission. Pursuant to Section 18(2), the decision of the Commission is final.


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ChaPtEr 21

thE nEthErLanDS




21.01. ContextDutch competition law is regulated by the Competition Act of 22 May 1997, which came into

force on 1 January 1998 and replaced the 1956 Act on Economic Competition. The Act introduced a system closely linked to the European model, specifically as regards Articles 101 and 102 TFEU. The present Act has replaced the former system of judicial enforcement with a system of administra-tive enforcement primarily in the hands of the Dutch Competition Authority.





C. Abuse of dominanceThe prohibition 21.05Exemption 21.06


The Competition Authority (Nederlandse mededingingsautoriteit - NMa) 21.07

The Minister of Economic Affairs 21.08B. Enforcement proceedings

Complaints and investigations 21.09Proceedings before the Competition Authority 21.10Interim relief 21.11Enforcement by ordinary courts 21.12



Section 2 Mergers



The Competition Authority 21.21The Minister for Economic Affairs 21.22

B. Enforcement proceedingsMerger notification 21.23

Proceedings before the Competition Authority 21.24Proceedings before the Minister for Economic Affairs 21.25


D. AppealsAppeals against decisions pursuant to the Act 21.28Appeals against judgments of the District Court of Rotterdam 21.29

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21.02. ScopeThe Dutch Competition Act is broad in its scope, applying whenever restrictive agreements, deci-

sions, practices or the abuse of a dominant position have an effect in the Netherlands. This includes the activities of foreign undertakings that have an anticompetitive effect on the Dutch market.

Under Section 11 of the Competition Act, Section 6(1) is not applicable to agreements involving undertaking(s) entrusted with the operation of services of general economic interest, insofar as its application would prevent the execution of a “special task” entrusted to that undertaking. This excep-tion is very similar to that found in Article 106(2) TFEU.

An agreement is also excluded from the Section 6 prohibition where it were associated to a concen-tration and necessary for the implementation of the respective concentration (Section 10).

The statutory exemption for certain agreements that are subject to approval by another regulatory body (e.g. in the telecommunication sectors) was repealed on 1 January 2003.


21.03. the prohibitionSection 6(1) of the Act mirrors Article 101 TFEU and prohibits “agreements between under-

takings, decisions by associations of undertakings and concerted practices by undertakings which have the intention to or will result in hindrance, impediment or distortion of competition within the Dutch market, or on a part thereof ”. Unlike Article 101, Section 6(1) does not set out a list of anticompetitive practices.

Section 7 of the Act excludes de minimis agreements from the Section 6 prohibition. Agreements, decisions and concerted practices are considered de minimis if not more than eight undertakings are involved in the relevant agreement, concerted practice, or association of undertakings, and the com-bined turnover of these undertakings is not more than EUR 5,5 million where the core activity is the supply of goods, or EUR 1,1 million in all other cases. Alternatively, if the combined market share of the undertakings involved in the agreement, decision or concerted practice does not exceed 5%, and their combined turnover is not higher than EUR 40 million, they are also allowed to cooperate. The Board of the Competition Authority has discretion to apply the prohibition in Section 6 to an agree-ment that would ordinarily fall within the de minimis exclusion if, taking into account the nature of the relevant market, an agreement is nevertheless deemed to have a significantly detrimental effect on competition (Section 9).

Agreements and decisions which are prohibited pursuant to Section 6(1) are considered null and void (Section 6(2)).

21.04. ExemptionsCertain anticompetitive agreements may be individually exempted where they provide countervai-

ling benefits for competition (Section 15). The grounds for the granting of an individual exemption in Dutch law are the same as those set

out in Article 101(3) TFEU, namely the agreement must contribute to improving production or distribution or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and at the same time must not:

- impose on the undertakings concerned restrictions which are not indispensable to the attain-ment of the objectives in question;.

- allow the undertakings in question the possibility of eliminating competition in respect of a substantial part of the products or services in question.

Since 1 August 2004, the Act no longer provides for a block exemption mechanism similar to the block exemptions available in EU law.


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21.05. the prohibitionThe aim of Chapter 4 of the Act is to prohibit the abuse of a dominant position. Section 1(i)

defines a dominant position as one that permits one or more undertakings to prevent effective com-petition by allowing them to behave “to an appreciable extent independently” of their competitors, suppliers, customers and end users. As with EU law, the prohibition in Section 24(1) applies only to “abusing a dominant position”. However, the Act does not list the conducts that might be considered an abuse of dominance although Section 24(2) does specifically provide that the implementation of a concentration cannot be regulated as an abuse of dominance.

21.06. ExemptionSection 25(1) provides that the Board of the Competition Council may declare Section 24(1)

inapplicable to certain practices where applying the prohibition would prevent an administrative agency, or an undertaking entrusted by law, from providing a service of public economic interest.

ii. Enforcement


21.07. the Competition authority (Nederlandse mededingingsautoriteit - nMa)The duty to ensure that undertakings comply with competition rules lies with the Competition

Authority (Sections 2-3). The Competition Authority is governed by a Board of three Members (one of whom shall be the Chairperson) and is now an Autonomous Administrative Authority (AAA). The Board of the Authority is empowered to grant exemptions, supervise compliance with the Act, investigate infringements and impose penalties.

21.08. the Minister of Economic affairsUnder Section 4 of the Act, the Minister of Economic Affairs determines the remuneration and

other rules regarding the legal position of the members of the Board. The Minister also approves the “management rules” adopted by the Board. However, with its independent status of AAA, the Minister is no longer responsible for providing instructions to the Board. Nevertheless, it still re-ceives an annual report from the Competition Authority that he is required to notify both Houses (Section 5g).


21.09. Complaints and investigations The Competition Authority may open an investigation either on the basis of a request for an exemp-

tion, a complaint by a third party or on its own initiative. Pursuant to Section 50, the officials of the Competition Authority, as appointed in accordance with a decision of the Board, are responsible for supervising compliance with the provisions of the Act and the carrying out of investigations (Section 52). The investigation powers of the Competition Authority are set forth in Section 52 of the Act. Where an infringement of the Competition Act is suspected, officers are required to notify parties that there is no obligation to make a statement before asking them to do so (Section 53). To the extent reasonably necessary to exercise their powers under the General Administrative Law Act, officers are entitled to place business premises under seal (Section 54). Where necessary in the course of an inves-tigation, officials of the Competition Authority may seek assistance from the police.

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21.10. Proceedings before the Competition authorityAfter its investigation, if the Board reasonably suspects, upon completion of the investigation

that there has been an infringement of the Act and that an administrative fine or an order subject to periodic penalty payments should be imposed to this regard, the Board should draw-up a report (Section 59). Under Section 5.48 paragraph 1 of the General Administrative Act, the report should contain, inter alia:

- a statement of the facts and the identity of the undertaking to whom the infringement can be attributed;

- the statutory provision that has been infringed.A copy of the report is sent to the undertakings identified and where the undertaking is not

Dutch, the Authority is required “as far as is possible” to ensure that the undertakings receive the report in a language which that party understands (Section 5.49 of the General Administrative Act).

Until the moment that a decision has been made, an undertaking may apply to the Board for a decree declaring a commitment to be binding.

21.11. interim reliefPursuant to Section 83 of the Competition Act, the Board may impose an interim order inclu-

ding the imposition of periodic penalty payments if, in its provisional opinion, it is probable that the prohibition on restrictive agreements and abuse of dominance have been infringed and, in view of the interests of the undertakings affected by the infringement or in the interest of preserving actual competition, immediate action is required.

21.12. Enforcement by ordinary courtsClaims for damages based on the General Rules of Tort are heard by ordinary courts.

C. Sanctions

21.13. Cease and desist ordersIn the context of an infringement of Section 6(1) or 24(1), Section 56 provides that the Board may

issue a binding instruction to comply with the Act or an order subject to periodic penalties.

21.14. FinesA violation of the prohibition on restrictive agreements or of the prohibition on abuse of a domi-

nant position is punishable by a fine of not higher than EUR 450,000 or ten percent of the tur-nover of the undertaking or association of undertakings in the prior financial year (Section 57). Requirements for calculating turnover are set out in Section 377, Para 6, Book II of the Dutch Civil Code. As of 1 July 2007, the Competition Authority now refers to the New Dutch Fining Code pro-viding guidelines on the method of setting fines imposed pursuant to statutory provisions (Boetecode). In determining the level of the fine, the Board of the Competition Authority takes into account the seriousness and the duration of the offense. The fine is now set on the following formula: Starting point x seriousness factor (duration factor) + increase / decrease for additional circumstances. The Board will determine the starting point by reference to the relevant turnover or the total annual tur-nover of the undertaking that has committed the violation.

21.15. Leniency On 28 June 2002, the Competition Authority adopted new guidelines “in relation to the non-

imposition or reduction of fines in cases pursuant to Section 6 in conjunction with Sections 56, 57


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and 62 of the Competition Act” (Leniency Guidelines, Staatscourant 1 July 2002, No 122). With the publication of these guidelines, the Authority aims at promoting the detection of cartels. It is possible that a company, which is involved in a cartel, wishes to end its involvement in the cartel or has already ended its involvement and wishes to inform Competition Authority of the cartel, but is restrained from doing so for fear of high fine. To encourage such companies to notify the Authority of the existence and the activities of the cartel, the Competition Authority may promise the company that it will not impose a fine (fine immunity) or that it will reduce the fine which may be imposed under the Competition Act.

The undertaking which is the first to provide the Authority with information regarding the cartel which the Authority did not have prior to its disclosure, may apply for a fine immunity. If the Authority already had the information but the information provided has added value, the undertaking may apply for a 60-100% fine reduction. Finally, if the undertaking provides the Authority with added value infor-mation regarding the cartel before the Authority publishes a report pursuant to Section 59 of the Act, the undertaking may apply for a 10 to 40% fine reduction. The guidelines define “added value informa-tion” as information on the basis of which the Authority can obtain evidence of an alleged violation of the Competition Act and which the Authority did not already have at its disposal.

D. appeals

21.16. appeals against decisions of the Competition authorityA ruling of the Competition Authority may be subject to an administrative appeal to the Board.

Thereafter a judicial appeal is possible before the Rotterdam District Court.

Section 2 MERGERS


21.17. ContextPrior to the enactment of the Competition Act on 1 January 1998, Dutch law contained no provi-

sions relating to the control of mergers. Up until then, the only text applicable to concentrations not having a Community dimension was Article 22(3) of the EC Merger Regulation No 4064/89, the “Dutch clause”, pursuant to which a Member State can request the European Commission to inves-tigate a concentration. Merger control now comes within the provisions of the Competition Act.

21.18. Concept of concentration Merger review is governed by Chapter 5 of the Competition Act, which draws a distinction

between three different types of concentration:- the merger of two or more previously independent undertakings,- the acquisition of direct or indirect control of the whole or parts of one or more other undertakings,- the establishment of a joint venture which performs all the functions of an autonomous econo-

mic entity on a lasting basis, and which does not give rise to coordination of the competitive behavior of the founding undertakings.

The term “control” is legally defined as the ability to exercise a decisive influence on the activities of an undertaking (Section 26).

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21.19. thresholdsOnly operations having a Dutch dimension must be notified to the Competition Authority prior

to implementation. This condition is met where the undertakings involved in the concentration have a combined worldwide turnover of more than EUR 113,450,000 and at least two of those underta-kings have achieved at least EUR 30 million each of their turnover in the Netherlands.

21.20. Control criteriaIn evaluating a concentration, the authorities consider whether a dominant position which signi-

ficantly restricts competition in the Dutch market or a part thereof could be created or strengthened as a result of the concentration (Section 41(2)). Where the Board has refused authorization for a concentration, the Minister for Economic Affairs has the authority to determine upon request that a license should nevertheless be granted where in the Minister’s view it is “necessary for serious reasons in the context of the general interest” (Section 47).

ii. Enforcement


21.21. the Competition authority Merger control is regulated by the Competition Authority, which, although it is an independent

body, is linked to the office of the Minister of Economic Affairs.

21.22. the Minister for Economic affairsThe Minister for Economic Affairs has the authority to overrule a decision by the Board refusing

the grant of a license permitting a concentration (Section 47).


21.23. Merger notificationWhere the thresholds set in the Act are met, a concentration must be notified to the Competition

Authority prior to its implementation.No specific deadline for filing a notification is specified in the Act. The Board has four weeks from

the date of notification to determine whether a license is required and the concentration cannot be implemented during this four-week period (Section 34).

The implementation of a concentration during the notification period or the failure to apply for a license leads to the nullity of the concentration. There are two exceptions to the prohibition of Section 34 on implementing a concentration prior to authorization. Firstly, Section 39 provides that prior notification is not required where the concentration is a public acquisition or exchange bid aimed at the acquisition of a share in the capital of an undertaking. Secondly, Section 40 authorizes the Board to grant an exemption from the prohibition set in Section 34, at the request of the notifying party, for “serious reasons.” Frequently, an exemption of this sort is made subject to restrictions or commitments.

The Board may require the notifying party to provide further information if the information pro-vided is insufficient and the running of the four-week period is suspended until the information is received (Section 38). If the Board fails to provide notice that a license is required within the four week period, then no license for the concentration is required (Section 37).

The filing fees are set at EUR 15,000 for a notification and EUR 30,000 for a license request.


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21.24. Proceedings before the Competition authorityWhere the Board gives notice to the notifying party that a license is required because a dominant

position could be created, the concentration may not be implemented until a license is received (Section 41). Applications for a license are submitted to the Board, providing any business informa-tion that is reasonably necessary (Section 44), as well as the specific information required by general administrative order (Section 42).

The implementation of a concentration for which a license is required is prohibited. However, for “serious reasons”, the Board may grant an exemption (Section 46). Such exemption may be granted subject to conditions and restrictions.

The Board issues a decision on the license application within thirteen weeks of receipt of the file (Section 44). Where no decision is issued within this period, the application is deemed granted. Alternatively, the concentration is declared void within thirteen weeks of the notice that a license is required in cases where the license is refused or no application for a license is submitted within four weeks of receipt of the notice (Section 39).

21.25. Proceedings before the Minister for Economic affairsWhere the Board refuses permission, a request to the Minister must be made within 4 weeks of

the date that the Board’s decision refusing the license becomes final, and the Minister’s decision must be issued not later than 12 weeks thereafter (Section 49). Review of any appeals from the Board’s decision is suspended pending a final decision of the Minister for Economic Affairs.


21.26. Conditions and commitments - DivestitureA license may be issued subject to conditions and restrictions (Section 41(4)). If the license appli-

cation is withdrawn or the license refused, the concentration, in as far as it has been implemented, shall be nullified within thirteen weeks.

21.27. FinesEnforcement of a concentration without notification or non-compliance with the conditions atta-

ched to a license are punished by a fine up to EUR 450,000 or up to 10% of the turnover of the undertaking or the combined turnover of the undertakings. In addition, a transaction that is not notified can be declared null and void.

D. appeals

21.28. appeals against decisions pursuant to the actAccording to Section 93, the District Court of Rotterdam is competent to hear appeals against

decisions pursuant to the Competition Act.

21.29. appeals against judgments of the District Court of rotterdamThe Trade and Industry Appeals Tribunal is competent to hear appeals against judgments of the

District Court of Rotterdam.


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ChaPtEr 22

POLanD




22.01. ContextThe Act of 16 February 2007 on Competition and Consumer Protection that currently governs

competition matters in Poland came into effect in April 2007. It replaced the Act of 15 December 2000 on Competition and Consumer Protection.








The President of the Office for Competition and Consumer Protection (UrzadOchrony Konkurencji i Konsumentów) 22.08

The Office for Competition and Consumer Protection 22.09

B. Enforcement proceedingsComplaints and investigations 22.10Proceedings before the President of the Office 22.11Interim relief 22.12Enforcement by ordinary courts 22.13


D. AppealsAppeals against decisions of the President of the Office 22.18

Section 2 Mergers



The President of the Office for the Protection of Competition and Consumers 22.23


Proceedings before the President of the Office for the Protection of Competition and Consumers 22.25


D. AppealsAppeals against the decisions of the President of the Office 22.28Appeals against a Court of Competition and Consumer Protection decision 22.29

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Alongside this Act, the Council of Ministers issued regulations on different legal aspects pertai-ning to competition law (e.g. motor vehicle sector; method of calculation of the turnover of underta-kings participating in a concentration; notification of the intention of concentration of undertakings; procedure for immunity and reduction of fine etc).

Moreover, the President of the Office of Competition and Consumer Protection may issue non-binding comments and interpretations aiming at assessing anticompetitive practices. There are inter-nal guidelines regarding fines and sanctions.

22.02. ScopeThe Act on Competition and Consumer Protection addresses anticompetitive practices that cause

or may cause effects in the territory of the Republic of Poland (Section 1). The Act aims to protect the interests of both consumers and undertakings. It applies to any person, natural or legal, public or private (Section 4). Section 3 of the Act specifies that it does not apply to restrictions of competition exempted by virtue of separate legal acts. Actions by local governments may also be controlled under the Act.


22.03. the prohibitionSection 6 of the Act prohibits agreements that have as their object or effect the elimination or

restriction or any other infringement of competition on the market. It contains a non-exhaustive list of prohibited practices including price fixing, limiting output, allocating markets, applying dissimilar contract terms to equivalent transactions, conditioning an agreement upon acceptance of unrelated terms, limiting access to the market and bid rigging.

Agreements between competitors with a combined market share of less than 5% in the year prior to the agreement are not considered as coming within the scope of the prohibition. Where the par-ties to an agreement falling within Section 6 are not competitors, the prohibition will not apply if the aggregate market share is less than 10%.

Prohibited agreements are considered void.

22.04. ExemptionsFollowing Section 8(1), the prohibition shall not apply if the agreements (i) contribute to impro-

ving production or distribution and technical or economic progress, (ii) allow consumers a fair share of the benefit, (iii) do not impose restrictions that are not indispensable, and (iv) do not afford the possibility of eliminating competition for a substantial part of the products in question (Section 8).

Applying Section 8(2), the Council of Ministers has adopted block exemption regulations in res-pect of specific vertical agreements, specialization, scientific research and development agreements, agreements pertaining to the transfer of technology, and certain agreements between insurers.


22.05. Dominant positionSection 9 prohibits the abuse of a dominant position. A dominant position is defined in Section

4(10) as a position which allows the holder to prevent efficient competition and thus to act to a significant degree independently of competitors, contracting parties and consumers. An undertaking with a market share exceeding 40% is presumed to hold a dominant position.


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22.06. abuseSection 9 includes a non-exhaustive list of behavior that constitutes abuse of a dominant position

including imposing unfair prices, limiting output, applying unequal contract terms, or making the conclusion of an agreement subject to unrelated conditions.

D. State aid

22.07. ScopeThe rules for monitoring and granting State aid stem directly from EU legislation. Polish regu-

lations on State aid govern only the national procedures for aid allocation and notification to the European Commission.

The Act of 30 April 2004 on the procedural issues concerning State aid entered into force in May 2004 and replaced the Act of 27 July 2002 on the conditions for admissibility and supervision of State aids for entrepreneurs. This Act has been amended in 2008.

According to Section 1 of the Act, the President of the Office:- carries out proceedings regarding preparations for notification of draft aid schemes, drafts of

individual aid and individual aid for restructuring;- co-operates with entities preparing aid schemes, aid granting authorities, entities applying for

aid and aid beneficiaries with respect to State aid;- represents Poland in proceedings before the Commission and the Courts of the European Union;- carries out proceedings regarding State aid recovering; and- monitors the State aid granted to undertakings.In particular, before their formal notification to the European Commission, the draft aid schemes

or individual aid projects require the opinion of the President of the Office. The President analyses whether the aid granted to an undertaking meets all the conditions of State aid and decides whether such aid complies with the principles of the European Union and suggests changes if necessary.

ii. Enforcement


22.08. the President of the Office for Competition and Consumer Protection (Urzad Ochrony Konkurencji i Konsumentów)

The President of the Office for Competition and Consumer Protection is the central administra-tive organ with jurisdiction over the protection of consumers and competition. He/she is appointed and supervised by the Prime Minister. The President’s duties include monitoring compliance with the Act, conducting studies on market concentration, elaborating draft proposals for developing competition, issuing decisions in matters involving concentrations or practices that restrict competi-tion, and monitoring public aid.

22.09. the Office for Competition and Consumer ProtectionThe Office for Competition and Consumer Protection supports the President in its tasks.

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276


22.10. Complaints and investigationsThe President of the Office may conduct exploratory investigations on an ex officio basis (Section 47). Exploratory investigations aim to make a preliminary assessment as to whether an infringement

has occurred, including defining the structure and level of concentration on the market. Such pro-ceedings are not carried out against a specific undertaking.

An exploratory investigation may be followed by an anti-monopoly investigation. Anti-monopoly investigations are always instituted on an ex officio basis. The purpose of these investigations is to collect information on the alleged infringement.

The inspector conducting an investigation pursuant to a resolution of the Court of Competition and Consumer Protection may enter premises and means of transportation, access files and docu-ments, and request oral explanations. The police may perform these functions upon instruction from the office of the President.

22.11. Proceedings before the President of the Office During the proceedings, a hearing may be held (Section 60). Hearings are usually open session,

except if the hearing involves the disclosure of business secrets. Expert testimony may be ordered where special information is required. Only documents drafted in Polish, or certified translations of documents drafted in a foreign lan-

guage, constitute evidence in proceedings. If in the course of the proceedings the undertaking agrees to take or discontinue actions aiming at

preventing its infringements, the President of the Office may render the commitments binding on it.

22.12. interim reliefThe Act contains no provisions allowing any of the parties to competition proceedings to claim for

interim relief. However, such remedy may be granted by the ordinary courts pursuant to the general rules of the Polish Civil Procedure Code.

22.13. Enforcement by ordinary courtsVictims of anticompetitive practices may claim damages before a civil court (the general civil law

rules apply). In the event of a stand-alone action, the victim has to prove the infringement, whereas in a follow-on action, the decision of the President of the Office is binding upon the civil courts.

C. Sanctions

22.14. Cease and desist ordersThe President of the Office may issue a decision ordering to refrain from a restrictive practice.

22.15. FinesWhere an undertaking engages in restrictive agreements or abuses its dominant position, a fine

not exceeding 10% of annual turnover may be imposed. The President of the Office may also impose a fine up to the equivalent of EUR 50 million, if

an undertaking (even unintentionally) fails to provide information as demanded by the President of the Office of Competition and Consumer Protection pursuant to Section 12(3), Section 19(3), or Section 50 of the Act on Competition and Consumer Protection, or provides false or mislea-


277

ding information or fails to co-operate in the course of the inspection being carried out within the framework of proceedings pursuant to Section 105(a), without prejudice to the right to refuse to provide information or cooperate with the inspection if this would expose the interested individuals, their spouse or relations to criminal liability.

In the fixing of the amount of the fines, the duration of the infringement, its gravity, its circums-tances, and the existence of previous infringements must be taken into account (Section 111).

Periodic penalty payments of up EUR 10,000 for each day of failure to execute a decision may be imposed (Section 107).

22.16. LeniencyFollowing Section 109, an undertaking which participated in restrictive agreements may obtain

immunity from fine upon certain condition if it has been the first to provide information concerning the existence of the prohibited agreement. If the conditions for obtaining immunity are not fulfilled, then the President may decrease the fine which should not exceed certain fixed ceilings.

22.17. Criminal sanctionsInformation disclosed during an anti-monopoly investigation can be used in criminal proceedings

conducted under the public complaints procedure (Section 73), but the Act on Competition and Consumer Protection does not itself provide for criminal sanctions.

D. appeals

22.18. appeals against decisions of the President of the OfficeDecisions of the President of the Office may be appealed to the Court of Competition and

Consumer Protection within two weeks of the notification of the decision (Section 81). The appeal is initially lodged with the President, who must transfer it without delay to the Court

of Competition and Consumer Protection. However, where the President of the Office considers the appeal to be justified, he/she may – without transferring the appeal to the court, revoke or change the decision appealed.

The newly issued decision may thereafter be appealed. Decisions of the Court of Competition and Consumer Protection may be appealed before the

Court of Appeal. An appeal can then be brought before the Supreme Court.

Section 2 MERGERS


22.19. ContextThe provisions dealing with merger control are set out at Title III of the Competition Act, Sections

13-23.

22.20. Concept of concentration A concentration is deemed to exist in the event of a:- merger between two or more independent undertakings;- taking over by acquiring or taking up stocks, other securities or shares, or in any other way, direct

or indirect control over one or more undertakings by one or more undertakings;

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278

- creation by undertakings of one joint undertaking; or - acquisition by the undertaking, of a part of another undertaking’s property (the entirety or part

of the undertaking).

22.21. thresholdsA concentration is subject to notification where the combined turnover of the participating under-

takings in the year before concentration exceeds either:- EUR 1 billion worldwide; or- EUR 50 million in Poland. However, notification is not required where the turnover on Polish territory of the acquired under-

taking does not exceed EUR 10 million in either of the two financial years preceding the notification.The method for calculating turnover is set out in the Regulation of the President of the Council

of Ministers of 17 July 2007 concerning the method of calculation of the turnover of undertakings participating in the concentration.

22.22. Control criteriaA merger will only be cleared if it does not lead to significant restriction on competition on the

market, notably by the creation or strengthening of a dominant position.In such cases, the President of the Office must nonetheless authorize a concentration if waiving

the prohibition is justified, and in particular where the concentration contributes to the economic development or technical progress, or may have a favorable impact on the national economy.

ii. Enforcement


22.23. the President of the Office for the Protection of Competition and Consumers The President of the Office for the Protection of Competition and Consumers is the central admi-

nistrative organ in charge of merger control.


22.24. Merger notificationIf the thresholds are met, the notification is mandatory. There is no specific deadline provided by

the 2007 Act or the Regulation of the Council of Ministers of 17 July 2007 concerning the notifi-cation of the intention of concentration of undertakings. However, the concentration must not be implemented until the issuance of the decision by the President of the Office or the lapse of the time-limit in which such a decision should be issued (2 months).

Specific exemptions exist in the case of a concentration between undertakings that are within the same capital group, for financial institutions or in the case of acquisitions of assets to secure debts.

The President of the Office will return incomplete notifications to the notifying party within fourteen days of receipt, pointing out the errors to be eliminated or the supplementary information that is necessary.

The filing fees are set at EUR 1,200.

22.25. Proceedings before the President of the Office for the Protection of Competition


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and ConsumersThe investigation must be completed within two months of receipt of the notification.Merger proceedings are one-phase proceedings and there is no simplified procedure for mergers

of minor importance.


22.26. Conditions and commitments - DivestitureThe President of the Office may require that the undertaking or undertakings intending to imple-

ment a concentration, inter alia: - dispose of the entirety or part of the assets of one or several undertakings; - divest control over an undertaking or undertakings, in particular by disposing of a block of stocks or

shares, or dismiss one or several undertakings from the position in the management or supervisory board;- grant a competitor exclusive rights.In the event such remedies are offered by the President of the Office, the deadline for issuance of

the decision is extended by 14 days.

22.27. FinesThe implementation of a concentration without notification or before clearance may lead to a

fine of up to 10% of the annual turnover of the undertaking which has the obligation to notify the operation.

According to Section 106 Act of the Competition and Consumer Protection, the President of the Office may impose a fine up to EUR 50 million, if the undertaking, even unintentionally, has not provided information as demanded by the President of the Office or has provided untrue or mislea-ding information.

Moreover, failure to respect a conditional or prohibition decision may result in daily fines up to EUR 10,000 for non-compliance with the decision.

D. appeals

22.28. appeals against the decisions of the President of the OfficeAppeals of decisions of the President of the Office are initially lodged with the President, who

may repeal or modify the decisions without submitting the files to the Court of Competition and Consumer Protection. The President’s newly issued decision may thereafter be appealed to the Court of Competition and Consumer Protection within two weeks of the notification of the deci-sion (Section 81).

22.29. appeals against a Court of Competition and Consumer Protection decisionSuch decisions may be appealed to the Court of Appeals. Court of Appeal decisions can be appea-

led to the Supreme Court.


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ChaPtEr 23

POrtUGaL




23.01. Context Competition law in Portugal was previously governed by Decree-Law No 10/2003 of 18 January

2003 (Diarío da República No 15/2003), which created a new competition authority (Autoridade da Concorrência), while Act No 18/2003 of 11 June 2003 (Diarío da República No 134/2003) set out








The Competition Authority (Autoridade da Concorrência) 23.08

The Court of Competition, Regulation and Supervision (Tribunal da concurrência, regulação e supervisão) 23.09


C. Sanctions Cease and desist orders 23.14Fines 23.15Leniency 23.16

D. AppealsAppeals against decisions of the Competition Authority 23.17Appeals against decisions of the Court of Competition, Regulation and Supervision 23.18Appeals against decisions of the Court of Appeals 23.19

Section 2 Mergers





Proceedings before the Competition Authority 23.26


D. AppealsAppeals against decisions of the Competition Authority 23.29Appeals against decisions of the Court of Competition, Regulation and Supervision 23.29

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282

Portugal’s main competition rules (hereafter the Competition Act) and Act No 39/2006 of 25 August 2006 introduced a leniency scheme in Portuguese law. Acts No 18/2003 and No 39/2006 were repealed and replaced by Act No 19/2012 of 8 May 2012 (Diarío da República No 89/2012), which entered into force on 7 July 2012. The new Act, adopted following the Memorandum of Understanding between the Portuguese Republic and the International Monetary Fund, the European Central Bank and the European Union, aims at aligning Portuguese competition law with EU law and strengthening the Portuguese Competition Authority in order to enhance enforcement of competition law in Portugal. The reform leaves intact Decree-law No 370/93, which, in the area of unfair practices, contains pro-visions on discriminatory pricing, resale below cost, refusals to sell and above all, prohibits distribu-tors from obtaining prices, payment conditions, selling arrangements or cooperation conditions from producers that are not in proportion to the volume of goods purchased or provided. The aim of this provision is to control the exercise of buyer power by distributors over producers.

23.02. Scope Pursuant to Section 2 of the Act, Portuguese competition rules are applicable to anticompetitive

practices that occur within the Portuguese national territory and to practices outside of Portugal that may have an effect within Portugal.

The Competition Act is applicable to all economic activities undertaken in the private, public or cooperative sectors. Section 3 defines the undertakings concerned by the Act as “any entity that has an economic activity comprising the supply of goods or services in a specific market, irrespective of its legal status or means of financing”. However, undertakings legally entrusted with the manage-ment of services of general economic interest, or which by their nature are legal monopolies, are only subject to the Competition Act where its enforcement does not create an obstacle to the fulfillment of their specific mission (Section 4).

The Competition Authority has jurisdiction to apply competition rules in all economic sectors and under Section 35 of the Act, cooperates with regulatory authorities where they exist (e.g. tele-communications).


23.03. the prohibition Section 9 of the Act mirrors Article 101 TFEU and prohibits:“Agreements between undertakings, concerted practices and decisions by associations of underta-

kings which have as their object or effect the prevention, distortion or restriction of competition in the domestic market, in whole or in part, and to a considerable extent”.

This includes, but is not limited to agreements which fix prices, limit or control production or markets or share markets or sources of supply, as well as practices such as the application of dissimilar conditions to equivalent transactions and directly or indirectly refusing to purchase or sell goods or pay for services. To be caught by Section 9, the agreement or practice must have an appreciable effect. Under Section 9(2) any agreement prohibited pursuant to its terms is considered void and without effect.

23.04. ExemptionsUnder Act No 18/2003, restrictive agreements could be notified to the Competition Authority for

prior assessment. The new Competition Act no longer affords such negative clearance.However, Section 10 sets out an individual exemption similar to that contained in Article 101(3)

TFEU. Upon application, an exemption will be granted a restrictive agreement where it contributes to the improvement of production or distribution of goods and services or promotes technical or economic progress and cumulatively:


283

- allows the users of these goods or services obtain a fair share of the resulting benefit;- does not impose on the undertakings concerned any restrictions which are not indispensable for

the attainment of these objectives; and- does not allow undertakings the possibility of eliminating competition in respect of a substantial

part of the market in question. Section 10 of the Competition Act also provides that practices that comply with EU block regu-

lations are not prohibited even though they might not affect trade between Member States.


23.05. abuse of a dominant positionPursuant to Section 11 of the Act, the abuse by one or more undertakings of a dominant position

is prohibited.Under a former Decree-Law of 1993, a dominant position was defined by reference to the market

share of the undertaking concerned. The previous Competition Act had changed that definition by providing that a dominant position existed where an undertaking operated in a market in which it was not exposed to significant competition or in which it had the predominant market share in relation to its competitors, or where two or more undertakings operated jointly in a market in which they were not exposed to significant competition or in which they had a predominant market share in relation to third parties (collective dominance).

The new Competition Act of 2012 adopts almost the same wording as Article 102 TFEU, giving no definition of a dominant position but only examples of what an abuse can be: a) imposing prices or unfair trading conditions; b) limiting production, markets or technical development to the detriment of consumers; c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; e) refusing access for ano-ther undertaking to a network or other essential facilities that it controls, when appropriate payment for such is available, in a situation where the other undertaking cannot therefore, in fact or in law, act as a competitor of the undertaking in a dominant position in the market, upstream or downstream.

23.06. abuse of economic dependencyUnder Section 12, abuse of economic dependency is only prohibited where it may affect the

functioning of the market or the structure of competition. Moreover, for the prohibition to apply, the victims must be able to show the absence of an equivalent alternative. Section 12 sets out that a company does not have an equivalent alternative where the supply of the goods or services, e.g. distribution, is controlled by a limited number of undertakings or where the victim of the abuse cannot obtain identical conditions from other commercial partners within a reasonable time scale. Abuse may be constituted by any of the behavior described in subparagraphs a) to d) of Section 11(2) or when an undertaking without any justification terminates, totally or partially, an established commercial relationship, without due consideration being given to prior commercial relations, the recognized usage in that area of economic activity and the contractual conditions established.

D. State aid

23.07. ScopeLike EU law, the Portuguese Competition Act has put in place specific provisions at Section 65

dealing with State aid. Subject to the prohibition is all aid granted to undertakings by the State or any other public body where the aid has a significant effect upon competition in the market.

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284

ii. Enforcement


23.08. the Competition authority (Autoridade da Concorrência)The Competition Authority was created by Decree-Law No 10/2003 of 18 January 2003. The

Competition Authority is an independent administrative body. The authority has regulatory, super-visory and disciplinary powers to:

- propose laws to the competent institutions and approve regulations necessary for creating a competitive environment;

- issue recommendations and general directives about restrictive practices;- propose and approve codes of conduct and best practices;- identify and investigate practices prejudicial to free competition, on the basis of national and

community laws, and conduct studies, surveys and hearings to investigate those practices;- prepare and decide on antitrust cases, applying sanctions or preventive measures.

23.09. Court of Competition, regulation and Supervision (Tribunal da concurrência, regulação e supervisão)

Under Section 50 of the previous Act, decisions of the Competition Authority were appealed to the commercial section of the locally competent Court. If there was no commercial section in this court, the commercial section of the district court would be competent. If there was no commercial section in the district court, appeals would have to be lodged before the Lisbon Commercial Court.

However, as a condition of financial aid from Europe and the International Monetary Fund, Portugal had to amend those provisions and further decentralize the implementation of its Competition Law. Act No 46/2011 of 24 June 2011, which modified Sections 50 et seq. of Act No 18/2003, crea-ted a court with specialized jurisdiction over competition matters, regulation and supervision that will be the appellate court of competition against all decisions of the Competition Authority. This court, established in the city of Santarem, is now expressly designated by Section 84(3) of the new Competition Act as the appeals court against the Competition Authority’s decisions.


23.10. Complaints and investigationsThe decision to open an investigation lies exclusively with the Competition Authority (Section

17(1)), which can be informed of a violation of the Act by any means. However, Section 7 of the new Competition Act expressly empowers the Competition Authority to define priorities in the handling of matters that it is called on to analyze. For this purpose, the Competition Authority will take into account in particular priorities in competition policy and the elements of fact and of law brought by the parties to the file, as well as the seriousness of the alleged infringement, the likelihood of being able to prove its existence and the extent of investigation required to fulfill its mission as properly as possible.

The procedure before the Authority is administrative in nature and thus follows the rules set out in the General Regime of Administrative Offences (Section 13).

The Competition Authority’s investigation powers include:- questioning persons at the undertaking and other persons involved in the case, either personally

or through their legal representatives, and requesting documents and other information useful or necessary for determining the facts;

- interviewing any other persons, either personally or through their legal representatives, where their statements might be relevant, and requesting documents and other information;


285

- carrying out searches, examinations, collecting and seizing accounting data or other documenta-tion, irrespective of the devices where they are stored or saved, in the premises, property and means of transport of the undertakings concerned (with a warrant from the competent judicial authorities);

- sealing off the premises of undertakings or associations of undertakings where there are, or may be, accounting data or other documentation, including the devices where they are stored or saved, such as computers and other data storage electronic equipment, during the period and to the extent that is strictly necessary for carrying out the actions detailed in the previous subparagraph (also with a warrant);

- requesting assistance from any service that is part of the Public Administration, including the police, as necessary for the fulfillment of its functions (Section 18).

A novelty introduced by the Act is the possibility for the Authority to search private premises under authorization by the judge responsible for procedural safeguards, where there is a well-subs-tantiated indication that evidence of a serious infringement of Sections 9 or 11 of the Act may be found at the private homes of partners, members of the board of directors, employees or anyone who works with the undertaking or association of undertakings.

23.11. Proceedings before the Competition authority The new Act brought Portuguese competition law in line with EU law as regards two procedural

opportunities offered to the investigated undertakings before the proceedings are formally initiated. Firstly, pursuant to Section 23, the Competition Authority may accept commitments submitted by an undertaking where they are likely to eliminate the effects on competition stemming from the practices at issue and terminate the investigation following the imposition of conditions gua-ranteeing that the proposed commitments are met. Such arrangement, however, is not tantamount to the recognition that an infringement to the provision of the Act has been committed (Section 23(6)). Secondly, pursuant to Section 22, a settlement between the Competition Authority and the investigated undertakings may be reached during the investigation phase. This implies that the undertakings accept responsibility for the infringement at issue and foregoes the right to make an appeal for judicial review of the facts. Under those conditions, the undertakings may be granted a fine reduction. Such settlement may also occur later on, during the prosecution phase, i.e. after the notification of the Statement of Objections (Section 27).

Where no such arrangement is entered into, Section 24 provides that at the end of its preliminary investigation, which duration should not exceed a period of 18 months, the Competition Authority may either:

- close the case on the grounds that there is no sufficient evidence of a violation of the Act; or- where, on the basis of the investigation undertaken, there exists a reasonable likelihood of a deci-

sion imposing a sanction, initiate prosecution proceedings, with a notification to the party concerned of the Statement of Objections.

In the notification of the Statement of Objections, the Competition Authority shall set a reaso-nable time-limit of not less than 20 working days for the party concerned, to respond in writing. In its written submission, the undertaking may request an oral hearing to complement the written reply (Section 25). Pursuant to Section 26 of the Act, the hearing held by the Competition Authority allows the applicant to make all due clarification, and to add documentation to the file.

Prosecution proceedings shall be concluded, whenever possible, within a 12-month period from the notification of the Statement of Objections (Section 29(1)), by a final decision either:

- declaring that there has been a prohibited practice and imposing fines or any appropriate beha-vioral or structural measure or considering such a practice justified pursuant to Section 10;

- imposing a sanction in the context of a settlement decision pursuant to Section 27; - ordering the case to be closed with the imposition of conditions under the provisions of Section 28;- ordering the case to be closed without the imposition of any conditions.

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23.12. interim reliefUnder Section 34, where on the basis of the facts collected there is an indication that the practice

under examination may cause serious and irreparable harm to competition, the Competition Authority may, at any stage of the proceedings, ex officio or upon request of any interested party, order the imme-diate suspension of the practice under consideration or order any provisional measure necessary to restore competition or ensure the full effect of the decision to be taken. However, any measures adopted pursuant to Section 34 may last no longer than 90 days, subject to an extension period.

23.13. Enforcement by ordinary courtsDamages actions may be brought before ordinary courts.

C. Sanctions

23.14. Cease and desist ordersSection 29(4) provides that a decision finding an infringement to the Act may be accompanied by

the imposition of behavioral or structural measures necessary for putting an end to the prohibited practices or their effects. However, structural measures may only be imposed when there is no equally effective or less onerous behavioral measure.

23.15. FinesWithout prejudice to criminal liability or administrative measures that may be taken (Section 67),

fines can be imposed for violation of the Act (Section 68). Conduct restricting competition is punishable by a fine of up to 10% of the turnover in the pre-

vious financial year. Other breaches such as obstructing an investigation or providing false informa-tion during an investigation may, pursuant to Section 69(3), be punished by a fine of up to 1% of the turnover in the prior financial year.

The amount of a fine is determined with reference to:- the seriousness of the infringement in terms of its effect on competition in the domestic market; - the nature and size of the market affected;- the duration of the infringement;- the degree of involvement in the infringement;- the profits made by the infringing undertakings due to the infringement;- the infringing party’s efforts to eliminate the prohibited practice and compensate for the damage

caused to competition;- the economic situation of the infringing party;- the occasional or regular nature of the infringement;- the cooperation with the Competition Authority during the antitrust proceedings.The fine can be imposed on the undertaking and/or natural persons. The new Competition Act

has broadened the scope of the persons liable for competition infringements. While the previous Act only punished those who held a leading position in the corporate bodies and the representatives of the legal person, the new Act holds liable the members of the board of directors of the legal person or equivalent entity, as well as those responsible for the management or supervision of the areas of acti-vity where there has been an administrative offense, when being aware or having the duty of being aware that an infringement has been committed, they have not adopted any appropriate measures to terminate it (Section 73(6)).


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23.16. LeniencyA leniency program was introduced in Portuguese Law by Act No 39/2006 of 25 August 2006.

Act No 39/2006 was repealed and provisions relating to leniency are now included in the general Competition Act (Sections 75-82). The new Act explicitly restricts the scope of leniency to cartels. Both undertakings and members of their boards as well as those responsible for the executive mana-gement or supervision of areas of activity where an administrative offense has occurred can apply for leniency (Section 76).

Pursuant to Section 77, immunity from fines may be granted to the first undertaking which discloses its participation in an alleged agreement or concerted practice and supplies information and evidence which, in the view of the Competition Authority, provide a substantive reason for a request to carry out search and seizure, at a time when the Competition Authority does not have enough information to warrant the request; or allows it to detect a cartel for which the Competition Authority does not have enough evidence. The applicant must also meet, cumulatively, the following conditions: a) fully and continuously cooperating with the Authority from the moment it applied for leniency by: i) supplying any element of proof he holds or may hold, ii) answering diligently any claim for information that can contribute to the establishment of the facts, iii) refraining from any act that could jeopardize the course of proceedings and iv) not informing the other participants of its application for leniency; b) putting an end to its participation in the infringement and c) not having put any pressure on the other undertakings in order to force them to participate in the infringement.

Pursuant to Section 78 a reduction of the amount of the fine, of 30-50%, can be granted to the first undertaking which complies with the conditions set in Section 77(2)(a) and (b) and (3) to provide significant added value information when an investigation has already been opened. A reduction of the fine of 20-30% is awarded to the second undertaking to provide information of significant added value and a reduction of up to 20% is granted to the subsequent undertakings.

D. appeals

23.17. appeals against decisions of the Competition authority Decisions of the Competition Authority may now be appealed to the Court of Competition,

Regulation and Supervision of Santarem (Sections 84(3)). Pursuant to Section 88, the Court of Competition, Regulation and Supervision enjoys full jurisdiction and it can reduce or increase the amount of the fine imposed by the Competition Authority. Except for decisions imposing structural measures, appeals do not have a suspensory effect (Section 84(4)).

23.18. appeals against decisions of the Court of Competition, regulation and SupervisionDecisions of the Court of Competition, Regulation and Supervision that impose fines or other

sanctions may henceforth be appealed before the territorially competent Court of Appeal (Tribunal da relação), whose decision is final (Section 89(1)).

23.19. appeals against decisions of the Court of appealsThere is no ordinary appeal against decisions of the Court of Appeals. An administrative appeal

limited to points of law can however be brought before the Supreme Court (Section 93(3)).

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Section 2 MERGERS


23.20. Context Merger control is set out in Sections 36 to 59 of the Act. The 2012 reform brought significant

changes in the law, in order to enhance the approximation of Portuguese competition rules with EU standards.

23.21. Concept of concentration A concentration is deemed to occur where there is a lasting change of control in one or more

undertakings as a result of two or more previously independent undertakings merging, or creating a joint venture intended to be an autonomous entity, or where one or more persons already controlling at least one undertaking acquire direct or indirect control of all or part of at least one undertaking (Section 36). These provisions do not apply to the acquisition of shares in order to guarantee or satisfy credits or to special procedures for restructuring an undertaking, or to certain operations made by credit, financial or insurance institutions.

23.22. thresholdsThe new Competition Act has substantially increased the notification thresholds. Now, prior noti-

fication of a concentration to the Competition Authority is mandatory where the concentration either:

- creates or strengthens a share greater than 50% (compared to 30% previously) of the national market for a particular good or service or a substantial part of it; or

- creates or strengthens a share equal to, or greater than, 30% but smaller than 50% of the national market for a particular good or service or a substantial part of it where the individual turnover in Portugal in the previous financial year, by at least two of the undertakings involved in the concentra-tion is greater than EUR 5 million; or

- involves undertakings whose aggregate turnover in Portugal in the previous financial year was more than EUR 100 million, net of directly related taxes, provided that the turnover of at least two of the participating undertakings exceeded EUR 5 million (Section 37).

23.23. Control criteriaPursuant to Section 41 of the Act, the Authority appraises a concentration by taking into account

its effects on the structure of competition, in order to preserve effective competition on the national market for the benefit of intermediate and final consumers.

Under the previous Act, concentrations that created or reinforced a dominant position in the national market or a substantial part of it, so as to substantially impede effective competition, were prohibited. Approximating Portuguese law with the latest EU standards, the new Act applies the test adopted in the EU Merger Regulation. Thus the new test is whether the transaction is likely or not to create significant impediments to effective competition in the domestic market or a substantial part of it.

In the course of assessment, the following factors should be taken into account:a) the structure of the relevant markets and the existence or absence of competition from under-

takings in these markets or in separate markets; b) the position of the undertakings concerned in the relevant markets and their economic and

financial power, compared with those of their main competitors;


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c) the purchaser’s market power and its ability to prevent the reinforcement of situations of econo-mic dependency vis-à-vis the undertaking that results from the concentration;

d) potential competition and the existence, in fact or in law, of barriers to entry into the market; e) the possibility of choice for suppliers, clients and users; f ) the access of various undertakings to sources of supply and markets for their goods; g) the structure of existing distribution networks; h) developments in the supply and demand of the products and services at issue; i) the existence of special or exclusive rights conferred by law or stemming from the nature of the

products being traded or the services supplied; j) the control of essential facilities by the undertakings concerned and the possibility of access to

these facilities provided for competing undertakings; k) any technical and economic progress that does not constitute an impediment to competition,

provided there are efficiency gains that benefit consumers, stemming directly from the concentration.

ii. Enforcement


23.24. the Competition authoritySince 2003, the Competition Authority has been, in principle, the sole body empowered to apply

merger control rules. Formerly, the final decision was in the hands of the Minister for Trade.


23.25. Merger notificationUnder the previous Act, notification of a concentration had to be made to the Competition

Authority within seven working days of the conclusion of the agreement or the publication of a public bid. Such is no longer the case: the new Act imposes no time-limit for notification of the agreement - as long as the transaction is not completed before clearance - and allows voluntary pre-notifications even where an agreement has not yet been reached (Section 37).

Notification of a concentration has a suspensory effect; the operation cannot be implemented as long as an authorizing decision has not been expressly or tacitly issued (Section 40). The Authority may grant derogation from the obligation to suspend the operation.

The Competition Authority may initiate ex officio proceedings where a merger has been imple-mented without prior notification (Section 56).

Filing fees are set at EUR 7,500 where the previous financial year’s combined turnover in Portugal of the undertakings concerned was at least EUR 150 million, EUR 15,000 where the combined tur-nover was between EUR 150 million and EUR 300 million, and EUR 25,000 where the combined turnover was more than EUR 300 million.

23.26. Proceedings before the Competition authority The Competition Authority has 30 days from the date when the notification is effective to com-

plete its enquiries (Section 49). The Authority is empowered to request any information useful for its investigation from any

undertaking (Section 43). At the end of the 30 day period, the Authority may decide that the operation is not a concentra-

tion, clear the concentration if it deems that it is not likely to create significant impediments to effec-

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tive competition in the domestic market or a substantial part of it, or may launch an in-depth investi-gation where it believes that the merger may significantly impede effective competition (Section 50).

Where an in-depth investigation is decided, the Authority carries out a complementary inquiry within 90 days (Section 52). At the end of this period, the Authority may decide not to oppose or prohibit the concentration (Section 53).

If a concentration has effects on a regulated market sector, the Competition Authority requests a prior opinion from the sectoral regulation authority concerned (Section 55).


23.27. Conditions and commitments - DivestitureAuthorization of a merger may be made subject to certain conditions and obligations (Section

51). However, the Competition Authority may refuse the proposed commitments whenever it consi-ders that the submission is simply a delaying tactic or that the conditions or obligations offered are insufficient or inadequate to prevent impediments to competition that might result from the concentration between undertakings or that the feasibility of such commitments is uncertain. The Competition Authority may initiate ex officio proceedings where the parties to the concentration have supplied false information in order to obtain the authorization of the Authority or have partially or totally failed to respect the conditions set out in an authorization decision (Section 57).

A decision prohibiting a merger may order, among other things, the divestiture of assets (Section 53(2)) and declare null and void the legal operations in relation to the prohibited merger.

23.28. FinesPursuant to Sections 68(1)(f ) and 69, implementation of a prohibited or suspended merger is

punishable by a fine up to 10% of the turnover made in the previous financial year. A similar fine may be imposed for failure to comply with conditions or obligations set out by the Authority (Section 68(1)(g)).

D. appeals

23.29. appeals against decisions of the Competition authority Decisions of the Competition Authority may be appealed before the Court of Competition,

Regulation and Supervision of Santarem (Section 84(3)).

23.30. appeals against decisions of the Court of Competition, regulation and SupervisionAppeals against decisions of the Court of Competition, Regulation and Supervision may be lodged

before the territorially competent Court of Appeal. Appeals against decisions of the Court of Appeal on points of law may be lodged before the Supreme Court of Justice.


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ChaPtEr 24

rOMania




24.01. ContextThe Romanian Act on Competition was adopted on 4 April 1996 (Official Gazette No 88 of 30

April 1996) and came into force on 1 February 1997. One of the reasons behind the adoption of the law was to harmonize Romanian competition law provisions with their European Union coun-terparts, in order to comply with the EU requisites for future accession negotiations. The explicit aim of the Competition Act was to stimulate competition and promote consumers’ interests. The Competition Act was amended in 2003 for further harmonization with European competition rules and even more significantly by Emergency Government Ordinance No 75/2010 of 30 June 2010 (Official Gazette No 459 of 6 July 2010) and then again by Law No 149/2011 of 5 July 2011 (Official Gazette No 490 of 11 July 2011). Provisions on unfair competition can be found in Act No 11 of 29





C. Abuses of dominanceAbuse of a dominant position 24.05Abuse of economic dependency 24.06



The Competition Council (Consiliul Concurentei) 24.08

The Competition Council’s Advisory Board (Colegiul Consultativ) 24.09The Government 24.10


C. SanctionsCease and desist orders 24.15Fines 24.16Criminal sanctions 24.17Leniency 24.18

D. AppealsAppeals against Competition Council decisions 24.19

Section 2 Mergers



The Competition Council 24.24The courts 24.25

B. Enforcement proceedingsMerger notification 24.26Proceedings before the Competition Council 24.27



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January 1991 (Official Gazette No 24 of 30 January 1991), as amended, which are applicable by the Competition Council from the entry in force of Law No 149/2011.

24.02. ScopeThe scope of the Act extends to practices performed outside the Romanian territory, if they have

an effect within Romania. The Romanian Competition Act applies to undertakings and groups of undertakings, whether or not constituted as legal entities, and national or local public administrative bodies that engage in conduct that restricts or distorts competition or that may have this effect. Until Ordinance No 75/2010, the Act did not apply to labor issues or financial and securities markets, which were governed by separate legislation. The prices and tariffs charged for natural or legal mo-nopoly activities are still excluded from the scope of the Act and are instead set by special regulation following an advisory opinion from the Ministry of Public Finance. The Romanian Government also retains some authority, notwithstanding the provisions of the Competition Act, to engage in price control for limited periods of time in certain economic sectors for structural reasons such as a market crisis or where a market is malfunctioning. However, prior to adopting any such measures, the Government must first receive an advisory opinion from the Competition Council. Under Section 9 of the Act, any actions by central or local public administrative bodies that have the object or poten-tial effect of restricting, preventing or distorting competition are prohibited, especially where they limit the freedom of trade or the autonomy of undertakings that act in accordance with the law or establish discriminatory business conditions.


24.03. the prohibitionSection 5 of the Romanian Competition Act, which deals with restrictive agreements, is modeled

on Article 101(1) TFEU. It prohibits all express or tacit agreements whose object or effect is to res-trict, distort or prevent competition on the Romanian market or any part thereof. A non-exhaustive list of the types of prohibited agreements is provided, including agreements aimed at price fixing, limiting production, allocating markets, tying, and bid-rigging. Section 5 also prohibits the refusal by certain parties to buy or sell without justification.

Section 8, heavily amended by Ordinance No 75/2010 and Law No 149/2011, establishes a de minimis exemption for restrictive agreements entered into by competing undertakings with a com-bined market share of less than 10%, for agreements entered into by non-competing undertakings with an individual market share of less than 15%, or, where it is difficult to establish whether the undertakings are competitors or not, where their combined market share is lower than 10% on the affected market. Where competition on the market is undermined by the cumulative effect of similar agreements, the thresholds are downsized to 5%, either for agreements between competitors on non-competitors. This de minimis rule does not apply where the agreement contains hardcore restrictions such as price fixing, limiting output or sales, market sharing, or bid rigging or hardcore restrictions similar to those detailed in EU Regulation No 330/2010 on Vertical Restraints.

Any agreement referring to an anticompetitive practice banned by Sections 5 and 6 of the Competition Act is null and void (Section 49).

24.04. Exemptions Under the original provisions of the Competition Act, individual exemptions were available upon

the request of the notifying undertakings, based on the criteria set forth in Article 101(3) TFEU. Since the adoption of Ordinance No 75/2010, which aimed to put Romanian competition rules in line with the requirements of EU Regulation No 1/2003, negative clearance is no longer available and undertakings are required to conduct a self-assessment of their agreements. Thus, under Section 5(2), agreements are exempted from the prohibition set in paragraph 1 where:


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- they contribute to improving the production or distribution of goods or to promoting technical or economic progress while assuring consumers a benefit corresponding to the benefit of the parties to the agreement;

- no unnecessary restrictions are imposed; and - the practice does not afford the possibility of eliminating competition for a substantial part of

the market concerned. Under the original version of Section 5(5) and 28 of the Competition Act, the Competition

Council could adopt block exemption regulations. Ordinance No 75/2010 put an end to that possi-bility: from that date, the only block exemption regulations applicable in Romania in order to enforce Section 5(2) are those enacted by the European Council or the European Commission on the basis of Article 101(3) TFEU. The Competition Council’s block exemption regulations on vertical agree-ments, specialization agreements and R&D agreements have thus been repealed.


24.05. abuse of a dominant positionSection 6 sets out a non-exhaustive list of practices that are considered abusive when carried

out by an undertaking holding a dominant position on the Romanian market or a part thereof. Behavior coming under this heading includes imposing sales or purchase prices, limiting production, applying unequal trading terms to similar transactions and charging excessively high or low prices. The Competition Act, as amended by Law No 149/2011, lays down a presumption of the existence of a dominant position where an undertaking holds a market share exceeding 40%.

Contrary to most competition law systems, Section 8 of the Romanian Competition Act subjected the prohibition on the abuse of dominance to a de minimis rule as described above. Since Ordinance No 75/2010, such is no longer the case: Section 8 only applies to restrictive practices.

24.06. abuse of economic dependencySection 6(f ) of the Competition Act prohibits taking advantage of the state of economic de-

pendency of an undertaking that has no alternative solution under equivalent conditions. Pursuant to this provision, it is also prohibited to break off contractual relations for the sole reason that a trading partner is refusing to submit to unjustified commercial conditions.

D. State aid

24.07. ScopeState aid control in Romania was governed by Act No 143 of 27 July 1999. This Act was repealed

by Government Emergency Ordinance No 117/2006 (Official Gazette 1042 of 28 December 2006) as of 31 December 2006 due to its contravention with EU rules. From this date, EU rules have been directly applicable in Romania and the European Commission has been responsible for the moni-toring of State aid schemes. However, the Ordinance still regulates the national procedures on State aid and the modes of collaboration between the Competition Council – which retains jurisdiction to give advisory opinion on the notification of State aid based on the acquis communautaire - and the European Commission.

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ii. Enforcement


24.08. the Competition Council (Consiliul Concurentei)The 1996 Act established a Competition Council having the status of an autonomous administra-

tive authority (Section 16). It is composed of a President, two Vice-Presidents, and four competition counselors. Members are appointed for a once renewable five-year term by the President of Romania, upon joint recommendation of the Government. Law No 249/2011 increased the Council’s profes-sionalization and independence by requiring that the members exhibit high professional competence in the field of competition and have at least a ten years’ experience in legal or economic activities, and by setting a list of incompatible activities. According to the provisions of the Competition Act (Section 26), the Competition Council is responsible for, inter alia:

- conducting investigations regarding violations of Sections 5, 6, 9, 15 and 46(3) of the Act;- taking decisions regarding violations of Sections 5 and 6 (anticompetitive practices and abuse of

a dominant position) and 9 (acts of public bodies) after investigations;- accepting commitments and imposing interim measures;- enforcing its decisions,- informing the Government about monopoly situations or other cases falling under Sections 4(2)

and (3), and proposing necessary price control measures.Finally, pursuant to Section 27 of the Act, the Competition Council adopts regulations and gui-

delines and issues orders in order to apply the provisions of the Act.Under Section 20 the Competition Council deliberates in plenary sessions and in commissions.

Each commission is made up to two Council members designated by the President of the Council and is headed by a vice-president. Plenary sessions are called when the Council examines investiga-tion reports and decides on measures to be taken.

24.09. the Competition Council’s advisory Board (Colegiul Consultativ)The Competition Council’s Advisory Board was instituted by Law No 149/2011 to operate as a

non-permanent body entrusted with the task of issuing non-binding opinions on the main aspects of competition policy (Section 24 of the Competition Act). It is composed of 11 to 17 representatives from the competition academic sphere, business and consumer associations or other people enjoying high reputation in the economic, legal or competition area. It can also include former presidents of the Competition Council. The appointment of the Advisory Board’s members, their role, its functioning and organization shall be provided in the Rules of Procedure approved by Government decision.

24.10. the GovernmentUnder Section 4(3), the Government may, in specific economic sectors and under exceptional

circumstances, such as crises, major imbalances of supply and demand, or obvious market malfunc-tions, adopt temporary measures to prevent or block excessive price increases. These measures may be adopted for six months, and extended for no more than three months. Also, where competition is affected or substantially restricted by law or by the existence of monopolies, the Government may institute price control for three years, which may be extended for periods not exceeding one year.


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24.11. Complaints and investigationsInvestigations may be initiated in response to a complaint from a natural or legal person directly

affected by an alleged violation of Section 5(1) or Section 6 of the Act or ex officio (Section 34). The Competition Council may order investigations if there is enough de jure and de facto evidence

to do so. If it determines that no investigation is justified, it must notify that decision in writing to the complainant within sixty days, stating the reasons. Rejection of a complaint must be made by decision after having given the complainant the possibility to submit its views (Section 40)

Under Section 35, the staff of the Competition Council and of the Competition Office may request the necessary information from undertakings. Whereas under Ordinance No 75/2010 the information gathered could only be used for their original purpose, under Law No 149/2011, Section 35 now provides that such information can be used for the purpose of implementation of competi-tion law in general and be dispatched to other institutions or public authorities if it relates to matters within their jurisdiction. Non-compliance may be sanctioned. However, Law No 149/2011 specified that communications between the undertaking investigated and its lawyer and made for the sole purpose of exercising the right of defense of the undertaking cannot be removed or used as evidence during the proceedings before the Competition Council (Section 36(8) of the Competition Act). The investigation powers of the control authority also include conducting unannounced inspections of the premises of an undertaking or even of personal residences of management within the limits of Section 27(3) of the Romanian Constitution, following receipt of an authorization from a competent judge (Sections 37 and 38). The President of the district court where the premises to be searched are located, or the President of the Bucharest Court, is considered as having jurisdiction to authorize investigations. Search, seizure, and sealing must be carried out under the control of the judge who issued the authorization. Inventory and sealing are done according to the provisions of the Code of Criminal Procedure.

24.12. Proceedings before the Competition CouncilIf an investigation is opened, the Council’s President designates a case-handler to draft the inves-

tigation report. Whereas hearings were originally required in any investigation procedure, since Law No 149/2011 they have been replaced by the possibility to address written submissions to the Council and are only held when required by the undertakings and deemed fit by the Council (Section 43 of the Competition Act). In such cases, a copy of the report drafted by the investigating officer may be sent upon their request and only if the President considers it appropriate to those undertakings testifying at the hearing at least thirty days before the hearing is held, or to the undertakings who wish to make written submissions, who are granted thirty days to draft their comments. Parties are also entitled to view the files, except for confidential information, and make copies at their own expense upon the President’s authorization. After hearing the parties’ responses to the report, the Competition Council, which alone has decision-making power, issues a reasoned decision (Section 45).

During the investigations, the parties may submit commitments that the Competition Council may render binding.

Since Ordinance No 75/2010 and a further amendment by Law No 149/2011, a reduction of the fine can be awarded to undertakings that, after having received the report of investigation, expli-citly acknowledge their participation in an unlawful agreement or practice and, where appropriate, propose remedies to remove the causes leading to the breach. According to Section 52(2), such behavior may reduce the basic amount of the fine incurred by a percentage between 10% and 30%.

24.13. interim reliefBefore issuing a decision under Section 45, the Competition Council may order interim relief pur-

suant to Section 47 in case of an emergency due to the risk of serious injury and irreparable damage

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to competition if it finds, in a first assessment, the existence of anti-competitive acts prohibited by law which must be removed immediately.

24.14. Enforcement by ordinary courtsSection 61 provides for the possibility of civil enforcement of the Act to individuals and legal

entities who have suffered damages because of a violation thereof either directly, or within two years of a Competition Council ruling.

C. Sanctions

24.15. Cease and desist ordersThe Competition Council may, in the context of Sections 5(1) and 6 violations, order the imme-

diate cessation of any anticompetitive practices (Section 47). Pursuant to Section 45, the Council may order that the practices found be stopped and/or impose

special conditions and obligations on the parties.

24.16. FinesPursuant to Sections 50 and 51 of the Act, several fines sanction breaches of the prohibitions set

out in the Act. Following infringements, if not committed under conditions that make them crimi-nal, but intentionally or with negligence, are considered as civil offenses:

- submitting false or misleading information in response to a request during an investigation under the Act or refusing to submit to an inspection, is punishable by fines from 0.1% to 1% of the total turnover achieved by the undertaking during the previous financial year;

- violations of the prohibitions on anticompetitive agreements and abuse of dominance, and failure to comply with a condition imposed in a decision under the Act are punishable by fines from 0.5% to 10% of the total turnover achieved by the undertaking during the previous financial year.

Pursuant to Section 52, the fine is calculated taking into account the seriousness of the infringe-ment and its consequences on competition, using the criteria of turnover value and market share and according to a scale adopted by Competition Council guidelines.

Periodic fines may also be imposed in order to compel compliance with orders of the Competition Council. A daily penalty of up to 5% of the undertaking’s daily turnover in the preceding business year for each day of delay may be imposed on undertakings that do not comply with the prohibitions on anticompetitive agreements and abuses of dominance, or with a decision imposing interim relief, or to submit complete and correct information to the Competition Council or that do not accept inspections (Section 54).

24.17. Criminal sanctionsCriminal sanctions in the form of fines or imprisonment from 6 months to 3 years are potenti-

ally available where an individual clearly participates in anticompetitive agreements with fraudulent intent (Section 60).

Section 62 makes it a criminal violation to disclose business secrets.

24.18. LeniencyThe Competition Council introduced a leniency program in Romania through Order No 93/2004

of 13 May 2004. Given the total absence of applications for leniency, the Competition Council issued new Guidelines in September 2009 (Official Gazette No 610 of 7 September 2009). The new system includes vertical restraints within its scope, but does not cover abuses of dominance. As in


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the EU program, total immunity is awarded to the first undertaking that provides information and evidence that, in the opinion of the Competition Council, enables it to start investigations and make unannounced inspections on a practice it was unaware of. Section 10 of the Guidelines details preci-sely the content of the information which must be given by the undertaking. In any case, the initiator of the agreement and/or the economic operator who has taken steps to coerce other economic ope-rators to participate in the agreement or to remain part of it is not eligible for immunity from fines. It can still qualify, however, for a reduction of the fine, if it meets the requirements and conditions set in the guidelines. Economic operators disclosing their participation in an agreement and who do not qualify for immunity may, however, be granted a reduction of the fine if they provide evidence regarding the alleged violation of the Competition Act bringing significant added value compared with that already in possession of the Competition Council.

Economic operators applying for leniency must: i) provide actual, full, continuous and prompt cooperation with the Competition Council, throughout the investigation procedures; ii) put an end to their participation in the agreement, and iii) not reveal their intention to request leniency to the other participants.

Pursuant to Section 61 of the Competition Act, as amended by Law No 149/2011, immunity awarded by the Competition Council does not prevent civil actions against the undertaking.

D. appeals

24.19. appeals against Competition Council decisionsDecisions the Competition Council has taken in plenary session and search and seizure decisions

may be appealed in administrative proceedings to the Bucharest Court of Appeals within thirty days of being communicated or published (Sections 20(6) and 47-1). The court may order a suspension of the contested decision upon request of the appellants. In the case of fines, the suspension will only be ordered if the appellants provide payment of a bond of 20% of the amount of the fine. No appeal is available against the Court of Appeals’ sentence, except before the High Court of Cassation and Justice.

Section 2 MERGERS


24.20. ContextRules applicable to merger control in Romania can be found in the Competition Act (Sections

10 et seq.) and in the Competition Council’s Merger regulation approved by Order No 385/2010 of 5 August 2010. On the same day the Competition Council issued two sets of Guidelines, one on the concept of concentration, undertakings concerned, full-function joint-ventures and calculation of turnover (approved by Order No 386/2010) and the other on restrictions directly linked and necessary for the implementation of the concentrations, approved by Order No 387/2010, both of 5 August 2010.

24.21. Concept of concentration Section 10 of the Competition Act provides that a concentration consists in a lasting change of

control which occurs where independent undertakings merge or where one or more persons who already control at least one undertaking acquire direct or indirect control over another, or over a part thereof. Control is defined as the possibility of exercising a decisive influence, whether through asset ownership or through the ability to influence the composition or deliberations of management or the Board of Directors.

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The creation of a joint venture which performs on a lasting basis all the functions of an autono-mous economic entity constitutes a concentration. When such joint ventures have as their object or effect the coordination of the competitive behavior of the participating undertakings, which remain independent, coordination is assessed according to the criteria laid down in Section 5(1) and (3).

On the other hand, Section 11 enumerates the type of transaction where no concentration is deemed to occur. Thus, there is no concentration within the meaning of the Act where control is acquired by a liquidator for purposes of winding up an undertaking, where a bank, financial institu-tion or insurance company temporarily holds securities and exercises voting rights only to maintain the value of an investment or where undertakings part of the same group perform restructuring and reorganization transactions within that group.

24.22. thresholdsPursuant to Section 14, as amended by Ordinance No 75/2010, a concentration is subject to

control when the aggregate turnover of the undertakings concerned exceeds EUR 10 million and at least two of the undertakings involved achieve, each, on the Romanian territory, a turnover of at least EUR 4 million. Sections 64 and 66 detail the rules for calculating the turnovers mentioned in Section 14.

24.23. Control criteriaUntil Ordinance No 75/2010, concentrations were prohibited under Section 12 where they had

the effect of creating or consolidating a dominant position, or lead to or were likely to lead to a signi-ficant restriction, prevention or distortion of competition on the Romanian market or on a part of it. The text was amended to put Romanian Law in line with the EU criteria. From now on, concentra-tions must be prohibited if they significantly impede effective competition on the Romanian market or a substantial part thereof, notably by creation or consolidation of a dominant position.

In its Merger Regulation of August 2010, the Competition Council sets out the criteria derived from EU Law according to which it will assess transactions: a) the need to protect, maintain and develop effective competition on the Romanian market or a substantial part of it, having regard, inter alia, to the structure of all target markets and actual or potential competitors; b) the market position of the merging parties and their economic power and financial alternatives available to suppliers and users, their access to markets and sources of supply or any other barriers to entry, legal or otherwise, trends in supply and demand for goods and relevant services, the interests of intermediate and ulti-mate consumers, technical progress and economic development, provided that they are beneficial to consumers and do not represent an obstacle to competition.

ii. Enforcement


24.24. the Competition CouncilPursuant to Section 15 of the Competition Act, concentrations must be notified to the Competition

Council. In this regard, the Council is empowered to issue guidelines regarding the criteria of assess-ment of the compatibility of concentrations with a normal competitive environment, the notification procedure, the terms, documents and data to be supplied. The Competition Council clears or forbids concentrations.


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24.25. the courtsThe Bucharest Court of Appeal has jurisdiction over appeals against decisions of the Competition

Council.


24.26. Merger notificationPursuant to Section 15, concentrations must be notified either after the formal deed is signed but

before its implementation or even when the parties only intend to engage in a concentration. When the concentration is performed by mutual agreement, each party to the concentration must notify the concentration to the Competition Council. In all other cases, the undertaking that initiates the concentration is required to notify it. Although notification is suspensive, since a concentration must neither be implemented before notification nor before clearance, the Competition Council may grant a waiver upon reasoned request. Furthermore, the suspension obligation does not prevent the implementation of takeover bids if both the following conditions are met: a) the transaction is notified without delay to the Competition Council; b) the acquirer does not exercise the voting rights attached to securities in question or does so only to maintain the full value of its investment under an exemption granted by the Competition Council. In granting such exemption, the Competition Council will consider the effects of suspension on one or more of the companies involved in the ope-ration or the third party and the possible threat caused by the concentration on competition.

Filing fees are set at RON 4,775 (EUR 1,063).

24.27. Proceedings before the Competition CouncilPursuant to Section 46 of the Act, within 45 days of receipt of a complete notification, the Competition

Council is required to issue a decision of approval, non-objection or, where there are serious doubts as to the merger’s compatibility with a normal competitive environment, of investigation (phase 1). Where the Competition Council decides to open an investigation (phase 2), a final decision must be issued within five months of receipt of the notification. When the information supplied is incomplete, the delays set above only start to run when complete information has been gathered.

If the Competition Council takes no decision within the deadlines stipulated above, the notified concentration may take place without explicit authorization being given. Section 23 of the Merger Regulation specifies that a decision declaring a concentration compatible with a normal competi-tive environment covers restrictions directly related and necessary to implement the concentration. Evaluation of ancillary restrictions will be made by the merging parties, in accordance with the Guidelines of the Competition Council on restrictions directly related and necessary to implement the merger (approved by Order No 387/2010 of 5 August 2010).


24.28. Conditions and commitments - Divestiture Section 46 empowers the Competition Council to accept commitments proposed by the parties in

phase 1 or to order obligations and/or conditions for authorization in phase 2. Under Section 46-1 inserted by Ordinance No 75/2010, where the Competition Council finds that a concentration has been implemented before it declared it incompatible with a normal competitive environment, it may impose on the parties to dissolve the entity resulting from the concentration, in particular by dives-titure of the assets acquired, in order to re-establish the situation prevailing before the transaction.

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24.29. FinesFailure to notify a concentration as required by Section 15 or providing false or misleading infor-

mation is punishable by a fine of 0.1% to 1% of the total turnover achieved by the undertakings concerned in the previous fiscal year. Concluding a concentration, either in violation of the notifica-tion procedure required under Section 15 or after a decision declaring the concentration incompa-tible with Romania’s Competition Act, is punishable by fines of 0.5% to 10% of the turnover of the concerned undertakings.

Pursuant to Section 54(2), daily penalties of up to 5% of the undertakings’ daily turnover may also be imposed for failure to comply with an order imposing obligations or conditions.

D. appeals

24.30. appeals against decisions of the Competition Council Competition Council decisions on mergers can be appealed to the Bucharest Court of Appeal

within thirty days of that decision being notified. Further appeal may be made before the High Court of Cassation and Justice.


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ChaPtEr 25

SLOVaK rEPUBLiC




25.01. ContextAfter the fall of the communist regime, the former Czechoslovakia adopted the Antimonopoly

Act in January 1991. In 1994, the Slovak Republic, one of the successor States to the former Czechoslovakia, adopted a new Antimonopoly Act, which came into force on 1 August, 1994. Thereafter, on 27 February 2001, the Slovak Republic adopted the Protection of Competition Act No 136 (“the Act”) which is presently governing competition law in Slovakia. It has been since amended by Act No 465 of 20 June 2002, which came into force on 1 October 2002. This Act introduced, among others, block exemptions into the Slovak competition rules. Then, Act No 204/2004 of 9 March 2004 introduced new modifications in order to reflect the latest changes of EU Competition law, and, in particular, those qtemming from Regulation No 1/2003: modernization of the individual and block exemptions, introduction of commitment proceedings, modification of the sanction policy and of the leniency program. This Act also modified the merger regulation. Another amendment to the Act was introduced by Act No 165 of 1 June 2009. This amendment mainly affected the rules applicable to mergers with, among others, the introduction of a pre-notification referral system, but







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D. AppealsAppeals against decisions of the Authority 25.15

Section 2 Mergers

I. Substantive rulesContext 25.16Concept of concentration 25.17 Thresholds 25.18Control criteria 25.19





C. AppealsAppeals against decisions of the Competition Authority 25.24

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it also amended the leniency program provisions to better take into account the EU model. Further changes were also made in connection with Slovakia’s switch from crown to Euro. The Act applies to agreements restricting competition, abuse of dominance and concentrations.

25.02. ScopeThe Protection of Competition Act extends to activities that take place abroad only where such

activities lead to, or may lead to, restrictions on competition in the domestic market. It applies to undertakings, State administrative bodies and municipal bodies. Undertakings are defined broadly to include natural and legal persons and their associations, regardless of whether the activities are actually aimed at making a profit.

Certain economic sectors are regulated by special legislation. In such case, the Act will not apply, nor will the Competition Authority have competence (see for example Act No 276/2001 Coll. on the regulation of network industries, lastly amended in March 2010, Act No 610/2003 Coll. on Electronic Communication, as amended, and Act No 507/2001 Coll. on postal services as amended).


25.03. the prohibitionSections 4 - 7 of the Act govern agreements restricting competition. Prohibited agreements in-

clude written or oral agreements as well as concerted practices. Agreements that are explicitly listed as prohibited include price fixing, output limitation, boycott, tying, and bid rigging. Where only some portions of an agreement are prohibited, these will be severed from the agreement and the rest left intact where possible.

Pursuant to Section 6, where the parties’ combined market share does not exceed 10% of the total shares for the goods in question on the relevant domestic market, agreements between them do not fall within the scope of the prohibition of Section 4, unless they involve hardcore restrictions such as price fixing or other trade conditions, limiting or controling production, sales, technical develop-ment or investments or dividing the market or sources of supply (Section 6(1)). Another exception concerns the situation where, on the market in question, competition is restricted by a cumulative foreclosure effect from parallel networks of similar agreements. Pursuant to Section 6(1)(b) of the Act, there is a foreclosure effect when more than 10% of the market is covered by similar agreements.

25.04. ExemptionsThe prohibition of Section 4 does not apply where an agreement contributes to improving the

production or distribution of goods and allows consumers an adequate share of the benefit, and as long as the agreement does not also impose unnecessary restrictions or create the possibility of elimi-nating competition for a substantial proportion of the goods in question (Section 6(3)).

Block exemptions were introduced in Slovakian competition law by Act No 465/2002 “on Block Exemptions from the Ban of Agreements restricting Competition and on Amendments of some acts” entered into force on 1 October 2002. It has been since replaced by Act No 204/2004 of 9 March 2004, which entered into force on 1 May 2004. Since this amendment, Section 6(4) of the Act regulates block exemptions in the same manner as the EU. Indeed, according to Section 6(4), EU block exemptions also apply to agreements which do not influence trade between Member States and whose object or effect is or may be restriction of competition on the Slovakian market.

Pursuant to Section 6(5), the Slovakian competition authority has the competence to withdraw a block exemption in individual cases if it finds out that an agreement has anticompetitive effects.


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25.05. Dominant positionSection 8 of the Act defines a dominant position as a situation where one or more undertakings

are not subject to substantial competition in the relevant market or have the possibility of behaving independently as a consequence of its economic power.

25.06. abuseWhere an undertaking meets the criteria for a dominant position, pursuant to Section 8 of the

Act, it is considered as abusing of that position if it:- imposes disproportionate trade conditions; - threatens restrictions or actually restrict output;- applies dissimilar conditions to similar agreements;- subjects the agreement to the other party’s acceptance of conditions unrelated to the subject of

the agreement, i.e. tying;- temporarily uses economic power to exclude competition. The Act also sets out an express provision prohibiting restrictions on access to essential facilities

(Section 8(3)-(5)).

ii. Enforcement


25.07. the Competition authority (Protimonopolný úrad Slovenskej republiky)The Act established a Competition Authority to give effect to its provisions. The Authority is

an administrative authority located in Bratislava. It is headed by a Chairperson, appointed by the President of the Slovak Republic for a five-year term. Pursuant to Section 22, the duties of the Authority involve, inter alia:

- carrying out general investigations in the relevant market;- prohibiting conduct that is in violation of the Act;- enforcing decisions arising out of proceedings before the Authority;- proposing measures of a general nature for competition protection.The Council of the Authority, which hears appeals and reviews decisions of the Competition Authority,

is composed of the Chairperson of the Authority, a deputy chair, and five additional members. The Authority submits a report on its activities annually to the Government of the Slovak Republic

or whenever asked to do so.


25.08. Complaints and investigationsProceedings may be initiated upon petition by an undertaking or individual, or on the Authority’s

own initiative (Section 25). Within two months of receipt of a request, the Authority sets out in writing the steps to be taken in any given case.

Under Section 22, employees of the Authority have the right to request information from any undertaking, State administrative body or municipality, including taking copies of any accounting and business records or legal documents or requiring translation of such documents into Slovak. The

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Authority may also request immediate oral or written explanations from individuals working for or representing the undertaking in question. Where authorized, Authority employees have the right to enter any premises, land or means of transport.

25.09. Proceedings before the Competition authorityPursuant to Section 25(3)(f ), parties to the proceedings can be those whose rights, interests as

protected by the law, and duties stipulated by the Act will be affected by the decision. The Authority is empowered to join separate matters for common proceedings where the subject matter or parties are the same. If third parties demonstrate a legitimate interest in a matter, the Authority gives them the opportunity to be heard (Section 27). Parties to the proceedings must also to be heard before a final decision is taken (Section 33). The Authority issues a decision within six months from the date on which the proceedings started, although extensions of up to six months are possible in certain cases (see Section 30).

The Authority may end proceedings by a decision imposing on an undertaking to fulfill the com-mitments it submitted.

25.10. interim reliefThe Act contains no specific provision the victim of anticompetitive practices to claim interim

relief from the Competition Authority. However, Section 42 allows consumers whose rights have been violated by unlawful restrictions of competition to demand in court that the infriging party refrain from this conduct and remedy the unlawful state of affairs. In such case, the general rules laid down by the Slovak Civil Procedure Code apply.

25.11. Enforcement by ordinary courtsAny consumer who has been harmed by an unlawful restriction of competition or an organization

representing consumers’ interests is authorized under Section 42 to bring a civil lawsuit.

C. Sanctions

25.12. Cease and desist ordersSection 22(1)(b) of the Act empowers the Authority to prohibit conduct that violates the Act and

to order action to remedy the unlawful state of affairs.

25.13. FinesAgreements restricting competition or abuse of a dominant position are punishable by a fine of up

to 10% of undertaking’s turnover (defined in Section 10(3) of the Act). Fines up to 1% of its turnover may also be imposed if an undertaking fails to fulfill the obligation to submit the requested docu-ments or information to the Authority within the specified time-limit, or submits false or incomplete documents. With respect to an undertaking that has achieved limited or no turnover, or where tur-nover is impossible to calculate, the Authority imposes a fine of up to EUR 330,000.

Pursuant to Section 38(9), if an undertaking fails to pay the imposed fine before the period set in the decision, it may be obliged to pay a penalty of 0.1 per cent of the debt amount of the imposed fine for each day of delay.

25.14. Leniency Section 38(11) provides that no fine is imposed if an undertaking that was a party to a cartel res-

tricting competition cooperates with the Authority and is the first to provide decisive evidence of the


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agreement. Immunity is granted only if several cumulative conditions are fulfilled. The undertaking must be the first to provide, on its own initiative, decisive evidence to prove the agreement. Immunity cannot be granted either to the instigator of the cartel, or to the undertaking that forced another undertaking to take part in the cartel. The undertaking must end its participation in it. Finally, the undertaking must cooperate with the Authority throughout the entire procedure and provide all evidence available.

D. appeals

25.15. appeals against decisions of the authorityAppeals from first instance decisions of the Authority may be made to the Council of the Authority

within 15 days of the delivery of the decision. The Council, which is made up of the Chairperson, the Vice-chairperson and five other members of the Authority may change the decision or remand the case to the first instance organ of the Authority for further investigations. In such a case, the first instance organ must issue a new decision that can in turn be appealed to the Council.

Ultimately, the Authority Council’s decision may be appealed on points of law to the Supreme Court of the Slovak Republic pursuant to Section 246(2)(a) of the Code of Civil Procedure within two months.

Section 2 MERGERS


25.16. ContextThe Competition Act makes express provision for merger control in Sections 9-13. The rules

adopted by the Slovakian authorities are based on the EU model and have led to an alignment on EU merger control. Act No 465/2002 of 20 June 2002 simplified proceedings regarding the assessment of concentrations that have a negligible impact on the market. Subsequently, Act No 204/2004 of 9 March 2004 introduced important changes: a modification of the control criteria for mergers, an increase of the thresholds, a modification of the simplified procedure and the improvement of the decision making process. Act No 165/2009 mainly concerned merger control with, among others, the introduction of a pre-notification referral system. More recently, a new amendment to the Act was adopted on 19 October 2011 which entered into force on 1 January 2012. It modified the thres-holds and adopted the substantive impediment of effective competition test, in line with EU Merger Regulation No 139/2004.

25.17. Concept of concentrationA concentration is defined in Section 9 of the Act as a merger or “amalgamation” of two previously

independent undertakings or an acquisition of direct or indirect control. In turn, control is defined as the ability to exercise a controlling influence on the activities of an undertaking, especially by means of: ownership rights or other rights on the undertaking or part thereof; rights, contracts or other facts allowing the exercising of a controlling influence on the composition, voting or decisions of the undertaking’s bodies. Concentrations are considered to include the creation of a joint venture if it performs all of the functions of an independent economic entity on a continuing basis. Coordination of the competitive behavior of the controlling undertakings which accompanies the creation of a concentrative joint venture is reviewed by the Authority with respect to Sections 4-6 of the Act. However, no concentration is considered to exist where a bank, financial institution or insurance company temporarily acquires securities with the aim of reselling them.

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25.18. thresholds A concentration is subject to control by the Authority if one of the two positive thresholds defined

by Section 10(2) is met. Thus, if the combined turnover of the parties to the concentration is at least EUR 46,000,000 in the Slovak Republic for the last closed accounting period and the turnover of at least two of the parties in the last closed accounting period in the Slovak Republic is at least EUR 14,000,000 each, then the concentration is subject to Authority control. Alternatively, if at least one of the parties to the concentration attains a total turnover of at least EUR 19,000,000 in the Slovak Republic for the last closed accounting period and at least one other party to the concentration attains a total global turnover of at least EUR 46,000,000 for the last closed accounting period, then the concentration is likewise subject to control. Details regarding the calculation of turnover are set out in Section 10(2) of the Act.

25.19. Control criteriaBefore the amendment of 19 October 2011, the Act prohibited concentrations that created or

strengthened dominant position resulting in significant barriers to effective competition in the rele-vant market. In its new version, the test is now whether the concentration would significantly impede effective competition.

ii. Enforcement


25.20. Merger notificationConcentrations reaching the established thresholds must be notified to the Competition Authority

before their implementation and before: a contract on which the concentration is based has been concluded; acceptance of a bid in a public tender is announced; a State authority’s decision is delive-red to an undertaking; announcement of an acquisition bid; the day when the Commission informed an undertaking that the Office will deal with the matter; the day when another fact occurred based on which concentration has arisen.

The notification of a concentration may also be submitted before the conclusion of the agreement on which the concentration is based or before another legal fact founding the concentration occurs. In such cases, the notification must also contain written reasoning and written documents certifying the essential facts of the concentration.

The information to be provided with notification is listed in Section 10(12)). Act No 204/2004 introduced the possibility for the Authority to reduce the amount of information required in certain justified cases (Section 10(13). This replaced the “simplified proceedings”, which had been intro-duced by Act No 465/2008

Parties to a concentration must not implement it until a decision has been taken on the matter. However, the Authority may grant an exemption (Section 10(17)).

An undertaking may ask the Authority to issue an opinion concerning a concentration proposal (pre-notification contacts). Pre-notification contacts are specified by the Authority’s Guidelines on pre-notification contacts in merger cases released on 1 July 2010. The delivery of such an opinion is without prejudice to the obligation to notify pursuant Section 9 of the Act.

Filing fees are set at EUR 3,319.


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25.21. Proceedings before the Competition authorityIn carrying out an inquiry as to the possible anticompetitive effect of a notified merger, employees of the

Authority have the powers set out in Section 22, including the right to request materials and documents, to request immediate oral or written explanations or to enter any premises when specially authorized.

The Authority issues a decision on a concentration within 25 working days following the date of delivery of the notification. However, this period may be extended in complicated cases up to an additional 90 working days.

The Authority announces the notification of a concentration and its subsequent decision, taking care to preserve any business secrets of the parties. Both the parties to the proceedings and third parties demonstrating a legitimate interest have a right to be heard before the final decision is issued.


25.22. Conditions and commitments - DivestitureThe Authority is empowered to prohibit a concentration or to impose conditions on its imple-

mentation or, where it creates major barriers to effective competition, to require remedial measures including divestment (Section 12). Moreover, the Authority may modify or withdraw a decision on a concentration where the decision was based on incomplete or inaccurate data (Section 13).

25.23. FinesFailure to notify a concentration, supplying inaccurate or incomplete information regarding a

concentration, or implementing a concentration before a valid decision goes into effect is punishable by a fine of up to 10% of turnover for the previous closed accounting period (Section 38). With res-pect to an undertaking that has achieved limited or no turnover, or where turnover is impossible to calculate, the Authority imposes a fine of up to EUR 330,000.

Pursuant to Section 38(9), if an undertaking fails to pay the imposed fine before the period set in the decision, it may be obliged to pay a penalty of 0.1 per cent of the debt amount of the imposed fine for each day of delay.

C. appeals

25.24. appeals against decisions of the Competition authorityAppeals from first instance decisions of the Authority may be made to the Council of the Authority

within 15 days of the delivery of the decision (Section 34). Ultimately, the Authority Council’s decision may be appealed on points of law to the Supreme

Court of the Slovak Republic pursuant to Section 246(2)(a) of the Code of Civil Procedure within two months.


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ChaPtEr 26

SLOVEnia




26.01. ContextThe foundation for Slovenia’s competition law is to be found in Section 74 of the Slovenian

Constitution, the third paragraph of which prohibits all practices that restrict competition in a man-ner contrary to law. Competition law in Slovenia was governed by the Prevention of the Restriction of Competition Act, which was adopted on 30 June 1999 (Official Gazette No 56/1999). The Act replaced to a large extent the provisions of the Protection of Competition Act, which in turn replaced the earlier Law on the Regulation of Unfair Competition and Monopolistic Agreements of 1974. More recently, this act was repealed and the Prevention of the Restriction of Competition Act (“the Act”) was adopted in 11 april 2008 (Official Gazette No 36/08 and 40/09). This new consolidated act seeks to align Slovenian law with EU provisions in this field and regulates the areas of restrictive agreements, abuse of dominance and concentrations. The area of unfair competition is still governed by the provisions of the earlier Law on the Protection of Competition.







The Competition Protection Office (Urad rs za varstvo konkurence) 26.07

B. Enforcement proceedingsComplaints and investigations 26.08Proceedings before the Competition Protection Office 26.09Interim relief 26.10Enforcement by ordinary courts 26.11


D. AppealsAppeals against decisions of the Competition Protection Office 26.15

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Proceedings before the Competition Protection Office 26.21


C. AppealsAppeals against the CPO’s decisions 26.24

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26.02. ScopeThe Act prohibits restrictive practices and abuses of a dominant position which prevent competi-

tion on the territory of Slovenia irrespective of where they occurred. It applies to undertakings which are defined as any entity engaged in economic activities, regardless of their legal and organizational form and ownership status. It also applies to associations of undertakings not directly engaged in an economic activity but which affect or may affect the behavior on the market of undertakings as defined. The competition rules also apply to public undertakings and other public law legal persons performing economic activities unless otherwise provided by law.

The Act does not apply to the relationship between employers and employees.


26.03. the prohibitionPursuant to Section 6(1) of the Act, agreements that restrict competition are in principle pro-

hibited, and are null and void. Restrictive agreements are defined as agreements between underta-kings regarding business conditions in the market that have as their object or effect the prevention, restriction or distortion of competition on the territory of Slovenia. The prohibition encompasses both vertical and horizontal agreements and applies to decisions by associations of undertakings and concerted practices. Section 6(2) sets out a non-exhaustive list of prohibited practices, including agreements that:

- directly or indirectly fix purchase or selling prices;- limit or control production;- apply dissimilar conditions to equivalent transactions;- make the conclusion of contracts subject to acceptance of supplementary conditions;- share markets or other sources of supply.The Act recognizes that certain agreements only have a negligible effect on competition because

of the limited market share of the participants, and thus do not come within the prohibition (Section 7(1)). Such agreements, referred to as agreements of minor importance, are defined in Section 7(2) as: “agreements between the undertakings whose aggregate market share, in combination with other undertakings in the group, on any of the relevant markets on the territory of the Republic of Slovenia to which the agreement pertains, does not exceed: 10% in the case of undertakings operating at the same level of production or trade (“horizontal agreements”), 15% in the case of undertakings opera-ting at different levels of production or trade (“vertical agreements”), 10% in the case of mixed hori-zontal-vertical agreements or where it is difficult to determine whether an agreement is horizontal or vertical.” Where there are cumulative effects, the market share thresholds are decreased by 5%.

However, the exception granted to such agreements does not apply where competition in respect of the relevant product is restricted due to market circumstances, or where the undertakings enter into one of the agreements listed in Section 7(4), namely:

- horizontal agreements that have as their object to fix prices, restrict production or sales or share markets or sources of supply;

- vertical agreements that seek to fix retail prices or grant territorial protection to the participating undertakings or to third parties.

26.04. ExemptionsSection 6(3) of the Act explicitly permits certain agreements falling within the prohibition set

out in Section 6(1) where such agreements contribute to improving production or distribution of goods or to promoting technical and economic progress, while allowing consumers a fair share of the resulting benefit, and without imposing restrictions that are not indispensable to the attainment of


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these objectives or that afford undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

The possibility of block exemption is provided for in Section 8 of the Act. Provisions of EU Block Exemptions apply mutatis mutandis, even in the absence of an effect on trade between Member States. Previous national decrees on block exemptions have been repealed by the Act (Section 79).

However, Section 8(2) empowers the Government to establish by decree block exemptions for other categories of agreements. Agreements must meet the conditions of Section 6(3) of the Act. The Competition Protection Office (CPO) can withdraw the benefit of a block exemption if it finds that the agreement is incompatible with Section 6(3).


26.05. Dominant positionUnder Section 9 of the Act, abuse of a dominant position is prohibited. Like under EU law,

dominance per se is not prohibited, merely its abuse. An undertaking is said to be in a dominant position when it is able to act to a significant degree independently of its clients, competitors and final consumers.

More specifically, pursuant to Section 9(5) “an undertaking shall be deemed to have a dominant position if its share on the market of the Republic of Slovenia exceeds the 40% threshold”. Joint dominance is said to exist where two undertakings have a market share exceeding 60% on the market of the Republic of Slovenia.

Market share is only considered a factor, albeit an important one, of an overall economic evalua-tion aimed at measuring the economic power of an undertaking. Section 9(2) lists other factors of importance, including funding options, existence of entry barriers, the state of competition on the market, access to suppliers on the market, and existing or potential competition.

26.06. abusePursuant to Section 9(4) of the Act, abuse of dominant position may, in particular, consist in: - directly or indirectly imposing unfair purchase or selling prices, or other unfair trading conditions; - limiting production, markets, or technical development; - applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage; - making the conclusion of contracts subject to acceptance by the other parties of supplementary

obligations which, by their nature or according to commercial usage, have no connection with the subject of their contracts.

ii. Enforcement


26.07. the Competition Protection Office (Urad rs za varstvo konkurence) Sections 1(2) and 5 of the Prevention of the Restriction of Competition Act provide for the esta-

blishment of the Competition Protection Office (CPO) to carry out the tasks in accordance with the Act. Thereafter, the CPO is governed by Part IV of the Act. Section 12 of the Act provides that the CPO is an autonomous administrative agency, independent as regards its activities. It is managed by a Director who is responsible for issuing the acts or decisions that come within the CPO’s jurisdiction.

Pursuant to Section 12, the CPO has the responsibility to control the implementation of the Act. It conducts procedures and issues decisions, submits its opinions to the National Assembly and the

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Government on general issues under its competence. It acts as a minor offense procedure authority regarding anticompetitive behavior in accordance with the Act regulating minor offenses, and can bring an annulment action before the competent courts for restrictive agreements.


26.08. Complaints and investigationsAs regards the CPO’s general power of investigation, inquiries may be carried out ex officio or at

the request of an interested third party (Section 23). The person submitting the complaint is normal-ly not a party to the procedure, and can apply for his/her identity not to be disclosed. However, the complainant can lodge an application to participate in the procedure in order to protect its own legal interests within 30 days from the day of publication of the order on the commencement of procedure.

If the CPO decides to initiate a procedure, it must issue an order on commencement of procedure that outlines, inter alia:

- the circumstances underlying the initiation of the procedure;- the provisions of the Act that have allegedly been violated;- the evidence for the commencement of the procedure.A summary of the order is published on the Office’s website (Section 24). Thereafter all interested

parties may apply to participate in the proceedings (Section 16). Prior to beginning an investigative action, it is necessary to serve an order for inspection on the

undertaking against which the procedure has been initiated. The order must state the subject-matter and purpose of the inspection, the date on which the inspection will begin, the authorized person in charge of the inspection, the scope of powers of the inspectors, and indicate the penalty for refusal to cooperate or obstruction.

An order for inspection may coincide with the order on the commencement of procedure when this is unavoidable in order to achieve the purpose of the inspection (Section 28).

Investigations are carried out by CPO employees duly authorized by the Director (Section 30). Undertakings under investigation must allow investigating officers access to the premises, and to their books, administrative records, computer records and any other relevant documentation. The authorized persons may also seal and seize documents, question representatives and employees of the undertaking and control the identity of the persons (Section 29). Further, The Office shall obtain a court order to search a third party’s residential or business premises from a judge of the competent Court in Ljubljana.

26.09. Proceedings before the Competition Protection OfficeAfter the investigation is completed, a record of it is served on the party targeted by the inquiry.

This document must contain a certain number of elements, including the place and date of the pre-paration of the report, the name of the person having drafted the report; a brief description of the inspection, a list of statements made by the representatives and employees, and a list of the docu-ments obtained by the Office during the inspection.

All information concerning the undertaking against which the procedure has been brought must be treated in a confidential manner (Sections 18 and 22(3)). The Act provides also for protection of privileged communication (Section 32). Thereafter, the matter is decided by the CPO, without the parties having a right to a hearing except where the Office considers it necessary (Section 21). However, the decision adopted by the CPO must not be based on facts and evidence to which the defending party in the procedure has not been given the possibility of replying (Section 19), in order to protect the rights of defense.


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The undertakings against which proceedings have been initiated may offer commitments up until the expiry of the time-limit for submission of observations on the Statement of Objections which the Office makes binding on it.

26.10. interim reliefPursuant to Section 38 of the Act, where an infringement to Section 6 or 9 of the Act is likely, the

CPO may order interim measures in cases of urgency due to the risk of serious and irreparable damage to effective competition on the market. The measure, which must be limited in time, may be appealed within three days of its service to the party. The court must render its ruling on such an action without delay, and no later than 15 days after receiving the application.

26.11. Enforcement by ordinary courtsTo have an agreement declared null and void, the CPO must bring an action before the competent court.Pursuant to Section 62 of the Act, “A person who intentionally or through negligence infringes the

provisions [regarding restrictive practices] shall be liable for the damage caused by such infringement”.

C. Sanctions

26.12. Cease and desist ordersPursuant to Section 37, the CPO may issue a decision that requires the undertaking to take mea-

sures to bring an infringement to an end.

26.13. FinesIf an investigated undertaking supplies incorrect information or refuses to submit to the investi-

gation procedure or in some other way obstructs the investigation procedure, it may be subject to a fine of up to EUR 50,000 (Section 27(4)). Moreover, if that same undertaking continues to obstruct the procedure despite the imposition of the fine, the CPO may impose another penalty in the same manner, until the penalty reaches one% of the annual turnover of the undertaking in the preceding business year.

Pursuant to Section 73 of the Act, a fine for a minor offense of up to ten% of the annual turnover of the undertaking in the preceding business year may be imposed on an undertaking in case of a res-trictive agreement, an abuse of dominant position, or when it acts in contravention of an enforceable decision of the CPO on the termination of an infringement, interim measures or commitments.

A fine of between EUR 5,000 and EUR 10,000 can also be imposed on the responsible natural person for a minor offense, or between EUR 15,000 and EUR 30,000 for particularly serious infringements.

The CPO can impose such a fine via a fast-track procedure (Section 77).

26.14. LeniencySection 76 provides for a leniency program when the undertaking has participated in a cartel. It

may be granted immunity from fines under certain conditions. The offender must: disclose its par-ticipation in the cartel; be the first to submit information to the CPO which enables the CPO to conduct an inspection or find an infringement; fully cooperate with the CPO along the procedure; ends its participation in the cartel immediately and not have coerced other undertakings to partici-pate in the cartel.

If those criteria are not met, a reduction of the fine may be granted when the offender provides evi-dence with significant added value, cooperates and ends its involvement in the cartel. The reduction can be of 30 to 50%, 20 to 30%, or up to 20%, according to the order of the submission of evidence.

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A decree on the procedure for leniency entered into force on 1 January 2010.

D. appeals

26.15. appeals against decisions of the Competition Protection OfficeSection 15 provides that procedural decisions of the CPO cannot be appealed - specifically requests

for information orders or inspection orders. However, judicial actions may be initiated against deci-sions of the CPO which are subject to appeal under the provisions of the law governing general administrative procedure.

The judicial protection procedure is organized before the Supreme Court in a panel of three judges, which examine the decision of the CPO in compliance with Section 27(3) of the Administrative Dispute Act (No 105/06). The Supreme Court decides without a hearing and its decisions cannot be appealed.

Section 2 MERGERS


26.16. ContextThe Prevention of the Restriction of Competition Act has set up provisions governing the control

of concentrations similar to those in place at EU level. The provisions on concentrations extend to mergers, acquisitions and full-function joint ventures. Substantial rules are set out in Sections 10 and 11, while the rules of procedure can be found under Sections 42 to 53.

26.17. Concept of concentrationThe Act defines undertakings involved in a concentration as undertakings that merge, gain

control over other undertakings, or acquire undertakings and undertakings creating a joint venture. Therefore, a concentration arises where a change of control results from:

– the merger of two or more previously independent undertakings or parts of undertakings, or– the acquisition, by one or more natural persons already controlling at least one undertaking, or

by one or more undertakings, whether by purchase of securities or assets, by contract or by any other means, of direct or indirect control of the whole or parts of one or more other undertakings, or

– the creation of a joint venture by two or more independent undertakings, performing on a lasting basis all the functions of an autonomous economic entity.

Under the Act, a controlling undertaking is an undertaking that, directly or indirectly holds a majority of interests in capital or business shares in another undertaking, holds a majority of voting rights in another undertaking, has the right to appoint or remove a majority of the members of the management or supervisory board of another undertaking or has the right to manage the affairs of another undertaking on the basis of a business contract or other legal arrangement. Therefore, control is constituted by rights, contracts or any other means that, either separately or in combina-tion and having regard to the considerations of facts or regulations involved, confer the possibility of exercising decisive influence on such an undertaking or part of an undertaking.

Pursuant to Section 10(4) a concentration is not deemed to arise where banks or other financial institutions whose normal activities include transactions in securities, temporarily hold securities acquired with a view to reselling them.


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26.18. thresholdsNot all concentrations need be notified, only those meeting the thresholds set out at Section 42

of the Act, namely:– if the total annual turnover of the undertakings involved in a concentration, together with other

undertakings in the group, on the market of Slovenia in the preceding business year exceeded EUR 35 million, and

– if the annual turnover of the acquired undertaking, together with other undertakings in the group, on the market of Slovenia in the preceding business year exceeded EUR 1 million; or if in the case of merger the annual turnover of at least two undertakings concerned in a concentration, toge-ther with other undertakings in the group, in the preceding business year exceeded EUR 1 million.

If the thresholds are not reached, the CPO can invite the undertakings to notify a concentration if they hold more than a 60% market share on the market of Slovenia.

26.19. Control criteriaThe CPO establishes whether or not there is a threat of significantly impeding effective competi-

tion in particular as a result of the creation or strengthening of a dominant position.The CPO will take into account, among other criteria, the market position of the undertakings

involved, their financial options, the market structure, alternatives available to suppliers and users, any legal or other barriers to entry, supply or demand trends, the interests of intermediate and ulti-mate consumers and the development of technical and economic progress provided that it is to the consumer’s advantage and does not form an obstacle to competition.

ii. Enforcement


26.20. Merger notificationConcentration participants must notify the CPO of any concentration prior to implementation,

but not later than 30 days after the conclusion of the contract, the announcement of the public bid, or the acquisition of a controlling interest. That period begins when the first of those events occurs.

The operation should be notified by the parties acquiring control of another undertaking. Notifications can be made jointly. Details as to how a notification should be carried out are set out in the Decree Defining the Contents and Elements Required for the Notification Form for the Concentration of Undertakings (Official Gazette No 36/08). Pursuant to Section 44, the CPO may, with the exception of public tenders, order the suspension of a concentration until a decision has been taken.

Filing fees are set at EUR 850.

26.21. Proceedings before the Competition Protection OfficeThe CPO must issue a decision as regards a complete notification within 25 working days of its

receipt, unless it raises serious doubts as to compatibility with the Act. Where the CPO considers that the notified concentration comes within the provisions of the Act and raises serious doubts as to its compatibility with competition rules, it issues an order to initiate an in-depth investigation procedure, in which case a decision must be taken within 60 days (Section 50).

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26.22. Conditions and commitments - DivestitureAfter completing its analysis of the concentration, the CPO will approve the operation, make its

approval subject to compliance with certain conditions (Section 51), or rule that it is incompatible with the applicable competition rules set out in the Act. In such a case, the CPO may attach to its decision measures with a view to eliminate the effects of the prohibited concentration, or to restore the situation prevailing before the implementation of the concentration (Section 53).

26.23. FinesPursuant to Section 74, a fine up to ten% of the annual turnover of the undertaking involved

in a concentration together with other undertakings in the group in the preceding business year is imposed on an undertaking when:

– it fails to notify to the CPO a concentration governed by the provisions of the Act, or fails to notify it within 30 days;

– in breach of the interdiction of an implementation before approval by the CPO, it implements rights or obligations arising from the concentration;

– it fails to implement remedies or obligations imposed by a decision declaring the concentration compatible with competition rules;

– it acts in contravention of a decision declaring a concentration incompatible with competition rules;

– it acts in contravention of an enforceable decision issued by the CPO.Moreover, persons controlling undertakings responsible for a minor violation of the obligations

listed above may be fined between EUR 5,000 and EUR 10,000, or EUR 3,000 and EUR 5,000 in case of a natural person. Those fines can be increased to EUR 15,000 - EUR 30,000 or EUR 10,000 – EUR 15,000 for a natural person in case of particularly serious minor offense.

C. appeals

26.24. appeals against the CPO’s decisionsAs in the case of restrictive agreements or abuses of a dominant position, judicial review of deci-

sions adopted by the CPO is available to the parties under the provisions of the Act governing the administrative dispute procedure.

The judicial protection procedure is carried out by the Supreme Court in a panel of three judges, who examine the decision of the CPO in compliance with Section 27(3) of the Administrative Dispute Act (No 105/06). The Supreme Court decides without a hearing and its decisions cannot be appealed.


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ChaPtEr 27

SPain




27.01. ContextCompetition in Spain is governed by Act No 15/2007 of 3 July 2007 on the Protection of

Competition (Ley de Defensa de la Competencia), which replaces former Act No 16/1989 of 17 July 1989. The object of the new Act is to reform the Spanish competition system in order to streng-then the existing mechanisms and provide it with the instruments and the optimum institutional structure to protect effective competition in the markets. Act No 15/2007 particularly takes into






D. Other practicesUnfair competition 27.07State aid 27.08


The National Competition Commission (Comision Nacional de la Competencia) 27.09

Regional antitrust authorities 27.10B. Enforcement proceedings

Complaints and investigations 27.11Proceedings before the Council of the National Competition Commission 27.12Interim relief 27.13Enforcement by ordinary courts 27.14

C. Sanctions Cease and desist orders 27.15Fines 27.16Leniency 27.17

D. AppealsAppeals against resolutions and acts issued by the Directorate of Investigation 27.18Appeals against resolutions and acts of the Chairman or of the Council of the CNC 27.19

Section 2 Mergers



Merger notification 27.24Proceedings before the National Competition Commission 27.25


C. AppealsAppeals against decisions of the Council of the CNC 27.28Appeals against decisions of the Council of Ministers 27.29

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account the reform of the EU Competition framework by Regulations No 1/2003 and 139/2004 as well as the Autonomous Communities’ competences for the application of the provisions relating to restrictive competition practices. In fact, on 11 November 1999, the Constitutional Court held that the Spanish law on the Protection of Competition was unconstitutional insofar as it granted exclu-sive jurisdiction to State authorities. The Court reasoned that, given that the Spanish Constitution did not list the protection of competition among the powers exclusively attributed to the State, the Autonomous Communities were entitled to exercise some authority in this area. As of 21 February 2002, Act No 1/2002 establishes procedures allocating authority between the State and the Autonomous Communities. The State retains exclusive authority over the assessment of concen-trations, State aid, the issuing of block exemption regulations, representation before foreign courts, and the application of competition rules involving the entire Spanish territory or an area larger than a single Autonomous Community. Where permitted by their own statutes, the Autonomous Communities can exercise powers regarding restrictive agreements, abuses of a dominant position and unfair competition involving conduct within the territory of the Autonomous Community. A consultative body is established by Act No 1/2002 to resolve conflicts of jurisdiction between the State and Autonomous Community authorities.

In order to take account of the system of decentralization in application of the competition rules set up by Regulation No 1/2003, the commercial courts (Juzgados de la Mercantil) can now directly apply the provisions of Act No 15/2007 on restrictions of competition. As in most EU countries, the Spanish Act on the Protection of Competition governs agreements restricting competition, abuse of dominance and mergers. Like EU law, it also has provisions addressing State aids. Unfair practices that may restrain competition are covered either by the Act on the Protection of Competition or by Act No 3/1991 of 10 January 1991 on Unfair Competition (Ley de Competencia Desleal), which now governs abuse of economic dependency, previously covered by Act No 15/2007. Finally, a third Act may apply where the parties to a transaction all belong to the retail sector, namely Act No 7/1996 of 15 January 1996 on the organization of small retail trade (Ley de ordenación del comercio minorista).

Act No 15/2007 has been supplemented by an application regulation, the Defense of Competition Regulation (Reglamento de Defensa de la Competencia), approved by Royal Decree No 261/2008 of 22 February 2008, which lays down the set of rules applicable to agreements of minor importance and the framework of merger procedures, competition and the review of State aids.

The administrative body in charge of the enforcement of the rules laid down by Act No 15/2007 is the National Competition Commission (Comision Nacional de la Competencia - CNC), which replaces the Tribunal for the Protection of Competition (Tribunal de Defensa de la Competencia) formerly designated by Royal Decree No 295/1998.

27.02. ScopePursuant to Section 1 of the Act, the latter applies to behavior that has an anticompetitive effect

on the whole or part of Spanish territory, irrespective of the location of the undertakings concerned. The Act is applicable to restrictions of competition stemming from the exercise of other adminis-

trative powers or caused by the actions of public authorities or public undertakings not derived from the enforcement of another statute (Section 4). The Act also provides for cooperation with the regulators of specific industries and sectors (Section 17), and it applies, especially, the provisions on abuse of dominance, to deregulate network industries (Section 2.3).


27.03. the prohibitionThe prohibition in Section 1 of the Act is similar to the one established in Article 101 TFEU. It

includes a general prohibition, followed by a non-exhaustive list of conduct deemed anticompetitive.


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Section 1 of the Spanish Act prohibits agreements, collective decisions, recommendations and concerted practices, which have as their object or effect the restriction of competition in all or part of Spain. One difference with Article 101 TFUE is the inclusion of a prohibition on consciously parallel practices.

Under Section 4, agreements, decisions, recommendations and practices that result from the appli-cation of the law are not covered by the prohibition in Section 1. Thus, such practices are not prohi-bited even when they may restrict competition. Acts of public authorities or public undertakings are not excluded, however, unless such acts are the result of the application of law. Furthermore, EU law may be applicable to such agreements or practices.

Section 5 provides that competition authorities shall not apply the Act to agreements that are of minor importance. The criteria for demarcating conduct of minor importance, which are very close to the European Commission’s criteria, are laid down in Sections 1 through 3 of the Defense of Competition Regulation.

Finally, under Section 6, duplicating the wording of Article 10 of EU Regulation No 1/2003, the CNC acting ex officio may find, when the public interest so requires, that Section 1 is not applicable to an agreement or practice either because the conditions of the prohibition are not fulfilled, or because the conditions of the individual exemption are satisfied.

27.04. ExemptionsAn agreement or practice must satisfy the test provided in Section 1,3 in order to qualify for an

exemption. An agreement or practice may be exempt if it contributes to improving the production or marketing of goods or services, or to promoting technical or economic progress, so long as it allows consumers a fair share of its benefits, only imposes restrictions that are indispensable to achievement of the objective and does not eliminate competition in a substantial part of the market. Following the decentralized system of application of competition set up by Regulation No 1/2003, Act No 15/2007 replaces the former system of the notification of prohibited agreements (Section 4 of Act No 16/1989), by a system of legal exception and self-assessment by undertakings of their agreements.

Under Section 1, 5, the Government may promulgate regulations authorizing categories of conduct that satisfy the provisions of Section 3 of the Section.

Furthermore, Section 1,4 specifies that the prohibitions in Section 1 do not apply to agreements or practices that comply with the provisions of EU Block Exemption Regulations, even where the corresponding conduct may not affect trade between Member States.


27.05. abuse of a dominant positionSection 2 of the Act prohibits the abuse of a dominant position in terms equivalent to those of

Article 102 TFEU. Section 2(2) establishes a non-exhaustive list of abusive conduct. The list essentially mirror the

behavior prohibited in Article 102 TFEU, with the addition of the unjustified refusal to satisfy requests for the sale of a product or the supply of a service.

3 of Section 2 specifies that the prohibition applies even where the dominant position in the market of one or more undertakings has been established by legal provisions.

Finally, under Section 6, the CNC may make a finding of inapplicability of Section 2 where the public interest so requires.

27.06. abuse of economic dependencySpanish law also prohibited the abuse of a situation of economic dependency. Section 6(1)(b) of

Act No 16/1989 defined economic dependency as a situation where clients or suppliers do not have

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an equivalent possibility of exercising the activity in question. Such a situation was presumed to exist when a supplier, in addition to the usual discounts, would grant a regular customer additional advantages that are not granted to similar buyers. Act No 15/2007 removed the specific reference to the abuse of economic dependency from the Protection of Competition Act. In fact, this prohibition was redundant since it was already covered by the provisions of Act No 3/1991 of 10 January 1991 on Unfair Competition (Ley de Competencia Desleal). However, under Section 3 of Act No 15/2007, the competition authorities may hear acts of unfair competition such as abuses of economic dependency, which affect the public interest by the distortion of free competition.

D. Other practices

27.07. Unfair competitionThe law on unfair competition is set out in Act No 3/1991 and is generally enforced by the civil

courts. However, as noted above, pursuant to Section 3 of the Act on the Protection of Competition, certain practices prohibited by Act No 3/1991 which seriously distort competition on the market and affect the public interest may be handled by the administrative courts.

27.08. State aidThe third chapter of Act No 15/2007 lays down provisions in the area of State aid. According

to Section 11, the CNC, ex officio or at the request of the Public Administration, may review the criteria for awarding public aid in relation to its possible effects on the maintenance of effective competition in the markets with the aim of issuing reports with regard to the systems of aid and individual aid and addressing to the Public Administration proposals leading to the maintenance of competition. For this purpose, the CNC must be notified of any public aid project notified to the European Commission and of any public aid awarded under the provisions of EU Block Exemption regulations. The competition bodies of the Autonomous Communities may, likewise, draft reports on public aid awarded by the autonomous or local Administrations in their respective geographical areas. Those provisions are without prejudice to Sections 107 - 109 TFEU, and to the competences of the European Commission and to the Union and national jurisdictional bodies in matters of public aid control.

ii. Enforcement


27.09. the national Competition Commission (Comision Nacional de la Competencia) The National Competition Commission (CNC) was created by Act No 15/2007 to replace

the Tribunal for the Protection of Competition (Tribunal de Defensa de la Competencia) and the Competition Service in order to form a single competition institution independent of the Government. According to Section 12, the CNC is entrusted with the preservation of the competitive organiza-tion of the markets. It exercises its functions throughout the Spanish territory. The CNC comes under the responsibility of the Ministry for Economy and Finance but acts with organic and functio-nal autonomy and is fully independent of the Public Administration (Section 19). It is made up of a Chairman, a Council (collegiate resolution organ which comprises the Chairman and six members both appointed for a one-time renewable six-year term by way of royal decree, upon proposal from the Minister of Economy and Finance, from among lawyers, economists and other highly regarded professionals), a Directorate of Investigation, which carries out the functions of case handling and investigation and a Chief Economist.

Its fields of competence are listed in Sections 24 to 26, namely:


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- to resolve the matters coming before it in terms of conduct restrictive of competition and econo-mic concentration control;

- to apply EU rules on restrictive agreements and abuse of dominance in Spain;- to carry out arbitral functions, whether legal or equitable, provided for by law;- to give an opinion on draft and proposal rules that affect competition, on opening projects of

large commercial establishments under Act No 7/1996 on the organization of small retail trade, on criteria for the quantification of compensations that the perpetrators of conduct laid down in Sections 1 to 3 of the Act must pay to the victims when required to do so by the commercial courts;

- to issue reports on the impact of State aids on effective competition on the markets.The Act also empowers the CNC to carry out consultative functions for Spanish institutions and

the Government or private bodies, such as professional or consumer organizations, on competition matters. Finally, the CNC is empowered to impose fines on natural persons and legal entities.

27.10. regional antitrust authoritiesFollowing the adoption of Act No 1/2002 of 21 February 2002, several regional governments

established their own antitrust agencies and drafted statutes. This is the case of Andalucía, Aragón, Canarias (which has set up a Service but no decision-making body), Castilla La Mancha, Castilla y León, Cataluña, Extremadura, Galicia, Madrid, Murcia, País Vasco, and Valencia. Those authorities exercise the competences derived from Sections 1 to 3 of Act No 15/2007 in relation to agreements or practices having effect only in their territories.

Act No 1/2002 provides for the adoption of co-operation agreements between national antitrust authorities and the appropriate bodies of the Autonomous Communities.


27.11. Complaints and investigations The Directorate of Investigation may initiate proceedings sua sponte be it on its own initiative or

that of the Council of the CNC, or upon complaint of an interested party. The conditions as to the form of the complaint are laid down in Section 25 of Decree No 261/2008 and in Annex I thereof. Section 40 establishes the investigation powers of the Directorate of Investigation. The personnel of the Directorate may, even without the undertaking’s consent, examine, obtain copies, take extracts from books and company documents, irrespective of the medium on which they are stored and request oral explanations with the possibility of recording the answers. They may access any premises, land and means of transport of the undertakings or associations of undertakings and, as under EU Regulation No 1/2003, the private homes of the entrepreneurs, managers and other members of the staff of the undertakings with the prior consent of the occupants or, failing this, the corresponding judicial autho-rization. Where there is a risk of opposition to the investigation, the personnel of the Directorate must request a judicial authorization, when this involves the restriction of fundamental rights.

Undertakings concerned are notified of the facts allegedly constituting a breach, in order to allow them to respond within a period of fifteen days (Section 50, Section 3). When the file is complete, the Directorate of Investigation formulates a proposal for resolution, which is notified to the interested parties, who have another period of fifteen days to submit their observations. The Directorate then refers the proceedings to the CNC’s Council, attaching to it its proposal for resolution.

The time-limit for investigating the case is of twelve months from the date of the decision to initiate proceedings (Section 28 of Royal Decree No 261/2008).

27.12. Proceedings before the Council of the national Competition Commission The CNC Council may order, ex officio or at the request of any interested party, the examination

of evidence not examined during the handling phase by the Directorate of Investigation and the

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performance of complementary actions with the aim of clarifying precise questions for the forma-tion of its judgment. The interested parties are notified of this decision and have a period of seven days to submit observations. This decision shall set, whenever possible, the period for its perfor-mance. Where the Council finds that the matter may not have been duly qualified in the proposal of the Directorate of Investigation, it submits its own assessment to the interested parties and to the Directorate of Investigation, who are granted a period of fifteen days to submit their observations.

According to Section 52, proceedings may be terminated, upon proposal of the Directorate of Investigation, where the alleged offenders propose commitments deemed to resolve the anticompeti-tive effects of their behavior, and where the public interest is sufficiently guaranteed. The termination of proceedings can occur at any time of the proceedings but before the Directorate of investiga-tion refers its proposal for resolution. Section 39 of Royal Decree No 261/2008 sets the commit-ment procedure. The commitments must be presented within three months of the decision to make commitments. The CNC’s Council may either uphold the adequacy of the commitments submitted and resolve the disciplinary proceeding, or deem that the commitments presented do not adequately resolve the effects on competition arising from the conduct examined or do not sufficiently safeguard the public interest, and, if new, more suitable commitments are not submitted, decide, to resume the disciplinary proceedings. On October 2011, the CNC issued Guidelines on termination by commit-ments of infringement proceedings, aimed at establishing the general criteria guiding its actions and letting companies know how to proceed when requesting and processing a termination by commit-ments of their infringement proceedings.

According to Section 53 of the Act, the Council may declare in its resolution that prohibited practices or agreements exist, or alternatively that they have not been proven to exist, or that due to their minor importance, they are not capable of significantly affecting competition. The decision may contain a cease-and-desist order applicable within a certain period, or impose conditions, obligations, fines or any other measure authorized by the Act. In any case, the maximum length of the proceedings must not exceed eighteen months (Section 36), but cases of extension of periods and suspension of their compu-tation are foreseen in Section 37. According to Section 28 of Royal Decree No 261/2008, expiry of the maximum time-limit without a resolution having been issued causes the proceeding to lapse.

27.13. interim reliefOnce the procedure of control has begun, interim relief may be imposed pending a final decision

(Section 54) by the CNC’s Council, acting either sua sponte or at the request of an interested party, on proposal of the Directorate of Investigation. Pursuant to Section 40 of Royal Decree No 261/2008, relief will be handed down, inter alia:

- where it is necessary to avoid harm which could be caused by the activity(ies) the subject of the procedure;

- where a guarantee, validated by the Council, is offered so as to provide sufficient compensation for any future damages arising out of the award.

In this regard, interim measures cannot be awarded where they will cause irreparable damage to interested parties or involve a violation of fundamental rights. Finally, any interim relief awarded automatically comes to an end at the moment of finalization of the CNC’s decision.

27.14. Enforcement by ordinary courtsAccording to the First Additional Provision to Act No 15/2007, and pursuant to Section 86 ter

2. (f ) of the Judiciary Act 6/1985, of 1 July 1985, the commercial courts (Juzgados de la Mercantil) have jurisdiction in civil actions concerning the application of Sections 1 and 2 of Act No 15/2007.


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C. Sanctions

27.15. Cease and desist ordersUndertakings found to have entered into restrictive agreements or engaged in abuse of dominance may

be required by the CNC’s Council to desist from such behavior and to remedy its effects (Section 53).

27.16. Fines Fines for breach of the prohibition on restrictive agreements or abuse of dominance may reach

EUR 10 million for very serious infringements, or up to a maximum of 10% of the total turnover of the infringing undertaking in the fiscal year preceding the CNC’s decision.

When imposing a fine, the CNC must take into account, inter alia, the dimension and charac-teristics of the relevant market, the market shares of the undertakings concerned, the scope and duration of the restriction on competition, the effects of the restriction on competition on the rights and legitimate interests of consumers or on other economic operators, the illicit benefits obtained as a consequence of the infringement and the aggravating or mitigating circumstances that exist in relation to each of the responsible undertakings (Section 64). Furthermore, infringements are classi-fied as minor, serious and very serious according to criteria set in Section 62, and this classification commands the percentage of the undertaking’s turnover to be taken into account for the setting of the amount of the fine (Section 63). In addition, a fine of up to EUR 60,000 may be imposed on the legal representative of the undertakings personally.

The CNC may also impose coercive fines up to EUR 12,000 a day in order to force the underta-kings concerned to cease prohibited conduct, to remedy the effects of such conduct or to fulfill the commitments or conditions agreed (Section 67). The same fines may be imposed in order to ensure compliance with interim protective measures.

27.17. LeniencyAct No 15/2007 introduces a leniency scheme, very similar to the EU procedure, whereby the

first undertaking part of a cartel to denounce its existence and to provide substantial evidence for the investigation may be exonerated from payment of the fine, provided it cooperates fully, continuously and expeditiously with the CNC, brings an end to its participation in the infringing conduct, has not destroyed evidence or disclosed its application for exemption to third parties and has not been the instigator of the prohibited agreement (Section 65). Likewise, the amount of the fine may be reduced from 20% to 50% for undertakings that collaborate but do not meet the requirements for complete exemption (Section 66).

D. appeals

27.18. appeals against resolutions and acts issued by the Directorate of investigationResolutions and acts of the Directorate of Investigation that result in defenselessness or irreparable

damage to rights or legitimate interests may be appealed against before the Council of the CNC within ten days (Section 47). Upon reception of the appeal, the Council must notify the proceedings to the parties in order to enable them to submit their comments within fifteen days.

27.19. appeals against resolutions and acts of the Chairman or of the Council of the CnC

No appeal may be brought against an order for interim measures or against the final decisions of the CNC. The sole appeal that may be filed is an administrative review (recurso de contencio-

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so-administrativo), which must be brought before the Administrative Courtroom of the National Audience (Audiencia Nacional), in the terms of the Administrative Jurisdiction Act No 29/1998.

Section 2 MERGERS


27.20. ContextThe scheme for the control of concentrations in Spain lays in Competition Act No 15/2007 and

Royal Decree No 261/2008 which brings Spanish law closer to and EU merger law based on EU Regulation No 139/2004 of 20 January 2004. Compared to the previous regime under Royal Decree No 1443/2001 of 22 December 2001, the new Spanish law on concentrations clarifies and extends the concept of concentration for the purposes of control, renders the system of compulsory notifi-cation more flexible, and strengthens the CNC’s role in the control of concentrations while limiting the government’s prerogatives and specifies the criteria of substantive assessment that should guide the decisions of both bodies.

27.21. Concept of concentrationSection 7 of the Act defines a concentration as a stable change in the control structure of an under-

taking which can result from a merger between two or more previously independent undertakings, the acquisition in whole or in part of the control of one or more undertakings, or the creation of a joint venture and, in general, the acquisition of joint control of one or more undertakings, where they perform on a lasting basis the functions of an autonomous economic activity. By including all the full-function joint ventures in the scope of the review, Act No 15/2007 unifies the treatment of concentrative joint ventures, while under the previous scheme only cooperative joint ventures were examined under the restrictive agreement provisions. In the case of full-function joint ventures, coordination is assessed according to Sections 1 and 2 of the Act.

Control is defined as the possibility of exercising a decisive influence on the activities of an undertaking.Furthermore, the assessment may take account of ancillary restraints necessary for the implemen-

tation of the merger.

27.22. thresholds Under Section 8 the control procedure applies when the market share of the undertaking

subsequent to the acquisition is equal or superior to 30% of the national market or when certain turnover thresholds are met: the total volume of sales in Spain must exceed EUR 240 million in the last financial year and at least two of the participants must each have an individual turnover in Spain of more than EUR 60 million. However, Section 8, as amended by Act No 2/2011 of 4 March 2011, now exempts from control transactions concerning undertakings which exceed the 30% market share threshold, where the acquired undertaking’s global turnover in the last financial year is below EUR 10 million, provided that the parties do not hold an individual or combined market share equal or greater than 50% in the relevant markets.

Pursuant to Section 5 of Decree No 261/2008, the turnover of undertakings belonging to a group is the sum of the affected undertaking’s turnover plus the aggregate turnover of all the companies making up the group. The decree also sets out a calculation method for credit and other finan-cial institutions, as well as for insurance companies, identical to that provided by the EU Merger Regulation.


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27.23. Control criteriaSection 10 makes a clear distinction between the assessment criteria used by the CNC, which

relate to the maintenance of effective competition on the market and those used by the Government, which relate to the general interest. Thus, the CNC assesses the restrictive effect of a merger by evaluating the structure of the relevant market the market position of the parties, their economic and financial power, the existence of actual or potential competition, the alternatives available to suppliers and consumers, their access to supplies or markets, barriers to entry, supply and demand trends, buying power, or economic efficiencies, such as the contribution to improvement of systems of production or commercialization and the business competitiveness.

The Government may make its approval subject to compliance with conditions that ensure that the operation satisfies goals of general interest, such as defense and national security, the protection of public security or public health, free movement of goods and services, environment protection, promotion of technological research and development or sectorial regulation.

ii. Enforcement


27.24. Merger notification A proposed concentration must be notified to the CNC prior to its implementation where it falls

within established thresholds (Section 9). The CNC is also available to consult with undertakings prior to notification regarding whether the contemplated operation is a concentration within the meaning of Section 7 or whether thresholds are met (Section 55(2)). Spanish law does not establish any time-limit for notifying a concentration. However, the concentration cannot be implemented until it has been notified (Section 9(2)). There is an exception for public takeovers, which can be implemented prior to notification if notification occurs within a period of five days as of the presen-tation of the application for authorization of the bid to the National Securities Commission and provided that the buyer does not exercise the voting rights attached to the shares bought.

Requests to implement the concentration pending authorization are handled by the CNC’s Council on the proposal of the Directorate of Investigation and by prior motivated request. Lifting the suspension may be subject to the fulfillment of conditions and obligations (Section 9(6)).

Filing fees range from EUR 5,502 to EUR 109,860 depending on the aggregate total turnover in Spain of the undertakings concerned or are set at EUR 1,500 where the operation is subject to a simplified procedure.

27.25. Proceedings before the national Competition Commission After being notified of the operation, the Directorate of Investigation conducts its assessment

according to the criteria laid down in Section 10 and drafts a report containing a proposal for resolu-tion. The CNC’s Council, on the basis of that report, issues a phase 1 resolution, in which it may: authorize the concentration, or submit its authorization to the fulfillment of certain commitments proposed by the notifying party, or decide to initiate the second phase of the procedure where it considers that the concentration may hinder the maintenance of effective competition in all or part of the national market (Section 57). The maximum duration of phase 1 is one month from reception of a due form notification (Section 36(2)(a))

Where a second procedural phase is initiated, the Directorate of Investigation must draw up a note on the concentration which is made public and informs the natural or legal persons that may be affected and the Consumer Council, for them to submit their observations within a period of 10 days.

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The Directorate of Investigation then drafts a Statement of Objections indicating the possible obstacles to competition resulting from the concentration, which is notified to the interested parties, who have another period of 10 days to submit their observations. Then the Directorate of Investigation drafts a final proposal for resolution on the basis of which the CNC’s Council may: authorize the concentration, or make its authorization conditional upon the fulfillment of commit-ments proposed by the notifying parties or conditions, or prohibit the concentration (Section 58). Second phase proceedings must not exceed two months (Section 36(2)(b)).

Where, in the second phase, the CNC’s Council has resolved to prohibit the concentration or to subordinate its authorization to the fulfillment of commitments or conditions, the Minister of Economy and Finance may refer, within 15 days (Section 36(3)), the decision to the Council of Ministers for reasons of general interest (Section 60). The Council of Ministers has one month (Section 36(4)) to either confirm the resolution issued by the CNC Council or authorize the concen-tration, with or without conditions, for reasons of general interest other than protecting competition.


27.26. Conditions and commitments - DivestitureConditions and commitments may be imposed by the CNC. When the merger is prohibited, the

decision may order appropriate measures to restore effective competition, including a de-merger (Section 60(4)(b).

27.27. FinesFailure to make a required pre-merger notification is a serious infringement punishable by a fine

of up to 5% of the undertaking’s total turnover for the preceding accounting year (Section 62(3)(d)) or EUR 10 million.

Failure to comply with a resolution or commitment adopted in the course of merger control is a very serious infringement punishable by a fine of up to 10 % of the undertaking’s total turnover for the preceding accounting year or more than EUR 10 million.

C. appeals

27.28. appeals against decisions of the Council of the CnCParties can appeal CNC Council decisions before the Administrative Courtroom of the National

Audience (Audiencia national) within two months of the decision.

27.29. appeals against decisions of the Council of MinistersDecisions of the Council of Ministers can be appealed before the Supreme Court (Tribunal

Supremo) within two months of the decision.


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ChaPtEr 28

SWEDEn




28.01. ContextA new Swedish Competition Act came into force on 1 November 2008, replacing the previous

law of 1993. The Swedish Competition Act (2008:579) contains prohibitions and sanctions which basically follow the same principles that apply within the European Union. Its purpose is to elimi-nate and counteract obstacles to effective competition in the field of production and trade in goods, services and other products. The substantive rules of the Act are similar to those found in Articles 101 and 102 TFEU and EC Council Regulation No 139/2004 on merger control.





C. Abuse of dominance Scope 28.05


The Competition Authority (Konkurrensverket) 28.06The Stockholm City Court 28.07

The Market Court 28.08B. Enforcement proceedings

Proceedings before the Swedish Competition Authority 28.09Interim relief 28.10Enforcement by ordinary courts 28.11


D. AppealsAppeals against decisions of the Competition Authority or of the Stockholm City Court 28.15

Section 2 Mergers



Merger notification 28.20Proceedings before the Competition Authority 28.21

Proceedings before the Stockholm City Court 28.22B. Conditions/Sanctions


D. AppealsAppeals against decisions of the Stockholm City Court 28.25

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28.02. ScopeThe Competition Act is broad in its scope. It applies to the activities of foreign undertakings that

have an anticompetitive effect on the national market. The Act covers anticompetitive behavior of undertakings, whether public or private, operating on the Swedish market.

The Swedish Competition Authority is also charged with the deregulation of specified sectors of the economy, such as telecommunications, electricity and transport.


28.03. the prohibitionChapter 2, Section 1 of the Competition Act contains a prohibition on anticompetitive coope-

ration between undertakings that is similar to the prohibition set down in Article 101 TFEU: the general prohibition is followed by a list of practices deemed to be anticompetitive which include practices that:

- directly or indirectly fix purchase or selling prices or any other trading conditions;- limit or control production, markets, technical development, or investment;- share markets or sources of supply;- apply dissimilar conditions to equivalent transactions with other trading parties (and thus place

those parties at a competitive disadvantage) or- make the conclusion of contracts subject to acceptance by other parties of supplementary obli-

gations, which by their nature or according to commercial usage have no connection with the subject of such contracts.

The prohibition of Chapter 2, Section 1 covers cooperation between two or more undertakings where they have as their object or effect the prevention, restriction or distortion of competition in the market “to an appreciable extent”. In its Notice on Agreements of Minor Importance (KKVFS 2009:1), the Competition Authority has set down guidelines as to what type of agreements will be regarded as having no appreciable effects on competition and which will be exempted from Chapter 2, Section 1. Cooperation is not regarded as affecting competition to an appreciable extent where the undertakings involved have a joint market share of a maximum of 10% of the relevant market for horizontal agreements or 15% for vertical agreements. Where the individual turnover of each of the parties does not exceed 30 million kronor (EUR 3,625,000), the 15% threshold applies irrespective of the type of agreement. However, according to the notice, the de minimis principle does not apply to agreements that contain certain “hard core” restrictions. Indeed, for certain types of agreements, i.e. horizontal agreements on prices or vertical agreements on territorial protection, the market-share limit does not apply, since such agreements are always considered to appreciably restrict competition.

Certain cooperation agreements concerning farming and taxi operations are excluded from the prohibition on anticompetitive cooperation (Chapter 2, Sections 4 and 5).

28.04. ExemptionsOn July 2004, the Swedish system of individual exemptions and negative clearance was abolished

and replaced with a directly applicable legal exception system. Individual exemptions granted before 1 July 2004 will, however, continue to be valid until the exemption periods expires. Where it can be demonstrated that the beneficial effects of anticompetitive cooperation outweigh its adverse effects, the Swedish Competition Authority may grant an exemption to the prohibition set out in Chapter 2, Section 1. Chapter 2, Section 2 of the Act sets out the types of agreement that are exempted from Chapter 2, Section 1 and includes any type of agreement which:

- contributes to improving the production or distribution or to promoting technical or economic progress;

- allows consumers a fair share of the resulting benefit;


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- only imposes on the undertakings concerned restrictions which are indispensable to the attain-ment for the objective referred to in paragraph 1;

- does not afford such undertakings the possibility of eliminating competition in respect of a subs-tantial part of the utilities in question.

Following Article 101(3) of the TFEU, Swedish law provides for the adoption of block exemption regulations. Pursuant to Chapter 2, Section 3 of the Act, exemptions from the prohibition on anti-competitive cooperation between undertakings shall apply to categories of agreements laid down in:

- Act (2008:580) concerning block exemption on anti-competitive agreements on certain co-ope-ration concerning taxi service;

- Act (2008:581) concerning block exemption on vertical anti-competitive agreements;- Act (2008:582) concerning block exemption on anti-competitive specialization agreements;- Act (2008:583) concerning block exemption on anti-competitive agreements concerning re-

search and development;- Act (2008:584) concerning block exemption on vertical anti-competitive agreements in the mo-

tor vehicle sector;- Act (2008:585) concerning block exemption on anti-competitive agreements in the insurance

sector;- Act (2008:586) concerning block exemption on anti-competitive technology transfer agreements.If an individual agreement as a result of a block exemption is exempted from the prohibition

of anticompetitive cooperation between undertakings, but has effects which are incompatible with Chapter 2, Section 2, the Swedish Competition Authority may determine that the agreement shall not be covered by the block exemption.


28.05. ScopePrior to the introduction of the Competition Act, dominance was particularly in evidence in

Swedish publicly-owned undertakings and undertakings affiliated with the public sector.Chapter 2, Section 7 of the Act prohibits the abuse of a dominant position and sets out a non

exhaustive list (similar to that given in Article 102 of the TFEU) of some of the types of practices that could constitute abuse:

- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;- limiting production, markets or technical development to the prejudice of consumers;- applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage, or;- making the conclusion of contracts subject to acceptance by the other parties of supplementary

obligations, which by their nature or according to commercial usage, have no connection with the subject of such contracts.

ii. Enforcement


28.06. the Competition authority (Konkurrensverket)The Swedish Competition Authority was established on 1 July 1992 and has full responsibility

to administer and enforce competition rules. It is headed by a Director General and comprises two

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competition law enforcement departments, each of which has its own area of specialization. The Authority initiates investigations into alleged breaches of the Act.

The Swedish Competition Authority institutes proceedings at the Stockholm City Court as re-gards administrative fines, trading prohibitions and anti-competitive activities by public entities.

It may issue fine orders if the infringement is established and the parties agree.The Swedish Competition Authority may conduct investigations at the premises of undertakings

to investigate any infringements of the Competition Act after having obtained permission by the Stockholm City Court.

28.07. the Stockholm City CourtUpon request of the Competition Authority, the Stockholm City Court may impose a fine on

undertakings in breach of the provisions of the Competition Act where the undertaking, or a person acting on behalf of the undertaking, has intentionally or negligently infringed the prohibitions in Chapter 2, Section 1 or 7.

Moreover, pursuant to Chapter 3, Section 20, the administrative fine may only be imposed if the summons application has been served on the party against whom the claim is directed within five years when the infringement ceased.

28.08. the Market CourtAppeals against decisions of the Swedish Competition Authority regarding obligations to termi-

nate infringements of the Competition Act may be lodged directly with the Market Court (Chapter 7, Section 1).

Where the Competition Authority has decided to take no injunction, the Market Court may, upon appeal, order an undertaking to discontinue a breach of the prohibitions of Chapter 2, Section 1 or Chapter 2, Section 7.

Appeals against judgments and decisions of the Stockholm City Court relating to competition law issues may be lodged with the Market Court. Leave to appeal is required for such cases (Chapter 7, Section 2).


28.09. Proceedings before the Swedish Competition authorityThe Act confers broad powers of investigation on the Authority. Under Chapter 5, Section 1,

the Authority can require an undertaking to submit information or documents for inspection and, subject to the Stockholm City Court’s approval, it can conduct an inspection on the premises of an undertaking (Chapter 5, Section 3). The Authority also has the power to carry out on-the-spot inspections of undertakings where the undertaking in question is not already the subject of an inves-tigation. It may also enter a business premises in order to examine the books and other records or to conduct an oral interrogation.

The Swedish Competition Authority has full responsibility to ensure that all undertakings com-ply with the Act. The Swedish Competition Authority may require an undertaking to terminate an infringement of any prohibitions laid down in Chapter 2, Section 1 or 7 (Chapter 3, Section 1). If the Swedish Competition Authority decides in a particular case not to impose such an obligation, the Market Court may do so at the request of an undertaking that is affected by the infringement (Chapter 3, Section 2).

Where it can be demonstrated that the beneficial effects of anticompetitive cooperation outweigh its adverse effects, the Swedish Competition Authority may grant an exemption to the prohibition set out in Chapter 2, Section 1 of the Act.


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A commitment offered by an undertaking may result in a decision stating that there are no longer grounds for action.

28.10. interim reliefUnder Chapter 3, Section 3 of the Act, where particular grounds exist, the Competition Authority

may require an undertaking to terminate an infringement of any of the prohibitions laid down in Chapter 2, Sections 1 or 7, for the period until a final decision is taken on the matter. The Market Court may only impose such an obligation following commencement of legal proceedings.

28.11. Enforcement by ordinary courtsIn addition to filing a complaint with the Competition Authority, an injured party can also seek

redress in the ordinary courts. Actions for damages or cases concerning the invalidity of agreements can be heard in the national courts with a final appeal to the Supreme Court.

C. Sanctions

28.12. Cease and desist ordersThe Swedish Competition authority may require an undertaking to discontinue an infringement

of the Act. If the Authority decides not to do so, the Market Court may issue an injunction at the request of an affected party.

28.13. FinesAccording to Chapter 3, Section 5 of the Act, the Stockholm City Court, at the request of the

Competition Authority, may order an undertaking to pay an administrative fine where the under-taking has intentionally or negligently infringed the prohibitions contained in Chapter 2, Sections 1 to 7. Such a fine may not exceed 10% of the annual turnover of the undertaking in the preceding business year (Chapter 3, Section 6). Chapter 3, Section 8 of the Act provides that in determining the amount of the fine, the gravity and duration of an infringement is to be taken into account. Chapter 3, Section 5 of the Act provides that the City Court may impose fines for failure to comply with the decisions of the Competition Authority. Such fines have no specified maximum limit and may be imposed consecutively.

When imposing a fine, the following elements are taken into account:- the duration and gravity of the infringement; when assessing the gravity of the infringement,

particular account must be taken of the following: the nature of the infringement, the size and signi-ficance of the market and the infringement’s actual or potential impact on competition in the market;

- the assistance provided by the undertaking during the investigation;- other aggravating or mitigating factors.

28.14. LeniencyLeniency is provided for in Chapter 3, Sections 12 to 15 of the Competition Act.Pursuant to Chapter 3, Section 12, leniency regarding an administrative fine may be granted for an

undertaking which has infringed a prohibition contained in Chapter 2, Section 1, if the undertaking is the first to notify the infringement to the Swedish Competition Authority and if it is only owing to the information contained in the notification that the Authority has obtained sufficient material to take action against the infringement. When the Swedish Competition Authority has already received sufficient material to take action against the infringement and no declaration in accordance

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with Section 15 has been made, leniency may be granted for the administrative fine to an underta-king that has infringed the said prohibition, provided that:

- the undertaking is the first to provide such information that results in it being established that the infringement occurred, or;

- the undertaking in some other way has to a very significant extent facilitated the investigation of the infringement.

Pursuant to Chapter 3, Section 14, in order to be granted leniency or reduction, the undertaking must also:

- provide the Swedish Competition Authority with all the information and evidence about the infringement which the undertaking has or gets access to;

- actively cooperate with the Swedish Competition Authority during the investigation of the infringement;

- refrain from destroying evidence or in any other way hindering the future or the present investi-gation of the infringement, and;

- stop its participation in the infringement as soon as possible after an application or after it has provided the information.

Under Chapter 3, Section 12 of the Competition Act, leniency may not be granted for the admi-nistrative fine to an undertaking that has compelled another undertaking to participate in the infrin-gement.

The General Guidelines of the Swedish Competition Authority on immunity from fines and reduction of fines (KKVFS 2008:3) give an indication as to the level of fine reduction that can be expected in cases where total immunity cannot be granted but where the undertaking concerned has provided significant information about the infringement: for the first undertaking the reduction is between 30-50%, for the second undertaking the reduction is between 20-30%, and for other under-takings the reduction is up to 20%.

D. appeals

28.15. appeals against decisions of the Competition authority or of the Stockholm City Court

Decisions of the Competition Authority or of the Stockholm City Court must be appealed, within three weeks, before the Market Court. Chapter 7, Sections 1 and 2 of the Competition Act set out the procedures involved where an appeal is made.

Section 2 MERGERS


28.16. ContextMergers are governed by Chapter 4 of the Swedish Competition Act and the Swedish Competition

Authority’s Regulations on the Notification of Concentrations between undertakings under the Swedish Competition Act, which provide for an administrative review of concentrations exceeding certain defined thresholds. Like EU law, Swedish law has a system of mandatory prior notification. The Competition Authority has issued a Guidance document for the notification and examination of concentrations between undertakings.


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28.17. Concept of concentrationThe notion of concentration was defined in previous Section 34(1) of the Swedish Competition

Act of 1993 as arising where either two or more previously independent undertakings merge, or either one or more persons, already controlling at least one undertaking, or one or more underta-kings acquire whether by purchase of securities or assets, by contract or by and other means, direct or indirect control of the whole or parts of one or more undertakings (this is similar to the definition contained within Section 3 of the EU Merger Regulation No 139/2004).

Today, pursuant to the Swedish Competition Authority’s Guidance for the notification and exa-mination of concentrations between undertakings, a concentration between undertakings arises if there is a lasting change to the control of an undertaking.

A change of control on a lasting basis may occur through two or more independent undertakings amalgamating or through one or more undertakings gaining control (sole or joint control) of an undertaking or part of an undertaking. An internal restructuring within a group of companies does not constitute a concentration. Control means the possibility of exerting a decisive influence over an undertaking.

The creation of a joint venture which on a lasting basis fulfils all the functions of an autonomous economic entity constitutes a concentration (Chapter 1, Section 9). However, under Chapter 4, Section 1 of the Act, where the creation of a joint venture, which constitutes a concentration in accordance with Section 34, has the aim or effect of coordinating the competitive behavior of the undertakings which remain independent, the coordination is assessed in accordance with Chapter 2, Sections 1 and 2.

28.18. thresholdsChapter 4, Section 7 of the Act sets out the thresholds that a concentration must meet in order to

be notifiable to the Authority:a) the combined aggregate turnover in Sweden of all the undertakings concerned in the preceding

financial year exceeds SEK 1 billion (EUR 120,810,000); andb) at least two of the undertakings concerned had a turnover in Sweden in the preceding financial

year which exceeds SEK 200 million (EUR 24,162,000) for each of the undertakings.Where particular ground exists to do so, the Swedish Competition Authority may require a party

to a concentration to notify the concentration even if the undertaking’s turnover in Sweden does not exceed SEK 200 million (EUR 24,162,000).

A party to a concentration is also entitled to voluntarily notify a concentration to the Swedish Competition Authority in that case (Chapter 4, Section 7 of the Act).

28.19. Control criteriaPursuant to Chapter 4, Section 1 of the Act, a concentration is prohibited if it significantly res-

tricts occurrence or the development of effective competition within the country as a whole, or a substantial part thereof. During the examination of the concentration account must be taken of whether it creates or strengthens a dominant position.

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ii. Enforcement


28.20. Merger notificationIt is up to the merging undertakings or the party/parties acquiring control over an undertaking to

notify the operation to the Competition Authority if the threshold requirement is satisfied (Chapter 4, Section 9 of the Act).

28.21. Proceedings before the Competition authority The Competition Authority has 25 working days from the date of receipt of notification to issue

a decision as to whether or not it is necessary to carry out a special investigation of a concentration (Chapter 4, Section 11). During this period, the concentration may not be implemented (Chapter 4, Section 12). If a party to the concentration submits a proposed commitment, this time-limit will be prolonged to 35 working days. If special reasons exist, the Competition Authority may grant an exemption from the suspension period.

If the Competition Authority decides to carry out a special investigation, the Authority has a further three months to institute proceedings at the Stockholm City Court. This time-limit can be extended by no more than one month at a time if the parties give their consent or if there are exceptional circumstances. If the Authority decides not to intervene, an action before the City Court cannot be brought concerning the concentration.

At the end of the three-month period, the Competition Authority must decide either to approve the concentration or to apply to the Stockholm City Court to prohibit it or to have special conditions sanctioned by the Court.

28.22. Proceedings before the Stockholm City CourtIf it is justified by public interest outweighing the inconvenience caused, the Stockholm City

Court may, upon request of the Competition Authority, prohibit the parties and other participants of a concentration from taking any measure to put the concentration into effect until a final decision is issued (Chapter 4, Section 17).


28.23. Conditions and commitments - DivestitureUnder Chapter 4, Section 3 of the Act, as a result of a decision to prohibit a concentration, the un-

dertaking making the acquisition may be ordered to divest itself of the acquired assets. Alternatively, where it is possible to eliminate the negative effects of a concentration, a party to a concentration may instead be required to either divest an undertaking, or part of an undertaking, or to take some other measure having a favorable effect on competition (Chapter 4, Section 2).

28.24. FinesThere is no automatic penalty attached to the failure to notify or to observe a decision of the

Stockholm City Court. Chapter 6, Section 2 of the Competition Act provides that actions for the imposition of fines under

the provisions of the Competition Act should be brought before a district court by the Competition Authority. Undertakings may also bring a request for fines before the court. The Act makes provision for the imposition of fines in the following cases, where and undertaking fails to comply with:

- an injunction pursuant to Chapter 4, Section 1;


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- an obligation pursuant to Chapter 4, Section 2 or 3;- a prohibition pursuant to Chapter 4, Section 12, third paragraph;- a prohibition pursuant to Chapter 4, Section 17.

D. appeals

28.25. appeals against decisions of the Stockholm City CourtAppeals against judgments and decisions of the Stockholm City Court may be lodged before the

Market Court. The Market Court must issue its decision within three months of the date of appeal of the City Court’s decision (Chapter 4, Section 16).


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ChaPtEr 29

UnitED KinGDOM





C. Abuse of dominanceContext 29.05Dominant position 29.06Abuse 29.07


The Office of Fair Trading (OFT) 29.08The Competition Commission (CC) 29.09The Secretary of State (SoS) 29.10The Competition Appeal Tribunal (CAT) 29.11The courts 29.12

B. Enforcement proceedingsa) OfT proceedings

Complaints 29.13

Super-complaints 29.14Powers of investigation 29.15Rights of the investigated undertakings 29.16Two-stage proceedings 29.17Interim relief 29.18

b) Competition Commission proceedingsThe OFT reference 29.19Powers of investigation 29.20

c) Enforcement by ordinary courtsDamages 29.21

C. SanctionsCease and desist orders 29.22Fines 29.23SMEs’ immunity 29.24Leniency 29.25Criminal sanctions 29.26Competition Disqualification Orders 29.27

D. AppealsAppeals against decisions of the OFT 29.28Appeals against decisions of the Competition Appeal Tribunal 29.29

Section 2 Mergers



Office of Fair Trading 29.34The Competition Commission 29.35The Secretary of State 29.36


Proceedings before the OFT 29.38Proceedings before the Competition Commission 29.39Proceedings before the Secretary of State 29.40

C. Conditions/SanctionsConditions and commitments – Divestiture 29.41Civil sanctions 29.42Criminal sanctions 29.43

D. AppealsAppeals before the CAT 29.44

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29.01. ContextCompetition law in the UK is mostly governed by the Competition Act 1998 (“the 1998 Act”)

of 9 November 1998. This Act replaced or amended prior legislation such as the Restrictive Trade Practices Act 1976, the Resale Prices Act 1976 and relevant parts of the Competition Act 1980. It has been in force since March 2000. The aim of the 1998 reform was to introduce a prohibition against anticompetitive agreements and more generally to bring UK law more in line with EU law. Thus, the prohibitions of Chapter I and Chapter II of the Competition Act 1998 mirror those set out in Articles 101 and 102 TFEU. On 31 July 2001, the Department of Trade and Industry published a White paper entitled “Productivity and Enterprise: A World Class Competition Regime” which discussed the benefit of modernizing the merger regime and adopting criminal sanctions in order to fight cartels. Thereafter, the Enterprise bill was published in spring 2002 and the Enterprise Act (“the 2002 Act”) received Royal Assent on 7 November 2002. It reformed the law on mergers and changed the manner in which market investigations are carried out. Further, in an attempt to try and limit conflict between UK and EU competition law provisions, Section 60 of the Competition Act 1998 specifically allows the UK competition authorities to apply EU competition law when making decisions under the Act “as far as is possible.”

The Competition Act 1998 deals with anticompetitive agreements and abuse of dominance. The 1998 Act also established a new competition authority called the Competition Commission. The Enterprise Act 2002, which deals with mergers and criminal offenses related to competitive behavior, reformed the organization of the UK’s Competition authorities and established the Competition Appeal Tribunal.

29.02. ScopePursuant to Section 2(3) of the Act, the prohibition only applies to restrictive agreements intended

to be implemented in the UK. As regards abuse of dominance, there is no express limitation on the extra-territorial application of the Act as set out in Section 2(3). Nonetheless, Section 18(3) does require that the position of dominance must be within the UK.

Competition rules apply to all industrial sectors, including regulated industries such as gas, electri-city, water, telecommunications and rail, but are implemented by each sector’s Regulator (the Office of Gas and Electricity Markets - Ofgem, the Office of Water Services - Ofwat; the Office of Rail Regulation - ORR, the Office of Communications - Ofcom and the Civil Aviation Authority – UK CAA), who has the same powers of investigation and enforcement as the OFT (Office of Fair Trading) in its respective field. The general duties of the Regulators are set out in their sector-spe-cific statutes. In general, Regulators are to ensure fair competition with regard to the services they monitor. Finally, certain anticompetitive behavior which is under the scrutiny of another statute (e.g. the Broadcasting Act) is excluded from the scope of the Competition Act.

Finally, the prohibitions of the Act apply to public sector bodies only insofar as they are acting as an undertaking. This means that any activities that they engage in as ‘non-undertakings’ fall outside the scope of the prohibitions. Undertakings entrusted with operating services of general economic interest are not covered by Chapter I and II prohibitions insofar as the prohibition would obstruct the performance, in law or in fact, of the particular tasks assigned to that undertaking (Schedule 3).


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29.03. the prohibitionSection 2 of the Act, (Chapter I prohibition), regulates collusive behavior between undertakings.

Section 2(1) prohibits agreements, decisions by associations of undertakings, and concerted practices which may affect trade within the UK, and have as their object or effect the prevention, restriction, or distortion of competition in the UK. The Act fails to develop these concepts, preferring instead to refer to the interpretation given to these notions under EU law (Section 60).

Taking its cue from Article 101 TFEU, Section 2(2) lists unacceptable behavior as including:- directly or indirectly fixing purchase or selling prices or any other trading conditions;- limiting or controlling production, markets, technical developments or investments;- sharing markets or supply sources;- applying dissimilar conditions to equivalent transactions with other trading parties, thereby

placing them at a competitive disadvantage;- making the conclusion of contracts conditional on the other party’s acceptance of supplementary

conditions. The prohibition in Section 2 is only applicable when the agreement results in an appreciable res-

triction on competition. Interestingly, this appreciability requirement is not expressly contained in the Act but applies pursuant to Section 60, which, as we have seen, will bring into play EU case-law on this issue. Following OFT’s (Office of Fair Trading) Guidelines 401 (§ 2.18-2.22), an agree-ment has no appreciable effect on competition where the undertakings’ share of the relevant market is lower than 25%. This threshold is much higher than the EU standard. However, the exception may not apply if the agreement is one of a large number of similar agreements that together have a cumulative anticompetitive effect. Even where the parties’ combined share is higher than 25%, the OFT may find that the effect of the agreement on competition is not appreciable. This analysis is carried out on a case-by-case basis. As in EU law, price-fixing, market-sharing or bid-rigging agree-ments, agreements that impose discriminatory terms or conditions and tying clauses are considered especially noxious, and the OFT will apply a lower threshold for agreements of this kind. Moreover, small agreements (i.e. non price-fixing agreements made by parties where combined turnover does not exceed £20 million (EUR 23 million) are unlikely to be prohibited by Chapter I, the parties being in any event immune from penalties (Section 39).

Schedules 1 to 3 of the Act provide for certain exclusions from the prohibition, including, inter alia:

- merger agreements, including any ancillary restraints; this exception equally applies to mergers coming within the EU Merger Regulation;

- the transfer of a newspaper or of newspaper assets for the purposes of the FTA (Fair Trading Act) 1973;

- agreements which are subject to scrutiny in respect of anticompetitive behavior under other Acts, including, inter alia, the Financial Services and Markets Act 2000, the Companies Act 1989, the Broadcasting Act 1990 or the Environmental Act 1995;

- undertakings entrusted with operating services of general economic interest.Furthermore, the Secretary of State for Trade and Industry (SoS) may exclude a particular agree-

ment from the Chapter I prohibition for “exceptional compelling reasons of public policy”.According to Section 2(4) of the 1998 Act, agreements prohibited pursuant to the Act are consi-

dered void. If only some provisions of an agreement infringe the Act, and if such provisions can be severed from the agreement, only those provisions will be void.

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29.04. ExemptionsProhibited agreements may be exempted where they provide countervailing benefits. The exemp-

tion criteria are close to those of Article 101(3) TFEU.Under Section 4 of the Act, an individual exemption may be granted, after notification to the

OFT, where the anticompetitive consequences of the agreement are outweighed by its beneficial effects. Individual exemptions may be granted where several conditions are met: the agreement must improve the production or distribution of goods or services or promote technical or economic pro-gress, and it must allow consumers a fair share of the resulting economic benefit. Moreover, the agreement must not impose restrictions that are not essential to achieving the agreement’s objective and must not enable the parties to eliminate competition affecting a substantial part of the products concerned (Section 9). Pursuant to Section 5(1), the OFT may cancel an individual exemption or alternatively vary its conditions and obligations if there are reasonable grounds to believe there has been a material change in circumstance since the exemption was granted.

Under Section 6 of the Act, provision is made for enabling the Secretary of State to adopt block exemptions applicable to categories of agreements that meet established exemption criteria. An agree-ment that falls within a category named in the block exemption will be automatically exempted without being notified to the OFT. A block exemption may have retrospective effect. To date, only one block exemption order, concerning transportation ticketing schemes, has been adopted (Order 2001, SI 2001/319 lastly amended by Order 2011, SI 2011/227 to extend its application until March 2016).

Pursuant to section 10 of the Competition Act 1998, an entirely new concept referred to as a parallel exemption was introduced into UK competition law. Under this procedure, an agreement is considered automatically exempt from Chapter I prohibition if it benefits from individual or block exemption under Article 101(3) TFEU. The OFT has the power to subject a parallel exemption to conditions or obligations.

There is no statutory requirement to notify agreements or conduct to the OFT. A particularity of UK law is that it made provision for two types of notification, namely:

- notification for guidance;- notification for a decision (Sections 12 through 16). Regulation No 2004/1261, applicable from 1 May 2004, put UK legislation in line with the moder-

nization of Competition Law brought about by EU Regulation No 1/2003, by promoting self-assess-ment of their agreements by undertakings and stating that Sections 12 to 16 shall cease to have effect.


29.05. ContextChapter II of the Act is modeled on Article 102 TFEU. It prohibits only the abuse of a dominant

position by one or more undertakings and not merely holding such a position. Contrary to several Member States (e.g. Germany and France), there are no provisions concerning economic dependen-cy. In addition, trade within the UK must be affected for the prohibition to come into play. In terms of demonstrating there is a position of dominance, the question is whether dominance exists in the UK or any part of it.

Exclusions are more limited than those covering the Chapter I prohibition. However, the SoS may by an order provide that for “exceptional and compelling reasons of public policy”, the Chapter II prohibition should not apply.

Notification for guidance or for a decision (see above) could concern abuse of a dominant position. However, as for the Chapter I prohibition, this system no longer exists.

The 2002 Act repealed the parts of the Fair Trading Act 1973 (FTA 1973) relating to monopoly inquiries and replaced them with references to the Competition Commission in order that it conducts market investigations. The purpose of these investigations is to examine markets where it appears that the structure of the market or the conduct of suppliers or customers is harming competition.


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29.06. Dominant positionThe first step for establishing a dominant position consists in defining the relevant market. To

this end, the authority in charge of control may rely on the OFT’s Guideline on Market Definition, which adopts a similar line of reasoning that the EU guidelines. As a consequence, the product market is mostly determined by reference to the notion of substitutability. In this regard, the UK authorities have said they are in favor of the SSNIP test, i.e. whether a small but significant non-transitory increase in the price of goods would lead consumers of the product in question to switch to another. If it would, then such secondary product(s) come within the scope of the definition of the product market; if it would not, then they do not. As regards the definition of the geographic market, the OFT will address demand-side issues such as customer mobility and chains of substitution as well as supply-side issues such as transportation costs.

The test used to assess dominance is the same as that employed under EU law. The OFT Guideline actually refers to EU case law to indicate what is a dominant position. Dominance is defined as an undertaking’s power to behave independently of its competitors, customers and consumers on a relevant market. The Guideline does not set any market share thresholds indicating dominance; however, it does refer to EU case-law, noting that the Court of Justice considers that a 50% market share creates a presumption of dominance.

In its assessment of dominance (see OFT Guideline 415 on assessment of market power), the OFT looks to a number of factors such as:

- market share. It should be studied over a prolonged period as it fluctuates over short time spans. Further, market share is not in itself the determining condition of market power, since much depends on other factors such as barriers to entry etc. (point 4.3);

- entry barriers. Pursuant to the Guideline, three different types of entry barrier exist. The first is one that grants what is referred to as absolute advantage, e.g. the holder of a government-granted monopo-ly. The second is referred to as a strategic advantage. This covers situations where one undertaking has invested so much in a particular field that it is the clear leader or benefits from incomparable economies of scale. Finally, the Guideline lists exclusionary behavior aimed at preventing market entry as behavior that may be considered as creating a barrier to entry (see paragraph 5 of the Guideline);

- miscellaneous. At paragraph 6, the Guidelines consider other factors that may be of importance to assessing market power, such as the conduct of the undertaking under investigation, i.e. whether it has acted in such a way as to demonstrate the existence of market power, e.g. raising its prices. Another important factor is whether the undertaking benefits from buying power.

29.07. abuseOnce dominance is established, it is necessary to demonstrate its abuse. Section 18 of the

Competition Act 1998 sets out a list similar to that laid down in EU law on abusive practices. Further in its Guidelines on the assessment conduct (OFT 441a), the OFT has explained its approach to each of the following types of behavior: refusal to supply in the context of an essential facility, dis-counting, vertical restraints, excessive pricing, predatory pricing, and discriminatory pricing.

There is no power to grant an exemption from the Chapter II prohibition. However, the OFT Guidelines indicate that if the undertaking’s behavior involves an agreement which has been granted an individual exemption, whether at the UK or the EU level, it cannot be re-examined under the Chapter II prohibition in the absence of any change in circumstance.

Although there are no appreciability thresholds with respect to the Chapter II prohibition, the SoS considers that an undertaking with a turnover of £50 million (EUR 58 million) or less is, in principle, immune from penalties (SI 2000 No 262).

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ii. Enforcement


29.08. the Office of Fair trading (OFt)Before the Enterprise Act 2002, the Director General of Fair Trading (DGFT), operating with

the assistance of the Office of Fair Trading (OFT), was the main enforcement body of the Chapter I and II prohibitions.

The Enterprise Act 2002 established the OFT on a statutory basis as a corporate body and has transferred to it the functions previously exercised by the DGFT. Since 1 April 2003, the OFT Board is made up of a Chairman and a Chief Executive, Executive Directors and Non-executive Members, appointed by the SoS.

Under Section 25 of the Competition Act, the OFT may conduct an investigation if there are reasonable grounds for suspecting that the Chapter I or II prohibitions have been infringed. It can grant individual exemptions from Chapter I prohibitions (Section 4) make a decision to bring the infringement to an end (Sections 32 and 33), take interim measures (Section 35) and impose penal-ties (Section 36).

Pursuant to the 2002 Act, the general functions of the OFT include:- obtaining, compiling and keeping under review information about matters relating to perfor-

ming its functions, with a view to insuring that the OFT has sufficient information to take informed decisions and to carry out its functions effectively;

- making the public aware of the ways in which competition may benefit consumers and the economy, and giving information or advice about its functions to the public. This includes publishing educational material and carrying out educational activities;

- providing information and advice to ministers and public bodies on matters relating to any of its functions and

- promoting good consumer practice.Finally the 2002 Act requires the OFT to publish an annual plan containing its main objec-

tives and priorities for the year. This plan is subject to public consultation and a copy laid before Parliament. Following the end of each financial year, the OFT also gives the SoS a report on its activities and performance throughout the year.

29.09. the Competition Commission (CC)The Competition Commission replaces the Monopolies and Mergers Commission (MMC) and

was created pursuant to Section 45 of the Competition Act 1998. Since 1 April 2003, it no longer hears competition case appeals. It is empowered to conduct in-depth inquiries into mergers and markets as to alleged anticompetitive practices. Every inquiry that the Commission undertakes is in response to a referral from another authority, usually the OFT. The Commission cannot initiate inquiries ex officio.

The 2002 Act enhanced the role of the Commission, giving it the responsibility for making deci-sions on competition questions and for making and implementing decisions on appropriate reme-dies. This differs from the previous regime where the Commission’s only power in relation to reme-dies was to make recommendations to the SoS.

The Commission is a non-departmental public body. It consists of members who are supported by a staff. One Commission member is Chairman, and also chairs the Council, which is the stra-tegic management board of the Commission. The Council includes the Deputy Chairman of the Commission and three non-executive Commission members.

Members of the Commission are appointed by the SoS for an eight year term following an open competition. There are usually about 50 members in the Commission.


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29.10. the Secretary of State (SoS)The role of the Secretary of State for Business, Innovation and Skills (SoS) in competition law is

primarily legislative. The SoS has limited powers to make block exemption orders from prohibitions and to resolve jurisdictional disputes between the OFT and Utility Regulators. Thus, the SoS does not as a rule become involved in specific cases; but does have more general responsibilities, namely:

- pursuant to Section 6 of the 1998 Act, it is the SoS who has the power to approve a recommen-dation of the OFT to issue a block exemption order. In this regard, the SoS also has the power to vary an existing block exemption regulation;

- under paragraph 7 of Schedule 3, the SoS has the power to exclude certain agreements or conduct from the application of the Chapter I and Chapter II prohibitions for “compelling reasons of public policy”;

- the SoS establishes the method for calculating turnover for the purpose of fixing penalties pur-suant to Chapters I and II;

- the SoS may adopt regulations in order to coordinate the functions performed concurrently by two or more Regulators;

- pursuant to Section 76(3) of the 1998 Act, it is for the SoS to decide when particular provisions of the 1998 Act will come into force; and

- the SoS has various powers, pursuant to Schedule 7 of the 1998 Act, as regards the composition of the Competition Commission.

29.11. the Competition appeal tribunal (Cat)The 2002 Act established the Competition Appeal Tribunal (CAT), which replaced the

Competition Commission Appeal Tribunal on 1 April 2003. The CAT, which is entirely inde-pendent from the Competition Commission, has taken over the latter’s function of hearing appeals of certain decisions taken by the OFT or sectoral Regulators under the 1998 Act. Among other things, it has the power to confirm, set aside or vary the decision or remit the matter to the OFT or appropriate Regulator.

The CAT’s functions under the 2002 Act are:- to hear claims for damages where an infringement of competition rules has been found;- to hear representative claims for damages, brought by specified bodies on behalf of groups of

named individual consumers in respect of established breaches of those competition laws and;- to review decisions taken by the OFT, the Competition Commission, the SoS or sectoral

Regulators.Any person aggrieved by a decision of the OFT or of Competition Commission may apply to

the CAT for redress. Applications need to be brought without unreasonable delay and in any event within three months.

The President and chairmen of the CAT are appointed by the Lord Chancellor. The SoS ap-points ordinary members. For each proceeding, the CAT must consist of a chairman and two other members.

The CAT receives its funds and administrative support through a new body called the Competition Service.

29.12. the courtsCriminal offenses set out by the 2002 Act may be tried either in a magistrates’ court, for a summary

trial, or before a jury in the crown court for a trial on indictment. In England, Wales and Northern Ireland, prosecutions are generally undertaken by the Serious Fraud Office (Section 190), although the OFT also has the power to prosecute. Private prosecutions may be brought only with the consent of the OFT. In Scotland, prosecutions are brought by the Lord Advocate.

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a) OfT proceedings

29.13. ComplaintsComplaints alleging a breach of a prohibition may be made to the OFT or to a sector Regulator

if appropriate. The OFT published a Guideline on the submission of complaints (OFT 451), whose Annex B details the information which should be provided by the complainants and recommends that complaints not be made anonymously, so it is easier to seek clarification and information. Moreover, in order to help the speedy handling of complaints, the Guideline provides in certain circumstances for letters from complainants to be disclosed to the target of the complaint.

29.14. Super-complaintsOn 20 June 2003, the super-complaints provisions of Section 11 of the 2002 Act entered into

force. They authorize designated consumer bodies to make “super-complaints” where there are market features that may be harming consumers to a significant extent. Relevant market features that could give rise to a complaint include the market structure or the general conduct of firms operating in the market. Any body that represents the interests of consumers of any description and which meets other criteria published by the SoS’s Guidance for prospective designated super-complaints bodies may be deemed eligible to make super-complaints. So far, the SoS designated: The Campaign for Real Ale Limited (CAMRA), The Consumer Council for Water, The Consumers’ Association (trading as “Which?”), The General Consumer Council for Northern Ireland (GCCNI), National Association of Citizens Advice Bureaux (NACAB), The National Consumer Council (trading as “Consumer Focus”) and The Scottish Association of Citizens Advice Bureaux (trading as Citizens Advice Scotland (CAS)).

The OFT has up to 91 days to respond to a super-complaint. The answer will state whether the OFT has decided to take action, and if so, what action it proposes to take. The 2002 Act does not limit the types of action allowed. Outcomes may include investigations into the market, enforce-ment action under the 1998 Act, recommending changes to legislation or referring the market to the Competition Commission for further investigation. Super-complaints may also be made to sectoral Regulators in relation to particular markets (see OFT’s Super-complaints: guidance for designated consumer bodies, OFT 504).

29.15. Powers of investigationThe 1998 Act introduced wide ranging changes as regards procedure and enforcement under

UK competition law. This new approach is effect-oriented, rather than placing an emphasis on form. These changes created a need for wider investigative and enforcement powers. Under the new regime, the OFT operates under a system not unlike that of the European Commission, and the new powers are based on Articles 17-20 of EU Regulation No 1/2003. Under Sections 26 to 29 of the 1998 Act, the OFT is empowered to do any of the following:

- require the production of specified documents;- require the provision of any specified information;- enter and search premises without a warrant after giving two-days working notice, require the

production of any relevant documents and explanations;- without giving notice, enter and search premises with a High Court warrant where there are

reasonable grounds to believe that a document will be destroyed or where entry without a warrant has been refused.

The OFT may open an investigation if there are reasonable grounds for suspecting a violation of the prohibitions set out in Chapters I and II. The formal powers of investigation cannot be used unless an investigation is opened based on such reasonable grounds for suspicion. Reasonable


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grounds may include inter alia incriminating copies of secret arrangements provided by members of a cartel, statements from employees or complaints. Further, the OFT may require any person to produce documents or information that relate to any matter relevant to the investigation. The notice requiring information can be served upon the undertakings concerned and on third parties, such as complainants, suppliers, customers and competitors. The OFT can take copies or extracts of docu-ments and require explanations. The time-limit for producing documents is set by the OFT on a case by case basis.

When on the premises of the suspected undertaking, the investigating officer may require the production of documents on the premises, take copies or extracts of the documents produced and require explanations regarding the documents. The officer also may take any equipment deemed necessary, such as portable computers or tape recording equipment or require any relevant infor-mation electronically stored to be produced in a form that can be read and taken away, and take steps necessary to preserve documents or prevent interference with them. The premises also include vehicles and domestic premises if the home is used in connection with the business or if business documents are kept there, but their access to is conditional on a warrant being produced (see OFT’s Guide to the investigation procedures in competition cases, OFT 1263, March 2011).

29.16. rights of the investigated undertakings Under Section 30 of the Competition Act, no person shall be required to produce or disclose a pri-

vileged communication, i.e. a communication between a professional legal advisor and the client, or a communication made in connection with legal proceedings for the purposes of these proceedings. In contrast to EU law, the term professional advisor extends to in-house counsel and non-qualified lawyers under the laws of the Member States.

More generally, an investigating officer has no power to order the production of documents unless the officer considers that the document relates to a matter relevant to the investigation (Section 26(1)). Thus, investigating officers have no right to conduct fishing expeditions.

Part 9 of the 2002 Act included new requirements for safeguarding certain information and laid down the requirements to be met before public authorities, including the OFT, may disclose such information. The general rule is that “specified information” which relates to the affairs of an indivi-dual or of any business of an undertaking must not be disclosed during the lifetime of that individual or undertaking (Section 237 of the Act). Section 243 of the Act provides some leeway for disclosing information to overseas public authorities under certain circumstances, despite the general prohibi-tion under Section 237.

Neither, as is the case under EU law, are undertakings compelled to answer questions that may lead to self-incrimination.

29.17. two-stage proceedingsEnforcement proceedings are carried out over two stages. Where the OFT considers that an

infringement of the Competition Act 1998 may have occurred, it will carry out an investigation pur-suant to Section 25. Where the investigation leads the OFT to consider that there has been a breach of Chapter I or Chapter II, then pursuant to section 31 of the Act it must, before taking the decision, give the undertakings concerned a chance to defend themselves.

If the OFT considers that there has been an infringement, it must notify a Statement of Objections to the parties who have an opportunity to respond before the OFT issues its final decision.

The OFT can accept binding commitments of the parties at any time during the investigation until a decision is made. A formal settlement may also be reached with addressees of the Statement of Objections by early resolution agreements. In return for an admission of liability and an agreement to cooperate, the OFT will lower the fine.

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29.18. interim reliefUnder the previous competition regime, serious harm could be inflicted on a company before the

competition authorities were able to intervene. Since 1998 (Section 35 of the Competition Act), the OFT now has the authority to adopt interim measures where the circumstances so require pending a final decision. It may be necessary to act urgently to prevent serious, irreparable damage where, for example, a smaller competitor is put out of business or is suffering a considerable competitive disad-vantage as the result of apparently abusive conduct from another dominant undertaking on the market.

Interim measures may be awarded by the OFT sua sponte or upon request by a complainant. The measures may, inter alia, require the undertaking concerned to terminate an agreement, cease conduct, or modify an agreement or conduct. Contrary to EU law, measures are not required to be temporary or limited to what is strictly necessary.

The OFT will award interim relief where:- there exists a reasonable suspicion that the Chapter I or Chapter II prohibition has been infringed;- it is necessary to act urgently either to prevent serious and irreparable damage to a particular

person or category of persons, or to protect the public interest.

b) Competition Commission proceedings

29.19. the OFt referenceThe 2002 Act repealed the former FTA 1973 monopoly inquiries and replaced them with market

investigation references from the OFT to the Competition Commission. The Government intended market investigation references to focus upon the function of a market as a whole rather than the conduct of a single firm in a market. If the OFT has concerns about the conduct of a firm or firms that have engaged in anticompetitive agreements, it will first consider whether those actions infringe the Competition Act 1998. However, in the context of oligopolistic markets, the 1998 Act does not cover all types of competition issues and it may be appropriate for the OFT to make a market inves-tigation reference.

Pursuant to Section 131 of the 2002 Act, the OFT may make a market investigation reference to the Competition Commission where it has “reasonable grounds for suspecting that any feature, or combination of features, of a market in the UK for goods and services prevents, restricts or distorts competition in connection with the supply or acquisition of any goods and services in the UK or part thereof. However, a reference cannot be made by the OFT where a commitment has been accep-ted in lieu of a reference (officially called “undertaking in lieu of reference”) or where a ministerial reference of the same matter has been made but not yet ruled on by the Competition Commission.

Under Section 131(2) of the Act, a ‘feature of a market’ refers to:- the structure of the market concerned or any aspect of its structure;- any conduct (whether or not in the market concerned) of one or more than one person who

supplies or acquires goods or services in the market concerned;- any conduct relating to the market concerned of customers of any person who supplies or acquires

goods or services.

29.20. Powers of investigationWhere the Competition Commission decides that there is an adverse effect on competition, it

is required to determine whether it should take action itself, or recommend others do so for the purpose of remedying, mitigating or preventing the adverse effect on competition or any detrimental effect on customers, to the extent that such an effect has resulted from, or may be expected to result from, the adverse effect on competition.

In either case, if action is taken, the Commission decides what action should be taken and what is to be remedied, mitigated or prevented.


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The maximum period for the Competition Commission’s investigation is two years.Further information on market investigation references can be found in the OFT’s Guidance

about the making of reference under Part 4 of the Enterprise Act (OFT 511) published in March 2003 and the Competition Commission’s Guidelines on market investigation references ( June 2003, to be revised following a 2011 draft).

c) Enforcement by ordinary courts

29.21. DamagesThird parties who consider that they have suffered a loss as a result of unlawful agreements or

conduct may bring a claim for damages in the courts. According to Section 60 of the 1998 Act, the UK courts are required to handle cases so as to ensure consistency with EU law. Section 60 expressly refers to the decisions of the European Court and of the European Commission as to the civil liabi-lity of an undertaking for harm caused by infringements of EU law.

The 2002 Act also enables claims for damages to be brought before the CAT where a breach of competition law has already been established. Damages claims may be available to persons who have suffered loss or damage as a result of certain types of competition law infringement. Claims may be made where either the OFT or the European Commission has decided that there has been a breach of the cartel prohibition or of the abuse of a dominant position prohibition. Claims may also be made where the CAT has itself established a breach of one of these prohibitions as a result of an appeal of a decision of the OFT. Those follow-on actions may be brought before the CAT, or the High Court. Finally, claims may be brought directly by the person who has suffered a loss caused by an infrin-gement of the prohibitions or by bodies specified by the SoS who may bring representative actions on behalf of consumers. In the latter case, damages will be awarded directly to the represented consumers. Those standalone actions may only be brought before the High Court.

C. Sanctions

29.22. Cease and desist ordersWhen the OFT has decided that an agreement infringes the prohibitions of Chapter I or II,

directions may be given to such persons as deemed appropriate to terminate the infringement. The direction may require an undertaking modify or terminate the agreement or conduct in question (1998 Act, Sections 32 and 33).

Failure to comply with a direction without reasonable excuse may lead the OFT to apply to the courts for an order requiring compliance within a specified time-limit. Breach of such court orders is considered contempt of court and punishable by a fine or imprisonment.

29.23. FinesInfringement of the Chapter I or Chapter II prohibition is punishable by a fine. Inflicting penalty

necessitates proof that infringement has been committed intentionally or negligently (Section 36(3)). Under Section 36(8), the penalty may not exceed 10% of the undertaking’s turnover achieved in the UK.

As regards the amount of the penalty, OFT Guideline 407 on enforcement and OFT Guideline 423 on Guidance as to the appropriate amount of a penalty, revised in September 2012, offer insight into the factors taken into consideration by the OFT. The 2012 Guidelines increases from 10% to 30% of the undertaking’s turnover the maximum starting point for penalty calculations, in order to better reflect the seriousness of infringements such as cartel activities and serious abuses of dominant position. From September 2012, penalties will be calculated following a six-step approach: i) calcu-lation of the starting point having regard to the seriousness of the infringement and the relevant tur-nover of the undertaking ; ii) adjustment for duration ; iii) adjustment for aggravating or mitigating

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factors ; iv) adjustment for specific deterrence and proportionality ; v) adjustment if the maximum penalty of 10 per cent of the worldwide turnover of the undertaking is exceeded and to avoid double jeopardy ; and vi) adjustment for leniency and/or settlement discounts.

29.24. SMEs’ immunitySmall and Medium-sized Enterprises (SMEs) may be immune from financial penalties for agree-

ments that may infringe the Chapter I prohibition and conduct that may infringe the Chapter II prohibition. This immunity does not, however, apply to price fixing agreements. Statutory Instrument 2000 No 262 indicates the criteria used to determine if agreements or conduct is of minor significance.

Agreements are considered minor where the parties’ combined turnover for the business year preceding the one during which the infringement occurred does not exceed £20 million (EUR 23 million). For an undertaking’s conduct to be deemed minor with respect to the Chapter II prohibi-tion, the ceiling is £50 million (EUR 58 million) turnover in the previous business year.

29.25. LeniencyWhistleblowing is a central plank of OFT policy, which has been influenced by the corporate

leniency policy of the US Department of Justice.In order to encourage undertakings involved in cartel activities to inform the OFT of the cartel’s

existence, the OFT will offer total immunity from financial penalties for a Chapter I infringement to the first member of the cartel to come forward before any investigation has been initiated. Alternatively, cartel members who provide evidence of a cartel’s existence after an investigation has begun, but before the OFT gives written notice of its intention to take an infringement decision, may be eligible for a 50 % reduction of penalties. More precisely, the leniency scheme offers many options: i) type A immunity (automatic civil immunity for the undertaking and automatic criminal immunity for all of its current and former employees and directors who co-operate) is granted where an undertaking is the first to apply and there was no preexisting civil and/or criminal investigation into the activity at stake; ii) type B immunity (discretionary civil immunity for the undertaking and discretionary criminal immunity for all of its current and former employees and directors who co-operate) is granted where the undertaking is the first to apply but there was already a pre-existing civil and/or criminal investigation into such acti-vity; iii) type B leniency consists in a reduction of, but not immunity from, a financial penalty imposed under the 1998 Act where the undertaking is the first to apply but there was already a pre-existing civil and/or criminal investigation into the relevant cartel activity; type C leniency consists in a reduction of up to 50% of the level of a financial penalty imposed under the 1998 Act where the undertaking was not the first to apply whether or not there was already a pre-existing civil and/or criminal investigation into the relevant cartel activity. In all cases, additional conditions regarding cooperation and future behavior apply in order to qualify for leniency.

When assessing the amount of any penalty the OFT may take the existence of a compliance program into account as a mitigating circumstance (For more detailed information on compliance programs, practitioners should refer to OFT 1341, How your business can achieve compliance with competition law and OFT 1340, Company directors and competition law and OFT revised Guideline 423). In order for a compliance program to reduce a penalty, the parties need to show that they engaged in a risk-based, four-step approach on top of which lies a clear and unambiguous commitment to competition law compliance made the senior management of the undertaking and especially the board. Step 1 consists in risk identification; step 2 implies assessing risk; step 3 involves risk mitigation, i.e. the setting up of appropriate policies, procedures and training with the aim of avoiding the identified risks and ensuring their proper detection and defining a course of action; step 4, finally, consists in regular review if compliance tools. Where the above conditions are satisfied, the OFT may make a reduction in the amount of the penalty by up to 10% (see OFT Guidelines 423 on penalties, OFT No-action Guidance (OFT 513, April 2003) and OFT Guidance 803 of December 2008 on the handling of applications – Leniency and no-action).


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29.26. Criminal sanctionsThe 1998 Act provides for criminal liability for failure to cooperate during the investigation

phase. According to Sections 42 - 44 and Section 65, it is a criminal offense not to comply with a requirement imposed under the investigation powers of the Act, to intentionally obstruct an officer carrying out an on-site investigation, to intentionally or recklessly destroy, conceal or falsify docu-ments requested by authorities, or to provide false information. Offenses will be tried either in the Magistrates’ Court or Sheriff Court or, in case of more serious offenses, on indictment in the Crown Court or the High Court of the Justiciary. Fines or imprisonment may be imposed and will differ ac-cording to the offense committed and to whether the person is found guilty on summary conviction or on indictment. Fines on summary conviction may run to £5,000 (EUR 6,360), but are unlimited when a person is found guilty on indictment. Moreover, in case of an indictment, imprisonment of up to two years may be imposed for obstructing an investigation carried out pursuant to a warrant, for destroying documents or for providing misleading or false information (OFT Guideline 404, Powers of Investigation).

The 2002 Act also introduced a criminal offense for individuals who dishonestly engage in certain types of cartels. The cartel agreements specified in Sections 188-189 of the Enterprise Act do not cover all agreements which would be caught by the Chapter I prohibition, but only the specified offenses of price-fixing, market-sharing, bid-rigging and limiting the supply of goods or services. The offense only applies to horizontal agreements. Before the Magistrates’ court, where summary trials are held, a convicted offender is punishable with a maximum of six month’s imprisonment and/or a fine up to the statutory minimum. Upon conviction on indictment before the Crown Court, an offender is punishable with up to a five years imprisonment and/or an unlimited fine.

However, in the context of cartel offenses, the 2002 Act provides for immunity from prosecu-tion for individuals in the form of a “no-action letter” issued by the OFT under Section 190(4) of the Act. The conditions to benefit from a no-action letter are quite the same as those required for immunity from fines under the leniency program: individuals must acknowledge their participation in the criminal offense, provide the OFT with any information they have about the existence and activities of the cartel, maintain cooperation throughout the investigation and until conclusion of the proceedings and must not have taken steps to coerce another undertaking to take part in the cartel and refrain from further participation in the cartel from the time of its disclosure to the OFT. Furthermore, the OFT must not already hold sufficient information to prosecute.

A draft no-action letter can be found in the OFT’s Guidance on the issue of no-action letters for individuals (OFT 513, April 2003), supplemented by OFT’s Guidance 803 of December 2008 on the handling of applications – Leniency and no-action.

29.27. Competition Disqualification OrdersSection 204 of the Enterprise Act empowers the OFT to ask a court to order that directors of

companies which have committed a breach of competition law be disqualified, hence the name of these orders: Competition Disqualification orders (CDOs). Sectoral Regulators may also apply for CDOs in relation to their designated sectors. A CDO may be issued for breach of the Chapter I and II prohibitions of the 1998 Act or for breach of Articles 101 and 102 TFEU.

The court must make a CDO against a person if it is satisfied that he or she is a director of a company that has committed a breach of competition law, and if the court considers that person’s conduct (either active or passive, i.e. through omission) as a director makes him/her unfit to be involved in the management of a company.

When assessing the director’s conduct, the court must consider whether he/she contributed to the breach, failed to take steps to prevent it or ought to have known that the conduct violated competition law.

Finally, the OFT may accept a Competition Disqualification Undertaking instead of applying for a CDO; this has the same effect as a CDO but is a binding commitment given to the OFT by the person in question rather than being ordered by the court (OFT’s Guidance on Director disqualifi-cation orders in competition case, OFT 510, 2010).

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D. appeals

29.28. appeals against decisions of the OFtAppeals against decisions of the OFT are heard by the Competition Appeal Tribunal (Sections

46-49 and Schedule 8). Any party to an agreement subject to an OFT decision or any person whose conduct has been subject to an OFT or the sectoral Regulator decision may appeal this decision. In hearing appeals of OFT decisions, the CAT is not limited to judicial review but may consider their full merits (i.e. points of law and fact).

Third parties having a “sufficient interest” and bodies representing such parties are also able to appeal decisions of the OFT. However, for their appeal to be considered valid, they must have pre-viously asked the OFT to withdraw or vary the relevant decision.

The CAT may confirm the decision, send the case back to the OFT, impose, revoke or vary the amount of a penalty, grant or cancel an individual exemption and more generally, make any other decision that the OFT could have made. The rules of procedure before the CAT can be found on the Tribunal’s website (www.catribunal.org.uk).

29.29. appeals against decisions of the Competition appeal tribunal There may be further appeals on points of law or the amount of a fine, which may be brought before

the appropriate Court of Appeal in the United Kingdom. Points of law include errors of law, jurisdic-tional issues or essential procedural safeguards. The appropriate appeal courts are the Court of Appeal in England and Wales, the Court of Session in Scotland and the Court of Appeal in Northern Ireland. The ultimate court to hear appeals from any of these latter courts is the House of Lords (Competition Appeal Tribunal’s Guide to appeal under the Competition Act 1998, June 2003).

Section 2 MERGERS


29.30. ContextUnder the Enterprise Act, mergers are investigated by the OFT and may be referred to the

Competition Commission for a Phase 2 in-depth analysis.Mergers involving defense-related companies, newspapers and broadcast media or water compa-

nies may be subject to distinct procedures and jurisdictional tests, so that mergers of smaller busi-nesses that do not meet the turnover test nor the share of supply test may still be subject to merger scrutiny. Moreover, sector-specific Regulators, such as the Ofcom in the telecommunications sector, are empowered to investigate sector-specific mergers.

In March 2011, the Department of Business Innovation and Skills (BIS) launched a consultation (A Competition Regime for Growth: A Consultation on Options for Reform) containing a proposal to merge the competition functions of the Office of Fair Trading and the Competition Commission to create a single Competition and Markets Authority (CMA). According to the BIS, a single CMA would “ensure the flexible allocation of scarce public resource to competition issues as they emerge”, and enable it “to be a stronger advocate for pro-competition policy across government, including in the delivery of public services”.

29.31. Concept of concentrationThe Enterprise Act 2002 substantially changed the existing rules applicable to mergers in the UK

by replacing the vast majority of the provisions of the Fair Trading Act 1973 (FTA 1973). Following the new provisions, prior notification of a merger to the OFT is not mandatory, except in certain


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cases specified in the Act. However, where a “relevant merger situation” is created, the OFT is requi-red by Section 22 of the 2002 Act to refer any completed or anticipated merger to the CC (see joint OFT and CC’s Merger Assessment Guidelines, OFT 1254 of September 2010).

A relevant merger situation under the 2002 Act (Section 23) arises where two or more enterprises cease to be distinct and either the merger has not yet taken place or has taken place less than four months before the reference is made, or it took place without having been made public and without the OFT being informed.

Enterprises cease to be distinct if they are brought under common ownership or control (Section 26). The term “control” refers to the existence of a controlling interest, such as where an individual or undertaking acquires more than 50 per cent of the voting right in a company. However, “control” is also defined more broadly as the ability to materially influence or control the policy of an underta-king or of any person carrying on an enterprise.

29.32. thresholdsA merger falls under the Enterprise Act if the share of supply test or the assets test, or both, are

satisfied. Broadly speaking, the share of supply test is met if, as a result of the merger, the new entity accounts for at least 25 per cent of the supply or acquisition of particular goods or services either in the UK as a whole or in a substantial part of it. If this was already the case before the merger, the test will be met if, as a result of the merger, the market share is enhanced. The assets test is satisfied if the gross value of the world-wide assets taken over exceeds £70 million (EUR 82 million).

The phrase “a substantial part of the UK” has been held to mean an area which must be of a size, character and importance as to make it worth consideration by the supervisory authorities (Regina v Monopolies and Mergers Commission, ex p South Yorkshire Transport Ldt, [1993] 1 WLR 23).

29.33. Control criteriaThe 2002 Act substantially modified the assessment criteria for mergers. Except in certain cases,

mergers will now be assessed against a pure competition test, rather than the wider public interest test. Generally, mergers will be prohibited, or remedies required, if they would result in a substantial lessening of competition in a UK market. In December 2010 the OFT and the CC decided to unify their assessment criteria relating to the competition effects of a merger, nevertheless specifying that they will conduct a case by case analysis taking account of the particular transaction and the indivi-dual markets being analyzed. Namely, they will define the relevant market(s) in which the parties to the merger are involved and then analyze the structure of these markets, the unilateral or coordinated effects, and pay particular attention to elements such as barriers to entry, buying power of customers, and efficiencies.

ii. Enforcement


29.34. Office of Fair tradingThe OFT, as established by the 2002 Act, has the function of obtaining and reviewing informa-

tion relating to merger situations on behalf of the Crown. It also has a duty to refer any relevant merger situations to the CC for further investigation. The OFT also refers public interest mergers to the SoS.

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29.35. the Competition CommissionThe CC investigates mergers referred to it by the OFT and occasionally by the SoS to determine

whether the merger situation qualifies for investigation. The CC has no authority to investigate a merger unless it has been asked to do so by the OFT or the SoS.

29.36. the Secretary of StateThe head of the Department of Business Innovation and Skills has retained a role in merger decisions

for certain newspaper mergers and certain public interest cases. The SoS may also modify certain provi-sions of the Act, including those relating to jurisdictional thresholds and merger fee amounts.


29.37. Merger notificationThere is no general requirement to notify mergers to the UK competition authorities except in

the case of newspaper mergers, which require the prior consent of the Secretary of State. However, in its March 2011 consultation, the Department of Business Innovation and Skills suggested three scenarios regarding notification, two of which providing for compulsory notification in specific cir-cumstances. At present, there are two recognized types of notification:

- voluntary notification. This is where the parties make an informal written submission outlining the facts of the case, the relevant market, the situation as to barriers to entry etc. Thereafter, the OFT considers the matter and ordinarily hands down a decision within 40 working days;

- statutory voluntary notification. Alternatively, the parties can make a statutory voluntary notifi-cation. The procedure under Section 96 of the 2002 Act is only applicable to mergers that have yet to be completed. The parties must use the notification form prescribed by the OFT and provide it with sufficient information to assess whether or not the transaction should be referred to the CC. Ordinarily, a decision on the matter will be taken within 20 working days, although this period can be extended for another 10 days.

Finally, the parties can seek informal advice. This is a confidential process and thus input from third parties is not sought. This potentially weakens the advice given however, as the evaluation may change after all the relevant parties have been heard. The advice does not commit the Secretary of State or the OFT in any way.

Mergers can be reviewed in the absence of voluntary notification: the OFT may investigate a case on its own initiative in the course of its monitoring activity or following a complaint from a third party (customer, consumer or competitor). Where the merger is not voluntarily notified, the OFT will consider whether to investigate the case by sending the parties an inquiry letter, whose purpose is to establish whether the thresholds set by the 2002 Act are met and to ascertain information about the transaction. If the response to the inquiry letter contains all the information that the OFT needs to begin its investigation, it will then review the merger as if it had been notified. If the OFT is not satisfied with the parties’ submission, it will make a request for a full submission and the administra-tive timetable will only begin when sufficient information has been received.

As a result of the absence of compulsory notification, there is no obligation to suspend a merger after its voluntary notification. However, both the OFT and the CC enjoy the power of imposing “hold separate” orders designed to avoid integration between the merging parties if a negative deci-sion is likely to be given.

Filing fees are set at £40,000 (EUR 50,000), £80,000 (EUR 100,000), £120,000 (EUR 150,000) and £160,000 (EUR 200,000) where the target’s turnover is respectively £20 million or less (EUR 25 million), greater than £20 million but less than £70,000 (greater than EUR 25 million but less than EUR 85,5 million), between £70 million and £120 million (EUR 85,5 million and EUR 150 million), or over £120 million (EUR 150 million).


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29.38. Proceedings before the OFtThe OFT invites comments on any public merger situation under review from interested third

parties by means of an invitation to comment notice published on its website. The OFT may also conduct specific consultations and ask merging parties to provide contact details for their main custo-mers, suppliers and/or competitors. Customers’ views may be of value in assessing the degree of substi-tutability between different products or services and therefore in defining the relevant market. In addi-tion, the OFT seeks to estimate the degree of buyer power exercised by major customers, which may act as a constraint on any market power resulting from the merger. Competitors as well as customers may be asked their opinions on such matters as the degree of substitutability between their products and those of the merged company, and whether they believe that the merged company might behave anti-competitively. Generally, the OFT will give more weight to the views of customers than compe-titors, though this partly depends on the quality of the opinions. Where adverse views raise significant competition issues, the parties proposing the merger are told of the nature of the concerns expressed (but not the identity of the persons involved) and are given the opportunity to respond to them. The OFT may also seek opinions from the Government or from sectoral Regulators.

The statutory time table for the OFT’s investigation is normally up to four months after the tran-saction becomes unconditional or is made public.

If pursuant its investigation, the OFT is satisfied that there is no relevant merger situation or no substantial lessening of competition, it will clear the merger. Conversely, the OFT has a duty to refer completed and anticipated mergers to the CC for investigation if it believes that the merger has resulted, or may be expected to result in an Substantial Lessening of Competition (SLC). The OFT must make a reference to the CC when it believes that the merger is more likely than not to result in an SLC. If the OFT believes that the relevant likelihood is greater than fanciful, but below 50%, it has a wide margin of appreciation in exercising its judgment. There is a duty to refer when the OFT believes there to be a realistic prospect that the merger will result in an SLC. However, the OFT may decide not to refer the transaction to the CC for a phase 2 investigation in the case of de minimis mergers; where customer benefits outweigh the SLC and any adverse effects of the SLC; and in the case of an anticipated merger, where the arrangements concerned are not sufficiently far advanced, or are not sufficiently likely to proceed, to justify a reference. Furthermore, the OFT may not make a reference where it considers accepting undertakings in lieu of making a reference.

29.39. Proceedings before the Competition CommissionThe CC cannot initiate an investigation ex officio but only after reference made by the OFT or the

SoS. When a merger is referred to the CC for an in-depth investigation (phase 2), it has 24 weeks, beginning with the date of the reference, to prepare and publish its report. One extension of no more than eight weeks is allowed. The CC’s duty is to investigate and report on whether a relevant merger situation has been or will be created and, if so, whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition within any market or markets for goods or services in the UK. In addressing those two issues, the CC will apply a ‘balance of proba-bilities’ threshold to its analysis to decide if it is more likely than not that the transaction will result in an SLC. In this respect, the CC must form an expectation which has a higher level of probability than that required of the OFT, which requires a more extensive investigation than that carried out at phase 1. As the OFT, the Commission has the power to ask the merging parties to supply any document, information or witness testimony. The Commission is also empowered to take evidence on oath and to administer oaths for that purpose.

The 2002 Act contains two prohibitions (in Sections 77 and 80) that prevent the parties taking any action which might prejudice the reference or make it difficult to take action on the CC’s findings in the event of an adverse report. Where the merger has not yet been completed, Section 78 of the Act prohibits the parties from acquiring interests in each other’s shares during the reference period without the CC’s consent. Parties can however apply for special consent to acquire shares during the reference period. A company that wants to do this can either make its views known before the

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decision to refer has been announced or seek special consent after the reference has been made. In considering any request for such special consent, the CC will take into account the need to prevent the bidding company from increasing its level of control over the target. Where a merger does not involve the acquisition of shares or where it has already been completed, the CC may, for the purposes of preventing pre-emptive action, accept interim measures under Section 80. It may also adopt any initial measure accepted by the OFT under Section 71, or initial orders imposed by the OFT under Section 72, if still in force. Such measures or orders will normally require the merged company not to proceed with the transaction or to take further steps to integrate the businesses until the outcome of the CC investigation has been made public.

29.40. Proceedings before the Secretary of StateUnder the 2002 Act, the Secretary of State has the ability to issue an intervention notice in public

interest cases (Sections 42 and 43). The Act currently defines only national security, plurality of the media and stability of the UK financial system as public interest criteria, although there is provision for the SoS to identify additional public interest criteria. If such a notice is not issued, the OFT will treat the case and make its decision on competition grounds as if it were any other merger case. If an intervention notice is issued, the case is handled in the following way:

- The OFT provides definitive advice to the Secretary of State on jurisdictional and competition issues, which must be accepted. The OFT can also advise on the public interest considerations that are relevant to the Secretary of State’s decision on referred cases, and must pass a summary of any relevant public interest-related representations it has received to the Secretary of State.

- The Secretary of State then makes a judgment on the outcome of the case in light of the OFT’s advice. References to the Commission can be made either because the merger results in a substantial lessening of competition and, combined with the public interest issues, will operate or be expected to operate against the public interest; or because, while there is no substantial lessening of competition arising from the merger the public interest issues are such that the merger may be expected to operate against the public interest. The Secretary of State will also consider whether undertakings in lieu of a reference are justified.

If a reference is made on public interest grounds (with or without competition grounds) the Secretary of State will also make the final decision on the merger following the CC’s report. If the Secretary of State concludes that there are no public interest issues that are relevant to the interven-tion notice, the OFT will be instructed to deal with the merger as an ordinary merger case.

In any event, any decision in the case that is based on competition considerations must follow the OFT’s advice on whether or not the merger should be expected to result in a substantial lessening of competition.


29.41. Conditions and commitments – DivestitureUnder the Act, the OFT (or the SoS in public interest cases) may accept binding commit-

ments from a merging business as an alternative to making a reference to the CC (See OFT’s 1122 Exceptions to the duty to refer and undertakings in lieu of reference guidance of December 2010). While “structural undertakings”, such as divestiture of assets, are generally the most appropriate remedy for competition problems in a merger situation, behavioral undertakings may, in some cases, provide a means of seeking to ensure that a merged undertaking does not behave in an anticompe-titive manner, for example by following a particular course of action made possible by the merger.

Where the OFT concludes that those commitments (undertakings in lieu of a reference) are a sui-table remedy to the identified adverse effects arising from the merger, it will normally issue a public announcement stating the merger will be referred to the CC unless satisfactory commitments can be obtained.


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In order to give interested third parties an opportunity to comment, the Act provides for a two-stage consultation process for undertakings. The first consultation is for a period of at least 15 days, and calls for comments on the purpose and effect of the proposed commitments. This stage occurs at the time of the decision or, more likely, a short period afterwards. A second consultation period is only required if the originally proposed undertakings are modified in any material way, in which case there is a further seven day consultation period (See OFT’s Mergers).

If in phase 2, the CC concludes that competition will be lessened, it decides whether action should be taken by it or by others for the purpose of remedying, mitigating or preventing the substantial lessening of competition and what that action should be. In some cases, it might recommend that the merger not take place. It can also recommend that assets, shares or interests in shares already acquired be disposed of, or that the merger only be allowed subject to conditions.

29.42. Civil sanctionsThe OFT and the CC may apply to the High Court for enforcement of merger-related commit-

ments and orders.

29.43. Criminal sanctionsThere are penalties for both notifying parties and third parties that supply false or misleading infor-

mation to competition authorities. Section 117 of the 2002 Act makes it an offense to knowingly or recklessly supply false or misleading information to the OFT, the SoS or the CC in connection with any of their functions under that Act. It is also an offense to give false or misleading information to any third party knowing that they will then supply it to the OFT, the SoS or the CC. The penalties for breaching this provision are a fine, or a maximum of two years imprisonment, or both.

D. appeals

29.44. appeals before the CatThe 2002 Act introduced a new right to apply for review of OFT, CC, or SoS merger decisions.

The parties to the merger or other persons who are sufficiently affected by the decision may apply to the Competition Appeal Tribunal (CAT) for review. The CAT cannot substitute its own decision on the merits of the case, but it can review the reasonableness, lawfulness and fairness of the decision and if necessary, require the OFT, CC or SoS to reconsider.

Part 2

other coUntrieS


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ChaPtEr 30

arGEntina




30.01. ContextThe competition process in Argentina is governed by the Argentine Competition act for the

Defense of Competition No 25.156 of 1999 (“the Competition Law”). It is interesting to note that this law has a constitutional basis as the right to “a defense of competition against all forms of distor-tion of the markets” is established in Article 42 of the Argentine Constitution.

The two main novelties of the Competition Act were the introduction of a merger control pro-cedure and the creation of a new competition law enforcement body, the Tribunal for the Defense of Competition. However, in the end, such a Tribunal was never created and the procedures and powers conferred to the Tribunal by the Competition Law are in fact exercised by the National Commission for the Defense of Competition (“the Antitrust Commission”). The only difference is that the Antitrust Commission remains an advisory body.

Unfair competition is regulated by a specific law, namely the Commercial Loyalty Law No 22.802 which governs false product labeling, false and misleading advertising, false country of origin de-




B. Restrictive agreements and abuse of a dominant position

The prohibition 30.03Restrictive agreements 30.04Dominant position 30.05


The National Commission for the Defense of Competition 30.06

B. Enforcement proceedingsComplaints and investigations 30.07Proceedings before the Antitrust Commission 30.08Interim relief 30.09Enforcement by ordinary courts 30.10

C. SanctionsCease and desist orders 30.11Fines 30.12Criminal sanctions 30.13

D. AppealsAppeals against the Antitrust Commission decisions 30.14

Section 2 Mergers

I. Substantive ProvisionsContext 30.15Concept of concentration 30.16Thresholds 30.17Control criteria 30.18



Proceedings before the Antitrust Commission 30.20B. Conditions / Sanctions


C. AppealsAppeals against the Antitrust Commission decisions 30.23

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nomination. Enforcement of the prohibition of unfair practices is not exercised by the Antitrust Commission but by the National Bureau of Interior Trade.

The Competition Act regulates three types of conduct: anticompetitive agreements; abuses of dominance; and mergers.

In 1996, Argentine signed with the other members of Mercosur (Brazil, Paraguay and Uruguay) an agreement on competition policy called the Fortaleza Protocol. The purpose of the agreement was the creation of a supra-national Committee for the Defense of Competition which would have enforcement powers in matters referred to it by the national competition authorities. The Fortaleza Protocol is not yet in force as only Brazil and Paraguay have ratified it.

30.02. ScopeThe Competition Act covers anticompetitive conduct in markets within Argentina and overseas

business activities to the extent that Argentine markets are affected. More specifically, Section 3 of the Competition Law sets forth “all natural or artificial, public or

private, profit or non-profit persons, performing economic activities in whole or part of the national territory and those performing economic activities outside the country, to the extent their acts, acti-vities or agreements affect the national market, are subject to the provisions of this law”.

B. restrictive agreements and abuse of a dominant position

30.03. the prohibitionAnticompetitive conducts are governed by Section 1 and 2 of the Competition Act. It should be

noted that unlike most competition laws, agreements and concerted actions, and abuses of domi-nance are not treated separately.

30.04. restrictive agreementsSection 1 contains a general prohibition of restrictive practices: “acts and behaviors related to the

production or trade of goods and services that have as their object or effect to limit, to restrict or to distort competition, or constituting abuse of dominant position in a market, in a manner that may result in harm to the general economic interest are prohibited”.

The “harm to the general economic interest” criterion is interpreted by the Antitrust Commission as amounting to harm to consumer welfare, on the basis of the Merger Guidelines adopted in 2001 (Resolution 164/2001) and a judgment of the National Supreme Court of Justice of 2 July 2002 (Yacimientos Petrolíferos Fiscales S.A. [YPF] / ley 22262-Comisión Nacional de Defensa de la Competencia-Secretaría de Comercio e Industria).

Section 2 contains a list of practices which will be considered anticompetitive if they have as their object or effect to harm the general economic interest. This list is not exhaustive and contains, among others, the following conducts:

- price or output fixing agreements (Section 2.a and 2.b); - market allocation (Section 2.c); - exchange of information (Section 2.a); - resale price maintenance (Section 2.g); and- discrimination (Section 2.k).

30.05. Dominant positionSections 4 and 5 of Chapter 2 define the concept of “dominant position”. An undertaking in a

dominant position is described as an undertaking “not exposed to substantial competition”, or alter-


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natively as an undertaking capable, “because of the vertical or horizontal degree of integration”, of excluding a competitor from the market.

The Competition Act does not establish a presumption of dominance based upon a certain level of market share. Instead, Section 5 enumerates three criteria to be taken into account to assess the existence of a dominant position:

- the extent to which the relevant goods or services may be replaced by other national or foreign goods or services, and the conditions and time required for such replacement (Section 5.a);

- the extent to which regulatory restrictions limit the access of products or suppliers or buyers to the relevant market (Section 5.b); and

- the extent to which the relevant undertaking has the power to unilaterally affect prices or to restrict the supply or demand in the market, and the extent to which its competitors are able to offset that power (Section 5.c).

ii. Enforcement


30.06. the national Commission for the Defense of CompetitionThe National Commission for the Defense of Competition (the Antitrust Commission) is in

charge of enforcing the Competition Act. It is formed of five members: four Commissioners and a Chairman. The Commissioners are appointed by the President of Argentina for a period of four years. Two of them must be lawyers and two must be economists. The Chairman of the Commission is appointed by the President of Argentina for an indefinite term. In general, the election of a new President results in the appointment of a new Chairman.

Pursuant to Section 24 of the Competition Act, the Commission has the power: - to conduct studies or market surveys; - to hold hearings with the alleged responsible individuals, claimants, affected parties, witnesses,

or experts; - to take testimony; - to examine books and documents; - to conduct dawn raids upon authorization by a court; - to engage in competition advocacy;- to draft internal rules; - to prosecute actions in court; - to participate with other relevant government’s agencies to the negotiation of international

agreements relating to competition policy; and - to enter into consent agreements.


30.07. Complaints and investigationsThe Competition Act sets out that the Antitrust Commission initiates its investigations either on

its own motion or after a claim is filed by a party. In the latter case, the claim must contain the name and domicile of the claimant, the purpose of the claim, the facts on which the claim is based, and the legal provisions on which the claim is based (Section 28). If the Antitrust Commission decides to investigate a claim, it provides notice to the accused party, who then has ten days to respond to the

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allegations. After receiving the response, the Antitrust Commission must decide either to continue the investigation or to dismiss the claim.

30.08. Proceedings before the antitrust CommissionIf the Antitrust Commission decides to continue the proceedings, it notifies the defendant to

appear and provides any relevant evidence within 15 days of the notification. After the administra-tive procedure (which cannot last more than 90 days), the parties have 6 days to argue against the evidence produced. The final decision is made within the following 60 days.

30.09. interim reliefUnder Section 35 of the Act, the Antitrust Commission may, at any stage of the proceedings,

impose the enforcement of conditions or order the parties to terminate or to refrain from engaging in anticompetitive conduct. Where an irreparable harm may be caused to competition, the Commission may adopt the most suitable remedies to prevent such harm. Appeal may be brought against the Commission’s orders pursuant to Sections 52 and 53 of the Law.

30.10. Enforcement by ordinary courtsPrivate enforcement actions for damages are available for violations of the Competition Act.

According to Section 51, entities which have suffered harm because of an act prohibited by the Act are entitled to seek relief before civil courts. These actions proceed according to the general rules governing tort liability cases (Argentine Civil Code, Section 1109).

Class action suits are permitted under Section 43 of the Argentine Constitution.

C. Sanctions

30.011. Cease and desist ordersThe Antitrust Commission can impose an order to cease and desist from the anticompetitive

conduct or, in the event of abuse of dominant position, request for the issuance of a court order to divest assets or dissolve the company.

30.12. FinesThe Antitrust Commission can impose a fine ranging from AR$ 10,000 (US$ 2,600) to AR$

1,500,000 (US$ 390,000). The amount of the fine is calculated by considering the loss incurred by the affected parties, the benefit obtained by the parties that carried out the anticompetitive conduct, and the value of the assets involved. Moreover, according to Section 46, the amount of the fine can be doubled in the event of a repeated offense.

30.13. Criminal sanctionsThe Antitrust Act eliminated criminal sanctions for antitrust violations.

D. appeals

30.14. appeals against the antitrust Commission decisions According to Section 52, decisions of the Antitrust Commission may be appealed to all Federal

Courts of Appeals. However, most of the competition cases are appealed before the Federal Civil and Commercial Court of Appeals in Buenos Aires.


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Appeals against Court of Appeals decisions are heard by the Argentine Supreme Court.

Section 2 MERGERS

i. Substantive Provisions

30.15. ContextMerger control has been introduced in Argentina by the Competition Law.

30.16. Concept of concentrationCertain transactions are deemed to be economic concentrations when they result in control being

taken by means of: (a) merger; (b) transfer of businesses; (c) acquisition of shares; and (d) acquisition of certain assets.

30.17. thresholdsSection 8 of the Act imposes notification requirements. Transactions must be notified to the

Antitrust Commission when the total turnover in Argentina of the participating firms exceeds AR$ 200,000,000 (US$ 67,000,000).

30.18. Control criteriaFollowing Section 7, concentrations are prohibited if their purpose or effect is to restrain compe-

tition resulting in damage to the general economic interest.

ii. Enforcement


30.19. Merger notificationSection 8 requires that the notification must be made to the Antitrust Commission within one

week from the earliest of: “the conclusion of the [merger] agreement, the publication of the acqui-sition or exchange offer or the acquisition of a controlling share.” The “trigger date” that marks the beginning of the one-week period has been further defined by decree to mean: the date of the conclusion of a definitive merger agreement, as defined by a separate law; in the case of the transfer of a business, the closing date of the transfer as defined by a separate law; in the case of the acquisi-tion of stock or property, the closing date as provided in the sales agreement; or in other cases on the closing date of the transaction as defined by law.

Section 10 of the Act lists some exemptions to the notification requirement imposed by Section 8. They are:

- the acquisition of firms in which the purchaser already holds more than 50% of the shares;- the acquisition of bonds, debentures, shares with no voting rights or certificates of indebtedness;- the acquisition of a domestic firm by a foreign firm that does not own any shares or assets of

another domestic firm;- acquisitions of liquidated companies;- acquisitions of operations or assets in Argentina whose value does not exceed AR$ 20,000,000

(US$ 6,700,000), unless there has been more than one acquisition in the preceding 12 months and

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their total value exceeds that amount, or the value of the total of such acquisitions in the preceding 36 months exceeds AR$ 60,000,000 (US$ 20,000,000); the transactions subject to the 12 month and 36 month periods must have occurred in the same market.

The last exemption, which effectively creates a “size of the transaction” threshold of AR$ 20 million (US$ 6,700,000), was added by decree in 2001. This was an important addition. Without it, every acquisition, however small, by a large company triggered the AR$ 200 million size of the parties test.

30.20. Proceedings before the antitrust CommissionThe Antitrust Commission must, within 15 days of the notification, decide whether:- to approve the transaction with or without conditions;- to require the parties to submit to submit further information (F1 form);- to require the parties to submit specific information (F3 form).Within 35 days (F1 form) or 45 days (F3 form) of such notification, the Antitrust Commission

must decide whether:- to approve the transaction, with or without conditions;- to prohibit the transaction;- to require the parties to submit further information.

B. Conditions / Sanctions

30.21. Conditions and commitments – DivestitureThe Antitrust Commission can impose structural or behavioral conditions and ask the judge to

order the divestment of the merged entity.

30.22. FinesFailure to notify as required is punishable by a fine of up to AR$ 1,000,000 (US$ 333,000) per

day of delay.Implementation of a prohibited concentration or failure to observe decisions or conditions im-

posed by the Antitrust Commission is sanctioned by a fine of between AR$ 10,000 (US$ 2,600) and AR$ 150,000,000 (US$ 39,000,000).

C. appeals

30.23. appeals against the antitrust Commission decisionsSection 52 of the Competition Act provides that decisions of the Antitrust Commission imposing

fines, issuing remedial orders or denying a merger and dismissing a complaint can be appealed to Federal Courts.


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ChaPtEr 31

aUStraLia




31.01. ContextCompetition law in Australia is governed principally by Part IV of the Competition and Consumer

Act (formerly the Trade Practices Act of 1974), which is administered by the Australian Competition and Consumer Commission (ACCC).The Trade Practices Act was renamed the Competition and Consumer Act (CCA), when the Australian Consumer Law (ACL) was implemented on 1 January 2011. Before implementing of the national law concerning consumer protection and fair trading, Part




B. Restrictive agreementsThe prohibition 31.03Civil or criminal offenses 31.04Specific offenses 31.05Exemptions 31.06

C. Abuse of dominanceMisuse of market power 31.07


The Australian Competition and Consumer Commission 31.08The Commonwealth Director of Public Prosecutions 31.09

The National Competition Council 31.10The Australian Competition Tribunal 31.11The Federal Courts 31.12

B. Enforcement proceedingsComplaints and investigations 31.13Authorization proceedings 31.14Proceedings before the ACCC 31.15Interim relief 31.16

C. SanctionsCease and desist orders 31.17Fines 31.18Leniency 31.19Civil remedies 31.20

D. AppealsAppeals from decisions linked to authorization 31.21Appeals against decisions of the Federal Court 31.22

Section 2 Mergers

I. Substantive rulesConcept of concentration 31.23Control criteria 31.24Joint ventures 31.25


The Australian Competition and Consumer Commission 31.26The Australian Competition Tribunal 31.27The Federal Courts 31.28

B. Enforcement proceedingsMerger notification 31.29Informal clearance 31.30Authorization 31.31


D. AppealsInformal clearance 31.34Authorization 31.35

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IVA of the Trade Practices Act addressed unconscionable conduct. Now, the Australian Consumer Law (ACL) which is Schedule 2 to the CCA includes a provision that makes unfair contract terms in consumer contracts void (Chapter 2). Chapter 3 sets out provisions banning specific unfair practices in trade or commerce and Chapter 4 deals with criminal offenses relating to these unconscionable conducts. The CCA covers inter alia unfair market practices, industry codes, mergers and acquisi-tions of companies, product safety, product labelling, price monitoring, and the regulation of indus-tries such as telecommunications, gas, electricity and airports.

Since 1995, each of the Australia States has adopted competition law statutes mirroring the Competition and Consumer Act (CCA). The adoption of uniform national and local competition statutes was considered essential as, according to the structure of government established in the Australian Constitution, the federal state does not have the power to regulate certain non-commer-cial entities, such as professions, the commercial activities of State governments and market autho-rities operating within a State.

31.02. ScopeAlthough the CCA generally is limited to conduct that may reduce competition in Australia,

it does have some limited extraterritorial application where the party engaged in the cartel is an Australian citizen, an Australian resident or bodies corporate incorporated or carrying on business within Australia (Section 5).

The function of the Competition and Consumer Act (CCA) is set out in Part I – Preliminary (2) of the Act as a desire to “enhance the welfare of Australians through the promotion of competition and fair trading and provision for consumer protection”. The provisions of the CCA apply principally to restrictive agreements, misuse of market power (monopolization) and unfair practices.

Certain categories of agreements are excluded from the otherwise broad scope of the CCA, in-cluding certain employment agreements, agreements on the use of standards, agreements relating exclusively to exports, and agreements relating exclusively to assignments and licenses of intellectual property. The CCA applies not only to private businesses, but also to the Crown to the extent that it carries on commercial activities. One limitation on this is that the Crown is not liable for monetary damages for violations of the CCA.


31.03. the prohibitionAccording to Section 44ZZRD of the Act, a provision of a contract, arrangement or understan-

ding is a cartel provision if:- (a) either “the purpose/effect condition” set out in subsection (2) or “the purpose condition” set

out in subsection (3) and - (b) “the competition condition” set out in subsection (4) are satisfied. “The purpose/effect condition” is satisfied if the provision has the purpose, or has or is likely to

have the effect, of directly or indirectly fixing, controlling or maintaining a price or a component of a price.

“The purpose condition” is satisfied if the provision has the purpose of directly or indirectly: - (a) preventing, restricting or limiting outputs in the production and supply chain- (b) allocating customers, suppliers or territories; - (c) bid-rigging.The competition condition is satisfied if at least 2 of the parties to the contract, arrangement or

understanding are or are likely to be or but for any contract, arrangement or understanding, would be or would be likely to be in competition with each other (Section 44ZZRD).


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31.04. Civil or criminal offensesCivil and criminal prohibitions are respectively set out in Sections 4422RJ, 4422RK and 4422RF,

4422RG of the Act. Their elements are the same except that the standard of proof is higher in case of a criminal offense which furthermore requires a fault.

31.05. Specific offenses1º) Price fixingPrice fixing in Australia is deemed to substantially lessen competition and is treated as a per se

violation of the CCA. Any agreement between competitors that has the purpose or likely effect of fixing, controlling or maintaining either the price, discounts, allowances, rebates or credits for goods or services constitutes illegal price fixing (Section 45 C). Recommending prices may be considered as amounting to price fixing under section 44ZZRD(6).

The Courts have held that in order to establish a price fixing violation, the agreement must have some horizontal character. Thus, at least two parties to the agreement must be competitors; it is not necessary that all parties be competitors (Trade Practice Comm’n v. David Jones Pty. Ltd., 13 F.C.R. 446, 473, 1986, Fed. Ct.). The manner in which prices are fixed, or the length of time is not determi-native in evaluating whether price fixing occurred, although it must be established for a period that is not “merely ephemeral” (Radio2UE Sydney Pty. Ltd. v. Stereo FM Pty. Ltd., 5 F.C.R. 140, 1985, Fed. Ct.).

2º) Exclusionary provisions (collective boycotts)Exclusionary provisions are defined in Section 4D of the CCA as terms in an agreement between

competitors which have the purpose of preventing, restricting or limiting the supply or acquisition of goods or services from either a particular person or classes of persons, or from persons or classes of persons in specific circumstances.

As with price fixing, there must be some horizontal element, that is, at least two of the parties to the agreement must be competitors (Section 4D(2)). The case law has been mixed regarding whe-ther the requirement that there be an actual purpose present of preventing, restricting, or limiting supplies refers to an objective purpose, (see, e.g., TPC v. TNT Management Pty Ltd., 6 F.C.R. 1 1985, holding in the context of exclusionary provisions that “it is the objective purpose which is relevant”), or a subjective one, as the court held in Hughes v. Western Australian Cricket Assoc. Inc., (19 F.C.R. 10, 1986, Fed. Ct.). The anticompetitive purpose must be shared by all members of the agreement (Carlton & United Breweries (N.S.W.) Pty. Ltd. v. Bond Brewing, N.S.W., Ltd., 16 F.C.R. 351, 1987, Fed. Ct.). Finally, it must be possible to identify an excluded class of persons.

3º) Secondary boycottsThe Act was amended in 1996 to include regulation of secondary boycotts. A secondary boycott

occurs when two or more parties act to hinder or prevent third parties from dealing with the target business (a fourth party). Separate Sections of the Act address secondary boycotts aimed at causing substantial loss or damage (Section 45D), and those directed at substantially lessening competition (Section 45DA) or at affecting trade or commerce (Section 45DB).

A secondary boycott requires concerted action by two or more parties, meaning that the par-ties must have a common purpose and must act relatively contemporaneously (Australian Builders Labourers Federated Union of Workers v. J-Corp. Pty. Ltd., 42 F.C.R. 452, 1993, Fed. Ct.).

The CCA specifies a number of exemptions to the prohibition on secondary boycotts. According to Section 45DD(1) and (2), if the dominant purpose of the boycott is substantially related to remu-neration, conditions of employment, hours of work or the working conditions of employees, then there is no infringement of the secondary boycott provisions set out at Sections 45D(1), 45DA(1), 45DB(1). An exception also exists where the dominant purpose of a boycott relates to environmental or consumer protection (Section 45DD(3)). This does not mean, however, that all union activities are exempt. The activities of a union may violate the secondary boycott provisions if, for example,

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the union does not have a dispute with an employer but engages in a boycott solely in support of another union.

4º) Exclusive dealingVertical restraints such as exclusive dealing are addressed under the prohibition set out at Section

47(1). Exclusive dealing occurs where an undertaking supplies goods or services only on certain conditions. Often, the condition is that the purchaser will not acquire goods or services from a competitor, or will agree to restrictions on the right to resell the goods and services to third parties or within a geographic area. At least three different types of exclusive dealing can be identified: (1) product exclusivity; (2) customer exclusivity; (3) territorial exclusivity.

Product exclusivity can be in the form of a requirement whereby a purchaser agrees to satisfy a percentage of its production needs from a particular distributor. Where a purchaser agrees to satisfy all of its requirements from a particular supplier, this could decrease competition by excluding com-petitors of that supplier from a portion of the market. On the other hand, where a buyer agrees to purchase a certain quantity of a product, this is less likely to limit competition since the buyer is free to deal with other suppliers in response to market needs. The bundling together of two products in the same contract, i.e. tying, so that the purchaser must buy both, may also be considered anticom-petitive under Section 47.

Customer exclusivity may be prohibited whether it requires a trading partner to deal only with particular parties, or requires a trading partner not to deal with specified parties. If the parties to the agreement are competitors, then such an agreement could be treated as an anticompetitive horizon-tal agreement barred by Section 45. Where the parties operate at different levels of the production scheme, then such exclusionary conduct is governed by Section 47.

Territorial exclusivity involves a refusal to deal except with specified dealers or within a specified area. Territorial exclusivity is prohibited where it has the purpose or likely effect of substantially lessening competition in the relevant market.

5º) Resale price maintenanceA corporation cannot supply a customer on condition that he will not resale the goods at a price

less than that it specified, except in the case of loss leading.

31.06. ExemptionsSection 88 of the CCA provides for a notification (e.g. to obtain an exemption in case of collective

bargaining) and an authorization procedure whereby the ACCC is empowered to grant immunity when it is satisfied that otherwise anticompetitive conduct is likely to result in a net public benefit. Section 88 specifies that the ACCC can grant authorization relating to anticompetitive agreements, covenants affecting competition, primary and secondary boycotts, exclusive dealing, resale price maintenance and other potentially anticompetitive arrangements.

The public benefits that the ACCC has recognized in the past as justifying otherwise anticom-petitive conduct include: increasing employment (or preventing unemployment), improving inter-national competitiveness, economic development of natural resources (through research or explora-tion), assistance to small businesses, environmental benefits, safety improvements, improvements for consumers such as better quality or choice, and industry rationalization increasing the efficiency of resource allocation.

Parties can apply to the ACCC to obtain an authorization on public benefit grounds. Applications for authorization must set out the relevant market and any specific characteristics it may have, a description of the parties, whether there exists other stakeholders in the market, the nature of the behavior and the benefits likely to result from same.

Each notification or application for authorization is allocated a unique registered number. A sepa-rate public register file is created for each application for authorization and public access is available to the contents of that file, except for those contents with respect to which the ACCC has granted a request for confidentiality.


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The onus is on the applicant to satisfy the ACCC that there is public benefit arising from the conduct and that the public benefit outweighs any detriment that might be caused as a result of a lessening of competition. The ACCC may request meetings with interested parties and any party may ask to be included in the assessment process. Although the process is generally public, the ACCC will consider requests for confidentiality where founded.


31.07. Misuse of market powerSection 46 of the CCA prohibits misuse of market power, also referred to as monopolization or

dominance. Thus, corporations with a substantial degree of power in a market are prohibited from taking advantage of that power to eliminate or substantially damage a competitor, prevent entry into the market, or deter competitive conduct. The ACCC has indicated that mere possession or acquisi-tion of substantial power in the market is not prohibited, only misuse of such power.

In determining the degree of power in a market, the Court evaluates the extent to which the conduct of the corporation is constrained by the conduct of either competitors or suppliers of goods or services. The conclusion that a corporation has abused its power may be inferred from conduct or other circumstances.

ii. Enforcement


31.08. the australian Competition and Consumer CommissionThe Australian Competition and Consumer Commission (ACCC), an independent statutory

authority, was formed in 1995 by the merger of the Trade Practices Commission and the Prices Surveillance Authority. The ACCC is the primary competition authority in Australia as regards the enforcement of the CCA. Members of the Commission are appointed by the Governor-General for five-year terms. The ACCC has the power to grant immunity through authorization procedures, but its authorization decisions are subject to review by the Australian Competition Tribunal, with the possibility of further appeal to the Federal court.

The ACCC has no power to impose penalties but it can seek monetary damages, injunctive relief and divestiture orders before the Federal court (Section 77). It has the authority to file class action suits in Federal Court on behalf of consumers or groups of small businesses. The ACCC has a statu-tory right to intervene in private enforcement actions, but in practice rarely does so.

The ACCC refers serious cartel conduct to the Commonwealth Director of Public Prosecutions.The Australian Energy Regulator (AER), which regulates Australian energy market, is a consti-

tuent, but separate part of the ACCC. It shares staff and premises with the ACCC, but has a separate board. One board member must also be a Commissioner at the ACCC (Section 8AB).

31.09. the Commonwealth Director of Public ProsecutionsThe Commonwealth Director of Public Prosecutions (CDPP) is responsible for prosecuting se-

rious criminal cartel offenses.

31.10. the national Competition CouncilThe National Competition Council (NCC) is established by Part IIA of the CCA. It is composed

of a President and four additional members appointed by the Governor-General for five years period (Section 29C(2)).

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The Council’s functions include research and advice on matters referred to it by the Minister. To a certain extent the NCC represents the interests of the individual Australian States making up the Federation.

31.11. the australian Competition tribunal The former Trade Practices Tribunal has been reestablished as the Australian Competition

Tribunal. Its members are judges appointed by the Governor-General for seven-year periods (Section 32). The Tribunal reviews decisions of the ACCC. The Tribunal is not bound by rules of evidence and parties appearing before it need not be represented by members of the legal profession.

31.12. the Federal CourtsThe ACCC must seek orders from the Federal Courts regarding injunctions or other sanctions

it may seek to impose. Further, actions brought pursuant to the State competition statutes must be brought in the appropriate State court (Ex parte McNally, 163 A.L.R. 270, 1999, Austl.).


31.13. Complaints and investigationsAny person can bring a complaint and the ACCC can also initiate an investigation ex officio. The

ACCC can require a person to provide information or documents or appear before it and can obtain search and seizure warrants.

31.14. authorization proceedingsAfter investigating an application for authorization, the ACCC distributes a draft setting out its

proposed decision and the reasoning behind same. The applicant and interested parties are invited to seek a meeting to discuss the matter within 14 days of receiving the draft (Section 90A). Upon termination of the conference, the ACCC issues a final decision granting or denying the authoriza-tion, or granting it subject to conditions. Authorization may be granted for a limited period, subject to renewal.

31.15. Proceedings before the aCCCOutside of authorizing agreements or receiving notifications, the ACCC has a general enforce-

ment role. However, as we have seen, unlike many administrative competition control authorities, the ACCC has no power to impose penalties or indeed take any other action itself. Instead, it must at all times apply to the courts and prosecute parties before them, which have been endowed with the real power of enforcement. For example, the enforcement procedure for cartel conduct will depend on the seriousness of the conduct. In case of “serious cartel conduct”, the ACCC will seek to have the undertakings prosecuted criminally whereas less serious conduct will be pursued just under civil penalty provisions. As regards its enforcement of Part IV, the ACCC frequently negotiates penalties with undertakings which have committed violations of the Act and acknowledge their guilt.

31.16. interim reliefUpon the application of the ACCC or any other party the courts may grant an interim injunction

where a party is engaging in or is about to engage in conduct that is contrary to the provisions of Part IV (Section 44ZZG).


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C. Sanctions

31.17. Cease and desist ordersSection 80 authorizes certain anticompetitive practices violating the CCA to be enjoined. This

Section provides that injunctions are available to “a person.” This has been interpreted to mean that there is no standing requirement.

31.18. FinesUnder both the civil and criminal prohibitions, the Federal Courts may impose fines of up to

A$10 million (US$ 10,500,000), or three times the value of the benefits through the conduct, or 10% of the annual turnover of the body corporate during the period of 12 months ending at the end of the month in which the act or omission occurred for other violations of Part IV (Section 76). Under civil prohibitions, fines for individuals are limited to A$ 500,000 (US$ 525,000). Individuals face up to 10 years in prison and/or fines of A$ 220,000 (US$ 231,000) under criminal prohibitions.

31.19. LeniencyThe ACCC developed a Leniency Policy in October 1998. Pursuant to this policy, the ACCC will

request reduced penalties from the court where certain conditions are satisfied. The Federal Courts have also held that the factors listed in the ACCC Leniency Policy are relevant to their own determi-nation of appropriate sanctions. The policy states that leniency is likely for a corporation that: comes forward with valuable information which the ACCC is not aware of or in a situation where the ACCC has insufficient evidence to initiate proceedings; however, the undertaking must promptly terminate its participation in the illegal activity; fully cooperate with the investigation. Moreover, the enterprise must not have been the ring leader or have coerced other corporations to participate in the anticompetitive activity or have a record of prior offenses.

The ACCC immunity policy for cartel conduct was revised in July 2009. This policy provides greater certainty for immunity applicants so that the ACCC is better able to

detect and break up hard-core cartels operating in Australia. A corporation will be eligible for conditional immunity from ACCC-initiated civil proceedings

where: (i) the corporation is or was a party to a cartel ; (ii) the corporation admits that its conduct in respect of the cartel may constitute a contravention or contraventions of the Competition and Consumer Act ; (iii) the corporation is the first person to apply for immunity in respect of the cartel under this policy ; (iv) the corporation has not coerced others to participate in the cartel and was not the clear leader in the cartel ; (v) the corporation has either ceased its involvement in the cartel or indicates to the ACCC that it will cease its involvement in the cartel ; (vi) the corporation’s admis-sions are a truly corporate act (as opposed to isolated confessions of individual representatives) ; (vii) the corporation undertakes to provide full disclosure and cooperation to the ACCC.

An individual may also apply for immunity under this part of the ACCC’s immunity policy. The ACCC may refer a matter to the CDPP by way of recommendation in relation to leniency in crimi-nal matters.

31.20. Civil remediesSection 82 of the Act authorizes individuals who are harmed by a violation of Part IV (anticom-

petitive agreements, misuse of market power, exclusive dealing, and resale price maintenance), to sue for damages in the Federal Courts. Private suits for injunctive relief are available under Sections 80, 80AB, 82 and 87. Class action suits by private parties are authorized where seven or more persons have claims raising common issues of law or fact.

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D. appeals

31.21. appeals from decisions linked to authorization The ACCC’s decision regarding an application for authorization or notification can, on appli-

cation by a party with an appropriate legal interest, be reviewed by the Competition Tribunal and thereafter the courts. The hearing before the Tribunal is essentially a rehearing of the matter and it is entitled to make its own factual findings. In so doing, the Tribunal is not bound by the regular rules of evidence governing the ordinary courts.

31.22. appeals against decisions of the Federal CourtDecisions of the Federal Court can be appealed to the full Federal Court, where the matter is

heard on appeal by three Federal Court judges.

Section 2 MERGERS


31.23. Concept of concentration A concentration subject to control occurs both where there is a direct acquisition of shares or

assets by a corporation, or where there is an indirect acquisition made by a third party on behalf of another corporation or person. The Federal Court has determined that even an option as regards the purchase of shares can constitute an acquisition subject to merger control (Trade Practices Comm’n v. Arnotts Ltd., A.T.P.R. 41-002, 1990, Fed. Ct.).

31.24. Control criteriaSection 50 of the CCA prohibits mergers or acquisitions that would have the effect or likely

effect of substantially lessening competition in any market for goods and services. Section 50(A) of the CCA regulates merger activity outside of Australia that substantially lessens competition in Australia, or in a State or Territory thereof. In practice, this extraterritorial legislation has proved cumbersome and it is little used. In cases under Section 50(A), both the Minister for Financial Services and the Treasurer are authorized to seek an injunction of the merger from the Federal Court before the merger is consummated. In 1972, the Trade Practices Act was amended so that the standard for prohibiting a merger was a dominance test. Further amendments in 1992 restored the original test which looks to see whether the merger will result in a substantial lessening of competi-tion, and this remains the test that is currently in effect.

The CCA does not provide formal thresholds for application of merger control.In evaluating the anticompetitive effects of a merger or acquisition, the ACCC first identifies the

relevant market, including its product, geographic, functional and temporal dimensions. In concep-tual terms, the relevant market can be identified by determining the smallest group of products over which a profit-maximizing monopolist could impose a small but significant and non-transitory increase in price, or equivalent exercise of market power. Thereafter, the ACCC considers the smal-lest geographic area over which a profit-maximizing monopolist could impose a small but significant and non-transitory increase in prices.

To determine whether a merger is likely to substantially lessen competition, after having defined the relevant market, the ACCC then assesses the level of concentration in the market and the market share of the merged firm. The Merger Guidelines issued by the ACCC suggest that acquisitions will only raise competition concerns where the merged entity would have 40% or more of the relevant market, or the four largest firms would have more than 75% of the market and the merged entity would have more than 15% of the market. Since 2008, the ACCC uses the Herfindahl-Hirschman


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Index (HHI) as a preliminary indicator. If the concentration level is sufficiently high to raise concern as to the anticompetitive effects, the ACCC then considers the factors listed in Section 50(3), inclu-ding:

- the actual and potential level of import competition on the market to determine whether it effec-tively constrains the merged entity ;

- assessing barriers to entry to determine whether it is likely that new entrants will establish them-selves in the market on a sufficient scale within a reasonable time to inhibit the exercise of market power by the merging firm.

Other factors taken into consideration include:- the degree of countervailing power in the market;- whether the acquirer will be able to significantly and sustainably increase prices; - the availability of substitutes in the market; - the dynamic characteristics of the market; and- whether the acquisition would remove a vigorous competitor;- the degree of vertical integration;- the possibility of coordinated effects.The authorization procedure for mergers parallels the authorization procedure applicable general-

ly for anticompetitive conduct. Essentially, the ACCC considers whether the merger which substan-tially lessens competition will produce public benefits that outweigh any anticompetitive effects of the merger. The ACCC is required by the Act to consider as a public benefit any significant increase in the real value of exports, any significant substitution of domestic products for imported goods, and other matters that relate to the international competitiveness of Australian industry.

31.25. Joint venturesJoint ventures are defined in Section 4J of the CCA as an activity in trade or commerce “(i) car-

ried on jointly by two or more persons, whether or not in partnership; or (ii) carried on by a body corporate formed by two or more persons for the purpose of enabling those persons to carry on that activity jointly by means of their joint control, or by means of their ownership of shares in the capital, of that body corporate.”

Joint ventures may be governed either by Section 50 controlling mergers, or under Section 45 regulating anticompetitive agreements. Where a joint venture may be considered under either hea-ding, Section 50 is deemed to be the applicable provision. The same test is applied under both provisions, i.e., whether the joint venture is likely to substantially lessen competition in the relevant market, although it may be more advantageous to have the matter governed by Section 50 as under the merger provisions, the matter is likely to be addressed more quickly by the ACCC, and private parties cannot sue to enjoin a merger until after it is consummated.

ii. Enforcement


31.26. the australian Competition and Consumer CommissionNotification is voluntary, but the Merger Guidelines suggest notification of mergers where either

the acquirer will have a share of 20% or more of any market and it and the target supply substitutable goods or services. In practice, many mergers are notified before realization. The ACCC is empowe-red to investigate mergers and may authorize them; however, the procedure is onerous and rarely used. Further it is open to review which takes from the legal certainty of any such decision. To make up for this lacuna, the ACCC offers undertakings the possibility of an informal clearance, which is

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without binding legal effect. To prohibit a merger, the ACCC must seek an order from the Federal Court and only the ACCC has the power to seek such an order.

31.27. the australian Competition tribunalThe Australian Competition Tribunal reviews informal authorization and notification decisions

of the ACCC. The Tribunal consists of a President and Deputy Presidents (who are judges of the Federal Court) and members appointed because of their experience in industry or law.

31.28. the Federal CourtsAlthough only the ACCC can seek an order from the Federal Court to enjoin a merger prior to

consummation, Section 81 of the CCA provides that any party that demonstrating standing may seek a divestiture order from the Federal Court once the merger has been consummated. With regard to mergers outside of Australia governed by Section 50(A), private parties can likewise only seek a divestiture order post consummation of the merger.


31.29. Merger notificationThere is no mandatory pre-merger notification procedure in Australia. Nevertheless, in the case

of mergers which may potentially lessen competition, the parties may seek authorization under Part VII. Filling fees are set at A$ 25,000 (US$ 26,000) for an application for authorization.

31.30. informal clearanceThe Merger Review Process Guidelines ( July 2006) deal with the ACCC’s informal approval pro-

cess. A separate public register file is created for each application for authorization and public access is available as regards all non-confidential contents. The ACCC may interview interested parties, and any party may ask to be included in the assessment process. In practice, the authorization pro-cedure is rarely used since it is time-consuming, requires that information about the merger be made publicly available and any decision is subject to review by the Federal Courts.

The Guidelines provide that the ACCC will take a confidential decision within two to four weeks of commencing its review.

However, in case of more complex mergers, which require in depth market inquiries, this period may be extended. According to the Merger Review Process Guidelines, the ACCC will aim to take a decision within a total period of 12 weeks from when the public review commenced.

The ACCC frequently gives non-binding “clearance” to a merger. Although the clearance has no legal effect, it nevertheless signals to the parties that the ACCC considers that it is unlikely to pose serious competition concerns. The informal clearance procedure has the further benefit that it can be confidential, so that details of the merger do not necessarily need to be made public. It remains, true, however, that once the merger becomes public, the ACCC may change its position especially if it receives new information. On the contrary to formal clearance, informal clearance does not confer statutory immunity, or a right to apply to the Australian Competition Tribunal for review.

31.31. authorizationThe ACCC has 40 business days in which to decide merger authorization applications. The pe-

riod for decision can be extended to 20 business days if the matter is complex. If the ACCC does not formally clear the merger within that time frame, it is deemed to have taken a decision denying the authorization.


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The ACCC issues a final decision granting or denying the authorization, or granting it subject to conditions. Authorization may be granted for a specific period, subject to renewal.

A filing fee of A$ 25,000 (US$ 26,000) applies.An acquirer may apply to the Australian Competition Tribunal for authorization based on public

benefit grounds. The Tribunal takes its decision within three months of receiving the application, or within six months, if the matter is complex.


31.32. Conditions and commitments – DivestitureThe ACCC may subject a formal authorization or a decision granting an informal clearance to the

performance of certain conditions and commitments by the parties to the merger.

31.33. FinesPenalties for violating Section 50(1) are up to a maximum of A$ 10 million (US$ 10,5 million)

for corporations, or three times the value of the benefits through the conduct, or 10% of the annual turnover of the body corporate during the period of 12 months ending at the end of the month in which the act or omission occurred and A$ 500,000 (US$ 525,000) for individuals. Thus, the parties to a merger have an interest in consulting the ACCC, even if not technically legally obliged to do so.

D. appeals

31.34. informal clearanceA decision not to grant informal clearance cannot be appealed. If the ACCC concludes that an

acquisition contravenes Section 50, and the parties do not agree to modify or abandon the acquisi-tion, it can apply to the Federal Court for an injunction prior to consummation of the merger. The parties can seek a declaration from the Federal Court that the merger would not contravene Section 50 of the Act.

31.35. authorizationThe ACCC’s decision not to grant an authorization may be reviewed on the merits by the

Australian Competition Tribunal. The Tribunal is required to reach a decision within three months of receiving the application for review. In special circumstances, the Tribunal may extend the period, with an additional 60 business days (Division 3 of Part IX of the Act).

The Australian Competition Tribunal’s decisions not to grant an authorization based on public benefits may be reviewed on the merits by the Federal Court of Australia.


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ChaPtEr 32

BraZiL




32.01. ContextCompetition law in Brazil was governed by Act No 8.884 of 11 June 1994 until the recent adoption

of Act No 12.529 of 30 November 2011, which came into force on 29 May 2012. Although competi-tion rules existed before (the Administrative Council of Economic Defense Conselho Administrativo de Defensa Econômica (CADE) was created by Act No 4137 of 10 September 1962), only after 1994 has an effective competition policy enforcement been possible. With the 1994 Act, the competition authorities’ focus shifted from basically direct intervention in the market for the purpose of protec-ting the “popular economy” to topics more in line with the range of subjects usually identified with modern competition policy, such as abuse of a dominant position or restrictive practices. The New





C. Abuses of dominanceAbuse of a dominant position 32.05


The CADE (Conselho Administrativo de Defensa Econômica) 32.06The SEAE (Secretaria de Acompanhamento Econômico) 32.07

B. Enforcement proceedingsComplaints and investigations 32.08Proceedings before the TADE 32.09Interim relief 32.10Enforcement by ordinary courts 32.11

C. SanctionsCease and desist orders 32.12Fines 32.13Civil sanctions 32.14Criminal sanctions 32.15Leniency policy 32.16

D. AppealsAppeals against decisions of the Superintendent- General or case-handling Councilor 32.17Appeals against decisions of the TADE 32.18

Section 2 Mergers



The CADE 32.23B. Enforcement proceedings


Proceedings before the Superintendent-General and the TADE 32.25

C. Conditions/Sanctions Conditions and commitments - Divestiture 32.26Fines 32.27

D. Appeals Appeals against decisions of the Superintendent- General 32.28Appeals against decisions of the TADE 32.29

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2011 Competition Act purports to align Brazilian merger control with US and EU standards and to put an end to the inefficiencies brought about by the overlapping jurisdictions of the three Brazilian competition authorities.

32.02. ScopeLike the 1994 Act, the 2011 Competition Act applies to acts wholly or partially carried out within

the Brazilian territory or whose effects are or may be suffered therein (Section 2). It sets out antitrust measures in keeping with constitutional principles such as free enterprise and open competition, the social role of property, consumer protection and restraints or abuses of economic power (Section 1). Pursuant to Section 36, the Act prohibits behavior intended to or that may I) limit, restrain or injure competition or free enterprise, II) control a relevant market for certain products or services, III) increase profits on a discretionary basis and IV) abuse one’s market control. Finally, the Act applies to individuals, public or private companies, as well as to any individual or corporate associations, established de facto and de jure - even on a provisional basis - irrespective of a separate legal nature, and notwithstanding the exercise of activities regarded as a legal monopoly (Section 31).


32.03. the prohibitionParagraph 3 specifies the general prohibition set out in Section 36, but it does not specifically

distinguish between restrictive agreements and abuses of dominance. It gives a list of 19 prohi-bited practices; including price fixing agreements, market sharing, market access restraints, and more generally, behavior causing disorganization of the market. The prohibition applies to vertical and horizontal restraints, collusive behavior, and cartels.

The CADE Resolution No 20 of 9 June 1999 (partially repealed in 2007) contains two annexes still in force which provide useful guidelines for the analysis of restrictive agreements. Annex I contains definitions and classifications relating to such behaviors. It makes a distinction between “horizontal restrictive practices” (including predatory pricing) and “vertical restrictive practices”. Annex II outlines basic criteria for the analysis of restrictive trade practices and describes the steps to be followed, including:

- defining the relevant product and geographical market, taking into consideration the actual or potential product substitution by buyers;

- developing market shares and measures of concentration, using either or both the CRx and HHI indices;

- analyzing the competitive effects of the practice;- analyzing the economic efficiencies likely to result from the practice;- balancing the efficiencies against the resulting harm to competition, if necessary.

32.04. ExemptionsUnder the 1994 Act, the CADE could authorize behavior normally prohibited if it increased

productivity, improved product or service quality, or if it fostered efficiency and technological or economic development. The benefits that resulted from the anticompetitive behavior also had to be of advantage to consumers and end-users. Moreover, it could not drive competition out of a substan-tial part of the relevant market and only those acts strictly required to attain a reasonable objective could be performed to achieve the goals listed above (Act No 8.884, Section 54, paragraph 1, I). Individual exemption was linked to the obligation on the parties to notify any restrictive agreement to the CADE. Prior notification of agreements is no longer provided by the new Competition Act.


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32.05. abuse of a dominant positionNeither monopolies nor dominance are prohibited – under Section 36, paragraph 1, achieving

market control as a result of the greater efficiency of an economic agent in relation to its competitors does not characterize the illicit control of a certain product or service market.

Dominance occurs when a company or group of companies: i) is able to alter market conditions; or ii) controls 20% or more of the relevant market.

Section 36 of the Act does not give specific examples of what qualifies as abuse of a dominant position. But certain prohibited practices listed in that Section can be deemed to be abusive when carried out by an undertaking that holds a dominant position, such as:

- limiting or restraining market access for new companies (subparagraph III);- posing difficulties for the establishment, operation or development of a competitor company or

supplier, purchaser or financer of a certain product or service (subparagraph IV);- barring access of competitors to input, raw material, equipment or technology sources, as well as

to their distribution channels (subparagraph V);- establishing or applying dissimilar conditions to purchasers or suppliers (subparagraph X);- refusing to sell certain products or services under payment conditions usually applying to regular

business practices and policies (subparagraph XI);- unreasonably selling products below costs (subparagraph XV);- altering production without good cause (subparagraphs XVII);- conditioning the sale of a product or service to the acquisition of another product or service, i.e.

tying (subparagraph XVIII); and- abusing exploitation or use of IP rights (subparagraph XIX).

ii. Enforcement


32.06. the CaDE (Conselho Administrativo de Defensa Econômica)The 2011 Act entirely remodeled the Brazilian Defense of Competition System (Sistema brazileiro

de defesa da concorrência – SBDC). Under the 1994 Act, the SBDC was made up of three authorities: the CADE, an autonomous government authority (autarquia federal) reporting to the Minister of Justice; the SDE (Secretaria de Direito Econômico - Secretariat of Economic Law) which lies within the Ministry of Justice and had a supporting role towards the CADE in investigating possible viola-tions of the Competition Act; and the SEAE (Secretaria de Acompanhamento Econômico - Secretariat for Economic Monitoring), placed under the auspices of the Ministry of Finance, which provided regulatory analysis (including price monitoring) and economic monitoring (in a macroeconomic context) mainly in the field of merger control. The inefficiencies resulting from the overlapping of those three agencies’ jurisdictions led the Brazilian legislator to retain only one authority responsible for investigating cases and making decisions - the CADE. The 2011 Act significantly altered the CADE’s composition, which is now made up of three organs: the Tribunal Administrativo de Defesa Econômica – TADE (Administrative Tribunal of Economic Defense), the Superintendência-Geral (Superintendent-General) and the Departamento dos Estudios Econômicos (Department of Economic Studies).

The TADE comprises seven members – a President and six Councilors - appointed for a four-year term, renewable once, by the President of the Republic, after approval by the Federal Senate. Section 9 of the Act lists the matters that come under the TADE’s jurisdiction: its main function is to take preventive and punitive measures against infringements of the Competition Act and, more generally,

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against violations of the Brazilian economic order. It hears and decides cases involving breaches of the substantive provisions of the law, orders the cessation of unlawful activity and the implemen-tation of any commitments made to remedy the same, approves settlement agreements, assesses on appeal any interim preventive orders made by the case-handling Councilor or the Superintendent and imposes fines on corporations and individual managers responsible for such unlawful conduct.

The 2011 Act merged the SDE with the CADE, which resulted in the establishment of a new body: the Superintendent-General. Its main functions are to monitor business activities and practices, conduct preliminary inquiries, and more generally, to assist the TADE in adopting its decisions, by referring cases and requesting data from undertakings, authorities or individuals. The Superintendent-General may also propose settlement agreements to the TADE, adopt interim measures and is responsible for the implementation of the TADE’s decisions.

The Department of Economic Studies, headed by a Chief-Economist, is responsible for drawing up economic studies, either ex officio or upon request of the TADE, of the President, of the Case-handling Councilor or the Superintendent-General.

32.07. the SEaE (Secretaria de Acompanhamento Econômico)The SEAE - the second remaining body of the SBDC - had a major role in merger control under

the 1994 Act. Since the 2011 Act, it primarily retains an advisory and advocacy function.


32.08. Complaints and investigationsPreliminary investigations are conducted by the Superintendent-General, ex officio or at the written

request of interested parties (Section 66, paragraph 1). The Superintendent-General has 180 days to terminate the preliminary investigations, with a 60 day extension period. To gather evidence, the Superintendent-General may request information and data from any person, request oral explana-tions, conduct inspections in business premises and upon production of a mandate from the court, may search and seize any relevant document (Section 13, VI).

Administrative proceedings must be initiated within 10 days after the closing of the prelimi-nary investigation conducted upon the order of the Superintendent-General. The defendant has then 30 days to file a defense (Section 70). Once the time period for filing a defense lapses, the Superintendent-General may order investigations and evidence to be submitted within 30 days. After that time period, the defendant has 5 days to submit new observations. The Superintendent-General has then 15 days to notify the President of the TADE whether there are grounds for prose-cution or not.

32.9. Proceedings before the taDEOnce the case has been deemed admissible, the TADE President assigns the case to one of the

six Council members. The case-handler will issue his opinion after supplementary investigations or requesting further information if necessary. The defendant has then 15 days to put forth its final arguments. At the end of this period, the case-handling Councilor issues its report, either forwar-ding the case to the TADE for review or ordering its shelving. Upon request of the case-handling Councilor, the President may invite any person to submit oral explanations to the Tribunal.

The TADE renders a substantiated decision, specifying the facts constituting the infringement, and the actions to be undertaken by the defendant to put it to an end, the delays for taking such steps, the amount of the fine and of the daily fine to apply while the violation is in effect and the amount of the fine incurred in case of non compliance.

Before 2000, Brazilian competition law allowed parties under investigation and Brazilian autho-rities to enter into a commitment agreement, in which the parties consented to cease the practice


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under investigation within a certain period of time. Once the practice had ceased, the authorities closed the investigation process without imposing a fine or restrictions on the infringing party. The 1994 Act, as amended by Act no. 10.149 of 21 December 2000, forbade this type of settlement for cartel activity. The 2011 Act comes back to the previous state of the law and contains no such restric-tions (Section 85). Once the agreement is reached and published, the case will be on hold while the cease-and-desist commitment is duly complied with, and after a pre-established time the case will be shelved if all conditions set out in the corresponding commitment have been fully met.

32.10. interim reliefSection 84 of Act No 12.529/2011 allows the Superintendent-General or the case-handling

Councilor to adopt interim measures, ex officio or at the request of the CADE’s Attorney General, whenever there are signs or sound reason to believe that the defendant directly or indirectly caused or may cause irreparable or substantial harm to the market or that it may render the final outcome of the proceeding ineffective. Interim measures are meant to order prompt cessation of the harmful behavior and return to the former situation, if reasonably feasible.

32.11. Enforcement by ordinary courtsThe 2011 Act provides, under Section 47, that any injured party may submit violations of the

economic order to the courts for examination. The action may seek to obtain the termination of the reported practices, interim measures or damages for the loss suffered. The filing of such suit does not suspend administrative proceedings.

C. Sanctions

32.12. Cease and desist ordersThe CADE may issue cease and desist orders.

32.13. FinesThe 2011 Act substantially altered the amount of the fines incurred by both undertakings and

individuals. Those amounts are now set out in Section 37 of the 2011 Act:- undertakings may be fined from 0.1% to 20% of their pre-tax income in the affected market

in the prior financial year, on condition that the fine is not lower than the gains resulting from the infringement;

- managers directly or indirectly liable for their company’s infringement may be punished with an individual fine equaling from 1 to 20% of the fine imposed on the company;

- other individuals and other public or private legal entities, as well as associations of entities or persons that do not engage in business activities, may be fined from R$50,000 (US$ 25,000) to R$2 billion (US$ 985,000,000);

In case of recurrence, these fines are doubled.- Failure to appear when summoned to provide oral testimony during investigations is punishable

with a fine of R$500 to R$15,000 (US$ 245,000 to US$ 7,400).- Any attempts to impede, hinder or prevent inspections ordered by the TADE, the Superintendent-

General or the case-handling Councilor is punishable by a fine of R$20,000 to 400,000 (US$ 9,850 to US$ 197,000).

- Producing false or misleading information, data or statements to the CADE or the SEAE is punishable by a fine of R$5,000 to R$5 million (US$ 2,460 to US$ 2,460,000).

Pursuant to Section 45 of the Act, the amount of the fine must be determined having regard to the seriousness of the infringement, the infringing party’s good faith, the gains resulting from the infrin-

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gement, the actual commission of the infringement or mere intent to do so, the damages sustained by the Brazilian economy, consumers and third parties, the anti-competitive effects on the market, the infringing party’s economic status and the existence of further infringements.

Pursuant to Section 39 of the Act, failure to comply with interim measures, cease and desist orders, plea bargaining agreement or any CADE order aimed at putting an end to the detrimental behavior, is punishable by a daily fine of at least R$5,000 (US$ 2,460). This fine may be increased up to 50 times in consideration of the seriousness of the infringement and the infringing party’s economic status. The same penalty may apply for failure to provide competition authorities with requested documents, but it can only be increased up to 20 times in that case (Section 40).

32.14. Civil sanctionsSection 38 of the Act provides for several penalties that may be imposed together with fines.

The infringing party may be ordered to publish a summary of the sentence in a court-appointed newspaper for two consecutive days, during one to three consecutive weeks. Ineligibility for public financing or participation in public bids may also be imposed for a period of at least five years. Public agencies may also grant compulsory licenses for patents held by the infringing party or deny it installment payments of overdue Federal debts. Finally, the CADE may also order the company’s spin-off, transfer of corporate control, sale of assets, partial discontinuance of activities, forbid the managers to engage in commerce activities for five years or any other measure required for the elimi-nation of any anticompetitive effects.

32.15. Criminal sanctionsCriminal sanctions are dealt with in Act No 8.137 of 27 December 1990. Section 4 declares that the

abuse of economic power by dominating the market or totally or partially eliminating a competitor is a crime against the economic order. Likewise constitute such crime agreements between undertakings having as their object artificial price or quantity fixing, regional market control by one undertaking or a group of undertakings, anticompetitive control of a distribution channel or of suppliers.

Such crimes were punishable with a 2 to 5-year imprisonment or a fine. The 2011 Competition Act changed the wording of Act No 8.137: now imprisonment and a fine can be imposed cumulatively.

32.16. Leniency policyA leniency program was incorporated into Brazilian competition law in 2000, and now figures in

Sections 86-87 of the 2011 Act.The Superintendent-General may sign agreements giving full amnesty to individuals or corpora-

tions that have “infringed the economic order” and that collaborate with the investigation, or reduce their fines by 1/3 to 2/3. Full amnesty is automatically granted when the antitrust authorities were previously unaware of the reported violation of the competition rules. Also, since the fines imposed on the infringing parties may vary, the Act states that the nominal penalty imposed on undertakings eligible for leniency must be smaller than the smallest fine imposed on the other infringing parties.

Leniency agreements may only be signed if the Superintendent-General does not already have enough evidence to secure the conviction of the corporation or individual at the time the agreement is proposed. Thus, even if the authority is already aware of an infringement to the competition act, a party may qualify for leniency provided the authority did not have the necessary evidence. Moreover, to be eligible for leniency, an undertaking must be the first to come up with evidence and must completely stop its involvement with the alleged infringement. Finally, the undertaking must admit its participation in the infringement and provide full and continuous cooperation during investiga-tions and administrative proceedings.


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A new feature of the 2011 Competition Act is that corporate leniency now extends to any other undertaking of the group as well as to managers and members of the staff involved in the infringe-ment, who previously had to file individual applications for leniency.

Section 87 addresses questions relating to the threat of criminal charges under Act No 8.137. The leniency program prevents the case from being brought to court and, upon fulfillment of the leniency agreement, the offenders automatically receive full immunity for the crimes involved in that competition law infringement.

D. appeals

32.17. appeals against decisions of the Superintendent-General or case-handling Councilor

Pursuant to Section 84, paragraph 2, of the Competition Act, the Superintendent-General or case-handling Councilor’s decision to adopt interim measures may be appealed to the TADE within five days, without suspensive effects.

The TADE may also review the Superintendent-General’s finding that there are no grounds for action and demand additional instruction measures (Section 67).

32.18. appeals against decisions of the taDEDecisions of the TADE may be appealed before Federal Courts.

Section 2 MERGERS


32.19. ContextMerger control is set forth in Sections 53-66 (proceedings) and 88-91 (concept of concentration)

of Act No 12.529. The 2011 Act brings major amendments to Brazilian merger control, putting it further in line with US and EU standards, by introducing a compulsory pre-notification of transac-tions while increasing control thresholds.

CADE’s Resolutions No 1 and No 2 of 29 May 2012 supplement Brazilian merger control legis-lation on procedure related issues and notification forms.

32.20. Concept of concentration Pursuant to Section 90, a concentration arises where: i) two or more previously independent

undertakings merge; ii) one or more undertakings acquire, directly or indirectly, part or full control of one or other undertakings; iii) one or more undertakings incorporate one or more undertakings; iv) two or more undertakings enter into an association agreement, a consortium agreement or create a joint venture. Under Section 10 of CADE’s Resolution No 2, a concentration also arises in the case of share acquisitions even where control is not acquired, where the buyer: i) becomes the largest indi-vidual shareholder, or; ii) acquires 20% or more of the capital of an undertaking which neither is a competing undertaking nor operates in a vertically related market, or; iii) acquires 5% of a competing undertaking’s capital or of the capital of an undertaking operating in a vertically related market.

32.21. thresholdsThe 1994 Act set both turnover and market share thresholds. The 2011 Act abandoned the latter.

Section 88, amended by Interministerial Ordinance No 994 of 30 May 2012, provides that transac-

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tions must be submitted to the CADE’s approval where, cumulatively: i) at least one of the parties has achieved in Brazil a gross annual turnover equal of higher than R$750 million (US$ 370,000,000) in the previous fiscal year; ii) at least one of the other parties has achieved in Brazil a gross annual turnover equal of higher than R$75 million (US$ 37,000,000) in the previous fiscal year. Those thresholds, much higher than those provided by the 1994 Act (R$400 million; US$ 197,000,000), should dramatically decrease the number of mergers subject to control and therefore the CADE’s workload.

32.22. Control criteriaPursuant to Section 88, paragraph 5, a concentration must be prohibited where it results in the

elimination of competition in a substantial part of the relevant market, where it may create or reinforce a dominant position or where it may result in the domination of a market of goods or services. However, under paragraph 6, such concentrations may nonetheless be authorized where, cumulati-vely or alternatively, they contribute to an increase in productivity or competitiveness, improve the quality of goods or services, or foster efficiency and technological and economic development. In addition, part of the resulting benefits must be passed to consumers.

ii. Enforcement


32.23. the CaDEThe CADE is the body to which notifications must be made (Sections 88 and 53). Within the

CADE, the Superintendent-General will conduct the instruction of the case. If the Superintendent-General deems that a phase 2 examination is appropriate, the case will be tried by the TADE.


32.24. Merger notificationSince the 2011 Act, pre-notification of mergers is mandatory and has a suspensory effect (Section

88, paragraph 3). Mergers must not be implemented before a final decision is handed down by the CADE and the conditions of competition between the parties involved must be preserved until that decision. Such amendment to Brazilian merger control rules constitutes a significant step towards a higher level of legal certainty as under the 1994 system, concentrations could be subject to control a long time after their implementation. However, a certain amount of uncertainty remains as under Section 88, paragraph 7, of the Act, the CADE may require the parties to submit for control a tran-saction not covered by the pre-notification obligation up to one year after its implementation.

There is no legal deadline for notification but under Section 108, paragraph 1, of CADE’s Resolution No 1, notification should occur after the signing of the agreement and before any act of implementation. Notification must be made using the forms annexed to CADE’s Resolution No 2, which detail the information to be submitted. Notification fees amount to R$45,000 (US$ 22,150).

32.25. Proceedings before the Superintendent-General and the taDEPursuant to Section 88, paragraph 2, the assessment of a merger must be conducted in a maximum

of 240 days after the transaction is duly notified. An extension of up to 60 days is possible if the parties so require. The TADE may also request an extension of up to 90 days upon substantiated request (Section 88, paragraph 9). Those are short deadlines compared to those applicable under the 1994 Act. Such shortening has been made possible by having only one authority dealing with the


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case instead of three, with a serious risk of conflicting opinions. Compliance with the above-mentio-ned deadlines is important since Section 133 of CADE’s Resolution No 1 specifies that should they be not respected, the concentration would be deemed to be tacitly approved.

Once it is notified, the merger operation is first examined by the Superintendent-General, who will first check whether the parties have provided the required data and then if the operation presents risks for competition. If it deems that such risks are only minor, it will issue a clearance decision (Section 54). However where there are serious risks, the Superintendent-General will undertake an additional instruction. If after such instruction it is satisfied that the transaction passes the substan-tive test, it will issue a clearance decision, without remedies (Section 57-I). This decision may be challenged before the TADE by any interested party (Section 65).

By contrast, where the Superintendent-General deems the transaction should be prohibited or only cleared with conditions and obligations, it must submit the case to the TADE for a second phase examination (Section 57-II). The parties to the concentration have 30 days to submit their written comments and any useful evidence or economic study. The file is then assigned to one of the TADE Council members who will instruct the case. The TADE then may approve the operation with or without restrictions or reject it.

Pursuant to CADE’s Resolution No 2, some categories of mergers do not raise significant compe-tition concerns (Section 6). For that reason, they are subject to simpler notification obligations (summary notification form in annex II of the Resolution) and eligible for fast-track analysis proce-dures before the Superintendent-General, under the terms of Section 54-I of the Competition Act.

Section 8 of the Resolution gives a list of transactions eligible for the simplified procedure:- concentrative or cooperative joint-ventures;- consolidation of control;- replacement of an economic agent when the acquiring company does not operate in the market

of the acquired company;- small market shares held by the undertakings involved.Other cases may also benefit from simplified treatment at the discretion of the Superintendent-

General.


32.26. Conditions and commitments - DivestitureIn the case of a conditional authorization, the TADE will attach commitments designed to

mitigate its competition concerns. Under Section 61 of the Competition Act, commitments may include the sale of assets or of control, divestment of the company, accounting or legal separation of activities, compulsory licensing of IP rights or any other measure necessary to eliminate the anti-competitive effects.

32.27. FinesPursuant to Section 88, paragraph 3, acts implementing a merger before clearance are void and

punishable with a fine of R$60,000 (US$ 30,000) to R$60 million (US$ 30 million). In addition, where an authorization has been granted on the basis of false or misleading information, or the conditions attached to the decision have not been respected or the benefits expected are not reached, the undertakings concerned incur a fine of R$60,000 (US$ 29,500) to R$6 million (US$ 2,950,000).

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D. appeals

32.28. appeals against decisions of the Superintendent-GeneralPursuant to section 65 of the Act, the Superintendent-General’s clearance of the transaction in

phase 1 may be appealed before the TADE by any interested third party within 15 days of the decisions’ publication. The case is handled by a TADE Council member, who will issue an opinion on whether further investigation is necessary. The TADE may on the basis of such opinion decide or not to open phase 2 proceedings. The notifying parties may intervene to submit their own comments.

The exercise of the right of appeal may lead to the imposition of a fine of R$5,000 to R$5 million (US$ 2,460 to US$ 2,460,000) on the appellant if s/he is proven to be of bad faith and acted on the sole purpose of delaying the approval of the transaction.

32.29. appeals against decisions of the taDEThe Federal Courts may review TADE decisions. Remedies and appeals in such cases are under

the jurisdiction of the Superior Court of Appeals.


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ChaPtEr 33

CanaDa




33.01. ContextCanada first enacted competition law legislation in 1889. Now the Competition Act of 1985

governs matters relating to competition. It contains both civil and criminal provisions. The deve-lopment of competition regulations has moved towards a de-criminalization of behaviors and major reforms were introduced in 1986 by the Competition Act reinforcing a continuing trend toward civil enforcement by making abuse of dominant position and mergers subject only to civil review. Further




B. Restrictive agreementsContext 33.03Civil offenses 33.04Defenses and exceptions to civil offenses 33.05Criminal offenses 33.06Exemptions to criminal offenses 33.07

C. Abuse of dominanceContext 33.08Abuse of a dominant position 33.09


The Competition Bureau 33.10

The Attorney General 33.11The Competition Tribunal 33.12The courts 33.13

B. Enforcement proceedingsContext 33.14Complaints and investigations 33.15Civil proceedings 33.16Criminal proceedings 33.17Interim relief 33.18

C. SanctionsCease and desist orders 33.19Criminal sanctions 33.20Leniency 33.21Administrative monetary penalties 33.22Damages 33.23

D. Appeals

Section 2 Mergers



The Competition Bureau 33.28The Competition Tribunal 33.29Other authorities 33.30

B. Enforcement proceedingsMerger notification 33.31Proceedings before the Competition Tribunal 33.32


D. AppealsAppeals against the Competition Tribunal’s orders 33.35

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recent amendments to the Competition Act were made in 1999 and 2001 concerning, inter alia, an increase in the investigative powers of the Competition Authority and an extension of the scope of third party actions. This trend continued with amendments to the Competition Act on 12 March 2009 after the Budget Implementation Act which repealed different prohibitions on restrictive practices (price discrimination, allowances, abusively low prices). The reformed provisions relating specifically to criminal provisions of the Act came into force on 13 March 2010.

33.02. ScopeCanadian competition law is considered to have extraterritorial effect where the actions of an

undertaking provoke anticompetitive effect in Canada, regardless of whether the activity is carried out in Canada or elsewhere.

In response to a Supreme Court decision granting immunity to two Crown corporations, i.e. State corporations, involved in a uranium cartel (The Queen v. Uranium Canada Ltd., (1983) 2 S.C.R. 551), the 1986 amendments to the Competition Act added Section 2.1, which provides that Crown corporations do not benefit from any immunity under the Competition Act with respect to their commercial activities. Thus, the Competition Act extends to both private corporations and to the commercial activities of federal and provincial Crown corporations.

The Act applies to all sectors of the economy, with limited exceptions, such as collective bargaining agreements, agreements between fishermen and fish processing firms, security underwriting agree-ments and amateur sports agreements. Certain banking transactions are exempt from the conspiracy provisions of the Canadian Competition Act.


33.03. ContextImportant amendments were made to the Competition Act in March 2009. The Competition

Act now reserves criminal sanctions to the most serious forms of anticompetitive agreement (Section 45) and provides civil sanctions for other forms of agreement. On 23 December 2009, the Canadian Competition Bureau adopted the Competitor Collaboration Guidelines setting out the prohibitions included in the Competition Act.

33.04. Civil offensesAgreements that are likely to substantially lessen or prevent competition in any relevant market

may be prohibited by the court in application of Section 90(1) of the Competition Act.Section 90.1 is only applicable to agreements between parties who compete or who are potential

competitors with respect to the products that are the subject of the agreement.

33.05. Defenses and exceptions to civil offensesExceptions and defenses provided for the application of Section 90(1) concern, inter alia, the

existence of efficiency gains (Section 90(4)), agreements between competitors that relate only to the export of products from Canada (Section 90(8)), specialization agreements that are registered under Section 86 of the Act.

33.06. Criminal offensesUnder Section 45 of the Competition Act it is an indictable criminal offense:(a) to fix, maintain, increase or control the price for the supply of the product;


389

(b) to allocate sales, territories, customers or markets for the production or supply of the product; or

(c) to fix, maintain, control, prevent, lessen or eliminate the production or supply of the product.The provisions of Section 45 apply to agreements between actual and potential competitors to fix

prices, allocate markets or limit the production of a good. The restrictions referred to are prohibited per se: they are anticompetitive restrictions by object and do not require any analysis of their effects.

Where a restrictive agreement has been concluded between federal financial institutions within the meaning of Section 49(1) of the Act, it is assessed under the special provisions of Section 49 of the Act and not under Section 45.

The former criminal pricing provisions (resale price maintenance, Section 61, and price sugges-tions) have been repealed on March 2009; such activities are now addressed under the civil abuse of dominance provisions.

“Bid rigging” is a specific infringement. It is defined in Section 47 as an agreement whereby one party agrees not to submit a bid or where a bid results from a secretive arrangement between two or more bidders. Agreements between a company and its affiliates are specifically excluded from the scope of the prohibition.

The Act also provides for a criminal fine at the discretion of the Competition Tribunal for under-takings operating in Canada and which are implementing a restrictive agreement falling within the scope of Section 45 but concluded abroad (Section 46(1)).

33.07. Exemptions to criminal offensesExemptions to the prohibition provided by Section 45 include, inter alia, ancillary restrictions, i.e.

agreements or arrangements that are directly related to and necessary for giving effect to a broader lawful agreement, such as for example a non-compete clause between a joint venture and the under-takings having created it (Section 45(4)), agreements between a company and its affiliates (Section 45(6 a)) and agreements between competitors which only relate to the export of products from Canada (Section 45(5)).


33.08. ContextMonopolization was initially a criminal offense in Canada, subject to a criminal standard of proof

that was difficult to satisfy. As part of the 1986 amendments to the Competition Act, the prohibi-tion on monopolies was repealed and replaced with a non-criminal offense of abuse of a dominant position. However, since 2009, administrative monetary penalties have been established.

33.09. abuse of a dominant positionSections 78 and 79 of the Competition Act govern the abuse of a dominant position. To come

within the scope of the prohibition three main elements must be established: - that one or more undertakings “substantially or completely control” an area or class of business;- that those undertakings engage in anticompetitive acts; and - that these acts result in a substantial lessening of competition.Although they have declined to provide a fixed rule, the control authorities have held that no

prima facie finding of dominance arises where an entity holds a market share below 50 percent (Dir. of Investigation & Research v. Laidlaw Waste Sys. Ltd., 1992, 40 Can. Patent Rep., 3d, 289, Comp. Trib.). In the small number of cases brought under the provision to date, most entities have had a market share of approximately 85% and the Competition Tribunal has had little difficulty establishing the existence of substantial control of the relevant market.

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A non-exhaustive list of examples of anticompetitive acts under this heading is set out in Section 78, for example “squeezing,” i.e., buying-up products and withholding facilities or resources from the market; selective temporary use of fighting brands; buying-up products to prevent the erosion of existing price levels; and selling products at a price lower than the acquisition cost for the purpose of disciplining or eliminating a competitor.

On January 2009, the Competition Bureau published Updated Enforcement Guidelines on the Abuse of Dominance Provisions.

ii. Enforcement


33.10. the Competition BureauThe Competition Bureau is part of the Federal Department of Industry of Canada and is headed

by the Commissioner of Competition. The Bureau is responsible for administering and enforcing the Competition Act. The Competition Bureau is headed by the Commissioner og Competition and the latter enjoys statutory authority to administer and enforce the Competition Act. In this regard, the Commissioner is charged with responsibility to investigate breaches of the Act and to initiate proceedings for reviewable practices, i.e. civil offenses under the Act.

33.11. the attorney GeneralThe Attorney General enjoys ultimate discretion and responsibility for the initiation of criminal

proceedings. However, in the area of antitrust enforcement, prosecutions are normally initiated by the Attorney General only after the recommendation of the Commissioner of Competition.

33.12. the Competition tribunalThe 1986 amendments to the Competition Act led to the establishment of the Competition

Tribunal, composed of up to six judges of the Federal Court of Canada and not more than eight non-judicial members. The members are appointed for fixed terms of up to seven years and may be reappointed. One of the judicial members is appointed Chairman of the Tribunal by the Governor in Council.

Unlike the US Federal Trade Commission, the Canadian Competition Tribunal has no investi-gative powers or duties, and does not provide advice to the government on matters coming within its jurisdiction. The Competition Tribunal is solely an adjudicative body, with jurisdiction over non-criminal reviewable practices coming within the Competition Act. The Competition Tribunal has jurisdiction to hear and dispose of all applications made under Parts VII.1 and VIII of the Competition Act and any related matters. This includes matters involving abuse of a dominant position. Actions may be brought before the Tribunal by the Commissioner and with regards to refusal to deal (Section 75) and exclusive dealing, tied selling, and market restrictions (Section 77) by individuals.

33.13. the courtsCriminal proceedings under the Competition Act are usually brought before the provincial

Superior Courts of Criminal Jurisdiction and the latter Courts have exclusive jurisdiction for matters arising under Sections 45-49 (Section 67(3)). However, the Federal Trial Courts share jurisdiction with the Superior Courts of Criminal Jurisdiction over certain matters under, inter alia, Section 45 to 49, or over matters on indictment under Sections 52, 52.1, 55, 55.1 or 66 (Section 73(1)).


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33.14. ContextProceedings may be either civil or criminal, depending upon the nature of the infringement.

Investigations are conducted by the Commissioner, and where criminal enforcement is likely the matter is referred to the Attorney General.

33.15. Complaints and investigationsOnly the Commissioner of Competition may investigate breaches of the Act and initiate procee-

dings for reviewable practices. The Commissioner is under a duty to begin an inquiry whenever there are grounds to believe that a criminal offense has been committed. An application for an inquiry may be made to the Commissioner where at least six persons are of the opinion that a provision of Canada’s antitrust law has been violated (Section 9). The application must include the names and addresses of the applicants, the nature of the alleged violation, names of the persons concerned and a statement of the evidence (Section 10).

The Civil Matters Branch of the Bureau investigates competition cases deemed reviewable under the Act. The Criminal Matters Branch of the Competition Bureau investigates possible criminal offenses relating to anticompetitive behavior.

Any person who has applied for, or is the target of, an inquiry is entitled to receive written infor-mation regarding its progress. The Minister may also require the Commissioner to submit an interim report.

When carrying out an investigation, the Commissioner is empowered to apply to the superior, county or Federal Court for an order compelling any person to testify or produce relevant documents (Section 11). Such orders may also be sought for corporations or their affiliates (Section 11(2)). The Commissioner may also seek warrants to enter premises and search or seize documents (Section 15). At any stage, the Commissioner may discontinue the inquiry, making a report to the Minister and subject to review by the Minister.

33.16. Civil proceedingsWhere the existence of an anticompetitive practice is established and the parties do not agree to

put an end to the infringement, the Commissioner may seek to enforce the application of the pro-visions of the Competition Act by requesting an appropriate order from the Competition Tribunal.

Proceedings before the Tribunal are complex and a detailed description may be found in Regulation SOR/2008-141.

33.17. Criminal proceedingsAt any stage during an investigation, where it appears that criminal prosecution may be appro-

priate, the Commissioner may refer the matter to the Attorney General of Canada (Section 23) with a recommendation attached. In the absence of such a recommendation, it is unlikely the Attorney General will act. The Federal Court and superior courts of criminal jurisdiction may, on applica-tion by the Attorney General, issue interim injunctions pending commencement or completion of criminal proceedings (Section 33). Interim injunctions are appropriate where an undertaking appears likely to do an act that will irreparably harm competition and for which money damages will be an insufficient remedy.

With regard to offenses under the Competition Act, the accused may elect to be tried without a jury (Section 67). Corporate defendants are tried without a jury (Section 67(4)).

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33.18. interim reliefPursuant to Section 33 of the Act, a court may, on application by the Attorney General, issue an

interim injuction preventing an undertaking from doing any act that the court deems to constitute or be directed toward the commission of an offense in relation to competition, pending the commence-ment or completion of a proceeding or a prosecution against the underaking. The injuction may only be granted where, without such relief:

(i) injury to competition that cannot adequately be remedied under any other provision of the Act will result, or

(ii) a person is likely to suffer damage for which no adequate compensation may be provided under any other provision of the Act and that will be substantially greater than any damage that the supposedly infringing undertaking is likely to suffer from the injunction in the event that it is subsequently found that an offense has not been committed, was not about to be committed and was not likely to be committed.

C. Sanctions

33.19. Cease and desist ordersThe Competition Tribunal has broad discretion to order any person to take steps deemed necessary

to prevent the commission, continuation or repetition of an offense. Prohibition orders, valid for ten years unless otherwise specified, are authorized upon petition by the Attorney General of Canada or of any province in case of offenses in relation to the competition (Section 34). The vast majority of the Act’s civil provisions empower the Tribunal to prohibit the continuation of certain practices and to order further actions to overcome the effect of the anticompetitive action. Thus, under Section 79(1), where an undertaking is abusing a position of dominance, the Tribunal may make an order prohibiting the conduct in question. Further, under Section 79(2), where the Tribunal considers that an order, as provided for under Section 79(1) would not have sufficient effect, it can instead choose to make an order providing for divestiture of market share. The Tribunal may order that any agreement which prevents or lessens competition substantially shall cease immediately (Section 90.1).

33.20. Criminal sanctions Any infringement of Section 45(1) of the Act is punishable by a maximum fine of C$ 25 million

(US$ 25,370,000) and imprisonment of up to 14 years. Bid rigging is punishable by a discretionary fine or imprisonment of up to 14 years. Granting allowances that are not offered on proportionate terms, failure to obey an order of the court, and violating an interim injunction are each punishable by fine or imprisonment of up to two years.

The Competition Act also provides for criminal sanctions for other infringements. Any person impeding or preventing an investigation may be fined up to C$ 100,000 (US$ 101,500) and/or im-prisoned for up to two years. Destroying evidence may be punished by a fine up to C$ 100,000 (US$ 101,500) and/or imprisonment of up to two years on summary conviction, or a fine in the discretion of the court or imprisonment of up to ten years for conviction on indictment (Sections 63-66).

Any person convicted on indictment of contravening an order of the Tribunal regarding abuse of dominance may be fined at the discretion of the court and imprisoned for up to five years, or, on summary conviction, fined up to C$ 25,000 (US$ 25,380) or imprisoned for up to one year.

33.21. LeniencyThe power to grant immunity or leniency from criminal prosecution under the Competition Act

lies solely with the Attorney General. The Attorney General’s policy on immunity is articulated in the Federal Prosecution Service Deskbook, Part VII, Chapter 35: Immunity Agreements. Companies address their demands to the Competition Bureau which makes its proposals to the Attorney


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General (see Immunity Program under the Competition Act, August 2009). The Commissioner will recommend that the Attorney General grant immunity to a party who is the first to disclose an offense of which the Bureau is unaware, or the first to come forward with sufficient evidence to warrant a referral of the matter to the Attorney General. In order to receive immunity, the underta-king must also: terminate its participation in the illegal activity; not have coerced others to be party to the illegal activity; cooperate completely with the investigation. If the first party fails to meet these requirements, a subsequent party that does meet the requirements may be recommended for immunity.

33.22. administrative monetary penaltiesAdministrative monetary penalties were introduced in 2009 to the Competition Act for cases

of abuses of dominant position. The can be of up to C$ 10 million (US$ 10,150,000) for an initial infringement and up to C$ 15 million (US$ 15,225,000) for subsequent infringements (Section 79 (3.1)). In determining the amount of an administrative monetary penalty, the Tribunal takes into account the effect on competition in the relevant market, the gross revenue from sales affected by the practice, any actual or anticipated profits affected by the practice, the financial position of the person against whom the order is made and the history of compliance with this Act by the person against whom the order is made (Section 79(3.2)).

33.23. DamagesPrivate parties harmed by a violation of a criminal provision of the Competition Act, or by the

failure of another to comply with a court ruling, may bring a civil action in the Federal Court for the amount of the loss plus any additional amount the court may allow (Section 36). No private civil action is available for damages arising from non-criminal reviewable practices.

D. appeals Appeals from decisions of the Competition Tribunal are brought before the Federal Court of

Appeal. However, the Canadian Supreme Court has held that given the specificity of competition control and that its application implies a level of expertise in economic matters, the appellate court should accord special deference to the Tribunal’s decisions concerning matters such as market defi-nition etc.

In criminal matters, orders of the superior court of criminal jurisdiction may be appealed to the court of appeals of the same province. Orders of the trial division of the Federal Court may be appealed to the Federal Court of Appeals. The appellate court may quash any order made by the lower court or impose any order that in its opinion the lower court should have made. Appeals on any ground involving a question of law may be brought within twenty one days from the date of judgment, or within such extended period as the appellate court allows.

The courts also enjoy an appellate supervisory role over the Competition Bureau as regards the exercise of certain powers such as obtaining search warrants and the application of wire taps.

Appeals from orders of both the provincial and the Federal Courts of Appeals may be taken to the Supreme Court of Canada on any ground involving a question of law or, with leave, on any other ground.

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Section 2 MERGERS


33.24. ContextThe current Competition Act includes a set of non-criminal provisions governing mergers. All

merger transactions, whether notifiable or not, are subject to examination by the Commissioner for an appreciation of their anticompetitive effect.

33.25. notion of concentrationA merger is defined in the Competition Act as the acquisition, whether by purchase or lease of

shares or assets, by amalgamation or by combination, of control over or a “significant interest” in the whole or part of a business (Section 91). With respect to corporations, “control” is defined in Section 2(4) of the Competition Act to mean de jure control, that is, a direct or indirect holding of more than 50 per cent of the votes that may be cast to elect directors of the corporation, and which are sufficient to elect a majority of such directors. The Competition Bureau has indicated in its Merger Enforcement Guidelines that acquisition of de jure control constitutes a merger. The Guidelines also indicate that a significant interest exists when a merger confers upon the acquiring party the ability to materially influence the economic behavior of the business of the acquired party. In this context, a significant interest has been found to exist where the acquiring party had sufficient shares to obtain representation on the board of the acquired party so as to materially influence the board or to block resolutions of the corporation. The acquisition of a minority shareholding can amount to a merger. Moreover, a significant interest may arise, even in the absence of a share acquisition, for example, through contract, where it results in the acquisition of a material influence.

The Merger Enforcement Guidelines provide a safe harbor for acquisitions of less than 10% of a company’s shares, which generally are not considered as leading to the acquisition of a significant interest.

Exceptions to the application of the merger rules are set out in Section 113, including, inter alia, transactions where the parties are affiliates.

33.26. thresholdsParties are required to notify mergers and concentrations to the Bureau prior to consummation

where thresholds concerning asset and transaction significance are met. The first threshold provides that the parties to the transaction, together with affiliates, must have assets or annual gross revenues from sales in, to or from Canada, in excess of C$ 400 million (US$ 406 million) (Section 109). The second threshold varies depending on the nature of the transaction. With regard to the acquisition of assets, the operation must be notified where the value of assets (or gross revenues in or from Canada generated by those assets) exceeds C$ 77 million (US$ 78 million) (Section 110(2)). With regard to the acquisition of voting shares, the operation must be notified where assets of the acquired cor-poration (or the gross revenues in or from Canada generated by those assets) exceed C$ 77 million (US$ 78 million) and the acquiring persons would have voting shares in the corporation exceeding:

- in the case of a publicly traded corporation, 20 percent (or if the person owned 20 percent or more prior to the acquisition, then where the voting shares as a result of the transaction exceed 50 percent);

- in the case of a private corporation, 35 percent (or if the person owned 35 percent or more prior to the acquisition, then where the voting shares as a result of the transaction exceed 50 percent).

In the case of a corporate amalgamation, the operation must be notified where the value of the assets of the continuing corporation exceeds C$ 77 million (US$ 78 million). Finally, in the case of


395

a combination, the operation must be notified where combined assets exceed C$ 77 million (US$ 78 millions).

The amounts of the second threshold are amended annually (e.g. from 2011 to 2012, they increased from C$73 to 77 million).

33.27. Control criteriaIn making its evaluation, the Competition Bureau appreciates if the merger substantially prevents

or lessens, or is likely to substantially prevent or lessen, competition.The Canadian Merger Enforcement Guidelines dated October 6, 2011 have adopted a methodo-

logy similar to that adopted by the US Department of Justice and the FTC in their Joint Horizontal Merger Guidelines. In general, the relevant market is defined as the smallest group of products and the smallest geographic area in relation to which sellers are able to impose and maintain a significant and non-transitory price increase. In most contexts, the Canadian Competition Bureau considers a 5% price increase to be significant, and a one-year period to be non-transitory. The Canadian Competition Tribunal has approved this approach.

The Competition Act provides that the Tribunal shall not make the finding that a merger is likely to substantially lessen competition based solely on evidence of market share (Section 92(2). Nevertheless, the Canadian Merger Enforcement Guidelines state that the Competition Bureau is unlikely to challenge a merger on the basis of a concern related to the unilateral exercise of market power if the post-merger market share of the entity will likely be less than 35 percent. The Bureau has also stated that it is unlikely to question a merger on the basis of a concern related to a coordi-nated exercise of market power where the four largest firms on the relevant would have less than 65 percent of the market or, if this four firm ratio is exceeded, if the market share of the entity post-merger would be less than 10 percent. Neither does large market share always result in a finding of anticompetitive effect and in at least one case, the Commissioner found no substantial lessening of competition even though the merger at issue resulted in a market share of 60% (Dir. of Investigation and Research v. Hillsdown Holdings Ltd., 1992, 41 Can. Patent Rep.3d 289, 328-331, Comp. Trib.).

Once the Competition Bureau has identified the relevant market for a merger and calculated the market shares likely to exist post-merger, it considers additional factors and has developed different doctrines of appreciation, as listed in Section 93 of the Competition Act. These factors include:

- the nature and extent of foreign competition;- failing company defense; - availability of substitute products; - the existence of barriers to entry; - degree of effective competition remaining on the market; - the likelihood that a merger will remove a vigorous and effective competitor; - the nature and extent of change and innovation in the relevant market; and - any other relevant factors.Assessment of the factors listed in Section 93 allows the Bureau to determine whether a merger

substantially enhances market power. In particular, the Commissioner considers whether the merged entity will be able to exercise as a result of the merger a materially greater degree of market power in a substantial part of the market.

Further, following the US approach, the Competition Act provides that a merger should not be prohibited where the Tribunal finds that any lessening of competition is likely to be more than offset by greater gains in efficiency, including potential substitution of domestic products for imports and increases in the real value of exports (Section 96). Thus, while defendants may not rely on the efficiencies that may result from an agreement among competitors as a defense to a violation of the conspiracy provisions (The Queen v. N.S. Pharm. Soc’y, 1992, 2 S.C.R. 606), in contrast, an efficiencies defense is expressly provided for under Section 96 with respect to mergers.

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ii. Enforcement


33.28. the Competition BureauThe Merger Notification Unit of the Competition Bureau is responsible for the administration of

Part IX of the Competition Act concerning notifiable transactions. The Commissioner, who heads the Competition Bureau, is empowered to investigate mergers and institute formal proceedings before the Competition Tribunal where necessary. The Bureau has issued Merger Enforcement Guidelines (MEGs) and Merger Review Process Guidelines to assist practitioners.

33.29. the Competition tribunalThe Competition Tribunal Act established a Competition Tribunal with jurisdiction to hear and

dispose of all applications concerning mergers upon referral by the Commissioner.

33.30. Other authoritiesThe Attorney General of each of the provinces may intervene in any proceedings before the

Competition Tribunal pursuant to Section 92 (Section 101).


33.31. Merger notificationParties must provide certain information to the Commissioner. To assist parties in compiling the

prescribed information, the Bureau has developed a template form, use of which although not man-datory, is strongly recommended.

After supplying the required information, there is a statutory waiting period during which the proposed merger cannot be completed. The waiting period is thirty days. The Bureau may issue a “supplementary information request” (“SIR”) for additional relevant information. The issuance of a SIR to one or more notifying parties triggers a second 30-day waiting period, which commences when the Commissioner has received from each SIR recipient a certified complete response to all information requests set out in the SIR. A proposed transaction may not be completed until the expiry of the applicable waiting period (Section 123). These waiting periods apply except where the Commissioner informs the notifying parties that there is no intention to apply for an order relative to the merger pursuant to Section 92, i.e. where it is considered that the merger will have an anti-competitive effect.

A filing fee of C$ 50,000 (US$ 50,750) applies.

33.32. Proceedings before the Competition tribunalIn cases where an inquiry is being made, the Competition Commissioner may seek an interim

order from the Competition Tribunal delaying a transaction where it needs further time to complete its investigation (Section 100).

Where satisfied that there would be no grounds for alleging that a proposed transaction substan-tially lessens competition, the Commissioner may issue an Advance Ruling Certificate (“ARC”) to this effect. The Commissioner is barred from challenging the concentration on the basis of substan-tially the same information, if the transaction to which the certificate relates is substantially comple-ted within one year after the certificate is issued (Section 103).

Where the Commissioner considers that a merger may have an anticompetitive effect, under Section 92, the matter may be referred to the Tribunal for consideration. The Commissioner can


397

refer proposed mergers following their notification and mergers not meeting the notification requi-rement but which nonetheless are considered to have an anticompetitive effect.

Alternatively, where the parties and the Commissioner have agreed a method of removing the anticompetitive effect of a proposed merger, the Commissioner may apply to the Tribunal to have their agreement endorsed by way of a consent order. As part of this process, the Tribunal can choose to endorse the agreement; modify its terms; or refuse to endorse it. However, in practice it is not the habit of the Tribunal to second guess agreements that the Commissioner reaches with the parties. Rather the Tribunal’s decision tends to be restricted to an analysis of the actual legality of the agree-ment and whether there may be problems linked to enforcement.

Where the Commissioner allows the 30 day period to elapse without adopting a decision, the parties are legally entitled to close their transaction. However, in the absence of an ARC or no-action letter, the parties have no assurances that the Commissioner has no present intention to challenge the proposed transaction, which he has a year to do.


33.33. Conditions and commitments - DivestitureIf the Tribunal finds that a merger substantially lessens competition or is likely to do so, it may

order the parties not to proceed with all or part of the merger, or if the merger should be completed, attach conditions thereto (Section 92). In the case of a completed merger, the Tribunal is empowered to dissolve the merger, direct the disposition of assets, and make such other orders as are necessary.

When the Competition Bureau determines that a merger substantially prevents or lessens, or is likely to substantially prevent or lessen, competition, the Commissioner can apply to the Competition Tribunal under Section 92 for an order dissolving the merger or disposing of designated assets or shares.

33.34. FinesCurrently, the fine for failure to notify has been increased to C$50,000 (US$ 50,750), but this

offense is not punishable by imprisonment. The same fine applies in case of implementation without approval. In such case the parties are also liable for administrative penalties not exceeding C$ 10,000 (US$ 10,150) for each day they fail to comply.

D. appeals

33.35. appeals against the Competition tribunal’s ordersPursuant to Section 106, and upon application by the Commissioner or the party against whom

an order is made, the Tribunal may rescind or vary an order that it has issued. Further, appeals from orders of the Competition Tribunal may be made to the Federal Court of Appeal.


399

ChaPtEr 34

ChiLE




34.01. ContextThe first Chilean competition law, enacted in 1959, instituted an Antimonopoly Commission

which enjoyed monitoring and sanction powers over anticompetitive behavior. In 1963, a suppor-ting body was created, entrusted with investigation and prosecution powers: the Fiscalía Nacional Económica (FNE, National Economic Prosecutor’s Office). However, under a system of planned economy, little room was left to competition. The 1973 coup opened Chile to a liberal economy system, and led to the adoption of the Competion Act, Decree Law No 211 of 22 December 1973. The Decree Law instituted a new Competition Commission (Comisión Resolutiva) and at the central and regional levels, Consultative Commissions (Comisiones Preventivas) while keeping the FNE in office. The Decree Law underwent several amendments until 2003, when Law No 19.911 replaced the various Commissions by a Tribunal de Defensa de la Libre Competencia (TDLC). New amend-ments were introduced in 2009, aimed at enhancing the enforcement of competition law in Chile.







The FNE (Fiscalia Nacional Economica) 34.06

The TDLC (Tribunal de Defensa de la Libre Competencia) 34.07

B. Enforcement proceedingsComplaints and investigations 34.08Proceedings before the TDLC 34.09Interim relief 34.10Enforcement by ordinary courts 34.11


D. AppealsAppeals against decisions of the TDLC 34.15

Section 2 Mergers

I. Substantive rulesContext 34.16Concept of concentration 34.17Control criteria 34.18


The FNE and TFLC 34.19B. Enforcement proceedings

Merger notification 34.20Proceedings before the FNE and the TDLC 34.21


D. AppealsAppeals against decisions of the TDLC 34.24

Chile

400

Unfair competition is covered by a separate law. Section 3 of the Unfair Competition Act of 2007 defines unfair competition as any conduct contrary to good faith or morality, which is intended to take customers away from one market player through illegitimate means. The Act lists several examples of such practices: deception (by “passing off ” and other means), misleading advertising, defamation of competitors, commercial bribery, misuse of trade secrets and sham litigation filed to exclude a competitor from the market. Claims of unfair competition are decided by general jurisdic-tion courts.

34.02. ScopeThe Competition Act does not specify a particular objective. Section 1 states in general terms that

the purpose of the law is “to promote and defend free market competition.” The competition bill originally submitted to the Congress in 2002 explicitly called for the promotion of efficiency and consumer welfare.


34.03. the prohibitionCollusion is an anticompetitive practice under Section 3. According to Section 3(a), “express or

implied agreements” or “concerted practices” intended to fix prices of sale or purchase, limit pro-duction or allocate areas or market shares, and abusing the power that such agreements or practices confer, constitute violations of the Act.

Moreover vertical agreements are also covered by the general principle of Section 3, that any act or contract that prevents, restrains or hinders free competition or tends to produce such effects may be subject to sanctions.

34.04. ExemptionsAccording to Section 4, no concessions, authorizations or acts that imply the grant of monopolies

for the exercise of economic activities are allowed, except where the law so permits.


34.05. abuse of a dominant positionAbuse of dominance has been the most important area of antitrust enforcement. The prohibition

in Section 3(b) includes illustrations of behavior that would be regarded as abuse of dominance: abusive prices, tying and dividing markets. Section 3(c) prohibits “predatory or unfair competitive practices conducted in order to attain keep or increase a dominant position.”

ii. Enforcement


34.06. the FnE (Fiscalia Nacional Economica)The Fiscalía Nacional Económica (FNE) is the national agency responsible for safeguarding fair

competition. Its duty is to defend and advocate for competition in all markets or productive sectors of the Chilean economy.


401

The Competition Act states that the FNE is a decentralized public service, with legal personality and assets of its own, independent from any other entity or service, and subject to the surveillance of the President of the Republic, through the Ministry of the Economy.

The head of the organization is the National Economic Prosecutor who is both the executive director and legal and extra-judicial representative of the FNE.

34.07. the tDLC (Tribunal de Defensa de la Libre Competencia)Private parties can seek relief by filing a complaint at the TLDC. The TDLC must notify the

FNE about the suit. The TDLC can issue an order to correct or cease conduct, but it cannot award damages.


34.08. Complaints and investigationsThe FNE must investigate all valid complaints. It may initiate an investigation ex officio, and

undertake sectoral investigations of particular markets. No special regulations govern FNE investi-gations. General rules for administrative processes are set out in the Administrative Procedure Act and the General Basis for Fiscal Administration Act. The FNE also applies an internal manual of procedural guidelines.

In its investigations, the FNE has the power to compel the production of documents and the co-operation of public agencies, state-owned entities, private firms and individuals, and the power to request information from any Government agency. It can summon witnesses to testify, including the defendant’s representatives, managers and advisors or anyone with potential knowledge of an infrin-gement. It can inspect the premises of the investigated businesses on a voluntary basis. The 2009 Law now gives it stronger powers of investigation, such as dawn raids and wiretapping. These require authorization from the TDLC and an order from a judge of the Court of Appeals.

When the FNE initiates an investigation it must provide notice to the target, unless the TDLC waives this requirement. Upon notice to the Chair of the TDLC, the FNE may declare an investiga-tion confidential. This happens generally when notice may jeopardize the investigation.

Confidentiality protection for information obtained during an FNE investigation is guaranteed in the Competition Act. The Competition Act requires that FNE’s professionals keep confidential the information obtained in their official capacity (Section 42).

The results of an FNE investigation may be a filed report, which is an administrative decision, or a report to the TDLC in a proceeding (either adversarial or non-adversarial) in which the TDLC asks for the FNE’s opinion, or an ex officio charge or complaint (requerimiento) seeking a fine or other remedy. All of the above are matters of public record.

34.09. Proceedings before the tDLCAn “adversarial” proceeding before the TDLC begins with a charge by the FNE or a complaint by a

private party. A complaint must be answered within 15 working days; that deadline can be extended to 30 days. The TDLC will then summon the parties for conciliation. If conciliation fails, there is a 20-day “discovery” period. In the first five days of this period, interested parties may designate witnesses to tes-tify. Other forms of evidence may be submitted throughout the period. Testimony is heard by a single judge, in sessions that are typically one half-day per week and per judge. Thus, despite the 20-day limi-tation, it may take several weeks to hear all the testimony. The testimony is transcribed and becomes part of the record of the case, together with the parties’ documentary submissions and any evidence that the TDLC may directly request. At the end of the discovery period, the judge will convene the parties for a hearing. This hearing consists of oral argument by counsel for the parties. The TDLC then issues a decision. The target for decision is 45 days, but this time-limit may be extended.

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A “consultative” or non-adversarial procedure before the TDLC is a way to determine the legality of contracts or practices. It can be initiated by private parties or by the FNE. A public notice in the Official Gazette invites participation of interested parties and others potentially interested in the com-petitive conditions of the relevant market. The TDLC will then hold a public hearing before reaching a decision. In a consultative proceeding, the TDLC may issue a mandatory order imposing conditions.

34.10. interim reliefPursuant to Section 25, “the Tribunal may, at any stage of the trial or prior its commencement,

decree all precautionary measures needed to avoid the negative effects of the conduct subject of the complaint and to safeguard the common interest, for the time deemed necessary”.

The measures taken are of a provisional nature and may be modified or set aside at any stage in the case. In order to resolve them, the petitioner must provide background information that at least constitutes a serious presumption of the right claimed or of the facts complained of.

The resolution that grants or denies interim relief must be served by post by means of a certified letter. Where the measure is ordered pre-judicially, the prosecutor or the petitioner must file the formal complaint or the demand within a period of twenty working days from the notification of the measure; otherwise, the measure ceases to have effect.

However, the measures may be enforced without prior service on the person against whom they are directed, provided that there are serious reasons for doing so, and that the Tribunal so decrees. In this case, if five days have elapsed without the service being performed, the proceedings carried out will be void. The Tribunal may extend this time-limit for justified reasons.

34.11. Enforcement by ordinary courtsDamages caused by a violation of the Competition Act can be recovered through a suit filed in a

lower District Court, but only after a decision by the TDLC finding the violation.

C. Sanctions

34.12. Cease and desist ordersIn adversarial cases, the TDLC can impose behavioral or structural orders. Orders can amend or

eliminate anticompetitive acts, contracts, agreements, schemes or arrangements in violation of the Competition Act. The TDLC can also order divestiture or dissolution of partnerships, corporations or business companies whose existence rests on the implementation of anticompetitive arrangements.

34.13. FinesThe 2003 Competition Act eliminated criminal prosecution while increasing the maximum admi-

nistrative fine substantially.Administrative fines can be imposed upon the infringing legal entity and on its directors and

managers and persons who participated in the infringement. The amount depends on the financial benefit received from the infringement, the severity of the breach and the offenders’ recidivism. The maximum fine is 20 000 tax units (US$ 15 million).

34.14. LeniencyThe Competition Act provides for an anticipated reduction of administrative fines or full immu-

nity from antitrust prosecution in exchange for collaboration in cartel investigation and detection.Under the legislation adopted in 2009, the first party in a cartel to come forward with information

about it may obtain total immunity, provided that the information is precise and truthful, subject to


403

verification and sufficient to back FNE’s claim or requerimiento. In addition, the party must refrain from disclosing any information until the FNE files its claim before the TDLC or dismisses the case altogether, and it must refrain from engaging in the agreement any further, unless the FNE deems such involvement is necessary for attaining the objectives of the investigation. Other members of the cartel could receive a reduction in fine, up to 50%, if they cooperate with the FNE with new infor-mation useful for the prosecution.

D. appeals

34.15. appeals against decisions of the tDLCThe Supreme Court decides appeals from final TDLC decisions by a special appeal (recurso de

reclamación).

Section 2 MERGERS


34.16. ContextThe substantive law applied to mergers is Section 3 of the Competition Act, which does not ad-

dress mergers or acquisitions directly. In addition, the Fiscalia Nacional Economica (FNE) has tried to provide guidance merger analysis in its non-binding “Internal Guide for the Analysis of Horizontal Concentration Operations”. The FNE conducts its merger analysis with the aid of these guidelines which represent a first step toward the standardization of competition rules for merger control.

34.17. Concept of concentration Mergers are broadly defined as arrangements or transactions that have as an object or effect, for two

or more independent economic entities, to become a single entity, or form part of the same corporate group. The law and the guidelines do not provide a list of transactions subject to merger control.

34.18. Control criteriaThe guidelines state that a merger transaction infringes or may infringe competition law when it

grants, reinforces or increases the capacity of the merged entity, to exercise market power, or when it tends or may tend towards it.

To assess the competitive impact of a merger, the FNE determines the level of concentration in the market and the changes caused by the merger transaction. It uses mainly, but not exclusively, the Herfindahl Hirschman Index (HHI). Where the HHI is below 1,000, the merger should not be likely to damage competition. By contrast, where the HHI is above 1,800, the merger is considered as potentially damageable for competition.

ii. Enforcement


34.19. the FnE and tFLCThe Fiscalia Nacional Economica (FNE), equivalent to the National Economic Prosecutor’s Office,

conducts investigations and provides opinions.

Chile

404

The Tribunal de Defensa de la Libre Competencia (TDLC), the Competition Tribunal, is the deci-sion-making authority. It accepts, refuses or imposes remedies to the transaction.


34.20. Merger notificationThere is no general pre-merger notification and review requirement. Mandatory pre-merger notification is required only for transactions involving television and radio.

In such cases, a 30 day notice period is required.

34.21. Proceedings before the FnE and the tDLCMergers may be challenged and reviewed ex-post in an adversarial proceeding at the TDLC. Any

interested person, as well as the FNE, can challenge a merger before the TDLC.Parties may also request a preliminary review of their proposed merger by the TDLC. In this

non-adversarial proceeding, the FNE submits a report stating its opinion, which may or may not be followed by the TDLC. During the investigation procedure, the parties and the FNE can reach an agreement. The FNE and the parties can propose remedies. The TDLC may issue an injunction to prohibit the closing of the transaction while the contested proceeding is ongoing. If the parties voluntarily initiate a consultation, the transaction cannot be completed during the review period until the TDLC accepts the transaction.

If the transaction is approved and the parties comply with the conditions set by the TDLC, this transaction cannot be challenged ex-post facto.


34.22. Conditions and commitments – DivestitureThe TDLC may issue orders that might require partial divestiture, require parties to offer pro-

ducts or services under certain limitations or prevent the merged entity from participating in certain markets. The TDLC may block a merger outright, even in a consultative proceeding, if there is a serious threat to competition.

34.23. Fines Undertakings who implement transactions that may impede or restrict competition without the

approval of the TDLC may be subject to fines.

D. appeals

34.24. appeals against decisions of the tDLCThe TDLC decisions can be appealed before the Supreme Court. Nevertheless, the Supreme

Court cannot modify a TDLC decision issued in a non-adversarial proceeding (pre-merger notifica-tion). In this case it can only reconsider the measures and conditions imposed in the TDLC decision.


405

ChaPtEr 35

China (PEOPLE’S rEPUBLiC OF)




35.01. ContextThe Anti-Monopoly Law (the AML), which was adopted by the National People’s Congress on

30 August 2007 and came into force on 1 August 2008, is the main piece of legis¬lation governing restrictive arrangements in the People’s Republic of China (PRC). Other less significant laws dealing with competition related issues include the Anti-Unfair Competition Law of 1993, the Price Law of 1998 and the Bidding Law of 2000.







Context 35.07

The Anti-Monopoly Commission 35.08The Anti-Monopoly Authority under the State Council 35.09

B. Enforcement proceedings Proceedings before the Anti-Monopoly Law Enforcement Authority 35.10Interim relief 35.11Enforcement by ordinary courts 35.12

C. SanctionsRefusal to provide materials or information 35.13Monopoly agreement 35.14Leniency 35.15Abuse of a dominant position 35.16

D. AppealsAppeals against the AMA’s decision 35.17

Section 2 Mergers


II. Enforcement A. Enforcement authority

MOFCOM 35.22

B. Enforcement proceedingsMerger notification 35.23Proceedings before the MOFCOM 35.24


D. AppealsAppeals before administrative courts 35.27

China

406

35.02. ScopeAs regards the extraterritorial application, Section 2 of the AML states “This law shall be appli-

cable to the [monopolistic] conducts outside the territory of the People’s Republic of China if they elimina¬te or have restrictive effect on competition on the domestic market of the PRC.”

Section 1 states: “This Law is enacted for the purpose of preventing and restraining monopolistic conducts, protecting fair competition in the market, enhancing economic efficiency, safeguarding the interests of consumers and social public interest, promoting the healthy development of the socialist market economy.”

Section 3 points out the term of “monopolistic conducts” which notably refers to “monopolistic” agreements and abuse of dominant market positions.

In order to reduce the scope of exemptions, Section 7 introduces the obligation for “industries controlled by the State-owned economy and concerning the lifeline of national economy and natio-nal security” not to “damage the interests of consumers by virtue of their dominant or exclusive posi-tions”. On the other hand, Sections 55 and 56 preserve intellectual property rights and agriculture from the applica¬tion of the AML.


35.03. the prohibitionThe prohibition in the AML is directed against two types of anti-competitive agreements: 1º) Horizontal agreements According to Section 13, ‘monopoly agreement’ refers to “agreements, decisions or other concer¬ted

actions which eliminate or restrict competition”. Section 13 AML lists 6 types of monopoly agreement: - fixing or changing the prices of commodities; - limiting commodities output or sale; - dividing the sales market or the raw material procurement market; - restricting the purchase of new technology or new facilities, or the development of new techno-

logy or new products; - making boycott transactions; or - other monopoly agreements as determined by the Anti-Monopoly Authority under the State

Council. 2º) Vertical agreements Business operators are forbidden to reach agreements with trading partners that eliminate or res-

trict com¬petition. Section 14 lists: - fixing the price for resale of commodities to a third party; - restricting the minimum price for resale of commodities to a third party; or - other monopoly agreements as determined by the Anti-Monopoly Authority under the State

Council.

35.04. ExemptionsExemptions are provided for under Sections 15 and 16 AML: Section 15 AML provides that an agreement forbidden by articles 13 and 14 but complying with

certain conditions may be exempted. Such agreement must purport to: (1) improve technologies, research and develop new products;(2) upgrade product quality, reduce costs, improve efficiency, unify product specifications or stan-

dards or carry out professional labor division;


407

(3) enhance operational efficiency or the competitiveness of small and medium-sized business operators;

(4) achieve public interests such as energy conservation, environmental protection, relieving the victims of a disaster;

(5) mitigate serious decrease in sales volume or obviously excessive production during economic recession;

(6) safeguard the justifiable interests in the foreign trade or foreign economic cooperation.The undertaking justifying the agreement under items (1) to (5) must also prove that the situation

will bring benefits for consumers and will not adversely restrict competition.


35.05. Dominant positionThe definition of a dominant position is given by Section 17 AML: “a market position held by

a business operator having the capacity to control the price, quantity or other trading conditions of commodities in relevant market, or to hinder or affect any other business operator to enter the rele-vant market.”

A relevant market is according to Section 12 AML “the commodity scope or territorial scope within which the business operators compete against each other during a certain period of time for specific commodities or services.” The geographical market is not limited to PRC but may be more global: thus for a specific commodity market, small transactions might fall within the scope of the provision despite the fact that they do not affect the Chinese market.

Section 19 provides for a list of three presumptions of existence of market dominance: (1) a business operator holding a market share of 50% or above; (2) two business operators jointly holding a market share of 66% or above; (3) three business operators jointly holding a market share of 75% or above. An undertaking holding less than 10% of the market in situation 2 or 3 is not presumed to have a

dominant position on the market. Conversely, an undertaking falling under the scope of situations 1 to 3 may bring evidence to the contrary.

35.06. abuseAn undertaking having a dominant position is precluded from abusing it by engaging in any of

the conducts prohibited by the AML listed in Section 17, such as unfair pricing or imposition of unrea¬sonable trading conditions without any justification, or implementation of dissimilar treat-ment without justification.

Finally, the provision states the possibility of having an abuse “determined by the Anti-Monopoly Authority under the State Council.” Important concepts such as “unfairly high prices”, “unfairly low prices” and “justifiable cause” are not defined in the text.

Section 18 lists the factors used to determine whether the undertaking is in a dominant position: competition situation of the market, capacity to control the sales market or the raw material pro-curement market, financial and technological conditions of the undertaking, degree of dependence of the other undertakings and the degree of difficulty for other un¬dertakings to enter the market. Similarly to Section 17, Section 18 ends with a very vague formula embracing all “other factors rela-ted to determine a dominant market position”.

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408

ii. Enforcement


35.07. ContextThe AML provides for a differentiation in the level of enforcement institutions in charge of the

Anti-Monopoly Law. At first level, the AML establishes the Anti-monopoly Commission under the State Council (AMC), and on at lower level, the Anti-Monopoly Law Enforcement Authorities under the State Council (AEA).

35.08. the anti-Monopoly Commission According to Section 9 of the AML, the AMC, “in charge of organizing, coordinating, guiding

anti-monopoly work, performs the following functions: (1) studying and drafting related competi-tion policies; (2) organizing the investigation and assessment of overall competition situations in the market, and issuing assessment reports; (3) constituting and issuing anti-monopoly guidelines; (4) coordinating anti-monopoly administrative law enforcement; and (5) other functions as assigned by the State Council”.

35.09. the anti-Monopoly Law Enforcement authorities under the State CouncilSection 10 introduces the second level of institutions, entrusted with anti-monopoly enforcement

duties and appointed by the State Council: the Anti-Monopoly Authority under the State Council (AMA).

Two distinct Anti-Monopoly Authorities under the State Council (or AMA) bodies can be dis-tinguished:

- the State Administration of Industry and Commerce (SAIC), in charge of all anticompetitive conduct (agreements, abuses of dominant positions, and abuses of administrative power), except conducts related to prices;

- the National Development and Reform Commission (NDRC) in charge of conducting investi¬gations and anticompetitive pricing arrangements.

All of the AMAs have the possibility to delegate their work to provincial, autonomous regions and municipal governments.


35.10. Proceedings before the anti-Monopoly Law Enforcement authorityAnyone can report any suspected monopolistic conducts to the Anti-Monopoly Authority.

Depending on the evidence and facts, the Authority decides whether or not to investigate. The Authority may conduct inspections, question the undertakings and other relevant entities or persons, consult or copy the relevant documents, seize evidence and also enquire the bank account of the undertaking (Section 39 AML).

The Authority and its officials are required to keep confidential any trade secrets made known to them during the process of investigation (Section 41 AML). The undertakings are required to coo-perate and may not obstruct any investigation (Section 42 AML). The undertakings have the right to make known their view (Section 43 AML).

If the Authority finds monopolistic conduct, it issues a decision and may make a public statement (Section 44 AML).

The Authority might suspend the investigation if the undertakings promise to “eliminate the impact of the conduct by taking specific measures within the time limit prescribed by the Anti-


409

Monopoly authority”. The commitments ta¬ken will not be seen as an evidence of anti-monopoly conduct by the Authority. The Authority will supervise the performance of the commitments given by the undertaking. It will resume the investigation if the undertaking fails to implement its commit-ments, if there is any significant change to the facts on which the decision to suspend investigation was based or if the decision to suspend investigation was based on incomplete or inaccurate infor-mation (Section 45 AML).

35.11. interim reliefThe AML contains no spectific provision regarding the availability of interim relief.

35.12. Enforcement by ordinary courtsAnti-monopoly civil cases may be brought before the Intellectual Property Tribunal.

C. Sanctions

35.13. refusal to provide materials or information Anyone who refuses to provide materials or information shall be ordered by the Authority to

rec¬tify the situation, and be imposed a fine. The fine provided for an individual is between CNY 20,000 (US$ 3,150) and CNY 100,000 (US$ 15,750), if the situation is serious.

The fine for an entity will not exceed CNY 200,000 (US$ 31,500) or CNY 1 million (US$ 57,400) in a serious situation.

In some situations, the behavior may constitute a crime and criminal liability shall be prosecuted in accordance with laws (Section 52 AML).

35.14. Monopoly agreementIn case of a monopoly agreement, the undertaking will be ordered to cease its illegal behavior, have

its illegal gains confiscated, and have a fine imposed of not less than 1% but not more than 10% of its sales turnover for the preceding year. If the monopoly agreement was not implemented, a fine of CNY 500,000 (US$ 78,700) may be imposed.

For determining the fine imposed on the undertakings, the AMA shall take into account, the nature, extent and duration of the illegal behavior (Section 49 AML).

If the monopoly agreement causes losses to other undertakings or individuals, the victim may bring an action against the undertaking on the basis of civil liability (Section 50 AML). In that case, the statute of limitations will be the one applicable to general litigation, as referred to in Section 135 of the General Principles of Civil Law, which provide that the civil action shall be taken within two years from the knowledge of the tort.

35.15. LeniencyIf the undertaking takes the initiative of reporting the monopoly agreement to the Anti-Monopoly

Authority and gives evidence of the agreement, the AMA may impose a mitigated punishment or exemption from punishment as the case may be (Section 46 AML). In that sense, Section 46 pro-vides the basis for a leniency regime, which still depends on the good will of the AMA.

35.16. abuse of a dominant positionIn case of an abuse of a dominant position, the sanction is almost the same as for monopoly

agree¬ments. The undertakings will be ordered to cease the infringement, its illegal proceeds will

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410

be confis¬cated, and a fine of not less than 1% but not more than 10% of its sales turnover for the preceding year will be imposed (Section 47 AML).

For determining the fine imposed on the undertakings, the AMA shall take into account, the nature, extent and duration of the illegal behavior (Section 49 AML).

If the abuse causes losses to other undertakings or persons, the victim may bring an action against the undertaking on the basis of civil liability in the same conditions as for monopoly agreements.

D. appeals

35.17. 35.16. appeals against the aMa’s decisionFor any other matters than concentration (monopoly agreement or abuse of a dominant posi-

tion), the undertaking may at the same time apply for an administrative reconsideration or initiate admi¬nistrative lawsuit without being obliged to apply for reconsideration beforehand (Section 53 AML).

Section 2 MERGERS


35.18. ContextChapter 4 of the AML governs “concentrations of business operators”.

35.19. Concept of concentrationSection 20 of the AML defines ‘concentration’ as: (1) the merger of undertakings; (2) acquiring control over other undertakings by acquisition of equities or assets; (3) acquiring control over other undertakings or possibility of exercising decisive influence on

other undertakings by virtue of contract or any other means. The concepts of “control” and “decisive influence” are not defined by the law.

35.20. thresholdsThe Regulations on Filing Thresholds for Concentration of Business Operators (the “Filing

Thresholds Regulations”) became effective on 1 August 2008. The undertakings involved in the merger must notify firstly if the combined worldwide annual

turnover of all business operators involved in the preceding fiscal year exceeds CNY 10 billion (US$ 1,575 million) and at least two of the undertakings have an annual turnover in China excee¬ding CNY 400 million (US$ 63 million).

Secondly they must notify if the combined Chinese annual turnover of all business opera¬tors involved in the concentration in the preceding fiscal year exceeds CNY 2 billion (US$ 315 million), and at least two of the business operators having an annual turnover in China excee¬ding CNY 400 million (US$ 63 million).

35.21. Control criteriaThe decision is taken on the basis of factors including the market share of the business operators,

the degree of market concentration, the influence of the concentration on access to the market and technological progress, the influence of the concentration on consumers and other undertakings and


411

on the development of the national economy and other considerations identified by the MOFCOM (Section 27 AML).

If the operation has or may have the effect of eliminating or restricting competition, the MOFCOM may prohibit the concentration. However, the undertaking may prove that the operation will bring positive impact on competition (Section 28 AML).

If a foreign undertaking is concerned by the acquisition of a domestic undertaking, this operation will be submitted to a national security assessment (Section 31 AML).

ii. Enforcement


35.22. MOFCOMThe Anti-Monopoly Bureau (AMB) within the Ministry of Commerce (MOFCOM) is in charge

of the merger control, as an AMA.


35.23. Merger notificationBefore a concentration, business operators must make a declaration to the MOFCOM where the

ope¬ration reaches the thresholds specified by the State Council (Section 21 AML). Such a notification is not necessary in the two following cases: - one of the undertakings is the major shareholder of each of the other undertakings; - one undertaking that is not a party to the concentration is the major shareholder of each of the

other undertakings (Section 22 AML). The contents of the notification file to the MOFCOM is detailed in Section 23: “(1) a declaration paper;(2) explanations on the effect of the concentration on competition on the relevant market;(3) the agreement of concentration;(4) the financial reports and accounting reports of the proceeding accounting year of the business

operator; and(5) other documents and materials as stipulated by the Anti-monopoly Authority under the State

Council.Such items shall be embodied in the declaration paper as the name, domicile and business scopes

of the business operators involved in the concentration as well as the date of the scheduled concen-tration and other items as stipulated by the Anti-monopoly Authority under the State Council”.

35.24. Proceedings before the MOFCOMOnce the notification completed, the MOFCOM has a 30-day period to conduct a preliminary

review and to decide if an in-depth review is necessary. The undertakings must wait for the deci-sion before implementing the concentration. Once the period is expired, the concentration may be imple¬mented (Section 25 AML).

In the case in-depth review is deemed necessary, the MOFCOM has 90 days to make a decision; during that period the undertakings cannot implement the concentration. If the operation is prohi-bited, it shall state its reasons.

The period of 90 days might be extended to no more than 60 days in some particular cases (Section 26 AML).

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412


35.25. Conditions and commitments - DivestitureRather than prohibit the concentration, the MOFCOM may decide to impose additional restric-

tive conditions on the operation (Section 29 AML). The undertakings may be ordered to cease implementing the concentration, to dispose of their

shares or assets or to transfer the business within a specified period, and to work in order to restore the situation to what it was before the concentration.

35.26. FinesImplementation of a concentration in violation of the law is liable to a fine of amount of no more

than CNY 500,000 (US$ 78,700) (Section 48 AML). For determining the fine imposed on the undertakings, the MOFCOM shall take into account,

the nature, extent and duration of the illegal behavior (Section 49 AML).

D. appeals

35.27. appeals before administrative courtsAny business operator complaining about the decision in a concentration has first to apply for an

administrative reconsideration and then only may initiate an administrative litigation in accordance with the law.


413

ChaPtEr 36

COLOMBia

Section 1 AnTICOMPETITIVE AnD RESTRICTIVE PRACTICES



36.01. ContextColombia was one of the first countries in South America to introduce a competition regime

when, in 1959, Act No 155 was approved by Congress under the auspices of the national govern-ment. However, it took a long time before the provisions of that Act were truly enforced and the exis-tence of several agencies with concurrent antitrust enforcement powers proved problematic. Thus, with the enactment in 2009 of Act No 1340, Colombia’s antitrust regime has been strengthened. In addition to the above, the competition rules cover acts of unfair competition established in Act No 256 of 1996 which affect or have an impact on the market.

According to Section 48 of Decree No 2153 of 1992, the following acts are also considered to be contrary to free competition without requiring that the firm engaging in them be in a dominant position:

Section 1 anticompetitive and restrictive practices



B. Restrictive agreementsThe prohibition 36.03



The Superintendent of Industry and Commerce 36.05The courts 36.06

B. Enforcement proceedingsProceedings before the SIC 36.07Interim relief 36.08

C. SanctionsCease and desist orders 36.09Fines 36.10Criminal sanctions 36.11Leniency 36.12Damages 36.13

D. AppealsAppeals against SIC decisions 36.14

Section 2 Mergers



The Superintendent of Industry and Commerce 36.19

B. Enforcement proceedingsMerger notification 36.20Proceedings before the SIC 36.21


D. AppealsAppeal against decisions of the SIC 36.24

Colombia

414

- violating the rules on advertising contained in the consumer protection statute;- exerting influence on a company to raise the prices of its products or services or to give up its

intention to cut prices;- refusing to sell or provide services to a company or discriminate against it which would be seen

as retaliation for its pricing.

36.02. ScopeThe Colombian legal system prohibits agreements between two or more companies when prevent,

restrict or disrupt competition in the Colombian market and abusive behavior by economic agents having a dominant position.


36.03. the prohibitionAn anticompetitive agreement is any contract, agreement, concerted practice or parallel action

between two or more companies that prevents, restricts or disrupts competition or has the potential to give rise to one of these effects. The object or effects of the agreement can be anticompetitive.

Anticompetitive agreements include horizontal anticompetitive agreements, i.e. agreements between companies that provide for goods or services that are similar or substitute in the production chain and vertical anticompetitive agreements, i.e. agreements between companies at different stages of the production chain.

Competition law prohibits concluding anti-competitive agreements. Section 47 of Decree No 2 153 of 1992 defines the typical anti-competitive agreements as any agreement concluded with any of the following objectives or effects:

- price fixing;- establishing discriminatory sales or marketing conditions;- market-sharing between producers or suppliers;- allocating of quotas between producers or suppliers;- allocating, limitation or distribution of raw materials or inputs required for production;- limitation of technical developments;- conditioning the supply of products upon the acceptance of additional obligations, limiting pro-

duction in order to affect the product’s production levels;- colluding in tender offers or agreeing on the allocation of contracts, tender offers or to offer the

same terms in a bidding; or- obstructing or blocking access to a market or a distribution channel.Colombian legislation sets no thresholds for market shares or thresholds of any other kind for

purposes of enforcing competition rules, and the Superintendency of Industry and Commerce (SIC) may abstain from taking action in cases deemed insignificant, pursuant to the 1992 Decree whereby the SIC is only required to pursue antitrust complaints that are “significant” or “important”. This rule may in effect involve a de minimis criterion that avoids extending the presumption of Sections 47 and 48 to cases that have no significant impact on market competition because of low market shares.


415


36.04. abuse of a dominant positionA dominant position is not necessarily anticompetitive. However, if a company uses its dominant

position to exclude or exploit competitors or consumers, it is deemed to abuse its position and this practice is illegal.

According to Section 50 of Decree 2153 of 1992, when there is dominance, the following conducts constitute an abuse:

- selling below cost (predatory pricing);- applying discriminatory conditions to equivalent transactions, thereby placing a consumer or

supplier at a disadvantage compared to other consumer or provider under similar conditions;- making the supply of a product conditional upon the acceptance of additional obligations which

by their nature are not intrinsic to the business;- selling to a buyer under conditions different from those offered to another buyer with the inten-

tion to reduce or eliminate competition in the market;- selling or serving in any part of the country at a price different from that which is offered

elsewhere in the territory, where the intent or effect is to reduce or eliminate competition in that part of the country and the price corresponds to the cost structure of the transaction;

- obstructing or preventing third parties from accessing markets or marketing channels.

ii. Enforcement


36.05. the Superintendent of industry and CommerceAct No 1340 of 2009 designates the Superintendent of Industry and Commerce (SIC) as the

national competition authority. This authority can order administrative investigations or impose fines and other administrative decisions taken in violation of the provisions on the protection of competition.

In accordance with Decree No 3523 of 2009, as amended by Decree No 1687 of 2010, the func-tion of the SIC, in its capacity as National Authority for Protection of Competition, is to ensure compliance with the provisions in this area in domestic markets, to deal with claims or complaints through events that affect competition in the markets and process those complaints that are signifi-cant, particularly for achieving free participation of businesses in the market, consumer welfare and economic efficiency.

36.06. the courtsProceedings for the recovery of pecuniary penalties, applications for injunctions and action for

damages are heard by the Juridiccion Contencioso Administrativa.


36.07. Proceedings before the SiCThe SIC officially starts the action based on information of which it is aware, through the appli-

cation of a third party, a complaint or when it receives a transfer or referral from another authority.

Colombia

416

The authority can, with the request to the complainant, keep the identity of those who report anticompetitive practices secret where there are risks that the complainant will be subject to trade retaliation because of the denunciation.

Firstly, the SIC studies the information contained in the complaint filed by a party. The autho-rity can also use its power to determine its admissibility and whether an action can be initiated or whether there are sufficient merits to engage in a preliminary inquiry. For the above analysis, the Superintendent is empowered to collect more information.

The results of the preliminary inquiry will determine the need to open a formal investigation. Any evidence may be requested that the SIC considers appropriate. The findings are presented to

the SIC and a report is submitted stating whether or not there has been any infringement. That report must be included in the investigation file and any interested parties can submit observations. Finally, the SIC issues the order terminating the process, an act that supports application for reconsideration.

36.08. interim reliefInterim remedies are unavailable during the SIC proceedings. However, during a court procee-

ding, interim remedies are available.

C. Sanctions

36.09. Cease and desist ordersA number of injunctions are available for third parties seeking redress for anticompetitive conduct

suffered.

36.10. FinesFor companies, fines can be as high as 100,000 times the minimum monthly wage (US$ 3,28

million) or up to 150% of the profits generated by the violation of the duty to report (Act No 1340 of 2009).

There are some criteria used by the authority to impose a fine on a company:- the impact that the conduct had over the market;- the size of the affected market;- the benefit from the conduct received by the perpetrator;- the degree of participation of the party;- the procedural conduct of the party;- the market share of the party as well as the portion of its assets or sales or both involved in the

conduct;- the assets of the perpetrator.

36.11. Criminal sanctionsThe recently enacted Anticorruption Statute of Colombia includes a provision criminalizing bid

rigging in the context of public procurement. Section 27 of the Anticorruption Statute penalizes with 6 to 12 years of prison and a fine of between 200 to 1,000 times the minimum monthly wage any person who, in the course of a public procurement selection process, concludes an unlawful agreement after having engaged in corruption.


417

36.12. LeniencyAccording to Act No 1340 of 2009, the SIC may grant benefits to individuals or undertakings

who have engaged in conduct that violates competition law if they work in collaboration with the authority. Therefore, in those cases when a participating company reports the existence of anticom-petitive conduct to the authority and cooperates in the delivery of information and relevant evidence, including identification of the other participants, such an undertaking can receive full exemption from fines. This benefit applies even when the competition authority has already initiated an action.

In the case of bid rigging, the benefit also includes a reduction of sentence in accordance with the provisions of the Anti-Corruption Act.

36.13. DamagesA person can claim damages in the administrative law court for losses suffered as a result of an

agreement that unreasonably restricts competition, unless the defendants can prove that the violation was neither intentional nor negligent. There are no special procedures or rules for these claims for damages. No class actions are permitted for unlawful restrictive agreements or practices.

D. appeals

36.14. appeals against SiC decisionsThe SIC carries out proceedings of an administrative nature and its decisions can be subject to

review by administrative courts.

Section 2 MERGERS


36.15. ContextThe principal rules governing prior review of mergers are the 1959 Act, Decree No 1302/64,

the 1992 Decree and Title VII of the Single Circular of the SIC, as amended in 2006, and Act No 1340/09.

36.16. Concept of concentration “Business integrations” are defined as any act of concentration, merger or consolidation between two

or more economic agents engaged in the same productive, distribution, supply or consumer activity. Thus, according to these terms, the law would seem to apply only to horizontal mergers, but the autho-rity has managed to extend coverage to vertical transactions by means of an extensive interpretation.

36.17. thresholdsAccording to the 1959 Act, consolidations, mergers, acquisitions or takeovers between firms in the

same business activity must be notified in advance to the SIC if their respective or combined assets amount to 20 million pesos (US$ 11,000) or more. That threshold is very low, and would imply that nearly all mergers would have to be reported to the SIC.

To correct this rule, the SIC has established two notification thresholds, based on its powers under the 1992 Decree, as amended in the Single Circular: when the parties, jointly or separately, had during the preceding tax year, operational income above 150,000 times the minimum monthly wages in Colombia (US$ 44 million); or when the parties, jointly or separately, had during the preceding

Colombia

418

tax year, total assets valued at more than 150,000 times the minimum monthly wages in Colombia (US$ 44 million).

36.18. Control criteriaWhen a transaction has an anticompetitive effect, the law provides that the parties can argue that

it produces efficiencies that otherwise would not be possible to achieve. A transaction will only be cleared on efficiency grounds when the parties are able to prove that the efficiencies can be measured and passed on to consumers. To date, there are no examples of a successful efficiency exception.

ii. Enforcement


36.19. the Superintendent of industry and CommerceThe SIC was the authority for prior review of mergers in all economic sectors, with the exception

of finance, television, air transport and vertical integrations in the health-care sector. Under the 2009 Act, the SIC is the only authority with powers of prior review of mergers in all sectors, except only for mergers in the financial sector, where the SIC must provide an assessment on the competition effects of the merger and may suggest remedies.


36.20. Merger notificationThe SIC has stated that any transaction affecting the Colombian markets should be reported.

Hence, Colombian market presence of the parties is a determining condition on whether an interna-tional transaction needs to be cleared by the Colombian authority. Colombian law provides for joint filings. Thus, every party involved in the transaction is expected to join the filing. The cover letter which should be attached to every filing is a form provided by the SIC. All other documents filed are not standardized. The SIC requests that the filing be provided in a digital medium and that all spread sheets also be presented digitally.

36.21. Proceedings before the SiCThe SIC has a broad power to conduct the review. The authority can request any information

from the parties that it considers necessary to conduct its analysis. Information is submitted as docu-ments attached to the request for review or filed at a later stage of the process, either by the parties of their own motion or at the specific request of the SIC.

Third parties (competitors and consumer associations) are also permitted to submit information to the SIC and to challenge the parties’ allegations. Sector-specific regulators are also allowed by the law to issue recommendations for the SIC when the parties to the transaction are subject to the control or supervision of such industry agencies.

Where the parties have a market share lower than 20%, they need only file a notice of the transac-tion. Where the market share is higher, a full review is required. The full review procedure starts by the publication of a merger notice in a national newspaper. Within 30 days of receiving the informa-tion about the transaction, the SIC can clear the transaction or engage in an in-depth analysis. The SIC has then three months to render its decision.


419


36.22. Conditions and commitments - DivestitureThe parties can offer remedies to the authority to mitigate any identified anticompetitive issues.

The law empowers the SIC to supervise that conditions it has set or remedies accepted are being properly implemented. The SIC may also order to put an end to the transaction.

36.23. Fines Failing to file a transaction in a timely manner can lead to the issuance of an order to cancel the

transaction and to the imposition of fines on the parties and individuals responsible for the tran-saction. Under Colombian law, the SIC can impose fines on the entities of up to 100,000 times the minimum monthly wages in Colombia (US$ 3,28 million) or 150% of the profits made through the violation of the duty to report. For individuals, the SIC is authorized to impose fines of up to 2,000 times the minimum monthly wages (US$ 656,000) in Colombia.

D. appeals

36.24. appeal against decisions of the SiCDecisions from the SIC are reviewed by administrative courts provided that the decision has been

challenged before the SIC itself. Moreover, a decision from an administrative court can be appealed before a tribunal.


421

ChaPtEr 37

iCELanD




37.01. ContextCompetition in Iceland is governed by the Competition Act of 2005, as amended by Amendments

No 52/2007, No 94/2008 and No 14/2011. The first Competition Act, which came into force in 1993, was largely inspired by EU competition law provisions and the principal reason behind its adoption was to harmonize Iceland’s competition law provisions with the EU model of control in the context of EU/EFTA relations.

Competition law in Iceland is applied at different levels of enforcement:- at national level when the effects of a practice are restricted to the Icelandic market (Section

3(1)); - at EEA level when practices affect other contracting parties to the EEA Agreement (Chapter

XI of the Competition Act; for a presentation of the EEA rules, please refer to the Liechtenstein commentary) (Section 3(2)).




B. Restrictive agreements The prohibition 37.03Exemptions 37.0


D. General prohibitionII. Enforcement A. Enforcement authorities

The Minister for Commerce 37.06


Complaints and investigations 37.08Proceedings before the Competition Authority 37.09Interim relief 37.10



Section 2 Mergers






C. AppealsAppeals against decisions of the Competition Authority 37.24

Iceland

422

Prior to the entry into force of Act No 44/2005, the competition authorities were also responsible for supervision of unfair business practices and market transparency. These tasks have now been assigned to the Consumer Agency pursuant to Act No 57/2005 on the supervision of unfair trade practices and market transparency. Misleading advertising (Section 14) and bribery and industrial espionage (Section 16(c)) are inter alia prohibited by Act No 57/2005.

37.02. ScopeThe Act covers activities which have effect or are liable to have effect in Iceland, regardless of

whether such activities have been carried out in Iceland or not (Section 3). The Act does not apply to export cartels or practices concerning exports which only have an effect outside the national territory.

The Act prohibits agreements or concerted practices that restrict competition and the abuse of dominance. It covers all kinds of economic operations, irrespective of whether they are carried out by private individuals, companies or public authorities (Section 2). As regards the activities of public undertakings to which the State has granted exclusive rights, the control authorities have the right to segregate the activities of the undertaking to ensure that operations conducted in competition with private parties are not subsidized by operations which enjoy State protection (Section 14).


37.03. the prohibitionSection 10 of the Competition Act prohibits all kinds of cooperation and concerted practices

between undertakings which restrict competition. Section 12 extends the prohibition to decisions by associations of undertakings. The prohibition applies to restrictions on competition regardless of the form such restrictions take. Section 10 sets out a list of prohibited activities, which is practically identical to that in Section 101(1) TFEU, applying to agreements which:

- directly or indirectly fix prices, discounts, margins or any other trading conditions,- limit or control production, markets, technical development, or investment,- share markets or sources of supply,- apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing

them at a competitive disadvantage,- made the conclusion of contracts subject to acceptance by the other parties of supplementary

obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Agreements infringing the provisions of the Competition Act are considered null and void (Section 33).

A de minimis rule, determined by reference to market share, is set forth in Section 13. Under this pro-vision, the prohibition on agreements distorting competition does not apply to horizontal agreements where the combined market share of the parties does not exceed 5% or to vertical agreements where the combined market share does not exceed 10%. In the case of a mixed horizontal and vertical agreement or where it is difficult to classify the agreement, the 5% threshold is said to apply. Further, agreements will not be considered as coming within the prohibition set out at Section 10, even where the market share exceeds the abovementioned thresholds, if the market share of the undertakings does not exceed 5.5% in horizontal agreements or 11% as regards vertical agreements for two successive financial years.

37.04. ExemptionsThe Competition Authority has discretion to grant individual exemptions upon request for agree-

ments that improve production or distribution of goods, allowing consumers a fair share of the benefit, so long as only necessary restrictions are included and the agreement does not eliminate competition in a substantial part of the relevant market (Section 15).


423

If the conditions fundamental to the granting of the exemption have substantially changed, the parties to the agreement have breached any of the conditions or obligations attached to the exemp-tion or where the decision to grant the exemption was made on the basis of incorrect or incomplete information, the Office may revoke or amend the exemption.

Section 15(3) also empowers the Competition Authority “to lay down rules relating to the gran-ting of exemptions from the prohibitions of Section 10 (…), to certain categories of agreements.”


37.05. abuse of a dominant positionSection 11 of the Competition Act forbids abuse of a dominant position per se, providing examples

of abuse based on EU law:- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions,- limiting production, markets or technical development to the prejudice of the consumers,- applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage,- making the conclusion of contracts subject to acceptance by the other parties of supplementary


According to Section 4, a dominant position is the position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and consumers.

D. General prohibition

37.06. action in the public interestThe Competition Authority is empowered to act against agreements, terms and any actions

constituting infringement of the prohibition provisions of the Act, settlements or decisions that have been made pursuant to this Act and circumstances or conduct which prevents, limits or affects competition to the detriment of the public interest (Section 16). The actions of the Competition Authority may include any measure that is necessary to enhance competition, put an end to viola-tions or respond to actions of public entities that may adversely affect competition.

ii. Enforcement


37.07. the Minister for CommercePursuant to Section 5, the Minister for Commerce is charged with responsibility for the imple-

mentation of the Competition Act.

37.08. the Competition authorityAlthough the Minister for Commerce is ultimately responsible for implementation of the Act,

Section 5 expressly provides that “day to day administration of matters within the scope of the act is entrusted by the minister to a separate Agency, the Competition Authority”.

The functions of the Competition Authority are notably to:

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- enforce the provisions of the Act and grant derogations where applicable;- decide on the measures to be taken in the case of anticompetitive behavior;- monitor market developments in Iceland.The Competition Authority is an independent agency with a separate Board of Directors, composed

of three members appointed by the Minister for Commerce. Three alternates are appointed in the same manner. The Minister appoints the Chairman of the Board. The Director of the Competition Authority, who is appointed by the Board of Directors of the Authority, is in charge of the day-to-day activities and running of the Authority.

The role of Board of directors is to prepare the matters submitted to the Competition Authority and discharge the routine functions of the Authority. Major material decisions shall be submitted to the Board for approval or rejection. The Board of Directors shall establish its own rules of procedure (Section 5).


37.09. Complaints and investigationsThe Competition Authority initiates proceedings either on the basis of complaints or on its own

initiative. In accordance with Section 19 of the Competition Act, the Competition Authority may request from undertakings or groups of undertakings any information deemed necessary for the inves-tigation of a case. The Authority may also request documents to be given up for inspection. It may even request information and documents from other administrative authorities, including the tax and customs authorities, irrespective of their duty not to reveal confidential information. On 1 April 2001 an agreement between Denmark, Iceland and Norway on cooperation in competition cases came into effect, which enables the competition authorities of these countries to exchange confidential infor-mation in order to achieve more effective enforcement of the three countries national competition legislation. Section 20 provides that during an investigation the Authority may carry out inspections on the premises of an undertaking and seize documents and other evidence when it deems necessary, in accordance with the rules of the Code of Criminal Procedure concerning search and seizure.

37.10. Proceedings before the Competition authorityProceedings before the Competition Authority are conducted in writing but the Authority may

permit the parties to give an oral account of their written submissions. If the Competition Authority is of the opinion that a decision shall be taken, it addresses the parties a Statement of Objections. The parties are granted a reasonable time to comment and to submit documents (no less than two weeks and no longer than two months).

The Competition Authority is permitted at all stages of the proceedings to conclude the case by a settlement. The settlement may involve a party consenting to change a specified conduct or to observe instructions or conditions. Settlement may also involve the admission by a party of a viola-tion of the Act and consent to pay a reduced administrative fine.

37.11. interim reliefPursuant to Section 16 of the Competition Act the Competition Authority may take provisional

decisions on individual matters. Interim decisions shall be effective for a specific period time and may be renewed if necessary.


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C. Sanctions

37.12. Cease and desist orders According to Section 16 of the Competition Act the Competition Authority may take measures

against any kind of act that constitutes infringement of the prohibition provisions of the Competition Act. Measures taken by the Competition Authority can be a ban, an order or authorization with a certain condition.

37.13. FinesPursuant to Section 37 of the Competition Act, the Competition Authority may impose admi-

nistrative fines on undertakings which either violate the Act or the Council’s decisions. Fines cannot exceed 10% of the turnover of each of the infringing undertakings in the previous financial year. The Council may impose periodic penalty payments for non-compliance with its decisions taken under the Act, until such decisions are complied with (Section 38).

37.14. LeniencyA decision to impose a fine may be waived if a violation is regarded as insignificant, or for other

reasons if no need is seen for such fines for the purpose of promoting and strengthening effective com-petition. Furthermore, the imposition of a fine may be waived if an undertaking took the initiative in providing the Competition Authority with information or documents relating to violations of Sections 10 and 12 which, in the opinion of the Authority, could lead to investigation or proof of a violation.

Fines may be reduced if an undertaking has taken the initiative in providing information or do-cuments to the Competition Authority concerning violations of Sections 10 or 12, which, in the opinion of the Authority, constitute an important addition to the evidence already in its possession.

37.15. Criminal sanctionsAccording to Section 41(a), violations of Sections 10 or/and 12 of the Competition Act may be

subject to criminal fines or imprisonment up to six years. Fines may be imposed on legal as well as natural persons. Suspension of license pursuant to Section

68 of the Penal Code, and confiscation of assets pursuant to Section 69 of the Code, may be decided in proceedings that have their origins in violations of Sections 10, 12 and 41(b) of the Competition Act. An attempt to commit or participation in violations pursuant to this Section is subject to sanc-tions as prescribed in the Penal Code.

According to Section 41(b), any person who destroys or renders unusable any documents which are significant for an investigation by the Competition Authorities shall be subject to fines or impri-sonment up to three years, unless more severe sanctions are provided for under other legislation. Any person who provides the Authority false, misleading or inadequate information shall be subject to fines or imprisonment up to two years.

A legal person may be subject to fines pursuant to the provision of chapter II of the Penal Code for these violations.

D. appeals

37.16. appeals against decisions of the Competition authorityDecisions of the Competition Authority may be appealed to the Competition Appeals Committee

within four weeks from the time of the notification of the decision to the undertakings concerned. The decision of the Appeals Committee must then be rendered within six weeks from the date of the appeal (Section 9).

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According to Section 37, decisions imposing fines may be appealed to the Competition Appeals Committee. In the case of an appeal, periodic penalty payments may not be imposed until the Committee has reached its decision. A decision to impose periodic penalty payments can be appea-led to the Competition Appeals Committee within fourteen days from the date of notification to the concerned party (Section 39).

Decisions of the Appeals Committee may be referred to the courts. But the decision of the Competition Authority cannot be referred to the courts until the decision of the Competition Appeals Committee has been handed down (Section 40). An action for the annulment of the deci-sion of the Committee must be brought in court within six months and does not suspend the deci-sion, the subject of the appeal (Section 41).

Section 2 MERGERS


37.17. ContextIt is in the context of mergers that the recent amendments to the Competition Act have had the

most impact. The changes have strengthened the provisions on merger control whilst making pro-cedure in merger cases clearer.

37.18. Concept of concentrationPursuant to Section 17 of the Act, a merger takes place when two or more previously independent

undertakings merge, when an undertaking takes over another undertaking, when direct or indirect control of one or more undertakings is acquired or when a joint venture is created that performs on a lasting basis all the functions of an autonomous economic entity.

37.19. thresholds Pursuant to Section 17(a), notification of mergers is required where the total turnover of the

undertakings in question is ISK 2 billion (EUR 12. 5 million) or more. The turnover of parent com-panies and subsidiaries as well as undertakings within the same group must be taken into account in this figure. Where a merger involves more than two undertakings, at least two of the undertakings party to the merger must each have an annual turnover of at least ISK 200 million (EUR 1,25 mil-lion) in order for the provisions of Section 17(a) to apply.

37.20. Control criteriaA merger is deemed valid when it does not obstruct effective competition by giving one or more

undertakings a dominant position or by strengthening such a position, or will result in a significant distortion of competition in the Icelandic market. In determining whether a merger is compatible with the Act, the Competition Authority takes into account to what extent international competi-tion affects the competitive position of the merged undertaking (Section 17(c)). Also when assessing the legality of a merger it must be taken into account whether the market is open or access to it is obstructed. According to Section 4 market means the area within which a commodity and its subs-titute commodities are sold.


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ii. Enforcement


37.21. Merger notification The Competition Authority must be notified of a merger before it takes effect but after the

conclusion of an agreement on the proposed merger, the public announcement of a takeover bid or the acquisition of a controlling interest in an undertaking. The Competition Authority may, upon request, grant an exception from suspensory effect of notificationwhere it is established that delaying the implementation of the merger could harm the undertakings concerned or its business partners and threaten competition (Section 17(a)). A short form notification is available under certain condi-tions (Section 17(a)). A filing fee of ISK 250,000 (EUR 1,680) applies. According to Section 17(g), a company that submits a merger notification pursuant to Section 17(a) shall pay a merger fee of ISK 250,000 (EUR 1,680) for each merger notification.

37.22. Proceedings before the Competition authorityThe Competition Authority is in charge of the merger investigation. There are two phases of

investigation. The first phase begins after the notification of the merger. The Competition Authority has 25 working to take its decision. If no notification is received from the Competition Authority within this period, it cannot annul the merger. If the Competition Authority sees reason for further investigation of the competitive impact of the merger, it must, before the end of the 25 working days period, inform the parties. A decision on the annulment of a merger shall be made no later than 70 working days from the time that a notification pursuant to the first decision has been sent to the notifying party. If it is necessary to obtain further information, the Competition Authority may extend this time-limit by up to 20 working days (Section 17(d)).


37.23. Conditions and commitments - DivestitureAccording to Section 17(e) of the Competition Act, the Competition Authority may annul a merger

which will obstruct effective competition. To this effect, the Competition Authority may, by a separate decision, require the undertakings or assets brought together to be separated or the cessation of joint control or any other action that may be appropriate in order to restore conditions of effective competition.

37.24. FinesIn accordance with Section 37 of the Act, the Competition Authority may impose administrative

fines on undertakings which infringe its provisions. Fines cannot exceed 10% of the turnover of the undertaking in the preceding financial year. Daily periodic penalties can be imposed until a decision is complied with (Section 38).

C. appeals

37.25. appeals against decisions of the Competition authorityDecisions of the Competition Authority concerning mergers can be appealed to the Competition

Appeals Committee.Decisions of the Competition Appeals Committee relating to anticompetitive practices may be

challenged before the courts.


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ChaPtEr 38

inDia




38.01. ContextThe Competition Act was passed by the Parliament in 2002. It was subsequently amended by the Competition Amendment Act in 2007. In accordance with

the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal have been established. Finally, the provisions of the Competition Act relating to anti-competitive agreements and abuse of dominant position were published on 20 May 2009.

The objectives of competition law have been highlighted in a recent judgment delivered by the Supreme Court of India as: “to promote economic efficiency using competition as one of the means of assisting the creation of market responsive to consumer preferences. The advantages of perfect competition are three-fold: allocative efficiency, which ensures the effective allocation of resources, productive efficiency, which ensures that costs of production are kept at a minimum and dynamic efficiency, which promotes innovative practices.” (CCI v. Steel Authority of India Limited, Civil Appeal No 7999, 9 September 2010).







The Competition Commission of India (CCI) 38.05The Competition Appellate Tribunal (CompAT) 38.06

B. Enforcement proceedingsProceedings before the Competition Commission 38.07 Interim relief 38.08

C. SanctionsCease and desist orders 38.09Fines 38.10Criminal sanctions 38.11Leniency 38.12Damages 38.13

D. AppealsAppeals against the Competition Commission’s decisions 38.14

Section 2 Mergers

I. Substantive rulesContext 38.15Concept of concentration 38.16.Thresholds 38.17Control criteria 38.18



Proceedings before the Competition Commission 38.20B. Conditions/Sanctions

Conditions and commitments – Divestiture 38.21Fines 38.22Criminal sanctions 38.23

C. AppealsAppeals against decisions of the Competition Commission 38.24

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38.02. ScopeThe Competition Act prohibits anticompetitive agreements, abuse of dominant position by enter-

prises and regulates combinations, which cause or are likely to cause an appreciable adverse effect on competition within India.


38.03. the prohibitionAnti-competitive agreements are prohibited by Section 3 of the Competition Act: “No enterprise

or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India.” Such agreements are void.

1º) Horizontal agreementsSection 3(3) specifies that a presumption of “an appreciable adverse effect on competition” is on

“any agreement entered into between enterprises or associations of enterprises or persons or associa-tions of persons or between any person and enterprise or practice carried on, or decision taken by, any association of enterprises or association of persons, including cartels, engaged in identical or similar trade of goods or provision of services, which:

- directly or indirectly determines purchase or sale prices;- limits or controls production, supply, markets, technical development, investment or provision

of services;- shares the market or source of production or provision of services by way of allocation of geo-

graphical area of market, or type of goods or services, or number of customers in the market or any other similar way;

- directly or indirectly results in bid rigging or collusive bidding”2º) Vertical agreementsSection 3(4) states that an agreement causing an appreciable adverse effect on competition in

India is considered to be “any agreement amongst enterprises or persons at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services, including:

- tie-in arrangement;- exclusive supply agreement;- exclusive distribution agreement;- refusal to deal;- resale price maintenance”.


38.04. abuse of a dominant positionThe prohibition of abuse of dominant position is provided by Section 4 of the Competition Act:

“No enterprise or group shall abuse its dominant position.”An undertaking is in a dominant position where it is able to act independently of competitors or

affects its competitors or consumers in its favor.There may be an abuse of dominant position if an enterprise or a group: - directly or indirectly, imposes unfair or discriminatory conditions in purchase or sale of goods or

service or prices in purchase or sale (including predatory prices) of goods or services;


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- limits or restricts production of goods or provision of services or market therefore or technical or scientific development relating to goods or services to the prejudice of consumers;

- indulges in practice or practices resulting in denial of market access in any manner; - makes conclusion of contracts subject to acceptance by other parties of supplementary obliga-

tions which, by their nature or according to commercial usage, have no connection with the subject of such contracts;

- uses its dominant position in one relevant market to enter into, or protect, other relevant market.

ii. Enforcement


38.05. the Competition Commission of india (CCi)The Competition Commission of India has been established by the Central Government with

effect from 14th October 2003. The Commission consists of a Chairperson and 6 Members appoin-ted by the Central Government.

It is the duty of the Commission to eliminate practices having adverse effect on competition, promote and sustain competition, protect the interests of consumers and ensure freedom of trade in the markets of India.

The Commission must also give opinion on competition issues on a reference received from a statutory authority established under any law and undertake competition advocacy, create public awareness and impart training on competition issues.

38.06. the Competition appellate tribunal (Compat)When the Competition Act 2002 was enacted there was no mention of any Competition Appellate

Tribunal. It was only after the filing of the Brahm Dutt v. Union of India case that the Competition (Amendment) Act 2007 provided for the establishment of the CompAT. The CompAT is a quasi-judicial body and consists of a Chairperson and not more than two other members appointed by the Central Government. The Chairperson is a judge or former judge of the Supreme Court or the Chief Justice of the High Court. Members of the CompAT must have special knowledge and pro-fessional experience of not less than 25 years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public, affairs, and administration or in any other matter which, in the opinion of the Central Government, may be useful to the Appellate Tribunal.


38.07. Proceedings before the Competition CommissionThe CCI can start investigations of its own initiative, on complaint by a party or on reference by a

public authority. The CCI has the same investigation powers as a civil court under the Code of Civil Procedure (search and seizure; discovery). Search and seizures are submitted to prior approval of the Chief Metropolitan Magistrate in New Dehli. If the CCI finds a prima facie breach of the Act, it will send the case to the Director General (DG) for an investigation. On receipt of the report of the DG, the CCI may either file the case or proceed to hear the parties. The DG’s report must be submitted within the time set by the CCI and in principle no later than 60 days from the CCI’s decision to order an investigation. The CCI must take its decision, as far as is practicable, within 21 days of the date of conclusion of final arguments. However, the Competition Act does not prescribe a maximum time-limit for an investigation.

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38.08. interim reliefWhere the CCI has granted interim relief, the Supreme Court has ordered that a final decision

should be taken within 60 days of the interim decision (CCI v. Steel Authority of India Limited, Civil Appeal No 7779, 9 September 2010).

C. Sanctions

38.09. Cease and desist ordersThe CCI can issue cease and desist orders or direct that the illegal agreement be modified to the

extent and in the manner it indicates.

38.10. FinesThe CCI can impose a penalty of up to 10% of the average turnover of the previous three financial

years or, in case of a cartel (association of producers, sellers, distributors, traders or service providers controlling or attempting to control production, distribution, sale or price), impose on each member a penalty equivalent to the higher of three times its profits or 10% of its turnover for each year of the duration of the agreement.

Additional fines may be imposed in case of non-payment, false statements or omission to furnish material information.

38.11. Criminal sanctionsThe Competition Act provides for a penalty of imprisonment up to three years or a fine of up to

INR 250 million (US$ 4,512,280) or both in case of a contravention to an order of the CCI.

38.12. LeniencyThe CCI may grant a reduction of fine in case of full, true and vital disclosure regarding violations

of the Act. The first applicant is granted full immunity, the second up to 50% immunity and the third up to 30% immunity.

38.13. DamagesAny person may make an application to the CompAT to adjudicate a claim in damages that arises

from the findings of the CCI or the decisions of the CompAT which can authorize class actions.

D. appeals

38.14. appeals against the Competition Commission’s decisionsAny person aggrieved by a decision of the CCI may appeal to the CompAT within 60 days from

its notification. Appeals against decisions of the CompAT may be introduced before the Supreme Court of India within 60 days from the notification of the CompAT’s decision.


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Section 2 MERGERS


38.15. ContextThe regulation of “combinations” is set forth in Chapter II, Section 5, of the Competition Act.

38.16. notion of concentrationA combination results from the acquisition of one or more undertakings or persons, or a merger or

amalgamation of enterprises. Acquisition may be direct or indirect and concern shares, voting rights or assets or control over an undertaking’s management or assets.

38.17. thresholdsCombinations must be notified to the CCI if:- the acquirer and acquired enterprise jointly have assets in India worth more than INR 15 billion

(US$ 270,740,000) or turnover in India of more than INR 45 billion (US $ 812,210,000); or world-wide assets worth more than US$ 750 million including assets in India worth at least INR 7.5 billion (US$ 135,370,000); or worldwide turnover of more than US$ 25 billion including turnover in India of at least INR 22,5 billion (US$ 406,100,000);

- the group or entity to which the target or merged entity will belong will have Indian assets worth more than INR 180 billion (US$ 3,25 billion); or worldwide assets worth more than US$ 3 billion and assets in India worth at least INR 7,5 billion (US$ 135,370,000); or worldwide turnover of more than US$ 9 billion including turnover in India of at least INR 22,5 billion (US$ 406,1 million).

Transactions where the target has either assets in India worth less than INR 2,5 billion (US$ 45,123,000) or turnover in India of less than INR 7.5 billion (US$ 135,370,000) or groups exercising less than 50% of the voting rights in the other enterprise are exempt from notification.

38.18. Control criteriaThe CCI assesses if the combination causes or is likely to cause an appreciable adverse effect on

competition within the relevant market. This assessment implies checking whether any benefits outweigh the adverse effect of the combination.

ii. Enforcement


38.19. Merger notificationNotification of the combination must take place within 30 days of the approval of the merger or

amalgamation or the execution of any agreement or other document for the acquisition. Notification must be made within 7 days where an acquisition, share subscription or financing facility is carried out by a public financial institution, a foreign institutional investor, a bank, a venture capital fund under a covenant in a loan agreement or an investment agreement. A notified combination must be suspended for 210 days from the date of the notification or until an order clearing the transaction. Filing fees vary depending on the form of the notification amount to INR 50,000 (US$ 900) in case of form I (short form), and INR 1 million (US$ 18,000) in case of firm II (long form).

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38.20. Proceedings before the Competition CommissionWithin 30 days of the notification by the parties the CCI forms a prima facie opinion. This period

is extended to 45 calendar days if commitments are proposed by the parties. The CCI can either clear the transaction within this period or decide to conduct further investigation. Phase 2 can last up to an additional 180 days period. If the CCI is of the opinion that a combination is likely to cause an appreciable adverse effect on competition, it notifies the parties who must respond within 31 days. The CCI can ask for a report from the DG, invite affected parties or members of the public to file written objections and call for additional information from the parties. The CCI must render its decision within 45 days of the receipt of all the information. The CCI can approve, prohibit or pro-pose modification to the combination. If no decision is taken within 210 days from the date of the notification, approval of the combination is deemed to be granted.


38.21. Conditions and commitments – DivestitureThe CCI and the parties can propose modification to the combination during phase 1 and phase

2 of the review process. In case of implementation of the combination before approval or after pro-hibition, all acts relating to the combination are void.

38.22. FinesA penalty of INR 100,000 (US$ 1,800) per day up to a maximum of INR 100 million (US$ 1,8

million) can be levied for contravention of CCI’s decisions.

38.23. Criminal sanctionsIn case of contravention of the CCI’s decision, the Chief Metropolitan Magistrate in Delhi may

impose imprisonment for a term of up to three years and/or a fine of up to INR 250 million (US$ 4,525,000).

C. appeals

38.24. appeals against decisions of the Competition CommissionParties to the proceedings have the right to file an appeal against any decision of the CCI before

the CompAT.


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ChaPtEr 39

iSraEL


i. Subtantive rules


39.01. ContextUntil 1988, competition Act in Israel was regulated by the Restrictive Trade Practices act No

5748-1988 of 1959. In late 1988, a new Restrictive Trade Practices act entered into force. That Act was amended on several occasions, inter alia in 1994, 1998, 2005 and 2008. The 1988 Act has been supplemented by various Guidelines.


I. Subtantive rulesA. Context and scope



C. Abuse of dominanceRegulation of monopolies 39.05


The Israel Antitrust Authority (IAA) 39.06The Antitrust Tribunal 39.07The District Court 39.08

B. Enforcement proceedingsComplaints and investigations 39.09Proceedings before the IAA 39.10Interim relief 39.11Enforcement by ordinary courts 39.12

C. SanctionsCease and desist orders 39.13Criminal sanctions 39.14Leniency 39.15

D. AppealsAppeals against decisions of the IAA General Director 39.16Appeals against decisions of the Antitrust Tribunal 39.17Appeals against judgments of the District Court 39.18

Section 2 Mergers

I. Subtantive rulesContext 39.19Concept of concentration 39.20Thresholds 39.21Control criteria 39.22


The Israel Antitrust Authority (IAA) 39.23B. Enforcement proceedings


Proceedings before the IAA 39.25C. Conditions/Sanctions


D. Appeals Appeals against the IAA General Director’s decisions 39.28

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39.02. ScopeRestrictive practices committed outside Israel, which have harmful effects on competition within

Israel, are subject to Israeli law.


39.03. the prohibitionSection 4 of the 1988 Act prohibits being “party to a restrictive arrangement, in whole or in part”. Section 2 defines restrictive arrangement as: “[…] an arrangement entered into by persons conducting business, pursuant to which at least one

of the parties restricts itself in a manner likely to prevent or reduce competition in the marketplace between it and the other parties to the arrangement, or any of them, or between it and a person not party to the arrangement”.

The Act also specifies a list of arrangements deemed to be restrictive arrangements: arrangements on the price to be demanded, offered or paid; on the profit to be obtained; on market allocation; on the quantity, quality or type of assets or services in the business.

Pursuant to the Israel Antitrust Authority (IAA) General Director’s Block Exemption for Arrangements of Minor Importance of 2006, agreements which cause only negligible harm to com-petition are exempt from the requirement of obtaining approval from the Antitrust Tribunal, if they satisfy all the conditions set out in the Rules. Agreements are deemed to cause only negligible harm to competition if the aggregate market share of all the parties in the product market does not exceed 10% of the market - if the agreement is between competitors - and if such aggregate market share does not exceed 15% of each of the product markets to which the agreement relates - if the agree-ment is between parties who are not competitors. However, the exemption will not apply to agree-ments in which a party holds a monopoly in the market for a tangential product; or to agreements to purchase a right in a competing corporation, other than a public company whose shares are offered to the public, where such purchase has not transformed the purchaser into an interested party in such company, under the Securities Act -1968. Likewise, the exemption is not applicable to agreements whose main objective is the limitation or elimination of competition; or to agreements that include restrictions that are not necessary for the purpose of carrying out their main purpose.

Section 3 of the Act deals with “Arrangements which are not restrictive”. Many practices are excluded from the application of competition Act, such as:

- arrangements involving restraints established by Act;- arrangements involving the use of intellectual property rights; - arrangements involving the use of real property rights;- arrangements in the field of raw agricultural products;- arrangements entered into by a company and its subsidiary;- reciprocal exclusivity arrangements between the purchaser of an asset or service and its supplier,

provided that both the supplier and the purchaser are not engaged in the production of such assets or the provision of such services;

- non-compete obligations on the seller of a business towards the purchaser of the business;- arrangements between trade unions and employers’ associations relating to the employment of

workers and to working conditions.

39.04. ExemptionsA negative clearance procedure for restrictive arrangements is provided by Sections 7 to 16 of the

1988 Act. That procedure falls within the jurisdiction of the Antitrust Tribunal (Section 9), which must hear the position of the IAA General Director (Section 8a). The application for exemption is


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published in the Official Gazette. Within 30 days of said publication, any person likely to be injured by the restrictive arrangement, any industry association, and any consumers’ organization may sub-mit a written objection to the Tribunal (Section 8b).The Tribunal, must take into account public in-terest considerations when issuing its decision. Pursuant to Section 10, such considerations include:

“(1) Efficiency in the production and marketing of assets or services, assurance of their quality, or reduction in their price to the consumer;

(2) Assurance of a sufficient supply of assets or services to the public;(3) Prevention of unfair competition by a person not party to the arrangement, which may result

in a reduction in competition for the supply of the assets or services in which the parties to the arran-gement are engaged;

(4) Enabling the parties to the arrangement to obtain the supply of assets or services on reasonable terms from a person who controls a considerable share of the supply of such assets or services, or to supply assets or services on reasonable terms to a person who controls the purchase of a considerable share of the supply of such assets or services;

(5) Prevention of severe damage to an industry which is important to the national economy;(6) Safeguarding the continued existence of factories as a source of employment in areas in which

substantial unemployment may be created as the result of their closure or a reduction in their pro-duction;

(7) Improving the balance of payments of the State by reducing imports or reducing the price of imports or by increasing exports and their feasibility”.

Approval is given for a maximum period of three years or for a period determined by the Tribunal or by the parties (Section 11) and may be subject to conditions (Section 9). Approval may be revoked if a substantial change has occurred or in the event of objections by third parties (Section 12). A temporary permit to implement the arrangement may also be granted for a period of no more than one year upon recommendation of the General Director if the arrangement appears prima facie in the public interest (Section 13).

An individual exemption from having to obtain an approval may be requested by the parties to an arrangement and granted by the General Director where: (1) the restraints in the restrictive arrange-ment do not reduce competition in a considerable share of the market affected by the arrangement, or may reduce competition in a considerable share of the market, but do not result in a substan-tial harm to competition in such market; (2) the objective of the arrangement is not the reduction or elimination of competition, and the arrangement does not include any restraints which are not necessary in order to fulfill its objectives. The exemption may be subject to conditions, amended or revoked and its terms are published in the Official Gazette.

Finally, pursuant to Section 15A of the Act, the IAA General Director may establish guidelines regarding types of restrictive arrangements for which the parties will be exempt from applying for the Tribunal’s approval. However, for the Block Exemption Rules to apply, all of the following condi-tions must be met: (1) The restraints in the restrictive arrangement must not reduce competition in a considerable share of the market affected by the arrangement, or if such is the case, they must not result in a substantial harm to competition in such market ; (2) The objective of the arrangements must not be the reduction or elimination of competition, and the arrangements must not include any restraints which are not necessary in order to fulfill their objectives.

The General Director’s intention to submit Block Exemption Rules to the Committee for ratifi-cation must be published in two daily newspapers, and if any objections are received from the public, the General Director, when submitting the Block Exemption Rules to the Committee for ratifica-tion, must give a detailed response to such objections. The Block Exemption Rules may remain in force for a period of five years, unless a shorter period is provided for.

The following legislation has been adopted in that context:- Affiliated Companies Block Exemption, 2011;- Group Exemption for Arrangements Between Aircraft Carriers, 2008;

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- General Provisions and Definitions, 2006;- Block Exemption for Joint Ventures, 2006;- Block Exemption for Arrangements of Minor Importance, 2006;- Block Exemption for Agreements for the Execution of Research and Development, 2006;- Block Exemption for Restraints Ancillary to Mergers, 2004;- Block Exemption for Exclusive Distribution Agreements, 2001;- Block Exemption for Exclusive Purchase Agreements, 2001;- Block Exemption for Franchise Agreements, 2001.


39.05. regulation of monopoliesChapter IV of the 1988 Act deals with monopolies, which are defined by Section 26 as the concen-

tration, by one person (the monopolist), of more than half of the total supply or acquisition of an asset, or more than half of the total provision or acquisition of a service.

The Minister of Trade and Industry may, pursuant to the General Director’s recommendation, determine that, with respect to certain assets or to certain services, a concentration lower than one half shall be deemed to be a monopoly, where the person holding such concentration has a decisive impact in the market relevant to such assets or services.

Where the concentration is held by two or more persons, who are not in competition or are only in slight competition, the concentration is deemed to be a monopoly.

Monopolies can be specific to a particular region.In the case of a monopoly, the IAA General Director may impose certain restrictions (Section

27). He/she may stipulate in writing that a monopolist contracting or intending to contract with customers or suppliers by means of a standard terms contract is under the obligation to submit an application for approval of the contract pursuant to Chapter III of The Contracts of Adhesion Act, 1982; or stipulate that a monopoly manufacturing or importing an asset, or providing a service, has to comply with the standards established by the Standards Act, 1953. The monopolist may appeal to the Tribunal against such stipulations.

Section 29 provides that a monopoly may not unreasonably refuse to provide or purchase an asset or a service over which the monopoly exists. Those provisions are supplemented by Section 29A which also forbids the monopolist from abusing its position in the market in a manner which might reduce competition in the marketplace or injure the public. Such abuse may consist in: (1) applying unfair buying or selling prices; (2) reducing or increasing in the quantity of the assets or the scope of the services offered; (3) applying different contractual conditions to similar transactions in a manner which is likely to grant certain customers or suppliers with an unfair advantage vis-à-vis their com-petitors; (4) including conditions in a contract regarding an asset or a service that, by their nature or according to accepted trading practices, are unrelated to the subject matter of the contract.

Where there is a restriction of competition, the General Director may take measures in order to prevent any prejudice (Section 30), which may go as far as the Tribunal “breaking up” a monopoly (Section 31).


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ii. Enforcement


39.06. the israel antitrust authority (iaa)The Israel Antitrust Authority is an independent administrative authority which was created in

1994 by amendment of the 1988 Act. It is headed by the General Director and its mission is to en-sure the proper functioning of the market by controlling concentrations, restrictive agreements and abuses of dominance. The IAA initiates both civil and criminal actions and can impose restrictions on undertakings in a monopoly position in order to ensure effective competition.

39.07. the antitrust tribunalThe Antitrust Tribunal was created under Chapter V of the 1988 Act. It is part of the Jerusalem

District Court and has exclusive jurisdiction in non-criminal antitrust proceedings relative to appeals on decisions rendered by the IAA General Director. Appeals against decisions of the Tribunal are brought before the Supreme Court, the highest court of justice in Israel.

39.08. the District CourtThe District Court of Jerusalem has exclusive jurisdiction over criminal antitrust matters which

are brought by the IAA. The District Court’s decisions can also be appealed to the Supreme Court.


39.09. Complaints and investigationsThe IAA has the power to bring civil and criminal actions.Alongside the powers of the IAA, the 1988 Act also provides that all persons may seek a remedy

under the Torts Ordinance, since any act or omission contrary to the provisions of the 1988 Act may constitute a tort (Section 50).

The investigatory powers of the IAA are set out in Sections 45 and 46 of the 1988 Act. They include:

- ordering any person related to a violation of the Act, or any person who may have information regarding such violation, to report to them for an investigation, to accompany them for an investiga-tion and to provide them with any detail, document or information relevant to such violation;

- ordering such persons to provide all information, documents, ledgers and other certificates which, in the opinion of the General Director, would ensure or facilitate the implementation of the Act;

- detaining, arresting and releasing any person who has committed an “arrestable offense”;- entering into any business premises and search there (entry into residential premises is possible

only in accordance with a search warrant handed down by a court of competent jurisdiction); - seizing any Section, including computer material, that may serve as evidence in a hearing of an

offense.

39.10. Proceedings before the iaaWhere the findings of the investigation show an infringement of the Act has been committed,

the IAA will first conduct a hearing of the parties, and then issue a determination under Section 43. Thus, the IAA General Director may determine that an arrangement constitutes a restrictive arran-gement; or that a course of action established or recommended by an industry association constitutes

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a restrictive arrangement; or that a concentration group constitutes a monopoly; or that a monopoly has abused its position in the market.

Where the General Director finds there are grounds for criminal proceedings, and after having heard the concerned parties, the IAA will file an action before District Court of Jerusalem.

Operators seeking to reach an arrangement, but uncertain as to its validity, may also submit an application for a pre-ruling opinion of the General Director (Section 43A). In 2004, the General Director issued Rules for pre-ruling detailing the applicable procedural rules. A pre-ruling is not a substitute for a decision by the General Director. However, this does not deny the parties the right to rely, within the framework of a request for a final decision, on the pre-ruling. If the General Director, in its pre-ruling, undertakes not to invoke an enforcement measure in regard to an action or a transaction, no enforcement proceedings shall be undertaken against the recipients of the pre-ruling unless it is found that the latter did not present all relevant facts or that the circumstances under which the pre-ruling was given have changed. In addition, a previously issued pre-ruling may be modified or rescinded if the General Director believes that it is justified.

Finally, the General Director may request from any court of competent jurisdiction or the Tribunal, in lieu of proceedings, to accord the force of a ruling to a consent agreement reached between the General Director and another person. Such consent decree may be reached without admission of liabi-lity and may include, inter alia, an obligation by the person to pay a sum of money to the State Treasury, and a commitment by such person to take a specific action or to refrain from taking a specific action. In the case that the Court decides not to grant the consent decree, any document disclosed for the purpose of such proceedings, shall not be admissible as evidence in any other legal proceedings.

39.11. interim reliefPursuant to Section 50A relating to Restrictive injunctions, the General Director may request

the President of the Antitrust Tribunal to order any person not to take an action which violates the provisions of the Act, and to give security to such effect; or to order any action necessary for the prevention of such violation.

39.12. Enforcement by ordinary courtsThird parties can claim damages before ordinary courts and class actions are possible under Class

action Act 2006.

C. Sanctions

39.13. Cease and desist ordersThe IAA General Director can apply to the Antitrust Tribunal to obtain a cease and desist order.

39.14. Criminal sanctionsImprisonment of three to five years, or a fine of up to NIS 2,020,000 (US$ 500,000) and an addi-

tional fine of up to NIS 14,000 (US$ 3,500), for each day that the offense continues (doubled if the offender is a corporation) is incurred by: i) any party to a restrictive arrangement which has not been properly approved and for which no temporary permit or exemption has been granted; ii) any person who violates a condition pursuant to which a restrictive arrangement was approved or pursuant to which a temporary permit or exemption was granted; iii) a monopoly that abuses its market position, provided that the offender’s intention to reduce competition in the market or to harm the public has been proven; iv) a monopoly that does not comply with an instruction given to it by the Antitrust Tribunal, or which violates a monopoly divestiture order; v) a person violating a temporary order given by the Antitrust Tribunal’s Chief Judge or by the Antitrust Tribunal, or any other order that


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was given by the Antitrust Tribunal for the purpose of assuring compliance with a Tribunal decision. Fines may only be ordered by court.

39.15. LeniencyThe IAA published its Leniency Program on 18 June 2005. The immunity program applies only to

cartel-type restrictive arrangements, i.e. any arrangement between competitors, in which the compe-titors fix prices between themselves, set quotas or divide the market between themselves, according to territories, clients or type of products. Bid rigging between competitors, such as an agreement between competitors in which the competitors agree upon the identity of the winner, the identity of those who will submit bids or the terms of the bids, is also counted as a cartel-type restrictive arrangement.

Immunity will be granted only to the first applicant who comes forward to the Authority, from among the cartel members. The applicant must provide the Authority with full information, which is all the information known to him, all evidence that is within his reach and all the information and evidence that will come to his reach relating to the cartel that the applicant is part of, provided the information and the evidence are substantial. Immunity will be granted only if the applicant applies before an overt investigation has begun.

Immunity will be granted only if the applicant terminated its participation in the cartel and com-mits not to expose the essence of the application to any third party (except to its attorney), unless it received the consent of the Authority. Immunity is conditioned upon providing full and continuing co-operation with the Authority. However, immunity will not be granted if the applicant is the clear leader in the cartel.

D. appeals

39.16. appeals against decisions of the iaa General DirectorAppeals against decisions of the IAA General Director are brought before the Antitrust Tribunal

(Sections 15 22, 28 and 43 of the 1988 Act). The appeal must be filed within thirty days of receipt of the decision.

39.17. appeals against decisions of the antitrust tribunalPursuant to Section 39, any litigant injured by a decision of the Antitrust Tribunal, an interim

ruling or a Temporary Permit may appeal against such decision to the Supreme Court, within forty five days of the date on which the notice thereof is received.

39.18. appeals against judgments of the District CourtIt is possible to appeal before the Supreme Court against judgments rendered by the District

Court, which has exclusive jurisdiction over criminal antitrust matters brought by the IAA.

Section 2 MERGERS

i. Subtantive rules

39.19. ContextConcentrations are dealt with in Chapter III of the 1988 Act (Sections 17 to 25). These provisions

are supplemented by the following guidelines, based on the principles used by the IAA as reflected in its decisions and court rulings:

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- Guidelines For Reporting and Evaluating Mergers Pursuant to the Restrictive Trade Practices Act, 1988, published on 9 January 2008;

- Guidelines of the Failing Firm Doctrine, published on 25 January 2010;- Horizontal Merger Guidelines, published on 23 January 2011;- Draft Guidelines for Remedies in Mergers, published on 23 January 2011.Also worth mentioning is the IAA’s Database of Market Definitions, established from 1 January 2005.

39.20. Concept of concentrationA corporate merger is defined in Section 1 of the Act as follows:“Including the acquisition of most of the assets of a company by another company or the acquisi-

tion of shares in a company by another company by which the acquiring company is accorded more than a quarter of the nominal value of the issued share capital, or of the voting power, or the power to appoint more than a quarter of the directors, or participation in more than a quarter of the profits of such company; the acquisition may be direct or indirect or by way of rights accorded by contract”.

According to the 2008 Guidelines, such definition comprises two aspects: a wide and open one (which is not specified in the definition and which consists in any creation or strengthening of a substantial influence link between the decision-making mechanisms of two companies) and a col-lection of specific cases, which are listed in the definition, each one of which necessarily creating a corporate merger. Therefore, pursuant to the Guidelines, the Act is concerned only with the result (a structural link between the companies) and not with the method that led to such result.

39.21. thresholdsThe duty to file a merger notice arises only when the merger satisfies one or more of the following

conditions established in Section 17(a) of the Act:- as a result of the merger, the market share of the merging companies in the production, sale, mar-

keting or purchase of a particular asset and a similar asset or in the provision of a particular service and a similar service, would exceed fifty percent, or such lower market share as the Minister shall determine with regard to a monopoly, in accordance with section 26(c);

- the aggregate sales turnover of the merging companies, in the fiscal year preceding the merger, exceeded NIS 150 million (US$ 37,470,000), and the combined sales turnover of at least two of the merging companies is not less than NIS 10 million (US$ 2,5 million) for each of them;

- one of the merging companies is a monopoly within the meaning of the term under Section 26.

39.22. Control criteriaThe substantive test for assessment of a merger is established in Section 21 of the Act, according

to which:“The General Director shall object to a merger or stipulate conditions for it, if he believes that there

is a reasonable risk that, as a result of the merger as proposed, the competition in the relevant sector would be significantly damaged or that the public would be injured in one of the following regards:

(1) the price level of an asset or a service;(2) low quality of an asset or of a service;(3) the quantity of the asset or the scope of the service supplied, or the constancy and conditions

of such supply.”


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ii. Enforcement


39.23. the israel antitrust authority (iaa)The IAA General Director has jurisdiction in matters of concentrations. However, pursuant to

Section 24, before approving a concentration, the General Director must consult the Exemptions and Mergers Advisory Committee, established by Section 23 of the Act.


39.24. Merger notificationAccording to Section 19, companies may not merge unless a Pre-Merger Notification is issued

and the consent of the General Director to the merger is given.The notification must be filed using the form attached to the Registration, Publication and

Reporting of Transactions Regulation, 2004. Before notification, the parties may also apply for a Pre-Ruling Opinion under Section 43A,

where they have doubts about the validity of the transaction.

39.25. Proceedings before the iaaPursuant to Section 20(b), the General Director must inform the concerned companies of his/her

decision as to whether to consent or object to the merger and whether any conditions are stipulated therefore, within thirty days of the date on which the premerger notification form is received. Failure to give such notice within this deadline is deemed to constitute a notice of consent.

The decision must not be taken before the General Director consults with the Exemptions and Mergers Advisory Committee. Finally, the General Director may approve the transaction, establish conditions for its approval or oppose it. According to the 2011 Draft Guidelines for Remedies in Mergers, where remedies are contemplated, they should: i) address specific anticompetitive concerns; ii) be enforceable and allow effective supervision over the merging parties’ compliance (with mini-mum monitoring costs); iii) be tailored to address the competitive concerns in a timely manner; iv) be feasible in the sense that parties should have the ability to comply.

The General Director’s decision is issued to the parties to the transaction and published in the Official Gazette, in two daily newspapers and on the IAA’s website.


39.26. Conditions and commitments - DivestitureIn its decision, the IAA may impose conditions such as divestiture of certain assets or behavior

undertakings. It may also suggest remedies to the parties during the review process. Under Section 25, the General Director may file an application for a divestiture order before the Tribunal if he believes, that there is a reasonable likelihood that, as a result of a corporate merger made contrary to the provisions of the Act, competition in the relevant sector would be significantly harmed or that the public would be injured.

Such divestiture may take place either by means of restoring the situation to its former state, or by means of transferring some of the shares to an unrelated body, of the merged companies’ choosing, or by means of the establishment of another company to which some of the assets of such companies would be transferred, or by any other means as the Tribunal sees fit.

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39.27. FinesFailure to notify correctly, implementation before approval or failure to observe a decision of the

IAA constitutes a criminal offense punished by three years imprisonment for an individual or a fine of up to NIS 2.,02 million (US$ 500,000) plus an additional fine of up to NIS 14,000 (US$ 3,500) for every day the offense continues for an individual (or double of these sums for a corporation). Fines can only be imposed by a court order.

D. appeals

39.28. appeals against the iaa General Director’s decisionsWhere the General Director has objected to the merger or imposed conditions on the parties, the

latter may, pursuant to Section 22, appeal to the Antitrust Tribunal, within thirty days of the date on which the General Director’s decision is received.

Third parties injured by an authorization decision, including industry associations and consumers’ organizations, may also appeal to the Tribunal against the General Director’s decision, within thirty days of the date on which the General Director’s decision is published in two daily newspapers. Such appeal does not have the effect of delaying the implementation of the merger.


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ChaPtEr 40

JaPan




40.01. ContextThe primary competition law in Japan is the Act on Prohibition of Private Monopolization and

Maintenance of Fair Trade, also known as the Antimonopoly Law (“the Act”), enacted in 14 April 1947. Alongside the Antimonopoly Act there are a number of other laws that have been adopted supplementing its application, for example, the Act Against Unjustifiable Premiums and Misleading Representations 1962 (allowing for swift enforcement of certain provisions of the Antimonopoly Act) or the Subcontract Act, 1956 (concerning payment delays in certain transactions concerning subcontractors).





C. Abuse of dominanceMonopolization 40.05

D. unfair trade practicesScope 40.06


The Japanese Fair Trade Commission ( JFTC) 40.07

The courts 40.08B. Enforcement proceedings

Complaints and investigations 40.09Proceedings before the Japanese Fair Trade Commission 40.10Interim relief 40.11

C. SanctionsCease-and-desist orders 40.12Fines 40.13Leniency 40.14Criminal sanctions 40.15Civil remedies 40.16

D. AppealsAppeals to the Tokyo High Court 40.17

Section 2 Mergers

I. Substantive provisionsContext 40.18Concept of concentration 40.19Thresholds 40.20Control criteria 40.21



Proceedings before the JFTC 40.23B. Conditions/Sanctions


C. AppealsAppeals against the JFTC’s orders 40.26

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40.02. ScopeThe Antimonopoly Act applies to entities engaged in business activities within Japan and also

has limited indirect extraterritorial application. In this regard, Section 7 authorizes the Japanese Fair Trade Commission ( JFTC) – the Competition Authority – to issue cease-and-desist orders against international cartels where the provisions of the agreement constitute an unreasonable restraint of trade or amount to unfair trade practices.

The Act regulates three primary types of conduct: unreasonable restraints of trade, monopoli-zation (Section 3) and unfair trade practices. Of these three areas, only the regulations prohibiting unfair trade practices have been consistently enforced. However, in recent years there has been an increased enforcement of the rules in place, due in no small part to the bilateral competition agree-ments Japan has entered into with the European Union and the United States.

The Japanese Antimonopoly Act contains a number of provisions without exact equivalent in the competition laws of other countries, for example, Section 8, which regulates the activities of trade associations. The scope of the Antimonopoly Act excludes the activities of cooperatives and associa-tions established by small businesses.


40.03. the prohibitionSection 2(6) of the Antimonopoly Act is modeled on Section 1 of the Sherman Act. It prohibits

unreasonable restraints of trade, including cartel activities and bid-rigging. In this context, a cartel is defined as a joint action among competitors mutually agreeing on an element fundamental to competition - such as price, allocation of customers or suppliers - resulting in a substantial restraint of competition. Although the restraint has to be “substantial”, the Japan Fair Trade Commission ( JFTC) has a loose assessment of the condition in the context of hardcore restraints. In its “Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Antimonopoly Violations” document, the JFTC defined price-fixing cartels, supply restraint cartels, market alloca-tions, bid-rigging and group boycotts as vicious, i.e. hardcore, restraints.

An unreasonable restraint of trade is statutorily defined as conduct through which undertakings “in concert with other entrepreneurs, mutually restrict or conduct their business activities.” Thus, joint action is a required element of a claim for unreasonable restraint of trade.

With regard to vertical agreements between business entities operating at different levels of the production chain, the Tokyo High Court unequivocally held in Asahi Shimbunsha (6-9 Kōsai Minshū 435, Tokyo High Court, 1953) that the prohibition on unreasonable restraints of trade applies only to horizontal restraints, not vertical restraints. Thereafter, the JFTC likewise adopted the view that unreasonable restraints of trade could only exist between competitors.

More recently, however, both the JFTC Guidelines (see Guidelines concerning distribution sys-tems and business practices under the Antimonopoly Act of 11 July 11, 1991) and decisions by the Tokyo High Court have underlined that there are circumstances in which agreements between business entities not operating at the same level may be found to constitute unreasonable restraints of trade in the context of the Section 2 prohibition. In the 1993 Seal Bid Rigging case, for example, the Tokyo High Court held that it “could not support the position that (…) these entities necessarily had to be on the same trading level” in order for an agreement to violate the Antimonopoly Act.

Despite the increasing application of the provisions on restrictive agreements to vertical agree-ments, many vertical restraints are still only considered anticompetitive under the heading of unfair practices.

40.04. ExemptionsThere is a general tendency in Japanese competition law to reduce the number of exemptions

available. Examples of this tendency can be seen from the abolition of the Exemption Act which


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provided for the granting of wide-ranging exemptions, the suppression of 35 different exemption systems existing under other Acts and the repeal of Section 21 of the Antimonopoly Act eliminating the exemption available to the electricity, gas and railroad sectors as well as any other sectors that could be characterized as natural monopolies.

Exemptions can broadly be ranged under two headings:- the three exemptions available under the Antimonopoly Act;- those exemptions available under other Acts. Exemptions existing under the Antimonopoly Act concern:- exercise of intellectual property rights (Section 21); pursuant to Section 21, the legitimate exer-

cise of intellectual property rights is not considered to violate the provisions of the Antimonopoly Act.

- acts of partnerships between small businesses (Section 22); the scope of this exemption is limited to acts organizing mutual support and which are voluntary in nature;

- resale price maintenance agreements (Section 3); however, the scope of this exception is limited to products designated by the JFTC, namely copyright products, and products expressly exempted under statutory provisions.

Further, in the Oil Cartel case, the Japanese Supreme Court held that an exemption exists for cartel activity taken pursuant to legal administrative guidance by the government, where such conduct is not contrary to the public welfare (Oil Cartel, 38-4 Keishu 1287, Supreme Court, Feb. 24, 1984).

Exemptions available under other Acts cover certain conducts contemplated in other instruments, such as the Insurance Business Law, the Copyright Act, transport-related Acts, etc.


40.05. Monopolization1º) Section 3 of the Antimonopoly ActSection 3 of the Antimonopoly Act prohibits monopolization by private market operators. Private

monopolization is defined in the Act as “such business activities by which any entrepreneur (…) excludes or controls the business activities of other entrepreneurs, thereby causing, contrary to public interest, a substantial restraint of competition in any particular field of trade”. Activities that consti-tute private monopolization may be engaged in “individually or by combination or conspiracy with other entrepreneurs, or by any other manner.”

Thus, the prohibition is directed against acts that substantially restrict competition through the exclusion or domination of other business entities.

Exclusionary acts are defined as intentionally committing an anticompetitive act thereby creating substantial restrictions on competition within a particular field of trade. An exclusionary act may be committed in a field of trade other than one’s own, and thus, the business entity excluded need not be a direct competitor of the private monopolist. Examples of acts that are prohibited when engaged in by a dominant entity include obstructing market entry, discriminatory pricing, dumping or res-tricting supplies.

Little case law has developed under Section 3, mainly because before 2005, there was no fine (called “surcharge”) for this type of behavior and because of the high level of the standard of proof required. A dominant entity that unfairly maintained or enhanced that position was therefore more likely to be sanctioned under the prohibition against unfair trade practices than under Section 3. In 28 October, 2009, the JFTC issued its Guidelines for Exclusionary Private Monopolization under the Antimonopoly Act. The Guidelines describe four typical exclusionary conducts: below-cost pri-cing; exclusive dealing; tying and refusal to supply and discriminatory treatment and for each type of conduct, details factors for assessing whether the alleged conduct falls under exclusionary conduct. However, exclusionary conduct that constitutes exclusionary private monopolization is not limited to the acts that fall under these four typical exclusionary conducts.

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2º) Section 8-4 of the Antimonopoly ActEven though it is not absolutely prohibited to achieve a dominant position through the applica-

tion of ordinary business methods, Section 8-4 of the Antimonopoly Act provides for the JFTC to be able to take measures against monopolistic situations. Thus, where the structure of the market is highly oligopolistic and exhibits other undesirable indicators, the JFTC may, in extreme cases and as a last resort, require transfer of part of a business where this will restore effective competition.

Adverse effects that might justify such measures include situations where the market share of the top firm exceeds 50%, or the market share of the top two firms exceeds 75%, where market entry is extremely difficult and there has been a decrease in demand or supply costs unaccompanied by a corresponding decrease in price (Section 2(7)). Although this power exists theoretically, the stringent criteria governing its application has resulted in its not having been used to date.

D. Unfair trade practices

40.06. ScopeSection 19 of the Japanese Antimonopoly Act is modeled on Section 5 of the US Federal Trade

Commission Act (FTCA). As originally enacted, it prohibited “unfair competition practices” but was thereafter amended to prohibit “unfair trade practices.” The interpretation of Section 19 fol-lowing this change greatly expanded its scope of application.

Unfair trade practices can be divided into three categories:- acts which may restrict free competition, for example, refusal to trade, discriminatory pricing or

resale price maintenance;- acts which are unfair in themselves, for example, customer enticement by deceptive measures,

unjust benefits, etc.;- conduct by undertakings with a large market share whereby unreasonable demands are made of

trading partners.Some of these practices, such as resale price maintenance, are clearly unfair; however, others are

only considered an offense where they are only likely to impede fair competition and thus require a case by case evaluation by the control authorities.

Section 2(9) of the Antimonopoly Act lists 15 acts that are considered as unfair trade practices prohibited under Section 19 including: unjust refusal to trade (or boycott), discriminatory treatment on trade terms, unjust low price sales or unjust high price purchasing, tie-in sales, trading on exclu-sive terms or making use of one’s dominant bargaining power.

Section 2(9) thus sets out broad concepts regarding the types of acts that constitute unfair trade practices, which allowed the JFTC to cope with vertical agreements not covered by the prohibi-tion of restraints of trade. The JFTC has authority to designate concrete practices. In this regard, the JFTC issues both General Designations (Ippan Shitei), which apply generally to all types of businesses (Public Notice No. 15 of 18 June 1982, revised in 2009) and more tailor made Specific Designations (Tokushu Shitei): applying to the newspaper business, (JFTC Notification No. 9 of 21 July 1999); applying to large-scale retailers in relation to trade with suppliers (JFTC Notification No. 11 of 13 May 2005).

The JFTC has issued General Designations prohibiting the following as unfair trade practices: - unilateral or concerted refusal to deal; - discriminatory pricing or treatment;- unfairly low pricing or unfairly purchasing at high prices; - deceptive customer inducement or inducing customers with unfair benefits; - tying; - dealing on exclusive terms, dealing on restrictive terms; - abuse of a dominant bargaining position; and


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- interference with a competitor’s transaction or with the internal operations of a competitor. 1º) Unilateral or concerted refusal to dealRefusal to deal, either individually or in concert with other firms, is prohibited as an unfair trade

practice where it is aimed at excluding firms from the market or achieving another unfair result. In addition to a direct refusal to deal, indirect refusal to deal, whereby a party causes another business entity to refuse to deal, constitutes a violation of unfair trade practices provisions of the Antimonopoly Act. A retailer who pressures a wholesaler not to do business with a competing retailer is an example of such indirect refusal to deal.

2º) Discriminatory pricing or treatmentIt is considered unlawful to unjustly apply different prices for the same goods or services. It is also

considered unlawful to unjustly apply different terms depending on the sales region involved or the transaction partners. An act is considered unjust where firms actively exclude competitors from the market through discriminatory pricing or where the aim or effect is to place certain partners in a disadvantageous position.

Further, unjustly excluding a business entity from a trade association or concerted activity thereby causing difficulties in its business activities constitutes an unfair trade practice. On the other hand, given the private autonomy of a trade association or cooperative activity, business entities may be excluded where such exclusion is reasonable.

3º) Unfairly low pricing or unfairly purchasing at high pricesIn 1984, the JFTC issued Guidelines on Unjust Low-Price Sales, revised in 2009. The Guidelines

deem that although there is no problem in providing goods at a low price that has been achieved through an enterprise’s efficient operations, any attempt to acquire customers by offering a low price that totally disregards profitability runs counter to the purposes of the Antimonopoly Act. The Guidelines clarify that there are three elements required to establish such a violation. First, the price must be “excessively below the cost required for the supply”, where the cost of goods means the manufacturing cost, i.e. for an ordinary manufacturing business, the production costs plus the selling costs and general and administrative costs, and, for an ordinary selling business, the purchasing costs plus the selling costs and general and administrative costs. The second element is the impact on competition; in other words the likelihood that the low-price sales will harm other business entities. However, if there are justifiable grounds behind the price charged, the low-price sale will not consti-tute an unfair trade practice. Justifiable grounds include disposal of seasonal or perishable goods or excess inventory, or a change of business activity.

As regards unjustly high purchasing prices, it is rare for goods to be artificially sold at unjustly high prices; however, there may be cases where dominant firms corner the market in raw materials at high prices, thereby driving competitors from the market.

4º) Deceptive customer inducement or inducing customers with unfair benefitsAlthough undertakings are free to try their best to attract clients, they are not allowed do so by

means of:- false or misleading advertisements; or - inducing customers of a competitor to deal with oneself though offering unjust benefits in light

of normal business practices. 5º) TyingIt is also considered illegal for an undertaking to unjustly force trading partners to deal exclusively

in one’s goods or services.6º) Dealing on exclusive terms, resale price restrictions, dealing on restrictive termsWhere as a result of exclusive dealing an undertaking has the possibility of depriving competitors

of trade opportunities and/or hindering new market entry, such conduct will be considered unlawful. In the same way, resale price restrictions have the effect of restraining competition between sellers and will be considered unlawful. Finally, the fact of carrying on trade at terms that have the effect of restricting the business activities of trading partners may be considered unlawful depending on

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the trading positions of the parties and the nature of the business activity subject to the restriction. Conduct that has been considered unlawful under this heading includes customer restrictions and territorial restrictions as regards sales areas.

7º) Abuse of dominant bargaining positionPursuant to Japanese competition law, in order to be liable for abuse of a dominant bargaining

position, a party need not have a monopolistic or oligopolistic position on the market. Rather, an entity need only have a dominant position relative to another entity as regards the transaction in question which makes it possible for the former to unfairly impose a disadvantage on the other party.

Abuse of a dominant bargaining position is defined in Section 2(9)(v) of the Act as using a do-minant position to do any of the following: causing the other party to purchase a good or service unrelated to the transaction; providing money or other economic benefits; refusing to receive goods related to a transaction; delaying or reducing the amount of payments or setting transaction terms disadvantageous to the non-dominant party. Where such conduct is established, proof of an actual reduction in competition is not necessary in order to establish a violation.

In evaluating dominance, the JFTC considers the overall difference in scale between the two par-ties, the opportunities for an undertaking to choose another transacting party, market circumstances and the types of goods or services concerned. In practice, this provision has been enforced with regard to transactions between financial institutions and borrowers, oligopolistic manufacturers and retail merchants, large scale retail firms and their vendors, and prime contractors with subcontractors. For further insight, see the JFTC’s 30 November 2010 Guidelines Concerning Abuse of Superior Bargaining Position under the Antimonopoly Act.

8º) Interference with a competitor’s transaction or internal operationsSections 14 and 15 of the JFTC’s General Designations prohibit, respectively, interfering with the

transaction of a competitor located in Japan or interfering with a Japanese competitor’s internal ope-rations. Section 14 provides as an example of interfering with a transaction, preventing the formation of a contract or inducing a breach of a contract, as well as any other means of interference.

Interfering with internal operations under Section 15 includes unjustly inducing shareholders of a competitor to engage in conduct that is disadvantageous to that entity, whether by exercising voting rights, transferring stock, divulging business secrets or by any other means.

ii. Enforcement


40.07. the Japanese Fair trade Commission ( JFtC)The Japanese Fair Trade Commission is an administrative agency in charge with implementing

two Acts: the Antimonopoly Act and the Act against Delays in Payment of Subcontract Proceeds, etc. to Subcontractors. Until 2009, it was also entitled to apply the Act against Unjustifiable Premiums and Misleading Representations - an Act for the protection of consumers - but this mission is now conferred on the Consumer Affairs Agency. The JFTC is an extra-ministerial bureau of the Cabinet Office, administratively attached to the Prime Minister.

The JFTC is composed of a Chairperson and four Commissioners appointed by the Prime Minister with the consent of both Houses of the Diet, the Japanese Parliament. The appointment or dismissal of the Chairperson is approved by the Emperor. Although the JFTC acts independently, it is required to submit an annual report to the Diet on enforcement activities. The JFTC exercises both quasi-legislative and quasi-judicial powers: it enacts internal regulations and designates unfair trading practices, and may hold hearings before making individual decisions.

The JFTC has always sought to separate its investigative and trial functions. Thus, individuals who have participated in the investigation of a case are not allowed to be designated as hearing examiners for the case.


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40.08. the courtsWhen the JFTC believes that a criminal violation of the Antimonopoly Act has occurred, it may

investigate the case and then file an application with the Public Prosecutor General. A criminal action may not be initiated on the basis of statements from any party other than the JFTC. The District Courts have exclusive jurisdiction for most criminal cases involving a violation of the Antimonopoly Act in first instance. The prescription period for such cases is five years, after which no criminal suit may be initiated.


40.09. Complaints and investigationsInvestigations may be initiated either by a report from the public (Shinkoku report, Section 45(1)

of the Antimonopoly Act) or as a result of monitoring from the JFTC or following an application for leniency. Reports submitted by the public play a key role in enforcement proceedings and may be submitted by victims of the alleged anticompetitive act in question, general consumers or any other third parties. A Report can take an oral or written form; however, parties have greater chance of trig-gering an investigation where their Report is substantiated by documentary evidence. The contents of Reports are treated confidentially.

Where a preliminary investigation by the General Secretariat of the JFTC suggests that an in-vestigation is appropriate, the latter appoints investigators (Shinsakan) to conduct an investigation. Investigators have authority to issue a summons requiring parties to appear before them, to carry out interrogations (without the assistance of the undertaking’s attorney), request expert advice, require the handing over personal property (there is no legal privilege in Japan) and to carry out an on-site inspection (Section 47 of the Antimonopoly Act). Once the investigation is complete, investigators prepare a report and submit it to the JFTC upon finishing the investigation.

40.10. Proceedings before the Japanese Fair trade CommissionUnder the Antimonopoly Act, if the investigations conducted establish a violation thereof, the

JFTC can either issue a cease-and-desist order, impose a fine (called a “surcharge”) or file an accu-sation with the Public Prosecutor’s Office. Before the 2005 Amendment to the Antimonopoly Act, the JFTC decisions could be handed down in three types of ways. First, the JFTC could issue a recommendation, stating the established facts, the applicable law and the remedial action to be taken to restore competition. If the party to whom it was directed agreed to its terms, the JFTC would make a recommendation decision without necessity for a hearing. However, if, after receiving the recommendation, the party did not consent, a decision to initiate a formal hearing was rendered. The Official Decision, also known as the Hearing Decision, was issued at the conclusion of the hearing proceedings. At the time that the Decision to Commence a Hearing was served on the respondent, the respondent could acknowledge the facts and interpretation of law in the Decision and submit a plan outlining the specific remedial measures that it would take. If the JFTC accepted the remedial plan as appropriate, it could issue a decision to that effect without undertaking a hearing. Such deci-sions were referred to as Consent Decisions.

The 2005 Amendment substituted a post-hearing system to this scheme. Currently, before issuing a cease-and-desist order, the JFTC must give the undertakings concerned the opportunity to express their opinion and submit evidence, and then only, issue the order. If the undertakings are dissatisfied with the order, they may request, within sixty days of the servicing of the order, the JFTC to initiate a hearing (Section 49(6)). If no such request is made within the period prescribed, the cease-and-desist order becomes final and binding. Pending the hearing, the JFTC may suspend the execution of all or part of the cease-and-desist order. After the hearing, the JFTC may uphold, rescind or modify its order.

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40.11. interim reliefThe JFTC can seek an order of interim relief from the courts in cases where it is urgently necessary

to temporarily restrain suspected illegal activity (Section 70-13). Urgent necessity will be deemed to exist where competition is being damaged and the harm will be difficult to remedy if allowed to continue until the moment a final decision is to be taken.

C. Sanctions

40.12. Cease-and-desist ordersThe JFTC has authority to order measures necessary to eliminate violations of the Antimonopoly Act.In order to remedy cases of private monopolization, the JFTC has for example ordered the dis-

solution of an association, issued prohibitions on holding stock, interfering in business activities or with personnel, issued prohibitions on restricting production of goods, refusing transactions, discri-mination or requiring resale prices.

With regard to unreasonable restraints of trade, the JFTC has ordered, inter alia, dissolution of the cartel, prohibited future illegal acts and termination of executed acts. The JFTC has penalized unfair trade practices by prohibiting illegal shipping restrictions, rebates, and general trade interfe-rence. Also, where necessary, it has not hesitated to cancel contracts, to require the withdrawal of requests or instructions or order the resignation of officers. Where it deems it appropriate, it has ordered the public announcement of the measures to be taken.

The existence of a monopolistic situation is not in itself considered an anticompetitive act. Nevertheless, under the Antimonopoly Act, the JFTC has authority, where necessary, if investi-gation and hearings reveal that certain stringent criteria are satisfied, to take measures to counter a monopolistic situation. As we have seen, this can include ordering that a portion of a business be spun off or other measures necessary to restore competition.

40.13. FinesIn order to eliminate any economic benefit deriving from the formation of cartels, the JFTC

imposes administrative surcharges or fines intended both to divest the cartel of its unjustly acquired profits and to suppress the cartel. Behavior subject to surcharges includes, since June 2009, not only cartels or monopoly by control, but also monopoly by exclusion, abuse of a dominant bargaining position and certain types of unfair trade practices (concerted refusal to trade, discriminatory pricing, unjust low price sales and resale price restrictions).

Surcharges are calculated according to prescribed formulas and the JFTC does not have discretion to decline to order payment of a fine. The amount of a fine is the amount of sales during the prose-cution period multiplied by a fixed percentage according to the type and scale of the business. For cartels, inter alia, the multiplier is greater for manufacturers (10%) than for retail (3%) or wholesale businesses (2%). The rate of the surcharge is lower for SMEs: 4% for manufacturers, 1.2% for retai-lers and 1% for wholesalers. Repeat offenders will incur a surcharge raised by 50% if they commit the same infringement within a period of ten years. Leaders of the cartel (those who originated the cartel or incited others to join) will also see their surcharge increased by 50%.

If a party does not agree the terms of the surcharge ordered against it, it may request a hearing within sixty days upon receiving the official payment order. The JFTC will consider the legitimacy of the request prior to deciding whether to grant the party a right to a hearing. If a hearing is granted, thereaf-ter the JFTC adopts a new decision deciding whether or not to require the party(ies) to pay a surcharge.

40.14. LeniencyUnder Japan’s program (Section 7-2 of the Act), a total of five undertakings may apply for le-

niency before the JFTC, by reporting the cartel and providing useful information. Five applications


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are allowed before the JFTC launches an investigation (only three were allowed before the 2009 Amendment), and up to three undertakings can apply after the investigation is initiated, if the total of five undertakings is not exceeded. The first to apply before the investigation is awarded full immu-nity, the second a 50% reduction and the others 30% reductions. After the investigation is initiated, applicants can only receive 30% reductions. Since the 2009 Amendment, undertakings can make joint applications for leniency where they belong to the same corporate group.

The JFTC made the public announcement that the first applicant for leniency before the investi-gation starting date and its employees will also be immune from criminal prosecution ( JFTC’s Policy on Criminal Accusation and Compulsory Investigation of Criminal Cases Regarding Antimonopoly Violations, 7 October 2005). However, no undertaking is immune from civil action.

40.15. Criminal sanctionsCriminal cases have played an important role in the development of Japanese case law regarding

cartels. In June of 1990, the JFTC announced a policy of actively pursuing criminal prosecution of cartels. The District Courts have original jurisdiction over violations of the criminal provisions set forth in Sections 89 et seq. of the Antimonopoly Act.

Failure to respond to a summons during investigation may be enforced by recourse to criminal sanctions.An individual found liable for private monopolization, unreasonable restraint of trade or a subs-

tantial restraint of competition by a trade association (or for attempting such crimes) can be pu-nished by imprisonment of up to five years or fined 500 million yen (US$ 6,350,000). Employees of the undertaking may also be punished by a sentence of five years imprisonment and a fine of up to 5 million yen (US$ 63,500). There are also criminal penalties for failure to act, such as taking no action to prevent a known violation of the Antimonopoly Act or failure to eliminate a known violation of the Antimonopoly Act.

Criminal sanctions are also available for agreements substantially restricting competition where these offenses are serious or likely to have a widespread effect. Criminal sanctions are likewise available against firms that are repeat offenders, or where administrative sanctions are deemed insuf-ficient. No criminal sanctions are available for violations of the provisions on unfair trade practices.

40.16. Civil remediesAn individual harmed by a violation of the Antimonopoly Act can seek compensation under the

strict liability provisions of the Act, as well as under Section 709 of the Civil Code which provides for general tort claims. Such actions are available both to the party directly affected by the illegal tran-saction and to general consumers who are indirect purchasers of goods. A private action for damages under the provisions of the Antimonopoly Act cannot be asserted in the court, however, until the JFTC has handed a final and binding cease-and-desist order. The Tokyo High Court has original jurisdiction over such suits for compensation of damages under Section 25.

Furthermore, persons injured or likely to be injured by unfair trade practices are entitled to seek a court injunction for the suspension or prevention of such infringements. The right to an injunction exists with respect to violation of Sections 19 (unfair trade practices) and 8(v) (trade associations causing business entities to use unfair trade practices). When an action seeking an injunction is filed in the Tokyo High Court, the Court will notify the JFTC and can request the JFTC’s opinion.

D. appeals

40.17. appeals to the tokyo high CourtParties dissatisfied with a JFTC decision can file a lawsuit with the Tokyo High Court seeking to

quash the decision. The appeal must be filed within thirty days from the date the decision becomes effective or, in the case of monopolization decisions, within three months of such date. In an appeal,

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the factual findings of the JFTC are binding on the Tokyo High Court if they are supported by substantial evidence. A request to offer new evidence may be accepted where the JFTC has failed to examine the evidence without proper grounds, or where evidence was truly unavailable and there was no gross negligence in failing to present the evidence earlier. If the Court deems it necessary to examine new evidence, the case is referred back to the JFTC.

An Amendment Bill under review before the Diet proposes to abolish the JFTC’s hearing procedure and to place appeals against the JFTC’s orders directly before the Tokyo High Court. According to the Bill, the Court would no longer be bound by the JFTC’s assessment of the facts.

Section 2 MERGERS

i. Substantive provisions

40.18. ContextAll concentrations required notification under the Antimonopoly Act as originally enacted. At that

time, the JFTC’s Business Combination Guidelines provided that where market share was greater than 25 percent as a result of a merger, then the merger would be carefully scrutinized. However, since 1 January 1999, only mergers exceeding certain thresholds are required to be notified. The Guidelines to Application of the Antimonopoly Act concern the review of business combination (31 May 2004, lastly revised in 2011), together with the Rules on Applications for Approval, Reporting, Notification, etc. Pursuant to the provisions of Sections 9 to 16 of the Act on Prohibition of Private Monopolization and Maintenance of Fair Trade (1 September 1953, lastly revised in 2009) currently contain the standards for determining the anticompetitive effect of a merger, rather than being limited to determining which concentrations would be selected for careful examination as did their predecessor.

40.19. notion of concentration The Japanese Antimonopoly Act prohibits amalgamations (mergers and consolidations, Section

15), corporate divisions (Section 15-2) and joint stock transfer involving a business combination (Section 15-3), stock acquisitions (Section 10), acquisitions of businesses (Section 16) and interloc-king directorates (Section 13) if the effect may be such as to substantially restrain competition in a particular field or if they result from unfair trade practices.

A concentration is said to occur in the case of corporate division, i.e., where one company acts jointly with another to transfer the business of the companies to a new company (joint venture). Division by acquisition, where one company transfers a business to another existing company, likewise constitutes a concentration. On the other hand, an internal division within one company is regarded as merely a change in organizational form and does not constitute a concentration.

With regard to stock acquisitions, if the acquisition results in a combination between the two par-ties then it is treated as a merger. If the percentage of stock held is more than fifty percent - or more than twenty five percent if the stockholder is the sole leading stockholder - the JFTC will almost certainly find in favor of a concentration. Where the percentage of stock held is less than ten percent or if the stockholder is not among the top three stockholders, the transaction will not constitute a concentration. If the percentage of stock acquired is between these extremes, the JFTC will consider the question of whether a concentration has occurred on a case by case basis, taking into account fac-tors such as whether the ownership of stock is dispersed, whether there is an interlocking directorate and the nature of business relationship between the entities.

Other transactions that are treated as concentrations include the acquisition of all or an important part of the business or fixed operating assets of another company, taking over a lease or important part of the business of another company, taking over the management of another company or ente-ring into a contract that provides for a joint operating profit and loss account with another company.


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Acquisitions between a parent company and its subsidiary and mergers between sister companies (where a parent company owns more than 50 percent of a subsidiary’s stock), are not subject to the notification requirement.

40.20. thresholds The Antimonopoly Act sets specific thresholds for each type of concentration. However, roughly

speaking, a transaction must be notified where the sum of the total sales in Japan of the corporate group to which anyone of the parties belong exceeds 20 billion yen (US$ 255 million) and the sum of the total sales in Japan of the corporate group to which the other party belongs exceeds 5 billion yen (US$ 63,5 million).

40.21. Control criteriaIf the effect of a concentration “may be substantially to restrain competition” in the relevant mar-

ket, it is prohibited. The Tokyo High Court has defined substantially restraining competition as bringing about “a situation that appears, or at least could appear, in which competition itself is re-duced and a certain business entity or a group of business entities is able intentionally and somewhat freely to control the market by influencing prices, quality, quantity and other terms” (4 Kominshu Nº 14, 497, Tokyo High Court, Sept. 19, 1951). In other words, the prevailing view is that forming and strengthening market control power constitutes substantially restricting competition.

The merger control standards consider the effect of a concentration on “any particular field of trade” (Section 15(1)(i)). A particular field of trade is said to be composed of the same or similar (i.e., substitutable) products or services. Depending on the particular characteristics of the product or service, the relevant geographic scope may be a limited region or extend to the entire nation.

The JFTC issued Guidelines concerning the review of business combination in 2004 explaining the criteria for evaluating whether a concentration is prohibited. The Guidelines set a safe harbor concerning horizontal concentrations. A transaction will not be deemed to substantially restrain competition where the Herfindahl-Herschmann Index (HHI) after the transaction i) does not ex-ceed 1,500, or ii) where it exceeds 1,500, does not reach 2,500 while the increment of HHI is not more than 250, or iii) exceeds 2,500 while the increment of HHI is not more than 150. Furthermore, in light of past cases, the JFTC is of the opinion that if the HHI is not more than 2,500 and the market share of the new entity is not more than 35%, the probability that the transaction will subs-tantially restrain competition is small.

Transactions going beyond the scope of the safe harbor will be assessed according to their possible unilateral and coordinated effects. The Guidelines provide a detailed list of factors to be taken into consideration for this purpose.

The Guidelines also set a safe harbor for conglomerate and vertical transactions. The result of such transactions may not be a substantial restraint of competition where: i) the market share of the new entity is not more than 10% in all of the particular fields of trade where the company group is involved; or ii) the HHI is not more than 2,500 and the market share of the new entity is not more than 25% in all of the particular fields of trade where the company group is involved. Also, in the light of past cases, the JFTC considers that if the HHI is not more than 2,500 and the market share of the new entity is not more than 35%, the probability that the transaction may substantially restrain competition is small.

As the language of Sections 15 through 16 suggests, it is not necessary for a substantial restraint of trade to inevitably result in order for the concentration to be prohibited. The standard is whether the effect “may be” to restrain trade.

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ii. Enforcement


40.22. Merger notificationA concentration may not be implemented until thirty days after the merger notification is received

by the JFTC, except where this waiting period is shortened by the JFTC. It is important to note that although the period for examining the merger may be extended, this does not have the effect of extending the length of the enforced waiting period.

40.23. Proceedings before the JFtCAn examination period of 120 days begins to run on the date that the JFTC receives notification

of a merger. Alternatively, if the JFTC requests additional materials after the receipt of notifica-tion, the examination period may be extended to 90 days after receipt of the additional materials; whichever period is longer will be the applicable deadline. During the examination period, the JFTC has the authority to initiate hearings or issue a prior notice of cease-and-desist order so as to allow the undertakings to submit their views. In the course of the merger procedure, third parties are not invited to make observations.

In Japan conditions and commitments are usually made or required prior to the actual notifica-tion of the concentration. Consultation with the JFTC prior to formal notification of a merger is common in Japan and in actual practice it is unusual for the JFTC to take legal action in response to merger notification, since most problems will have been detected and resolved or the merger abandoned prior to notification.


40.24. Conditions and commitments - DivestitureAccording to the Guidelines, if remedies are proposed, they should, in principle, be structural

measures such as the transfer of business and should basically be able to restore effective competition. However, the JFTC admits that there may be cases where it is appropriate to take certain types of behavioral measures instead. In principle, the remedies should be completed before the implemen-tation of the transaction.

40.25. FinesFailure to file a required notification, submitting a written notification with a false description,

executing a merger, corporate division or acquisition before the waiting period, is punishable by a fine of up to 2 million yen (US$ 25,450). Failure to comply with a cease-and-desist order is punishable with a fine of up to 300 million yen (US$ 3,810,000) for an undertaking and 2 years imprisonment or a fine of up to 3 million yen (US$ 38,140) for an individual.

C. appeals

40.26. appeals against the JFtC’s ordersA motion to quash the JFTC’s order can be brought within sixty days from the date the order is

served under the JFTC’s hearing procedure. If the plaintiff is dissatisfied with the decision, an appeal may be filed before the Tokyo High Court within thirty days from the date the decision is effective. The plaintiff must be an interested party, which in practice has been limited to the respondents named in the JFTC’s decision. The facts recognized by the JFTC are binding upon the Court, unless the Court determines that the facts are not supported by substantial evidence. If the Court reverses the decision,


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it must give its reasons and remand the case to the JFTC. The Bill presented to the Diet, if adopted, might change the appeal procedure by suppressing the step of the hearing before the JFTC.


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ChaPtEr 41

LiEChtEnStEin




41.01. ContextUnlike the other EFTA countries, Liechtenstein has no national competition legislation and thus

the Act of 23 May 1996 merely provides for the “implementation of the competition rules in the European Economic Area” (Section 1(1)).

The area of unfair practices is covered by the Liechtenstein Act on Unfair Competition of 1992 which established the principle in Section 2 that: “any commercial behavior or practice which is mis-leading or which violates in any other manner the rules of good faith and which impacts on the rela-tions between competitors or between suppliers and customers is prohibited”. Also prohibited are: unfair advertising and sales methods and other unlawful behavior such as disparagement (Section 3), incitements to breach or terminate a contract (Section 4), the exploitation of the work of others (Section 5), violation of production or business secrets (Section 6), failure to comply with working conditions (Section 8) and use of abusive commercial terms (Section 9).




B. Restrictive agreements The prohibition 41.03Exemptions 41.04


D. State aidProhibited aid 41.06Compatible aid 41.07

II. Enforcement A. Enforcement authorities

The Office of Economic Affairs 41.08

The EU Commission 41.09The EFTA Surveillance Authority (ESA) 41.10

B. Enforcement proceedingsJurisdictional rules 41.11Complaints and investigations 41.12Proceedings before the ESA, the EU Commission and the Office of Economic Affairs 41.13Interim relief 41.14Enforcement by ordinary courts 41.15

C. SanctionsCease and desist order 41.16Fines 41.17

D. AppealsAppeals against decisions at national level 41.18Appeals against decisions at EEA level 41.19

Section 2 Mergers

I. Substantive rulesContext 41.20Scope 41.21


Jurisdictional rules 41.22

B. Conditions/SanctionsConditions and commitments – Divestiture 41.23Fines 41.24

C. AppealsAppeals against decisions of the ESA and the EU Commission 41.25

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41.02. ScopeThe EEA agreement implements the EU competition rules applicable to undertakings in their enti-

rety, subject to necessary adaptations. The primary effect of the EEA Agreement is that its rules on competition and free movement of goods apply to the EEA Member States, i.e. Liechtenstein, Norway and Iceland. In order for the EEA competition rules to apply, there must be either an effect on trade between the EU and one or more EFTA States or an effect on trade between EFTA States alone.


41.03. the prohibitionSection 53 of the EEA Agreement prohibits agreements between undertakings, decisions by asso-

ciations of undertakings and concerted practices which are restrictive of competition. The list of prohibitions contained in Section 53 applies to practices which:

- directly or indirectly fix prices, discounts, margins or any other trading conditions,- limit or control production, markets, technical development, or investment,- share markets or sources of supply,- apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing

them at a competitive disadvantage,- make the conclusion of contracts subject to acceptance by the other parties of supplementary


41.04. ExemptionsThe EEA Agreement provides for both individual and group exemptions. Undertakings may

apply for an exemption where the agreement or concerted practice in question fulfills certain condi-tions. In essence, these conditions are identical to those set out in the corresponding provision in Section 101 (3) TFEU. Annex XIV of the EEA agreement states the EU exemption regulations are applicable in the EEA Member States.


41.05. abuse of a dominant positionSection 54 of the EEA Agreement prohibits abuse of a dominant position within the territory

covered by the Agreement or a substantial part of it. The fact that an undertaking has a dominant position is not actionable in itself. Only the abuse

of such position may constitute an infringement of the EEA rules. Section 54 gives a list of abuses: imposing unfair prices; limiting production, markets or technical development; applying dissimilar conditions to equivalent transactions; demanding from a trading party supplementary obligations which have no connection with the subject of the contract.

D. State aid

41.06. Prohibited aidThe provisions of Section 61 of the EEA Agreement mirror those of Section 107 TFEU. According

to Section 61 (1), any aid granted by EU Member States, EFTA States or through State resources in any form whatsoever which distorts or threatens to distort competition by favoring certain under-


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takings or the production of certain goods is, insofar as it affects trade between contracting parties, incompatible with the functioning of the Agreement.

41.07. Compatible aidSection 61(2) defines three categories of aids which are compatible ipso jure:- aid having a social character,- aid to make good the damages caused by natural disasters or exceptional occurrences,- aid granted to the economy of certain areas of the Federal Republic of Germany affected by the

division of Germany. Section 61(3) lists a number of aids that might be subject to facultative exemptions:a) aid with a regional purpose,b) aid to promote the execution of an important project of common European interest or to

remedy a serious disturbance in the economy of an EU Member State or an EFTA State;c) aid to facilitate the development of certain economic activities or of certain economic regions,d) such other categories of aid as may be specified by the EEA Joint Committee in accordance

with Part VII.

ii. Enforcement


41.08. the Office of Economic affairsPursuant to Section 2 of the 1996 Act, the Office of Economic Affairs (formerly Office of National

Economy) is the Liechtenstein Authority in charge of the implementation of the competition rules. The Office of Economic Affairs is responsible for, inter alia:

- giving administrative assistance in cases specified under Section 55(1) of the EEA Agreement; - adopting necessary remedial measures pursuant to Section 55(2) EEA and cooperating with the

EFTA Surveillance Authority (ESA) and the EU Commission. According to Section 2 of the 1996 Act, the Office of National Economy is competent unless the

jurisdiction of the courts is otherwise provided for.

41.09. the EU CommissionA dual jurisdictional system has been created to implement EEA competition law. Where anticom-

petitive conduct between undertakings affects trade between the EU and one or more EFTA States, it will be dealt with either by the EU Commission or by the EFTA Surveillance Authority pursuant to the attribution rules contained in Sections 56 and 57 EEA. As a general rule, the EU Commission is responsible for matters predominantly coming within Union control and the EFTA Surveillance Authority (ESA) is responsible for the EFTA States. In this context, the EU Commission imple-ments the EEA competition rules on the basis of its existing powers for the application of the EU competition rules, supplemented by the provisions contained in the EEA Agreement.

There is no overlap between the jurisdiction of the EU Commission and that of the ESA. The one-stop-shop principle applies, which in essence means that although the Agreement provides for two se-parate enforcement authorities, only one of these authorities will ever be competent to decide on a case.

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41.10. the EFta Surveillance authority (ESa)The ESA is an independent body established under an agreement between the EFTA States. The

ESA is entrusted with equivalent powers and similar functions to those of the EU Commission as regards the application of the EU competition rules.


41.11. Jurisdictional rules1º) Restrictive agreementsIn the case of a restrictive practice the ESA has jurisdiction when:- trade between EFTA States only is affected (Section 56 (I a), EEA), or - trade between the EU and at least one ETFA State is affected and the participating undertakings

achieve a turnover of at least 33% in EFTA States (Section 56 (I b), EEA), or where- the effect on trade between EU Member States or on competition within the Union is not

appreciable (Section 56 III, EEA).According to Section 56 (I c) EEA, the EU Commission decides on the remaining cases as well

as on cases under Section 56 (I b) EEA, where trade between Member States is affected.2º) Abuse of dominanceThe division of jurisdiction in cases of abuse of a dominant position is based on three parameters:- the geographic market on which a dominant position is found to exist,- the potential effect on trade, and- the share of turnover between in the EU and EFTA.Cases are attributed to one or the other authority on the basis of a combination of two or all three

parameters. In principle, the authority in the territory of which a dominant position is found to exist has jurisdiction (Section 56 (II), EEA). If a dominant position is found to exist in both the EFTA States and the EU, the attribution rules under restrictive practices apply: the ESA has jurisdiction where trade between the EU and at least one EFTA State is affected and if the undertaking concer-ned achieves a specific percentage (33% or more) of its aggregate EEA turnover in the territory of the EFTA States. The European Commission is said to have jurisdiction if:

(1) the undertaking achieves more than 67 per cent of its aggregate EEA turnover in the EU States, or

(2) the practice affects trade between EU Member States.3º) State aidAccording to Section 62, all existing systems of State aid in the territory of the contracting parties,

as well as any plans to grant or alter State aid, shall be subject to constant review as to their compa-tibility with Section 61. This review shall be carried out:

(a) as regards the EU Member States, by the EU Commission; (b) as regards the EFTA States, by the EFTA Surveillance Authority which is entrusted with the

powers and functions laid down in Protocol 26 of the EEA Agreement. With a view to ensuring a uniform surveillance in the field of State aid throughout the territory

covered by this Agreement, the EU Commission and the ESA must cooperate in accordance with the provisions set out in Protocol 27 of the EEA Agreement.

41.12. Complaints and investigationsThe powers and functions of the ESA, the EU Commission or the Liechtenstein authorities

when investigating alleged breaches of the EEA competition rules include, the possibility to request information from and to carry out on-the-spot investigations into undertakings, make requests for


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information from the competent authorities and the Governments of Member States and to make inquiries into sectors of the economy where pertinent. Where an investigation is to be carried out by the ESA, the permission of the General Court must first be received, on the application of the Office of Economic Affairs, in order for all the premises, properties and means of transport belonging to the undertaking to be searched (Section 4 of the 1996 Act). According to Section 55 EEA, the ESA and the EU Commission shall investigate cases on their own initiative or on application by a State coming from their respective territory.

At a national level the Office of the Economic Affairs shall give its assistance to the competent surveillance authority in order to carry out these investigations. The Office of Economic Affairs may in accordance with Section 3 of the 1996 Act, request undertakings and associations of undertakings to provide information within a specified time limit set in accordance with the circumstances of each individual case. The Authority may also inspect and audit an undertakings business records or have them inspected and audited by suitably qualified experts. The proprietors of an undertaking must provide any information requested by the authority as well as permit business premises and business property to be entered.

41.13. Proceedings before the ESa, the EU Commission and the Office of Economic affairs

In enforcing the provisions of the EEA competition rules, both the ESA and the EU Commission are obliged to respect the right of defense of the undertakings concerned thus ensuring a fair proce-dure. This involves giving the undertaking the opportunity to express its views on the matter both orally and in a written form and allowing it access to the file. Both the ESA and EU Commission are bound by a duty not to disclose confidential information and the rules on professional secrecy. Furthermore, the authorities must carry out their respective duties in close liaison with the com-petent authorities of the Member States. At national level, enforcement proceedings are carried out by the Office of Economic Affairs. The national procedure follows the rules of the law regarding the General Maintenance of State Administration (Gesetz über die allgemeine Landesverwaltungspflege).

41.14. interim reliefPursuant to Section 4 of Chapter II of Protocol 4 to the Agreement between the EFTA States on

the Establishment of a Surveillance Authority and a Court of Justice, the competition authorities of the EFTA States have the power to apply Sections 53 and 54 of the EEA Agreement in individual cases and, for this purpose, acting on their own initiative or on a complaint, they may, inter alia, order interim measures.

Likewise, under Section 8 of the same Protocol, the ESA may also order interim measures in cases of urgency due to the risk of serious and irreparable damage to competition, on the basis of a prima facie finding of infringement. Such an order applies for a specified period of time and may be renewed insofar as is necessary and appropriate.

41.15. Enforcement by ordinary courtsLaw suits or claims for damages can be taken in Liechtenstein’s civil courts, based on the compe-

tition rules of the EEA Agreement.

C. Sanctions

41.16. Cease and desist orderIf the EU Commission or the ESA find that there has been an infringement to Sections 53 or 54

of the EEA Agreement, they shall propose appropriate measures to bring it to an end. Pursuant to

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Section 53 (II) of the EEA Agreement, any agreement in violation of the EEA Agreement is dee-med to be void.

41.17. FinesThe ESA and the EU Commission may impose fines and periodic penalty payments to be paid by

undertakings for infringements of Sections 53 or 54 of the EEA Agreement. Fines may be set to an amount up to 10% of the infringing companies’ turnover. The ESA has adopted a series of (non-bin-ding) notices and guidelines on different aspects of the competition rules, like guidelines on the method of setting fines, or a notice on immunity from fines and reduction of fines in cartel cases. These notices and guidelines take account of similar instruments adopted by the European Commission.

Pursuant to Section 5 of the 1996 Act, administrative fines or penalty payments shall be imposed by the Office of Economic Affairs where the EFTA Surveillance Authority or the EU Commission authorize Liechtenstein to adopt remedial measures. The level of administrative fines must not ex-ceed CHF 10,000 (EUR 8,350). Penalty payments must not amount to more than CHF 2,000 (EUR 1,660) for each day of default.

D. appeals

41.18. appeals against decisions at national levelDecisions of the Office of Economic Affairs may be appealed to the Government within 14 days

following service (Section 7(1)). Representations or appeals against decisions of the Government may be referred to the Administrative

Court (Section 7(2)).

41.19. appeals against decisions at EEa levelDecisions of the EU Commission in relation to the EEA competition rules can be appealed to the

EU General Court and the Court of Justice. Decisions of the ESA may be appealed to the EFTA Court in Luxembourg.National courts may also refer cases to the EFTA Court in order to receive an opinion on the

interpretation of EEA law.

Section 2 MERGERS


41.20. ContextThe EEA Agreement provisions on mergers are directly applicable in Liechtenstein. Pursuant to

Annex XIV and Section 3 of Protocol 21 of the EEA Agreement, mergers with an EFTA dimension are controlled pursuant to the provisions of EU Regulation No 139/2004.

41.21. ScopeWhen a concentration meets the definition and thresholds set out in the EU Merger Regulation

and impedes significantly effective competition in the EEA, or a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, it may be prohibited.


465

ii. Enforcement


41.22. Jurisdictional rulesIn accordance with Section 57(2) of the EEA Agreement, undertakings must address their noti-

fications to the competent surveillance authority. Notifications addressed to the authority which is not competent shall be transferred to the competent surveillance authority. The control of concentra-tions having a Community dimension will be carried out by the EU Commission. Under the EEA rules, the ESA will be competent with regard to concentrations with an EFTA dimension where same have no Community dimension (Section 57(II) of the EEA Agreement).

Notification must be made in one of the official languages of the EU to the EU Commission where they have a Community dimension and in one of the official languages of the ESA if they have an EFTA, but no Community, dimension.


41.23. Conditions and commitments – DivestitureWhere a concentration has already been implemented, the Commission or the ESA may require the

undertakings or assets brought together to be separated or the cessation of joint control or any other action that may be appropriate in order to restore the conditions of effective competition. As under EU law, a decision permitting a merger under EFTA Law may be subject to conditions and commitments.

41.24. FinesSection 14 (1) of the EU Merger Regulation makes provision for a fine not exceeding 1% of the

aggregate turnover of the undertaking or association of undertakings concerned where undertakings “intentionally or negligently” supply incorrect or misleading information when submitting a notifi-cation or fail to submit to an investigation or to provide complete information during the period of investigation.

Section 14(2) of Regulation No 139/2004 imposes a fine not exceeding 10% of the turnover upon the undertakings concerned which, “either intentionally or negligently”, fail to notify a concentra-tion. A notification submitted outside the time-limits prescribed or one which is not jointly submit-ted where so required under the terms of the Regulation is equivalent to a failure to notify.

Likewise, undertakings which either deliberately or negligently put into effect a concentration during the period of suspension or fail to comply with the conditions or requirements linked to the granting of a derogation as regards the suspension may be subject to fines of up to 10% of the aggregate turnover of the undertakings concerned The Regulation also provides for periodic penalty payments not exceeding 5% of the average daily aggregate turnover of the undertaking or association of undertakings concerned for each working day of delay, calculated from the date set in the decision, in order to compel undertakings to comply with an obligation, or to implement measures intended to restore competition (Section 15(1)).

C. appeals

41.25. appeals against decisions of the ESa and the EU CommissionAs with the other areas of competition law, decisions of the EU Commission under the EEA com-

petition rules shall be subject to the judicial control of the General Court and the Court of Justice. The EFTA court shall be competent for appeals concerning decisions in the field of mergers ad-

opted by the EFTA Surveillance Authority.


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ChaPtEr 42

MExiCO




42.01. ContextCompetition law in Mexico is based on Section 28 of the Political Constitution of the United

Mexican States. Following this Section, the Federal Law of Economic Competition (Ley Federal de Competencia Económica, LFCE, “the Act”) was enacted in 1992 and came into effect in June 1993. The present Act replaced the “Organic Law of Section 28 of the Constitution on Monopolies” enac-ted in 1934 and its purpose is “to protect the competitive process and free market participation by preventing and eliminating monopolies, monopolistic practices and other restraints on the efficient functioning of markets for goods and services”. The Act was modified in 2006 and a regulation was adopted on 12 October 2007 (Reglamento de la Ley Federal de Competencia Economica, RLFCE). New amendments were brought to the LFCE in 2011 which, inter alia, increased the investigative powers of the Competition Commission and the amount of fines and introduced criminal sanctions for indivi-duals.The area of unfair practices is regulated by a number of different statutes such as the Consumer Protection Law (Ley Federal de Proteccion al Consumidor, 1992) or the Patent and Trademark Law (Ley de la propriedad industrial, 1991).





C. Abuse of dominanceMonopolies and monopolistic practices 42.04


The Federal Competition Commission (FCC) 42.05The courts 42.06

B. Enforcement proceedingsComplaints and investigations 42.07Proceedings before the FCC 42.08Interim relief 42.09


D. AppealsAppeals before the FCC 42.14Appeals before Federal District Courts 42.15

Section 2 Mergers

I. Substantive rulesConcept of concentration 42.16Thresholds 42.17Control criteria 42.18



Proceedings before the FCC 42.20B. Conditions/Sanctions


C. AppealsAppeals before the FCC and the Federal District Courts 42.23

Mexico

468

42.02. ScopeThe Act applies to all sectors of economic activity throughout the Mexican Republic, subject to

limited exemptions which it specifies. Federal, State and municipal authorities are subject its provi-sions to the extent such authorities participate in economic activities, with the exception of certain state functions in strategic fields such as postal services and electricity (Section 4 et seq.).


42.03. the prohibitionSection 8 of the Act prohibits both horizontal and vertical agreements that restrict competition. 1º) Horizontal agreementsSection 9 of the Act sets out a per se prohibition against horizontal agreements providing that

“absolute monopolistic practices” are void and without effect. The Act defines absolute monopolistic practices as agreements, contracts, arrangements or combinations between competitive economic agents, the purpose of which is to:

- fix prices or exchange information with this goal, - restrict output or services, - allocate or share markets,- share or rig bids. 2º) Vertical agreementsVertical agreements (“relative monopolistic practices”) that restrict competition are prohibited by

Section 10 of the Act. A violation of the practices listed in Section 10 requires that the parties exer-cise “substantial power” in the relevant market, the subject of the agreement. Relative monopolistic practices may consist of agreements the purpose of which is to hinder access or establish advantages, for example:

- resale price maintenance;- exclusive dealing;- imposition of requirement contracts (whereby a buyer agrees to buy all or a large part of a specific

good or service from a specific seller).


42.04. Monopolies and monopolistic practicesSection 28 of the Constitution bans monopolies and monopolistic practices. Monopolistic prac-

tices are also prohibited under Section 10 of the Act as “relative monopolistic practices”, which require having a market power. Relative monopolistics practices may consist in business actions taken by one or more individuals or entities, having the intent or effect of illegally ousting competitors from the market, impeding their access to the market or granting one or more individuals or entities exclusive advantages.

Pursuant to the Act, in order to define the market power of an undertaking, it is necessary to consider inter alia:

- its market share and whether it can act unilaterally as regards other market operators;- the existence or not of entry barriers;- the existence and power of competitors;- the state of potential development for all actors on the market.Section 10 of the Act provides a list of practices that are deemed to be abuses of market power,

including inter alia: refusal to deal, boycotts, tying, predatory pricing and discrimination.


469

The 2011 Amendments introduced the concept of collective dominance, previously unknown in Mexican competition law.

ii. Enforcement


42.05. the Federal Competition Commission (FCC)The Federal Competition Commission (FCC), an administrative agency depending on the

Ministry of Economy, was created in 1993 by virtue of Section 23 of the Federal Law on Economic Competition, in order to investigate and adjudicate violations of the Act. It is composed of five commissioners, including a President, appointed by the Federal Executive. Commissioners must be Mexican citizens with a distinguished professional record in a relevant field. Commissioners are appointed for a ten-year term and may be removed only for a duly justified serious reason.

Within the FCC, the Pleno, made up of five Commissioners, rules on the cases submitted to it by the other departments making up the FCC.

42.06. the courtsEven if the Mexican Civil Code contemplates private rights of action for damages resulting from

acts considered illegal under the law, recovery of damages for anticompetitive acts is only possible where the plaintiff has demonstrated such loss during proceedings before the FCC.


42.07. Complaints and investigationsThe FCC may initiate investigations ex officio or upon petition. Where a complaint is plainly

unfounded, the Commission may reject it (Section 32). Within ten days of receiving a third party complaint, the Commission must issue an order commencing the investigation, rejecting the com-plaint or seeking clarification.

The Commission has the authority to require the production of documents or testimony relevant to its investigation. Information and documents obtained pursuant to such investigations are only for the parties or are confidential and are not to be made public except where so ordered by the com-petent authorities (Section 31). The 2011 Amendment grants the FCC more powers by allowing it to conduct dawn raids which will result in more efficient investigations than in the past since the FCC had to require judicial authorization and warn the visited undertakings that it would conduct investigations.

42.08. Proceedings before the FCCIn proceedings before the FCC, the accused is notified of the nature of the investigation and is

provided with a copy of the complaint. The accused has thirty days to submit a defense, including any documentary evidence deemed relevant. After review of the evidence, the Commission establishes a period of not more than thirty days in which to hear oral or written arguments. The Commission has sixty days from the conclusion of such period to issue a decision (Section 33).

Steps of the procedure within the FCC are as follows:- the Department of Investigations carries out an investigation on the basis of a complaint or

where the FCC itself initiates the investigation;- any subsequent enforcement action is then brought by the Department for Legal Matters;

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470

- a final decision on the matter is taken by the Pleno.In case of vertical agreements, and before the FCC issues its resolution, the parties may submit

commitments. The FCC will then either close the file or impose a fine of up to half that set out in the Act.

42.09. interim reliefThe 2011 amendments to the Act now allow the Commission, during the investigation and before

a final decision is issued, to order the temporary suspension of actions that it deems liable to consti-tute monopolistic practices. The maximum duration of the injunction is twelve months with an initial suspension of four months renewable twice for periods of four months. However, the under-takings concerned may lift the suspension by providing a guarantee.

C. Sanctions

42.10. Cease and desist ordersSection 35 of the Act provides that the Commission may order the suspension, correction or eli-

mination of an anticompetitive practice, as well as imposing fines.

42.11. FinesThe 2011 Amendment dramatically increased the amount of penalties incurred. The FCC can

now impose the following maximum administrative fines:- 10% of the annual tax income of the wrongdoer in case of absolute monopolistic practices;- 8% of the annual tax income of the wrongdoer in case of relative monopolistic practices.For repeat defenders, fines may be doubled.Individuals may also be held personally liable.

42.12. LeniencyIn 2006, the Mexican Federal Competition Commission (CFC) put in place a leniency program

in order to better combat cartels having an effect on the Mexican territory and sought to provide the greatest benefit for consumers and for the economy as a whole.

By this system, the first party involved in an absolute monopolistic practice to apply for leniency and bring sufficient evidence allowing the Commission to assume the existence of the practice will be able to receive the maximum benefit from a fine reduction equal to the amount of the minimum wage.

Other parties involved in the infringement (individuals or legal persons) may also obtain the benefit of the leniency program and the reduction can be of up to 50%, 30% or 20% (according to chronological order of application) of the applicable fine if they provide any new information that is considered relevant by the Commission.

42.13. Criminal sanctionsIn case of absolute monopolistic practices, three to ten years imprisonment may be imposed.

D. appeals

42.14. appeals before the FCCAn appeal from a decision of the FCC may be filed with the Commission within thirty days of its

notification. This procedure is referred to as recurso de reconideracion and is only open to interested


471

parties. Enforcement is stayed pending appeal. Where third parties may potentially suffer damages during the appeal period, the petitioner is required to provide a guarantee to repair the damage in the event that the decision on appeal is unfavorable. The Commission shall issue a decision within sixty days after filing of the appeal.

42.15. appeals before Federal District CourtsThe 2011 Amendment also institutes specialized antitrust courts before which appeals against

FCC’s decisions may also be lodged. A party who claims that a legally protected interest has been infringed by the Commission may bring an action before a specialized Federal District Court to challenge the legality or the constitutionality of the decision. This procedure is referred to as juicio de amparo (petition for judicial review).

Section 2 MERGERS


42.16. Concept of concentration The concept of concentration is broadly defined in Section 16 as including any “merger, or acqui-

sition of control or any other act whereby companies, partnerships, shares, equity, trusts or assets in general are concentrated among competitors, suppliers, customers or any other economic agent.”

42.17. thresholdsUnder Section 20, pre-merger notification is mandatory where any one of three thresholds applies:- the value of the transaction is equal to or greater than 18 million times the general minimum

wage in force for the Federal District (US$ 78,2 million); - the act or succession of acts giving rise to the concentration involve 35% or more of the assets

or shares of an economic agent whose assets in Mexico or annual sales in Mexico account for more than the equivalent of 18 million times the average minimum wage in force in the Federal District (US$ 78,2 million).

- the act or succession of acts giving rise to the concentration involve an accumulation in Mexico of assets or share capital of more than the equivalent of 8.4 million times the average minimum wage in force in the Federal District (US$ 36,5 million) and two or more participating economic agents have holdings or annual sales volumes, either jointly or separately of more than 48 million times the average minimum wage in force in the Federal District (US$ 209 million).

If a transaction does not come within the notification thresholds, the possibility of a voluntary notification always exists. Parties sometimes choose to notify as, according to Section 22 of the Act, once approved, concentrations may not be subsequently challenged pursuant to the terms of the Act.

42.18. Control criteriaPursuant to Section 16 of the Act, the FCC is required to control concentrations that have as their

object or effect a negative effect on competition or more precisely which seek to diminish competi-tion and “free access to equal, similar or substantially related goods and services.” Merger control is first carried out by defining the relevant market and by analyzing the extent of market power through use of the Herfindahl-Hirschman Index and the Dominance Index. Finally, under Section 17, the FCC must analyze whether:

- the transaction will allow the resulting entity to set prices unilaterally;- the resulting entity can either displace other undertakings or interfere with their access to market;

Mexico

472

- the object or effect of the operation is to facilitate the carrying out of monopolistic practices.

ii. Enforcement


42.19. Merger notificationWhere the applicable thresholds are satisfied, notification is made pursuant to Section 21.

Notification must be made in writing, and must include the names of the parties involved and finan-cial statements for the prior fiscal year.

Section 21bis, introduced by 2011 Amendment, excludes from the notification requirement intra-group concentrations. The creation of specific trusts and certain foreign transactions are also exemp-ted from notification.

42.20. Proceedings before the FCCIn the 15 days following notification, the Commission is entitled to request additional data or

documents, and the parties have 15 days to supply such material. These deadlines can be extended in appropriate cases.

The FCC is required to make its determination either 35 days after receipt of the notification or from the date of receipt of any additional information that has been requested. Where there is no response from the Commission within the established period, the Commission is deemed to have no objection to the concentration.


42.21. Conditions and commitments - DivestitureThe Act authorizes the Commission to order the suspension of a concentration or a partial or

total de-merger. Alternatively, the Commission may make approval of an acquisition subject to the divestiture of assets or rights, the elimination of a particular line of production, modification of the terms of the acquisition agreement or other acts designed to foster the participation and access of competitors in the market and any other conditions aimed at avoiding any impairment of competi-tion or participation in the market.

42.22. FinesThe FCC can impose a fine of up to 5% of the company’s annual income for tax purposes in case

of failure to notify correctly and of 8% in case of an illegal concentration. Individuals may also be subject to fines.

C. appeals

42.23. appeals before the FCC and the Federal District CourtsThe same appeal procedure applies as that in the case of anticompetitive conduct.


473

ChaPtEr 43

MOrOCCO




43.01. ContextThe instrument forming the principal basis of competition policy in Morocco is Act No 06-99

on free pricing and competition - supplemented and amended by Act No 30.08 (Bulletin officiel No 58/4 of 18/02/2010). Its aim is the protection of the free play of competition in order to stimulate economic efficiency and increase the well-being of consumers.

Competition Act is relatively new to Morocco and has been largely inspired by French and European Act.

Act No 06-99 is inspired by the principles of transparency, non-discrimination, and fairness pro-mulgated by the WTO and the provisions of all the Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices adopted by UNCTAD.

43.02. ScopeUnder its Section 1, the Act applies to:





C. Abuse of dominanceScope 43.05


The Competition Council 43.06The Prime Minister 43.07

B. Enforcement proceedingsComplaints and investigations 43.08Proceedings before the Competition Council and the Prime Minister 43.09Interim relief 43.10

C. SanctionsCease and desist orders 43.11Civil and criminal sanctions 43.12

D. AppealsAppeals against decisions of the Prime Minister 43.13

Section 2 Mergers

I. Substantive rulesConcept of concentration 43.14Thresholds 43.15Control criteria 43.16



Proceedings before the Competition Council and the Prime Minister 43.18

B. Conditions/SanctionsConditions and commitments - Divestiture 43.19Civil and criminal sanctions 43.20

C. AppealAppeals against decisions of the Prime Minister 43.21

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474

- all natural or legal persons whether or not they have their headquarters or establishments in Morocco, where their operations or behavior have an effect on competition in the Moroccan market or a substantial part thereof;

- all production, distribution and service activities;- public authorities insofar as they are involved in the activities cited in paragraph 2 above as eco-

nomic operators and not in the exercise of the prerogatives of public authority or the performance of public service tasks;

- export agreements insofar as their application affects competition on the internal Moroccan market.


43.03. the prohibitionTitle III of Act No 06-99 on free pricing and competition deals with restrictive agreements.Section 6 provides that: “Where they have as their object, or may have as their effect, the preven-

ting, restricting or distorting of the play of competition on a market, concerted actions, agreements, cartels or alliances, whether express or implied and regardless of their form and the reason for them, are prohibited in particular where they:

- restrict access to a market or the exercise of free competition by other undertakings; - hinder the setting of prices through the free play of market forces by artificially promoting their

increase or decrease;- limit or control production, markets, investments or technical progress;- share markets or sources of supply.”Any agreement or understanding constituting a prohibited practice is null and void.

43.04. ExemptionsSection 8 provides that certain practices are not subject to Section 6. This refers to practices: - resulting from the application of a legislative or a regulatory text; - for which a contribution to economic progress can be justified, that is sufficient to compensate

for the restrictions to competition and that wille reserve consumers a fair share of the resulting benefit, without giving the interested undertakings the possibility to eliminate competition for a substantial part of the products or services in question; such practices must only impose restrictions on competition if they are essential for the achievement of the objective of progress.


43.05. ScopeSection 7 prohibits any undertaking or group of undertakings - where its object or effect is to

prevent, restrict or distort the free play of competition - from abusively exploiting:- a dominant position on the internal market or a substantial part thereof;- the situation of economic dependence of a customer or a supplier having no other alternative.Abuse may consist in a refusal to sell, tied selling or discriminatory terms of sale or the breaking

off of a commercial relationship on the sole ground that the partner refuses to accept unjustified tra-ding conditions. It may also take the form of directly or indirectly imposing a minimum on the resale price on a product or a good, or on the price of a provision of a service or a sales margin. The abuse may also consist in price offers or pricing to consumers which are abusively low compared to the costs of production, processing and marketing, when such offers or practices have as their object or may have as their effect the elimination of a market, or the preventing of access to a market.


475

ii. Enforcement


43.06. the Competition CouncilThe competent authority is the Competition Council (Conseil de la concurrence). It ensures the

proper functioning of the market and the application of the competition rules. It is also an advisory body which is responsible for providing opinions, advice, or recommendations on competition in general terms. Sometimes it is subject to mandatory consultation from the government in respect of some draft Acts. It must examine the practices brought to its notice and issue a recommendation to the Prime Minister, by reasoned opinion, of the action to be taken.

43.07. the Prime MinisterThe Prime Minister’s role is important both in respect of the referral of cases and of the imple-

mentation of the opinions of the Competition Council.


43.08. Complaints and investigationsThe Prime Minister and some agencies covered by the Act may bring facts before the Competition

Council that are likely to constitute anticompetitive practices. It cannot be seized of matters dating back more than 5 years.

The President of the Competition Council appoints a case-handler to investigate and review each case. He can ask the authorities to proceed with any necessary investigations and has recourse to any experts needed.

Investigators may enter all business premises, property and means of transport used for professio-nal purposes, require the disclosure of books, invoices and all other business records and take copies of or collect on convocation or on-the-spot, any information and justifications.

43.09. Proceedings before the Competition Council and the Prime MinisterThe case-handler investigates the case and drafts a report. The parties involved must submit their

comments on the report within a period of two months. The Competition Council examines whe-ther the practices constitute violations of provisions of the Act. It may by reasoned decision, declare the application inadmissible within a period of 2 months or declare that there is no cause to continue the procedure.

The Competition Council renders its opinion that it discloses to the Prime Minister or to the authorities having instigated the request for an opinion and recommends the required measures, conditions or injunctions to be imposed.

43.10. interim reliefPursuant to Section 32, The Prime Minister may, by reasoned decision and upon recommendation

from the Competition Council, after hearing the concerned parties, order interim measures. Interim measures may only be ordered where a prior referral of the case has been made to the Competition Council. They may occur at any stage of the proceedings and consist in a suspension of the practice or an injunction on the parties to restore the situation to what it was prior to the infringement.

Interim measures must be strictly limited to what is necessary to deal with urgency and the prac-tice at stake must seriously and immediately harm the economy, the sector concerned, consumers’ interests or the interests of the plaintiff.

Morocco

476

C. Sanctions

43.11. Cease and desist ordersThe Prime Minister may, by a reasoned decision and on the recommendation of the Competition

Council, order provisional measures that may include the suspension of the relevant practice as well as an injunction on the parties to return to the previous situation. It may also order the parties to put an end to the anticompetitive practices within a specific period of time.

If the parties involved fail to comply with injunctions, conditions or provisional measures, the Prime Minister can apply to the crown prosecutor to initiate prosecution proceedings.

43.12. Civil and criminal sanctionsThe Competition Council is not empowered to impose fines. However, the Prime Minister may,

by reasoned opinion and on the recommendation of the Council, seize the competent courts which will impose civil fines.

Moroccan competition Act remains to a great degree subject to criminal sanctions although a bill to amend the Act on free pricing and competition and supporting decriminalization has been sub-mitted to the Government.

Any natural person who, fraudulently or knowingly participates personally in the conception, organization, the implementation or the control of practices referred to in Sections 6 and 7 may be punished with imprisonment of between two months to two years and a fine of between 10,000 to 500,000 dirhams (EUR 905,000 to EUR 45,300) or one of those two sanctions.

Legal persons may also be held criminally liable. The penalty incurred is a fine of between 2 and 5% of turnover excluding taxes achieved in Morocco. The amount of the fine is determined indivi-dually for each legal person being sanctioned by taking into account the severity of the alleged facts and of the size of the damage to the economy.

D. appeals

43.13. appeals against decisions of the Prime MinisterAppeals against the decisions of the Prime Minister are brought before the competent adminis-

trative court.

Section 2 MERGERS


43.14. Concept of concentration Section 11 provides that a concentration may result from any instrument, regardless of form,

which constitutes a transfer of property or of enjoyment of all or part of the property, the rights and obligations of a business or which has the object or effect of enabling an undertaking or a group of undertakings to exert, directly or indirectly, a decisive influence over one or several other companies.

43.15. thresholdsMerger control only applies where the undertakings which are the parties to the transaction, or

are the subject thereof, or are economically linked have, in the previous calendar year, carried out jointly more than 40% of sales, purchases or other business on a national market of goods, products or services being of the same or of a substitutable nature, or on a substantial part of such market.


477

43.16. Control criteriaSection 10 provides that any proposed concentration or any concentration likely to harm competi-

tion, in particular through the creation or strengthening of a dominant position, is submitted by the Prime Minister for an opinion from the Competition Council.

To assess whether a proposed merger or a merger operation raises competition problems, the Competition Council carries out an economic evaluation in order to determine whether the concen-tration can bring sufficient “economic progress” to compensate for the damage to competition. The Council takes account of the competitiveness of undertakings in terms of international competition.

Furthermore when it takes its decision, the Prime Minister may impose conditions to the parties in order to ensure a contribution to “economic and social” progress sufficient to compensate the res-traint to competition.

ii. Enforcement


43.17. Merger notificationCompanies are required to notify the Prime Minister of any proposed merger. The Act does not

mention a specific time-limit for the notification, but it must take place before completion of the merger. Certain agencies referred to in the Act may inform the Prime Minister that a merger has been carried out in violation of the pre-merger notification requirement. Commitments may be included with the notification.

43.18. Proceedings before the Competition Council and the Prime MinisterWhere no response is forthcoming after a period of two months, the concentration and any com-

mitments offered are deemed to have been tacitly accepted. This time-limit is extended to 6 months if the Prime Minister makes a referral to the Competition Council. The Prime Minister may not refer the merger to the Competition Council after expiry of the two months period except in the event of non-execution of any of the commitments contained in the notification. During this period, the notification has a suspensive effect on the implementation of the proposed merger and on the commitments.

Section 42 provides that when the Prime Minister makes a referral to the Competition Council for a merger proposal or a merger operation, he must notify the parties thereof. The Competition Council must assess whether the proposed concentration or the merger brings a sufficient contribu-tion to economic progress to compensate for the damage to competition.

The Council is only empowered to advise the Prime Minister, who may at his discretion, choose to follow said advice or reject it.


43.19. Conditions and commitments - DivestitureSection 43 provides that the Prime Minister may, by reasoned decision, and as a result of the opi-

nion of the Competition Council, order companies, within a specified time: - either not to go ahead with the merger project or to re-establish the previous legal situation;- or to modify or supplement the operation or to take any measures necessary to ensure or to esta-

blish sufficient competition.The completion of the operation may also be subject to conditions.

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478

Section 45 addresses the case where the merger has already taken place in compliance with the notification procedure. In this case, the Competition Council may, if it finds an abuse of a dominant position, advise the Prime Minister to instruct the undertaking or the group of undertakings at issue, to amend, supplement or terminate, in a given period of time, all agreements and all acts by which it has carried out the concentration of economic power having given rise to the abuse, even if those acts had been notified.

43.20. Civil and criminal sanctionsIn the event of failure to notify or non-compliance with commitments, the Prime Minister may,

after consultation with the Competition Council, refer the matter to the crown prosecutor of the competent first instance court, who will initiate criminal proceedings.

Under Section 70, legal persons can be found criminally liable when the circumstances of the case warrant it, especially in the event of bad faith by the parties involved or according to seriousness of the offenses and without prejudice to the civil penalties that may be applied by the competent courts. A fine of between 2 and 5% of turnover, excluding taxes, achieved in Morocco may be handed down.

C. appeals

43.21. appeals against decisions of the Prime MinisterAppeals against the decisions of the Prime Minister are brought before the competent adminis-

trative court.


479

ChaPtEr 44

nEW ZEaLanD




44.01. ContextThe competition process in New Zealand is governed by the Commerce Act of 1986 (“the Act”),

replacing the former Commerce Act of 1975. While the earlier Commerce Act was modeled on the UK’s Restrictive Trading Practices Act, the current Act, closely parallels Australia’s Trade Practices Act. In particular, the Commerce Amendment Act of 2001, the main amendment to the Commerce Act to date, alters the standards applicable to mergers and abuse of a dominant position, and em-powers the Commission to issue administrative cease and desist orders. An amendment Bill is cur-rently under review before Parliament with the aim of introducing criminal sanctions for hardcore cartel activities in order to further bring in line New Zealand’s regime with its trading partners’, especially Australia.





C. Abuse of dominanceTaking Advantage of Market Power 44.05

D. unfair practicesScope 44.06


The New Zealand Commerce Commission (NZCC) 44.07

The courts 44.08B. Enforcement proceedings

Complaints and investigations 44.09Authorization proceedings 44.10Proceedings before the NZCC 44.11Interim relief 44.12


D. AppealsAppeals against decisions of the NZCC and the High Court 44.17

Section 2 Mergers

I. Substantive rulesConcept of concentration 44.18Control criteria 44.19


The New Zealand Commerce Commission 44.20The courts 44.21


Informal clearance 44.23Authorization 44.24


D. AppealsAppeals against decisions of the NZCC 44.27

New ZealaNd

480

44.02. ScopeThe expressed purpose of the Commerce Act is to promote competition for the long-term benefit

of consumers within New Zealand. The Commerce Act covers anticompetitive conduct in markets within New Zealand and overseas business activities to the extent that New Zealand markets are affected. In particular it:

- prohibits the establishment or operation of business arrangements which substantially lessen competition (Section 27);

- prohibits arrangements between competing undertakings containing exclusionary provisions (Section 29);

- prohibits price fixing agreements between competing undertakings (Section 30);- prohibits undertakings from taking advantage of a substantial degree of market power for anti-

competitive purposes (Section 36);- prohibits resale price maintenance by suppliers (Section 37);- provides for price control in markets where there is an absence of competition (Section 52 et seq.). In addition, the Act regulates access to essential facilities such as electricity (Section 54 et seq.) and

gas (Section 55 et seq.). The Crown is subject to the provisions of the Act to the extent that it engages in trade (Section 5); however, it is not liable for pecuniary penalties.


44.03. the prohibitionSection 27 of the Commerce Act sets out a general prohibition concerning “arrangements” if they

have purpose, effect or likely effect to substantially lessening competition on the market. Specific behavior is prohibited in subsequent Sections of the Act. Such is the case of collective boycotts, described as the entering into agreements with competing undertakings containing exclusionary provisions, either by refusing to buy or to sell to a competitor. Resale price maintenance is prohibited under Sections 37 and 38. With regard to price suggestions, a supplier must be clear that there is no obligation to comply with recommended prices (Section 39). New Zealand’s Commerce Act does not include any specific counterpart to the prohibition set out under Australian law on exclusive dealing but this behavior is likely to be covered by the general prohibition in Section 27.

However Section 30 specifically prohibits per se agreements fixing, controlling or maintaining prices for goods or services, which encompasses market sharing and bid rigging.

44.04. ExemptionsAn individual wishing to enter into an agreement that might be prohibited under Sections 27, 28,

29, 37 or 38 may apply to the Commission for authorization pursuant to Section 58. Authorization is appropriate where the Commission is satisfied that under all the circumstances a benefit to the public will result which will outweigh the lessening of competition brought about by the agreement. The granting of an authorization has the effect of protecting the undertaking concerned from any action stemming from the Act, either by the Commission or by private parties. The Amendment Bill under scrutiny, if adopted, will provide for a clearance system allowing undertakings to notify their agree-ments to the Commerce Commission before entering them.

In addition to such individual exemptions, agreements that are excluded from coverage under the Act are listed in Section 44. These include, inter alia, agreements establishing standards, employ-ment agreements, agreements relating exclusively to exports or between partners or interconnected corporate bodies. There is also a separately established exemption relating to intellectual property rights (Section 45). Finally, there are partial exemptions from the price-fixing prohibition set out in Article 30 in favor of recommended prices (Section 32), joint buying or advertising arrangements (Section 33) and joint ventures (Section 31).


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44.05. taking advantage of Market PowerPrior to the May 2001 amendments to the Commerce Act, Section 36 of the Act prohibited the

“use of a dominant position in the market” to prevent or eliminate competition. The amended Act now prohibits “taking advantage” of a “substantial degree of power in a market.” These changes in the Act bring it into line with Australian law and clearly lower the threshold for behavior coming within the prohibition.

The prohibition covers: (a) restricting the entry of a person into a market; (b) preventing a person from engaging in competitive conduct in a market; or (c) eliminating a person from a market.

D. Unfair practices

44.06. ScopePreventing the supply of goods, including providing goods on terms that are less favorable than

those offered to other purchasers, is prohibited under Section 41. As with restrictive agreements, parties can seek authorization from the Commission regarding otherwise prohibited restrictive trade practices. In addition to the Commerce Act, the New Zealand Commerce Commission also admi-nisters the Fair Trading Act 1986, dealing with misleading advertising and product standards.

ii. Enforcement


44.07. the new Zealand Commerce Commission (nZCC)The New Zealand Commerce Commission is charged with enforcing the Commerce Act. It

is composed of four to six members. No less than 3 and no more than 5 of the members must be appointed by the Governor-General, on recommendation of the Minister. One of the members must be appointed by the Governor-General as Telecommunications Commissioner.

The Commission has authority to issue warnings and cease and desist orders, negotiate settle-ments or seek an order from the court for damages, injunctive relief or divestiture. The Commission is entitled to intervene in private enforcement actions but there is no provision for the Commission to bring representative actions on behalf of consumer groups.

44.08. the courtsPrivate enforcement actions for damages or injunctive relief are available for violations of the res-

trictive trade practices provisions of the Commerce Act. Class action suits are permitted but few, if any, have been brought under the Commerce Act.

Proceedings for the recovery of pecuniary penalties, applications for injunctions and action for damages are heard by the High Court.


44.09. Complaints and investigationsMost cases are opened by a leniency application. The NZCC defined the criteria according to

which it will exercise its discretionary assessment on whether or not to open an investigation. Such decision depends on: i) the extent of detriment arising from the conduct at stake; ii) the seriousness

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482

of the conduct; and iii) the public interest. When carrying out inquiries, the Commission may issue written notices requiring information or specific documents to be supplied within a certain prescri-bed period or a person to appear before the Commission to give oral or written evidence or produce specified information (Section 98).

Further, the Commission may apply to the court for a warrant to search premises and seize and remove goods, documents, computer records and other items (Section 98 et seq.). Under Section 98E, the occupier or person in charge of the premises searched must assist the Commission in executing the warrant.

44.10. authorization proceedingsSection 60 et seq. outlines the procedure for investigating an application for authorization of an

otherwise restricted trade practice. The Commission maintains a register of applications for authori-zation. In making its investigation, the Commission considers submissions made to it by the appli-cant or any other person. A draft determination is provided to the applicant and other interested parties. The recipients of the draft determination are permitted, within 10 days of receipt, to seek a pre-decision conference, to be held not later than twenty days thereafter. The Commission then makes a determination in writing, granting or declining the application, and setting forth its reasons. Authorization may be revoked if there is a material change in circumstances or there has not been compliance with a condition of authorization.

44.11. Proceedings before the nZCCAfter carrying out an investigation, the NZCC has a number of potential remedies, for example

handing the parties a compliance advice letter in the case of a possible but not serious harm to com-petition, giving warnings, settling the case, issuing cease and desist orders or seeking an enforcement action through the courts (inter alia, injunctions and/or pecuniary penalties). In deciding which remedy to apply, the Commission uses the same assessment criteria as those implemented for deter-mining whether or not to launch investigations.

Under the 2001 amendments to the Commerce Act the NZCC may take cease and desist orders. The Act provides for two lawyers to be appointed to the Commission for the sole purpose of hearing and determining applications for cease and desist orders granted pursuant to Sections 74A to 74C. Such orders may be issued only after serving of notice and an opportunity to be heard is given the parties concerned.

The recipient has an opportunity to access relevant information held by the Commission and make written submissions. The recipient may choose to consent to the terms of the proposed order or having the matter decided following the holding of a hearing. If a hearing is held, the person against whom an order is sought has an opportunity to appear and give evidence, cross-examine witnesses and be represented by counsel.

44.12. interim reliefWhere necessary, the Commission may seek an injunction from the High Court. The Court may order

an interim injunction restraining a person from engaging in conduct infringing the Commerce Act pen-ding a full hearing of the case (Section 88) and in this respect, must consider the interests of consumers.

C. Sanctions

44.13. Cease and desist ordersUnder Section 74B, a cease and desist order may only be awarded, by a Cease and desist

Commissioner where, i) after investigating an alleged offense, a Commission staff member submits a report recommending that a cease and desist order should be sought; ii) the Commission agrees


483

with such recommendation and iii) the person against whom it is sought is notified in writing of the nature of the alleged offense, the terms of the proposed order and the reasons behind its adoption.

The effect of a cease and desist order is to restrain conduct for any period and on any terms that are specified in the order. A cease and desist order may require a person to do something only if the Commissioner is satisfied that restraining the person from engaging in the conduct will not restore competition, or the potential for competition, in a market.

44.14. FinesThe High Court has the authority to impose fines for violations of any provision of Part II of the

Act dealing with anticompetitive practices (Section 80). After the 2001 modifications, violations of Part II of the Act by a corporation may be punished by exemplary damages of either three times the amount of the unlawful gain, if ascertainable, or 10% of annual turnover, up to a maximum of NZ$10 million (US$ 8,1 million). The 2001 modifications also prohibit a corporate entity from indemnifying an individual for anticompetitive activity. The breach of a cease and desist order of the Commission is punishable by a fine of up to NZ$ 500,000 (US$ 406,000).

44.15. Criminal sanctionsNew Zealand’s Commerce Act does not yet provide for criminal sanctions. However, an

Amendment Bill currently under scrutiny proposes to introduce such sanctions for hardcore cartel activities to put New Zealand law in line with Australian Law. The Bill includes, in order to ensure legal certainty for undertakings, provisions giving a clearer definition of the scope of the prohibition and of exemptions.

44.16. LeniencyThe Commerce Act does not contain any provision for leniency. However, the Commission has

issued guidelines providing that in its discretion it may seek lower penalties or take no enforcement action against individuals who cooperate fully with the NZCC.

Immunity is granted to the first member of a cartel to approach the Commission and provide information establishing a breach of the Act, identifying the parties involved and detailing the ope-rating mode of the cartel and how it affects consumers. The applicant must continue to provide information and cooperate with the Commission throughout the investigation and any court procee-dings. Immunity, however, does not prevent third parties for bringing an action for damages.

Full cooperation by other cartel members is rewarded by a lower level of enforcement action from the Commission or a lower level of penalty being recommended to the court.

Finally, under the “Amnesty Plus” program, a cartel member not eligible for immunity in relation to a specific cartel, may be eligible for “Amnesty Plus” if it reveals its involvement in another cartel that the Commission was unaware of. Eligibility to “Amnesty Plus” means immunity from fines related to the second cartel and a recommendation for a lower level of penalty in relation to the first cartel.

D. appeals

44.17. appeals against decisions of the nZCC and the high CourtDecisions of the NZCC can be appealed to the High Court. Appeals against High Court deci-

sions are heard by the Court of Appeal.

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Section 2 MERGERS


44.18. Concept of concentration Section 47 extends to all acquisitions of shares or assets regardless of the size of the transaction.

The term “assets” is defined broadly and, according to the 2003 Guidelines includes goodwill; patent rights and other intellectual property; contractual rights, such as options, franchises or some mana-gement contracts; operational know-how; and customer lists.

44.19. Control criteriaInitially, Section 47 of the Commerce Act prohibited mergers and acquisitions to the extent that

such acquisitions created or strengthened a dominant position in the market. As amended in 2001, the current standard for determining whether a merger or acquisition is prohibited is whether it substantially lessens competition in a market. Further guidance is available from the Commission’s Mergers and Acquisitions Guidelines of 2003, supplemented by the Clearance Process Guidelines of 14 July 2010, the Guidelines on Divestment Remedies of June 2010 and the Guidelines on Failing Firms of October 2009. The New Zealand Parliament has expressed the desire that the interpreta-tion of Section 47 mirror that of Section 50 of the Australian Trade Practices Act.

Despite the absence of thresholds in the Commerce Act, the Commission Guidelines of 2003 developed a “safe harbor” according to which a transaction is not likely to substantially lessen com-petition where:

- the concentration ratio of the top three firms is below 70% and the market share of the merged entity is below 40%;

- the concentration ratio of the top three firms is above 70% and the market share of the merged entity should not exceed 20%.

In determining the relevant market, the Commission takes into account five dimensions: product dimension, functional level, geographic scope, customer dimension and temporal dimension. Both demand side and supply side factors are generally considered.

Having defined the relevant market, the Commission then examines the market share of existing competitors. When evaluating anticompetitive effect the Commission will look to factors such as actual and potential competition to see whether it is a sufficient constraint on market power. The Commission also examines other competition factors such as the elimination of a vigorous and effective competitor; the countervailing power of buyers or suppliers; and the scope for efficiencies.

If the Commission concludes that a merger that substantially lessens competition is likely to generate public benefits that will outweigh any anticompetitive detriment, it has the authority to authorize the merger.

ii. Enforcement


44.20. the new Zealand Commerce CommissionThe NZCC is responsible for administering the Commerce Act, including the provisions relating

to mergers and acquisitions. Requests for clearance or authorization of an acquisition are made to the Commission.


485

44.21. the courtsUnder New Zealand’s Merger and Acquisitions regime, private parties can sue to prohibit a

merger they deem to substantially lessen competition. Parties’ submissions are also welcome where the Commission makes public an application for clearance or authorization. However, only the Commission is entitled to seek divestiture.


44.22. Merger notificationNew Zealand has a voluntary pre-merger notification methodology. Parties are permitted but not

required to lodge a notice with the Commission seeking either clearance or authorization.Filing fees are set at NZ$ 2,000 (US$ 1,620) for clearance and NZ$ 20,000 (US$ 16,200) for

authorization.

44.23. informal clearanceUnder Section 66, clearance may be granted where the Commission is satisfied that the proposed

transaction would not have, or would not be likely to have, the effect of substantially lessening com-petition in a market. Section 68 requires applicants for clearance to furnish information requested by the Commission and entitles the latter to consult with any person able to assist in making a determi-nation. Before making a final decision, the Commission may hold a conference after giving notice to persons entitled to attend (Section 69B). An application for clearance pursuant to Section 66 is to be resolved within 10 working days from receipt of the official notification, although the Commission and the parties may agree on a longer deadline.

44.24. authorizationUnder Section 67, the Commission may grant an authorization for an acquisition that may result

in a substantial lessening of competition, where the public benefits resulting from the transaction outweigh the detriments it causes. The Commission should give or decline authorization within 60 working days or more if the Commission and the parties agree on a longer deadline.


44.25. Conditions and commitments - DivestitureUnder Section 69A of the Act, the Commission may accept undertakings from applicants in

respect of the clearance or authorization of a business acquisition. Only structural divestment under-takings may be offered. They must be sufficient to remedy the competition concerns raised by the proposed acquisition while also allowing the merger to proceed with its potential benefits and effi-ciencies. Non observance of an undertaking leads the clearance or authorization to be declared void and of no effect (Section 69AB). The Commission may seek divestiture before the courts.

44.26. Fines Engaging in a merger that is prohibited under Section 47 is punishable by a fine up to NZ$ 500,000

(US$ 405,650) for an individual and NZ$ 5 million (US$ 4 million) for a corporate entity (Section 83). Proceedings may be commenced within 3 years after the matter giving rise to the contravention arose.

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D. appeals

44.27. appeals against decisions of the nZCCDecisions of the Commission pursuant to Section 47 can be appealed to the High Court. On

appeal from a Commission determination, the High Court may either (a) confirm, modify, or reverse the determination or any part of it; (b) exercise any of the powers that could have been exercised by the Commission in relation to the matter to which the appeal relates (Section 93). The Court may also refer appeals back to the Commission and have it reconsider, either generally or in respect of any specified matters, the whole or any specified part of the matter to which the appeal relates (Section 94). Appeals against decisions of the High Court may be lodged before the Court of Appeal.


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ChaPtEr 45

nOrWay




45.01. ContextIn Norway two parallel sets of antitrust laws apply:- Act No 12 of 5 March 2004 on competition between undertakings and control of concentra-

tions, (“the Competition Act”); and- the competition rules of the Agreement on the European Economic Area (EEA Agreement) of

1 January 1994, implemented through Act No 11 of 5 March 2004 (“the EEA Competition Act”). The relationship between national and EEA law is the same as that between EU competition

rules and Member States competition laws. Thus, as regards the Norwegian national market, the applicable competition law will normally be Act No 12. For EEA competition rules to apply there must be an appreciable effect on competition and cross-border trade within the EEA. In the event of a conflict between the Norwegian Competition Act and the EEA rules, the latter take precedence. The Norwegian Competition Authority has the power to apply Articles 53 and 54 EEA (which are a







The Norwegian Competition Authority 45.06The King and the Ministry of Government Administration 45.07

B. Enforcement proceedings Complaints and investigations 45.08Proceedings before the NCA 45.09Interim relief 45.10Enforcement by ordinary courts 45.11


D. AppealsAppeals against decisions of the NCA 45.16

Section 2 Mergers




Proceedings before the NCA 45.22B. Conditions/Sanctions


C. AppealsAppeals against decisions of the NCA 45.25

Norway

488

carbon copy of Articles 101(1) and 102 of the TFEU) since the EEA Competition Act of 2004. For an overview of the EEA rules, please refer to the commentary regarding Liechtenstein.

Norwegian law is partly harmonized with EU competition rules, and basically seeks to control the same types of anticompetitive conduct.

Finally, an agreement between Denmark, Iceland and Norway on cooperation in competition cases came into effect on 1 April 2001 (Sweden joined in 2003). Pursuant to the agreement, the parties will provide each other with confidential and non-confidential information for the purpose of achieving more effective enforcement of the four countries national competition legislation.

45.02. ScopeThe Norwegian Competition Act applies to all agreements, actions and practices that are capable

of affecting the Norwegian market regardless of whether the participating undertakings are based in Norway or abroad (Section 5) Further, pursuant to Section 2, the Act applies to all kinds of commer-cial activity, irrespective of whether it is carried out by private or public bodies.


45.03. the prohibitionThe Competition Act explicitly prohibits all agreements, decisions, and concerted practices

between competitors which:- directly or indirectly fix purchase or selling prices or any trading conditions (Section 10-a); - limit or control production, markets, technical development, or investment (Section 10-b); - share markets or sources of supply (Section 10-c); - apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing

them at a competitive disadvantage (Section 10-d); or- make the conclusion of contracts subject to acceptance by the other parties of supplementary

obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts (Section 10-e).

The Competition Authority applies a de minimis exclusion. As there is no de minimis notice in Norway, the Authority typically uses the European Commission’s notice to assess whether there is an appreciable restriction or effect on competition.

According to Section 10 of the Competition Act, agreements that infringe its prohibitions are automatically void.

45.04. ExemptionsPursuant to Section 10 of the Competition Act, the Norwegian Competition Authority (NCA)

may grant an individual exemption where the agreement, decision, or concerted practice contributes to improving the production or distribution of goods or to promoting technical or economic progress.

To benefit from this exception a fair share of the resulting benefit must be passed to consumers, the restriction must be indispensible to the attainment of these objectives, and the concerned under-takings must not have the possibility of eliminating competition in respect of a substantial part of the products in question.

Pursuant to Section 3 of the Competition Act, the King may by regulation exempt certain mar-kets or industries from the prohibition contained in the Competition Act (block exemptions). Block exemptions have been adopted for vertical agreements, specialization agreements, vertical agree-ments and concerted practices in the motor vehicle sector, research and development agreements, insurance agreements, and technology transfer agreements.


489


45.05. abuse of a dominant positionAbuses of a dominant position are explicitly prohibited under Section 11 of the Competition Act.Such abuse may consist in:- directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions

(Section 11-a);- limiting production, markets or technical development to the prejudice of consumers (Section

11-b);- applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage (Section 11-c); and- making the conclusion of contracts subject to acceptance by the other parties of supplementary

obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts (Section 11-d).

ii. Enforcement


45.06. the norwegian Competition authorityIn Norway, the duty to ensure that undertakings comply with the Competition Act lies primarily

with the Competition Authority. According to Section 9 of the Norwegian Competition Act, the Authority is in charge to supervizing competition in the various markets which involves the fol-lowing responsibilities:

- to ensure adherence to the prohibitions and orders of the Act (Section 9-a);- to implement measures to promote market transparency (Section 9-c);- to enforce Articles 53 and 54 of the EEA Agreement (Section 9-d); and- to call attention to any restrictive effects on competition of public measures (Section 9-e).The Competition Authority must also provide guidance to undertakings as to the interpretation

of the Competition Act.

45.07. the King and the Ministry of Government administrationThe Competition Act also gives the King and the Ministry of Government Administration,

Reform and Church Affairs a significant role in competition matters. Pursuant to Section 8, the King may issue specific provisions regarding the organization and activities of the Competition Authority, and may order the Competition Authority to deal with a case. Pursuant to Section 14 the King may also, if necessary to promote competition in the markets, intervene by regulation against terms of business, agreements or actions that restrict or a liable to restrict competition.

As regards the Ministry of Government Administration, Reform and Church Affairs, it is ultima-tely responsible for the Competition Authority and decisions of the Authority are appealed before it.


45.08. Complaints and investigationsThird parties can submit a complaint and the NCA can initiate an investigation on its own initiative.

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Under Chapter 6 of the Competition Act, the NCA is given wide powers of investigation. Parties under investigation are required to give the information demanded of them either in oral or in writ-ten form. According to Section 24, the Authority may require any type of information to be handed over to it and access to sources of such information. This information must be surrendered irrespec-tive of the duty of confidentiality.

Pursuant to Section 25, the officers of the Authority may, subject to a court decision, carry out a dawn raid on a company’s premises, employees’ residences, and other places of keeping where evi-dence of infringement may be found.

During the dawn raid, the Authority has the power to confiscate items that may have significance as evidence for further examination, and to seal business premises, books, or business documents as long as is deemed necessary.

The Authority may demand police assistance.The King may issue specific provisions as regards the duty to provide information and the conduct

of investigations.

45.09. Proceedings before the nCaWhen dealing with behavior coming within the Section 3-10 prohibition, the NCA will issue

a letter setting out its intention to intervene along with the facts of the case and its economic and legal assessment of the matter. The parties to the alleged anticompetitive behavior are then given a period of time within which to comment on the Competition Authority’s analysis. Thereafter, the Competition Authority will adopt a decision as regards the anticompetitive nature of the behavior.

45.10. interim reliefThe NCA may under certain conditions order interim measures provided that there are reasonable

grounds to assume that Section 10 or Section 11 have been infringed.

45.11. Enforcement by ordinary courtsThird parties that have suffered economic loss due to a prohibited collusion between undertakings

may sue the said undertakings for damages in court.

C. Sanctions

45.12. Cease and desist ordersAccording to Section 12, the NCA can adopt orders imposing a prohibition as regards conduct

coming within the scope of the section.

45.13. FinesPursuant to Section 28 of the Competition Act, the NCA may determine that the undertaking

against which a decision or an order is directed shall pay a periodic penalty to the State until the anticompetitive situation has been rectified.

According to Section 29, an administrative fine may be imposed by the NCA if an undertaking or an association of undertaking, intentionally or negligently:

- infringes a provision of the Competition Act (Section 28–a); - infringes a decision or an order made pursuant to the Competition Act (Section 28-a and b); - provides incorrect or incomplete information to the competition authorities (Section 28–d); - breaks seals made during inspections (Section 28-e);


491

- infringes a regulation adopted to promote competition (Section 28-f ); or- contributes to such infringements (Section 28-g).Fines are ordered by the Authority. In determining their amount, the Authority takes into account

the turnover of the undertaking, the gravity and duration of the infringement. Section 31 of the Competition Act also specifies that the Authority must give consideration as to whether the under-taking concerned has assisted the competition authorities in the detection of its own infringements or those of others.

The ceiling of administrative fines has been fixed in the Regulation on the calculation of and leniency from administrative fines of 22 August 2004 to 10 percent of the undertaking’s worldwide turnover.

45.14. LeniencyUnder Section 4 of the Regulation on the calculation of and leniency from administrative fines

of 22 August 2004, an undertaking party to a restrictive agreement may be fully exempted from the imposition of fines where it is the first to provide, on its own initiative, evidence that is sufficient to:

- acquire a court order to secure evidence in connection with the infringement, at a time where the Authority is not in possession of sufficient evidence to be able to acquire such an order, or

- prove the infringement, at a time where the Authority is not in possession of sufficient evidence to prove such infringement.

This full immunity is however subject to: - full cooperation of the undertaking with the Authority, including providing all evidence that is

known to the undertaking and answering any question or inquiry the Authority has in connection with the infringement ;

- the undertaking ending its participation in the infringement at the latest when the evidence is submitted; and

- the undertaking having not sought to coerce other undertakings to participate in the infringement.Partial leniency may be granted under Section 6 of the Regulation where an undertaking submits

evidence that significantly strengthens the Competition Authority’s ability to establish an infringe-ment of Section 10 of the Act, and ends its participation in the infringement no later than when the evidence is submitted.

45.15. Criminal sanctionsUndertakings which fail to comply with the provisions of the Competition Act or decisions or or-

ders of the Competition Authority adopted thereunder, provide incorrect or incomplete information, break seals made during inspections, or which infringe a regulation adopted to promote competition may be held criminally liable. Companies may be fined while natural persons may be imprisoned for up to three years (Section 30). Imprisonment may be increased to six years in the case of agreements restricting competition where ‘aggravating circumstances’ are found to exist. When deciding whether aggravating circumstances exist, the court will consider the significance of the damage suffered, the anticipated profit resulting from the infringement, the seriousness of the infringement, and whether there was an attempt to conceal the infringement.

In determining the amount of the criminal fine, Section 31 of the Competition Act specifies that the Authority must give consideration as to whether the undertaking concerned has assisted the competition authorities in the detection of its own infringements or those of others.

Contributory infringements may also be sanctioned by criminal sanctions.

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D. appeals

45.16. appeals against decisions of the nCaIndividual decisions of the NCA may be appealed to the Ministry of Government Administration,

Reform and Church Affairs.Decisions as to administrative fines may not be appealed.

Section 2 MERGERS


45.17. ContextIn Norway, merger and acquisitions are subject to two parallel sets of rules:- Act No 12 of 5 March 2004 on competition between undertakings and control of concentra-

tions; and- Regulation on the notification of concentrations, adopted by the Ministry of Labor and

Government Administration on 28 April 2004, (‘the Regulation’).The Norwegian merger rules apply to acquisitions occurring within Norway and also to foreign

transactions producing an effect on the Norwegian market. However, where an operation has an EU or EEA dimension, control by the Norwegian authorities is restricted by reference to the one-stop-shop principle.

45.18. Concept of concentrationA concentration is defined in Section 17 as (i) a merger of two or more previously independent

undertakings or part of undertakings, (ii) the acquisition by one or more persons that already control at least one undertaking, or several undertakings, of the direct or indirect control on a lasting basis of the whole or parts of one or more other undertakings, or (iii) the creation of a joint venture perfor-ming on a lasting basis all the functions of an autonomous economic entity.

45.19. thresholdsAccording to Section 2 of the Regulation, a concentration or acquisition must be notified where: - the combined annual turnover in Norway of the undertakings concerned is more than NOK 50

million (EUR 6,8 million); and- each of the undertakings concerned has an annual turnover in Norway of NOK 20 million (EUR

2,7 million).

45.20. Control criteriaSection 16 of the Competition Act establishes a two-step test for the control of concentrations,

according to which the NCA has to consider:- whether the proposed concentration will result in or strengthen a significant restriction of com-

petition; and then- whether these negative effects are necessary to the implementation of the concentration or ac-

quisition.Such control will however not apply where there is a well functioning Nordic or European market

and the concentration or acquisition does not adversely affect Norwegian customers.


493

According to the Competition Authority’s Merger Guidelines, such control will usually also be avoided where the merged entity obtains a market share under 40% or where the market share of the three largest market players, including the undertakings concerned, does not exceed 60%.

The Competition Act also gives the King and the Ministry of Government Administration, Reform and Church Affairs a significant role. The King may issue specific provisions regarding the scope of the merger rules and may approve a concentration that the Competition Authority has in-tervened against, in cases involving questions or principle or interests of major significance to society.

ii. Enforcement


45.21. Merger notificationThe parties must inform the NCA by way of a standardized notification, which must include (i)

the names and addresses of the parties concerned, (ii) information on the nature of the concentra-tion, (iii) a description of the undertakings concerned and of the undertakings in the same corporate group, and their areas of activity, (iv) a description of the markets in which the undertakings concer-ned and the undertakings in the same corporate group will obtain combined market shares exceeding 20 percent as a result of the concentration, (v) the names of the five most important competitors, customers, and suppliers in these markets, and (vi) the annual reports and annual accounts of the undertakings concerned and of the undertakings in the same corporate group.

45.22. Proceedings before the nCaAccording to Section 18 of the Competition Act, within 15 working days after receipt of a stan-

dardized notification, the NCA must decide whether to order the submission of a complete notifica-tion. The transaction is automatically cleared if no such order is received within this period.

After the submission of a complete notification, under Section 20, the Authority must notify the parties within 25 working days of its intention to intervene (first-phase investigation). The transac-tion is automatically cleared if such a notification is not received within this period.

Within 70 working days after receipt of a complete notification, the Authority must present the parties with a preliminary decision on intervention (second-phase investigation). The parties must reply to this decision within 15 working days. After receipt of the parties’ reply, the Authority has 15 working days to decide whether it will intervene. This deadline is extended to 25 working days if an offer of commitments has been submitted by the parties.

According to Section 19 of the Competition Act, a concentration may not be implemented before the deadline to order submission of a complete notification has expired, or, where such a notification has been submitted, before the Authority has notified the parties of its intention not to intervene.


45.23. Conditions and commitments - DivestiturePursuant to Section 16, the Competition Authority, when intervening in a merger, may:- prohibit the concentration or the acquisition;- subject the acquisition to the disposal of stocks or shares; or- subject the acquisition to such conditions as are necessary to counteract any restrictions on com-

petition resulting from the merger.

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45.24. FinesThe failure to comply with orders of the Competition Authority and violations of the Act are pu-

nished by penalties and criminal sanctions similar to the ones imposed for anticompetitive practices.

C. appeals

45.25. appeals against decisions of the nCaDecisions of the Competition Authority in relation to concentrations may be appealed to the

Ministry of Government Administration, Reform and Church Affairs within 15 working days of the decision.


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ChaPtEr 46

rUSSia




46.01. ContextRussian competition law is not directly modeled on the law of any other single jurisdiction. It

contains several rather unusual provisions, some of which were designed to meet the special concerns raised by Russia’s early stage of economic transition in 1991, when the law on competition was passed. The competition process in Russia is governed by the Federal Law of the Russian Federation No 135-FZ of 16 July 2006 “On Protection of Competition”. The “Third Antimonopoly Package (TAP)” which introduced amendments to the competition legislation entered into force on January 2012. The Federal Antimonopoly Service (FAS) is in charge of the enforcement of the Law on the Protection of Competition (LPC).

46.02. ScopeThe LPC applies to relations which are connected with the protection of competition and in

which Russian and foreign persons are involved. Its provisions are applicable to the agreements








The Federal Antimonopoly Service (FAS) 46.07B. Enforcement proceedings

Complaints and investigations 46.08Proceedings before the FAS 46.09Interim relief 46.10


D. AppealsAppeals against decisions of the FAS 46.15

Section 2 Mergers




Proceedings before the FAS 46.21B. Conditions / Sanctions


C. AppealsAppeals against decisions of the FAS 46.24

Russia

496

between Russian and (or) foreign persons or any actions if such agreements or actions affect the state of competition in the Russian Federation.

The LPC determines organizational and legal basis for protection of competition including pre-vention and restriction of:

- monopolistic activity and unfair competition;- prevention, restriction, elimination of competition by federal executive authorities, public autho-

rities or the subjects of the Russian Federation, bodies of local self-government, other bodies or orga-nizations exercising the functions of the above-mentioned bodies, as well as public extra-budgetary funds or the Central Bank of the Russian Federation.


46.03. the prohibitionSections 11 and 12 prohibit all agreements or concerted actions of economic entities that result or

may result in restricting competition. This prohibition includes horizontal agreements between com-peting economic entities (cartels), vertical agreements or any other agreements that lessen competi-tion on the market. The TAP encompasses under the term “cartel” an unlawful agreement between competitors in the market and envisages a non comprehensive list of absolute prohibitions that will constitute a cartel. It may consist in fixing or maintaining prices; dividing the goods market accor-ding to geographic principle or quantity of sales; increasing, reducing or maintaining prices in the course of competitive bidding; reducing production of the goods; refusing to conclude contracts with particular sellers or buyers. Cartels are unlawful per se and there is no need to prove their negative impact on competition. With regard to vertical agreements it is forbidden to fix reselling prices, except if the seller fixes the maximum reselling price of the goods for a buyer, or to preclude buyers from selling the goods of an economic entity that is a competitor of the seller.

46.04. ExemptionsUnder Section 13 of Chapter 2, restrictive agreements and concerted actions may be recognized as

permissible where they do not create the opportunity to eliminate competition in the relevant goods market, do not impose restrictions upon third parties, and also where they result or may result in:

- perfection of production, sale of goods or stimulation of technical, economic progress or rising the competitive capacity of Russian goods in the world market;

- benefits for consumers which are proportionate to the benefits obtained by the economic entities.The Government of the Russian Federation has the right to determine the cases where agreements

and concerted practices meeting the conditions stated above are authorized. General exemptions are defined by the Government of the Russian Federation on proposal of the FAS. The TAP does not allow for the possibility to apply for an individual exemption for such practices.

The TAP introduces an important novelty: some but not all intra-group agreements are exempted from the prohibitions established for anticompetitive agreements and actions.


46.05. abuse of a dominant positionSection 5 of Chapter 1 of the LPC gives a precise definition of the dominant position on a market.

According to the Section 5(1), a dominant position allows an undertaking or group of undertakings the opportunity to have a decisive impact on the general conditions of commodity circulation in the relevant goods market and/or to remove other undertakings from this goods market and/or to impede access to this goods market for the other undertaking. A dominant position is established where one undertaking holds a market share of:


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1) more than 50% except if the undertaking proves, in the course of proceedings, that such share does not confer on it a dominant position;

2) less than 50% where the FAS establishes that such share confers a dominant position on the undertaking due, inter alia, to the stability of its share compared to that of its competitors or oppor-tunities for access to the concerned goods market of new competitors.

Conversely, Section 5(2) sets a presumption that there is no dominant position where the under-taking’s market share does not exceed 35%. Such presumption may however be reversed where very specific conditions are satisfied, state at Sections 5(3) and (6).

Section 5(7) also special rules for determining the possible dominant position of financial organi-zations (excluding credit organizations).

Section 10 of Chapter 2 prohibits the abuse of dominant position by an economic entity that aims to prevent, restrict or eliminate competition.

The LPC provides a list of prohibitions: it covers for example the establishment and maintaining of monopolistically high or monopolistically low prices for a commodity, the withdrawal of goods from circulation, if the result of such withdrawal is to increase the price of the commodity or the imposition of contractual terms upon a counteragent which are unprofitable for the latter or not connected with the subject of agreement.

An economic entity can benefit from an exemption only for some specific actions. It has the right to provide evidence that its actions can be recognized as eligible to the exemption provided in Section 13 of Chapter 2.

D. Unfair practices

46.06. ScopeSection 2 of Chapter 2 of the LPC contains a non-comprehensive list of non-competitive prac-

tices that fall under the definition of “unfair competition”. These include dissemination of false, inac-curate, or distorted information, which can inflict losses on an economic entity or cause damage to its business reputation; misrepresentation concerning the nature, method, and place of manufacture, consumer characteristics, quality and quantity of a commodity or concerning its producers; incorrect comparison of the products of an economic entity with the products of other economic entities.

ii. Enforcement


46.07. the Federal antimonopoly Service (FaS)The FAS (central and territorial divisions) main function is to reveal violations of competition law,

to take measures to stop them and to account for such violations. Its powers consist in initiating and examining cases of violation of competition law and in issuing binding determinations to economic entities in cases stated by the LPC. For examination of each case of violation of the antimonopoly legislation, the antimonopoly body establishes a Commission. The Commission passes warnings, orders, decisions, and determinations.


46.08. Complaints and investigationsThe FAS may start an investigation or proceedings on its own initiative or on receiving informa-

tion from other State agencies, the media or third parties. To trigger an investigation, a third party

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(for example, a competitor, buyer or consumer) may file a complaint with the FAS for a violation of the LPC. The procedure for investigating a case is the same whether the FAS initiated proceedings on its own initiative or following a third party complaint. The FAS must review any complaint and/or supporting materials within one month of their submission and decide whether to initiate an action in relation to an alleged violation of the LPC.

When exercising control over compliance with the LPC, the FAS has a wide range of powers. It can, for example, conduct scheduled and unscheduled inspections (dawn raids) of undertakings, request and obtain all documents, explanations and information including commercial or trade se-crets and other privileged information, gain access to the undertakings’ premises.

46.09. Proceedings before the FaSUndertakings may submit drafts of certain types of agreements to the FAS for a compliance

review with the LPC. This notification process is broadly similar to that for mergers.The Commission established by the FAS must adopt a decision within three months, with a pos-

sible extension to six months, and may issue an injunction to eliminate breaches or perform other corrective actions.

The LPC is silent on the possibility of reaching a settlement without issuing an infringement de-cision during a FAS review of an alleged breach of competition law. However, the FAS can terminate proceedings in relation to a violation if the party responsible for the violation voluntarily eliminates the violation and rectifies its consequences.

The TAP introduced two new forms of control by the FAS: a preventive notice and a warning. A preventive notice is issued where no prohibited behavior has occurred yet but there is a statement made by a representative of the entity that it is planning to undertake a certain behavior which, in the view of the FAS, may lead to an anti-trust violation. A warning is issued in case of an existing behavior that may lead to an anti-trust violation. These new forms are not treated as official admi-nistrative liability. An administrative proceeding may be initiated by the FAS only if the entity did not react and there remain signs of an anti-trust violation.

46.10. interim reliefUnder Section 25(7) of the LPC, where an officer of an economic entity has made a statement

about proposed conduct that the FAS deems liable to be an infringement of the LPC and where there are no grounds to initiate and investigate a case on an antimonopoly violation, the FAS may send the entity a written warning on the prohibition of carrying out actions that can lead to a violation of the antimonopoly law. The decision to send a warning must be taken no later than ten days from the day when the FAS found out about the public statement made about the proposed conduct on a goods market. The warning must provide the conclusions about the grounds for sen-ding a warning and the LPC provisions that may be violated by the economic entity.

Likewise, pursuant to Section 39(1), the FAS may issue a written warning to an economic entity in a dominant position to stop actions or omissions that show signs of violating the LPC, to eliminate the causes and conditions facilitating the emergence of the violation and to take measures towards eliminating the consequences of it. The warning must include the conclusions on the grounds for issuing the warning, the provisions of the LPC that were violated by the actions or omissions of the person to whom the warning is issued and the list of actions aimed at stopping the violation, elimi-nating the causes and conditions that facilitated it, eliminating the consequences of the violation and providing a reasonable period for their execution.

The warning must be considered as mandatory by the person to whom it is addressed within the period specified therein. The period for compliance with the warning must be no less than ten days. The FAS must be informed about the implementation of the warning within three days from the day of expiry of the period set for compliance. If the warning is complied with, an antimonopoly case is not initiated and the person having complied is not subject to administrative liability for violating the


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antimonopoly law due to its elimination. Conversely, if the warning is not complied with within the established period where there are signs of violating the LPC, the FAS makes a decision to initiate proceedings for infringement.

C. Sanctions

46.11. Cease and desist ordersThe FAS can impose a variety of measures to bring infringements to an end, such as issuing bin-

ding instructions to undertakings, filing court claims or imposing administrative sanctions.

46.12. FinesEngaging in restrictive agreements and concerted actions, abuses of dominant position or unfair

competition is penalized with fines (payable by entities and individual officers). Fines payable by legal entities may range from 1 per cent to 15 per cent of the violator’s revenue from the sale of the relevant goods and services in the market where the violation has taken place. With regard to the abuse of a dominant position, the TAP introduced a differentiation between fixed administrative fines and turnover fines, depending on the consequences of the breach.

Mitigating and aggravating factors must be taken into account when calculating the amount of fine to be imposed. Fines must be paid within 30 days of the FAS decision coming into force.

46.13. LeniencyAn exemption from liability for agreements or concerted practices that restrict competition

was adopted in April 2007 which amended the Administrative Code. Recent amendments to the Administrative Code were made to encourage persons or entities to participate in the leniency pro-gram. The amendments clarify the list of persons or entities that may enjoy the leniency program as well as other conditions, such as the information that needs to be disclosed to the FAS.

Any person who voluntarily informs the FAS of an illegal agreement or a coordinated practice it has been a party to may gain full immunity against administrative liability if all of the following conditions are met:

- at the time, the FAS did not have any information about the violation;- the person refused to continue taking part in such an agreement or a coordinated practice;- the information and evidence supplied enabled the FAS to prove the offense.

46.14. Criminal sanctionsCriminal liability is applied only for cartels and repeated abuse of a dominant position. Section

178 of the Russian Criminal Code establishes criminal liability for company executives who are res-ponsible for restriction, limitation or elimination of competition through price-fixing, maintaining monopolistically high or low prices, market allocation, setting barriers to entry into the market or squeezing other participants out of the market, if such actions have caused damage in excess of RUB 1 million (US$ 30,900).

D. appeals

46.15. appeals against decisions of the FaSThe parties can appeal FAS decision and instruction to an arbitration court within three months

from the day when the decision was made or the instruction was issued. If an arbitration court ini-tiates proceedings on an appeal against a determination, execution of the determination of the FAS shall be suspended until the day when the judgment of the arbitration court comes into effect.

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Section 2 MERGERS


46.16. ContextThe essential source of the Russian merger control regime is the Federal Law of the Russian

Federation No 135-FZ of 16 July 2006 “On Protection of Competition”, as set out in Chapter 7. The Third Anti-monopoly Package (TAP), which was adopted in December 2011 and came into force in January 2012, introduced major amendments to the LPC.

Merger control requirements apply to certain transactions involving assets located in Russia, or shares of or rights relating to undertakings incorporated in Russia. They also apply to transactions concerning shares of or rights relating to foreign undertakings, if those undertakings have supplied products or services to Russia in an amount exceeding RUB 1 billion (US$ 30,9 million) in the calendar year preceding the transaction.

46.17. Concept of concentrationThe LPC provides a list of transactions subject to merger control. It also envisages special rules

for transactions concerning financial organizations. The following transactions require notification to the FAS:

- concerning Russian targets: acquisitions of more than 25%, 50% or 75% of voting shares of a joint stock company, or 33.3%, 50% or 66.6% participatory interest in a limited liability company; acquisitions of more than 20% of the production or intangible assets from another company; acqui-sitions of rights to determine the business activities of another company.

- concerning foreign targets: acquisitions of more than 50% of voting shares; acquisitions of rights to determine the foreign target’s business activities.

- concerning either Russian or foreign undertakings: mergers of companies or consolidation of se-veral companies; incorporation of a company by contribution of assets or shares in another company.

46.18. thresholdsTransactions subject to pre-merger control require that prior permission be obtained if any one of

the following threshold is met:- the aggregate value of assets of all companies in the acquirer’s group and the target’s group

exceeds RUB 7 billion (US$ 216 million), and of all companies in the target’s group exceeds RUB 250 million (US$ 7,720,000).

- the aggregate annual revenues of all companies in the acquirer’s group and the target’s group exceeds RUB 10 billion (US$ 309 million) and the aggregate book value on a worldwide basis of all companies in the target’s group exceeds RUB 250 million (US$ 7,720,000).

- any company in the acquirer’s or the target’s group is recorded in the Russian register of domi-nant businesses and businesses with a market share exceeding 35% (Register).

A post-completion notification may be required if the above thresholds are not met but both:- the aggregate value of assets, or the aggregate turnover of the groups above, exceeds RUB 400

million (US$ 12,355,000).- the aggregate value of assets of the target’s group exceeds RUB 60 million (US$ 1,854,000).Specific thresholds apply to financial institutions and insurance companies, and natural monopolies.


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46.19. Control criteriaIn assessing the concentration the FAS will consider whether the transaction leads or may lead to

a restriction of competition including by creating or strengthening a dominant position. The contri-bution to economic efficiency is taken into account.

ii. Enforcement


46.20. Merger notificationThere are two forms of notification, a pre-merger filing and a post-completion notification. There

are no specific time-limits to file for prior approval. However, a transaction must be notified and cleared before closing and a clearance is valid for a period of 12 months. Post-closing notifications must be filed within 45 days of the completion of the transaction. A special decree of the FAS pro-vides for the form of the notification.

Once the clearance is granted, the FAS must normally consider a notification and issue a written decision within one month of receiving the notification. If the FAS finds that the transaction may lead to a restriction of competition, it may extend the review by two additional months and request additional information and documents and in that case, information on the case is published on its website. The FAS may also extend the deadline by imposing certain conditions to be fulfilled within a maximum of nine months, after completion of which the FAS takes a final decision on the transac-tion. If after the first 10 days following submission of a notification the FAS has not returned it, the notification is considered as complete and accepted by the FAS. If the review period is expired and the FAS has not made any decision, it does not mean that the transaction is automatically cleared.

For post-completion notifications there are no deadlines.Filing fees for pre-merger control are set at RUB 20,000 (US$ 618).

46.21. Proceedings before the FaSThe FAS has broad powers to obtain any useful information to determine whether the transaction

may lead to a restriction of competition or not. It may initiate and carry out scheduled or unsche-duled inspections, request additional information.

Third parties may be involved in the review procedure. Interested parties can find general infor-mation on pre-merger filings displayed by the FAS on its official website. They can then suggest any information or opinion about the impact of such transactions on competition in the Russian market.

Commercially sensitive information, which is confidential, must be handed to the FAS but is protected by special legislation against public disclosure. The FAS cannot disclose confidential infor-mation obtained while exercising its powers.

According to the Russian competition legislation, it is not possible to negotiate remedies with the FAS but in practice there is a possibility to discuss and cooperate with it during the filing review procedure. Some remedies may be adopted after the completion of the merger: they aim to promote competition; other remedies shall be enforced before the completion: they aim to eliminate the res-triction of competition that may occur if the transaction is completed.

The parties can refuse to meet the conditions issued by the FAS but if they engage in the proposed action without obtaining any consent, they might be liable to sanctions.

After reviewing an application, the FAS may:- approve the transaction without any limitations ;- approve the transaction and issue binding prescriptions imposing obligations on the parties with

the aim to promote competition ;

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- refuse the transaction.The consent given by the FAS for a special transaction is valid for one year.


46.22. Conditions and commitments – DivestitureThe FAS may issue binding instructions to undertakings.The FAS is the only authority that may bring a civil action in court to obtain the invalidation of

transactions if it proves that they may induce a restriction of competition. The mere fact of failing to submit an application cannot serve as a ground for the invalidation of a transaction. The invalidation can lead to the liquidation or the reorganization of the company.

46.23. FinesThe failure to provide an application can result in administrative fines: the FAS can impose fines

of up to RUB 500,000 (US$ 15,500) for legal entities and of up to 20,000 (US$ 620) for the chief executive officer for failure to file a pre/post completion notification.

C. appeals

46.24. appeals against decisions of the FaSDecisions of the FAS may be appealed in the court of arbitration within three months of their

issuance date.


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ChPatEr 47

SinGaPOrE




47.01. ContextEnacted in 2004, the Competition Act (“the Act”) provides a generic law to protect consumers

and businesses from anti-competitive practices of private entities. It also sets out the various powers and processes in the administering and enforcement of the Act. It is largely modeled on the UK Competition Act 1998. The objective of the Act is to promote the efficient functioning of Singapore’s markets and hence enhance the competitiveness of the economy.

47.02. ScopeThe Section 34 prohibition may apply even where the agreement is entered into, or where any

party to the agreement is located outside Singapore, so long as the agreement has as its object or effect the appreciable prevention, restriction of distortion of competition within Singapore.







The Competition Commission Singapore (CCS) 47.06

The Competition Appeal Board 47.07B. Enforcement proceedings

Complaints and investigations 47.08Proceedings before the CCS 47.09Interim relief 47.10Enforcement by ordinary courts 47.11


D. AppealsAppeals against decisions of the CCS 47.15Appeals against the CAB’s decisions 47.16

Section 2 Mergers

I. Substantive rulesContext 47.17Concept of concentration 47.18Control criteria 47.19



Proceedings before the CCS 47.21B. Conditions / Sanctions


C. AppealsAppeals against decisions of the CCS 47.24

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Activities relating to services of general economic interest or having the character of a revenue-producing monopoly or which already have sector-specific competition frameworks are excluded from the scope of the Act.


47.03. the prohibitionAgreements between undertakings, decisions by associations of undertakings or concerted prac-

tices which have as their object or effect the appreciable prevention, restriction or distortion of com-petition within Singapore will fall within the scope of the Section 34 prohibition.

Agreements involving price-fixing, bid-rigging, market sharing or output limitation are consi-dered per se to have an appreciable effect on competition. Section 34 does not apply to any vertical agreement other than specified by the Minister’s order.

Section 34(2) of the Act provides an illustrative but not exhaustive list of agreements which may be prohibited. These include:

- agreements which directly or indirectly fix purchase or selling prices or any other trading conditions; - agreements which limit or control production, markets, technical development or investment;- agreements which share markets or sources of supply; - agreements which apply dissimilar conditions to equivalent transactions with other trading par-

ties, thereby placing them at a competitive disadvantage; or- agreements which make the conclusion of contracts subject to acceptance by the other parties of

supplementary obligations which, by their nature or according to commercial usage, have no connec-tion with the subject of such contracts.

47.04. ExemptionsFollowing paragraph 9 of the Third Schedule, Section 34 does not apply to agreements which

contribute to economic progress without imposing restrictions which are not indispensable or giving the undertakings the possibility of eliminating competition. Parties may notify their agreements for decision or guidance (see United Kingdom). The Minister may also issue block exemption orders on recommendation of the Competition Commission.


47.05. abuse of a dominant positionSection 47 prohibits conduct on the part of one or more undertakings which amounts to the abuse

of a dominant position in any market in Singapore, unless such conduct falls within the exclusion in the Third Schedule. While the Section 47 prohibition does not prohibit undertakings from having a dominant position or striving to achieve it by offering cheaper or more innovative products, conduct that protects, enhances or perpetuates the dominant position in ways unrelated to competitive merit is prohibited.

Section 47(2) of the Act provides an illustrative but not exhaustive list of abuses of a dominant position:- predatory behavior towards competitors; - limiting production, markets, or technical development to the prejudice of consumers; - applying dissimilar conditions to equivalent transactions with other trading parties, thereby pla-

cing them at a competitive disadvantage; - and making the conclusion of contracts subject to acceptance by the other parties of supplemen-

tary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts.


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ii. Enforcement


47.06. the Competition Commission Singapore (CCS)The CCS is Singapore’s competition authority. Established on 1 January 2005, it is a statutory

board under the authority of the Ministry of Trade and Industry whose task is to administer and enforce the Competition Act (Chapter 50B).

47.07. the Competition appeal BoardThe CAB is an independent body established under Section 72 of the Act comprising not more

than 30 members appointed by the Minister for Trade and Industry. The CAB members are lawyers, economists, accountants, academics and other business people.

The CAB’s main function is to hear appeals from the CCS’s decisions.


47.08. Complaints and investigationsThe CCS prefers complaints to be filed in writing, giving as much factual information as possible,

to enable an initial assessment of the complaint to be carried out as quickly as possible.After a complaint is received, the CCS may carry out informal checks and make informal enqui-

ries to the business to clarify the situation or get more information. The CCS will launch a formal investigation only when it has reasonable grounds for suspecting

that the Competition Act has been infringed. The CCS is empowered to issue notices to require undertakings and their owners/managers/employees to provide information and documents. In cer-tain circumstances, the CCS has the power to enter premises (with or without a warrant) to obtain the necessary evidence in the form of documents, equipment or information.

47.09. Proceedings before the CCSWhere the CCS proposes to take a decision under the Sections 34 or 47 prohibition, it will give

written notice to the undertaking and give the business an opportunity to make representations to the CCS. The CCS will then make a decision after considering any representations made.

47.10. interim reliefThe Singapore courts may grant interim remedies in the hearing of competition law cases, in the

same manner that they may grant interim remedies in the hearing of any case before them.The CAB (Competition Appeal Board) can also order a wide range of interim remedies, upon

application of a party, or on its own initiative. Any such interim orders or directions are subject to the CAB’s further order, direction or final decision.

47.11. Enforcement by ordinary courtsA party who has suffered any loss or damage directly as a result of an infringement of the Sections

34 and 47 prohibition has a right of action in civil proceedings against the relevant undertakings. This right of private action can only be exercised after the CCS has determined that an undertaking

has infringed the Sections 34 and 47 prohibition and after the appeal process has been exhausted.

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C. Sanctions

47.12. Cease and desist ordersInjunctions are available to third parties seeking redress for anticompetitive conduct suffered.

47.13. FinesThe amount of the financial penalty to be imposed may not exceed 10 per cent of the turnover of the

business of the undertaking in Singapore for each year of infringement, up to a maximum of 3 years.A financial penalty imposed by the CCS under Section 69 of the Act will be calculated taking into

consideration the following:- the seriousness of the infringement;- the turnover of the undertaking in Singapore for the relevant product and relevant geographic

markets affected by the infringement in the undertaking’s last business year;- the duration of the infringement;- other relevant factors, e.g. deterrent value; and- any further aggravating or mitigating factors.The involvement of an association of undertakings (e.g. a trade association) in an infringement of

the Section 34 prohibition or Section 47 prohibition may result in financial penalties being imposed on the association itself, its members or both. Where the infringement by an association of under-takings relates to the activities of its members, the penalty may not exceed 10 per cent of the sum of the turnover of business of each member of the association of undertakings in Singapore active on the market affected by the infringement, for each year of infringement, up to a maximum of 3 years.

47.14. LeniencyThe CCS administers a leniency program for undertakings which came forward with evidence of

cartel activities. To qualify for leniency, the undertaking must (a) provide the CCS with all the infor-mation, documents and evidence available to it regarding the cartel activity; (b) maintain continuous and complete co-operation throughout the investigation and until the conclusion of any action by the CCS arising as a result of the investigation; (c) refrain from further participation in the cartel activity from the time of disclosure of the cartel activity to the CCS except as directed by the CCS; (d) not have been the one to initiate the cartel; and (e) not have taken any steps to coerce another undertaking to take part in the cartel activity. Depending on the time at which the undertaking makes contact with the CCS, the evidence already in the CCS’ possession and the quality of infor-mation provided by the undertaking, the undertaking may be granted a reduction in the amount, or even total immunity from, financial penalty.

D. appeals

47.15. appeals against decisions of the CCSAppeals of CCS decisions are made by lodging a Notice of Appeal with the Competition Appeal

Board (CAB) within two months of the infringement decision. The CAB may hear appeals on infringement findings by the CCS in respect of Sections 34 or 47 of the Act. The CAB may also hear appeals in respect of directions on interim measures, and enforcement actions including the imposition of financial penalties.

The CAB may confirm or set aside the CSS’s decisions and remit the matter to the CSS; impose or revoke or vary the amount of a financial penalty; give such direction or take such step as the CCS could itself have giver or taken; or make any other decision which the CSS could itself have made (section 73(8)).


507

47.16. appeals against the CaB’s decisionsAppeals against a decision of the CAB lie to the High Court either on points of law or on the

amount of a financial penalty (Section 74).

Section 2 MERGERS


47.17. ContextThe provisions relating to mergers may be found in Sections 54 to 60B of the Act. Section 54 prohibition may apply even where the merger takes place outside of Singapore, or

where any party to the merger is located outside Singapore, so long as the substantial lessening of competition is within any market in Singapore.

47.18. Concept of concentration Section 54(2) of the Act provides that a merger occurs where: - two or more undertakings, previously independent of each other, merge; - one or more persons or other undertakings acquire direct or indirect control of the whole or part

of one or more other undertakings; or - one undertaking acquires the assets (including goodwill), or a substantial part of the assets, of

another undertaking, with the result that the acquiring undertaking is placed in a position to replace or substantially replace the second undertaking in the business (or the part concerned of the busi-ness) in which the second undertaking was engaged immediately before the acquisition.

An undertaking that buys or proposes to buy a majority stake in another undertaking is the most obvious example of a merger. However, the transfer or pooling of assets may also give rise to a mer-ger. The Act also provides that the creation of a joint venture to perform, on a lasting basis, all the functions of an autonomous economic entity, shall constitute a merger falling within section 54(2)(b) of the Act.

47.19. Control criteriaSection 54 prohibits mergers that have resulted or may be expected to result in a substantial lesse-

ning of competition within any market in Singapore for goods or services, unless the merger falls within an exclusion in the Fourth Schedule, or is exempted by the Minister on the grounds of any public interest consideration.

ii. Enforcement


47.20. Merger notificationNotification is not mandatory. However, undertakings having serious concerns as to whether their

anticipated merger will, if carried into effect, be in violation of the law, or that their merger has infringed the Section 54 prohibition, may apply to the CCS for a decision.

Filling fees are set at S$ 15,000 (US$ 12,000), S$ 50,000 (US$ 40,000) or S$ 100,000 (US$ 80,000) where the target turnover or asset respectively is equal to or less than S$ 200 million (US$

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160 million) is between S$ 200 and 600 million (US$ 160 million and 480 million) or above 600 million (US$ 480 million).

47.21. Proceedings before the CCSIf any interested party wishes to make CCS aware of a merger that it considers might raise concerns

under the merger provisions of the Act, it is encouraged to make use of the Complaint Form on the CCS website in order to register the complaint. Complainants should try to provide all the informa-tion requested in the form. The CCS endeavors to keep complaints and the identity of complainants confidential. It should be noted that there is no obligation on the CCS to follow-up or investigate com-plaints relating to non-notified mergers as this would undermine the benefits of the voluntary regime.

The CCS has certain powers of investigation if there are reasonable grounds for suspecting that the Section 54 prohibition will be infringed by any anticipated merger if carried into effect or has been infringed by any merger (Sections 63, 64 and 65 of the Act).

The CCS adopts a two-phased approach when evaluating notified anticipated mergers and mer-gers. Upon receiving the notification, the CCS will carry out Phase 1 review, which is expected to be completed within 30 working days from when the applicable Phase 1 filing requirements have been met. Anticipated mergers and mergers that clearly do not raise any competition concerns under the Section 54 prohibition will be cleared under Phase 1. If the CCS is unable, based on the information submitted during the Phase 1 review, to conclude that the anticipated merger or merger does not raise any competition concerns, it will proceed to the Phase 2 review. The Phase 2 review entails a more detailed assessment, and is expected to be completed within 120 working days from when the applicable Phase 2 filing requirements have been met. The timeframes of 30 working days and 120 working days are administrative in nature, and may be stopped if parties fail to comply with the CCS’ requests for further information or if commitments are being negotiated.

Where the CCS proposes upon a notification to make a decision that the notified anticipated merger will if carried into effect infringe, or that the notified merger has infringed, the Section 54 prohibition, it will give notice to the party who applied for the decision or, where that party no longer exists, the merged entity. That party may, within 14 days of the notice, apply to the Minister for the anticipated merger or merger to be exempted from the Section 54 prohibition on the ground of any public interest consideration.


47.22. Conditions and commitments – DivestitureWhere the CCS has made a decision that the Section 54 prohibition has been infringed, or that

the Section 54 prohibition will be infringed by an anticipated merger if carried into effect, the CCS may give such directions as it considers appropriate to bring the infringement to an end or (in the case of an anticipated merger) to prevent the impending infringement. For example, the parties may be required to modify or cease the agreement or conduct or anticipated merger. In the case of mergers which have been carried into effect, the CCS may also order structural remedies (such as divestment) or behavioral remedies to address any adverse effects arising from the merger.

47.23. Fines Where the infringement has been committed intentionally or negligently, the CCS may impose is

a financial penalty of up to 10% of the turnover of the business of the undertaking in Singapore for each year of infringement up to a maximum of three years.


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C. appeals

47.24. appeals against decisions of the CCSSection 71 sets out a list of decisions for which appeals lie to the CAB. They include a decision of

the CCS as to whether the Section 54 prohibition has been infringed and a decision as to whether the Section 54 prohibition will be infringed by an anticipated merger if carried into effect. Any party to an anticipated merger or party involved in a merger in respect of which the CCS has made a deci-sion may appeal against the decision.


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ChaPtEr 48

SOUth aFriCa




48.01. ContextCompetition in South Africa is regulated by Act No 89 of 1998 (“the Competition Act”). The

Competition Act created three independent bodies, which replaced the Competition Board which was not independent of the Minister of Trade and Industry: the Competition Commission, the Competition Tribunal and the Competition Appeal Court.

The Competition Act has been amended on, several occasions, notably in 1999 and 2000 (Competition Amendment Act No 35 of 1999, Competition Amendment Act No 15 of 2000, Competition Second Amendment Act No 39 of 2000). The Competition Amendment Act No 1





C. Abuse of dominanceAbuse of a dominant position 48.05Complex monopoly 48.06Exemptions 48.07



The Competition Tribunal and the Competition Appeal Court 48.09

B. Enforcement proceedingComplaints and investigations 48.10Proceedings before the Competition Tribunal 48.11Interim relief 48.12Enforcement by ordinary courts 48.13


D. AppealsAppeals against decisions of the Competition Tribunal 48.18

Section 2 Mergers




Proceedings before the Competition Tribunal 48.25B. Conditions/Sanctions


C. Appeals Appeals against decisions of the Competition Commission or the Competition Tribunal 48.28

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of 2009 constituted a major reform; it imposed criminal sanctions on directors taking part in cartels and introduced provisions with regard to complex monopolies and leniency. However, the reform will enter into force on a date not yet determined by the President of the Republic of South Africa.

48.02. ScopeThe Competition Act is applicable throughout the South African territory and to activities of

foreign undertakings that have an anticompetitive effect on the South African market. Competition law is broad in its scope, since it applies to “all economic activity within, or having

an effect within, the Republic” (Section 3 of Competition Act). The Competition Act provides for a few exceptions to the application of competition law (collective bargaining within the meaning of Section 23 of the Constitution and the Labour Relations Act, 1995, collective agreement, as defined in Section 213 of the Labour Relations Act, 1995; and concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose).


48.03. the prohibitionSection 4(1) of the Competition Act prohibits a horizontal agreement or concerted practice if (a)

it has the effect of substantially preventing, or lessening, competition in a market, or (b) it involves any of some restrictive horizontal (price or purchase or selling fixing; dividing markets by allocating customers, suppliers, territories, collusive tendering). Section 4(2) sets out a rebuttable presumption of the existence of an agreement to engage in a restrictive horizontal practice if any one of those firms owns a significant interest in the other, or they have at least one director or substantial shareholder in common, and any combination of those firms engages in that restrictive horizontal practice. Section 4(1) of the Competition Act does not apply to intra-group agreements (Section 4(5)).

Section 5(1) of the Competition Act prohibits vertical agreements which have the effect of subs-tantially preventing or lessening competition in a market, unless a party to the agreement can prove that any technological, efficiency or other pro-competitive gain resulting from that agreement ou-tweighs that effect. Section 5(2) prohibits per se the practice of minimum resale price maintenance, without prejudice to the possibility for the supplier to recommend a minimum resale price to the reseller provided the supplier or producer makes it clear to the reseller that the recommendation is not binding, the product has its price stated on it, and the words “recommended price” appear next to the stated price (Section 5(3)).

48.04. ExemptionsSection 10 of the Competition Act confers the power on the Commission to grant an indivi-

dual exemption to undertakings requesting it. The possibility of exemption concerns all agreements or practices covered by Chapter 2 of the Competition Act. An exemption may be granted if the agreement or practice is found to contribute to maintenance or promotion of exports, promotion of the competitiveness of small businesses or firms controlled or owned by historically disadvantaged persons, changing the productive capacity to stop decline in an industry or maintaining economic stability in an industry designated by the Minister. In addition, exemptions may be granted for an agreement or practice that relates to the exercise of a right acquired or protected in terms of specific legislation, such as intellectual property legislation, as stipulated in Section 10(4) of the Act. The exemption is awarded at the end of a procedure giving rise to a publication on which third parties are invited to make comments and after review by the Competition Commission.


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48.05. abuse of a dominant positionThe Competition Act contains a series of rules applicable to undertakings in a dominant position.

Section 7 of the Competition Act provides for a presumption of dominance according to the market share of the undertaking and which may or may not be overturned depending on the market shares held: a firm is dominant if it has at least 45% of a market, or if it has at least 35%, but less than 45%, of that market unless it can show that it does not have market power or, if it has less than 35% of that market, but has market power. The Competition Act defines market power as “the power of a firm to control prices, or to exclude competition or to behave to an appreciable extent independently of its competitors, customers or suppliers”.

Section 8 of Competition Act prohibits certain “abuses of dominance”: charging an excessive price to the detriment of consumers, refusing to give a competitor access to an essential facility, adopting exclusionary acts (requiring or inducing a supplier or customer not to deal with a competitor, refusing to supply scarce goods to a competitor when supplying those goods is economically feasible, selling goods or services on condition that the buyer purchases separate goods or services unrelated to the object of a contract, or forcing a buyer to accept a condition unrelated to the object of a contract, selling goods or services below their marginal or average variable cost; or buying-up a scarce supply of intermediate goods or resources required by a competitor).

Section 9 prohibits price discrimination if: it is likely to have the effect of substantially preventing or lessening competition, it relates to the sale, in equivalent transactions, of goods or services of like grade and quality to different purchasers and it involves discriminating between those purchasers in terms of prices, discounts, allowances, rebates or credits, provision of services or payments. Price discrimination is not prohibited if the dominant firm establishes that the differential treatment (a) makes only reasonable allowance for differences in cost or likely cost of manufacture, distribution, sale, promotion or delivery resulting from the differing places to which, methods by which, or quan-tities in which, goods or services are supplied to different purchasers, (b) is constituted by doing acts in good faith to meet a price or benefit offered by a competitor or (c) is in response to changing conditions affecting the market for the goods or services concerned.

48.06. Complex monopolyThe Competition Amendment Act, No 1 of 2009, which will come into force on a date to be

decided by the South African President, regulates complex monopolies. A complex monopoly is a situation where: (a) at least 75% of the goods or services in that market are supplied to, or by, five or fewer firms, (b) any two or more of the firms contemplated conduct their respective business affairs in a conscious parallel manner or coordinated manner, without agreement between or among themselves and (c) the conduct has the effect of substantially preventing or lessening competition in that market.

48.07. ExemptionsExemptions are possible under the same conditions and according to the same criteria as for res-

trictive agreements.

ii. Enforcement


48.08. the Competition CommissionThe Competition Commission is an independent administrative body created in 1998 by the

Competition Act. The Commission is an investigation and enforcement agency in respect of prohi-

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bited practices and mergers. It consists of the Commissioner and one or more Deputy Commissioners, appointed by the Minister of Trade and Industry. The Commissioner is appointed for a five-year term and is accountable to the Minister of Trade and Industry and Parliament.

48.09. the Competition tribunal and the Competition appeal CourtThe Competition Tribunal and the Competition Appeal Court are special courts established in

1998 by the Competition Act. In respect of prohibited practices, the Competition Tribunal has deci-sion-making powers with regard to cases submitted to it by the Competition Commission. Tribunal members (a Chairperson and not less than three, but not more than ten other women or men) are appointed to serve a five year term of office by the President of South Africa. The Competition Appeal Court considers appeals against decisions of the Tribunal. The Competition Appeal Court consists of at least three judges, appointed by the President, each of whom must be a judge of the High Court. The Minister of Justice, after consulting the Judge President of the Competition Appeal Court, may appoint any number of judges of the High Court to serve as acting judges of the Competition Appeal Court.


48.10. Complaints and investigationsThe Commissioner may decide to initiate a complaint against an alleged prohibited practice. Any

interested person may also submit a complaint to the Commissioner (Section 49B of the Competition Act). The Commissioner directs an inspector to investigate the complaint. He/she may be assisted by one or more persons.

A judge of the High Court, a regional magistrate, or a magistrate may issue a warrant to authorize an inspector or a police officer to enter and search any premises. An inspector who is not authorized by a warrant may enter and search premises other than a private dwelling. In such a case, immedia-tely before entering and searching, the inspector conducting the search must provide identification to the owner or person in control of the premises and explain to that person the authority by which the search is being conducted, and must get permission from that person to enter and search the pre-mises or believe on reasonable grounds that a warrant would be issued under Section 46 if applied for, and that the delay that would ensue by first obtaining a warrant would defeat the object or purpose of the entry and search.

Section 48 of the Competition Act gives the following powers to inspectors: to enter upon or into the premises, search any person on those premises, examine any document, request information about documents, take extracts from, or make copies of, any document, use any computer system and search any data contained in or available to that computer system, reproduce any record from that data.

Once investigations are completed, the Competition Commission will decide to refer the com-plaint to the Competition Tribunal or to issue a notice of non-referral. The Competition Commission may choose to refer all the particulars of the complaint submitted by the complainant or only some of them and may add particulars to the complaint. The Competition Commission has a period of one year after a complaint was submitted to it in which to decide whether it will refer the complaint or not to the Tribunal but, with the consent of the complainant or the authorization of the Tribunal, can extend that period. If the Competition Commission issues a notice of non-referral in response to a complaint, the complainant may refer the complaint directly to the Competition Tribunal.

48.11. Proceedings before the Competition tribunalThe Competition Tribunal conducts a hearing which is, in principle, public. The Competition

Tribunal can hear testimony and order the disclosure of any document. The following persons may participate in the proceedings and put questions to witnesses and inspect any books, documents or


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items presented at the hearing: the Commissioner, the complainant, the respondent and any person who has a material interest in the hearing.

If, during, on or after completion of the investigation of a complaint, the Competition Commission and the respondent agree on the terms of an appropriate order, the Competition Tribunal, without hearing any evidence, may confirm that agreement as a “consent order”. After hearing a motion for a consent order, the Competition Tribunal must make the order as agreed to and proposed by the Competition Commission (and the respondent indicate any changes that must be made in the draft order before it will make the order) or refuse to make the order. With the consent of a complainant, a consent order may include an award of damages to the complainant.

48.12. interim reliefAt any time, whether or not a hearing has commenced into an alleged prohibited practice, the

complainant may apply to the Competition Tribunal for an interim order in respect of the alleged practice (Section 49C). The Tribunal may grant an interim order if it is reasonable and just to do so, having regard to the evidence relating to the alleged prohibited practice, the need to prevent serious or irreparable damage to the applicant and the balance of convenience. An interim order may not extend beyond the conclusion of a hearing into the alleged prohibited practice or six months after the date of issue of the interim order whichever the earlier. However if no hearing into the matter has been concluded within six months after the date of that order, the Tribunal may extend the interim order for a further period not exceeding six months. Appeals may be brought before the Competition Appeal Court.

48.13. Enforcement by ordinary courtsOnly the Competition Tribunal or the Competition Appeal Court may declare void an agreement

which is unlawful under the Competition Act. Where a civil court hears a claim based on an infrin-gement of the Competition Act, it must apply the determination of the Tribunal or the Competition Appeal Court to the issue if it has already been ruled upon, and, where this is not the case, it must refer the issue to them to be judged on the merits with regard to the infringement of the competition rules. The ordinary court will then rule on the award of damages due. Claims may not be brought before a civil court in the event that the Competition Tribunal has issued a “consent order” awarding damages to the plaintiff (Section 65).

C. Sanctions

48.14. Cease and desist ordersAccording to Section 58 of the Competition Act, the Competition Tribunal may adopt any ap-

propriate order in relation to a anticompetitive practice, including the cessation of anticompetitive practices, declaring the whole or any part of an agreement to be void; ordering access to an essential facility on terms reasonably required, ordering a party to supply or distribute goods or services to another party on terms reasonably required to end a prohibited practice. For a Complex Monopoly, the Competition Tribunal may issue a declaratory order against two or more firms (i) if at least one of the firm has at least 20% of the relevant market and (ii) they are engaged in complex monopoly conduct and their conduct has resulted in high entry barriers, exclusion of other firms from the market, excessive pricing within that market, refusal to supply other firms within that market or other market characteristics that indicate coordinated conduct. The order may consist in requiring, prohibiting or setting conditions upon any particular conduct by the firm, to the extent justifiable to mitigate or ameliorate the effect of the complex monopoly conduct on the market.

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48.15. FinesThe Competition Tribunal may impose a fine (administrative penalty) on persons convicted of

anticompetitive practices. A fine may also be incurred in case of failure to respect an injunction orde-red by the Competition Tribunal or the Competition Appeal Court. The fine may be up to 10% of the firm’s annual turnover in the Republic and its exports from the Republic during the firm’s prece-ding financial year. The Competition Tribunal must considerer such factors as the nature, duration, gravity and extent of the contravention, the behavior of the respondent, market circumstances, the level of profit derived from the contravention, the degree to which the respondent has cooperated with the Competition Commission and the Competition Tribunal and recidivism.

48.16. Leniency The Competition Tribunal recognizes the power of the Competition Commission to grant im-

munity, which is set out in its “Corporate Leniency Policy”. It is aimed at encouraging parties to an anticompetitive practice to freely report their practices. In practice, immunity means that the Commission would not subject the successful applicant to adjudication before the Tribunal for its in-volvement in the cartel activity if it denounces the others. Immunity is conditional: the Competition Commission will give the applicant total immunity after it has completed its investigation and refer-red the matter to the Tribunal and once a final determination has been made by the Tribunal or the Appeal Court provided the applicant has met the conditions set forth by the Commission on a continuous basis throughout the proceedings. Those conditions principally concern the provision of information and cooperation during the investigation, and the cessation of the unlawful practices.

48.17. Criminal sanctionsWhen the Amendment Act comes into operation, directors or managers who caused or knowingly

acquiesced in a firm engaging in cartel conduct will be personally liable to a fine not exceeding ZAR 500,000 (US$ 60,000) or imprisonment for a period not exceeding 10 years, or both.

D. appeals

48.18. appeals against decisions of the Competition tribunalThe Competition Appeal Court has exclusive jurisdiction for judicial review of the Competition

Tribunal (Section 61 of the Competition Act). The Competition Appeal Court may affirm, modify in part or reverse the decision of the Tribunal. It may qualify the infringements differently, raise the administrative fine or lower it.

An appeal from a decision of the Competition Appeal Court may be brought by the parties to the action before the Supreme Court of Appeal, or the Constitutional Court, if it concerns a constitutio-nal matter, with leave of the Competition Appeal Court or if the Competition Appeal Court refuses leave, with leave of the Supreme Court of Appeal or the Constitutional Court.

Section 2 MERGERS


48.19. ContextMerger review is governed by Chapter III of the Competition Act. It provides for a review by

Competition Commission or Competition Tribunal of concentrations exceeding certain defined thresholds. The Competition Act distinguishes three categories of merger, large, intermediate and small according to the value and turnover of the acquiring group and of the target. Whether control


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is mandatory, suspends the operation or falls within the jurisdiction of the Competition Commission or the Competition Tribunal depends on the category the merger belongs to.

48.20. Concept of concentration In order to fall within the scope of the provisions, the merger must constitute a concentration,

which is defined by Section 12 of the Competition Act: a concentration is deemed to arise when one or more firms directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another firm. A concentration may occur through a purchase or lease of shares and assets, joint ventures and/or pure amalgamation of firms/businesses. The Competition Act pro-vides examples of cases of acquisition of control: owning of more than 50% of the issued share capital of another firm, obtaining majority votes in general meetings, having the right to appoint or veto the appointment of majority directors and/or having the ability to materially influence the policy of the firm.

48.21. thresholdsThe Competition Act provides that the Minister in consultation with the Competition

Commission, must determine the thresholds for large, intermediate and small mergers; the merger is deemed “large” if the combined annual turnover or assets of both the acquiring and transferred/target firms are valued at or above ZAR 6,6 billion (US$ 790 million), and the annual turnover or asset value of the transferred/target firm is at least ZAR 190 million (US$ 22,7 million); the merger is deemed “intermediate” if the value of the proposed merger equals or exceeds ZAR 560 million (US$ 67 million) (calculated by either combining the annual turnover of both firms or their assets), and the annual turnover or asset value of the transferred/target firm is at least ZAR 80 million (US$ 9,6 million); under these thresholds, the merger is deemed “small”. The Commission has developed a merger notification calculator to assist practitioners and the merging parties in determining whether a merger is small, intermediate or large.

48.22. Control criteriaThe Competition Commission or Competition Tribunal must initially determine whether a large

or intermediate merger is likely to substantially prevent or lessen competition. It must assess the strength of competition in the relevant market and the probability that the firms in the market after the merger will behave competitively or cooperatively, taking into account different factors, set out in Section 12A of the Competition Act (actual and potential level of import competition, ease of entry into the market, levels and trends of concentration, degree of countervailing power, dynamic characteristics of the market, nature and extent of vertical integration, whether the merger will result in the removal of an effective competitor). If the Competition Commission or Competition Tribunal concludes that the merger is likely to prevent or lessen competition, then it has to determine (i) whether or not the merger is likely to result in any technological, efficiency or other pro-competitive gain which will be greater than, and offset, the effects of any prevention or lessening of competition, that may result or is likely to result from the merger, and would not likely be obtained if the merger is prevented; and (ii) whether the merger can or cannot be justified on substantial public interest grounds by assessing the factors set out in Section 12A(3).

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ii. Enforcement


48.23. Merger notificationNotification of small mergers is not mandatory and they may be implemented without approval.

However, within 6 months after a small merger is implemented, the Competition Commission may require the parties to notify the merger if, in the opinion of the Commission, the merger may subs-tantially prevent or lessen competition or cannot be justified on public interest grounds. In such a case, the parties to the merger may take no further steps to implement that merger until the merger has been approved or conditionally approved (Section 13 of Competition Act). The parties to a small merger may voluntarily notify the Competition Commission of that merger at any time.

Notification of intermediate and large mergers is mandatory. The parties to an intermediate or large merger may not implement that merger before the Commission’s or Tribunal’s decision. The parties must disclose a certain amount of information using the forms provided by the Competition Commission.

Filing fees are set at ZAR 100,000 (US$ 12,000) for intermediate mergers and ZAR 350,000 (US$ 42,000) for large mergers.

48.24. Proceedings before the Competition CommissionThe procedure begins with investigations by the Competition Commission. The initial review

period by the Competition Commission is of 20 business days from the date of a complete notifi-cation for small and intermediate mergers and of 40 business days for large mergers. For small and intermediate mergers, the Commission can extend the period of investigation for 40 business days. There can be one or more extensions of a maximum of 15 business days for large mergers. The Commission has to require the Tribunal’s consent to extend the investigation.

The time–limit for investigations only starts to run if the file received by the Commission is complete. The Commission may deliver a notice of complete filing. Within 5 business days after receiving a merger notice for a large merger, or within 10 business days after receiving a merger notice in respect of any other merger, the Commission may also deliver to the filing firm a notice of incomplete filing. The initial period for consideration of the proposed merger will not begin until the merging parties have provided all information requested by the Commission. In the absence of a notice of incomplete filing within the required time, the filing will be deemed to be complete.

In case of intermediate or small mergers, the Competition Commission takes the decision. The Commission can approve the merger, approve it subject to conditions or prohibit the merger. If the Commission does not issue a certificate within the required deadline for investigations, the merger must be regarded as having been approved (Section 14 of Competition Act).

48.25. Proceedings before the Competition tribunalIn case of large mergers, the decision will be taken by the Competition Tribunal. After its investi-

gation, the Competition Commission must forward to the Competition Tribunal and the Minister a written recommendation, with reasons, whether or not implementation of the merger should be ap-proved, approved subject to any conditions or prohibited (Section 14 A of Competition Act). When a merger referral has been filed, the Tribunal must schedule a date within 10 business days after the filing date for either the beginning of the hearing or of a pre-hearing conference. After completing its hearing, the Tribunal must approve the merger, approve the merger subject to conditions, or pro-hibit the merger within 10 business days after the end of the hearing by issuing a certificate in the appropriate form. Within 20 business days after issuing a certificate, the Tribunal must issue written reasons for its decision and publish a notice of its decision in the Gazette.


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48.26. Conditions and commitments - DivestitureThe competition authorities may make a merger authorization subject to conditions and impose

structural or behavioral remedies on the parties.

48.27. FinesThe failure to notify a merger is punishable by a fine up to 10% of the firm’s annual turnover in

South Africa and its exports from the Republic for the preceding financial year. The Competition Tribunal may also order a party to the merger to sell any shares, interest or other assets it has acqui-red pursuant to the merger or declare void any provision of an agreement to which the merger was subject (Section 60).

C. appeals

48.28. appeals against decisions of the Competition Commission or the Competition tribunal

In case of small or intermediate mergers, if the Competition Commission approves the merger subject to conditions or prohibits such merger, any party to the merger may appeal the decision before the Competition Tribunal. In case of intermediate mergers, if the Competition Commission approves the merger, or approves such merger subject to any conditions, a person who, in terms of Section 13A(2) of Competition Act, is required to be given notice of the merger, may request the Competition Tribunal to consider the approval or conditional approval, provided the person had been a participant in the proceedings of the Competition Commission (Section 16.1. of Competition Act).

Any party to the merger or a person who, in terms of Section 13A(2) of the Competition Act, is required to be given notice of the merger, provided the person has been a participant in the procee-dings of the Competition Tribunal, may appeal any decision by the Competition Tribunal (concer-ning small, intermediate or large mergers) before the Competition Appeal Court.


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ChPatEr 49

SOUth KOrEa




49.01. ContextThe competition process in South Korea is controlled by the Monopoly Regulation and Fair

Trade Act (MRFTA) enacted in 1980. The MRFTA has been amended and remodeled by different reforms during 30 years and its last version was adopted on December 2, 2011.

49.02. ScopeThe aim of the MRFTA is to stimulate the creative initiative of undertakings, to protect consumers,

and to work for the balanced development of the national economy by promoting fair and free com-petition by preventing abuse of market dominance and excessive concentration of economic power by undertakings and by regulating improper concerted practices and unfair trade practices. In particular:








The Korea Fair Trade Commission 49.07The courts 49.08

B. Enforcement proceedingsComplaints and investigations 49.09Proceedings before the KFTC 49.10Interim relief 49.11


D. AppealsAppeals against decisions of the KFTC 49.16

Section 2 Mergers



Merger notification 49.21Proceedings before the KFTC 49.22

B. Conditions / SanctionsConditions and commitments – Divestiture 49.23Fines 49.24

C. AppealsAppeals against decisions of the KFTC 49.25

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- Section 19(1) of the MRFTA generally prohibits any agreements between competitors that unreasonably restrict competition.

- Section 26 of the MRFTA prohibits the same restrictive activities where they are committed by business associations.

- Section 3 et seq. prohibits monopolies and abuse of market power.Restrictive practices that are legitimate under any industry-specific law as set forth in Section 58

of the MRFTA or considered to be a reasonable exercise of intellectual property rights (Section 59) are excluded from the scope of the prohibition.


49.03. the prohibitionSection 19(1) of the MRFTA prohibits any agreements between competitors that unreasonably

restrict competition like fixing, maintaining or altering prices; determining terms of trade or pay-ment conditions for goods or services; restricting production, distribution or transaction; limiting or allocating geographic areas or customers; restricting the establishment or extension of facilities and preventing the installation of new equipment; restricting the types or specifications of traded goods or services; jointly carrying out the main parts of a business, or jointly establishing a company for the same purpose; determining the successful bidder or the highest bid in bidding or auctions; any other practices that substantially restrict competition in a particular market by obstructing or restraining other companies business activities.

The regulations apply not only to formal agreements but also to informal practices where two or more undertakings are conducting any activity which restricts competition in a particular market or in the case of a consultation between competitors.

49.04. ExemptionsSome restrictive agreements can be exempted under Section 19(2) of the MRFTA if the

Competition authority authorizes them because they meet the requirements specified in the Enforcement Decree of the MRFTA. These agreements must be concluded for purposes such as industrial rationalization, research and technology development, overcoming economic depression, industrial restructuring, rationalization of transaction terms and conditions, enhancement of small- and medium sized companies’ competitiveness. But, since the requirements are very hard to satisfy, there have been few applications for individual exemptions.


49.05. abuse of a dominant positionSection 3 of the MRFTA defines a market dominant undertaking as a supplier or customer in a

particular market that can fix, maintain or alter the prices, quantity, quality or other terms and condi-tions of trade regarding commodities or services, individually or jointly with other undertakings. To determine if a company has a dominant position in a relevant market, some factors may be used, including market share, existence and extent of market barriers and relative size of its competitors. Section 4 of the MRFTA states that undertakings with annual turnover or purchases of, within a relevant market, less than KRW 4 billion (US$ 3,5 million), are excluded from the presumption of being a market dominant company. By contrast, an enterprise is presumed to be dominant if it controls more than 50% of the market or if the total market share of no less than three enterprises on the market is 75 % or more.


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According to Section 3-2 of the MRFTA, there are six types of specified abusive behaviors: price abuse, output control, obstruction of business, obstruction of new entry, exclusion of competitors, and finally infringement of consumer interests.

D. Unfair practices

49.06. ScopeUnfairly rejecting any transaction or discriminating against a certain trading partner, excluding

competitors, inducing or coercing customers of competitors to deal with the undertaking in question, engaging in a trade with a trading partner by unfairly taking advantage of its own position in the transaction, trading under conditions that unfairly restrict the business activities of a trading partner or disrupt the business activities of another undertaking, assisting a person with special interest or other companies by providing advanced payment, loans, manpower, real estate, stocks and bonds, goods and services, intangible assets and such, or by transacting under substantially favorable terms, is prohibited under Section 23 of the MRFTA.

ii. Enforcement


49.07. the Korea Fair trade CommissionThe Korea Fair Trade Commission (KFTC) is formed of:- a Commission (the decision-making body) which consists of nine commissioners who deliberate

and make decisions on competition and consumer protection issues;- a secretariat (the working body), which is directly involved in drafting and promoting competi-

tion policies, investigating antitrust issues and presenting them to the Commission and handling the issues in line with the Commission’s decision.

49.08. the courtsA person may claim damages for losses suffered from an agreement that unreasonably restricts

competition, unless the defendants prove that the violation was neither intentional nor negligent. There are no special procedures or rules for these claims for damages. No class actions are permitted for unlawful restrictive agreements or practices.

Proceedings for the recovery of pecuniary penalties, applications for injunctions and action for damages are heard by the Korean District Court.


49.09. Complaints and investigationsWhen the KFTC considers a violation of the provisions of the MRFTA has been committed by

companies, it can conduct the necessary investigation sua sponte. Moreover, any person who deems that a violation of the provisions of the Act has been committed may report the occurrence of such violation to the KFTC (Section 49).

For investigations under Section 49(1)(2), the KFTC shall notify the parties concerned via written documents (specifying all decisions, if any, such as orders for remedial measures, needed as a result of investigations).

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The investigation is conducted on the premises of the suspected infringers by the enforcement team of the KFTC which has the power to seize or request documents, examine witnesses, request answers to interrogatories.

49.10. Proceedings before the KFtCAfter the team’s review of the information and documents obtained, the KFTC issues a written

complaint to the suspected parties. The parties are then allowed to examine the complaint and the attached documents and to respond to it in writing or at an oral hearing before the full Commission deliberation which comprises nine KFTC commissioners. The full Commission makes a final deci-sion which it notifies the parties.

49.11. interim reliefInterim remedies are unavailable during the KFTC proceedings by contrast to court proceedings.

C. Sanctions

49.12. Cease and desist ordersThe KFTC can issue corrective orders on the MRFTA infringers. This corrective order encom-

passes orders against the infringer to cease and desist from continuing violation, to take certain actions, and also to make a public notice of the corrective order.

49.13. FinesThe KFTC imposes an administrative fine under which companies can be ordered to pay a sum

not exceeding the equivalent of 10% of the turnover generated by the sale of the relevant goods or services during the period of infringement.

49.14. LeniencyThe KFTC has a leniency program which grants automatic immunity from all or part of the

administrative fines. A party who comes forward first may have a reduction and may be eligible for full immunity; a party who provides evidence of a cartel is eligible for partial leniency (50% reduction in administrative fines).

Under the amnesty plus scheme, a party that does not qualify for full immunity but reports ano-ther cartel (unrelated to the initial cartel) is eligible for an additional reduction of the administrative fines for participating in the initial reported cartel. A party that has coerced other firms to either join or remain in the cartel is excluded from such immunity.

49.15. Criminal sanctionsIndividuals can be subject to either imprisonment of up to three years or a criminal fine of up to

KRW 200 million (US$ 176,500).

D. appeals

49.16. appeals against decisions of the KFtCThe defendant may challenge the KFTC’s decision by filing an application of objection with the

KFTC. If the outcome of this claim is unsatisfactory, the defendant can then file an appeal with the


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Seoul High Court (within 30 days of receiving the KFTC decision on the application of objection). Furthermore, the judgment from the Seoul High Court can be appealed before the Supreme Court.

Section 2 MERGERS


49.17. ContextSections 7 and 12 of the MRFTA outline the substantive standards for anti-competitive business

combinations and notification requirements. The Enforcement Decree of the MRFTA provides additional regulations concerning the authorities and standards for merger control.

49.18. Concept of concentration Business combinations that are subject to merger control include (Sections 7(1) and 12(1) of the

MRFTA) acquisition or ownership of 20% or more of the shares of another company (or 15% for companies listed on the Korea Exchange) or acquisitions of additional shares in a company where the acquiring party already holds 20% or more of the shares in the company and the acquisition results in the acquiring party becoming the largest shareholder.

It includes also interlocking directorate, merger with other companies, acquisition by transfer of business and participation in the establishment of a new company or a joint venture. Only the inves-tor with the largest stake of a new company or joint venture is required to notify.

49.19. thresholdsThe general thresholds for notification are as follows:- one party to the transaction has worldwide assets or turnover of a least KRW 200 billion (US$

176 million)- the other party has total assets or annual turnover of at least KRW 20 billion (US$ 17,6 million).Moreover, local thresholds are applied to overseas mergers, including transactions where either:- a foreign company acquires another foreign company;- a Korean company acquires a foreign company.If each of these merging parties has local sales revenues of at least KRW 20 billion (US$ 17,6

million) in the Korean market, notification of the merger is mandatory.

49.20. Control criteriaSection 7(4) of the MRFTA prohibits a merger where it substantially restricts competition. A

substantial restriction of competition is presumed if the combined market share of the parties:- meets the requirements for a dominant position;- is the largest in the relevant business area;- exceeds the market share of the company with the second largest market share by not less than 25%.

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ii. Enforcement


49.21. Merger notificationPre-merger notification is mandatory where the size of the merging parties exceeds the thresholds.

Mergers in which only small companies are engaged require a post-merger notification. For these mergers, notification should be made within 30 days after the completion of the merger.

A system of voluntary prior notification also exists. A company that plans to merge with another may ask the KFTC to review the planned merger before the ordinary notification period and decide whether the planned merger will substantially restrict competition. The review period is 30 days but can be extended by an additional period of 90 days if the KFTC deems further examination necessary.

49.22. Proceedings before the KFtCPrivate parties are not allowed to actively participate in the review process. However, they can

submit information and their opinions. They can request the KFTC for data relating to measures that the KFTC has taken. The KFTC must comply with such requests if it feels it is in the public interest. The persons providing the relevant data must grant consent. Finally they can also be heard during the full Commission hearing, if the KFTC so accepts.

The majority of the notified mergers go through the KFTC review without further requests for information. But if the KFTC finds it necessary to request additional information, mostly related to issues having arisen during its review, it will ask the parties to provide the information within a cer-tain time-limit. If, for example, the KFTC is concerned about the anti-competitiveness of a merger, it may extend the review period up to a maximum of 90 days after the end of the first 30- day review period. If a merger raises substantial issues, the KFTC can decide to refer the case to full commissio-ners. The KFTC will decide at the end of the review to either approve the transaction or prohibit it.


49.23. Conditions and commitments – DivestitureThe KFTC may impose various remedies including prohibition of transactions, disposition of all

or parts of the shares acquired, resignation of an officer, transfer of business, a party publishing that it has received a corrective order, restrictions on the business method or business scope of the com-bined undertaking to prevent the negative effects of restricted competition and any other behavioral measures regarding the methods or scope of business activities.

The Guidelines on Imposition of Merger Remedies define general principles of merger remedies and various factors to be taken into account when imposing different remedies. A prohibition order is imposed only if partial divestiture is impossible or is insufficient to maintain effective competition. Behavioral remedies are often considered when they are sufficient to eliminate threats to competi-tion. The parties can propose remedies at any stage of the KFTC’s review.

49.24. Fines The MRFTA imposes an administrative fine of up to KRW 100 million (US$ 88,000) if the

company fails to make a timely and correct notification. The KFTC can impose an administrative fine of up to 0.3% of the transaction value for each day the parties do not comply with its decisions, including remedial undertakings.


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C. appeals

49.25. appeals against decisions of the KFtCAny company participating in a merger may file an appeal with the KFTC or the Seoul High

Court if the company is not agreeing with the decision of the KFTC. The appellant must file an appeal with the KFTC within 30 days of receiving the decision being challenged. It can be also appeal to the court within 30 days for judicial review. If the appellant is not agreeing with the result of the KFTC’s review on its original decision it can still file an appeal to the court for judicial review within 30 days after receiving the KFTC’s decision on the administrative complaint.


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ChaPtEr 50

SWitZErLanD




50.01. ContextAs set out by Section 96 of the 1999 Swiss Constitution, which is an exact copy of Section 31

bis of the 1947 Constitution, “1. The Confederation shall legislate to fight against economically or socially damaging effects of cartels and other restrictions of competition. 2. It shall take measures a) to prevent abuses in price fixing by enterprises and organizations of private and public law enjoying a dominant position on the market; b) against unfair competition”. Competition law in Switzerland is now governed by the Federal Act on Cartels and Other Limitations to Competition of October 6, 1995 (“the Cartel Act”), which is based on the above constitutional provisions and came into effect on 1 July 1996. The purpose of Swiss competition law is to promote competition in Switzerland by preventing the harmful effects of cartels and other anticompetitive restrictions thereby allowing the





C. Abuse of dominance Dominant position 50.05Abuse 50.06Exemptions 50.07



The Secretariat 50.09The Federal Council 50.10

B. Enforcement proceedings Complaints and investigations 50.11Proceedings before the Competition Commission 50.12Interim relief 50.13Enforcement by ordinary courts 50.14


D. AppealsAppeals against decisions of the Competition Commission 50.19

Section 2 Mergers




Proceedings before the Federal Council 50.26B. Conditions / Sanctions

Conditions and commitments - Divestiture 50.27Fines 50.28Criminal sanctions 50.29

C. AppealsAppeals against decisions of the Competition Commission 50.30

Switzerland

530

development of a more liberal and open economy. Amendments to the Cartels Act, providing for the direct imposition of fines and leniency policy, amongst other things, were adopted in June 2003 by the Swiss Parliament and entered into force on 1 April 2004. The Cartel Act was later amended in 2005, 2007 and 2008.

50.02. ScopeThe Cartel Act applies to the activities of foreign-based undertakings that have an anticompetitive

effect on the Swiss market. Further, the Act applies to all anticompetitive practices in the public and private sectors. The 2003 amendments declare that, although the Act does not apply to competition effects that result from the application of legislation on intellectual property, restrictions on imports based on IP rights are subject to the Act (Section 3(2) of the Cartel Act).


50.03. the prohibitionAccording to Section 5 of the Cartel Act, only agreements that are not justified on grounds of

economic efficiency and that “significantly affect competition in the market for certain goods and services”, as well as “all agreements that lead to the suppression of effective competition”, are prohi-bited under the Act.

Pursuant to the terms of the Cartel Act, the following agreements are considered as creating a presumption of anticompetitive effect, namely those that:

- directly or indirectly fix prices;- restrict the quantity of goods or services to be produced; - allocate markets.To this list the 2003 amendments added agreements between undertakings occupying different

levels on the market that set minimum or fixed selling prices, and distribution contracts that assign territories where selling by other authorized suppliers is excluded.

Vertical agreements are presumed not to have an appreciable effect on the market if none of the participating undertakings has a market share in excess of 15% and if they do not contain any hard-core restrictions (e.g. price-fixing). However, this de minimis rule does not apply to agreements that have a cumulative effect on the market.

50.04. ExemptionsAs regards the notion of economic efficiency set out in Section 5, pursuant to Section 5(2), an

agreement can be justified on this ground where:- it does not allow the participating undertakings to eliminate effective competition;- it is necessary to reduce production or distribution costs, promote know-how and R&D, or

rationalize production methods. To obtain an exemption, parties must notify their agreements.Further, pursuant to Section 8 of the Cartel Act, agreements, the anticompetitive effect of which

is confirmed by the control authorities, may be exempted if in exceptional cases they are necessary for compelling public interest reasons. This exceptional authorization is granted by the Federal Council at the request of the parties. Public interest has been considered to extend, inter alia, to notions such as the protection of employee rights, the environment, and cultural interests.

Finally, Section 6 of the Cartel Act provides for the adoption of ordinances and communications recognizing particular forms of cooperation as justifiable, in particular as regards:

- R&D cooperation agreements; - specialization or rationalization agreements;


531

- agreements granting exclusive licenses for intellectual property rights or granting exclusive rights to deal in goods and services.

The 2003 amendments added agreements that aim to improve SME competitiveness, as long as they have little impact on the market.

Only two communications have been adopted by the Competition Commission so far: the Communication of 18 February 2002 on the assessment of vertical agreements, and the Communication of 21 October 2002 on vertical agreements in the motor vehicle distribution sector.

The Communication on vertical agreements is very much inspired by the October 2000 EU Guidelines on vertical restraints (replaced in 2010). As in EU law, the Communication lists those hard-core restrictions that significantly affect the market: resale price maintenance, limitation of the distributor’s selling territory, non-competing clauses exceeding five years during the validity of the contract and exceeding one year after termination of the contract.

On 2nd July 2007, the Competition Commission adopted a revised Communication on the assess-ment of vertical agreements which replaced the previous communication of February 18, 2002, and entered into force on 1st January 2008. It was later amended by the Competition Commission by a Communication on the assessment of vertical agreements.


50.05. Dominant positionSection 4(2) of the Cartel Act defines dominance as “one or more undertakings being able, as

regards supply demand, to behave in a substantially independent manner with regard to the other participants in the market.” Thus, the definition is exactly the same as that developed in the case law of the EU Court of Justice.

50.06. abuseSection 7(2) of the Cartel Act sets out a list of the different types of behavior deemed abusive:- refusal to supply or buy goods; - discrimination between trading partners with regard to prices or other trading conditions; - imposing unfair prices or other unfair trading conditions;- undercutting prices or other trading conditions in relation to a specific competitor;- restrictions on production, outlets or other unfair conditions of trade;- making the conclusion of contracts subject to acceptance by the other parties of supplementary


The wording of Section 7(2) of the Cartel Act indicates that this list is not exhaustive.

50.07. ExemptionsSection 8 of the Cartel Act also establishes an exemption procedure in the same conditions for

undertakings considered by the control authorities to have abused a position of dominance.

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532

ii. Enforcement


50.08. the Competition CommissionThe Competition Commission is responsible for the administration and enforcement of Swiss

competition rules. It is an independent body set up under the Cartel Act, made up of between eleven and fifteen members appointed by the Federal Council and headed by a president and two vice-presidents. Section 18(2) of the Act specifies that the majority of the Commission members are independent experts, usually law or economics professors, while the remaining seats are taken by members of business associations and consumer organizations.

The Commission is largely a self-regulating body and Section 20(1) of the Cartel Act provides that it shall draw up its own regulations detailing its organization and powers, which are then subject to the approval of the Federal Council (Section 20(2)). According to Section 45(1) of the Cartel Act, the Commission’s advisory and recommendatory functions include monitoring the competi-tion situation on the national market as well as addressing recommendations to the authorities on competition policy matters (Section 45(2)). This particularly concerns the drafting and enforcement of legislation relating to economic or competition matters. The Commission should also express its opinion during the consultation procedure with regard to legislative measures which may influence competition (Section 46(2)).

50.09. the SecretariatThe Secretariat is a part of the Commission, and not an independent body although it has a certain

degree of autonomy under the provisions of the Cartel Act, especially in the area of investigations (Sections 26 and 27 of the Cartel Act). It is headed by a director appointed by the Federal Council, and its staff is comprised of civil servants. The duties of the Secretariat include making proposals to the Commission and implementing the latter’s decisions (Section 23(1)).

50.10. the Federal CouncilUnder Sections 8 and 31 of the Act, in exceptional circumstances the Federal Council is empowe-

red to grant exemptions to anticompetitive agreements or unlawful practices of undertakings in a position of dominance. The Federal Council is the Chief executive authority in Switzerland.


50.11. Complaints and investigationsSections 26, 27 and 28 of the Cartel Act outline the powers of the Commission Secretariat concer-

ning the conduct of investigations. The Secretariat may conduct preliminary inquiries on its own ini-tiative, at the request of undertakings concerned or based on information received from third parties (Sections 26(1)). The main purpose of the preliminary investigation is to gather the information neces-sary to the Secretariat to determine whether the conduct has an appreciable effect on competition.

Where signs of an unlawful restraint on competition are deemed to exist, the Secretariat must open an investigation with the consent of a member of the Commission’s presiding body (Section 27(1)). Notice that an investigation has been opened must be given in an official publication (Section 28(1)). During the course of an investigation, the competition authorities have the right to enter the premises of an undertaking and carry out inspections and searches. Section 40 obliges the parties concerned by an investigation to supply any useful information or evidence. Refusal to comply with this obligation is governed by Section 16 of the Act on administrative procedure (refusal to testify).


533

The provisions of Section 64 of the Federal Act on federal civil procedure of 4 December 1947 apply to the hearing procedure. False oral testimony incurs criminal liability.

Once the investigation is terminated, the Secretariat will draft a fact report to be submitted to the Competition Commission, with whom the final decision-making power lies.

The 2003 amendments gave more investigative powers to the competition authorities. They ad-ded several provisions to Section 42 of the Act: competition authorities are empowered to order evidentiary search and seizure. Section 45 to 50 of Federal Act of 22 March 1974 on administrative criminal law will be applicable. Search and seizures are to be ordered upon request of the Secretariat by a president of the Commission.

50.12. Proceedings before the Competition CommissionThe draft decision issued by the Secretariat is submitted to the parties for comment. Before clo-

sing proceedings, the Competition Commission may conduct hearings and propose amicable settle-ments which may be combined with a fine.

50.13. interim reliefInterim measures are available in competition matters according to the general rules laid down by

the Swiss Civil Procedure Code (CPC). Under Section 261 CPC, the applicant must credibly show that: i) its rights have been violated or such violation is anticipated; and ii) the violation threatens to cause harm that is not easily reparable to the applicant. However, the court may refrain from ordering interim measures if the opposing party provides an appropriate security.

Pursuant to Section 265 CPC, in cases of special urgency, and in particular where there is a risk that the enforcement of the measure will be frustrated, the court may order the interim measure immediately and without hearing the opposing party. Before ordering interim measures, the court may, ex officio, order the applicant to provide security.

50.14. Enforcement by ordinary courtsPursuant to Section 12, a person hindered from entering a market by an unlawful restraint of

competition may request damages and compensation in accordance with the Code of Obligations. The same person may also request that illicitly earned profits be paid back in accordance with the legal provisions on conducting business without a mandate. Same actions may be taken by a person who is prevented from competing by the implementation of a valid restraint of competition or may be hindered more than is warranted by the application of said restriction (Section 12(3)).

Where the lawfulness of a restraint on competition is called into question over the course of civil proceedings, the case must be transferred to the Commission to obtain an advisory opinion. However, if a restraint that is unlawful per se is said to be necessary to safeguarding of predominant public interest, the matter must be referred to the Federal Council for a ruling (Section 15).

C. Sanctions

50.15. Cease and desist ordersPursuant to section 30 of the Cartel Act, once in receipt of a proposal from the Secretariat, the

Commission shall specify the “appropriate measures to be taken.”

50.16. FinesPursuant to Section 49(1)(a) of the Cartel Act, any undertaking that participates in an unlawful

agreement or abuses of its dominant power can be charged up to 10 per cent of the turnover that

Switzerland

534

it achieved in Switzerland in the preceding three financial years. The amount is dependent on the duration and seriousness of the unlawful behavior. Due account shall be taken of the likely profit that resulted from the unlawful behavior.

The infringement of an amicable settlement, a legally enforceable decision of the Competition Commission or a ruling on appeal shall be charged up to 10% per cent of the turnover the underta-king achieved in Switzerland in the preceding three financial years (Section 50).

50.17. Criminal sanctionsIntentional violation of an amicable settlement, a legally enforceable decision of the Competition

authorities or a ruling on appeal is punishable by a fine of up to CHF 100,000 (EUR 83,250).Failure to comply or partial compliance with a decision of the competition authorities regarding

the information to be provided is punishable by a fine of up to CHF 20,000 (EUR 16,650).During a civil action, false oral testimony is criminally punished. The judge must ask witnesses to

tell the truth and remind them they may be jailed or imprisoned for up to three years for failure to do so. False testimony given under oath is punished with a jail sentence of at least three months, or imprisonment of up to three years (Section 306 of the Swiss Criminal Code).

50.18. LeniencyUnder the leniency program, an undertaking that participates in a hard-core cartel may avoid the

fine if it has been the first to submit evidence to enable the Competition Commission to initiate an investigation or discover a cartel. The instigator of the cartel cannot apply for full immunity. The fine can be partially reduced by up to 50% if the undertaking cooperates with the investigators and by up to 80% if it provides information on other cartels.

D. appeals

50.19. appeals against decisions of the Competition CommissionThe Federal Administrative Tribunal may review the sanctions and the amount of the fine decided

by the Competition Commission.Decisions of the Tribunal may in turn be appealed to the Swiss Federal Supreme Court

(Bundesgericht).

Section 2 MERGERS


50.20. Context The rules on mergers and concentrations are set out in sections 9-11, and 32-38 of the Cartel

Act and in the Ordinance on Merger Control of 17 June 1996 (“the 1996 Ordinance”). Although Switzerland is not a member of the EU, Swiss merger control rules are largely based on the provi-sions of the EU Merger Regulation, both in their substantive provisions and their scope. Specific rules apply to the banking and insurance as well as to the media sectors.

50.21. notion of concentrationSection 4(3) of the Cartel Act applies the same definition of a concentration as Section 3(1) of the

EU Merger Regulation, namely:


535

- the merger of two or more undertakings hitherto independent of each other;- any transaction whereby one or more undertakings obtain direct or indirect control of all or part

of one or more hitherto independent enterprises, in particular by the acquisition of an equity interest or conclusion of an agreement.

50.22. thresholdsTo be subject to control, a concentration must meet the thresholds established under the Act.

Pursuant to Section 9(1) of the Cartel Act, a concentration must be notified where, in the last busi-ness year prior to the concentration:

- the combined aggregate worldwide turnover of all the undertakings concerned exceeded CHF 2 billion (EUR 1,650,000,000) or their turnover in Switzerland was at least CHF 500 million (EUR 415,000,000), and,

- at least two of the undertakings concerned reported an individual turnover in Switzerland of at least CHF 100 million (EUR 83,250,000).

Pursuant to Section 9(4) of the Cartel Act, an undertaking is required to notify a concentration, even where the abovementioned thresholds are not met, where the undertaking enjoys a position of dominance on the relevant Swiss market.

50.23. Control criteriaWhere a concentration creates or strengthens a dominant position that eliminates competition

and does not lead to the improvement of competition in another market, thereby outweighing the harmful effects of the dominant position, the Commission may prohibit it or authorize it subject to conditions or commitments. When considering the effects of a concentration, the authorities are also required, pursuant to Section 10(4) of the Cartel Act, to take into consideration “market develop-ments and the situation with regard to international competition.”

Section 11 of the Cartel Act enables the Federal Council to approve prohibited concentrations in exceptional circumstances for reasons of public interest.

ii. Enforcement


50.24. Merger notificationIn September 1998, the competition authorities issued an official notification form setting out the

information to be provided to the Competition Commission. Notification may be filed in German, French or Italian in five copies. Accompanying documents may be submitted in English. The parties do not have to use the official Swiss notification form and foreign forms, such as the EU Form CO, are accepted. Required content of the notification is specified in Section 11 of the 1996 Ordinance – information on the parties to the concentration, their turnovers, a description of the operation and of the markets concerned, etc. Concentrations must be notified where the undertakings meet the criteria set out in Section 4(3) of the Cartel Act. Prior notification is mandatory under Section 9 of the Cartel Act. Within 10 days, the Secretariat must deliver a certificate confirming that notifica-tion is complete. The Secretariat has one month to verify and examine the information submitted. During this period, the notifying undertakings pledge not to implement the operation, unless the Commission has authorized them to do so for important reasons (Section 11).

Short form notification is possible where the Commission is already familiar with the affected markets following a previous decision, or where an undertaking is entering a new, developing market.

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536

The content of the simplified notification is determined by the Secretariat after consultation with the applicants.

Under Section 35 of the Act, if the undertakings concerned implement a merger without notifi-cation, an investigation procedure is opened ex officio.

Filing fees for a preliminary investigation are set at CHF 5,000 (EUR 4,160).

50.25. Proceedings before the Competition CommissionUpon receiving notice of a concentration, the Commission decides whether there are reasons to

investigate the operation. It must inform the undertakings concerned of an investigation within one month from the date of the notification. If it fails to do so, the concentration is deemed approved.

If the preliminary review shows that the concentration may create or strengthen a dominant posi-tion, the concentration must be investigated, as part of a Phase 2 procedure. This latter investigation must be completed within four months (Section 33), but the deadline may be extended upon the request of the participating undertakings. If the Commission does not issue its decision within the four-month-period, the merger is deemed approved.

At the end of the investigating procedure, the Commission has the power to authorize the merger, with or without conditions, or to prohibit it.

50.26. Proceedings before the Federal CouncilWithin 30 days from the date a concentration has been prohibited, the parties may submit an

application for authorization by the Federal Council on the grounds of compelling public interest. Pursuant to Section 36(1), if such an application is submitted, the period in which an appeal may be filed with the Federal Administrative Court shall begin to run only after the parties have been notified of the Federal Council’s decision.

Under Section 36(3) of the Cartel Act, the Council must issue its decision within four months.


50.27. Conditions and commitments - DivestitureWhen a prohibited concentration has been implemented or if a concentration is prohibited after

implementation, the parties are required to take the necessary measures in order to re-establish effec-tive competition. Thus, the Commission may require the participating undertakings to submit a pro-posal within a certain time-limit. If the Commission rejects the proposal, it can require any necessary measures to re-establish effective competition: divestiture of assets, de-merger, termination of the anticompetitive effects, or any other measure adequate to restore effective competition (Section 37).

50.28. FinesAccording to Section 51 of the Cartel Act, an undertaking that carries out a concentration without

giving notice may be punished by an administrative fine of up to CHF 1 million (EUR 830,000). A fine of the same amount may be imposed for: failure to comply with a provisional ban on carrying out a concentration, failure to comply with an authorization condition, carrying out a prohibited concentration, or for the non-implementation of a measure aimed at restoring effective competition.

Recidivist undertakings may be fined up to 10 per cent of their total annual revenue in Switzerland. Failure to provide information wholly or in part is punished with a fine of up to CHF 100,000

(EUR 83,000) (Section 52)


537

50.29. Criminal sanctionsAny person who intentionally carries out a concentration without notifying it, or who violates

decisions relating to the concentration is punishable by a fine of up to CHW 20,000 (EUR 16,650) (Section 55). In this case, the person held responsible must be a decision-maker for the company and must have acted intentionally.

C. appeals

50.30. appeals against decisions of the Competition CommissionDecisions of the Competition Commission may be challenged before the Federal Administrative

Court, except by third parties (i.e. competitors). The decisions of the Federal Administrative Court are in turn subject to review by the Federal

Supreme Court.


539

ChaPtEr 51

tUrKEy




51.01. ContextSection 167 of the Turkish Constitution requires that the State take all the measures necessary

to improve the market for goods and services. Pursuant thereto, the Turkish government adopted the Protection of Competition Act (Law No 4054) in 1994. The Act was adopted in order to pre-vent agreements, decisions and practices which restrain, distort or restrict competition, but also to define abuse of dominant position. Competition law in Turkey is influenced by an international context. Turkey has obligations stemming from the EEC-Turkey Association Agreement (Ankara Agreement) dated 12 September 1963. The Agreement provides that the rules of the TFEU relative to competition, tax and harmonization of legislation shall apply between EU and Turkey.

The law is largely based on the European competition law model, especially Sections 101 and 102 TFEU, no doubt in the context of Turkey’s application for future accession to the European Union. In this regard, the Customs Agreement entered into between Turkey and the European Union in 1995 requires that Turkey ensure the enforcement of an effective competition law framework.





C. Abuse of dominanceAbuse of a dominant position 51.05Exemptions 51.06



Complaints and investigations 51.08Proceedings before the Competition Board 51.09Interim relief 51.10Enforcement by ordinary courts 51.11

C. SanctionsCease and desist orders 51.12Fines 51.13

D. AppealsAppeals against decisions of the Competition Board 51.14

Section 2 Mergers




Proceedings before the Competition Board 51.20B. Conditions/Sanctions


C. AppealsAppeals against decisions of the Competition Board 51.23

Turkey

540

51.02. ScopeUndertakings located outside Turkey are subject to the provisions of the Act, where their behavior

has an effect within the Turkish territory: the scope of the Protection of Competition Act extends to anticompetitive agreements and practices, abuse of a dominant position, and mergers and acquisi-tions that distort competition in the territory of the Republic of Turkey. The Act applies to all kinds of entities, including State-owned enterprises.


51.03. the prohibitionSection 4 of the Protection of Competition Act governs anticompetitive agreements. The provi-

sion sets out a non-exhaustive list of prohibited practices including price-fixing, market allocation agreements, agreements limiting supplies, boycotts, exclusive dealing agreements, and tying. Section 4 further provides that where it is shown that competition in the market is apparently distorted, the burden of proof will be on the undertakings concerned.

51.04. ExemptionsPursuant to Section 5, the Competition Authority is authorized to grant exemptions to agree-

ments or practices otherwise prohibited by Section 4 except cartel agreements, which are not cove-red. The exemption may be granted for a defined period or until the fulfillment of a particular term or condition. Since the amendment of 2 July 2005, the Act no longer provides for a maximum period of five years for the exemption as it was the case in the past.

Agreements or practices potentially eligible for individual exemptions are those agreements that contribute to new developments in production or distribution whilst allowing consumers a share of the resulting benefit. However, at no time should an agreement lead to a suppression of competition in a significant part of the market or go beyond what is essential for the improvement of production or distribution.

The Competition Authority is also entitled under Section 5(4) to issue communications esta-blishing block exemptions applicable to particular categories of agreement. In this regard, block exemption regulations have been issued concerning:

- exclusive distribution and purchase agreements; - motor vehicle servicing agreements; and - franchise agreements.Pursuant to Section 8 of the Competition Act, it is possible to also receive a negative clearance

whereby the Competition Authority states that on the basis of the facts in its possession, the agree-ment is not contrary to Sections 4, 6 and 7 of the Act.


51.05. abuse of a dominant positionThe Act defines “dominant position” as the power of one or more undertakings in a particular

market to determine economic parameters such as price, supply, the amount of production and dis-tribution, by acting independently of their competitors and customers (Section 3).

Section 6 of the Protection of Competition Act provides that abuse of a dominant position of an undertaking or through agreement of undertakings, within the whole country or just a part of it, is prohibited, including, inter alia:

- impeding the activities of competitors, especially new ones; - imposing dissimilar conditions to similarly positioned purchasers;


541

- subjecting agreements to conditions outside usual business terms; - distorting competitive conditions in another market by means created by dominance in a parti-

cular market; or - restricting production to the detriment of consumers.

51.06. ExemptionsNegative clearance may be granted for potentially abusive behaviors in the same conditions as for

Section 4 above, and may be revoked in the conditions set forth in Section 13.

ii. Enforcement


51.07. the Competition authorityThe Act establishes a Competition Authority enjoying administrative autonomy. The Authority,

located in Ankara, is under the supervision of the Ministry of Trade and Industry and is made up of a Competition Board, a Directorate, and service departments. The Competition Board is composed of a total of seven members including a Chairman and a Deputy Chairman, elected and appointed by the Council of Ministers.

The Board is empowered by Section 27, inter alia to: - investigate violations of the Act, either on its own initiative or upon application and to take

necessary measures to terminate infringement;- evaluate requests and grant exemption and negative clearance certificates and follow the evolu-

tion of the concerned market;- issue communiqués and regulations necessary to the implementation of the act or upon the

request of the Ministry of industry and trade.


51.08. Complaints and investigationsUpon application or on its own initiative, the Competition Board may initiate what is referred to

as a preliminary inquiry in order to decide whether it is necessary to actually begin a specific investi-gation (Section 40). Alternatively, the Board may initiate a full investigation of its own motion. In the case of a preliminary investigation, an expert is assigned and conducts the preliminary inquiry over 30 days. Within a 10-day period following the submission of a preliminary inquiry report, a decision will be taken as to whether a full investigation should be carried out (Section 41). If the Board rejects the investigation, anyone showing they have a direct or indirect interest may take action against the rejec-tion decision of the Board. On the contrary, the decision to initiate an investigation is final (Section 43).

Upon the initiation of an investigation, the Board selects a reporter or a group of reporters to carry out the investigation. The period for an investigation must not exceed 6 months, with the possibility of extension for another 6-month period. The parties must be informed within 15 days that they are under investigation and be given sufficient information regarding the nature and type of allegation against them (Section 42).

Pursuant to Section 14, the Committee “in carrying out the duties set forth in this Law, may request all necessary information from any public authorities and entities, enterprises and associa-tions of enterprises.” Furthermore, under Section 15, the Board is entitled to carry out all necessary investigations in the premises of the enterprise and in particular to:

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542

- examine the books, documents of all types and other records of the enterprises or associations of enterprises and where necessary make copies of those documents;

- request written and oral explanations on certain issues;- carry out on-the-spot investigations on the premises concerning the assets of the undertaking(s).The parties may request a copy of all documents issued by the Board and all evidence obtained

(Section 44). The report prepared at the end of the investigation stage is notified to all Board mem-bers and the party(s) involved, and the latter have thirty days to submit a defense. Both the Board and the parties may exchange replies thereafter (Section 45).

51.09. Proceedings before the Competition BoardA hearing is held if the parties so request, or if the Board so decides, no sooner than thirty days

after the investigation is complete but not more than sixty days thereafter. Hearings are held publicly unless the Board concludes that a particular hearing should be held in camera. Since the amend-ment of 2 July 2005, at least four members must be present in addition to the Chairman or Deputy Chairman. The Board decides with a vote of at least four members. If the quorum is not attained in the second meeting, the decision is made via the absolute majority. The final decision is to be made at the hearing or by reasoned decision within 15 days thereafter (Sections 46 to 51).

The decision of the Board is published on the Internet page of the Authority in such a way as to preserve the trade secret of the parties (Section 53).

51.10. interim reliefWhere it appears that serious and irreparable damage may occur before a final decision can be

taken, the Board may take interim measures to protect the status quo (Section 9).

51.11. Enforcement by ordinary courtsAny person who suffers injury following an infringement of the Act is entitled to sue the infringer

for up to three times the damages suffered (Section 57 et seq.)

C. Sanctions

51.12. Cease and desist ordersPursuant to Section 9, where the Board considers that there is an infringement of Sections 4, 6

or 7 “it shall inform the enterprise (…) concerned by a decision stating the conduct to be performed or avoided (…) in order to maintain conduct and reinstate the situation prior to the infringement.”

51.13. FinesWhere an undertaking engages in anticompetitive conduct, fines of at least TRY 200 million

(EUR 87,600,000) and up to 10% of their Turkish turnover in the previous financial year may be imposed.

Employees of the undertakings involved may also be ordered to pay up to 5% of the undertaking’s fine. When determining the fine, the Board has to take into consideration factors, such as the injury suffered, the seriousness of fault, the market power of the undertaking involved, the duration of infringement and the role of each undertaking.

The Competition Board has the authority to impose administrative fines and periodic penalties for the provision of incorrect or misleading information in an application for exemption or negative clearance, for supplying incorrect, misleading or absence of information in response to a request for


543

information or an on-the-spot investigation, or for infringing conditions attached to an exemption decision (TRY 100 million (EUR 43,800,000)) (Section 16).

D. appeals

51.14. appeals against decisions of the Competition BoardUnder Section 55, final decisions of the Board, decisions on interim relief and periodic fines may

be subject to an application for judicial review before the Council of State.

Section 2 MERGERS


51.15. ContextSection 7 of the Protection of Competition Act governs mergers and acquisitions. Although the

provision contains the broad outlines of the principles governing such transactions, most of the specifics as regards the nature of the control exercised are contained in communiqués issued by the Board. The Board published on 7 October 2010 the Communiqué No 2010/4 on Mergers and acquisitions requiring the Approval of the Competition Board.

51.16. Concept of concentrationA concentration is said to involve:- the merger of two previously independent undertakings;- the acquisition of control by any undertaking or person of the assets of another undertaking

(where control is defined as the ability to exercise a decisive influence); and- a joint venture resulting in the creation of an autonomous economic entity.According to the Communiqué No 2010/4 on Mergers and acquisitions requiring the Approval of

the Competition Board, “control can be constituted by rights, agreements or any other means which, either separately or jointly, de facto or de jure, confer the possibility of exercising decisive influence on an undertaking. These rights or agreements are instruments which confer decisive influence in particular by ownership or right to use all or part of the assets of an undertaking, or by rights or agreements which confer decisive influence on the composition or decisions of the organs of an undertaking”.

51.17. thresholdsSince Section 7 of the Competition Act fails to provide the applicable thresholds, Section 7 of the

New Communiqué No 2010/4 identifies those mergers or acquisitions that should be notified prior to being put into effect. Notification to the Board’s approval is compulsory if:

- the total turnover of the parties to a concentration in Turkey exceeds TRY 100 million (EUR 43,800,000), and the respective turnovers of at least two of the parties individually exceed TRY 30 million (EUR 13,141,628.18); or

- the worldwide turnover of one of the parties exceeds TRY 500 million (EUR 219,000,000) and the Turkish turnover of at least one of the other parties exceeds TRY 5 million (EUR 2,190,000).

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51.18. Control criteriaFollowing Section 7, a “merger of two or more undertakings, aimed at creating a dominant po-

sition or strengthening their dominant position, as a result of which, competition is significantly decreased in any market for goods or services within the whole or a part of the country” is illegal.

ii. Enforcement


51.19. Merger notificationNotification of a merger or acquisition may be made jointly, or by either of the parties, to the

Competition Board within one month after conclusion of the agreement regarding the transac-tion. In addition to filing a Form-2, which must be precisely and correctly completed, the parties are required to file a copy of the final agreement giving effect to the transaction, a copy of related documents or certificates, the most recent annual reports and accounts of the parties, and any market surveys or studies carried out with respect to the transaction.

51.20. Proceedings before the Competition BoardThe Competition Board is authorized to investigate and make a decision with respect to mergers

and acquisitions. Within fifteen days following notification, having made a preliminary investiga-tion, the Board must either permit the transaction or inform the parties that it intends to investigate further and that the transaction may not be put into effect pending a final decision.

In assessing a merger or acquisition, the Competition Board may request information from the parties and from third parties including customers, competitors or suppliers. The latter and any other third parties demonstrating a legitimate interest in the matter may be invited to the hearing.

Negative clearance, provided for in Section 8, is available in the case of mergers and acquisitions. Thus, the Board may grant a negative clearance certificate indicating that a merger / acquisition is not contrary to Section 7 of the Act.


51.21. Conditions and commitments – DivestitureWhere a party fails to notify and the Board subsequently becomes aware of the transaction and

determines that it violates Section 7, the Board has the authority, in addition to any fines, to suspend the transaction and order its reversal.

51.22. FinesAccording to Section 16, a fine of up to TRY 50 million (EUR 21,900,000) may be imposed for

failure to notify an acquisition or merger within a specified period where such notification is compul-sory. An additional fine of TRY 100 million (EUR 43,800,000) is applicable for providing incorrect or misleading information in a notification for a merger or acquisition.

If, the transaction falls within the prohibition of Section 7 and creates or strengthens a dominant position and causes a significant decrease in competition, the companies involved may be ordered to pay a fine of up to 10% of their Turkish turnover generated in the financial year preceding the date of the decision on fines. Employees of the undertakings involved might also be fined up to 5% of the undertaking’s fine. When determining the fine, the Board has to take into consideration factors such


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as the harm suffered, the severity of the infringement, the market power of the undertaking involved, the duration of infringement and the role of each undertaking.

C. appeals

51.23. appeals against decisions of the Competition BoardFinal decisions of the Board regarding mergers or acquisitions may be appealed to the Council

of State within a 60-day period (Section 55) upon reception by the parties of the decision of the Competition Board.


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ChaPtEr 52

UKrainE




52.01. ContextThe competition process in Ukraine is mainly governed by the Law of Ukraine on the protec-

tion of economic competition of 2001 (“the Competition Act”) and the Law on the Antimonopoly Committee of Ukraine of 1993 (“the AMC Act”).

52.02. ScopeUkrainian Competition Act applies to such relations that ensue from or can have an impact on

economic competition in the territory of Ukraine. It governs relations of bodies of the State, bodies of local government, bodies of administrative and economic management and control and relations of economic entities with other economic entities, consumers, other legal and natural persons in connection with economic competition.







The Antimonopoly Committee (AMC) 52.06The Cabinet of Ministers (CMU) 52.07

B. Enforcement proceedingsComplaints and investigations 52.08Proceedings before the AMC 52.09Interim relief 52.10Enforcement by ordinary courts 52.11

C. SanctionsCease and desist orders 52.12Administrative sanctions 52.13Criminal sanctions 52.14Leniency 52.15

D. AppealsAppeals against decisions of the AMC 52.16

Section 2 Mergers

I. Substantive rulesContext 52.17concept of concentration 52.18Thresholds 52.19Control criteria 52.20



Proceedings before the AMC 52.22Proceedings before the CMU 52.23

B. Conditions/SanctionsCommitments - Divestiture 52.24Fines 52.25

C. AppealsAppeals against decisions of the AMC 52.26

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52.03. the prohibitionSection 5 of the Competition Act gives a definition of concerted actions which include:- any coordinated competitive behavior between undertakings such as agreements in any form or

decisions of undertakings or associations;- establishment of an undertaking or an association that is directed toward or results in the coor-

dination of competitive behavior between undertakings that establish a new undertaking or between them and the newly-established undertaking.

Section 6 gives a list of anticompetitive concerted actions: they may consist in fixing prices or other purchase or sale conditions; limiting production or markets; sharing markets or sources of supply according to territory or type of goods; ousting other companies from the market; parallel behavior leading to a restriction of competition, etc.

A de minimis exemption applies where the aggregate market share of the parties in any of the pro-duct markets concerned is less than 5% or, in case of vertical or conglomerate arrangements, where it is below 20%, or, in case of horizontal and mixed arrangements, where it is below 15%, provided neither of the parties is dominant and the aggregate turnover of the parties does not exceed certain limits. These exemptions do not apply in case of hard-core restrictions.

52.04. ExemptionsThe Antimonopoly Committee (AMC) may authorize certain anticompetitive concerted actions

if the parties can prove that these actions:- facilitate the improvement of production, the technological or economic development, or other

efficiencies, and- do not lead to a substantial restriction of competition on the market.Participants in the concerted actions must submit an application to the AMC to obtain an autho-

rization for those actions. The implementation of the transaction is prohibited until the AMC gives an individual clearance. The notification must be in writing. The different stages of the procedure (preview period, Phase 1 and Phase 2) are the same as in merger control.


52.05. abuse of a dominant positionAn undertaking occupies a dominant position if it has no competitors on the market or if it is not

exposed to substantial competition. An undertaking is presumed to be in a dominant position if its market share exceeds 35%.

Under Section 13 of the Competition Act, any action of an undertaking occupying a dominant position that results or may result in the prevention, elimination or restriction of competition is considered as an abuse. A list of prohibitions is given and covers, for example, the setting of prices or conditions which could not have been established in a competitive market; the application of different prices or conditions to equivalent agreements without objective justification; the limitation of production, markets or technological development which causes damage to other companies, etc.


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ii. Enforcement


52.06. the antimonopoly Committee (aMC)The Antimonopoly Committee of Ukraine (AMC) is the State authority with special status,

aimed at providing the State protection to competition in the field of entrepreneurial activity.

52.07. the Cabinet of Ministers (CMU)The Cabinet of Ministers of Ukraine (CMU) may authorize concerted actions that have not been

approved by the AMC if the participants prove that a positive effect produced by the restriction of competition on the public interest outweighs any negative consequences.


52.08. Complaints and investigationsThe parties to a concerted practice must submit a written notification in the form and with the

contents and annexes as set out in the Concerted Practices Regulation. Similarly to merger notifica-tions, some information must also be submitted in electronic form. Third parties can file a complaint with the AMC if they believe that certain practices on the market may be anti-competitive. The AMC can start an investigation based on a third party complaint.

The AMC may launch an investigation on its own initiative based on available information, mar-ket research and so on. In addition, the AMC can launch an investigation if so requested by govern-mental or local authorities.

52.09. Proceedings before the aMCThere are different stages for a regular investigation initiated by the AMC on the notification

submitted by the parties to a concerted practice.First, there is a preview period. The AMC considers the notification and decides whether it is

complete and can be reviewed on the merits. If the AMC considers it to be incomplete, the notifica-tion is rejected and must be resubmitted. The AMC has 15 calendar days to make a decision.

The Phase 1 review involves an assessment by the AMC of whether the concerted practice can be approved or whether there are grounds to prohibit it, in which case an in-depth investigation is required. The assessment must be completed within 30 calendar days of the AMC’s decision that the notification is complete.

Finally, the Phase 2 review involves a close analysis of competition concerns raised by the concerted practice, examination of expert opinions and other additional information. Although the review period is limited to three months from the AMC’s decision to initiate a Phase 2 review, it may be extended.

The AMC investigation initiated on a complaint by a third party or on its own initiative is limited to 30 calendar days, which can be extended by up to 60 calendar days. In such case, there are no strictly defined stages of investigation.

52.10. interim reliefA commercial court may grant interim remedies if failure to grant them would make the enforce-

ment of the future judgment on the merits of the case impossible or complicated. An administrative court may suspend the challenged act of the governmental or municipal body, or prohibit certain actions and grant interim relief in the event of an obvious danger to the rights or interests of the claimant, if the protection of such rights and interests may become impossible unless interim relief

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is granted, the renewal of such rights and interests may require considerable efforts and expenses, or if the challenged act or action of the defendant is clearly unlawful.

52.11. Enforcement by ordinary courtsThird parties having sustained loss as a result of an infringement to the Competition Act may

recover up to twice the amount of the loss suffered.

C. Sanctions

52.12. Cease and desist ordersThe AMC may issue an order to bring an infringement to an end and eliminate its consequences.

52.13. administrative sanctionsOnce the AMC establishes the violation, the participants to a prohibited action must pay a fine of

an amount not exceeding 10% of their turnover in the year preceding the year in which the fine was imposed. In addition to financial penalties, other sanctions may apply, such as ban on the companies’ cross-border activities with Ukraine, invalidation of the transaction, third party damages claims. In case of abuse of dominance, the AMC can also request a mandatory divestment of a dominant undertaking.

52.14. Criminal sanctionsForcing undertakings into anti-competitive concerted actions by violence or material harm or

threat of such violence or material harm is regarded as a criminal offense.

52.15. LeniencyThe Competition Act provides for a possibility to apply for full immunity. The AMC has recently

published a draft Leniency Regulation detailing the rules and procedures applicable to leniency applications in cartel cases, which came into force in early 2012.

Any person who voluntarily informs the AMC of an illegal agreement or a coordinated practice it has been a party to may gain full immunity against administrative liability if all of the following conditions are met:

- the applicant is the first to voluntary inform the AMC of the violation;- the information and evidence provided enable the AMC to prove the offense;- the applicant must provide all available evidence and information concerning the violation;- the applicant must take effective measures to cease its participation in the anti-competitive practices.

D. appeals

52.16. appeals against decisions of the aMCThe AMC decisions can be appealed by the parties or third parties in court within two months

of their issuance date.


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Section 2 MERGERS


52.17. ContextThe essential sources of the merger control regime are the Law of Ukraine on Protection of

Economic Competition of 2001 and the Act on the Antimonopoly Committee of Ukraine of 1993.

52.18. Concept of concentrationThe Competition Act (Section 22) provides for a comprehensive list of transactions subject to

merger control. The following transactions require a prior merger clearance:- merger of previously independent undertakings or takeover of one undertaking by another;- acquisition of direct or indirect control over an undertaking (including through the acquisition

of a significant part of the assets of an undertaking, appointment of its managers, etc.);- establishment by two or more undertakings of a new undertaking that will independently per-

form economic activities for a long period; this establishment may not result in co-ordination of competitive behavior of either its parents or the new undertaking and its parents;

- direct or indirect acquisition of control over shares that result in attaining or exceeding certain thres-holds (25% or 50% of the votes in the highest board of management of the undertaking concerned).

52.19. thresholdsThe concentration has to be notified and requires prior authorization of the AMC if all of the

following thresholds are exceeded:- the aggregate worldwide value of assets or turnover of the participants of the concentration in

the last financial year exceeds EUR 12 million;- the aggregate worldwide value of assets or turnover of at least two participants in the concentra-

tion in the last financial year exceeds EUR 1 million;- the aggregate worldwide value of assets or turnover in Ukraine of at least one participant in the

concentration in the last financial year exceeds EUR 1 million.

52.20. Control criteriaThe AMC approves the concentration if it does not result in monopolization or a significant

restriction of competition on the whole market or a significant part of it (Section 25). Even if the AMC has not authorized the transaction, the CMU may authorize it if a positive effect outweighs its adverse consequences on competition.

ii. Enforcement


52.21. Merger notification Participants in the concentration must obtain AMC prior approval before the completion of the

envisaged transaction. The Competition Act does not set any specific deadlines for filing; however, a transaction must be notified and cleared before closing. An informal discussion is possible between

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the AMC and the parties, who may refer to the AMC for a preliminary opinion on whether the concentration may be notified or whether the clearance is likely to be granted or refused.

The notification must be established in the form and with the contents required.The concentration requiring authorization is prohibited until it has been authorized. Moreover,

participants in the concentration must refrain from performing such actions that could result in the restriction of competition and in the impossibility of restoring the original state.

Filing fees are set at 300 times the non-taxable minimum personal income (EUR 500).

52.22. Proceedings before the aMCThe AMC considers the notification and decides whether it is complete and can be accepted for

review. The decision must be made within 15 days of the filing.Phase 1 of the review gives one month to the AMC to consider the notification. At this stage the

AMC decides whether the concentration is approved or whether it involves competition issues and requires more in-depth investigations.

Phase 2 of the review is initiated if grounds for the prohibition against concentration are established and if it is necessary to carry out thorough research. The AMC may request any additional information or order an expert examination. Third parties can be involved during this phase if the transaction may have the result of affecting their rights and interests. This stage cannot exceed three months.

Remedies may be offered and accepted at any time during the review but in practice they are usually discussed in Phase 2. If the transaction may lead to a restriction of competition, remedies cannot preclude the initiation of a Phase 2.

Pursuant to the review of an application the AMC may:- approve the transaction without any limitations ;- approve the transaction and issue binding prescription imposing obligations on the parties with

the aim to promote competition ;- refuse the transaction.

52.23. Proceedings before the CMUWithin a period of one month from the date when the AMC takes a decision to refuse a concen-

tration, it is possible to submit an application to the Cabinet of Ministers of Ukraine, which may take a reasoned decision authorizing or refusing the merger.


52.24. Commitments - DivestitureRemedies can be either behavioral or structural. In case of implementation before approval or after

prohibition, the transaction may be invalidated and divestment remedies applied.

52.25. FinesFailure to provide an application or to comply with a decision of prohibition can result in fines.

Implementation before approval can lead to impose on the parties a fine of up to 5% of the turnover of the purchaser from its worldwide sales of the last financial year. Failure to comply with a prohibi-tion decision may result in a fine of up to 10% of such turnover.


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C. appeals

52.26. appeals against decisions of the aMCThe AMC decisions can be appealed by the parties or third parties before the court within two

months of their issuance date.


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ChaPtEr 53

USa




B. Restrictive agreementsa) The prohibition

Per se rule, “rule of reason” and “quick look” analysis 53.03 Concerted action 53.04

b) Substantive offensesPrice-fixing 53.05Non-price restraints 53.06Group boycotts 53.07Tying arrangements 53.08Exclusive dealing agreements 53.09

C. Monopolizationa) The prohibition

Definition 53.10Relevant market 53.11Market power 53.12Behavioral requirement 53.13Attempting to monopolize 53.14Conspiracy to monopolize 53.15

b) Substantive offensesExclusionary practices 53.16Essential facilities doctrine 53.17Predatory pricing 53.18Category management 53.19

D. unfair practicesPrice discrimination 53.20

Promotional allowances 53.21Business torts 53.22


The Antitrust Division of the Department of Justice (DoJ) 53.23The Federal Trade Commission (FTC) 53.24

B. Enforcement proceedingsa) Complaints and investigations

Department of Justice civil investigations 53.25Department of Justice criminal investigations 53.26Federal Trade Commission investigations 53.27

b) SettlementPre-complaint settlement with the FTC 53.28Post-complaint settlement with the FTC 53.29Settlement with the Department of Justice 53.30

c) Administrative, civil and criminal proceedingsAdministrative proceedings 53.31Civil proceedings 53.32Criminal proceedings 53.33Interim relief 53.34

C. Sanctions/RemediesCease and desist orders 53.35Treble damages 53.36Fines 53.37Criminal sanctions 53.38Leniency 53.39

D. AppealCourts of Appeals review 53.40Supreme Court review 53.41

Section 2 Mergers

I. Substantive rulesA. Context

Section 7 of the Clayton Act 53.42B. Scope of control

Concept of mergers 53.43Control criteria 53.44Relevant market 53.45Thresholds 53.46

C. Horizontal mergersDefinition 53.47Agencies Guidelines 53.48Efficiency defense 53.49

Failing firm defense 53.50D. non-horizontal mergers

Definition 53.51Merger with potential entrant 53.52Vertical mergers 53.53Conglomerate mergers 53.54


The Department of Justice 53.55The Federal Trade Commission 53.56The Federal District Courts 53.57The State Attorneys General 53.58

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53.01. ContextAs a federal nation, the United States are governed by a two-tiered system of State and Federal

Governments in designated, mostly separate spheres. The Federal Constitution grants some powers to the federal government, but any powers not specifically granted are reserved to the states. The Federal Government is entitled to regulate and control interstate and international commerce, but not intrastate commerce. Thus, there are both Federal and State antitrust laws; however, since most state antitrust laws imitate the Federal laws, only the latter will be discussed.

Three principal Federal statutes govern competition in the United States. The Sherman Act covers anticompetitive agreements and monopolies. The Clayton Act deals with mergers, price discrimina-tion, and certain restrictive practices. Lastly, the Federal Trade Commission Act (FTCA) sets up the Federal Trade Commission (FTC) and broadly prohibits unfair methods of competition.

53.02. Scope1º) Sherman and Clayton ActToward the end of the last century, the proliferation of price-fixing cartels and large trusts esta-

blished to monopolize markets led to the adoption of the Sherman Act in 1890. Section 1 of the Sherman Act (15 U.S.C. § 1) prohibits contracts, combinations and conspiracies that unreasonably restrain trade. It has been used to strike down horizontal and vertical price-fixing, market allocation, group boycotts, exclusive dealing agreements and tying arrangements. Section 2 of the Sherman Act (15 U.S.C § 2) makes it unlawful “to monopolize,” and this standard has been deemed to require that the defendant willfully acquire or maintain its monopoly power. Thus, while the violations set forth in Section 1 of the Sherman Act require coordinated activity, Section 2 stretches to unilateral activity.

B. Enforcement proceedings a) notification

Context 53.59Notifying undertakings 53.60Waiting period 53.61Exemptions from notification 53.62

b) Proceedings before the agenciesSecond requests for information 53.63Administrative proceedings before the FTC 53.64

Preliminary injunctive relief 53.65C. Sanctions/Remedies

Injunctions 53.66Divestiture of assets 53.67Civil penalties 53.68

D. AppealsAppeals against cease and desist orders 53.69Appeals against decisions of the district courts 53.70Appeals against decisions of the Federal Courts of Appeals 53.71

Section 3 relationship to State law and State authorities

A. State antitrust legislationContext 53.72The Commerce Clause 53.73The Supremacy Clause 53.74

B. State enforcement of bans on anticompetitive conduct

The State Attorneys General 53.75The National Association of Attorneys General 53.76Coordination between Federal and State authorities 53.77


557

In response to concerns that court interpretations had deprived the Sherman Act of its strength, the Clayton Act was enacted in 1914. Although the Sherman Act had already been used to challenge tying arrangements under its general prohibition against agreements that unreasonably restrain trade, Section 3 of the Clayton Act explicitly bars tying and exclusive dealing arrangements (15 U.S.C. § 14).

The 1936 Robinson-Patman Act amended Section 2 of the Clayton Act in the area of price discri-mination. The amendments made it unlawful for a seller to vary prices in sales to purchasers of goods of like grade and quality when substantial competitive injury could result. The legislative history of the amendments reveals congressional concern that dominant sellers could misuse predatory price differentials to drive smaller competitors from the market (15 U.S.C. § 13).

The 1914 Federal Trade Commission Act (FTCA) established the Federal Trade Commission and empowered it to enforce both the FTCA and the Clayton Act (15 U.S.C. §§ 41-58). The FTCA is principally enforced through administrative proceedings before the FTC, though FTC cease and desist orders are subject to review in federal district court. The FTCA is a purely civil statute, and may not be relied on by private litigants. Suits pursuant to the FTCA may only lead to prospective equitable relief, not penalties or money damages.

Section 5 of the FTCA has been treated as essentially coterminous with the Sherman and Clayton Acts and thus can be used to challenge actions including monopolization, price-fixing, exclusive dealing, and anticompetitive group boycotts. The Supreme Court has also recognized that Section 5 can reach behavior that falls into the gaps of the antitrust framework and thus it has been used to strike down practices that fall outside the language of other statutes (15 U.S.C. § 45).

Congressional authority to enact Federal antitrust laws derives from the Commerce Clause, which allows it to regulate conduct involving interstate or foreign trade, as opposed to wholly intrastate conduct. The Sherman Act has been construed broadly to apply to any commerce that Congress is entitled to regulate. Even conduct that occurs wholly within a single state may be treated as inters-tate and subject to the Sherman Act if the conduct has a substantial effect upon interstate commerce (Hospital Building Co. v. Trustees of Rex Hospital, 425 U.S. 738, 1976). However, where the business that is the subject of the antitrust violation is almost entirely intrastate, the Sherman Act does not apply (YellowCab Co. v. Cab Employers, Automotive & Warehousemen Local No 881, 457 F.2d 1032 (9th Cir. 1972)).

In this regard, the scope of the Clayton Act appears more restrictive than that of the Sherman Act. Thus, in suits for price discrimination, the Supreme Court has held that the commerce requirement is satisfied only where the goods that are the subject of the transaction cross State lines in moving from seller to buyer (Gulf Oil Corp. v. Copp Paving Co., 419 U.S. 186 (1974)). In addition to this more limited reading of the commerce requirement, price discrimination and other claims under Section 3 of the Clayton Act are restricted to commodities and cannot be based on discrimination in the sale of services or other intangible items.

2º) Foreign commerceWith regard to foreign commerce, the antitrust laws explicitly apply to “commerce... with foreign

nations” and thus acts that take place within the US involving foreign commerce are clearly covered (15 U.S.C. § 3). Under the Foreign Trade Antitrust Improvements Act of 1982, 15 U.S.C. § 6a, a distinction is made between import trade flowing into the US and export trade flowing out of the US or trade occurring wholly abroad. Jurisdiction may be asserted over export trade or trade occurring wholly abroad only if the defendant’s conduct has a “direct, substantial and reasonably foreseeable effect” on US domestic trade or import trade, or on a person engaged in US export trade. In the case of the latter, persons engaged in US export trade bringing an antitrust claim must allege that they personally have suffered an antitrust injury because of the activity (Access Telecom, Inc. v. MCI Telecommunications Corp., 197 F.3d 694 (5th Cir. 1999)).

3º) Excluded sectorsThe scope of the antitrust laws is limited with respect to specified areas of activity. Thus, the fields

of insurance, labor activities, agricultural cooperatives, export trade and activities are all to some degree excluded from the coverage of the antitrust laws. These are discussed in turn below.

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The 1945 McCarran-Ferguson Act (15 U.S.C. §§ 1011-1015) provides that the “business of insurance” is covered by the Sherman Act only to the extent that such business is not regulated by State law. Since State law broadly regulates insurance matters, most of such business will not be covered by the Sherman Act. The McCarran-Ferguson Act does, nevertheless, provide that agree-ments to boycott will be covered by the Sherman Act regardless of whether they relate to the business of insurance.

The formation and activities of labor unions are not covered by the antitrust laws pursuant to Section 6 of the Clayton Act (15 U.S.C. § 17). The Supreme Court held that this exemption for labor unions may extend to collective action by employers where such action is ancillary to the collective bargaining process (Brown v. ProFootball, Inc., 518 U.S. 231 (1996)). Likewise, Section 20 of the Clayton Act, (29 U.S.C. § 52), and Section 4 of the Norris-LaGuardia Act, 29 U.S.C. § 104, restrict the use of injunctive relief against certain types of labor activities.

A relatively narrow exclusion from the antitrust laws exists for agricultural cooperatives. Price-fixing and other joint marketing activities by farm cooperatives are not covered by antitrust laws where the association conforms to certain requirements (7 U.S.C. § 291). The challenged activity must be reasonably related to bona fide collective marketing efforts and must not go further than necessary for the legitimate needs of collective marketing (see, e.g., United States v. Borden, 308 U.S. 188 (1939)), holding that exclusion does not extend to conspiracies with non-members of the coo-perative).

Next, the Export Trading Company Act of 1982 (15 U.S.C. §§ 4001-4021) authorizes the Commerce Department to issue an export trade certificate where an applicant satisfies the criteria set forth (15 U.S.C. § 4013). With regard to the conduct specified in the certificate, the holder is exempt from civil or criminal action under any of the antitrust laws, State or Federal, and the tradi-tional antitrust standards are replaced with a series of competitive standards of behavior. Potential exposure is also reduced since a violation of these special standards is subject only to actual damages rather than treble damages.

Under the so-called Noerr-Pennington doctrine, antitrust laws are inapplicable to individual or group action intended to influence legislation even if the proposed legislation could be deemed to have an anticompetitive purpose. Thus, in Eastern Railroad Conference v. Noerr Motor Freight, (365 U.S. 127 (1961)), railroad companies which sued for a joint publicity campaign seeking to prompt the legislator to impede trucking companies from competing with them, were held immune from the antitrust laws although the court admitted they had an “anticompetitive purpose”. This immunity has since been extended to individual or joint action designed to influence executive branch officials (United Mine Workers of America v. Pennington, 381 U.S. 657 (1965)) or administrative agencies (California Motor Transp. Co. v. Trucking Unlimited, 404 U.S. 508 (1972)), or to action filed before state or federal courts for the defense of legal rights (Professional Real Estate Investors, Inc. v. Columbia Pictures Industries, Inc., 508 U.S. 49 (1993)).

4º) State actionIn addition to the exclusions from coverage for certain areas of activity, there are limits on the

scope of the application of antitrust laws to some entities. Supreme Court decisions have concluded that Congress did not design the Sherman and Clayton Acts to be enforced against action taken by State governmental bodies and thus, that these entities enjoy an implied immunity (Hoover v. Ronwin, 466, U.S. 558 (1984)), dismissing an antitrust challenge to bar examination on the grounds of implied immunity where examination was administered by the state Supreme Court). Likewise, according to the “filed rate doctrine”, immunity from application of the Sherman and Clayton Acts is granted to the individual or collective determination of tariffs or rates by undertakings under the approval of a Federal regulatory agency (Keogh v. Chicago & N.W. Ry. Co., 260 U.S. 156 (1922)). In 1984, Congress enacted the Local Government Antitrust Immunity Act, 15 U.S.C. §§ 34-36, which expressly removed the availability of damages claims against cities, towns, villages and other govern-mental subdivisions as well as against local Government officials, agents or employees acting in an official capacity, while maintaining injunctive relief against municipalities.


559

Although foreign nations are generally immune from suit in the United States under the Foreign Sovereign Immunities Act (28 U.S.C. §§ 1330, 1602-1611) a foreign sovereign may be subject to suit for commercial activity carried on in the United States whether or not in connection with com-mercial activity carried out elsewhere (28 U.S.C. § 1605). Likewise, private parties are immune from antitrust liability for acts carried out in a foreign nation as required by a foreign Government (see, e.g., Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690 (1962)).

5º) Non-profit organizationThe status of an organization as a non-profit entity does not prevent its activities from being

subject to antitrust scrutiny (Hamilton Chapter of Alpha Delta Phi v. Hamilton College, 128 F.3d 59 (2nd Cir. 1997)). Nevertheless, actions by a non-profit entity may be exempt on grounds that they do not constitute “commercial activity” within the meaning of the antitrust laws (see Dedication & Everlasting Love to Animals v. Humane Society of the United States, Inc., 50 F.3d 710 (9th Cir. 1995)), where the solicitation of donations by a nonprofit organization was not deemed to constitute trade or commerce. However, in United States v. Brown University, (5 F.3d 710 (3rd Cir. 1993)), the court held that financial aid to students constitutes commerce subject to the Sherman Act.


a) The prohibition

53.03. “Per se” rule, “rule of reason” and “quick look” analysisSection 1 of the Sherman Act proscribes any “contract, combination… or conspiracy” that restrains

domestic or foreign commerce (15 U.S.C. § 1). Since this provision read literally would prohibit any commercial contract or action that has the effect of restraining trade, the Supreme Court has inter-preted this Section as prohibiting only restraints of trade that unreasonably restrict competition (Standard Oil Co. of N.J. v. United States, 221 U.S. 1 (1911)). Courts determining whether a practice unreasonably restrains trade apply either the per se rule, the “rule of reason,” or the intermediate “quick look” standard.

Practices with obvious anticompetitive effects are presumed unreasonable and declared illegal without factual inquiry. In this regard, the Supreme Court has held that, “There are certain agree-ments or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable.” (Northern Pacific Railway Co. v. U.S., 356 U.S. 1 (1958)). These per se offenses include horizontal price-fixing, market division, and group boycotts. In such cases, only one element of proof is required from the plaintiff: the existence of the practice. Neither is he/she required to prove it produces an unreasonable restraint nor is the defendant allowed to claim its reasonableness.

Other restraints are examined under the “rule of reason” analysis. Delineating the relevant market is generally the first step in this analysis, although the Supreme Court has held that direct proof of harm to competition can obviate the need for such an inquiry (Federal Trade Comm’n v. Indiana Federation of Dentists, 476 U.S. 447 (1986)). Next, the plaintiff must establish that the defendant has enough market power to actually threaten competition. Market power can be defined as the ability to control prices, restrict output, or exclude competition. Courts then consider the particular nature of the restraint and its apparent effect including the impact on existing and prospective competitors, the structure of the industry, barriers to entry, efficiency gains or losses, and the strength of the defendant relative to competitors.

A final indicator of reasonableness is whether the restraint was intended to implement a legitimate business objective; good intentions are not conclusive where a restraint actually has unreasonable an-ticompetitive effects. The court then balances the harm against any countervailing pro-competitive justification, such as increased efficiencies in the operation of the market or the provision of goods and services, in order to determine whether the restraint unreasonably harms competition.

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The “quick look” analysis applies where the challenged conduct does not involve a per se restraint but the likelihood of anticompetitive harm nevertheless appears at first glance to be high. In such cases, the burden shifts to the defendant to justify the effect on competition of its conduct. If the defendant makes a plausible showing that the effect on competition is not unreasonably harmful, then the burden shifts back to the plaintiff to prove its case under the full rule of reason analysis.

53.04. Concerted actionA key requirement in finding a Section 1 violation is that the challenged conduct must involve

concerted action rather than the unilateral behavior of separate actors. Written agreements, contem-poraneous oral statements, or circumstantial evidence may all be used to infer the existence of concerted conduct, (see, e.g., American Tobacco Co. v. United States, 328 U.S. 781 (1946)), finding a conspiracy where there existed parallel conduct that would not otherwise be expected). On the other hand, coincidental behavior that can be explained on legitimate business grounds does not establish a conspiracy (Williamson Oil Co., Inc. v. Philip Morris USA, 346 F.3d 1287 (11th Cir. 2003)), parallel though individual price increases in an oligopoly market). Joint action involving a corporation and its unincorporated divisions or controlled subsidiaries also does not constitute concerted action (see Copperweld Corp. v. Independence Tube Corp., 467 U.S. 752 (1984)).

b) Substantive offenses

53.05. Price-fixing Horizontal price-fixing, in which firms at the same level of the market structure agree upon the

prices they will charge customers or pay suppliers, violates Section 1 of the Sherman Act and is deemed per se illegal (United States v. Socony Vacuum Oil Co., 310 U.S. 150 (1940)). This prohibition is broad and applies regardless of whether the price set is reasonable (United States v. Trenton Potteries Co., 273 U.S. 392 (1927)), and even when the agreement merely indirectly affects prices, such as agreements to lower quality, exchange pricing information, or use uniform terms of credit. The per se rule also applies when firms at the same level of the market structure fix maximum prices (see Arizona v. Maricopa County Medical Soc., 457 U.S. 332 (1982)), where an agreement between physi-cians to set maximum fees was held contrary to Section 1 of the Sherman Act).

Vertical price-fixing (resale price maintenance) occurs when firms at different levels of the market structure, such as a manufacturer and one of its dealers, agree to fix prices at one or both levels, either at a set amount or within a prescribed range. Vertical price fixing agreements – determining either “floor prices” or “ceiling” prices - have long been viewed as per se violations of Section 1 of the Sherman Act. However, the Supreme Court initiated a reversal of its doctrine in 1997.

While in early cases, vertical maximum price-fixing or “ceilings,” were held per se illegal (Albrecht c. Herald Co., 390 U.S. 145 (1968)), the Supreme Court, in State Oil Co. v. Kahn (495 U.S. 328 (1997)), hearing the pleas that the condemnation of practices resulting in lower prices to consumers is likely to harm both consumers and manufacturers, held that “vertical maximum price fixing […] should be evaluated under the rule of reason”. The Court insisted, however, that “arrangements to fix minimum prices […] remain illegal per se”. The latter prohibition, set in Dr. Miles Medical Co. v. John D. Park & Sons Co. (220 U.S. 373 (1911)) was finally overruled in Leegin Creative Leather Products, Inc. v. PSKS, Inc. (551 U.S. 877 (2007)). In this case the Supreme Court highlighted the many potential procompetitive effects for the practice: “Minimum resale price maintenance can stimulate interbrand competition among manufacturers selling different brands of the same type of product by reducing intrabrand competition among retailers selling the same brand […]. This […] in turn encourages retailers to invest in services or promotional efforts that aid the manufacturer’s position as against rival manufacturers. Resale price maintenance may also give consumers more options to choose among low-price, low-service brands; high-price, high-service brands; and brands falling in between. Absent vertical price restraints, retail services that enhance interbrand competition might be underprovided because discounting retailers can free ride on retailers who furnish services and


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then capture some of the demand those services generate. Retail price maintenance can also increase interbrand competition by facilitating market entry for new firms and brands and by encouraging retailer services that would not be provided even absent free riding”. It concluded that per se prohi-bition of minimum price fixing is no longer relevant and that vertical price restraints should now be judged according to the rule of reason.

Price suggestions, contrary to fixed prices, do not constitute a violation of the Sherman Act even where the supplier refuses to deal with customers who refuse to apply the suggested prices (United States v. Colgate & Co., 250 U.S. 300 (1919)). On the other hand, where a supplier demands express assurances of compliance with price suggestions (see U.S. v. Parke, Davis & Co., 362 U.S. 29 (1960) or forces compliance (see Simpson v. Union Oil Co. of California, 377 U.S. 13 (1964)), such conduct may satisfy the concerted action requirement and constitute illegal vertical price-fixing.

53.06. non-price restraintsNon-price restraints include agreements to divide sales territories or allocate customers (market

division). Such agreements are indirect forms of output restriction. The Supreme Court has generally applied a formalistic horizontal/vertical distinction, treating such restrictions as per se violations where they are between horizontally situated firms, even if unaccompanied by price-fixing. However, in National Collegiate Athletic Assn. v. Bd. of Regents of Univ. of Oklahoma (468 U.S. 85 (1984)), the Supreme Court decided to apply a “quick look” rather than a per se standard to a horizontal agreement affecting output considering the particulars of the affected industry. In the same way, the Antitrust Division of the Department of Justice and the Federal Trade Commission issued Antitrust Guidelines for Collaborations Among Competitors, 2000, where the agencies commit to analyze “agreements […] reasonably related to, and reasonably necessary to achieve procompetitive benefits from, an efficiency-enhancing integration of economic activity” according to the rule of reason.

On the other hand, non-price arrangements between vertically situated firms (and now price agreements too) are analyzed using the rule of reason and condemned only when unreasonable given the totality of the economic circumstances of the market. This greater judicial tolerance reflects the view that such restrictions can serve pro-competitive business justifications, such as stimulating interbrand competition, allowing new or weak market participants to induce dealers to promote their products, to attract companies willing to make capital investments, or to ensure control of product quality or safety (see Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36 (1977)), where the rule of reason, rather than a per se prohibition, was applied to a franchisor’s ban on the franchisees opening outlets elsewhere than in their assigned area).

53.07. Group boycottsThe Sherman Act concept of the group boycott, or concerted refusal to deal, refers to commer-

cially motivated action by groups of traders against their competitors, customers or suppliers. Early case law concluded that group boycotts are per se illegal, and thus could not be justified by the defen-dants on grounds that they were reasonable or by demonstrating that the boycott did not affect prices (Klor’s, Inc. v. Broadway-Hale Stores, 359 U.S. 207 (1959)).

The per se standard has been applied to at least four types of classic group boycott cases. The first type concerns group boycotts aimed at ousting a price cutter from the market. A second per se category involves the exploitation of joint market power or control over resources to freeze actual or potential competition. A third category covers the conduct of companies sharing market power who direct their power vertically to force their suppliers or customers to enter into unconscionable arrangements. Finally, the per se standard has been applied to horizontal agreements, regardless of the shared market power of the defendants, where their suppliers or customers are induced to refuse sales or supplies to competitors.

More recently, the Supreme Court narrowed earlier case-law by ruling that “not every cooperative activity involving restraint or exclusion will share with the per se forbidden boycotts the likelihood of predominantly anticompetitive consequences” (Northwest Wholesale Stationers v. Pacific Stationary &

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Printing Co., 472 U.S. 284 (1985)). In the case before it, the Court held that unless the plaintiff de-monstrated that the defendant cooperative possessed market power or “exclusive access to an element essential to competition”, then the rule of reason should apply to claims that excluding a member from a wholesale purchasing cooperative constitutes a concerted refusal to deal.

Thus, even in cases where a horizontal agreement exists, courts have sometimes applied the rule of reason rather than the per se standard if the boycotting group did not meet a market power threshold or where the group action was clearly directed at legitimate business, health or safety objectives. Likewise, non-economic boycotts intended to advance political, religious or other non-commercial goals do not violate Section 1 of the Sherman Act.

53.08. tying arrangements Tying arrangements are agreements by which a seller makes the sale of one product dependent

on the purchase of another. Tying arrangements may be challenged under Section 1 of the Sherman Act as a violation of the general prohibition against “unreasonable restraint[s] of trade,” or under Section 3 of the Clayton Act, which explicitly bars sellers from conditioning sales of a commodity on forbearance from purchasing their competitor’s products if the effect may be to lessen competition.

In early cases, the Supreme Court held that although a plaintiff could prevail on a tying claim under Section 3 of the Clayton Act by establishing either that the tying defendant has a “monopo-listic position in the market” or a restraint of a significant volume of commerce in the tied product, both elements had to be present in order to prove a tying claim under the Sherman Act. The Court has subsequently held that the standards applied under Section 1 of the Sherman Act are the same as those of Section 3 of the Clayton Act. The Clayton Act’s prohibition, however, applies only where both the tying and the tied product are commodities.

Tie-ins are presumed unlawful if the seller has sufficient market power to impose the tie-in. The plaintiff must establish the following five elements: (1) that the tie affects more than a de minimis amount of interstate commerce; (2) if the tying is not express, that the buyer was coerced into buying the tied product as a condition of buying the tying product; (3) that the two products are separate; (4) that the defendant has economic power in the market; and (5) that there is no valid business justification for the tied sale.

In determining whether a sufficient volume of interstate commerce is affected, the focus is on the absolute dollar amount of all tied sales rather than the share of the market that such sales represent.

Products are deemed separate for the purposes of a tying claim if there is sufficient consumer demand for firms to justify providing one item without the other. Thus, in determining whether there are two products involved, the inquiry looks into whether the products are distinguishable in the eyes of buyers and does not turn on the functional relation between the two products.

The coercion standard is met if business realities “practically compel” the use of the tied product. The Court has rejected the initial requirement that a defendant must possess monopolistic or dominant control in favor of an inquiry that examines whether the defendant’s power is sufficient to force consumers to buy something they would not purchase in an unrestrained market. There was a presumption that the defendant enjoyed market power where it offered a unique product, or where the product was protected by patent or copyright. The Supreme Court reversed that case-law in Illinois Tools Works, Inc. v. Independent Ink, Inc., 547 U.S. 28 (2006), holding that “a patent does not necessarily confer market power upon the patentee ... in all cases involving a tying arrangement, the plaintiff must prove that the defendant has market power in the tying product”. Where a plaintiff fails to prove that the defendant has market power in the tying market, it may nevertheless try to show that the challenged arrangement violates the rule of reason.

Even if the other elements are met, tying may be allowed where necessary to a lawful purpose, such as quality control in franchise agreements, or to a new entrant into the market in order to establish its reputation. Thus, although the per se designation theoretically precludes defenses based on the reasonableness of the conduct, even in such cases courts have generally considered the existence of business justifications for tying arrangements.


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Moreover, until courts develop sufficient experience with a particular industry, tying claims should be evaluated under the rule of reason analysis rather than classified as per se violations (United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001), holding that the court considering a novel claim relating to the technological integration of added functionality should apply the rule of reason).

53.09. Exclusive dealing agreements Exclusive dealing agreements consist in a commitment by a supplier to sell its output exclusively

to a particular buyer or by a buyer to source all or a substantial portion of its supplies from a single seller. These agreements have been treated more leniently than tying arrangements, since they may have pro-competitive effects and the seller may pursue objectives other than anticompetitive. Thus, such agreements are assessed pursuant to the rule of reason.

The key factor in determining the validity of an exclusive dealing agreement is whether it effecti-vely forecloses actual or potential rivals’ access to the retail market.

Courts first determine the relevant market. As is the case for monopolization or for mergers, for the purposes of Section 1 of the Sherman Act, the relevant market is considered both in terms of product and geographic market.

Having determined the relevant market, courts then look to see whether a substantial share of the relevant market is foreclosed. In making the latter inquiry, they consider the relative strength of the parties, the proportional volume of commerce, and the probable immediate and future effects of the agreement on commerce. A virtual safe harbor exists where the percentage of the market foreclosed is twenty percent or less, and in Jefferson Parish Hospital District No 2 v. Hyde, 466 U.S. 2 (1984), the Supreme Court upheld an exclusive dealing agreement where the market share foreclosed was thirty percent. The duration of the agreement is also relevant, with shorter agreements and agreements with short notice periods for termination more likely to be upheld.

As with tying arrangements, the restraint can be challenged under Section 3 of the Clayton Act if it involves a commodity. Claims falling outside the scope of Section 3 may be brought under Section 1 of the Sherman Act, both requiring now identical proof of a probable competition-lesse-ning effect. Section 5 of the FTCA may also reach exclusive dealing arrangements although the sanctions available are more limited.

C. Monopolization

a) The prohibition

53.10. Definition Section 2 of the Sherman Act sets a prohibition on monopolizing, attempting to monopolize, or

combining or conspiring with any other person or persons to monopolize any part of the trade or commerce among the several states or with foreign nations (15 U.S.C. § 2). A violation of Section 2 occurs where an individual firm or a group of firms willfully acquires monopoly power in the relevant market, “as distinguished from growth or development as a consequence of a superior product, business acumen, or historic accident”, as the Supreme Court clarified it in United States v. Grinnell Corp., (384 U.S. 563 (1966). The implementation of Section 2 thus requires to determine the relevant market and the existence of market power, and to assess the behavior or the monopolist.

53.11. relevant marketThe relevant market is considered both in terms of product and geographic market. To define

the relevant product market the control authorities notably look at both the existence of reasonably interchangeable products to those of the defendant and the cross-elasticity of demand, that is, the extent to which consumers are likely to shift from a product to another in response to changes in their relative cost. In addition, practical indicia of product markets or submarkets that were initially

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developed in the context of merger cases have been applied in monopolization cases. These include industry or consumer recognition of products as distinct, peculiar characteristics or uses of a product, unique production facilities, distinct customers, distinct prices, sensitivity to price changes and spe-cialized vendors. The Horizontal Merger Guidelines jointly issued by the DoJ and the FTC in 1992 and replaced in 2010 elaborate further on these standards. Moreover, the Supreme Court has affirmed that in some instances one brand of a product can constitute a separate market (Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451 (1992)).

Defining the relevant geographic market focuses on the geographic area within which the defendant operates and to which customers can practicably turn for supplies. Key factors may include the area in which the defendant markets its products, the area within which the plaintiff seeks to compete, the characteristics of the products, regulations affecting the flow of goods, shipping limitations…

53.12. Market powerMarket power is defined as the power to control prices or exclude competition. The most important

factor in determining the existence of monopoly power is the alleged monopolist’s market share. Although the Supreme Court has refused to specify percentage figures, a market share in excess of 70 percent in the relevant market almost always supports an inference of monopoly power, although this may be overcome by other evidence. (United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 391 (1956)). On the other hand, courts rarely find monopoly power where the market share is less than fifty percent.

Other evidence used to establish such power includes the ability to apply supra-competitive prices or to force actual or potential competitors out of the market. The strength of competition whether actual or potential, the size of the defendant compared to that of its competitors, the probable deve-lopment of the industry, barriers to entry, the elasticity of customer demand are also useful indicators of monopoly power.

Lastly, in a regulated industry, where regulatory authorities exercise control over prices and market entry, courts are less likely to find that defendants are able to control prices or exclude competition even if they enjoy a high market share.

53.13. Behavioral requirement The offense of monopoly under Section 2 of the Sherman Act implies the existence of two

elements: first, the possession of market power in the relevant market and, second, the willful acqui-sition or maintenance of that power. Thus, according to the first element, the control authorities consider only whether monopoly power exists rather than whether it is exercised. Courts have held that in considering whether a monopoly exists it is not material whether prices are raised or competi-tion actually excluded, but only whether the undertaking has the power to do so. Where a monopoly power exists for only a short time, however, this may not support a monopolization claim.

Although the vast majority of cases address the monopoly power of sellers, a buyer may also possess power over prices and entry to the market (monopsony power).

With regard to the second element, the “deliberateness” requirement, it is well established that the mere possession of monopoly power is not unlawful if a firm has gained market dominance simply by being the most successful competitor. Section 2 makes it unlawful “to monopolize,” which requires that the defendant willfully acquire or maintain its monopoly power. A willful monopoly is easy to identify where the defendant has engaged in clearly illegal practices such as boycotts, tying agree-ments and other anticompetitive practices. However, where the defendant’s conduct would not be illegal absent its market power, courts ask whether its conduct had a rational business purpose other than its adverse effect on competitors.


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53.14. attempting to monopolizeSection 2 of the Sherman act also prohibits attempts to monopolize by companies that do not

yet possess market power but use anticompetitive conduct in an attempt to achieve it. The plaintiff must establish: i) the relevant market; ii) predatory or anticompetitive conduct from the defendant; iii) a specific intent to monopolize; and iv) a dangerous probability of achieving monopoly power (Spectrum Sports, Inc. v. McQuillan, 506 U.S. 447, (1993)).

53.15. Conspiracy to monopolizeFinally, Section 2 of the Sherman Act prohibits combining or conspiring to monopolize, both

where the conspirators jointly possess actual monopoly power (joint monopolization) and where monopoly power has not yet been achieved.

With regard to joint monopolization, if the existence of a conspiracy is established and it is shown that the participants jointly possess monopoly power, the plaintiff need only establish that the necessary and direct result of their joint conduct is the expansion or maintenance of their combined monopoly position; it is unnecessary to show that the conspirators acted with a particular purpose.

b) Substantive offenses

53.16. Exclusionary practicesAll types of exclusionary practices may satisfy the behavioral requirement. Thus, a Section 2

violation is established where a monopolist charges a wholesale price greater than the retail price (price squeeze), opposes an unjustified refusal to deal, uses its monopoly power in one market in order to monopolize a second market (leveraging), introduces new products with a predatory intent or imposes contractual clauses – e.g. long-term leases – to the disadvantage of competing underta-kings.

53.17. Essential facilities doctrinePursuant to the essential facilities doctrine, a monopolist must not unreasonably deny compe-

titors access to essential resources or facilities that it controls. The 7th Circuit Court held in MCI Communications Corp. v. AT&T (708 F.2d 1081 (7th Cir.) (1983)), that an essential facilities claim has standing if the plaintiff establishes that: i) the monopolist controls an essential facility or output; ii) the facility cannot reasonably or practicably be duplicated; iii) he/she is unreasonably denied access to the facility; and iv) access to the facility without interfering with the defendant’s use is feasible.

Applying the essential facilities doctrine in the case before it, the Court held that it was an act of monopolization for AT&T to refuse to provide a rival telephone company with access to the local telephone loop. The doctrine has also been applied to railroad lines (United States v. Terminal R.R. Ass’n, 224 U.S. 383 (1912)), electric transmission lines (Otter Tail Power Co. v. United States, 410 U.S. 366 (1973)), natural gas pipelines (Woods Exploration and Producing Co. v. ALCOA, 438 F.2d 1286 (5th Cir. 1971), and a professional football stadium (Hecht v. Pro-Football, Inc., 570 F.2d 982 (D.C. Cir. 1977)).

53.18. Predatory pricingPredatory pricing is defined as pricing below an appropriate measure of cost for the purpose of eli-

minating competitors and reducing competition. Section 2 of the Sherman Act prohibits predatory pricing where it is undertaken by a monopolist or attempted monopolist and there is a genuine threat of monopolization. Section 3 of the Robinson-Patman Act prohibits predatory pricing for the purpose of “destroying competition or eliminating a competitor” (15 U.S.C. § 13).

With regard to predatory pricing, the Supreme Court has held that competitive harm exists where at least two criteria are satisfied. First, the prices complained of must be below-cost. Second, the

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competitor must have either a “reasonable prospect” or a “dangerous probability” of recouping its investment in below-cost prices (Brooke Group, Ltd. v. Brown & Williamson Tobacco Corp., 509 U.S. 209 (1993)). Although the intent of the undertaking concerned is relevant to the inquiry, liability for predatory pricing is not necessarily founded solely on evidence of predatory intent.

With regard to a claim under Section 2 of the Sherman Act, pricing only meets the “predatory” standard where the market share requirements for monopolization are satisfied. Alternatively, although a claim under Section 3 of the Robinson Patman Act can be brought against a defendant who is not a monopolist, courts will nevertheless measure the market’s conduciveness to oligopoly when predatory pricing is considered under this heading.

The Supreme Court has interpreted the standard for predatory pricing restrictively, emphasizing that predatory price cutting must be distinguished from pro-competitive price cutting (see, e.g., Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986), stating that “[w]e must be careful lest a rule or precedent that authorizes a search for a particular type of undesirable pricing behavior end up by discouraging legitimate price competition”).

In determining whether a price is below-cost, the first issue is identifying the relevant product. Differences have arisen as to whether the price-cost comparison should be made for each product or across an entire product line. Likewise, challenges have sometimes been based on the predatory pricing of a package of products sold together. The analysis appears to depend on the nature of the predatory pricing and its effect. Thus, if predatory pricing of one product is sufficient to remove a competitor from the market, then the analysis will be limited to this single product. Consequently, a supermarket that adopts a predatory policy with respect to only one of the hundreds of products it sells will not normally be considered as acting in a predatory way, since the effect of such a pricing policy is generally considered insufficient to have an anticompetitive effect.

Once the product or products have been identified, the controlling issue is whether a given price for the relevant product is below-cost. In this regard, courts have adopted the Areeda and Turner test as the legal test of predatory pricing. Costs can be divided into four categories. First, there are fixed costs that do not vary with output. Next there are variable costs, such as materials and labor that depend upon the output produced. Determining which costs are variable is an issue of fact for the jury. Third, total costs equal fixed costs plus variable costs. Fixed, variable and total costs can all be expressed as averages by dividing them by the total output. A firm selling below its average total cost will eventually go out of business since most fixed costs are eventually variable, such as a plant that will need to be replaced. Lastly, the marginal cost is the change in total costs brought about by increasing or decreasing production output by one unit. Because selling below marginal cost is inconsistent with profit maximizing behavior and gives rise to an inference of irrational or strategic behavior, Areeda and Turner initially suggested that courts adopt this as the standard for determining whether a firm was engaged in predatory price cutting. The actual practical difficulties of determi-ning marginal costs in litigation ultimately led courts to use average variable costs as a proxy. In sum, the Areeda and Turner test has been adopted with varying inflections by all of the Circuit Courts, and thus as a general rule pricing below average variable cost will satisfy the below cost element.

The plaintiff must also establish the likelihood of recoupment of losses initially sustained from be-low-cost pricing. Recoupment is possible where, first, the below-cost pricing drives the target out of the market and, second, the market is susceptible to monopoly pricing following the victim’s exit. In making the latter assessment, relevant considerations include market shares in the relevant product market, ease of entry into the market, and excess capacity. Thus, where new entry into the market is easy, it is unlikely that the monopoly can be sustained for a sufficiently long period for recoupment to occur. Likewise, if the defendant lacks the excess capacity to absorb the market share of rivals and cannot quickly purchase or create such capacity, recoupment is unlikely.

Given that it is sometimes easier to determine the likelihood of recoupment than to establish whether a price is below cost, some Circuit Courts have made the former the initial hurdle in predatory pricing cases, thus avoiding the need for the price-cost analysis.


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53.19. Category managementCategory management is where a retailer manages its business on a product category basis and

appoints one supplier as the category captain, who collects information on all brands in the category and develops a category management plan to be presented to the retailer. In Conwood Co. v. United States Tobacco Co. (2002 FED App. 0171P (6th Cir.)) the Court of Appeals for the Sixth Circuit held, on 15 May 2002, that a category captain infringed Section 2 of the Sherman Act by abusing its category captain status. In fact, the defendant “used its position as category manager to exclude competition by suggesting that retailers carry fewer products, particularly competitor’s products, by attempting to control the number of price value brands introduced in stores and by suggesting that stores carry its slower-moving products instead of better-selling competitor products”.

D. Unfair practices

53.20. Price discriminationPrice discrimination is actionable under the Robinson-Patman Act, which amended the Clayton

Act (15 U.S.C. § 13), as well as under Section 2 of the Sherman Act. Courts have defined price discrimination within the meaning of the Clayton Act as “merely a

difference in price.” (Federal Trade Commission v. Anheuser-Busch, Inc., 363 U.S. 536 (1960)). Even where a commodity is sold to two buyers at the same price, the prohibition may apply if one receives significantly better terms for return, warranty services or other benefits. In order to establish a price difference, sales must be reasonably contemporaneous so that the differential is not the result of a changing market.

The commodities at issue must be of “like grade and quality” (15 U.S.C. § 13 (a)). This inquiry considers whether there are differences affecting customer use, perception or marketability. The dif-ferences must be in the actual product, not merely in the trademark, and alterations must be “signi-ficant” to render goods unlike.

Often, the most difficult element for the plaintiff at trial is to adequately demonstrate that there is a “reasonable possibility” that competitive harm will ultimately result from defendant’s acts. Analytically, the inquiry differs depending on whether the injury asserted is at the seller’s own competitive level (primary line injury) or at some lower level of the distribution hierarchy (secondary line injury).

The Supreme Court has clarified that primary line injury under the Robinson-Patman Act is essentially the same as a predatory pricing claim under Section 2 of the Sherman Act. As set forth above in the context of actual or attempted monopolization, in order to find predatory pricing both statutes require evidence that the challenged prices were below an appropriate measure of costs and that the defendant had a reasonable prospect of recoupment.

With regard to secondary line cases, competitive injury may be established by evidence of subs-tantial price discrimination between competing purchasers over a significant period of time. No competitive injury exists unless the favored and disfavored purchasers operate in the same geogra-phic market. Thus, at least one Court of Appeals has held that favorable pricing to direct end buyers falls outside the Clayton Act since the allegedly disfavored plaintiff was not in competition with the advantaged end users (Lycon, Inc. v. Juenke, 250 F.3d 285 (5th Cir. 2001)).

Even where a prima facie case of price discrimination is established, a defendant has a number of affirmative defenses. A defendant may justify price discrimination on grounds that the price diffe-rential is due to cost savings from the different methods or quantities in which the product is sold or delivered, or to meet a competitor’s low price (15 U.S.C. § 13(b)). Price discrimination can additio-nally be defended against on the grounds that the reduced price was also available to the allegedly disfavored customer. Finally, under the “functional discount” justification, a supplier can reward the additional services performed by a category of customers in the course of their distribution function as opposed to others not providing such services.

Buyer liability for knowing inducement or receipt of discriminatory prices is covered by Section 2(f ). Buyer liability is entirely derivative and it cannot be found absent seller liability.

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53.21. Promotional allowancesSections 2 (d) and (e) of the Clayton Act require that payment for services or facilities furnished

in connection with processing, handling or sale of commodities bought for resale be made upon proportionally equal terms. These Sections are limited to advertising or promotional allowances provided in connection with the resale of the seller’s goods.

Section (d) is limited to discrimination between “customers,” while Section 2(e) is limited to dis-crimination between purchasers. A sales agent is not a customer under Section 2(d), but may be a purchaser under Section 2(e).

The FTC has concluded that a prima facie case under both provisions must include proof that pro-motional offers were not affirmatively made available to the injured customer. A promotional offer is made available where a supplier takes reasonable steps to make the offer known to all competing customers.

53.22. Business tortsTort law is a judge-made law which varies from State to State. Tort law also exists at the Federal

level. One should read each of the major court cases discussing torts to get a clear picture of how to define tort. In the 1990’s, new torts category appeared: business torts General consensus includes as business torts unfair competition and tortious interference with contractual relations. Those also come under the scrutiny of Section 5 of the FTCA. Indeed, some competitor’s activities may be found by a court to be unfair, such as using illegal methods to compete or using methods solely designed to destroy a competitor with no other purpose, or to create tortious interference with contractual relations.

ii. Enforcement


53.23. the antitrust Division of the Department of Justice (DoJ)The Antitrust Division of the Department of Justice (DoJ) has exclusive governmental authority

to enforce the Sherman Act, and shares with the Federal Trade Commission the authority to enforce the Clayton Act. Thus, the DoJ handles claims regarding restrictive agreements or monopolization under the Sherman Act, and shares jurisdiction with the FTC over mergers and Robinson-Patman Act claims.

The DoJ Antitrust Division comes within the Executive Branch of the Government. The daily operations of the Antitrust Division are headed by the Assistant Attorney General, who is appointed by the President of the United States and confirmed by the Senate. The Assistant Attorney General reports to the US Attorney General. Five Deputy Assistant Attorney Generals oversee the major program areas, including civil enforcement, regulatory matters, criminal enforcement, economic analysis and international enforcement.

There is broad overlap between the jurisdictions of the DoJ and the FTC. One of the principal differences is that the DoJ handles all criminal antitrust matters. On 5 March 2002, the Assistant Attorney General and the FTC Chairperson announced an agreement explicitly dividing industries between the two agencies. Although strong political pressure led to the Assistant Attorney General declaring, on 20 May 2002, that the DoJ would no longer be adhering to the agreement, it nevertheless provides an indicator of how matters are likely to be allocated. Under the agreement, enforcement of the antitrust laws was given to the FTC for the following sectors: healthcare, pharmaceuticals, biotechnology, airframes, cars and trucks, building materials, chemicals, computer hardware, energy, industrial gases, munitions, grocery and retail, professional services, textiles and satellite manufactu-ring. The areas allocated to the DoJ were: agriculture, avionics, beer, computer software, cosmetics, financial services, insurance (including health insurance), flat glass, industrial equipment, media and


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entertainment, metals, missiles and military vehicles, naval defense, photography and film, telecom-munication services and equipment, travel and transportation, pulp and paper, and waste.

53.24. the Federal trade Commission (FtC)The Federal Trade Commission (FTC) is a regulatory agency established by Congress in 1914 to

administer the Federal Trade Commission Act (FTCA). The FTC is composed of 5 Commissioners appointed by the President for seven-year terms, with one Commissioner designated as the Chairperson (15 U.S.C. § 41). The FTC acts by the majority vote of a quorum, where a quorum is three Commissioners (16 C.F.R. § 4.14).

Under Section 5 of the FTCA, the Commission’s jurisdiction extends to “unfair or deceptive acts or practices.” The FTC can provide formal advisory opinions, promulgate industry guides, and issue statements of policy (16 C.F.R. §§ 1.1-1.4). The FTC has discretion to proceed against industry-wide practices either through case-by-case adjudication or by initiating a trade regulation rule pro-ceeding. Section 18 of the FTCA expressly authorizes the FTC to issue rules defining acts that are unfair or deceptive (15 U.S.C. § 57a (a)(1)(B)).

Alternatively, the FTC can prosecute conduct prohibited by the Clayton Act, 15 U.S.C. §§12-27, 29 U.S.C. §52-53, or the Robinson-Patman Act, 15 U.S.C. §§ 13-13b, either directly under those statutes or under Section 5 of the FTCA. Moreover, although the FTC may not directly enforce the Sherman Act, it may proceed against conduct that violates the Sherman Act under Section 5 of the FTCA.

The Commission’s cease and desist powers under Section 5 permit only prospective relief. However, the FTC is authorized to bring civil actions in both State and Federal court under Section 19(b) of the FTCA to seek consumer redress for injuries caused by rule violations or practices as to which the FTC has issued a cease and desist order. Section 13(b) of the FTCA authorizes the FTC to seek permanent injunctions in Federal District Court.


a) Complaints and investigations

53.25. Department of Justice civil investigations The DoJ’s antitrust investigations may arise from complaints from consumers or competitors,

leniency applications, the DoJ’s monitoring of private litigation, pre-merger notification filings or other sources. In order to open an investigation, staff attorneys prepare a memorandum setting forth the basis for investigation. Once clearance from the FTC and approval by the DoJ are obtained, preliminary investigation begins.

The DoJ frequently seeks voluntary cooperation in the early stages of civil investigation. The DoJ is authorized under the Antitrust Civil Processes Act of 1962, (15 U.S.C. §§ 1311-1314), prior to the filing of a complaint, to serve a civil investigative demand (CID) on any person to compel the production of documents, responses to written interrogatories or oral testimony where there is reason to believe the person may have information or be in custody of documents relevant to an antitrust violation. The demand must specifically state the nature of the alleged antitrust violation, and prescribe a reasonable period for response, not less than 20 days after service of the demand.

The recipient of a CID may initiate proceedings in the Federal District Court to set aside or modify the CID (15 U.S.C. § 1314(b)). The time period for complying is suspended while the petition is pending before the court.

53.26. Department of Justice criminal investigations When the DoJ suspects conduct that would constitute a per se violation of Section 1 of the Sherman

Act, it normally begins a grand jury investigation. The first step is for the Assistant Attorney General

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to issue letters of authority to DoJ staff attorneys so that they can conduct a grand jury investigation, either through a regularly sitting grand jury or through special grand juries.

The DoJ often enlists the assistance of the Federal Bureau of Investigation (FBI) to interview witnesses, conduct electronic surveillance, and execute search warrants (which are issued by a federal judge or magistrate and are directed at specific files or papers believed to constitute evidence of a criminal offense).

The grand jury subpoena is the primary investigative tool in criminal investigations. Grand jury subpoenas may be used both to gather documents and to command testimony. They can be issued anywhere in the United States and can reach US citizens residing in foreign countries. A grand jury subpoena expires at the end of the term of the grand jury or upon its discharge. A motion to quash or modify the subpoena may be brought before the district court, but the breadth and complexity of antitrust investigations have generally been held to justify broad discovery.

Under the Federal Rules of Criminal Procedure, grand jury proceedings are secret. A witness who refuses to testify before the grand jury may be compelled to testify under a grant of immunity. “Use immunity,” whereby testimony and leads derived from that testimony cannot be used against the witness has replaced “transactional immunity,” which totally precluded prosecution of a witness.

During the final stages of a grand jury investigation, the DoJ will issue target letters to potential defendants informing them that they are the targets of a grand jury investigation. Defendants are entitled to testify before the grand jury but rarely take advantage of this since they would be required to submit to cross-examination and to waive the privilege against self-incrimination. The prosecutor will summarize the case and ask the grand jury to return an indictment. If the grand jury votes to indict, the judge will issue a warrant or summons to compel the defendant to appear at an arraign-ment.

53.27. Federal trade Commission investigationsLike DoJ investigations, investigations by the FTC may arise from requests by private parties, go-

vernmental entities, or from staff initiatives (16 C.F.R. § 2.1). An initial phase investigation that does not involve compulsory process may be initiated by staff without FTC approval. After 100 hours of staff work on an initial phase investigation, the recommendation to proceed with a full investigation must be received and approved by the appropriate bureau.

There are four means of pre-complaint compulsory process that may be used in addition to voluntary means. Each requires authorization by an FTC resolution. The FTC may, first, require the filing of annual or special reports (15 U.S.C. § 46(b)), or second, issue access orders permitting on-site inspection of documentary evidence (15 U.S.C. § 49). Third, the FTC is authorized to issue subpoenas in cases involving unfair methods of competition. Fourth, in cases relating to unfair or deceptive practices, the civil investigative demand (CID) has replaced the subpoena (15 U.S.C. § 57b-1). The CID combines the power to order production of documents, filing of written reports or responses to interrogatories, and giving oral testimony. The FTC is required to state in the CID the nature of the conduct constituting the alleged unfair or deceptive act or practice, and this allows courts to evaluate whether the information sought is reasonably relevant in case of a challenge. A party may move to quash a CID or subpoena within twenty days after service (16 C.F.R. § 2.7d).

Each of these forms of compulsory process requires the FTC to apply to the District Court for an order requiring compliance (15 U.S.C. § 49). Failure to comply with any of the four types of compul-sory process may result in a fine or imprisonment of up to one year if the failure to comply is frivolous or in bad faith (15 U.S.C. § 50).

Production of information is covered by broad provisions for the protection of confidential infor-mation, including Section 7A(h) of the Hart-Scott-Rodino Act, (15 U.S.C. § 18a(h)), Sections 21(b) and (f ) of the FTCA, and Commission Rule 4.10(d).


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b) Settlements

53.28. Pre-complaint settlement with the FtCPrior to the filing of a complaint, the FTC may enter into a consent agreement with a potential

defendant, including an admission of proposed findings of fact, admissions of jurisdiction and a waiver of the Commission’s obligation to make findings of fact and conclusions of law. Consent agreements also generally waive the right to judicial review. If the proposed consent decree is provisionally accepted, it is published in the Federal Register, marking the beginning of a sixty-day period, during which the FTC considers comments received from the public. After the comment period expires, the FTC may issue the consent order, withdraw its acceptance, or issue a modified order if the defendant so agrees.

53.29. Post-complaint settlement with the FtC With regard to post-complaint settlements with the FTC, the parties may jointly submit a

proposed settlement and motion to withdraw to the administrative law judge hearing the matter. The matter may be withdrawn from adjudication and all proceedings stayed while the FTC considers the proposal. The defendant may submit a proposed settlement over counsel’s objections and if the administrative law judge certifies the matter to the FTC it may be withdrawn from adjudication pending the outcome.

53.30. Settlement with the Department of Justice Consent decrees are the most common outcome of DoJ antitrust claims. Although for a number

of years the DoJ refused to engage in settlement negotiations prior to filing a complaint, its current practice is to simultaneously file complaints and propose settlements. The DoJ generally seeks to include provisions terminating the conduct, requiring periodic compliance efforts and reports, and permitting inspection of company records. Such decrees are generally limited to ten years. Occasionally, consent decrees will provide for different relief relating to different defendants.

Procedures for court approval of consent decrees are set forth in the Tunney Act (15 U.S.C. § 16(b-h)). The Tunney Act requires that the Government file a competitive impact statement (CIS) together with the proposed consent decree. The CIS identifies alternatives considered by the DoJ and the reason for their rejection. The proposed decree must be published in the Federal Register with a sixty-day period for public comment.

After the notice period, the consent decree may be accepted by the District Court if it is in the public interest (15 U.S.C. § 16(e)). A violation of a final consent decree, like the violation of any judgment, is punishable as contempt of court.

c) Administrative, civil and criminal proceedings

53.31. administrative proceedingsAdministrative proceedings before the FTC are governed by Section 5(b) of the FTCA, by the

Administrative Procedure Act, and by Part 3 of the Commission’s Rules of Practice (16 C.F.R. Part III).The FTC initiates a proceeding by serving a complaint stating its charges upon a person, par-

tnership or corporation and fixing a hearing date not less than thirty days after service of the complaint (16 C.F.R. § 3.32). The person complained of has an opportunity to appear and show cause why a cease and desist order should not be issued (15 U.S.C. § 45). Any other person may be allowed to intervene upon showing good cause (15 U.S.C. § 45(b)).

The testimony is reduced to writing and, if the FTC is of the view that a violation has occurred, it makes a report in writing stating its findings and serves an order to cease and desist. The FTC may modify its report in whole or in part, either before expiration of the period for filing a request for review, or where conditions of fact or law have changed such that the public interest requires modification (15 U.S.C. § 45(b)).

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53.32. Civil proceedingsSuits brought by private parties constitute a significant portion of antitrust suits. Section 4 of the

Clayton Act provides that “any person... injured in his business or property by reason of anything forbidden in the antitrust laws” is permitted to recover three times the damages sustained. Section 16 of the Clayton Act likewise provides that “[a]ny person … threatened [with] loss or damage by a violation of antitrust laws” is entitled to obtain an injunction. Thus, both damages and injunctive relief are available in private enforcement actions.

For purposes of Sections 4 and 16, the term “antitrust laws” is defined to include the Sherman Act, the Clayton Act (including the Robinson-Patman amendments) and parts of the Wilson Tariff Act (15 U.S.C. §§ 8-11). Section 3 of the Robinson-Patman Act, providing criminal penalties for predatory pricing, (15 U.S.C. § 13a), and Section 5 of the FTCA, are not included in the definition of antitrust laws.

A person within the meaning of Sections 4 and 16 has been defined to include individuals, par-tnerships, corporations and associations existing under Federal, State, territorial or foreign law (15 U.S.C. § 7; 15 U.S.C. § 26). States are considered persons, but the United States Government is not. The latter is nevertheless authorized to recover treble damages under Section 4A of the Clayton Act as a purchaser of goods (15 U.S.C. § 15a). Foreign Governments are considered persons, but their recovery is limited to actual damages.

Private parties bringing antitrust enforcement actions must meet requirements for standing. A private plaintiff has standing where the plaintiff has suffered “an antitrust injury,” that is, an injury of the type that the antitrust laws were intended to prevent. A number of alternative tests have been applied. The “target area test” inquires whether the plaintiff comes within the area of the economy toward which the challenged practice is directed. Other courts have asked whether the plaintiff has suffered a “direct” injury not overly remote from the antitrust offense at issue.

In addition Section 4C of the Clayton Act authorizes State Attorneys General to bring class action suits as parens patriae in Federal District Court on behalf of natural persons who are residents of their state for injuries arising from violations of the Sherman Act (15 U.S.C. § 15(c)). In such cases, both injunctive relief and treble damages are available. Unlike other class action suits, parens patriae actions do not require that the court certify a class of plaintiffs.

States are also entitled to bring actions under Section 4 in their capacity as direct purchasers of goods or services. On the other hand, States are not entitled to bring actions for damages based on harm to the general economy of the State, though injunctive actions to forestall harm to the State’s economy are available under Section 16 of the Clayton Act.

The United States Attorney General is required to promptly notify the State Attorney General whenever the former has brought an action under the antitrust laws and has reason to believe that the latter would also be entitled to bring an action (15 U.S.C. § 15f (a)). Upon request, the United States Attorney General must make general investigative files or other potentially relevant material available to the State Attorney General.

Section 4 of the Sherman Act and Section 15 of the Clayton Act confer exclusive jurisdiction on the Federal District Court for violations of Federal antitrust laws. Civil antitrust suits are governed by the Federal Rules of Civil Procedure. Once a complaint is filed, traditional discovery techniques, including interrogatories, requests to produce documents, and requests for admissions and deposi-tions may be used to supplement pre-filing investigation.

Federal courts are empowered to issue such orders as are necessary to accomplish the objectives of antitrust law. Thus, in fashioning relief, courts may seek to restore competitive conditions in addition to awarding damages for past violations. Antitrust suits may therefore result in orders for preliminary or permanent injunctive relief, divestiture, rescission and/or forfeiture.


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53.33. Criminal proceedingsAfter a grand jury returns a felony indictment, a warrant may be issued for the arrest of the

defendant. Alternatively a summons may be issued requiring the defendant appear at the arraign-ment.

In the case of a corporate defendant, counsel may appear for the corporation at the arraignment. If the defendant is a natural person, the defendant must appear personally at the arraignment. A magistrate judge will determine the conditions for releasing an individual defendant pending trial.

If the parties reach a plea bargain, it will be accepted or rejected by the court. In criminal antitrust matters, the defendant may file pretrial motions to raise any objections or defenses that can be deter-mined without trial. Where two or more defendants are charged in the same indictment as a result of being accused of participating in the same act or series of acts, the defendants may seek separate trials.

When there are concurrent criminal antitrust proceedings and civil enforcement and damage suits arising from the same conduct, the civil matter will often be stayed since statutes requiring a speedy trial of criminal defendants dictate the precedence of criminal trials.

53.34. interim reliefSection 13 of the FTCA authorizes the FTC to order preliminary and other injunctive relief

pending the adjudication of its own administrative complaint (15 U.S.C. § 53). Subsection (a) speci-fically authorizes such preliminary injunctive relief in order to restrain false advertising of food, drugs, devices or cosmetics. Section (b) provides general authority to issue preliminary relief in connection with any provision of law enforced by the FTC. A preliminary injunction under Section 13(b) is dissolved if the FTC does not commence administrative proceedings within twenty days of issuance.

Preliminary injunctive relief is also available from the Federal District Court in private enforce-ment actions pursuant to Section 16 of the Clayton Act. In contrast to actions for damages under Section 4 which require a showing of actual injury to business or property, Section 16 actions for injunctive relief require only a showing of “threatened” loss or damages. Injunctive relief actions are also available to indirect purchasers even though such purchasers are not entitled to bring actions for damages (Illinois Brick Co. v. Illinois, 431 U.S. 720 (1977)).

C. Sanctions/remedies

53.35. Cease and desist ordersSection 16 of the Clayton Act empowers any person threatened with injury by a violation of the

Sherman or Clayton Acts to seek injunctive relief in the Federal courts. A preliminary injunction may be granted where the plaintiff demonstrates a threat of significant harm to it if the relief is not granted; this is in contrast to actions for damages brought under Section 4 of the Clayton Act which require a showing of actual injury to business or property.

Courts have considerable latitude in fashioning permanent injunctions, including, for example, orders to continue supplying, or orders prohibiting the termination of a distributorship. Divestiture (requiring a monopolist to sell off most of its assets to separate firms that will proceed to compete in the market) is also a potential remedy in monopolization cases under Section 2 of the Sherman Act, both in cases brought by the Government or by private parties.

53.36. treble damagesSection 4 of the Clayton Act (15 U.S.C. § 15) entitles any person who is injured in his or her

business or property by reason of a violation of the Sherman or Clayton Acts to sue for treble damages, that is, three times the damages actually sustained. Like private plaintiffs and State and local Governments, the United States can recover treble damages. However, the Antitrust Criminal Penalty Enhancement and Reform Act of 2004 (ACPERA) provides for an exception to this rule for

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corporations participating in the DoJ’s leniency program. Private plaintiffs are henceforth limited to obtaining single damages, as long as the undertakings in question are cooperating with the plaintiffs in civil antitrust suits.

53.37. FinesSection 5(l) of the FTCA authorizes the FTC to bring actions in Federal District Court for civil

penalties of up to US$ 10,000 per violation of its cease and desist order or, in the case of a continuing violation, US$ 10,000 per day.

The District Court’s role in such actions is not to consider de novo whether the conduct underlying the order is unlawful; its role is solely to determine whether the defendant’s conduct violated the terms of the FTC’s cease and desist order and, if so, the amount of the penalty to be imposed. The District Court has broad discretion in setting the amount of the penalty after taking into account the good or bad faith of the defendant, the injury to the public, the defendant’s ability to pay, the desire to strip the defendant of the benefit of the violation, and the necessity of vindicating the authority of the FTC.

The FTC is likewise authorized under Section 5(m) to institute an action for civil penalties against anyone who knowingly violates a FTC rule or engages in a practice resulting in a cease and desist order (15 U.S.C. § 45(m)).

53.38. Criminal sanctionsThe DoJ has primary authority for prosecuting criminal violations of the Sherman Act. Criminal

prosecutions are limited to traditional per se offenses of the law, which typically involve price-fixing, customer allocation, bid-rigging or other cartel activities. Violations of Section 1 or 2 of the Sherman Act are felonies punishable by a fine of no more than US$ 100 million for a corporation or US$ 1 million for an individual, and/or by imprisonment not exceeding 10 years. These fine maximums reflect the increases set forth in the Antitrust Criminal Penalty Enhancement and Reform Act, bringing criminal penalties in line with those for other Federal white collar crimes. Moreover, “if any person derives pecuniary gain from the offense, or if the offense results in pecuniary loss to a person other than the defendant, the defendant may be fined not more than the greater of twice the gross gain or twice the gross loss […]” (18 U.S.C. 3571(d)).

All Federal case sentencing is subject to the Sentencing Reform Act of 1984 which requires that the court apply the Sentencing Guidelines established by the US Sentencing Commission.

A violation of Section 3 of the Clayton Act constitutes a misdemeanor punishable by fines of up to US$ 5,000, imprisonment for not more than one year, or both (15 U.S.C. § 13a). Section 3 of the Robinson-Patman Act imposes criminal penalties for territorial price discrimination or charging unreasonably low prices for the purposes of destroying competition. Section 3 is only enforceable in criminal cases brought by the Department of Justice; neither a private party nor the FTC is entitled to challenge discriminatory pricing under Section 3. In practice, Section 3 has rarely been enforced and no criminal prosecutions have been brought under this Section since the 1960s.

It is also a criminal offense to intentionally withhold, misrepresent, conceal, destroy, alter or falsify any documentary material or testimony that is the subject of a civil investigative demand (15 U.S.C. § 57b-1(e)).

Where a company is criminally liable for infringement of the antitrust laws, individual directors, officers or agents of the convicted firm may be punished by a fine of up to US$ 5,000, imprisonment for not more than one year, or both (15 U.S.C. § 24).

53.39. LeniencyIn 1993, the DoJ issued a Corporate Leniency Policy setting forth the conditions under which

it would grant leniency to undertakings involved in an antitrust violation. A Leniency Policy for


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Individuals was adopted in 1994. Finally, in 2008, the DoJ issued a Frequently Asked Questions (FAQ) paper providing guidance on how the leniency program is implemented. Concerning corporate leniency, the DoJ considers, inter alia, how early the corporation came forward and whether it was an originator of the antitrust violation. Type A leniency, which gives immunity from prosecution where an applicant is the first to approach the DoJ before an investigation is initiated, will be granted if the following six conditions are met:

- at the time the corporation comes forward, the Antitrust Division has not received information about the illegal activity from any other source;

- the corporation takes prompt and effective action to terminate its participation in the activity;- the corporation reports the wrongdoing completely and cooperates throughout the investigation;- the confession is a corporate act, rather than the act of isolated individuals (which would be

considered separately); - the corporation makes restitution to injured parties where possible; and- the corporation was not the originator of or did not coerce other parties to take part in the illegal

activity.Type B leniency, which gives immunity from prosecution where an applicant is the first to approach

the DoJ after an investigation has begun, will evaluate the request for leniency under an alternative seven-part test. The alternative test examines if the following conditions are met:

- the corporation is the first to come forward and qualify for leniency with respect to the conduct at issue;

- the Division does not at that time have evidence likely to result in a sustainable conviction;- the corporation takes prompt action to terminate its participation in the activity;- the corporation reports the wrongdoing completely and cooperates throughout the investigation;- the confession is a corporate act, rather than an individual confession;- the corporation makes restitution to injured parties where possible; and- the Division determines that granting leniency would not be unfair to others given the nature of

the illegal activity, the role of the corporation, and timing of its confession.If a corporation qualifies for leniency, corporate directors, officers and employees who cooperate

and admit their involvement in the illegal antitrust activity may obtain immunity from criminal prosecution. Such individuals may alternatively be eligible for immunity from criminal prosecution under the 1994 Leniency Policy for Individuals, where individuals approach the Department on their own behalf rather than on behalf of their organization. Leniency also ensures that the corpora-tion is only liable for single damages in civil suits, thereby removing a disincentive for undertakings to act as whistle-blowers in antitrust matters.

D. appeals

53.40. Courts of appeals reviewAppeals from final decisions of the Federal District Court shall be taken to the Court of Appeals.

Administrative decisions of the FTC may likewise be appealed to the appropriate Federal Court of Appeals within sixty days from the date of service of the cease and desist order (15 U.S.C. § 45 (c)). Cease and desist orders become effective sixty days after service. But the respondent may seek a stay, either from the FTC or, if the FTC denies the request for a stay or does not rule on it within thirty days, from the Court of Appeals.

On appeal, the FTC’s findings of fact cannot be set aside if they are supported by substantial evidence, even if the appellate court would have reached another conclusion. Although reviewing courts give great deference to the agency in view of its expertise, nevertheless, courts refuse to uphold the FTC decision when it applies an incorrect legal standard in determining whether a practice is unfair or deceptive.

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Appeals from criminal prosecution also lie to the Court of Appeals, although the Government is not entitled to appeal in criminal cases where the appeal would amount to double jeopardy (18 U.S.C. § 3731).

53.41. Supreme Court reviewThe US Supreme Court may hear appeals on points of law from judgments entered by the Court

of Appeals by way of petitions for a writ of certiorari. An appeal from a final judgment of the District Court in a suit under the Clayton Act may lie directly to the US Supreme Court where the District Court enters an order indicating that hearing by the Supreme Court is of general public importance (15 U.S.C. § 29(b)).

Section 2 MERGERS


a. Context

53.42. Section 7 of the Clayton actMergers were initially subject to control solely under Section 1 of the Sherman Act (Northern

Securities Co. v. United States, 193 U.S. 197 (1904)), holding that formation of a holding company to purchase railroad stock was a “combination in restraint of trade” violating Section 1). In 1914, Congress enacted the Clayton Act, whose Section 7 strengthens measures protecting the public from harmful mergers (15 U.S.C. § 18). Thereafter, the Celler Kefauver amendments to the Clayton Act were enacted in 1950, closing loopholes in the Clayton Act’s coverage and creating a legislative record to guide the interpretation by the courts. The Clayton Act was later amended by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act), modified in January 2001, which requires mandatory pre-merger notification in certain circumstances.

In addition to this legislation, more detailed specifications are provided in the Code of Federal Regulations (16 C.F.R. § 801 et seq). Section 801 defines the terms used in the HSR Act and rules, and specifies which acquisitions are subject to reporting and waiting period requirements. Section 802 establishes exemptions under the HSR Act. Finally, Section 803 contains the procedural rules for complying with the HSR Act.

In 1992, the DoJ and the FTC jointly issued guidelines setting forth the criteria used by both agencies in screening mergers for compliance with the Clayton Act. These 1992 Horizontal Merger Guidelines were further amended in 1997, and were replaced by new Guidelines in 2010. The guide-lines state the criteria that the agencies use in determining whether to challenge a merger in court and thus are not necessarily identical to the case law developed by the courts in applying the Clayton Act.

The initially limited scope of Section 7 of the Clayton Act has been greatly expanded by sub-sequent amendments. As originally enacted, the scope of Section 7 was limited to acquisitions of one corporation’s stock by another corporation, where both corporations were engaged in interstate commerce. The 1950 amendments expanded the scope of Section 7 to include the acquisition of assets, including, inter alia, patents, trademarks, leases and licenses, as well as asset acquisitions re-sembling mergers. In 1980, the statute was again amended to include acquisitions by or from indivi-duals or partnerships and certain joint ventures, as well as corporations. In 2005, the rules were once again amended to include in the coverage of merger control acquisitions of controlling interests in unincorporated entities, i.e. partnerships, limited liability companies, cooperatives, certain trusts. On the other hand, acquisitions by foreign Governments (or the United States or any of the States) are not covered (16 C.F.R. § 801.1(a)). This exemption does not apply to acquisitions by governmental corporations, which do come within the scope of Section 7.


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Prior to the 1980 amendments, Section 7 did not apply to entities engaged only in local activities, even if those activities may have affected interstate commerce. Section 7 was extended in 1980 to include firms engaged in “any activity affecting commerce.” In this context, commerce has the same meaning as it does in Section 1 of the Clayton Act or Section 4 of the FTCA (Rule 801.1(l)).

B. Scope of control

53.43. Concept of mergersThe Clayton Act applies to an acquisition of “the whole or any part of the stock or other share

capital” or the acquisition of “the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce” (15 U.S.C. §18). The Clayton Act uses the term “acquisition” throughout the text and does not explicitly refer to mergers. Nevertheless, Section 801.2(d)(1)(i) of the Code of Federal Regulations provides that “[m]ergers and consolidations are transactions subject to the act and shall be treated as acquisitions of voting securities.”

As originally enacted in 1914, the merger control provisions of the Clayton Act specifically addressed only the acquisition by one corporation of the stock of another corporation when certain negative effects were likely to follow. The Act did not bar the acquisition of the assets of another corporation. The Clayton Act was amended in 1950, and as the Supreme Court stated, “there is no doubt that Congress did wish to ‘plug the loophole’ and to include within the coverage of the Act the acquisition of assets no less than the acquisition of stock” (Brown Shoe Co. v. United States, 370 U.S. 294, 317 (1962)). In 2005, in order to remedy the difference in treatment between incorporated and unincorporated companies, the HSR Rules were revised to include within the filing obligation the acquisition of controlling interests in unincorporated companies.

As a jurisdictional matter, the statutory language is clear that the acquisition of “any part” of stock or assets is covered. No bright line rule exists regarding how large an acquisition must be in order to constitute an acquisition, though the Supreme Court has held that a company “need not acquire control of another company in order to violate the Clayton Act” (Denver & Rio Grande Western Railroad v. United States, 387 U.S. 485, 501 (1967)). This was true only until 2005, since the acqui-sition of non-corporate interests is only covered when it is such as to grant control to the acquirer.

Secondary acquisitions, formerly referred to in the Clayton Act as indirect acquisitions, are sepa-rately subject to the requirements of the Act. Thus, if an undertaking to be acquired holds voting securities from other undertakings that it does not control, acquisition of these voting securities by the acquiring undertaking is deemed a secondary acquisition that must be evaluated separately (Section 801.1 (e)).

A fully integrated joint venture, i.e. that encompasses all aspects of a line of business including manufacturing, distribution, marketing and sales, resembles a merger and is subject to the same analysis under Section 7. With regard to joint ventures, the Supreme Court held in United States v. Penn-Olin Chemical Co. (378 U.S. 158 (1964)) that the formation of a joint venture constitutes an acquisition within the meaning of Section 7, even if it is not a fully integrated joint venture, where the parties acquire voting securities in that entity.

Acquisitions that are subject to challenge under the Clayton Act may be horizontal mergers, involving firms selling competing products or services in the same geographic area, vertical mergers, involving firms in a customer-supplier relationship, or conglomerate mergers, i.e. transactions that are neither horizontal nor vertical, such as product market extension mergers, geographic market extension mergers or pure conglomerate mergers.

53.44. Control criteria The Clayton Act provides:“No person engaged in commerce or in any activity affecting commerce shall acquire, directly

or indirectly, the whole or any part of the stock or other share capital and no person subject to the

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jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly” (15 U.S.C. §18).

Thus, where the effect of an acquisition may be to substantially lessen competition, or to tend to create a monopoly in a particular geographic and product market, it may be prohibited under the Clayton Act. The standards articulated by the DoJ and the FTC (jointly “the agencies”) in deter-mining whether to challenge an acquisition in court, and the standards applied by the courts to determine whether an acquisition may substantially lessen competition under the Clayton Act, differ depending on whether the acquisition is a horizontal, vertical or conglomerate merger and therefore will be discussed separately below.

It is clear, based on both the language of the statute and well-established case law, that Section 7 applies where there is an “appreciable danger” that an acquisition may substantially lessen competi-tion; no present anticompetitive effect is required.

53.45. relevant marketEvaluating whether a merger may substantially lessen competition necessarily requires a definition

of the relevant market. The mechanics of defining the relevant market, taking into account both the product and geographic market, are developed in the 2010 joint Horizontal Merger Guidelines. However, contrary to the 1992 Guidelines, the 2010 Guidelines state that although “market defini-tion helps specify the line of commerce and section of the country in which the competitive concern arises [… and] allows the agencies to identify market participants and measure market shares and market concentration [… it] is not an end in itself, but is useful to the extent it illuminates the merger’s likely competitive effects”. The relevant market is defined solely in terms of demand subs-titution factors, that is, consumer response. Supply substitution factors are not taken into account in defining the relevant market. These factors are considered after the relevant market is defined, when the agencies evaluate access to the market or identify the participants in the market.

The agencies attempt to define the product or group of products and geographic area over which a hypothetical monopolist would be able to impose a “small but significant and non-transitory” increase in price (SSNIP test). A five percent increase over one year is ordinarily considered significant, but the Guidelines are clear that higher or lower price increases may be appropriate depending upon the context and industry involved. This test requires an evaluation of the likely consumer response, including whether consumers would switch to other products or the same product produced by firms at other locations. Thus, the relevant product market looks at both the extent to which the defen-dant’s product is interchangeable in use with other products and the cross-elasticity of demand, that is, the extent to which a change in the price of one product will alter demand for another product.

In practice, the agencies begin with each product produced or sold by each merging firm and ask what consumer response would be if a hypothetical monopolist imposed a small but significant and non-transitory increase in price. If the reduction in sales would be such that the price increase would not be profitable, then the agencies will add to the product market the product that is the next best substitute. This process continues until a group of products is identified over which a hypothetical monopolist could profitably impose a small but significant and non-transitory increase in price. In evaluating the likely reaction of buyers, the agencies consider evidence that buyers have shifted or considered shifting purchases between product in response to price changes or other competitive variables, evidence that sellers base decisions on the prospect of buyer substitution, the influence of downstream competition faced by buyers, and the timing and costs of switching products.

Definitions of the relevant geographic market focus on the geographic area within which customers affected by the challenged practice can practicably turn to other sellers for supplies. In this regard, the agencies begin with the location of each merging firm and ask what the consumer response would be if a hypothetical monopolist of the relevant product imposed a small but significant and non-transitory increase in price. If the price increase would not prove profitable, the tentatively


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identified geographic area is too narrow and the agencies will add the location that would be the next best substitute. Once the agencies have determined the relevant market, they can evaluate whether a merger threatens to substantially lessen competition in that market.

53.46. thresholdsThe Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act) requires Pre-Merger

Notification forms to be filed with the Federal Trade Commission and the Department of Justice where certain thresholds are satisfied. It is theoretically possible that a merger that does not reach these thresholds and is not required to be notified to the FTC and DoJ could nevertheless be chal-lenged on grounds that it substantially lessens competition, either by the enforcement agencies if it became known to them or, indeed, by private parties (see, e.g., United States v. Flow Int’l Corp., No 94-71320 (E.D. Mich. 1994)), challenging a merger with gross sales less than US$10 million).

As a general rule, both acquiring and acquired persons are required to file notifications if all of the following conditions are met: (i) as a result of the transaction, the acquiring person will hold an aggregate amount of voting securities, non-corporate interests and/or assets of the acquired person valued in excess of $ 200 million ($ 272,8 million as adjusted for 2012), regardless of the sales or assets of the acquiring and acquired persons (size of person test); or (ii) as a result of the transaction, the acquiring person will hold an aggregate amount of voting securities, non-corporate interests and/or assets of the acquired person valued in excess of $ 50 million (or $ 68,2 million as adjusted) but less than $ 200 million (($ 272,8 million as adjusted) or less (size of transaction test); and (iii) one person has sales or assets of at least $100 million ($ 136,4 million as adjusted); and (iv) the other person has sales or assets of at least $ 10 million ($ 13,6 million as adjusted).

C. horizontal mergers

53.47. DefinitionHorizontal mergers or acquisitions occur between competitors operating at the same level of

the market structure and within the same product and geographic market area. Because horizontal mergers may result in high market concentration, increasing the likelihood of collusion or reducing pressure to innovate, such mergers are closely reviewed.

53.48. agencies GuidelinesThe 2010 joint Horizontal Merger Guidelines describe the analysis the agencies will employ in

determining whether a horizontal merger is likely “to create, enhance, or entrench market power or to facilitate its exercise”.

Pursuant to the 1992 Guidelines, a five-step process was used to assess mergers. The 2010 Guidelines depart from this approach, favoring a focus on the more significant factors on a case-by-case basis. Though the “uniform application” of the previous “single methodology” has been abandoned, the factors of assessment previously used are not deprived of all relevance.

Thus, the agencies may still determine whether the merger would significantly increase concentra-tion in the relevant market. In evaluating market concentration, the Guidelines use the Herfindahl-Hirschman Index (HHI), which calculates statistically whether the post-merger market could be considered not concentrated, moderately concentrated or highly concentrated.

The agencies must consider whether the merger, based on market concentration and other factors, may adversely affect competition. The 2010 Guidelines provide a non-exhaustive list of categories of evidence that the agencies, in their experience, have found most informative in predicting the likely competitive effects of mergers. Thus, the agencies will consider the actual effects observed in consummated mergers (such as price increases or other changes adverse to customers), make direct comparisons based on experience, observe the merging parties’ market shares in a relevant market, the level of concentration, and the change in concentration caused by the merger, consider whether

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the merging firms have been, or likely will become absent the merger, substantial head-to-head com-petitors and whether the merger may lessen competition by eliminating a “maverick” firm.

Likewise, the agencies will assess whether entry into the market is timely, likely and sufficient to counteract the anticompetitive effects of the transaction. Thereafter, they may consider whether there will be efficiency gains that cannot reasonably be achieved through other means and whether either party would be likely to fail and exit the market absent the merger. The efficiency defense and failing firm defense are discussed below.

53.49. Efficiency defenseUnder US law, in some cases the anticompetitive effects of a merger may be offset by the efficien-

cies it generates. Efficiencies must be verifiable, merger specific and must not arise from anticompeti-tive reductions in output or services. Pursuant to the 2010 Guidelines the agencies will not challenge a merger if cognizable efficiencies are of a character and magnitude such that the merger is not likely to be anticompetitive in any relevant market. They provide the example of shifting production among facilities formerly owned separately as a type of efficiency that can be verified, is specific to the merger, and is not likely to result in an anticompetitive reduction in output. On the other hand, efficiencies relating to research and development may be difficult to verify, and those relating to pro-curement, management or capital cost are less likely to be merger specific.

53.50. Failing firm defenseIn appraising an acquisition, the FTC and the DoJ have accepted the failing firm defense,

according to which absent the acquisition, the failing firm would exit the market where three criteria are satisfied: the firm would not be able to meet its financial obligations in the near future; it would not be able to successfully reorganize under Chapter 11 of the Bankruptcy Code; and, it has made a good faith effort to elicit reasonable alternative acquisition offers that pose a lesser danger to com-petition. If the agency concludes that the market would not be worse off post-merger than it would be if the merger were blocked and the assets leave the market, then there is a likelihood that the merger will not be challenged, or that an administrative action before the FTC will not be permitted. Similar arguments may be made for failing divisions.

D. non-horizontal mergers

53.51. DefinitionNon-horizontal mergers encompass mergers between a firm that is in the market and a firm that

is a potential entrant into the market, vertical mergers between firms in an actual or potential custo-mer-supplier relationship, and conglomerate mergers between firms that are not actual or potential competitors and do not have an actual or potential customer-supplier relationship.

53.52. Merger with potential entrant With respect to a merger between an undertaking already in the market and a potential entrant

into the market, two doctrines have developed to describe the nature of the anticompetitive effect: the perceived potential entrant doctrine and the actual entrant doctrine. The perceived potential entrant doctrine posits that one of the participants to a merger may be exerting a significant present compe-titive threat that constrains the behavior of the firms already in the market where the other party is operating and that this tempering effect on prices and profit levels may be lost if the merger is cleared.

The actual potential entrant doctrine considers whether the acquisition eliminates likelihood that the potential entrant would otherwise have entered the market in a more pro-competitive manner, for example, by internal expansion or acquisition of a smaller firm than the firm involved in the acqui-


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sition under review. Thus, while the perceived potential entrant doctrine focuses on present competi-tive effects, the actual potential entrant doctrine focuses on likely future competitive consequences.

In the 1984 Non-Horizontal Merger Guidelines, the DoJ recognized the actual and perceived potential entrant doctrines as distinct theories but analyzed both in the same fashion. Three pre-requisites must be satisfied before the agency will challenge a merger on either of these theories. First, the market must be highly concentrated, which the DoJ defines as above 1,800 on the HHI. Second, entry barriers to the market must be high, such that firms without a specific entry advantage cannot be expected to enter. Lastly, the acquiring firm’s entry advantage must be possessed by fewer than three firms. Where all three criteria are satisfied, the DoJ may file suit in the Federal District Court on grounds that the proposed non-horizontal merger may substantially lessen competition in violation of Section 7 of the Clayton Act.

53.53. Vertical mergersIn the 1984 Non-Horizontal Merger Guidelines, the Department of Justice indicates the manner

in which it evaluates whether a vertical merger will substantially lessen competition and thus whether it considers it necessary to challenge the merger before the Federal District Court. With regard to vertical mergers between undertakings at different levels of the production chain, the DoJ considers whether the merger will increase market entry barriers or facilitate collusion.

According to the DoJ Guidelines, a merger may create barriers to market entry where three condi-tions are satisfied. First, the degree of vertical integration between the markets must be so extensive that entrants to the primary market are also required to enter the secondary market simultaneously. Secondly, the need to simultaneously enter the market at the secondary level must make entry at the primary level more difficult and significantly less likely to occur. Lastly, the structure of the primary market must be such that increased difficulty of entry is likely to affect the performance of the market. Where these conditions are met, the DoJ may challenge the vertical merger on grounds that it threatens to substantially lessen competition by creating barriers to entry into the market.

A vertical merger may also substantially lessen competition by facilitating collusion. The Guidelines describe three factual scenarios in which vertical integration may facilitate collusion. First, vertical integration involving upstream firms in the associated retail market may facilitate collusion by allowing price monitoring. The monitoring effect may be significant where the upstream market is sufficiently concentrated and a large percentage of the upstream products would be sold through vertically integrated retail outlets.

Second, a merger may threaten to facilitate collusion where it eliminates a “disruptive buyer.” The DoJ indicates that, if sales to a particular buyer are deemed sufficiently important, firms may deviate from a collusive agreement in order to secure that business, thereby disrupting the collusive agreement. The merger of such a disruptive buyer with an upstream firm may eliminate this rivalry, making collusion easier.

Lastly, public utilities may use vertical mergers to circumvent rate regulation. A public utility might, for example, acquire a supplier of its fixed or variable inputs so that thereafter it would be selling to itself and could conceivably arbitrarily inflate the price of internal transactions. These inflated prices would then be passed on to consumers as legitimate costs. Thus, the Department of Justice has indicated that it is prepared to challenge cases where a vertical merger threatens to substantially lessen competition by facilitating collusion, whether through increasing the ability to monitor prices, eliminating a “disruptive buyer,” or permitting the evasion of rate regulation.

53.54. Conglomerate mergersPure conglomerate mergers involve firms that are not actual or potential competitors, and do not

have an actual or potential customer supplier relationship. Arguments against allowing unfettered conglomerate acquisitions rest on the view that such mergers centralize power in the hands of a few corporate giants, allowing them to potentially cause economic hardship to many actors or to exercise

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dominant political power. Conglomerate mergers are sometimes viewed as decreasing local control of economic institutions, and creating entities that demand a higher rate of return, making layoffs and plant closings more likely.

ii. Enforcement


53.55. the Department of Justice The Department of Justice (DoJ) has primarily an enforcement role rather than a regulatory

approval role in the area of mergers and acquisitions. Thus the Attorney General, who heads the DoJ, must turn to the Federal courts in order to obtain an injunction to block a merger.

Because the DoJ and the FTC share enforcement responsibility for Section 7 of the Clayton Act, clearance conflicts frequently arise. The clearance procedure attempts to ensure that matters will be handled by the agency with the most experience in a particular area.

Prior to initiating an investigation, each agency will seek clearance from the other. Where there is a dispute as to expertise, the staff prepares a file outlining agency experience in handling such claims within the past five years, giving greater weight to matters involving litigation. Under these procedures, clearance for investigations should be completed in all cases within 9 business days of the date of filing.

53.56. the Federal trade CommissionSection 13(b) of the FTCA empowers the FTC to seek a preliminary injunction in Federal Court

for a violation of Section 7 of the Clayton Act. Nevertheless, the courts do not ordinarily take a final decision on the merits in cases involving the FTC. In such cases, a final decision on the merits is ordinarily made in an administrative proceeding before the FTC reviewable by a court of appeals. The FTC does, however, have discretion under Section 13(b) to ask the court to resolve the matter on the merits and to issue a permanent injunction.

The FTC has authority to issue implementing regulations and forms regarding mergers (18 U.S.C. § 18a(d)).

53.57. the Federal District CourtsThe Federal District Courts have jurisdiction over merger cases involving challenges under Federal

law. Both the enforcement agencies and private parties may seek injunctive relief in Federal District Court (15 U.S.C. § 26). Damages are also available in civil actions in the Federal District Courts. This is in contrast to administrative proceedings before the FTC, where no damages are available.

Section 4 of the Clayton Act allows persons injured “by reason of anything forbidden in the antitrust laws” to bring suit and recover three times the damages sustained where they are successful. Likewise, Section 16 of the Clayton Act allows private parties to sue for injunctive relief for viola-tions of the antitrust laws. These provisions have been construed to allow private parties to bring suit in Federal District Court to block a merger.

Commentators have noted that there is a danger that the ability of private parties to block a merger can be used strategically. This danger has been limited to some extent by the requirement that a private plaintiff suffer an antitrust injury. Given that a merger can have both pro and anticompetitive aspects, the courts have held that only those private parties injured by the anticompetitive aspects of a merger can sue to enjoin it (Brunswick Corp. v. Pueblo Bowl-O-Mat (429 U.S. 477 (1977)).


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53.58. the State attorneys GeneralAlthough the FTC and the DoJ are the main enforcement agencies in merger control, the Supreme

Court recognized that the Clayton Act authorizes State Attorneys General to pursue injunctive relief, including divestiture and rescission for mergers that violate Section 7 of the Clayton Act (California v. American Stores Co, 495 U.S. 271 (1990)). Moreover, certain States have enacted specific laws pro-hibiting anticompetitive mergers and authorizing their State Attorneys General to challenge them. When States have used their own laws to challenge mergers, their exercise of authority has survived the challenges of the Supremacy Clause of Article VI, Clause 2, of the US Constitution (State v. Coca-Cola Bottling Co, 697 S.W.2d 677 (Texas Ct. App. 1985)). Section 4c et seq. of the Clayton Act (15 U.S.C. §§15c et seq.) is the main provision granting State Attorneys General with standing to challenge antitrust laws, including the Clayton Act.

A transaction may thus be investigated at both Federal and State levels. The Protocol for Coordination in Merger Investigation Between the Federal Enforcement Agencies and State Attorneys General (1998) has been adopted to set forth a general framework for the conduct of joint investigations in order to maximize cooperation between Federal and State agencies and to minimize the burden on the parties.

Finally, States may control a merger even if Federal agencies did not object to the transaction. State Attorneys General may also seek different or additional remedies from the parties than those of the Federal agencies. They may also pursue negotiations or investigating strategies different from those of the other agencies.


a) notification

53.59. ContextHSR notification requirements are governed by the pre-merger Notification Rules (HSR Rules)

adopted by the FTC (16 CFR §§801-803). If the thresholds requirements of the Clayton Act are met, filing the transaction is mandatory.

Filing fees range from US$ 45,000 to US$ 280,000 depending on the size of the transaction.

53.60. notifying undertakingsThe first step in determining notification under the HSR Rules is to identify the “acquiring

person” and the “acquired person”. A “person” is defined as the ultimate parent entity of the buyer or seller. An “acquiring person” is defined as any person who will hold voting securities or assets as the result of an acquisition. In this context, a “person” is defined as the ultimate parent entity and all of the entities that it directly or indirectly controls, as that term is defined in Section 801.1(b). The types of entities that can together constitute an “ultimate parent entity” include natural persons, corporations, partnerships, joint ventures, unincorporated associations, and trusts. As noted above, the Governments of foreign nations, the United States and the States of the Union, as well as their agencies and political subdivisions, are not persons and thus are not subject to the notification requi-rement. Given that the term “hold” is defined to mean beneficial ownership, an agent or other entity acquiring on behalf of another entity need not file notification; only the beneficial owner need do so where the other statutory criteria are satisfied.

Likewise, any party is defined as an acquired person if after the transaction “the assets or voting securities of any entity included within such person will be held by any other person”. Thus, in the case of mergers, consolidations and other acquisitions combining all or part of the business of two or more parties, each party to the acquisition is defined as both the acquiring and the acquired person.

Under Section 7A of the Clayton Act, as amended by the HSR Act, modified in 2001, “both persons” involved in a covered transaction must file Pre-Merger Notification forms with the FTC

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and the DoJ (15 U.S.C. § 18a). Where a party is both an acquiring person and an acquired person for the same transaction, then the party must complete the portions of the Notification and Report Form separately as acquiring and acquired persons but need not file two separate forms. Alternatively, where a transaction involves more than one separately reportable acquisition, separate Notification and Report Forms must be filed.

The dual designation as both an acquirer and acquired person is useful in situations where an issuer of stock included within one of the “persons” is not to be merged or consolidated. In these cases, when such an issuer is reporting as an acquired person, it completes the Notification Form only with respect to the entities involved in the merger or consolidation.

In the case of a tender offer, only the acquiring person must notify the transaction.

53.61. Waiting periodThere are no specific filing deadlines under the HSR Act. The parties can submit their notifi-

cation at any time after the execution of a letter of intent, even if it is non-binding, or a definitive agreement. However, if a transaction is covered by the HSR Act, it cannot be implemented until all required fillings have been made and the applicable waiting periods have been observed. The appli-cable waiting periods are 15 days for a cash tender offer and 30 days for other types of transactions. The waiting period begins on the date of receipt by the FTC and the Assistant Attorney General of the DoJ of the completed notification. The agencies have discretion to extend the 30-day waiting period (or in the case of a cash tender offer, the 15-day waiting period) for an additional period of not more than 30 days (or 10 days in case of a cash tender offer) upon issuing a request for additional information and documentary material. In this initial period, the agency asks the merging firms to voluntarily provide information, such as descriptions of all overlapping products, product/marketing brochures, business plans, market studies, strategic plans and information on market shares and com-petitor positioning, a list of competitors, suppliers and customers, readily available data regarding sales and output, and any analyses or studies regarding the transaction. The DoJ or the FTC also attempts to dispense with transactions that are not candidates for further investigation, and to narrow and refine issues for transactions likely to progress to formal HSR Second Request inquiries.

The waiting period may also be terminated earlier (early termination), upon request of the filing persons. Early termination is granted if one of the notifying undertakings so specifies on the notifica-tion form, if all the undertakings concerned have submitted forms that comply with instructions, and if both antitrust agencies have completed their review and determined not to take any enforcement action during the waiting period. Early termination decisions are published in the Federal Register.

53.62. Exemptions from notificationSection 7A of the Clayton Act lists exemptions from the notification requirement. They include

purchases of real estate or goods in the ordinary course of business, acquisitions of securities other than voting securities, acquisitions where the buyer already has 50 percent voting control, acquisitions subject to antitrust exemptions by other Federal agencies, certain acquisitions by banks, trust, invest-ment and insurance companies, and acquisition of voting securities solely for investment purposes.

b) Proceedings before the agencies

53.63. Second requests for informationPrior to expiration of the initial waiting period, the agency may request further information and

extend the waiting period by not more than 30 days, or 10 days in the case of a tender offer. Only the Federal District Court may make subsequent extensions. Where the waiting period ends on a Saturday, Sunday or public holiday, it is extended to the end of the following day.

The 2001 amendments to the HSR Act require both the DoJ and the FTC to have internal review procedures to address claims that the request for additional materials is unreasonably cumulative or


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burdensome, or contentions that the request has been substantially complied with, and such petitions are entitled to expedited review.

During the merger review, the agencies have broad investigative powers: they may for example request a consultation with the parties to discuss their views of the transaction, or order interviews of personnel of the merging parties. Testimonies may also be recorded.

53.64. administrative proceedings before the FtCWhere the FTC has reason to believe a violation of Section 13, 14, 18 or 19 exists, it may issue a

complaint and notice of hearing to both the party involved and the Attorney General. The complaint must state the charges and the hearing must be set at least thirty days after the date of service of the complaint. The person complained of, the Attorney General, and any person showing good cause have the right to be heard.

If the FTC finds a violation, it issues a report in writing and serves the report on the challenged party together with an order to cease and desist from such violations within the time fixed in the order. The challenged party may seek review of the FTC’s cease and desist order in the Court of Appeals.

53.65. Preliminary injunctive reliefBoth the FTC and the DoJ are authorized to institute an action in the Federal District Court

seeking a preliminary injunction against consummation of an acquisition pendente lite, that is, until resolution of the suit alleging that the acquisition would constitute an antitrust violation.

C. Sanctions/remedies

53.66. injunctionsThe civil remedies available under Section 7 of the Clayton Act include a permanent injunction

prohibiting a pending merger or acquisition.

53.67. Divestiture of assetsRetroactive remedies under Section 7 of the Clayton Act include forced divestiture of acquired stock

or assets, corporate spin-offs, the compulsory purchase of or sale of needed materials to a divested firm, the compulsory sharing of technology, and temporary restrictions on the defendant’s output.

In June 2011, the DoJ issued new Guidelines on Merger remedies to provide guidance to Antitrust Division staff in their work analyzing proposed remedies for mergers and detailing the basic prin-ciples they should implement: “First, effectively preserving competition is the key to an appropriate merger remedy. Second, the remedy should focus on preserving competition, not protecting indivi-dual competitors. Third, a remedy needs to be based on a careful application of legal and economic principles to the particular facts of a specific case”. Though until recently, the agency showed a strong preference for structural remedies, the 2011 approach seems much more flexible. In fact, the new Guidelines state that if in certain factual circumstances, structural relief may be the best choice to preserve competition, in a different set of circumstances, conduct relief may be the best choice. And in still other circumstances, the DoJ deems that a combination of both conduct and structural relief may be appropriate. In horizontal mergers, the DoJ typically has a preference for divestiture remedies whereas in vertical mergers tailored conduct remedies seem the best solution. However, the DoJ acknowledges that conduct remedies may be an effective method for dealing with competition concerns raised by horizontal mergers, though usually in conjunction with a structural remedy.

Pursuant to the Guidelines, structural remedies include: i) divestiture of all assets necessary for the purchaser to be an effective, long-term competitor – in such case, the agency will require the parties to provide an “up-front” buyer for the divested assets, and to include “crown jewel” provisions, which provide that unless the original package is divested in the time allotted, the assets to be divested

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will expand to include other attractive assets - ; or more preferably for the DoJ, ii) divestiture of an existing business entity that already has demonstrated its ability to compete in the relevant market and divestiture of rights to critical intangible assets, i.e. sale or licensing of IP rights.

The most common conduct remedies are: (i) firewall provisions, designed to prevent the dissemi-nation of information within a firm; (ii) non-discrimination clauses; (iii) mandatory licensing; (iv) transparency provisions requiring the merged firm to make certain information available to a regula-tory authority; (v) anti-retaliation provisions either against customers or other parties who enter into (or contemplate entering into) contracts or who do business with the merged entity’s competitors or against an entity for providing information to the DoJ about alleged non-compliance with a decree or for invoking any of the provisions of a decree or a regulatory agency’s rule or order; and (vi) pro-hibitions on certain contractual practices.

Remedies agreed by the DoJ are set out in consent decrees issued by the District Court. Remedies agreed by the FTC are set out in consent orders issued by the FTC itself.

53.68. Civil penaltiesFailure to comply with any provision of Section 7 may result in a civil penalty of up to US$ 10,000

for each day of violation. Violation of any order of the FTC may result in a civil penalty of US$ 5,000 per violation.

Where there is a failure to substantially comply with the pre-merger notification requirement, or with requests for further information within the waiting period, the District Court may order com-pliance, extend the waiting period, and grant such other equitable relief as is necessary.

Taking action to consummate the merger prior to waiting period expiration, known as “gun jumping”, may likewise be subject to penalties.

D. appeals

53.69. appeals against cease and desist ordersFTC cease and desist orders may be appealed to the Federal Court of Appeals within 60 days of

the order being served.

53.70. appeals against decisions of the District CourtsDecisions of the Federal District Court may be appealed to the Federal Court of Appeals.

53.71. appeals against decisions of the Federal Courts of appealsDecisions of the Federal Courts of Appeals may in turn be appealed to the United States Supreme

Court.

Section 3 RELATIOnSHIP TO STATE LAW AnD STATE AuTHORITIES

a. State antitrust legislation

53.72. ContextWhen the Sherman Act was adopted in 1890, at least twenty-six States in the US already had

some type of antitrust prohibition in place. Fundamental concepts of Federal antitrust law, such as the rule against per se price-fixing, originated in principles developed by State courts enforcing State antitrust laws.


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53.73. the Commerce ClauseThe Commerce Clause grants power to the Federal Government to regulate commerce between

States and thereby acts as a limit on the States’ power to do so. In determining whether a state has violated the Commerce Clause in enacting a State antitrust statute, courts ask whether a legitimate local purpose exists and whether the statute rationally serves that purpose. The court then balances the importance of the local interest against the burden on interstate commerce, asking whether the interest could be promoted by a statute with a lesser impact.

Where a State statute discriminates against interstate commerce, or its effect is simply to favor local economic interests, it will be invalid. Even where a State law does not appear to violate the Commerce Clause prohibition on state Regulation of interstate commerce, some applications of state antitrust laws to interstate commercial activity may not be permissible.

53.74. the Supremacy ClauseThe Supremacy Clause provides that the US Constitution and Federal laws are “the supreme Law

of the land,” and that State courts are bound thereby notwithstanding any contrary State statute. Federal laws preempt state laws in three circumstances: where Congress expressly preempts state law; where Congress manifests an intent to “occupy the field” being regulated; and, in case of actual conflict between Federal and State law. State antitrust laws are not generally preempted by Federal laws, particularly given the legislative history of the Sherman Act indicating that the Federal statute was intended to “supplement” state law. Thus, while a State law cannot authorize a practice that is prohibited under Federal law, it may be able to impose prohibitions beyond those for which a Federal remedy has been created.

State antitrust law largely parallels federal law and states give varying degrees of deference to federal law interpretations. Nevertheless, some differences remain, such as a different approach to the “relevant market” definition, set forth in the states’ 1993 NAAG (National Association of Attorneys General) Merger Guidelines.

State courts lack jurisdiction to hear claims pursuant to Federal antitrust law. On the other hand, Federal courts may sometimes hear a State antitrust claim where there exists a basis for Federal jurisdiction and the state claim is based on substantially the same conduct. If the Federal claim is dismissed, thereby depriving the plaintiff of the basis for Federal court jurisdiction, the State claim is likely to be dismissed as well.

B. State enforcement of bans on anticompetitive conduct

53.75. the State attorneys GeneralIn addition to State laws proscribing anticompetitive conduct, in the 1970s, many States passed

legislation empowering the State Attorney General to bring actions on behalf of the state and its political subdivisions in either State or Federal court.

53.76. the national association of attorneys GeneralCurrently, all States are members of the National Association of Attorneys General’s (NAAG’s)

Antitrust Committee Task Force. The Task Force coordinates multistate investigations and litigation in State antitrust matters. Generally one state takes the lead, issuing administrative subpoenas or civil investigative demands authorized under its statutes, and shares the responses with other states. Such coordination has been particularly effective in resolving vertical price-fixing claims with respect to resale prices for consumer products.

In 1987, the NAAG published a Voluntary Pre-Merger Disclosure Compact (“the Compact”), revised in 1994, concerning information sharing on proposed mergers and acquisitions among States, and coordinating investigations for possible challenges by one or more States. In accordance

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with the Compact, parties may file copies of their initial Federal HSR Pre-Merger Notification, of any subsequent Federal requests for information and the materials provided in response with a desi-gnated liaison State. In return, the States signatory to the Compact agree not to serve any additional requests for information during the Federal HSR waiting period and to keep information confiden-tial. The Compact signatories are not, however, bound by decisions of the Federal authorities.

The 1994 modifications to the Compact require States to seek voluntary disclosure of materials during the HSR waiting period before resorting to compulsory process, rather than foreclosing States completely from requesting additional information.

53.77. Coordination between Federal and State authoritiesIn addition to the coordination among States, there is some coordination between Federal and

State authorities. Coordination of Federal and State enforcement activities in order to avoid dupli-cating efforts is organized through the Executive Working Group for Antitrust (EWG). The EWG is composed of representatives from the DoJ, the FTC, and State Attorneys General.

There is no constitutional bar to Federal prosecution of an offense for which there has been a state prosecution but, as a general rule, Federal authorities will only do so where Federal interests have not been vindicated in the State prosecution.

Part 1 EU & MEMBEr StatES

UE http://ec.europa.eu/dgs/competition/index_en.htm

aUStria http://www.en.bwb.gv.at

BELGiUM http://economie.fgov.be/fr/entreprises/concurrence/

CrOatia http://www.aztn.hr/

CyPrUS http://www.competition.gov.cy

CZECh rEPUBLiC http://www.compet.cz/en/

DEnMarK http://www.kfst.dk/en/

EStOnia http://www.konkurentsiamet.ee

FinLanD http://www.kilpailuvirasto.fi

FranCE http://www.autoritedelaconcurrence.fr/

GErMany http://www.bundeskartellamt.de

GrEECE http://www.epant.gr/main.php?Lang=en

hUnGary http://www.gvh.hu/gvh/alpha?do=2&st=2&pg=96&m19_act=4

irELanD http://www.tca.ie/

itaLy http://www.agcm.it/en/

LatVia http://www.kp.gov.lv/?l=2

LithUania http://www.konkuren.lt/en/index.php

LUxEMBOUrG http://www.concurrence.public.lu/

MaLta https://secure2.gov.mt/consumer/home?l=1

thE nEthErLanDS http://www.nma.nl/en/default.aspx

POLanD http://www.uokik.gov.pl/home.php

POrtUGaL http://www.concorrencia.pt/vPT/Paginas/HomeAdC.aspx

rOMania http://www.consiliulconcurentei.ro/en/about-us.html

SLOVaK rEPUBLiC http://www.antimon.gov.sk/

SLOVEnia http://www.uvk.gov.si/en/

SPain http://www.cncompetencia.es/default.aspx

SWEDEn http://www.kkv.se/default____218.aspx

UnitED KinGDOM http://www.oft.gov.uk/

aPPEnDix

WebSiTeS of The compeTiTion AuThoriTieS

590

APPENDIX

Part 2 OthEr COUntriES

arGEntina http://www.cndc.gov.ar/

aUStraLia http://www.accc.gov.au/content/index.phtml/itemId/142

BraZiL http://www.cade.gov.br ; http://portal.mj.gov.br/data/

CanaDa http://www.competitionbureau.gc.ca ; http://www.ct-tc.gc.ca/Accueil.asp

ChiLE http://www.fne.cl/

China http://www.saic.gov.cn/english/index.html ; http://fldj2.mof-com.gov.cn/

COLOMBia http://www.sic.gov.co/en/

iCELanD http://en.samkeppni.is/

inDia http://www.cci.gov.in/

iSraEL http://www.antitrust.gov.il/eng/

JaPan http://www.jftc.go.jp/en/

LiEChtEnStEin http://www.avw.llv.li/

MExiCO http://www.cfc.gob.mx/index.php/en/Inicio

MOrOCCO http://proweb-media.com/projets/conseilconcurence/wor-dpress/

nEW ZEaLanD http://www.comcom.govt.nz/ ; http://www.med.govt.nz/tem-plates/Page____3408.aspx

nOrWay http://www.comcom.govt.nz/ ; http://www.med.govt.nz/tem-plates/Page____3408.aspx

rUSSia http://en.fas.gov.ru/

SinGaPOrE http://app.ccs.gov.sg/

SOUth aFriCa http://www.compcom.co.za/ ; http://www.comptrib.co.za/

SOUth KOrEa http://eng.ftc.go.kr/

SWitZErLanD http://www.weko.admin.ch/index.html?lang=fr&PHPSESSID=697d1571abcb9018a20906bc134dd68e

tUrKEy http://www.rekabet.gov.tr/index.php?Lang=EN

UKrainE http://www.amc.gov.ua/amc/control/en/publish/article?art_id=44798

USa http://www.ftc.gov/ ; http://www.justice.gov/atr/