Upload
edward-elliott
View
224
Download
2
Tags:
Embed Size (px)
Citation preview
Dr. Volker Soyez 2
Introduction to EU competition law
The cartel prohibition (art. 101 (1) TFEU)
Exemptions from the cartel prohibition (art. 101 (3) TFEU)
Abuse of dominance (art. 102 TFEU)
EU competition law procedure (reg. 1/2003)
Private enforcement of EU competition law / damages actions
EU merger control (reg. 139/2004)
Work and life as a competition lawyer (in Brussels)
Agenda
EU Competition Law
Dr. Volker Soyez 3
„Competition is a situation in a market in which firms or sellers independently strive for the buyers patronage in order to achieve a particular business objective eg. profits, sales or market shares“ WorldBank,1999
The existence of a free and effective competition is one of the key components of the free market economy
Free competition promotes economic growth, innovation, tecnological progress, and the search for the most efficient production methods
Consumers benefit from free competition in that they can choose from a great variety of products and services which best serve their needs and they receive the best price-quality ratio
Therefore: competition law is set of legal rules which are aimed at protecting the competitive process with the ultimate goal of maximising consumer welfare
Regulatory goal of the competition laws
EU Competition Law
Dr. Volker Soyez 4
In order to safeguard free competition EU competition law:
Prohibits agreements between companies which restrict competition (art. 101 TFEU)
Prohibits abuses of dominance (art. 102 TFEU)
Imposes a merger control system (reg. 139/2004)
Imposes a state aid control system (art. 107 et seq. TFEU)
EU competition law constrains and complements but does not generally replace national competition law
Pillars of EU competition law
EU Competition Law
Dr. Volker Soyez 5
Free Trade Area covering 27 markets: “The Common Market” (plus 3 associated states in the EEA)
Treaty based; souvereign powers in certain areas (principle of subsidiarity), e.g. EU competition law enforcement
European Commission: executive body (with legislative role)
European Courts (ECJ / General Court): judicial bodies
European Council and European Parliament: legislative roles
Hearing Officer at EU Commission
Institutional Framework
EU Competition Law
Dr. Volker Soyez 6
Primary law (Treaty): art. 101 and 102 TFEU
Secondary law: reg. 1/2003 (cartel regulation), reg. 139/2004 (merger control regulation); Block Exemption Regulations
Supplementary law: Communications / Guidelines / Decisions of the EU Commission
http://ec.europa.eu/competition/antitrust/legislation/legislation.html
Caselaw of the European Courts in Luxemburg (www.curia.europa.eu)
Sources of EU competition law
EU Competition Law
Dr. Volker Soyez 7
„The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) 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.“
Cartel prohibition, Art. 101 (1) TFEU
EU Competition Law
Dr. Volker Soyez 8
Agreements between undertakings […] and concerted practices
Under the Community courts’ case-law, an agreement encompasses anything which encapsulates the „faithful expression of the joint intention of the parties“, irrespective of its form
Concept of „concerted practice“: „A form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition“
The ECJ and the Commission have promoted an extensive interpretation of the concepts referred to in art. 101 TFEU
In practice: virtually any type of coordination is caught
Cartel prohibition, Art. 101 (1) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 9
Key case „Dansk Rorindustri“
Cartel meeting organised by large competitors; small competitors participated but remained silent and did not implement the anti-competitive agreements.
„It is sufficient for the Commission to show that an undertaking participated in meetings at which anti-competitive agreements were concluded, without manifestly opposing them, to prove to the requisite standard that the undertaking participated in the cartel. Where participation in such meetings has been established, it is for that undertaking to put forward evidence to establish that its participation in those meetings was without any anti-competitive intention by demonstrating that it had indicated to its competitors that it was participating in those meetings in a spirit that was different from theirs. In that regard, a party which tacitly approves of an unlawful initiative, without publicly distancing itself from its content or reporting it to the administrative authorities, effectively encourages the continuation of the infringement and compromises its discovery. That complicity constitutes a passive mode of participation in the infringement which is therefore capable of rendering the undertaking liable in the context of a single agreement.“
Cartel prohibition, Art. 101 (1) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 10
Between (independent) undertakings
“The concept of an undertaking encompasses every entity engaged in an economic activity regardless of the legal status of the entity and the way in which it is financed” (ECJ Case 41/90, Höfner and Elsner v Macrotron, para 21)
The involvement of at least two (independent) undertakings, acting in concert, is thus required
According to the EU Courts, a contract between a mother company and its subsidary – which are two legally separate entities – may fall short of art. 101 TFEU
According to the EU Courts, „true“ or „genuine“ agency agreements fall short of art. 101 TFEU
Cartel prohibition, Art. 101 (1) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 11
Object or effect of restricting competition
Restriction by “Object“: it is not necessary that competition is effectively restricted / that anti-competitive practice has been implemented
Restriction by “Effect”: it is not necessary that the parties intended a restriction of competition
”restriction of competition” not definable
In practice: non-conclusive catalogue of standard restrictions
Cartel prohibition, Art. 101 (1) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 12
The most relevant restrictions of competition
EU Competition Law
Horizontal restrictions
Hardcore Non-Hardcore
Fixing of sales prices or purchasing prices or other commercial conditions
Exchange of confidential information
Fixing production quotas Strategic alliances
Customer allocation or sharing of geographical markets
Agreements relating to joint sales, purchasing or production
Bid rigging Agreements relating to joint R&D
Restricting imports or exports Specialisation agreements
Vertical restrictions
Hardcore Non-Hardcore
Resale price maintenance Exclusive distribution
Prohibition of passive sales Selective distribution
Prohibition of cross-sales between distributors in a selective distribution system
Single branding / exclusive purchasing / non-compete clauses
Dr. Volker Soyez 13
Restriction of competition must be „appreciable“
On competition (filter for de facto irrelevant cases)
Commission Notice on Agreements of Minor Importance (“de minimis”)
Market shares: 10% (horizontal) / 15% (vertical)
“hardcore”-restrictions are always appreciable
On trade between Member States (jurisdictional filter)
Sufficient if practice is “capable of constituting a threat, either direct or indirect, actual or potential, to freedom of trade between Member States in a manner which might harm the attainment of the objectives of a single market”
Commission Notice on “Effect on Trade”
Cartel prohibition, Art. 101 (1) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 14
„The provisions of paragraph 1 may, however, be declared inapplicable in the case of any agreement or category of agreements between undertakings,any decision or category of decisions by associations of undertakings,any concerted practice or category of concerted practices, which
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,
and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.“
Exemptions, Art. 101 (3) TFEU
EU Competition Law
Dr. Volker Soyez 15
Individual exemptions for agreements, which
contribute to improving the production or distribution of goods or to promoting technical or economic progress,
allow consumers a fair share of the resulting benefits,
do not impose restrictions which are not indispensable to the attainment of these objectives,
do not afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products concerned.
Conditions are cumulative; balancing process between pro-competitive and anti-competitive effects; hardcore restrictions unlikely to be exempted; burden of proof lies with the party claiming exemption
Guidelines on the application of art. 101 (3) TFEU
Exemptions, Art. 101.3 TFEU
EU Competition Law
Dr. Volker Soyez 16
Block exemptions:
Art. 101 (3): applies also to categories of agreements = block exemption regulations (BERs)
Block Exemption Regulations (BER) provide “safe harbours”
Definition of agreements in class (e.g. vertical agreements / technology transfer agreements)
Market share thresholds (20-30%)
“Black lists” of prohibited hardcore terms
Exemptions, Art. 101 (3) TFEU ctd.
EU Competition Law
Dr. Volker Soyez 17
Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice 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.
Abuse of Dominance, Art. 102 TFEU
EU Competition Law
Dr. Volker Soyez 18
Art 102 prohibits not dominance, but its abuse
Dominance is assessed in the relevant market: “a dominant position is demonstrated by an undertaking’s ability to operate to an appreciable extent independently of its competitors, its customers, and ultimately the consumers in a relevant market.”
Indicators for dominance:
High market shares (>40% = presumption of dominance)
Low market shares of competitors
Financial capacities
Vertical integration
Barriers for market entry
Abuse of Dominance, Art. 102 TFEU
EU Competition Law
Dr. Volker Soyez 19
Art. 102 TFEU prohibits
any abuse
within the common market or in a substantial part thereof, to the extent that it may affect trade between Member States
Art. 102 TFEU provides a non-exhaustive list of examples of abuses; EU Commission, CFI and ECJ have found abuses in other circumstances
Examples:
Excessive pricing
Tying / bundling
Predatory pricing
Abuse of Dominance, Art. 102 TFEU ctd.
EU Competition Law
Dr. Volker Soyez 20
Key case: “Microsoft” – Tying
Microsoft has a near monopoly in PC operating systems (OS). It sells Windows OS to OEM manufactures with “built-in” Microsoft media player. Other customers get Windows without Microsoft media player. Microsoft previously sold Windows to OEMs bundled with a third party media player. Media players are generally offered as a separate software in the market.
Legal test:
two separate products
supplier is dominant in one
sales of two products are tied together
the tie significantly weakens effective competition
there is no objective justification for the tie
Outcome: $ 600 million fine
Abuse of Dominance, Art. 102 TFEU ctd.
EU Competition Law
Dr. Volker Soyez 21
Key case: “Wanadoo” – Predatory Pricing
On 16 July 2003, the European Commission found that Wanadoo Interactive SA (Wanadoo) had pursued a predatory pricing policy in relation to its Pack eXtense and Wanadoo ADSL services, as part of a plan to exclude competitors in the high speed internet access market. It sold its products below costs.
EU Commission imposes fines of € 10.35 Million. Wanadoo appeals.
The ECJ’s judgment is significant in confirming that, for a finding that a dominant undertaking has breached art. 102 TFEU by pursuing predatory pricing:
(i) it does not need to be demonstrated that the undertaking could recoup its losses
(ii) a dominant undertaking does not have an absolute right to align its prices with those of its competitors
Abuse of Dominance, Art. 102 TFEU ctd.
EU Competition Law
Dr. Volker Soyez 22
Market definition – determines the factual framework for the analysis of market power
Important starting point: Commission Notice on the definition of the relevant market for the purposes of Community competition law (1997)
Relevant product market:
all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of the products‘ characteristics, their prices and their intended use
Method relies on demand substitutability but also supply-side substitutability can be taken into account
Relevant geographical market
Market Definition
EU Competition Law
Dr. Volker Soyez 23
Procedural phases:
Initiation of proceedings
Investigation
Statement of Objections
Access to File
Oral Hearing
Decision / fines
Appeals
“Long and slow” – generally many years
Art. 101 / 102 TFEU - Procedure
EU Competition Law
Dr. Volker Soyez 24
By customers, competitors, suppliers, or consumer
Art. 7 (2) reg. 1/2003, “Form C”, Commission Notice on the handling of complaints (OJ C 101, 27.04.2004, p. 65-77)
Indicative time frame for preliminary assessment of 4 months; but: right of prioritisation
Additional procedural rights for complainants
Partly access to (non-confidential) version of file
Participation in oral hearing
Right to appeal rejection of complaint
Initiation of proceedings - complaints
EU Competition Law
Dr. Volker Soyez 25
Commission Notice on Immunity from fines and reduction of fines in cartel cases (OJ C 298, 8.12.2006, p. 17–22)
Current source of most decisions
Only applicable to cartels, not applicable to vertical restraints or abuses of dominance
Leniency application: strict formal requirements
Rebate system depending on time of application and value of input:
100% reduction in fines for first past post
Up to 50% for “significant added value”
Initiation of proceedings – leniency applications
EU Competition Law
Dr. Volker Soyez 26
Requests for information (art. 18 reg. 1/2003)
Power to take statements (art. 19 reg. 1/2003)
Inspections / “dawn raids” (art. 20 reg. 1/2003)
enter any premises, land and means of transport
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;
seal any business premises and books or records for the period and to the extent necessary
Investigative powers of the EU Commission
EU Competition Law
Dr. Volker Soyez 27
Key case: “E.on”
May 2006: inspection by the EU Commission of E.on's commercial premises in Munich
Documents selected for closer examination were stored in a room. The door of the room was locked and an official Commission seal affixed
When Commission inspectors later returned to the room, they found the seal had been broken
The Commission imposed a fine of € 38 Million (Art. 23 (1) reg. 1/2003)
E.on appeals to GC and finally to ECJ: (i) undue reversal of burden of proof, (ii) disproportionality of fine
The Court of Justice finds: (i) no undue reversal of the burden of proof. Since the Commission had determined that there had been a breach of seal based on a body of evidence, it was for E.on to adduce evidence challenging that finding, (ii) 0.14% of turnover is not disproportionate
Investigative powers of the EU Commission
EU Competition Law
Dr. Volker Soyez 28
Key case: “Orkem” – Privilege against self-incrimination
EU Commission asked Orkem to provide information about the purpose of certain meetings
ECJ: The Community law imposes certain limitations on the Commission’s powers of investigation:
Certain questions are permitted (“factual questions”)
Certain questions are not permitted (“incriminating questions”), as for instance questions relating to the purpose of the actions taken and the objectives pursued
Investigative powers of the EU Commission
EU Competition Law
Dr. Volker Soyez 29
Legal basis: Art. 6 ECHR: “Everyone charged with a criminal offence has the following minimum rights: (a) to be informed promptly, in a language which he understands and in detail, of the nature and cause of the accusation against him; (b) to have adequate time and facilities for the preparation of his defence; (c) to defend himself in person or through legal assistance of his own choosing; [...]”
Statement of Objections (art. 10 reg. 773/2004)
Access to the file (art. 15 reg. 773/2004)
Oral Hearing (art. 12 reg. 773/2004)
“Fair trial” safeguards
EU Competition Law
Dr. Volker Soyez 30
Informal closing of procedure
Finding of inapplicability (art. 10 reg. 1/2003) / informal guidance
Commitment decisions (art. 9 reg. 1/2003)
Prohibition decisions / imposition of behavioural or structural remedies (art. 7 reg. 1/2003)
Imposition of fines on undertakings (art. 23 (2) reg. 1/2003); EU Commission has no competence to impose fines on natural persons (NCAs can)
Settlements (reg. 622/2008) / „Settlement Notice“ (OJ C 167, 2.7.2008, p. 1–6)
Decisions, sanctions & settlements
EU Competition Law
Dr. Volker Soyez 31
Commission guidelines on the method of setting fines imposed pursuant to art 23(2)(a) of reg. 1/2003 (OJ C 210, 1.9.2006, p. 2–5):
Determination of „affected sales“
Basic amount of the fine based on „gravity” and “duration” of the infringement; possible “entry fee” for hardcore-cartels
Adjustment of the basic amount (aggravating circumstances / mitigating circumstances)
Increase for deterrence / Inability to pay
10%-rule (art. 23 (2) reg. 1/2003)
Leniency notice
Calculation of fines
EU Competition Law
Dr. Volker Soyez 32
Competitors A and B enter into a price fixing agreement. A initiated the cartel and coerced B to participate. 5 years later the cartel is exposed and the Commission plans to impose sanctions. What amounts will it come up with?
A has annual sales of € 1 billion (€ 50 million with the cartelised product), B of € 10 million (only cartelised product). A was found guilty of a similar cartel offence a couple of years ago. B stopped its participation in the cartel immediately when the Commission investigation started and admitted its involvement to the Commission.
Calculation of fines – example
EU Competition Law
A B
Basic amount (25%) 12.500.000 2.500.000
Duration (5) 62.500.000 12.500.000
Aggravating circumstances (50%) 93.750.000 12.500.000
Mitigating circumstances (20%) 93.750.000 10.000.000
10% 93.750.000 1.000.000
Dr. Volker Soyez 33
Art. 263 (4) TFEU: “Any natural or legal person may, under the conditions laid down in the first and second paragraphs, institute proceedings against an act addressed to that person or which is of direct and individual concern to them, and against a regulatory act which is of direct concern to them and does not entail implementing measures.”
General Court (former Court of First Instance): art. 257 (1) 1 TFEU
2 months deadline for filing the appeal: art. 263 (5) TFEU
judicial review only (except fines): art. 31 reg. 1/2003
Appeals: European Court of Justice (ECJ): art. 257 (1) 2 TFEU
on points of law only
Appeals against Commission Decisions
EU Competition Law
Dr. Volker Soyez 34
Victims of anti-competitive practices have a right to claim damages; key cases Courage Crehan (ECJ, case C-453/99) / Manfredi (ECJ, case C-295/04)
Stand alone actions vs. follow-on actions
Binding effect of Commission decisions (art. 16.1 reg. 1/2003) and – as the case may be – of decisions by national competition authorities (e.g. section 33 (4) German Act against Restraints on Competition)
Instrumentalisation of complaints
Indirect purchaser standing and passing-on defence
Access to the file / interaction with leniency programs (Pfleiderer, ECJ case – C-360/09)
Directive 2014/104/EU of 26 November 2014
Private enforcement of EU competition law
EU Competition Law
Dr. Volker Soyez 35
Collective redress; no “class actions” available throughout the EU; “CDC Model”
Obligation to claim damages for corporations and public bodies
Interaction with public procurement
Compensation as mitigating factor when calculating fines
Limitation periods
Quantification of damages: counterfactual, legal presumptions
Private enforcement of EU competition law
EU Competition Law
Dr. Volker Soyez 36
Choice of Forum – Brussels I Reg. 1215/2012
Art. 4 – place of residence / incorporation
Art. 7(2) – place where harmful event occurred
Art. 8(1) – place of any of multiple defendants
Applicable law – Rome II Reg. 864/2007
Art. 6(3) (a) – the law applicable to a non-contractual obligation arising out of a restriction of competition shall be the law of the country where the market is, or is likely to be, affected
Art. 6(3) b) – when the market is affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seized
Private enforcement of EU competition law
EU Competition Law
Dr. Volker Soyez 37
Concept of merger control
Complexity: (27 +1) merger control regimes throughout the EU (plus international merger control regimes)
Reg. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (EU Merger Regulation / EUMR)
If the EUMR applies, the national rules do not („one-stop-shop“)
EU Merger Control
EU Competition Law
Dr. Volker Soyez 38
Certain turnover based thresholds must be met
worldwide turnover of all parties combined > €5 billion; and each of two or more parties have EU-wide turnover > €250 million, or
worldwide turnover of all parties combined > €2.5 billion; and each of two or more parties have EU-wide turnover of > €100 million; and each of two or more parties have national turnover of > €25 million in at least three EU states
Referrals to the EU Commission may occur if a concentration triggers national merger control rules in 3+ EU Member States
EU Merger Control - Applicability
EU Competition Law
Dr. Volker Soyez 39
Mandatory notification (Art. 4 EUMR)
Implementation prohibited pending clearance; “gun jumping”
Notification is information heavy (“front loaded”)
mandatory form: Form CO
detailed requirements
pre-filing contact (‘ping-pong’) with EU Commission usual
some ‘short form’ exceptions
EU Merger Control - Procedure
EU Competition Law
Dr. Volker Soyez 40
Binding deadlines apply for Commission review (automatic clearance if deadlines not met) (Art. 10 EUMR)
Phase I
25 working day deadline (in principle)
clearance unless “serious doubts” (~96%)
Phase II
further 90 working day deadline (in principle)
around 25% of Phase II cases cleared unconditionally; around 60% cleared with remedies (see Commission Notice on remedies, Official Journal C 267, 22.10.2008, p. 1-27)
Judicial review (competitors have standing / parties can recover damages (Schneider), “Fast Track” process)
EU Merger Control – Procedure ctd.
EU Competition Law
Dr. Volker Soyez 41
Will a concentration
“significantly impede effective competition” in the EU “SIEC-Test”
in particular by creating or strengthening a dominant position
In practice
analysis generally less economically detailed
greater focus on structural analysis, in particular market shares
more weight given to competitor complaints / concerns
Commission horizontal and non-horizontal guidelines
EU Merger Control – substantial test
EU Competition Law
Dr. Volker Soyez 42
Types of assignment
Compliance consulting
Transactional work
Public investigations / defense work
Private antitrust litigation / damages actions
Working hours / holidays / salaries
“Prácticas en Bruselas”
Work & Life as a competition lawyer
EU Competition Law
Dr. Volker Soyez 44
Partner. Admitted to the Cologne (2002) and Brussels (2003) bar Universities of Frankfurt/Main, Fribourg (CH) and Madrid; PhD 2002 Founder and Member of the Editorial Board of „Global Competition
Litigation Review“ (Sweet & Maxwell / Thompson Publishing, London) Chair of the working group „Competition Law Compliance“ within the
German Association for Corporate Compliance Owner of state-approved mediation body for competition law disputes Practice areas: European and German competition law (cartels, merger
control, distribution, abuses of dominance, litigation), corporate compliance regarding competition law and EU regulatory law (trade, institutional, regulatory)
Dr. Volker Soyez
EU Competition Law