Worksheets on European Competition Law

Friedrich Schiller University of Jena From the SelectedWorks of Christian Alexander Winter February, 2018 Worksheets on European Competition Law Christian Alexander Available at: https://works.bepress.com/ christian_alexander/13/

Worksheets on European Competition Law Preface This is an abbreviated version of the German Arbeitsblätter zum Kartellrecht, created for the lecture in Competition Law. Its main focus is on the European Competition Law, but includes some additional information on private enforcement in Germany, based on the Act against Restraints of Competition (Competition Act GWB 1 ). Please note that this worksheet presents only some short checklists that may be helpful for understanding of the structure and the application of European Competition law. The checklists show the legal requirements of the different articles and sections of the TFEU and GWB. These criteria must be satisfied in each individual case. Furthermore, the checklists explain some basic and important terms and definitions of European Competition Law. A short explaining on the terminology: In the European Union the term Competition Law has the same meaning as the term Antitrust Law in the US. In Germany the term Competition Law could be misinterpreted if you don t know the context. Sometimes the term Competition Law in German (translated as Wettbewerbsrecht ) has the same meaning as in the EU (in that case a more precise translation is Kartellrecht or Recht gegen Wettbewerbsbeschränkungen ). In a broader meaning the term Competition Law can also include the Law Against Unfair Competition or Unfair Commercial Practices (translated as Lauterkeitsrecht or Recht gegen unlauteren Wettbewerb ). Contents A. Structure of European Competition Law... 3 B. Enforcement of European Competition Law... 3 C. Basic Terms... 4 I. Undertakings... 4 II. Relevant Market... 5 D. Anti-competitive Agreements... 6 I. Art. 101 TFEU... 6 1 GWB = Gesetz gegen Wettbewerbsbeschränkungen.

II. Block Exemptions... 10 1st Block Exemptions for Horizontal Agreements... 10 2nd Block Exemptions for Vertical Agreements... 10 E. Art. 102 TFEU... 11 F. Merger Control... 13 G. Private Enforcement... 14 I. Overview... 14 II. Claim for Injunction, Sec. 33 (1) GWB... 14 III. Claim for Injunction, Sec. 33 (2) GWB... 15 IV. Claim for Elimination of a Disturbance, Sec. 33 (1) GWB... 16 V. Claim for Damages, Sec. 33a (1) GWB... 17 VI. Disgorgement of Benefits by Associations, Sec. 34a (1) GWB... 18 2

A. Structure of European Competition Law European Competition Law Prohibition of anticompetitive agreements Prohibition of the abuse of a dominant position within the internal market or in a substantial part of it Control of concentrations (merger control) Art. 101 TFEU 2 Art. 102 TFEU EUMR 3 B. Enforcement of European Competition Law Public enforcement Private enforcement Council Regulation (EC) No 1/2003 of 16 December 2002 on the implementation of the rules on competition laid down in Articles 81 and 82 of the Treaty 4 Directive 2014/104/EU of the European Parliament and of the Council of 26 November 2014 on certain rules governing actions for damages under national law for infringements of the competition law provisions of the Member States and of the European Union 5 European Commission and national competition authorities of the EU member states National courts 2 TFEU = Treaty on the Functioning of the European Union. 3 EUMR = Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings, OJ [2004] L 24/1. 4 OJ [2003] L 1/1. 5 OJ [2014] L 349/1. 3

C. Basic Terms I. Undertakings Functional approach ECJ: every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed. 6 General criteria a) Economic activity b) Autonomous exercise of the economic activity c) Offering or purchasing goods or services on a market d) Regardless of a profit or economic purpose e) Regardless of the legal status, legal form and the way in which the entity is financed 6 ECJ, 23.04.1991, Höfner and Elser, C-41/90, ECLI:EU:C:1991:161, para. 21. 4

II. Relevant Market Market definition Commission: Market definition is a tool to identify and define the boundaries of competition between firms. It serves to establish the framework within which competition policy is applied by the Commission. The main purpose of market definition is to identify in a systematic way the competitive constraints that the undertakings involved face. Product market Commission: a relevant 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. 7 Geographic market Commission: The relevant geographic market comprises 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 neighbouring areas because the conditions of competition are appreciably different in those area. 8 Temporal market, e.g. for seasonal products 7 Commission Notice on the definition of relevant market for the purposes of Community competition law, OJ [1997] C 372/5, para 7. 8 Commission Notice on the definition of relevant market for the purposes of Community competition law, OJ [1997] C 372/5, para 8. 5

D. Anti-competitive Agreements I. Art. 101 TFEU Prohibition, Art. 101 (1) TFEU 1. Undertakings or associations of undertakings a) Undertakings B. I. b) Associations of undertakings 2. Form of collusion a) Agreement b) Decision c) Concerted practices 3. Restraints of competition a) Prevention of competition b) Restriction of competition c) Distortion of competition Legal examples 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 6

4. Object or effect the prevention, restriction or distortion of competition a) Infringements by object Commission: Restrictions of competition by object are those that by their very nature have the potential of restricting competition. These are restrictions which in light of the objectives pursued by the Community competition rules have such a high potential of negative effects on competition that it is unnecessary for the purposes of applying Article 81(1) [= Art. 101 (1) TFEU] to demonstrate any actual effects on the market. This presumption is based on the serious nature of the restriction and on experience showing that restrictions of competition by object are likely to produce negative effects on the market and to jeopardise the objectives pursued by the Community competition rules. Restrictions by object such as price fixing and market sharing reduce output and raise prices, leading to a misallocation of resources, because goods and services demanded by customers are not produced. They also lead to a reduction in consumer welfare, because consumers have to pay higher prices for the goods and services in question. 9 b) Infringements by effect Commission: If an agreement is not restrictive of competition by object it must be examined whether it has restrictive effects on competition. Account must be taken of both actual and potential effects. In other words the agreement must have likely anti-competitive effects. 10 5. Appreciable impact on competition (de minimis rule) a) Objected restriction ECJ: an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition. 11 b) Effected restriction Commission: De Minimis Notice 12 6. Effect on inter-state trade a) trade between Member States Commission: all cross-border economic activity including establishment. 13 9 Communication from the Commission Notice Guidelines on the application of Article 81(3) of the Treaty, OJ [2004] C 101/97, para. 21. 10 Communication from the Commission Notice Guidelines on the application of Article 81(3) of the Treaty, OJ [2004] C 101/97, para. 24. 11 ECJ, 13.12.2012, Expedia, C-226/11, ECLI:EU:C:2012:795, para. 37. 12 Communication from the Commission Notice on agreements of minor importance which do not appreciably restrict competition under Article 101 (1) of the Treaty on the Functioning of the European Union (De Minimis Notice), OJ [2014] C 291/1. 13 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 19. 7

b) may affect Commission: the notion may affect implies that it must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States. 14 c) appreciability Commission: quantitative element, limiting Community law jurisdiction to agreements and practices that are capable of having effects of a certain magnitude. ( ) Appreciability can be appraised in particular by reference to the position and the importance of the relevant undertakings on the market for the products concerned. 15 14 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 23. 15 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 44. 8

Exempted agreements, Art. 101 (3) TFEU 16 Legal exemptions a) Block exemptions C. II. b) Art. 101 (3) TFEU-criteria in individual cases Cumulative criteria 1. Agreement must contribute to improving the production or distribution of goods or contribute to promoting technical or economic progress 2. while allowing consumers a fair share of the resulting benefit Agreement does not: 3. impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives 4. afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question 16 See Communication from the Commission Notice Guidelines on the application of Article 81(3) of the Treaty, OJ [2004] C 101/97. 9

II. Block Exemptions 1st Block Exemptions for Horizontal Agreements Commission Regulation (EU) No 1218/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements Commission Regulation (EU) No 1217/2010 of 14 December 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements Commission Regulation (EU) No 267/2010 of 24 March 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of agreements, decisions and concerted practices in the insurance sector Period of validity: 1 January 2011 to 31 December 2022 Period of validity: 1 January 2011 to 31 December 2022 Period of validity: 1 April 2010 to 31 March 2017 2nd Block Exemptions for Vertical Agreements Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices 17 Commission Regulation (EU) No 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector Commission Regulation (EU) No 316/2014 of 21 March 2014 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of technology transfer agreements Period of validity: 1 June 2010 to 31 May 2022 Period of validity 1 June 2010 to 31 May 2023 Period of validity: 1 May 2014 to 30 April 2026 17 For further details see Guidelines on Vertical Restraints OJ [2010] C 130/1. 10

E. Art. 102 TFEU 18 1. Undertakings B. I. 2. Dominant market position 3. Abuse a) Relevant market B. II. b) ECJ: a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, its customers and ultimately of the consumers. 19 ECJ: The concept of abuse is an objective concept relating to the behaviour of an undertaking in a dominant position which is such as to influence the structure of a market where, as a result of the very presence of the undertaking in question, the degree of competition is weakened and which, through recourse to methods different from those which condition normal competition in products or services on the basis of the transactions of commercial operators, has the effect of hindering the maintenance of the degree of competition still existing in the market or the growth of that competition. 20 Legal examples 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 18 For details see Communication from the Commission Guidance on the Commission's Enforcement Priorities in Applying Article 82 EC Treaty to Abusive Exclusionary Conduct by Dominant Undertakings, COM(2008) 832 final. 19 ECJ, 13.02.1979, Hoffman-La Roche, 85/76, ECLI:EU:C:1979:36, para. 38. 20 ECJ, 13.02.1979, Hoffman-La Roche, 85/76, ECLI:EU:C:1979:36, para. 91. 11

4. Effect on inter-state trade a) trade between Member States all cross-border economic activity including establishment. 21 b) may affect the notion may affect implies that it must be possible to foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member States. 22 c) appreciability quantitative element, limiting community law jurisdiction to agreements and practices that are capable of having effects of a certain magnitude. ( ) Appreciability can be appraised in particular by reference to the position and the importance of the relevant undertakings on the market for the products concerned. 23 21 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 19. 22 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 23. 23 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty, OJ [2004] C 101/81, para. 44. 12

F. Merger Control 1. Art. 3 EUMR: Meaning of a concentration Art. 3 (1) (a) EUMR: mergers Art. 3 (1) (b) EUMR: acquisition of control, including full-function joint ventures, Art. 3 (4) EUMR 2. Art. 1 (1)-(3) EUMR: Concentrations having a Union dimension 3. Concerned undertakings 4. Art. 2 EUMR: Criteria for substantive analysis Significant Impediment to Effective Competition (SIEC)-Test Art. 2 (2) EUMR: Compatibility with the internal market Art. 2 (3) EUMR: Incompatibility with the internal market 13

G. Private Enforcement I. Overview Claim for injunction Claim for elimination of a disturbance Claim for damages Disgorgement of benefits by associations Sec. 33 (1) und (2) GWB Sec. 33 (1) GWB Sec. 33a (1) GWB Sec. 34a (1) GWB II. Claim for Injunction, Sec. 33 (1) GWB 1. Violation of a provision of GWB Part I (Sec. 1-47l) Art. 101 or 102 TFEU a decision taken by the competition authority 2. risk of recurrence 3. Obliged party (claimholder) Sec. 33 (3) GWB: competitors or other market participants impaired by the infringement Sec. 33 (4) GWB: associations and qualified entities 4. Liable party: infringer Art. 2 (2) Directive 2014/104/EU: undertaking or association of undertakings which has committed an infringement of competition law. 14

III. Claim for Injunction, Sec. 33 (2) GWB 1. Violation of a provision of GWB Part I (Sec. 1-47l) Art. 101 or 102 TFEU a decision taken by the competition authority 2. infringement is likely 3. Obliged party (claimholder) Sec. 33 (3) GWB: competitors or other market participants impaired by the infringement Sec. 33 (4) GWB: associations and qualified entities 4. Liable party: infringer Art. 2 (2) Directive 2014/104/EU: undertaking or association of undertakings which has committed an infringement of competition law. 15

IV. Claim for Elimination of a Disturbance, Sec. 33 (1) GWB 1. Violation of a provision of GWB Part I (Sec. 1-47l) Art. 101 or 102 TFEU a decision taken by the competition authority 2. Incessant infringement 3. Proportionality and reasonability of remedies 4. Obliged party (claimholder) Sec. 33 (3) GWB: competitors or other market participants impaired by the infringement Sec. 33 (4) GWB: associations and qualified entities 5. Liable party: infringer Art. 2 (2) Directive 2014/104/EU: undertaking or association of undertakings which has committed an infringement of competition law. 16

V. Claim for Damages, Sec. 33a (1) GWB 1. Violation of a provision of GWB Part I (Sec. 1-47l) Art. 101 or 102 TFEU a decision taken by the competition authority 2. Intentional or negligent violation 3. Obliged party (claimholder) Sec. 33 (3) GWB: competitors or other market participants impaired by the infringement. direct purchaser: a natural or legal person who acquired, directly from an infringer, products or services that were the object of an infringement of competition law. 24 indirect purchaser: a natural or legal person who acquired, not directly from an infringer, but from a direct purchaser or a subsequent purchaser, products or services that were the object of an infringement of competition law, or products or services containing them or derived therefrom. 25 4. Liable party: infringer Art. 2 (2) Directive 2014/104/EU: undertaking or association of undertakings which has committed an infringement of competition law. 24 Art. 2 (23) Directive 2014/104/EU. 25 Art. 2 (24) Directive 2014/104/EU. 17

VI. Disgorgement of Benefits by Associations, Sec. 34a (1) GWB 1. Violation of a provision of GWB Part I (Sec. 1-47l) Art. 101 or 102 TFEU a decision taken by the competition authority 2. Intentional violation 3. Economic benefit 4. At the expense of multiple purchasers or suppliers 5. Obliged party (claimholder) Sec. 34a and 33 (4) GWB: associations and qualified entities 6. Liable party: infringer Art. 2 (2) Directive 2014/104/EU: undertaking or association of undertakings which has committed an infringement of competition law. 18