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The treatment of vertical agreements in EC competition law has changed significantly during the last ten years - Essay Example

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The treatment of vertical agreements in EC competition law has changed significantly during the last ten years

Article 81 regulates anti-competitive behaviour in a wide range of scenarios and has been applied with reference to what the EU is trying to achieve: a level playing field2 for competition within an internal market. The aim of achieving market integration between the Member States is apparent in many rulings of the Commission and European courts.
Article 81(1) provides that "all agreements between undertakings, decisions by associations of undertakings and concerted practices and which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market shall be prohibited. In Article 81(3) the conditions for exemption from Article 81(1) are laid down. The way in which the ECJ has interpreted these concepts and requirements will be examined in the following subsection.
According to the (C-41/90 Hofner and Elser3), the meaning of undertakings is 'The concept of 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'. This means that any entity carrying on a commercial or economic activity (company, partnership, sole trader, co-operative) is subject to the competition rules, including individual professionals, non-profit- making services, public utilities, and even public authorities when they are acting commercially, but not when exercising their official authority [Case 30/87 Corinne Bodson v Pompes Funbres des Regions Libres4].

Under Article 81, there is first a finding of infringement under Article 81(1). The weighing of the pro- and anti-competitive effects of an agreement only takes place under Article 81(3) which allows exemption for agreements, which produce positive effects.5 This two-stage process under Article 81 can be contrasted with the US 'rule of reason' approach, which balances the pro- and anti-competitive consequences of an agreement before a finding of infringement is made. The CFI recently confirmed the two-stage approach and rejected the 'rule of reason' in Case T-112/99 Metro pole Television (M6) and Others v Commission6.

In a recent Commission decision, involving a duopoly which had engaged in information exchange, price-fixing and market sharing, one party to the cartel was granted 100 per cent remission of fines for whistle-blowing and the other 40 per cent for mitigating factors [COMP/E- 2/37.978 Re the Methylglucamine Cartel7].

The vertical regulation and guideline indicate that the commission now adopts a more economic approach to vertical agreements. The vertical regulation sets out a presumption that vertical agreements which do not incorporate hard-core restraints and which are concluded between undertakings which do not exceed a 30 per cent market threshold are Article 81. 8

Though the vertical regulation provides legal certainty and is intended to operate as a safe harbour, its existence clouds the water when trying to rationalize under and the analysis required under Article 81(1) and Article 81(3) respectively.9 The commission has not therefore met the criticism that it does not make a realistic economic assessment of agreements under Article 81( ...Show more

Summary

EC competition policy is one of the original policy areas of the 1957 EC Treaty and has a number of objectives, some of which are common to all competition systems and some specific to the EC. A key function of the EC competition rules, as interpreted by the ECJ, has been to assist in the establishment of a single Community-wide market, (for example, by preventing companies from dividing the market into national sales territories)…
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The treatment of vertical agreements in EC competition law has changed significantly during the last ten years essay example
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