Competition law compliance training
We provide you with this article based on a webinar by Dr Andrés Martin-Ehlers, a partner attorney of Oppenhoff in Frankfurt, Germany. This article is an abstract of the webinar recorded in May 2021. Also, the information and materials are as of the date when the webinar was recorded.
TFEU 101 for Prohibition of Restrictions on Competition in the EU
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits all EU member states from restricting competition. It states in paragraph 1;
“1. The following shall be seen 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.”
Block Exemption Regulations
The followings are main block exemption regulations: Horizontal, Vertical, and Hybrid.
- Horizontal Block Exemption Regulations define certain research and development and specialisation agreements that can be considered more beneficial than harmful and are therefore allowed under antitrust rules.
- Specialisation Agreements: Each participant agrees to produce, sell and provide only a defined range of goods and services.
- Research and Development Agreements
- Vertical Block Exemption Regulations exempt agreements between manufacturers and distributors provided their agreements do not contain price-fixing and other hardcore restrictions, and both do not have over a 30% market share.
- An example of Hybrid Block Exemption Regulations is technology transfer agreements.
The system of the block exemption regulations is that “everything which is not explicitly prohibited by this regulation is allowed,” Dr Martin-Ehlers said. However, we need to keep in mind market shares. If your market share exceeds a certain threshold, such activities may be regulated. However, hardcore cartels, like price-fixing and allocation of customers or territories, are strictly prohibited.
Exemption Under TFEU 101.3
Certain agreements are exempted from Article 101.1 under the conditions stated in paragraph 3.
“3. 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.”