TRAJECT dag 1 en 2

TRAining of Judges in European CompeTition law (TRAJECT) 13-17 October 2014 Intensive training programme for members of the national judiciary, focused on EU competition law

Art. 101 TFEU

13 October & 14 October

Reader for internal use only

© 2014 This publication has been produced with the financial support of the Training of National Judges Programme of the European Union. The contents of this publication are the sole responsibility of the Radboud University Nijmegen and Péter Pázmány University Budapest, and can in no way be taken to reflect the views of the European Union.

Table of Contents Prof. Petra Pohlmann ......................................................................................................................... 4

TRAJECT Reader Prof. Pohlmann ................................................................................................................ 5

Prof. Thomas Hoeren ...................................................................................................................... 157

CJEU, Case 421/05, City Motors Groep NV v. Citroën Benelux NV ........................................................158

CJEU, Case 439/09, Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorité de la concurrence, Ministre de l’Économie, de l’Industrie en de l’Emploi ...........................................................................174

Maurits Dolmans & Anu Piilola, ‘The New Technology Transfer Block Exemption’, World Competition (2004), 27 (3), 351-363 ...........................................................................................................................185

Claudia Seitz, ‘One Step in the Right Direction – The New Horizontal Guidelines and the Restated Block Exemption Regulations’, Journal of European Competition Law & Practice (2011), Vol. 2, No. 5, 452-462 ..................................................................................................................................................198

Cyril Ritter, ‘The New Technology Transfer Block Exemption under EC Competition Law’, Legal Issues of Economic Integration (2004), 31(3), 161–184 ........................................................................................209

Jonathan Faull & Ali Nikpay, ‘The EU law of competition’, Oxford University Press (2014), 314-317 ...232

Prof. Gerald Mäsch ......................................................................................................................... 237

Case study ...............................................................................................................................................238

EC memo - Antitrust: Commission proposal for Directive to facilitate damages claims by victims of antitrust violations – frequently asked questions ..................................................................................241

EC Press release - Commission recommends Member States to have collective redress mechanisms in place to ensure effective access to justice .............................................................................................246

Assimakis Kominos, ‘Private enforcement: An overview of EU and national case law’, (N°44442, www.concurrences.com) .......................................................................................................................250

Prof. Petra Pohlmann Prof. Pohlmann will be handing out study questions, and she will also be conducting an interactive case

study.

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Prof. Petra Pohlmann: Article 101 TFEU and the prohibition on cartels

Contents

A. Introduction: The Legal Foundations of EU Competition Law 34 pages

(Lorenz, An Introduction to EU Competition Law, 2013)

B. Public Enforcement (overview)

1. Commission Decisions: Artt. 7-10 Regulation 1/2003 19 pages

(Faull& Nikpay, The EU Law of Competition, 3rd

Ed. 2014)

2. Commission Decisions: Cartel Fines 15 pages


C. Private Enforcement (overview)

1. Private Enforcement 4 pages


2. Commission Press Releases: 4 pages

Proposed Directive on Antitrust Damages Actions

3. Commission Memo 14/310 5 pages

D. Case Law Art. 101 TFEU 50 pages

International Application 1

1. Undertaking/Association of undertakings 1

a. General 1

b. Public undertakings 2

c. Parents and subsidiaries 6

2. Agreement, decision or concerted practice 8

3. Capability of affecting inter-state trade 14

4. Prevention, restriction or distortion of competition as object or effect 22

a. as effect 22

b. as object 25

5. Appreciability of the restriction of competition 32

6. Immanent boundaries 35

7. Art. 101 (3) TFEU 37

8. Consequence of a violation of Art. 101 (1): Nullity, Art. 101 (2) TFEU 42

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9. Enforcement 43

a. Public Enforcement 43

b. Private Enforcement 45

10. National Courts 48

E. Vertical Agreements and Vertical Block Exemption 19 pages


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Art. 101 (1) TFEU

International Application

ECJ, joined cases C-89/85, 27.09.1988, “Wood pulp I”

16 It should be observed that an infringement of Article 85, such as the conclusion of an agreement

which has had the effect of restricting competition within the common market, consists of conduct

made up of two elements, the formation of the agreement, decision or concerted practice and the

implementation thereof. If the applicability of prohibitions laid down under competition law were

made to depend on the place where the agreement, decision or concerted practice was formed, the

result would obviously be to give undertakings an easy means of evading those prohibitions. The

decisive factor is therefore the place where it is implemented.

1. Undertaking/Association of undertakings

a. General

ECJ, C-41/90, 23.04.1991, „Höfner and Elser“

21 The concept of an undertaking encompasses every entity engaged in an economic activity,

regardless of the legal status of the entity or the way in which it is financed.

ECJ, C-309/99, 19.02.2002, „Wouters“

47 It is also settled case-law that any activity consisting of offering goods and services on a given

market is an economic activity (Case 118/85 Commission v Italy [1987] ECR 2599, paragraph 7; Case

C-35/96 Commission v Italy [1998] ECR I-3851, ‘CNSD’, paragraph 36).

[…]

57 According to the case-law of the Court, the Treaty rules on competition do not apply to activity

which, by its nature, its aim and the rules to which it is subject does not belong to the sphere of

economic activity (see, to that effect, Joined Cases C-159/91, C-160/91 Poucet and Pistre [1993] ECR

I-637, paragraphs 18 and 19, concerning the management of the public social security system), or

which is connected with the exercise of the powers of a public authority (see, to that effect, Case C-

364/92 Sat Fluggesellschaft [1994] ECR I-43, paragraph 30, concerning the control and supervision of

air space, and Case C-343/95 Diego Calì & Figli [1997] ECR I-1547, paragraphs 22 and 23,

concerning anti-pollution surveillance of the maritime environment).

[…]

66 According to its very wording, Article 85 of the Treaty applies to agreements between undertakings

and decisions by associations of undertakings. The legal framework within which such agreements are

concluded and such decisions taken, and the classification given to that framework by the various

national legal systems, are irrelevant as far as the applicability of the Community rules on competition,

and in particular Article 85 of the Treaty, are concerned (Case 123/83 BNIC v Clair [1985] ECR 391,

paragraph 17, and CNSD, paragraph 40).

ECJ, C-205/03 P, 11.07.2006, „FENIN“:

25 The Court of First Instance rightly held, in paragraph 35 of the judgment under appeal, that in

Community competition law the definition of an ‘undertaking’ covers any entity engaged in an

economic activity, regardless of the legal status of that entity and the way in which it is financed (Case

C-41/90 Höfner and Elser [1991] ECR I-1979, paragraph 21, and Joined Cases C-264/01, C-306/01,

C-354/01 and C-355/01 AOK-Bundesverband and Others [2004] ECR I-2493, paragraph 46). In

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accordance with the case-law of the Court of Justice, the Court of First Instance also stated, in

paragraph 36 of the judgment under appeal, that it is the activity consisting in offering goods and

services on a given market that is the characteristic feature of an economic activity (Case C-35/96

Commission v Italy [1998] ECR I-3851, paragraph 36).

26 The Court of First Instance rightly deduced, in paragraph 36 of the judgment under appeal, that

there is no need to dissociate the activity of purchasing goods from the subsequent use to which they

are put in order to determine the nature of that purchasing activity, and that the nature of the

purchasing activity must be determined according to whether or not the subsequent use of the

purchased goods amounts to an economic activity.

b. Public undertakings

ECJ, C-159 and 160/91, 17.02.1993, „Poucet“

17 The Court has held (in particular in Case C-41/90 Höfner v Elser [1991] ECR I-1979, paragraph

21) that in the context of competition law 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.

18 Sickness funds, and the organizations involved in the management of the public social security

system, fulfil an exclusively social function. That activity is based on the principle of national

solidarity and is entirely non-profit-making. The benefits paid are statutory benefits bearing no relation

to the amount of the contributions.

19 Accordingly, that activity is not an economic activity and, therefore, the organizations to which it is

entrusted are not undertakings within the meaning of Articles 85 and 96 of the Treaty.

20 The answer to be given to the national court must therefore be that the concept of an undertaking

within the meaning of Articles 85 and 86 of the Treaty does not encompass organizations charged with

the management of social security schemes of the kind referred to in the judgments of the national

court.

ECJ, C-364/92, 19.01.1994, „Eurocontrol – SAT Fluggesellschaft“

15 SAT claims that Eurocontrol is an undertaking within the meaning of Articles 86 and 90 of the

Treaty. The research and coordination activities carried on by that organization and the collection of

route charges do not fall within the "jus imperii", but constitute economic activities that could be

carried on by bodies governed by private law. Even air navigation control is an economic activity, as

shown by the fact that in some Member States it is private undertakings that exercise such control.

SAT claims, in the alternative, that at least the collection of charges, which gave rise to the dispute in

the main proceedings, is a commercial activity as is demonstrated in particular by the fact that

Eurocontrol has brought actions for recovery before the Brussels Commercial Court.

16 The French, German and Greek Governments, and the United Kingdom, on the other hand, base

their reasoning on the public character of Eurocontrol’s activities, in denying that the latter is an

undertaking within the meaning of the Treaty rules of competition. They are supported, in particular,

by the judgments of the Court on the interpretation of the Convention of 27 September 1968 on

Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, from which it is

apparent that Eurocontrol must be regarded as a public authority acting in the exercise of its powers

(judgments in Case 29/76 LTU v Eurocontrol [1976] ECR 1541, and in Joined Cases 9/77 and 10/77

Bavaria Fluggesellschaft and Germanair v Eurocontrol [1977] ECR 1517). More particularly, they

argue that air navigation control is a supervisory activity intended to ensure public safety. The

collection of route charges, for its part, is an activity carried on on behalf of the Contracting States, the

charges merely constituting the consideration for the air navigation services provided by those States.

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17 The Commission also maintains that Eurocontrol does not constitute an undertaking, within the

meaning of the relevant Treaty provisions, and in that connection puts forward the same arguments as

those developed by the Member States so far as the collection of route charges is concerned.

Furthermore, it considers that air navigation control, which is not directly at issue in the main

proceedings, is a task involving the exercise of public authority and is not of an economic nature, since

that activity constitutes a service in the public interest which is intended to protect both the users of air

transport and the populations affected by aircraft flying over them.

18 It follows from the case-law of the Court (see especially the judgments in Case C41/90 Hoefner

and Elser v Macrotron GmbH [1991] ECR I-1979, at paragraph 21, and in Joined Cases C-159/91 and

C-160/91 Poucet et Pistre [1993] ECR I-637, at paragraph 17) that, in Community competition law,

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.

19 In order to determine whether Eurocontrol’s activities are those of an undertaking within the

meaning of Articles 86 and 90 of the Treaty, it is necessary to establish the nature of those activities.

20 Under Article 1 of the Convention on International Civil Aviation, signed at Chicago on 7

December 1944 (United Nations Treaty Series, Vol. 15, No 105): "The Contracting States recognize

that every State has complete and exclusive sovereignty over the air space above its territory". It is in

the exercise of that sovereignty that the States ensure, subject to compliance with the provisions of the

applicable international conventions, the supervision of their air space and the provision of air

navigation control services.

21 According to the Convention establishing it, Eurocontrol is a regionally-oriented international

organization, whose aim is to strengthen cooperation between the Contracting States in the field of air

navigation and develop joint activities in this field, making due allowance for defence needs and

providing maximum freedom for all air space users consistent with the required level of safety. The

organization is to act in cooperation with the civil and military authorities of the Contracting States

(Article 1 of the amended Convention).

22 Eurocontrol' s tasks, as defined in Article 2 of the amended Convention, are concerned in the first

place with research, planning, coordination of national policies and staff training.

23 Secondly, Eurocontrol is competent to establish and collect the route charges levied on users of air

space. Eurocontrol settles, in accordance with the guidelines laid down by the International Civil

Aviation Organization, the common formula on the basis of which the route charges are calculated.

That formula takes into account the weight of the aircraft and the distance travelled, to which a "rate

per unit" is applied. That rate is not fixed by Eurocontrol, but by each of the Contracting States for the

use of its air space. A single charge, making up the sum of the charges payable, is calculated and

collected by Eurocontrol for each flight. The charges are collected on behalf of the Contracting States

to which they are paid over, after deduction of a proportion of the revenue corresponding to an

"administrative rate" intended to cover collection costs.

24 Finally, as the Protocol of 12 February 1981 expressly provides, the operational exercise of air

navigation control is limited since Eurocontrol can only carry on that activity at the request of the

Contracting States. In that connection, it is common ground that Eurocontrol confines itself to

providing air space control for the Benelux countries and the northern part of the Federal Republic of

Germany from its Maastricht centre. For the purposes of such control, Eurocontrol is vested with

rights and powers of coercion which derogate from ordinary law and which affect users of air space. In

exercising those particular powers, it must ensure compliance with international agreements and

national rules concerning access, overflying and the territorial security of the Contracting States

concerned.

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25 So far as the last-mentioned activity is concerned, it may be noted that it has not been disputed that

Eurocontrol is required to provide navigation control in that air space for the benefit of any aircraft

travelling through it, even where the owner of the aircraft has not paid the route charges owed to

Eurocontrol.

26 Finally, Eurocontrol' s activities are financed by the contributions of the Contracting States.

27 Eurocontrol thus carries out, on behalf of the Contracting States, tasks in the public interest aimed

at contributing to the maintenance and improvement of air navigation safety.

28 Contrary to SAT' s contention, Eurocontrol' s collection of route charges, which gave rise to the

dispute in the main proceedings, cannot be separated from the organization' s other activities. Those

charges are merely the consideration, payable by users, for the obligatory and exclusive use of air

navigation control facilities and services. As the Court has already held, specifically in connection

with the interpretation of the abovementioned Convention of 27 September 1968, Eurocontrol must, in

collecting the charges, be regarded as a public authority acting in the exercise of its powers (the LTU

judgment, cited above, at paragraphs 4 and 5).

29 Eurocontrol acts in that capacity on behalf of the Contracting States without really having any

influence over the amount of the route charges. Responsibility for the fact, relied upon by SAT before

the national court, that the amounts of the charges vary in time or with respect to the areas overflown,

cannot be attributed to Eurocontrol, which merely establishes and applies a common formula in the

circumstances set out above, but to the Contracting States which set the amount of the rates per unit.

30 Taken as a whole, Eurocontrol' s activities, by their nature, their aim and the rules to which they are

subject, are connected with the exercise of powers relating to the control and supervision of air space

which are typically those of a public authority. They are not of an economic nature justifying the

application of the Treaty rules of competition.

31 Accordingly, an international organization such as Eurocontrol does not constitute an undertaking

subject to the provisions of Articles 86 and 90 of the Treaty.

ECJ, joined cases, 16.03.2004, „AOK Bundesverband“

47 In the field of social security, the Court has held that certain bodies entrusted with the management

of statutory health insurance and old-age insurance schemes pursue an exclusively social objective and

do not engage in economic activity. The Court has found that to be so in the case of sickness funds

which merely apply the law and cannot influence the amount of the contributions, the use of assets and

the fixing of the level of benefits. Their activity, based on the principle of national solidarity, is

entirely non-profit-making and the benefits paid are statutory benefits bearing no relation to the

amount of the contributions (Joined Cases C-159/91 and C-160/91 Poucet and Pistre [1993] ECR I-

637, paragraphs 15 and 18).“

48 The fact that the amount of benefits and of contributions was, in the last resort, fixed by the State

led the Court to hold, similarly, that a body entrusted by law with a scheme providing insurance

against accidents at work and occupational diseases […] was not an undertaking for the purpose of the

Treaty competition rules (see Cisal, cited above, paragraphs 43 to 46).

49 On the other hand, other bodies managing statutory social security systems and displaying some of

the characteristics referred to in paragraph 47 of the present judgment, namely being non-profit-

making and engaging in activity of a social character which is subject to State rules that include

solidarity requirements in particular, have been considered to be undertakings engaging in economic

activity (see Case C-244/94 Fédération française des sociétés d’assurance and Others [1995] ECR I-

4013, paragraph 22, and Case C-67/96 Albany [1999] ECR I-5751, paragraphs 84 to 87).

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50 Thus, in Fédération française des sociétés d’assurance and Others, at paragraph 17, the Court held

that the body in question managing a supplementary old-age insurance scheme engaged in an

economic activity in competition with life assurance companies and that the persons concerned could

opt for the solution which guaranteed the better investment. In paragraphs 81 and 84 of Albany,

concerning a supplementary pension fund based on a system of compulsory affiliation and applying a

solidarity mechanism for determination of the amount of contributions and the level of benefits, the

Court noted however that the fund itself determined the amount of the contributions and benefits and

operated in accordance with the principle of capitalisation. It deduced therefrom that such a fund

engaged in an economic activity in competition with insurance companies.“

51 Sickness funds in the German statutory health insurance scheme, like the bodies at issue in Poucet

and Pistre, cited above, are involved in the management of the social security system. In this regard

they fulfil an exclusively social function, which is founded on the principle of national solidarity and

is entirely non-profit-making.

52 It is to be noted in particular that the sickness funds are compelled by law to offer to their members

essentially identical obligatory benefits which do not depend on the amount of the contributions. The

funds therefore have no possibility of influence over those benefits.

53 In its orders for reference, the Bundesgerichtshof states in this regard that the sickness funds are

joined together in a type of community founded on the basis of solidarity (‘Solidargemeinschaft’)

which enables an equalisation of costs and risks between them. In accordance with Paragraph 265 et

seq. of SGB V, an equalisation is thus effected between the sickness funds whose health expenditure is

lowest and those which insure costly risks and whose expenditure connected with those risks is

highest.

54 The sickness funds are therefore not in competition with one another or with private institutions as

regards grant of the obligatory statutory benefits in respect of treatment or medicinal products which

constitutes their main function.

55 It follows from those characteristics that the sickness funds are similar to the bodies at issue in

Poucet and Pistre and Cisal and that their activity must be regarded as being non-economic in nature.

56 The latitude available to the sickness funds when setting the contribution rate and their freedom to

engage in some competition with one another in order to attract members does not call this analysis

into question. As is apparent from the observations submitted to the Court, the legislature introduced

an element of competition with regard to contributions in order to encourage the sickness funds to

operate in accordance with principles of sound management, that is to say in the most effective and

least costly manner possible, in the interests of the proper functioning of the German social security

system. Pursuit of that objective does not in any way change the nature of the sickness funds’ activity.

57 Since the activities of bodies such as the sickness funds are not economic in nature, those bodies do

not constitute undertakings within the meaning of Articles 81 EC and 82 EC.

58 However, the possibility remains that, besides their functions of an exclusively social nature within

the framework of management of the German social security system, the sickness funds and the

entities that represent them, namely the fund associations, engage in operations which have a purpose

that is not social and is economic in nature. In that case the decisions which they would be led to adopt

could perhaps be regarded as decisions of undertakings or of associations of undertakings.

59 It must therefore be examined whether determination of the fixed maximum amounts by the fund

associations is linked to the sickness funds’ functions of an exclusively social nature or whether it falls

outside that framework and constitutes an activity of an economic nature.

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60 In the submission of the pharmaceutical companies, the fund associations adopt decisions of

associations of undertakings, of an economic nature, when they determine the fixed maximum

amounts.

61 However, as is apparent from the documents before the Court, when the fund associations

determine the fixed maximum amounts they merely perform an obligation which is imposed upon

them by Paragraph 35 of SGB V in order to ensure continuance of operation of the German social

security system. That paragraph also lays down in detail the applicable procedure for determining the

amounts and specifies that the fund associations must observe certain requirements as to quality and

profitability. SGB V also provides that if the fund associations do not succeed in determining fixed

maximum amounts, the competent minister must then decide them.

62 Thus, only the precise level of the fixed maximum amounts is not dictated by legislation, but

decided by the fund associations having regard to the criteria laid down by the legislature.

Furthermore, while the fund associations have a certain discretion in this regard, the discretion relates

to the maximum amount paid by the sickness funds in respect of medicinal products which is an area

where the latter do not compete.

63 It follows that, in determining those fixed maximum amounts, the fund associations do not pursue a

specific interest separable from the exclusively social objective of the sickness funds. On the contrary,

in making such a determination, the fund associations perform an obligation which is integrally

connected with the activity of the sickness funds within the framework of the German statutory health

insurance scheme.

64 It must accordingly be found that, in determining the fixed maximum amounts, the fund

associations merely perform a task for management of the German social security system which is

imposed upon them by legislation and that they do not act as undertakings engaging in economic

activity.

65 The answer to the first question must therefore be that groups of sickness funds, such as the fund

associations, do not constitute undertakings or associations of undertakings within the meaning of

Article 81 EC when they determine fixed maximum amounts corresponding to the upper limit of the

price of medicinal products whose cost is borne by sickness funds.

c. Parents and subsidiaries

ECJ, C-97/08, 10.09.2009, “Akzo Nobel”:

54 It must be observed, as a preliminary point, that Community competition law refers to the

activities of undertakings (Joined Cases C-204/00 P, C-205/00 P, C-211/00 P, C-213/00 P, C-217/00 P

and C-219/00 P Aalborg Portland and Others v Commission [2004] ECR I-123, paragraph 59), and

that the concept of an undertaking covers any entity engaged in an economic activity, regardless of its

legal status and the way in which it is financed (see, in particular, Dansk Rørindustri and Others v

Commission, paragraph 112; Case C-222/04 Cassa di Risparmio di Firenze and Others [2006]

ECR I-289, paragraph 107; and Case C-205/03 P FENIN v Commission, [2006] ECR I-6295,

paragraph 25).

55 The Court has also stated that the concept of an undertaking, in the same context, must be

understood as designating an economic unit even if in law that economic unit consists of several

persons, natural or legal (Case C-217/05 Confederación Española de Empresarios de Estaciones de

Servicio [2006] ECR I-11987, paragraph 40).

56 When such an economic entity infringes the competition rules, it falls, according to the principle

of personal responsibility, to that entity to answer for that infringement (see, to that effect, Case

C-49/92 P Commission v Anic Partecipazioni [1999] ECR I-4125, paragraph 145; Case C-279/98 P

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Cascades v Commission [2000] ECR I-9693, paragraph 78; and Case C-280/06 ETI and Others [2007]

ECR I-10893, paragraph 39).

57 The infringement of Community competition law must be imputed unequivocally to a legal person

on whom fines may be imposed and the statement of objections must be addressed to that person (see,

to that effect, Aalborg Portland and Others v Commission, paragraph 60, and Joined Cases C-322/07

P, C-327/07 P and C-338/07 P August Koehler and Others v Commission [2009] ECR I-0000,

paragraph 38). It is also necessary that the statement of objections indicate in which capacity a legal

person is called on to answer the allegations.

58 It is clear from settled case-law that the conduct of a subsidiary may be imputed to the parent

company in particular where, although having a separate legal personality, that subsidiary does not

decide independently upon its own conduct on the market, but carries out, in all material respects, the

instructions given to it by the parent company (see, to that effect, Imperial Chemical Industries v

Commission, paragraphs 132 and 133; Geigy v Commission, paragraph 44; Case 6/72 Europemballage

and Continental Can v Commission [1973] ECR 215, paragraph 15; and Stora, paragraph 26), having

regard in particular to the economic, organisational and legal links between those two legal entities

(see, by analogy, Dansk Rørindustri and Others v Commission, paragraph 117, and ETI and Others,

paragraph 49).

59 That is the case because, in such a situation, the parent company and its subsidiary form a single

economic unit and therefore form a single undertaking for the purposes of the case-law mentioned in

paragraphs 54 and 55 of this judgment. Thus, the fact that a parent company and its subsidiary

constitute a single undertaking within the meaning of Article 81 EC enables the Commission to

address a decision imposing fines to the parent company, without having to establish the personal

involvement of the latter in the infringement.

60 In the specific case where a parent company has a 100% shareholding in a subsidiary which has

infringed the Community competition rules, first, the parent company can exercise a decisive influence

over the conduct of the subsidiary (see, to that effect, Imperial Chemical Industries v Commission,

paragraphs 136 and 137) and, second, there is a rebuttable presumption that the parent company does

in fact exercise a decisive influence over the conduct of its subsidiary (see, to that effect, AEG-

Telefunken v Commission, paragraph 50, and Stora, paragraph 29).

61 In those circumstances, it is sufficient for the Commission to prove that the subsidiary is wholly

owned by the parent company in order to presume that the parent exercises a decisive influence over

the commercial policy of the subsidiary. The Commission will be able to regard the parent company as

jointly and severally liable for the payment of the fine imposed on its subsidiary, unless the parent

company, which has the burden of rebutting that presumption, adduces sufficient evidence to show

that its subsidiary acts independently on the market (see, to that effect, Stora, paragraph 29).

ECJ, C-179/12, 26.09.2013, „Dow Chemical“

52 As a preliminary point, it must be observed that, according to settled case-law, the behaviour of a

subsidiary can be imputed to the parent company, in particular where, despite having separate legal

personality, that subsidiary does not decide independently upon its own conduct on the market, but

carries out, in all material respects, the instructions given to it by the parent company, regard being

had in particular to the economic, organisational and legal links between those two legal entities (Akzo

Nobel and Others v Commission , paragraphs 58 and 72, and Joined Cases C-628/10 P and C-14/11 P

Alliance One International and Standard Commercial Tobacco v Commission and Commission v

Alliance One International and Others [2012] ECR I-0000, paragraph 43)

53 In such a situation, because the parent company and its subsidiary form a single economic unit and

therefore form a single undertaking for the purposes of Article 81 EC, the Commission may address a

decision imposing fines to the parent company, without having to establish the personal involvement

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of the latter in the infringement (see Akzo Nobel and Others v Commission, paragraph 59, and

Alliance One International and Standard Commercial Tobacco v Commission and Commission v

Alliance One International and Others, paragraph 44).

54 The Court of Justice has stipulated that account must be taken of all the relevant factors relating to

the economic, organisational and legal links which tie the subsidiary to the parent company, which

may vary from case to case and cannot therefore be set out in an exhaustive list (see, to that effect,

Akzo Nobel and Others v Commission, paragraph 74, and Case C-521/09 P Elf Aquitaine v

Commission [2011] ECR I-8947, paragraph 58).

55 In paragraphs 73 and 75 of the judgment under appeal, the General Court therefore cited the case-

law setting out the test for imputing to a parent company the competition infringement committed by

its subsidiary. It rightly held that, in order to be able to impute the conduct of a subsidiary to the parent

company, the Commission cannot merely find that the parent company is in a position to exercise

decisive influence over the conduct of its subsidiary, but must also check whether that influence was

actually exercised (see, to that effect, Case 107/82 AEG-Telefunken v Commission [1983] 3151,

paragraph 50).

56 It should be noted in that regard that the principle that it is necessary to check whether the parent

company actually exercised decisive influence over its subsidiary applies only where the subsidiary is

not wholly owned by its parent company. According to settled case-law of the Court of Justice, where

the entire capital of the subsidiary is owned, there is no longer any requirement to carry out such a

check since, in those circumstances, there is a presumption of decisive influence on the part of the

parent company which has the burden of rebutting that presumption (see Alliance One International

and Standard Commercial Tobacco v Commission and Commission v Alliance One International and

Others, paragraphs 46 and 47 and the case-law cited).

[…]

58 Where two parent companies each have a 50% shareholding in the joint venture which committed

an infringement of the rules of competition law, it is only for the purposes of establishing liability for

participation in the infringement of that law and only in so far as the Commission has demonstrated,

on the basis of factual evidence, that both parent companies did in fact exercise decisive influence over

the joint venture, that those three entities can be considered to form a single economic unit and

therefore form a single undertaking for the purposes of Article 81 EC.

2. Agreement, decision or concerted practice

ECJ, C-56/65, 30.06.1966, „Maschinenbau Ulm/ Societe Technique Miniere“

p.248: In order to fall within this prohibition, an agreement must have been made between

undertakings. Article 85 (1) makes no dinstinction as to whether the parties are at the same level in the

economy (so-called 'horizontal' agreements), or at different levels (so-called 'vertical' agreements).

Therefore an agreement containing a clause 'granting an exclusive right of sale' may fulfil this

condition.

ECJ, C-48/69, 14.07.1972, „ICI v Commission“

64 Article 85 draws a distinction between the concept of “concerted practices” and that of “agreements

between undertakings” or of “decisions by associations of undertakings”; the object is to bring within

the prohibition of that article 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 risk of competition.

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65 By its very nature, then, a concerted practice does not have all the elements of a contract but may

inter alia arise out of coordination which becomes apparent from the behavior of the participants.

66 Although parallel behavior may not be itself be identified with a concerted practice, it may however

amount to strong evidence of such a practice if it leads to conditions of competition which do not

correspond to the normal conditions of the market, having regard to the nature of the product, the size

and number of undertakings, and the volume of the said market.

67 This is especially the case if the parallel conduct is such as to enable those concerned to attempt to

stabilize prices at a level different from that to which competition would have led, and to consolidate

established positions to the detriment of effective freedom of the movement of the products in the

common market and of the freedom of consumers to choose their suppliers.

68 Therefore the question whether there was a concerted action in this case can only be correctly

determined if the evidence upon which the contested decision is based is considered, not in isolation,

but as a whole, account being taken of the specific features of the market in the products in question.

ECJ, C-40/73, 16.12.1975, „Suiker Unie“ (Sugar Cartel)

26 The concept of a 'concerted practice' refers to a form of coordination between undertakings, which,

without having been taken to the stage where an agreement properly so-called has been concluded,

knowingly substitutes for the risks of competition, practical cooperation between them which leads to

conditions of competition which do not correspond to the normal conditions of the market, having

regard to the nature of the products, the importance and number of the undertakings as well as the size

and nature of the said market.

27 Such practical cooperation amounts to a concerted practice, particularly if it enables the persons

concerned to consolidate established positions to the detriment of effective freedom of movement of

the products in the common market and of the freedom of consumers to choose their suppliers.

[…]

173 The criteria of coordination and cooperation laid down by the case-law of the Court, which in no

way require the working out of an actual plan, must be understood in the light of the concept inherent

in the provisions of the Treaty relating to competition that each economic operator must determine

independently the policy which he intends to adopt on the common market including the choice of the

persons and undertakings to which he makes offers or sells.

174 Although it is correct to say that this requirement of independence does not deprive economic

operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their

competitors, it does however strictly preclude any direct or indirect contact between such operators,

the object or effect whereof is either to influence the conduct on the market of an actual or potential

competitor or to disclose to such a competitor the course of conduct which they themselves have

decided to adopt or contemplate adopting on the market.

GC, T-186/06, 16.06.2001, „Solvay/Commission“:

86 An agreement within the meaning of Article 81(1) EC can be regarded as having been concluded

where there is a concurrence of wills on the very principle of a restriction of competition, even if the

specific features of the restriction envisaged are still under negotiation (see, to that effect, HFB

Holding and Others v Commission, paragraph 85 above, paragraphs 151 to 157 and 206).

[…]

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145 In so far as the material set out above shows that the competitors already had a common scheme

whose objective was to arrive at an anti-competitive agreement, those discussions must be regarded as

going beyond a mere intention or an attempt to conclude an agreement.

[…]

147 It should be recalled that, according to settled case-law, the disclosure of information to one’s

competitors in preparation for an anti-competitive agreement suffices to prove the existence of a

concerted practice within the meaning of Article 81 EC (see paragraph 89 above).

ECJ, C-2/01 P, 06.01.2004, „Adalat“:

83 Secondly, the Court of First Instance did not in any event consider that the absence of a system of

subsequent monitoring and penalties in itself implied the absence of an agreement prohibited by

Article 85(1) of the Treaty. On the other hand, such an absence was regarded as one of the relevant

factors in the analysis concerning Bayer's alleged intention to impose an export ban and, therefore, the

existence of an agreement in this case. In that regard, although the existence of an agreement does not

necessarily follow from the fact that there is a system of subsequent monitoring and penalties, the

establishment of such a system may nevertheless constitute an indicator of the existence of an

agreement.

[…]

96 It does not appear from the judgment under appeal that the Court of First Instance took the view

that an agreement within the meaning of Article 85(1) of the Treaty could not exist unless one

business partner demands a particular line of conduct from the other.

97 On the contrary, in paragraph 69 of the judgment under appeal, the Court of First Instance set out

from the principle that the concept of an agreement within the meaning of Article 85(1) of the Treaty

‘centres around the existence of a concurrence of wills between at least two parties, the form in which

it is manifested being unimportant so long as it constitutes the faithful expression of the parties'

intention’. The Court further recalled, in paragraph 67 of the same judgment, that for there to be an

agreement within the meaning of Article 85(1) of the Treaty it is sufficient that the undertakings in

question should have expressed their common intention to conduct themselves on the market in a

specific way.

[…]

101 However, such an agreement cannot be based on what is only the expression of a unilateral policy

of one of the contracting parties, which can be put into effect without the assistance of others. To hold

that an agreement prohibited by Article 85(1) of the Treaty may be established simply on the basis of

the expression of a unilateral policy aimed at preventing parallel imports would have the effect of

confusing the scope of that provision with that of Article 86 of the Treaty.

102 For an agreement within the meaning of Article 85(1) of the Treaty to be capable of being

regarded as having been concluded by tacit acceptance, it is necessary that the manifestation of the

wish of one of the contracting parties to achieve an anti-competitive goal constitute an invitation to the

other party, whether express or implied, to fulfil that goal jointly, and that applies all the more where,

as in this case, such an agreement is not at first sight in the interests of the other party, namely the

wholesalers.

ECJ, C-74/04 P, 13.07.2006, “Volkswagen v Commission”

35 In support of its argument, the Commission refers to settled case-law according to which a call by a

motor vehicle manufacturer to its authorised dealers does not constitute a unilateral act but an

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agreement within the meaning of Article 81(1) EC if it forms part of a set of continuous business

relations governed by a general agreement drawn up in advance.

36 However, the case-law to which the Commission refers does not imply that any call by a motor

vehicle manufacturer to dealers constitutes an agreement within the meaning of Article 81(1) EC and

does not relieve the Commission of its obligation to prove that there was a concurrence of wills on the

part of the parties to the dealership agreement in each specific case.

37 The Court of First Instance rightly noted, in paragraphs 30 to 34 of the judgment under appeal,

that, in order to constitute an agreement within the meaning of Article 81(1) EC, it is sufficient that an

act or conduct which is apparently unilateral be the expression of the concurrence of wills of at least

two parties, the form in which that concurrence is expressed not being by itself decisive.

38 As stated by Volkswagen in paragraph 29 of its response to the notice of appeal, to find otherwise

would have the effect of reversing the burden of proof of the existence of a breach of the competition

rules and contravening the principle of presumption of innocence.

39 The will of the parties may result from both the clauses of the dealership agreement in question

and from the conduct of the parties, and in particular from the possibility of there being tacit

acquiescence by the dealers in a call from the manufacturer (see, to that effect, Case C-338/00 P

Volkswagen v Commission, paragraphs 61 to 68).

41 It should be borne in mind that, in paragraph 20 of the judgment in Ford v Commission, the Court

rejected an argument based on the allegedly unilateral nature of certain measures of selective

distribution of motor vehicles, stating that dealership agreements must necessarily leave certain

aspects for subsequent decision by manufacturers and that such decisions were expressly provided for

in Annex 1 to the dealership agreement in question.

42 Likewise, in paragraph 64 of the judgment in Case C-338/00 P Volkswagen v Commission, this

Court held that the Court of First Instance had found correctly that measures taken by Volkswagen to

limit the deliveries of motor vehicles to Italian dealers, implemented with the express aim of blocking

re-exports from Italy, was part of the ongoing commercial relationship between the parties to the

dealership agreement; the Court of First Instance relied, inter alia, on the fact that the dealership

agreement in question provided for the possibility of limiting such deliveries.

43 In that context, this Court notes that its case-law does not indicate that the compliance or non-

compliance of the contractual clauses in question with the competition rules is necessarily decisive in

that examination. It follows that the Court of First Instance erred in law in finding, in paragraphs 45

and 46 of the judgment under appeal, that clauses which comply with the competition rules may not be

regarded as authorising calls which are contrary to those rules.

44 The possibility that a call which is contrary to the competition rules may be regarded as being

authorised by seemingly neutral clauses of a dealership agreement cannot be automatically excluded.

45 Consequently, the Court of First Instance could not, without making an error of law, refrain from

examining the clauses of the dealership agreement individually, taking account, where applicable, of

all other relevant factors, such as the aims pursued by that agreement in the light of the economic and

legal context in which it was signed.

GC, T-99/04, 08.07.2008, „AC Treuhand AG“:

118 As regards the term ‘agreement’, it should be noted, first of all, that that term is merely another

way of indicating coordinated/collusive conduct which is restrictive of competition, or a cartel in the

wider sense, in which at least two distinct undertakings participate after expressing their joint intention

of conducting themselves on the market in a specific way […]. Furthermore, in order to constitute an

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agreement within the meaning of Article 81(1) EC, it is sufficient that an act or conduct, albeit

apparently unilateral, be the expression of the concurrence of wills of at least two parties, the form in

which that concurrence is expressed not being by itself decisive (Case C-74/04 P Commission v

Volkswagen [2006] ECR I-6585, paragraph 37). That broad notion of agreement is confirmed by the

fact that the prohibition laid down in Article 81(1) EC also covers concerted practice whereby there is

a form of coordination between undertakings which does not lead to the conclusion of an agreement as

such […].

ECJ, C-8/08, 04.06.2009, „T-Mobile Netherlands“

23 As a preliminary point, the definitions of ‘agreement’, ‘decisions by associations of undertakings’

and ‘concerted practice’ are intended, from a subjective point of view, to catch forms of collusion

having the same nature which are distinguishable from each other only by their intensity and the forms

in which they manifest themselves (see, to that effect, Commission v Anic Partecipazioni, paragraph

131).

24 It follows, as the Advocate General stated in essence at point 38 of her Opinion, that the criteria

laid down in the Court’s case-law for the purpose of determining whether conduct has as its object or

effect the prevention, restriction or distortion of competition are applicable irrespective of whether the

case entails an agreement, a decision or a concerted practice.

25 In that regard, it should be noted that the Court has already provided a number of criteria on the

basis of which it is possible to ascertain whether an agreement, decision or concerted practice is

anti-competitive.

26 With regard to the definition of a concerted practice, the Court has held that such a practice is a

form of coordination between undertakings by which, without it having been taken to the stage where

an agreement properly so-called has been concluded, practical cooperation between them is knowingly

substituted for the risks of competition (see Joined Cases 40/73 to 48/73, 50/73, 54/73 to 56/73,

111/73, 113/73 and 114/73 Suiker Unie and Others v Commission [1975] ECR 1663, paragraph 26,

and Joined Cases C-89/85, C-104/85, C-114/85, C-116/85, C-117/85 and C-125/85 to C-129/85

Ahlström Osakeyhtiö and Others v Commission [1993] ECR I-1307, paragraph 63).

32 Second, with regard to the exchange of information between competitors, it should be recalled that

the criteria of coordination and cooperation necessary for determining the existence of a concerted

practice are to be understood in the light of the notion inherent in the Treaty provisions on

competition, according to which each economic operator must determine independently the policy

which he intends to adopt on the common market (see Suiker Unie and Others v Commission,

paragraph 173; Case 172/80 Züchner [1981] ECR 2021, paragraph 13; Ahlström Osakeyhtiö and

Others v Commission, paragraph 63; and Case C-7/95 P Deere v Commission [1998] ECR I-3111,

paragraph 86).

44 By its second question, the referring court asks essentially whether, in examining whether there is

a causal connection between the concerted practice and the market conduct of the undertakings

participating in the practice – a connection which must exist if it is to be established that there is a

concerted practice within the meaning of Article 81(1) EC – the national court is required to apply the

presumption of a causal connection established in the Court’s case-law, according to which, where

they remain active on the market, such undertakings are presumed to take account of the information

exchanged with their competitors, or whether that court can apply the rules of national law pertaining

to the burden of proof.

[…]

49 It should be borne in mind at the outset that Article 81 EC, first, produces direct effects in relations

between individuals, creating rights for the persons concerned which the national courts must

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safeguard and, second, is a matter of public policy, essential for the accomplishment of the tasks

entrusted to the Community, which must be automatically applied by national courts (see, to that

effect, Case C-126/97 Eco Swiss [1999] ECR I-3055, paragraphs 36 and 39, and Joined Cases

C-295/04 to C-298/04 Manfredi and Others [2006] ECR I-6619, paragraphs 31 and 39).

50 In applying Article 81 EC, any interpretation that is provided by the Court is therefore binding on

all the national courts and tribunals of the Member States.

51 As regards the presumption of a causal connection formulated by the Court in connection with the

interpretation of Article 81(1) EC, it should be pointed out, first, that the Court has held that the

concept of a concerted practice, as it derives from the actual terms of that provision, implies, in

addition to the participating undertakings concerting with each other, subsequent conduct on the

market and a relationship of cause and effect between the two. However, the Court went on to consider

that, subject to proof to the contrary, which the economic operators concerned must adduce, it must be

presumed that the undertakings taking part in the concerted action and remaining active on the market

take account of the information exchanged with their competitors in determining their conduct on that

market. That is all the more the case where the undertakings concert together on a regular basis over a

long period. Lastly, the Court concluded that such a concerted practice is caught by Article 81(1) EC,

even in the absence of anti-competitive effects on the market (see Hüls, paragraphs 161 to 163).

52 In those circumstances, it must be held that the presumption of a causal connection stems from

Article 81(1) EC, as interpreted by the Court, and it consequently forms an integral part of applicable

Community law.

53 In the light of the foregoing considerations, the answer to the second question must be that, in

examining whether there is a causal connection between the concerted practice and the market conduct

of the undertakings participating in the practice – a connection which must exist if it is to be

established that there is concerted practice within the meaning of Article 81(1) EC – the national court

is required, subject to proof to the contrary, which it is for the undertakings concerned to adduce, to

apply the presumption of a causal connection established in the Court’s case-law, according to which,

where they remain active on that market, such undertakings are presumed to take account of the

information exchanged with their competitors.

ECJ, C-452/05, 28.04.2010, „BST v Commission“

31 It is apparent, first of all, from the case-law that, given the nature of the infringements of the

competition rules and the nature and degree of severity of the ensuing penalties, liability for those

infringements is personal in nature. The agreements and concerted practices referred to in Article

81(1) EC are necessarily the result of collusion on the part of a number of undertakings, all of which

are co-perpetrators of the infringement, but whose participation can take different forms, varying, in

particular, according to the characteristics of the market concerned and the position of each

undertaking on that market, the aims pursued and the means of implementation chosen or envisaged.

However, the mere fact that each undertaking takes part in the infringement in ways particular to it

does not suffice to exclude its liability for the entire infringement, including its liability for conduct

which, in practical terms, is put into effect by other participating undertakings, but which has the same

anti-competitive object or effect (Case C-49/92 P Commission v Anic Partecipazioni [1999] ECR

I-4125, paragraphs 78 to 80).

32 Thus, an undertaking may be held liable for an overall cartel even though it is shown to have

participated directly only in one or some of its constituent elements, if it knew, or must have known,

that the collusion in which it participated, especially by means of regular meetings organised over

several years, was part of an overall plan intended to distort competition and if that overall plan

included all the constituent elements of the cartel (see, to that effect, Case T-48/00 Corus UK v

Commission [2004] ECR II-2325, paragraph 176). Similarly, the fact that the roles played by various

undertakings in pursuit of a common objective were different does not cancel out the fact that the anti-

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competitive objective, hence the infringement, was the same, provided that each undertaking has

contributed, at its own level, to the pursuit of the common objective (see, to that effect, Joined Cases

T-25/95, T-26/95, T-30/95 to T-32/95, T-34/95 to T-39/95, T-42/95 to T-46/95, T-48/95, T-50/95 to

T-65/95, T-68/95 to T-71/95, T-87/95, T-88/95, T-103/95 and T-104/95 Cimenteries CBR and Others

v Commission [2000] ECR II-491, paragraph 4123).

33 Lastly, since, by virtue of the fact that they shared the same object, the agreements and concerted

practices found to exist formed part of systems of regular meetings, target-price fixing and quota

fixing, schemes which in turn formed part of a series of attempts made by the undertakings concerned

in pursuit of a single economic aim, namely to distort the normal movement of prices, it would be

artificial to split up such continuous conduct, characterised by a single purpose, by treating it as a

number of separate infringements when, on the contrary, what was involved was a single infringement

which progressively manifested itself both in the form of agreements and in the form of concerted

practices. An undertaking which has taken part in such an infringement through conduct, particular to

it, which was covered by the notion of an agreement or concerted practice having an anti-competitive

object, for the purposes of Article 81(1) EC, and which was intended to help bring about the

infringement as a whole, is also liable – throughout the entire period of its participation in that

infringement – for conduct put into effect by other undertakings in the context of the same

infringement. That is the case where it is established that the undertaking in question was aware of the

offending conduct of the other participants, or could reasonably have foreseen it, and that it was

prepared to take the risk. That conclusion is not inconsistent with the principle that liability for such

infringements is personal in nature. It reflects a conceptual approach which is widely followed in the

legal orders of the Member States concerning the attribution of liability for infringements committed

by a number of perpetrators according to their participation in the infringement as a whole, which is

not regarded in those legal systems as incompatible with the personal nature of liability (see, to that

effect, Commission v Anic Partecipazioni, paragraph 31 above, paragraphs 82 to 84).

[…]

37 Furthermore, according to the case-law, it is sufficient for the Commission to show that the

undertaking concerned 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 (see, to that effect, Case C-199/92 P Hüls v

Commission [1999] ECR I-4287, paragraph 155, and Commission v Anic Partecipazioni, paragraph

31 above, paragraph 96). The reason underlying that legal principle is that, having participated in the

meetings without publicly distancing itself from what was discussed, the undertaking gave the other

participants to believe that it subscribed to what was decided there and would comply with it. That is

also true of the participation of an undertaking in the implementation of a single agreement. In order to

establish that an undertaking participated in such an agreement, the Commission must show that the

undertaking intended to contribute by its own conduct to the common objectives pursued by all the

participants and that it was aware of the actual conduct planned or put into effect by other

undertakings in pursuit of those same objectives, or that it could reasonably have foreseen it, and that

it was prepared to take the risk […].

3. Capability of affecting inter-state trade

ECJ, C-56/65, 30.06.1966, „Maschinenbau Ulm/Societe Technique Miniere“

p. 249: The agreement must also be one which 'may affect trade between Member States'. This

provision, clarified by the introductory words of Article 85 which refers to agreements in so far as they

are 'incompatible with the Common Market', is directed to determining the field of application of the

prohibition by laying down the condition that it may be assumed that there is a possibility that the

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realization of a single market between Member States might be impeded. It is in fact to the extent that

the agreement may affect trade between Member States that the interference with competition caused

by that agreement is caught by the prohibitions in Community law found in Article 85, whilst in the

converse case it escapes those prohibitions. For this requirement to be fulfilled it must be possible to

foresee with a sufficient degree of probability on the basis of a set of objective factors of law or of fact

that the agreement in question may have an influence, direct or indirect, actual or potential, on the

pattern of trade between Member States. Therefore, in order to determine whether an agreement which

contains a clause 'granting an exclusive right of sale' comes within the field of application of Article

85, it is necessary to consider in particular whether it is capable of bringing about a partitioning of the

market in certain products between Member States and thus rendering more difficult the

interpenetration of trade which the Treaty is intended to create.

ECJ, C-56/64, 13.07.1966, “Consten/Grundig”

p. 339-340:

The applicants submit that the prohibition in Article 85 (1) applies only to so-called horizontal

agreements. The Italian Government submits furthermore that sole distributorship contracts do not

constitute 'agreements between undertakings' within the meaning of that provision, since the parties

are not on a footing of equality. With regard to these contracts, freedom of competition may only be

protected by virtue of Article 86 of the Treaty.

Neither the wording of Article 85 nor that of Article 86 gives any ground for holding that distinct areas

of application are to be assigned to each of the two Articles according to the level in the economy at

which the contracting parties operate. Article 85 refers in a general way to all agreements which distort

competition within the Common Market and does not lay down any distinction between those

agreements based on whether they are made between competitors operating at the same level in the

economic process or between non-competing persons operating at different levels. In principle, no

distinction can be made where the Treaty does not make any distinction.

Furthermore, the possible application of Article 85 to a sole distributorship contract cannot be

excluded merely because the grantor and the concessionnaire are not competitors inter se and not on a

footing of equality. Competition may be distorted within the meaning of Article 85 (1) not only by

agreements which limit it as between the parties, but also by agreements which prevent or restrict the

competition which might take place between one of them and third parties. For this purpose, it is

irrelevant whether the parties to the agreement are or are not on a footing of equality as regards their

position and function in the economy. This applies all the more, since, by such an agreement, the

parties might seek, by preventing or limiting the competition of third parties in respect of the products,

to create or guarantee for their benefit an unjustified advantage at the expense of the consumer or user,

contrary to the general aims of Article 85. It is thus possible that, without involving an abuse of a

dominant position, an agreement between economic operators at different levels may affect trade

between Member States and at the same time have as its object or effect the prevention, restriction or

distortion of competition, thus falling under the prohibition of Article 85 (1).

In addition, it is pointless to compare on the one hand the situation, to which Article 85 applies, of a

producer bound by a sole distributorship agreement to the distributor of his products with on the other

hand that of a producer who includes within his undertaking the distribution of his own products by

some means, for example, by commercial representatives, to which Article 85 does not apply. These

situations are distinct in law and, moreover, need to be assessed differently, since two marketing

organizations, one of which is untegrated into the manufacturer's undertaking whilst the other is not,

may not necessarily have the same efficiency.

The wording of Article 85 causes the prohibition to apply, provided that the other conditions are met,

to an agreement between several undertakings. Thus it does not apply where a sole undertaking

integrates its own distribution network into its business organization. It does not thereby follow,

however, that the contractual situation based on an agreement between a manufacturing and a

distributing undertaking is rendered legally acceptable by a simple process of economic analogy —

which is in any case incomplete and in contradiction with the said Article. Furthermore, although in

the first case the Treaty intended in Article 85 to leave untouched the internal organization of an

undertaking and to render it liable to be called in question, by means of Article 86, only in cases where

it reaches such a degree of seriousness as to amount to an abuse of a dominant position, the same

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reservation could not apply when the impediments to competition result from agreement between two

different undertakings which then as a general rule simply require to be prohibited. Finally, an

agreement between producer and distributor which might tend to restore the national divisions in trade

between Member States might be such as to frustrate the most fundamental objections of the

Community. The Treaty, whose preamble and content aim at abolishing the barriers between States,

and which in several provisions gives evidence of a stern attitude with regard to their reappearance,

could not allow undertakings to reconstruct such barriers. Article 85 (1) is designed to pursue this aim,

even in the case of agreements between undertakings placed at different levels in the economic

process.

p. 441: The complaints relating to the concept of 'agreements... which may affect trade between

Member States'

The applicants and the German Government maintain that the Commission has relied on a mistaken

interpretation of the concept of an agreement which may affect trade between Member States and has

not shown that such trade would have been greater without the agreement in dispute. The defendant

replies that this requirement in Article 85 (1) is fulfilled once trade between Member States develops,

as a result of the agreement, differently from the way in which it would have done without the

restriction resulting from the agreement, and once the influence of the agreement on market conditions

reaches a certain degree. Such is the case here, according to the defendant, particularly in view of the

impediments resulting within the Common Market from the disputed agreement as regards the

exporting and importing of Grundig products to and from France.

The concept of an agreement 'which may affect trade between Member States' is intended to define, in

the law governing cartels, the boundary between the areas respectively covered by Community law

and national law. It is only to the extent to which the agreement may affect trade between Member

States that the deterioration in competition caused by the agreement falls under the prohibition of

Community law contained in Article 85; otherwise it escapes the prohibition. In this connexion, what

is particularly important is whether the agreement 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 between States. Thus the fact that an

agreement encourages an increase, even a large one, in the volume of trade between States is not

sufficient to exclude the possibility that the agreement may 'affect' such trade in the abovementioned

manner. In the present case, the contract between Grundig and Consten, on the one hand by preventing

undertakings other than Consten from importing Grundig products into France, and on the other

hand by prohibiting Consten from re-exporting those products to other countries of the Common

Market, indisputably affects trade between Member States. These limitations on the freedom of trade,

as well as those which might ensue for third parties from the registration in France by Consten of the

GINT trade mark, which Grundig places on all its products, are enough to satisfy the requirement in

question.

ECJ, C-23/67, 12.12.1967, “Brasserie de Haecht I“

p. 414-417: By a judgment of 8 May 1967, received by the Court on 27 June, the Tribunal de

Commerce, Liège, referred to the Court under Article 177 of the EEC Treaty for a preliminary ruling

on the interpretation of Article 85 (1) of the said Treaty. The Court is asked whether, 'in order to judge

whether the contracts in question are prohibited byArticle85 (1) of the EEC Treaty, it is necessary to

take into account the economic context and the whole of the market, that is to say, in this case, the

simultaneous existence of a large number of contracts of the same type imposed by a small number of

Belgian breweries upon avery large proportion of liquor licensees', or whether'consideration must be

limited to an examination of the effects on the market of the said agreements considered in isolation'.

According to this judgment the question refers to agreements whereby a dealer undertakes for a certain

period to obtain his supplies solely from agiven supplier, to the exclusion of all others.

The prohibition in Article 85 (1) of the Treaty rests on three factors essential for a reply to the question

referred. After stating the limits within which the prohibition is to apply, Article85 (1) mentions

agreements, decisions and practices. By referring inthe same sentence to agreements between

undertakings, decisions by associations of undertakings and concerted practices, which may involve

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many parties, Article 85(1) implies that the constituent elements of those agreements,decisions and

practices may be considered together as a whole.

Furthermore, by basing its application to agreements, decisions or practices not only on their subject-

matter but also on their effects in relation to competition, Article 85 (1) implies that regard must be

had to such effects in the context in which they occur, that is to say, in the economic and legal context

of such agreements,decisions or practices and where they might combine with others to have a

cumulative effect on competition.In fact, it would be pointless to consider an agreement,decision or

practice by reason of its effects if those effects were to be taken distinct from the market in which they

are seen to operate and could only be examined apart fromt he body of effects, whether

convergent or not, surrounding their implementation. Thus in order to examine whether it is caught by

Article 85(1) an agreement cannot be examined in isolation from the above context, that is, from the

factual or legal circumstances causing it to prevent, restrict or distort competition. The existence

of similar contracts may be taken into consideration for this objective to the extent to which the

general body of contracts of this type is capable of restricting the freedom of trade.

Lastly, it is only to the extent to which agreements, decisions or practices are capable of affecting trade

between Member States that the alteration of competition comes under Community prohibitions. In

order to satisfy this condition, it must be possible for the agreement, decision or practice, when

viewed in the light of a combination of the objective,factual or legal circumstances, to appear to be

capableof having some influence, direct orindirect, on trade betweenMember States, of being

conducive to a partitioning of the market and of hampering the economic interpenetration sought by

the Treaty.

When this point is considered the agreement, decision or practice cannot therefore be isolated from all

the others of which it is one. The existence of similar contracts is a circumstance which, together with

others, is capable of being a factor in the economic and legal context within which the contract must

be judged. Accordingly, whilst such a situation must be taken into account it should not be considered

as decisive by itself, but merely as one among others in judging whether trade between Member States

is capable of being affected through any alteration in competition.

ECJ, C-40/73, 16.12.1975, „Suiker Unie“ (Sugar Cartel)

12 Before dealing with each of the nine complaints separately it is advisable to consider a general

question, namely whether, as several applicants assert, the common organization of the sugar market is

arranged in such a way that it eliminates any effective competition.

13 The provisions relating to this organization provide in particular for the fixing of a minimum price

to be paid by sugar manufacturers for the purchase of sugar beet, a threshold price, a target price and

intervention prices at which national agencies have to buy the sugar which they are offered, the

collection of an import levy and the grant of export refunds, of denaturing premiums and, for the

chemical industry, refunds to producers.

14 The common organization of the sugar market unlike those of the other agricultural markets also

provides that each Member State shall fix, on the basis of the quantity allocated to it for each factory

or undertaking producing sugar in its territory, a basic quota and a maximum quota, it being

understood, on the one hand, that Member States shall collect from the manufacturer a production levy

on sugar which is outside the basic quota but within the maximum quota and, on the other hand, that

the quantity of sugar in excess of the maximum quota shall not be disposed of on the domestic

market.

15 From the economic point of view the main features of the sugar market are that sugar is for the

most part a homogeneous and standardized product, that transport costs of sugar are relatively high

and that freight rates make the transportation of sugar beet over long distances out of the question.

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18

16 It is beyond doubt that, as the beforementioned system of national quotas stopped production

moving gradually to areas particularly suitable for the cultivation of sugar beet and, in addition

prevented any large increase in production, it cut down the quantities which producers can sell in the

common market.

17 This restriction together with the relatively high transport costs, is likely to have a not

inconsiderable effect on one of the essential elements in competition, namely the supply, and

consequently on the volume and pattern of trade between Member States.

18 Similarly the fact that a uniform intervention price was fixed for all Member States except Italy

was likely to prevent a rapid increase of intra-Community trade capable of making competition more

intense and all the more so because, on the one hand, the original Member States with the exception of

Italy and Luxembourg were able to meet their requirements to a greater or lesser extent from their own

production and, on the other hand, the sugar factories with very few exceptions were more favourably

located in relation to the areas of consumption of their respective countries than the producers of

the other Member States.

19 However the Community system also contains elements which either promote the development of

trade between Member States and, consequently, effective competition, or at least are likely to

moderate the opposite effects arising out of the beforementioned facts.

20 In the first place the distinctive feature of this system — which moreover has allowed areas having

a surplus as well as areas having a deficit to continue in being — is the disappearance of intra-

Community barriers.

21 Further the 'prices' fixed or provided for by the Community system are not sale prices for dealers,

users and consumers and, consequently, allow producers some freedom to determine themselves the

price at which they intend to sell their products.

22 Moreover there is a good deal of evidence on the Court's file, including statements by several

applicants, to show that, when the opportunity presented itself, the sale price, far from appearing to the

persons concerned to be a value predetermined in practice by Community rules, was the subject of

tough negotiations.

23 Finally the common organization of the market has no appreciable effect, even indirect, on certain

matters which are also capable of being the subject of, or ensuring effective competition, such as the

volume of demand and conditions of sale other than those relating to the price or quality of service.

24 Whatever criticisms may be made of a system, which is designed to consolidate a partitioning of

national markets by means of national quotas, the effects of which will be examined later, the fact

remains that if it leaves in practice a residual field of competition, that field comes within the

provisions of the rules of competition.

ECJ, C-42/84, 11.07.1985, „Remia/Nutricia“

22 Taking first the condition with regard to the effect on trade between Member States, the Court

would point out that, as it has consistently held, in order that an agreement between undertakings may

affect trade between Member States 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 it may have an influence, direct

or indirect, actual or potential, on the pattern of trade between Member States, such as might prejudice

the realization of the aim of a single market in all the Member States. The Court has also held

(judgment of 17 October 1972 in Case 8 / 72 , Cementhandelaren, [1972] ECR 977) that an agreement

or practice restricting competition and extending over the whole territory of a Member State by its

very nature has the effect of reinforcing the compartmentalization of markets on a national basis,

thereby holding up the economic interpénétration which the Treaty is intended to bring about.

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19

GC, T-374/94, 15.09.1998 “European Night Services”

86 According to case-law, a 5% market share warrants considering an undertaking to be of sufficient

importance for its behaviour to be in principle capable of affecting trade between Member States (Case

19/77 Miller ν Commission [1978] ECR 131, Joined Cases 100/80 to 103/80 Musique Diffusion

Française and Others ν Commission [1983] ECR 1825, and Case 107/82 AEG ν Commission [1983]

ECR 3151). The same rule must apply to restrictions of competition liable to result from an agreement

between undertakings. In that regard, the Commission submits that, contrary to the applicants'

contention, it is not clear from the Langnese-Iglo and Schöller judgments, cited above, that a market

share of over 5% is insufficiënt by itself to conclude that there is an appreciable restriction of

competition.

[…]

90 First of all, it must be noted that, in order to assess the effects of the ENS agreements on

competition and on trade between Member States, the Commission defined two relevant service

markets in the decision: the market for the transportof business travellers, for whom scheduled air

travel and high-speed rail travel areinterchangeable modes of transport (the 'intermodal' market for

business travel),and the market for the transport of leisure travellers, for whom substitute services

may include economy-class air travel, train, coach and possibly private motor car(the 'intermodal'

market for leisure travel) (see points 26 and 27 of the decision).

[…]

102 In any event, even if, as noted above, ENS's share of the tourist travel market was in fact likely to

exceed 5% on certain routes, attaining 7% on the London- Amsterdam route and 6% on the London-

Frankfurt/Dortmund route (see paragraph 94 above), it must be borne in mind that, according to the

case-law, an agreement may fall outside the prohibition in Article 85(1) of the Treaty if it has only an

insignificant effect on the market, taking into account the weak position which the parties concerned

have on the product or service market in question (Case 5/69 Volk ν Vervaecke [1969] ECR 295,

paragraph 7). With regard to the quantitative effect on the market, the Commission has argued that, in

accordance with its notice on agreements of minor importance, cited above, Article 85(1) applies to an

agreement when the market share of the parties to the agreement amounts to 5%. However, the mere

fact that that threshold may be reached and even exceeded does not make it possible to conclude with

certainty that an agreement is caught by Article 85(1) of the Treaty. Point 3 of that notice itself states

that 'the quantitative definition of "appreciable" given by the Commission is, however, no absolute

yardstick' and that 'in individual cases ... agreements between undertakings which exceed these limits

may ... have only a negligible effect on trade between Member States or on competition, and are

therefore not caught by Article 85(1)' (see also Langnese-Iglo, cited above, paragraph 98). It is

noteworthy, moreover, if only as an indication, that that analysis is corroborated by the Commission's

1997 notice on agreements of minor importance (OJ 1997 C 372, p. 13) replacing the notice of 3

September 1986, cited above, according to which even agreements which are not of minor importance

can escape the prohibition on agreements on account of their exclusively favourable impact on

competition.

103 That being so, where, as in the present case, horizontal agreements between undertakings reach or

only very slightly exceed the 5% threshold regarded by the Commission itself as critical and such as to

justify application of Article 85(1) of the Treaty, the Commission must provide an adequate statement

of its reasons for considering such agreements to be caught by the prohibition in Article 85(1) of the

Treaty. Its obligation to do so is all the more imperative here, where, as the applicants stated in their

notification, ENS has to operate on markets largely dominated by other modes of transport, such as air

transport, and where, on the assumption of an increase in demand on the relevant markets and having

regard to the limited possibilities for ENS to increase its capacity, its market shares will either fall or

remain stable. In addition, such a statement of reasons is necessary in the present instance in view of

the fact that, as the Court of Justice held at paragraph 86 of its judgment in Musique Diffusion

Française, cited above, an agreement is capable of exercising an appreciable influence on the pattern

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20

of trade between Member States even where the market shares of the undertakings concerned do not

exceed 3%, provided that those market shares exceed those of most of their competitors.

ECJ, C-309/99, 19.02.2002, „Wouters“

95 As regards the question whether intra-Community trade is affected, it is sufficient to observe that

an agreement, decision or concerted practice extending over the whole of the territory of a Member

State has, by its very nature, the effect of reinforcing the partitioning of markets on a national basis,

thereby holding up the economic interpenetration which the Treaty is designed to bring about (Case

8/72 Vereeniging van Cementhandelaren v Commission [1972] ECR 977, paragraph 29; Case 42/84

Remia and Others v Commission [1985] ECR 2545, paragraph 22; and CNSD, paragraph 48).

[…]

97 However, not every agreement between undertakings or every decision of an association of

undertakings which restricts the freedom of action of the parties or of one of them necessarily falls

within the prohibition laid down in Article 85(1) of the Treaty. For the purposes of application of that

provision to a particular case, account must first of all be taken of the overall context in which the

decision of the association of undertakings was taken or produces its effects. More particularly,

account must be taken of its objectives, which are here connected with the need to make rules relating

to organisation, qualifications, professional ethics, supervision and liability, in order to ensure that the

ultimate consumers of legal services and the sound administration of justice are provided with the

necessary guarantees in relation to integrity and experience (see, to that effect, Case C-3/95 Reisebüro

Broede [1996] ECR I-6511, paragraph 38). It has then to be considered whether the consequential

effects restrictive of competition are inherent in the pursuit of those objectives.

[…]

105 The aim of the 1993 Regulation is therefore to ensure that, in the Member State concerned, the

rules of professional conduct for members of the Bar are complied with, having regard to the

prevailing perceptions of the profession in that State. The Bar of the Netherlands was entitled to

consider that members of the Bar might no longer be in a position to advise and represent their clients

independently and in the observance of strict professional secrecy if they belonged to an organisation

which is also responsible for producing an account of the financial results of the transactions in respect

of which their services were called upon and for certifying those accounts.

106 Moreover, the concurrent pursuit of the activities of statutory auditor and of adviser, in particular

legal adviser, also raises questions within the accountancy profession itself, as may be seen from the

Commission Green Paper 96/C/321/01 ‘The role, the position and the liability of the statutory auditor

within the European Union’ (OJ 1996 C 321, p. 1; see, in particular, paragraphs 4.12 to 4.14).

107 A regulation such as the 1993 Regulation could therefore reasonably be considered to be

necessary in order to ensure the proper practice of the legal profession, as it is organised in the

Member State concerned.

[…]

109 In light of those considerations, it does not appear that the effects restrictive of competition such

as those resulting for members of the Bar practising in the Netherlands from a regulation such as the

1993 Regulation go beyond what is necessary in order to ensure the proper practice of the legal

profession (see, to that effect, Case C-250/92 DLG [1994] ECR I-5641, paragraph 35).

ECJ, C-238/05, 23.11.2006, “Asnef-Equifax”

33 The interpretation and application of the condition contained in Article 81(1) EC relating to the

effect of agreements on trade between Member States must take as its starting-point the purpose of

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21

that condition, which is to define, in the context of the law governing competition, the boundary

between the areas respectively covered by Community law and the law of the Member States. Thus,

Community law covers any agreement or any practice which is capable of affecting trade between

Member States in a manner which might harm the attainment of the objectives of a single market

between the Member States, in particular by sealing off national markets or by affecting the structure

of competition within the common market (see Manfredi and Others, paragraph 41).

34 For an agreement, decision or practice to be capable of affecting trade between Member States, it

must be possible to foresee with a sufficient degree of probability, on the basis of a set of objective

factors of law or of fact, that they have an influence, direct or indirect, actual or potential, on the

pattern of trade between Member States in such a way as to cause concern that they might hinder the

attainment of a single market between Member States (see Case 42/84 Remia and Others v

Commission [1985] ECR 2545, paragraph 22, and Case C‑475/99 Ambulanz Glöckner [2001] ECR

I‑8089, paragraph 48). Moreover, that influence must not be insignificant (Case 22/71 Béguelin

Import [1971] ECR 949, paragraph 16; Case C‑306/96 Javico [1998] ECR I-1983, paragraph 16; and

Manfredi and Others, paragraph 42).

35 Thus, an effect on intra-Community trade is normally the result of a combination of several factors

which, taken separately, are not necessarily decisive (Joined Cases C‑215/96 and C‑216/96 Bagnasco

and Others [1999] ECR I‑135, paragraph 47, and Case C‑359/01 P British Sugar v Commission

[2004] ECR I‑4933, paragraph 27). In order to assess whether an arrangement has an appreciable

effect on trade between Member States, it is necessary to examine it in its economic and legal context

(see, to that effect, Case C‑393/92 Almelo [1994] ECR I‑1477, paragraph 37).

36 In that regard, the mere fact that the participants in a national arrangement include undertakings

from other Member States is an important element in the assessment, but, taken alone, it is not so

decisive as to permit the conclusion that the criterion of trade between Member States being affected

has been satisfied (see Manfredi and Others, paragraph 44).

37 On the other hand, the Court has already held that the fact that an arrangement relates only to the

marketing of products in a single Member State is not sufficient to preclude the possibility that trade

between Member States might be affected (see Case 246/86 Belasco and Others v Commission [1989]

ECR 2117, paragraph 33). An arrangement extending over the whole of the territory of a Member

State has, by its very nature, the effect of reinforcing the partitioning of markets on a national basis,

thus impeding the economic interpenetration which the EC Treaty is designed to bring about (Case

8/72 Vereeniging van Cementhandelaren v Commission [1972] ECR 977, paragraph 29, and Manfredi

and Others, paragraph 45).

38 Furthermore, the fact that an agreement or practice encourages an increase in the volume of trade

between Member States does not preclude the possibility that that agreement or practice may affect

trade in the sense described at paragraph 34 of this judgment (see, to that effect, Joined Cases 56/64

and 58/64 Consten and Grundig v Commission [1966] ECR 299, 341).

39 It is for the national court to determine whether, in the light of the characteristics of the market at

issue, there is a sufficient degree of probability that the implementation of the register may have an

influence, direct or indirect, actual or potential, on the supply of credit in Spain by operators from

other Member States and that that influence is not insignificant.

[…]

43 According to settled case-law, and as follows from paragraph 34 of this judgment, Article 81(1)

EC does not require that the arrangements referred to in that provision have actually affected trade

between Member States, but it does require that it be established that those arrangements are capable

of having that effect (see, to that effect, Case 19/77 Miller v Commission [1978] ECR 131, paragraph

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22

15; Case C‑219/95 P Ferriere Nord v Commission [1997] ECR I-4411, paragraph 19; and Bagnasco

and Others, paragraph 48).

44 Thus, it is necessary to take account of the foreseeable development in the conditions of

competition and in the pattern of trade between Member States. On that point, it is for the referring

court to take into consideration, for example, possible development in cross-border activities and the

foreseeable impact of any policy or legislative initiatives designed to reduce legal or technical barriers

to trade.

4. Prevention, restriction or distortion of competition as object or effect


p. 249:

Finally, for the agreement at issue to be caught by the prohibition contained in Article 85 (1) it must

have as its 'object or effect the prevention, restriction or distortion of competition within the Common

Market'. The fact that these are not cumulative but alternative requirements, indicated by the

conjunction 'or', leads first to the need to consider the precise purpose of the agreement, in the

economic context in which it is to be applied. This interference with competition referred to in Article

85 (1) must result from all or some of the clauses of the agreement itself. Where, however, an analysis

of the said clauses does not reveal the effect on competition to be sufficiently deleterious, the

consequences of the agreement should then be considered and for it to be caught by the prohibition it

is then necessary to find that those factors are present which show that competition has in fact been

prevented or restricted or distorted to an appreciable extent. The competition in question must be

understood within the actual context in which it would occur in the absence of the agreement in

dispute. In particular it may be doubted whether there is an interference with competition if the said

agreement seems really necessary for the penetration of a new area by an undertaking. Therefore, in

order to decide whether an agreement containing a clause 'granting an exclusive right of sale' is to be

considered as prohibited by reason of its object or of its effect, it is appropriate to take into account in

particular the nature and quantity, limited or otherwise, of the products covered by the agreement,

the position and importance of the grantor and the concessionnaire on the market for the products

concerned, the isolated nature of the disputed agreement or, alternatively, its position in a series of

agreements, the severity of the clauses intended to protect the exclusive dealership or, alternatively,

the opportunities allowed for other commercial competitors in the same products by way of parallel

re-exportation and importation.

a. as effect

ECJ, C-7/95 P, 28.05.1998, „John Deere“

75 In this regard, it must be stated first of all that the Court of First Instance was right to consider, at

paragraph 92 of the contested judgment , that since it was not contended that the agreement had an

anti-competitive object, the effects of the agreement had to be evaluated in order to determine whether

it prevented, restricted or distorted competition to an appreciable degree.

76 According to the settled case-law of the Court, in order to determine whether an agreement is to be

considered to be prohibited by reason of the distortion of competition which is its effect, the

competition in question should be assessed within the actual context in which it would occur in the

absence of the agreement m dispute (see, in particular, Case 56/65 Société Technique Minière [1966]

ECB. 337 and Case 31/80 L'Oréal v De Nieuwe AMCK [1980] ECR 3775, paragraph 19).

77 Article 85(1) does not restrict such an assessment to actual effects alone; it must also take account

of the agreement's potential effects on competition within the common market (see, to this effect, Case

31/85 ETA v DK Investment [1985] ECR 3933, paragraph 12, and BAT and Reynolds, cited above,

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23

paragraph 54). As the Court of First Instance correctly reiterated, an agreement will, however fall

outside the prohibition in Article 85 if it has only an insignificant effect on the market (Case 5/69 Völk

v Vervaecke [1969] ECR 295, paragraph 7).

86 First of all, according to the case-law of the Court Joined Cases 40/73 to 48/73, 50/73, 54/73 to

56/73, 111/73, 113/73 and 114/73, Suiker Unie v Commission [1975] ECR 1663, paragraph 173, and

Case 172/80 Züchner v Bayerische Vereins-bank [1981] ECR 2021, paragraph 13), the criteria of

coordination and cooperation necessary for determining the existence of a concerted practice, far from

requiring an actual 'plan' to have been worked out, are to be understood in the light of the concept

inherent in the Treaty provisions on competition, according to which each trader must determine

independently the policy which he intends to adopt on the common market and the conditions which

he intends to offer to his customers.

87 According to the same case-law (Suiker Unie v Commission, paragraph 174, and Zuchner,

paragraph 14), although it is correct to say that this requirement of independence does not deprive

traders of the right to adapt themselves intelligently to the existing or anticipated conduct of their

competitors, it does however strictly preclude any direct or indirect contact between such traders, the

object or effect of which is to create conditions of competition which do not correspond to the normal

conditions of the market in question, regard being had to the nature of the products or services offered,

the size and number of the undertakings and the volume of the said market.

88 In the present case, in reaching the conclusion that a reduced degree of uncertainty as to the

operation of the market restricts undertakings' decision-making autonomy and is consequently liable to

restrict competition within the meaning of Article 85(1), the Court of First Instance, at paragraph 51 of

the contested judgment, held in particular that, in principle, where there is a truly competitive market,

transparency between traders is likely to lead to intensification of competition between suppliers, since

the fact that in such a situation a trader takes into account information on the operation of the market,

made available to him under the information exchange system, in order to adjust his conduct on the

market, is not likely, having regard to the atomised nature of the supply, to reduce or remove for the

other traders all uncertainty about the foreseeable nature of his competitors' conduct. The Court of

First Instance considered, however, that on a highly concentrated oligopolistic market, such as the

market in question, the exchange of information on the market was such as to enable traders to know

the market positions and strategies of their competitors and thus to impair appreciably the competition

which exists between traders.

89 In making that assessment, the Court of First Instance took account of the nature of the information

exchanged, the frequency with which it was disseminated and of the persons to whom it was disclosed.

As regards, first, the nature of the information exchanged, particularly that relating to sales made in the

territory of each of the dealerships in the distribution network, the Court of First Instance found at

paragraphs 51 and 81, that those were business secrets and allowed the undertakings which were

parties to the agreement to know the sales made by their dealers within and beyond their allocated

territory, and also the sales made by the other competing undertakings and their dealers who were

parties to the agreement. Second, the Court of First Instance held, again at paragraphs 51 and 81, that

the information on sales was disseminated systematically and at short intervals. Last, at paragraph 51,

the Court of First Instance found that the information was shared between the main suppliers, for their

sole benefit, to the exclusion of other suppliers and of consumers.

90 In view of that reasoning, the Court of First Instance must be considered to have concluded

correctly that the information exchange system reduces or removes the degree of uncertainty as to the

operation of the market and that the system is therefore liable to have an adverse influence on

competition between manufacturers.

91 In addition, this assessment does not conflict with the judgment in Ahlström Osakeyhtiö and Others

v Commission, cited above, and referred to by the appellant. It is true that in that judgment the Court

held, at paragraph 64 that the system of quarterly price announcements on the wood pulp market did

not in itself constitute an infringement of Article 85(1) of the Treaty. However the system of quarterly

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announcements of paper pulp sale prices set up by the manufacturers involved the communication of

information of use to purchasers, whereas the information exchange system in question in the present

case enables information to be shared only by the undertakings which are members to the agreement.

ECJ, C-279/06, 11.09.2008, “CEPSA”

42 If an examination of the risks leads to the conclusion that there is an agreement between

undertakings within the meaning of Article 81 EC, as regards the sale of goods to third parties, the

fixing of the retail price of those goods constitutes a restriction of competition expressly provided for

in Article 81(1)(a) EC which brings that agreement within the scope of the prohibition laid down in

that provision to the extent to which all the other conditions for the application of that provision are

satisfied, namely that that agreement has as its object or effect to restrict appreciably competition

within the common market and is capable of affecting trade between Member States (see, to that

effect, Case C-230/96 Cabour [1998] ECR I-2055, paragraph 48).

43 Moreover, as regards in particular exclusive purchasing agreements, the case-law of the Court of

Justice should be recalled, according to which, even if those agreements do not have as their object the

restriction of competition within the meaning of Article 81 EC, it is nevertheless necessary to ascertain

whether they have the effect of preventing, restricting or distorting competition. The effects of an

exclusive purchasing agreement have to be assessed in the economic and legal context in which the

agreement occurs and where it may combine with other agreements to have a cumulative effect on

competition. It is therefore necessary to analyse the effects of such an agreement, taken together with

other agreements of the same type, on the opportunities of national competitors or those from other

Member States to gain access to the relevant market or to increase their market share (see Case

C-234/89 Delimitis [1991] ECR I-935, paragraphs 13 to 15, and Case C-214/99 Neste [2000]


44 In the light of the foregoing considerations, the answer to Question 1(a) and 2(a) must be that an

exclusive supply contract for petroleum products is capable of falling within the scope of Article 81(1)

EC where the service-station operator assumes, in a non-negligible proportion, one or more financial

and commercial risks linked to the sale of those products to third parties and where that contract

contains clauses capable of infringing competition, such as that relating to the fixing of the retail price.

If the service-station operator does not assume such risks or assumes only a negligible share of them,

only the obligations imposed on the operator in the context of services as an intermediary offered by

the operator to the principal, such as the exclusivity and non-competition clauses, are capable of

falling within the scope of that provision. It is for the referring court to ascertain, moreover, whether

the contract at issue in the main proceedings has the effect of preventing, restricting or distorting

competition within the meaning of Article 81 EC.

ECJ, C-209/09, 20.11.2008, “BIDS”

15 It must be recalled that, to come within the prohibition laid down in Article 81(1) EC, an

agreement must have ‘as [its] object or effect the prevention, restriction or distortion of competition

within the common market’. It has, since the judgment in Case 56/65 LTM [1966] ECR 235, 249, been

settled case-law that the alternative nature of that requirement, indicated by the conjunction ‘or’, leads,

first, to the need to consider the precise purpose of the agreement, in the economic context in which it

is to be applied. Where, however, an analysis of the clauses of that agreement does not reveal the

effect on competition to be sufficiently deleterious, its consequences should then be considered and for

it to be caught by the prohibition it is necessary to find that those factors are present which show that

competition has in fact been prevented or restricted or distorted to an appreciable extent.

16 In deciding whether an agreement is prohibited by Article 81(1) EC, there is therefore no need to

take account of its actual effects once it appears that its object is to prevent, restrict or distort

competition within the common market (Joined Cases 56/64 and 58/64 Consten and Grundig v

Commission [1966] ECR 299, 342, and Case C-105/04 P Nederlandse Federatieve Vereniging voor de

Groothandel op Elektrotechnisch Gebied v Commission [2006] ECR I-8725, paragraph 125). That

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examination must be made in the light of the agreement’s content and economic context (Joined Cases

29/83 and 30/83 Compagnie royale asturienne des mines and Rheinzink v Commission [1984]

ECR 1679, paragraph 26, and Case C-551/03 P General Motors v Commission [2006] ECR I-3173,

paragraph 66).

17 The distinction between ‘infringements by object’ and ‘infringements by effect’ arises from the

fact that certain forms of collusion between undertakings can be regarded, by their very nature, as

being injurious to the proper functioning of normal competition.

[…]

21 In fact, to determine whether an agreement comes within the prohibition laid down in Article 81(1)

EC, close regard must be paid to the wording of its provisions and to the objectives which it is

intended to attain. In that regard, even supposing it to be established that the parties to an agreement

acted without any subjective intention of restricting competition, but with the object of remedying the

effects of a crisis in their sector, such considerations are irrelevant for the purposes of applying that

provision. Indeed, an agreement may be regarded as having a restrictive object even if it does not have

the restriction of competition as its sole aim but also pursues other legitimate objectives (General

Motors v Commission, paragraph 64 and the case-law cited). It is only in connection with Article 81(3)

EC that matters such as those relied upon by BIDS may, if appropriate, be taken into consideration for

the purposes of obtaining an exemption from the prohibition laid down in Article 81(1) EC.

[…]

39 Finally, the fact that those restrictions, as well as the non-competition clause imposed on the goers,

are limited in time is not such as to put in doubt the finding as to the anti-competitive nature of the

object of the BIDS arrangements. As the Advocate General observed in point 86 of her Opinion, such

matters may, at the most, be relevant for the purposes of the examination of the four requirements

which have to be met under Article 81(3) EC in order to escape the prohibition laid down in

Article 81(1) EC.

b. as object

ECJ, C-8/08, 04.06.2009, „T-Mobile Netherlands“

27 With regard to the assessment as to whether a concerted practice is anti-competitive, close regard

must be paid in particular to the objectives which it is intended to attain and to its economic and legal

context (see, to that effect, Joined Cases 96/82 to 102/82, 104/82, 105/82, 108/82 and 110/82 IAZ

International Belgium and Others v Commission [1983] ECR 3369, paragraph 25, and Case C-209/07

Beef Industry Development Society and Barry Brothers [2008] ECR I-0000, paragraphs 16 and 21).

Moreover, while the intention of the parties is not an essential factor in determining whether a

concerted practice is restrictive, there is nothing to prevent the Commission of the European

Communities or the competent Community judicature from taking it into account (see, to that effect,

IAZ International Belgium and Others v Commission, paragraphs 23 to 25).

28 As regards the distinction to be drawn between concerted practices having an anti-competitive

object and those with anti-competitive effects, it must be borne in mind that an anti-competitive object

and anti-competitive effects constitute not cumulative but alternative conditions in determining

whether a practice falls within the prohibition in Article 81(1) EC. It has, since the judgment in Case

56/65 LTM [1966] ECR 235, 249, been settled case-law that the alternative nature of that requirement,

indicated by the conjunction ‘or’, means that it is necessary, first, to consider the precise purpose of

the concerted practice, in the economic context in which it is to be pursued. Where, however, an

analysis of the terms of the concerted practice does not reveal the effect on competition to be

sufficiently deleterious, its consequences should then be considered and, for it to be caught by the

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26

prohibition, it is necessary to find that those factors are present which establish that competition has in

fact been prevented or restricted or distorted to an appreciable extent (see, to that effect, Beef Industry

Development Society and Barry Brothers, paragraph 15).

29 Moreover, in deciding whether a concerted practice is prohibited by Article 81(1) EC, there is no

need to take account of its actual effects once it is apparent that its object is to prevent, restrict or

distort competition within the common market (see, to that effect, Joined Cases 56/64 and 58/64

Consten and Grundig v Commission [1966] ECR 299, 342; Case C-105/04 P Nederlandse Federatieve

Vereniging voor de Groothandel op Elektrotechnisch Gebied v Commission [2006] ECR I-8725,

paragraph 125; and Beef Industry Development Society and Barry Brothers, paragraph 16). The

distinction between ‘infringements by object’ and ‘infringements by effect’ arises from the fact that

certain forms of collusion between undertakings can be regarded, by their very nature, as being

injurious to the proper functioning of normal competition (Beef Industry Development Society and

Barry Brothers, paragraph 17).

30 Accordingly, contrary to what the referring court claims, there is no need to consider the effects of

a concerted practice where its anti-competitive object is established.

31 With regard to the assessment as to whether a concerted practice, such as that at issue in the main

proceedings, pursues an anti-competitive object, it should be noted, first, as pointed out by the

Advocate General at point 46 of her Opinion, that in order for a concerted practice to be regarded as

having an anti-competitive object, it is sufficient that it has the potential to have a negative impact on

competition. In other words, the concerted practice must simply be capable in an individual case,

having regard to the specific legal and economic context, of resulting in the prevention, restriction or

distortion of competition within the common market. Whether and to what extent, in fact, such anti-

competitive effects result can only be of relevance for determining the amount of any fine and

assessing any claim for damages.

32 Second, with regard to the exchange of information between competitors, it should be recalled that

the criteria of coordination and cooperation necessary for determining the existence of a concerted

practice are to be understood in the light of the notion inherent in the Treaty provisions on

competition, according to which each economic operator must determine independently the policy

which he intends to adopt on the common market (see Suiker Unie and Others v Commission,

paragraph 173; Case 172/80 Züchner [1981] ECR 2021, paragraph 13; Ahlström Osakeyhtiö and

Others v Commission, paragraph 63; and Case C-7/95 P Deere v Commission [1998] ECR I-3111,

paragraph 86).

33 While it is correct to say that this requirement of independence does not deprive economic

operators of the right to adapt themselves intelligently to the existing or anticipated conduct of their

competitors, it does, none the less, strictly preclude any direct or indirect contact between such

operators by which an undertaking may influence the conduct on the market of its actual or potential

competitors or disclose to them its decisions or intentions concerning its own conduct on the market

where the object or effect of such contact is to create conditions of competition which do not

correspond to the normal conditions of the market in question, regard being had to the nature of the

products or services offered, the size and number of the undertakings involved and the volume of that

market (see, to that effect, Suiker Unie and Others v Commission, paragraph 174; Züchner, paragraph

14; and Deere v Commission, paragraph 87).

34 At paragraphs 88 et seq. of Deere v Commission, the Court therefore held that on a highly

concentrated oligopolistic market, such as the market in the main proceedings, the exchange of

information was such as to enable traders to know the market positions and strategies of their

competitors and thus to impair appreciably the competition which exists between traders.

35 It follows that the exchange of information between competitors is liable to be incompatible with

the competition rules if it reduces or removes the degree of uncertainty as to the operation of the

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27

market in question, with the result that competition between undertakings is restricted (see Deere v

Commission, paragraph 90, and Case C-194/99 P Thyssen Stahl v Commission [2003] ECR I-10821,

paragraph 81).

36 Third, as to whether a concerted practice may be regarded as having an anti-competitive object

even though there is no direct connection between that practice and consumer prices, it is not possible

on the basis of the wording of Article 81(1) EC to conclude that only concerted practices which have a

direct effect on the prices paid by end users are prohibited.

37 On the contrary, it is apparent from Article 81(1)(a) EC that concerted practices may have an

anti-competitive object if they ‘directly or indirectly fix purchase or selling prices or any other trading

conditions’. In the present case, as the Netherlands Government submitted in its written observations,

as far as concerns postpaid subscriptions, the remuneration paid to dealers is evidently a decisive

factor in fixing the price to be paid by the end user.

38 In any event, as the Advocate General pointed out at point 58 of her Opinion, Article 81 EC, like

the other competition rules of the Treaty, is designed to protect not only the immediate interests of

individual competitors or consumers but also to protect the structure of the market and thus

competition as such.

39 Therefore, contrary to what the referring court would appear to believe, in order to find that a

concerted practice has an anti-competitive object, there does not need to be a direct link between that

practice and consumer prices.

ECJ, joined cases C-501/06 P, 06.10.2009, “GlaxoSmithKline II”

55 First of all, it must be borne in mind that the anti-competitive object and effect of an agreement are

not cumulative but alternative conditions for assessing whether such an agreement comes within the

scope of the prohibition laid down in Article 81(1) EC. According to settled case-law since the

judgment in Case 56/65 LTM [1966] ECR 235, the alternative nature of that condition, indicated by

the conjunction ‘or’, leads first to the need to consider the precise purpose of the agreement, in the

economic context in which it is to be applied. Where, however, the analysis of the content of the

agreement does not reveal a sufficient degree of harm to competition, the consequences of the

agreement should then be considered and for it to be caught by the prohibition it is necessary to find

that those factors are present which show that competition has in fact been prevented, restricted or

distorted to an appreciable extent. It is also apparent from the case-law that it is not necessary to

examine the effects of an agreement once its anti-competitive object has been established (see, to that

effect, Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-0000, paragraphs 28 and 30).

[…]

58 According to settled case-law, in order to assess the anti-competitive nature of an agreement,

regard must be had inter alia to the content of its provisions, the objectives it seeks to attain and the

economic and legal context of which it forms a part (see, to that effect, Joined Cases 96/82 to 102/82,

104/82, 105/82, 108/82 and 110/82 IAZ International Belgium and Others v Commission [1983]

ECR 3369, paragraph 25, and Case C-209/07 Beef Industry Development Society and Barry Brothers

[2008] ECR I-0000, paragraphs 16 and 21). In addition, although the parties’ intention is not a

necessary factor in determining whether an agreement is restrictive, there is nothing prohibiting the

Commission or the Community judicature from taking that aspect into account (see, to that effect, IAZ

International Belgium and Others v Commission, cited above, paragraphs 23 to 25).

59 With respect to parallel trade, the Court has already held that, in principle, agreements aimed at

prohibiting or limiting parallel trade have as their object the prevention of competition (see, to that

effect, Case 19/77 Miller International Schallplaten v Commission [1978] ECR 131, paragraphs 7 and

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28

18, and Joined Cases 32/78, 36/78 to 82/78 BMW Belgium and Others v Commission [1979]

ECR 2435, paragraphs 20 to 28 and 31).

[…]

62 With respect to the Court of First Instance’s statement that, while it is accepted that an agreement

intended to limit parallel trade must in principle be considered to have as its object the restriction of

competition, that applies in so far as it may be presumed to deprive final consumers of the advantages

of effective competition in terms of supply or price, the Court notes that neither the wording of Article

81(1) EC nor the case-law lend support to such a position.

63 First of all, there is nothing in that provision to indicate that only those agreements which deprive

consumers of certain advantages may have an anti-competitive object. Secondly, it must be borne in

mind that the Court has held that, like other competition rules laid down in the Treaty, Article 81 EC

aims to protect not only the interests of competitors or of consumers, but also the structure of the

market and, in so doing, competition as such. Consequently, for a finding that an agreement has an

anti-competitive object, it is not necessary that final consumers be deprived of the advantages of

effective competition in terms of supply or price (see, by analogy, T-Mobile Netherlands and Others,

cited above, paragraphs 38 and 39).

ECJ, C-439/09, 13.10.2011, “Pierre Fabre”

34 It must first of all be recalled that, to come within the prohibition laid down in Article 101(1)

TFEU, an agreement must have ‘as [its] object or effect the prevention, restriction or distortion of

competition within the internal market’. It has, since the judgment in Case 56/65 LTM [1966] ECR

235 been settled case-law that the alternative nature of that requirement, indicated by the conjunction

‘or’, leads, first, to the need to consider the precise purpose of the agreement, in the economic context

in which it is to be applied. Where the anticompetitive object of the agreement is established it is not

necessary to examine its effects on competition (see Joined Cases C-501/06 P, C-513/06 P, C-516/06

P and C-519/06 P GlaxoSmithKline Services and Others v Commission and Others [2009] ECR

I-9291, paragraph 55 and the case-law cited).

35 For the purposes of assessing whether the contractual clause at issue involves a restriction of

competition ‘by object’, regard must be had to the content of the clause, the objectives it seeks to

attain and the economic and legal context of which it forms a part (see GlaxoSmithKline and Others v

Commission and Others, paragraph 58 and the case law cited).

[…]

39 As regards agreements constituting a selective distribution system, the Court has already stated

that such agreements necessarily affect competition in the common market (Case 107/82

AEG-Telefunken v Commission [1983] ECR 3151, paragraph 33). Such agreements are to be

considered, in the absence of objective justification, as ‘restrictions by object’.

40 However, it has always been recognised in the case-law of the Court that there are legitimate

requirements, such as the maintenance of a specialist trade capable of providing specific services as

regards high-quality and high-technology products, which may justify a reduction of price competition

in favour of competition relating to factors other than price. Systems of selective distribution, in so far

as they aim at the attainment of a legitimate goal capable of improving competition in relation to

factors other than price, therefore constitute an element of competition which is in conformity with

Article 101(1) TFEU (AEG-Telefunken v Commission, paragraph 33).

41 In that regard, the Court has already pointed out that the organisation of such a network is not

prohibited by Article 101(1) TFEU, to the extent that resellers are chosen on the basis of objective

criteria of a qualitative nature, laid down uniformly for all potential resellers and not applied in a

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discriminatory fashion, that the characteristics of the product in question necessitate such a network in

order to preserve its quality and ensure its proper use and, finally, that the criteria laid down do not go

beyond what is necessary (Case 26/76 Metro SB-Großmärkte v Commission [1977] ECR 1875,

paragraph 20, and Case 31/80 L’Oréal [1980] ECR 3775, paragraphs 15 and 16).

[…]

46 The aim of maintaining a prestigious image is not a legitimate aim for restricting competition and

cannot therefore justify a finding that a contractual clause pursuing such an aim does not fall within

Article 101(1) TFEU.

ECJ, C-226/11, 13.12.2012, “Expedia”

15 It should be noted that Article 101(1) TFEU prohibits 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.

16 It is settled case-law that an agreement of undertakings falls outside the prohibition in that

provision, however, if it has only an insignificant effect on the market (Case 5/69 Völk v Vervaecke

[1969] ECR 295, paragraph 7; Case C-7/95 P John Deere v Commission [1998] ECR I-3111,

paragraph 77; Joined Cases C-215/96 and C-216/96 Bagnasco and Others [1999] ECR I-135,

paragraph 34; and Case C-238/05 Asnef-Equifax and Administración del Estado [2006] ECR I-11125,

paragraph 50).

17 Accordingly, if it is to fall within the scope of the prohibition under Article 101(1) TFEU, an

agreement of undertakings must have the object or effect of perceptibly restricting competition within

the common market and be capable of affecting trade between Member States (Case C-70/93 BMW v

ALD [1995] ECR I-3439, paragraph 18; Case C-306/96 Javico [1998] ECR I-1983, paragraph 12; and

Case C-260/07 Pedro IV Servicios [2009] ECR I-2437, paragraph 68).

[…]

21 The Court has held that the existence of such a restriction must be assessed by reference to the

actual circumstances of such an agreement (Case 1/71 Cadillon [1971] ECR 351, paragraph 8). Regard

must be had, inter alia, to the content of its provisions, the objectives it seeks to attain and the

economic and legal context of which it forms a part (Joined Cases C-501/06 P, C-513/06 P, C-516/06

P and C-519/06 P GlaxoSmithKline Services and Others v Commission and Others [2009] ECR

I-9291, paragraph 58). It is also appropriate to take into consideration the nature of the goods or

services affected, as well as the real conditions of the functioning and the structure of the market or

markets in question (see, to that effect, Asnef-Equifax and Administración del Estado, paragraph 49).

[…]

23 It is apparent from paragraphs 1 and 2 of the de minimis notice that the Commission intends to

quantify therein, with the help of market share thresholds, what is not an appreciable restriction of

competition within the meaning of Article 101 TFEU and the case-law cited in paragraphs 16 and 17

of the present judgment.

[…]

32 Contrary to what Expedia argued during the hearing, the proceedings brought and penalties

imposed by the competition authority of a Member State, on undertakings that enter into an agreement

that has not reached the thresholds defined in the de minimis notice, cannot infringe, as such, the

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30

principles of legitimate expectations and legal certainty, having regard to the wording of paragraph 4

of that notice.

33 Furthermore, as the Advocate General pointed out in point 33 of her Opinion, the principle of the

lawfulness of penalties does not require the de minimis notice to be regarded as a legal measure

binding on the national authorities. Cartels are already prohibited by the primary law of the European

Union, that is, by Article 101(1) TFEU.

34 In so far as Expedia, the French Government and the Commission have, in their written

observations or during the hearing, questioned the finding made by the national court that it is not

disputed that the agreement at issue in the main proceedings had an anti-competitive object, it should

be remembered that, in proceedings under Article 267 TFEU, which is based on a clear separation of

functions between the national courts and the Court of Justice, any assessment of the facts in the main

proceedings is a matter for the national court (Case C-409/06 Winner Wetten [2010] ECR I-8015,

paragraph 49 and the case-law cited).

35 Moreover, it should be noted that, according to settled case-law, for the purpose of applying

Article 101(1) TFEU, there is no need to take account of the concrete effects of an agreement once it

appears that it has as its object the prevention, restriction or distortion of competition (see, to that

effect, Joined Cases 56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299; Case

C-272/09 P KME Germany and Others v Commission [2011] ECR I-0000, paragraph 65; and Case

C-389/10 P KME Germany and Others v Commission [2011] ECR I-0000, paragraph 75).

36 In that regard, the Court has emphasised that the distinction between ‘infringements by object’ and

‘infringements by effect’ arises from the fact that certain forms of collusion between undertakings can

be regarded, by their very nature, as being injurious to the proper functioning of normal competition

(Case C-209/07 Beef Industry Development Society and Barry Brothers (‘BIDS’) [2008] ECR I-8637,

paragraph 17, and Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paragraph 29).

37 It must therefore be held that 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.

ECJ, C-32/11, 14.03.2014, “Allianz Hungaria Biztosito”

33 It must first of all be recalled that, to be caught by the prohibition laid down in Article 101(1)

TFEU, an agreement must have ‘as [its] object or effect the prevention, restriction or distortion of

competition within the internal market’. According to established case-law since the judgment in Case

56/65 LTM [1966] ECR 337, the alternative nature of that requirement, indicated by the conjunction

‘or’, leads, first of all, to the need to consider the precise object of the agreement in the economic

context in which it is to be applied.

34 Accordingly, where the anti-competitive object of the agreement is established it is not necessary

to examine its effects on competition. Where, however, the analysis of the content of the agreement

does not reveal a sufficient degree of harm to competition, the effects of the agreement should then be

considered and, for it to be caught by the prohibition, it is necessary to find that factors are present

which show that competition has in fact been prevented, restricted or distorted to an appreciable extent

(see Case C-8/08 T-Mobile Netherlands and Others [2009] ECR I-4529, paragraphs 28 and 30; Joined

Cases C-501/06 P, C-513/06 P, C-515/06 P and C-519/06 P GlaxoSmithKline Services and Others v

Commission and Others [2009] ECR I-9291, paragraph 55; Joined Cases C-403/08 and C-429/08

Football Association Premier League and Others [2011] ECR I-0000, paragraph 135; and Case

C-439/09 Pierre Fabre Dermo-Cosmétique [2011] ECR I-0000, paragraph 34).

35 The distinction between ‘infringements by object’ and ‘infringements by effect’ arises from the

fact that certain forms of collusion between undertakings can be regarded, by their very nature, as

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31

being injurious to the proper functioning of normal competition (see Case C-209/07 Beef Industry

Development Society and Barry Brothers [2008] ECR I-8637, paragraph 17; T-Mobile Netherlands

and Others, paragraph 29; and Case C-226/11 Expedia [2012] ECR I-0000, paragraph 36).

36 In order to determine whether an agreement involves a restriction of competition ‘by object’,

regard must be had to the content of its provisions, its objectives and the economic and legal context

of which it forms a part (see GlaxoSmithKline Services and Others v Commission and Others,

paragraph 58; Football Association Premier League and Others, paragraph 136; and Pierre Fabre

Dermo-Cosmétique, paragraph 35). When determining that context, it is also appropriate to take into

consideration the nature of the goods or services affected, as well as the real conditions of the

functioning and structure of the market or markets in question (see Expedia, paragraph 21 and the

case-law cited).

37 In addition, although the parties’ intention is not a necessary factor in determining whether an

agreement is restrictive, there is nothing prohibiting the competition authorities, the national courts or

the Courts of the European Union from taking that factor into account (see, to that effect,

GlaxoSmithKline Services and Others v Commission and Others, paragraph 58 and the case-law

cited).

38 The Court has, moreover, already held that, in order for the agreement to be regarded as having an

anti-competitive object, it is sufficient that it has the potential to have a negative impact on

competition, that is to say, that it be capable in an individual case of resulting in the prevention,

restriction or distortion of competition within the internal market. Whether and to what extent, in fact,

such an effect results can only be of relevance for determining the amount of any fine and assessing

any claim for damages (see T-Mobile Netherlands and Others, paragraph 31).

39 Concerning the agreements referred to in the question submitted, it should be noted that they relate

to the hourly charge to be paid by the insurance company to car dealers, acting as repair shops, for the

repair of cars in the event of accidents. They provide that that charge is increased in accordance with

the number and percentage of insurance contracts that the dealer sells for that company.

40 Such agreements therefore link the remuneration for the car repair service to that for the car

insurance brokerage. The linkage of those two different services is possible because of the fact that the

dealers act in relation to the insurers in a dual capacity, namely as intermediaries or brokers, offering

car insurance to their customers at the time of sale or repair of vehicles, and as repair shops, repairing

vehicles after accidents on behalf of the insurers.

41 However, while the establishment of such a link between two activities which are in principle

independent does not automatically mean that the agreement concerned has as its object the restriction

of competition, it can nevertheless constitute an important factor in determining whether that

agreement is by its nature injurious to the proper functioning of normal competition, which is the case,

in particular, where the independence of those activities is necessary for that functioning.

42 Moreover, it is necessary to take account of the fact that such an agreement is likely to affect not

only one, but two markets, in this case those of car insurance and car repair services, and that its object

must be determined with respect to the two markets concerned.

43 In that regard, it must, first, be noted that, in contrast to the view apparently held by Allianz and

Generali, the fact that both cases concern vertical relationships in no way excludes the possibility that

the agreement at issue in the main proceedings constitutes a restriction of competition ‘by object’.

While vertical agreements are, by their nature, often less damaging to competition than horizontal

agreements, they can, nevertheless, in some cases, also have a particularly significant restrictive

potential. The Court has thus already held on several occasions that a vertical agreement had as its

object the restriction of competition (see Joined Cases 56/64 and 58/64 Consten and Grundig v

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32

Commission [1966] ECR 429; Case 19/77 Miller International Schallplatten v Commission [1978]

ECR 131; Case 243/83 Binon [1985] ECR 2015; and Pierre Fabre Dermo-Cosmétique).

[…]

45 It is not disputed that, if there was a horizontal agreement or a concerted practice between those

two companies designed to partition the market, such an agreement or practice would have to be

treated as a restriction by object and would also result in the unlawfulness of the vertical agreements

concluded in order to implement that agreement or practice. Allianz and Generali dispute however that

they acted in agreement or concert and claim that the contested decision found that there was no such

agreement or practice. It is for the referring court to check the accuracy of those claims and, to the

extent that it is enabled under domestic law, to determine whether there is enough evidence to

establish the existence of an agreement or concerted practice between Allianz and Generali.

46 Nevertheless, even if there is no agreement or concerted practice between those insurance

companies, it will still be necessary to determine whether, taking account of the economic and legal

context of which they form a part, the vertical agreements at issue in the main proceedings are

sufficiently injurious to competition on the car insurance market as to amount to a restriction of

competition by object.

[…]

48 Furthermore, those agreements would also amount to a restriction of competition by object in the

event that the referring court found that it is likely that, having regard to the economic context,

competition on that market would be eliminated or seriously weakened following the conclusion of

those agreements. In order to determine the likelihood of such a result, that court should in particular

take into consideration the structure of that market, the existence of alternative distribution channels

and their respective importance and the market power of the companies concerned.

5. Appreciability of the restriction of competition

� see attached “de minimis notice”

ECJ, C-234/89, 28,02.1991, “Delimitis”

13 If such agreements do not have the object of restricting competition within the meaning of Article

85(1), it is nevertheless necessary to ascertain whether they have the effect of preventing, restricting or

distorting competition.

14 In its judgment in Case 23/67 Brasserie De Haecht vWilkin [1967] ECR 407, the Court held that

the effects of such an agreement had to be assessed in the context in which they occur and where they

might combine with others to have a cumulative effect on competition. It also follows from that

judgment that the cumulative effect of several similar agreements constitutes one factor amongst

others in ascertaining whether, by way of a possible alteration of competition, trade between Member

States is capable of being affected.

15 Consequently, in the present case it is necessary to analyse the effects of a beer supply agreement,

taken together with other contracts of the same type, on the opportunities of national competitors or

those from other Member States, to gain access to the market for beer consumption or to increase their

market share and, accordingly, the effects on the range of products offered to consumers.

[…]

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19 In order to assess whether the existence of several beer supply agreements impedes access to the

market as so defined, it is further necessary to examine the nature and extent of those agreements in

their totality, comprising all similar contracts tying a large number of points of sale to several national

producers (judgment in Case 43/69 Bilger v feble [1970] ECR 127). The effect of those networks of

contracts on access to the market depends specifically on the number of outlets thus tied to national

producers in relation to the number of public houses which are not so tied, the duration of the

commitments entered into, the quantities of beer to which those commitments relate, and on the

proportion between those quantities and the quantities sold by free distributors.

20 The existence of a bundle of similar contracts, even if it has a considerable effect on the

opportunities for gaining access to the market, is not, however, sufficient in itself to support a finding

that the relevant market is inaccessible, inasmuch as it is only one factor, amongst others, pertaining to

the economic and legal context in which an agreement must be appraised (Case 23/67 Brasserie De

Haecht, cited above). The other factors to be taken into account are, in the first instance, those also

relating to opportunities for access.

21 In that connection it is necessary to examine whether there are real concrete possibilities for a new

competitor to penetrate the bundle of contracts by acquiring a brewery already established on the

market together with its network of sales outlets, or to circumvent the bundle of contracts by opening

new public houses. For that purpose it is necessary to have regard to the legal rules and agreements on

the acquisition of companies and the establishment of outlets, and to the minimum number of outlets

necessary for the economic operation of a distribution system. The presence of beer wholesalers not

tied to producers who are active on the market is also a factor capable of facilitating a new producerüs

access to that market since he can make use of those wholesalersü sales networks to distribute his

own beer.

22 Secondly, account must be taken of the conditions under which competitive forces operate on the

relevant market. In that connection it is necessary to know not only the number and the size of

producers present on the market, but also the degree of saturation of that market and customer fidelity

to existing brands, for it is generally more difficult to penetrate a saturated market in which customers

are loyal to a small number of large producers than a market in full expansion in which a large number

of small producers are operating without any strong brand names. The trend in beer sales in the retail

trade provides useful information on the development of demand and thus an indication of the degree

of saturation of the beer market as a whole. The analysis of that trend is, moreover, of interest in

evaluating brand loyalty. A steady increase in sales of beer under new brand names may confer on the

owners of those brand names a reputation which they may turn to account in gaining access to the

public-house market.

23 If an examination of all similar contracts entered into on the relevant market and the other factors

relevant to the economic and legal context in which the contract must be examined shows that those

agreements do not have the cumulative effect of denying access to that market to new national and

foreign competitors, the individual agreements comprising the bundle of agreements cannot be held to

restrict competition within the meaning of Article 85(1) of the Treaty. They do not, therefore, fall

under the prohibition laid down in that provision.

24 If, on the other hand, such examination reveals that it is difficult to gain access to the relevant

market, it is necessary to assess the extent to which the agreements entered into by the brewery in

question contribute to the cumulative effect produced in that respect by the totality of the similar

contracts found on that market. Under the Community rules on competition, responsibility for such an

effect of closing off the market must be attributed to the breweries which make an appreciable

contribution thereto. Beer supply agreements entered into by breweries whose contribution to the

cumulative effect is insignificant do not therefore fall under the prohibition under Article 85(1).

[…]

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26 The contribution of the individual contracts entered into by a brewery to the sealing-off of that

market also depends on their duration. If the duration is manifestly excessive in relation to the average

duration of beer supply agreements generally entered into on the relevant market, the individual

contract falls under the prohibition under Article 85(1). A brewery with a relatively small market share

which ties its sales outlets for many years may make as significant a contribution to a sealing-off of

the market as a brewery in a relatively strong market position which regularly releases sales outlets at

shorter intervals.

27 The reply to be given to the first three questions is therefore that a beer supply agreement is

prohibited by Article 85(1) of the EEC Treaty, if two cumulative conditions are met. The first is that,

having regard to the economic and legal context of the agreement at issue, it is difficult for

competitors who could enter the market or increase their market share to gain access to the national

market for the distribution of beer in premises for the sale and consumption of drinks. The fact that, in

that market, the agreement in issue is one of a number of similar agreements having a cumulative

effect on competition constitutes only one factor amongst others in assessing whether access to that

market is indeed difficult. The second condition is that the agreement in question must make a

significant contribution to the sealing-off effect brought about by the totality of those agreements

in their economic and legal context. The extent of the contribution made by the individual agreement

depends on the position of the contracting parties in the relevant market and on the duration of the

agreement.

GC, T-7/93, 08.06.1995, „Langnese-Iglo/Schöller“

99 As to whether the exclusive purchasing agreements fall within the prohibition contained in Article

85(1) of the Treaty, it is appropriate, according to the case-law, to consider whether, taken together, all

the similar agreements entered into in the relevant market and the other features of the economic and

legal context of the agreements at issue show that those agreements cumulatively have the effect of

denying access to that market for new domestic and foreign competitors. If, on examination, that is

found not to be the case, the individual agreements making up the bundle of agreements as a whole

cannot undermine competition within the meaning of Article 85(1) of the Treaty. If, on the other hand,

such examination reveals that it is difficult to gain access to the market, it is necessary to assess the

extent to which the contested agreements contribute to the cumulative effect produced, on the basis

that only agreements which make a significant contribution to any partitioning of the market are

prohibited (Delimitis, paragraphs 23 and 24).

100 It must then be borne in mind that, as the Court of Justice held in its judgment in Brasserie de

Haecht, consideration of the effects of an exclusive agreement implies that regard must be had to the

economic and legal context of the agreement, in which it might combine with others to have a

cumulative effect on competition.

101 As regards the impact of networks of exclusive agreements on access to the market, it is also

apparent from the case-law of the Court of Justice, first, that it depends in particular on the number of

sales outlets tied to the producers in relation to the number of retailers not so tied, on the quantities to

which those commitments relate and on the proportion between those quantities and those which

are sold through retailers that are not tied. Furthermore, the extent of tieing-in brought about by a

network of exclusive purchasing agreements, although of some importance in assessing the

partitioning of the market, is only one factor amongst others pertaining to the economic and legal

context in which the agreement or, as in this case, a network of agreements must be assessed

(Delimitis, paragraphs 19 and 20).

102 As regards the extent of tieing-in, the Court considers that it must be determined in this case by

reference to the extent to which it is possible to gain access to retailers throughout the relevant market,

as previously defined by the Commission, that is to say both in the traditional trade and in the grocery

trade, the delimitation of the market serving to define the context in which the effects of the contested

agreements on competition must be assessed.

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35

103 The Court finds, first, that, as indicated above (paragraph 96), if account is taken of the volume of

sales of impulse ice-cream achieved in the relevant market, a figure is arrived at for the extent of

tieing-in of about [...] % (more than 15%) attributable to the exclusive purchasing agreements

concluded by the applicant and that, if account is taken of the ratio between the number of sales outlets

tied to the applicant and the total number of sales outlets, the extent of tieing-in amounts to about [...]

% (more than 15%).

104 As regards the cumulative effect of other similar agreements on the market, the Court finds,

secondly, that the similar exclusive purchasing agreements concluded by Schöller, the other main ice-

cream producer in Germany, cover around [...] % (more than 10%) of the independent relevant market

if account is taken of the percentage of tied sales outlets or the turnover achieved by those sales

outlets.

105 It must therefore be held that the networks of exclusive purchasing agreements set up by the two

main producers affect about [...] % of the market, which exceeds the extent of tieing-in of 30%

considered acceptable by the Commission in the comfort letter sent to Schöller, and later commented

on in paragraph 19 of the 1985 Fifteenth Report on Competition Policy.

106 However, as stated above (paragraph 101), the extent of tieing-in is only one factor among others

pertaining to the economic and legal context in which the network of agreements must be assessed. It

is also necessary to analyse the conditions prevailing on the market and, in particular, real and specific

possibilities for new competitors to penetrate the market despite the existence of a network of

exclusive purchasing agreements.

[…]

129 It must be noted at the outset that it is settled law that a network of exclusive purchasing

agreements set up by a single supplier can escape the prohibition laid down in Article 85(1) if it does

not significantly contribute, with the totality of similar agreements found on the market, including

those of other suppliers, to denying access to the market to new national and foreign competitors

(Delimitis, paragraphs 23 and 24). In the Court's view, it follows that, where there is a network of

similar agreements concluded by the same producer, the assessment of the effects of that network on

competition applies to all the individual agreements making up the network. Furthermore, the

Commission is required, in assessing the applicability of Article 85(1) of the Treaty, to examine the

actual details of the case and cannot rely on hypothetical situations. In that respect, the Court considers

that, as the Commission has observed, it might be arbitrary in the present case to divide the contested

agreements into different hypothetical categories.

[…]

131 The Court considers, therefore, that a bundle of similar agreements must be considered as a whole

and, therefore, that the Commission was right not to examine the agreements separately. It follows that

this part of the plea must be rejected.

6. Immanent boundries

ECJ, C-40/73, 16.12.1975, „Suiker Unie“ (Sugar Cartel) (trade representatives)

537 Pfeifer & Langen submits that, since the relationship to it of the agents with whom it entered into

the agreements, which are the subject-matter of this complaint, was that of trade representatives,

Article 85 does not apply to these agreements.

[…]

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36

539 If such an agent works for his principal he can in principle be regarded as an auxiliary organ

forming an integral part of the latter's undertaking bound to carry out the principal's instructions and

thus, like a commercial employee, forms an economic unit with this undertaking.

540 In these circumstances incompatibility with Article 85 is not simply due to the fact that the

principal forbids such an auxiliary to trade without his consent in products which might compete with

his own products.

541 The position is different if the agreements entered into between the principal and his agents,

whom the contracting parties call 'trade representatives', confer upon these agents or allow them to

perform duties which from an economic point of view are approximately the same as those carried out

by an independent dealer, because they provide for the said agents accepting the financial risks of the

sales or of the performance of contracts entered into with third parties.

542 For in such cases the agents cannot be regarded as auxiliary organs forming an integral part of the

principal's undertaking, so that a clause prohibiting competition which they entered into may be an

agreement between undertakings which is prohibited under Article 85.

543 The Commission submits that in this case the assumption that the agents were merely auxiliaries,

forming an integral part of the undertaking cannot be made good.

544 In fact it is not disputed that the agents in question are large business houses, which at the same

time as they distribute sugar for the account of the applicant, WZV and others, undertake a very

considerable amount of business for their own account on the sugar market, in particular in the field of

exports to third countries or of supplies for denaturing.

545 Thus these representatives are authorized to act as independent dealers in those transactions where

there is no risk of competition in the common market but they are, on the other hand, effectively

fettered by their trade representatives contracts in those transactions where such competition may be

generated at the commercial level.

546 That these commercial undertakings sometimes formed an integral part of the applicant

undertaking and sometimes acted as independent traders, is moreover confirmed by the applicant's

own observation (reply page 44) that the integration of representatives in its sales organization 'did not

rule out the possibility that agents may also compete with independent dealers, in particular when they

sell for their own account', and that 'when they do so they do not act as members of the applicant's

sales organization'.

547 In fact the creation of such an ambivalent relationship, which in respect of the same commodity

only gives the trader the opportunity of continuing to operate independently to the extent to which it is

in the interest of his supplier for him to do so, cannot escape the prohibitions of Article 85 no matter

how such a relationship is regarded under national law. 548 When Article 85 (1) not only prohibits

agreements, decisions or practices having regard to their object but also to their actual effects in the

field of competition, it implies that these effects must be considered in the context in which they take

place, that is to say in their surrounding economic and legal circumstances within which they may,

together with other factors, have a cumulative effect on competition.

ECJ, C-42/84, 11.07.1985, „Remia/Nutricia“ (non-competition clauses, acquisition of companies)

17 It should be stated at the outset that the Commission has rightly submitted — and the applicants

have not contradicted it on that point — that the fact that noncompetition clauses are included in an

agreement for the sale of an undertaking is not of itself sufficient to remove such clauses from the

scope of Article 85 (1) of the Treaty.

18 In order to determine whether or not such clauses come within the prohibition in Article 85 (1), it is

necessary to examine what would be the state of competition if those clauses did not exist.

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37

19 If that were the case, and should the vendor and the purchaser remain competitors after the transfer,

it is clear that the agreement for the transfer of the undertaking could not be given effect. The vendor,

with his particularly detailed knowledge of the transferred undertaking, would still be in a position to

win back his former customers immediately after the transfer and thereby drive the undertaking out of

business. Against that background non-competition clauses incorporated in an agreement for the

transfer of an undertaking in principle have the merit of ensuring that the transfer has the effect

intended. By virtue of that very fact they contribute to the promotion of competition because they lead

to an increase in the number of undertakings in the market in question.

20 Nevertheless, in order to have that beneficial effect on competition, such clauses must be necessary

to the transfer of the undertaking concerned and their duration and scope must be strictly limited to

that purpose. The Commission was therefore right in holding that where those conditions are satisfied

such clauses are free of the prohibition laid down in Article 85 (1).

21 However, without denying the basic principle of that reasoning, the applicants challenge the way in

which it has been applied to their case on the ground, first, that the non-competition clause contained

in the sauce agreement does not affect trade between Member States within the meaning of Article 85

(1) of the Treaty, and, secondly, that in view of the special circumstances surrounding the transfer at

issue the Commission did not provide an adequate statement of the grounds for its decision and

wrongly assessed the facts in limiting to four years the permissible duration of the non-competition

clause included in the transfer agreement.

22 Taking first the condition with regard to the effect on trade between Member States, the Court

would point out that, as it has consistently held, in order that an agreement between undertakings may

affect trade between Member States 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 it may have an influence, direct

or indirect, actual or potential, on the pattern of trade between Member States, such as might prejudice

the realization of the aim of a single market in all the Member States. The Court has also held

(judgment of 17 October 1972 in Case 8 / 72 , Cementhandelaren, [1972] ECR 977) that an agreement

or practice restricting competition and extending over the whole territory of a Member State by its

very nature has the effect of reinforcing the compartmentalization of markets on a national basis,

thereby holding up the economic interpénétration which the Treaty is intended to bring about.

23 In this case it should be pointed out that the non-competition clause at issue covers the entire

territory of the Netherlands. Furthermore, the terms of clause 5 of the sauce agreement under which

Nutricia, Luycks and subsequently Zuid are prohibited from engaging directly or indirectly in the

production or sale of sauces on the Netherlands market do not merely affect the national production of

sauces but also have the effect of prohibiting those undertakings from selling sauces previously

imported from other Member States. Finally, it is not denied that Remia has the largest individual

share in the Netherlands market in the sauces in question.

24 It must therefore be concluded that the Commission correctly assessed the facts of the case in

finding that the clause at issue was likely to affect trade between Member States within the meaning of

Article 85 (1) of the Treaty.

7. Art. 101 (3) TFEU

� see attached “Guidelines on the application of Art. 101 (3) TFEU”

GC, T-17/93, 15.07.1994, “Matra Hachette SA v Commission”

104 It must first be borne in mind that the Commission may only grant an individual exemption

decision if, in particular, the four conditions laid down by Article 85(3) of the Treaty are all met by the

agreement, with the result that an exemption must be refused if any of the four conditions is not met

(judgment of the Court of Justice in Joined Cases 43/82 and 63/82 VBVB and VBBB v Commission

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38

[1984] ECR 19; judgment of the Court of First Instance in Case T-66/89 Publishers Association v

Commission [1992] ECR II-1995); secondly, it is incumbent upon notifying undertakings to provide

the Commission with evidence that the conditions laid down by Article 85(3) are met (judgment in

VBVB and VBBB v Commission, cited above), an obligation which, in the proceedings before the

Court, must be assessed in the light of the onus which falls on the applicant to provide information to

challenge the Commission's appraisal; thirdly, where complex economic facts are involved, judicial

review of the legal characterization of the facts is limited to the possibility of the Commission having

committed a manifest error of assessment (judgment of the Court of Justice in Case 42/84 Remia and

Others v Commission [1985] ECR 2545).

105 With regard more particularly to the first of the four conditions laid down by Article 85(3), it

should be borne in mind that, by virtue of that provision, the agreements which may qualify for an

exemption are those which contribute 'to improving the production or distribution of goods or to

promoting technical or economic progress'.

[1st Condition: Improvement of the production or distribution of goods or promotion of technical or

economic progress]

106 The Court notes that in the present case the examination of this first condition is dealt with in

paragraphs 24 to 26 of the Decision. Paragraph 24 is limited to considerations concerning the

adaptation of the product to suit the requirements of European consumers and the differentiation of the

product by each of the two founders. Paragraph 25 deals more particularly with an examination of the

contribution to technical progress deriving from the know-how and capacity of the founders and from

the manufacturing process, whereas paragraph 26 is devoted to the improvement made by the vehicle

itself, described as 'a continuous development of technical progress of production in the Community'.

107 It follows that it is only in relation to paragraphs 24 to 26 of the Decision that the merits of the

applicant's arguments should be considered. Consequently, certain arguments put forward by Matra,

which do not relate to the Commission's appraisal at that stage of the examination of the application

made to it, are irrelevant. That is true, in particular, of the argument concerning the contribution to

'social' progress and the cntribution to regional progress (matters not dealt with in the Decision) as part

of the analysis of the project's contribution to technical or economic progress, regardless of the

arguments put forward, by the defendant or the interveners, in the written procedure before this Court.

108 The Court therefore considers that, having regard to paragraph 24 of the Decision, as analysed

above, the discussion of the appraisal in this case of the first of the four conditions is limited to the

question whether, as maintained by the Commission and contrary to the arguments put forward by the

applicant, the manufacturing process for the 'VX62' vehicle, as described in paragraph 25 of the

Decision, together with the improvements to the product referred to in paragraph 26, are such as to

justify the application of the provisions in question to the present case.

109 As regards, first, the manufacturing process, it is clear from the unambiguous statements from the

intervener, Ford, which have not been seriously challenged by the applicant, that the manufacturing

process to be used at Setúbal constitutes the first application by a European car manufacturer of the

enhanced form of the manufacturing process recommended in 1990 by the most authoritative

researchers in the field of technological development, such as the Massachusetts Institute of

Technology (MIT). The Court considers, despite the applicant's assertions to the contrary, that an

optimization of the manufacturing process of that kind is in conformity with the meaning and purpose

of the first of the four conditions laid down by Article 85(3) of the Treaty.

110 As regards, secondly, the technical improvements made to the product, described as 'cosmetic' by

the applicant, they must be assessed in relation to the state of development of car construction

techniques in Europe when the Decision was adopted. Adopting that approach, the Court considers

that, as maintained by the Commission, the technical improvements made to the vehicle fall within the

scope of Article 85(3), since they bring together in a single product techniques which, where they

exist, are at present used in isolation, on different models.

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39

111It follows that the Commission's assessment, according to which the manufacturing process for the

vehicle and the technical improvements made to the product are conducive to improvement of the

production or distribution of products or to the promotion of technical or economic progress, does not

contain any manifest error.

[…]

[2nd

Condition: Fair share of resulting benefit for consumers]

120 The Court would point out in the first place that, according to the second of the four conditions

laid down by Article 85(3) of the Treaty, agreements qualifying for exemption are those which allow

consumers 'a fair share of the resulting benefit'. The question whether the project in question satisfies

that condition is examined in paragraph 27 of the Decision, according to which the exempted project

will enable economies of scale to be achieved and promote intensified competition in the market, to

the benefit of the European consumer.

121 Examination of the applicant's criticisms on this point shows that they raise two main questions.

122 The first question is whether, as contended, the advantage given to the consumer must be assessed

by reference to the present state of the market or by reference to the advantage that might have been

afforded to the consumer in the event of the founders having chosen to penetrate the market

individually. The Court considers that, as rightly maintained by the Commission, the applicant's

reasoning is based on false premises. At that stage of the examination of the application for exemption,

it is incumbent upon the Commission to appraise the project submitted to it as objectively as possible,

without in any way considering the appropriateness of the project by reference to other technically

possible or economically viable choices, since it is common ground that it is when considering the

third of the four conditions laid down by Article 85(3) of the Treaty that the Commission may, in

order to appraise the indispensability of the restrictions on competition resulting from the project in

question, take account of other possible choices. The applicant's view that the advantage made

available to the consumer by the project in question should be assessed by reference to the advantage

accruing to the consumer from other technologically possible or economically viable choices is

therefore, to that extent, unfounded.

123 The applicant's argument then raises the question whether the project at issue is capable of

affording the founders a collective dominant position. In that regard, the applicant's reasoning is based

on the idea that the existence of considerable excess production capacity, linked with substantial State

aid, enables the founders to engage in unfair practices, ousting the competition and, in the longer term,

giving the founders a collective dominant position, which they will abuse to the detriment of the

consumer (see below, paragraph 153).

124 The Court considers that the applicant's reasoning takes for granted, successively, the acquisition

by the founders of a collective dominant position, then the abuse by those undertakings of that

position. Such reasoning is purely hypothetical and can only be rejected, without its being necessary

for the Court to say whether, in the presence of an adequately substantiated infringement of Article 86

of the Treaty, the Commission is required to reject a request for an exemption (see below, paragraph

154).

125 In short, the Court considers that the statements contained in paragraph 27 of the Decision have

not been seriously contested by the applicant, and therefore the Decision cannot be regarded as vitiated

by a manifest error of assessment on that point.

[…]

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40

[3rd

Condition: Restrictions are indispensable]

135 According to the terms of the third and fourth conditions laid down by Article 85(3) of the Treaty,

exemption is available for agreements which do not 'impose on the undertakings concerned restrictions

(of competition) which are not indispensable to the attainment of (the) objectives' of improving the

production or distribution of products and promoting technical or economic progress, while allowing

consumers a fair share of the resulting benefit. It follows that the Decision must establish that any

adverse effects on competition resulting from the project are proportionate to the contribution made by

it to economic or technical progress. As stated in the judgment of the Court of Justice in Joined Cases

56/64 and 58/64 Consten and Grundig v Commission [1966] ECR 299, 'this improvement must in

particular show appreciable objective advantages of such a character as to compensate for the

disadvantages which they cause in the field of competition'. It is therefore for the Court to verify

whether, as contended by the founders, any adverse affects on competition deriving from the project in

question are indispensable in order to attain the objectives of achieving economic and technical

progress.

136 The Court observes that that question is analysed in paragraphs 28 to 36 of the Decision. In those

paragraphs, the Commission states in turn that:

— the joint venture may be regarded as necessary, in the light of the exceptional circumstances of the

case and the conditions the Commission considers necessary for an exemption to be granted

(paragraph 28);

— the founders, each acting alone, could not offer the product under the same conditions (paragraphs

29 and 31)

— the latter assessment not being in itself undermined by the fact that other manufacturers, in non-

comparable situations, were themselves able individually to penetrate the market (paragraph 33) and

that, on the contrary, the joint venture is efficient (paragraph 30);

— it is not possible to penetrate the market by a simple adaptation for the European market of existing

vehicles, which means that a new type of vehicle must be developed (paragraph 32);

— the restrictions on competition between the two founders are limited to what is indispensable

(paragraph 34);

— the cooperation agreements existing between Ford and Nissan, on the one hand, and Ford and

Mazda, on the other, do not exclude competition in the sector in question (paragraph 35);

— the project represents the largest foreign investment ever made in Portugal, thus contributing to

harmonious development of the Community and to the reduction of regional disparities; at the same

time the Commission states that 'this would not be enough to make an exemption possible unless the

conditions of Article 85(3) were fulfilled, but it is an element which the Commission has taken into

account' (paragraph 36).

137 The argument put forward by Matra to counter that analysis consists essentially in the contention

that, in view of the alternative solutions available, the Commission did not establish that the choices

made by the founders were indispensable, with the result that the restrictions of competition deriving

from them are not in themselves justified, and merely resorted to the theory of 'exceptional

circumstances', which finds no basis in the text of Article 85(3) -of the Treaty.

138 The Court considers that, as the Commission maintains, the central question to be answered, in

assessing the legality of the Decision in relation to the third of the four conditions laid down in Article

85(3) of the Treaty, is whether the joint venture is strictly indispensable to enable the founders to

penetrate the market in question. If that question is answered in the affirmative, it will ipso facto be

established that the restrictions of competition deriving from the agreement are indispensable in order

to attain the objectives pursued by the two conditions examined above, in particular the first one. The

answer is indeed affirmative, since the Commission maintains, without being contradicted in any

serious way by the applicant, whose reasoning is based on non-comparable situations, that, if each of

the founders actually was technically and financially capable of penetrating the market individually,

such penetration could be achieved only at a loss, in view of the particularly high level of the joint

venture's 'break-even point' and of the information available concerning forecasts of sales and market

shares.

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139 As regards the argument based on the reference to 'exceptional circumstances', the Court observes

that, although the Commission refers to them, in particular in paragraphs 23 and 28, and in paragraph

36, in which the Decision concludes its examination of the condition under review and considers the

project's impact on public infrastructures and on employment, and its impact on European integration,

the latter paragraph ends with the following sentence: 'This would not be enough to make an

exemption possible unless the conditions of Article 85(3) were fulfilled, but it is an element which the

Commission has taken into account'. The Court considers that it is clear from the latter sentence that

the 'exceptional circumstances' thus referred to in the Decision were taken into consideration by the

Commission only supererogatorily. In other words, it is sufficiently established that, if those

circumstances had not been referred to, the operative part of the decision adopted would have been

exactly the same as that of the contested Decision. It follows that the applicant's argument that, on the

contrary, the individual exemption decision granted for the project in question was adopted only on the

basis of the 'exceptional circumstances' surrounding the project must be rejected.

140 Accordingly, the applicant has not established that the Commission's assessment, according to

which the restrictions on competition deriving from the joint venture project notified to it are

indispensable, is manifestly incorrect.

[…]

[4th Condition: Must not afford undertakings the possibility of eliminating competition in respect of a

substantial part of the products in question]

150 The Court would point out, first, that, by virtue of the last of the four conditions imposed by

Article 85(3) of the Treaty, an individual exemption decision may be available for agreements which

do not 'afford ... undertakings the possibility of eliminating competition in respect of a substantial part

of the products in question'.

151 In the present case, that point is covered by paragraphs 37 and 38 of the Decision. According to

paragraph 37, cooperation between Ford and VW, far from eliminating competition in the multi-

purpose vehicle segment, will on the contrary stimulate it, in view of the important position occupied

by the 'Espace'. In paragraph 38, the Decision states that the differentiation of the products offered by

each of the two founders will have a positive effect on competition between car manufacturers in

Europe at the distribution stage.

152 In challenging those two paragraphs of the Decision, the applicant argues, first, that the Setúbal

plant will give rise to excess production capacity in the market concerned. However, the Court notes

that the applicant has not established that the Decision is incorrect in that respect, in particular

paragraphs 6 and 14 thereof, which are confirmed by Ford's statements. Moreover, in its judgment in

Matra v Commission, cited above, the Court of Justice held that 'as regards the evaluation of the risk

of excess production capacity, ... the Commission carried out a comprehensive and detailed

examination of this question before concluding that no such risk exists .... In those circumstances, the

arguments put forward by Matra ... are not such as to establish that the Commission based its decision

on a manifestly incorrect assessment of the economic data' (paragraphs 26 and 28). The applicant's

argument must therefore be rejected, without its being necessary for the Court to consider whether, as

contended by the applicant, which relies in particular on an expert's report from Professor Encaoua,

the existence of excess production capacity will necessarily have the effect of ousting competitors.

153 The applicant claims, secondly, that the existence of excess production capacity will, in time,

enable the founders to achieve a collective dominant position. However, the Court considers that, as

stated by the Commission, the achievement or strengthening of a dominant position, whether

individual or collective, is not as such prohibited by Articles 85 and 86 of the Treaty. Article 86

merely prohibits the abuse of a dominant position by one or more undertakings. Accordingly, an

alleged risk that the founders might in time collectively achieve a dominant position cannot in any

event constitute legal justification for withholding an exemption, the likelihood of that risk

materializing during the period of validity of the Decision not having been established by the

applicant.

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154 Accordingly, the Court considers that, as already stated in paragraph 124 above, the argument

based on the risk of the achievement and abuse of a collective dominant position must be rejected in

any event, without its being necessary for the Court to decide whether — as the applicant necessarily

implies — the Commission should, in the presence of a sufficiently clear infringement of Article 86 of

the Treaty, reject an application for an individual exemption.

155 The applicant considers, thirdly, that the differentiation of the products will not have any positive

impact on competition between the founders at the stage of distribution of the products. The Court

observes, first, that the applicant's statement that paragraph 38 of the Decision conflicts at least

partially with the analysis of agreement between the founders set out in paragraphs 5 and 8 of the

Decision is in no way substantiated since, in particular, paragraph 8 expressly states that 'The partners

are entirely free as to the distribution of the vehicles. They will independently distribute their

respective MPVs through their own networks and under their own brand names'. Since the agreement

at issue is limited to the production of vehicles and since there is no agreement between the founders

concerning the marketing of the vehicles produced by the joint venture and purchased from the latter

by the founders, the applicant has not established, as it purports to have done, either that the agreement

will have the effect of limiting, to a sufficiently substantial extent, competition between the founders,

at the stage of product distribution, or, in any event, that the measures imposed by the Decision, in the

form of obligations and requirements to which the founders are subject, are not adequate.

156 It follows that the applicant has not shown that the Commission's appraisal, according to which

the project satisfies the last of the four conditions laid down by Article 85(3) of the Treaty, is vitiated

by a manifest error.

157 Accordingly, the Court considers that the allegation of a manifest error on the part of the

Commission in its appraisal of the facts, in relation to each of the four conditions laid down by Article

85(3) of the Treaty, must be rejected.

8. Consequence of a violation of Art. 101 (1) TFEU: Nullity, Art. 101 (2) TFEU


p. 250: Article 85 (2) provides that 'Any agreements or decisions prohibited pursuant to this Article

shall be automatically void'. This provision, which is intended to ensure compliance with the Treaty,

can only be interpreted with reference to its purpose in Community law, and it must be limited to this

context. The automatic nullity in question only applies to those parts of the agreement affected by the

prohibition, or to the agreement as a whole if it appears that those parts are not severable from the

agreement itself. Consequently any other contractual provisions which are not affected by the

prohibittion, and which therefore do not involve the application of the Treaty, fall outside Community

law.

ECJ, C-279/06, 11.09.2008, “CEPSA”

74 It follows from settled case-law that, once the conditions for the application of Article 81(1) EC

are met and so long as the agreement concerned does not justify the grant of an exemption under

Article 81(3) EC, the nullity referred to in Article 81(2) EC can be relied on by anyone. Since that

nullity is absolute, it is capable of having a bearing on all the effects, either past or future, of the

agreement concerned (Joined Cases C-295/04 to C-298/04 Manfredi and Others [2006] ECR I-6619,

paragraph 57 and the case-law cited).

[…]

78 In this regard, it must be borne in mind that, according to the settled case-law of the Court, the

automatic nullity of an agreement within the meaning of Article 81(2) EC only applies to those parts

of the agreement affected by the prohibition laid down in Article 81(1) EC or to the agreement as a

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whole if it appears that those parts are not severable from the agreement itself (see, in particular, Case

56/65 LTM [1966] ECR 235, at 250, and Delimitis, cited above, paragraph 40).

79 If those parts are severable from the agreement, the consequences, for all other parts of the

agreement or for other obligations flowing from it, of the nullity are not a matter for Community law.

It is therefore for the referring court to determine, in accordance with the national law applicable, the

extent and consequences, for the contractual relation as a whole, of the nullity of certain contractual

clauses under Article 81(2) EC (see, inter alia, Case 10/86 VAG France [1986] ECR 4071, paragraphs

14 and 15; Cabour, cited above, paragraph 51, and Joined Cases C-376/05 and C-377/05 Brünsteiner

and Autohaus Hilgert [2006] ECR I-11383, paragraph 48).

80 The answer to Question 1(d) must therefore be that the automatic nullity provided for in Article

81(2) EC affects a contract in its entirety only if the clauses which are incompatible with Article 81(1)

EC are not severable from the contract itself. Otherwise, the consequences of the nullity, in respect of

all the other parts of the contract, are not a matter for Community law.

9. Enforcement

a. Public enforcement

ECJ, C-360/09, 14.06.2011, „Pfleiderer“ (Leniency programme)

19 It must be recalled at the outset that the competition authorities of the Member States and their

courts and tribunals are required to apply Articles 101 TFEU and 102 TFEU, where the facts come

within the scope of European Union law, and to ensure that those articles are applied effectively in the

general interest (see, to that effect, Case C-439/08 VEBIC [2010] ECR I-0000, paragraph 56).

20 Neither the provisions of the EC Treaty on competition nor Regulation No 1/2003 lay down

common rules on leniency or common rules on the right of access to documents relating to a leniency

procedure which have been voluntarily submitted to a national competition authority pursuant to a

national leniency programme.

21 With regard to the Commission notices, one on cooperation within the Network of Competition

Authorities (OJ 2004 C 101, p. 43) and one on immunity from fines and reduction of fines in cartel

cases (OJ 2006 C 298, p. 17), it should be pointed out that those notices are not binding on Member

States. Further, the latter notice relates only to leniency programmes implemented by the Commission

itself.

22 Within the ECN, a model leniency programme, designed to achieve the harmonisation of some

elements of national leniency programmes, was also drawn up and adopted in 2006. However, that

model programme likewise has no binding effect on the courts and tribunals of the Member States.

23 Accordingly, even if the guidelines set out by the Commission may have some effect on the

practice of the national competition authorities, it is, in the absence of binding regulation under

European Union law on the subject, for Member States to establish and apply national rules on the

right of access, by persons adversely affected by a cartel, to documents relating to leniency

procedures.

24 However, while the establishment and application of those rules falls within the competence of the

Member States, the latter must none the less exercise that competence in accordance with European

Union law (see, to that effect, the judgment of 12 November 2009 in Case C-154/08 Commission v

Spain, paragraph 121 and the case-law cited). In particular, they may not render the implementation of

European Union law impossible or excessively difficult (see, to that effect, Case C-298/96 Oelmühle

and Schmidt Söhne [1998] ECR I-4767, paragraphs 23 and 24 and the case-law cited) and,

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specifically, in the area of competition law, they must ensure that the rules which they establish or

apply do not jeopardise the effective application of Articles 101 TFEU and 102 TFEU (see, to that

effect, VEBIC, paragraph 57).

25 However, as maintained by the Commission and the Member States which have submitted

observations, leniency programmes are useful tools if efforts to uncover and bring to an end

infringements of competition rules are to be effective and serve, therefore, the objective of effective

application of Articles 101 TFEU and 102 TFEU.

26 The effectiveness of those programmes could, however, be compromised if documents relating to

a leniency procedure were disclosed to persons wishing to bring an action for damages, even if the

national competition authorities were to grant to the applicant for leniency exemption, in whole or in

part, from the fine which they could have imposed.

27 The view can reasonably be taken that a person involved in an infringement of competition law,

faced with the possibility of such disclosure, would be deterred from taking the opportunity offered by

such leniency programmes, particularly when, pursuant to Articles 11 and 12 of Regulation

No 1/2003, the Commission and the national competition authorities might exchange information

which that person has voluntarily provided.

28 Nevertheless, it is settled case-law that any individual has the right to claim damages for loss

caused to him by conduct which is liable to restrict or distort competition (see Case C-453/99 Courage

and Crehan [2001] ECR I-6297, paragraphs 24 and 26, and Joined Cases C-295/04 to C-298/04

Manfredi and Others [2006] ECR I-6619, paragraphs 59 and 61).

29 The existence of such a right strengthens the working of the Community competition rules and

discourages agreements or practices, frequently covert, which are liable to restrict or distort

competition. From that point of view, actions for damages before national courts can make a

significant contribution to the maintenance of effective competition in the European Union (Courage

and Crehan, paragraph 27).

30 Accordingly, in the consideration of an application for access to documents relating to a leniency

programme submitted by a person who is seeking to obtain damages from another person who has

taken advantage of such a leniency programme, it is necessary to ensure that the applicable national

rules are not less favourable than those governing similar domestic claims and that they do not operate

in such a way as to make it practically impossible or excessively difficult to obtain such compensation

(see, to that effect, Courage and Crehan, paragraph 29) and to weigh the respective interests in favour

of disclosure of the information and in favour of the protection of that information provided

voluntarily by the applicant for leniency.

31 That weighing exercise can be conducted by the national courts and tribunals only on a

case-by-case basis, according to national law, and taking into account all the relevant factors in the

case.

32 In the light of the foregoing, the answer to the question referred is that the provisions of European

Union law on cartels, and in particular Regulation No 1/2003, must be interpreted as not precluding a

person who has been adversely affected by an infringement of European Union competition law and is

seeking to obtain damages from being granted access to documents relating to a leniency procedure

involving the perpetrator of that infringement. It is, however, for the courts and tribunals of the

Member States, on the basis of their national law, to determine the conditions under which such access

must be permitted or refused by weighing the interests protected by European Union law.

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b. Private enforcement

ECJ, C-453/99, 20.09.2001, „Courage/Crehan“

17 By its first, second and third questions, which should be considered together, the referring court is

asking essentially whether a party to a contract liable to restrict or distort competition within the

meaning of Article 85 of the Treaty can rely on the breach of that provision before a national court to

obtain relief from the other contracting party. In particular, it asks whether that party can obtain

compensation for loss which he alleges to result from his being subject to a contractual clause contrary

to Article 85 and whether, therefore, Community law precludes a rule of national law which denies a

person the right to rely on his own illegal actions to obtain damages.

18 If Community law precludes a national rule of that sort, the national court wishes to know, by its

fourth question, what factors must be taken into consideration in assessing the merits of such a claim

for damages.

19 It should be borne in mind, first of all, that the Treaty has created its own legal order, which is

integrated into the legal systems of the Member States and which their courts are bound to apply. The

subjects of that legal order are not only the Member States but also their nationals. Just as it imposes

burdens on individuals, Community law is also intended to give rise to rights which become part of

their legal assets. Those rights arise not only where they are expressly granted by the Treaty but also

by virtue of obligations which the Treaty imposes in a clearly defined manner both on individuals and

on the Member States and the Community institutions (see the judgments in Case 26/62 Van Gend en

Loos [1963] ECR 1, Case 6/64 Costa [1964] ECR 585 and Joined Cases C-6/90 and C-9/90

Francovich and Others [1991] ECR I-5357, paragraph 31).

20 Secondly, according to Article 3(g) of the EC Treaty (now, after amendment, Article 3(1)(g) EC),

Article 85 of the Treaty constitutes a fundamental provision which is essential for the accomplishment

of the tasks entrusted to the Community and, in particular, for the functioning of the internal market

(judgment in Case C-126/97 Eco Swiss [1999] ECR I-3055, paragraph 36).

21 Indeed, the importance of such a provision led the framers of the Treaty to provide expressly, in

Article 85(2) of the Treaty, that any agreements or decisions prohibited pursuant to that article are to

be automatically void (judgment in Eco Swiss, cited above, paragraph 36).

22 That principle of automatic nullity can be relied on by anyone, and the courts are bound by it once

the conditions for the application of Article 85(1) are met and so long as the agreement concerned does

not justify the grant of an exemption under Article 85(3) of the Treaty (on the latter point, see inter

alia Case 10/69 Portelange [1969] ECR 309, paragraph 10). Since the nullity referred to in Article

85(2) is absolute, an agreement which is null and void by virtue of this provision has no effect as

between the contracting parties and cannot be set up against third parties (see the judgment in Case

22/71 Béguelin [1971] ECR 949, paragraph 29). Moreover, it is capable of having a bearing on all the

effects, either past or future, of the agreement or decision concerned (see the judgment in Case 48/72

Brasserie de Haecht II [1973] ECR 77, paragraph 26).

23 Thirdly, it should be borne in mind that the Court has held that Article 85(1) of the Treaty and

Article 86 of the EC Treaty (now Article 82 EC) produce direct effects in relations between

individuals and create rights for the individuals concerned which the national courts must safeguard

(judgments in Case 127/73 BRT and SABAM [1974] ECR 51, paragraph 16, (‘BRT I’) and Case C-

282/95 P Guérin Automobiles v Commission [1997] ECR I-1503, paragraph 39).

24 It follows from the foregoing considerations that any individual can rely on a breach of Article

85(1) of the Treaty before a national court even where he is a party to a contract that is liable to restrict

or distort competition within the meaning of that provision.

25 As regards the possibility of seeking compensation for loss caused by a contract or by conduct

liable to restrict or distort competition, it should be remembered from the outset that, in accordance

with settled case-law, the national courts whose task it is to apply the provisions of Community law in

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areas within their jurisdiction must ensure that those rules take full effect and must protect the rights

which they confer on individuals (see inter alia the judgments in Case 106/77 Simmenthal [1978] ECR

629, paragraph 16, and in Case C-213/89 Factortame [1990] ECR I-2433, paragraph 19).

26 The full effectiveness of Article 85 of the Treaty and, in particular, the practical effect of the

prohibition laid down in Article 85(1) would be put at risk if it were not open to any individual to

claim damages for loss caused to him by a contract or by conduct liable to restrict or distort

competition.

27 Indeed, the existence of such a right strengthens the working of the Community competition rules

and discourages agreements or practices, which are frequently covert, which are liable to restrict or

distort competition. From that point of view, actions for damages before the national courts can make

a significant contribution to the maintenance of effective competition in the Community.

28 There should not therefore be any absolute bar to such an action being brought by a party to a

contract which would be held to violate the competition rules.

29 However, in the absence of Community rules governing the matter, it is for the domestic legal

system of each Member State to designate the courts and tribunals having jurisdiction and to lay down

the detailed procedural rules governing actions for safeguarding rights which individuals derive

directly from Community law, provided that such rules are not less favourable than those governing

similar domestic actions (principle of equivalence) and that they do not render practically impossible

or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness)

(see Case C-261/95 Palmisani [1997] ECR I-4025, paragraph 27).

30 In that regard, the Court has held that Community law does not prevent national courts from taking

steps to ensure that the protection of the rights guaranteed by Community law does not entail the

unjust enrichment of those who enjoy them (see, in particular, Case 238/78 Ireks-Arkady v Council

and Commission [1979] ECR 2955, paragraph 14, Case 68/79 Just [1980] ECR 501, paragraph 26, and

Joined Cases C-441/98 and C-442/98 Michaïlidis [2000] ECR I-7145, paragraph 31).

31 Similarly, provided that the principles of equivalence and effectiveness are respected (see

Palmisani, cited above, paragraph 27), Community law does not preclude national law from denying a

party who is found to bear significant responsibility for the distortion of competition the right to obtain

damages from the other contracting party. Under a principle which is recognised in most of the legal

systems of the Member States and which the Court has applied in the past (see Case 39/72

Commission v Italy [1973] ECR 101, paragraph 10), a litigant should not profit from his own unlawful

conduct, where this is proven.

32 In that regard, the matters to be taken into account by the competent national court include the

economic and legal context in which the parties find themselves and, as the United Kingdom

Government rightly points out, the respective bargaining power and conduct of the two parties to the

contract.

33 In particular, it is for the national court to ascertain whether the party who claims to have suffered

loss through concluding a contract that is liable to restrict or distort competition found himself in a

markedly weaker position than the other party, such as seriously to compromise or even eliminate his

freedom to negotiate the terms of the contract and his capacity to avoid the loss or reduce its extent, in

particular by availing himself in good time of all the legal remedies available to him.

34 Referring to the judgments in Case 23/67 Brasserie de Haecht [1967] ECR 127 and Case C-234/89

Delimitis [1991] ECR I-935, paragraphs 14 to 26, the Commission and the United Kingdom

Government also rightly point out that a contract might prove to be contrary to Article 85(1) of the

Treaty for the sole reason that it is part of a network of similar contracts which have a cumulative

effect on competition. In such a case, the party contracting with the person controlling the network

cannot bear significant responsibility for the breach of Article 85, particularly where in practice the

terms of the contract were imposed on him by the party controlling the network.

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47

35 Contrary to the submission of Courage, making a distinction as to the extent of the parties' liability

does not conflict with the case-law of the Court to the effect that it does not matter, for the purposes of

the application of Article 85 of the Treaty, whether the parties to an agreement are on an equal footing

as regards their economic position and function (see inter alia Joined Cases 56/64 and 58/64 Consten

and Grundig v Commission [1966] ECR 382). That case-law concerns the conditions for application

of Article 85 of the Treaty while the questions put before the Court in the present case concern certain

consequences in civil law of a breach of that provision.

36 Having regard to all the foregoing considerations, the questions referred are to be answered as

follows:

- a party to a contract liable to restrict or distort competition within the meaning of Article 85 of the

Treaty can rely on the breach of that article to obtain relief from the other contracting party;

- Article 85 of the Treaty precludes a rule of national law under which a party to a contract liable to

restrict or distort competition within the meaning of that provision is barred from claiming damages

for loss caused by performance of that contract on the sole ground that the claimant is a party to that

contract;

- Community law does not preclude a rule of national law barring a party to a contract liable to

restrict or distort competition from relying on his own unlawful actions to obtain damages where it is

established that that party bears significant responsibility for the distortion of competition.

ECJ, joined cases C-295/04, 13.07.2006, „Manfredi“

83 By this question, the national court asks, in essence, whether Article 81 EC must be interpreted as

requiring national courts to award punitive damages, greater than the advantage obtained by the

offending operator, thereby deterring the adoption of agreements or concerted practices prohibited

under that article.

[…]

89 In accordance with settled case-law, the national courts whose task it is to apply the provisions of

Community law in areas within their jurisdiction must ensure that those rules take full effect and must

protect the rights which they confer on individuals (see, inter alia, Case 106/77 Simmenthal [1978]

ECR 629, paragraph 16, Case C-213/89 Factortame and Others [1990] ECR I-2433, paragraph 19,

and Courage and Crehan, cited above, paragraph 25).

90 As was pointed out in paragraph 60 of this judgment, the full effectiveness of Article 81 EC and, in

particular, the practical effect of the prohibition laid down in Article 81(1) EC would be put at risk if it

were not open to any individual to claim damages for loss caused to him by a contract or by conduct

liable to restrict or distort competition.

91 Indeed, the existence of such a right strengthens the working of the Community competition rules

and discourages agreements or practices, frequently covert, which are liable to restrict or distort

competition. From that point of view, actions for damages before the national courts can make a

significant contribution to the maintenance of effective competition in the Community (Courage and

Crehan, cited above, paragraph 27).

92 As to the award of damages and the possibility of an award of punitive damages, in the absence of

Community rules governing the matter, it is for the domestic legal system of each Member State to set

the criteria for determining the extent of the damages, provided that the principles of equivalence and

effectiveness are observed.

93 In that respect, first, in accordance with the principle of equivalence, it must be possible to award

particular damages, such as exemplary or punitive damages, pursuant to actions founded on the

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Community competition rules, if such damages may be awarded pursuant to similar actions founded

on domestic law (see, to that effect, Brasserie du pêcheur and Factortame, cited above, paragraph 90).

94 However, it is settled case-law that Community law does not prevent national courts from taking

steps to ensure that the protection of the rights guaranteed by Community law does not entail the

unjust enrichment of those who enjoy them (see, in particular, Case 238/78 Ireks-Arkady v Council

and Commission [1979] ECR 2955, paragraph 14, Joined Cases C-441/98 and C-442/98 Michaïlidis

[2000] ECR I-7145, paragraph 31, and Courage and Crehan, cited above, paragraph 30).

95 Secondly, it follows from the principle of effectiveness and the right of any individual to seek

compensation for loss caused by a contract or by conduct liable to restrict or distort competition that

injured persons must be able to seek compensation not only for actual loss (damnum emergens) but

also for loss of profit (lucrum cessans) plus interest.

96 Total exclusion of loss of profit as a head of damage for which compensation may be awarded

cannot be accepted in the case of a breach of Community law since, especially in the context of

economic or commercial litigation, such a total exclusion of loss of profit would be such as to make

reparation of damage practically impossible (see Brasserie du pêcheur and Factortame, cited above,

paragraph 87, and Joined Cases C-397/98 and C-410/98 Metallgesellschaft and Others [2001] ECR I-

1727, paragraph 91).

97 As to the payment of interest, the Court pointed out in paragraph 31 of Case C-271/91 Marshall

[1993] ECR I-4367 that an award made in accordance with the applicable national rules constitutes an

essential component of compensation.

98 It follows that the answer to the fourth question in Cases C-295/04 to C-297/04 and the fifth

question in Case C-298/04 must be that, in the absence of Community rules governing that field, it is

for the domestic legal system of each Member State to set the criteria for determining the extent of the

damages for harm caused by an agreement or practice prohibited under Article 81 EC, provided that

the principles of equivalence and effectiveness are observed.

99 Therefore, first, in accordance with the principle of equivalence, if it is possible to award specific

damages, such as exemplary or punitive damages, in domestic actions similar to actions founded on

the Community competition rules, it must also be possible to award such damages in actions founded

on Community rules. However, Community law does not prevent national courts from taking steps to

ensure that the protection of the rights guaranteed by Community law does not entail the unjust

enrichment of those who enjoy them.

100 Secondly, it follows from the principle of effectiveness and the right of individuals to seek

compensation for loss caused by a contract or by conduct liable to restrict or distort competition that

injured persons must be able to seek compensation not only for actual loss (damnum emergens) but

also for loss of profit (lucrum cessans) plus interest.

10. National courts

ECJ, C-226/11, 13.12.2012, “Expedia”

14 By its question, the referring court seeks to know, essentially, whether Article 101(1) TFEU and

Article 3(2) of Regulation No 1/2003 must be interpreted as precluding a national competition

authority from applying Article 101(1) TFEU to an agreement between undertakings that may affect

trade between Member States, but that does not reach the thresholds specified by the Commission in

its de minimis notice.

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[…]

18 With regard to the role of Member State authorities in the enforcement of Union competition law,

the first sentence of Article 3(1) of Regulation No 1/2003 establishes a close link between the

prohibition of the agreements set out in Article 101 TFEU and the corresponding provisions of

national competition law. Where the national competition authority applies provisions of national law

prohibiting cartels to an agreement of undertakings which is capable of affecting trade between

Member States within the meaning of Article 101 TFEU, the first sentence of Article 3(1) requires

Article 101 TFEU also to be applied to it in parallel (Case C-17/10 Toshiba Corporation [2012] ECR

I-0000, paragraph 77).

19 Under Article 3(2) of Regulation No 1/2003, the application of national competition law may not

lead to the prohibition of such agreements if they do not restrict competition within the meaning of

Article 101(1) TFEU.

20 It follows that the competition authorities of the Member States can apply the provisions of

national law prohibiting cartels to an agreement of undertakings which is capable of affecting trade

between Member States within the meaning of Article 101 TFEU only where that agreement

perceptibly restricts competition within the common market.

[…]

23 It is apparent from paragraphs 1 and 2 of the de minimis notice that the Commission intends to

quantify therein, with the help of market share thresholds, what is not an appreciable restriction of

competition within the meaning of Article 101 TFEU and the case-law cited in paragraphs 16 and 17

of the present judgment.

24 With regard to the wording of the de minimis notice, its non-binding nature, for both the

competition authorities and the courts of the Member States, is emphasised in the third sentence of

paragraph 4 thereof.

25 Furthermore, in the second and third sentences of paragraph 2 of that notice, the Commission

states that market share thresholds used quantify what is not an appreciable restriction of competition

within the meaning of Article 101 TFEU, but that the negative definition of the appreciability of such

restriction does not imply that agreements of undertakings which exceed those thresholds appreciably

restrict competition.

26 Moreover, contrary to the Commission notice on cooperation within the network of competition

authorities (OJ 2004 C 101, p. 43), the de minimis notice does not contain any reference to

declarations by the competition authorities of the Member States that they acknowledge the principles

set out therein and that they will abide by them.

27 It also follows from the objectives pursued by the de minimis notice, as mentioned in paragraph 4

thereof, that it is not intended to be binding on the competition authorities and the courts of the

Member States.

28 It is apparent from that paragraph, first, that the purpose of that notice is to make transparent the

manner in which the Commission, acting as the competition authority of the European Union, will

itself apply Article 101 TFEU. Consequently, by the de minimis notice, the Commission imposes a

limit on the exercise of its discretion and must not depart from the content of that notice without being

in breach of the general principles of law, in particular the principles of equal treatment and the

protection of legitimate expectations (see, to that effect, Joined Cases C-189/02 P, C-202/02 P,

C-205/02 P to C-208/02 P and C-213/02 P Dansk Rørindustri and Others v Commission [2005] ECR

I-5425, paragraph 211). Furthermore, it intends to give guidance to the courts and authorities of the

Member States in their application of that article.

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50

29 Consequently, and as the Court has already had occasion to point out, a Commission notice, such

as the de minimis notice, is not binding in relation to the Member States (see, to that effect, Case

C-360/09 Pfleiderer [2011] ECR I-0000, paragraph 21).

30 Accordingly, that notice was published in 2001 in the ‘C’ series of the Official Journal of the

European Union, which, by contrast with the ‘L’ series of the Official Journal, is not intended for the

publication of legally binding measures, but only of information, recommendations and opinions

concerning the European Union (see, by analogy, Case C-410/09 Polska Telefonia Cyfrowa [2011]


31 Consequently, in order to determine whether or not a restriction of competition is appreciable, the

competition authority of a Member State may take into account the thresholds established in paragraph

7 of the de minimis notice but is not required to do so. Such thresholds are no more than factors among

others that may enable that authority to determine whether or not a restriction is appreciable by

reference to the actual circumstances of the agreement.

[…]

38 In light of the above, the answer to the question referred is that Article 101(1) TFEU and

Article 3(2) of Regulation No 1/2003 must be interpreted as not precluding a national competition

authority from applying Article 101(1) TFEU to an agreement between undertakings that may affect

trade between Member States, but that does not reach the thresholds specified by the Commission in

its de minimis notice, provided that that agreement constitutes an appreciable restriction of competition

within the meaning of that provision.

137

Prof. Thomas Hoeren

157

CITY MOTORS GROEP

JUDGMENT OF THE COURT (Third Chamber)

18 January 2007 *

In Case C-421/05,

REFERENCE for a preliminary ruling under Article 234 EC from the Rechtbank van Koophandel te Brussel (Belgium), made by decision of 21 November 2005, received at the Court on 29 November 2005, in the proceedings

City Motors Groep NV

v

Citroën Belux NV,

THE COURT (Third Chamber),

composed of A. Rosas, President of the Chamber, J.N. Cunha Rodrigues and A. Ó Caoimh (Rapporteur), Judges,

Advocate General: L.A. Geelhoed, Registrar: J. Swedenborg, Administrator,

* Language of the case: Dutch.

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158

JUDGMENT OF 18. 1. 2007 — CASE C-421/05

having regard to the written procedure and further to the hearing on 26 October 2006,

after considering the observations submitted on behalf of:

— City Motors Groep NV, by A. Tallon and Y. Lemense, advocaten,

— Citroen Belux NV, by J. Verbist and B. van de Walle de Ghelcke, advocaten,

— the Commission of the European Communities, by A. Bouquet and A. Whelan, acting as Agents,

having decided, after hearing the Advocate General, to proceed to judgment without an Opinion,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 3(6) of Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector (OJ L 203, p. 30).

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CITY MOTORS GROEP

2 The reference has been made in the context of proceedings between City Motors Groep NV ('CMG') and Citroen Belux NV ('Citroën') concerning the validity of the latter's termination of the agreement which it had concluded with CMG to distribute motor vehicles of the Citroen brand in Belgium.

Legal context

Community legislation

3 Article 5(3) of Commission Regulation (EC) No 1475/95 of 28 June 1995 on the application of Article [81] (3) of the Treaty to certain categories of motor vehicle distribution and servicing agreements (OJ L 145, p. 25) provided:

'The conditions for exemption laid down in (1) and (2) shall not affect:

— the right of one party to terminate the agreement for cause where the other party fails to perform one of its basic obligations.

In each case, the parties must, in the event of disagreement, accept a system for the quick resolution of the dispute, such as recourse to an expert third party or an arbitrator, without prejudice to the parties' right to apply to a competent court in conformity with the provisions of national law.'

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4 From 1 October 2002, Regulation No 1475/95 was replaced by Commission Regulation No 1400/2002.

5 According to recitals 9 and 11 in the preamble to Regulation No 1400/2002:

'(9) In order to prevent a supplier from terminating an agreement because a distributor or a repairer engages in pro-competitive behaviour, such as active or passive sales to foreign consumers, multi-branding or subcontracting of repair and maintenance services, every notice of termination must clearly set out in writing the reasons, which must be objective and transparent Furthermore, in order to strengthen the independence of distributors and repairers from their suppliers, minimum periods of notice should be provided for the non-renewal of agreements concluded for a limited duration and for the termination of agreements of unlimited duration.

(11) In order to favour the quick resolution of disputes which arise between the parties to a distribution agreement and which might otherwise hamper effective competition, agreements should only benefit from exemption if they provide for each party to have a right of recourse to an independent expert or arbitrator, in particular where notice is given to terminate an agreement.'

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CITY MOTORS GROEP

6 Article 2 of Regulation No 1400/2002, under the heading 'Scope', provides in the first paragraph of Article 2(1):

'Pursuant to Article 81(3) of the Treaty and subject to the provisions of this Regulation, it is hereby declared that the provisions of Article 81(1) shall not apply to vertical agreements where they relate to the conditions under which the parties may purchase, sell or resell new motor vehicles, spare parts for motor vehicles or repair and maintenance services for motor vehicles/

7 Article 3 of Regulation No 1400/2002, under the heading 'General conditions', provides in Article 3(4) and (6):

'4. The exemption shall apply on condition that the vertical agreement concluded with a distributor or repairer provides that a supplier who wishes to give notice of termination of an agreement must give such notice in writing and must include detailed, objective and transparent reasons for the termination, in order to prevent a supplier from ending a vertical agreement with a distributor or repairer because of practices which may not be restricted under this Regulation.

6. The exemption shall apply on condition that the vertical agreement provides for each of the parties the right to refer disputes concerning the fulfilment of their contractual obligations to an independent expert or arbitrator. Such disputes may relate, inter alia, to any of the following:

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(g) the issue whether the termination of an agreement is justified by the reasons given in the notice.

The right referred to in the first sentence is without prejudice to each party's right to make an application to a national court/

8 Article 4 of Regulation No 1400/2002, under the heading 'Hardcore restrictions', provides, in Article 4(1), that the exemption is not to apply to vertical agreements which have as their object the restrictions set out in that provision.

9 Article 5 of the same regulation, under the heading 'Specific conditions', provides that the exemption is not to apply to the obligations listed thereunder which are contained in vertical agreements.

National legislation

10 Under Article 1184 of the Belgian Civil Code:

Ά termination clause is always implied in synallagmatic contracts in the event of one of the two parties failing to perform its contractual obligations.

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CITY MOTORS GROEP

In that situation, the contract is not terminated as of right. The party to which the obligation is owed can choose whether to compel the other party to perform the agreement where that is possible or to request termination of the agreement with damages and interest.

Termination must be requested by court application, and the defendant may be granted a period in which to comply depending on the circumstances.'

1 1 By providing for an express termination clause, the parties can however mutually agree to place themselves outside the scope of Article 1184 and set out the circumstances in which a breach is sufficiently serious to warrant termination of the agreement as of right without a courts intervention.

The dispute in the main proceedings and the question referred for a preliminary ruling

12 Since 1992, CMG has been distributing vehicles of the Citroen brand in Belgium under sale concession agreements concluded with Citroen. The last of those agreements on the sale of new motor vehicles was concluded on 13 May 2003 for an unlimited duration, with effect from 1 October 2003 ('the concession agreement').

13 Under Article XVIII of the concession agreement, Citroen can terminate the agreement immediately as of right and without giving formal notice, inter alia 'in the event of resale, contrary to the provisions of Articles V and XIV(9), of one or more new cars [of the Citroen brand], or cars of that brand which have been registered for less than three months, and/or of equipment and accessories to a reseller who is not a member of the official [Citroen] distribution network, authorised as a reseller and established in the territory of the European Economic Area or in Switzerland'.

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14 In addition, Article XXI of the concession agreement stipulates:

'... In the event of a dispute relating to performance of this agreement and in order to reach an amicable settlement, each party can call on the services of an expert, appointed by the President of the Brussels Commercial Court at the request of the more prompt party.

This provision shall not have any effect on the right of either party to apply to the courts in the event of a dispute concerning the performance of the agreement ...'

15 On 1 June 2004, Citroen terminated the agreement under Article XVIII thereof owing to CMG's sale of cars to the company Interlease N V

16 CMG summoned Citroen to appear before the Rechtbank van Koophandel te Brussel (Brussels Commercial Court) with a view to obtaining damages for unlawful breach of the concession agreement. In this connection, it claims, inter alia, that the express termination clause under that agreement is contrary to Regulation No 1400/2002.

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17 In interlocutory proceedings, the president of that court ordered Citroen, on pain of incurring a periodic penalty payment, to continue existing relations with CMG until judgment was given in the main proceedings. The appeal brought by Citroen against that order before the Hof van Beroep te Brussel (Brussels Court of Appeal) was dismissed.

18 As regards the substance of the case, the referring court, adopting as its own the considerations of the Hof van Beroep te Brussel, considers that Article 3(6)(g) of Regulation No 1400/2002 appears to require to be interpreted as meaning that the agreement must stay in force until the dispute has been resolved. It follows that an express termination clause, whereby the prior intervention of an expert, arbitrator or court is circumvented, cannot lawfully exist if the situation is one listed in Article 3(6). Article XVIII of the concession agreement is therefore, at first sight, incompatible with Regulation No 1400/2002.

19 In those circumstances, the Rechtbank van Koophandel te Brussel decided to stay proceedings and to refer the following question to the Court for a preliminary ruling:

'Is Article 3(6) of ... Regulation ... No 1400/2002 ... to be interpreted as precluding an express termination clause in a motor vehicle concession agreement which is intended to benefit from the exemption [provided for in Article 2(1) of that regulation]?'

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The question referred

20 By its question, the referring court asks in essence whether Article 3(6) of Regulation No 1400/2002 must be interpreted as meaning that the block exemption provided for in Article 2(1) thereof does not apply to agreements which fall within its scope if they contain an express termination clause, such as that at issue in the main proceedings, under which an agreement can be terminated by the supplier without notice and as of right in the event of a breach by the distributor of one of the contractual obligations referred to in that clause.

21 According to CMG, an express termination clause must be regarded as distorting competition in so far as it places the supplier in a commanding position by limiting the national courts discretion in the event of a dispute. If there is such a clause, the court dealing with the case must confine itself to considering whether the conditions governing its application are met and whether the termination constitutes misuse of the law. The anti-competitive character of that clause is, furthermore, confirmed by the fact that, unlike Regulation No 1475/95, Regulation No 1400/2002 no longer provides for the possibility of terminating the agreement for cause on account of failure to perform one of the basic obligations of the contract.

22 It must first of all be noted that, as Citroen has rightly observed, neither Article 4 nor Article 5 of Regulation No 1400/2002, which provide an exhaustive list of the hardcore restrictions and specific conditions precluding application of the block exemption provided for by that regulation, refers to express termination clauses.

23 Admittedly, as CMG observes in its written observations, Regulation No 1400/2002, unlike Article 5(3) of Regulation No 1475/95, no longer expressly states that the conditions for the block exemption shall not affect ... the right of one party to

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terminate the agreement for cause where the other party fails to perform one of its basic obligations'.

24 However, it cannot be inferred from that omission that express termination clauses are now prohibited in so far as they constitute a restriction on competition within the meaning of Article 81(1) EC. Article 5(3) of Regulation No 1475/95 was not in any way intended to grant a block exemption to certain restrictions on competition within the meaning of Article 81(1) EC, but simply introduced a possibility which did not restrict the contractual freedom of the parties, as exercised under the applicable national law (see, to that effect, Case C-125/05 Vulcan Silkeborg [2006] ECR I-7637, paragraph 47).

25 In its decision to refer, the Rechtbank van Koophandel te Brussel wishes to ascertain, however, whether an express termination clause, in so far as it enables the prior intervention of an expert, arbitrator or court to be circumvented, is not contrary to Article 3(6) of Regulation No 1400/2002. Compliance with that provision would seem indeed to require that an agreement which has been terminated remain in force pending the final outcome of a dispute concerning the validity of that termination.

26 It must be pointed out that Article 3(6) of Regulation No 1400/2002 does not prohibit any contractual clause, but merely requires, as a condition for the application of block exemption, that the agreement with a distributor should give each party a contractual right, without prejudice to their right to make an application to a national court, to refer to an independent expert or arbitrator any contractual disputes concerning, inter alia, under paragraph (g) of that provision, whether the termination of the agreement is justified by the reasons given in the notice.

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27 Therefore, in order to comply with the condition governing application of the block exemption, it suffices, under Article 3(6) of Regulation No 1400/2002 and as follows from recital 11 in the preamble thereto, that the agreement contain a clause providing for such a contractual right. Since the list of contractual disputes given in that provision is not exhaustive, that must be the case whether termination takes place with or without notice. On the other hand, that provision does not require, any more than any other provision in the regulation, in respect of application of block exemption, that the intervention of an expert, arbitrator or court should precede termination being put into effect or that the effects of termination should be suspended until a decision is adopted as to its validity.

28 It thus follows from the foregoing that no provision in Regulation No 1400/2002 prohibits the parties to an agreement falling within the scope of that regulation from providing for an express termination clause such as that at issue in the main proceedings (see, to that effect, Case C-230/96 Cabour [1998] ECR I-2055, paragraph 37). Accordingly, the validity of such a clause is governed in principle not by the regulation but by national law alone.

29 However, as regards termination of an agreement falling within the scope of Regulation No 1400/2002, account must be taken of the fact that, pursuant to the very terms of Article 3(4) thereof, the block exemption is to apply solely on condition that the agreement provides that a supplier who wishes to give notice of termination of an agreement must give such notice in writing and must include detailed, objective and transparent reasons for the termination, in order to prevent a supplier from ending an agreement because of practices which may not be restricted under that regulation. That would be the case, according to recital 9 in the preamble to the regulation, if a supplier terminated an agreement because a distributor engaged in pro-competitive behaviour, such as active or passive sales to foreign consumers.

30 It follows, as CMG and the Commission of the European Communities submit and as Citroen itself indeed concedes, that where a supplier terminates an agreement

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under an express termination clause, compliance with the conditions for application of the block exemption introduced by Regulation No 1400/2002 requires not only that that supplier indicate in writing the reasons for termination but also that the independent expert, arbitrator or national court to whom the distributor has the right, under Article 3(6) of that regulation, to refer a challenge to the validity of that termination should be in a position to exercise an effective review of those reasons.

31 It is for the national court to verify that such effective review is ensured by the national law applicable where an agreement is terminated by a supplier under such an express termination clause.

32 In the light of the objective of Article 3(4) of Regulation No 1400/2002, the effectiveness of such review requires, at the very least, that the independent expert, arbitrator or court is in a position to verify that the termination by the supplier was not motivated by practices on the part of the distributor falling under the hardcore restrictions referred to in Article 4 of that regulation.

33 Furthermore, in the event of a breach by a supplier of the condition for application of the block exemption set out in Article 3(4) of Regulation No 1400/2002, the national court must be in a position to draw all the necessary inferences, in accordance with national law, concerning both the validity of the agreement at issue with regard to Article 81 EC and compensation for any harm suffered by the distributor where there is a causal relationship between that harm and an agreement or practice prohibited under Article 81 EC (see, to that effect, Case C-453/99

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Courage and Crehan [2001] ECR I-6297, paragraph 26, and Joined Cases C-295/04 to C-298/04 Manfredi and Others [2006] ECR I-6619, paragraphs 60, 61 and 90).

34 As to whether the intervention of an independent expert, arbitrator or national court should precede termination or whether the effects of that termination should be suspended pending a decision as to its validity, it must be pointed out that, in the absence of Community rules governing the matter, and since there is no provision in Regulation No 1400/2002 containing such a requirement, as follows from paragraph 27 of this judgment, it is for the legal system of each Member State to designate the courts and tribunals having jurisdiction and to lay down the detailed procedural rules governing actions for safeguarding rights which individuals derive directly from Community law, provided that such rules are not less favourable than those governing similar domestic actions (principle of equivalence) and that they do not render practically impossible or excessively difficult the exercise of rights conferred by Community law (principle of effectiveness) (see, inter alia, Courage and Crehan, paragraph 29, and Manfredi and Others, paragraphs 62 and 71).

35 In accordance with the principle of equivalence, an independent expert, arbitrator or national court entrusted with assessing, in the light of Community competition law, the validity of a termination effected pursuant to an express termination clause cannot be required to intervene prior to that termination if, as is clear from the order for reference and as the parties to the dispute in the main proceedings in essence stated at the hearing in response to the Court's questions, no such prior intervention is required where the validity of such a termination is examined with regard to similar provisions of domestic law. Likewise, it does not appear that the conditions under which a court hearing applications for interlocutory relief in the context of actions founded on the Community competition rules would intervene are less favourable than those applicable to similar actions founded on domestic law; this is, however, a point which should nevertheless be checked by the national court.

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36 So far as the principle of effectiveness is concerned, since the validity, with regard to Regulation No 1400/2002, of the grounds for a termination effected pursuant to an express termination clause must be subject to review which satisfies the conditions set out in paragraphs 29 to 33 of this judgment, the fact that such a clause has the effect of precluding the prior intervention of an independent expert, arbitrator or national court and that the effects of such termination are not suspended pending a decision as to its validity cannot be considered to render practically impossible or excessively difficult the exercise of the rights conferred by that regulation.

37 Consequently, in answer to the question referred for a preliminary ruling, Article 3(6) of Regulation No 1400/2002 is to be interpreted as meaning that the mere fact that an agreement falling within the scope of that regulation contains an express termination clause, such as that at issue in the main proceedings, under which such an agreement can be terminated by the supplier as of right and without notice in the event of a breach by the distributor of one of the contractual obligations referred to in that clause, does not have the effect of rendering the block exemption provided for in Article 2(1) of that regulation inapplicable to that agreement.

Costs

38 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

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On those grounds, the Court (Third Chamber) hereby rules:

Article 3(6) of Commission Regulation (EC) No 1400/2002 of 31 July 2002 on the application of Article 81(3) of the Treaty to categories of vertical agreements and concerted practices in the motor vehicle sector is to be interpreted as meaning that the mere fact that an agreement falling within the scope of that regulation contains an express termination clause, such as that at issue in the main proceedings, under which such an agreement can be terminated by the supplier as of right and without notice in the event of a breach by the distributor of one of the contractual obligations referred to in that clause, does not have the effect of rendering the block exemption provided for in Article 2(1) of that regulation inapplicable to that agreement,

[Signatures]

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12-8-2014 CURIA - Documents

http://curia.europa.eu/juris/document/document_print.jsf?doclang=EN&text=&pageIndex=0&part=1&mode=lst&docid=111223&occ=first&dir=&cid=151334 1/11

JUDGMENT OF THE COURT (Third Chamber)

13 October 2011 (*)

(Article 101(1) and (3) TFEU – Regulation (EC) No 2790/1999 – Articles 2 to 4 – Competition –

Restrictive practice – Selective distribution network – Cosmetics and personal care products – General

and absolute ban on internet sales – Ban imposed by the supplier on authorised distributors)

In Case C‑439/09,

REFERENCE for a preliminary ruling under Article 234 EC from the cour d’appel de Paris (France),

made by decision of 29 October 2009, received at the Court on 10 November 2009, in the proceedings

Pierre Fabre Dermo-Cosmétique SAS

v

Président de l’Autorité de la concurrence,

Ministre de l’Économie, de l’Industrie et de l’Emploi,

intervening parties:

Ministère public,

European Commission,

THE COURT (Third Chamber),

composed of K. Lenaerts, President of the Chamber, E. Juhász (Rapporteur), G.Arestis, T. von Danwitz

and D. Šváby Judges,

Advocate General: J. Mazák,

Registrar: R. Şereş, Administrator,

having regard to the written procedure and further to the hearing on 11 November 2010,

after considering the observations submitted on behalf of:

– Pierre Fabre Dermo-Cosmétique SAS, by J. Philippe, avocat,

– the président de l’Autorité de la concurrence, by B. Lasserre, F. Zivy, I. Luc and L. Gauthier-

Lescop,

– the French Government, by G. de Bergues and J. Gstalter, acting as Agents,

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– the Italian Government, by M. Massella Ducci Teri, avvocato dello Stato,

– the Polish Government, by M. Szpunar, acting as Agent,

– the European Commission, by P.J.O. Van Nuffel and A. Bouquet, acting as Agents,

– the EFTA Surveillance Authority, by O. Einarsson and F. Simonetti, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 3 March 2011,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Article 81(1) and (3) EC and of

Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the application of Article 81(3) of

the Treaty to categories of vertical agreements and concerted practices (OJ 1999 L 336, p.21).

2 The reference has been made in an action for annulment and, in the alternative, for amendment by Pierre

Fabre Dermo‑Cosmétique SAS (‘Pierre Fabre Dermo-Cosmétique’) against decision No 08‑D‑25 of 29

October 2008 (‘the contested decision’) of the Conseil de la concurrence (French Competition Board;

now, since 13 January 2009, the Autorité de la concurrence (French Competition Authority)), regarding

the ban imposed by Pierre Fabre Dermo‑Cosmétique, contained in its selective distribution contracts, on

distributors which it previously chose to authorise, on the sale of its cosmetics and personal care products

via the internet, contrary to the provisions of Article L. 420-1 of the code de commerce (Commercial

Code) and Article 81 EC.

Legal context

European Union legislation

3 Recital 10 in the preamble to Regulation No 2790/1999 states:

‘This Regulation should not exempt vertical agreements containing restrictions which are not indispensable

to the attainment of the positive effects mentioned above; in particular, vertical agreements containing

certain types of severely anti-competitive restraints such as minimum and fixed resale-prices, as well as

certain types of territorial protection, should be excluded from the benefit of the block exemption

established by this Regulation irrespective of the market share of the undertakings concerned.’

4 Article 1(d) of Regulation No 2790/1999 defines a ‘selective distribution system’ 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 unauthorised distributors’.

5 Article 2(1) of Regulation No 2790/1999 provides:

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‘Pursuant to Article 81(3) of the Treaty [Article 101(3) TFEU] and subject to the provisions of this

Regulation, it is hereby declared that Article 81(1) [Article 101(1) TFEU] shall not apply to agreements or

concerted practices entered into between two or more undertakings each of which operates, for the

purposes of the agreement, at a different level of the production or distribution chain, and relating to the

conditions under which the parties may purchase, sell or resell certain goods or services (“vertical

agreements”).

This exemption shall apply to the extent that such agreements contain restrictions of competition falling

within the scope of Article 81(1) [Article 101(1) TFEU] (“vertical restraints”).’

6 Under Article 3(1) of that regulation ‘…the exemption provided for in Article 2 shall apply on condition

that the market share held by the supplier does not exceed 30% of the relevant market on which it sells the

contract goods or services’.

7 Article 4 of Regulation No 2790/1999 provides that the exemption to the prohibition laid down in Article

81(1) EC [Article 101(1) TFEU] is not to apply to vertical agreements which, directly or indirectly, in

isolation or in combination with other factors under the control of the parties, have as their object:

‘…

(c) the restriction of active or passive sales to end users by members of a selective distribution system

operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of

the system from operating out of an unauthorised place of establishment;

…’

National legislation

8 Article L. 420-1 of the French Commercial Code provides:

‘Common actions, agreements, express or tacit understandings or coalitions, particularly when they are

intended to:

(1) limit access to the market or the free exercise of competition by other undertakings;

(2) prevent price fixing by the free play of the market, by artificially encouraging the increase or reduction

of prices;

(3) limit or control production, markets, investment or technical progress;

(4) share markets or sources of supply,

shall be prohibited, even through the direct or indirect intermediation of a company in a group established

outside France, when they have the object, or may have the effect, of preventing, restricting or distorting

competition in a market.’

The dispute in the main proceedings and the question referred for a preliminary ruling

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9 Pierre Fabre Dermo-Cosmétique is one of the companies in the Pierre Fabre group. It manufactures and

markets cosmetics and personal care products and has several subsidiaries, including, inter alia, the

Klorane, Ducray, Galénic and Avène laboratories, whose cosmetic and personal care products are sold,

under those brands, mainly through pharmacists, on both the French and the European markets.

10 The products at issue are cosmetics and personal care products which are not classified as medicines and

are, therefore, not covered by the pharmacists’ monopoly laid down by the code de la santé publique

(Public Health Code).

11 In 2007, the Pierre Fabre group had 20% of the French market for those products.

12 Distribution contracts for those products in respect of the Klorane, Ducray, Galénic and Avène brands

stipulate that such sales must be made exclusively in a physical space, in which a qualified pharmacist must

be present.

13 Articles 1.1 and 1.2 of the general conditions of distribution and sale of the brands stipulate:

‘The authorised distributor must supply evidence that there will be physically present at its outlet at all

times during the hours it is open at least one person specially trained to:

acquire a thorough knowledge of the technical and scientific characteristics of the products…, necessary

for the proper fulfilment of the obligations of professional practice…

regularly and consistently give the consumer all information concerning the correct use of the products...

give on-the-spot advice concerning sale of the…product that is best suited to the specific health or care

matters raised with him or her, in particular those concerning the skin, hair and nails.

In order to do this, the person in question must have a degree in pharmacy awarded or recognised in

France…

The authorised distributor must undertake to dispense the products…only at a marked, specially allocated

outlet…’

14 Those requirements exclude de facto all forms of selling by internet.

15 By decision of 27 June 2006, the Competition Authority opened an ex officio investigation of practices in

the distribution sector for cosmetics and personal care products.

16 By decision No 07-D-07 of 8 March 2007, the Competition Authority approved and made binding the

commitments proposed by the group of undertakings concerned, with the exception of Pierre Fabre

Dermo‑Cosmétique, to amend their selective distribution contracts in order to enable the members of their

networks to sell their products via the internet, subject to certain conditions. The proceedings opened

against Pierre Fabre Dermo‑Cosmétique followed their ordinary course.

17 During the administrative proceedings, Pierre Fabre Dermo‑Cosmétique explained that the products at

issue, by their nature, require the physical presence of a qualified pharmacist at the point of sale during all

opening hours, in order that the customer may, in all circumstances, request and obtain the personalised177



advice of a specialist, based on the direct observation of the customer’s skin, hair and scalp.

18 In view of the fact that there might be an effect on trade between the Member States, the Competition

Authority analysed the practice in question in the light of the provisions of French competition law and

European Union law.

19 In the contested decision, the Competition Authority first of all noted that the ban on internet sales

amounted to a limitation on the commercial freedom of Pierre Fabre Dermo‑Cosmétique’s distributors by

excluding a means of marketing its products. Moreover, that prohibition restricted the choice of consumers

wishing to purchase online and ultimately prevented sales to final purchasers who are not located in the

‘physical’ trading area of the authorised distributor. According to the Authority, that limitation necessarily

has the object of restricting competition, in addition to the limitation inherent in the manufacturer’s very

choice of a selective distribution system, which limits the number of distributors authorised to distribute the

product and prevents distributors from selling the goods to non-authorised distributors.

20 Since Pierre Fabre Dermo‑Cosmétique’s market share is less than 30%, the Competition Authority

examined whether the restrictive practice could benefit from the block exemption provided for in

Regulation No 2790/1999. Although the practice of prohibiting internet selling is not expressly referred to

in that regulation, it is equivalent to a ban on active and passive sales. Consequently, the practice falls

within Article 4(c) of the regulation, which excludes restrictions on active or passive sales by members of a

selective distribution system from the automatic block exemption.

21 According to the Competition Authority, the ban on internet sales does not meet the conditions for

exception provided for in Article 4(c) of Regulation No 2790/1999, according to which those restrictions

on sales are without prejudice to the possibility of prohibiting a member of the system from operating ‘out

of an unauthorised place of establishment’. The Authority held that the internet is not a place where goods

are marketed, but an alternative means of selling which is used in the same way as direct selling in a shop

or mail-order selling by distributors in a network which have physical outlets.

22 Moreover, the Competition Authority noted that Pierre Fabre Dermo‑Cosmétique failed to demonstrate

that it could benefit from an individual exemption pursuant to Article 81(3) EC and to Article L. 420-4,

paragraph 1, of the Commercial Code.

23 In that regard, the Authority rejected Pierre Fabre Dermo‑Cosmétique’s argument that the ban on internet

sales at issue contributes to improving the distribution of dermo-cosmetic products whilst avoiding the risks

of counterfeiting and of free-riding between authorised pharmacies. Pierre Fabre Dermo‑Cosmétique’s

choice of a selective distribution system, with the presence of a pharmacist at the place of sale, guaranteed

that an advisory service is provided at all authorised pharmacies and that each of them bears the cost.

24 In response to Pierre Fabre Dermo‑Cosmétique’s argument on the need for a pharmacist to be physically

present when the products at issue are purchased, in order to ensure the consumer’s well-being, the

Competition Authority first of all noted that the products concerned were not medicines. In this respect,

the specific legislation by which they are governed concerns rules which apply to their manufacture and not

to their distribution which is free, and, moreover, a pharmacist does not have the power to make adiagnosis, only a doctor being authorised to do so. The Competition Authority then applied Case

C‑322/01 Deutscher Apothekerverband [2003] ECR I-14887, concerning restrictions on the

distribution of non-prescription medicines via the internet, to the products at issue.178



25 According to the Competition Authority, Pierre Fabre Dermo‑Cosmétique also failed to demonstrate in

what way visual contact between the pharmacist and the users of the product ensures ‘cosmetovigilance’,

which requires health-care professionals to record and communicate any adverse reactions to cosmetic

products. Indeed, any negative effects of the products at issue will become apparent only after the product

has been used and not when it is purchased. In the event of problems linked to its use, the patient will tend

to consult a doctor.

26 In response to Pierre Fabre Dermo‑Cosmétique’s final argument, the Competition Authority did not find

the fact that internet distribution does not lead to a reduction in prices to be relevant. The benefit for the

consumer lies not only in the reduction of prices, but also in the improvement of the service offered by the

distributors including, inter alia, the possibility of ordering the products at a distance, without time

restrictions, with easy access to information about the products and allowing prices to be compared.

27 The Competition Authority thus concluded that the ban imposed by Pierre Fabre Dermo‑Cosmétique on

its authorised distributors on selling via the internet amounts to a restriction on competition contrary to

Article 81 EC and Article L. 420-1 of the Commercial Code, and ordered it to remove from its selective

distribution contracts all terms that are equivalent to a ban on internet sales of its cosmetics and personal

care products and to make express provision in its contracts for an option for its distributors to use that

method of distribution. Pierre Fabre Dermo‑Cosmétique was ordered to pay a fine of EUR 17 000.

28 On 24 December 2008, Pierre Fabre Dermo‑Cosmétique brought an action for annulment and, in the

alternative, for amendment of the contested decision before the cour d’appel de Paris. At the same time

Pierre Fabre Dermo‑Cosmétique requested the first president of the court to stay execution of the

contested decision. In support of its action, Pierre Fabre Dermo‑Cosmétique claimed, primarily, that the

contested decision was vitiated by an error of law in that it denied the contested practice the benefit of

both the block exemption provided for in Regulation No 2790/1999 and the individual exemption

provided for in Article 81(3) EC.

29 On 18 February 2009, the first president of the cour d’appel de Paris ordered a stay of execution of the

orders made by the Competition Authority against Pierre Fabre Dermo‑Cosmétique until the referring

court had ruled on the merits of the action.

30 In its order for reference, the cour d'appel de Paris, after recalling the reasons behind the contested

decision, and the content of the written observations that the European Commission presented pursuant to

Article 15(3) of 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 (OJ 2003 L 1, p.1), nevertheless noted

that neither the Commission’s guidelines nor its observations were binding on the national courts.

31 In those circumstances, the cour d’appel de Paris decided to stay the proceedings and refer the following

question to the Court for a preliminary ruling:

‘Does a general and absolute ban on selling contract goods to end-users via the internet, imposed on

authorised distributors in the context of a selective distribution network, in fact constitute a “hardcore”

restriction of competition by object for the purposes of Article 81(1) EC [Article 101(1) TFEU] which is

not covered by the block exemption provided for by Regulation No 2790/1999 but which is potentiallyeligible for an individual exemption under Article 81(3) EC [Article 101(3) TFEU][?]’

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Consideration of the question referred

32 It is to be observed at the outset that neither Article 101 TFEU nor Regulation No 2790/1999 refer to the

concept of ‘hardcore’ restriction of competition.

33 In those circumstances, the question referred for a preliminary ruling must be understood as seeking to

ascertain, firstly, whether the contractual clause at issue in the main proceedings amounts to a restriction of

competition ‘by object’ within the meaning of Article 101(1) TFEU, secondly, whether a selective

distribution contract containing such a clause – where it falls within the scope of Article 101(1) TFEU –

may benefit from the block exemption established by Regulation No 2790/1999 and, thirdly, whether,

where the block exemption is inapplicable, the contract could nevertheless benefit from the exception

provided for in Article 101(3) TFEU.

The classification of the restriction in the contested contractual clause as a restriction of

competition by object

34 It must first of all be recalled that, to come within the prohibition laid down in Article 101(1) TFEU, an

agreement must have ‘as [its] object or effect the prevention, restriction or distortion of competition within

the internal market’. It has, since the judgment in Case 56/65 LTM [1966] ECR 235 been settled case-

law that the alternative nature of that requirement, indicated by the conjunction ‘or’, leads, first, to the need

to consider the precise purpose of the agreement, in the economic context in which it is to be applied.

Where the anticompetitive object of the agreement is established it is not necessary to examine its effects

on competition (see Joined Cases C‑501/06 P, C‑513/06 P, C‑516/06 P and C‑519/06 P

GlaxoSmithKline Services and Others v Commission and Others [2009] ECR I‑9291, paragraph 55

and the case-law cited).

35 For the purposes of assessing whether the contractual clause at issue involves a restriction of competition

‘by object’, regard must be had to the content of the clause, the objectives it seeks to attain and the

economic and legal context of which it forms a part (see GlaxoSmithKline and Others v Commission

and Others, paragraph 58 and the case law cited).

36 The selective distribution contracts at issue stipulate that sales of cosmetics and personal care products by

the Avène, Klorane, Galénic and Ducray brands must be made in a physical space, the requirements for

which are set out in detail, and that a qualified pharmacist must be present.

37 According to the referring court, the requirement that a qualified pharmacist must be present at a physical

sales point de facto prohibits the authorised distributors from any form of internet selling.

38 As the Commission points out, by excluding de facto a method of marketing products that does not

require the physical movement of the customer, the contractual clause considerably reduces the ability of

an authorised distributor to sell the contractual products to customers outside its contractual territory or

area of activity. It is therefore liable to restrict competition in that sector.

39 As regards agreements constituting a selective distribution system, the Court has already stated that such

agreements necessarily affect competition in the common market (Case 107/82 AEG‑Telefunken v

Commission [1983] ECR 3151, paragraph 33). Such agreements are to be considered, in the absence of

objective justification, as ‘restrictions by object’.180



40 However, it has always been recognised in the case-law of the Court that there are legitimate

requirements, such as the maintenance of a specialist trade capable of providing specific services as

regards high-quality and high-technology products, which may justify a reduction of price competition in

favour of competition relating to factors other than price. Systems of selective distribution, in so far as they

aim at the attainment of a legitimate goal capable of improving competition in relation to factors other than

price, therefore constitute an element of competition which is in conformity with Article 101(1) TFEU

(AEG‑Telefunken v Commission, paragraph 33).

41 In that regard, the Court has already pointed out that the organisation of such a network is not prohibited

by Article 101(1) TFEU, to the extent that resellers are chosen on the basis of objective criteria of a

qualitative nature, laid down uniformly for all potential resellers and not applied in a discriminatory fashion,

that the characteristics of the product in question necessitate such a network in order to preserve its quality

and ensure its proper use and, finally, that the criteria laid down do not go beyond what is necessary (Case

26/76 Metro SB‑Großmärkte v Commission [1977] ECR 1875, paragraph 20, and Case 31/80

L’Oréal [1980] ECR 3775, paragraphs 15 and 16).

42 Although it is for the referring court to examine whether the contractual clause at issue prohibiting de facto

all forms of internet selling can be justified by a legitimate aim, it is for the Court of Justice to provide it for

this purpose with the points of interpretation of European Union law which enable it to reach a decision

(see L’Oréal, paragraph 14).

43 It is undisputed that, under Pierre Fabre Dermo‑Cosmétique’s selective distribution system, resellers are

chosen on the basis of objective criteria of a qualitative nature, which are laid down uniformly for all

potential resellers. However, it must still be determined whether the restrictions of competition pursue

legitimate aims in a proportionate manner in accordance with the considerations set out at paragraph 41 of

the present judgment.

44 In that regard, it should be noted that the Court, in the light of the freedoms of movement, has not

accepted arguments relating to the need to provide individual advice to the customer and to ensure his

protection against the incorrect use of products, in the context of non-prescription medicines and contact

lenses, to justify a ban on internet sales (see, to that effect, Deutscher Apothekerverband, paragraphs

106, 107 and 112, and Case C‑108/09 Ker‑Optika [2010] ECR I-0000, paragraph 76).

45 Pierre Fabre Dermo‑Cosmétique also refers to the need to maintain the prestigious image of the products

at issue.

46 The aim of maintaining a prestigious image is not a legitimate aim for restricting competition and cannot

therefore justify a finding that a contractual clause pursuing such an aim does not fall within Article 101(1)

TFEU.

47 In the light of the foregoing considerations, the answer to the first part of the question referred for a

preliminary ruling is that Article 101(1) TFEU must be interpreted as meaning that, in the context of a

selective distribution system, a contractual clause requiring sales of cosmetics and personal care products

to be made in a physical space where a qualified pharmacist must be present, resulting in a ban on the use

of the internet for those sales, amounts to a restriction by object within the meaning of that provisionwhere, following an individual and specific examination of the content and objective of that contractual

clause and the legal and economic context of which it forms a part, it is apparent that, having regard to the181



properties of the products at issue, that clause is not objectively justified.

The possibility of a block exemption or an individual exemption

48 If it is established that an agreement or contractual clause restricts competition within the meaning of

Article 101(1) TFEU, it will be for the referring court to examine whether the conditions in paragraph 3 of

that article are met.

49 The possibility for an undertaking to benefit, on an individual basis, from the exception provided for in

Article 101(3) TFEU derives directly from the Treaty. It is not contested in any of the observations

submitted to the Court. That possibility is also open to the applicant in the main proceedings.

50 However, in that regard, given that the Court does not have sufficient information before it to assess

whether the selective distribution contract satisfies the conditions in Article 101(3) TFEU, it is unable to

provide further guidance to the referring court.

51 As regards the possibility that the selective distribution contract may benefit from the block exemption of

Regulation No 2790/1999, it should be noted that the categories of vertical agreements that are eligible

have been defined by the Commission in that regulation, on the basis of the Council’s authorisation

contained in Council Regulation No 19/65/EEC of 2 March 1965 on the application of [81(3)] of the

Treaty to certain categories of agreements and concerted practices (OJ, English Special Edition 1965-

1966, p. 35).

52 Under Articles 2 and 3 of Regulation No 2790/1999, a supplier, in the context of a selective distribution

system, may, in principle, benefit from an exemption, where its market share does not exceed 30%. It is

apparent from the documents before the Court that Pierre Fabre Dermo‑Cosmétique’s market share does

not exceed that threshold. However, that regulation, pursuant to Article 2 of Regulation No 19/65, has

excluded certain types of restrictions that have severely anticompetitive effects, irrespective of the market

share of the undertakings concerned.

53 Hence, it follows from Article 4(c) of Regulation No 2790/1999 that the exemption is not to apply to

vertical agreements which directly or indirectly, in isolation or in combination with other factors under the

control of the parties, have as their object the restriction of active or passive sales to end users by

members of a selective distribution system operating at the retail level of trade, without prejudice to the

possibility of prohibiting a member of the system from operating out of an unauthorised place of

establishment.

54 A contractual clause such as the one at issue in the main proceedings, prohibiting de facto the internet as

a method of marketing, at the very least has as its object the restriction of passive sales to end users

wishing to purchase online and located outside the physical trading area of the relevant member of the

selective distribution system.

55 According to Pierre Fabre Dermo‑Cosmétique, the ban on selling the contractual products via the internet

is equivalent however to a prohibition on operating out of an unauthorised establishment. It submits that,

since the conditions for exemption laid down at the end of the provision, cited in paragraph 53, are thus

met, Article 4 does not apply to it.

182



56 It should be pointed out that, by referring to ‘a place of establishment’, Article 4(c) of Regulation No

2790/1999 concerns only outlets where direct sales take place. The question that arises is whether that

term can be taken, through a broad interpretation, to encompass the place from which internet sales

services are provided.

57 As regards that question, it should be noted that, as an undertaking has the option, in all circumstances, to

assert, on an individual basis, the applicability of the exception provided for in Article 101(3) TFEU, thus

enabling its rights to be protected, it is not necessary to give a broad interpretation to the provisions which

bring agreements or practices within the block exemption.

58 Accordingly, a contractual clause, such as the one at issue in the main proceedings, prohibiting de facto

the internet as a method of marketing cannot be regarded as a clause prohibiting members of the selective

distribution system concerned from operating out of an unauthorised place of establishment within the

meaning of Article 4(c) of Regulation No 2790/1999.

59 In the light of the foregoing considerations, the answer to the second and third parts of the question

referred for a preliminary ruling is that Article 4(c) of Regulation No 2790/1999 must be interpreted as

meaning that the block exemption provided for in Article 2 of that regulation does not apply to a selective

distribution contract which contains a clause prohibiting de facto the internet as a method of marketing the

contractual products. However, such a contract may benefit, on an individual basis, from the exception

provided for in Article 101(3) TFEU where the conditions of that provision are met.

Costs

60 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before

the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations

to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

Article 101(1) TFEU must be interpreted as meaning that, in the context of a selective

distribution system, a contractual clause requiring sales of cosmetics and personal care products

to be made in a physical space where a qualified pharmacist must be present, resulting in a ban

on the use of the internet for those sales, amounts to a restriction by object within the meaning

of that provision where, following an individual and specific examination of the content and

objective of that contractual clause and the legal and economic context of which it forms a part,

it is apparent that, having regard to the properties of the products at issue, that clause is not

objectively justified.

Article 4(c) of Commission Regulation (EC) No 2790/1999 of 22 December 1999 on the

application of Article 81(3) of the Treaty to categories of vertical agreements and concerted

practices must be interpreted as meaning that the block exemption provided for in Article 2 of

that regulation does not apply to a selective distribution contract which contains a clauseprohibiting de facto the internet as a method of marketing the contractual products. However,

such a contract may benefit, on an individual basis, from the exception provided for in Article

183



101(3) TFEU where the conditions of that provision are met.

[Signatures]

* Language of the case: French.

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One Step in the Right Direction – The NewHorizontal Guidelines and the Restated BlockExemption RegulationsClaudia Seitz*

I. IntroductionIn January 2011, the new guidelines on horizontalcooperation agreements and the restated block exemp-tion regulations on research and development and onspecialization and joint production of the EuropeanCommission entered into force. The aim of these newdocuments was to ‘bring more legal certainty’, to‘match market developments and respond to the needsof modern businesses’ and to ‘prevent competitionconcerns from arising from the outset, rather than onlyaddressing concerns ex-post’ commented the DirectorGeneral of the Directorate General for Competition,Alexander Italianer, a few weeks after the new guide-lines and regulations replaced the former documents.1

In addition to the goal to increase legal certainty theCommission intended to strengthen the innovation andcompetitiveness as well as to minimise agreements whichare anticompetitive. According to Commission Vice Pre-sident responsible for competition policy, JoaquınAlmunia, ‘one of the overarching goals of the new rulesis to contribute to the Commission’s Europe 2020 strat-egy, in particular by promoting innovation and competi-tiveness’ whereas the ‘new Guidelines and BlockExemption Regulations will give companies the necessaryfreedom to cooperate in a globalised market place, whileat the same time minimising the risk of agreements thatare harmful to industry and to consumers.’2

This article will give a short overview of the newdocuments and assess to what extent the goal of theCommission may be achieved by the new guidelinesand block exemption regulations.

For this purpose, the article will first outline the back-ground of the new guidelines and regulations and give ashort overview in this section, before summarising the

new block exemption regulations for research and devel-opment (Section II.A.) and for specialisation (SectionII.B). Then the new guidelines on horizontal cooperationwill be analysed in more detail in Section III. with aspecial focus on information exchange (Section III.A.)and standardisation (Section III.B.). This article will thenanalyse the practical consequences of these documents forcompanies in Section IV. with some specific remarks onthe block exemption regulations for research and devel-opment and for specialisation (Section IV.A.) as well ason the new chapters in the horizontal guidelines on infor-mation exchange (Section IV.B.) and standardisation(Section IV.C.). Finally, a critical analysis on the newdocuments in Section V. will conclude this article.

A. BackgroundOn 14 January 2011, the Commission’s revised guidelineson the application of Article 101 TFEU to horizontal

* Dr Claudia Seitz, MA (Kings College London), is a Partner at Seitz &Riemer Attorneys-at-Law, as well as a Lecturer of Law at the Universitiesof Basel, Switzerland and Constance, Germany. This article is based on aspeech delivered at the Competition Law Conference of the University ofBasel, Switzerland on 10 June 2011 on ‘Information Exchange inHorizontal Cooperations under European and Swiss Law’ and on aspeech delivered at SwissHoldings, Competition Law Section, in Berne.Comments can be sent to [email protected] or [email protected].

1 Speech of Directorate General for Competition, Alexander Italianer, atStudienvereinigung Kartellrecht Conference on 1 March 2011 in Brussels,‘Doing business in Europe: the review of the rules on cooperationagreements between competitors’, the speech is available at: http://ec.europa.eu/competition/speeches/text/sp2011_01_en.pdf.

2 Press Release of the European Commission, Commission adopts revisedcompetition rules on horizontal cooperation agreements, 14 December2010, IP/10/1702, ,http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/1702..

452 ARTICLE Journal of European Competition Law & Practice, 2011, Vol. 2, No. 5

# The Author 2011. Published by Oxford University Press. All rights reserved. For Permissions, please email: [email protected]

Key Points

† In its new approach to horizontal agreements,the Commission expands the range of efficiencyconsiderations that can be taken into account toassess practices.

† The objective is reached, partly at least, in theRegulation, which provides more clarity onissues important in that regard.

† But the Guidelines remain desperately vague –potentially causing a ‘chilling effect’ towards effi-cient practices and creating a risk that firms mayunconsciously engage in unlawful activities.

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cooperation agreements (‘Horizontal Guidelines’)3 werepublished in the Official Journal, along with the revisedblock exemption regulations on research and develop-ment (‘R&D BER’),4 and on specialization and joint pro-duction agreements (‘Specialisation BER’).5 The newHorizontal Guidelines replace the 2001 HorizontalGuidelines.6 The previous guidelines that serve as a fra-mework for horizontal cooperation agreements expiredon 31 December 2010.

The new block exemption regulations entered intoforce on 1 January 2011 with a two-year transitionalperiod, during which the former regulations remainin force for all agreements which meet the conditionsof these regulations but which do not fall under thenew rules. Agreements in these specific sectors areauthorised provided the companies concerned havelimited market power, which means a market shareof no more than 25 per cent for research and devel-opment agreements and 20 per cent for specialisationor joint production agreements.7

B. OverviewThe new Horizontal Guidelines provide an analyticalframework for assessing the most common types ofhorizontal cooperation agreements, such as researchand development, production, purchasing, commercia-lisation, standardisation, and information exchange.The two key features of the new Horizontal Guidelinesare a new chapter on information exchange and a sub-stantial revision of the chapter on standardisationagreements. The chapter on information exchange nowprovides general guidance in this area.8 Before the newHorizontal Guidelines entered into force companieshad only some sector-specific guidance for information

exchange concerning liner shipping, which was com-prised in the Maritime Guidelines of 2008.9

According to the Commission, the new documentsupdate the application of the general competition lawrules by the Commission to these specific forms ofagreements so that companies can better assess whethertheir agreements are in line with the EU Regulations,the Commission’s decisions and the jurisdiction of theEU Courts. To finalise these new documents the Com-mission launched a public consultation on 4 May 2010on the application of Article 101 TFEU to horizontalcooperation agreements, and published revised draftsof the Horizontal Guidelines and the new R&D BERand Specialisation BER for comments.

The basic approach of all revised documents—thenew block exemption regulations and the HorizontalGuidelines—is to give more detailed and clearer gui-dance for companies in the respective areas.10 Theamendments, innovations, and enhancements will nowbe assessed in more detail.

II. Restated Block ExemptionRegulationsBefore the new regulations entered into force guidancewas provided by two previous block exemption Regu-lations—the Commission Regulation (EC) No. 2659/2000 on Research and Development Agreements andthe Commission Regulation (EC) No. 2658/2000 onSpecialisation Agreements. The two block exemptionregulations exempt research and developmentcooperation as well as specialization and joint pro-duction agreements from the general ban on restrictivebusiness practices laid down in Article 101(1) TFEU,

3 Guidelines on the applicability of Article 101 of the Treaty on theFunctioning of the European Union to horizontal cooperationagreements, 2011/C 11/01, 14/01/2011, OJ 11/1–72, ,http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2011:011:0001:0072:EN:PDF..

4 Commission Regulation No 1217/2010 of 14 December 2010 on theapplication of Article 101(3) of the Treaty on the Functioning of theEurpean Union to categories of research and development agreements,18/12/2010, OJ L 335/36–42, ,http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:335:0036:0042:EN:PDF..

5 Commission Regulation No 1218/2010 of 14 December 2010 on theapplication of Article 101(3) of the Treaty to Categories of SpecialisationAgreements, 18/12/2010, OJ L 335/43–47, ,http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:L:2010:335:0043:0047:EN:PDF..

6 Commission Notice, Guidelines on the applicability of Article 81 of theEC Treaty to horizontal cooperation agreements (‘HorizontalGuidelines’), 2001/C 3/02, 6/1/2001, OJ C 3/2–28, ,http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=OJ:C:2001:003:0002:0030:EN:PDF..

7 For further information regarding the drafts, see Lubbig, Die Reform derEU-kartellrechtlichen Regeln uber die horizontale Zusammenarbeit,[2011] EWS 5–8; Drexl, Fruh, Mackenrodt, Picht, Pulyer, and Ullrich,

Comments of the Max Planck Institute for Intellectual Property,Competition and Tax Law on the Draft Commission Block ExemptionRegulation on Research and Development Agreements and the DraftGuidelines on Horizontal Cooperation Agreements, IIC (2010) 41, 948 –965.

8 Concerning a short comment on the Horizontal Guidelines, [seeCamesasca and Schmidt, ‘New Horizontal Guidelines: Providing HelpfulGuidance in the Highly Diverse and Complex Field of CompetitorCooperation and Information Exchanges’ 2011 JECLAP 227–229].

9 Council Regulation (EC) No 1419/2006 of 25 September 2006, i.e. linershipping services, cabotage and international tramp services’ (‘MaritimeTransport Guidelines’). For additional information to these guidelines,see Bermig and Ritter, ‘The new Guidelines on the application of Article81 of the EC Treaty to the maritime sector’ [2008] Competition PolicyNewsletter 25–9; Guersent, The Guidelines on Maritime TransportServices, Speech at the European Maritime Law Organisation,Copenhagen 24 Ocotber 2008, ,http://ec.europa.eu/competition/speeches/text/sp2008_12_en.pdf..

10 See Italianer, Speech at Studienvereinigung Kartellrecht Conference on 1March 2011 in Brussels, the available at: ,http://ec.europa.eu/competition/speeches/text/sp2011_01_en.pdf..

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provided they meet all the conditions set out in theseregulations.

A. Research and Development BlockExemption RegulationThe revised R&D BER which entered into force on1 January 2011 and expires on 31 December202211 replaces the former Block Exemption Regulationon Research and Development Agreements12 whichexpired on 31 December 2010. The objective of thenew R&D BER is to meet two requirements: ensuringeffective protection of competition and providing ade-quate legal security for undertakings.13 The objectivesshould take account of the need to simplify administra-tive supervision and the legislative framework to asgreat an extent as possible.14

One of the key elements of the R&D BER is theinsight that certain research and developmentcooperation activities by small enterprises will notdistort competition because of their small marketpower. Cooperation between competitors to jointlyundertake and subsequently exploit R&D activities inthis case may promote technical and economic pro-gress, especially where the parties contribute comp-lementary skills, assets, or activities to thecooperation.15 Thus, the R&D BER generally presumesfor the application of Article 101(3) TFEU that below acertain level of market power the positive effects ofresearch and development agreements will outweighany negative effects on competition.16

As before, the R&D BER provides an automaticexemption for joint research and development of pro-ducts or technologies, as well as the horizontal special-isation or joint exploitation of those results under thecondition that the parties’ combined market share inthe relevant product or technology market does notexceed 25 per cent.17 If the market share exceeds 25 percent, the exemption will last a further two years follow-ing the year the threshold of 25 per cent wasexceeded.18 If, however, the market share exceeds 30per cent, the exemption will persist for one furtheryear only. Another condition is that where the R&D

agreement provides only for joint R&D, the partiesmust agree to give access to each others’ pre-existingknowledge.

The new R&D BER is characterised by the widerscope of its application. Most of the changes andamendments of the new R&D BER will provide moreclarity and legal certainty.19 The new regulation nowcovers not only activities carried out jointly by theinvolved companies but considers also so-called ‘paid-for research agreements’. These sorts of agreementscover arrangements where one party merely financesthe research carried out by another company. The R&DBER is based on the presumption of the Commissionthat joint research and development activities havepositive effects, especially in cases where the parties donot have market power.

Besides that, the possibility to jointly exploit theresults of R&D activities has been extended. Parties toan R&D activity can now profit from the exemptionwhere only one party sells the contract products on thebasis of an exclusive licence by the other party.

Moreover, the revised R&D BER takes into account‘patent ambush’ cases. The Commission noted that aparty’s intellectual property rights shall not undulyimpair the exploitation of the results of an R&D agree-ment by the other parties and therefore an exemptionunder the new R&D BER should be available if prior tostarting the R&D activity all parties agree that they willdisclose in an open and transparent manner their exist-ing and pending intellectual property rights relevantfor the exploitation of the results by the other parties.20

B. Specialisation Block Exemption RegulationThe revised Specialisation BER also entered into forceon 1 January 2011 and replaces the former Specialis-ation Block Exemption Regulation which expired alsoon 31 December 2010. The new Specialisation BERclarifies that the benefit of exemption may also applyeven when one of the parties to the agreement onlypartly ceases its production. This enables a companythat has two production plants for a certain product toclose down one of its plants and outsource the output

11 Article 9 R&D BER.

12 Commission Regulation (EC) No 2659/2000 of 29 November 2000 on theapplication of Article 81(3) of the Treaty to categories of research anddevelopment agreements, OJ L 304, 5/12/2000, 7.

13 R&D BER, para. 4.




17 Article 4, para. 2 R&D BER.

18 The Commission noted at the time the new R&D BER entered into forcethat ‘with a 25% market share threshold, R&D agreements are the most

favourably treated category of horizontal agreements as such agreementscan lead to substantial efficiencies because they stimulate innovation’,MEMO/10/676, para. 3/4.

19 MEMO/10/676, para. 14.

20 MEMO/10/676, para. 14. The Commission noted in this context that ishas ‘become apparent during the public consultation that there is nopractical need for such a disclosure obligation as, in particular, potentialpatent ambushes in the context of R&D agreements can be adequatelyaddressed by the parties through private contractual agreements.’

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of the closed plant while still benefiting from theexemption under the Specialisation BER.

The new provisions also introduce a second marketshare threshold where the agreement concerns inter-mediary products. It provides that, where the productsconcerned by a specialisation or joint productionagreement are intermediary products which one ormore of the parties use for the production of certaindownstream products which they also sell, the exemp-tion is conditional upon a 20 per cent market sharethreshold downstream. In case of a higher marketshare such a specialisation or joint production agree-ment should not benefit from an exemption under theSpecialisation BER since there may be a potential riskof closing off inputs for competitors at the level of thedownstream products. In this case an individualassessment according to Article 101(3) TFEU isrequired.

The Specialisation BER provides ‘safe harbours’ forcertain specialisation and joint production agreementsbelow the market share threshold from the scope ofArticle 101 TFEU. In general three ‘safe harbours’ canbe identified: (i) unilateral specialisation agreements,where one party agrees to cease or refrain from pro-duction and purchase the product from another party;(ii) reciprocal specialisation agreements, where two ormore parties agree reciprocally to cease or refrain fromproduction of certain different products and purchasethem from another party; and (iii) joint productionagreements, where two or more parties agree toproduce certain products jointly.

III. New Horizontal GuidelinesOn 4 May 2010 the Commission published draft regu-lations and guidelines for the assessment ofcooperation agreements between competitors.21 Thenew Horizontal Guidelines22 replace the 2001 Horizon-tal Guidelines and contain two new elements: theformer Guidelines did not deal with the exchange ofinformation between competitors and the new Hori-zontal Guidelines amend the chapter on standardis-ation agreements.

In the new Horizontal Guidelines the Commissionacknowledges that horizontal cooperation can lead tosubstantial economic benefits, in particular if theycombine complementary activities, skills, or assets.23

Horizontal cooperation can be a measure to sharerisk, save costs, increase investments, pool know-how,enhance product quality and variety, and launchinnovation faster.24 On the other hand, however, hori-zontal cooperation agreements may lead to compe-tition problems—for example if the parties agree tofix prices or output, to share markets, or if thecooperation enables the parties to maintain, gain, orincrease market power—and thereby is likely to giverise to negative market effects with respect to prices,output, innovation, or the variety and quality ofproducts.25

A. Information ExchangeInformation exchange among competitors is one of themost sensitive and critical area of competition law andrequires a careful consideration of all aspects. Agree-ments or concerted practices which have as their objector effect the prevention, restriction, or distortion ofcompetition constitute a competition law infringementaccording to Article 101(1) TFEU.26 Thus, as a generalrule, commercially sensitive information must not beexchanged with competitors, since companies mustoperate independently of their competitors. Thisgeneral rule, however, is not easy to assess in all cases.In the light of increasing fines, companies and theirlegal advisors have frequently complained that theylack sufficient official guidance on how to structureinformation exchange without running the risk ofinfringing competition law.27 The chapter on infor-mation exchange is a new element in the 2011 Hori-zontal Guidelines.28 The problems in connection withexchange of information between competitors,however, form a classic area of legal uncertainty. Assuch, the question of the permissibility of informationexchange has been discussed since several decades.29

Before the new Guidelines entered into force,companies looking for guidance might consult the

21 Berg/Koebele, Round Up, [2010] JECLAP 444; Lubbig, ‘Die Reform derEU-kartellrechtlichen Regeln uber die horizontale Zusammenarbeit’[2011] EWS 5; Mohlenkamp, ‘Informationsaustausch alsWettbewerbsbeschrankung—Kriterien und Beweislast’, FIW,Wettbewerbspolitik und Kartellrecht, 2010, 209.

22 Gehring/Mager, ‘Kartellrechtliche Grenzen von Kooperationen zwischenWettbewerbern—Neue Leitlinien der EU-Kommission’, [2011] DerBetrieb 398.

23 Horizontal Guidelines, para. 2.



26 Jones, ‘Left behind by modernisation?—restrictions by object underArticle 101(1)’ [2010] European Competition Journal 649.

27 Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’ [2011] KSzW 87–94.

28 Wagner-von Papp, ‘Who is’t that can inform me?—The Exchange ofIdentifying and Non-Identifying Information’ [2007] ECLR 264.

29 For example Carle and Johnsson, ‘Benchmarking and E. C. CompetitionLaw’ [1998] ECLR 74; Feldkamp, ‘StatistischeMarktinformationsverfahren und das europaische Kartellrecht’ [1991]EuZW 617; Wagner-von Papp, ‘Wie “identifizierend’ durfenMarktinformationsverfahren sein?’ [2005] WuW 732.


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Guidelines on the application of Article 81 of the ECTreaty to Maritime Transport Services (Maritime Trans-port Guidelines)30 which provided a framework forinformation exchange within the sector of maritimetransport.31 However, this general framework was con-tained in a sector-specific context which lead to thequestion whether the chapter on information exchangewas of general applicability.32 While it was generallyassumed that this guidance would be applicable toinformation exchanges in other sectors as well, theexact degree of transferability remained a matter forspeculation.33

The Horizontal Guidelines now explicitly state thatcertain forms of information exchange may have, initself, the object of restricting competition and thatsuch information exchanges are not covered by theguidelines. This distinction between restriction byobject or effect has recently been emphasised by the ECJin T-Mobile34 and the Commission refers to this dis-tinction in the new Horizontal Guidelines by focusingon agreements and practices having the object, ratherthan the effect, or restricting, distorting, or preventingcompetition. The Horizontal Guidelines make it clearthat information exchanges which are restrictive byobject are not covered by the Horizontal Guidelines,since these practices are per se illegal. Thus there is, inaddition, no need to carry out analytical assessments inthese cases in order to determine whether or not theexchange of information is caught by Article 101 TFEU.

Whereas information exchange may lead to substan-tial economic benefits, exchange may also, undercertain circumstances, have the effect of reducing orremoving uncertainty as to the future behaviour of themarket players, with the result that competitionbetween undertakings is restricted. A restriction ofcompetition may occur if certain circumstances arepresent, such as a concentrated market structure andexchanges of commercially sensitive information.

† The market structure is to be assessed in view of thelevel of concentration and the structure of supplyand demand, notably the number of competitors,the symmetry, and stability of their market sharesand the existence of structural links between them.

† Whether information is sensitive depends on its ageand the period to which it relates, its aggregated orindividualised nature and the frequency of theexchange. It also depends on whether the infor-mation is public or not, although in some casespublic information may be enhanced or combinedor made more accessible in a way that makes itsensitive.

The exchange of historic data is unlikely to lead to acollusive outcome as it is unlikely to be indicative ofthe competitors’ future conduct or to provide acommon understanding on the market.35 The Horizon-tal Guidelines give no guidance to the question wheninformation can be considered as ‘historical’. Accord-ingly, the historical or recent nature of the informationneeds to be assessed on a case-by-case basis with regardto all other factors in the relevant market. In thiscontext the Commission noted in the HorizontalGuidelines that the three key factors—age, level ofaggregation, and frequency—will be assessed by theCommission as a whole rather than separately, becausesome factors may have an impact on others.

B. StandardizationAccording to the growing role of industry standards tofacilitate innovation, the revised chapter on standardis-ation in the new Horizontal Guidelines sets out the cri-teria under which the Commission will not take issuewith a standard-setting agreement. The chapter reflectsmore than ten years of experience with standardizationagreements. The revised chapter on standardization islonger and more precise than the correspondingchapter in the 2001 Horizontal Guidelines. The newprovisions clarify in detail how to assess the compat-ibility of standard setting systems with Article 101TFEU.

The new chapter supports a standard-setting systemthat is open, transparent, and fair and increases as suchthe transparency of licensing costs for intellectual prop-erty rights as a basis for standards, like patents. Forthis reason the new Horizontal Guidelines set out therules for standard setting systems on ‘fair, reasonableand non-discriminatory terms’, the so-called FRAND

30 Guidelines on the application of Article 81 of the EC Treaty to MaritimeTransport Services, 2008/C 245/02, OJ C245/2, 26/9/2008, paras 38–59,para. 41 et seq.

31 Before the Maritime Transport Guidelines entered into force in 2008parties of a cooperation agreement had to consult the Commission’s 7th

Report on Competition Policy 1977. See Wagner-von Papp, ‘DraftGuidelines on the Applicability of Article 101 TFEU to HorizontalCooperation Agreements’ [2010] JECLAP 422–424.

32 The scope of the Maritime Transport Guidelines was limited to theassessment of ‘cooperation agreements in those maritime transport

services directly affected by the changes brought about by CouncilRegulation (EC) No 1419/2006 of 25 September 2006, i.e. liner shippingservices, cabotage and international tramp services’ (Maritime TransportGuidelines, para. 1).

33 Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’ [2010] KSzW, 87–94.

34 Case C-8/08 T-Mobile [2009] ECR I-4529.



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criteria.36 According to the new Horizontal Guidelines,an effective standard-setting process should take placein a non-discriminatory, open, and transparent way soas to ensure competition on the merits and to allowconsumers to benefit from technical development andinnovation.37 One of the key elements of the standard-ization chapter is on effective access to standard-settingprocedures and to intellectual property rights whichprovide certain technology in order to implementadopted standards.

The new and revised chapter on standardisationdefines some criteria under which standardisation agree-ments will not be considered as anticompetitive and assuch defines some ‘safe harbours’ for industry practice.With a view to providing clear and useful guidance, theCommission adopted this ‘safe harbour’ approach: if thestandard-setting process complies with the defined prin-ciples, it should normally not fall within Article 101(1)TFEU whereas standard setting processes that do notremain within the ‘safe harbour’ are not presumed to beillegal.38 Outside the ‘safe harbours’ companies arerequired to analyse the standard-setting conditions in aself-assessment according to Article 101(3) TFEU.

The revised chapter defines as the two most impor-tant conditions for safe harbour exceptions underArticle 101(1) TFEU the faith disclosure of intellectualproperty rights for the standardisation technology aswell as access to standards according to the FRANDconditions. For the ‘safe harbour’ exception the criteriaare (i) the requirement of unrestricted access and par-ticipation of all interested companies;39 (ii) transpar-ency and the good faith disclosure of standard-essential IPR’s;40 (iii) the voluntariness of participationin the standardization technology;41 and (iv) access tothe standard on FRAND terms.42,43

In addition, the revised chapter on standardisationprovides detailed guidance on standardisation agree-ments that do not fulfil the criteria for ‘safe har-bours’ and will be considered anticompetitive underArticle 101 TFEU. As such the two most importantelements of the standardization chapter cover the‘safe harbour’ standardization agreements on the onehand and on the other hand the effects-based assess-ment of standardisation agreements outside the scopeof the ‘safe harbour’ exception.

IV. Practical consequences forcompaniesA. Block Exemption Regulations on R&D andSpecialisationIn general the revised new block exemption regu-lations—the R&D BER and the Specialisation BER—contain useful clarifications in comparison to theformer versions of these guidelines. As such they willbring additional value to the companies and their advi-sors and create ‘safe harbours’ for certain defined typesof research and development agreements as well asspecialisation agreements which are covered by therevised block exemption regulations.

Specialisation block exemption regulationAs such the revised block exemption regulations definecertain ‘safe harbours’ for an exemption from Article101 TFEU. These ‘safe harbours’ provide companieswith a degree of legal certainty. Outside the scope ofthe ‘safe harbours’ there is, however, no presumptionthat agreements will automatically be consideredanticompetitive under Article 101 TFEU. In this case,agreements need to be assessed individually on a case-by-case basis to determine whether they will fall withinthe exceptions of Article 101(3) TFEU.

The self-assessment in this case depends on the rel-evant market as well as on the possibility of illustratingthat each of the cumulative conditions of Article101(3) TFEU—efficiency gains, indispensability, pass-on of benefits to consumer, and no elimination ofcompetition—is met. Regarding efficiency gains, theSpecialisation BER recognises that specialisation andjoint production agreements may have a pro-competi-tive effect if they permit parties to benefit from econ-omies of scale that would not have been available toeach party individually. Cooperation may also result inimproved production technology and an improvedproduct quality.

The condition of indispensability, however, couldcreate a hurdle for companies in the self-assessmentprocess. The Specialisation BER states that joint com-mercialisation of products could be considered as pro-blematic. In cases where a joint commercialisationof products cannot be shown as indispensable for

36 Barthelmeß and Gauß, ‘Die Lizenzierung standardessentieller Patente imKontext branchenweit vereinbarter Standards unter dem Aspekt des Art.101 AEUV’ [2010] WuW 626–36; Layne-Farrar, Padilla and Schmalensee,‘Pricing Patents for Licensing in Standard-Setting Organizations: MakingSense of FRAND Commitments’ [2007] 74 Antitrust Law Journal 671.

37 See Schellingerhout and Cavicchi, ‘Patent ambush in standard-setting: theCommission accepts commitments from Rambus to lower memory chiproyalty rates’ [2010] 1 Competition Policy Newsletter 32, 36.

38 See van der Walle de Ghelcke, ‘The Commissions New Guidance onStandardisation’ [2010] JECLAP 352–355.





43 See van der Walle de Ghelcke, ‘The Commission’s New Guidance onStandardisation’ [2010] JECLAP 352–355.


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achieving efficiency gains, this could create some uncer-tainty as to the question of whether the agreement maybe exempted or not.

In order to fulfil the condition of passing-on benefitsto consumers the specialisation or joint productionagreement must grant consumers a fair share of thebenefit resulting from the efficiency gains. This shouldbe easy to prove if the agreement leads to lower pricesor better quality of the products. Finally, the agreementmust not eliminate competition in respect of a substan-tial part of the products.

R&D Block Exemption RegulationThe revised R&D BER exempts several research anddevelopment agreements from the general prohibitionunder Article 101(1) TFEU.44 As such there are several‘safe harbours’ for companies in this area, which com-prise agreements for (i) the carrying out of jointresearch and development; (ii) agreement for jointresearch and development combined with an agreementfor joint commercialisation of joint research and devel-opment results; (iii) agreements that provide commer-cialisation by one party under an exclusive licence; and(iv) agreements which oblige one party to carry outresearch and development work for the other party.

B. Information exchangeThe practical implications of the new HorizontalGuidelines on information exchange differ regardingthe form of information exchange. There are too manyforms of information exchange depending on thevarious industries and the companies to build cat-egories for all of them. The typical practices of directinformation exchange, however, may include forexample (besides direct discussions between competi-tors or through trade associations) different forms ofinformation exchange such as data exchange throughblack box systems, market specific panels, distributionpanels, industry research, governmental sources,customs data, or field force surveys. How different theforms of information exchange may be even in thesetraditional forms of exchange will be illustrated on thebasis of the following examples of some typical formsof information exchange.

Black box data exchange systemsThe procedure referred to with this term is the market-size assessment based on actual sales numbers on a pre-determined schedule. Sometimes it is set-up by specificassociations or, if independently, by a group of compa-

nies representing the biggest share of the market. Theparticipating companies provide their sales numbers ina predefined structure to a trustee who compiles themarket value report accordingly. The individualcompany would be able to identify its own sharewithin the total market and each partition of the struc-ture in this report. In this specific case of dataexchange, entering information where a company canlearn about market share, sales volume, or price infor-mation from individual competitors is not allowed.

Panel exchange systemsPanel exchange systems refer to the data collection byan industry association or a private market researchcompany. The exchange system may return informationabout products, product application, and eventuallyqualitative information. The market research companyis either contracted by an open group of companiesinterested in this type of data or has actively sold itsoffer to a number of companies. The number of com-panies participating is mainly limited to the biggerplayers due to the rather high investment required.

Distribution panelThis sort of information exchange system refers to datacollection at distributor or retailer level, usually doneby a market research company. The information col-lected can be looking at sales volumes or stock levels atdifferent levels of detail (brand, product category, etc.).This information can be grouped by product, producttypes or selling companies, depending on the contrac-tual agreements.

Industry researchThis procedure refers to a data collection process con-ducted by consultants or market research firms. Duringthis process the consultants or firms gather marketinformation from various sources (manufacturers, dis-tributors, associations, advisors, consultants, customersetc.). The information collected may target differentlevels of detail (total market, sector values, specificvalues, key products, etc.). Through a process of cross-comparing, aggregation, and disaggregation the marketresearch firms synthesise a market picture at a sales ofconsumption level.

Government sourcesIn some industries national statistical bureaus mayconduct specific surveys for certain products or servicesas well. The purchase or use of specific products orservice could be the subject of or part of these surveys.

44 Article 2(1) of the R&D BER.


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Results are usually published by the governmentalsource and some results are generally made available tothe public.

Customs dataIn addition, in some industries, national customs keepsrecords on the export and import of specific products.The trade balance plus eventual domestic sales can givea good indication of the overall market value in salesterms. Depending on the availability of customs data,detailed conclusions on manufacturing or distributingcompanies as well as on product type or even activeingredients might be revealed.

In all of these typical forms of information exchangeit is evident that it is illegal to exchange informationwhich would be considered commercially sensitive orsecret or to allow access to individualised competitiveinformation. It is also critical to make use of non-public information (sources) and to exchange infor-mation on future market or market share developmentexpectations. Because of the limited aggregation of sen-sitive information, it is also not permissible to enterinto an exchange of information if it is substantiallyrestricted to a limited number of participants only. Itis also clearly not permissible to grant access to indivi-dualised competitive information, to make use of non-public sensitive information and to exchange infor-mation on future market or market share development.

However, there are a various specific questions relat-ing to the specific form of exchange. In the case of dataexchange through a black box data exchange system, forexample, the question may arise whether there isenough data aggregation granted by a system whichdoes not allow the parties to learn about market share,sales volume, or price information from individual com-petitors. The panel exchange system may raise the ques-tion of whether the number of companies participatingin this exchange system is too limited or whether restric-tion to the bigger players may lead to concerns. Inaddition any form of investment or any other form ofpayment in order to acquire the information may leadto the question of whether this information may still beconsidered as public information since several—at leastsmaller—companies may not be able to afford theseinvestment and, as a result, will be excluded from thisinformation. Due to the rather high investmentrequired, companies run the risk that the exchange maybe considered as non-public information which mightnot be available to all competitors on the market.

While there are some information exchanges that areclearly permissible, and some information exchangesthat are clearly anticompetitive and therefore prohib-ited, cases which do not fall into one of these categoriesare difficult to assess. These cases fall into the so-called‘grey zone’.45 While the Horizontal Guidelines explainsome examples of illegal information exchange—whichare rather easy to assess since they constitute forms ofanticompetitive information exchange—the new Hori-zontal Guidelines give few examples of what can be con-sidered as pro-competitive and legal informationexchange. Thus, the competitive assessment of infor-mation exchanges may not be straightforward.46

In addition, besides these traditional types of infor-mation exchanges there are various other forms of infor-mation exchange which are not covered by the newHorizontal Guidelines but which are of practical impor-tance. One area of information exchange which is notexplicitly covered by the new Horizontal Guidelines isinformation exchange in the context of M&A projects,especially in the context of due diligence activities orduring the phase between signing and closing. It is clearthat ‘gun jumping’ is not allowed, however, the questionremains how the closing of a deal may be preparedwithout any information exchange between the involvedcompanies of a merger.

There is no indication in the text of the new Horizon-tal Guidelines that, for example, during due diligence pro-cesses the Horizontal Guidelines will not apply or at leastwhat kind of information is exchangeable in the contextof merger deals. This means that as a general rule compe-titors should not exchange sensitive information such as,for example, prices, discounts, conditions of supply,profit margins, cost structures, calculation practices, dis-tribution practices, territories, and customers. Otherforms of information gathering during a due diligenceprocess, such as information on the future strategies ofthe target as well as other data required to evaluate thetarget are not easy to assess under the new HorizontalGuidelines. In this case the Commission should take intoaccount when assessing such cases that there may be legit-imate business reasons for this form of ‘exchange’ whichmay not be anticompetitive. This approach, however, willnot help the parties of merger at the time of merger nego-tiations and notifications.

C. StandardisationThe new chapter on standardisation agreements is sub-stantially revised and amended. The new chapter now

45 See Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’ [2010] KSzW 87.

46 Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’, [2010] KSzW 87, 88.


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comprises—when compared to the chapter in theformer guidelines—helpful clarifications. In addition, itcontains ‘safe harbour’ conditions under Article 101(1)TFEU which, together with the new clarifications,create real value for companies.

Although the new chapter results in considerableadvantages there are still some open questions. It isunclear, for example, whether the FRAND rules willapply for small standard-setting groups in the same way.And there is no indication in the new chapter regardingthe consequences under Article 101 TFEU if one of theparticipations of a standardisation agreements fails tolicense the technology on FRAND terms. From a legalpoint of view this could lead to a violation of Article101 TFEU, which could lead to the standardisationagreement being nullified according to Article 101(2)TFEU. In practice, however, this would not help greatly,if the standard is already widely applied by companies.In addition there are not many indications for self-assessment in cases where a standardisation agreementfalls outside the scope of a ‘safe harbour’. If the stan-dardisation agreement falls within Article 101(1) TFEU,it could be exempted under Article 101(3) TFEU. Unfor-tunately, the guidance on this point is rather limited andoften repeats general priniciples that were discussedunder the section on Article 101(1) TFEU.47

V. Critical analysis and conclusionsA. Critical analysisRestated block exemption regulationsIn general the Specialisation BER and the R&D BER donot represent a radical departure from the previous regu-latory regime for specialisation and joint productionagreements and for research and development agree-ments. The scope of the exemptions, however, is broaderthan the exemptions provided under the previous blockexemption regulations. For R&D agreements, forexample, the new R&D BER applies also to paid R&Dservices which were not covered by the former regulation.The former regulation also did not clearly extend theexemption to agreements providing for the commerciali-sation of the results by one party only, based on an exclu-sive licence.

Besides this useful extension of the scope of ‘safeharbours’ the amendments of the regulations are rela-tively minor in nature. They could be considered asupdates of the previous practice of the Commission

rather than a wholesale change of the applicable rules.Therefore, companies that are familiar with the pre-vious block exemption regulations should not find itdifficult to navigate the revised Specialisation BER andR&D BER in general.

Horizontal GuidelinesThere is no doubt that horizontal cooperation agreementssuch as information exchanges can lead to efficiencies andpro-competitive effects. The new Horizontal Guidelinesnotice that ‘horizontal cooperation agreements can lead tosubstantial economic benefits, in particular if theycombine complementary activities, skills or assets’.48 Theyascertain further that ‘horizontal cooperation can be ameans to share risk, save costs, increase investments, poolknow-how, enhance product quality and variety, andlaunch innovation faster’.49 Thus, horizontal cooperationagreements are also not regarded as per se illegal by therevised Horizontal Guidelines. However, in order to bringthese pro-competitive effects and efficiencies to live legalcertainty is required.

Without this legal certainty companies will still runthe risk of infringing competition law which will resultin heavy fines and severe other consequences in the formof high compensation claims. In this context, it is alogical consequence that companies tend to be overcau-tious. This leads to a scenario which is affected by ‘overcompliance by companies. This, on the other hand, willimplicate less efficiencies and pro-competitive effects.

A solution would have been the introduction ofcertain de-miminis thresholds, at least for agreementswithout any restriction by object. It may be the case thatinformation exchange which is based on legitimatebusiness reasons and which do not restrict competitionby object may not have any anti-competitive effect and,thus, may be unproblematic from a competition lawpoint of view. It should be sufficiently clear, for example,that information exchange is permissible where undertak-ings in an atomistic market that do not collectivelycontrol a large market share want to aggregate their infor-mation about the development of consumer demand fora certain product, so as to arrive at significant industrystatistics.50 In this context the new Horizontal Guidelinesnotice that ‘if the parties have a low combined marketshare, the horizontal cooperation agreement is unlikely togive rise to restrictive effects on competition with themeaning of Article 101(1) and, normally, no furtheranalysis will be required’. This notice, however, does notgives sufficient official guidance on how to assess what is

47 See van der Walle de Ghelcke, ‘The Commissions New Guidance onStandardisation’ [2010] JECLAP 352–355.



50 Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’ [2010] KSzW 87–94.


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meant by ‘a low combined market share’. The new Hori-zontal Guidelines do not give any indication on thisspecific question.

The Guidelines further state ‘what is considered tobe a “low combined market share” depends on the typeof agreement in question’. In this respect the HorizontalGuidelines refer to the De Minimis Notice.51,52 Thequestion is whether the ‘low combined market share’for horizontal cooperation agreements is the same asmentioned in the De Minimis Notice or whether it ishigher for such kind of agreements. If the market shareis the same then the new Horizontal Guidelines do notbring extra value, since the thresholds are already estab-lished in the De Minimis Notice. If the thresholds arehigher, then the question still remains: what is meantby a ‘low combined market share’.

It seems, however, that it may be not the same, sincethe new Horizontal Guidelines notice that ‘if one ofjust two parties has only an insignificant market shareand if it does not possess important resources, even ahigh combined market share normally cannot be seenas indicating a likely restrictive effect on competition inthe market’.53 Thus, the notice in the HorizontalGuidelines is logical: ‘Given the variety of horizontalcooperation agreements and the different effects theymay cause in different market situations, it is not poss-ible to give a general market share threshold abovewhich sufficient market power for causing restrictiveeffects on competition can be assumed’.54 This is alogical consequence but does not provide legal cer-tainty. This could lead to a situation where companiesmay not agree on efficient horizontal cooperationagreements above the thresholds of the De MinimisNotice.

Besides the lack of any de minimis thresholds beyondthe De Minimis Notice, the new chapter on informationexchange does not provide additional ‘safe harbours’for certain forms of information exchange. Neither dothe guidelines define what is meant, for example, by‘historic information’ or which level of ‘aggregation’ isnot considered as problematic, nor do the new Hori-zontal Guidelines give any indication on the questionwhat is really meant by ‘public information’. Therefusal to establish ‘safe harbours’ leads to the resultthat the new chapter on information exchange could be

regarded as largely worthless in the eyes of the prac-titioner.55

Another critical area seems to be the publicannouncement of company information. Where acompany announces publicly, for example in the inter-net or via the press, its future strategy on new pro-ducts, capacity, or pricing, this could be regarded as aform of information exchange, since competitors coulduse this information to adapt their own capacity orpricing strategy accordingly. Not every publicannouncement of company information, however, maybe anticompetitive. There are often legitimate businessreasons behind the announcement such as, forexample, the publication of a price list of distributorsof a specific product. Competition authorities need toconsider carefully in this case whether the publicationof certain company information is clearly anticompeti-tive.

These examples illustrate the difficulties in establish-ing ‘hard and fast rules’ which apply in all cases ofinformation exchange. In practice it is sometimes diffi-cult to distinguish between information exchange thatis anticompetitive and will restrict competition on theone hand and information exchange that could providea transparency to the market which is actually pro-competitive with some benefits for competition and theconsumer.

It is clear that transparency in the market couldsupport tacit collusion, coordination within a cartel,and monitoring compliance with a cartel. Knowledgeof a competitor’s strategies on pricing or capacityremoves the uncertainty in the market that underpinscompetition. As such, information exchange has itsassets and drawbacks: information exchange can beboth—depending of the circumstances of each case—pro-competitive and anticompetitive. On the one handit is a basic element of benchmarking and competition,on the other hand it may lead to massive anticompeti-tive results, such as anticompetitive agreements or col-lusive behaviour up to hard core restrictions. Thismakes it very difficult to establish clear-cut rules forthe assessment of information exchange in guidelineswhich are generally applicable. From an analyticalpoint of view, the difficulties in assessing informationexchange between competitors are based on the

51 Commission Notice on agreements of minor importance which do notappreciably restrict competition under Article 81(1) of the Treatyestablishing the European Community (de minimis) OJ C 368, 22/12/2001, 13-15.

52 See Horizontal Guidelines, para. 44.


54 See Horizontal Guidelines, para. 44.

55 Wagner-von Papp, ‘Information Exchanges in the Draft HorizontalCooperation Guidelines’ [2010] KSzW 87, 91. However, Wagner-vonPapp does not consider this as a ‘damning critique on the Guidelines’,since the ‘factors determining the harmfulness of information exchangesare “compensatory” in that there is no single factor which cannot becompensated by other factors, alone or in combination’.


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‘janus-face’ of market transparency, which also cannotbe clearly categorised as pro- or anticompetitive.

B. ConclusionsIndeed, the new and revised chapters in the HorizontalGuidelines as well as the revised block exemption regu-lations are clearly a step in the right direction to theextent that they provide additional guidance. This gui-dance, however, does not remove the uncertainty com-pletely and gives advice to a certain extent only. Ingeneral, the Commission is adopting a more conserva-tive stance. The guidelines simply provide a generalanalytical framework, which should be adapted to theparticular circumstances in a given case. Although thedocuments comprise some examples, the guidelines aremeant to provide indications regarding the reasoningand relevant factors only.

Clearly, the Commission seemed to be anxious andtried to avoid making any specific statements regarding‘safe harbours’ or further de minimis thresholds thatcould be seen as specific ‘safe harbours’. Instead, thetone adopted is somewhat uncommitted and the sub-stance goes no further than what has already been estab-lished by existing policy, Commission decisions andcase law from the EU Courts. Maybe one of the reasonsfor this is that the Commission sought to eliminate thecreation of ‘loopholes’ by defining provisions that aretoo specific but which could not comprise all possiblecases of information exchange. This means that thereare no hard and fast rules which could be easily appliedto all cases in daily business. The assessment is stillfocused on a case-by-case analysis of each singleinstance.

Although it is fundamentally important for compa-nies to be familiar with the revised rules wheneverthey cooperate with competitors and while mistakescan have potentially severe consequences, the newdocuments may not be precise enough to clearlyassess the question of whether a cooperation isallowed in a specific case or not. The differencebetween permissible cooperation and an illegal cartelcan often be quite difficult to discern. In this respect,as Director General Alexander Italianer commentedon the new Horizontal Guidelines ‘most of the timecompetitors compete, but cooperation can neverthe-less be key in developing and marketing existing ornew products’,56 it is a good sign. A clear legal assess-ment in any one single case, however, may remaindifficult if not impossible.

This means for the companies that there still remainsome cases of information exchange which are notclearly identifiable as anti- or pro-competitive. As such,companies that participate in information exchange arestill walking on thin ice. This creates ‘chilling effects’which may lead to ‘over compliance’ by the companies.As such, efficiencies which could be created by someforms of cooperation may never come into existence.This should be kept at the back of one’s mind whenassessing cases under the revised guidelines and regu-lations. As such the new documents are one step in theright direction since they try to give more guidance - itremains to whish that there will be further steps in thisdirection in the near future.

doi:10.1093/jeclap/lpr061Advance Access Publication 14 September 2011

56 Speech at Studienvereinigung Kartellrecht Conference on 1 March 2011in Brussels, the speech is available at: ,http://ec.europa.eu/competition/speeches/text/sp2011_01_en.pdf..


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The New Technology Transfer Block Exemption under EC Competition Law

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The New Technology Transfer BlockExemption under EC Competition Law

By Cyril Ritter*

Abstract

This article looks at the recently published new EC block exemption regula-tion for ‘technology transfer’ agreements1 (a term that covers many, thoughnot all, intellectual property licensing agreements) and the accompanyingGuidelines.2 The purpose of this paper is to (a) discuss the importance of IPlicensing in the broader economic context (what degree of market powershould be conferred on licensors?); (b) set out the general scheme of the newsystem introduced by the technology transfer block exemption; (c) examinespecific types of restraints; and (d) identify the key changes introduced by thenew technology transfer block exemption, compared to the old one.

1. The broader picture

Under EC competition law, Article 81(1) of the EC Treaty prohibits anti-competitive agreements unless they can be saved under Article 81(3), whichprovides for a rule of reason approach based on four cumulative conditions.Broadly, the efficiency gains resulting from the agreement must outweigh itsanti-competitive effects. All agreements falling within the scope of Article81(1) are void, i.e. unenforceable, unless they benefit from the exemption inArticle 81(3) (e.g., one the many sector-specific ‘block exemptions’).

Until 1 May 2004, the European Commission (‘the Commission’) couldissue ‘individual exemptions’ when parties notified their agreement.3 Since 1May 2004, however, the Commission is no longer granting individual exemp-tions.4 Hence the importance of self-assessment under the block exemptions inorder to ensure that licensing agreements are valid and, thus, enforceable. Ifthe agreement is drafted so as to comply with the requirements of a blockexemption regulation, it is automatically exempted and thus lawful under Ar-

Legal Issues of Economic Integration 31(3): 161–184, 2004.© 2004 Kluwer Law International. Printed in the Netherlands.

* Morrison & Foerster, Brussels. E-mail: [email protected]. Commission Regulation no. 772/2004, [2004] OJ L 123/11.2. [2004] OJ C 101/2.3. Council Regulation no. 17, [1962] OJ P 13/204, English Special Edition: Series I, Chapter

1959-1962, page 87.4. Council Regulation no. 1/2003, [2003] OJ L 1/1 (the ‘modernisation’ regulation).

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ticle 81.5 If not, a party may claim that the agreement is unlawful in order toescape his contractual obligations (and possibly claim damages from the otherco-contractor under the Courage v. Crehan case-law).6 In the worst-case sce-nario, the parties may also face legal action by the Commission leading tofines.

Virtually any company may be involved in such litigation, regardless of thegeographic nexus of the agreement at issue. The only test for applicability ofArticle 81 is whether the agreement affects trade between Member States. Themore upstream the technology, the more likely it is that the agreement willmeet the test – as it is sufficient for trade between Member States to bepotentially affected.7

Until 1 May 2004, technology transfer agreements were block exemptedunder certain conditions by Regulation 240/96 (‘the old TTBE’),8 which waswidely seen as a ‘dinosaur awaiting extinction’. It was impractical, very restric-tive and prescriptive, unnecessarily complex and above all it was not in linewith the Commission’s latest economic thinking – as formulated in the Guide-lines on vertical restraints,9 for instance. The Commission has recentlyadopted a new, simpler TTBE10 which applies since 1 May 2004. The entryinto force of the new competition rules for technology transfer agreementscoincides with the enlargement, the reform of procedural rules11 and the re-form of merger control rules.12 It is understood that the Commission is nowturning its sights on the review of its policy in the area of Article 82.13

The purpose of this paper is to (a) discuss the importance of IP licensing inthe broader economic context; (b) set out the general scheme of the newsystem introduced by the TTBE; (c) examine specific types of restraints and

5. The fact that an agreement is block exempted does not preclude the application of Art. 82 EC:see case T-51/89 Tetra Pak I (the ‘BTG license’ case) [1990] ECR I-309.

6. See case C-453/99 Courage v. Crehan [2001] ECR I-6297, where the European Court of Justice(‘ECJ’) ruled that, despite the principle of in pari delicto, a party to an anti-competitive agree-ment cannot be barred from claiming damages from his co-contractor where the claimant doesnot bear ‘significant responsibility’ for the restriction of competition, particularly where inpractice the terms of the contract were imposed on him by the other party. On 21 May 2004,the UK Court of Appeal awarded damages to Mr Crehan: see Crehan v. Inntrepreneur, [2004]EWCA Civ 637.

7. See case 42/84 Remia, para. 22.8. Commission Regulation no. 240/96, [1996] OJ L 31/2.9. [2000] OJ C 291/1.10. Commission Regulation no. 772/2004, [2004] OJ L 123/11.11. Council Regulation no. 1/2003, [2003] OJ L 1/1 and Commission Regulation no. 773/2004,

[2004] OJ L 123/18.12. Council Regulation no. 139/2004, [2004] OJ L 24/1 and Commission Regulation no. 802/

2004, [2004] OJ L 133/1.13. Where the Commission is currently caught in a whirl of Court cases (the Wanadoo appeal (T-

340/03), the Microsoft appeal (T-201/04), the IMS judgment (C-418/01), the GlaxoSmithKlinecase (C-53/03) (preliminary reference), and the Van den Bergh Foods appeal (C-552/03)).

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(d) identify the key changes introduced by the new TTBE, compared to theold one.

2. Competition law versus intellectual property law

It has been argued that there is an inherent contradiction between IP law andcompetition law. While IP law seeks to reward the rightholder for his/hercreative efforts by granting him/her a temporary monopoly,14 competition lawaims to create more competition in the market, for the benefit of consumersand society at large. IP protection is meant to compensate – and thereforeencourage – investment in R&D, while competition law aims to bring aboutbetter allocation of resources (i.e., increased productivity), better distributionof wealth within society (i.e., increased consumer welfare), and, crucially, bet-ter products (in terms of innovation).15 Far from recognising any divergencebetween IP law and competition law, the guidelines accompanying the newTTBE stress the convergence between the two:

14. One needs to recognize, however, that the current tendency towards more IP (and thereforeweak, undeserving IP) may actually be harmful to the economy, as patents are used as bargainingchips (‘patent thickets’) or to ‘ambush’ competitors in order to either block them from manufac-turing a certain device or collect exorbitant royalties (‘submarine patents’). Invalid IP stiflesinnovation rather than promoting it.

15. On the goals of antitrust, see Williamson, ‘Allocative Efficiency and the Limits of Antitrust’,AMERICAN ECONOMIC REVIEW PAPERS & PROCEEDINGS 105-118, May 1969; Pitofsky, ‘The Politi-cal Content of Antitrust’, 127 UNIVERSITY OF PENNSYLVANIA LAW REVIEW 1051 (1979); Schwartz,‘‘Justice’ and Other Non-Economic Goals of Antitrust’, 127 UNIVERSITY OF PENNSYLVANIA LAW

REVIEW 1076 (1979); Fox, ‘The Modernization of Antitrust: A New Equilibrium’, 66 CORNELL

LAW REVIEW 1140 (1981); Lande, ‘Wealth Transfers as the Original and Primary Concern ofAntitrust: The Efficiency Interpretation Challenged’, 34 HASTINGS LAW JOURNAL 65 (1982);Baker and Blumenthal, ‘The 1982 Guidelines and Preexisting Law’, 71 CALIFORNIA LAW REVIEW

311 (1983); Fox, ‘The 1982 Merger Guidelines: When Economists Are Kings?’, 71 CALIFORNIA

LAW REVIEW 281 (1983); ‘Hovenkamp, Antitrust Policy After Chicago’, 84 MICHIGAN LAW

REVIEW 213 (1985); Easterbrook, ‘Workable Antitrust Policy’, 84 MICHIGAN LAW REVIEW 1696(1986); Brodley, ‘The Economic Goals of Antitrust: Efficiency, Consumer Welfare, and Tech-nological Progress’, 62 NEW YORK UNIVERSITY LAW REVIEW 1020 (1987); Fox, ‘The Battle for theSoul of Antitrust’, 75 CALIFORNIA LAW REVIEW 917 (1987); Lande, ‘The Rise and (Coming) Fallof Efficiency as the Ruler of Antitrust’, 33 ANTITRUST BULLETIN 429 (1988); Lande, Chicago’sFalse Foundation: Wealth Transfers (Not Just Efficiency) Should Guide Antitrust’, 58 ANTI-TRUST LAW JOURNAL 631 (1989); Crampton, ‘Alternative Approaches to Competition Law: Con-sumers’ Surplus, Total Surplus, Total Welfare and Non-Efficiency Goals’, 17 WORLD COMPETI-TION 56 (March 1994); Furse, ‘The Role of Competition Policy: A Survey’, 4 EUROPEAN

COMPETITION LAW REVIEW 255 (1996); Averitt and Lande, ‘Consumer Sovereignty: A UnifiedTheory of Antitrust and Consumer Protection Law’, 65 ANTITRUST LAW JOURNAL 713 (1997);Lande, ‘Proving the Obvious: The Antitrust Laws Were Passed to Protect Consumers (Not Justto Increase Efficiency)’, 50 HASTINGS LAW JOURNAL 959 (1999); Lande, ‘Consumer Choice Asthe Ultimate Goal of Antitrust’, 62 UNIVERSITY OF PITTSBURGH LAW REVIEW 503 (2001); and thevarious contributions in Ehlermann and Laudati (eds.), EUROPEAN COMPETITION LAW ANNUAL

1997: OBJECTIVES OF COMPETITION POLICY (Hart Publishing, 1998).

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‘Innovation constitutes an essential and dynamic component of an openand competitive market economy. Intellectual property rights promotedynamic competition by encouraging undertakings to invest in develop-ing new or improved products and processes. So does competition byputting pressure on undertakings to innovate. Therefore, both intellec-tual property rights and competition are necessary to promote innovationand ensure a competitive exploitation thereof.’16

While this is no doubt true, it circumvents the issue of how to strike the rightbalance between rewarding innovators and protecting competition. In a recentarticle, Mr Peeperkorn – one of the authors of the new TTBE – asked preciselythis question but failed to provide an answer. The key to this problem may beto recognise that in the short term, there is a contradiction between staticefficiency (low prices) and dynamic efficiency (innovation). The issue here isnot to determine which one is more important, for most economists seem tobe in agreement that dynamic efficiency is more important than static effi-ciency.17 (One might argue, however, that dynamic efficiency is more impor-tant than static efficiency only in markets where technological progress is rapid– whereas static efficiency should take precedence in technologically stablemarkets.) The real issue is how to work out a trade-off between low prices andinnovation. The logical rule of thumb, it is submitted, is that restrictions ofcompetition must be accepted only to the extent necessary to safeguard innova-tion.

16. Guideline 7.17. See Peeperkorn, ‘IP Licences and Competition Rules: Striking the Right Balance’, 26 WORLD

COMPETITION 527 (2003), at 532: the view that innovation, as opposed to static efficiency (lowprices), is the main source of increases in economic welfare is ‘generally accepted and wellsubstantiated’.

See also Singh, ‘Competition and Competition Policy in Emerging Markets: Internationaland Developmental Dimensions’, UNCTAD/Harvard University Center For International De-velopment, G-24 Discussion Paper No. 18, 2002 (pointing to ‘the need to emphasise dynamicrather than static efficiency as the main purpose of competition policy’); Posner, ‘Antitrust in theNew Economy’, ANTITRUST LAW JOURNAL (2001); Baumol, ‘When is Inter-Firm CoordinationBeneficial? The Case of Innovation’, 19 INTERNATIONAL JOURNAL OF INDUSTRIAL ORGANIZATION

727 (2001); Porter, THE COMPETITIVE ADVANTAGE OF NATIONS, pp. 18-30; Porter, Presentationto the ABA Fundamental Theory Task Force, Washington, D.C., January 11, 2001; Briggs andScheelings, ‘Taking dynamics seriously in competition regulation’, in Lal et al., AUSTRALIAN

COMPETITION POLICY: DEREGULATION OR REREGULATION? (Institute of Public Affairs, Melbourne,1998) pp. 27-37; Brodley, ‘The Economic Goals of Antitrust: Efficiency, Consumer Welfareand Technological Progress’ 62 NEW YORK UNIVERSITY LAW REVIEW 1020 (1987), at 1026:‘Innovation efficiency or technological progress is the single most important factor in the growthof real output in the United States and the rest of the industrialized world. Indeed, studies haveshown that over the forty-year period from the late 1920s to the late 1960s, at least half of thegain in United States output was due solely to technological and scientific progress’ [citingScherer and Ross, INDUSTRIAL MARKET STRUCTURE AND ECONOMIC PERFORMANCE, 2nd ed., 1980,p. 407].

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In this regard, Mr Peeperkorn put forward a crucial argument: IP rights, heargues, are but one means of protecting a company’s technological advance.The prospect of large profits is the main incentive to innovate, and IP does notconstitute the only means to protect these profits. Consequently, one can usecompetition law to erode the market power granted by IP rights withoutfearing a slump in R&D investment and innovation.

That is precisely what other authors have in mind: weakening R&D invest-ment as a result of overzealous enforcement of competition laws.18 This iswhere IP licensing comes in. A significant proportion of inventions are theproduct of small companies or even individuals who do not have the expertiseor equipment to manufacture their invention on a large scale. Rightholdersneed to license their IP right in order for the product to reach the market. Thisleads to more efficient production of the products incorporating the IP (i.e.lower production costs and possibly lower prices for consumers) and less dupli-cation of R&D efforts. Naturally, rightholders/licensors want to obtain themaximum possible financial advantage from the license agreement (by impos-ing restrictions on the licensee). If the contractual terms of the license do notallow the rightholder to recoup his/her investment – because competition lawprohibits certain restrictions on the licensee – R&D will be discouraged.19

Hence the need to find the right balance between rewarding the right-holder and safeguarding competition in the market. There are three importantpoints in this respect:

(1) Korah argues that EC law should not only be indulgent towards IP licens-ing; it should be less stringent than U.S. antitrust law in this area.20 As thethree major economic blocs compete for R&D, their competition laws areplaced in competition with each other. Competition between legal rules isnot uncommon: managers incorporate their company in the jurisdictionsthat have the lowest minimum capital requirements and the weakest cor-porate governance rules. Companies tend to relocate to jurisdictionswhere they enjoy a lower corporate tax rate. Similarly, research-intensiveindustries will tend to relocate to jurisdictions where they enjoy morefreedom in terms of IP licensing – or so the theory goes. This argumentfails to take account of the fact that investment in R&D depends on other

18. See Korah, ‘Draft Block Exemption for Technology Transfer’, 25 EUROPEAN COMPETITION LAW

REVIEW 247 (2004).19. Dolmans and Piilola make a similar point in ‘The Proposed New Technology Block Exemption’,

26 WORLD COMPETITION 541 (2003). They argue that unlike the Vertical Restraints BlockExemption, which ‘concentrates on protecting a distributor’s investments’, the TTBE shouldprotect not only the licensee’s investment (which requires at least as much protection as adistributor’s investments) but also the licensor’s investment in R&D.

20. See Korah, ‘Draft Block Exemption for Technology Transfer’, 25 EUROPEAN COMPETITION LAW

REVIEW 247 (2004), at 261: ‘It is vital that our competition law should not be more restrictivethan theirs’.

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factors than competition law and IP law. The most R&D-intensive coun-tries in the world have achieved this level of performance because of theirskilled workforce, a stable and predictable legislative environment, thequality of their public institutions, their workforce productivity, the qual-ity of their transport and telecommunications infrastructure, a favourablebusiness environment, and their favourable macroeconomic conditions.21

Consequently, the principle that competition law should safeguard com-petition only in so far as it does not jeopardize R&D and innovationneeds to be qualified: one should keep in mind that R&D and innovationdepend to a significant extent on other factors than competition and IPlaws.

(2) One needs to make a distinction between intra-technology restraints andinter-technology restraints.22 While it seems perfectly acceptable to ex-empt intra-technology restrictions from competition rules (in order tomaximize the licensor’s and licensee’s profits), it also seems that creatingmore intra-technology competition would lead to increased inter-technol-ogy competition. If a certain product is competitively priced at the retaillevel, it will put pressure on other manufacturers to improve their prod-ucts. In other words, intense intra-technology competition spurs furtherinter-technology competition.23 Therefore, the idea that innovation com-petition necessitates high profits for the licensor through intra-technologyrestrictions is not as sounds as it seems. Therefore, the EU approach to

21. See the various factors of assessment in the World Economic Forum’s annual global competitive-ness index (http://www.weforum.org/gcr).

22. Intra-technology restraints are contractual restrictions between the licensor and the licenseewhich limit the freedom of action of one party (or both parties) as regards the licensed technol-ogy. These types of restrictions are considered ‘intra-technology’ because their aim is to preservea high price level for the particular technology in question. Examples of intra-technology re-straints include: ‘field of use’ restrictions, whereby one party may only exploit the technology ina particular technical area or product market; restrictions on active and passive sales by exclusivelicensees into each other’s exclusive territory; clauses whereby licensors are restricted as to thenumber of licenses they may grant; and captive use obligations, whereby the licensor imposes onthe licensee an obligation to only use the technology for its own internal use (i.e. the licensorprevents the licensee from selling products incorporating the licensed technology).

By contrast, inter-technology restrictions aim to either restrict competition between technolo-gies or shut out competing technologies from the market. Examples of ‘inter-technology restric-tions’ include: reciprocal cross-licensing of competing technologies; non-compete clauses,whereby the licensee undertakes not to sell competing technologies; and limitations on thelicensee’s freedom to use or develop his own technology.

23. See Guideline 26. See also ‘IP Licences and Competition Rules: Striking the Right Balance’, 26WORLD COMPETITION 527 (2003), at 539, where Peeperkorn puts forward three other argumentsto the effect that restrictions on intra-technology competition should be kept to what is strictlyessential: intra-technology restrictions remove any competitive pressure on the licensee to im-prove its cost level; reduced intra-technology competition facilitates collusion; and territorialprotection through intra-technology restrictions is designed to engage in discriminatory pricing,which is – in principle – harmful.

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intra-technology restrictions is – quite rightly – more stringent than theU.S. approach: under the U.S. Guidelines, the parties can restrict intra-technology competition as much as they like, provided that the agreementas a whole brings about more competition than there would be in theabsence of the agreement. In the EU, proportionality is the guiding prin-ciple: the parties should only restrict intra-technology competition to theextent necessary to conclude the agreement (see Guideline 12(b)).

(3) Finally, it would be completely unacceptable to exempt inter-technologyrestrictions: rewarding one rightholder by exempting restrictive licenseterms cannot come at the expense of another technology (i.e. anotherrightholder). One may only rejoice at the thought of a situation whereinter-technology competition is so fierce that rightholders do not havesufficient market power to recoup their investment.

3. General scheme of the new system

Broadly, the new TTBE adopts the same approach as the block exemption forvertical agreements. Both were drafted by the same team of Commission offi-cials. The Guidelines accompanying the TTBE provide guidance as to theinterpretation of the TTBE and the proper assessment of agreements fallingoutside the scope of the TTBE.

Essentially, the TTBE provides for a ‘safe harbour’ for certain types of IPlicensing agreements, provided the parties do not exceed certain market sharethresholds and the agreement does not contain certain clauses.24 As a generalrule, clauses that do not fall within the category of ‘hardcore restrictions’ (theso-called ‘blacklisted’ clauses) or ‘excluded restrictions’ are block exempted.The TTBE provides that when an agreement contains a blacklisted clause, theagreement as a whole falls outside the scope of the TTBE, i.e. there is noseverability for hardcore restrictions. (One should make a distinction betweenseverability for the purpose of the block exemption and severability for thepurpose of enforceability of the agreement, which is a matter of nationalcontract law.)25 It is stated in the accompanying Guidelines that hardcore

24. This is in contrast with the approach under the old TTBE, where only certain clauses wereexempted. Hence the so-called ‘straitjacket’ effect.

25. See case 56/65 Société Technique Minière v. Maschinenbau Ulm [1966] ECR 235 at page 250:‘the automatic nullity in question only applies to those parts of the agreement affected by theprohibition, or to the agreement as a whole if it appears that those parts are not severable fromthe agreement itself’; case 319/82 Ciments et Bétons de l’Est v. Kerpen & Kerpen [1983] ECR4173, para. 12: ‘the automatic nullity decreed by art. [81(2)] of the treaty applies only to thosecontractual provisions which are incompatible with art. [81(1)]. The consequences of suchnullity for other parts of the agreement […] are not a matter for Community law. Those

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restrictions – which by definition do not benefit from the block exemption –are ‘unlikely’ to warrant individual exemption.26 The Court of First Instance,however, has ruled that in principle no anti-competitive practice can existwhich, whatever the extent of its effects on a given market, cannot be ex-empted, provided that all the conditions laid down in Article 81(3) are satis-fied.27

Another type of clauses does not benefit from the block exemption (‘ex-cluded’ clauses – Article 5 of the TTBE), but in contrast with hardcore restric-tions, excluded clauses do not cause the entire agreement to fall outside theblock exemption. This means that while the rest of the agreement may beblock exempted, an ‘excluded’ clause requires individual assessment under Art.81(3).

The benefit of the block exemption means that an agreement is per selawful. Agreements that fall outside the block exemption because the marketshare thresholds are exceeded are not necessarily illegal: they may be perfectlylawful and enforceable if the analysis shows that they are in compliance withArticle 81.28 For the purpose of the analysis under Article 81(3), a number offactors should be taken into account: the nature of the agreement, marketpower of the parties, buyer power, entry barriers, efficiency gains, etc…29

Agreements between competitors are subject to more stringent require-ments than agreements between non-competitors – in terms of market sharethresholds and ‘blacklisted’ clauses – because they are considered as inherentlymore dangerous. The first step of the analysis under the TTBE is therefore todetermine whether the parties to the agreement were competitors or non-competitors in the absence of the agreement (i.e. up until the agreement). Asregards the distinction between competitors and non-competitors, see below,section 4. Within the category of agreements between competitors, reciprocalagreements in particular are subject to a longer list of hardcore restrictionsthan non-reciprocal agreements.30

consequences are to be determined by the national court according to its own law’; and case 10/86 VAG France v. Magne [1986] ECR 4071, para. 15: ‘it is for the national court to determinein accordance with the relevant national law the extent and consequences, for the contractualrelations as a whole, of the nullity of certain contractual provisions by virtue of art. [81(2)]’.

26. Guideline 14.27. T-17/93 Matra [1994], para. 85. I.e., in theory, there is no per se prohibition in the sphere of

Art. 81 – unlike under U.S. law, where certain types of restraints are treated as per se illegal, andunlike under Art. 82 EC, where certain types of abuse are considered as per se illegal without anyinquiry into the actual effects of the abuse on the market.

28. Guidelines 37 and 65: ‘There is no presumption that technology transfer agreements fallingoutside the block exemption are caught by Art. 81(1) or fail to satisfy the conditions of Art.81(3).’

29. On the application of Art. 81(3) outside the ‘safe harbour’ of the TTBE, see the TechnologyTransfer Guidelines, Section 4, and the Commission Notice on Art. 81(3), [2004] OJ C 101/97.

30. As regards the definition of reciprocal and non-reciprocal agreements, see guideline 78: a recip-

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Scope of the block exemption

The new TTBE covers (a) patents, (b) copyrighted software and (c) know-how, i.e. non-patented information which is secret, identifiable, significant,and useful to the manufacture of the contract products. Although the newTTBE extends the scope of the block exemption to copyrighted software, itstill does not cover trademarks and copyrighted material other than software,unless they are ‘ancillary’ to the primary object of the agreement.31 This can beexplained by Article 1(1)(b) of Council Regulation 19/65 (the ‘Enabling Regu-lation’),32 which allows the Commission to adopt block exemptions for thelicensing of ‘industrial property rights’, as opposed to, presumably, intellectualproperty rights (i.e. copyright).

Agreements containing provisions relating to the purchase and sale of prod-ucts (i.e. distribution) are only covered by the TTBE to the extent that thoseprovisions do not constitute the ‘primary object’ of the agreement and are‘directly related’ to the licensed technology.33 There are two problems withthis approach: (a) the ‘primary object’ test can be difficult to carry out inpractice, e.g. in the case of wide-ranging strategic alliance agreements; and (b)it is unclear whether provisions on distribution which meet the two-prong testset out in Guideline 49 will be covered by the TTBE regardless of the restric-tions that they may contain.

Multiparty agreements not covered

The TTBE only covers agreements between two parties. Under the terms ofthe Enabling Regulation, the Commission may only grant block exemptionsfor IP licensing agreements between two parties. This means that multipartyagreements such as patent pools are not covered by the TTBE. However, (a)agreements whereby the pool as a whole licenses a bundle of technologies to alicensee may be covered, and (b) patent pools between two parties may also becovered (this would be considered as a cross-licensing agreement). Moreover,

rocal agreement is a cross-licensing agreement where the licensed technologies are competingtechnologies or can be used for the production of competing products. A non-reciprocal agree-ment is an agreement where (a) only one of the parties is licensing its technology to the otherparty or where (b) in case of cross-licensing the licensed technologies are not competing tech-nologies and cannot be used for the production of competing products.

See also in guideline 78: ‘In case at a later point in time a non-reciprocal agreement becomesa reciprocal agreement due to the conclusion of a second licence between the same parties, theymay have to revise the first licence in order to avoid that the agreement contains a hardcorerestriction.’

31. This, in effect, excludes the recording industry from the benefit of the TTBE.32. Council Regulation 19/65, English special edition of the OJ, Series I, Chapter 1965-1966, page

35, as amended by Council Regulation 1215/1999, [1999] OJ L 148/1.33. Guideline 49.

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with regard to multiparty agreements, ‘the Commission will apply by analogythe principles set out in the TTBE’.34 Clearly the limits laid down in theEnabling Regulation should not have any impact on the substantive assessmentof technology transfer agreements.

Other types of agreements not covered

The parties must be engaged in the provision of products or services incorpo-rating the licensed technology. This means that agreements that do not di-rectly relate to the supply of products, such as settlement agreements and non-assertion agreements, are not covered by the TTBE – unless the settlementagreement or non-assertion agreement in question is for the purpose of manu-facturing products.35 Similarly, ‘master licensing’ agreements whereby the li-censor grants the right to sub-license to a licensee are only covered if the sub-license does not constitute the primary object of the agreement.36

Interaction between the TTBE and other block exemptions

Whether a particular agreement is governed by the TTBE or by another blockexemption depends on the ‘primary object’ test. For instance, in the context ofagreements whose primary object is research and development, technologylicensing is covered by the R&D block exemption.37 One could imagine,however, that an agreement containing various sets of provisions dealing withcompletely different obligations (i.e. the different sets of provisions do notmeet the Guideline 49 test) could be subject to several block exemptions: eachpart of the agreement would be subject to the relevant block exemption, as ifthey were actually several agreements. It would be helpful if the Commissioncould acknowledge this possibility.

34. Guideline 40.35. Guideline 43: ‘The TTBER applies in all cases where technology is licensed for the purposes of

producing goods and services. It is sufficient in this respect that the licensor undertakes not toexercise his intellectual property rights against the licensee. Indeed, the essence of a pure patentlicence is the right to operate inside the scope of the exclusive right of the patent. It follows thatthe TTBER also covers so-called non-assertion agreements and settlement agreements wherebythe licensor permits the licensee to produce within the scope of the patent.’

36. Guideline 42: ‘The TTBER applies to [agreements] whereby the licensee is also permitted tosublicense the licensed technology to third parties provided, however, that the production ofcontract products constitutes the primary object of the agreement. Conversely, the TTBER doesnot apply to agreements that have sublicensing as their primary object. However, the Commis-sion will apply by analogy the principles set out in the TTBER and these guidelines to such‘master licensing’ agreements between licensor and licensee. Agreements between the licenseeand sub-licensees are covered by the TTBER.’

37. Commission Regulation no. 2659/2000, [2000] OJ L 304/7.

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Subcontracting/outsourcing

The TTBE covers subcontracting in so far as it is necessary for the subcontrac-tor. Where subcontracting involves both the supply of equipment by the licen-sor and the licensing of technology, the licensed technology, rather than thesupplied equipment, must constitute the ‘primary object’ of the agreement inorder for the agreement to be covered by the TTBE. Subcontracting agree-ments involving the transfer of equipment between the buyer and the subcon-tractor are covered by the 1979 Notice on Subcontracting Agreements.38 Cer-tain forms of subcontracting may also be subject to other block exemptions:R&D subcontracting, for instance, is subject to the R&D Block ExemptionRegulation.39 Where the buyer only provides specifications to the supplierwhich describe the goods or services to be supplied – the most common formof subcontracting –, subcontracting agreements between non-competitors arecovered by the Block Exemption Regulation on Vertical Agreements40 andsubcontracting agreements between competitors are covered by the Guidelineson Horizonal Agreements.41 Subcontracting agreements between competitorswhereby the contractor agrees to cease production of the product to which theagreement relates constitute unilateral specialisation agreements, which arenormally covered by the Block Exemption Regulation on Specialisation Agree-ments.42 Given the importance of outsourcing in today’s world and the com-plex regime that is applicable to subcontracting agreements under EC law, itwould be useful to consolidate the Commission’s approach to subcontractingagreements in a single document.

Duration of the block exemption

The previous TTBE applied a complex system whereby the duration of theblock exemption depended on each block exempted clause and on the natureof the agreement (e.g. a pure patent licensing agreement, a know-how licensingagreement, or a ‘mixed’ agreement). By contrast, the new TTBE simplifies therules on the duration of the exemption. The block exemption will be valid forthe whole agreement until the last IPR covered by the agreement expires (or,in the case of a know-how license, until the know-how is no longer secret). Ifthe parties exceed the market share thresholds, the agreement will remaincovered by the TTBE for two full years after the year in which the thresholdswere exceeded.43 The TTBE Regulation itself will last for 10 years.

38. [1979] OJ C 1/2.39. Regulation no. 2659/2000, [2000] OJ L 304/7.40. Regulation no. 2790/1999, [1999] OJ L 336/21.41. [2001] OJ C 3/2.42. Regulation no. 2658/2000, [2000] OJ L 304/3.43. Art. 8(2) of the TTBE.

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Transitional periods

The new TTBE entered into force on 1 May 2004. Agreements that compliedwith the ‘old’ TTBE at that date benefit from a ‘grace period’ of 23 months(i.e. until 31 March 2006 – when the old TTBE was due to expire) in order tobe amended so as to comply with the new TTBE. There seems to be anothergrace period of six months in respect of the new Member States: the Act ofAccession signed at Athens in 200344 amends the old TTBE (still in force atthat time) so that IP licensing agreements that fall foul of Article 81(1) byreason of the enlargement benefit from a six-month grace period.45

Withdrawal46 and non-application47 of the TTBE

Under the new TTBE, the Commission (and National Competition Authori-ties – to the extent that the relevant market does not exceed their nationalterritory)48 may withdraw the benefit of the block exemption to a network ofparallel agreements that contribute to foreclosing competing technologies (be-cause most licensees in the market are bound by a non-compete clause) orforeclosing potentially competing licensees (because licensors are restricted asto the number of licenses they may grant). The cumulative effect of the net-work of agreements is deemed to appreciably restrict competition where thenetwork covers more than 50% of a relevant (geographic and product) mar-ket.49

Whereas the Commission and the National Competition Authorities canwithdraw (Article 6) the benefit of the TTBE in respect of an agreement ornetwork of agreements, the Commission alone can disapply the TTBE in re-spect of a particular relevant product market and geographic market (Article 7)where competition is restricted because several networks of similar agreementscover more than 50% of a relevant market. The disapplication of the TTBE inrespect of a particular market will reinstate the full application of Articles81(1) and 81(3).

44. [2003] OJ L 236/33.45. Annex II.5.4 of the Act of Accession amends Art. 11 of Reg. 240/96 by adding the following

paragraph: ‘The prohibition in Art. 81(1) of the Treaty shall not apply to agreements whichwere in existence at the date of accession of [the new Member States] and which, by reason ofaccession, fall within the scope of Art. 81(1) if, within six months from the date of accession,they are so amended that they comply with the conditions laid down in this Regulation.’ It isunclear whether this amendment to Reg. 240/96 also applies to Reg. 772/2004, Art. 9 of whichprovides that ‘references to the repealed Regulation [i.e. Reg. 240/96] shall be construed asreferences to this Regulation.’

46. Art. 6 of the TTBE.47. Art. 7 of the TTBE.48. In accordance with Art. 29(2) of Regulation no. 1/2003, [2003] OJ L 1/1.49. Guideline 199.

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4. Distinction between competitors and non-competitors

As in the U.S. Guidelines,50 the distinction between competitors and non-competitors impacts the substantive assessment of the agreement. The distinc-tion is crucial under the new TTBE, as it determines which set of blacklistedclauses and which market share thresholds apply. The Guidelines provide use-ful guidance in this respect. Where the licensor and the licensee are both activeon the same product market51 and/or on the same technology market, they areconsidered as competitors. A contrario, this means that if one party is active ona product market and the other party is active on corresponding the technol-ogy market, the parties are considered non-competitors. If one of the twoparties merely owns a substitutable technology but does not license out histechnology, the parties will not be considered as competitors on the technol-ogy market (although they are arguably potential competitors). This is becausepotential competition is not taken into account on the technology market.52

They may still be competitors if they are both competing on the productmarket, however.

Where the parties to the agreement are not competitors at the time of theagreement but become competitors afterwards, they will be considered non-competitors anyway for the full life of the agreement unless the agreement issubsequently amended in any material respect.53

Blocking patents54

The Commission considers that where the parties hold one-way or two-wayblocking patents, they are non-competitors.55 It is up to the parties to provide‘convincing’ evidence of the existence of a blocking position, such as a finalcourt judgment or the opinion of an independent expert, particularly ‘wherethe parties may have a common interest in claiming the existence of a blockingposition in order to be qualified as non-competitors.’

50. See the 1995 DOJ/FTC Antitrust Guidelines for the Licensing of Intellectual Property (http://justice.gov/atr/public/guidelines/ipguide.htm).

51. The term ‘product market’ encompasses both product market definition and geographic marketdefinition.

52. Guideline 66. Therefore, one could imagine a relatively common situation where firm A manu-factures a product with its own technology, which it does not license out, and firm B owns asubstitutable technology but does not manufacture anything. If A and B were to conclude alicensing agreement, they would be considered as non-competitors (see Guideline 115).

53. Art. 4(3) of the TTBE and Guideline 31.54. A blocking position exists when a technology cannot be exploited without infringing upon

another technology.55. Guideline 32.

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‘Drastic innovations’

Where both parties own patents in the same field, they may nonetheless benon-competitors if one technology ‘represents such a drastic innovation’ thatthe other technology becomes obsolete or uncompetitive. However, this maynot always be clear at the time of the conclusion of the agreement. Therefore,‘if at the time of the conclusion of the agreement it is not obvious that thelicensee’s technology is obsolete or uncompetitive,’ the agreement will initiallybe assessed under the rules for competitors. If it turns out that one technologyis so innovative that it excludes the other technology, the agreement wouldthen be assessed under the rules for non-competitors.56 Here again there issome uncertainty as to the standard of proof that the parties need to meet inorder to show that they are non-competitors. In particular, it would be usefulto refer to the Commission’s 1997 Notice on the Definition of the RelevantMarket.57

5. The market share test

Among competitors, the block exemption applies only where the parties have acombined market share not exceeding 20% on each of the markets where theyare competitors.58 One could imagine that a technology has applications inseveral product markets or geographic markets. In this case, the block exemp-tion only applies to the markets where the threshold is not exceeded.59 Amongnon-competitors, the block exemption applies only if each party’s market sharedoes not exceed 30% on the affected technology and product market. Natu-rally, the Commission Notice on de minimis agreements remains available(where it is said that an agreement is deemed not to restrict competitionwithin the meaning of Article 81(1) if the combined market share of theparties does not exceed 10% on any of the relevant markets, where the partiesare competitors, or 15%, where the parties are non-competitors).60

For the purpose of calculating the market shares on the technology market,one should take into account the combined market share on the productmarket of the products incorporating the technology which are sold by thelicensor and all its licensees (as well as the products incorporating the licensee’sown technology, if the parties are competitors on the technology market). Asregards the share of the product market, it is calculated on the basis of each

56. Guideline 33.57. [1997] OJ C 372/5.58. Art. 3(1) of the TTBE and guidelines 69 et seq.59. Guideline 69 in fine.60. Commission Notice on agreements of minor importance which do not appreciably restrict

competition under Art. 81(1), [2001] OJ C 368/13.

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party’s sales of all its substitutable products on the relevant market, regardlessof the technology used.

Emerging technologies may become victims of their own success

In the case of emerging technologies that have not yet generated any sales, theshare of the technology market will initially be zero. As sales accumulate, sowill the technology’s market share. This may cause the agreement to fall out-side the safe harbour even though it was initially covered. Therefore, as atechnology becomes more successful, the licensing agreement also becomesvulnerable to an increased legal risk. If the technology represents a radicallyinnovative solution, it may create its own market and thus take a 100% marketshare within the first year. Note however that the agreement in this case willinitially be covered. Whether an agreement is covered by the TTBE dependson the market shares in the previous year.61 An agreement will remain coveredby the TTBE for two full years after the year in which the thresholds wereexceeded.

The Commission’s reliance on a market share test is likely to be problem-atic in fast-moving markets that are characterised by a series of sequentialmonopolies (‘Schumpeterian’ competition), where each existing monopolist isvulnerable to future technologies that are being developed. The acquisition ofa temporary monopoly is precisely what drives innovators to roll out radicallynew products. When Napster created the market for music downloads, fewpeople knew that within a few years Apple would capture a significant part ofthe market by launching iTunes and iPod. Similarly, both Napster and Apple’siTunes/iPod will be outdated when mobile operators roll out 3G handheldmini-computers/mobile phones that can download music directly from themajor music catalogues such as EMI, BMG, Sony Music, Universal Music,etc…

‘Second safe harbour’

Because of the fact that market shares do not always accurately reflect thedegree of competition in the market, the TTBE provides for a second safeharbour: where the parties exceed the market share thresholds, they will beable to benefit from a ‘presumption’ that their agreement is exempted if theycan demonstrate that at least four alternative ‘independently controlled’ substi-tutable technologies are available to users at a comparable cost.62 Again, this isin line with the U.S. Guidelines. It is likely that the analysis will turn on thecommercial strength/competitive impact of alternative technologies.

61. Art. 8(1) of the TTBE. See also the examples in Guideline 73.62. Guideline 131. This is merely a ‘presumption’. It is not codified in the TTBE Regulation.

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6. Specific types of restraints

As mentioned above, clauses that do not fall within ‘hardcore restrictions’ or‘excluded restrictions’ are block exempted. For the sake of clarity, however,certain types of clauses are explicitly mentioned in the TTBE and/or in theGuidelines as being block exempted (among competitors as well as amongnon-competitors). This system is in contrast with the previous TTBE: underthe old TTBE, an agreement had to contain certain clauses in order to benefitfrom the block exemption.

Exclusive territory or customer allocation

Among competitors, a clause prohibiting the licensor from licensing the tech-nology to another licensee in a particular territory is block exempted (in recip-rocal as well as non-reciprocal agreements).63 The fact that a party is the onlylicensee in a particular territory is of little practical effect, however, as thelicensee is still under threat from the licensor himself and from sales by otherlicensees into his territory. Therefore, in a non-reciprocal agreement, the par-ties may prohibit sales (including, possibly, passive sales)64 by one party intothe exclusive territory or to the exclusive customer group reserved for the otherparty.65 As regards protection from other licensees, and only in a non-recipro-cal agreement, the parties may prohibit active sales by the licensee into theexclusive territory or to the exclusive customer group allocated by the licensorto another licensee.66

Among non-competitors, active sales restrictions and passive sales restric-tions on the licensor, as well as active sales restrictions imposed on the licensee,are all block exempted.67 In addition, certain types of passive sales restrictionsimposed on the licensee are also block exempted, i.e. restrictions on passivesales into an exclusive territory or to an exclusive customer group reserved for

63. Art. 4(1)(c)(iii) of the TTBE.64. ‘Active’ sales means actively approaching individual customers inside another distributor’s exclu-

sive territory or exclusive customer group by mail, e-mail, visits, or specifically targeted advertis-ing. ‘Passive’ sales mean responding to unsolicited requests from individual customers who arelocated inside another distributor’s exclusive territory or exclusive customer group.

See also Guideline 98: ‘Passive sales restrictions on the licensee may be the result of directobligations, such as the obligation not to sell to certain customers or to customers in certainterritories or the obligation to refer orders from these customers to other licensees. It may alsoresult from indirect measures aimed at inducing the licensee to refrain from making such sales,such as financial incentives and the implementation of a monitoring system aimed at verifyingthe effective destination of the licensed products.’

65. Art. 4(1)(c)(iv) of the TTBE.66. Art. 4(1)(c)(v) of the TTBE (provided the latter was not a competing undertaking of the licensor

at the time of the conclusion of its own licence).67. Art. 4(2)(b) of the TTBE.

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the licensor or for another licensee (though only for a period of two years afterthis other licensee started selling the contract products in that territory or tothat customer group).68 ‘After the expiry of this two-year period restrictions onpassive sales between licensees constitute hardcore restrictions.’69

The block exemption of certain types of passive sales restrictions leads to acertain degree of ‘absolute territorial protection’. This warrants three com-ments.

(1) The reason for block exempting restrictions on active and passive sales toa certain extent is to avoid the ‘free-rider’ effect (whereby a licensee ‘free-rides’ on another licensee’s promotional efforts by selling into his terri-tory), which is likely to discourage the licensee from accepting the risk ofmaking and marketing the contract products in the first place.

(2) The treatment of passive sales under the TTBE is more permissive thanunder the Vertical Restraints Block Exemption.70 This is because (a) lic-ensees need greater protection from free riding than distributors: whereasdistributors are mere resellers, who only have to incur sales/marketingexpenses, licensees face much more significant costs, since they have toinvest in technological expertise, manufacturing capacity, transformingtheir equipment or buying new equipment, etc…, and (b) in the area oflicensing, there is greater scope for product differentiation and quality-based competition between licensees than in the case of vertical agree-ments for the resale of products.

(3) In certain industries, two years may not be enough to amortise the largecapital expenses incurred by the licensee. An arbitrary, ‘one-size-fits-all’two-year period may not be suitable for all industrial sectors. The analysisof how much protection is necessary (in terms of the duration of absoluteterritorial protection from other licensees) should be made on a case-by-case basis. The Commission itself has admitted that ‘the extent to whichfree riding is an issue depends’ on the specific situation in each case.71

Field of use restrictions

Field of use restrictions are considered as hardcore restrictions, except (a) fieldof use restrictions on the licensee (whether the agreement is reciprocal or

68. Art. 4(2)(b)(i) and (ii) of the TTBE. According to the Commission, restrictions on passive salesbetween licensees may even fall outside Art. 81(1) of the EC Treaty. The distinction betweenArt. 81(1) and Art. 81(3), however, is not as important under the ‘modernized’ regime as underthe old regime.

69. Guideline 101.70. Under the 1999 block exemption for vertical agreements, restrictions on passive sales are strictly

prohibited.71. See the Draft Guidelines on Technology Transfer Agreements, published in the OJ C 235/17 in

October 2003, Guideline 154.

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not),72 and (b) field of use restrictions on the licensor and/or the licensee(provided the agreement is non-reciprocal).73 It follows that (a) the only fieldof use restriction that is considered as ‘hardcore’ is a field of use restriction onthe licensor in a reciprocal agreement, and (b) if the licensor is subject to atotal and worldwide field of use restriction (in a non-reciprocal agreement),this amounts to an exclusive licence, implying that the licensor cannot exercisethe licensed rights and thus cannot enter or remain in the market.

Non-compete clauses

A non-compete obligation in the context of technology licensing is an obliga-tion on the licensee not to use third party technologies which compete withthe licensed technology. This type of clause clearly hinders inter-technologycompetition, though only in the presence of significant market power. There-fore, the TTBE exempts non-compete obligations both among competitorsand among non-competitors up to the market share thresholds of 20% and30% respectively.74

As regards restrictions on the licensee’s ability to use his own technologyand restrictions on either party’s ability to carry out R&D (among competi-tors), they are considered as ‘hardcore restrictions’, except where the licensee isprevented from carrying R&D in collaboration with third parties in order toprotect the licensor’s know-how.75 Among non-competitors, restrictions onthe licensee’s ability to use his own technology and restrictions on eitherparty’s ability to carry out R&D (subject to the same exception for R&D incollaboration with a third party) are considered as ‘excluded restrictions’,rather than ‘hardcore restrictions’.76 This means that such clauses among non-competitors require individual assessment while the rest of the agreement maybenefit from the block exemption.

Captive use obligations

Both among competitors and among non-competitors, an obligation on thelicensee to produce the contract products only for its own use is block ex-empted – provided that the licensee is not restricted in selling the contractproducts actively and passively as spare parts for its own products.77

72. Art. 4(1)(c)(i) of the TTBE.73. Art. 4(1)(c)(i) of the TTBE.74. Guideline 197.75. Art. 4(1)(d) of the TTBE and guidelines 94-95.76. Art. 5(2) of the TTBE.77. Arts. 4(1)(c)(vi) and 4(2)(b)(iii) of the TTBE.

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Price-fixing

Among competitors, any clause concerning price is blacklisted.78 This includesprice-fixing per se, charging minimum prices (‘resale price maintenance’),maximum prices, recommended prices as well as any financial incentive to doso. Among non-competitors, however, only price-fixing and minimum pricesare considered blacklisted (as well as indirect mechanisms designed to encour-age or enforce such prices).79 As with many other concepts in the TechnologyTransfer Guidelines, this is in line with the U.S. Guidelines (section 5.2),where resale price maintenance is treated as a per se restriction.

The Commission also believes that cross-licensing agreements with recipro-cal ‘running royalties’ (i.e. royalties based on product sales) should be carefullyexamined, for they may be a disguised means of coordinating prices on down-stream markets. This is because when competitors cross-license technologiesused in competing products on the basis of reciprocal running royalties, theparties eliminate price competition in respect of a certain proportion of thefinal price. The Commission’s approach to reciprocal running royalties haschanged significantly between the Draft Guidelines and final version of theGuidelines, however. In the Draft Guidelines, the Commission took the posi-tion that cross-licensing with reciprocal running royalties are blacklisted unlesseither the agreement leads to ‘a significant integration of complementary tech-nologies’, or no alternative basis – such as a lump sum payment or one-way netroyalty payments – for fixing royalties is reasonably available. By contrast, inthe final version of the Guidelines, the Commission says that it will only treatcross licenses with reciprocal running royalties as price fixing where the agree-ment is a sham arrangement without any valid business justification, in whichcase it would amount to a cartel.80

Limitation of output

Among non-competitors, a limitation of output is block exempted. Amongcompetitors, limitations on the output of contract products imposed on thelicensee are only block exempted if they are non-reciprocal. Reciprocal outputlimitations among competitors are considered as hardcore restrictions because

78. Art. 4(1)(a) of the TTBE.79. See the interpretation of Art. 4(2)(a) in guideline 97 (where indirect types of resale price

maintenance are said to include ‘agreements fixing the margin, fixing the maximum level ofdiscounts, linking the sales price to the sales prices of competitors, threats, intimidation, warn-ings, penalties, or contract terminations in relation to observance of a given price level. Direct orindirect means of achieving price fixing can be made more effective when combined withmeasures to identify pricecutting, such as the implementation of a price monitoring system, orthe obligation on licensees to report price deviations.’)

80. Guideline 80.

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they are likely to reduce output in the market (unlike non-reciprocal outputlimitations, which do not necessarily reduce total output in the market).81

Calculation of royalties

Clauses whereby royalties are calculated on the basis of all product sales, irre-spective of whether the products are based on the licensed technology or onanother technology (e.g., the licensee’s own technology), are considered ashardcore restrictions because they restrict the licensee’s ability to determine itsprices (Article 4(1)(a)) and because the licensee is restricted in his ability to usehis own technology (Article 4(1)(d)). The 1994 Microsoft undertaking to theCommission concerned precisely this type of clause.82 Such clauses raise thecost of using the licensee’s own competing technology and eliminates pricecompetition between the licensed technology and the licensee’s own technol-ogy. Exceptionally, such clauses would not be considered as hardcore restric-tions in cases where it is ‘impossible or unduly difficult to calculate and moni-tor the royalty payable by the licensee, for instance because the licensor’stechnology leaves no visible trace on the final product’.83

‘Second sourcing’

Among non-competitors, the obligation on the licensee to produce the con-tract products only for a particular customer (where the licence was granted inorder to create an alternative source of supply for that customer) is blockexempted.84 Among competitors, it is only block exempted if it forms part ofa non-reciprocal agreement.85

Restrictions imposed on licensees in the context of distribution systems

Among non-competitors, the licensor may impose an obligation on the lic-ensee not to sell to end users but only to retailers.86 This type of clause aims to

81. Guidelines 82-83.82. See Press Release IP/94/653, ‘Following an undertaking by Microsoft to change its licensing

practices, the European Commission suspends its action for breach of the competition rules’.The Commission had received a complaint from Novell alleging that Microsoft was using itslicensing agreements to foreclose competitors from the operating system software. Novell allegedthat Microsoft’s licensing agreements with PC manufacturers had an exclusionary effect becausemanufacturers were required to pay royalties to Microsoft based on the number of PCs shippedregardless of whether such PCs contained Microsoft software, a competitor’s software or nosoftware at all.

83. Guideline 81.84. Art. 4(2)(b)(iv) of the TTBE.85. Art. 4(1)(c)(vii) of the TTBE.86. Art. 4(2)(b)(v) of the TTBE.

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assign the role of wholesale distributor to the licensee. In parallel, the licensormay oblige the licensee to establish a certain type of distribution system such asexclusive distribution or selective distribution. This is block exempted.87 Inthis case the licensee is considered to be the ‘supplier’ for the purpose ofapplying the block exemption on vertical agreements to the distribution sys-tem. Where the licensee is also a member of a selective distribution system, thelicensor may prevent the licensee from selling to unauthorised distributors.88

This aims to maintain the integrity of the selective distribution network (alegitimate objective in terms of competition law, according to the Metro Ijudgment).89 However, licensee/distributor operating at the retail level must beallowed to sell both actively and passively to all end users.90 Therefore, otherlicensees have no protection against parallel importers who buy from Licensee/Distributor A in his territory and resell the products in Licensee/DistributorB’s territory. By reason of the Community-wide exhaustion principle laiddown in the Centrafarm v. Sterling Drug judgment,91 a licensee may not relyon its exclusive patent right in order to prevent imports from other exclusiveterritories.

Exclusive grant-back obligations, feed-on clauses and pass-on clauses

The TTBE provides that an obligation on the licensee to grant an exclusivelicense (or to assign the rights) to the licensor (or a third party designated bythe licensor) in respect of its own severable improvements to the licensedtechnology falls outside the scope of the block exemption. Therefore, it mustbe assessed on a case-by-case basis under Article 81(3).92 According to theCommission, such an exclusive grant-back obligation cannot be block ex-empted because it is likely to reduce the licensee’s incentive to innovate sinceit hinders the licensee in exploiting his own improvements. However, a non-exclusive grant-back obligation is block exempted, even if the licensor is en-titled to ‘feed-on’ the improvements to other licensees.

This only applies to improvements that are severable from the basic licensedtechnology. A contrario, grant-back obligations in respect of non-severable im-

87. Guideline 63. However, the distribution agreements concluded for the purposes of implement-ing such obligations must comply with the VRBE in order to be block exempted under thatRegulation.

88. Art. 4(2)(b)(vi) of the TTBE.89. See case 26/76 Metro-SB-Grossmärkte v. Commission [1977] ECR 1875, where the Court ruled

that selective distribution systems do not breach Art. 81(1) provided that distributors are se-lected on the basis of objective criteria of a qualitative nature and that such conditions areapplied uniformly and in a non-discriminatory manner.

90. Art. 4(2)(c) of the TTBE.91. Case 15/74 Centrafarm v. Sterling Drug [1974] ECR 1147.92. Art. 5(1)(a) and (b) of the TTBE and Guideline 109.

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provements are block exempted because, in this case, the licensee would beprevented from exploiting its own improvement anyway because the licensorwould hold a blocking patent on the basic technology.93 In the case of cross-licensing with a grant-back obligation between competitors, the parties areeffectively sharing the results of their R&D, thereby eliminating product-basedcompetition – which requires a very strict assessment under Article 81.

The Guidelines does not address obligations on the licensor to exclusively‘pass on’ its own improvements to the licensee (thereby giving a competitiveedge to one licensee compared to all others).

No-challenge clauses

Both among competitors and among non-competitors, an obligation not tochallenge the validity of the licensor’s IPR cannot be block exempted. Such aclause would be considered as an ‘excluded restriction’.94 This is because lic-ensees are normally in the best position to determine whether or not an IPR isinvalid. In the interest of undistorted competition and innovation (‘invalidintellectual property stifles innovation rather than promoting it’), therefore,no-challenge clauses must be carefully examined on a case-by-case basis.

Technology pools

Technology pools are multiparty agreements and are therefore not covered bythe TTBE. Two key distinctions are used by the Commission in its assessmentof technology pools: complementary technologies as opposed to substitute tech-nologies, and essential as opposed to non-essential technologies.95 A technologyis essential as opposed to non-essential if there are no substitutes for thattechnology inside or outside the pool. Technologies that are essential are also,by definition, complementary. Non-essential technologies include both tech-nologies that are not necessary in order to make the product in question andtechnologies for which substitutes exist outside the pool.

In principle, a pool of substitute (i.e. competing) technologies restrictscompetition and is unlikely to meet the requirements of Article 81(3).96 Bycontrast, pools of essential and therefore complementary technologies normallydo not infringe Article 81(1).97 However, the terms and conditions on whichthe licensors license their technologies may be subject by Article 81(1). The

93. Guideline 109.94. Art. 5(1)(c) of the TTBE. However, the licensor may terminate the agreement in the event of a

challenge by the licensee.95. Guidelines 215-218.96. Guideline 219.97. Guideline 220.

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pool may also be subject to the requirements of Article 82 if it holds sufficientmarket power (dominance). For instance, a pool may only be exempted oncondition that (a) it is open and non-discriminatory; (b) the patents are notlicensed to the pool on an exclusive basis and (c) the licensors are not boundby a non-compete clause. In the presence of network effects it may be verydifficult for another standard to survive in the market. The only possibility offurther innovation is to ensure that the members/licensors are free to contrib-ute their technologies to another standard.

In the case of non-essential but complementary technologies, there is a riskof foreclosure of competing technologies. Moreover, pooling non-essentialtechnologies may cause the agreement to fail the indispensability test underArticle 81(3). However, the pool may be exempted if it is clearly in the interestof efficiency, e.g. because of reduced transaction costs. As regards the fourthcondition contained in Article 81(3), the emergence of an industry standardthrough a technology pool does not eliminate competition on other factorsthan innovation, such as price, quality and product features. In the context ofthe Article 81(3) analysis, the Commission also believes that the members ofthe pool should price each technology individually in order to offer licenseesthe possibility to pick and choose what patents they need from the pool,instead of licensing the patent pool as a package only.

7. Conclusion

Overall, the new TTBE is simpler, more flexible and tougher than the oldTTBE. There are no white-listed clauses (i.e. required clauses) and grey-listedclauses any more. The new TTBE abandons the distinction between purepatent licenses, pure know-how licenses and ‘mixed’ licenses. The duration ofthe block exemption under the new TTBE is simpler. Software copyright iscovered by the new TTBE, whereas it was not covered by the old TTBE. Andthe new TTBE exempts all non-compete clauses and non-exclusive grant-backobligations, whereas under the old system they were blacklisted.

In certain respects, the new TTBE is also tougher than the current TTBEin that (a) it sets maximum market share thresholds; (b) the conditions forwithdrawal of the TTBE are more likely to be met; and (c) the Commissionrestricts the scope for absolute territorial protection of exclusive licenseesagainst other licensees (whereas under the old regime, which applied to bothcompetitors and non-competitors, absolute territorial protection was blockexempted for five years under certain conditions).

231

FAULL & NIKPAY

THE EU LAW OFCOMPETITION

THIRD EDITION

Edited by

JONATHAN FAULLDirector General, European Commission

Visiting Professor, College of Europe, Bruges, and King's College, LondonEmeritus Professor, Vrije Universiteit Brussel

ALI NlKPAYPartner, GibsonDunn 6' Crutcher LLP

Former Senior Director, UK Office of Fair TradingVisiting Lecturer at University of Oxford

Assistant Editor

DEIRDRE TAYLOROf Counsel, Gibson Dunn e^ CrutcherLLP

K 1n

;Q.

OXFORDUNIVERSITY PRESS

232

Chapter 3: Article 101 F. The Article 101(3) Exception

101 (3) but took the view that they were insufficient to outweigh the adverse effects.847 T^Commission did not take into account benefits to passengers not flying on the Frankfun-New York route.848 Thus, it appears that the principal difference between the approach ofthe Article 101(3) Guidelines and that taken in the Star Alliance case is the fact that theArticle 101 (3) Guidelines require that the afFected group of consumers be 'substantially thesame whereas the decision refers to 'considerable commonality in the consumer groups'. Iris submitted, however, that this is a distinction without a difference. What matters is thaithe adversely affected consumers as a group benefit from the efficiencies to such an extentthat they are no worse ofF. It is immaterial that they form part of a larger group ofconsum-ers-in this case, passengers on beyond and behind routes-who also benefit. It is alsonot decisive that within an afFected consumer group there is a very high degree of overlapbetween those who benefit and those who are harmed. What matters is that the group as awhole is no worse ofF. For instance, if a cooperation agreement enables the parties to mar-ket a higher quality product with new features that are deemed to compensate for a higherprice, the test of Article 101(3) is satisfied even if a significant share of the affected groupwould prefer the inferior lower price product. The purpose of the 'substantially the sameexception in the Article 101(3) Guidelines is merely to ensure that the analysis ofefficien-cies market-by-market takes into account that sometimes the adversely affected consumersmay derive benefits in related markets and that such benefits must be takes into account inthe assessment under Article 101(3). The Article 101(3) Guidelines give the example whereconsumers buy transportation services in related markets.849 While in that case the consum-ers purchased a bundle of services and therefore were substantially the same, the key point isthat the adversely affected consumers as a group potentially derived countervailing benefitsin related markets and that those benefits must be taken into account. On that reading of theArticle 101(3) Guidelines, the judgment in MasterCard and the decision in the Star Alliancecase appear entirely consistent.

(d) The Temporal Application of Article 101(3)3.464 Article 101 applies to agreements according to the actual legal and economic context in

which they occur.850 The application of Article 101(1) and Article 101(3) thus dependscrucially on the facts pertaining at the point when the assessment is made. It follows that theassessment cannot be made exclusively on the basis of the facts pertaining at the time whenthe agreement was concluded. If the circumstances subsequently change, the assessmentmay also change. It would be neither legally possible nor economically justified to base theassessment exclusively on the situation ex ante. The mere fact that at the time of conclusionan agreement is not caught by Article 101(1) nor satisfies the conditions of Article 101(3).

847 Para 76.848 Press Release IP/13/456 makes clear that:

This broadened test includes efficiencies produced on routes related to the route of concern-theso-called 'behind and beyond routes' (eg Prague-FrankRirt-New York or Frankfurt-New York-Seatde)-provided there is a considerable commonality bettveen passenger groups travelling onthe route of concern and these related routes. However, under this broadened test the Commissionaccepted only those efficiencies that accrued to the passengers also travelling on the Frankfurt-New York route. In other words, the broadened test does not weigh up the harm sufFered by onecustomer group against benefits perceived by another customer group.

849 Article 101(3) Guidelines, fn 57.850 See eg Joined Cases 25/84 and 26/84 Ford [1985] ECR 2725, para 33; Asnef-Equifax (n 697), para 49-

and Case T-l 11/08 MasterCard (n 643), para 87.

314

yeement is immune to subsequent intervention. Undertakings arelieedto reassess their agreements when circumstances change materially.

, his principle does not mean that the ex ante situation is irrelevant. It merely implies that all 3.465Uevant-facts have to be taken into account, whether or not they pre-date or post-date the

7reement. In order not to discourage pro-competitive agreements, it is particularly impor-,antto take account of ex ante investments committed by the parties. The Article 101(3)Tuidelines851 expressly recognize that it is necessary to take into account the initial sunkwestments made by any of the parties and the time needed and the restraints required toommit and recoup an efficiency-enhancing investment. The risk facing the parties and theink investment that must be committed to implement the agreement may thuslead to'^"agreement falling outside Article 101(1) or fulElling the conditions ofArticle 101 (3), as!ie case may be, for the period of time required to recoup the investment.852, tie Article 101 (3) Guidelines853 make one exception to the principle that agreements are 3.466

messed on the basis of the facts pertaining at the time the assessment is made. In certain casesiie agreement is an irreversible event, in the sense that once the restrictive agreement has been.nplemented the ex ante situation cannot be re-established. In such cases,the: assessment,,ust be made exclusively on the basis of the facts pertaining at the time of implementation.lie Article 101 (3) Guidelines give the example of an R&D agreement whereby the parties'ree to abandon their respective research projects and pool their capabilities. In such a'se, from an objective point of view, it may be technically and economically impossible1 revive a project once it has been abandoned. The assessment of the anti-competidve and-n-competitive effects of the agreement to abandon the individual research projects mustherefore be made at the time of the completion of its implementation. If at that point the^reement is compatible with Article 101, for instance because a sufficient number of thirdirties have competing RScD projects, the parties' agreement to abandon their individual

-ejects remains compatible with Article 101, even if at a later point the third party projects,il. The Article 101(3) Guidelines caution, however, that the prohibition of Article 101;iy apply to other parts ofitie agreement in respect of which the issue of irreversibility.>es not arise. If, for example, in addition to joint R&D, the agreement provides for jointoloitadon, Article 101 may apply 10 this part of the agreement if, due to subsequentarket developments, the agreement becomes restrictive of competition and does not (anymger) satisfy the conditions of Article 101(3).

Block Exemptionsick exemption Regulations are EU acts that produce effects erga. omnes.w Agreements that 3.467icfit from a block exemption are presumed to satisfy the conditions of Article 101 (3) andi;> ro be legally valid and enforceable.

51 See para 44.' The Technology Transfer Guidelines give examples of both situations. Para 101 provides that in the case

greements between non-competitors, it is likely-given the investment required by licensees penetrating aterritory-that licensees would not enter into a licence agreement without an initial period of protectionist passive sales from licensees in other territories, ie protection against intra-brand competition, in which'he agreement falls outside Alt 101 (1). Para 170 provides that restrictions on active sales in non-redprocal-mems between competitors may satisfy the conditions of Alt 101 (3), in particular, where the licensee haslively weak market position in the territory allocated to him and has to make a significant investment in

- to exploit the licensed technology efficiently.See para 45.

See in this respect Alt 288 TFEU.

315233

Chapter 3: Article 101 F. The Article 101(3) Exception

101 (3) but took the view that they were insufficient to outweigh the adverse effects.847 T^Commission did not take into account benefits to passengers not flying on the Frankfun-New York route.848 Thus, it appears that the principal difference between the approach ofthe Article 101(3) Guidelines and that taken in the Star Alliance case is the fact that theArticle 101 (3) Guidelines require that the afFected group of consumers be 'substantially thesame whereas the decision refers to 'considerable commonality in the consumer groups'. Iris submitted, however, that this is a distinction without a difference. What matters is thaithe adversely affected consumers as a group benefit from the efficiencies to such an extentthat they are no worse ofF. It is immaterial that they form part of a larger group ofconsum-ers-in this case, passengers on beyond and behind routes-who also benefit. It is alsonot decisive that within an afFected consumer group there is a very high degree of overlapbetween those who benefit and those who are harmed. What matters is that the group as awhole is no worse ofF. For instance, if a cooperation agreement enables the parties to mar-ket a higher quality product with new features that are deemed to compensate for a higherprice, the test of Article 101(3) is satisfied even if a significant share of the affected groupwould prefer the inferior lower price product. The purpose of the 'substantially the sameexception in the Article 101(3) Guidelines is merely to ensure that the analysis ofefficien-cies market-by-market takes into account that sometimes the adversely affected consumersmay derive benefits in related markets and that such benefits must be takes into account inthe assessment under Article 101(3). The Article 101(3) Guidelines give the example whereconsumers buy transportation services in related markets.849 While in that case the consum-ers purchased a bundle of services and therefore were substantially the same, the key point isthat the adversely affected consumers as a group potentially derived countervailing benefitsin related markets and that those benefits must be taken into account. On that reading of theArticle 101(3) Guidelines, the judgment in MasterCard and the decision in the Star Alliancecase appear entirely consistent.

(d) The Temporal Application of Article 101(3)3.464 Article 101 applies to agreements according to the actual legal and economic context in

which they occur.850 The application of Article 101(1) and Article 101(3) thus dependscrucially on the facts pertaining at the point when the assessment is made. It follows that theassessment cannot be made exclusively on the basis of the facts pertaining at the time whenthe agreement was concluded. If the circumstances subsequently change, the assessmentmay also change. It would be neither legally possible nor economically justified to base theassessment exclusively on the situation ex ante. The mere fact that at the time of conclusionan agreement is not caught by Article 101(1) nor satisfies the conditions of Article 101(3).

847 Para 76.848 Press Release IP/13/456 makes clear that:

This broadened test includes efficiencies produced on routes related to the route of concern-theso-called 'behind and beyond routes' (eg Prague-FrankRirt-New York or Frankfurt-New York-Seatde)-provided there is a considerable commonality bettveen passenger groups travelling onthe route of concern and these related routes. However, under this broadened test the Commissionaccepted only those efficiencies that accrued to the passengers also travelling on the Frankfurt-New York route. In other words, the broadened test does not weigh up the harm sufFered by onecustomer group against benefits perceived by another customer group.

849 Article 101(3) Guidelines, fn 57.850 See eg Joined Cases 25/84 and 26/84 Ford [1985] ECR 2725, para 33; Asnef-Equifax (n 697), para 49-

and Case T-l 11/08 MasterCard (n 643), para 87.

314

yeement is immune to subsequent intervention. Undertakings arelieedto reassess their agreements when circumstances change materially.

, his principle does not mean that the ex ante situation is irrelevant. It merely implies that all 3.465Uevant-facts have to be taken into account, whether or not they pre-date or post-date the

7reement. In order not to discourage pro-competitive agreements, it is particularly impor-,antto take account of ex ante investments committed by the parties. The Article 101(3)Tuidelines851 expressly recognize that it is necessary to take into account the initial sunkwestments made by any of the parties and the time needed and the restraints required toommit and recoup an efficiency-enhancing investment. The risk facing the parties and theink investment that must be committed to implement the agreement may thuslead to'^"agreement falling outside Article 101(1) or fulElling the conditions ofArticle 101 (3), as!ie case may be, for the period of time required to recoup the investment.852, tie Article 101 (3) Guidelines853 make one exception to the principle that agreements are 3.466

messed on the basis of the facts pertaining at the time the assessment is made. In certain casesiie agreement is an irreversible event, in the sense that once the restrictive agreement has been.nplemented the ex ante situation cannot be re-established. In such cases,the: assessment,,ust be made exclusively on the basis of the facts pertaining at the time of implementation.lie Article 101 (3) Guidelines give the example of an R&D agreement whereby the parties'ree to abandon their respective research projects and pool their capabilities. In such a'se, from an objective point of view, it may be technically and economically impossible1 revive a project once it has been abandoned. The assessment of the anti-competidve and-n-competitive effects of the agreement to abandon the individual research projects mustherefore be made at the time of the completion of its implementation. If at that point the^reement is compatible with Article 101, for instance because a sufficient number of thirdirties have competing RScD projects, the parties' agreement to abandon their individual

-ejects remains compatible with Article 101, even if at a later point the third party projects,il. The Article 101(3) Guidelines caution, however, that the prohibition of Article 101;iy apply to other parts ofitie agreement in respect of which the issue of irreversibility.>es not arise. If, for example, in addition to joint R&D, the agreement provides for jointoloitadon, Article 101 may apply 10 this part of the agreement if, due to subsequentarket developments, the agreement becomes restrictive of competition and does not (anymger) satisfy the conditions of Article 101(3).

Block Exemptionsick exemption Regulations are EU acts that produce effects erga. omnes.w Agreements that 3.467icfit from a block exemption are presumed to satisfy the conditions of Article 101 (3) andi;> ro be legally valid and enforceable.

51 See para 44.' The Technology Transfer Guidelines give examples of both situations. Para 101 provides that in the case

greements between non-competitors, it is likely-given the investment required by licensees penetrating aterritory-that licensees would not enter into a licence agreement without an initial period of protectionist passive sales from licensees in other territories, ie protection against intra-brand competition, in which'he agreement falls outside Alt 101 (1). Para 170 provides that restrictions on active sales in non-redprocal-mems between competitors may satisfy the conditions of Alt 101 (3), in particular, where the licensee haslively weak market position in the territory allocated to him and has to make a significant investment in

- to exploit the licensed technology efficiently.See para 45.

See in this respect Alt 288 TFEU.

315234

Chapter 3: Article 101

3.468 In the enforcement system created by Regulation 1/2003, only the Commission i.Council)855 has the power to adopt block exemption Regulations concerning the apolof Article 101(3). The NCAs may apply Articles 101 and 102 in individual caies.Commissions powers are laid down in enabling Regulations adopted by the Counci!far these cover vertical agreements, technology transfer agreements, R&D and special!agreements, and insurance.858

3.469 The application of Article 101(3) to categories of agreements by way of block exeiiiRegulations is based on the presumption that restrictive agreements that fall withinscope859 fulfil each of the four conditions laid down in Article 101 (3). A block exemortherefore appropriate only when it can reasonably be assumed that upon individual jment the vast majority of agreements falling within its scope would satisfy the condkiiArticle 101 (3). This is the reason why block exemptions are based on market share thresto limit their scope. Subject to the market share thresholds, the block exemptions have ;iscope of application in terms of the restrictions covered. Every provision which is not id,fied as a hardcore or excluded restriction benefits from the block exemption.

3.470 The mere fact that an agreement is covered by a block exemption does not imply thainecessarily caught by Article 101(1). Block exemptions formally cover many agreemthat are not restrictive of competition in the first place. The fact that an agreement isblock-exempted does not give rise to any presumption that the agreement in quesis caught by Article 101(1) or that it fails to satisfy the conditions of Article 101(3Individual assessment is required. The only exception is where the agreement contains hycore restrictions in which case there is a presumption that the agreement is incompariwith Article 101.861

3.471 If, in an individual case, the agreement is caught by Article 101(1) and the conditionsArticle 101(3) are not fulfilled, the block exemption may be withdrawn. AccordingArticle 29(1) of Regulation 1/2003, the Commission has the power to withdraw the bre£t of a block exemption when it finds in a particular case that an agreement covered bblock exemption Regulation has certain efFects that are incompatible with Article 1 OK-Pursuant to Article 29(2) of Regulation 1/2003, an NCA may also withdraw the beneof a Commission block exemption Regulation in respect of its territory (or part of its ter,tory), if this territory has all the characteristics of a distinct geographic market. In the c>

855 In the past certain block exemptions have been adopted by the Council. Block exemptions are enforcment instruments applying Art 101 (3). They are therefore different from other types of legislative act adopt.by the EU legislator. It is therefore a welcome development that in recent years the Council has confined its.to granting legislative powers to the Commission, refraining from adopting block exemptions itself.

856 See Art 5 ofRegularion 1/2003.857 The Council did not in Regulation 1,2003-as proposed by the Commission-grant the latter a gener

power to adopt block exemptions.858 See Regulation 19/65/EEC of 2 March of the Council on application of Article [101(3)] ofthe Treaty.

certain categories of agreements and concerted practices, OJ 1965 L36/533, as amended by Council Regulatio1215/1999, OJ 1999 L148/1; Regulation (EEC) No 2821/71 of the Council of 20 December 1971 on d:application of Article [101(3)] of the Treaty to categories of agreements, decisions and concerted practices, C1971 L285/46; Council Regulation 1534/91 on the application of Article [101(3)] to certain categories cagreements, decisions and concerted practices in the insurance sector, OJ 1991 L143/1.

859 The fact that an agreement is block-exempted does not in itself indicate that the individual agreementcaught by Art 101(1).

860 See eg Technology Transfer Guidelines, para 37.861 See Article 101 (3) Guidelines, para 46.

316

F. The Article 101(3) Exception

3.472

3.473

3.474

Ê^s^^^SSÔUl) andthatildoesô^m^^^^^^^^5:^^=:^^^^^':safonT"w3ivalenf national provisions.,e Four Conditions of Article 101(3)Wtluction ^ ^ _ ^ ^ ^^ ^ ^^ -^ to identify the eco-

Âequandficadonandv^rific^n^m^^^^^^r6irtec:;S:afT;£^^^^^:d. first Iworon<uuo;î^^^gSn^"d^rethe Commiss^^^s^^^^^^^^'0 [cdDriirion concerns.

^fi»,r»^,A^ ^^^^^^^^^^^^:^g;o the first condiuon^^^^^^^Sôno^''s:^^^^^^^:^_^:^r^^'l^^^=?!s^::;:J;h;bîi^Tr,sS^^^^^^:unomic benefits flowing fr^^^ti^^^^~::^^^B££^^:^::^°^:theiTOV!^^^.ter as\o compensateôÂedân^^though it is nor entirely cka^ iê^^Scano imply thatMlana!lsl^f^jS^S^-est: since Ac.e^red. Howeve. S^^^^S^Zê^reqmres tha. for^î^Ssssss^SiiîS^:SSS?h=Tcynguoflplosidv7and negative efFects is required under thehrstconaluuu^^ ^ ^ ^:^:^=s^^ 3A"

ictions contained in the agreement.

^s^^^s^^^^nenc. The condition ofindispensabilitywas ^SeeArride 101(3) Guidelines, para48;SeeCaseT-lU/08 MaMrC_ard(n6^, Paraj^ ^^ ECRII-4653, pan 139-, and CaseT-168/01See CaseT-65/98^ den Bergh Foods v Commôn^^-'.îthKUne Services Unlimited'^ 811), paras 247 andW-t-^/.

317235

Prof. Gerald Mäsch A solution outline for the case study and the slides of the Power Point presentation will follow after the

training.

237

Prof. Dr. Gerald Mäsch

Case Study

(based on ECJ, 5th June 2014, case C-557/12 – Kone AG)

The undertakings M1, M2, M3 and M4 produce elevators and escalators for

passengers. Since the 1980s at least, and until 2004, they have implemented,

in numerous Member States, a large scale agreement purporting to divide up

the elevator and escalator market. The goal was to ensure higher prices for

the machinery in question. The cartel distorted the market and, in particular,

the price development that would otherwise have occurred under such

conditions.

On 1 July 2007 the European Commission published the beginning of its

investigation concerning the agreement in question on its homepage.

Furthermore, nationwide daily newspapers reported on the investigation. On 1

May 2008 the European Commission imposed on M1, M2 und M3 a fine

totalling EUR 992 million for their participation in cartels involving the

installation and maintenance of elevators and escalators in Belgium, France,

Luxembourg and the Netherlands. As M4 had chosen to provide evidence in

order to improve its chances of leniency, it was not fined.

In connection with these proceedings, German authorities discovered that

the members of that cartel sought to coordinate their activities also in respect

of well over half the commercial volume of new machinery in the whole of

Germany. More than half of the projects concerned were allocated by

mutual understanding, so that at least one third of the market volume was the

subject of the agreed concerted practice. Approximately two thirds of the

projects subject to such concerted practices went ahead as planned. In the

remaining one third of cases, the project was awarded either to third

undertakings (not party to the cartel) or to a cartel member that did not

adhere to the agreed method of allocation but made an offer at a lower

price. The result of the conduct of the members of the cartel at issue was that

market prices hardly changed, even in the final years before 2004, and their

market shares remained essentially the same.

The Company A now claims from M1, M2 and M3 before the Landgericht

(District Court) Münster compensation for loss assessed at EUR 1 839 239.74, as

a result of buying from third undertakings not party to the cartel at issue

elevators and escalators at a higher price than it would have paid but for the

existence of that cartel, on the ground that those third undertakings

benefited from the existence of the cartel in adapting their prices to the

higher level.

238

2

Questions:

(1) Is A entitled to claim damages from the members of the cartel? If so,

under which conditions?

(2) Within the lawsuit, which facts must be proven by A, and which by the

defendant (burden of proof)?

(3) The cartel in question ended in 2004, the European Commission

imposed the fine on the cartel´s members after thorough investigations

in 2008. The claim for damages was lodged on 15 August 2011. Is the

claim time-barred because of the applicable statute of limitations? Is it

possible, and if so under which conditions, to suspend the period of

limitation?

(4) In addition to that, he asks for the standard of proof concerning the

conditions of the claim for damages from the cartel´s members.

§ 195 of the GERMAN CIVIL CODE (Standard limitation period)

The standard limitation period is three years.

§ 199 of the GERMAN CIVIL CODE (Commencement of the standard

limitation period and maximum limitation periods)

(1) Unless another commencement of limitation of is determined, the

standard limitation period commences at the end of the year in which:

1. the claim arose and

2. the obligee obtains knowledge of the circumstances giving rise to the

claim and of the identity of the obligor, or would have obtained such

knowledge if he had not shown gross negligence.

…

§ 287 of the CODE OF CIVIL PROCEDURE (Investigation and determination of

damages; amount of the claim)

(1) Should the issue of whether or not damages have occurred, and the

amount of the damage or of the equivalent in money to be reimbursed, be in

dispute among the parties, the court shall rule on this issue at its discretion and

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3

conviction, based on its evaluation of all circumstances. The court may

decide at its discretion whether or not – and if so, in which scope – any taking

of evidence should be ordered as applied for, or whether or not any experts

should be involved to prepare a report. The court may examine the party

tendering evidence on the damage or the equivalent in money thereof; the

stipulations of section 452 (1), first sentence, subsections (2) to (4) shall apply

mutatis mutandis.

(2) In the event of pecuniary disputes, the stipulations of subsection (1),

sentences 1 and 2, shall apply mutatis mutandis also to other cases, insofar as

the amount of a claim is in dispute among the parties and to the extent the

full and complete clarification of all circumstances authoritative in this regard

entails difficulties that are disproportionate to the significance of the disputed

portion of the claim.

240

MEMO/14/310

EUROPEAN COMMISSION

MEMO

Brussels, 17 April 2014

Antitrust: Commission proposal for Directive to facilitate damages claims by victims of antitrust violations – frequently asked questions

See also IP/14/455

What are the problems to be solved by this Directive? Infringements of the EU antitrust rules, such as cartels or abuses of dominant market positions, are liable to cause very serious harm, not only to the economy as a whole but also to particular businesses and citizens. They may, for example, pay higher prices because producers agreed not to compete against each other or lose profits if they are driven out of a market by a dominant company.

These victims are entitled to compensation for the harm they have suffered. They can bring an action for damages before a national court. The EU Court of Justice has emphasised the importance of this right as one of the means of achieving an effective enforcement of EU antitrust rules. However, few claims are made, as it is still difficult to obtain redress in practice.

This is due to shortcomings in the legal frameworks in most Member States that make it excessively costly and difficult to bring antitrust damages actions. In particular, victims may have difficulties in obtaining relevant evidence. Often they do not know within which time limit they can bring an action or to what extent they can rely on decisions of national competition authorities to prove an infringement.

This situation particularly affects citizens and SMEs, who can rarely bear the cost of legal action. Moreover, actions tend to be brought only in a few Member States where the rules are perceived to be more favourable, such as the UK, Germany or the Netherlands. Only 25% of antitrust infringements found by the Commission in the last 7 years have been followed by civil actions for damages. Most of these actions were brought by large businesses. National rules are widely diverging and, as a result, victims are more or less likely to obtain compensation depending on the Member State in which they live or do business.

Moreover, the current lack of rules regulating the interplay between private damages actions and public enforcement leads to significant legal uncertainty and creates unnecessary delays and problems in litigation before national courts. The problems relate to the effect of competition authorities' infringement decisions for follow-on damages actions, the availability of evidence from the file of a competition authority, etc.

241

http://europa.eu/rapid/press-release_IP-14-455_en.htm

2

What is private enforcement? Will it change the role of the Commission and national competition authorities in finding antitrust infringements? The notion of private enforcement of the EU antitrust rules refers to legal actions brought by private individuals or businesses before national courts to enforce the rights derived from these rules, including the right to be compensated for harm resulting from an antitrust infringement, e.g. through higher prices or lost profits.

The Directive is aimed at fully compensating those who suffered harm. Unlike in some other jurisdictions, the European approach does not conceive private damages actions as a tool for punishment and deterrence of those who breach antitrust rules. This remains the responsibility of competition authorities, both at the EU and national levels, which find, investigate and sanction infringements in the public interest (public enforcement).

Private and public enforcement are complementary tools: their combination will create a stronger enforcement of EU antitrust rules overall. This is why the Directive includes measures to optimise the interplay between these two tools and to avoid any undue interference of private damages claims with effective public enforcement. Therefore, the key role of the Commission and the national competition authorities as public enforcers of the EU antitrust rules remains unchanged.

What are the main measures put forward in the Directive? The Directive puts forward a number of measures which will facilitate antitrust damages claims in Member States:

• Parties will have easier access to the evidence they need. In particular, if a party needs specific pieces or categories of evidence to prove a claim or a defence, it will have the possibility to ask the court to order other parties or third parties to produce this evidence. The judge will ensure that disclosure orders are proportionate and that confidential information is duly protected.

• Claimants will be able to rely on a final decision of a national competition authority finding an infringement. Such decisions will automatically constitute proof before courts of the same Member State that the infringement occurred. In actions before courts of other Member States, claimants will be able to present such decisions as at least prima facie evidence of the infringement.

• Rules on limitation periods, i.e. the period of time within which victims can bring an action for damages, will be clarified. In particular, the Directive requires that the limitation period is at least five years and, importantly, that it is interrupted or suspended from the moment a competition authority starts investigating an infringement until at least one year after the infringement decision has become final. This means that victims will have at least one year to claim damages following the decision of a competition authority.

• The Directive clarifies that victims have a right to obtain full compensation for actual loss and for loss of profit, plus payment of interest from the time the harm occurred until compensation is paid.

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• In situations where price increases due to an infringement are "passed on" along the distribution chain, the Directive aims at ensuring that those who actually suffered the harm will be the ones receiving compensation. Direct customers of an infringer are often able to offset, fully or partially, the increased price they paid by raising the prices they charge to their own customers (indirect customers). The Directive allows infringers to defend themselves against a damages claim by proving that the price increase was (partially) passed on by the claimant to his own customers (passing-on defence). Importantly, the Directive makes it easier for indirect purchasers to prove that a passing-on occurred.

• The Directive establishes a rebuttable presumption that cartels cause harm. In combination with the power of national courts to estimate the amount of harm, this will help victims in the often difficult task of proving and quantifying the harm they have suffered.

• Rules are put in place to facilitate out-of-court resolution of damages claims which can often achieve compensation faster and at less cost. The Directive provides for the suspension of limitation periods/pending court proceedings to allow parties sufficient time to try and reach a consensual settlement, without the risk of losing procedural rights in the meantime. Further, the Directive clarifies the effect of partial consensual settlements (e.g. where a claimant settles with only one of the co-infringers) on subsequent actions for damages. The rules set out how the remaining claim is to be determined, against whom it can be made and how settling and non-settling co-infringers should contribute.

Further, the Directive optimises the interplay between private damages claims and public enforcement, ensuring the full effectiveness of the latter:

• Whereas the Directive enables parties to get hold of the necessary evidence from other parties or third parties based on a disclosure ordered by court, it also provides for two exceptions concerning evidence included in the file of a competition authority:

o Leniency statements and settlement submissions can never be disclosed. This preserves the incentive for companies to provide information to competition authorities - a key instrument without which many cartels would never be discovered in the first place.

o Certain information produced within public enforcement proceedings can only be disclosed after the investigation is closed. This concerns three categories of evidence: (i) information prepared by a party specifically for the proceedings (such as replies to questions from the authority); (ii) information drawn up by a competition authority and sent to parties in the course of the proceedings (such as statements of objections); and (iii) settlement submissions that have been withdrawn.

The Directive also clarifies that its rules on disclosure of evidence are without prejudice to the rules and practices on: (i) the protection of internal documents of competition authorities and correspondence between competition authorities; and (ii) public access to documents pursuant to the EU's transparency regulation 1049/2001.

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4

• By way of derogation from the general principle that co-infringers are jointly and severally liable for the entire harm caused by an antitrust infringement, the Directive provides that the immunity recipient (i.e. the cartelist which obtained full immunity from fines pursuant to a leniency programme operated by a competition authority) is primarily liable only towards its own customers (or providers). However, to safeguard the right to compensation, the immunity recipient would nevertheless have to pay any sums necessary to achieve a full compensation of other injured parties who are unable to obtain it from the other cartelists (e.g. because all of them went bankrupt).

Will actions for damages discourage companies from cooperating with the Commission or national competition authorities? Under leniency programmes, competition authorities establish the conditions under which they will reward companies who admit their participation in a secret cartel and contribute to the investigation in a decisive way by enabling the authority to detect and punish the cartel. To obtain a reduction of fines or immunity from fines under a leniency programme, companies make voluntary statements describing their knowledge of the cartel and their role therein (so-called leniency statements). Some competition authorities also have settlement procedures which enable them to follow a streamlined procedure when companies - having seen the evidence in the file and knowing their exposure and the (reduced) fine range they face - voluntarily acknowledge (in a settlement submission) their participation in an antitrust infringement (typically a cartel) and their concrete liability for it. These tools have become essential instruments to enforce the competition rules at both EU and national level.

Under the Directive, leniency statements and settlement submissions can never be disclosed and used in civil damages actions. The certainty that such self-incriminatory statements will not worsen the legal position of cooperating companies in the context of follow-on antitrust damages actions is essential to maintain the infringers’ incentives to voluntarily cooperate with competition authorities. In any event, the evidence needed by claimants will typically be contained in documents produced in connection with the perpetration of the infringement, i.e. evidence that exists irrespective of any public enforcement proceedings (so-called pre-existing information). The Directive makes it clear that such pre-existing information, whether or not it is also included in the file of a competition authority, can be disclosed at any time.

Further, the Directive safeguards the attractiveness of leniency programmes by providing that that the immunity recipient (i.e. the cartelist which received full immunity from fines) is primarily liable only towards its own customers or providers (see previous question).

The objective of this rule is to protect and even increase the incentives to apply for immunity by preventing that the immunity recipient becomes the preferred target of all follow-on actions, having to compensate upfront for the entire harm caused by the cartel. This risk exists because the infringement decision often becomes final first against the immunity recipient, who is unlikely to appeal the decision.

Importantly, the right of victims to full compensation is not affected by the exemption. Except for the immunity recipient, all other cartelists remain jointly and severally liable towards cartel victims, who can therefore claim from them compensation for the entire harm. And in the very unlikely case that full compensation could not be obtained in this way, the immunity recipient's joint and several liability revives.

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5

These measures are the result of a careful balancing of the victims’ right to obtain full compensation and the effective protection of public enforcement, including the necessary incentives to contribute to it. Even the latter are ultimately in the interest of injured parties, who will suffer less damages and have more opportunities to claim compensation if more cartels are detected and brought to an end.

What is the relationship between the compensation of victims and antitrust fines? Civil redress for victims obtained through private enforcement (i.e. actions for damages) is meant to compensate those victims for the harm they suffered.

Fines imposed by a competition authority after an investigation in the public interest (public enforcement) are a means of sanctioning infringers for their illegal conduct, and discouraging them, and other potential infringers, from engaging in further infringements.

Compensation and antitrust fines thus pursue different, yet complementary, objectives. Therefore, fines should generally not be lowered if compensation is paid, nor should they be increased if compensation is not paid.

Nevertheless, to stimulate consensual claim resolution, the Directive provides that where an infringer has paid compensation as a result of a consensual settlement, a competition authority may consider this as a mitigating factor in the setting the fine for that infringer.

Are lawsuits before national courts the only way to obtain compensation? No. Of course, the right to compensation will often be enforced before national courts. The Directive therefore aims at making it easier for victims to enforce their rights through courts by reducing costs and uncertainties.

However, consensual dispute resolution can sometimes be a more efficient and less costly way to settle disputes and obtain compensation. The Directive therefore encourages willing parties to use the means of consensual dispute resolution. It provides for the suspension of limitation periods/pending court proceedings to allow parties sufficient time to reach a consensual settlement, without the risk of losing procedural rights in the meantime. Further, the Directive clarifies the effect of partial consensual settlements (e.g. where a claimant settles with only one of the co-infringers) on subsequent actions for damages. The rules describe how the remaining claim is to be determined, against whom it can be made and how settling and non-settling co-infringers should contribute.

When will the Directive enter into force? Today's plenary vote, which approved the final compromise text of the proposed Directive, was the final step on the side of the European Parliament. A formal approval of the Parliament's position by the Council will complete the ordinary legislative procedure. Once the Directive has been officially adopted, Member States will have two years to implement the provisions in their legal systems.

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EUROPEAN COMMISSION

PRESS RELEASE

Strasbourg, 11 June 2013

Commission recommends Member States to have collective redress mechanisms in place to ensure effective access to justice

The European Commission has today set out a series of common, non-binding principles for collective redress mechanisms in the Member States so that citizens and companies can enforce the rights granted to them under EU law where these have been infringed. The Recommendation aims to ensure a coherent horizontal approach to collective redress in the European Union without harmonising Member States' systems. National redress mechanisms should be available in different areas where EU law grants rights to citizens and companies, notably in consumer protection, competition, environment protection and financial services. By recommending to Member States to put in place national collective redress mechanisms the Commission wants to improve access to justice, while ensuring appropriate procedural guarantees to avoid abusive litigation. The Recommendation complements the proposal for a Directive on antitrust damages which will help the victims of violations of antitrust rules to obtain compensation through the legal actions available in Member States (see IP/13/525, MEMO/13/531). While the Recommendation calls on Member States to put in place collective redress mechanisms, the Directive leaves it to Member States whether or not to introduce collective redress actions in the context of private enforcement of competition law.

“Member States have very different legal traditions in collective redress and the Commission wants to respect these. Our initiative aims to bring more coherence when EU law is at stake”, said Vice-President Viviane Reding, the EU’s Justice Commissioner. “This Recommendation is a balanced approach to improve access to justice for citizens while avoiding a US-style system of class actions and the risk of frivolous claims and abusive litigation.”

Vice President Joaquín Almunia, in charge of competition policy, said: “When they are victims of infringements of competition rules, citizens and businesses – particularly SMEs – often face strong obstacles in obtaining effective compensation. To overcome these difficulties we have proposed a Directive on antitrust damages actions. Since the harm may be shared by many injured parties, collective actions mechanisms should also be in place. This Recommendation is therefore a useful complement, sending a clear message to Member States.”

Consumer Policy Commissioner Borg added: "Today we are making an important step towards an EU framework for collective redress. We are inviting all EU Member States to equip EU consumers with the tools to enforce their rights and obtain compensation for the harm caused by violations of EU law. Member States should ensure that the collective redress procedures are fair, equitable, timely and not prohibitively expensive."

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Main Principles of the Commission Recommendation The Commission's Recommendation invites all Member States to have national collective redress systems and sets out a number of common European principles that such systems should respect:

• Member States should have a system of collective redress that allows private individuals and entities to seek court orders ceasing infringements of their rights granted by EU law (so called "injunctive relief") and to claim damages for harm caused by such infringements (so called "compensatory relief") in a situation where a large number of persons are harmed by the same illegal practice.

• Member States should ensure that the collective redress procedures are fair, equitable, timely and not prohibitively expensive.

• Collective redress systems should, as a general rule, be based on the "opt-in" principle, under which claimant parties are formed through directly expressed consent of their members. Any exception to this principle, by law or by court order, should be duly justified by reasons of sound administration of justice. In parallel, the Recommendation stresses the need to provide information to potential claimants who may wish to join the collective action.

• The Commission is recommending important procedural safeguards to make sure there are no incentives to abuse collective redress systems. Member States should for example not permit contingency fees risking creating an incentive for abuses. In addition, the entities which are representing claimants have to be of non-profit character, to ensure that they are guided by the interests of those affected in situations of mass damages. Another way of preventing abusive litigation is the prohibition of punitive damages which usually increases the economic interests at stake in such actions. Instead, full compensation should reach individuals once the court confirms that they are right in their claims.

• The central role in the collective litigation should be given to the judge, who should effectively manage the case and be vigilant against any possible abuses. The Commission has not ruled out third party financing for European collective redress, but proposes conditions, in particular related to transparency, to ensure there is no conflict of interests.

• The Recommendation also promotes Alternative Dispute Resolution, requiring that this possibility is offered to the parties on a consensual basis.

Next steps: The Recommendation asks Member States to put in place appropriate measures within two years at the latest. Two years after implementation of the Recommendation, at the latest, the Commission will assess the state of play, based on the yearly reports of the Member States to evaluate whether further measures to strengthen the horizontal approach reflected in the Recommendation are needed.

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Background

What is Collective Redress and why is it needed Collective redress is a procedural mechanism which allows for reasons of procedural economy and/or efficiency of enforcement, many single claims (relating to the same case) to be bundled into a single court action. It is a broad concept that includes injunctive relief (lawsuits seeking to stop illegal behaviour) and compensatory relief (lawsuits seeking damages for the harm caused). It needs to be clearly distinguished from so-called "class actions" that are common under the US legal system. In Europe, collective redress procedures have been introduced in some Member States. However, where introduced these procedures vary widely.

The Commission, as a public authority and guardian of the EU Treaties, enforces EU law. In parallel, individuals, business and entities representing interests of different groups of society can seek enforcement of their rights under EU law in national courts. In some cases, the violation of EU law may trigger multiple individual lawsuits. In these cases collective redress can complement public enforcement. Current EU law already provides for the possibility of pursuing collective actions for injunctions in the field of consumer law, but the national legal systems vary considerably concerning financial markets, competition, environmental protection, and other areas of law. The situation is even more diverse among Member States when several consumers or businesses want to seek damages in the same case. In preparing its Recommendation, the Commission carried out a broad public consultation in 2011 to assess if and under what conditions a European approach to collective redress can bring added value to European citizens and businesses (IP/11/132). It also took into account the European Parliament's Resolution "Towards a coherent European approach to collective redress" asking for a horizontal framework for collective redress.

Commission Action in the area of Collective Redress The Commission has worked for several years on developing European standards of collective redress in the field of consumer and competition law. The Commission adopted a Green Paper on antitrust damages actions in 2005 and a White Paper in 2008, both of which include a chapter on collective redress. In 2011, the Commission carried out a public consultation, in which around 300 institutions and experts as well as 10,000 citizens expressed their views on the European framework for collective redress. The public consultation demonstrated a divergence of views among stakeholders and a need for balanced solutions.

For more information Recommendation:

http://ec.europa.eu/justice/newsroom/civil/news/130611_en.htm

MEMO/13/530

Homepage of Vice-President Viviane Reding, EU Commissioner for Justice, Fundamental Rights and Citizenship:

http://ec.europa.eu/reding

Follow the Vice-President on Twitter: @VivianeRedingEU

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http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-//EP//TEXT+TA+P7-TA-2012-0021+0+DOC+XML+V0//EN

http://eur-lex.europa.eu/LexUriServ/site/en/com/2005/com2005_0672en01.pdf

http://ec.europa.eu/competition/antitrust/actionsdamages/files_white_paper/whitepaper_en.pdf

http://ec.europa.eu/justice/newsroom/civil/opinion/110430_en.htm

http://ec.europa.eu/justice/newsroom/civil/news/130611_en.htm

http://europa.eu/rapid/press-release_MEMO-13-530_en.htm

http://ec.europa.eu/reding

https://twitter.com/VivianeRedingEU

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Homepage of Commissioner Tonio Borg, responsible for Health and Consumer Policy:

http://ec.europa.eu/commission_2010-2014/borg/

Homepage of Vice-President Joaquín Almunia, responsible for Competition:

http://ec.europa.eu/commission_2010-2014/almunia/

Contacts : Mina Andreeva (+32 2 299 13 82) Natasha Bertaud (+32 2 296 74 56)

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http://ec.europa.eu/commission_2010-2014/almunia/

mailto:[email protected]

mailto:[email protected]

This article was published on March 22, 2012 as the Foreword to the e-Competitions Special Issue published

under the title “Private Enforcement: An overview of EU and national case law”,

N°44442, on www.concurrences.com”.

Dr Assimakis Komninos

White & Case Brussels

Private enforcement: An overview of EU and national case lawJune 2012

Introduction 2011 marked the ten year anniversary of the seminal Courage v. Crehan ruling of the Court of Justice1, so it seems appropriate to take stock. In the last ten years there have been a lot of developments, indeed, a true revolution with regard to private antitrust enforcement in Europe. This statement does not imply a positive or negative stance vis-à-vis private actions for damages in the area of competition law but merely describes a reality. The Court of Justice has spoken three times in preliminary rulings. In 2001 and 2006, it set out the general principle and spelled out the constitutive conditions of individual liability for damages2, in Courage and Manfredi 3, respectively, while in 2011, in Pfleiderer 4, it was called for the first time to make a balancing between the right to damages and the protection of leniency programmes.

In the legislative context, the last ten years have seen important developments. First, at the EU level, the European Commission published a Green5 and a White Paper6 in 2005 and 2008, respectively. In early 2011, the Commission also launched a public consultation aimed at achieving a coherent approach towards collective redress in the EU7. In 2009, a leaked copy of a Directive proposal was widely circulated in Brussels but the Union has so far not proceeded to legislate in this area. Nevertheless, the recent Commission Work programme confirms that in 2012 there will be a legislative proposal for private enforcement.

Meanwhile, in order to assist the Commission in the formulation of guidance to be provided to national courts on the quantification of damages, a study was commissioned and published on DG Competition’s website in January 20108. Then, in June 2011, the Commission held

a public consultation and published a Draft Guidance Paper on quantifying harm in actions for damages based on breaches of the EU antitrust rules9.

Second, at the national level, there have been various reforms designed to facilitate private antitrust enforcement, spanning from the UK Enterprise Act 2002, to the 7th amendment of the German Law against Restraints of Competition (GWB)10 and most recently to new legislation in Bulgaria11, the Czech Republic12, Denmark13, Hungary 14, and Italy15. Then, there is now a growing mass of national cases, including awards for damages, establishing national precedents and dealing not only with the fundamental questions of the existence of a remedy but also with the more specific conditions for the exercise of the right to damages.

E-Competitions has played a critical role in these developments. The private initiative has filled in an important gap, i.e. the building of a corpus of valuable information on EU and mainly national doctrine, legislation and precedent. Following three e-Competitions special bulletins on this topic, in 200516, 200617 and 201018, it is a pleasure to revisit the past decade and have a glimpse of what we can define as “second generation” topics, assuming that the “first generation” questions (existence of a remedy and basic conditions for the exercise of the corresponding right) have now been settled. I leave aside purely procedural questions or questions faced only in one Member State, such as the time limits sagas in the UK19 or elsewhere20 and concentrate on the questions of standing and passing-on, characterisation of damages, quantification of harm, causation, binding effect of public authorities’ decisions, collective claims and access of claimants to the public authority’s file.

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Private enforcement: An overview of EU and national case law

Standing and passing-on Many national laws in Europe contain restrictive rules on standing for competition law-related damages actions. In continental legal systems, the question of damages for competition law infringements has been more or less clear in jurisdictions following the unitary norm system of the French Civil Code (Article 1382), where the sweeping general nature of the national rule on civil liability allows for a liberal approach with regard to standing, but problems have existed in countries following the German doctrine of Schutznorm, where plaintiffs claiming damages have to belong to a group of persons whom the legislator intended to protect. In some other countries, notably Italy, the courts had difficulties in granting standing to certain persons, in particular consumers, because of a distinction made between subjective rights (diritti soggettivi) and lawful interests (interessi legitimi). According to this approach, the competition rules protected only the latter and consumers could not avail themselves of this protective scope21.

In Germany itself, until the latest amendment of the Competition Act, standing to sue for damages was conferred only on persons within the “protective scope” of the law. With regard to liability based on German competition law violations, the German courts tended to grant standing only to persons at whom the illegal activities were specifically directed22. For these reasons, section 33(1) GWB, which now applies both to German and to EU competition law-based liability, relaxed the rules on standing by referring to “affected persons”, including competitors and “other market participants”.

However, even under the more relaxed test, German courts have struggled with the question of standing because of the existence of a specific rule against the passing-on defence in the Competition Act (section 33(3) GWB). This rule led the courts to be rather reluctant to grant standing to indirect purchasers, bar some exceptional circumstances. The reason has invariably been the risk of unjust enrichment for claimants and multiple liability for defendants. The latter risk has actually led some German courts to innovative, if not impracticable, solutions, while attempting to reconcile the EU law requirements for a broad rule of standing with the German sensitivities. Thus, the Berlin Higher Regional Court, in the Berliner Transportbeton case23, recognised indirect purchaser standing, while eliminating the risk of multiple liability by considering direct and indirect purchasers as joint creditors (Gesamtgläubiger). The court, however, stopped short from providing a rule on contribution among the joint creditors.

In Carbonless paper, a claim for damages was brought against a member of a price-fixing cartel, following on from a 2001 decision by the Commission24. The Karlsruhe Higher Regional Court awarded damages to a savings bank acting on behalf of an indirect purchaser but, controversially, the judgment strengthened the

case of direct purchasers by restricting the passing-on defence. In so doing, it narrowed the chances for indirect claimants, as well as the circumstances under which they can seek redress. According to the court, such indirect purchasers can only pursue damages if they are customers of direct subsidiaries of the cartel members.

However, this ruling was recently reversed by the German Supreme Court25, which held that indirect purchasers, who have acquired goods at an inflated price from a company which has itself been the victim of a price-fixing cartel, can bring damages claims against members of the cartel. At the same time, cartel members may invoke the passing-on defence, by pointing out that the claimant has passed on the overcharge to its customers and was therefore not exposed to the full “cost” of the cartel. In other words, the only meaning that can now be given to section 33(3) GWB is that, in principle, the passing-on defence is available, but the burden of proving the “passing on” of costs down the chain will have to be borne by the defendant.

In France, on the contrary, where standing has never been an issue, the courts fully recognise the passing-on defence. A 2010 ruling of the French Supreme Court actually reversed an appellate judgment for failure to assess whether the claimant had fully or partly passed on to its clients the overcharge resulting from the lysine cartel. Such passing-on would have amounted, according to the Supreme Court, to unjust enrichment. It is notable that the court’s judgment seems to place the burden of proof on the claimant and has been criticised for viewing the passing-on question only as a shield26, unlike the 2008 Commission White Paper, which proposes the admissibility of the passing-on defence but stresses that the corresponding burden of proof must be borne by the defendant.

This is not the first time that a French court admitted the passing-on defence. In the Vitamins litigation, the Nanterre and Paris Commercial Courts27 found that direct purchasers of vitamins passed or could have passed the cartel overcharge on to their customers. Of the two judgments, the first one received a lot of criticism because the court adduced that there was a pass-on from statements by the Commission that the cartel harmed consumers.

Quantification of harm National courts have not very often reached the stage of quantifying the harm in private antitrust enforcement cases. There have been many cases which were settled28. At the same time, there are examples where the national courts established the liability but left the question of quantification of harm to be decided at a later stage, assuming that the parties would then conclude a settlement29.

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Claimants often find it difficult precisely to quantify the harm they have suffered as a result of an infringement of the EU competition rules due to a number of factors, including evidentiary burdens, lack of access to data, and/ or the general difficulty in producing robust estimations of damage. This can be quite a demanding procedure, as both the 2009 Study and the 2011 Draft Guidance Paper show. It is necessary to rely on economic experts, but then again the whole exercise must be very rigorous and avoid being based only on theoretical models. These difficulties are exemplified in the Spanish Antena 3 case, where the Madrid Court of First Instance partially accepted Antena 3’s claims and awarded EUR 25 million in damages30, on the basis of an expert’s report submitted by Antena 3. The judgment was, however, subsequently overturned by the Madrid Court of Appeal31, because the Antena 3 experts’ quantification of the damage was flawed. The court considered that Antena 3’s loss of profit must be proved with rigour and that it was unacceptable to award damages where proof of such loss is based on a theoretical expert report that runs counter to reality.

Interestingly, there have been quite a few awards of damages in exclusionary conduct cases. This seems to contradict the commonly held view that it is easier to quantify the harm in exploitative (e.g. cartels) than in exclusionary cases. Nevertheless, difficulties remain with regard to compensation of lost profits. Thus, in Verimedia, a French case, a competitor sought damages following an exclusionary agreement32. The claim followed on from a 1998 decision of the then French Competition Council, which found that the defendants had voluntarily delayed the communication of information to the claimant necessary for it to conduct its activities in the market for media services. In its claim, Verimedia sought to recover damages as a result of loss of clientele. The Versailles Court of Appeal considered that, while the claimant was entitled to recover damages as a result of its loss of clientele, the quantum of those damages should be reduced due to the claimant’s lack of knowledge of the business area in which it was starting up, and the lack of precision of certain of its orders. The court therefore compensated the claimant only for the lost opportunity to penetrate the market more quickly. Moreover, the court rejected the claim for damage resulting from the difference between the claimant’s expected business plan and its actual financial results, considering that since loss of clientele and the non-attainment of expected profits are one and the same loss, they can be compensated only once.

In INAZ Paghe, an Italian case, INAZ sought to recover damages for the harm suffered as a result of the National Association of Employment Consultants’ collective boycott of its software packages33. In its judgment, the Milan Court of Appeal awarded damages, after applying a “but for” test. But the court stopped there. While INAZ was able to show that, prior to the boycott, its

business was growing at a rate of more than 10% per annum and that this increase had suddenly ceased at the time of the boycott, the court considered that it could not be sure that this growth would have continued at a similar rate. An exclusionary case is also the first instance where a UK court granted damages. This was based on previous infringement decisions by the OFT in an abuse of dominance case concerning margin squeeze and rebates in the pharmaceutical sector. While the case was still pending before the Competition Appeal Tribunal, the court awarded “interim damages” for an amount of £2 million34. That represented, in the court’s view, roughly 70% of the likely final damages award. The case was then settled and no final judgment was rendered.

In exploitative cases, mainly cartels, a first barrier to cross, in quantifying the harm, is to prove that the cartel actually produced an overcharge. Three recent cases in Germany discuss this question. In theVitamins case, the Dortmund Regional Court applied the prima facie rule that35, a market price is generally lower than a cartel pri. In Berliner Transportbeton, the German Supreme Court (BGH)36, which was deciding on the appeals from the public enforcement decision of the Bundeskartellamt, stated that the longer is the cartel’s duration and the greater its geographic area, the higher should be the threshold for showing that a cartel did not accrue any economic benefit from its activity37. The court thus concluded that prices in the cartel were likely to be higher than in a competitive market. Then, on the civil side of this case, the Berlin Higher Regional Court38 held that there is a prima facie evidence that any quota cartel has had an anticompetitive and thus a price-enhancing effect. Furthermore, the court held that it can be assumed that the agreement of setting up a cartel is typically put into practice by its members. In other words, in both of these questions the defendant carries the burden to prove the opposite.

The latter principle has drawn some criticism because it is possible that a cartel was ineffective and hence there was no overcharge. There may also be decisions by competition authorities concerning agreements that infringe Article 101 TFEU or equivalent national provisions “by object” but may have never been implemented. In these cases the overcharge may also be negligible or zero39. Even on a cartelised market, price increases might also be explained by e.g. an unexpected increase in demand, as the Mannheim Regional Court has pointed out in the Carbonless paper case40.

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Characterisation of damages In cartel cases, quantification of harm is closely related to the legal characterisation of damages, i.e.whether these can be restitutionary or even punitive, in order to compensate the victim, while avoiding to embark on a demanding calculation and quantification of harm.

When the Manfrediruling of the Court of Justice was referred back to the national court, the Justice of the Peace of a small Southern Italian city followed an approach based on a mixture of equity and deterrence41. This damages claim followed on from a 2000 decision by the Italian competition authority, which found that the members of a car insurance cartel had collectively raised their premiums by 20%. In that decision, the authority had used the “yardstick method” in calculating the cartel overcharge by comparing the prices in the cartelised Italian market with the average European prices in other European (non-cartelised) markets. In support of his damages claim, the claimant relied on that finding. The court, adjudicating on the basis of equity, considered that the Italian competition authority’s finding as to the 20% overcharge amounted to a “simple presumption” and that the defendant had failed to rebut it. The court went further than full compensation by awarding the claimant double damages in order to increase deterrence and to skim off the illegal profits made by the defendant as a result of the cartel.

On the other hand, in Devenish, the English High Court decided, as a preliminary issue, that the non bis in idem principle precludes an award of exemplary damages in a case in which the defendants have already been fined or even not fined (as successful immunity applicants). At the same time, the court held that a restitutionary award, i.e. gain-based damages, was not available for competition law-based torts. The court also rejected the claim for an account of profits, which is a remedy aimed at stripping a wrongdoer’s profits42. On appeal, the Court of Appeal upheld the judgment and did not consider that the principle of effectiveness of EU law dictated a different result43.

V. Causation Causation is another important question. In Arkin, a case concerning liner conferences and the alleged violation of Articles 101 and 102 TFEU, the English High Court found that the right test for causation was whether the breach of duty was the dominant or effective cause of the loss. On the basis of that test, the court was required to consider whether the claimant was the author of its own misfortune by seeking to stay in a loss-making market44. In the end, the court decided that the plaintiff’s own irrational pricing policy was the predominant cause of his business failure. Thus, the conduct of a plaintiff who continues trading, although he knows that his business is evaporating, may take the form of contributory fault, break the chain of causation and thus exclude the defendant’s liability.

In another case, a Swedish court struggled with establishing causation and quantifying harm caused by an exclusionary abuse45. In proceedings brought before the Stockholm District Court by competitors of VPC, the central securities depository in Sweden, the claimants argued that VPC’s refusal to supply them with full CD-ROM copies of share registers constituted an abuse of a dominant position and that VPC should be ordered to pay damages. The court agreed that VPC had abused its dominant position, but awarded damages for half of the amount claimed, since full proof had not been presented by the claimants with respect to the quantum of their damages. For example, in relation to rental and employee costs, the court considered that it could not be excluded that office space and staff could have been used by other parts of the claimants’ business that were not affected by the abuse. Similarly, because the economy as a whole was in recession during the period when the abuse took place, the claimants were unable to precisely identify which part of the losses were the result of the defendant’s abusive conduct, and which part was caused by the general economic downturn.

Binding effect A comparative analysis of national competition laws shows that although a pre-existing decision by an administrative authority may be used by the courts and the litigants to establish and prove certain facts, in particular in case of follow-on civil actions, such a decision does not normally acquire the status of binding authority, though it can certainly be persuasive authority. However, some Member States have introduced a rule that civil courts in follow-on proceedings for damages are bound by final infringement decisions of national competition authorities46.

The scope, however, of this binding effect is not always clear, as, indeed, the English case law shows. Thus, in Crehan v. Inntrepreneur 47, a case decided on appeal from the High Court, the English Court of Appeal was confronted with the effect that past European Commission decisions had on a civil case where the facts were similar but not identical. The Commission in its past decisions, which were considered to be relevant to the facts of the civil case at hand, had found that the cumulative networks of the lease agreements between certain beer suppliers and pub tenants contributed to the foreclosure of the UK on-trade beer market, thus falling foul of Article 101(1) TFEU. In Crehan, the English courts had to identify whether the cumulative effect of several similar networks of beer distribution agreements foreclosed the UK market. The Court of Appeal reversed the High Court findings that a beer tie imposed on a pub tenant had not infringed Article 101 TFEU and held that the High Court judge should have followed the European Commission’s findings in the similar cases referred to above. It was the first time that the English Court of Appeal had awarded damages for breach of competition law48.

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This was not, however, the last episode and the House of Lords overturned the Court of Appeal and found that the High Court judgment should be restored. The House of Lords referred to the ECJ case law on conflicts between decisions of the Commission and national courts and followed a narrower concept of conflict, holding that there was no conflict between the Commission decisions and the High Court’s finding that the agreements did not infringe Article 101(1) TFEU. According to the House of Lords, whilst the court should respect the Commission’s expert analysis, Commission decisions are ultimately only part of the admissible evidence which the court must take into account.

Similar is the recent Enron case49, where the UK Office of Rail Regulation had found that EWS was in breach of Article 102 TFEU for abusing its dominant position, by charging Enron discriminatory prices for access to its rail freight services without having any objective justification. In a follow-on action, the Competition Appeal Tribunal, held that there was no liability in damages for lack of causation50. On appeal, the English Court of Appeal ruled that tribunals overseeing damage claims are bound by the facts contained in an antitrust decision, but stressed that these have to be clear statements and not “stray phrases”51. In that case, the courts accepted that they were bound by the regulator’s findings with regard to antitrust liability but that the question of civil liability was open.

There are also other examples of national courts hesitation to accept a binding effect of administrative authority decisions over civil court proceedings52.

Collective claims – Class actions The introduction of US-style class actions does not find favour in Europe and has been one of the main points of controversy around the European Commission’s legislative proposals in this area. At the same time, some Member States recognise the need for the law to make possible a degree of aggregation of claims and have recently introduced legislation providing for opt-in class action possibilities. However, most Member States still lack specific legislative bases for such types of collective claims.

In the UK, parties have tried, at times successfully53, to rely on existing civil procedural mechanisms, such as the Group Litigation Orders (GLOs). GLOs are most often used in mass tort personal injury cases and financial loss cases and are an “opt in procedure” publicised through the England and Wales Law Society. Then, recently, the English Court of Appeal rejected the attempt to use Rule 19.6 of the English Civil Procedure Rules to claim damages on behalf of all direct and indirect purchasers of air freight services from BA, without having identified and requested consent from all affected parties. Rule 19.6 allows representative actions where the

party bringing the claim and each party in the represented class, has the “same interest” in the claim, but the court thought that the claimants were abusing the law and attempting to introduce from the back door an opt-out class action model54.

The absence of class actions and collective relief at EU or national level has not, however, stood in the way of claimants joining their claims in national proceedings, using various mechanisms that the national laws allow for. Thus, a mechanism which has successfully been used to aggregate claims is the CDC model, where a specific business organisation (CDC) acquires the claims by customers of cartel members and then brings a bundled claim in its own name and on its own account. At the same time, CDC ensures that a part of the damages recovered will be transferred to the cartel victims. This model has attracted criticism, yet national courts, such as the Higher Regional Court of Düsseldorf, have considered it legal and the corresponding bundled claims admissible55. Then, in Slovenia, in 2010, a civil society was created to seek damages for some 75,000 Slovenian households from five electricity distributors that were condemned by the national competition authority for a violation of the competition rules, because they had simultaneously announced an increase in retail electricity prices for households56. Similarly, claimants have used “special purpose vehicles” to bring collective claims in the Netherlands.

Access to the administrative file – Protection of Leniency Programmes A thorny issue that has to do with the broader question of the relationship between private and public enforcement is access by civil litigants (claimants, in most cases) to the administrative file of competition authorities, in particular, discoverability in civil proceedings of corporate statements made or submitted by leniency applicants. The recent ECJ ruling in Pfleiderer, has offered the Commission and national competition authorities some support in their approach to resist or limit access to such evidence by civil claimants, when the effectiveness of their leniency programmes is at stake57.

In the specific case, the Bundeskartellamthad imposed fines on the three largest European producers of decor paper and on five individuals personally responsible for price-fixing agreements and agreements on capacity closure. Pfleiderer, a purchaser of decor paper, brought an action for damages against the producers of decor paper, from which it stated it had purchased goods. In order to prepare for the civil proceedings, it applied to the Bundeskartellamt for comprehensive access to the files relating to the cartel proceedings. After Pfleiderer received a version of the three decisions imposing fines, from which identifying information had been removed, and a list indicating the evidence collected in

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a search, it expressly requested, by way of a second application, access also to the leniency applications, the documents voluntarily transmitted by the immunity recipients and the evidence collected. The authority informed the claimant that it intended to accede to that request only in part and to limit access to the file to a version from which confidential business information, internal documents, the corporate statements themselves and documents provided by the applicants had been removed.

The Court of Justice, reminded, first of all, that neither the EU Leniency Notice, nor the ECN Notice, nor the ECN Model Leniency Programme bind the authorities and courts of the Member States, due to their soft law nature. Then, the Court, preferred to give a judgment of principle and not to offer a list of discoverable and non-discoverable evidence, as Advocate General Mazák had proposed in his Opinion. Since this was a matter, for which no Union legislation was in existence, it fell under the competence of the Member States. Therefore, the Court probably felt that it was impossible or – at least – inelegant for itself to construct a specific rule of discoverability. Its reliance, however, on the general principle of effectiveness58 left no doubt that “leniency programmes are useful tools if efforts to uncover and bring to an end infringements of competition rules are to be effective and serve, therefore, the objective of effective application of Articles 101 TFEU and 102 TFEU. The effectiveness of those programmes could, however, be compromised if documents relating to a leniency procedure were disclosed to persons wishing to bring an action for damages” 59.

Then, after repeating the Courage and Manfredi well-known text as to the important role of private antitrust enforcement in Europe60, the Court ruled that a balancing exercise is here necessary that can be conducted by the national courts only on an ad hoc basis, taking into account the above principles and the overall circumstances of each case.

It should, therefore, be no surprise that Pfleiderer resulted in more preliminary references to Luxembourg. A recent preliminary reference from Austria exemplifies this problem: Under Austrian procedural law, access to cartel proceeding files may only be granted if all parties involved give their express consent. In the case at hand, all cartel members refused to give their consent, so that the Austrian Cartel Court would have to deny access to the cartel file. However, in the light of ECJ’s ruling in Pfleiderer the Austrian Cartel Court enquires whether the Austrian provision conflicts with EU competition law61.

Apart from cartel proceedings, where disclosure is usually targeted at leniency-related documents, recently plaintiffs have also sought to obtain access to documents held by competition authorities in non-cartel cases. For example, Ma Liste de Courses (MLDC), an online discount coupon processor had initially submitted a complaint before the French Competition Authority against two rival companies, HighCo and Sogec, for setting a standard for online coupons without consulting other companies, such as MLDC. The Autorité decided to accept commitments offered by the two undertakings, to remove competition concerns, however, MLDC subsequently introduced an action for damages for the harm it had suffered during the period the allegedly anti-competitive conduct was at place. In so doing, MLDC sought non-confidential versions of all written and oral statements gathered by the NCA during its investigation, including the parties’ and third parties’ written observations, minutes of hearings, replies to questionnaires and several other documents on the administrative file. The French court decided that disclosure was justified, bearing in mind that the plaintiff only sought access to non-confidential versions of such documents62. This is an interesting case showing that claimants may be more successful in their requests for discovery in cases not involving a cartel leniency programme. Indeed, it may be argued that the public policy concerns to resist such disclosure recedes in cases of commitments decisions which, in terms of competition enforcement, do not mean as much as the leniency programmes63.

Conclusion It is clear that private actions in Europe have taken off. National courts no longer deal with the question whether there is a remedy for victims of anti-competitive conduct, but rather they must now rule on a series of important questions. As a result, an interesting body of national case laws is taking shape. Broadly speaking, the national courts are confronted with the same problems, have similar concerns and respond to the latter in similar ways. This “spontaneous” harmonisation is to be welcomed.

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Notes 1 Case C-453/99, Courage Ltd. v. Bernard Crehan, 2001 ECR I-6297.

2 See Assimakis P. Komninos, EC Private Antitrust Enforcement, Decentralised Application of EC Competition Law by National Courts (Oxford/Portland, 2008), pp. 162-179.

3 Joined cases C-295/04 to C-298/04, Vincenzo Manfredi et al. v. Lloyd Adriatico Assicurazioni SpA et al., 2006 ECR I-6619. See Eddy de Smijter, Denis O’Sullivan, The European Court of Justice renders a preliminary ruling under article 234 EC considering issues raised in the European Commission’s Green Paper on antitrust damages actions (Manfredi), 13 July 2006, e-Competitions, No 36562.

4 Case C-360/09, Pfleiderer AG v. Bundeskartellamt, Judgment of 14 June 2011, not yet reported.

5 Commission Green Paper on Damages Actions for Breach of the EC Antitrust Rules, COM(2005) 672 final. The Green Paper is accompanied by a Staff Working Paper which set out the various options more discursively: Commission Staff Working Paper, Annex to the Green Paper on Damages Actions for Breach of the EC Antitrust Rules, SEC(2005) 1732.

6 Commission White Paper on Damages Actions for Breach of the EC Antitrust Rules, COM(2008) 165 final. The White Paper itself is a rather short document that in reality summarises the far more developed Staff Working Paper Accompanying the White Paper on Damages Actions for Breach of the EC Antitrust Rules, SEC(2008) 404). See Daniel Fasquelle, Rodolphe Mesa, Actions en dommage et interets pour violation des regles de concurrence : Le livre vert de la Commission europeenne, Concurrences N° 1-200.

7 Commission Staff Working Document, Public Consultation: Towards a Coherent European Approach to Collective Redress, SEC(2011)173 final.

8 Oxera, Assimakis P. Komninos et al., Quantifying antitrust damages, Towards non-binding guidance for courts, Study prepared for the European Commission, December 2009, available at http://ec.europa.eu/competition/ant....

9 DG-Competition Draft Guidance Paper, Quantifying Harm in Actions for Damages Based on Breaches of Article 101 or 102 of the Treaty on the Functioning of the European Union, Public Consultation, Brussels, June 2011, available at http://ec.europa. eu/competition/con....

10 See Helmut Bergmann and Frank Rohling, The new German antitrust Act gives way to damages actions (Gesetz gegen Wettbewerbsbeschränkungen in der Fassung des Beschlusses des Deutschen Bundestages), 16 June 2005, e-Competitions, n° 1140; Stefan Thomas, Damage claims under the revised German Act against restraints of competition (§ 33 Gesetz gegen Wettbewerbsbeschrankungen), 1 July 2005, e-Competitions, n° 12706.

11 See Dessislava Fessenko, The new Bulgarian Act on the Protection of Competition, 28 November 2008, e-Competitions, n° 23076.

12 See Robert Pelikan and Jan Poevratil, The Czech NCA circulates a draft amendment to the Act on the Protection of Competition aimed at a harmonisation with substantive EC competition law, inclusion of specific procedural rules and launch of private enforcement, May 2008, e-Competitions, n° 19852.

13 See Jacob Borum, The Danish Parliament approves an amendment enabling antitrust class action, 22 February 2007, e-Competitions, n° 13745.

14 See Bálint Bassola, «Modernization« of the Hungarian Competition Act, 1 November 2005, e-Competitions, n° 406; Gusztav Bacher, The Hungarian Parliament adopts an amendment limiting the liability of leniency applicants and introducing new calculation of amount of damages, 23 March 2009, e-Competitions, n° 26235.

15 See Cristina Poncibo, The Italian Law providing for a group action has entered into force permitting collective enforcement of competition Law in Italy (“Azione di classe”), 9 July 2009, e-Competitions, n° 26730.

16 See Denis Waelbroeck, Antitrust Damages Decisions in Europe: Publication of the first results of the e-Competitions Damages Research Program – I, 28 January 2005, e-Competitions, n° 7.

17 See David Revelin, An economic assessment of damages actions for breach of antitrust rules: Foreword of the 2006 edition, 1 June 2006, e-Competitions, n° 137.

18 See Alessandro Marra, Cesare Pozzi, Alessandro Sarra, Private antitrust actions: An overview of national case laws – Foreword of the 2010 edition, 8 November2010, e-Competitions, n° 32953.

19 See e.g. Alison Jones, The UK Competition Appeal Tribunal is to rule on two follow-on damages’ claims (Emerson Electric/ Morgan Crucible; The Consumers’ Association/JJB Sport), 5 March 2007, e-Competitions, n° 13381; Sebastian Peyer, The UK Competition Appeal Tribunal clarifies limitation period for follow-on claims lodged with the Tribunal (Emerson a. o./Morgan Cricible a. o.), 17 October 2007, e-Competitions, n° 15523; Sebastian Peyer, The UK Competition Appeal Tribunal refuses permission to initiate follow-on claims for damages (Emerson Electric/Morgan Crucible), 28 April 2008, e-Competitions, n° 17678; Robert Eriksson, The British Competition Appeal Tribunal denies permission to bring follow-on damages actions while appeals to the European Court of First Instance are pending (Emerson Electric et al. / Morgan Crucible), 28 April 2008, e-Competitions, n° 19627; Charles Balmain, David Smales, The English Court of Appeal overturns Competition Appeal Tribunal in a pro-defendant judgment on follow-on damages actions (Bcl Old Co. Ltd. / BASF), 22 May 2009, e-Competitions, n° 26357; Frances Murphy, Stephen Brown, Matt Evans, The UK Competition Appeal Tribunal clarifies timing rules for follow-on private antitrust actions for damages against cartel participants (BCL, BASF), 19 November 2009, e-Competitions, n° 33762.

20 See Florian Neumayr, The Viennese Commercial Court finds a private damage claim following a fine decision in the non-cash payment industry time barred, 3 September 2009, e-Competitions, n° 30713.

21 Eventually, this ruling was reversed by the Sezioni Unite (a special chamber with an increased number of judges) of the Italian Supreme Court. See Tommaso Salonico, The Italian Supreme Court recognizes the right of consumers for claim for damages in case of violation of antitrust rules (Mario Ricciarelli/Unipol Assicurrazioni), 4 February 2005, e-Competitions, n° 27.

22 For examples, see Frank Rohling, Thomas Lübbig, Several German courts of first instance decide on damages claims brought by the customers of the vitamins cartel (Vitaminpreise), 1st April 2004, e-Competitions, n° 329.

23 See Stefan Thomas, Christoph Stock, The Berlin Higher Regional Court rules on key issues of standing and standard of proof in cartel damages suits, 1st October 2009, e-Competitions, n° 30783.

24 See Justus Herrlinger, The Karlsruhe Higher Regional Court awards € 100,000 in damages to a claimant on behalf of a printing firm which purchased paper from a subsidiary of a cartel holding the passing-on defence does not apply (Carbonlesspaper cartel), 11 June 2010, e-Competitions, n° 32441;Stefan Thomas, Christoph Stock, A German Higher Regional Court rules on key issues of private damages actions against hardcore cartels, decides on the indirect customer’s right to claim and addresses the challenging task of quantifying antitrust damages (Carbonless Paper Cartel), 11 June 2010, e-Competitions, n° 32898.

25 BGH, 28.6.2011 – KZR 75/10.

26 See Hugues Parmentier, Mathilde Descôte, The French Commercial Supreme Court validates the passing-on defence in a follow-on action based on the lysine cartel (Doux Aliments/Ajinomoto Eurolyne), 15 June 2010, e-Competitions, n° 32066.

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27 See Michel Debroux, A French commercial court dismisses a private action claiming compensation for damages caused by antitrust violation, on the basis of a broad interpretation of the passing on defence (Vitamins cartel), 11 May 2006, e-Competitions, n° 12129; Elie Kleiman, Alexandra Szekely, A French Court refuses to grant damages to alleged victim of the vitamin cartels (Juva/Hoffmann La Roche), 26 January 2007, e-Competitions, n° 13385, respectively.

28 For example, at least 4 cases brought before the UK Competition Appeal Tribunal under sections 47A and 47B of the Competition Act 1998 have been settled: Case 1060/5/7/06, Healthcare at Home v. Genzyme Ltd.; Case 1078/7/9/07, The Consumers Association v. JJB Sports plc; Case 1088/5/7/07, ME Burgess, JJ Burgess and SJ Burgess (trading as JJ Burgess & Sons) v. W Austin & Sons (Stevenage) Ltd. and Harwood Park Crematorium Ltd.; Case 1108/5/7/08, N J and D M Wilson v. Lancing College Ltd. See Alexandra Brown, The UK Competition Appeal Tribunal grants interim damages of £ 2 M in a case of abusive drugs price setting (Healthcare at Home/Genzyme), 15 November 2006, e-Competitions, n° 12650; Suzanne Innes-Stubb, The UK Competition Appeal Tribunal awards for the first time ever interim damages in an abuse of dominant position case on the drugs market (Healthcare at Home/Genzyme), 15 November 2006, e-Competitions, n° 12623; Liza Lovdahl Gormsen, The UK Court of Appeal rules on discussions on vertical basis and restricts the CAT’s test (Argos and Littlewood – JJB Sports), 19 October 2006, e-Competitions, n° 12451; Bruce Kilpatrick, The Court of Appeal of England and Wales dismisses appeals from two decisions of the CAT which had dismissed appeals from two decisions of the OFT finding resale price maintenance and price fixing in respect of replica football kit, toy and games (Argos, Littlewoods, JJB Sports), 19 October 2006, e-Competitions, n° 32229; Alison Jones, The UK Competition Appeal Tribunal is to rule on two follow-on damages’ claims (Emerson Electric/ Morgan Crucible; The Consumers’ Association/JJB Sport), 5 March 2007, e-Competitions, n° 13381 and Liza Lovdahl Gormsen, The UK Competition Appeal Tribunal relies on the refusal to supply doctrine to adopt a very wide interpretation of abuse (Burgess/OFT), 30 March 2006, e-Competitions, n°521.

29 See Aitor Montesa Lloreda, Angel Givaja Sanz, Spanish first case ordering compensation of damages suffered as a result of antitrust violation (Hidroelectrica de l’Emporda), 16 April 2002, e-Competitions, n° 20064.

30 See Aitor Montesa Lloreda, Angel Givaja Sanz, Spanish Courts rules on private actions for damages derived from antitrust law infringements in the subscriber directory inquiries market (Conduit / Telefonica - Antena 3 / Spanish Football League), 11 November 2005, e-Competitions, n° 469.

31 Audiencia Provincial de Madrid, Judgment of 18.12.2006; upheld by Tribunal Supremo, Judgment of 14.4.2009.

32 See Anne-Marie Luciani, The Versailles Court of Appeal makes good the damages resulting from delayed communication of key market information (Verimedia/Mediametrie), 12 June 2004, e-Competitions, n° 567.

33 See Paolisa Nebbia, An Italian Court of Appeal holds a professional association liable for the damage suffered following a boycotting campaign (INAZ Paghe/ ANCL), 10 December 2004, e-Competitions, n° 528.

34 See Charles Balmain, James Johnson, The UK Competition Appeals Tribunal receive the first claims for damages based on abuse of dominant position (Healthcare at Home/Genzyme), 10 May 2006, e-Competitions, n° 1332; Alexandra Brown, The UK Competition Appeal Tribunal grants interim damages of £2 M in a case of abusive drugs price setting (Healthcare at Home/Genzyme), 15 November 2006, e-Competitions, n° 12650; Suzanne Innes-Stubb, The UK Competition Appeal Tribunal awards for the first time ever interim damages in an abuse of dominant position case on the drugs market (Healthcare at Home/Genzyme), 15 November 2006, e-Competitions, n° 12623; Alison Jones, An UK Competition Court grants interim relief in ‘follow on’ damages claim (Healthcare at Home/Genzyme), 11 January 2007, e-Competitions, n° 12710.

35 LG Dortmund, 1.4.2004 – 0 55/ 02 Kart.

36 See Florian Wagner-von Papp, The German Court of Justice rules on the standard of proof for the existence of a revenue surplus from a cartel agreement (Transportbeton Berlin), 28 June 2005, e-Competitions, n° 467.

37 BGH, 28.6.2005 – KRB 2/05.

38 See Stefan Thomas, Christoph Stock, The Berlin Higher Regional Court rules on key issues of standing and standard of proof in cartel damages suits, 1st October 2009, e-Competitions, n° 30783.

39 See Oxera, Assimakis P. Komninos et al., Quantifying antitrust damages, Towards non-binding guidance for courts, Study prepared for the European Commission, December 2009, available athttp://ec.europa. eu/competition/ant..., p. 88. This is also recognised by the Court of Justice in Prym, where it was held there can be no “presumption that the implementation of the cartel has created an effect on the market” and that “where the Commission considers it appropriate for the purposes of calculating the fine to take that optional element – the actual impact of the infringement on the market – into account, it cannot just put forward a mere presumption but (…) must provide specific, credible and adequate evidence with which to assess what actual influence the infringement may have had on competition in that market” (Case C-534/07 P, William Prym GmbH & Co. KG v. Commission, 2009 ECR I-7415, paras 80 and 82).

40 See Stefan Thomas, The German Mannheim Regional Court decided on the right to claim against a vertically integrated cartelist and the standard of proof for antitrust damages in a follow on-suit (Carbonless paper), 29 April 2005, e-Competitions, n° 16044.

41 See Paolisa Nebbia, An Italian Court awards to a consumer damages amounting to twofold the loss suffered as a result of a cartel among insurance companies after obtaining an ECJ preliminary ruling (Manfredi), 21 May 2007, e-Competitions, n° 14052.

42 See Anthony Dawes, The English High Court finds that following an infringement decision by the European Commission, the appropriate claim is for compensatory and not exemplary or restitutionary damages (Devenish/Sanofi-Aventis – «Vitamins Cartel«), 19 October 2007, e-Competitions, n° 15157;Robert Eriksson, The UK High Court rules that restitutionary damages are not an available remedy in anti-trust cases, nor will an account of a defendant’s profits be appropriate (Devenish/Sanofi-Aventis «Vitamins Cartel«), 19 October 2007, e-Competitions, n° 15159; Jon Lawrence, The UK High Court rules that exemplary damages are not available to claimants bringing actions against cartelists that have already been fined by the EU Commission, even if their fine has been commuted due to an immunity or leniency application (Devenish/Sanofi-Aventis, Vitamins cartel), 19 October 2007, e-Competitions, n° 15029; Dimitrios Sinaniotis, The UK High Court of Justice rejects a claim for exemplary damages following an infringement decision by the European Commission (Devenish/Sanofi-Aventis ‘Vitamins cartel’), 19 October 2007, e-Competitions, n° 15158.

43 See David Henry, A UK Court of Appeal holds that compensatory damages are adequate and that a restitutionary reward is not available following a finding that the competition rules have been breached (Devenish Nutrition Limited vs Anofi-Aventis SA (France) and Ors), 14 October 2008, e-Competitions, n° 242; Andrea Lista, The UK Court of Appeal decides on restitutionary damages in the Devenish case, 14 October 2008, e-Competitions, n° 26360.

44 See Marjorie Holmes, The Queen’s Bench Division of the High Court of England & Wales gives important guidelines as to the standard of proof for claiming damages in competition cases (Arkin), 10 April 2003, e-Competitions, n° 34951.

45 See Jakob Lundstrom, The Stockholm District Court awards damages in private antitrust case for abuse of dominant position (Europe Investor Direct a. o./ VPC), 20 November 2008, e-Competitions, n° 22902.

46 See sections 58A and 47A of the UK Competition Act 1998, as subsequently amended; section 33(4) of the German Competition Act (GWB); Article 88/B(6) of the Hungarian Competition Act. In addition, the Polish Supreme Court has held that NCA decisions establishing breaches of competition law are binding on civil courts. See Tomasz Koziel, The Polish Supreme Court rules that a civil court may establish an abuse of a dominant position independently, unless the NCA has already found such an abuse (Torun Timber Industry Enterprise), 27 July 2008, e-Competitions, n° 34951.

47 See Orla Lynskey, The UK Court of Appeal held that beer distribution agreements containing ties were contrary to Art. 81.1 EC and thus upheld an appeal for damages (Crehan), 21 May 2004, e-Competitions, n° 345.

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48 Jacques Derenne, The UK Court of appeal applies Art. 81 EC and award damages for breach of EC law (Crehan), 21 May 2004, e-Competitions, n° 204.

49 See Jack Connah, The UK Court of Appeal upholds a decision of the UK Competition Appeals Tribunal denying a claimant follow-on damages (Enron Coal Services/English Welsh & Scottish Railway), 19 January 2011, e-Competitions, n° 34065.

50 See David Smales, The UK Competition Appeal Tribunal denies the claimant damages in first English follow-on damages case to reach trial (Enron Coal Services / English Welsh and Scottish Railway), 17 March 2010, e-Competitions, n° 30779.

51 Enron Coal Services Ltd. v. English Welsh & Scottish Railway Ltd., (2011) EWCA Civ 2.

52 E.g. Pablo Ibanez Colomo, A Spanish Court refuses to qualify a contract as a resale agreement and holds that the qualification given by «administrative bodies« to similar agreements is not binding upon national Courts (Melón/Repsol), 7 July 2004, e-Competitions, n° 171.

53 See Marjorie Holmes, The Commercial Court of the Queen’s Bench Division of the High Court of England and Wales makes a group litigation order in a competition case in the automobile sector (Prentice / DaimlerChrysler UK), 30 April 2001, e-Competitions, n° 36124.

54 See Simon Barnes, The English Court of Appeal holds its judgment on representative action in claim against air cargo cartel (Emerald Supplies and Anor/British Airways), 18 November 2010, e-Competitions, n° 33293; Morris Schonberg, The English Court of Appeal rejects attempted ‘opt-out’ class action (Emerald Supplies and Southern Glass House Produce/British Airways), 18 November 2010, e-Competitions, n° 33285; Alison Knight, The English Court of Appeal confirms strike-out of the representative element in cartel damages claim (Emerald Supplies Limited/British Airways), 18 November 2010, e-Competitions, n° 33893; Zoi Sazaklidou, The Court of Appeal rules that English court procedures do not allow representative actions on behalf of a class of direct and indirect purchasers of the air-freight cartel (Emerald Supplies/British Airways), 18 November 2010, e-Competitions, n° 34063;Ilan Sherr, The English Court of Appeal rejects representative element of private damages action (Emerald Supplies, Southern Class House Produce / British Airways), 18 November 2010, e-Competitions, n° 34263; Ruchit Patel, David R. Little, The UK Court of Appeal upholds Canchellor’s order striking out ‘representative parts’ of the class action claim (Emerald/ British Airways), 18 November 2010, e-Competitions, n° 35238. See also Renato Nazzini, The UK High Court allows a defendant’s application to strike out the representative element of the claim in an action seeking relief from damages (Emerald Supplies Limited / British Airways), 8 April 2009, e-Competitions, n° 28301.

55 See Justus Herrlinger, The Higher Regional Court of Düsseldorf declares admissible a claim for damages against cartel member (CDC – Cartel Damage Claims), 14 May 2008, e-Competitions, n° 19856. See also Stefan Thomas, A German Court rules on procedural key issues for cartel damages suits pawing the way to de facto class action for cartel damages in Germany (Cartel Damage Claims SA), 21 February 2007, e-Competitions, n° 13224.

56 In that case, the electricity distributors were given a notice for voluntary repayment of the overcharge and, eventually, the Slovenian consumers were given credit notes corresponding to the overcharge that each household had paid.

57 See Pedro Callol, The European Court of Justice acknowledges the need to weigh the different interests at stake when granting access to documents containing leniency applications in the context of civil claims for damages, in line with US courts (Pfleiderer), 14 June 2011, e-Competitions, n° 36988.

58 Pfleiderer, supra note 4, para. 24.

59 Ibid, paras 25-27.

60 Ibid, paras 28-29.

61 See Christina Hummer, The Austrian Cartel Court brings a preliminary ruling before the European Court of Justice on the question of access to cartel files by third parties adversely affected by a cartel (Printing chemical producers), 12 October 2011, e-Competitions, n° 40181.

62 See Lionel Lesur, Philipp Werner, The Paris Commercial Court orders the French Competition Authority to disclose antitrust investigation documents (Ma Liste de Courses/HighCo and Sogec), 24 August 2011, e-Competitions, n° 38891.

63 For the converse case where the plaintiff objects to the defendants’ use of documents from the administrative file in a civil follow-on procceeding for damages, see Dodo Chochitaichvili, The Paris Commercial Court allows the production of documents that are necessary for the rights of defence (Outremer Telecom, Orange Caraibe, France Télécom), 8 November 2011, e-Competitions, n° 40566.

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