Article 101 of the Treaty on the Functioning of the European Union

8/11/2019 Article 101 of the Treaty on the Functioning of the European Union

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Article 101 of the Treaty on the Functioning of theEuropean UnionFrom Wikipedia, the free encyclopedia

Scottish EnlightenmentphilosopherAdam Smithwas an early enemy of cartels, but did not advocate them being

outlawed

Article 101of theTreaty on the Functioning of the European Unionprohibitscartelsand other agreements

that could disrupt freecompetitionin theEuropean Economic Area's internal market.Article 101reads,[1]

1. The following shall be prohibited as incompatible with the internal market all agreements between

undertakings, decisions by associations of undertakings and concerted practices which may affect trade

between Member States and which have as their object or effect the prevention, restriction or distortion of

competition within the internal market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby

placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties ofsupplementary obligations which, by their nature or according to commercial usage, have

no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this article shall be

automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in

the case of:

any agreement or category of agreements between undertakings,

any decision or category of decisions by associations of undertakings,

any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of

goods or to promoting technical or economic progress, while

allowing consumers a fair share of the resulting benefit, and

which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the

attainment of these objectives;
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(b) afford such undertakings the possibility of eliminating competition in respect of a

substantial part of the products in question.

Businesses who infringe these rules can be subjected to large

fines by theEuropean Commissionor national competitionauthorities. Prison is not available as a punishment under Article

101 itself. Some countries within theEuropean Unionhave laws

that impose criminal sanctions, including prison, for participation

in anti-competitive agreements or practices.

Contents

[hide]

1 Goals

2 Undertakings

3 Collusion

4 Trade between Member States

5 Exemptions

6 See also

7 References

8 Notes

[edit]Goals

Article 101EC's goals are unclear. There are two main schools of

thought. The predominant view is that only consumer welfare

considerations are relevant there.[2]

However, a recent book[Book by

whom? Link to book and author page?]argues that this position is erroneous

and that other Member State and European Union public policy

goals (such as public health and the environment) should also be

considered there.[3]

If this argument is correct then it could have a

profound effect on the outcome of cases[4]

as well as the

Modernisation process as a whole.

[edit]Undertakings

Main article:Undertaking

Under EC law cartels are banned by Article 101TFEU.Art. 101

TFEU makes clear who the targets of competition law are in two

stages with the term agreement between "undertaking". This is

used to describe almost anyone "engaged in an economic
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activity",[5]

but excludes both employees, who are by their "very

nature the opposite of the independent exercise of an economic

or commercial activity",[6]

and public services based on "solidarity"

for a "social purpose".[7]

[edit]Collusion

See also:Collusion

Undertakings must then have formed an agreement, developed a

"concerted practice", or, within an association, taken a decision.

LikeUS antitrust,this just means all the same thing. According to

Advocate General Reischl in Van Landewyck[1980][8]

there is no

need to distinguish an agreement from a concerted practice,

because they are merely convenient labels. Any kind of dealing or

contact, or a "meeting of the minds" between parties could

potentially be counted as illegalcollusion.Covered therefore is a

whole range of behaviour from a strong handshakes, written or

verbal agreement to a supplier sending invoices with directions

not to export to its retailer who gives "tacit acquiescence" to the

conduct.[9]

This includes both horizontal (e.g. between retailers) and vertical

(e.g. between retailers and suppliers) agreements, effectively

outlawing the operation ofcartelswithin the EU. Article 101 has

been construed very widely to include both informal agreements

(gentlemen agreements) and concerted practices where firms

tend to raise or lower prices at the same time without having

physically agreed to do so. However, a coincidental increase in

prices will not in itself prove a concerted practice, there must also

be evidence that the parties involved were aware that their

behaviour may prejudice the normal operation of the competition

within the common market. This latter subjective requirement of

knowledge is not, in principle, necessary in respect of

agreements. As far as agreements are concerned the mere

anticompetitive effect is sufficient to make it illegal even if the

parties were unaware of it or did not intend such effect to take

place.

[edit]Trade between Member States
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Article 101 states that agreements that fall under it should

affect trade between Member States. This has been interpreted in

a non-restrictive way, for example, several agreements amongst

firms with no production in theEUhave been considered to affect

trade between Member States. In theWebb-Pomerenecase, EU

law was applied to aUScartelwith no production in theEU.[10]

[edit]Exemptions

This section does notciteanyreferences

or sources.Please help improve this section

byadding citations to reliable sources.Unsourced material may be challenged

andremoved.(July 2008)

Exemptions to Article 101 behaviour fall into three categories.

First, Article 101(3) creates an exemption where the practice is

beneficial to consumers, e.g., by facilitating technological

advances (efficiencies), but does not restrict all competition in the

area. In practice very few official exemptions were given by the

Commission and a new system for dealing with them is currently

under review. Secondly, the Commission has agreed to exempt

'Agreements of minor importance' (except those fixing sale prices)

from Article 101. This exemption applies to small companies,

together holding no more than 10% of the relevant market in the

case of horizontal agreements and 15% each in the case of

vertical agreements (the de minimiscondition). In this situation as

with Article 102 (see below), market definition is a crucial, but

often highly difficult, matter to resolve. Thirdly, the Commission

has also introduced a collection of block exemptions for different

types of contract and in particular in the case ofvertical

agreements.[11]

These include a list of permitted contract terms,

and a list of those banned in these exemptions (the so-

called hardcore restrictions).
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Article 101 of the Treaty on the Functioning of the European Union