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European Competition Law2017
The Team
Justin Pierce [email protected]
Arnljotur Astvaldsson [email protected]
Therése Fahlström [email protected]
The Course
The aim of the course is to enable students to criticallyreflect upon the basic principles, legislation and case law ofEuropean Union Competition Law.
The course includes a review of the European Unioncompetition law – its economic basis, legal substance andcurrent legal developments.
Course Plan
Introductory 16/01 - 26/01 Lectures on foundational principlesArticle 101 TFEU 30/01 - 06/02 Lectures and seminars Article 102 TFEU 09/02 – 17/02 Lectures and seminarsIPR & Competition 20/2 LectureMerger Control 24/2 - 2/3 Lectures and seminarsProcedure 6/3 LectureFines & Damages 9/3 Lecture
The Schedule
https://se.timeedit.net/web/lu/db1/jur2/ri105m5y3554Z6QY77Q157gXZQ0Q6287Y23032Y.html
Session Reading
Reading
All the materials and books listed in the reading areavailable through the library resource, Oxford CompetitionLaw, which is available through your student log in.
http://oxcat.ouplaw.com.ludwig.lub.lu.se/home/ocl
https://www-bloomsburycollections-com.ludwig.lub.lu.se/book/eu-competition-law-an-analytical-guide-to-the-leading-cases/
Assessment
Examination will take the form of a written exam. Gradingwill be based on oral and written presentations (50%) andthe written exam (50%).
Oral Presentations: Seminars will consist of allocated tasksto each student, these will be graded.
Written Exam: Take home written exam, 24 hours to handin examination. Will be limited in word count to 3,000words.
Lecture 1RESEARCH METHODS AND MATERIALS IN COMPETITION LAW
Objectives
1. Evaluate the uniqueness of competition law as a field ofstudy;1. Appreciate the methodological approaches to the
study of competition law;2. Understand that the law operates within an
economic framework;3. Understand the constitutional importance of EU
competition law.2. Gain a general understanding of the types of materials
that are pertinent to the study of Union competition law.
Reading
The following reading is essential:
• Richard Whish, David Bailey, Competition Law (8th Edition),pages 1-26
• Alison Jones, Brenda Sufrin, EU Competition Law: Text, Cases,and Materials (6th Edition), pages 99-110
• Hylton, Keith N: Antitrust Law and Economics, Chapter 1
Lecture 1RESEARCH METHODS
What is competition?
“Competition means a struggle or contention for superiority,and in the commercial world this means a striving for thecustom and business of people in the market place:competition has been described as ‘a process of rivalrybetween firms … seeking to win customers’ business overtime’” Whish and Bailey (p.4)
Perfect competition
Perfect competition is a market structure where many firmsoffer a homogeneous product. Because there is freedom ofentry and exit and perfect information, firms will makenormal profits and prices will be kept low by competitivepressures.
•The market price is set by the supply and demand of the industry•This sets market equilibrium price of Pe
* http://www.economicshelp.org (helpful site for basics of economics)
What are the benefits to competition?
At its simplest –– the benefits of competition are:• lower prices• better products• wider choice• greater efficiency than would be obtained under
conditions of monopoly. Whish and Bailey (p.4)
What does efficiency mean?
Allocative efficiency Under perfect competition economic resources are allocatedbetween different goods and services in such a way that it is notpossible to make anyone better off without making someone elseworse off.
Productive efficiency Under perfect competition goods and services will be produced atthe lowest cost possible, which means that as little of society’swealth is expended in the production process as necessary.
See Whish & Bailey chapter 1
Can competition fail?
• Suppose, hypothetically, that there is a single producer ofapples. What happens to price and quantity? Themonopolist clearly can do better than set the price at €1and make only a ‘normal’ profit. It can restrict output, thuscreating some artificial scarcity, and raise the price, is thisa competitive failure?
Can competition fail?
• Suppose, hypothetically, that there are two producers oforanges (A and B). What happens to price and quantitywhen A and B agree to charge the same price as eachother? What happens when A and B agree to divide theorange market equally and not compete with each othergeographically? Are these activities competitive failures?
Does competition always work?
Economic theory has contributed to a greaterunderstanding of the effects of certain common businesspractices that regularly become the subject of competitioninquiries. When are these practices anti-competitive andwhen not? The answer is not always obvious. (Economics for CompetitionLawyers (2nd Edition), pg 2)
Competition law
• Is there a role for law in competition failure?– Competition rules are necessary to deal with market imperfections and failures. In
particular, left alone to determine their own conduct, firms are likely to combine orcollude in a way which is profitable to them but which works to the detriment ofsociety as a whole. Adam Smith himself described the tendency of those operatingwithin the same trade to conspire to fix prices, in what we now call cartels. Onmarkets where only a few firms operate without any one of them dominating (calledan oligopoly) they may be able to behave as monopolists by acting together withoutconspiring. (Jones and Sufrin, chapter 1)
• Competition authorities and courts have to distinguishbetween business practices that are on balance pro-competitive (they do more good than harm to competitionand efficiency) and those that are on balance anti-competitive. (Economics for Competition Lawyers (2nd Edition, chapter 1)
Methodological considerations
• Commonly seen as a law and economics method ofresearch;
– Means that the law cannot be read in isolation;– Economic terms are incorporated into law, these need
to be understood in the legal and economic context;– Theories of harm are based on economic theories as
are the remedies.• Different from a ‘black letter’ law approach to research;
– Both the legal and economic interpretations ofconcepts, activities behaviours and harm need to beconsidered and understood.
Lecture 1ECONOMIC FRAMEWORK
Economic context in the EU
“Article 3 of the Treaty of Rome set out a broad range of the ‘activities’ ofthe Community. This included a highly significant provision, Article 3(1)(gwhich stated that the activities should include:
a system ensuring that competition in the internal market is not distorted.
Article 3(1)(g) was of great importance because it embedded theprinciple of undistorted competition in the fundamental provisions of theTreaty.
The Court saw it as the foundation for the specific competition rules andreferred to it in interpreting those rules, most famously in the seminalContinental Can case.”
(Jones and Sufrin, chapter 1)
Treaty changes: TFEU
Protocol No. 27 on the Internal Market and Competition statesthat the High Contracting Parties,Considering that the internal market as set out in Article 3 of the Treatyon European Union includes a system ensuring that competition is notdistorted, Have agreed that: To this end, the Union shall, if necessary,take action under the provisions of the Treaties, including under Article352 of the Treaty on the Functioning of the European Union.
Article 3(1)(b) TFEU states that one of the areas in which theUnion has exclusive competence is:The establishing of the competition rules necessary for the functioning ofthe internal market.
C-52/09, Konkurrensverket v TeliaSonera Sverige AB
20. In order to answer those questions, it must be observed at the outset thatArticle 3(3) TEU states that the European Union is to establish an internal market,which, in accordance with Protocol No 27 on the internal market and competition,annexed to the Treaty of Lisbon (OJ 2010 C 83, p. 309), is to include a systemensuring that competition is not distorted.
21. Article 102 TFEU is one of the competition rules referred to in Article 3(1)(b)TFEU which are necessary for the functioning of that internal market.
22. The function of those rules is precisely to prevent competition from beingdistorted to the detriment of the public interest, individual undertakings andconsumers, thereby ensuring the well-being of the European Union (see, to thateffect, Case C-94/00 Roquette Frères … paragraph 42).
Methodological considerations
• The constitutional placement of the competitionprovisions must be taken into account when consideringthe law, “the function of EU competition law is to ensurethat competition in the internal market is not distorted, inorder to achieve the objectives of the EU.”
– This colours the economic interpretations;– This influences the goals of competition law and
makes them more complex than mere marketregulation;
– This allows a more complex theory of harm andtheories of anti-competitive behaviour.
Section conclusion
Law has a role to play in regulating competition, howeverthere are no hard edges to defining and researchingcompetition law. Understanding competition law requires anappreciation that:
– Economics is a driving force underlying and directing the law;
– Economic concepts are embedded in the law and the application andinterpretation thereof;
– The uniqueness of the of the internal market project and the Unionexclusive competence in the area of competition enforcement adds anadditional layer of complexity to the understanding of the law.
Lecture 1COMPETITION MATERIALS
European competition enforcement
• In 1962 Council Regulation 17 gave wide powers to enforce and apply thecompetition rules to the Commission. Regulation 17 was replaced byRegulation 1/2003, which took effect on 1 May 2004.
• The Commission is divided into Directorates-General. One of these, theDirectorate-General for Competition (DG Comp) is responsible for competitionpolicy. One Commissioner has responsibility for the competition portfolio.
• DG Comp has the exclusive competence for Union competition law;
• The national competition authorities (NCAs) of the Member States and thenational courts share with the Commission the responsibility for the applicationand enforcement of the EU competition rules. (Jones and Sufrin pgs. 91-110)
Article 103 TFEU
Article 103 confers a general power on the Council to adopt secondary legislation to giveeffect to the principles laid down in Articles 101 and 102. It provides:
1. The appropriate regulations or directives to give effect to the principles set out in Articles101 and 102 shall be laid down by the Council on a proposal from the Commission and afterconsulting the European Parliament.
2. The regulations or directives referred to in paragraph 1 shall be designed, in particular:
– (a) to ensure compliance with the prohibitions laid down in Article 101(1) and inArticle 102 by making provision for fines and periodic penalty payments;
– (b) to lay down detailed rules for the application of Article 101(3), taking into accountthe need to ensure effective supervision on the one hand, and to simplifyadministration to the greatest possible extent on the other;
– (c) to define, if need be, in the various branches of the economy, the scope of theprovisions of Articles 101 and 102;
– (d) to define the respective functions of the Commission and of the Court of Justiceof the European Union in applying the provisions laid down in this paragraph;
– (e) to determine the relationship between national laws and the provisions containedin this Section or adopted pursuant to this Article.
–
Implementing legislation
The Council has adopted regulations pursuant to Article103 implementing Articles 101 and 102.The most important of these regulations is Regulation1/2003, which replaced Regulation 17 of 1962 on 1 May2004.Regulation 1/2003 confers power to enforce the competitionrules on the Commission and on the NCAs of the MemberStates. (Jones and Sufrin pgs. 91-110)
Block exemptions
The Council has adopted regulations delegating power tothe Commission to adopt regulations granting blockexemptions, by which Article 101(1) is declared to beinapplicable to specified types of agreements. TheCommission has issued a number of block exemptionsunder these delegated powers. Some of these are general(such as those on vertical restraints and horizontalcooperation agreements) and some relate only to particularsectors (for example, motor vehicle distribution, insurance,and maritime transport). (Jones and Sufrin pgs. 91-110)
Communications and notices
The Commission issues Communications and Notices(some of which are called ‘Guidelines’) which play asignificant role in EU competition law. They are importantstatements of how the Commission deals with certainmatters and are essential to an understanding of how thecompetition rules are applied in practice. Some Noticesstate the Commission’s view of the substantive law andexplain the approach the Commission takes to particularkinds of agreements, practices, or mergers and some setout the principles by which the Commission exercises itspowers and administrative discretion. (Jones and Sufrin pgs. 91-110)
Commission decisions case law of the EU Courts
• DG Comp. has power to take decisions finding aninfringement of the EU competition rules and fining thoseresponsible.
http://ec.europa.eu/competition/antitrust/cases/index.html
• The role of the Union courts is to review decisions of DGComp.
DG Comp.
• http://ec.europa.eu/competition/antitrust/legislation/legislation.html
• http://ec.europa.eu/competition/antitrust/legislation/handbook_vol_1_en.pdf
Section conclusion
Union competition law, notices and guidance is a uniquearea and the format of the law is different to that of otherareas of Union law.
– It is necessary to familiarise yourself with thedifferent materials and become used to working withthem;
– Remember that the Commission Decisions oncompetition matters are also strong sources ofinformation.
