EU Competition Law and Policy

Individual Assignment

Producer: Thorben Schenk

Subject:

European Community Business Law (ECBL)

Term: Semester 2003/ 2004

Word Count: 2,707

Table of Contents page

Contents I
List of Figures II
List of Tables II
List of Abbreviations II
Note II

1. Introduction 1

2. Competition Law – A Brief Outline 1
2.1. The Treaty Articles 81 (85) and 82 (86) 1
2.2. Agreements of Minor Importance – The de Minimis principle 2
2.2.1. The “New Notice” C 368/13 2
2.2.2. The Impact on the Effectiveness of Competition Policy Intervention 4

3. Weltbummel AG and Bouncing Balls Ltd 5
3.1. The Case – Their Action 5
3.2. The Legal Assessment 6
3.3. The Outcome – Worst Case Scenario 8

4. Conclusion 9

Bibliography 9

Appendices 10

1. The Treaty Article 81 (85) 10
2. Notice on Agreements of Minor Importance C 372 of 1997 11
3. Commission Notice on Agreements of Minor Importance C 368 of 2001 14
4. Hardcore Restrictions under the New Notice C 368 18
5. Tests 19
6. Press Notice on Competition Policy concerning de Minimis Agreements 19
7. Definitions 21
8. Weltbummel-Case 23


 

List of Figures page

Figure 1: Agreements that fall outside Article 81 (1) 2
Figure 2: Necessary Conditions for the Application of Article 82 2

List of Tables

Table 1: Overview of the changes with the “New” Notice 3
Table 2: Overview of the Contents and Areas of Law 7

List of Abbreviations

BBL Bouncing Balls Ltd
BER Block Exemption Regulation
Commission The European Commission
EC European Community
ECJ European Court of Justice
EDA Exclusive Distribution Agreement
EEA European Economic Area
EPA Exclusive Purchasing Agreement
GDP Gross Domestic Product
MMS Member States
SME Small and Medium Sized Enterprise

1. Introduction

Competition between companies, governments and states within and across the global trading areas¹ has become a vital part in this new world of less political and economical boundaries. Competition law therefore has to regulate the market powers of those who participate in the global exchange of goods and services. “There are now at least 80 systems of competition law in the world, in all continents and in all types of economies; many others are in contemplation.[...]”². It has a substantial impact upon the outline of agreements.

With Articles 81 and 82 of the EEC Treaty EU jurisprudence and the legislative bodies of the Member States (MMS) have a basis to work on this topic of immense importance. Ignoring the competition rules not seldom lead to large fines being levied by the European Commission (in July 1991 Tetra Pak was fined because of competition law infringement with a record sum of ₤52mn)³. The aim of this essay is to briefly outline the scope of EU´s competition policy and laws and to give an insight into both the Agreements of Minor Importance (“de Minimis”) and the impact of Competition Law on the topic of parallel (grey) imports. The latter is examined on a case study given.

The basis of this essay consists of secondary literature taken from books, treaties, articles, notices or webpages. A full bibliography can be found at the end of the main part.

2. Competition Law within the EU
2.1. The Treaty Articles 81 (85) and 82 (86)

Articles 81⁴ and 82 of the EC Treaty are inseperable combined and belong together when examining EU competition law.

Article 81 prohibits all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between MMS and which intend to prevent, restrict or distort competition within the Common Market. It has been established in a number of cases decided by the European Court of Justice (ECJ) that an agreement or concerted practice will infringe Article 81(1) if the agreement or practice has an appreciable effect on competition and trade between Member States⁵. However, Art 81 (3) contains exemptions to Art 81 (1)⁶. The Commission Four conditions⁷ must be fulfilled before the Commission grants this permission:

1. the agreement must improve the production or distribution of goods or promote technical or economic progress
2. consumers must receive a fair share of the resulting benefit
3. it must contain only restrictions which are indispensable to the attainment of the agreement′s objectives
4. the agreement may not lead to the end of competition in that product sector

[...]

1 e.g. NAFTA, MERCOSUR, EEA, EU

2 see: Whish, Richard: Competition Law

3 see Singleton, S.: Introduction to Competition Law,

4 for further reading refer to appendix 1

5 This principle was first established in case 5/ 69 Völk v Verwaeke [1969] ECR 295

6 But Art 81 (3) may not be applied by the national courts. Because of that it is a critical point between judicial scholars whether and in how far a rule of exemptions to Art 81 and can be applied by national courts.

7 taken from: Craig, P.; de Búrca, G.: EU Law, page 964