EU: Tighter control of anti-competitive agreements

The European Commission has tightened up on small agreements that restrict competition. For years various iterations of its Notice on agreements of minor importance (referred to by recalcitrant legal Latin-speakers as the de minimis exception) condoned agreements between parties so small as to have, effectively, no market power. Their activities would rarely have an appreciable effect on competition, although the exception never allowed the cardinal sins of price fixing and market sharing, the effect of which is always deemed to be appreciable.

The Notice has to be renewed from time to time, like much competition legislation, because markets evolve over time. The latest Notice (25 June), or more precisely the Guidance that comes with it, gives a free pass to agreements between competitors (actual or potential) whose market share does not exceed 10 per cent, and between non-competitors whose share does not exceed 15 per cent. Nothing new there. How to measure market share remains a bit of a mystery, explained in further guidance from the Commission: franchised dealers will always be considered to have a high market share, because broadly speaking (and of course it is not quite what the block exemption says) they enjoy fairly exclusive rights in their locality.

Importantly, though, the new Notice (and the Guidance) extend the non-exception for hardcore restrictions to cover all restrictions which have the object of restricting competition. It will still avail agreements which have that effect but which were not created with a view to achieving it, a distinction which might be difficult to draw in practice.

This change makes good sense, as focusing only on price fixing and market sharing was always a rather narrow approach. It will still be possible to gain exemption from the prohibition (a different matter from exception), but the Commission does make clear in its guidance that it is very unlikely that an agreement aimed at restricting competition (as opposed to that merely being an ancilliary effect) will qualify for exemption – it is unlikely to produce a benefit for consumers, and will inevitably impose restrictions which are not indispensable to the achievement of its objectives. Businesses which might previously have thought they were safe might have to think again.

The Notice applies only to the application of EU competition rules: but national competition laws form a seamless part of the EU-wide regulation of anticompetitive conduct, and the Guidance is expressly aimed at national competition authorities and courts as well. We have our own, slightly different, de minimis rule in the UK, but it should no longer be relied upon for “restrictions by object”.

Antitrust: Commission consults on review of safe harbour for minor agreements ("De Minimis" Notice)

The Notice on Agreements of Minor Importance has always been a key document in EU competition law (and EC competition law before it). It defines what agreements (and other arrangements) are too small to be worth bothering with, because they can safely be assumed not to affect competition, or at least not appreciably. Specialised car manufacturers can rely on the Notice to save them from having to comply with the block exemption. Now the Commission is consulting on a new Notice: here's what its press release says.

The European Commission invites comments on a proposal to revise its guidance notice for assessing when minor agreements between companies are not caught by the general prohibition of anticompetitive agreements under EU competition law. The proposal aims at updating the present Notice, in particular taking into account recent developments in the case law of the European Court of Justice (ECJ*). Comments can be submitted until 3 October 2013. In light of these comments, the Commission will then adopt a new notice in
2014.
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements that are aimed at or result in appreciable restrictions of competition. The current De Minimis Notice (adopted in 2001) defines, with the help of market share thresholds, what the Commission considers not to be an appreciable restriction of competition (see IP/02/13 ). It creates a safe harbour for companies whose market shares do not exceed 10% for agreements between competitors or 15% for agreements between non-competitors. If an agreement contains a hardcore restriction, that is, a very serious restriction for which there is a presumption of anti-competitiveness, the companies cannot benefit from the safe harbour.
The Commission's proposal is aimed at ensuring consistency with other recently amended competition rules, in particular the 2010 Vertical and Horizontal Block Exemption Regulations (see IP/10/445, MEMO/10/138, IP/10/1702, MEMO/10/676) and with an ECJ ruling of December 2012 (case C-226/11 Expedia). 
Questions from a French court in the Expedia case raised the issue of whether agreements aimed at restricting competition (restrictions having an anti-competitive "object") can be considered as "de minimis" and therefore fall outside the scope of Article 101(1). The Expedia judgment has established that a restriction with an anticompetitive object constitutes, by its very nature, an appreciable restriction of competition. The proposal therefore clarifies that agreements containing a restriction by object are always seen as an appreciable restriction of competition.

The consultation documents are available at: http://ec.europa.eu/competition/consultations/2013_de_minimis_notice/index_en.html

* It annoys me when lawyers lazily give the Court of Justice the adjective "European". It annoys me a great deal more when another European Union institution does so. The Court is properly called the Court of Justice of the European Union, but that title refers to the institution which consists of two courts, the General Court (which we used to call the Court of First Instance, which made it a bit easier to understand what it was for) and the Court of Justice - just that, which is utterly confusing but must be respected as best we can. Valentine Korah always used to call the Court of Justice "the Community Court", so I wonder whether she'd now call it the "Union Court"? I shall try to find out.