Handbook of EU Competition Law

Protecting competition from restrictions has now been made part of the objective of the Internal Market in Art. 3 (3) TEU as may be seen in Protocol 27 to the Treaty of Lisbon on the Internal Market and Competition. This protection against distortions of competition, and thus a true competitive system, is reflected by the fact that it is based on ensuring equality of opportunity for all market participants. The distortion-free competition has an independent function. The more economic approach is to reject. The structure is comparable with the fundamental freedoms. The fundamental rights have meanwhile a high importance.

Overlaps are nevertheless possible in areas where German competition law under the German Act against Restraints of Competition (GWB) and European Union competition law largely parallel each other. However, this only applies to the limited scope of Art. 101, 102 TFEU, thus only to circumstances which are apt to impair trade between the Member States or have as their object or effect the prevention, restriction or distortion of competition within the Internal Market. Outside of the area of merger control, any resulting conflicts had not been resolved by means of European law under Art. 103 (2) lit. e) TFEU for a long period of time. Actual problems are the application of the EU rules on competition to undertakings operating internationally, the compatibility with GATT and WTO and the cooperation with competition authorities from third countries, e.g. from the USA.

Together with the fundamental freedoms, the rules on competition ensure free trade within the Internal Market and, from a comprehensive perspective, apply to both private and state actions. There is only minimal overlap as a result of their mutually supplementary function. This is especially the case for rules on competition related to undertakings. Their most significant expression is embodied in the prohibition of cartels found in Art. 101 TFEU. It is shown which forms of undertakings and behaviour are regulated. What are the characteristics of competition, of the relevant market and of capacity to impair trade between member states?

Article 101 (3) TFEU provides the possibility of exempting behaviours otherwise falling within the definition of a cartel from the application of the prohibition of cartels under certain specifically described conditions. First it is to verify whether block exemptions exist, then whether there are individual exemptions. The direct gains in efficiency must be sufficient probable; the consumers must appropriatly participate in benefits, the impairment of the freedom of competition must be indispensable for achieving the desired objective and the competition may not be excluded for a significant share.

Classic cartel agreements must be greeted with scepticism. They generally do not result in any positive effects for consumers and competition. In its Guidelines on horizontal agreements, the Commission highlights specific groups of cases where particular circumstances may act as justification. By contrast, classic cartel agreements may not be removed from the definition of a cartel based on their serious infringements of competition and may likewise not be exempted as a rule. Regularly they are intended. The De Minimis Notice has no application to such agreements from the outset. The second large group of important restraints relevant to competition law comprises vertical restraints like exclusive or selective distribution, franchising and exclusive supply. It was easier accepted depending on market shares of the participating companies.

From a systemic and substantive standpoint, the invalidating effect of Art. 101 (2) TFEU relates to the prohibition of cartels. In this context, the prohibition of cartels is to be viewed on an integrated basis, as has now been codified in secondary law by Art. 1 Council Regulation (EC) No. 1/2003. Now the Directive 2014/104/EU sets out rules to ensure that anyone who has suffered harm caused by an infringement of competition law can effectively exercise the right to claim full compensation for that harm from the violating undertaking or association of undertakings (Art. 1 (1)). But the Member States shall bring into force the laws, regulations and administrative provisions necessary to comply this Directive by 27 December 2016 (Art. 21 (1)). Accordingly, claims for damage are further based on national law. Applicable national law is determined on the basis of the international conflicts of law principles of the forum jurisdiction. Leniency statements and their confidential treatment are a big problem.

Pursuant to Art. 102 TFEU, the abusive exploitation of a dominant position within the Internal Market, or a significant part thereof, on the part of one or more undertakings that is capable of impairing transnational trade is incompatible with the Internal Market. There are different forms of abusive exploitation, included the refusal to grant a license (Microsoft) or a supply (Amazon). Selectively low prices are another current problem.

The law of European anti-trust proceedings comprises all procedural rules relevant to the application of European competition law. These include not only procedural rules related to proceedings before the Commission but also rules related to proceedings in which the national competition authorities apply Art. 101, 102 TFEU. In addition, legal protection against decisions from the Commission and national competition authorities when applying European competition law and procedural rules related to the Commission’s handling of complaints submitted to it are of significance. The influence of the fundamental rights has become much stronger in the recent years. This concerns above all the exorbitant high fines.

The Treaties contain no independent provisions regarding merger control. It may indeed be the case that a merger may be prohibited on the basis of Art. 101, 102 TFEU, however these provisions do not enable merger control on a systematic basis. This basis is given by the EC Merger Regulation which is further developed by the ECJ, so about conglomerate concentrations, market-related uniform behaviour and rescue mergers. The procedure is influenced by the fundamental rights, also the compensation of damages.

Anti-competitive behaviour on the part of an undertaking may also be subject to influence by the state, be it by virtue of inclusion within a legislative framework or be it the result of pressure from the state or even state subsidies. In its well-settled case law, the ECJ applies Art. 101, 102 TFEU via Art. 4 (3) TEU to state measures that comprise the basis for infringement of the rules on competition by undertakings. It is to prefer to apply Art. 101, 102 TFEU directly and exclusively. The ECJ has precised its doctrine in the API case. This concerns above all the justfication.

Art. 106 TFEU is an interface between state intervention in economy for performance of nation-state public service tasks and the obligation, based on economic constitutional law, of the Member States to guarantee a system of undistorted competition. Even if services of general interest are not completely congruent with the services of general economic interest: both have the common core of covering special goods and services that serve existential basic human needs, and therefore must be rendered on a stable basis and not too expensively; a special responsibility of the state arises hereof. In the Dimosia case the ECJ accepted the principle of equal opportunities in favour of other undertakings; an abuse must not be proven if a situational basis is created which opens interventions of monopolists into the primary activities of upstream or downstream segments. This concept reaches too far.