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Chapter 2 Competition Regime Article 101 Notes

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Chapter 2 CHAPTER 2 ELEMENTS OF ARTICLE 101 TFEU Agreement, Concerted Practice or Decision of Association of Undertakings




Article 101(1) It prohibits agreements that have an effect on trade between EU countries and restrict competition in the EU. The effect on trade and competition can be actual or potential, but must be appreciable.

Prohibition in Article 101(1) There are four elements to a breach of Article 101(1):

There must be some form of agreement, decision or concerted practice between undertakings;

Which may affect trade between EU member states;

Which has as its object or effect the restriction, prevention or distortion of competition within the EU; and

Which has an appreciable effect on competition.

Article 101(2)

Article 101(3)

It provides that agreements caught by Article 101(1) are void and unenforceable (subject to Article 101(3)). But, if anti-competitive provisions can be severed from the rest of the agreement under the governing law of the contract, the unenforceability affects only the anti-competitive restrictions.

An agreement caught by Article 101(1) may nonetheless escape prohibition if it gives rise to benefits that outweigh its anti-competitive effects. Article 101(3) sets out the criteria for making this assessment.

Exemption under Article 101(3) An agreement that is caught by Article 101(1) may nevertheless escape prohibition (and thus voidness) under Article 101(3). There are 2 types of exemption:

Individual exemption.

Block exemption.



Chapter 2


Until 1 May 2004 - Commission had the power to determine whether an agreement meets the criteria set out in Article 101(3). Agreements caught by Article 101(1) were automatically void and unenforceable unless they benefited from an exemption. Exemptions are: individual exemption or block exemptions.

Since 1 May 2004- By introducing Regulation 1/2003, national competition authorities and national courts of member states are also required to apply and enforce Article 101 (and Article 102). The Commission no longer has the exclusive right to apply Article 101(3). The system of notifying agreements for individual exemption came to an end but the system of published block exemptions remains.

October 2011- Commission published Best Practices on the conduct of proceedings concerning Articles 101 and 102 of the TFEU (the Best Practices).

March 2012 - Commission published its Antitrust Manual of Procedures, which explain the internal Commission procedures for the application of Articles 101 and 102, but the Best Practices take priority.

Prohibition in Article 101(1) A breach of Article 101(1) consists of 4 elements:

Element 1 - must be some form of agreement, decision or concerted practice between undertakings;

Element 2 - may affect trade between EU member states;

Element 3 - has as its object or effect the restriction, prevention or distortion of competition within the EU; and

Element 4 - has an appreciable effect on competition.

Element 1

Element 2

Element 3

Agreement, decision or concerted practice between undertakings

Single and continuous infringement

Prevention, restriction or distortion of competition within the EU

Question 1: Is there an agreement, decision or concerted practice between undertakings?

Question 2: What is the definition of "Undertaking"?

Question 1: If "Element 1" is fulfilled, does it affect the trade between EU member states?

Question 1: If "Element 2" is fulfilled, does the agreement consists of an "object or effect" the prevention, restriction or distortion of competition" within the EU?

Element 4 Appreciable effect on competition

Question 1: If the agreement has an effect on the EU member states, does it cause the competition within EU to be appreciable?




Chapter 2


How to Prove Element 1: Agreement, decision or concerted practice between undertakings


If there are undertakings involved, is there an existence of agreement/decision/concerted practice between them?

Agreements, decisions of associations of undertakings and concerted practices are not mutually exclusive concepts.

The same conduct can be both an agreement and a concerted practice (Hercules v Commission [1991] ECR 1711). Agreements


What is "Undertaking"?


Hofner and Elser [1991] ECR I-1979: Any natural /
legal person can be an undertaking provided it is engaged in economic or commercial activity (whether or not profit-making and regardless of its legal status, or the way in which it is financed).


Who can be "Undertaking"?

Individuals - undertakings if they are carrying on a commercial activity. (Eg. sole trader/ consultant /
licensor of IP rights).

State undertakings - member states, regional and local authorities may be undertakings if they are engaged in commercial activities. Except: if a state undertaking is not an undertaking when purchasing goods or services for non-economic purposes (Case FENIN [2006] ECR I-6295).

What can be considered as "agreement"?
need not be in writing / be legally binding sufficient if there has been an expression of a joint intention to behave in a particular way. Konica OJ 1988 L78/34: a continuing trading relationship = can be an agreement

Decisions by associations of undertakings




Types of agreement?

Horizontal or vertical (Consten and Grundig v Commission [1966]
ECR 299): horizontal agreement (i.e. between competitors
undertakings trading at the same level of supply); or

- Vertical agreement (i.e. between a

What are "associations of undertakings"?
Example. Trade associations agricultural co-operatives non-profit-making associations What is considered "decisions"?
Rules of an association are treated as a "decision" under Article 101(1). Eg. Rules require members of the association to adhere to

Concerted practices


What is "concerted practice"?
When there is absence of an agreement /decision but consist of direct /indirect contact between competitors, the object / effect is to influence the conduct on the market of a competitor => Concerted practices

ICI v Commission [1972]
F: the price of aniline dyes increased; by 15% between the 7th and 20th Jan 1964, 10% on the last of Jan 1965 and betw 8% and 12%
in Oct 1967, (no written, no parole evidence, only this parallel behaviour is a collusion or infringement has occurred or evidence of infringement? It is inherent nature of infringement or evidential nature?)



Non-EU undertakings - may be subject to Article 101(1) if they are party to an agreement that has effects within the EU.


How wide is the concept of an "undertaking"?

be understood as designating an economic unit. An undertaking can be broader than a single company.

Eg. When a subsidiary carried out instructions given by its parent co. The conduct of a subsidiary may be imputed to the parent co as subsidiary does not act independently. Considering the economic, structural and legal link between the subsidiary and its parent, it could be a "single undertaking" under Art 101.


Chapter 2 manufacturer and wholesaler, or a wholesaler and retailer)

Multilateral, bilateral or unilateral The agreement can be multilateral or bilateral. Eg. where the conduct takes place in the context of an existing, underlying agreement, apparently unilateral conduct has been found to fall within Article 101(1).

Cases/Examples: AEG-Telefunken AG Commission [1983] ECR 3151

ECJ: (1) a parent co which has a 100% shareholding in a subsidiary has infringed the competition rules as there is a rebuttable presumption that the parent co exercises a decisive influence over its subsidiary. (2) It is sufficient for the Commission to prove that the subsidiary is wholly owned by its parent co (3) For parent co to rebut such presumption, it needs to have sufficient evidence to show that its subsidiary acts independently on the market. (4) Otherwise, the parent co can to be jointly and severally liable for the infringement of the subsidiary.


I: does it make economic sense to collude? Is collusion likely to be successful?

1. Identify a mutually beneficial strategy

2. Detect deviation from the strategy - detect "cheating", who is trying to get more sale secretly

3. Punish deviation- i.e. make sure that a person make no sale for instance, lower the price than that person Could parallel conduct occur absent collusion without generating any informative evidence? (very difficult) H: the producers increased on 3/4 same colours of aniline instead there are thousands colours of aniline. The court did not rely on this parallel conduct because there are some other written evidence with the customers the price through telex, the telex from the different producers, the wordings are the same including the spelling. That shows there is a collusion.

Recommendations of an association (even if non-binding) can be taken to constitute an agreement between the members.

Bayer AG v Commission (Adalat)
[2000] ECR 3383 (1) General Court seems to have raised the standard of proof needed to establish the presence of an agreement by stating that the continuation of commercial relations after the adoption of a unilateral policy is not sufficient to establish the presence of an agreement, and it is necessary to show a concurrence of wills.

Appeals by Dow and EI DuPont in chloroprene rubber cartel case ECJ: (1) Dismissed the appeals. (2) Confirmed that liability for the unlawful cartel conduct of a 50:50 joint venture can be imputed to its parent Cos. (3) The Commission proved that both parent Cos did exercise decisive influence over the joint

(1) AEG's refusal to appoint additional dealers was held to result from an implied agreement between AEG and its existing distributors to limit the number of distributors appointed

Cases/Examples: Akzo Nobel NV and others v Commission [2009]
ECR I-8237

certain price levels/
common terms of trade, restrict members' freedom to trade with third parties, or impose discriminatory restrictions on the admission of new members, can infringe Article 101(1).

(2) The Commission's appeal against this judgment was dismissed on 6 January 2004 by the ECJ (Bundesverband der Arzneimittel-Importeure v Bayer and Commission
[2004] ECR I-23)).

Intra-group Intra-group

-. arrangements (i.e.


Examples of "concerted practice" Eg. 1: Competitors inform each other in advance of the action each intends to adopt, eg. future price increases, so that each may regulate its commercial conduct in the knowledge, or with strong expectation that its competitors will behave in the same way.

Eg 2: Parallel market conduct (Ahlström v Commission [1993] 4 CMLR 407) - competitors raise their prices by a similar amount at the same time, will create the suspicion that there is a concerted practice. But, parallel conduct per se is not conclusive evidence of a concerted


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