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LPC Law Notes Commercial and IP Notes

Competition Law Notes

Updated Competition Law Notes

Commercial and IP Notes

Commercial and IP

Approximately 100 pages

A collection of the best LPC Commercial and IP notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through twenty-nine LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short these are what we believe to be the strongest set of CLIP notes available in the UK this year. This collection of notes is fully updated fo...

The following is a more accessible plain text extract of the PDF sample above, taken from our Commercial and IP Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:

Commercial Law

Competition Law

Why is competition law important?

  • Agreements can be void / unenforceable if found to be anti-competitive

  • Substantial fines [e.g. 10% turnover]

  • Creates bad publicity

  • Waste of management time

What does competition law try to achieve?

  • Single market throughout EU

  • Free movement of goods

  • Enforcement at both EU and MS level

Distribution Agency
EU UK
  1. Art 101

  • Appreciable effect

  • NAAT

  • NOAMI

  • Block Exemptions

  1. Art 102

Enforced by Competition commission and the UK Office of Fair Trade [OFT]

  1. Chapter I

  2. Block exemption

  3. Chapter II

Enforced by OFT

Agency agreements will generally fall outside the scope of Art.101 [Para 12-21 Commission Notice May 2010 – confirms this]

Indications that the Agency Agreement is outside Art.101 scope:

  • Consider what the financial / commercial risk borne by the agent is? If the agent does not have ownership of the goods then this is a strong indication that Art.101 will not apply.

  • Agent does not create / operate after-sales / repair / warranty services

  • Agent does not maintain at its own cost or risk stocks of the contract.

Article 101 Treaty of the Functioning of the European Union [TFEU]

Art 101 Criteria to satisfy =

1. Anti-competitive agreements

  • Prohibits… “agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between MS and which have as their object or effect the prevention, restriction or distortion of competition within the internal market”.

Definition
Agreements
  • All types of commercial arrangements

  • Verbal or written

  • Gentleman’s agreements

  • Don’t have to be legally binding

Between undertakings
  • Covers all legal and natural persons

  • Not-for profit organisations

Parent and subsidiary
  • There must be TWO separate undertakings

  • This does NOT include subsidiary companies

  • An agent is NOT a separate economic undertaking – Agent bears no risk to the transaction. Therefore agency agreement likely to fowl of Art.101

Decisions by associations or undertakings e.g. trade associations’ decisions
  1. There must be an appreciable effect on trade between member states

EXCLUSION: “Not capable of appreciably affecting trade” - NAAT
  • Combined market share of parties to the agreement is less that 5% of the relevant market; and

    • Horizontal: parties aggregate turnover in EU is below 40million Euros; or

    • Vertical: seller’s turnover is below 40 million Euros in the EU

  • UK law: S.2(1) Competition Act 1998 / Chapter I prohibition: applies the same restrictions as Art.101 but dealing with affected trade within the UK [the effect on trade must be within the UK].

OFT can choose to enforce EU or UK law [either Art.101 or Chapter I. However, where the agreement’s impact is felt solely in the UK then the OFT must apply CA 1998 and not Art 101.

  1. The object or effect of the agreement is to prevent, restrict or distort competition within the internal market.

  • UK equivalent = S.2(1) CA 1998: prevention, restriction or distortion of competition within the United Kingdom”.

  • “Object infringements” for Vertical relationships =

Fix minimum resale prices; and

Impose export bans

If there is an object infringement = no need to prove that the agreement had the desired effect. The mere existence of the infringement is enough to establish liability.

  • “Effect infringements” - the competition authorities must show that the infringement has an appreciable effect on competition before liability can be imposed.

Agreements that will not breach Art.101:

  1. Not capable of appreciably affecting trade” – [NAAT]

(See above)

  1. No appreciable effect: Notice on Agreements of Minor Importance [NOAMI]:

If this applies – the agreement will be saved and Art.101 will not apply:

Agreements between Small or Medium Enterprises
  • Agreement will not have appreciable effect; OR

  • Undertakings whose annual turnover is below 50 million Euros; OR

  • Balance Sheet value is below 43 Million Euros; AND

  • Who employ not more than 250 people

Vertical Agreements

Market share of each party in the relevant market does not exceed 15%

Threshold is more generous!

Horizontal Agreements Combined market share on relevant market does not exceed 10%
  1. Art. 101(3): Exemption will apply to undertaking’s agreements whose benefits outweigh the anti-competitive effects.

4 limb test: Parties must show

  1. Agreement offers efficiency by contributing to improving production and / or distribution or to promoting technical or economic progress

  2. Agreement offers consumer benefits – and consumers obtain a fair share of these efficiency gains

  3. No restraints placed on undertaking

  4. No competition is eliminated as a result

  • RISKY to reply on this exemption – the parties cannot be sure they will fall within the exemption. It has to make its own assessment and cannot apply to the powers that be to be certain if they benefit from the Art.101(3) exemption.

  1. Vertical Restraints Block Exemption [VRBE]:

Applies to vertical agreements entered into on / after 1st June 2010. Agreement is then safe [BUT NOT if a hard-core restriction applies].

Criteria:

  • It must be a vertical agreement [i.e. 2 undertakings at different stages of the production / distribution chain. Not in competition] (Defined in Art 1(1)(a) of the exemption)

  • Market share thresholds: [“the entry requirements” – Article 3]:

  1. Identify relevant market to determine MARKET SHARE of the supplier

  2. If EITHER party’s market share is more than 30% - the Block exemption will not apply [so consider Art.101 & 102]

  3. If both parties hold 30% or below = block exemption can apply – but subject to hard-core restrictions.

Hard Core Restrictions

  • Article 4

  • Whole agreement will loose protection of block exemption and Art.101 will find it anti-competitive

  1. Price fixing by the supplier / “Resale price maintenance” (allowing supplier to set a minimum sale price for distributor to sell at. Setting a maximum...

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