Dr. Volker Soyez
Introduction to EU Competition Law
Universidad de Murcia, 20.2.2015
Stuttgart · Frankfurt · Dresden · Brüssel
EU Competition Law
Agenda
 Introduction to EU competition law
 The cartel prohibition (art. 101 (1) TFEU)
 Exemptions from the cartel prohibition (art. 101 (3) TFEU)
 Abuse of dominance (art. 102 TFEU)
 EU competition law procedure (reg. 1/2003)
 Private enforcement of EU competition law / damages actions
 EU merger control (reg. 139/2004)
 Work and life as a competition lawyer (in Brussels)
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EU Competition Law
Regulatory goal of the competition laws
 „Competition is a situation in a market in which firms or sellers
independently strive for the buyers patronage in order to achieve a
particular business objective eg. profits, sales or market shares“
WorldBank,1999
 The existence of a free and effective competition is one of the key
components of the free market economy
 Free competition promotes economic growth, innovation, tecnological
progress, and the search for the most efficient production methods
 Consumers benefit from free competition in that they can choose from a
great variety of products and services which best serve their needs and
they receive the best price-quality ratio
 Therefore: competition law is set of legal rules which are aimed at
protecting the competitive process with the ultimate goal of maximising
consumer welfare
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EU Competition Law
Pillars of EU competition law
 In order to safeguard free competition EU competition law:
 Prohibits agreements between companies which restrict
competition (art. 101 TFEU)
 Prohibits abuses of dominance (art. 102 TFEU)
 Imposes a merger control system (reg. 139/2004)
 Imposes a state aid control system (art. 107 et seq. TFEU)
 EU competition law constrains and complements but does not generally
replace national competition law
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EU Competition Law
Institutional Framework
 Free Trade Area covering 27 markets: “The Common Market” (plus 3
associated states in the EEA)
 Treaty based; souvereign powers in certain areas (principle of
subsidiarity), e.g. EU competition law enforcement
 European Commission: executive body (with legislative role)
 European Courts (ECJ / General Court): judicial bodies
 European Council and European Parliament: legislative roles
 Hearing Officer at EU Commission
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EU Competition Law
Sources of EU competition law
 Primary law (Treaty): art. 101 and 102 TFEU
 Secondary law: reg. 1/2003 (cartel regulation), reg. 139/2004 (merger
control regulation); Block Exemption Regulations
 Supplementary law: Communications / Guidelines / Decisions of the EU
Commission
 http://ec.europa.eu/competition/antitrust/legislation/legislation.html
 Caselaw of the European Courts in Luxemburg (www.curia.europa.eu)
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU

„The following shall be prohibited as incompatible with the internal market: all agreements
between undertakings, decisions by associations of undertakings and concerted
practices which may affect trade between Member States and which have as their object
or effect the prevention, restriction or distortion of competition within the internal market,
and in particular those which:
 (a) directly or indirectly fix purchase or selling prices or any other trading
conditions;
 (b) limit or control production, markets, technical development, or investment;
 (c) share markets or sources of supply;
 (d) apply dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
 (e) make the conclusion of contracts subject to acceptance by the other parties
of supplementary obligations which, by their nature or according to commercial
usage, have no connection with the subject of such contracts.“
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU ctd.
 Agreements between undertakings […] and concerted practices
 Under the Community courts’ case-law, an agreement
encompasses anything which encapsulates the „faithful
expression of the joint intention of the parties“, irrespective of its
form
 Concept of „concerted practice“: „A form of coordination between
undertakings which, without having reached the stage where an
agreement properly so-called has been concluded, knowingly
substitutes practical cooperation between them for the risks of
competition“
 The ECJ and the Commission have promoted an extensive
interpretation of the concepts referred to in art. 101 TFEU
 In practice: virtually any type of coordination is caught
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU ctd.
 Key case „Dansk Rorindustri“
 Cartel meeting organised by large competitors; small competitors participated but
remained silent and did not implement the anti-competitive agreements.
 „It is sufficient for the Commission to show that an undertaking participated in
meetings at which anti-competitive agreements were concluded, without manifestly
opposing them, to prove to the requisite standard that the undertaking participated
in the cartel. Where participation in such meetings has been established, it is for
that undertaking to put forward evidence to establish that its participation in those
meetings was without any anti-competitive intention by demonstrating that it had
indicated to its competitors that it was participating in those meetings in a spirit that
was different from theirs. In that regard, a party which tacitly approves of an
unlawful initiative, without publicly distancing itself from its content or reporting it to
the administrative authorities, effectively encourages the continuation of the
infringement and compromises its discovery. That complicity constitutes a passive
mode of participation in the infringement which is therefore capable of rendering the
undertaking liable in the context of a single agreement.“
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU ctd.
 Between (independent) undertakings
 “The concept of an undertaking encompasses every entity
engaged in an economic activity regardless of the legal status of
the entity and the way in which it is financed” (ECJ Case 41/90,
Höfner and Elsner v Macrotron, para 21)
 The involvement of at least two (independent) undertakings,
acting in concert, is thus required
 According to the EU Courts, a contract between a mother
company and its subsidary – which are two legally separate
entities – may fall short of art. 101 TFEU
 According to the EU Courts, „true“ or „genuine“ agency
agreements fall short of art. 101 TFEU
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU ctd.
 Object or effect of restricting competition
 Restriction by “Object“: it is not necessary that competition is
effectively restricted / that anti-competitive practice has been
implemented
 Restriction by “Effect”: it is not necessary that the parties intended
a restriction of competition
 ”restriction of competition” not definable
 In practice: non-conclusive catalogue of standard restrictions
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EU Competition Law
The most relevant restrictions of competition
Horizontal restrictions
Hardcore
Non-Hardcore
Fixing of sales prices or purchasing prices or other
commercial conditions
Exchange of confidential information
Fixing production quotas
Strategic alliances
Customer allocation or sharing of geographical
markets
Agreements relating to joint sales, purchasing or
production
Bid rigging
Agreements relating to joint R&D
Restricting imports or exports
Specialisation agreements
Vertical restrictions
Hardcore
Non-Hardcore
Resale price maintenance
Exclusive distribution
Prohibition of passive sales
Selective distribution
Prohibition of cross-sales between distributors in a
selective distribution system
Single branding / exclusive purchasing / non-compete
clauses
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EU Competition Law
Cartel prohibition, Art. 101 (1) TFEU ctd.
 Restriction of competition must be „appreciable“
 On competition (filter for de facto irrelevant cases)
 Commission Notice on Agreements of Minor Importance (“de
minimis”)
 Market shares: 10% (horizontal) / 15% (vertical)
 “hardcore”-restrictions are always appreciable
 On trade between Member States (jurisdictional filter)
 Sufficient if practice is “capable of constituting a threat, either
direct or indirect, actual or potential, to freedom of trade between
Member States in a manner which might harm the attainment of
the objectives of a single market”
 Commission Notice on “Effect on Trade”
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EU Competition Law
Exemptions, Art. 101 (3) TFEU

„The provisions of paragraph 1 may, however, be declared inapplicable in the case of any
agreement or category of agreements between undertakings,any decision or category of
decisions by associations of undertakings,any concerted practice or category of
concerted practices, which
 contributes to improving the production or distribution of goods or to promoting
technical or economic progress,
 while allowing consumers a fair share of the resulting benefit,
 and which does not:
 (a) impose on the undertakings concerned restrictions which are not
indispensable to the attainment of these objectives;
 (b) afford such undertakings the possibility of eliminating competition in
respect of a substantial part of the products in question.“
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EU Competition Law
Exemptions, Art. 101.3 TFEU
 Individual exemptions for agreements, which
 contribute to improving the production or distribution of goods or
to promoting technical or economic progress,
 allow consumers a fair share of the resulting benefits,
 do not impose restrictions which are not indispensable to the
attainment of these objectives,
 do not afford such undertakings the possibility of eliminating
competition in respect of a substantial part of the products
concerned.
 Conditions are cumulative; balancing process between pro-competitive
and anti-competitive effects; hardcore restrictions unlikely to be exempted;
burden of proof lies with the party claiming exemption
 Guidelines on the application of art. 101 (3) TFEU
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EU Competition Law
Exemptions, Art. 101 (3) TFEU ctd.
 Block exemptions:
 Art. 101 (3): applies also to categories of agreements = block
exemption regulations (BERs)
 Block Exemption Regulations (BER) provide “safe harbours”
 Definition of agreements in class (e.g. vertical agreements /
technology transfer agreements)
 Market share thresholds (20-30%)
 “Black lists” of prohibited hardcore terms
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EU Competition Law
Abuse of Dominance, Art. 102 TFEU

Any abuse by one or more undertakings of a dominant position within the internal market
or in a substantial part of it shall be prohibited as incompatible with the internal market in
so far as it may affect trade between Member States.Such abuse may, in particular,
consist in:
 (a) directly or indirectly imposing unfair purchase or selling prices or other
unfair trading conditions;
 (b) limiting production, markets or technical development to the prejudice of
consumers;
 (c) applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
 (d) making the conclusion of contracts subject to acceptance by the other
parties of supplementary obligations which, by their nature or according to
commercial usage, have no connection with the subject of such contracts.
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EU Competition Law
Abuse of Dominance, Art. 102 TFEU
 Art 102 prohibits not dominance, but its abuse
 Dominance is assessed in the relevant market: “a dominant position is
demonstrated by an undertaking’s ability to operate to an appreciable
extent independently of its competitors, its customers, and ultimately the
consumers in a relevant market.”
 Indicators for dominance:
 High market shares (>40% = presumption of dominance)
 Low market shares of competitors
 Financial capacities
 Vertical integration
 Barriers for market entry
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EU Competition Law
Abuse of Dominance, Art. 102 TFEU ctd.
 Art. 102 TFEU prohibits
 any abuse
 within the common market or in a substantial part thereof, to the
extent that it may affect trade between Member States
 Art. 102 TFEU provides a non-exhaustive list of examples of abuses; EU
Commission, CFI and ECJ have found abuses in other circumstances
 Examples:
 Excessive pricing
 Tying / bundling
 Predatory pricing
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EU Competition Law
Abuse of Dominance, Art. 102 TFEU ctd.
 Key case: “Microsoft” – Tying
 Microsoft has a near monopoly in PC operating systems (OS). It sells Windows OS
to OEM manufactures with “built-in” Microsoft media player. Other customers get
Windows without Microsoft media player. Microsoft previously sold Windows to
OEMs bundled with a third party media player. Media players are generally offered
as a separate software in the market.
 Legal test:
 two separate products
 supplier is dominant in one
 sales of two products are tied together
 the tie significantly weakens effective competition
 there is no objective justification for the tie
 Outcome: $ 600 million fine
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EU Competition Law
Abuse of Dominance, Art. 102 TFEU ctd.
 Key case: “Wanadoo” – Predatory Pricing
 On 16 July 2003, the European Commission found that Wanadoo Interactive SA
(Wanadoo) had pursued a predatory pricing policy in relation to its Pack eXtense
and Wanadoo ADSL services, as part of a plan to exclude competitors in the high
speed internet access market. It sold its products below costs.
 EU Commission imposes fines of € 10.35 Million. Wanadoo appeals.
 The ECJ’s judgment is significant in confirming that, for a finding that a dominant
undertaking has breached art. 102 TFEU by pursuing predatory pricing:
 (i) it does not need to be demonstrated that the undertaking could recoup
its losses
 (ii) a dominant undertaking does not have an absolute right to align its
prices with those of its competitors
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EU Competition Law
Market Definition
 Market definition – determines the factual framework for the analysis of
market power
 Important starting point: Commission Notice on the definition of the
relevant market for the purposes of Community competition law (1997)
 Relevant product market:
 all those products or services which are regarded as
interchangeable or substitutable by the consumer, by reason of
the products‘ characteristics, their prices and their intended use
 Method relies on demand substitutability but also supply-side
substitutability can be taken into account
 Relevant geographical market
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EU Competition Law
Art. 101 / 102 TFEU - Procedure
 Procedural phases:
 Initiation of proceedings
 Investigation
 Statement of Objections
 Access to File
 Oral Hearing
 Decision / fines
 Appeals
 “Long and slow” – generally many years
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EU Competition Law
Initiation of proceedings - complaints
 By customers, competitors, suppliers, or consumer
 Art. 7 (2) reg. 1/2003, “Form C”, Commission Notice on the handling of
complaints (OJ C 101, 27.04.2004, p. 65-77)
 Indicative time frame for preliminary assessment of 4 months; but: right of
prioritisation
 Additional procedural rights for complainants
 Partly access to (non-confidential) version of file
 Participation in oral hearing
 Right to appeal rejection of complaint
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EU Competition Law
Initiation of proceedings – leniency
applications
 Commission Notice on Immunity from fines and reduction of fines in cartel
cases (OJ C 298, 8.12.2006, p. 17–22)
 Current source of most decisions
 Only applicable to cartels, not applicable to vertical restraints or abuses of
dominance
 Leniency application: strict formal requirements
 Rebate system depending on time of application and value of input:
 100% reduction in fines for first past post
 Up to 50% for “significant added value”
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EU Competition Law
Investigative powers of the EU Commission
 Requests for information (art. 18 reg. 1/2003)
 Power to take statements (art. 19 reg. 1/2003)
 Inspections / “dawn raids” (art. 20 reg. 1/2003)
 enter any premises, land and means of transport
 examine the books and other records related to the business,
irrespective of the medium on which they are stored
 take or obtain in any form copies of or extracts from such books
or records;
 seal any business premises and books or records for the period
and to the extent necessary
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EU Competition Law
Investigative powers of the EU Commission
 Key case: “E.on”
 May 2006: inspection by the EU Commission of E.on's commercial premises in
Munich
 Documents selected for closer examination were stored in a room. The door of the
room was locked and an official Commission seal affixed
 When Commission inspectors later returned to the room, they found the seal had
been broken
 The Commission imposed a fine of € 38 Million (Art. 23 (1) reg. 1/2003)
 E.on appeals to GC and finally to ECJ: (i) undue reversal of burden of proof, (ii)
disproportionality of fine
 The Court of Justice finds: (i) no undue reversal of the burden of proof. Since the
Commission had determined that there had been a breach of seal based on a body
of evidence, it was for E.on to adduce evidence challenging that finding, (ii) 0.14%
of turnover is not disproportionate
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EU Competition Law
Investigative powers of the EU Commission
 Key case: “Orkem” – Privilege against self-incrimination
 EU Commission asked Orkem to provide information about the purpose of
certain meetings
 ECJ: The Community law imposes certain limitations on the Commission’s
powers of investigation:
 Certain questions are permitted (“factual questions”)
 Certain questions are not permitted (“incriminating questions”), as
for instance questions relating to the purpose of the actions taken
and the objectives pursued
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EU Competition Law
“Fair trial” safeguards
 Legal basis: Art. 6 ECHR: “Everyone charged with a criminal offence has
the following minimum rights: (a) to be informed promptly, in a language
which he understands and in detail, of the nature and cause of the
accusation against him; (b) to have adequate time and facilities for the
preparation of his defence; (c) to defend himself in person or through legal
assistance of his own choosing; [...]”
 Statement of Objections (art. 10 reg. 773/2004)
 Access to the file (art. 15 reg. 773/2004)
 Oral Hearing (art. 12 reg. 773/2004)
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EU Competition Law
Decisions, sanctions & settlements
 Informal closing of procedure
 Finding of inapplicability (art. 10 reg. 1/2003) / informal guidance
 Commitment decisions (art. 9 reg. 1/2003)
 Prohibition decisions / imposition of behavioural or structural remedies
(art. 7 reg. 1/2003)
 Imposition of fines on undertakings (art. 23 (2) reg. 1/2003); EU
Commission has no competence to impose fines on natural persons
(NCAs can)
 Settlements (reg. 622/2008) / „Settlement Notice“ (OJ C 167, 2.7.2008, p.
1–6)
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EU Competition Law
Calculation of fines
 Commission guidelines on the method of setting fines imposed pursuant to
art 23(2)(a) of reg. 1/2003 (OJ C 210, 1.9.2006, p. 2–5):
 Determination of „affected sales“
 Basic amount of the fine based on „gravity” and “duration” of the
infringement; possible “entry fee” for hardcore-cartels
 Adjustment of the basic amount (aggravating circumstances / mitigating
circumstances)
 Increase for deterrence / Inability to pay
 10%-rule (art. 23 (2) reg. 1/2003)
 Leniency notice
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EU Competition Law
Calculation of fines – example

Competitors A and B enter into a price fixing agreement. A initiated the cartel and coerced
B to participate. 5 years later the cartel is exposed and the Commission plans to impose
sanctions. What amounts will it come up with?

A has annual sales of € 1 billion (€ 50 million with the cartelised product), B of € 10 million
(only cartelised product). A was found guilty of a similar cartel offence a couple of years
ago. B stopped its participation in the cartel immediately when the Commission
investigation started and admitted its involvement to the Commission.
A
B
Basic amount (25%)
12.500.000
2.500.000
Duration (5)
62.500.000
12.500.000
Aggravating circumstances (50%)
93.750.000
12.500.000
Mitigating circumstances (20%)
93.750.000
10.000.000
10%
93.750.000
1.000.000
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EU Competition Law
Appeals against Commission Decisions
 Art. 263 (4) TFEU: “Any natural or legal person may, under the conditions
laid down in the first and second paragraphs, institute proceedings against
an act addressed to that person or which is of direct and individual
concern to them, and against a regulatory act which is of direct concern to
them and does not entail implementing measures.”
 General Court (former Court of First Instance): art. 257 (1) 1 TFEU
 2 months deadline for filing the appeal: art. 263 (5) TFEU
 judicial review only (except fines): art. 31 reg. 1/2003
 Appeals: European Court of Justice (ECJ): art. 257 (1) 2 TFEU
 on points of law only
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EU Competition Law
Private enforcement of EU competition law
 Victims of anti-competitive practices have a right to claim damages; key
cases Courage Crehan (ECJ, case C-453/99) / Manfredi (ECJ, case C295/04)
 Stand alone actions vs. follow-on actions
 Binding effect of Commission decisions (art. 16.1 reg. 1/2003) and – as
the case may be – of decisions by national competition authorities (e.g.
section 33 (4) German Act against Restraints on Competition)
 Instrumentalisation of complaints
 Indirect purchaser standing and passing-on defence
 Access to the file / interaction with leniency programs (Pfleiderer, ECJ
case – C-360/09)
 Directive 2014/104/EU of 26 November 2014
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EU Competition Law
Private enforcement of EU competition law
 Collective redress; no “class actions” available throughout the EU; “CDC
Model”
 Obligation to claim damages for corporations and public bodies
 Interaction with public procurement
 Compensation as mitigating factor when calculating fines
 Limitation periods
 Quantification of damages: counterfactual, legal presumptions
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EU Competition Law
Private enforcement of EU competition law
 Choice of Forum – Brussels I Reg. 1215/2012
 Art. 4 – place of residence / incorporation
 Art. 7(2) – place where harmful event occurred
 Art. 8(1) – place of any of multiple defendants
 Applicable law – Rome II Reg. 864/2007
 Art. 6(3) (a) – the law applicable to a non-contractual obligation
arising out of a restriction of competition shall be the law of the
country where the market is, or is likely to be, affected
 Art. 6(3) b) – when the market is affected in more than one
country, the person seeking compensation for damage who sues
in the court of the domicile of the defendant, may instead choose
to base his or her claim on the law of the court seized
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EU Competition Law
EU Merger Control
 Concept of merger control
 Complexity: (27 +1) merger control regimes throughout the EU (plus
international merger control regimes)
 Reg. 139/2004 of 20 January 2004 on the control of concentrations
between undertakings (EU Merger Regulation / EUMR)
 If the EUMR applies, the national rules do not („one-stop-shop“)
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EU Competition Law
EU Merger Control - Applicability
 Certain turnover based thresholds must be met
 worldwide turnover of all parties combined > €5 billion; and each
of two or more parties have EU-wide turnover > €250 million, or
 worldwide turnover of all parties combined > €2.5 billion; and
each of two or more parties have EU-wide turnover of > €100
million; and each of two or more parties have national turnover of
> €25 million in at least three EU states
 Referrals to the EU Commission may occur if a concentration triggers
national merger control rules in 3+ EU Member States
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EU Competition Law
EU Merger Control - Procedure
 Mandatory notification (Art. 4 EUMR)
 Implementation prohibited pending clearance; “gun jumping”
 Notification is information heavy (“front loaded”)
 mandatory form: Form CO
 detailed requirements
 pre-filing contact (‘ping-pong’) with EU Commission usual
 some ‘short form’ exceptions
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EU Competition Law
EU Merger Control – Procedure ctd.
 Binding deadlines apply for Commission review (automatic clearance if
deadlines not met) (Art. 10 EUMR)
 Phase I
 25 working day deadline (in principle)
 clearance unless “serious doubts” (~96%)
 Phase II
 further 90 working day deadline (in principle)
 around 25% of Phase II cases cleared unconditionally; around
60% cleared with remedies (see Commission Notice on remedies,
Official Journal C 267, 22.10.2008, p. 1-27)
 Judicial review (competitors have standing / parties can recover damages
(Schneider), “Fast Track” process)
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EU Competition Law
EU Merger Control – substantial test
 Will a concentration
 “significantly impede effective competition” in the EU “SIEC-Test”
 in particular by creating or strengthening a dominant position
 In practice
 analysis generally less economically detailed
 greater focus on structural analysis, in particular market shares
 more weight given to competitor complaints / concerns
 Commission horizontal and non-horizontal guidelines
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EU Competition Law
Work & Life as a competition lawyer
 Types of assignment
 Compliance consulting
 Transactional work
 Public investigations / defense work
 Private antitrust litigation / damages actions
 Working hours / holidays / salaries
 “Prácticas en Bruselas”
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EU Competition Law
Questions / Answers
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EU Competition Law
Dr. Volker Soyez
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Partner. Admitted to the Cologne (2002) and Brussels (2003) bar
Universities of Frankfurt/Main, Fribourg (CH) and Madrid; PhD 2002
Founder and Member of the Editorial Board of „Global Competition
Litigation Review“ (Sweet & Maxwell / Thompson Publishing, London)
Chair of the working group „Competition Law Compliance“ within the
German Association for Corporate Compliance
Owner of state-approved mediation body for competition law disputes
Practice areas: European and German competition law (cartels, merger
control, distribution, abuses of dominance, litigation), corporate
compliance regarding competition law and EU regulatory law (trade,
institutional, regulatory)
vs@haver-mailaender.de
www.haver-mailaender.de
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