The Competition Act 1998 (the Act) prohibits anti-competitive agreements between businesses.

In particular, you must not:

• agree to fix prices or terms of trade, for example agreeing price rises with your
competitors
• agree to limit your production to reduce competition
• carve up markets or customers, for example agreeing with a competitor that you will bid
for one contract and they will take another
• discriminate between customers, for example charging different prices or imposing
different terms where there is no difference in the circumstances of supply.

In general terms, ANTI-COMPETITIVE AGREEMENTS are agreements that substantially

prevent, restrict, or lessen competition. Some anti-competitive agreements may be classified
into “horizontal” and “vertical” agreements.

HORIZONTAL AGREEMENTS are those entered into by and between two (2) or more
competitors. For example, two (2) competing manufacturers could collude and agree to sell the
same product at the same price.

1. the nature and content of an agreement

2. the area and objective of the co-operation
3. the competitive relationship between the parties and
4. the extent to which they combine their activities

VERTICAL AGREEMENTS are those entered into by and between two (2) or more entities at
different levels of distribution or production chains such as those entered into by suppliers,
manufacturers, distributors, and retailers. Examples include distribution, agency, and franchising
agreements.

• Agreement doesn’t have to be in writing or be legally binding

• Agreement with effect on EU (extra-territoriality)
• Restriction On competition can be by object (by their very nature) or effect

Article 101(1) TFEU inapplicable to certain (cooperation) agreements that fulfil conditions
under 101(3) TFEU (procompetitive effects): R&D, specialization, application of standards

Examples of anti-competitive agreements include:

Price-Fixing — Competitors collude with one another to fix prices of goods or services, rather
than allow prices to be determined by market forces.

Bid-Rigging — Parties participating in a tender process coordinate their bids, rather than submit
independent bid prices
Output-Limitations — Agreements which, among others, limit output or control production by
fixing production levels or setting quotas, or agreements which deal with structural overcapacity
or coordination of future investment plans.

Market-Sharing — Producers restrict their sales of goods and services to certain geographic
areas, developing local monopolies.

The information exchange is public so directly benefit consumers by reducing their

search costs and improving choice, and thereby also stimulating price competition.

Generally speaking, a cartel is an association of businesses in the same industry colluding with
one another to susbtantially prevent, restrict, or lessen competition. Cartels and collusive
agreements as described above are illegal. They result in anti-competitive practices like price-
fixing and market-sharing, which, in turn, reduce output and raise prices.

Antitrust rules prohibit agreements between market operators that would restrict competition,
and the abuse of dominance. European Antitrust policy is developed from two central rules set
out in the Treaty on the Functioning of the European Union:

Article 101 of the Treaty prohibits agreements between two or more independent market
operators, which restrict competition

The most flagrant example of illegal conduct infringing Article 101 is the creation of a cartel
between competitors, which may involve price-fixing and/or market sharing.

Article 102 of the Treaty prohibits firms that hold a dominant position on a given market to abuse
that position, for example by charging unfair prices, by limiting production, or by refusing to
innovate to the prejudice of consumers.
The Commission is empowered by the Treaty to apply these rules and has a number of
investigative powers to that end (e.g. inspections at business and non-business premises,
written requests for information, etc.). The Commission may also impose fines on undertakings
which violate the European Antitrust rules. The main rules on procedures are set out in Council
Regulation (EC) 1/2003.

Cartels are generally highly secretive and hard to detect. The Commission’s leniency
programme encourages companies to hand over inside evidence of cartels in exchange for
immunity for fines or a substantial reduction of fines. The first company in any cartel to apply for
leniency, may receive full immunity, if the information it provides is sufficient for the Commission
to start an investigation. The Commission also carries out its own investigations to detect
cartels.

Individuals may report any inside knowledge or suspicion of a cartel to the Commission through
the "whistleblower" tool.
Cartel participants can settle their case by acknowledging their involvement in the cartel and
thereby receiving a 10% reduction in any eventual fine. The settlement procedure brings
efficiencies for the Commission and the parties by reducing the time of the investigations, a
limited access to file procedure and shorter final decisions.

How a case starts

Article 101 cases can originate in: 1) a complaint, 2) opening of an own–initiative investigation,
or 3) a leniency application from one of the participants to a cartel. Under the Commission's
Leniency programme, the first firm to submit evidence that is sufficient for the Commission to
either launch an inspection or enable it to find an infringement receives full exemption from its
fine (total immunity). When it applies for immunity, the firm must also end its participation in the
infringement. Firms that approach the Commission later and that contribute a real added value
to the investigation are eligible for a fine reduction, subject to the same on-going cooperation as
for immunity applicants.

In cartel cases, the Commission or the parties may propose a settlement. The Commission may
reject the settlement route for cases that are not suitable. In settlement cases, the parties
acknowledge upfront their participation in the cartel, resulting in a speedier procedure and an up
to 10% reduction in the fines. The Commission presents parties with the evidence and notifies
them of its conclusions as to duration, seriousness, liability and likely fine. The parties must
make an oral or written submission acknowledging their liability and stating that they accept the
Commission's statement of objections. The settlement procedure allows the Commission to
adopt a faster, more streamlined decision and to allocate resources to other cases.

A company that has participated in an anticompetitive agreement and so infringed competition

law may have to pay a fine. The Commission's fining policy is aimed at punishment and
deterrence. The fines reflect the gravity and duration of the infringement. They are calculated
under the framework of a set of Guidelines last revised in 2006. The starting point for the fine is
the percentage of a company's annual sales of the product concerned in the infringement (up to
30%). This is then multiplied by the number of years and months the infringement lasted.
Certain aggravating circumstances (e.g. repeat offender) or attenuating circumstances (e.g.
limited involvement) may increase or decrease the fine. In cartel cases, the fine is increased by
a onetime amount equivalent to 15-25% of the value of one year's sales as an additional
deterrent. The maximum level of fine is capped at 10% of the overall annual turnover of a
company.

Antitrust: Commission fines car parts suppliers of € 18 million in cartel settlement

https://ec.europa.eu/commission/presscorner/detail/en/IP_20_1774

The Guidelines make clear that any information exchange with the objective of restricting
competition in the market will be considered a restriction of competition, regardless of its actual
effect on the market. Accordingly, if the aim of the exchange of information is to fix prices,
quantities or other terms of trade, it would be considered and treated as cartel activity
regardless of whether such information exchange has an actual effect on the market. In other
words, once the Board establishes that the exchange of information is a restriction of
competition by object, it is no longer required to analyse the effect of such exchange. The
exchange of strategic information such as future prices or sales amounts generally fall under
this category and would typically be treated as cartel activity.

Exchanges of information may also lead to infringement of competition laws where the
objective is not to restrict competition. In this case, the actual and potential effects on
competition of such an exchange must be analysed on a case-by-case basis. As a first
step, the characteristics of the market as well as the nature of the information
exchanged must be assessed. Secondly, it is necessary to analyse whether the pro-
competitive benefits of the information exchange (if any) outweigh the anti-competitive
effects.

The Guidelines list five main market characteristics that increase the likelihood of
information exchanges resulting in a collusive outcome:

Transparent
Information exchanges may increase market transparency. The more transparent the
market in terms of prices, costs, volume, demand, output, etc., the more likely that
exchanges of information may result in the restriction of competition.

Concentrated
The fewer the number of competitors in a market, the more likely that information
exchanges will have restrictive effects.

Stable
Information exchanges may decrease volatility in a market. It is easier to collude in a
stable market in terms of demand, supply, market share, number of competitors, etc.
Therefore, the more stable the market, the more likely that information exchanges
will restrict competition.

Symmetric
Companies with similar cost structures, market shares, product range, capacities, etc.
are more likely to end up with a collusive outcome through the exchange of
information.

Non- Complex
It is harder to restrict competition through information exchanges in complex markets
covering a number of differentiated products.
Information exchanges
• Direct – indirect (trade associations, market research organization etc)

• Restriction of competition – concerted practice, coordination

• Facilitation of cartel implementation

•
Characteristics of information:
The Guidelines lists the following factors that affect the assessment of whether
information exchanged is likely to raise competition law concerns:

Commercially Sensitive (Strategic) Information

Future sales prices, costs, profit margins, promotions, terms of sale, business plans,
customers, territories, capacities, production, output, quantities, turnovers and any
information that is likely to reduce market uncertainty is considered particularly sensitive
and risky to exchange with competitors.

Market Coverage
Information exchanges covering a substantial portion of the market are more likely to
raise competition law concerns.

Aggregated / Individualized
The exchange of genuinely aggregated data, which would make identification of the
individual data of a particular company difficult, is not likely to have restrictive effects.

Age of Data
The older the data, the less likely it is to have restrictive effects. Exchange of
historic data is unlikely to be problematic; however, there is no threshold to determine
how dated the data must be in order to be considered historic. This would require case-
by-case analysis. On the other hand, the exchange of current and especially future data
is generally considered problematic.

Frequency of Exchange
Frequent exchanges of information are more likely to lead to concerns compared to
infrequent exchanges; however, it should be noted that even one single exchange of
information may be considered restrictive.
Public / Non- public Information
The exchange of genuinely public information, described in the Guidelines as
information that is equally accessible to all competitors and customers in terms of
cost of access, is unlikely to restrict competition. A distinction should be made
between genuinely public information and publicly available information, the exchange
of which may give rise to a collusive outcome. The cost of collecting such data is an
important factor in the analysis and should be assessed on a case-by-case basis.

In cases where it has been established that the exchange of information is likely to have
restrictive effects due to market characteristics and the nature of information
exchanged, the next step would be to determine whether there are any pro-competitive
effects of the exchange and, if so, whether such pro-competitive effects outweigh the
restrictive effects of the exchange. In order to do so, based on Article 5 of the Law on
the Protection of Competition No. 4054, companies must show: (i) gains in efficiency, (ii)
consumer benefits arising from such efficiencies, (iii) that competition is not eliminated
in a significant part of the market and (iv) that competition is not restricted more than
necessary to achieve such efficiencies and consumer benefits.

A "no-poaching agreement" is a type of agreement between companies not to hire each

other's employees. It's aimed at preventing competition for talent between the
companies involved. These agreements are often scrutinized for their potential anti-
competitive effects and may be subject to legal restrictions in certain jurisdictions.

Article 101(3) can be applied in individual cases or to categories of agreements and

concerted practices through block exemption regulation (BER).

The conditions for block exemption regulation are:

● it must contribute to improving the production or distribution of goods or to

promoting technical or economic progress;
● consumers must receive a fair share of the resulting benefits;
● the restrictions must be essential to achieving these objectives; and
● the agreement must not give the parties any possibility of eliminating
competition in respect of substantial elements of the products in question.

Production agreements

● Production JV’s/ Horizontal subcontracting agreements /Joint production

agreements
● Coordination of parties’ competitive behavior (prices, output, innovation,
foreclosure of third parties)
● Market power

Purchasing agreements
 ● joint purchase of products – alliance, association of undertakings
● aim at the creation of buying power which can lead to lower prices or better-
quality products
● Restrictive effects due to the buying power of parties
● Foreclosure of competing purchasers
● Market power
● restrict competition by object if they serve as a tool to engage in a disguised
cartel

Commercialization agreements

● Co-operation between competitors in the selling, distribution or promotion of their

substitute products
● May lead to price fixing, facilitate output limitations, market /customer allocations,
and exchange of info
● Market power if combined market share exceeds 15%
● Efficiency gains

Standardization agreements

● Technical or quality requirements with which current or future products,

production processes, services or methods may comply
● Grades, sizes, technical specifications, standard terms (conditions of sale and
purchase of good/services between competitors and consumers
● Significant positive economic effects
● Restrictive effects to competition – to price competition, limiting production,
markets, innovation, technical development
● Preventing certain companies from obtaining access to results of standard-
setting process (IPR, standard-essential patents)
● Market power
● Fair Reasonable Non-Discriminatory (FRAND terms)
Ber for vertical agreements
Information exchange in the context of a vertical agreement, where information is
exchanged between a supplier and a buyer, may benefit from the block exemption
provided by the VBER231. This will be the case if the information exchanged is directly
related to the implementation of the vertical agreement between those parties and
necessary to improve the production or distribution of the contract goods or services.

Apart from facilitating collusion, an information exchange can also lead to

anticompetitive foreclosure on the same market where the exchange takes place or on
a related market.Foreclosure on the same market can occur when the exchange of
commercially sensitive information places competitors that do not take part in the
exchange at a significant competitive disadvantage compared to the undertakings that
participate in the exchange. This type of foreclosure is possible if the information
concerned is of strategic importance in order to compete on the market and the
exchange covers a significant share of the relevant market. This may be the case, for
instance, in datasharing initiatives, where the data shared is of strategic importance,
covers a large share of the market and competitors’ access to the shared data is
prevented.

Information that has been put in the public domain for legitimate reasons – and
therefore has become readily accessible (in terms of access costs) to all competitors
and customers251 – is usually not commercially sensitive.

This may be the case, for example, where the information is exchanged in a less
aggregated or more granular form, or the information is exchanged more frequently than
it is made publicly available, or when comments are attached to the information that
may signal to competitors the desired joint action to undertake. In that case, the
information exchange may restrict competition within the meaning of Article 101(1)

Unless it takes place between a relatively small number of undertakings with a

sufficiently large share of the relevant market253, the exchange of aggregated
information is unlikely to give rise to a restriction of competition.

Indirect information exchange Exchanges of commercially sensitive information

between competitors can take place via a third party, such as a third party service
provider (including a platform operator or optimisation tool provider), a common agency
(for instance, a trade organisation), a supplier or customer269, or a shared algorithm
(collectively referred to as the ‘third party’). As with direct information exchanges, an
indirect exchange may also reduce uncertainty about the actions of competitors and
lead to a collusive outcome on the market.

An online platform can also act as a hub where it facilitates, coordinates or enforces
information exchanges between business users of the platform, for example, to secure
certain margins or price levels. Platforms may also be used to impose technical
measures which prevent platform users from offering lower prices or other advantages
to final customers.

Information may also be exchanged indirectly via a shared optimisation algorithm which
takes commercial decisions based on commercially sensitive data feeds from
competitors.

Assessment under Article 101(3)

Where a restriction of competition under Article 101(1) has been proven, Article 101(3)
can be invoked as a defence. Regulation (EC) No 1/2003 (see summary) puts the
burden of proof on the undertaking invoking the benefit of this provision. There are four
cumulative conditions that must be met for cooperation agreements to be exempted:

the restrictive agreement must lead to economic benefits, such as improvements in the
production or distribution of products or the promotion of technical or economic
progress, i.e. efficiency gains;
the restrictions must be indispensable to the attainment of the efficiency gains;
consumers must receive a fair share of the resulting efficiency gains attained by
indispensable restrictions;
the agreement must offer the parties no possible elimination of competition in relation to
a substantial part of the products in question.
Where these four criteria are met, the efficiency gains generated by an agreement can
be considered to offset the restrictions of competition generated by it.

An information exchange may lead to efficiency gains, depending on the nature of the
information exchanged, the characteristics of the exchange and the structure of the
market.

Undertakings may become more efficient by benchmarking their performance against

best practices in the industry. An information exchange may contribute to a resilient
market by enabling undertakings to respond more quickly to changes in supply and
demand and allow them to mitigate internal and external risks of supply chain
disruptions or vulnerabilities. An information exchange may benefit consumers and
undertakings alike by enabling them to compare the price or quality of products, for
instance through the publication of best-selling lists or price comparison data. It can
thus help consumers and undertakings make more informed choices (and reduce their
search costs).

Restrictions that go beyond what is necessary to achieve the efficiency gains generated
by an information exchange do not fulfil the conditions of Article 101(3).To fulfil the
condition of indispensability, the parties must be able to prove that the nature of the
information exchanged and the characteristics of the exchange are the least restrictive
means of generating the claimed efficiency gains. In particular, the exchange should not
involve information that goes beyond the variables that are relevant for the attainment of
the efficiency gains.

The lower the market power of the undertakings involved in the information exchange,
the more likely it is that the efficiency gains will be passed on to consumers to an extent
that outweighs the restrictive effects on competition.

The conditions of Article 101(3) cannot be met if the undertakings involved in the
information exchange are afforded the possibility of eliminating competition in respect of
a substantial part of the products concerned.
Block Exemption Regulations
The block exemption regulations issued pursuant to Article 101(3) TFEU specify the
conditions under which certain types of agreements are exempted from the prohibition
of restrictive agreements laid down in Article 101(1) TFEU.

The Horizontal Block Exemption Regulations are two Commission regulations that
define certain research and development and specialisation agreements that can be
considered more beneficial than harmful. Agreements that meet the conditions of these
regulations are therefore exempted from Article 101(1) of the Treaty.
Abuse of Dominance
Article 102 TFEU
Dominance → economic strength that enables undertakings to prevent effective competition from being
maintained in a relevant market, by affording it, its customers.
Dominance is not likely if below 40%
Dominance has been defined under Community law as a position of economic strength enjoyed
by an undertaking, which enables it to prevent effective competition being maintained on a
relevant market, by affording it the power to behave to an appreciable extent independently of
its competitors, its customers and ultimately of consumers
• Competition constraints to be considered: existing suppliers, actual and potential
competitors, market position, strength of customers

The assessment of dominance will take into account the competitive structure of the market,
and in particular the following factors:

— constraints imposed by the existing supplies from, and the position on the market of,
actual competitors (the market position of the dominant undertaking and its
competitors),
— constraints imposed by the credible threat of future expansion by actual competitors or
entry by potential competitors (expansion and entry),

— constraints imposed by the bargaining strength of the undertaking's customers

(countervailing buyer power).

Foreclosure leading to consumer harm (‘anti-competitive foreclosure’)

the term ‘anti-competitive foreclosure’ is used to describe a situation where effective

access of actual or potential competitors to supplies or markets is hampered or
eliminated as a result of the conduct of the dominant undertaking whereby the
dominant undertaking is likely to be in a position to profitably increase prices to the
detriment of consumers.
The identification of likely consumer harm can rely on qualitative and, where possible and
appropriate, quantitative evidence
Economies of scale mean that competitors are less likely to enter or stay in the market if the
dominant undertaking forecloses a significant part of the relevant market.

Consider:

● Position of dominant undertaking (the stronger – the more likely foreclosure)

● Conditions on the relevant market (entry/expansion, economies of scale)
● Position of competitors
● Position of customers
● Extent of the allegedly abusive conduct (sales, duration, regularly applied)
● Possible evidence of actual foreclosure (sufficient time, rise of market share…)
● Direct evidence of any exclusionary strategy (internal documents-detailed plan to
engage in certain conduct, threats…)

SPECIFIC FORMS OF ABUSE

Exclusive dealing:
A dominant undertaking may try to foreclose its competitors by hindering them from selling
to customers through use of exclusive purchasing obligations or rebates, together referred
to as exclusive dealing.

An exclusive purchasing obligation requires a customer on a particular market to purchase

exclusively or to a large extent only from the dominant undertaking. Certain other
obligations, such as stocking requirements, which appear to fall short of requiring
exclusive purchasing, may in practice lead to the same effect
In order to convince customers to accept exclusive purchasing, the dominant undertaking
may have to compensate them, in whole or in part, for the loss in competition resulting
from the exclusivity. Where such compensation is given, it may be in the individual interest
of a customer to enter into an exclusive purchasing obligation with the dominant
undertaking.

Tying and bundling

A dominant undertaking may try to foreclose its competitors by tying or bundling. This
section sets out the circumstances which are most likely to prompt an intervention by the
Commission when assessing tying and bundling by dominant undertakings.

‘Tying’ usually refers to situations where customers that purchase one product (the tying
product) are required also to purchase another product from the dominant undertaking (the tied
product). Tying can take place on a technical or contractual basis (33). ‘Bundling’ usually refers
to the way products are offered and priced by the dominant undertaking. In the case of pure
bundling the products are only sold jointly in fixed proportions. In the case of mixed bundling,
often referred to as a multi-product rebate, the products are also made available separately, but
the sum of the prices when sold separately is higher than the bundled price.

two products are distinct if, in the absence of tying or bundling, a substantial number of
customers would purchase or would have purchased the tying product without also buying the
tied product from the same supplier, thereby allowing stand-alone production for both the tying
and the tied product

Predation
in line with its enforcement priorities, the Commission will generally intervene where there is
evidence showing that a dominant undertaking engages in predatory conduct by deliberately
incurring losses or foregoing profits in the short term (referred to hereafter as ‘sacrifice’), so as
to foreclose or be likely to foreclose one or more of its actual or potential competitors with a view
to strengthening or maintaining its market power, thereby causing consumer harm

Refusal to supply and margin squeeze

The Commission will consider these practices as an enforcement priority if all the following
circumstances are present:

— the refusal relates to a product or service that is objectively necessary to be able to

compete effectively on a downstream market,
— the refusal is likely to lead to the elimination of effective competition on the
downstream market, and

— the refusal is likely to lead to consumer harm.