REINVIGORATING THE ROLE OF ARTICLE 101(3)
UNDER REGULATION 1/2003
DAVID BAILEY*
Regulation 1/20031 transformed the enforcement of competition law in the
European Union.2 In May 2004, it swept away the system of notification of
agreements to the European Commission for authorization that had existed for
over 40 years.3 It established the current system that requires firms to decide
for themselves whether their agreements comply with EU law. The purpose of
this essay is to examine how well this system has operated in one particular
respect, namely the application of Article 101(3) of the Treaty on the Functioning of the European Union (TFEU). Article 101(3) provides a defense for
agreements, restrictive of competition in breach of Article 101(1), that create
objective economic benefits.4
In April 2009, the Commission reviewed the first five years of Regulation
1/2003 and concluded that there had been “[n]o major difficulties” encountered with the direct application of Article 101(3).5 Five years later, in July
2014, the Commission reported that “[t]he EU competition rules have to a
large extent become the ‘law of the land’ through-out the EU.”6 This essay
will evaluate whether Article 101(3) TFEU has become the “law of the land”
in the European Union. It will argue that Article 101(3) has been considered
by the Commission, national competition authorities (NCAs), and national
* Visiting Professor of Law, King’s College, London.
1 Council Regulation No. 1/2003, 2003 O.J. (L 1) 1, 1–7 [hereinafter Regulation 1/2003]
(explaining the implementation of the rules on competition in Articles 101 and 102 of the Treaty
on the Functioning of the European Union).
2 See generally EUROPEAN COMPETITION LAW ANNUAL 2000: THE MODERNISATION OF EC
ANTITRUST POLICY (Claus-Dieter Ehlermann & Isabela Atanasiu eds., 2001).
3 Council Regulation No. 17, 1959–1962 O.J. SPEC. ED. 87 [hereinafter Regulation 17].
4 Consolidated Version of the Treaty on the Functioning of the European Union art. 101(3),
2012 O.J. (C 326) 47, 88 [hereinafter TFEU].
5 Eur. Comm’n, Report on the Functioning of Regulation 1/2003, at 49, COM (2009) 206
final (Apr. 29, 2009) [hereinafter Regulation 1/2003 Report].
6 Eur. Comm’n, Ten Years of Antitrust Enforcement under Regulation 1/2003: Achievements
and Future Perspectives, COM (2014) 453 final, ¶ 23 (July 9, 2014).
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courts,7 but in virtually all cases the defense was held not to be applicable.
The cases in which Article 101(3) has been applied8 are so rare that one commentator has lamented that we are experiencing the “slow death of Article
101(3),” in the sense that Article 101(3) has seldom been the subject of formal
decisions.9
This essay will argue that it is in the public interest for the Commission, in
particular, to make decisions that apply Article 101(3). Carefully chosen cases
that lead to well-reasoned positive decisions under Article 101(3) would be an
important and welcome development at a time when there are misgivings
about the standard of proof under Article 101(3).10 Undertakings may be less
skeptical of the evidentiary demands under Article 101(3)11 if and when there
are examples of those demands being met in individual cases. It is to be hoped
that the next ten years of Regulation 1/2003 will feature some decisions and
informal guidance upholding the defense in Article 101(3). Such decisions
and guidance would contribute to the proper development of the law, policy,
and practice under Article 101(3) in individual cases.
I. INTRODUCTION TO ARTICLE 101 TFEU AND THE
APPLICATION OF ARTICLE 101(3) PRIOR TO
REGULATION 1/2003
This Part will briefly consider the procedural regime that existed for the
application of Articles 101 and 102 from 1962 to 2004.12 It is intended to
7 Importantly, and as discussed in greater detail below, Regulation 1/2003 also introduced a
decentralized system of enforcement in which not only the Commission, but also courts of EU
Member States and (with certain qualifications) NCAs, are empowered, and sometimes are required, to apply the EU competition rules. See Regulation No. 1/2003, supra note 1, art. 3(1), at
8.
8 As discussed in greater detail below, until the date of writing, the European Commission
had not taken any decisions under Regulation 1/2003 that declared Article 101(1) inapplicable to
agreements that satisfied the criteria of Article 101(3). National courts have heard some cases
involving the application of Article 101(3), but there have been very few judgments on that
provision. See infra Part IV.B. NCAs’ contribution to the law under Article 101(3) has also been
very limited, in part because they do not have the power to adopt formal decisions under Article
101(3). See infra Part III.B.
9 Alfonso Lamadrid, The Slow Death of Article 101(3), CHILLIN’ COMPETITION (Oct. 28,
2011, 12:31 PM), chillingcompetition.com/?s=slow†eath.
10 See Paul Lugard & Leigh Hancher, Honey, I Shrunk the Article! A Critical Assessment of
the Commission’s Notice on Article 81(3) of the EC Treaty, 2004 EUR. COMPETITION L. REV.
410, 416, 419.
11 See Eur. Comm’n, Guidelines on the Application of Article 81(3) of the Treaty, 2004 O.J.
(C 101) 97, 99–100 [hereinafter Article 101(3) Guidelines].
12 Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) were
formerly Articles 81 and 82 of the Treaty establishing the European Community (TEC). See
Foreign & Commonwealth Office, A Comparative Table of the Current EC and EU Treaties as
Amended by the Treaty of Lisbon 11 (Jan. 2008), gov.uk/government/uploads/system/uploads/
attachment_data/file/228835/7311.pdf.
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provide a historical comparison for the way in which Article 101(3) has, and
has not, been applied since Regulation 1/2003.
A. ARTICLE 101 TFEU
Article 101 has three paragraphs.13 Article 101(1) provides that agreements
that have as their “object or effect” the restriction of competition are prohibited.14 It is well-established case law that the words “object or effect” in Article 101(1) are disjunctive, not conjunctive: if an agreement reveals a sufficient
degree of harm to competition, it restricts competition by “object” and there is
no need to examine its effects.15 Otherwise, the agreement will fall under Article 101(1) only if it can be shown in light of the particular facts of the case
that the agreement has the effect of appreciably restricting competition.16
It is always possible, however, that an agreement that falls within Article
101(1) can benefit from the defense provided for in Article 101(3). There is
no such thing as per se illegality in EU law. Article 101(3) contains four
conditions: first, the agreement must create efficiencies; second, the benefit of
the efficiency gains must be passed on to consumers; third, the agreement’s
restrictions of competition must be indispensable to the attainment of the efficiencies; and, fourth, the agreement must not eliminate competition.17 These
conditions are cumulative. They are designed to ensure that the procompetitive benefits of an agreement outweigh the extent to which it restricts
competition.
Article 101(3) can be applied in individual cases or to categories of agreements by way of a so-called block exemption regulation.18 In individual cases,
the burden of proof under Article 101(3) lies on the parties to the agreement in
question.19 When an agreement is covered by a block exemption regulation,
however, the parties are relieved of the burden of proving that their agreement
satisfies the conditions of Article 101(3); they only need to show that the
agreement meets the requirements of the block exemption.
TFEU, supra note 4, arts. 101, 102, at 88–89.
Id. art. 101(1), at 88.
15 Case C-345/14, SIA “Maxima Latvija” v. Konkurences Padome, ECLI:EU:C:2015:784,
¶ 18 (ECJ Nov. 26, 2015); Case C-67/13, Groupement des Cartes Bancaires v. Comm’n,
ECLI:EU:C:2014:2204, ¶¶ 49–52 (ECJ Sept. 11, 2014).
16 Joined Cases 56 & 58/64, Établissements Consten S.à.R.L. & Grundig-Verkaufs-GmbH v.
Comm’n, 1966 E.C.R. 299, 342. The EU courts have repeatedly reaffirmed this position. See,
e.g., Joined Cases C-501, 513, 515, & 519/06 P, GlaxoSmithKline Servs. Unltd. v. Comm’n,
2009 E.C.R. I-9291, ¶ 55.
17 TFEU, supra note 4, art. 101(3), at 88–89.
18 The current block exemption regulations are available at ec.europa.eu/competition/antitrust/
legislation/legislation.html.
19 See Regulation 1/2003, supra note 1, art. 2, at 8.
13
14
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Agreements that satisfy the conditions of Article 101(3), either in an individual case or because they are block exempted, are valid and enforceable.
Agreements that infringe Article 101(1) and do not satisfy Article 101(3) are
void under Article 101(2).20
B. THE PROCEDURAL REGIME
THAT
EXISTED BEFORE REGULATION 1/2003
National courts and NCAs have always shared with the Commission a duty
to give effect to the prohibitions contained in Articles 101(1) and 102 TFEU.21
Article 9(1) of Regulation 17 used to give only the Commission the power to
declare Article 101(1) inapplicable to agreements that satisfied the criteria of
Article 101(3). Agreements had to be notified to the Commission in order to
obtain a decision granting a so-called individual exemption under Article
101(3).
The difficulties, drawbacks, and delays of the regime under Regulation 17
have been well documented.22 For example, the Commission adopted relatively few formal decisions granting individual exemptions under Article
101(3).23 The majority of cases were closed informally.24 Cases took a long
time to be resolved. Given the absence of a prolific or prompt application of
Article 101(3) under Regulation 17, it might be wondered whether the old
regime had many salutary benefits. Two benefits are, however, worth noting.
The first benefit, as Professor Richard Whish has pointed out, was that Regulation 17 gave the Commission “the opportunity to develop its policy towards various types of agreement over a period of time, and then to give
expression to this policy in its block exemptions.”25 Recital 4 of the preamble
to Council Regulation 19/65 specifically states that the Commission may
20 Case law has established that it may be that only the offending provision of the agreement is
void, leaving the remainder enforceable. See Article 101(3) Guidelines, supra note 11, ¶ 41.
21 See Case 127/73, Belgische Radio en Televisie v. SV SABAM, 1974 E.C.R. 52, 62; see
also Regulation 17, supra note 3 (requiring that agreements be presented to the Commission for
authorization).
22 See D.G. GOYDER ET AL., GOYDER’S EC COMPETITION LAW 40–53, 613–15 (5th ed. 2009)
(noting the problem of limited resources); see also Brenda Sufrin, The Evolution of Article 81(3)
of the EC Treaty, 51 ANTITRUST BULL. 915, 917–18, 926-30 (2006) (noting the drawbacks of the
Commission’s sole power to grant Article 81(3) exemptions).
23 See Wouter P.J. Wils, Ten Years of Regulation 1/2003–A Retrospective, 2013 J. EUR. COMPETITION L. & PRAC. 293, 296 (showing the number of decisions that granted individual exemptions under Regulation 17).
24 See, e.g., EUR. COMM’N, 24TH REPORT ON COMPETITION POLICY 1999, at 26 [hereinafter
REPORT ON COMPETITION POLICY 1999] (stating that the Commission closed 90% of cases by
comfort letter); see generally Denis Waelbroeck, New Forms of Settlement of Antitrust Cases
and Procedural Safeguards: Is Regulation 17 Falling into Abeyance?, 11 EUR. L. REV. 268
(1986) (stating that the Commission most commonly closes cases by negotiated settlement, comfort letter, or opposition procedure).
25 RICHARD WHISH, COMPETITION LAW 228 (3d ed. 1993); see BELLAMY & CHILD ON COMMON MARKET LAW OF COMPETITION ¶ 11-060, at 704–05 (Vivien Rose ed., 4th ed. 1993); LUIS
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adopt block exemptions “after sufficient experience has been gained in the
light of individual decisions” interpreting and applying Article 101(3).26 It was
the Commission’s exclusive application of Article 101(3) in individual decisions that gave the Commission the firsthand experience needed to enable it to
distinguish between procompetitive and anticompetitive agreements. It then
used that experience to promulgate block exemptions that provide for the application of Article 101(3) to agreements on a generic basis. Past27 and present28 block exemption regulations in relation to vertical agreements referred
and refer to the Commission’s experience of the procompetitive effects of
many vertical restraints.
The second benefit of Regulation 17 was the Commission’s ability in practice to use its exclusive power to apply Article 101(3) in order to modify
restrictive agreements. The Commission tried, as often as not, to persuade
undertakings to relinquish or relax restrictions in order to obtain a favorable
outcome.29 One of the last decisions of this type, which granted an individual
exemption to the IFPI “simulcasting” agreement, epitomized this pragmatic
approach.30 In that case, the Commission asked the parties to amend, and then
re-amend, an agreement enabling radio and TV broadcasters to obtain a multiterritorial license to simulcast music on the Internet at the same time as broadcasts on television and radio.31 By asking the parties to amend the territorial
scope of the agreement and its pricing structure, the Commission used its
exclusive control over the application of Article 101(3) to secure a practical
solution to a competition problem.
Regulation 1/2003 likewise provides a flexible process for modifying
firms’ behavior. Article 9 provides for firms to offer, and the Commission to
accept, legally binding commitments that alter the behavior, and sometimes
the structure, of firms.32 The Article 9 procedure is, however, quite different
from the system that used to exist under Regulation 17. Under the old system,
a decision granting an individual exemption removed the prohibition in ArtiORTIZ BLANCO, EUROPEAN COMMUNITY COMPETITION PROCEDURE 258 (1996); WOUTER P J
WILS, PRINCIPLES OF EUROPEAN ANTITRUST ENFORCEMENT 5–7 (2005).
26 Council Regulation No. 19/65 pmbl. recital 4, 1965 O.J. (36) 533, 533 (as amended).
27 Council Regulation (EEC) No. 4087/88, 1988 O.J. (L 359) 46 (franchising); Commission
Regulation (EEC) No. 1984/83, 1983 O.J. (L 173) 5 (exclusive purchasing); Commission Regulation (EEC) No. 1983/83, 1983 O.J. (L 173) 1 (exclusive distribution).
28 Commission Regulation (EU) No. 330/2010, 2010 O.J. (L 102) 1 (noting the overall positive experience with the application of the preceding regulation).
29 See WHISH, supra note 25, at 235.
30 Case COMP/C2/38.014—IFPI ‘Simulcasting,’ 2003 O.J. (L 107) 58.
31 Id. ¶¶ 3–4, 28, 39.
32 A number of the early Article 9 decisions originated from notifications under Regulation
17. See, e.g., Case COMP/B-1/38.348—Repsol CPP, 2006 O.J. (L 176) 104; Case COMP/B-2/
38.381—De Beers, 2006 O.J. (L 205) 24; Case COMP/C.2/37.214—Joint selling of the media
rights to the German Bundesliga, 2005 O.J. (L 134) 46.
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cle 101(1) for a period of time, with the consequence that the agreement was
lawful throughout that period. By contrast, the acceptance of commitments
under Article 9 does not affect the application of Articles 101 and 102.
It may be asked whether the removal of the Commission’s power to negotiate (or, indeed, impose33) terms and conditions when granting an individual
exemption has undermined the effective application of Article 101(3). In the
author’s opinion, the answer to that question is no. In principle, Article 101(3)
can be applied just as effectively without the power to grant individual exemptions. In practice, however, the problem has been that the mechanisms in
Regulation 1/2003 that provide for such effective application have not been
effectively utilized.
II. POWERS TO APPLY ARTICLE 101(3) UNDER
REGULATION 1/2003
Article 1(2) of Regulation 1/2003 provides that agreements that are caught
by Article 101(1) but that satisfy the conditions of Article 101(3) shall not be
prohibited; no prior decision to that effect is required.34 The European Commission, NCAs, and courts of Member States are all entitled to apply the
whole of Article 101. This Part will describe the powers given to each of these
bodies to apply Article 101(3). This description will be followed, in Part III,
by a review of the extent to which these powers have been used in practice.
A. POWERS
OF THE
EUROPEAN COMMISSION
The Commission’s decisionmaking powers are set out in Chapter III of
Regulation 1/2003. Article 7 empowers the Commission to take a decision
finding an infringement of Article 101 (or 102) and requiring the infringement
to be brought to an end. The Commission has frequently exercised this
power,35 often together with its power to impose fines. Under Article 8 the
Commission may impose interim measures, although it has not yet done so.36
As already noted, the Commission also has the power under Article 9 to accept commitments.
Article 7, however, does not enable the Commission to find that an agreement does not violate Article 101(1) because it fulfills the conditions in ArtiRegulation 17, supra note 3, art. 8(3).
Regulation 1/2003, supra note 1, art. 1(2), at 7. Article 101 is a “unitary norm” that comprises a prohibition contained in Article 101(1) and a defense contained in Article 101(3). Eur.
Comm’n, White Paper on Modernisation of the Rules Implementing Articles 85 and 86 of the EC
Treaty, 1999 O.J. (C 132) 1, ¶ 69 [hereinafter Commission White Paper].
35 See Regulation 1/2003 Report, supra note 5, ¶ 19.
36 The Commission’s power to impose fines for substantive breaches of EU competition law is
contained in Article 23(2) of Regulation 1/2003. See generally BELLAMY & CHILD ON EUROPEAN
UNION LAW OF COMPETITION 1091–1164 (Vivien Rose & David Bailey eds., 7th ed. 2013).
33
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cle 101(3). Only Article 10 of Regulation 1/2003 provides such a power. It
provides that the Commission may find that Article 101(1) is “not applicable”
to an agreement either because it falls outside Article 101(1) or because it
satisfies the criteria in Article 101(3).37 The exercise of this power is, however, subject to two conditions: first, the Commission must be satisfied that
the EU public interest relating to the application of Articles 101 and 102 requires a finding that one (or both) of these provisions does not apply; second,
the Commission must act on its own initiative.38
In relation to the first condition, Recital 14 to Regulation 1/2003 indicates
that the public interest may justify a finding of inapplicability in cases where
the Commission considers it appropriate to clarify its view of the law and/or
to ensure its consistent application throughout the European Union.39 Recital
14 gives an example of a case involving a new type of agreement that has
never been considered before.40 A further example, not mentioned by Regulation 1/2003, might be joint ventures that give rise to genuine uncertainty as to
the application of Article 101.41 An example of such a joint venture would be
a partial-function production joint venture that requires substantial investment
and far-reaching integration of operations.42 The Commission’s Staff White
Paper on Regulation 1/2003 noted that some firms blamed a lack of legal
certainty for deterring them from pursuing investments that they would otherwise have undertaken.43 The Commission does not appear to have been convinced by this argument (or, perhaps, it considered the degree of uncertainty
to be tolerable) and saw no need for change. In the absence of any evidence of
the forgone investments, it is impossible to appraise whether the claims of
insufficient legal certainty have merit. It would nevertheless be interesting to
know whether the firms in question asked the Commission to exercise its
powers under Article 10 and, if they did not, their reasons for not doing so.
Transparency on such matters would certainly improve the general understanding of when the power under Article 10 might be exercised.
The purpose of the second condition in Article 10 of Regulation 1/2003 —
acting on the Commission’s own initiative—is to avoid the resurrection of the
old system of notification. The Commission was understandably keen to enRegulation 1/2003, supra note 1, art. 10, at 10.
Id.
39 Id. at 4.
40 Id.
41 Cf. Eur. Comm’n, Informal Guidance Relating to Novel Questions Concerning Articles 81
and 82 of the EC Treaty that Arise in Individual Cases (Guidance Letters), 2004 O.J. (C 101) 78,
¶ 8(a) (requiring genuine uncertainty as a condition of issuing a guidance letter)[hereinafter Notice on Informal Guidance].
42 See Commission White Paper, supra note 34, ¶ 79.
43 Id. ¶ 47.
37
38
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sure that the focus of its enforcement activities would be the investigation and
censure of the most serious, pan-European infringements of Articles 101 and
102.44
Recital 14 refers to the power under Article 10 being exercised in “exceptional cases where the public interest of the [EU] so requires.”45 This reference
to exceptionality, however, is not a third hurdle that must be surmounted
before a decision may be adopted under Article 10. As the Court of Justice
noted in Inspecteur van de Belastingdienst v. X BV, a recital in the preamble
to a Regulation “may cast light on the interpretation to be given to a legal
rule,” but it does not constitute such a rule.46 Thus, the reference to exceptional cases in Recital 14 describes the likelihood that decisions declaring that
Articles 101 and 102 are inapplicable will be rare. Recital 14 has turned out to
be prescient: no Article 10 decisions were adopted in the first ten years of
Regulation 1/2003.
B. POWERS
OF
NCAS
Recital 6 to Regulation 1/2003 confirms the important role that NCAs can
and do play in applying the EU competition rules. Articles 5(1) and 35(1) of
Regulation 1/2003 provide that NCAs (designated by the Member States)
have the power to apply Articles 101 and 102 in individual cases. Like the
Commission, NCAs are entitled to find infringements, require infringements
to be terminated, order interim measures, accept commitments, and impose
fines. In contrast to Article 10 of the regulation, which allows the Commission
to adopt non-infringement decisions, the regulation contains no provision giving an equivalent power to NCAs. That is clear from the wording of Article
5(1) of Regulation 1/2003. Any lingering doubts in this respect were dispelled
by the ruling by the Grand Chamber of the Court of Justice in Tele2 Polska.47
The court held that NCAs cannot take decisions finding the absence of a
breach of Article 102, because such decisions “would call into question the
system of cooperation established by the Regulation” and “would risk undermining the uniform application of Articles 101 TFEU and 102 TFEU.”48
44 REPORT ON COMPETITION POLICY 1999, supra note 24, at 27. For an evaluation of whether,
and the extent to which, Regulation 1/2003 has realized that aim, see Wils, supra note 23, at
298–300.
45 Regulation 1/2003, supra note 1, at 4.
46 Case C-429/07, Inspecteur van de Belastingdienst v. X BV, ECLI:EU:C:2009:359, ¶ 31
(June 11, 2009); see Op. of Advocate General Trstenjak, Case C-92/11, RWE Vertrieb AG v.
Verbraucherzentrale Nordrhein-Westfalen, ECLI:EU:C:2012:566, ¶ 37 (Sept. 13, 2012).
47 Case C-375/09, Prezes Urzêdu Ochrony Konkurencji i Konsumentów v. Tele2 Polska sp. z
o.o., 2011 E.C.R. I-3055.
48 Id. ¶¶ 27, 28.
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It appears that the reasoning in Tele2 applies equally to the application of
Article 101.49 The wording of Article 5 of Regulation 1/2003 is the same for
Articles 101 and 102. The overarching point of principle invoked by the Court
in Tele2, concerning the uniform application of EU competition law, is the
same. In Schenker, Advocate General Kokott said that Regulation 1/2003
withholds the power to adopt non-infringement decisions from the NCAs in
order to reflect “the Commission’s leading role . . . in framing [EU] competition policy.”50
Thus, NCAs may simply decide that there are no grounds for action on their
part where the evidence before them suggests no breach of Article 101(1).51
“No grounds for action” decisions leave the way clear for other NCAs and the
Commission to intervene, if they so wish.52 The difference between a Commission finding of inapplicability in an Article 10 decision and an NCA “no
grounds for action” decision is important: the former reaches a conclusion on
the application of the law, whereas the latter simply explains why an investigation has been discontinued. This does not mean, however, that NCAs’ applications of Article 101(3) should go unnoticed or unheeded. NCAs’ “no
grounds for action” decisions are often published. When they are published
and are properly reasoned, they are helpful guides as to how an NCA interprets the substantive and evidentiary requirements of Article 101(3).53
C. POWERS
OF
NATIONAL COURTS
Article 6 of Regulation 1/2003 provides that national courts shall have the
power to apply Articles 101 and 102. This power enables litigants to raise
Article 101(3) as a defense to a stand-alone action54 alleging an infringement
See Commission White Paper, supra note 34, ¶ 37.
Case C-681/11, Bundeswettbewerbsbehörde v. Schenker & Co., ECLI:EU:C:2013:126,
¶ 108 (CJ Feb. 28, 2013).
51 Regulation 1/2003, supra note 1, art. 5, at 8–9.
52 Id.
53 See, e.g., OFCOM, Complaint from THUS plc & Gamma Telecom Ltd. Against BT About
Alleged Margin Squeeze in Wholesale Calls Pricing (2013), webarchive.nationalarchives.gov.uk/
20140402142426/http://stakeholders.ofcom.org.uk/binaries/enforcement/competition-bulletins/
closed-cases/all-closed-cases/cw_988/final.pdf (providing detailed reasons for OFCOM’s finding
that BT did not violate Article 102); Office of Fair Trading, Alleged Abuse of a Dominant
Position by Flybe Ltd. (2010), webarchive.nationalarchives.gov.uk/20140402142426/ http://
www.oft.gov.uk/shared_oft/ca98_public_register/decisions/OFT1286.pdf (providing detailed
reasons for “no grounds for action” decision of the OFT).
54 A stand-alone action alleges an infringement of EU (or domestic) competition law in the
absence of a prior infringement decision by a competition authority. See, e.g., Eur. Comm’n,
White Paper on Damages Actions for Breach of the EC Antitrust Rules, COM (2008) 165 final,
¶ 21 (Apr. 2, 2008).
49
50
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of Article 101(1).55 Part IV.B below discusses the litigation before national
courts in which judges have been required to interpret and apply Article
101(3).
III. APPLICATION OF ARTICLE 101(3) UNDER
REGULATION 1/2003 IN PRACTICE
No major difficulties with the application of Article 101(3) were reported to
the Commission during the first five years of Regulation 1/2003.56 What this
finding does not reveal is why no real difficulties were encountered. Was it
because Article 101(3) is well understood by all concerned? Was it because
the fears about the application of Article 101(3) at the time Regulation 1/2003
was proposed were unjustified? Was it because the application of Article
101(3) has not been properly tested?
Article 101(3) has been interpreted and applied in three situations during
the first ten years of Regulation 1/2003. First, decisions of the Commission
and NCAs that find an infringement of Article 101(1) normally contain a brief
discussion of Article 101(3).57 By their very nature, infringement decisions
explain why an infringing agreement does not benefit from the exception. The
second situation in which Article 101(3) has been invoked is proceedings
before national courts.58 There have been a few cases where a defendant has
successfully defended an alleged breach of Article 101(1) by demonstrating
that the impugned agreement fulfilled the criteria of Article 101(3). Third, as a
result of litigation in national courts, the issue has arisen in preliminary rulings to the Court of Justice.59 This Part will consider these three situations
before considering the argument for reinvigorating the affirmative application
of Article 101(3) in individual cases.
A. THE COMMISSION’S CONSIDERATION OF ARTICLE 101(3)
INFRINGEMENT DECISIONS
IN
Article 101(3) has been invoked as a defense in cases investigated by the
Commission in contemplation of a possible infringement decision. An excellent example of this is the case of MasterCard.60 The Commission held that
55 Such a defense was raised in Bookmakers’ Afternoon Greyhound Servs. v. Amalgamated
Racing Ltd. [2008] EWHC (Ch) 1978, ¶ 520. However, the judge held that there was no breach
of Article 101(1) and found it unnecessary to rule on the application of Article 101(3). Id. ¶ 441.
56 Regulation 1/2003 Report, supra note 5, ¶ 11, at 8–9.
57 See infra notes 60–117 and accompanying text.
58 See infra notes 108–117 and accompanying text.
59 See infra notes 118–126 and accompanying text.
60 Case T-111/08, MasterCard, Inc. v. Comm’n, ECLI:EU:T:2012:260 (GC May 24, 2012)
(upholding Commission decision of Dec. 19, 2007), aff’d, C-382/12 P, ECLI:EU:C:2014:2201
(ECJ Sept. 11, 2014).
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MasterCard’s default intra-EEA multilateral interchange fee (MIF) infringed
Article 101(1) TFEU.61 In a MIF, a bank that issues a credit card to a consumer charges a fee to a retailer’s bank for processing a card transaction. In
the view of the Commission, the MasterCard MIF had as its effect the restriction of competition by artificially inflating the costs of accepting payment
cards. MasterCard defended its MIF on various grounds, including that it fulfilled the requirements of Article 101(3). The Commission acknowledged
that, in theory, interchange fees could increase efficiency by optimizing the
utility of a payment card network for all its users. The Commission said that
“[a]ny claim that a MIF creates efficiencies within the meaning of Article
[101(3)] of the Treaty must therefore be founded on a detailed, robust and
compelling analysis that relies in its assumptions and deductions on empirical
data and facts.”62
MasterCard’s arguments that the MIF had positive effects on the market
were found by the Commission to be unsupported by empirical evidence. The
MasterCard decision contains a detailed and critical analysis of the assumptions underpinning MasterCard’s argument that the MIF allocated costs between the acquiring and issuing sides of the system.
The fact that MasterCard’s argument was not accepted does not mean that
the defense in Article 101(3) is reduced to a teasing illusion. The fact that it
can be difficult to demonstrate the efficiency gains to fulfill the requirements
of Article 101(3) does not, by itself, mean that it is impossible. On appeal to
the General Court, MasterCard complained that the Commission had imposed
an excessively high standard of proof under Article 101(3).63 Referring to
what it had said in GlaxoSmithKline v Commission,64 the General Court held
that the standard of proof applied by the Commission was appropriate.65 According to GlaxoSmithKline, an undertaking seeking to rely on Article 101(3)
must adduce “convincing arguments and evidence.”66 In MasterCard, the
General Court held that the Commission must “adequately examine those arguments and that evidence, that is to say, it must determine whether they
Id. ¶¶ 663–665.
Case COMP/34.579, 36.518, 38.580—Mastercard, Comm’n Decision, ¶ 732 (Dec. 19,
2007) (Summary: 2009 O.J. (C 264) 8), ec.europa.eu/competition/antitrust/cases/dec_docs/
34579/34579_1889_2.pdf.
63 Case T-111/08, MasterCard, ECLI:EU:T:2012:260, ¶ 196.
64 Case T-168/01, GlaxoSmithKline Servs. Unltd. v. Comm’n, 2006 E.C.R. II-2969,
¶¶ 235–236. On appeal, the European Court of Justice provided similar reasoning. Joined Cases
C-501, 513, 515, & 519/06 P, GlaxoSmithKline Servs. Unltd. v. Comm’n, 2009 E.C.R. I-9291,
¶¶ 78–88.
65 Case T-111/08, MasterCard, ECLI:EU:T:2012:260, ¶ 232.
66 Case T-168/01, GlaxoSmithKline, 2006 E.C.R. II-2969, ¶ 235.
61
62
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demonstrate that the conditions . . . are satisfied.”67 MasterCard had not
demonstrated that its MIF had contributed to improving the production or distribution of goods or promoting economic progress.
The Court of Justice dismissed MasterCard’s appeal against the General
Court’s judgment. The Court of Justice held that the General Court had correctly considered the two-sided nature of the credit card system and the optimization of that system that the MIF helps to achieve.68
There are several other infringement decisions that have considered the criteria of Article 101(3) in some detail.69 In Morgan Stanley/Visa International
& Visa Europe, the Commission acknowledged that the collaboration between
the banks that belong to the Visa card network (or to the licensing agreements
between collecting societies) generates efficiencies.70 That fact did not, however, justify Visa’s anticompetitive refusal to grant Morgan Stanley membership in the Visa network: the restriction of competition was unrelated to the
economic benefits of the Visa network.
In Groupement des Cartes Bancaires, the Commission found that GCB had
infringed Article 101(1) by adopting certain pricing practices that hindered the
issuing of CB payment cards in France at competitive rates by Internet and
supermarket banks.71 The Commission’s view was that the pricing measures
had the object and the effect of restricting competition and that GCB had
failed to demonstrate that the requirements of Article 101(3) were met.72 On
appeal, the General Court agreed with the Commission’s characterization of
the pricing measures as restrictive of competition by object. It also concluded
that the Commission had adequately dealt with the arguments and evidence
67 Case T-111/08, MasterCard, ECLI:EU:T:2012:260, ¶ 197; see Opinion of Advocate General Mengozzi, Case C-382/12 P, MasterCard v. Comm’n, ECLI:EU:C:2014:42, ¶¶ 141, 147
(Jan. 30, 2014).
68 Case C-382/12 P, Mastercard Inc. v. Comm’n, ECLI:EU:C:2014:2201, ¶ 227 (ECJ Sept. 11,
2014), eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:62012CJ0382&qid=1457
618505504&from=EN.
69 In addition to the cases mentioned in the text, see also the consideration of Article 101(3) in
Case COMP/C2/38.698—CISAC, Comm’n Decision, ¶¶ 238–255 (July 16, 2008), ec.europa.eu/
competition/antitrust/cases/dec_docs/38698/38698_4567_1.pdf. On appeal to the General Court,
the finding of a concerted practice in this case was annulled for want of evidence. Case T-442/
08, Int’l Confederation of Soc’ys of Authors & Composers (CISAC) v. Comm’n,
ECLI:EU:T:2013:188 (Apr. 12, 2013).
70 Case COMP/D1/37860—Morgan Stanley/Visa Int’l & Visa Eur., Comm’n Decision, ¶ 312
(Oct. 3, 2007) (Summary: 2009 O.J. (C 183) 6), ec.europa.eu/competition/antitrust/cases/dec_
docs/37860/37860_629_1.pdf, aff’d sub nom. Case T-461/07, Visa Eur. Ltd. v. Comm’n, 2011
E.C.R. II-1729.
71 Case COMP/D1/38606—Groupement des Cartes Bancaires “CB,” Comm’n Decision, ¶ 251
(Oct. 17, 2007) (Summary: 2009 O.J. (C 183) 12), ec.europa.eu/competition/antitrust/cases/dec_
docs/38606/38606_611_1.pdf.
72 Id. ¶ 503.
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that GCB had deployed under Article 101(3).73 On appeal to the Court of
Justice, the court held that the General Court had erred in law by concluding
that GCB’s pricing measures restricted competition by object.74 The General
Court had acknowledged that the measures had a legitimate objective to combat free riding on the system,75 but had failed to explain how or why the
measures revealed a sufficient degree of harm to competition (which is the
essential legal criterion for finding an object restriction).76 On remand the
General Court upheld the Commission’s finding that the CB pricing measures
had an appreciable anticompetitive effect.77
B. THE EXPERIENCE
OF
NCAS
IN
APPLYING ARTICLE 101(3)
The experience of NCAs and national courts in applying Article 101(3) has
been variable. It is not possible for reasons of space and language to discuss
the experience of all 28 Member States of the European Union. This Part will,
however, discuss a range of opinions, decisions, reports, and judgments of the
competition authorities and courts in the United Kingdom, France, Netherlands, Hungary, Ireland, and Poland.
In the United Kingdom, the former Office of Fair Trading (OFT)78 published a reasoned opinion in 2008 on the possible application of Article 101(3)
to a restriction by object in connection with the distribution of newspapers and
magazines in the UK.79 The opinion was issued because there was insufficient
precedent in the European Union and the United Kingdom in relation to
agreements that conferred “absolute territorial protection” on wholesalers
within a single Member State.80 Agreements of this kind that prevent parallel
trade between Member States are one of the cardinal sins of EU competition
73 Case T-491/07, Groupement des Cartes Bancaires “CB” v. Comm’n, ECLI:EU:T:2012:633
(GC Nov. 29, 2012).
74 Case C-67/13 P, Groupement des Cartes Bancaires “CB” v. Comm’n, ECLI:EU:
C:2014:2204 (ECJ Sept. 11, 2014).
75 Case T-491/07, Groupement, ECLI:EU:T:2012:633, ¶¶ 76–77. On the relevance of this legitimate objective to the application of Article 101(1) and of Article 101(3), see Opinion of
Advocate General Wahl of Mar. 27, 2014, Case C-67/13 P, Groupement, ECLI:EU:C:2014:1958,
¶¶ 121–124.
76 Case C-67/13 P, Groupement, ECLI:EU:C:2014:2204, ¶¶ 70–92.
77 Case T-491/07 RENV CB v. Comm’n, ECLI:EU:T:2016:379 (June 30, 2016).
78 It should be noted that the Enterprise and Regulatory Reform Act 2013 abolished the OFT
with effect from April 1, 2014. Enterprise and Regulatory Reform Act 2013, c. 26(1) (Eng.),
legislation.gov.uk/ukpga/2013/24/pdfs/ukpga_20130024_en.pdf. The OFT’s functions were
transferred to a new entity known as the Competition and Markets Authority (CMA). The
CMA’s website is gov.uk/cma.
79 Office of Fair Trading, Newspaper & Magazine Distribution (2008), webarchive.national
archives.gov.uk/20100512173611/ http://www.oft.gov.uk/shared_oft/reports/comp_policy/
oft1025.pdf.
80 Id. at 4.
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law.81 Restrictions on active and passive sales within one Member State do not
commit the sin of partitioning the European single market; even so, the OFT
opined that they could be classified as restrictions by object.82 In the specific
circumstances of the distribution of newspapers in the United Kingdom, however, the OFT’s opinion was that sub-national absolute territorial protection
could benefit from Article 101(3). The opinion acknowledged the well-established proposition of law that any agreement may be defended under Article
101(3).83 The opinion continued by setting out the OFT’s analysis of the circumstances in which exclusive territories, accompanied by restrictions on
sales between territories, may be efficiency enhancing. For example, the grant
of absolute territorial protection could make competition for the protected
market more effective (by generating competition between wholesalers to be
awarded exclusive territories), thereby reducing wholesale margins and improving the quality of wholesaling services.
The OFT’s opinion is helpful and valuable for four reasons. It sheds light,
first of all, on the OFT’s approach to the standard of evidence required in
cases under Article 101(3). Second, it demonstrates that restrictions by object
can be successfully defended under Article 101(3)—a point that ought not to
be underestimated, since such restrictions are often thought to be indefensible.84 Third, the opinion provides a real-life example of how the case law
and analytical framework set out in the Commission’s Article 101(3) Guidelines is to be applied in practice. It is not unreasonable to suppose that, in the
future, “no grounds for action” decisions based on Article 101(3) might also
provide such clarity.
In the case of Flybe, the OFT decided that there were no grounds for action
in relation to alleged predatory pricing in local air transport.85 The decision is
of interest because the OFT examined not only the loss-making or predatory
nature of Flybe’s new flights but also the possible efficiencies of Flybe entering the market. The OFT ultimately decided that there was insufficient evidence to support the efficiency defense. Like the 2008 opinion discussed
above, this “no grounds for action” decision carefully analyzed the nature and
effect of the claimed efficiencies.86
81 See, e.g., Joined Cases 56 & 58/64, Établissements Consten S.à.R.L. v. Comm’n, 1966
E.C.R. 301.
82 Office of Fair Trading, Newspaper & Magazine Distribution, supra note 79, ¶¶ 4.21–4.23.
83 Id. ¶ 4.30; see, e.g., Case T-168/01, GlaxoSmithKline Servs. v. Comm’n, 2006 E.C.R. II2969, ¶ 233; Case T-17/93, Matra Hachette SA v. Comm’n, 1994 E.C.R. II-595, ¶ 85.
84 See Article 101(3) Guidelines, supra note 11, ¶¶ 46, 79.
85 Office of Fair Trading, Alleged Abuse of a Dominant Position by Flybe Ltd. (2010),
webarchive.nationalarchives.gov.uk/20140402142426/ http://www.oft.gov.uk/shared_oft/ca98_
public_register/decisions/OFT1286.pdf (providing detailed reasons for “no grounds for action”
decision of the OFT).
86 Id. ¶¶ 6.100–6.108.
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Fourth, the opinion in Newspapers and Magazines provided a degree of
assurance for publishers and distributors in circumstances where they had to
make their own assessment of the compatibility of their distribution agreements with competition law for the first time.87
Like the Commission, various NCAs have considered the application of
Article 101(3) in the context of infringement decisions. A notable example in
the United Kingdom is the Tobacco case. In 2010, the OFT imposed fines of
£225 million on two manufacturers of tobacco products, each of which had
entered into bilateral trading agreements with ten retailers regarding the pricing of tobacco products in those retailers’ shops.88 The vice and virtues of the
agreements were vociferously disputed. The vice of the agreements was said
to consist of linking the retail pricing of one manufacturer’s product to the
retail price of another manufacturer. The OFT found that the agreements restricted the retailers’ ability to determine the price for competing linked
brands, incentivized manufacturers to increase wholesale prices, and, therefore, had as their object the restriction of competition.89 The alleged virtues of
the agreements were the funding by the manufacturers of lower retail prices
(in order to meet competition) and alignment of the interests of retailers and
manufacturers on margins. The OFT found that neither of these virtues met
the criteria of Article 101(3). The OFT concluded that the parties had not
demonstrated how any efficiencies achieved by the trading agreements would
be transmitted in sufficient measure to consumers.90
The OFT’s infringement decision was appealed to the UK Competition Appeal Tribunal (CAT). In 2011, the CAT allowed the appeals and quashed the
decision.91 The appeals were allowed because the CAT held that there was no
proper evidentiary basis for the infringement condemned by the OFT in its
decision. The OFT had conceded that if it wanted to put forward a case
outside the infringements alleged in the decision, that would require the decision to be set aside.92 The CAT did not have jurisdiction to continue hearing
the appeal on the basis of a theory of harm that was not contained in the
decision and, even if it had such jurisdiction, it would exercise its discretion
against doing so. That being so, the CAT did not address any of the substan-
87 From March 1, 2000, to May 1, 2005, vertical agreements were excluded from the Chapter I
prohibition, the UK’s domestic equivalent of Article 101 TFEU. See Office of Fair Trading,
Newspaper & Magazine Distribution, supra note 79, ¶ 1.5.
88 Office of Fair Trading, Tobacco (2010), webarchive.nationalarchives.gov.uk/20140402142
426/ http://www.oft.gov.uk/shared_oft/ca98_public_register/decisions/tobacco.pdf.
89 Id. ¶¶ 6.205–6.254.
90 Id. ¶¶ 7.84–7.88.
91 Imperial Tobacco Grp. v. Office of Fair Trading [2011] CAT 41.
92 Id. ¶ 50.
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tive issues on the infringements alleged in the decision.93 The OFT subsequently declined to reinvestigate the matter and closed the file.94
In Magyar Országos és Budapesti Fodrász, the Hungarian NCA held that
the recommendation by the Dental Technicians Guild of minimum prices to
its members had as its object the restriction of competition and thus infringed
Article 101(1).95 The NCA considered the criteria in Article 101(3), concluding that information on prices from independent sources (such as consumer
associations) was an effective, but less restrictive, alternative to horizontal
price recommendations.96
In 2008, the French NCA held that Pierre Fabre, a cosmetics company, had
unlawfully prevented its distributors from selling its skincare products on the
Internet.97 In Pierre Fabre, sales of skincare products had to be made in a
shop in the presence of a qualified pharmacist. This provision had the de facto
effect of preventing all Internet sales. The French NCA, with whom the Paris
Court of Appeal and (following an Article 267 reference) the Court of Justice
agreed, found that the de facto ban on Internet selling was a restriction by
object.98 Pierre Fabre had argued that the Internet-sales ban improved both the
distribution of cosmetics (by preventing counterfeiting) and the welfare of
consumers (by ensuring that a pharmacist was on hand to provide advice).
The French NCA rejected both of these arguments since there was no evidence of the claimed efficiencies.99 On the contrary, in the NCA’s view, consumers were deprived of online sales that offered greater choice and
potentially lower prices. Interestingly, both the French NCA and Advocate
General Mázak noted that the outcome might have been different if the products had been subject to regulations requiring their sale in a physical space
and only in the presence of a qualified pharmacist.100
Id. ¶ 3.
Two companies that originally did not appeal against the OFT decision were subsequently
granted permission to appeal by the CAT: Somerfield Stores and Gallaher Group. Somerfield
Stores Ltd. v. Office of Fair Trading [2013] CAT 5, overturned on appeal, [2014] EWCA (Civ)
400 (Eng.).
95 Gazdasági Versenyhivatal Versenytanács [Hungarian Competition Authority Competition
Council], Vj-051/2008/023 (Hung. Oct. 15, 2009), www.gvh.hu//data/cms992206/Vj051_
2008%20_m.pdf.
96 Id. ¶¶ 51–59.
97 Decision 08-D-25, Conseil de la Concurrence [Competition Board] (Fr. Oct. 29, 2008),
www.autoritedelaconcurrence.fr/pdf/avis/08d25.pdf.
98 Case C-439/09, Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorité de la Concurrence, 2011 E.C.R. I-9419, ¶ 19 (summarizing the NCA’s reasoning).
99 Decision 08-D-25, Conseil de la Concurrence [Competition Board] ¶¶ 73–82 (Fr. Oct. 29,
2008), www.autoritedelaconcurrence.fr/pdf/avis/08d25.pdf.
100 Id. ¶ 78; Opinion of Advocate General Mazák, Case C-439/09, Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorité de la Concurrence, ECLI:EU:C:2011:113, ¶ 34, curia.eu
ropa.eu/juris/document/document.jsf?text=&docid=84226&pageIndex=0&doclang=EN&mode=
lst&dir=&occ=first&part=1&cid=159579. The French NCA reached a similar conclusion in
93
94
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Restraints of e-commerce were cast in a more favorable light by a 2009
report prepared for the Dutch NCA.101 The report was the culmination of an
inquiry, lasting one year, into possible restrictions of sales via the Internet.
The report recognized, in particular, that a dual-pricing policy, whereby a distributor pays a higher price for products intended to be resold online than for
equivalent products intended to be resold in shops, is not necessarily unlawful.102 In this respect, the Dutch report echoes paragraph 64 of the Commission’s Guidelines on Vertical Restraints, which acknowledges that dual
pricing may fall under Article 101(3) where, for example, online sales lead to
substantially higher costs for a manufacturer than offline sales do.103 The
Commission is keen to improve its understanding of potential barriers to online trade between countries within the European Union and, in March 2016,
it presented its initial findings of a sectoral inquiry into e-commerce.104
Finally, it bears emphasizing that in cases where there has been no effect on
trade between Member States, NCAs have been prepared to apply the domestic equivalent of Article 101(3). A good example is the Polish NCA’s “no
grounds for action” decision in relation to horizontal price fixing of river tour
services in the Pieniny National Park.105 The Polish Raftsmen’s Association
had established uniform price lists that were applied by all its members. The
uniform pricing policy had the object of restricting or distorting competition,
because raftsmen invariably charged the same prices. The Polish NCA concluded that the agreement was justified on efficiency grounds and thus satisfied Article 8 of the 2007 Polish Law on Competition and the Protection of
Consumers, the domestic analogue to Article 101(3). The Polish NCA held
that uniform pricing contributed to the effective provision of the river tour
services, thereby improving the distribution of those services for the benefit of
consumers.106 This decision confirms that it is possible for an agreement that
2012 in relation to the prevention of online distribution of Bang & Olufsen hi-fi equipment. See
Decision 12-D-23, Autorité de la Concurrence [Competition Authority] (Fr. Dec. 12, 2012).
101 NEDERLANDSE MEDEDINGINGSAUTORITEIT [DUTCH COMPETITION AUTHORITY], SECTORSCAN SIGNALEN INTERNETVERKOOP [SECTOR SCAN ON INTERNET SELLING] (2009) (Neth.).
102 Id. at 5. The report went as far as to suggest that dual pricing may be unproblematic unless
one of the parties has a dominant position. Id. at 6.
103 Eur. Comm’n, Guidelines on Vertical Restraints, 2010 O.J. (C 130) 1, 16; see also DAMIEN
GERADIN ET AL., EU COMPETITION LAW AND ECONOMICS 494 n.221 (2012) (noting a Dutch trial
court’s decision that differential pricing between offline shops and online retailers in relation to
built-in kitchen equipment did not restrict competition).
104 Press Release, Eur. Comm’n, Antitrust: Commission Publishes Initial Findings of e-Commerce Sector Inquiry (Sept. 15, 2016) (IP/16/3017).
105 Decision of the Polish NCA of 4 Nov. 2011, RKT-33/2011, decyzje.uokik.gov.pl/bp/dec_
prez.nsf/0/050DF8EBB802A356C1257EC6007B9765/$file/Decyzja%20nr%20RKT%2033_
2011%20z%2004.11.pdf.
106 Id. at 17.
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restricts competition by object to be defended under the domestic analogue of
Article 101(3).107
C. THE EXPERIENCE
OF
NATIONAL COURTS
IN
APPLYING ARTICLE 101(3)
Article 101(3) has been raised before national courts but does not appear to
have been the subject of many reported judgments. In Pirtek (UK) Ltd. v.
Joinplace Ltd.,108 the English High Court held that even if a franchise agreement for making industrial hoses did restrict competition, it would satisfy Article 101(3). The court held that the franchisor could not reasonably be
expected to afford know-how and assistance to its franchisees without the
protection of the restraints in the franchise agreement; they were therefore
indispensable to the improvement of production or distribution.109
Article 101(3) was also due to be considered by the Irish High Court in the
Irish Beef case.110 That case arose from chronic overcapacity in the beef
processing industry in Ireland. Not only would this market failure lead to an
inefficient selection of retained capacity in the long term, but it was adversely
affecting processors’ profitability in the short term. To alleviate these difficulties, the Beef Industry Development Society (BIDS) sought to reduce total
capacity by 25 percent in one year. It did so by designing arrangements that
manifestly aimed to reduce competition by assisting the withdrawal of undertakings from the market. The Court of Justice concluded that the arrangements
were obviously intended to engineer a departure from the normal competitive
process and therefore constituted infringements by object.111 The Court of Justice nevertheless acknowledged that the arrangements could be defended successfully under Article 101(3).112
Following the Court of Justice’s preliminary ruling, the Irish Supreme
Court went out of its way to stress that the BIDS arrangements differed from
typical cartel activity and to point out how they could benefit from Article
101(3).113 Of particular importance is the court’s observation on the need for
an essentially pragmatic approach to the measurement of anticipated efficienAccord Case IV/36.748—Reims II, Comm’n Decision, 1999 O.J. (L 275) 17.
[2010] EWHC 1641 (Ch) (Eng.); see also Martin Retail Group Ltd. v. Crawley Borough
Council, [2013] EW Misc 32 (CC), ¶¶ 31–40 (London, Eng., Cty. Ct. Dec. 24, 2013),
www.bailii.org/ew/cases/Misc/2013/32.pdf (holding that a use restriction in a lease violated Section 2 of the UK Competition Act of 1998, and that the defendant did not meet its burden to
show the restriction was an allowed exception under Section 9, the domestic equivalent of Article 101(3)).
109 Pirtek, [2010] EWHC 1641, ¶¶ 68–70.
110 Case C-209/07, Competition Auth. v. Beef Indus. Dev. Soc’y, 2008 E.C.R. I-8637.
111 Id. ¶¶ 31–33, 36.
112 Id. ¶ 39.
113 Competition Auth. v. Beef Indus. Dev. Soc’y, [2009] IESC 72 [2010] 1 IR 767 (Ir.).
107
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cies.114 The case was remitted to the High Court for a new hearing that took
place in June 2010. The European Commission considered that the hearing
raised issues on the coherent application of Article 101 TFEU and helpfully
submitted written observations under Article 15(3) of Regulation 1/2003.115
The Commission did not take a position on whether the BIDS arrangements
were defensible, but its amicus curiae brief sheds light on how Article 101(3)
applies to crisis cartels in general and industrial restructuring agreements in
particular. The Commission recognized, in essence, that an agreement between competitors to reduce capacity may improve production and create efficiencies by removing inefficient capacity and/or by improving the utilization
of existing capacity.116 According to the Commission, the crucial question for
the application of Article 101(3) was whether the overcapacity could be remedied by market forces; if not, the coordinated restructuring between undertakings would be indispensable to rectify the overcapacity.117 This is, of course, a
question of fact—one that was ultimately not answered in Irish beef because
BIDS withdrew its Article 101(3) defense before the High Court could hand
down its judgment.
D. PRELIMINARY RULINGS
OF THE
COURT
OF
JUSTICE
Since Regulation 1/2003 entered into force, the Court of Justice has considered the interpretation of Article 101(3) on only a handful of occasions. The
Pierre Fabre case has already been mentioned, in which the Court of Justice
did no more than affirm the proposition of law that Article 101(3) may apply
to any type of anticompetitive agreement.118 In two other cases, FA Premier
League119 and Ordem dos Técnicos Oficiais de Contas (OTOC),120 the Court
of Justice considered the application of Article 101(3). In both cases the Court
concluded that Article 101(3) did not apply. In both cases the Court’s analysis
derived from the wording of the provision. In OTOC, for example, the Court
of Justice held that a scheme of compulsory training eliminated competition
on a substantial part of the training services for chartered accountants and
that, therefore, it did not satisfy Article 101(3)(b).121
Id.
Eur. Comm’n, Observations of the Commission Under Article 15, Paragraph 3, of Regulation No. 1/2003, Competition Auth. v. Beef Indus. Dev. Soc’y, 2003 No. 7764P (Ir.),
ec.europa.eu/competition/court/amicus_curiae_2010_bids_en.pdf.
116 Id. ¶¶ 20, 24.
117 Id. ¶¶ 30–32.
118 Case C-439/09, Pierre Fabre Dermo-Cosmétique SAS v. Président de l’Autorité de la Concurrence, 2011 E.C.R. I-9419, ¶ 57; see supra notes 97–100 and accompanying text.
119 Joined Cases C-403 & 429/08, Football Ass’n Premier League Ltd. v. QC Leisure, 2011
E.C.R. I-9083.
120 Case C-1/12, Ordem dos Técnicos Oficiais de Contas v. Autoridade da Concorrência,
ECLI:EU:C:2013:127 (ECJ Feb. 28, 2013).
121 Id. ¶ 103.
114
115
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In the FA Premier League case, the Premier League had sold its rights to
the live broadcasting of its football (soccer) matches on a territorial basis.
Broadcasters paid a lot of money for the media rights and so wanted as much
protection as possible from intrabrand competition in each territory. To give
this protection, the Premier League required its licensees in other Member
States not to sell, import, or use satellite decoder cards to viewers in other
territories. The effect of this agreement was that each licensee enjoyed “absolute territorial exclusivity” prohibiting parallel imports into their territory
from the other Member States.122 Problems arose, however, when pubs in the
United Kingdom bought satellite equipment and foreign decoder cards from
broadcasters in Greece. These pubs were then able to show live football
matches at a much lower price than if they had paid the licensee/broadcaster
for the United Kingdom.
One of the questions that arose in proceedings to enforce the license agreements was whether the provisions prohibiting the resale of decoder cards to
viewers in other Member States was compatible with Article 101. The Court’s
answer was clear and, in light of earlier case law,123 unsurprising. An agreement of the kind in question—one that conferred absolute territorial protection on a licensee—has as its object the restriction of competition.124 Such a
restriction of competition was not justified by the objective of protecting intellectual property or by the objective of encouraging the public to attend live
football games.125 The Court’s application of Article 101(3) is brief. It merely
cross-refers to the analysis of those justifications in the context of the related
restriction of free movement of services.126
IV. THE APPLICATION OF ARTICLE 101(3) UNDER
REGULATION 1/2003: THE FUTURE
Some commentators have expressed misgivings about the underdevelopment of Article 101(3). The previous Part sought to show that matters are,
perhaps, not quite as bad as some have suggested. There have been cases
considering and applying Article 101(3). It is nevertheless true that nearly all
of these cases have involved the negative application of Article 101(3). The
contention of this Part is that a judicious number of Commission decisions,
guidance letters, or amicus curiae observations instantiating the positive appliFootball Association Premier League, 2011 E.C.R. I-9083, ¶ 142.
See, e.g., Joined Cases 56 & 58/64, Établissements Consten, S.à.R.L. & Grundig-VerkaufsGmbH v. Comm’n, 1966 E.C.R. 299.
124 Football Association Premier League, 2011 E.C.R. I-9083, ¶ 140. The English High Court
subsequently made a declaration of an infringement of Article 101(1). Football Ass’n Premier
League Ltd. v. QC Leisure [2012] EWHC (Ch) 108, [99] (Eng.).
125 Football Association Premier League, 2011 E.C.R. I-9083, ¶ 145.
126 Id. ¶¶ 105–124.
122
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cation of Article 101(3) would be desirable. Also desirable would be published, reasoned NCA decisions that find no grounds for action because of
Article 101(3). Due to constraints of space, however, this Part will primarily
focus on how the Commission might go about this task.
A. THE CASE
FOR A
GREATER AFFIRMATIVE APPLICATION
ARTICLE 101(3)
OF
There are at least four reasons why there should be at least some decisions
and/or guidance letters clarifying the non-infringing side of the line as well as
the infringing side. Formal Article 10 decisions would, first of all, resolve any
substantive conflicts between the Commission and NCAs. Specifically, the
Commission could issue an Article 10 decision upholding an Article 101(3)
defense where it had a favorable view of an agreement and an NCA did not.
As already noted, however, such conflicts appear to be rare.127 Second, a small
number of favorable decisions under Article 101(3) would enable the Commission to apply the principles set out in the Article 101(3) Guidelines and
possibly refine those principles. Third, the affirmative application of Article
101(3) would be important at a time when there are misgivings about the
standard of proof in relation to Article 101(3).128 Undertakings and their advisers may be less skeptical of the evidentiary demands of Article 101(3) (and
the Article 101(3) Guidelines) if and when there are examples of the demands
actually being met in individual cases.129 Fourth, a limited number of findings
of inapplicability and/or guidance letters would not hinder the Commission in
the performance of tasks that it considers important, such as dealing with international cartels.130 On the contrary, a few well-reasoned non-infringement
decisions (or guidance letters) would enable the law and policy, as then Assistant Attorney General William Baxter put it, “to adapt to new learning without
the trauma of refashioning more general rules that afflict statutory law.”131
The golden thread running through the points in the previous paragraph is
that the Commission can, indeed should, seek to clarify the content of the law,
127 See, e.g., Opinion of Advocate General Mazák ¶ 37, Case C-375/09, Prezes Urzêdu
Ochrony Konkurencji i Konsumentów v. Tele2 Polska s.p. z o.o., devenue Netia SA, 2011
E.C.R. I-3055, curia.europa.eu/juris/document/document.jsf?text=&docid=78563&pageIndex=
0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=288295.
128 See Lamadrid, supra note 9; see also James Aitken & Sophie Mitchell, Efficiency Defences
Under Art 81 EC—Is the Hurdle Getting Higher?, 1 COMPETITION L.J. 55 (2009).
129 See also Richard Whish & David Bailey, Regulation 330/2010: The Commission’s New
Block Exemption for Vertical Agreements, 47 COMMON MKT. L. REV. 1757, 1776 (2010).
130 Paragraphs 5 and 7 of the Notice on Informal Guidance specifically refer to, and respect, the
Commission’s enforcement priorities. Notice on Informal Guidance, supra note 41, ¶¶ 5, 7. Similarly, the second condition for exercising the Commission’s power under Article 10 means that
the Commission’s priorities can and should be respected.
131 William F. Baxter, Separation of Powers, Prosecutorial Discretion, and the “Common
Law” Nature of Antitrust Law, 60 TEX. L. REV. 661, 666 (1982).
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including the application of Article 101(3), in appropriate cases.132 Wouter
Wils has argued that this is one of the main tasks of public enforcement (the
other task being, of course, the prevention of violations of the law).133 Similarly, William Kovacic has argued that a competition authority’s contributions
to doctrine ought to be a benchmark against which to assess its performance.134 The question that arises is this: how should the Commission seek to
clarify the law and policy under Article 101(3)? Should the Commission
adopt only a series of guidelines and infringement decisions? Or should the
Commission seek to adopt a broader portfolio of guidelines, infringement and
non-infringement decisions, commitment decisions, and informal guidance?
To answer this question, it is helpful to consider briefly why clarification of
the law is desirable. It is desirable in at least two respects.
First, there is the importance of fostering what H.L.A. Hart and Lon Fuller
have described as “fidelity to law.”135 Fuller has written that “laws, even bad
laws, have a claim to our respect, [so] law must represent some general direction of human effort that we can understand and describe, and that we can
approve in principle even at the moment when it seems to us to miss its
mark.”136 The reason why people obey the law depends, in part, on the clarity
of the law and, in part, on the moral quality of the law.137 In order for people
to be able to obey the law, the rules must be known and capable of being
understood.138 Clarifications of the law are the means to the end of ensuring
compliance with the law. This point nevertheless raises the question of how,
and how often, a public authority should seek to explain the law and its policy. This question is answered in Parts V.B through V.D below.
The second way in which clarification is valuable is mitigation of the effects of uncertainty. It might be argued that uncertainty leads to the risk that
some undertakings might refrain from what it is actually innocuous or beneficial conduct due to doubt about the application of the competition rules. To
put the same point in another way, clarification of the law is desirable because
132 This would be consistent with Article 17 TFEU, which imposes a duty on the Commission
to promote the general interest of the Union and ensure the application of the Treaties.
133 Wouter P.J. Wils, The Relationship Between Public Antitrust Enforcement and Private Actions for Damages, 32 WORLD COMPETITION 3, 5 (2009); see also WOUTER P.J. WILS, Settlements of Antitrust Investigations: Commitment Decisions Under Article 9 of Regulation No 1/
2003, in EFFICIENCY AND JUSTICE IN EUROPEAN ANTITRUST ENFORCEMENT 25, 29–30 (2007).
134 William E. Kovacic, Rating the Competition Agencies: What Constitutes Good Performance?, 16 GEO. MASON L. REV. 903, 913, 919 (2009).
135 Lon L. Fuller, Positivism and Fidelity to Law: A Reply to Professor Hart, 71 HARV. L. REV.
630, 631 (1958).
136 Id. at 632.
137 SIR ALFRED DENNING, THE ROAD TO JUSTICE 2–3 (1955).
138 LON L. FULLER, THE MORALITY OF THE LAW 35, 39 (1964) (arguing, inter alia, that a
failure to publicize rules and make those rules understandable undermines the morality of law).
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it minimizes the risk of false positives, that is to say, the prohibition of innocuous conduct. This point has been emphasized by John Fingleton and Ali
Nikpay, who have also argued that infringement and non-infringement decisions are key tools for ensuring consistency and clarity of approach.139
An example of uncertainty that might inhibit procompetitive conduct is
doubt over the meaning of the second condition in Article 101(3). That condition states that consumers should receive a fair share of any benefits created
by an agreement. Prior to Regulation 1/2003, it has been noted, the Commission tended to assume that consumers would receive a fair share of any efficiency gains if the gains had been demonstrated.140 In other words, the second
condition under Article 101(3) would effectively be deemed to be met if the
first condition had been met. The Article 101(3) Guidelines make no such
assumption. On the contrary, the Guidelines insist that a pass-on of efficiency
gains to consumers must be substantiated.141 This approach was justified, presumably, by the facts being peculiarly within the knowledge of the parties. It
may be questioned, however, whether the way in which consumers are affected by an agreement is really within the knowledge of the parties and
whether the Commission would really face insuperable difficulties if it had to
disprove consumer pass-on. In any event, the meaning of the second condition
of Article 101(3) and the method to be applied could be usefully clarified by
decisions in individual cases.142
This does not mean that the Commission should routinely, or even frequently, adopt non-infringement decisions. Rather, it means that non-infringement decisions are a valuable way of clarifying the law, clarifying how the
law is to be applied, and reducing uncertainty. The remainder of this Part will
consider how Article 101(3) might be applied in an affirmative manner to a
greater extent than in the past.
B. INFORMAL GUIDANCE
Recital 38 of the preamble to Regulation 1/2003 provides that the Commission may provide informal guidance to undertakings in cases of genuine uncertainty. The Commission’s notice on informal guidance states that the
John Fingleton & Ali Nikpay, Stimulating or Chilling Competition, in ANNUAL PROCEEDFORDHAM COMPETITION LAW INSTITUTE: INTERNATIONAL ANTITRUST LAW & POLICY 385, 408–09 (Barry E. Hawk ed., 2009); see also OFFICE OF FAIR TRADING, STREAMLINING
REGULATORY AND COMPETITION APPEALS CONSULTATION ON OPTIONS FOR REFORM: THE OFT’S
RESPONSE TO THE GOVERNMENT’S CONSULTATION, 2013 OFT 1504, ¶¶ 1.10, 3.17 (UK).
140 THE EC LAW OF COMPETITION ¶ 2.156 (Jonathan Faull & Ali Nikpay eds., 1999).
141 Article 101(3) Guidelines, supra note 11, ¶ 51.
142 Advocate General Mengozzi made some brief observations on the second condition of the
predecessor of Article 101(3) in paragraphs 154–161 of his opinion in Case C-382/12 P, MasterCard v. Comm’n, ECLI:EU:C:2014:42 (ECJ Jan. 30, 2014). That opinion is available at
www.dechert.com/files/upload/Advocate%20General%20Opinion.pdf.
139
INGS OF THE
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existing case law, decisional practice, and guidelines should enable undertakings to self-assess their conduct under Articles 101 and 102 reliably “in the
vast majority of cases.”143 It is only where there is no clarification in the existing law and practice that informal guidance may be appropriate, insofar as
this is compatible with its enforcement priorities. In practice, no guidance
letters have been issued. During the first five years of Regulation 1/2003, the
Commission said that it received very few requests for informal guidance,
none of which raised genuine uncertainty.144
It is submitted that the informal guidance-letter procedure has unfulfilled
potential. Guidance letters have the potential to increase legal and administrative certainty by setting out the Commission’s views on business phenomena.145 The recipient of such a letter would be better placed to deal with cases
of some doubt or complexity.146 Guidance letters are not binding on the NCAs
or national courts. As the notice on informal guidance rightly points out, however, the Member States may take account of guidance letters issued by the
Commission.147
Informal guidance has been much more popular in other jurisdictions. In
the United States, companies may ask the Department of Justice for a statement of its current enforcement intentions with respect to their proposed conduct, pursuant to the so-called Business Review Procedure.148 Each year the
Department of Justice issues two or three business review letters, which provide fact-specific guidance on the scope, interpretation, and application of the
antitrust laws to proposed conduct.149
The same goals led the UK OFT to introduce a pilot scheme of short-form
opinions in 2010.150 Short-form opinions are intended to provide guidance on
a novel or unresolved issues, “clarification of which would benefit a wider
Notice on Informal Guidance, supra note 41, ¶ 4.
Commission White Paper, supra note 34, ¶ 45.
145 There is a parallel here with the content of the Commission’s written observations under
Article 15(3) of Regulation 1/2003.
146 Notice on Informal Guidance, supra note 41, ¶ 22.
147 Id. ¶ 25; see also Case C-226/11, Expedia Inc. v. Autorité de la Concurrence,
ECLI:EU:C:2012:795, ¶ 31 (ECJ Dec. 13, 2012) (discussing the effect of de minimis notices on
NCAs and national courts).
148 Antitrust Division Business Review Procedure, 28 C.F.R. § 50.6 (2015).
149 For a summary of some illustrative business review letters, see UNITED STATES, Contribution to ROUNDTABLE ON INFORMATION EXCHANGES BETWEEN COMPETITORS UNDER COMPETITION LAW § 5.2, at 303 (OECD, Competition Policy Roundtables No. DAF/COMP (2010)37,
2010).
150 This procedure is in addition to the provision of longer, formal opinions, on which see
OFFICE OF FAIR TRADING, MODERNISATION: UNDERSTANDING COMPETITION LAW, 2004 OFT
442, § 7 (UK).
143
144
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audience.”151 To date, two short-form opinions have been published: one concerned a joint purchasing agreement, and the other concerned horizontal price
recommendations for allowing broadband to be rolled out into rural areas.152
In the author’s opinion, both opinions are laudable attempts to provide rapid
guidance in the context of a set of facts.
In the first opinion, P&H/Makro,153 the OFT was of the opinion that a joint
purchasing agreement in the wholesale grocery market was unlikely to cause
harm where the parties have no market power in the retail markets. The OFT
specifically noted that an imperfect analogy can be drawn between the economic effects of a joint purchasing agreement and the economic effects of a
merger: if no anticompetitive effects would arise from a full merger, it is
unlikely that they would arise under a purchasing agreement.154
The second short-form opinion, in Rural Broadband Wayleave Rates,155 is
of particular interest for present purposes. In that case, two trade associations
had recommended the price that landowners should charge for granting a
wayleave, that is, access to their land, for the purposes of installing broadband
infrastructure. The opinion of the OFT was that a price recommendation to
competing landowners had as its object the restriction of competition contrary
to Article 101(1).156 The OFT considered, however, that the price recommendation might benefit from the exception in Article 101(3) insofar as it could
be demonstrated that the recommendation facilitated the efficient rollout of
broadband in rural areas.157 The fact that there was little guidance on the appropriate level of wayleave rates, making rate negotiations costly and time
consuming, suggested that the price recommendation was capable of satisfying Article 101(3).158 It was for the parties to conduct their own self-assessment of the application of Article 101 in light of this short-form opinion.
151 COMPETITION & MKTS. AUTHORITY, GUIDANCE ON THE CMA’S APPROACH TO SHORT-FORM
OPINIONS, 2014 CMA 27, ¶ 4.4 (UK).
152 P&H/Makro Joint Purchasing Agreement, Short-form Opinion of the Office of Fair Trading, (Apr. 27, 2010), webarchive.nationalarchives.gov.uk/20140525130048/ http://
www.oft.gov.uk/shared_oft/SFOs/SFO_on_Joint_Purchasing.pdf; Rural Broadband Wayleave
Rates, Short-form Opinion of the Office of Fair Trading (Aug. 23, 2012), webar
chive.nationalarchives.gov.uk/20140402142426/ http://www.oft.gov.uk/shared_oft/SFOs/way
leave.pdf.
153 P&H/Makro Joint Purchasing Agreement, Short-form Opinion of the Office of Fair Trading
(Apr. 27, 2010), webarchive.nationalarchives.gov.uk/20140525130048/ http://www.oft.gov.uk/
shared_oft/SFOs/SFO_on_Joint_Purchasing.pdf.
154 Id. ¶ 6.9.
155 Rural Broadband Wayleave Rates, Short-form Opinion of the Office of Fair Trading (Aug.
23, 2012), webarchive.nationalarchives.gov.uk/20140402142426/ http://www.oft.gov.uk/shared_
oft/SFOs/wayleave.pdf.
156 Id. ¶ 7.27.
157 Id. ¶¶ 8.17, 9.4–9.5.
158 Id. ¶ 8.30.
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This experience in the United States and the United Kingdom reveals that
guidance letters could play a greater role in the European Union than has
hitherto been the case. In the author’s view, the guidance letter procedure
would be valuable as a way of providing real-life examples of circumstances
in which the efficiency argument in Article 101(3) succeeds. This has a dual
merit. First, it would show how the Commission applies the analytical framework in the Article 101(3) Guidelines in practice. This is important to avoid
misunderstanding and misperceptions about what is, and what is not, required.
A second virtue—which is related to the first one—is that guidance letters can
reveal the quality and quantity of evidence that Article 101(3) requires.
C. ARTICLE 10: FINDINGS
OF
INAPPLICABILITY
In its White Paper on Modernization, the Commission said that it should be
able to take “positive decisions . . . on grounds of general interest” in certain
cases—that is, decisions that hold that particular conduct does not infringe the
competition rules.159 The Commission noted that it would no longer be able to
adopt decisions that disapply Article 101(1) by way of an individual exemption under Article 101(3).160 The White Paper predicted that where an agreement “raises a question that is new, it may be necessary to provide the market
with guidance regarding the Commission’s approach to certain restrictions in
it.”161 To put the same point another way, it was anticipated that there may be
cases where it would be in the public interest for the Commission to clarify
the law by adopting an Article 10 decision.
During the early years of Regulation 1/2003, however, the Commission has
encouraged undertakings to be self-reliant and has discouraged anything that
might lead to an unofficial system of notification (such as requests for findings of inapplicability). Undertakings have had ten years to wean themselves
off notification. This being so, it may now be more appropriate for the Commission to consider making findings of inapplicability that could make an
important contribution to the coherent application of EU competition law.162
An important question to consider is the types of cases in which Article 10
could be used. In Expedia, Advocate General Kokott pointed out that “broader
statements of a general nature relating to competition policy” fall “outside the
Commission White Paper, supra note 34, ¶ 88.
Id. ¶ 78.
161 Id. ¶ 88.
162 See Comm’n Explanatory Memorandum Accompanying Proposal for a Council Regulation
on the Implementation of the Rules Laid Down in Articles 81 and 82 of the Treaty and Amending
Regulations (EEC) No. 4056/86 and (EEC) No. 3975/87, COM (2000) 582 final (Sept. 28, 2000),
2000 O.J. (C 365 E) 284.
159
160
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scope of Article 10.”163 This is because Article 10 is concerned with the nonapplication of Article 101 in individual cases. This does not mean, however,
that Article 10 cannot be used for discharging the Commission’s responsibility for the implementation and orientation of EU competition policy.164 The
notice on cooperation within the Network of Competition Authorities states
that the Commission is “particularly well placed” to deal with a case if the EU
interest requires the adoption of a Commission decision to ensure effective
enforcement or to develop EU competition policy when a new issue arises.165
Nicholas Khan has written that Article 10 is likely to be used in situations
where the Commission wishes to make a “quasi-legislative statement” on the
inapplicability of Articles 101 or 102.166
It is arguable that Article 10 could be used sparingly to address any of the
following situations: (1) to clarify the Commission’s interpretation and application of Article 101(3) in a case involving a new technology, an emerging
industry, or an untried form of cooperation; (2) to clarify the evidentiary standards that the Commission applies to efficiency defenses; or (3) to introduce a
new methodology for the assessment of economic benefits of an agreement.
Of course, the Article 101(3) Guidelines and the Commission’s guidelines on
different types of agreements are helpful aids to interpretation.167 Article 10
decisions could be a valuable complement to these guidelines, because they
would show how Article 101(3) will be applied. For example, the Guidelines
on Vertical Restraints168 helpfully explain the possible economic benefits of
so-called hard-core restrictions—restrictions that are presumed to be infringements by object of Article 101(1) and presumed not to satisfy Article
101(3).169 A small number of real-life examples of restrictions of Internet sales
that meet the criteria of Article 101(3) could vindicate, indeed refine, the approach taken in the guidelines.170 More generally, the experience gradually
163 Opinion of Advocate General Kokott ¶ 31, Case C-226/11, Expedia Inc. v. Autorité de la
Concurrence, ECLI:EU:C:2012:544 (CJ Sept. 6, 2012), curia.europa.eu/juris/document/docu
ment.jsf?text=&docid=126392&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=
1&cid=1125339.
164 See, e.g., Case C-344/98, Masterfoods Ltd. v. HB Ice Cream Ltd., 2000 E.C.R. I-11369,
¶ 46 (“The Commission, entrusted by Article 89(1) of the EC Treaty . . . with ensuring application of the principles laid down in Articles 85 and 86 of the Treaty, is responsible for defining
and implementing the orientation of Community competition policy.”); Case C-234/99, Stergios
Delimitis v. Henninger Bräu, 1991 E.C.R. 1-935, ¶ 44 (“[T]he Commission is responsible for the
implementation and orientation of Community competition policy.”).
165 Eur. Comm’n, Comm’n Notice on Cooperation Within the Network of Competition Authorities, 2004 O.J. (C 101) 43, 45.
166 NICHOLAS KHAN, KERSE & KHAN ON EU ANTITRUST PROCEDURE ¶ 2-088 (6th ed. 2012).
167 See, e.g., Eur. Comm’n, Guidelines on Vertical Restraints, supra note 103.
168 Id. ¶¶ 60–64.
169 Id. ¶ 47.
170 In the case of resale price maintenance, see RICHARD WHISH & DAVID BAILEY, COMPETITION LAW 647–49 (7th ed. 2012); see also Luc Gyselen, Resale Price Maintenance: Growing
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acquired through the sparing use of Article 10 could inform future versions of
the Commission’s guidelines.
It should be noted that the situations identified in the previous paragraph
could alternatively be the subject of informal guidance or “no grounds for
action” decisions of NCAs. Thus, Article 10 decisions, guidance letters, and
“no grounds for action” decisions provide different ways of answering novel
questions relating to Article 101 (or 102). Obviously, the legal status of these
measures differs. Three differences may be noted. First, Article 10 decisions
are legally binding in an individual case,171 whereas informal guidance and
“no grounds for action” decisions are precisely what their names suggest. Second, the nature of the investigation prior to these measures may differ. Informal guidance presupposes no further fact finding.172 “No grounds for action”
decisions will vary: sometimes they may be taken early on after only a preliminary investigation and simply close the file; sometimes they may be the culmination of a detailed investigation and set out detailed reasoning for not
taking action.173 It is not yet clear what sort of investigation might precede an
Article 10 decision, but it is not inconceivable that it would involve fact finding and public consultation. A third difference is that in some cases—cases of
conflict between the Commission and NCAs—an Article 10 decision may
provide clarification benefits that cannot be delivered by informal guidance or
an NCA “no grounds for action” decision. Such cases, however, are likely to
be rare.174
It is the view of the author of this essay that Article 10 should be used in a
small number of cases. This does not mean that use of Article 10 should deflect the Commission from concentrating on the most serious infringements of
competition law. Nor does it mean that undertakings should be given a right to
non-infringement decisions; such a right would be incompatible with the
wording of Article 10. It simply means that it is likely to be in the EU public
interest for the Commission to adopt decisions that set out its analytical approach and reasoning on (among other points) efficiencies under Article
Convergence Between the US and the EC in Sight?, in VIEWS OF EUROPEAN LAW FROM THE
MOUNTAIN 151, 158–59 (M. Bulterman et al. eds., 2009).
171 See, e.g., Case C-344/98, Masterfoods Ltd. v. HB Ice Cream Ltd., 2000 E.C.R. I-11369,
¶ 50.
172 Notice on Informal Guidance, supra note 41, ¶ 8(c).
173 See, e.g., OFCOM, supra note 53; Office of Fair Trading, Alleged Abuse of a Dominant
Position by Flybe Ltd. (2010), webarchive.nationalarchives.gov.uk/20140402142426/ http://
www.oft.gov.uk/shared_oft/ca98_public_register/decisions/OFT1286.pdf (providing detailed
reasons for “no grounds for action” decision of the OFT).
174 See, e.g., Joined Cases 56 & 58/64, Établissements Consten, S.à.R.L. & Grundig-VerkaufsGmbH v. Comm’n, 1966 E.C.R. 299.
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101(3).175 The benefits of doing so can be seen from several decisions under
the Merger Regulation, where the Commission has set out its assessment of
parties’ efficiency claims, sometimes in considerable detail.176 In Deutsche
Börse/NYSE Euronext,177 for example, the Commission prohibited a merger
that would have created a quasi-monopoly of European financial derivatives
that are traded globally on exchanges. The Commission considered the parties’ efficiency arguments but decided that they were not sufficient. Of particular interest here, however, are paragraphs 1133 to 1342 of the decision,
where the Commission discusses the probability that the merger would have
generated efficiencies but not enough to offset the harm caused by the
merger.178 If similar well-reasoned decisions were adopted under Article 10, it
would develop the law and help to ensure the consistent application of the
law.
In its contribution to the 2012 OECD roundtable on the role of efficiency
claims in antitrust proceedings, the Commission acknowledged that it had not
adopted any non-infringement decisions under Regulation 1/2003.179 It went
on to explain that if it found that an anticompetitive agreement could be saved
by a finding of efficiency, it would “simply not bring a case or close a case
that had already been opened.”180 Of course, decisions declining to investigate
or closing a file do not, and should not, require detailed analysis. It is not
unreasonable to ask, however, whether any of those cases in which an agreement would lead to substantial and timely efficiencies that should benefit consumers might have been suitable for an Article 10 decision (or informal
guidance).
175 Claus Dieter Ehlermann, The Modernization of EC Antitrust Policy: A Legal and Cultural
Revolution, 37 COMMON MKT. L. REV. 537, 565 (2000) (opining that “it may well be in the
public interest to give undertakings in certain situations, an assurance that their agreements are
compatible with the . . . competition rules”).
176 See, e.g., Case COMP/M.6570—UPS/TNT Express, Comm’n Decision (Summary), 2014
O.J. (C 137) 05, appeal docketed, Case T-194/13, United Parcel Serv. v. Comm’n (GC May 3,
2013), curia.europa.eu/juris/liste.jsf?language=EN&numT-194/13; Case COMP/M.4854—TomTom/Tele Atlas, Comm’n Decision, ¶¶ 238–250 (May 14, 2008) (Summary: 2008 O.J. (C 237)
12), ec.europa.eu/competition/mergers/cases/decisions/m4854_20080514_20682_en.pdf; Case
COMP/M.4057—Korsnäs/Assidomän Cartonboard, Comm’n Decision, ¶¶ 57–64 (May 12,
2006), ec.europa.eu/competition/mergers/cases/decisions/m4057_20060512_20310_en.pdf.
177 Case COMP/M.6166—Deutsche Börse/NYSE Euronext, Comm’n Decision (Feb. 1, 2012),
ec.europa.eu/competition/mergers/cases/decisions/m6166_20120201_20610_2711467_EN.pdf,
aff’d, Case T-175/12, Deutsche Börse v. Comm’n, ECLI:EU:T:2015:148 (GC Mar. 9, 2015).
178 Id. ¶¶ 1133–1142.
179 EUR. UNION, Contribution to ROUNDTABLE ON THE ROLE OF EFFICIENCY CLAIMS IN ANTITRUST PROCEEDINGS 90 (Organisation for Economic Co-operation and Development, Competition Policy Roundtables No. DAF/COMP (2012)23, 2012).
180 Id. at 90.
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D. ARTICLE 9: COMMITMENTS
Of the various powers bestowed on the Commission by Regulation 1/2003,
Article 9, which empowers the Commission to adopt commitment decisions
or to “settle” cases,181 has turned out to be one of the most prolific and versatile. The Court of Justice in Alrosa v. Commission confirmed that the Article 9
procedure provided a more rapid solution to competition problems identified
by the Commission than an Article 7 procedure that could lead to an infringement decision would provide.182 From an enforcement point of view, the number of Article 9 decisions, as well as the range of sectors and practices they
cover, is impressive. From May 2004 to June 2014, the Commission adopted
some thirty Article 9 decisions, accepting commitments in sectors as wideranging as air transport,183 broadcasting,184 and e-books,185 and addressing
practices such as tying,186 excessive pricing,187 and various causes of anticompetitive foreclosure.188
Article 9 decisions, by their very nature, do not reach a conclusion that an
agreement actually fulfills the conditions in Article 101(3). Nevertheless,
commitment decisions have contributed to our understanding of how, and
why, a particular agreement might fulfill the criteria of Article 101(3). In this
respect, commitment decisions provide another way for the Commission to
examine, in particular cases, concepts in Article 101(3) such as “improvement
in production” and “fair share.”
181 For commentary on Article 9, see Heike Schweitzer, Commitment Decisions Under Art. 9 of
Regulation 1/2003: The Developing EC Practice and Case Law, in EUROPEAN COMPETITION
LAW ANNUAL 2008: ANTITRUST SETTLEMENTS UNDER EC COMPETITION LAW 547 (Claus-Dieter
Ehlermann & Mel Marquis eds., 2009); Richard Whish, Commitment Decisions Under Article 9
of the EC Modernisation Regulation: Some Unanswered Questions, in LIBER AMICORUM IN HONOUR OF SVEN NORBERG (Martin Johansson et al. eds., 2006); Wouter P.J. Wils, Settlements of EU
Antitrust Investigations: Commitment Decisions Under Article 9 of Regulation No 1/2003, supra
note 133.
182 Case C-441/07 P, Comm’n v. Alrosa Co., 2010 E.C.R. I-5949, ¶ 35.
183 See, e.g., Case COMP/AT.39595—Continental/United/Lufthansa/Air Canada, Comm’n Decision (Summary), 2013 O.J. (C 201) 09.
184 See, e.g., Case COMP/C-2/38.173—Joint Selling of the Media Rights to the FA Premier
League, Comm’n Decision (Mar. 22, 2006), ec.europa.eu/competition/antitrust/cases/dec_docs/
38173/38173_134_9.pdf.
185 See, e.g., Case COMP/AT.39847—e-Books, Comm’n Decision (Summary), 2013 O.J.
(C378) 14.
186 See, e.g., Case COMP/C-3/39.530—Microsoft (tying), Comm’n Decision (Dec. 16, 2009),
ec.europa.eu/competition/antitrust/cases/dec_docs/39530/39530_2671_3.pdf. In 2013, the Commission imposed a fine of =
C 561 million on Microsoft for failing to comply with these commitments. Press Release, Eur. Comm’n, Antitrust: Commission Fines Microsoft for Non-compliance
with Browser Choice Commitments (Mar. 6, 2013) (IP/13/196).
187 See, e.g., COMP/39.592—Standard & Poor’s, Comm’n Decision (Summary), 2012 O.J. (C
31) 05.
188 See, e.g., Case COMP/39.315—ENI, Comm’n Decision (Summary), 2010 O.J. (C 352) 10.
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In Siemens/Areva,189 for example, two companies in the nuclear sector established a joint venture, Areva NP, to devise, develop, and produce nuclear
islands for nuclear power plants. In 2000, the Commission approved the creation of the joint venture.190 In 2009, however, Siemens decided to leave the
joint venture. Soon after that exit decision, Siemens complained to the Commission that a non-competition clause and a confidentiality clause, which continued to apply for eight years after the joint venture, were anticompetitive.
The Commission’s preliminary assessment was that the non-competition
clause, preventing Siemens and Areva from competing with one another in a
number of nuclear activities for eight to eleven years after the joint venture,
was an infringement by object of Article 101(1).191 The Commission’s view
was that the non-competition clause was neither ancillary to the creation of
Areva192 nor to the acquisition of sole control by Areva over Areva NP (when
Siemens left the joint venture).193 The Commission reached a similar conclusion in relation to the confidentiality clause.194
Paragraphs 79 to 83 and 94 to 96 of the Siemens/Areva decision consider
the application of Article 101(3). The Commission pointed out, first of all,
that the efficiencies invoked by Areva were linked to the creation and operation of the joint venture and not to the period after the venture had been terminated.195 Further, the Commission provisionally found that the noncompetition clause was unlikely to be indispensable within the meaning of
Article 101(3)(a).196 Even if the joint venture might have achieved fewer efficiencies without the non-competition clause, the Commission held that this
was not directly due to the clause, but due to the fact that Siemens and Areva
would have collaborated less closely if they stood to compete with one
another.197
Some commitment decisions shed little light on the application of Article
101(3). In BA/AA/IB, for example, the Commission accepted commitments
from American Airlines, British Airways, and Iberia in relation to the coordination of their schedules, capacity, pricing, and revenue management on
189
Case COMP/39.736—Siemens/Areva, Comm’n Decision (Summary), 2012 O.J. (C 280)
05.
190 Case COMP/M.1940—Framatome/Siemens/Cogéma/JV, Comm’n Decision, 2001 O.J. (L
289) 8.
191 Siemens/Areva, 2012 O.J. (C 280) 05, ¶ 80.
192 Id. ¶¶ 43–48.
193 Id. ¶¶ 52–78. The non-competition clause was objectively necessary for the acquisition of
sole control by Areva, but was disproportionate in terms of its product scope and duration.
194 Id. ¶¶ 84–96.
195 Id. ¶ 82.
196 Id.
197 Id. ¶ 83.
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routes between the European Union and the United States.198 The Commission’s preliminary assessment of the parties’ arguments under Article 101(3)
was simply that they “required clarification and further development,” without
any indication of the nature or content of the clarification and development
needed.199 It is worth pointing out, however, that this decision was adopted
prior to a joint report of the Commission and the U.S. Department of Transportation, regarding transatlantic alliances, that specifically acknowledges the
efficiencies of airline alliances.200 It is not unreasonable to suppose that the
findings in this report may have informed the Commission’s assessment of the
largest global airline alliance, Star Alliance.201
The Star Alliance case is fascinating and important in equal measure. It is
fascinating because the Commission extended, for the first time, the test set
out in paragraph 43 of the Article 101(3) Guidelines for what are commonly
referred to as “out-of-market efficiencies.” Paragraph 43 provides that, where
two markets are related, efficiencies that a restriction of competition produces
in a separate market can be taken into account, as long as substantially the
same group of consumers receives the positive and negative effects. In Star
Alliance, the Commission investigated transatlantic cooperation between four
airlines: Lufthansa, Air Canada, United, and Continental. The Commission
was concerned that the cooperation and joint activities of the airlines on the
Frankfurt-New York route could restrict competition. The parties argued,
however, that their cooperation created efficiencies on the Frankfurt-New
York route and on other related “behind and beyond” routes, such as PragueFrankfurt-New York, leading to benefits for connecting passengers.202 In response to these arguments, the Commission decided that the test in paragraph
43 of the Article 101(3) Guidelines was inapposite and needed to be broadened.203 Accordingly, the Commission said that it would be sufficient for the
parties to show (1) a “considerable commonality between passenger groups”
flying on the route of concern and the related routes, and (2) a two-way flow
of efficiencies across those routes.204
198 Case COMP/39.596—British Airways/American Airlines/Iberia (BA/AA/IB), Comm’n Decision (Summary), 2010 O.J. (C 278) 09.
199 Id. ¶ 79; cf. Case COMP/38.284/D2—Société Air France/Alitalia Linee Aeree Italiane
S.p.A., Comm’n Decision (Apr. 7, 2004), ec.europa.eu/competition/antitrust/cases/dec_docs/
38284/38284_104_1.pdf (granting an individual exemption to another airline alliance).
200 EUR. COMM’N & U.S. DEP’T OF TRANSP., TRANSATLANTIC AIRLINE ALLIANCES: COMPETITIVE ISSUES AND REGULATORY APPROACHES ¶¶ 98–108 (2010), ec.europa.eu/competition/sectors
/transport/reports/joint_alliance_report.pdf.
201 See Case COMP/AT.39595—Continental/United/Lufthansa/Air Canada, Comm’n Decision,
2013 O.J. (C 201) 09.
202 Id. ¶ 62.
203 Id. ¶ 57. However, the Commission emphasized that the broadened test is used in addition
to the test under paragraph 43 of the Guidelines.
204 Id. ¶ 60.
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The decision contains useful discussion of efficiencies that accrued to the
passengers, but concludes that the efficiencies would not outweigh the negative effects of the parties’ cooperation on the Frankfurt-New York route. The
Star Alliance commitment decision is important because it shows, in the
words of Director-General Alexander Italianer, that “the Commission is ready
to review its policy under 101(3) where this is justified and appropriate.”205 It
will be interesting to see whether this decision is a sign of things to come and
whether the Commission will apply, or perhaps refine, this approach in the
context of other network industries.
Another example of a commitment decision acknowledging a possible role
of efficiencies is the UK Hotel Online Booking case.206 The OFT had been
concerned that Expedia and Booking.com had respectively agreed with Intercontinental Hotels to sell rooms at the London Park Lane hotel at prices that
were set by that hotel. The alleged corollary of these agreements was that the
online travel agencies would refrain from discounting. The parties offered
commitments that would allow the online travel agencies to offer discounts in
certain circumstances (discounts that would be funded by their own revenues
and granted to loyal customers). The OFT noted that the commitments would
not remove all restrictions on the travel agencies’ ability to discount, but it
agreed that the alleged efficiency of hotels having control over the headline
rate for their hotel rooms is “likely to have some merit in this sector.”207 In the
end, the OFT did not reach any definitive conclusion on the merits of the
efficiency arguments put forward by Expedia, Booking.com, and Intercontinental Hotels because the OFT perceived no restriction of competition.208
It should be noted, however, that a third party, Skyscanner, successfully
appealed to the CAT against this decision on procedural grounds.209 The CAT
held that the OFT had failed properly to consider Skyscanner’s objections to
the proposed commitments.210 In doing so, the CAT held, the OFT acted unfairly, and the process by which it reached its decision was procedurally improper.211 The CAT did not address whether the commitments might enhance
efficiency. The matter was remitted to the Competition and Markets Authority
205 Alexander Italianer, Director-General for Competition, Eur. Comm’n, Speech at the 40th
Annual Conference on International Antitrust Law and Policy, Fordham Competition Law Institute: Competitor Agreements Under EU Competition Law (Sept. 26, 2013), ec.europa.eu/competi
tion/speeches/text/sp2013_07_en.pdf.
206 Office of Fair Trading, Hotel Online Booking: Decision to Accept Commitments to Remove Certain Discounting Restrictions for Online Travel Agents, 2014 OFT 1514dec (UK).
207 Id. ¶ 6.55.
208 Id.
209 Skyscanner Ltd. v. Competition & Mkts. Auth., [2014] CAT 16 (UK).
210 Id. ¶ 120.
211 Id.
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(the CMA), the OFT’s successor, which subsequently decided to close the
file.212
V. CONCLUSION
This essay has shown that Article 101(3) has been applied in infringement
decisions of the Commission and NCAs, as well as litigation before national
courts, during the first ten years of Regulation 1/2003. It has been argued,
however, that it would be in the public interest of the European Union for the
Commission to issue decisions or informal guidance upholding the application
of Article 101(3). It would also be helpful for NCAs to publish reasoned decisions finding no grounds for action on the basis of Article 101(3). A small
number of carefully chosen and well-reasoned decisions, informal guidance,
and/or written observations before national courts upholding agreements
under Article 101(3) would be warmly welcomed by the competition community. Such decisions and guidance letters would clarify the Commission’s
thinking and evidentiary requirements in actual cases. Such decisions could
help NCAs decide when there are no grounds for action on their part. Noninfringement decisions might assist judges to resolve parties’ efficiency arguments in relation to similar agreements. Such decisions could recognize new
circumstances and incorporate new wisdom, thereby resolving genuine cases
of uncertainty on whether an anticompetitive agreement satisfies Article
101(3).
COMPETITION & MKTS. AUTHORITY, HOTEL ONLINE BOOKING INVESTIGATION: CASE CLOS UMMARY , 2015 (UK), assets.publishing.service.gov.uk/media/55f8404aed915d
14f1000014/Hotel_online_booking_-_case_closure_summary.pdf; see also Daily News, Eur.
Comm’n, Antitrust: Swedish, French and Italian Competition Authorities Obtain Commitments
in Online Hotel Booking Sector (May 21, 2015) (MEX/15/4819) (announcing that each of the
French, Italian and Swedish NCAs had accepted commitments from Booking.com to remove
price parity clauses in its online hotel booking contracts).
212
SURE