EU Competition Policy

EU Competition Policy EU Competition Policy

Michele ColucciMichele ColucciISDE-JMLS Barcelona ISDE-JMLS Barcelona

June 2-4,2009June 2-4,2009Email: Email: [email protected]

Web site: Web site: www.colucci.eu

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PRINCIPLES PRINCIPLES

Art. 2 ECCOMMON MARKET

HIGH DEGREE OF COMPETITIVENESS

EU Competition Policy EU Competition Policy

Legal basis:

Rules applying to undertakings:

Art. 81 EC

Art. 82 EC

State aids

Art. 86 EC

Art. 87 EC

Four main forms of restriction of competition:Four main forms of restriction of competition:

Agreements between companies (Art. 81)Agreements between companies (Art. 81)

Abuse of dominant position (Art. 82)Abuse of dominant position (Art. 82)

Mergers (Regulation 139/2004)Mergers (Regulation 139/2004)

State aidsState aids

EU Competition PolicyEU Competition Policy

Art. 81.1Art. 81.1

Art. 81.1 Art. 81.1

The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which:

(a)directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

Art. 81.1 Art. 81.1

LEGAL ANALYSIS

SUBSTANTIAL ANALYSIS

LEGAL ANALYSISLEGAL ANALYSIS

DEFINITION OF “TRADE”DEFINITION OF “TRADE”

NEUTRALITYNEUTRALITY

APPRECIABILITYAPPRECIABILITY


1. 1. Definition of Definition of TRADETRADE (Point (Point 1919: Commission Notice 2004/C 101/07): Commission Notice 2004/C 101/07)

The concept of ‘trade’ is not limited to traditional exchanges of The concept of ‘trade’ is not limited to traditional exchanges of goods and services across borders. It is a wider concept, goods and services across borders. It is a wider concept, covering all cross-border economic activity including covering all cross-border economic activity including establishment.establishment.

Art. 81.1 Art. 81.1

Legal ANALYSISLegal ANALYSIS

2. MAY AFFECT 2. MAY AFFECT (Point (Point 2323: Commission Notice 2004/C 101/07): Commission Notice 2004/C 101/07)

[…] the notion ‘may affect’ implies that must be possible to […] the notion ‘may affect’ implies that must be possible to foresee with a sufficient degree of probability on the basis of a foresee with a sufficient degree of probability on the basis of a set of objective factors of law or fact that the agreement or set of objective factors of law or fact that the agreement or practice may have an influence, direct or indirect, actual or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between Member Statespotential, on the pattern of trade between Member States

Art. 81.1 Art. 81.1

Legal ANALYSISLegal ANALYSIS

3. NEUTRALITY3. NEUTRALITY (Point (Point 3434: Commission Notice 2004/C 101/07): Commission Notice 2004/C 101/07)

The term ‘pattern of trade’ is neutral. It is not a condition that The term ‘pattern of trade’ is neutral. It is not a condition that trade be restricted or reduced. Patterns of trade can also be trade be restricted or reduced. Patterns of trade can also be affected when an agreement or practice causes an increase affected when an agreement or practice causes an increase in trade.in trade.

Art. 81.1 Art. 81.1

1111


4. APPRECIABILITY4. APPRECIABILITY (Point (Point 4444: Commission Notice 2004/C 101/07): Commission Notice 2004/C 101/07)

The effect on trade criterion incorporates a quantitative element, The effect on trade criterion incorporates a quantitative element, limiting Community law jurisdiction to agreements and practices that limiting Community law jurisdiction to agreements and practices that are capable of having effects of a certain magnitude. Agreements are capable of having effects of a certain magnitude. Agreements and practices fall outside the scope of application of Article 81 and and practices fall outside the scope of application of Article 81 and 82 when they affect the market only insignificantly having regard to 82 when they affect the market only insignificantly having regard to the weak position of the undertakings concerned on the market for the weak position of the undertakings concerned on the market for the products in question. Appreciability can be appraised in the products in question. Appreciability can be appraised in particular by reference to the position and the importance of the particular by reference to the position and the importance of the relevant undertakings on the market for the products concernedrelevant undertakings on the market for the products concerned

Art. 81.1 Art. 81.1

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4. APPRECIABILITY4. APPRECIABILITY (Point (Point 5252: Commission Notice 2004/C 101/07): Commission Notice 2004/C 101/07)

Agreements are Agreements are not capable not capable of appreciably affecting trade between of appreciably affecting trade between Member States when 2 conditions are Member States when 2 conditions are both metboth met: :

a. If the a. If the aggregate market share aggregate market share of the parties to the agreement is of the parties to the agreement is less than 5less than 5%, %,

b. b. Horizontal AgreementsHorizontal Agreements: aggregate annual turnover of the : aggregate annual turnover of the undertakings does not exceed 40 Million Euroundertakings does not exceed 40 Million Euro

Vertical AgreementsVertical Agreements: aggregate annual Community turnover of the : aggregate annual Community turnover of the supplier does not exceed 40 Million eurosupplier does not exceed 40 Million euro

Art. 81.1 Art. 81.1

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SUBSTANTIAL ANALYSISSUBSTANTIAL ANALYSIS

Impact on CompetitionImpact on Competition

Object Object (contained in art. 81.1)(contained in art. 81.1)

De Minimis De Minimis (Commission Notice on Agreements of minor importance)(Commission Notice on Agreements of minor importance)

1.1. Paragraph 7Paragraph 7 : H. A. 10% Market Share : H. A. 10% Market Share

2.2. Paragraph 7 : Paragraph 7 : V. A. 15% Market Share (Aggregate)V. A. 15% Market Share (Aggregate)

Art. 81.1 Art. 81.1

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Art. 81.3 Art. 81.3

INDIVIDUAL EXEMPTION

BLOCK (OR GROUP)

EXEMPTION

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The Art.81.3 exception only refers to that behavior which falls The Art.81.3 exception only refers to that behavior which falls within Art.81.1. This is within Art.81.1. This is a fundamental pointa fundamental point..

Art. 81.3Art. 81.3The provisions of paragraph 1 may, however, be declared inapplicable in the case of:The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

- - any agreement or category of agreements between undertakings,any agreement or category of agreements between undertakings,

- - any decision or category of decisions by associations of undertakings,any decision or category of decisions by associations of undertakings,

- - any concerted practice or category of concerted practices,any concerted practice or category of concerted practices,

which contributes to which contributes to improving the production or distribution of goods or to promoting improving the production or distribution of goods or to promoting technical or economic progress, while allowing technical or economic progress, while allowing consumers a fair share consumers a fair share of the resulting of the resulting benefit, andbenefit, and

which does not:which does not:

(a) (a) impose on the undertakings concerned restrictions which are impose on the undertakings concerned restrictions which are not indispensable not indispensable to theto the

attainment of these objectives;attainment of these objectives;

(b) (b) afford such undertakings the possibility of afford such undertakings the possibility of eliminating competition eliminating competition in respect of ain respect of a

substantial part of the products in question.substantial part of the products in question.

Art. 81.3 Art. 81.3

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INDIVIDUAL EXEMPTIONINDIVIDUAL EXEMPTION

4 Cumulative conditions:4 Cumulative conditions:

Positive ConditionsPositive Conditions

1. 1. Economic BenefitsEconomic Benefits

2. Fair Share for Consumers2. Fair Share for Consumers

Negative ConditionsNegative Conditions 3. Indispensability3. Indispensability

4. Enough competition in the market4. Enough competition in the market

Art. 81.3 Art. 81.3

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Positive conditionsPositive conditions

1. 1. Economic BenefitsEconomic Benefits a. Improving Production ora. Improving Production or

b. Improving distribution orb. Improving distribution or

c. Promoting technical progress orc. Promoting technical progress or

d. Promoting economical progressd. Promoting economical progress

N.B. N.B. These 4 conditions are alterantives, while the previuos 4 are cumulativesThese 4 conditions are alterantives, while the previuos 4 are cumulatives

2. 2. Fair share for consumersFair share for consumers

Art. 81.3 Art. 81.3

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Negative ConditionsNegative Conditions

33.. Indispensability Indispensability[[… does not … impose on the undertakings concerned … does not … impose on the undertakings concerned

restrictions which are not indispensable to the attainment of restrictions which are not indispensable to the attainment of these objectives these objectives (referred to in the first condition…].(referred to in the first condition…].

Art. 81.3 Art. 81.3

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Negative ConditionsNegative Conditions

4.4. No Restriction of Competition No Restriction of Competition[[… which does not … afford such undertakings … which does not … afford such undertakings (which are party (which are party

to the agreement) to the agreement) the possibility of eliminating competition in the possibility of eliminating competition in respect of a substantial part of the products in questionrespect of a substantial part of the products in question.].]

Art. 81.3 Art. 81.3

2020

Comm. Regulation 2790/1999 – Vertical AgreementsComm. Regulation 2790/1999 – Vertical Agreements

This regulation is the concrete application of the new approach to This regulation is the concrete application of the new approach to vertical agreements and it is the first group exemption of the vertical agreements and it is the first group exemption of the new generationnew generation

Instead of indicating the clauses of vertical agreements which Instead of indicating the clauses of vertical agreements which would benefit the exempion, the Commission decided to would benefit the exempion, the Commission decided to indicate only the clauses which would prevent the exemption indicate only the clauses which would prevent the exemption and would permit the rest.and would permit the rest.

White listWhite list

Block ExemptionBlock Exemption

Black List

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Comm. Regulation 2790/1999 – Vertical AgreementsComm. Regulation 2790/1999 – Vertical Agreements

For a V.A. to be caught by the Art. 81.3 exemption, it must fulfill For a V.A. to be caught by the Art. 81.3 exemption, it must fulfill 2 2 conditions cumulativelyconditions cumulatively, found in Art. 3.1 and Art. 4 of the , found in Art. 3.1 and Art. 4 of the Regulation:Regulation:

1.1. Market share held by the supplier does Market share held by the supplier does not exceed 30% not exceed 30% of the relevant market on which it sells the contract goods of the relevant market on which it sells the contract goods or services; or services;

2.2. The agreement does not contain a clause which lays The agreement does not contain a clause which lays down a restriction of the type mentioned in the black list of down a restriction of the type mentioned in the black list of art. 4 (art. 4 (No Hardcore RestrictionNo Hardcore Restriction))


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Hardcore Restrictions for Vertical AgreementsHardcore Restrictions for Vertical Agreements

Art. 4 Commission Regulation n. 2790/1999Art. 4 Commission Regulation n. 2790/1999

1.1. Price fixing Price fixing

2.2. Territorial RestrictionTerritorial Restriction

3.3. Restriction to sell to end usersRestriction to sell to end users

4.4. Restriction of Cross- suppliesRestriction of Cross- supplies

5.5. Components and spare parts restrictionComponents and spare parts restriction


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Art. 11 De Minimis NoticeArt. 11 De Minimis Notice

==



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Active SalesActive SalesApproaching individuals customers by direct mail or visit; or actively Approaching individuals customers by direct mail or visit; or actively

approaching in a specific territory a customer by establishing a approaching in a specific territory a customer by establishing a warehouse or a distribution outletwarehouse or a distribution outlet

Passive SalesPassive SalesResponding to unsolicited request from individual customers including Responding to unsolicited request from individual customers including

delivery of goods or services to such customersdelivery of goods or services to such customers


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2. Market Sharing2. Market Sharing Not possible the restriction of the territory but:Not possible the restriction of the territory but:2.1 Possible restriction of 2.1 Possible restriction of Active Sales Active Sales (paragraph 50 guidelines)(paragraph 50 guidelines)

2.2 Possible restriction of Active and 2.2 Possible restriction of Active and Passive Sales Passive Sales to end users by the to end users by the wholesalerwholesaler

2.3 Selective Distribution 2.3 Selective Distribution

2.4 Possible restriction to sell componets to costumers who would use them to 2.4 Possible restriction to sell componets to costumers who would use them to manifacture the same type of goodsmanifacture the same type of goods


ABUSE OF DOMINANT POSITIONABUSE OF DOMINANT POSITION

ART. 82 EC:ART. 82 EC:

Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States.

ABUSE OF DOMINANT POSITIONABUSE OF DOMINANT POSITION

Such abuse may, in particular, consist in:(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;(b) limiting production, markets or technical development to the prejudice of consumers;(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

MARKETMARKET

GEOGRAPHICAL MARKETGEOGRAPHICAL MARKET

PRODUCT MARKETPRODUCT MARKET

Fields of application in SportFields of application in Sport

Transfer rulesTransfer rules

Sale of ticketsSale of tickets

Broadcasting rightsBroadcasting rights

Monopoly of federationsMonopoly of federations

Multi-ownership of clubsMulti-ownership of clubs

BASIC PRINCIPLES OF EC LAWBASIC PRINCIPLES OF EC LAW

EC law applies to Sport in so far it EC law applies to Sport in so far it constitutes an economic activity (ECJ case constitutes an economic activity (ECJ case law)law)No Activities “purely” social, artistic or No Activities “purely” social, artistic or sporting ......sporting ...... but then “MECA MEDICA” judgement of but then “MECA MEDICA” judgement of 18 July 2006...18 July 2006...Test of “Necessity”Test of “Necessity”Test of “Proportionality”Test of “Proportionality”

The Legal Methodology The Legal Methodology in the Meca Medina casein the Meca Medina case

STEP 1STEP 1: Are the EC anti-trust rules, i.e. Articles : Are the EC anti-trust rules, i.e. Articles 81 and/or Art. 82 applicable to Sporting rules?81 and/or Art. 82 applicable to Sporting rules?

STEP 2STEP 2: If EC anti-trust rules are applicable, : If EC anti-trust rules are applicable, does the sporting rule fall outside the prohibition does the sporting rule fall outside the prohibition of Articles 81 (1) and 82?of Articles 81 (1) and 82?

STEP 3: Can the rule be considered compatible STEP 3: Can the rule be considered compatible with EC anti-trust rules because it fulfils the with EC anti-trust rules because it fulfils the conditions of Article 81(3) EC or because of an conditions of Article 81(3) EC or because of an objective justification under Article 82 EC?objective justification under Article 82 EC?

STEP 1STEP 1

1. Is the sports association that adopted the rule in question an “undertaking” or an“association of undertakings”?– a. The sports association is an “undertaking” to the

extent it carries out an “economic activity” itself (e.g., the selling of broadcasting rights).

– b. The sports association is an “association of undertakings” if its members carry out an economic activity.

– If no economic activity, Articles 81 and 82 do not apply

– Is trade between MS affected (geographical market, production market, Community interest...)?

STEP 2STEP 2

Compatibility of rules with the Community rules Compatibility of rules with the Community rules on competition cannot be assessed in the on competition cannot be assessed in the abstract.abstract.

Taking into account:Taking into account:– “ “the overall context” in which the decision of the the overall context” in which the decision of the

association of undertakings was taken or produces its association of undertakings was taken or produces its effects.effects.

– Its objectives: Its objectives: measures inherent in the pursuit of measures inherent in the pursuit of those objectives and proportionate to themthose objectives and proportionate to them. .

– Proportionality of measures (quid sportive sanctions?)Proportionality of measures (quid sportive sanctions?)

STEP 3STEP 3

Can the rule be considered compatible Can the rule be considered compatible with EC anti-trust rules because it fulfils with EC anti-trust rules because it fulfils the conditions of Article 81(3) EC or the conditions of Article 81(3) EC or because of an objective justification under because of an objective justification under Article 82 EC?Article 82 EC?– Case by case approachCase by case approach– No General sports exception!No General sports exception!

Sporting rules that are more likely to Sporting rules that are more likely to comply with Art. 81 and Art. 82 ECcomply with Art. 81 and Art. 82 EC

Selection criteria for sport competitionSelection criteria for sport competitionAt home and away rulesAt home and away rulesTransfer periodsTransfer periodsNationality clauses for national teamsNationality clauses for national teamsRules prohibiting the multiple ownership of Rules prohibiting the multiple ownership of clubsclubsAntidoping rulesAntidoping rulesRules of the gameRules of the game

Sporting rules that are less likely to comply with Articles 81 and 82 EC

Rules regulating professions ancillary to Rules regulating professions ancillary to sportsport

Rules excluding legal challenges of sports Rules excluding legal challenges of sports awards before ordinary Courtsawards before ordinary Courts

Rules limiting the number of foreign Rules limiting the number of foreign playersplayers

Rules requiring transfer payments for Rules requiring transfer payments for players at the end of their contractsplayers at the end of their contracts

CONCLUSIONSCONCLUSIONS

ALL ROADS LEAD TO ROME ALL ROADS LEAD TO ROME BUT FIRST....BUT FIRST....

THEY GO THROUGH THEY GO THROUGH BRUSSELS!BRUSSELS!

EU Competition Policy

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