The establishment by the Treaty of Rome
Articles 81 and 82 of the Treaty of Rome of March 25, 1957 put in place a prohibition on anti-competitive agreements and the abuse of dominant positions.
Behavior which distorts the competitive mechanism by having a significant effect on competition is prohibited, as is those which have an effect on trade between States, thus undermining the Community objective.
Anti-competitive agreements and abusive behavior by dominant companies are likely to be subject simultaneously to national and Community rules.
The prohibition of cartels
Community regulations apply when the anti-competitive practice is likely to affect trade between Member States.
All agreements the object or effect of which is to prevent, restrict or distort the play of competition within the Common Market are prohibited.
These agreements are automatically void and may be subject to condemnation by the European Commission to fines of up to 10% of worldwide turnover.
The decisions of the European Commission are subject to appeal with full jurisdiction before the Court of First Instance of the European Communities.
Abuse of a dominant position
It is prohibited to abuse a dominant position in the Common Market or in a substantial part, under penalty of fines (see above)
The prohibition of public aid
Aid granted by Member States to businesses is incompatible with the Common Market when it favors certain businesses.
The States are required to present to the Commission plans to institute or modify aid for a validity check.
Illicit aid must be reimbursed;
State aid: technical sheet European Parliament
Concentrations with a Community dimension of public or private companies must be subject to control if they result from a legal act.
These concentrations must significantly impede effective competition in the Common Market or a substantial part of it.
The community dimension is set by the following two thresholds
- Worldwide turnover achieved by all the companies concerned in excess of 5 billion euros
- Turnover achieved individually in the community by at least two of the companies concerned of at least 250 million euros
The same applies if the operations exceed the following four thresholds
- total turnover achieved worldwide by all the companies concerned of more than 2.5 billion euros
- total turnover achieved in each of at least three Member States by all the companies concerned of more than 100 million euros
- turnover achieved individually in each of the above states by at least two of the companies concerned of 25 million euros
- turnover achieved individually in the Community by at least two of the undertakings concerned of at least EUR 100 million
The operation is not subject to community control when each of the companies concerned achieves more than two-thirds of its total turnover within a single state.
The transaction must be notified to the Commission within one week of the conclusion of the agreement or the takeover, or of the publication of the takeover bid or takeover bid. They cannot take effect for three weeks and carrying out the transaction during this period of suspension exposes companies to financial penalties.
The Commission declares the concentration compatible with the Common Market, otherwise, within four months, it declares the concentration incompatible.
The decision is subject to appeal before the Court of First Instance of the European Communities.
THE PROHIBITION OF AGREEMENTS
The agreement is the result of consultation between the companies
The notion of agreement
The cartel is defined in European competition law in application of article 85§1 as being an agreement (express or tacit) between two or more companies, a decision of an association of companies or a concerted practice.
Agreements: European Parliament technical sheet
Proof of the agreement
The proof of the agreement can be brought by any means and result from writings, presumptions or clues.
The illicit agreement
The cartel falls under the ban when it affects trade in a material way.
It is unlawful if it is liable to affect trade between Member States and if its object or effect is to prevent, restrict or distort competition within the common market.
Agreements may in certain cases benefit from exemption procedures.
ABUSE OF A DOMINANT POSITION
The concept of dominant position
The dominant position is “a situation of economic power held by a company which gives it the power to prevent the maintenance of effective competition on the market in question by providing it with the possibility of independent behavior to an appreciable extent vis-à-vis vis-à-vis its competitors, its customers and ultimately consumers “(CJCE February 13, 1979, Hoffman-La Roche)
The market criterion
Determining the relevant market is a fundamental part of determining dominance
The notion of abusive practice
Abusive practices are defined by article 86 of the Treaty.
Abuse of a dominant position and merger control: fact sheet European Parliament
The Regulation determines the conditions for the control of concentration operations which have a Community dimension
Definition of concentration
The merger operation is distinguished from the coordination operations between companies which remain independent. It is therefore a question of determining whether there is creation of a joint enterprise performing in a sustainable manner all the functions of an autonomous economic enterprise.
Competence and control procedure
These rules are determined by the Regulations.
Griffin, Joseph P, Antitrust aspects of cross-border mergers and acquisitions, European Competition Law Review (ECLR), 01/01/1998, pp. 12-20
Council Regulation (EEC) 4064/89 of December 21, 1989 on control of concentrations between undertakings; Council Regulation (EC) 1310/97 of June 30, 1997 amending Regulation (EEC) 4064/89 on the control of concentrations between untertakings
Ahlborn, Christian; Turner, Vanessa, Expanding success? Reform of the EC merger regulation, European Competition Law Review (ECLR), 01/04/1998, pp. 249-262
Clark, John, Recent Developments in Competition Law and Policy Regarding Mergers, OECD Journal on Competition Law and Policy, 01/01/2000, pp 88-95