Part III
Substantive Law
Introduction
Competitive markets are markets in which economic rivalry enhances efficiency. Market ‘forces’ determine the winners and losers of this rivalry, and competition will – ultimately – force inefficient losers out of the market.
Who, however, forces the winner(s) to act efficiently? By the end of the nineteenth century, this question was first raised in the United States. After a period of intense competition ‘the winning firms were seeking instruments to assure themselves of an easier life’; and they started to use – among other things – the common law ‘trust’ to coordinate their behaviour within the market. To counter the anticompetitive effects of these trusts, the US legislator adopted the first competition law of the modern world: the Sherman Antitrust Act (1890). It attacked the two cardinal sins within all competition law: anticompetitive agreements, and monopolistic markets. The meaning of what ‘competition’ is has nonetheless remained controversial; and two basic ‘schools’ have here traditionally ‘competed’ with each other. Following the ‘Harvard School’, competition law is to prevent harm to consumers (exploitative offences) as well as harm to competitors (exclusionary offences), whereas the ‘Chicago School’ sees the enhancement of ‘consumer welfare’ as the sole objective of competition law.
The US experience has significantly shaped the competition law of the European Union; yet the inclusion of a EU Treaty chapter on competition law was originally rooted not so much in competition concerns as such. It was rather the ‘general agreement that the elimination of tariff barriers would not achieve its objectives if private agreements of economically powerful firms were permitted to be used to manipulate the flow of trade’. The primary function of EU competition law was therefore originally seen in the removal of private party actions that would
tend to restore the national divisions in trade between Member States [and] might be such as to frustrate the most fundamental objectives of the [Union]. The Treaty, whose preamble and content aim at abolishing the barriers between States, and which in several provisions gives evidence of a stern attitude with regard to their reappearance, could not allow undertakings to reconstruct such barriers.
EU competition law was thus – at first – primarily conceived as a complement to the internal market. This also explains the position of the competition provisions within the EU Treaties. They are found in Chapter 1 of Title VII of the TFEU that deals principally with internal market matters. The chapter is divided into two sections – one dealing with classic competition law, that is: ‘[r]ules applying to undertakings’; the other with public interferences in the market through ‘[a]ids granted by States’. Table 17.1 provides an overview of the various competition rules within the EU Treaties. Both sections contain one or two (directly effective) prohibitions, as well as a Union competence for the adoption of Union secondary law. The legislative competence(s) have been used to some extent, yet EU competition law is equally governed by a wide range of soft-law instruments adopted by the executive.
This chapter concentrates on private undertakings. The relevant Treaty section here is built upon three pillars. The first pillar deals with anticompetitive cartels and can be found in Article 101. The second pillar concerns situations where a dominant undertaking abuses its market power and is dealt with in Article 102. The third pillar is unfortunately invisible, for when the Treaties were concluded, they did not mention the control of mergers. This constitutional gap has never been closed by subsequent Treaty amendments; yet it has received a legislative filling in the form of the EU Merger Regulation (EUMR). Let us discuss, step by step, these three pillars of ‘private’ competition law.
Cases
Legislation
EU Regulations
Council Regulation (EC) No. 139/2004 of 20 January 2004 on the control of concentrations between undertakings (EU Merger Regulation)
Commission Regulation (EC) No. 772/2004 of 7 April 2004 on the application of Article 81(3) of the Treaty to categories of technology transfer agreements, [2004] OJ L 123/11
Commission Regulation (EU) No. 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, [2010] OJ L 102/ 1
Commission Regulation (EU) No. 461/2010 of 27 May 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices in the motor vehicle sector, [2010] OJ L 129/52
Commission Regulation (EU) No. 1217/2010 of 14 December 2010 on the applica- tion of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of research and development agreements, [2010] OJ L 335/ 36
Commission Regulation (EU) No. 1218/2010 of 14 December 2010 on the applica- tion of Article 101(3) of the Treaty on the Functioning of the European Union to certain categories of specialisation agreements, [2010] OJ L 335/43
Figures
Extra Materials
Useful videos
Useful websites
European Commission – DG Competition: Antitrust
European Commission – DG Competition: Cartels
European Commission – DG Competition: Mergers
New York Law School – European Union Competition Law: Horizontal and Vertical Cooperation
New York Law School – European Union Competition Law: Concerted Practices
Further Reading
Books
P. Akman, The Concept of Abuse in EU Competition Law (Hart, 2012)
G. Amato, Antitrust and the Bounds of Power: The Dilemma of Liberal Democracy in the History of the Market (Hart, 1997)
D. Bailey and L. E. John (eds) Bellamy & Child: European Union Law of Competition (Oxford University Press, 2018)
A. Ezrachi, EU Competition Law: An Analytical Guide to the Leading Cases (Hart, 2018)
C. Harding and J. Joshua, Regulating Cartels in Europe (Oxford University Press, 2010)
P. Ibáñez Colomo, The Shaping of EU Competition Law (Cambridge University Press, 2018)
A. Jones, et al., Jones and Sufrin’s EU Competition Law: Text, Cases and Materials (Oxford University Press, 2019)
I. Kokkoris and H. Shelanski, EU Merger Control: A Legal and Economic Analysis (Oxford University Press, 2014)
R. Nazzini, The Foundations of European Union Competition Law: The Objective and Principles of Article 102 (Oxford University Press, 2011)
E. Rousseva, Rethinking Exclusionary Abuses in EU Competition Law (Hart, 2010)
R. Wish and D. Bailey, Competition Law (Oxford University Press, 2012)
Articles
A. Albors-Llorens, ‘The Role of Objective Justification and Efficiencies in the Application of Article 82 EC’ (2007) 44 CML Rev 1727
O. Brook, ‘Block Exemption Regulations and Public Policy: In the Defence of BERS’ (2022) 24 Cambridge Yearbook of European Legal Studies 111
J. Faull, ‘Effect on Trade between Member States’ (1999) 26 Fordham Corporate Law Institute, 481
B. Hawk, ‘System Failure: Vertical Restraints and EC Competition Law’ (1995) 32 CML Rev 973
P. Ibáñez Colomo, ‘Exclusionary Discrimination under Article 102 TFEU’ (2014) 51 CML Rev 141
A. Jones, ‘The Boundaries of an Undertaking in EU Competition Law’ (2012) 8 European Competition Journal 301
I. Lianos, ‘Collusion in Vertical Relations under Article 81 EC’ (2008) 45 CML Rev 1027
G. Monti, ‘The Scope of Collective Dominance under Article 82 EC’ (2001) 38 CML Rev 131
O. Odudu and D Bailey, ‘The Single Economic Entity Doctrine in EU Competition Law’ (2014) 51 DML Rev. 1555
J. Schmidt, ‘The New ECMR: “Significant Impediment” or “Significant Improvement”?’ (2004) 41 CML Rev 1555
A. Weitbrecht, ‘From Freiburg to Chicago and Beyond: The First 50 Years of European Competition Law’ (2008) 29 European Competition Law Review 81
R. Wish and B. Sufrin, ‘Article 85 and the Rule of Reason’ (1987) 7 YEL 1
A. Witt, ‘From Airtours to Ryanair: Is the More Economic Approach to EU Merger Law Really about More Economics?’ (2012) 49 CML Rev 217
How to Find (and Read) the EU Treaties
The EU Treaties constitute the primary law of the Union. The formula the ‘EU Treaties’ or simply ‘the Treaties’ commonly refers to two Treaties: the Treaty on European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU).
The ‘Treaties’ are the result of a long ‘chain novel’ of consecutive treaties (see Table 20.1). They started out from three ‘Founding Treaties’ that created the European Coal and Steel Community (1951), the European Atomic Energy Community (1957) and the European (Economic) Community (1957). A myriad of subsequent ‘Amendment Treaties’ and ‘Accession Treaties’ gradually changed the textual basis of the three Communities significantly; and this first treaty base would be complemented by a second treaty base in 1992, when the Maastricht Treaty created the (old) European Union.
To simplify the – very complex – textual foundations of the old European Union and European Communities Treaties, the Member States tried to create a single treaty in the early 2000s. The 2004 Constitutional Treaty was indeed intended to repeal all previous treaties; and it was to merge the European Union with the European Communities. Yet the attempt to ‘recreate’ one Union, with one legal personality, on the basis of one treaty failed; and the Member States thereafter resorted to yet another ‘Amendment Treaty’: the 2007 Reform Treaty – also called the Lisbon Treaty.
Despite its modest name, the Lisbon Treaty constitutes a radical new ‘chapter’ in the Union’s constitutional chain novel. For while it formally builds on the original ‘Founding Treaties’, it has nonetheless ‘merged’ the old ‘Community’ legal order with the old ‘Union’ legal order into a new ‘Union’ legal order.
Nevertheless, unlike the 2004 Constitutional Treaty, the 2007 Lisbon Treaty has not created a single treaty base for the European Union. Instead, it recognises the existence of two (main) treaties: the Treaty on European Union and the Treaty on the Functioning of the European Union. The division into two EU Treaties thereby follows a functional criterion: the Treaty on European Union (TEU) contains the general provisions defining the Union, while the Treaty on the Functioning of the European Union (TFEU) contains the specific provisions with regard to the Union institutions and policies. One of the new features of the post-Lisbon era is the possibility of minor treaty amendments instigated by European Council Decisions.
In addition to ‘Amendment Treaties’ there are now also ‘Amendment Decisions’ adopted by the European Council (see Table 21.4). The EU Treaties can today be found on the European Union’s
EUR-Lex website: http://eur-lex.europa.eu/collection/eu-law/treaties.html, but there are also a number of solid paper copies such as Blackstone’s EU Treaties & Legislation or my own EU Treaties and Legislation collection. What is the structure of today’s EU Treaties? The structure of the TEU and TFEU is shown in Table 20.4. The (longer) TFEU is divided into ‘Parts’ – ‘Titles’ – ‘Chapters’ – ‘Sections’ –‘Articles’, while the (shorter) TEU only starts with a division into ‘Titles’. The EU Treaties are joined by numerous Protocols and the ‘Charter of Fundamental Rights’. According to Article 51 TEU, Protocols to the Treaties ‘shall form an integral part thereof’; and the best way to make sense of them is to see them as legally binding ‘footnotes’ to a particular article or section of the Treaties.
By contrast, the Charter is ‘external’ to the Treaties; yet it also has ‘the same legal value as the Treaties’.
How to Find (and Read) EU Secondary Law
The Union publishes all of its acts in the Official Journal of the European Union. Paper versions can be found in every library that houses a ‘European Documentation Centre’, but electronic versions are also openly available on the Union’s EUR-Lex website: http://eur-lex.europa.eu/oj/direct-access.html. The Union distinguishes between two Official Journal series: the L-series and the C-series. The former contains all legally binding acts adopted by the Union (including its international agreements), while the latter publishes all other information and notices. Originally, only the paper version of the Official Journal was ‘authentic’; but since 1 July 2013, electronic versions of the Official Journal (e-OJ) are equally authentic and therefore endowed with formal legal force.
Union secondary law will first mention the instrument in which it is adopted. It will typically have the form of a ‘Regulation’, a ‘Directive’ or a ‘Decision’. This will be followed by two figures. In the past, where the Union act was a regulation, the figure was: number/year; while for directives and decisions this was inversed: year/number. However, since 2015, this has changed and all main Union instruments are now arranged by year/number.treaty base would be complemented by a second treaty base in 1992, when the Maastricht Treaty created the (old) European Union.
Where the year and number are known for a given EU act, the easiest way to find it is to use the Union’s EU-lex search engine: http://eur-lex.europa.eu/homepage.html. Importantly, there may be two or more acts for a given number combination, especially where a ‘legislative’ act has been followed by a non-legislative act. For two types of non-legislative acts – namely: ‘delegated’ and ‘implementing’ acts – the EU Treaties require that they contain the word ‘delegated’ or ‘implementing’ in their title. This is to indicate – at first glance – that these executive acts have been adopted according to a particular decision-making procedure. States thereafter resorted to yet another ‘Amendment Treaty’: the 2007 Reform Treaty – also called the Lisbon Treaty.
What is the structure of a piece of Union legislation? After its ‘Title’ there follows a brief summary of the decision-making procedure that led to the adoption of the act – including a reference to the legal competence on which it was based. Thereafter comes the ‘Preamble’, which sets out the reasons for which the Union act has been adopted. The content of the act is subsequently set out in various ‘articles’, which may be grouped into ‘Sections’ and ‘Chapters’. For very technical Union legislation, there may also be an Annex – which, like a ‘Schedule’ in a UK statute, adds detailed provisions ‘outside’ the core content of the act. To illustrate this legislative structure, let us take a closer look at the Services Directive as it would be published in the Official Journal.
How to Find (and Read) EU Court Judgments
All EU cases are identified by a number/year figure. Cases before the Court of Justice are preceded by a C-, while cases decided before the General Court are preceded by a T-( for the French ‘Tribunal’).7 The Civil Service Tribunal prefixed its cases with an F-( for the French ‘Fonction publique’). Following this unique figure come the names of the parties to the case. A full case name would for example be: Case C-144/ 04, Werner Mangold v. Rüdiger Helm. However, since no one can remember all the numbers or all the parties, EU cases often get simply abbreviated by the main party; in our case Mangold.
In the past, judgments of all EU Courts were published in paper form in the purple-bound European Court Reports (ECR). Cases decided by the Court of Justice were published in the ECR-I series; cases decided by the General Court were published in the ECR-II series, while cases decided by the Civil Service Tribunal were published in the ECR-SC series. However, as of 2012, the entire Court of Justice of the European Union decided to go ‘paperless’ and it now publishes its judgments only electronically.8 The two principal websites here are the Court’s own curia website (http://curia.europa.eu/jcms/jcms/j_6), and the Union’s general EUR-Lex website (http://eur-lex.europa.eu/homepage.html). For the purposes of this book, the easiest way is however to go to www.schutze.eu, which contains all the judgments mentioned in the main text – including the ‘Lisbon’ version of all classic EU Court judgments.
Once upon a time, judgments issued by the European Court were – to paraphrase Hobbes –‘nasty, brutish and short’. Their shortness was partly due to a structural division the Court made between the ‘Issues of Fact and of Law’ (or later: ‘Report for the Hearing’), which set out the facts, procedure and the arguments of the parties, on the one hand, and the ‘Grounds of Judgment’ on the other. Only the latter constituted the judgment sensu stricto and was often very short indeed. For the Court originally followed the ‘French’ ideal of trying to put the entire judgment into a single ‘sentence’! A judgment like Van Gend en Loos contains about 2,000 words – not more than an undergraduate essay.
This world of short judgments is – sadly or not – gone. A typical judgment issued today will, on average, be four to five times as long as Van Gend. (And in the worst-case scenario, a judgment, especially in the area of EU competition law, may be as long as 100,000 words – a book of about 300 pages!) This new comprehensiveness is perhaps the product of a more refined textualist methodology, but it also results from a change in the organisation and style of judgments. Modern judgments have come to integrate much of the facts and the parties’ arguments into the main body of a ‘single’ judgment, and this has especially made many direct actions much longer and much more repetitive! The structure of a modern ECJ judgment given under the preliminary reference procedure may be studied by looking at Figure 20.2.
How to Find EU Academic Resources
The literature with regard to European Union law has exploded in the last 30 years. Today, there exists a forest of European law journals and generalist textbooks. Moreover, since the mid 1990s ‘European’ law has increasingly developed specialised branches that are sometimes even taught separately at university (as is the case at my own university). The three main branches here are: European constitutional law, European internal market law and European competition law. The first was explored in Parts I and II, while the second branch (and elements of the third branch) were covered in Part III. In addition to these three ‘bigger’ branches, the last two decades have also seen the emergence of many ‘smaller’ branches, such as European external relations law, European labour law and European environmental law. And there now also exist specialised LLM courses on EU consumer law and EU tax law.
The list of journals (Table 21.5) is by no means comprehensive. It is meant to point the interested reader to a first gateway for an in-depth study of a particular part of European Union law. My selection focuses primarily on English-language academic sources. But it goes without saying that European Union law is a ‘European’ subject with journals and textbooks in every language of the Union.
