Guiyab Competition Law Reviewer

EU and US Competition Law Video Reviewer

105 Authorizes Enforcement of Cases

European Union - 28 countries, based on two

major treaties:

Q: If Google was excluding competitors in

Europe through the use of its search engine,
under what Article might the authorities come
after it for violation of the EU's competition
laws?

-Maastricht treaty
-TFEU treaty
Q: What Does TFEU Stand for?
A: Treaty for the Functioning of the European
Union

A: Article 102 Abuse of Dominant Market

Position. Google has a vastly dominant market
share in the market for search engines.

Formerly treaty for the establishment of the

European economic community TEEC

Article 106

Articles 81-86 old treaty now 101-106 new

treaty

106 (1) Competition Rules Apply to Public

Undertakings

Rule of 20

106 (2) Reconciling

Competition Values

Q: If you were researching decisions under

Article 106 and wanted to find some precedent
from cases decided in the 1980's under what
numbered article in the previous treaty would
you look?
A: Article 86. The new laws afterwards
renumbered this article to 106.
Article 101 Prohibitions on Concerted
Activity
101 (1) Standards
101 (2) Nullification
101 (3) Defenses
Article 102 Abuse of Dominant Market
Position
Types of Abuse:
Exclusionary
Exploitative
Article 103-105
Calls for IRRs for Enforcement
104 Transition Article

Public

Duties

and

106 (3) Enforcement of Above

European Commission
Court of Justice of the European Union (Judicial
Branch of the EU).
3 Dozen Directorates General There is one just
for competition manners (DGC Directorate
General for Competition).
Most Prominent
Members

Competition

Margrethe Vestager
Competition

Commission

Commissioner

for

Alexander Italiener Director General for

Comeptition
Court of Justice of the European Union (Judicial
Branch of the EU).
Shares jurisdiction with a general court (Former
Court of First Instance) and the civil service
tribunal.
ECJ is the equivalent of the Supreme Court.
There is no appeal beyond the ECJ.

Guiyab Competition Law Reviewer

Q: True or False: The court that adjudicates
disputes under EU law on a first instance basis is
often referred to as the ECJ.

2) Unfair Methods of Competition

EU Adjudication of Competition Cases

Q: What US law gave victims of anticompetitive activity the right to hire a lawyer
and due the perpetrator directly (and perhaps
win treble damages $$$)

Commission Issues fine on recommendation of

DGC (Directorate General for Competition. This
is not a quasi-judicial body).

A: The Clayton Act. Perhaps in the sense that

you might win. Trebling of damages is
mandatory in the Clayton Act.

General Court hears petition to annul (Can rule

on issues of law and fact).

Procedure:

A: False. This is an appellate court, not a court

of first instance.

European Court of Justice hears petition to annul

based on points of law.
US Competition Law
Sherman Act
Section 1 violations: Restraint of Trade (Similar
to Article 101 in the EU Treaty)
Section 2 violations: Monopolizing (Similar to
Article 102 in the EU Treaty)
Examples of Section 1 Violations:
1) Price Fixing
2) Territorial Allocation
The above are Per Se Offenses. (Term adopted
By the Philippine Competition Act)
3) Tying
4) Exclusive Dealing
5) Anticompetitive
Mergers
and
Acquisitions (Mergers are reviewed
following the Hart Scott Rodino (H-SR) Act).
6) Price Discrimination (Prohibited when
the Robinson-Patman Act amended the
Clayton Act).
There is also a private action for treble damages
provided for under the Clayton Act.
Federal Trade Commission Act:
1) Prohibits Deceptive Acts or Practices

Q: Take a look at the provisions on the PCC

found in the PCA. Which agency mentioned in
this video (The DG on Competition, the DOJ,
and the FTC) does the PCC seem to most
closely resemble? Please briefly state the basis
for your choice:
A: The FTC. The Limitation of criminal
prosecution to the DOJ is mirrored by the new
law allowing criminal prosecution to be handled
exclusively by the Department of Justices
Office for Competition. Decisions of the PCC
are also appealable to the Court of Appeals and
then, by certiorari, to the Supreme Court of the
Philippines.

Guiyab Competition Law Reviewer

effect of substantially preventing, restricting or
lessening competition shall also be prohibited:
RA 10667
Philippine Competiiton Act
Acts Punishable
PROHIBITED ACTS
Sec. 14. Anti-Competitive Agreements.
PER SE OFFENSES
(a) The following agreements, between or
among competitors, are per se prohibited:
(1) Restricting competition as to price, or
components thereof, or other terms of trade;
(2) Fixing price at an auction or in any form of
bidding including cover
bidding,
bid
suppression, bid rotation and market allocation
and other analogous practices of bid
manipulation;
Object or Effect Test
(b) The following agreements, between or
among competitors which have the object or
effect of substantially preventing, restricting or
lessening competition shall be prohibited:
(1) Setting, Limiting, or controlling production,
markets, technical development, or investment;
(2) Dividing or sharing the market, whether by
volume of sales or purchases, territory, type of
goods or services, buyers or sellers or any other
means;
Catch All Clause
(c) Agreements other than those specified in (a)
and (b) of this section which have the object or

Provided, Those which contribute to improving

the production or distribution of goods and
services or to promoting technical or economic
progress, while allowing consumers a fair share
of the resulting benefits, may not necessarily be
deemed a violation of this Act.
An entity that controls, is controlled by, or is
under common control with another entity or
entities, have common economic interests, and
are not otherwise able to decide or act
independently of each other, shall not be
considered competitors for purposes of this
section.
Sec. 15. Abuse of Dominant Market Position
ACT
Selling below
cost

Imposing
barriers
to
entry
or
competition
growth
hindrance
Subjecting
commercial
transactions to
conditions
unrelated to a
commercial
purpose

EXEMPTION
The price established was in
good faith to meet or
compete with the lower
price of a competitor in the
same market selling the
same or comparable product
or service of like quality.1
The barriers to entry
developed in the market as a
result of or arising from a
superior product or process,
business acumen, or legal
rights or laws.2
Must substantially prevent,
restrict
or
lessen
competition.3

1. Id. 15 (a).
2. Id. 15 (b).
3. Philippine Competition Act, 15.

Guiyab Competition Law Reviewer

Price and/or
market
discrimination

Exclusivity
arrangements

Bundling

Socialized pricing for the

less fortunate sector of the
economy; price differential
which
reasonably
or
approximately
reflect
differences in the cost of
manufacture,
sale,
or
delivery resulting from
differing methods, technical
conditions, or quantities in
which the goods or services
are sold or delivered to the
buyers or sellers; price
differential or terms of sale
offered in response to the
competitive
price
of
payments,
services
or
changes in the facilities
furnished by a competitor;
and price changes in
response to changing market
conditions, marketability of
goods or services, or
volume.4
Permissible
franchising,
licensing,
exclusive
merchandising or exclusive
distributorship agreements
such as those which give
each party the right to
unilaterally terminate the
agreement; or
Agreements
protecting
intellectual property rights,
confidential information, or
trade secrets. 5
If the goods have a direct
connection with the main
goods or services to be
supplied.6

Predatory
purchase
pricing
Predatory
selling pricing

Output
restriction

Prices must be unfairly low.7

Prices that develop in the
market as a result of or due
to a superior product or
process, business acumen or
legal rights or laws shall not
be considered unfair prices.8
Limitations that develop in
the market as a result of or
due to a superior product or
process, business acumen or
legal rights or laws shall not
be a violation.9

Glossary of Economic Terms:

SSNIP TEST:
In competition law, before deciding whether
companies have significant market power which
would justify government intervention, the test
of small but significant and non-transitory
increase in price (SSNIP) is used to define
the relevant market in a consistent way. It is an
alternative to ad hoc determination of the
relevant market by arguments about product
similarity.
The SSNIP test is crucial in competition
law cases accusing abuse of dominance and in
approving or blocking mergers. Competition
regulating authorities and other actuators of antitrust law intend to prevent market failure caused
by cartel, oligopoly, monopoly, or other forms
of market dominance.

HHI: The Herfindahl index (also known

as HerfindahlHirschman Index, or HHI) is a

4. Id. 15 (d).

7. Id. 15 (g).

5. Id. 15 (e).

8. Philippine Competition Act, 15 (h).

6. Id. 15 (f).

9. Id. 15 (i).

Guiyab Competition Law Reviewer

measure of the size of firms in relation to
the industry and an indicator of the amount of
competition among them. Named after
economists Orris C. Herfindahl and Albert O.
Hirschman, it is an economic concept widely
applied in competition law, antitrust[1] and also
technology management.[2] It is defined as the
sum of the squares of the market shares of the
firms within the industry (sometimes limited to
the 50 largest firms),[3] where the market shares
are expressed as fractions. The result is
proportional to the average market share,
weighted by market share. As such, it can range
from 0 to 1.0, moving from a huge number of
very
small
firms
to
a
single monopolistic producer. Increases in the
Herfindahl index generally indicate a decrease in
competition and an increase of market power,
whereas decreases indicate the opposite
Cellophane Fallacy:
The Cellophane Paradox (also the Cellophane
Trap or Cellophane Fallacy[1] or Gingerbread
Paradox) describes a type of incorrect reasoning
used in market regulation methods.
The paradox arises when a firm sells a product
with few substitutes, which in turn allows the
firm to increase the price of that product. The
original reason was that as the price increases,
the product will reach a point where it begins to
attract more and more substitutes. In technical
economic terms, such a product has very
low cross-price elasticity of demand. The

situation is linked to a United States Supreme

Court case and a subsequent response in
economic literature.
Cellophane was a DuPont Company plastic
wrapping material that had its U.S. production
restricted to du Pont by numerous patents in the
early 1950s. Du Pont was sued under
the Sherman Act for monopolization of the
cellophane market by the U.S. Justice
Department, and the case (U.S. v. E. I. du Pont[2])
was decided by the Supreme Court in 1956. The
Court agreed with du Pont that when evaluated
at the monopolistic price observed in the early
1950s, there were many substitutes for
cellophane and, therefore, du Pont had only a
small share of the market for wrapping materials
(i.e., it possessed little or no market power).