EU COMPETITION LAW Introduction to Course and General Considerations

Ctlin Grigorescu, LL.M.Eur Cristina Mihai 02.03.2011

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Overview
1. Introduction to the course 2. General aspects of Competition Law The Structure of EU Competition Law The Relationship between EU and National Competition Law 3. Relevant institutions in competition-related matters 4. Bibliography 5. Case law regarding the next courses topic

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1. Introduction to the course | Objectives

Course objectives:
Understanding the main policy areas of EU Competition Law Acknowledging the importance and the positive effects of the Competition Policy Analysing the activity of the institutions involved in competition related matters and their case law Underlining the main differences between the EU Competition Law and the Romanian Competition Law

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1. Introduction to the course | Structure

Topics to be discussed during following meetings:
Agreements and concerted practices Market power and dominance issues in Europe Merger control European enforcement and investigation procedure Procedure of enforcement by National Competition Authorities and National Courts General aspects of Romanian Competition Law

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1. Introduction to the course | Scope

The purpose of competition law:
Enhancing consumer welfare Ensuring an efficient allocation of resources Protecting the interests of consumers, by taking direct action against offending undertakings (e.g. requiring dominant firms to reduce their prices) Promoting economic equity rather than economic efficiency by protecting small undertakings against more powerful rivals (small undertakings should be given a fair chance to succeed) Achieving single market integration (by EU competition law)

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2. General aspects on the Competition Law

Source: http://en.wikipedia.org/wiki/Treaty_of_Lisbon
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2. General aspects on the Competition Law | 2

| EU Competition Law Origins
Treaty establishing the European Economic Community (EEC Treaty), in force since 1958

| Current Relevant EU Legislation

Essential provisions: Treaty on the Functioning of the European Union (TFEU) Articles 101 109 (former Articles 81 89 of the EC Treaty)

Article 101 collusion that restricts competition Article 102 abuse of dominant position Articles 107 109 aids granted by states Articles 103 and 352 and the Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings economic concentrations

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2. General aspects on the Competition Law | 3

| Current Relevant EU Legislation
Secondary Legislation
Council Regulation (EEC) No. 2821/71 on application of Article 85 (3) of the Treaty to categories of agreements, decisions and concerted practices Council Regulation (EC) No. 1/2003 on the implementation of the rules on competition laid down in Articles 81 and 82 of the EC Treaty Council Regulation (EC) No. 139/2004 on the control of concentrations between undertakings (Merger Regulation) Commission Regulation (EU) No. 330/2010 on the application of Article 101 (3) of TFEU to categories of vertical agreements and concerted practices Other regulations, guidelines and notices

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2. General aspects on the Competition Law | 4

| Current Relevant Romanian Legislation
Essential provisions:
Competition Law No. 21/1996 Fundamental Articles: 5, 6 and 10-15 EU Councils and Commissions Block Exemption Regulations

Secondary Legislation

Competition Councils Regulation on economic concentrations (Order No. 385/2010) Competition Councils Guidelines on the commitments in the field of economic concentrations (Order No. 688/2010) Competition Councils Guidelines on the requirements, terms and procedure for accepting and assessing commitments in case of anticompetitive practices (Order No. 724/2010) Other orders, regulations and guidelines issued by the Competition Council

(integrated in Romanian law by reference in art. 5 (3) of Law No. 21/1996)

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2. General aspects on the Competition Law | 5

| Applicability of the EU Relevant Legislation
Regulations
General applicability Fully binding Direct applicability Full (both horizontal and vertical) direct effect (usually)

Decisions
Individual applicability (usually) Fully binding Direct enforceability Direct effect (only vertical C-156/91 Hansa Fleisch [1992], para 13- 15)

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2. General aspects on the Competition Law | 6

Guidelines and notices
Not mandatory Must be taken into consideration by national courts

The guidelines and notices indicate the Commissions view on various matters relating to the application of the competition rules, and do not form part of the competition legal framework However, in certain circumstances, the general guidelines and notices may produce legal effects:
In adopting such rules of conduct and announcing by publishing them that they will henceforth apply to the cases to which they relate, the institution in question imposes a limit on the exercise of its discretion and cannot depart from those rules under pain of being found, where appropriate, to be in breach of the general principles of law, such as equal treatment or the protection of legitimate expectations. It cannot therefore be precluded that, on certain conditions and depending on their content, such rules of conduct, which are of general application, may produce legal effects (Joined Cases C-189/02 Dansk Rrindustri [2005], para 211)

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2. General aspects on the Competition Law | The Structure of EU Competition Law

Main policy areas:

Antitrust
The following are prohibited:
Agreements between two or more undertakings which restrict, by object or effect, the competition (article 101 of TFEU) e.g. cartels Abuse of dominant position (article 102 of TFEU)

Mergers

Mergers are examined in order to determine the extent to which they restrict effective competition in the EU
Articles 103 and 352 of TFEU Merger Regulation

State Aid

Government interventions are controlled so that they do not interfere with the smooth functioning of the internal market or harm the competitiveness of EU companies
Articles 103 109 of TFEU

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2. General aspects on the Competition Law | Relations between EU and National Competition Law
General rule: EU Competition Law applies in all cases where an agreement or practice may affect trade between Member States
Commission Notice 2004/C 101/07 Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty currently Articles 101 and 102 of TFEU

trade covers all cross-border economic activity including establishment between Member States involves at least two Member States may affect implies that it must be possible to foresee with a sufficient degree of probability that the agreement or practice may have an influence, direct or indirect, actual or potential, on the patterns of trade between Member States
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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 2
Agreements have to be capable of appreciably affecting trade between Member States. This requirement is not met when:
The aggregate market share of the parties on any relevant market within the Community affected by the agreement does not exceed 5% AND In case of horizontal agreements, the aggregate annual Community turnover of the undertaking concerned in the products covered by the agreement does not exceed EUR 40 million

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 3 Relevant factors in determining the effect on trade (none of which individually is necessarily decisive)
The nature of the goods or services covered by the agreement or practice, being sufficient that the products concerned are traded, or likely to be traded, between Member States. The effect is more readily established where, by their nature, the products are easily traded across boarders or are important for undertakings which want to enter the market in another Member State The characteristics of the agreement or practice. An effect on trade between Member States will normally be presumed where an agreement or practice directly relates to international transactions, especially if it restricts imports or exports, or where it applies to more than one Member State or throughout the Community or establishes a Community-wide distribution system The legal and factual environment in which the agreement or practice operates

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 4
Trade between Member States may be affected in case the agreement or conduct:
Has or is capable of having as effect:
Alteration of the pattern of trade Partition of the market Alteration of the structure of competition

The effect may be either direct or indirect (affecting, for example, a raw material for a product which is traded between Member States, even if the raw material by itself is not affected) And the generated effect is appreciable (de minimis principle)

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 5
Parallel application
Article 103 (2,e) of TFEU Articles 3 (1) and 16 of Regulation 1/2003

Broadly, a national authority or court must not take a decision which runs counter to the decision taken by the Commission National courts can apply Articles 101 and 102 of TFEU without it being necessary to apply national competition law in parallel. However, where a national court applies national competition law to agreements, decisions or practices which may affect trade between Member States within the meaning of Article 101 (1) of TFEU or to any abuse prohibited by Article 102 of TFEU, they also have to apply Community competition rules to those agreements Whether or not the legal concepts established in the national legal provisions reflect the Community concepts of undertakings, agreements, concerted practices or abuses, it is the Community concepts which the national competition authority or national court must overlay upon its national law

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 6
Convergence rule
Article 3 (2,3) of Regulation 1/2003

Under Article 101 of TFEU there is a duty to arrive at a consistent result under national law: Where an agreement may affect trade between Member States, the application by a national authority of the national competition law must not operate to prohibit an agreement:
- If it does not restrict competition within the meaning of Article 101 (1) of TFEU - If it fulfils the conditions of Article 101 (3) of TFEU OR - If it is covered by a block exemption

Where the agreement falls outside Article 101 (1) of TFEU, because it has no effect on trade between Member States, the convergence rule is not engaged and there is no restriction on the application of the national competition law

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 7
Convergence rule (2)
Under Article 102 of TFEU, national competition authorities are not precluded from adopting and applying on their territory stricter national laws which prohibit or sanction unilateral conduct engaged by undertakings The convergence rule does not apply when the national authorities apply national merger control law or provisions of national law that predominantly pursue an objective different from that pursued by Articles 101 and 102 of TFEU

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 8
Cooperation
Chapter IV Cooperation of Regulation 1/2003 Network Notice relating to cooperation and exchange of information between the Commission and the national competent authorities Notice on cooperation between the Commission and the national courts

The Commission has a duty of sincere co-operation with the national court (Case C-2/88 Zwartveld [1990], para 10) Equally, national courts may be obliged to assist the Commission in the fulfilment of its tasks and to avoid adopting measures that could jeopardise the Commissions function

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2. General aspects on the Competition Law | Relations between EU and National Competition Law | 9
Consistency
Article 16 of Regulation 1/2003 Notice on cooperation between the Commission and the national courts

National courts decisions under Articles 101 and 102 of TFEU have to be consistent with the Commissions decisions. National courts can never take a decision running counter to that of the Commission The Commission is entitled to adopt decisions under Articles 101 and 102 of TFEU which may conflict with the national courts decision The consistency rule is necessary for:
securing fairness in the particular case pending before the Commission and the national court securing the equal treatment of parties in similar or related circumstances

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3. Relevant institutions in competition related matters

Institutions tasked with applying EU competition law
European Commission > Directorate-General of Competition Community Courts
Court of Justice General Court (former Court of First Instance)

National Competition Authorities (together with the European Commission form the European Competition Network) and National Courts

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3. Relevant institutions in competition related matters | 2

European Commission
Charged with ensuring that the provisions of TFEU, and the measures taken pursuant thereto, are applied The Commission is of central importance to the enforcement of Community Competition Law The main departments of the Commission relevant in the competition field are:
Secretariat-General ensures the overall coherence of the Commissions work Legal Service advises the Commission, checks on the legality of its decisions and represents the Commission in the Court of Justice and the General Court Directorate-General of Competition

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3. Relevant institutions in competition related matters | 3

Directorate-General of Competition Mission
Enforces the competition rules through: Investigation and decision, taking direct enforcement action against companies and governments when it finds evidence of unlawful behaviour, mainly by:
- Obtaining from undertakings all necessary information either by simple request or decision - Conducting all necessary inspections in order to perform its duties Commission officials may carry out inspection either under an authorisation of the Commission or under a formal decision, with or without prior notice (Dawn Raids) to the undertakings involved - Closing its file on a case by accepting legally binding commitments from undertakings - Taking decisions against undertakings in case of infringements of the competition rules - Imposing fines either as a result of the conduct of the undertaking during the investigation or as a result of an undertaking infringing Articles 101 (1) and/or 102 of TFEU
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Directorate-General of Competition Mission (2)
And enforces the competition rules through: Legislation and guidance
- Has powers to participate in the shaping of legislative measures enacted by the Council by initiating proposals for legislative acts - Has powers to enact Directives and Decisions under Article 106 (3) of TFEU - Under Article 105 (3) of TFEU, the Commission may adopt regulations relating to block exemptions - Issues notices and guidelines guidance for undertakings and indicate the Commissions views on various competition matters (e.g. De Minimis Notice, Guidelines on Vertical Restraints, Horizontal Cooperation Guidelines, Relevant Market Notice)

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3. Relevant institutions in competition related matters | 5

Directorate-General of Competition Mission (3)
Takes decisions by which it declares a concentration compatible or incompatible with the common market May fight mergers when they significantly reduce competition by requiring the undertakings concerned to dissolve the merger Helps direct state support more closely to improving competitiveness and/or reducing regional and social disparities and away from aid which distorts competition on the market without any compensating benefit Works in partnership with other policies to support the delivery of other policy objectives in a pro-competitive way at EU and national level Works in partnership with national competition authorities and national courts to ensure an effective and coherent application of EU competition law Promotes the private enforcement of EU competition law, by providing guidance and transparency about competition rules and their enforcement

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3. Relevant institutions in competition related matters | 6 Community Courts

There are two tiers of judicial decision-making in the Community:
General Court European Court of Justice

The judgments of the Community Courts are binding in matters of law in all Member States

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3. Relevant institutions in competition related matters | 7

General Court
Formally known as the Court of First Instance Created in 1988 to help the European Court of Justice cope with the large number of cases brought before it Is made up of at least one Judge from each Member State Sits in Chambers of three Judges (usually, in competition cases) or five Judges (usually, in state aid and dumping cases), but exceptionally in Grand Chamber (13 Judges) or full court It normally operates without the assistance of an Advocate General

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3. Relevant institutions in competition related matters | 8

The General Court has jurisdiction to hear: Direct actions brought by natural or legal entities against acts of the institutions, bodies, offices or agencies of the EU and against regulatory acts or against a failure to act on the part of those institutions, bodies, offices or agencies, e.g. a case brought by a company against a Commission decision imposing a fine on that company for review of the fine or annulment of the decision Actions brought by Member States against the Commission Actions brought by Member States against the Council relating to acts adopted in the field of State aid, dumping and acts by which it exercises powers of implementation Actions seeking compensation for damages caused by the institutions of the EU or their staff

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European Court of Justice
Consists of one judge from each Member State, assisted by eight Advocates General Sits in Chambers of five Judges usually in competition cases, but exceptionally in Grand Chamber (13 Judges) or full court It acts as an appeal court against a decision of the General Court on the grounds of lack of competence, breach of procedure before the General Court or infringement of Community law Under article 267 of the TFEU, the Court of Justice has jurisdiction to give preliminary rulings, at the request of a court of a Member State, concerning, inter alia, the interpretation of TFEU and of the Treaty on European Union and of acts of the Council and the Commission

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Institutions tasked with applying Romanian competition law
Competition Council National Courts

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Competition Council Main Duties and Prerogatives
To take decisions in case of infringements of the Competition Law no. 21/1996 or of the provisions of Articles 101 and 102 of TFEU To perform investigations for the application of certain competition rules and of the provisions of Articles 101 and 102 of TFEU, including preliminary investigations To accept binding commitments from undertakings and to impose temporary measures to undertakings To take decisions concerning economic concentrations To carry out the effective enforcement of its decisions To carry out, at its own initiative, investigations aimed at a better understanding of the market
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Competition Council Main Duties and Prerogatives (2)
To supervise the enforcement of competition related legal provisions and norms To inform the Government about monopoly situations and to propose the measures deemed necessary to remedy the ascertained dysfunctions To give advisory opinion on the draft normative acts that may have anti-competitive impact To recommend to the Government to adopt measures facilitating the market and competition development To draw up studies and reports on its field of activity, and to inform the Government, the public and the specialised international organizations about this activity
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Competition Council Main Duties and Prerogatives (3)
To represent Romania and promote information and experience exchanges in the relationships with specialised international organizations and institutions, and to co-operate with foreign and community competition authorities To ensure the application of the provisions of the Government Emergency Ordinance No. 117/2006 regarding national proceedings in the state aid field As a National Competition Authority, has all rights and obligations provided by Regulation No. 1/2003 and Regulation No. 139/2004 regarding economic concentrations of undertakings

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National Courts
Bucharest Court of Appeal
Acts as an appeal court against the decisions or inspection orders of the Competition Council or the regulations (in Romanian reglementri) issued by the Competition Council in the application of the Law 21/1996 Cancels the act of a public authority or institution which led to the restriction, prevention or distortion of competition, compels public authorities or institutions to issue an administrative act or to perform an administrative operation, at the request of the Competition Council Gives authorisations for inspections in certain cases (e.g., inspection of undertakings directors premises) Settles the appeals against the judgements of the Bucharest Court of Appeal

High Court of Cassation and Justice

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National Courts
Special competence Bucharest Court of District 1
In case of sanctions applied by competition inspectors, the minutes through which such sanctions are applied may be challenged before the Bucharest Court of District 1. These sanctions may be applied for compelling the undertakings to:
- Comply with the commitments or obligations undertaken in respect to an economic concentration, made binding by a decision of the Competition Council - Supply complete and correct information in response to a request of the competition inspectors

The authority competent to settle the appeal against the Courts decision is the Bucharest Tribunal

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4. Bibliography
Peter Roth QC, Vivien Rose, Bellamy & Child: European Community Law of Competition, Oxford University Press, 2008, pg. 2-40, 14041429 Jonathan Faull, Ali Nikpay, Faull & Nikpay: The EC Law of Competition, Oxford University Press, 2007, pg. 96-111, pg. 117-134 Richard Whish, Competition Law, Oxford University Press, 2009, pg. 74-80, 142-145 Valentine Korah, An Introductory Guide to EC Competition Law and Practice, Hart Publishing, 2007, pg. 26-42, 66-73, 241-250 http://ec.europa.eu/competition/ http://curia.europa.eu/ http://eur-lex.europa.eu/ http://ec.europa.eu/competition/publications/glossary_en.pdf (Glossary of terms used in EC Competition policy note: references need own reworking to updated laws and regulations)
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4. Bibliography | 2
Treaty on the Functioning of the European Union consolidated version 30.03.2010 OJ C 38 Council Regulation No. 1/2003 consolidated version 18.10.2006 OJ L 1 Commission Notice Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty OJ C 101, 27.04.2004 Commission Notice on cooperation within the Network of Competition Authorities OJ C-101, 27.04.2004 Commission Notice on the co-operation between the Commission and the courts of the EU Member States in the application of Articles 81 and 82 EC OJ C101, 27.04.2004 Case C-156/91 Hansa Fleisch [1992], para 15 Case C-189/02 P Dansk Rrindustri [2005], para 211 Case C-2/88 Zwartveld [1990], para 10

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5. Case law regarding the next courses topic

Agreements and concerted practices
Case C-189/02 P Dansk Rrindustri [2005], para 112-113 Case C-309/99 Wouters [2002], para 46-47, 49 Case T-66/99 Minoan Lines v Commission [2003], para 121 Case C-204/00 P Aalborg Portland A/S and others v Commission [2004], para 59 Case C-205/03 P FENIN v Commission, Opinion of Advocate General, para 26 Case C-97/08 P Akzo Nobel NV and others v Commission [2009], para 55, 58 Case T-128/98 Aroports de Paris v Commission [2000] Case C-49/92 P Commission v Anix Partecipazioni [1999], para 108, 131 Case T-53/03 BPB plc v Commission [2008], para 82 Case T-44/02 OP Dresdner Bank v Commission [2006], para 53-55 Case 48/69 Imperial Chemical Industries Ltd. v Commission [1972], para 64

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5. Case law regarding the next courses topic | 2

Case T-168/01 GlaxoSmithKline Services Unlimited v Commission [2006], para 118, 171 Joined Cases 29/83 and 30/83 Compagnie Royale Asturienne des Mines SA and Rheinzink GmbH v Commission [1984], para 3 Case T-395/94 Atlantic Container Line v Commission [2002], para 76 Case 31/80 LOral v De Nieuwe AMCK [1980], para 19 Commission Decision of 15.10.2008, Case COMP/39188 Bananas, para 226 Case T-13/03 Nintendo v Commission [2009], para 41 Case C-297/06 CEPSA [2008], para 44 Case 26/76 Metro v Commission (No. 1) [1977], para 20 Commission Decision of 16.07.2003, Case COMP/37.975 PO/Yamaha, para 122 Commission Decision of 05.09.1979, BP Kemi/DDSF, para 64

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5. Contact

Catalin Grigorescu, LL.M.Eur.

catalin.grigorescu@bpv-grigorescu.com

Cristina Mihai
cristina.mihai@bpv-grigorescu.com

33 Dionisie Lupu Street RO - 020021 Bucharest Phone: (+40 21) 264 16 50 Fax: Web: (+40 21) 264 16 60 www.bpv-grigorescu.com E-Mail: office@bpv-grigorescu.com

Iulia Cojocaru
iulia.cojocaru@bpv-grigorescu.com

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6. Contacts bpv LEGAL

bpv Hgel Rechtsanwlte OEG Rond Point Schuman 9 B- 1040 Brussels Tel.: +32 2 286 81 10 Fax: +32 2 286 81 18 brussels@bpv-huegel.com www.bpv-huegel.com bpv Braun Partners Palac Myslbek, Ovocny trh 8 CZ- 110 00 Prague 1 Tel.: +420 224 490 000 Fax: +420 224 490 033 prague@bpv-bp.com www.bpv-bh.com bpv Jadi-Nemeth Vrsmarty Tr 4, Medimpex Building H-1051 Budapest Tel.: + 36 1 484 0484 Fax: + 36 1 484 0433 budapest@bpv-jadi.com www.bpv-jadi.com bpv Hgel Rechtsanwlte OEG Donau-City-Strae 11, ARES-Tower A- 1220 Vienna Tel.: +43 1 260 50 0 Fax: +43 1 260 50 133 vienna@bpv-huegel.com www.bpv-huegel.com www.bpvlegal.com

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