Concerted Practices

Economic Considerations

• hardcore cartels are anti competitive and contrary to the public interest because prices are likely to be higher than they would be under free competition

The question is whether parallel conduct that is not collusive such as reacting to price changes but has much the same effect as price fixing agreement infringes article 81(1)?

• market behaviour, adopted in the knowledge and hope that competitors will follow it, a concerted practice if, in fact competitors do follow?

• Enabling competitors to learn of a price rise plus the hope that they would follow or maintain it might be treated as an offer to collude accepted when competitors follow

  • However this is hard to do considering markets do go up and down.

  • Most reliable way is to wait for a complaint or something that’s really obvious

Dyestuffs Case

• ECJ observed that Article 81 distinguishes concerted practices from agreements and decisions in order to bring within the competition rules

  • ‘a form of coordination between undertakings which, without having reached the stage where an agreement properly so called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition’

• In this case and in Sugar Cartel, the ecj said that for the few firms in a concentrated market to take account of each other’s market behaviour does not amount to a concerted practice.

• The  ECJ suggested that ‘co ordinated course of action’ might be broader than collusion.

  • Facilitating devices, acting in a way that makes it easier for suppliers or buyers not to compete, for instance by giving considerable notice of price increases in a trade journal might amount to a concerted practice if competitors followed the rise.

• The commission had found  that the price increases on 3 occassions were ‘concerted’ partly because the producers had met and discussed price and partly because of various other items of circumstantial evidence of collusion.

  • On the first occasion, 6 of 10 firms were fined and which supplied about 85% of the dyestuffs in the common market had sent notices of increases to their subsidiaries and dealers.

• The ECJ pointed out that the 3 increases showed progressive coordination which consisted mainly of the leader announcing its intended price rise for a particular country further in advance.

• The final increase was announced 3 months in advance at a meeting of the producers. The others followed.

Polypropylene

• commission had found ample documentary evidence that 15 companies had worked out a complex scheme of arrangements with the purpose of setting and implementing target prices and quotas

• clear evidence of collusion but there were hardly any effects on the market.

• The CFI held that the existence of an intent to concert is sufficient to establish a concerted practice even if there are no actual effects.

Cartonboard case

• the producers who without objection attended meetings which they knew were intended to reduce price competition and impose quotas were liable to fines even if they said nothing, missed meetings or cheated in the cartel

Where there is another reasonable explanation for parallel conduct, collusion will not be inferred as in SACEM.

SACEM

• SACEM replied that it would be difficult for each of the copyright societies to grant such licences abroad as they would have to negotiatie them and check what was being played.

• Since there was another explanation of parallel conduct, the ECJ ruled that it was not collusive.

Agreements to exchange information

• agreements between competitors to exchange detailed information about price or output changes may well be treated as having the object of restricting competition