Which may affect trade between member states

The condition that trade member states be affected is easily satisfied.

• trade covers all economic activities relating to goods or services, even the right of a trader in one member state to set up business in another.

Market integration

The condition between trade between member states may be affected has been construed in the light of the need to establish and maintain a single market: export boosters distort trade as much as import deterrents.

Consten and Grundig

• what is important is whether the agreement is capable of constituting a threat, either direct or indirect, actual or potential, to freedom of trade between the MS in a manner which might harm the attainment of the objectives of a single market between states.

• The fact that an agreement encourages an increase, even a large one, in the volume of trade between states is not sufficient to exclude the possibility that the agreement may ‘affect’ such trade in the above mentioned manner.

• The contract between consten and grundig, on the one hand by preventing undertakings other than consten from importing grundig products into france and on the other hand by prohibiting consten from re exporting those products to other countries of the common market, indisputably affects trade between member states

There is no need to prove an actual effect on trade between states: a potential effect is enough.

The goods subject to an agreement may not move between MS but if there is or may be trade between MS in the products of which they form part, the condition is fulfilled

• BNIC v Clair

  • An agreement relating to a cognac was held to infringe art 1, although little was exported, since the cognac made from them was sold throughout the community.

It is not necessary to show that the effect is adverse.

• Cimbel
  

  • The agreement was intended to increase exports from Belgium , but it discriminated along state boundaries and infringed art 81(1)
    

• Consten and Grundig
  

  • Stress was laid on the isolation of the French market
    

Condition often fulfilled even if agreement is confined to a single member state

An agreement confined to activities in a single member state may infringe art 81(1).

• Vereeniging van cementhandelaren v Commission
  

  • Dutch cement dealers were members recommended the prices and its in the Nederland ’s, and since it did not export, it did not ‘affect member states.’
    

  • ECJ: an agreement extending over the whole of the territory of a member state by very nature has the effect of reinforcing the compartementalization of markets on a national basis, thereby holding up the economic inter penetration which the treaty is designed to bring about and protecting domestic production.
    

  • ECJ is concerned that the common market should be treated as a unit and price fixing throughout the Netherlands affects the pattern of trade by creating a distortion along the dutch border.
    

  • Belasco v Commission  confirms this too
    

The comparable provision in art 82 is similarly construed

Commercial solvents v commission

• when an undertaking in a dominant position within the common market abuses its position in such a was that a competitor in the common market is likely to be eliminated, it does not matter whether the conduct relates to the latter’s exports or its trade within the common market.

• Once it has been established that this elimination will have repercussions on the competitive structure within the common market

Have as their object or effect the prevention, restriction or distortion of competition within the common market

To be caught, the arrangements must have ‘as their object ‘or effect’ the prohibited effects on competition.

• consten and grundig
  

  • ECJ held that there is no need to examine the effects of an agreement if its object is to restrict competition.

• Delimitis v Henninger Brau

  • A tenant agreed to acquire from its landlord all the beer to be consumed in its bar

  • ECJ pointed to the benefits to both parties and concluded that the restriction did not have the ‘object of restricting competition’

  • It required the national court to make a full analysis of the market to appraise its effects

    • Is it easy to enter at retail level, and many other factors.

  • If analysis shows that there is no denial of access to the market, an agreement cannot be found to restrict competition

    • Conversely, if access is inhibited it must then be assessed whether the agreement in question contributes appreciably to that situation.

Restrictions by object

• Consten and grundig
  

  • Absolute territorial protection has the object of restricting competition and there is no need to make a market analysis
    

  • Same has been held of price fixing agreements
    

    • All that needs to be established is collusion and that the agreement may affect trade between MS appreciably
      

• Restrictions by object’ are often referred to as hard core constraints
  

• Societe la technique miniere v maschienbau ulm
  

  • An exclusive distriubtion was infringed and the defence was that the exclusive provisions infringed art 81.
    

  • Unlike Consten and grundig there was no export bans
    

  • ECJ said that if an agreement, considered in its economic and legal context, does not have the object of restricting competiton:
    

    • The agreement should be considered and for it to be caught b the art, it is necessary to find that competition has in fact been prevented or restricted or distorted to an appreciable extent.
      

Ancillary restraints

Nungesser v Commission

• ECJ held that an open exclusive licence of plant breeders’ rights, one not granting absolute territorial protection, did not in itself infringe article 81 (1) because it was needed to induce he investment of both parties

Coditel (II)

• in light of the practice of the industry, exclusive licenses of performing rights did not infringe, even in the circumstances they conferred absolute territorial protection

Pronuptia

• many restrictions on conduct do not infringe art 81 (1) where they are necessary to make a distribution network viable

‘appreciable effects’

• ECJ implied that in order to infringe art 81, the restriction of competition and the possible effect on trade between MS should be appreciable

  • Volk v Veraecke

    • Volk made less that 1% of the market and even granting absolute terriotiral protection to its exclusive distributor in different MS, it would not infringe art 81

• The de minimis rule (notice)

  • Under 10% of relevant market (competitors) or under 15% of relevant market (non competitors)

Nullity

• art 81 (2) says that any agreements or decisions prohibited by 81 (1) shall be automatically void

  • It is not the whole of an agreement that is rendered void.

  • Consten and grundig

    • ECJ quashed the decision for not specifying how much of the agreement was contrary to art 81

    • It is up to the national law