ARTICLE 101
This essay examines [X]’s suggested [distribution strategies] to determine their compliance with
Article 101 of the Treaty on the Functioning of the European Union (TFEU), identify additional
information needed, and explore measures to mitigate the risk of infringement.
1) Breach of Article 101(1)
According to Article 101(2), “any agreement or decisions prohibited [under Article 101(1)] shall
be automatically void”. Thus, to determine the validity of [suggestion], it is necessary to
determine whether it violates Article 101(1). + fine?
(i) Agreement between undertaking
- First, Article 101 applies to “agreements between undertakings”. Hofner & Elser defined
an undertaking as “every entity engaged in an economic activity”. Pavlov further detailed
that economic activity means “offering goods or services on a given market”.
● Does X fulfill these requirements?
- Single economic entity doctrine = agreements between those firms will not fall
within Article 101
● The Viho judgment = must apply the decisive influence test
○ owning 100% of shares = rebuttable presumption of decisive
influence
■ Akzo v Commission
■ Elf Aquitaine v Commission (almost all shares (98%) is
enough)
○ Under 80% = no Akzo presumption
■ decisive influence in other ways (arms length, separate
project, instructed by parent…)
■ Alliance One v Commission
- Moreover, Article 101(1) governs agreements between undertakings. Bayer defined
agreements as a “concurrence of wills between at least two parties”, regardless of form,
provided it reflects intentions. Additionally, Consten & Grunding confirmed that “Article
101(1) applies to vertical [and] horizontal agreements”.
● parties at different levels of the supply chain vs same level
, - The Commission will say that, even if contacts between competitors do not amount to an
agreement, they can still be characterised as a concerted practice ⇒ Inferred from a
number of coincidences
● Asnef-Equifax
(ii) Object or effect of the agreement
- To violate Article 101(1) an agreement must have as its “object or effect the prevention,
restriction, or distortion of competition”. According to Society Technique Minière, it is not
necessary to establish both, either an anti-competitive object or effect will suffice.
- Export bans
● Direct = restrict competition by object
○ GlaxoSmithKline v Commission
● Indirect = restrict competition by object
○ Paragraph 204 of the Vertical Guidelines
■ requiring the buyer to request the supplier’s approval for sales to a
customer
■ refusal or reduction of bonuses or discounts
■ Dual pricing cf. essay
■ termination of supply
- Dual pricing
- Exclusive distribution
● Mere appointment does not restrict by object
○ Société Technique Minière
● Effect
○ if market share of supplier is over 30% = likely that exclusive distribution
will limit inter brand competition
■ Audible/Apple
○ combination of exclusive distribution and other vertical restraints may
increase its negative effects
■ Consten and Grundig v Commission
○ Ensure there is no reduction of intra-brand competition + market
partitioning
- Selective distribution (“to sell […] goods [… ] only to distributors selected on the basis of
specified criteria” VBER para-143)
● AEG-Telefunken v Commission established that a selective distribution system is
restrictive of competition by object unless it satisfies the three Metro
requirements. This test was reaffirmed in Coty
1. the product must be of a nature that justifies restricting a type distributors
This essay examines [X]’s suggested [distribution strategies] to determine their compliance with
Article 101 of the Treaty on the Functioning of the European Union (TFEU), identify additional
information needed, and explore measures to mitigate the risk of infringement.
1) Breach of Article 101(1)
According to Article 101(2), “any agreement or decisions prohibited [under Article 101(1)] shall
be automatically void”. Thus, to determine the validity of [suggestion], it is necessary to
determine whether it violates Article 101(1). + fine?
(i) Agreement between undertaking
- First, Article 101 applies to “agreements between undertakings”. Hofner & Elser defined
an undertaking as “every entity engaged in an economic activity”. Pavlov further detailed
that economic activity means “offering goods or services on a given market”.
● Does X fulfill these requirements?
- Single economic entity doctrine = agreements between those firms will not fall
within Article 101
● The Viho judgment = must apply the decisive influence test
○ owning 100% of shares = rebuttable presumption of decisive
influence
■ Akzo v Commission
■ Elf Aquitaine v Commission (almost all shares (98%) is
enough)
○ Under 80% = no Akzo presumption
■ decisive influence in other ways (arms length, separate
project, instructed by parent…)
■ Alliance One v Commission
- Moreover, Article 101(1) governs agreements between undertakings. Bayer defined
agreements as a “concurrence of wills between at least two parties”, regardless of form,
provided it reflects intentions. Additionally, Consten & Grunding confirmed that “Article
101(1) applies to vertical [and] horizontal agreements”.
● parties at different levels of the supply chain vs same level
, - The Commission will say that, even if contacts between competitors do not amount to an
agreement, they can still be characterised as a concerted practice ⇒ Inferred from a
number of coincidences
● Asnef-Equifax
(ii) Object or effect of the agreement
- To violate Article 101(1) an agreement must have as its “object or effect the prevention,
restriction, or distortion of competition”. According to Society Technique Minière, it is not
necessary to establish both, either an anti-competitive object or effect will suffice.
- Export bans
● Direct = restrict competition by object
○ GlaxoSmithKline v Commission
● Indirect = restrict competition by object
○ Paragraph 204 of the Vertical Guidelines
■ requiring the buyer to request the supplier’s approval for sales to a
customer
■ refusal or reduction of bonuses or discounts
■ Dual pricing cf. essay
■ termination of supply
- Dual pricing
- Exclusive distribution
● Mere appointment does not restrict by object
○ Société Technique Minière
● Effect
○ if market share of supplier is over 30% = likely that exclusive distribution
will limit inter brand competition
■ Audible/Apple
○ combination of exclusive distribution and other vertical restraints may
increase its negative effects
■ Consten and Grundig v Commission
○ Ensure there is no reduction of intra-brand competition + market
partitioning
- Selective distribution (“to sell […] goods [… ] only to distributors selected on the basis of
specified criteria” VBER para-143)
● AEG-Telefunken v Commission established that a selective distribution system is
restrictive of competition by object unless it satisfies the three Metro
requirements. This test was reaffirmed in Coty
1. the product must be of a nature that justifies restricting a type distributors
