Article 101 of the Treaty on the Functioning of the European Union

Businesses ('undertakings') infringing the provisions of Article 101 are liable to a fine of up to 10% of its worldwide annual turnover by the European Commission. However, Member States usually have their own domestic competition law which they may enforce, provided it is not contrary to EU law. The role of the Commission is the area is quasi-judicial and subject to appeal to the ECJ. Conventional wisdom declares that the aim of domestic competition law (such as that of the UK) is to provide a remedy to litigants whose interests are damaged by the anti-competitive behaviour of others, whereas the EU takes a broader view and has the goal of maintaining transparent markets and a 'level playing field'. Thus, the main objectives of the EU competition law are to maintain openness and to unify the internal market; to ensure economic efficiency in the marketplace; to ensure the conditions of effective competition and competitiveness; and to protect consumers. However, some argue that the goals of Article 101 TFEU (ex Article 81 EC) are unclear. There are two main schools of thought: the predominant view is that only consumer welfare considerations are relevant there. An alternative view is that other Member State and European Union public policy goals (such as public health and the environment) should also be considered there. Article 101 TFEU does not specifically ban cartels, instead declaring as illegal all 'agreements, decisions and concerted practices' which are anti-competitive and which distort the single market. The term 'undertaking' is a Eurospeak word for any person(s) or firms in an enterprise, and is used to describe those 'engaged in an economic activity'. The term excludes (i) employees, who are by their 'very nature the opposite of the independent exercise of an economic or commercial activity', and (ii) public services based on 'solidarity' for a 'social purpose'. Undertakings must then have formed an agreement, developed a 'concerted practice', or, within an association, taken a decision. Like US antitrust, this just means all the same thing. According to Advocate General Reischl in Van Landewyck there is no need to distinguish an agreement from a concerted practice, because they are merely convenient labels. Any kind of dealing or contact, or a 'meeting of the minds' between parties could potentially be counted as illegal collusion. This includes both horizontal (e.g. between retailers) and vertical (e.g. between retailers and suppliers) agreements, effectively outlawing the operation of cartels within the EU. Article 101 has been construed very widely to include both informal agreements (gentlemen's agreements) and concerted practices where firms tend to raise or lower prices at the same time without having physically agreed to do so. However, a coincidental increase in prices will not in itself prove a concerted practice, there must also be evidence that the parties involved were aware that their behaviour may prejudice the normal operation of the competition within the common market. This latter subjective requirement of knowledge is not, in principle, necessary in respect of agreements. As far as agreements are concerned the mere anticompetitive effect is sufficient to make it illegal even if the parties were unaware of it or did not intend such effect to take place. Article 101 covers agreements and anti-competitive practices that might affect 'trade between Member States'. This provision has been interpreted broadly: for example, several agreements amongst firms with no production in the EU have been considered to affect trade between Member States. In the Webb-Pomerene case, EU law was applied to a US cartel with no production in the EU. The ECJ has also held that 'trade between Member States' includes 'trade between regions of a Member State', to prevent cartels 'carving up' territories for their own benefit. Exemptions to Article 101 behaviour fall into three categories. First, Article 101(3) creates an exemption where the practice is beneficial to consumers, e.g., by facilitating technological advances (efficiencies), but does not restrict all competition in the area. In practice very few official exemptions were given by the Commission and a new system for dealing with them is currently under review. Secondly, the Commission has agreed to exempt 'Agreements of minor importance' (except those fixing sale prices) from Article 101. This exemption applies to small companies, together holding no more than 10% of the relevant market in the case of horizontal agreements and 15% each in the case of vertical agreements (the de minimis condition). In this situation as with Article 102 (see below), market definition is a crucial, but often highly difficult, matter to resolve. Thirdly, the Commission has also introduced a collection of block exemptions for different types of contract and in particular in the case of vertical agreements. These include a list of permitted contract terms, and a list of those banned in these exemptions (the so-called hardcore restrictions).