Many states in the world have been down-graded by the actions of multinationals which tend to influence commerce in most jurisdictions and the world over. Can EC Competition assist?
Major sectors of the world?s economy have been dominated by large
private corporations some of which have bigger annual turnover than the
GDP of many small states1.Certainly, the financial status of these
corporations, coupled with their global reach and control of new
technologies contribute to their tremendous influence in the society 2.
Abusive practices by such businesses may have more impact on
international trade than the activities of the smaller state governments3.
More economic activity has to be stimulated to keep this enormous clout
in check and the most veritable means of achieving this significant desire
is through what the United States (hereinafter referred to as US) and
European Union (hereinafter referred to as EU) economies term
ANTITRUST4 and/or COMPETITION LAW5 respectively.
Competition serves as the best stimulant of economic activity6 with a view
to ensuring both an optimum allocation of resources and maximum
consumer welfa 7re. ?Yet, society continuously strives to overcome capital?s
tendency to concentrate and the desire of most entrepreneurs to
eliminate their competitors. Defending competition process seems to be
the only effective way of doing this 8? .
?Arguably, the European Union has promoted ?all forms of competition? in
all sectors, which has been further legitimated from an economic
perspective by two factors: ...its support for the integration of the internal
market, by monitoring behaviour within the common market....,benefits
for customers who are in a position to take advantage of lower prices for
be 9tter quality products...?
J. Fairhurst Law of the European Union (5th edn: Pearson, Longman, 2006) p.524.
E. Bannerman, The Future of EU competition Policy of 28 January, 2002, available on
http://cer.org.uk/pdf/p297_competition_policy.pdf assessed on 25 march, 2009.
The word ?antitrust? dates from the late-1800s when powerful companies dominated industries
working together as ?trusts? to stifle competition. Thus, laws aimed at protecting competition have
long been tagged ?Antitrust?. See also ?competition counts? available on
http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm assessed on 26 March, 2009.
Modernised in 2004 by Council Regulation (EC) No 1/2003 of 16 December, 2002 on the
implementation of the rules on competition laid down in Articles 81 and 82 EC, the European
Competition Law was conceived in 1957 as a means to optimise the allocation of resources
amongst member states on the Community Market. See also Frédérich Jenny, ?Droit européen de
la concurrence et efficience économique?, (1993) 63 Reveu d?économie industrielle 193-20, as
cited in G. Vallindas, ?New Directions in EC Competition Policy: The Case of Merger Control?
(2006)12 E.L.J. 636
J. Fairhurst (op cit) p. 1
A.Albors-Llorens ?Competition Policy and the Shaping of the Single Market? in C. Barnard and J.
Scotts (eds) The Law of the Single European Market (Hart, Oxford, 2002).
G. Vallindas, ?New Directions in EC Competition Policy: The Case of Merger Control? (2006)12
A third factor has been identified as ?globalised economic exchanges?
whereby the competition has a direct consequence on both the
enterprises and the economy as a whole as it is in constant competition
with other leading economies of the world10.
In this discourse, recourse will be made to the two fundamental
competition articles of the European Commission Treaty (hereinafter
referred to as EC Treaty) - Articles 81 and 82- as well as other relevant
Articles in the treaty in other to analyse the view of competition policy set
out in the above quotation.
As such, a brief overview of the development of Competition law and
policy within the EU will be explored accompanied by a subjective analysis
of the effects of Articles 81 and 82 of the EC Treaty, together with other
relevant articles of the Treaty. Other secondary legislations and soft laws
will also be used to achieve the aim of this essay.
There shall also be a comparison of the US and EU competition policies.
The influence of the European courts- the European Court of Justice
(hereinafter referred to as ECJ) and the Court of First Instance
(hereinafter referred to as CFI) - and the European Commission
(hereinafter referred to as Commission) in furthering the objectives of
Competition law and policy set out, cannot be left out.
Economic and social policy cohesion within the EU birthed the concept of
the European Social Model. This concept shall also be looked into. Finally,
I shall conclude by subjectively analysing roles of the ECJ and the
Commission, in developing EU Competition Law.
A BRIEF OVERVIEW OF THE DEVELOPMENT OF EU COMPETITION
LAW AND POLICY
Congress passed the first Antitrust Law-The Sherman Act- in 189011. ?The
prolonged economic malaise of Europe appears to have led the
Commission to conceive of competition policy as part of a broader
strategy to deliver greater economic growth and sustainable
employment 12? . The US Marshall Plan influenced the struggle for a
peaceful and economic Europe, thus, the Rome treaty.
http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm 26 march, 2009.
M. Marquis, ?O2 (Germany) v Commission and the exotic mysteries of Article 81 (1) EC
(2007)32 E.L. REV. 29.
The Rome treaty, however, laid the foundation for economic integration
within Europe13. It was the principal focus of the Rome treaty of 1957 and
it was a conscious decision after the failures of the more ambitious
attempts at European integration of the mid-1950s14.
Many economic advantages were expected to flow from the establishment
of the European common market embracing an area that had been
divided by national custom duties and quotas for over a century15.
?Herr Von der Groben16, believed that these rules also had a longer term
function- to encourage the expansion of efficient firms and sectors of the
economy at the expense of those good at supplying what the people want
to pay fo 1r? .
But should small firms be assisted in competing with supermarkets, even
if they are less efficient in providing what consumers want to buy and
even charge more18? An analysis of the prohibition provisions of the
Treaty appears indispensable.
SURVIVAL OF THE FITTEST
?Antitrust has one objective: to protect the process of competition for the
benefit of consumers, making sure there are strong incentives for
businesses to operate efficiently, keep prices down and quality up 19? .
Thus, the consumer ends the market chain.
?In order to establish a system which ensures that competition in the
common market is not distorted, Articles 81 and 82 must be applied
effectively and uniformly in the community 20? . Both Articles have as their
objective the protection of competition on the common marke 21t ; and
V. Korah, An Introductory Guide To EC Competition Law and Practice (9th edition, Hart, Oxford,
Paul craig, ?Evolution of the Single Market?. In Barnard and Scott (eds.) The Law of the Single
European Market. (2002, Hart, Oxford). This includes the European Coal and Steel Community
Treaty of 1951.
V. Korah An introductory guide to EC Competition law and Practice (9th edition, Hart, Oxford,
The first member competition commissioner and one of the drafters of the spaak report.
V. Korah op cit
M. Herdegen, ?Legal Challenges for transatlantic economic integration? (2008) 45 CMLR 1581.
Article 1, Council Regulation (EC) No 1/2003 O.J. 2003 L1/1 on the implementation of the rules
on competition laid down in Articles 81 and 82 of the Treaty.
Article 9, Council Regulation (EC) No 1/2003 O.J. 2003 L1/1 on the implementation of the rules
on competition laid down in Articles 81 and 82 of the Treaty.
seeks to achieve the same aim on different levels, through the
maintenance of effective competition within the common marke 22t .
W.P.J. Wils has identified the principal development of competition law as
the Commission?s increased interest in enforcing Article 81 against
cartels. This is reflected both in the significant increase in the number of
cases and in the revision of its notices on fines and leniency to improve
Marquis contends that the competition rules must be read in the light of
Article 3 (1) (g) and ultimately, Article 2, EC Treaty24. The later
establishes a common market, while the former refers to a system
ensuring that competition in the internal market is not distorted.
Article 4 (1) EC Treaty refers to the activities of the community and the
member states which include adoption of an economic policy conducted in
accordance with the principle of open market economy with free
Three elements are indispensable in the application of Article 81 (1) EC
Treaty; a form of co-operation among undertakings, an anti-competitive
object or effect and an effect on trade between Member States25. Article
81 (2) EC Treaty renders any of such null and void26 while they may,
withal, benefit from the exemption offered by Article 81 (3) EC Treaty.
Articles 81 and 82, EC Treaty are applicable to horizontal (Cartels) and
vertical agreements27. ?In recent years, the balance of emphasis of EC
competition policy towards agreements between firms has shifted, at least
to some degree, from vertical to horizontal agreements and from legal
form to economic effect 28? .
Case 6/72 Continental Can v Commission (1973) ECR 215. Also, S. Weatherill stated that the
requirement contained in Article 3 and 81 of the EC Treaty that competition shall not be distorted
implies the existence on the market of workable competition, that is to say the degree of
competition necessary to ensure the observance of the basic requirements and attainment of the
objectives of the Treaty, in particular the creation of a single market achieving conditions similar of
a domestic market.
W.P.J. Wils Efficiency and Justice in European Antitrust Enforcement (Hart Publishing, Oxford,
2008) as cited in C. Murray et al., Smitchoff?s Export Trade: The Law and Practice of International
Trade (11th edition, Sweet & Maxwell, London, 2007)
M. Marquis, op cit, p.3; See also Case 26/76 Metro-SB-GmbH & Co. KG v Commission (1997)
A. Albors-Llorens op cit p.2.
Case C-56/65 Societe La Technique Miniere v Mashinenbau Ulm GmbH (1966) ECR 235.
Draft Commission Notice Guidelines on the effect on trade concept contained in Article 81 and
82 of the Treaty (OJ 2004 C 101/81);also available via
http://ec.europa.eu/comm/competition/index_en.html assessed on 26 march, 2009.
J. Vickers ?Abuse of Market Power? (2005)115 The Economic Journal 244.
?Under European law, economic factors are not merely an extra-legal
justification for legal rules, but they are genuinely integrated with them 29? .
?Economic theory goes to the very foundation of competition law itself:
the latter could not exist without the former? .
Effects of Articles 81 and 82 of the EC Treaty
Article 81 EC Treaty
Cartels are the most obvious example of illegal conduct infringing Article
81, EC Treaty which involves price-fixing and market-sharing31. ?Instead
of competing with each other, cartel members rely on each other?s agreed
course of action which reduces their incentives to provide new or better
products and services at competitive prices 32? .
?In the context of cartels, there is no need to establish anti-competitive
effects as the object is to restrict competition?33. Between 1990 and 2009,
the Commission has taken decisions on a total of 659 undertakings with
fines amounting to a total of ? 13,104,678,75034, the highest single fine
being that on Saint Goben35 in 2008 amounting to ?896,000,00036, and a
total of ?992,000,000 on a group car 7te 3l .
The Commission has issued new guidelines on the method of setting
fines38 which are geared towards imposing tougher fines on cartels
complimented with a leniency and settlement plans. According to Neelie
Richard Whish, Competition Law, 5th edition (Oxford University Press, 2003) p. 1; Wiley and
Shepard, ?A Capture Theory of Antitrust Federalism?, (1986) 99(4) Harvard Law Review 713-715;
as cited in G. Vallindas op cit , at p.2.
G. Vallindas op cit, at p.2.
http://ec.europa.eu/competition/antitrust/overview 31 March, 2009.
http://ec.europa.eu/competition/cartels/overview assessed on 31 March, 2009.
Case C- 251/99 Enichem v commission.
http://ec.europa.eu/competition/statistics/statistics assessed on 31 March, 2009.
A cartel on car glass.
http://ec.europa.eu/competition/statistics/statistics assessed on 31 March, 2009.
Otis, KHONE, Schindler and Thyssenkrupp in 2007.
Guidelines on the method of setting fines imposed pursuant to Article 23 (2) (a) of Regulation
1/2003  O.J. C210/2. The reaction of the Commission to the recent ECJ judgement involving
sodium gluconate cartels where the court upheld the Commission decision imposing fines of a total
of ?57.53 million for cartel behaviour is another example. See Press release IP/01/1335
,MEMO/09/119 Commission welcomes European Court of Justice judgment in sodium gluconate
cartel case; Case C-510/06 P Archer Daniels Midland Co. v Commission, judgement of 19 march,
2009, available on http://europa.eu/competition/index_en.html assessed on 26 March, 2009.
?[T]he fight against cartels will remain a priority for the commiss 0ion 4? .
?The suggestions in this white paper are about
justice for consumers businesses that lose their
billions of euro each and every year as a result of
companies breaking antitrust rules; these people
have a right to compensation through an effective
system that compliments enforcement 41....?
One important lingering bit of formalism in the ?modernised? system of
EC competition law concerns the way Article 81(1) is sometimes
For many years, the ECJ ignored the whole question of economic theory in
competition cases43 until its judgement in Société Technique Minière44. In
applying Article 81 to an agreement, the first step is to consider the
objective of the agreement in the light of its economic context to ensure
whether its intended effect is appreciably to restrict competition45.
Article 81(1) cannot be applied without taking account of the relevant
economic circumstances surrounding a given agreement or a concerted
practice46. This requires an examination of relevant market conditions
DG Competition Annual Management Plan, 2009 delivered on the 28th of November, 2008 and
available on http://ec.europa.eu/competion/index_en.html 26 March, 2009.
Press release IP/08/515 (3 April, 2008) on Commission?s White Paper on Damages Action for
breach of the EC Antitrust Rules also available on http://europa.eu/competition/index_en.html 26
M. Marquis, op cit, p.3.
M. Glais, ?L?utilisation des travaux de la nouvelle économie industrielle par les autorités de la
concurrence?, (2000) 37 Cashiers d?économie politique, pp. 197-223, as cited in G. Vallindas, op
cit, at p.2.
Here, the exclusive distribution agreement at issue was to be assessed from two angles of
economic evaluation-the intra-community trade criterion and the restriction of competition
requirement under Article 81 (1) EC Treaty. See also Case 61/80 Cooperatieve Stremsel- en
Kleurselfabriek v Commission (1981) ECR 851; Case 56/65, Société Technique Miniére v
Maschinenbau Ulm (1966) E.C.R. 235; See also Cases 56 and 58/64 Etablissements Consten SA
and Grundig GmbH v Commission (1996) ECR 299 where the court maintained that there is no
need to take account of the concrete effects of an agreement once it appears that it has the object
of prevention, restriction, or distortion of competition.
Case C-399/93 H.G. Oude Luttikhuis v Coberco (1995) ECR I-4515, 10; Joined Cases T-374,
375, 384, 388/94, European Night Services v Commission (1998) ECR II-3141, 136; Case T-
77/94, VGB and Verhaa v Commission (1997) ECR II-759, 140. Competition means the
competition which would exist in the absence of the agreement. Compare with Cases 56 and 58/64
Etablissements Consten SA and Grundig GmbH v Commission (1966) ECR 299,(1966) CMLR 418
where the applicants maintained that the Commission has relied on a mistaken interpretation of
the concept of an agreement which may affect trade between Member states and has not shown
that such trade would have been greater without the agreement in dispute. The ECJ dismissed the
complaint and held that ?the concept of an agreement which may affect trade between Member
states is intended to define, in the law governing cartels, the boundary between the areas
respectively held by Community and national laws. ?It is only to the extent to which the agreement
may affect trade between Member states that the deterioration in competition caused by the
which must be evaluated within the framework of a counterfactual
analysis47. However, a discussion on the economic test and relevant
market shall be done later on.
For a better understanding of the wording of Article 81 EC Treaty, I shall
explain briefly forms of co-operation namely agreement, undertaking and
concerted practice. ?The question whether an agreement has the object of
preventing, restricting or distorting competition is a question of
foreseeable effects of the agreement, not of the subjective intentions of
the parties 48? .
An agreement can be caught under Article 81 before it comes into
effec 49t , whether or not the restrictive effect is complied with50 or
enforced51, or the attempt to restrict competition succeeds52, or the
parties had a common purpose or one or more of them was apathetic and
unwilling53. Proof that the agreement had an actual impact on trade is not
An Undertaking covers any entity engaged in an economic activity
regardless of its legal status and the way in which it is financed55. Liberal
professionals can qualify as undertakings56 or advocates57. Any form of
conduct between undertakings which without having been taken to the
stage where an agreement properly so-called has been concluded,
agreement falls under the prohibition of Community law contained in Article 85 (now Article 81);
otherwise, it escapes the prohibition....what is particularly important is whether the agreement is
capable of constituting a threat, either direct or indirect, actual or potential, to freedom of trade
between Member states in a manner which might harm the attainment of the objectives of a single
market between states?.
See also R. Whish, op cit, at p. 6.
C. Murray et al,: Schmitoff?s Export Trade: The Law and Practice of International Trade (11th
edn, Sweet and Maxwell, London, 2007).
Commission Decision (EEC) 72/480 The WEA- Filipachi Music SA decision  O.J. L308/52.
Case T- 141/89 Tréfileurope Sales v Commission (1995) ECR II- 791.
Case T- 43/92 Dunlop Slazenger v Commission (1994) ECR II- 441.
Joined 29, 30/83 Compagnie Royale Asturienne des Mines SA and Rheinzink GmbH v
Case T- 9/89 Huls AG v.Commission (1999) ECR II-499; Case T- II/89 Shell International
Chemical Company Ltd (1992) ECR II-757.
Case C- 199/92 P Huls v. Commission (1999) ECR I- 4287, para.155; Cases C- 204, 205, 211,
213, 217 and 219/ 00 P Aalborg Portland As v. Commission (2004) ECR I- 123, paras. 81-86.
Murray stated that in assessing the effect of an agreement upon competition, the agreement must
be viewed in its economic and legal context, taking into account, all relevant facts. A Gentleman?s
agreement to extend a cartel?s activities to the common market was held to amount to an
agreement under Article 81 EC Treaty. See Cases 41, 44 and 45/69 ACF Chiemefarma v
Commission (1970) ECR 661.
Case C-41/90 Hofner and Elsner v Macroton GmbH (1991) ECR I- 1979, para 21.
World-class opera singers in RAI/Unitel (1987) 3 CMLR 306.
Wouters ECJ C-309/99.
knowingly substitutes for the risks of competition, practical cooperation
between them, amounts to a concerted practice58.
A circular restricting parallel import was held to be an agreement though
it was not a contractual document59. The inserting of a General sales
condition clause in a contract to prevent parallel exports was held to be
insufficient to find an anticompetitive objec 60t .
However, Article 81(3) EC exempts conducts, from prohibitions under
Article 81(1) EC, if consumers benefit from such and which do not impose
on the undertaking concerned restrictions which are not indispensable to
the attainment of its objects and afford such undertakings the possibility
of eliminating competition in respect of a substantial part of the products
However, due to the circumscribed nature of this essay, I shall proceed to
discuss Article 82 EC Treaty.
Article 82 EC Treaty
This Article prohibits an abuse of a dominant position and it relates to the
position occupied by the undertaking at the time when the alleged abuse
occurs62. It only prohibits abuse and not dominance63. Thus, a dominant
position must have been abused64.
The ECJ defined dominance as ?...relates to a position of economic
strength enjoyed by an undertaking which enables it to prevent effective
competition from being maintained on the relevant market...and behave
Case 48/89 ICI v Commission; See also Cases C-89, 104, 114, 116-7, 125-129/85 Ahlstrom O
Sakyhtio v Commission (1993) ECR I-1307, (1993) 4 CMLR 407. Article 81 EC does not apply to an
agreement unless its effects, both upon competition and upon inter-state are appreciable and not
de minimis. See Commission Notice on Agreements of Minor Importance which do not appreciably
restrict competition under Article 81(1)  O.J. C 368/13, and Commission Notice: Guidelines
on the effect of trade concept contained in Articles 81 and 82 EC  O.J. C101/81;
Commission Decision (EEC) 82/174 The Fire Insurance Decision  O.J. L80/36 2 CMLR
159; Case 48/49 Imperial Chemical Industries Ltd v Commission (1972) ECR 619.
Case 32/78 BMW Belgium v Commission.
Case T-186/01 Glaxosmithklime services unltd v Commission, judgement of 27 September,
Paragraph a and b.
Joined Cases 40-48, 50, 54-56, 111, 113, 114/73 Cooperative Vereniging Suiker Unie UA v
Commission (1975) ECR 1663,  1 CMLR 295.
C. Murray et al, op cit, p.9.
Case 6/72 Europemballage corporation & Continental Can co. Inc. V Commission (1973) ECR
215,  CMLR 199.
to an appreciable extent independently of its competitors, customers and
ultimately, consume 5rs 6? .
Market share is the primary element in determining economic strength66.
Large or small market shares may be important evidence of a dominant
position67. The relevant market where dominance is to be tested need not
be the same in which the alleged abuse is committed68.
It means determining the scope of the competition rules in respect of
restrictive practices and abuse of dominant position69. It combines the
product and geog 70raphic market . Case-law identified a third one-
temporal marke 71t- .
Under the product market, the general approach is that of
interchangeability72 and is addressed both from the demand and supply
Case 322/81 Nederlandsche Banden- Industrie Michelin NV v Commission (1983) ECR 3461,
para. 37; Case 27/76 United Brands and United Brands Continental BV v Commission (1978)ECR
207; Case C-418/01 IMS Health GmbH & co OHG v NDC Health GmbH & co. KG (2004) 4 CMLR
United Brands ibid p. 207
Hoffman La-Roche opcit p. ; Case 247/82 Société alsacienne et Lorraine de telecommunications
et d`electronique (Alsatel) v Novasam SA (1988) E.C.R 5987,  4 CMLR 434. See also United
Brands case op cit., Case 62/86 AKZO Chemie v Commission (1991) ECR I-3353,  5 CMLR
215. Also, on the notice on market definition cited op cit, the commission begins by stating that a
total market size and shares for each supplier can be calculated on the basis of their sales of the
relevant products on the relevant area. In practice, the total market size and shares are often
available from the market sources. Otherwise, the commission will task each supplier in the
relevant market to supply them. The resources of an undertaking and its method of supply,
production, research, packaging, transportation, selling and displaying its products are also
relevant factors in evaluating economic strength. See also United Brands case op cit, at p. See
also Joined Cases T-213/95 and T-18/96 Stitchting certificatie Kraanhuur bedrijf (SCK) and FNK &
Another v Commission where the court stated that ?even if the market share of FNK members was
?only? 37 or 40% of the Netherlands market, the applicants were large enough and had sufficient
economic power for their practices to be capable of having an appreciable effect on trade between
Case 62/86 AKZO Chemie v Commission (1991) ECR I-3359.
Regulation (EC) No 1/2003. In the event of the suspected infringement of competition rules, the
first element to be considered is the relevant market. See the Commission Notice on the definition
of relevant market for the purposes of community competition law [O.J. C 327 of 09/12/1997].
Commission Notice on the definition of relevant market for the purposes of community
competition law [O.J. C 327 of 09/12/1997].
United brands case op cit. See also P.Craig and G. de Burca, EU Law-Text, cases and materials
(4th edition Oxford, Oxford, 2008) p.1006. Once these have been defined, the Commission carries
out a more detailed analysis of based on the concept of substitutability. A market is competitive if
customers can choose between a range of products with similar characteristics and if the supplier
does not face obstacles to supplying products or services on a given market. See the Commission
Notice ibid. The relevant product market has also been defined in Case T-70/89 British
Broadcasting Corp. & BBC Enterprises v Commission (1991) ECR II-535,  4 CMLR 669, as
the market for a particular product which is sufficiently differentiated from other product markets
so that its only to a limited extent, interchangeable with them and either not exposed to
competition from other products or only exposed to such competition in a way which is hardly
United brands case op cit, page 209; Michelin?s case op cit; Hoffman-La Roche?s case op cit.
The Geographic Market refers to a territory in which all traders operate in
the same or sufficiently homogenous conditions of competition in relation
to the relevant products and services without it been necessary for those
conditions to be perfectly homogenous73.
Markets may have a temporal element to them. Thus, a firm may possess
market power at a particular time of the year during which competition
from other products is low because other products are available only
The Commission has adopted a narrower market definition than that of
case-law to establish dominance75.
Dominance relates to the economics to impede the maintenance of
effective competition76 and to determine conduct regardless of
competitive products77. It also includes situations where other firms are in
a position of economic dependence on the dominant firm78.
Where a dominant undertaking actually implements a practice whose
object is to oust a competitor, the fact that the result was not achieved is
not sufficient to exempt it from Article 82 EC prohibition79.
What is an abuse? Several inexhaustible factors have been outlined in
Article 82 EC to amount to an abuse. Affecting trade within the Common
Marke 0t is the key element 8.
Abuse of a dominant position may be reprimanded due to its effect on a
different market even where there is no later dominance, especially where
the dominant undertaking can control access to the other marke 81t.
Four principal Article 82 cases are 82 Microsoft , France telecom83 British
Airways84 and United brands85. In British Airways, the company was held
Case T-219/99 British Airways plc v Commission (2003) ECR II-5917, para. 108; Case T-83/91
Tetra Park 11 (1994) ECR II-755, para.91. This was confirmed on appeal. See also United brands
case where it was stated that its banana market in France, Italy and UK were not the same with
other EC States.
United Brands case op cit, at page 210.
S. Weatherill op cit, p.2.
Case 40/70 Sirena SrL v Eda SrL (1971) ECR 69,  CMLR 260
Case 22/78 Hugin Kassaregister AB v Commission (1979) ECR 1869,  3 CMLR 345
Joined cases C-241, 242/91 Independent Television Publications (ITP) and Radio Telefis Eireann
(RTE) v Commission  ECR I-743,  4 CMLR 718
France Telecom op cit. Discriminate pricing, Refusal to Supply, Tying and bundling can amount
to an abuse. See also United brands case op cit p. 207.
Hugins case op cit. In Hoffman-La Roche, op cit, an abuse was defined thus ?The concept of an
abuse is an objective concept relating to the behaviour of an undertaking in a dominant position
which is such as to influence the structure of a market where as a result
Craig and De Burca op cit, p.1021.
Case T-201/04 Microsoft corp. V Commission, judgement of 17 September, 2007.
to have abused its dominant position by offering travelling agents extra
commissions when they promoted British Airways tickets86.
An undertaking in a dominant position may be deprived of the right to
adopt a course of conduct which is not in itself abusive but would be
objectionable if taken by a non-dominant undertaking87. Thus, though it
can protect his interest when attacked by competitors, it is not allowed to
strengthen its position which can be held as an abuse88.
There is also a position that obtaining or strengthening a dominant
position, individually or collectively is not of itself prohibited by Article 82
EC89. Why do this judgements conflict?
The acquisition by a dominant firm of a potential competitor might
infringe Article 82 EC. Behaviour by a dominant undertaking that injures a
competitor will not necessarily be injurious to consume 90rs.
A dominant undertaking?s refusal to supply raw materials to
manufacturers91 or finished goods to distributors92 or innovations93 can
amount to an abuse under Article 82 EC.
Article 82 EC does not only apply to private enterprises but also involves
public bodies94, undertakings granted specific powers by statute or public
Case T-340/03 France telecom SA v Commission, judgement of 30 January, 2007, confirmed on
appeal in Case C-202/07 France telecom SA v Commission, judgement of 2 April, 2009.
Case C-95/04 P British Airways plc v Commission, judgement of 15 March, 2007. See also P.
Craig and G. De Burca, op cit,
Case 27/76 United Brands op cit p. 210
A.G. Kokott?s opined in this case that ?...Article 82 EC ...is not designed...primarily to protect
the immediate interests of individual competitors or consumers, but to protect the structure of the
market and thus competition as such (as an institution) which has already been weakened by the
presence of the dominant undertaking on the market, while indirectly protecting the consumers.
The conduct of a dominant undertaking is not to be regarde as abusive only once it has concrete
effects on the competitors or consumers but as soon as it runs counter to the purpose of
protecting competition in the internal market from distortion because he bears a particular
responsibility towards ensuring this objective?. See also case 85/76 Hoffman-La Roche & co. AG v
Commission (1979) ECR 461.; France Telecom (case c-95/04) op cit. No 83.
Michelin?s case op cit para 57; Tetra pak case opcit on page 15, para 27;Case T-111/96 ITT
Promedia NV v Commission (1998) ECR II-2937, para 138.
United Brands op cit, para 189;
Case T-17/93 Matra Hachette v Commission (1994) ECR II-595, paras. 123-4. An undertaking in
a dominant position is obliged to modify its conduct so as not to impair effective competition on
the market regardless of whether the Commission has adopted a decision to that effect. See Case
C-12/03 P Commission v Tetra-Laval BV judgement of February 15, 2005, para 56.
Case C-7/97 Oscar Brooner GmbH & Co KE v Mediaprint Zeitungs-undzeitschriftenverlang GmbH
Cases 6 and 7/73 Istituto Chemioterapico Italiano SPA and Commercial Solvents v Commission
(1974) ECR 223.
United brands op cit page 15.
Microsoft?s case op cit, . Microsoft had refused to supply interoperability information to its
competitors in work group server operating systems market which excluded them and allowed
Microsoft to strengthen its position in the market. The court finally held that this amounted to
refusal to supply and as such, falls under Article 82 EC.
authorities95, subject to official authorisation96 or state supervision97 and
non-profit making bodies98 engaged in economic activity.
Economics and competition policy
Numerous texts on competition policy have incorporated economics into
law99. The establishment of the single market has an economic foundation
and even from the contents of this essay, it is obvious that EC
competition law is based on economic theory.
The idea of a single market sprung up in a bid to ensure optimum
allocation of resources for profit maximization while qualitative products
with unlimited choices abound. The ECJ and the Commission are not
innocent of this 100. Suffice it to say that the EC Treaty itself is the
background of the economics logic. A single market, on its own, is an
An economic activity is defined as ?any activity consisting in offering
goods and services on a given marke 101t? . The Commission, on addressing
Article 81(3) expresses that for an agreement to be restrictive of
competition by effect, there must be a reasonable degree of probability
that it will produce negative effects on prices, output, innovation, or the
variety or quality of goods and services102.
Moreover, the Commission explicitly follows Metropole103 in its Guidelines
on the application of Article 81(3), which states that the balancing of
?certain economic benefits? against the restrictive effects of an agreement
is ?reserved for Article 81(3) 104? .
Article 81(3) states that the provisions of Article 81(1) may be exempted
from prohibition where an agreement ?contributes to improving the
Case 155/73 sacchi  E.C.R. 409; Commission Decision (EEC) 82/86  O.J. L360/36,
 I CMLR 457.
Case 127/73 Belgische Radio en Televisie (BRT) V sv SABAM  E.C.R 51 and 313; Case
26/75 General Motors Continental NV v Commission  E.C.R. 1367.
Case 7/82 GVL v Commission (1983) E.C.R. 483.
Case T-128/98 Aeroports de Paris v Commission (2000) E.C.R. II-3927.
Belgische Radio op cit.
G. Vallindas op cit
This can be shown from the case-laws and commission decisions and notices mostly involving
definition of various competition law concepts like relevant product market, dominance, abuse, to
name but a few.
Wouters; Ambulance Groucker (para. 19) Wouters (2002) ECR I-1577. An abuse of a dominant
position may consist in directly or indirectly imposing unfair purchase or selling prices which might
be excessively high or low. See General Motors op cit; Commission Decision (EEC) 85/609 (1985)
O.J. L 374/1 (ECS/AKZO).
Commission Guidelines on the application of Article 81(3) of the Treaty,  O.J. C101/97
Case T-112/99, Metropole television (M6) v Commission  E.C.R II-2459.
Commission Guidelines on Article 81(3) op cit, para 30
production or distribution of goods or to promoting technical or economic
THE EC AND THE US SITUATIONS; WHICH IS MORE BUSINESS-
The US and EU competition policies, though they may be similar in some
respects have a number of differences.
Firstly, the European threshold for finding a dominant position (Art. 82
EC)106 is lower than the respective finding of monopoly in the US
(Sherman Act, s. 2)107. Both jurisdictions make use of market shares to
establish dominance. Consequently, a company having a similar market
share is more likely to have a dominant position in the European Union
than being subjected to monopolisation claim.
Also, the US Supreme court requires an actual impact on the market so as
to establish harm to the consumers108. However, in the EU, a likely impact
on the market is sufficient to amount to an abuse of dominance109.
A dominant firm in the EU has a special responsibility to other competitors
on the market, towards ensuring that its conduct does not impair
undistorted competition on the common market. On the contrary, there is
a clear freedom for leading companies in the US to carry on business
without taking their competitors into account110.
O. Odudu, ?A New Economic Approach to Article 81(1)?? (2002) 27 E.L.REV. 100. Odudu finds
restriction of competition as a substantive element in Article 81(1) EC and allocative inefficiency
are synonymous. See also Odudu, The Boundaries of EC Competition Law (OUP 2006), p.7 as cited
in M. Marquis, op cit. In essence, Economic analysis provides the rules that are necessary for the
proper functioning of market and therefore constitutes the basis for economic policy decisions. See
also G. Vallindas op cit. at page2.
50% of the market share.
http://www.ftc.gov/bc/antitrust/antitrust_laws.shtm assessed on 26th March, 2009. The US
uses 70% market share. See Town of Concord v Boston Edison Co 915 F.2d 17 (1st Cir. 1990) 43.
See also Case C-62/86 AKZO Chemie BV v Commission  E.C.R. I-3359, para. 60.
United States v Grimmel Corp 384 US 563 (1996) at . The US authorities do not even
attempt to assess the competitive significance of the conduct under challenge. See also
Copperweld Corp v Independent Corp (Sup Ct) 467 US 752 (1984) at 796.
See Case T-203/01 Manufacture Francaise des Pneumatiques Michelin v Commission 
Microsoft case op cit; France telecom op cit; in the US, As long as there is no willful monopoly,
US companies are free to do as they please on the market as long as they do not monopolise it.
See United States v Colgate & Co 250 US 300 (1919) at 307. Here, the US Supreme Court makes
it clear that ?...[I]n the absence of any purpose to create or maintain a monopoly, the Act does not
restrict the long recognised right of trader or manufacturer engaged in an entirely private
business, freely to exercise his own independent discretion as to parties with whom he will deal?.
While the EU favours fair competition111, the US authorities favour
aggressive competition112. The fairness is also incorporated in the special
responsibility of a dominant towards its competitors113.
When the EU competition authorities talk about consumer welfare, they
refer to the economic surplus for the consumers114. For the US antitrust
authorities, total economic efficiency is the goal for competition policy,
however it may be distributed115.
The EU competition policy tends to be more interventionist in nature in
the sense that its afore-mentioned attributes always attracts the
intervention of the authorities on the market to maintain undistorted
competition. The US authorities adopt a liberal approach and have faith in
the free market forces 16 to regulate the marke 1t .
The interventionism may lead to false acquittals whereby the legal
conduct of an undertaking may amount to an abuse under Article 82 EC
Treaty117. The US antitrust authorities prefer a liberal approach and as
such strive to avoid reducing the competitive zeal of the companies by
convicting behaviour which is harmless to consumers118.
The US antitrust protects the large enterprises and have no legal
obligation to protect small and medium-sized companies as against EC
antitrust which has a special responsibility to ensure that their
competitors are not ousted from the market through their conducts which
Article 3(1) (g) EC Treaty states that it requires a system ensuring that competition on the
common market is not distorted.
United States v Microsoft Corp (Microsoft 111) 253 F.3d 34, Case No 00-5213. The US supreme
court stated that ?...Competition is a ruthless process... injuries to rivals are by-products of
vigorous competition, and the antitrust laws are not balm for rivals? wounds. See Ball Memorial
Hospital Inc v Mutual hospital Insurance 784 F.2d 1325 (1986) at 1338.
D. De Smet, ?The diametrically opposed principles of US and EU antitrust policy? (2008) 29
Ibid. P 22. They try to make sure that there will be sufficient benefits passed on to the society
and thereby, promoting consumer redistribution. Article 2 EC Treaty seeks to achieve a sustainable
development of economic activities and raise the economic and social cohesion within the EU.
R.H. Borx, The Antitrust Paradox: a policy at war with itself (Basic Books, New York, 1978) 90.
Spectrum Sports Inc v McQuillan 506 US 447(1993) 458.The court stated that ?it is not to
protect business from the working of the market; it is to protect the public from the failure of the
market. The law directs itself not against competitive conduct but against that which tends to
Case T-65/89 BPB Industries Plc v Commission  E.C.R.II-389, where the court stated
that ?the conduct of an undertaking in a dominant position may be regarded as abusive...even in
the absence of any fault?. In continental can?s case, the ECJ stated that ?... [Article 82 is] aimed at
practices which may cause damage directly, but also at those which are detrimental to them
through their impact on an effective competition structure?
The US Supreme Court, in Verizon 540 US 682  at  that ?... the means of legitimate
competition are myriad... mistaken inferences and the resulting false condemnations are especially
costly because they chill the very conduct antitrust laws are designed to protect?
include the small and medium-sized enterprises119.
EU competition authorities, while analysing possible harm to consumers,
need to maintain undistorted competition120. This they achieve by
assessing harm in the short, medium or long term121. Due to their policy
of actual concrete impact on the market, the US antitrust authorities only
look at the present situation on the marke 122t .
The European antitrust measures in the Microsoft case123 provoked sharp
criticism in the U.S. mainly for requiring Microsoft to offer a version of the
windows operating system without the middleware ?Windows Media
Player? (?code removal 24? remedy 1) .
The European Social Model
?European integration has created a constitutional asymmetry between
policies promoting market efficiencies and policies promoting social
protection and equality as economic policies have been Europeanized
The US Supreme Court stated that the antitrust laws were created for competition not
competitors. See Brown Shoe Co. v United States 370 US 294 (1962) at 320.
D.De Smet ibid. P.22.
DG Competition discussion paper on the application of Article 82 of the Treaty to exclusionary
abuses Brussels, December, 2005, available on
http://ec.europa.ec/comm/competition/antitrust/others/discpaper.pdf assessed on 28 March,
See United States v E I du Pon de Nemours and Co 351 US 377 (1956) 426, where the US
Supreme Court observed that ?...only actual competition can assure long-run enjoyment of the
goals of a free economy?.
Microsoft v Commission op cit, at p.
T.O. Barnett (US Department of Justice), Issues Statement on European Microsoft Decision,
2007, available on
assessed on 27 March, 2009. It is worthy of note that the CFI contended that Microsoft had a
market share above 50% of the relevant market which amounted to a dominant position on its
part (Decision in COMP/C-3/37,792-Microsoft at ). That meant that it had special
responsibility towards ensuring undistorted competition on the market. It found Microsoft liable
under Article 82 EC which confirmed the Commission decision on the matter and as such, a huge
fine of Microsoft up to ?497 million, compulsory licensing and a full unbundling of Media player in
its operating software windows was the consequence. The liberalist nature of the US antitrust
favoured Microsoft somehow. Even though a monopoly was established (up to 95% of the market
share), the US District courts stated that ?We do not have enough empirical evidence regarding
the effect of Microsoft?s practice on the amount of consumer surplus created or consumer choice
foreclosed by the integration of added functionality into platform software to exercise sensible
judgement regarding that entire class of behaviour? (United states v Microsoft Corp 253 F.3d 34
DC Cir 2001, 94). The claim that bundling the windows internet explorer was detrimental could
therefore not be proven and the unbundling was therefore not considered an option. We should
remember that the US favours aggressive competition and would not likely have the position on
this kind of matter with the EU competition that favours fair competition.
whi 25le social protection policies remained at the national leve 1l? . The
supremacy of all EU rules poses a constraint for the national welfare
?In December 2001, consequent upon their meeting a year earlier, the
European council agreed to a set of social indicators covering four
dimensions of social exclusion, namely financial poverty, employment,
health and education, to be used by all EU states in biennial reports on
social inclusion to the Spring European Council from 2003 onwards. This
was to be achieved through an open method of coordination which
involves, inter alia establishing policy guidelines127.
?Jacques Delors128 designated the term ?European Social Model? as an
al 9ternative to the American form of pure-market capitalism 12? .
What is more to it?
An overview of the Concept of ESM vis-a-vis EU competition policy
The ESM is been used to describe the European experience of
simultaneously promoting sustainable economic growth and social
cohesion130. It encompasses wide range of interventions for social
?In the EU context, the social dimension... is designed to... mitigate the
social consequences of economic development within the EU. Market
integration impacts on social policy...particularly in terms of social and
health services that have a market dimension where issues of competition
ar 132ise? .
The ESM could also be regarded as a political concept in the framework of
a demand for legitimacy generated by the EU project per se133 and
manifestation of a political struggle to push certain items unto the political
F. Scharpf, ?The European Social Model: Coping with the Challenges of Diversity? (2002) 40
Ibid p. 645
J. O?Connor, ?Policy coordination, social indicators and the social policy agenda in the European
Union (2005) 15 J.E.S.P 345.
President of the European Commission in 1985.
M. Jepsen and A.S. Pascual, ?The European Social Model: an exercise in deconstruction? (2005)
Kleinman and Piachaud, ?European Social Policy: Conceptions and Choices? (1993) 3 J.E.S.P. 1
as cited in J O?Connor op cit., p.26.
J. O?Connor ibid.
Jepsen & Pascaul op cit,
The recent landmark decisions of the ECJ in Laval and Viking have
intensified the debate over the role of European law in protecting the
boundaries of the national welfare state135. Hostile reactions from the
academia show that the court, in trying to police the hostility between the
trans-national market and a national social space, is faced with an
increasingly impossible task of reconciling the commitment of national
polities to universal social services, and the idea of a European market
committed to free entry of foreign providers136.
?A service and knowledge society will depend on the qualifications of the
average citizen and not just of the elite; on his or her productive and
integrative capabilities 137? . According to Marshall, educational policy
influences future market processes by extending and improving
qualifications useful in the labour marke 138t .
In the run-up to the tripartite Social Affairs Summit at Hampton court on
24 October, 2005, the ETUC139 proposed a seven-point programme to
emphasise its belief in the ESM140.
The Commission identifies the ?share values? underlying the social and
economic policies of the Member States141 which indicates that Europe
has chosen to adopt a social market economy. These values are enshrined
in the Treaties142 the activities and the legislation of the EU. The
Commission aims to achieve coordination between national and European
Ibid. This could be evidenced in the Nice Conference of 2000 which had a political undertone
although it is been characterised today as the bedrock of the ESM concept.
135Case C-438/05 Laval un partneri Ltd v Svenska Byggnadsarbetaref?rbundet (2007) E.C.R I-
11767;  2 C.M.L.R 9.
M. Dawson, ?The ambiguity of social Europe in the open method of co-ordination? (2009) 34 E.L.
J. Allmendinger and S. Leibfreid, ?Education and the Welfare State: the four worlds of
competence production? (2003) 13 J.E.S.P 1.
T.H. Marshall, ?Citizenship and Social Class?, Class Citizenship and Social Development. Essays,
(Garden City, New York, 1964) 65-122; as cited in Allmendinger and Liebfreid ibid.
European Trade Union Confederation.
They include further development of social policy and legislation, a strong framework to deal
with delocalisation and restructuring, addressing demographic challenges in a forward looking way,
provision and implementation of active labour market policies and life-long learning, equality for
all, a sustainable legal framework for migration and mobility, a stronger external dimension of the
social model. President of the EC, 2005 José Manuel Barroso highlighted core European values
such as welfare state, social dialogue and the balance to be struck between economic efficiency
and cohesion. See Cecile Barbier et al, ?observatoire Social Européen, Brussels (Digest) (2006)16
This includes solidarity and cohesion, equal opportunities and the combating of any form of
discrimination, sufficient occupational health and safety rules, access for all to education and
healthcare, quality of life and quality in work, sustainable development and participation in civil
For instance, Article 2 EC Treaty.
economic and social policy areas within the EU143.
The ECJ has held that social policy was not consistent with competition
policy and Article 81 could not be applied to collective labour agreements
about conditions of wo 44rk and employment 1.
The Commission and the European courts
A good number of case-laws and secondary legislation have been used
extensively in the course of this essay to buttress the strong influence of
the ECJ, the CFI and the Commission in European competition law and
The courts constitute the judicial arm of the EU and reserve the power to
interpret the Treaty. In case of any lacuna in the Treaty, recourse could
be had to case-law. National courts can refer cases of competition to
The Commission is the executive arm of the EU and proposes new laws
for the governance of the EU. It is empowered under Article 85 EC to
ensure the application of the principles laid down in Articles 81 and 82 EC.
It also enforces competition policy in the EU. Guidelines and Notices used
by the Commission to enforce competition policy are however without
p 146rejudice to the decisions of the courts.
Enforcement of competition policy
In addition to the functions of the Commission already outlined, it is
pertinent to note that the Commission has power to make final and
interim orders for the termination of infringements147, enforced by
periodic penalties in de 148fault and to impose fines in respect of breaches
of Article 81 committed intentionally or negligently149.
Exemptions for the antitrust rules were granted to forms of
(transnational) corporations between undertakings which the commission
Cecile Babier op cit, p.28.
Case C-67/96, C-115-117 and 219 (97) Albany international BV v Stitchting,
Bedrijfspensioenfonds Textielindustrie and others  E.C.R I-5751.
In such an instance, the direction of the European courts in such cases have binding effect on
the national courts and though they are not called judgements, they have the nature of
judgements and will always serve as an authority to the national courts when handing matters of
http://europa.eu.int/comm/competition/antitrust/legislations assessed on 28 March, 2009.
Article 7, Council Regulation (EC) 1/2003.
Article 24, Council Regulation (EC) 1/2003.
Article 23, Council Regulation (EC) 1/2003.
considered desirable to promote either integration or broader competition
The prohibitions of Articles 81 and 82 EC have direct effect in national
law151. It is the duty of national courts to give effect to the rights created
by Article 81 EC152. Infringement of both Articles them gives a potential
liability to fines and orders as to past and future conduct and to
The Commission also has powers to investigate into alleged anti-
competitive practices154. It can carry this out on its own or through
It is obvious that the European courts-ECJ and CFI- have been very
influential in the development of competition policy in the EU. The ECJ has
been defending the cause of competition law right from its inception. It
has gone a long way in adding more power to the elbow of the Treaty
provisions of competition law and providing a stance for those areas that
were not provided for within the Treaty. E.g. dominance.
However, their judgments in some cases do not tally with the innovating
spirit which competition develops.
Their decision in the Microsoft case provoked sharp criticism from mostly
American critics who urged European competition authorities to refrain
from such a regulatory approach towards a dominant actor?s unilateral
conduct, arguing that the imposed restraints on the improvement of
products by adding feature could cause a chilling effect and may
The Commission, on its part, has in an enormous way, depicted prowess
in competition policy enforcement. They have vigorously fought cartels for
years now and currently, cartels are seriously on the low side unlike the
situation few years ago156.
This was prior to the enactment of Regulation 1/2003 which gave the commission the direct
powers to grant exemptions under Article 81(3) EC Treaty. There are no more notifications under
Article 81(3) EC Treaty.
Article 3 Regulation (EC) 1/2003
Case C-453/99, Courage v Crehan (2001) E.C.R. I-6297. See also Article 5, Regulation (EC)
Yeheskel Akin v Bochard Lines Ltd and others (2003) E.U.L.R. 287. There is also a cooperation
between national authorities and the Commission; and between national courts and between
Article 17, Regulation (EC) 1/2003 O.J L1/1.
The complainant shall have legitimate interest. See the Article 5 (1),Regulation (EC) 773/2004.
For more on cartels, see http://ec.europa.ec/comm/antitrust/
However, they should try to propose laws that will enhance the
development of societal goals which will ultimately provide for the grass-
roots who may not have the wherewithal to be on the market but can go
to school, gain employment, eat 2-3 square meals a day and have a
sense of belonging without being an undertaking in the market.
?At the current stage, there is no clear European Social Model promoted at
the EU level. Rather, a conflict of laws between economically oriented
actors promoting market-type solutions and socially oriented actors trying
to find new perspectives for a productive approach to social policy linking
them positively to economic and employment policies 157?.
It should not be all about market; it should be for the people, by the
people and for the people.
A.M. Guillén, and B. Palier, ?Does Europe Matter? Accession to EU and Social Policy
Developments in recent and new member states? (2004) 14 J.E.S.P. 203.