Guidelines on the effect on trade concept
Guidelines on the effect on trade concept contained in Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)
WHAT IS THE AIM OF THE GUIDELINES?
Article 101 TFEU (ex Article 81 of the Treaty establishing the European Community (TEC)) bans cartels* and behaviour that prevents, restricts or distorts competition (vertical* and horizontal agreements*) with certain exceptions (specified under Article 101(3)).
Article 102 TFEU (ex Article 82 of the Treaty establishing the European Community (TEC)) outlaws abuses by companies with a dominant position.
The two articles apply only when it can be established that agreements and practices are capable of appreciably affecting trade between EU countries.
These European Commission guidelines seek to explain and set out the methodology for applying the concept of the effect on trade between EU countries with regard to competition cases, thus reflecting case law handed down by the Court of Justice of the European Union.
In the case of Article 101 TFEU, if the agreement as a whole is capable of affecting trade between EU countries, the entire agreement is subject to EU law, including any parts of the agreement that individually do not affect trade between EU countries. In cases where the contractual relations between the same parties cover several activities, these activities must, in order to form part of the same agreement, be directly linked and form an integral part of the same overall business arrangement. If not, each activity constitutes a separate agreement.
In the case of Article 102 TFEU, it is the abuse that must affect trade between EU countries. Conduct that forms part of an overall strategy pursued by the dominant firm must be assessed in terms of its overall impact. Where a dominant firm adopts various practices in pursuit of the same aim (e.g. seeking to eliminate or foreclose competitors), for Article 102 TFEU to be applicable to all the practices forming part of this overall strategy, it is sufficient that at least one of these practices is capable of affecting trade between EU countries.
The guidelines focus on 3 main aspects and seek to clarify:
- the concept of trade between EU countries as not being restricted to traditional exchanges of goods and services across borders. It is a wider concept, covering all cross-border economic activity including establishment*. The concept implies that there must be an impact on cross-border economic activity involving at least (parts of) 2 EU countries;
- the meaning of the words ‘may affect’ which define the nature of the required impact on trade between EU countries. According to the standard test developed by the Court of Justice, it must be possible to anticipate with a sufficient degree of probability, on the basis of a set of objective factors of law or fact, that the agreement or practice may have an influence, direct or indirect, actual or potential, on the pattern of trade between EU countries. In cases where the agreement or practice is liable to affect the competitive structure inside the EU, EU law jurisdiction is established;
- the notion of ‘appreciability’: the effect on trade criterion incorporates a quantitative element, limiting EU law jurisdiction to agreements and practices that are capable of having effects of a certain magnitude. Appreciability can be assessed in particular by reference to the position and the importance of the relevant firms on the market for the products concerned. This assessment depends on the circumstances of each individual case, in particular the nature of the agreement and practice, the nature of the products covered and the market position of the firms concerned.
The Commission considers that in principle agreements are not capable of appreciably affecting trade between EU countries when 2 conditions are simultaneously satisfied:
- the aggregate market share of the parties within the relevant market in the EU does not exceed 5%; and
- in the case of horizontal agreements, the aggregate annual turnover of the firms in the products concerned does not exceed €40 million. In the case of vertical agreements, the aggregate turnover of the supplier in the products covered concerned does not exceed €40 million.
The guidelines include an analysis of various forms of agreements and practices providing an indication of how the trade effect concept should be applied in practice.
The effect of trade criterion is an autonomous EU law jurisdictional criterion. It must be assessed separately in each case and is a distinct assessment from that of the restriction of competition.
FROM WHEN DO THE GUIDELINES APPLY?
They have applied since 27 April 2004.
Cartels: a group of similar but independent companies which join together to fix prices, to limit production or to share markets or customers between them.
Vertical agreements: agreements between firms operating at different levels of the supply chain, for example, where one company supplies the second company’s production materials.
Horizontal agreements: agreements between competing firms.
Establishment: the freedom of businesses (whether self-employed individuals and professionals or legal persons, such as firms) which are legally operating in one EU country to carry out an economic activity in a stable and continuous way in another EU country.
Commission Notice — Guidelines on the effect on trade concept contained in Articles 81 and 82 of the Treaty (OJ C 101, 27.4.2004, pp. 81-96)
Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 1 — Rules applying to undertakings — Article 101 (ex Article 81 TEC) (OJ C 202, 7.6.2016, pp. 88-89)
Consolidated version of the Treaty on the Functioning of the European Union — Part Three — Union policies and internal actions — Title VII — Common rules on competition, taxation and approximation of laws — Chapter 1 — Rules on competition — Section 1 — Rules applying to undertakings — Article 102 (ex Article 82 TEC) (OJ C 202, 7.6.2016, p. 89)
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 of the Treaty (OJ L 1, 4.1.2003, pp. 1-25)
Successive amendments to Regulation (EC) No 1/2003 have been incorporated into the original text. This consolidated version is of documentary value only.
last update 29.05.2020