EU rules on concerted practices and agreements between companies

SUMMARY OF:

Regulation No 19/65/EEC on application of EU treaties to certain types of agreements and concerted practices between companies

Article 101 of the Treaty on the Functioning of the European Union (TFEU) - competition rules applying to companies

WHAT IS THE AIM OF ARTICLE 101 TFEU AND OF THE REGULATION?

Article 101(1) TFEU^₁ bans agreements and concerted practices* between companies and groups of companies that may affect trade between EU countries and whose purpose is to prevent, restrict or distort competition within the EU’s single market.

Article 101 (2) states that all agreements that fall within the scope of Article 101(1) are void unless they are exempted under Article 101(3).

Article 101(3), however, allows for exceptions to be made to this rule where these agreements or practices:

benefit the production or distribution of goods; or
promote economic or technical progress; and
allow consumers a fair share of the resulting benefit.

The regulation applies Article 101(3) TFEU to certain types of agreements and concerted practices between companies where their pro-competitive benefits are greater than their anti-competitive impact.

¹Note: Article 101 was previously Article 81 of the Treaty establishing the European Community, as amended by the Treaty of Amsterdam. Prior to that, it was Article 85 of the Treaty of Rome.

KEY POINTS

The regulation empowers the European Commission to apply Article 101(3) TFEU by regulation to certain categories of vertical agreements* and corresponding concerted practices falling within the ambit of Article 101(1) TFEU.

It lays down the conditions whereby the Commission, having consulted interested parties and the Advisory Committee on restrictive practices and dominant positions, may adopt a regulation declaring that Article 101(1) does not apply to an individual case or to categories of agreements:

entered into by 2 or more companies, each operating at a different level of the production or distribution chain, and which relate to the conditions under which the parties may purchase, sell or resell certain goods and services;
to which only 2 companies are party and which include restrictions in relation to acquiring or using industrial property rights, such as patents, utility models, designs or trade marks, or the rights arising out of contracts for assignment of, or the right to use, a method of manufacture or knowledge relating to the use or to the application of industrial processes.

The Commission’s regulation defines the categories of agreements to which it applies and stipulates the restrictions or clauses which may not be contained in the agreements. The same rules apply in relation to categories of concerted practices.

The regulation may also stipulate the conditions which may lead to the exclusion from its application of certain parallel networks of similar agreements or concerted practices operating on a particular market.

Such regulations:

are adopted for a specified period;
may be amended or repealed where the circumstances on which they are based have changed;
may be issued with retroactive effect.

Further to a 1997 Commission green paper on vertical restraints in EU competition policy, Regulation 19/65 was amended, along with Regulation No 17/62 (the first EU competition policy regulation adopted cto implement Articles 85 and 86 of the Treaty of Rome) to pave the way for a single block exemption (BER) regulation for vertical supply and distribution agreements (Regulation (EU) No 330/2010).

The Commission has also issued guidelines on vertical restraints clarifying the conditions for the application of the BER regulation.

FROM WHEN DOES THE REGULATION APPLY?

The regulation has applied since 6 March 1965.

BACKGROUND

For more information, see:

Exempted agreements (Article 101(3) TFEU) (European Commission).

KEY TERMS

Concerted practices: practices which, whether with or without a formal agreement being concluded between the parties, are anti-competitive. They may result from either direct or indirect contact between companies whose intention is to either influence the conduct of the market or to disclose intended future behaviour to competitors.

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.

MAIN DOCUMENT

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)

Regulation No 19/65/EEC of 2 March of the Council on application of Article 85 (3) of the Treaty to certain categories of agreements and concerted practices (English special edition: Series 1 Volume 1965-1966, pp. 35-37)

Successive amendments to Regulation No 19/65/EEC have been incorporated in the basic text. This consolidated version is of documentary value only.