Competition Law

1088 Pages·2012·9.081 MB·English

by  Richard Whish, David Bailey

COMPETITION LAW
Seventh Edition
RICHARD WHISH
BA BCL (Oxon)
Professor of Law at King’s College London
DAVID BAILEY
LLB (King’s College London), LLM (Harv)
Senior Lecturer at King’s College London
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3
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Preface to the seventh edition
It has become customary for Richard Whish to begin the preface to successive editions
of this book by remarking upon how much has changed since the previous edition. For
this edition there is a signifi cant change of a diff erent kind, which is the addition of David
Bailey as a co-author of the book. David worked as a research assistant on the fi ft h edition,
contributed signifi cantly to the sixth, and now shares responsibility, and credit(!), for the
seventh. Richard is delighted that David has become party to what is now a joint venture.
Of course, it is also true to say that there has been an enormous amount of change to
the law, even in the three years between the last edition and this one.
Th e most important development, though not involving any change of the law as such,
is probably the publication of the Guidance on the Commission’s enforcement priorities in
applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings. Th e
preface to the sixth edition predicted that the Commission would not publish guidelines
setting out the law: that proved to be a correct prediction. It speculated that instead the
Commission might make a statement as to the ‘principles’ it would apply when deciding
which types of abuse, or which economic sectors, to investigate: that was almost correct, ex-
cept that the document in question explains the Commission’s ‘enforcement priorities’, not
quite the same as ‘principles’. Th e publication of these Enforcement priorities has provoked a
huge amount of debate, not always supportive of the Commission’s approach. We are sup-
portive. Th e Enforcement priorities do not state the law: it is for the EU Courts to decide what
the law is. But they do shed light on what a ‘more economic approach’ to the application of
Article 102 TFEU might look like in practice, and it is not unreasonable to suppose that they
will have a subtle infl uence on the future orientation of the law. Th is is all work-in-progress:
it will be for the ninth edition of this book (probably not the eighth) to refl ect on what infl u-
ence the Enforcement priorities will have had in practice. We have tried very hard to weave
the Enforcement priorities into the text, but without in any sense treating them as a state-
ment of the law: we repeatedly tell our students at King’s not to fall into error by treating the
Enforcement priorities as guidelines setting out the law; the two should not be elided.
Th ere have been many other developments. Th e regime in the EU for vertical agreements
under Article 101 TFEU has been refreshed, with the adoption of Regulation 330/2010 and
the publication of new Guidelines. Th e same is true for horizontal cooperation agreements:
chapter 15 has been rewritten. Th e European Commission has introduced a system of set-
tlements in cartel cases, and three decisions have so far been adopted under this procedure.
Th ere has been an enormous amount of case law from the Courts in Luxembourg, oft en
dealing with procedural issues and the level of fi nes, in particular in cartel cases; but also ex-
ploring some of the most basic issues under Articles 101 and 102 TFEU such as the meaning
of ‘object’ restrictions under Article 101(1) (Beef Industry Development Society v Competition
Authority, GlaxoSmithKline v Commission, T-Mobile v NMa) and the nature of ‘abuse’ under
Article 102 (see in particular AstraZeneca v Commission). Deutsche Telekom v Commission
and TeliaSonera v Konkurrensverket are notable not only for their recognition of margin
squeeze as an independent type of abuse under Article 102 but also for their emphasis on the
‘as effi cient’ competitor approach to that provision. Th e Court of Justice would appear to want
to contradict the common accusation that Article 102 is used to protect competitors rather
than the process of competition: it actually protects competition between effi cient fi rms.
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iv PREFACE TO THE SEVENTH EDITION
Much has been happening in UK competition law and policy as well. Th e OFT has
imposed signifi cant fi nes in a number of cases in recent years, for example in Construction
bid rigging, Recruitment agencies, Royal Bank of Scotland, Tobacco and Reckitt Benckiser.
Th e fi nes in the fi rst two of these were reduced on appeal, but there is no doubt that the
law is being enforced more vigorously now than previously. Th ere have been many new
guidelines on matters such as leniency, OFT investigation procedures and merger con-
trol: a welcome development has been the adoption of joint guidelines on substantive
merger assessment by the OFT and Competition Commission.
At the time of writing, a consultation on the reform of UK competition law, initiated
by the Department for Business, Innovation and Skills, has just closed: this is likely to
lead to the OFT and Competition Commission being merged into a new Competition and
Markets Authority. In writing this book we are constrained by a word limit (this edition is
the same length as the sixth). We have chosen to say little about the possibilities for reform
in the text of this edition, as it is likely that anything we write now will soon be overtaken
by events. We intend, therefore, to keep readers informed of the position by updating the
Online Resource Centre that accompanies this book. Th e cut-off date for this text is 20 June
2011, although a few minor updates have been included at the stage of correcting proofs.
We have made many changes to the text to refl ect the entry into force of the Lisbon
Treaty. In particular we have used the terms ‘General Court’ and ‘Court of Justice’
throughout, and have deleted all references to the ‘CFI’ and ‘ECJ’. We have usually
changed Articles 81 and 82 to Articles 101 and 102, except that we have not altered the
titles of books and articles, in deference to their authors.
Th e book contains numerous tables of cases and decisions, for example of commitment
decisions of the European Commission under Article 9 of Regulation 1/2003 (chapter 7),
decisions of the competition authorities in the UK under the Chapter I and II prohibi-
tions in the Competition Act 1998 and Articles 101 and 102 (chapter 9) and Phase II
merger investigations under the EU Merger Regulation (chapter 21). In some cases fuller
tables containing details of older decisions will be found on the Online Resource Centre:
for example we have posted there tables of all Phase II merger cases under the EU Merger
Regulation and the UK Enterprise Act 2002 since they entered into force.
Many people have been very helpful to us with their comments, and we thank them hugely.
In particular we would like to mention Carole Begent, Margaret Bloom, Leo Flynn, Jackie
Holland, Deborah Jones, Adrian Majumdar, Sheldon Mills, David Rawlings, Chris Townley
and Wouter Wils. If we have forgotten anyone, we apologise profusely! A very special ‘thank
you’ goes to Dimitris Mourkas, who was also Richard’s research assistant for the sixth edition:
his contribution was terrifi c, and he is also a very good friend. We are very grateful to the
Centre of European Law at King’s College London, which provided the funding for Dimitris’
research assistance. We also thank OUP for their support throughout, including their under-
standing of our diffi culties in complying with what would have been their ideal deadlines.
Th e development of competition law today is ceaseless, and updating a book that
attempts to explain the EU rules as well as the UK ones (which in several ways are quite
diff erent) within a broader international context inevitably takes its toll on social and
family life. For this edition Anil Sinanan was unable to provide any Bollywood block-
busters to provide respite (sadly a lean period musically), but at least there was always
some Pinot Grigio to encourage original thinking.
Richard Whish
Marshfi eld, June 2011
David Bailey
London, June 2011
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Contents
Table of treaties and conventions xiii
Table of EU legislation xiv
Table of statutes xviii
Table of statutory instruments xxii
Table of competition commission reports xxv
Table of OFT reports, decisions and publications xxvii
Table of cases xxviii
List of abbreviations lxix
1 Competition policy and economics 1
1. Introduction 1
2. Overview of the Practices Controlled by Competition Law 2
3. The Theory of Competition 3
4. The Function of Competition Law 19
5. Market Defi nition and Market Power 25
2 Overview of EU and UK competition law 49
1. Introduction 49
2. EU Law 49
3. UK Law 58
4. The Relationship Between EU Competition Law and National
Competition Laws 75
5. The Institutional Structure of EU and UK Competition Law 79
3 Article 101(1) 82
1. Introduction 82
2. Undertakings and Associations of Undertakings 83
3. Agreements, Decisions and Concerted Practices 99
4. The Object or Effect of Preventing, Restricting or Distorting Competition 115
5. The De Minimis Doctrine 140
6. The Effect on Trade Between Member States 144
7. Checklist of Agreements That Fall Outside Article 101(1) 149
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vi CONTENTS
4 Article 101(3) 151
1. Introduction 151
2. The Article 101(3) Criteria 155
3. Regulation 1/2003 166
4. Block Exemptions 168
5 Article 102 173
1. Introduction 173
2. The Commission’s Guidance on Article 102 Enforcement Priorities 174
3. Undertakings 177
4. The Effect on Inter-State Trade 178
5. Dominant Position 179
6. A Substantial Part of the Internal Market 189
7. Small Firms and Narrow Markets 190
8. Abuse 192
9. Defences 210
10. The Consequences of Infringing Article 102 214
6 The obligations of Member States under the EU competition rules 215
1. Introduction 215
2. Article 4(3) TEU – Duty of Sincere Cooperation 216
3. Article 106 TFEU – Compliance with the Treaties 222
4. Article 37 TFEU – State Monopolies of a Commercial Character 245
5. Articles 107 to 109 TFEU – State Aids 246
7 A rticles 101 and 102: public enforcement by the European Commission
and national competition authorities under Regulation 1/2003 248
1. Overview of Regulation 1/2003 250
2. The Commission’s Enforcement Powers under Regulation 1/2003 251
3. Regulation 1/2003 in Practice 288
4. Judicial Review 290
8 Articles 101 and 102: private enforcement in the courts of Member States 295
1. Introduction 295
2. Actions for an Injunction and/or Damages 297
3. Damages Actions in the UK Courts 306
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CONTENTS vii
4. Competition Law as a Defence 319
5. Arbitration 325
6. Proposals for Reform 327
9 Competition Act 1998 – substantive provisions 330
1. Introduction 330
2. The Competition Act 1998 – Overview 331
3. The Chapter I Prohibition 333
4. The Chapter II Prohibition 360
5. ‘Governing Principles Clause’: Section 60 of the Competition Act 1998 369
6. The Competition Act 1998 in Practice 374
10 Competition Act 1998 and the cartel offence: public enforcement
and procedure 393
1. Introduction 393
2. Inquiries and Investigations 394
3. Complaints and Super-Complaints 402
4. Opinions and Informal Advice 403
5. Enforcement 404
6. The Cartel Offence and Company Director Disqualifi cation 424
7. Concurrency 437
8. Appeals 439
9. Article 267 References 449
11 Enterprise Act 2002: market studies and market investigations 451
1. Introduction 451
2. Overview of the Provisions on Market Investigation References 452
3. Super-Complaints 454
4. OFT Market Studies 458
5. Market Investigation References 466
6. Public Interest Cases 474
7. Enforcement 474
8. Supplementary Provisions 477
9. The Market Investigation Provisions in Practice 479
10. Orders and Undertakings Under the Fair Trading Act 1973 486
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viii CONTENTS
12 The international dimension of competition law 487
1. Introduction 487
2. Extraterritoriality: Theory 488
3. The Extraterritorial Application of US Competition Law 491
4. The Extraterritorial Application of EU Competition Law 495
5. The Extraterritorial Application of UK Competition Law 501
6. Resistance to Extraterritorial Application of Competition Law 504
7. The Internationalisation of Competition Law 506
13 Horizontal agreements (1) – cartels 512
1. The Hardening Attitude of Competition Authorities Worldwide
Towards Cartels 513
2. The European Commission’s Approach to Cartels 517
3. Horizontal Price Fixing 522
4. Horizontal Market Sharing 530
5. Quotas and Other Restrictions on Production 533
6. Collusive Tendering 536
7. Agreements Relating to Terms and Conditions 538
8. Exchanges of Information 539
9. Advertising Restrictions 547
10. Anti-Competitive Horizontal Restraints 550
11. UK Law 552
14 Horizontal agreements (2) – oligopoly, tacit collusion and
collective dominance 559
1. Introduction 559
2. The Theory of Oligopolistic Interdependence 560
3. Article 101 567
4. Article 102 and Collective Dominance 571
5. UK Law 582
15 Horizontal agreements (3) – cooperation agreements 585
1. Introduction 585
2. Full-Function Joint Ventures 585
3. The Application of Article 101 to Horizontal Cooperation Agreements and
the Commission’s Guidelines on Horizontal Cooperation Agreements 586
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CONTENTS ix
4. Information Agreements 592
5. Research and Development Agreements 592
6. Production Agreements 599
7. Purchasing Agreements 603
8. Commercialisation Agreements 605
9. Standardisation Agreements 607
10. Other Cases of Permissible Horizontal Cooperation 611
11. The Application of the Chapter I Prohibition in the UK Competition
Act 1998 to Horizontal Cooperation Agreements 615
16 Vertical agreements 617
1. Introduction 617
2. The Distribution Chain 618
3. Vertical Integration 619
4. Commercial Agents 621
5. Vertical Agreements: Competition Policy Considerations 623
6. Vertical Agreements: Article 101(1) 628
7. Vertical Agreements: Regulation 330/2010 649
8. The Application of Article 101(3) to Agreements that do not Satisfy
the Block Exemption 672
9. Regulation 461/2010 on Motor Vehicle Distribution 674
10. Sub-Contracting Agreements 676
11. UK Law 677
17 Abuse of dominance (1): non-pricing practices 681
1. Introduction 681
2. Exclusive Dealing Agreements 682
3. Tying 688
4. Refusal to Supply 697
5. Non-Pricing Abuses that are Harmful to the Internal Market 711
6. Miscellaneous Other Non-Pricing Abuses 712
18 Abuse of dominance (2): pricing practices 715
1. Introduction 715
2. Cost Concepts 716
3. Exploitative Pricing Practices 718
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