THE COMPETITION LAW OF THE EUROPEAN UNION IN COMPARATIVE PERSPECTIVE

CASES AND MATERIALS

By

Eleanor M. Fox Walter J. Derenberg Professor of Trade Regulation New York University School of Law

A spinoff of George A. Bermann, Roger J. Goebel, William J. Davey and Eleanor M. Fox's CASES AND MATERIALS ON EUROPEAN UNION LAW

AMERICAN CASEBOOK SERIES3

WEST; I®

A Thomson Reuters business Mat #40790338

SUMMARY OF CONTENTS

Page PREFACE -l — ..FOREWORD : TABLE OF EUROPEAN CASES IN THE EUROPEAN COURT OF JUSTICE TABLE OF EUROPEAN CASES IN THE EUROPEAN COURT OF FIRST INSTANCE TABLE OF EUROPEAN COMMISSION DECISIONS TABLE OF UNITED STATES AND OTHER NATIONAL COURT CASES

iii vii xix xxi

xxiii xxv

Introduction

1

Chapter 1. The Treaty, Objectives and the Single Market A. The Objectives of European Competition Policy — B. A Note on the Institutions —— -C. Introduction to Articles 81 and 82 and the Implementing Regulation D. Market Integration and the Blockage of Imports-

5 5 11 12 17

Chapter 2. Cartels ——A. Introduction B. Cartels and the Economics of Competition C. Proof of Cartels-— — — D. May Cartels Be Justified?—Crisis Cartels E. World Cartels and Offshore Cartels—Jurisdiction, Comity, and Cooperation -— —

29 29 31 35 51

Chapter 3. Abuse of a Dominant A. The Treaty —B. Dominance C. Market Definition — D. Abusive Conduct

Position - . . — — --

-

67 67 69 72 75

— -----

Chapter 4. Horizontal Restraints Under Article 81 A. Agreements Among Competitors—General B. The Reach of Article 81(1) —C. Article 81(3): Effects of the Agreement on Competition, Efficiency, Innovation—) T D. Article 81(1) and (3)—Public Policy; Non-Competition Goals—E. Block Exemptions — Chapter 5. Vertical Restraints Under Article 81 A. Vertical Restraints and Their Effects B. A Note on the Effect of Modernisation C. Is There an Agreement Within Article 81(1)? —D. Parallel Imports and Exports and Dual Pricing E. Resale Price Maintenance: Europe, and a View From the US

xi

57

147 147 151 162 180 191

197 197 198 —- 207 209 218

xii

SUMMARY OF CONTENTS

Page

F. Selective Distribution G. Single Branding (Exclusive Purchasing), Tying and Related Foreclosures H. Franchising I. Block Exemptions and Reform Chapter 6. Merger Control A. Introduction . B. The Merger Regulation : C. The Economics of Merger Analysis----— D. Substantive Law Under the Merger Regulation E. The International Dimension

227 232 241 245 254 254 255 259 264 305

Chapter 7. Public Enterprises, State Privileges and State Action

310

A. Introduction B. s Ports Cases, and a Note on Liberalization C. State Monopolies of a Commercial Character—Application of Articles 28 and 31 D. Exclusive Privileges—Article 86 E. State Measures—Articles 3, 10, 81, 82 F. State Aids —-

310 311

Afterword

358

Appendices INDEX

-

—

317 324 335 347

359 565

TABLE OF CONTENTS

Page PREFACE ." —FOREWORD TABLE OF EUROPEAN CASES IN THE EUROPEAN COURT OF JUSTICE TABLE OF EUROPEAN CASES IN THE EUROPEAN COURT OF FIRST INSTANCE TABLE OF EUROPEAN COMMISSION DECISIONS TABLE OF UNITED STATES AND OTHER NATIONAL COURT CASES

iii vii xix xxi

xxiii ---

Introduction

xxv

1

Chapter 1. The Treaty, Objectives and the Single Market 5 A. The Objectives of European Competition Policy 5 XXXVIth Report on Competition Policy (2006) 5 XXXth Report on Competition Policy (2000) 7 XXIXth Report on Competition Policy (1999) 8 . XXVIth Report on Competition Policy (1996) —9 B. A Note on the Institutions 11 C. Introduction to Articles 81 and 82 and the Implementing Regulation 12 D. Market Integration and the Blockage of Imports 17 1. General —. 17 2. Parallel Imports 18 A. Consten and Grundig 18 Consten and Grundig v. Commission 20 B. Development of the Rule Against Market Partitioning 24 SA Musique Diffusion Franqaise v. Commission (Pioneer) 24 Chapter 2. Cartels A. Introduction B. Cartels and the Economics of Competition C. Proof of Cartels 1. The Quinine Case —i ACF Chemiefarma v. Commission (Quinine) 2. The Dyestuffs Case Imperial Chemical Industries Ltd. v. Commission (Dyestuffs) 3. The Sugar Cartel Case 4. Wood Pulp Ahlstrom Osakeyhtio v. Commission (Wood pulp)

xm

29 29 31 35 36 36 41 41 v

43 46 46

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D. May Cartels Be Justified?—Crisis Cartels Stichting Baksteen (Dutch brickmakers) — E. World Cartels and Offshore Cartels—Jurisdiction, Comity, and Cooperation--1. Effects, Sovereignty, and Restraint Ahlstrom Osakeyhtio v. Commission (Wood pulp) 2. Cooperation, and Seeds of a Global Regime

Page 51 .— 51 57 57 59 65

Chapter 3. Abuse of a Dominant Position 67 A. The Treaty 67 B. Dominance '. 69 C. Market Definition 72 D. Abusive Conduct 75 1. Introduction - 75 76 s 2. Excessive and Discriminatory Prices and Unfair Terms British Leyland PLC v. Commission— 76 United Brands Co. v. Commission 77 3. Exclusionary Conduct 82 A. Refusal to Deal 83 Istituto Chemioterapico Italiano SpA v. Commission (Commercial Solvents) 84 United Brands Co. v. Commission "-— 86 Verizon Communications Inc. v. Law Offices of Curtis V. Trinko 89 Radio Telefis Eireann v. Commission (Magill) 95 IMS Health GmbH & Co. and NDC Health GmbH & Co 98 Microsoft Corp. v. Commission 100 B. Exclusive Dealing and Loyalty Rebates 109 Hoffmann-La Roche & Co. AG v. Commission (Vitamins) 111 Manufacture Franqaise des Pneumatiques Michelin v. Commission-- 114 British Airways PLC v. Commission 115 C. Tying and Bundling 120 Tetra Pak International SA v. Commission 121 Microsoft Corp. v. Commission 126 D. Price Predation and Price Squeezes 133 AKZO Chemie BVv. Commission 134 Brooke Group Ltd. v. Brown & Williamson Tobacco Corp. 137 Tetra Pak International SA v. Commission 139 Chapter 4. Horizontal Restraints Under Article 81 A. Agreements Among Competitors—General Commission Notice on Agreements of Minor Importance Which Do Not Appreciably Restrict Competition Under Article 81 (De Minimis Notice) B. The Reach of Article 81(1) Commission Notice—Guidelines on the Applicability of Article 81 of the EC Treaty to Horizontal Cooperation Agreements European Night Services v. Commission O2 (Germany) GMBH & Co. OHG v. Commission

147 147 148 151 151 156 157

TABLE OF CONTENTS

xy

Page C. Article 81(3): Effects of the Agreement on Competition, Efficiency, Innovation 162 1. Introduction and Guidelines 162 2. Loose Agreements 166 A. Agreements to Exchange Information 166 Asnef-Equifax v. Asociacion De Usuarios De Servicios Bancarios (AUSBANC) 169 B. Decisions of Associations 172 3. Tighter Agreements -—- -173 European Night Services Ltd. v. Commission 174 r D. Article 81(1) and (3)—Public Policy; Non-Competition Goals 180 1. Introduction 180 2. Labor 180 Albany International BV and Textile Industry Pension Funds 180 ,3. The Liberal Professions 183 WoutersetCie 184 4. The Environment and Competitiveness 187 CECED 190 E. Block Exemptions 191 1. Research and Development 192 2. Specialisation 194 Chapter 5. Vertical Restraints Under Article 81 197 A." Vertical Restraints and Their Effects 197 B. A Note on the Effect of Modernisation 198 New Competition Rules for Distribution 199 2004 Guidelines: Communication From the Commission 202 C. Is There an Agreement Within Article 81(1)? 207 Commission v. Volkswagen AG -208 D. Parallel Imports and Exports and Dual Pricing 209 Consten and Grundig v. Commission 209 GlaxoSmithKline Services Unlimited v. Commission 211 Sot. Lelos Kai Sia EE v. GlaxoSmithKline AEVE 215 E. Resale Price Maintenance: Europe, and a View From the US 218 Leegin Creative Leather Products, Inc. v. PSKS, Inc ---- 220 F. Selective Distribution 227 Metro SB-Grossmarkte GmbH & Co. v. Commission (Metro I) 228 Metro SB-Grossmarkte GmbH & Co. v. Commission (Metro II) 230 G. Single Branding (Exclusive Purchasing), Tying and Related Foreclosures 232 Stergios Delimitis v. Henninger Brau AG— 233 Schbller Lebensmittel v. Commission 236 H. Franchising 241 Pronuptia De Paris GmbH v. Pronuptia De Paris

241

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Page

I.

Block Exemptions and Reform 1. History 2. Reform 3. Regulation 2790/99 and the Guidelines

245 245 246 247

Chapter 6. Merger Control-A. Introduction B. The Merger Regulation 1. Coverage and Procedures ~ -2. The Substantive Standard C. The Economics of Merger Analysis 1. Introduction 2. Competition-Lessening Effects —3. Other Effects N 4. Competitiveness 5. Markets, Concentration, Barriers, and Efficiencies D. Substantive Law Under the Merger Regulation 1. Mergers of Competitors That Increase Dominance A. De Havilland Aerospatiale-Alenia/De Havilland B. Boeing/McDonnell Douglas

254 254 255 255 257 259 259 259 261 261 262 264 264 264 ~-

264 268

Matter of Boeing Company/McDonnell Douglas Corporation C. New Economy Issues: The Gatekeeper D. The Failing Firm Defense — France v. Commission (Kali + Salz) 2. Mergers of Competitors That Facilitate Coordinated Behavior (Collective Dominance) Gencor Ltd. v. Commission Airtours v. Commission Bertelsmann AG v. Commission (Impala) — 3. Mergers That Create Non-Coordinated Effects 4. Mergers Other Than Mergers of Competitors A. Leverage and Foreclosure Effects Tetra Laval BV v. Commission General Electric v. Commission B. The Guidelines on Non-Horizontal Mergers E. The International Dimension Chapter 7. Public Enterprises, State Privileges and State Action A. Introduction .— B. Ports Cases, and a Note on Liberalization PortofR0dbyMerci Convenzionali Porto Di Genova v. Siderurgica Gabrielli SpA

269 273 276 276 277 .278 281 288 289 290 290 291 295 304 305 310 310 311 312

-

314

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Page C. State Monopolies of a Commercial Character—Application of Articles 28 and 31 317 Franzen (Swedish Alcohol Monopoly) 318 D. Exclusive Privileges—Article 86 324 Hofner v. Macrotron GmbH

325

Albany International By and Textile Industry Pension Funds Deutsche Post AG v. GZS, Deutsche Post AG v. Citicorp E. State Measures—Articles 3, 10,81,82 1. State Responsibility---Cipolla v. Fazari and Macrino v. Meloni^ 2. Private Responsibility Commission and France v. Ladbroke Racing Ltd Commission v. Italy (CNSD) F. State Aids 1. Introduction 2. State Aid Policy Report on Competition Policy (2006) Germany v. Commission (state aids for small business) Afterword

-

Appendices 1. Treaty Establishing the European Community 2. Council Regulation (EC) No. 1/2003 3. Commission Guidance on Article 82 4. Commission Notice on the Definition of the Relevant Market 5. Guidelines on the Application of Article 81(3) of the Treaty 6. Vertical Agreements—Block Exemption 7. Merger Regulation 8. Horizontal Merger Guidelines 9. Non-Horizontal Merger Guidelines INDEX

329 331 335 335 336 341 341 — 343 347 347 349 -

352 355 358

359 360 — - 370 397 423 437 468 478 — 512 "536 565