Antitrust Alert: EU Commission Adopts Revised Safe Harbor Rules for Minor Agreements and Provides Guidance on "By Object" Restrictions of Competition
The European Commission has published revised safe harbor rules for agreements that are not deemed to appreciably restrict competition. This is the so-called "De Minimis Notice," the first version of which dates back to 2001. At the same time, the Commission also published guidance on the concept of restrictions of competition "by object."
The main takeaways from the Commission’s initiative are the following:
- The market share thresholds for the safe harbor remain unchanged;
- The De Minimis Notice now clarifies that agreements that restrict competition "by object" do not benefit from the De Minimis Notice;
- With the accompanying Staff Working Document, the Commission has for the first time published specific guidance on the concept of "restriction of competition by object," clarifying that restrictions labeled as "hardcore" in (existing or future) block exemption regulations "generally" also constitute restrictions "by object."
Impact for companies
The revision of the De Minimis Notice and the accompanying guidance on restrictions of competition by object are not revolutionary, as they do not inaugurate a fundamentally new approach to minor agreements. However, the guidance paper on restrictions by object provides a handy "checklist" which should make it somewhat easier for companies, especially SMEs, to assess whether their agreements fall within the safe harbors of the Notice.
No changes to the thresholds
First and foremost, the market share thresholds remain unchanged in the 2014 De Minimis Notice compared to the previous version of 2001. Thus, a safe harbor is still available for agreements between (actual or potential) competitors whose aggregate market share does not exceed 10% on any affected relevant market, and for agreements between non-competitors whose market share does not exceed 15% each on any of the affected relevant markets. Where, in a relevant market, competition is restricted by the cumulative effect of agreements for the sale of goods or services entered into by different suppliers or distributors, these market share thresholds are reduced to 5% per competitor for both agreements between competitors and agreements between non-competitors. However, a cumulative foreclosure effect resulting from parallel (networks of) agreements is deemed unlikely to exist if less than 30% of the relevant market is covered by such parallel (networks of) agreements. The Notice adds that agreements do not appreciably restrict competition if the market shares of the parties do not exceed the above-mentioned thresholds during two years by more than 2 percentage points.
Restriction by object
The main change in the revised Notice is that, unlike the 2001 Notice, the 2014 Notice clearly states that agreements which have as their object the restriction, prevention or distortion of competition within the internal market cannot be considered minor and always constitute an appreciable restriction of competition under EU law. In fact, the Notice has been updated to reflect the ruling of the Court of Justice in the Expedia case (case C-226/11, judgment of 13 December 2012), where the Court held that "an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition." Hence, restrictions by object cannot benefit from the safe harbor thresholds as set out in the De Minimis Notice.
However, even an agreement that contains one or more restrictions "by object" may still escape the general prohibition of restrictive agreements set out in Article 101 of the Treaty on the Functioning of the European Union (TFEU) if it has no appreciable effect on trade between Member States. As the Commission has issued specific guidance on the assessment of "effect on trade" in 2004, the revised De Minimis Notice no longer deals with this issue, although it explicitly refers to the rule set out in the 2004 Notice on Effect on Trade that agreements between parties with an aggregate market share not exceeding 5% and an annual turnover equal or below €40 million are in principle not capable of appreciably affecting trade between Member States.
Guidance on restrictions by object
The Notice is accompanied by a Staff Working Document from DG Competition intended to assist companies in assessing whether their agreements contain any restrictions of competition "by object," which are not eligible for a safe harbor under the Notice. With respect to agreements between competitors, the guidance paper mentions price fixing, market sharing, output restrictions, bid rigging, collective boycotts, sharing information on intended future prices and quantities, and restrictions on carrying out R&D or using own technology. In agreements between non-competitors, such restrictions include the "hardcore restrictions" identified in existing and future block exemption regulations, such as sales restrictions on buyers or licensees, or resale price maintenance. For each restriction by object it identifies, the guidance paper provides illustrative examples drawn from the case law of the Court of Justice and the Commission's existing decisional practice.
Even though this document will be updated regularly by DG Competition, it does not constitute an exhaustive catalogue of all possible restrictions by object, but only a practical check-list for companies, which does not prevent the Commission from finding "new" restrictions of competition by object which are not (yet) identified by it.
No binding effect on national authorities
In cases covered by the newly published Notice, the Commission will not institute an antitrust investigation. Additionally, where the Commission has instituted an investigation but companies can demonstrate that they have assumed in good faith that the market share thresholds were not exceeded, the Commission will not impose fines. However, the Notice has no binding effect on national competition authorities and national courts, although the Commission stresses that it is also intended to give guidance to the courts and competition authorities of the Member States in their application of Article 101 TFEU. Moreover, even agreements that remain below the "de minimis" thresholds and/or do not affect trade between Member States may still be caught by domestic competition law.
The June 25 Notice and the Staff Working Document are available at: http://ec.europa.eu/competition/antitrust/legislation/deminimis.html.
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