European Competition Law Newsletter – December 2015

December 1, 2015

UK Competition and Markets Authority Publishes Suite of Competition Compliance Documents

The UK Competition and Markets Authority (CMA) regularly publishes compliance materials aimed at educating the business community in the UK. These are well worth a read by anyone involved in competition law compliance in the EU, since essentially the same competition law rules apply EU-wide.

The latest offering from the CMA is a useful suite of materials aimed at underlining that competition law applies equally to SMEs, which was published on 18 November 2015. At the same time, the CMA published an external qualitative study on SMEs and competition law.

This study opens with the comment that “SMEs’ awareness of competition law is minimal.” This again demonstrates the need for suitable compliance training and programmes in the UK (and indeed EU-wide), particularly for SMEs.

The other materials published by the CMA are the following titles:

  • “Competing fairly in business: at-a-glance guide to competition law”
  • “How small businesses can comply with competition law”
  • “Competition law checklist: identify where your business is at risk”

In addition, the CMA published case studies and video guides to competition law compliance.

European Court of Justice Rules on “Object” Restrictions of Competition Law and Commercial Leases

On 26 November 2015, the European Court of Justice (ECJ), in a preliminary reference (interpretative) ruling requested by a Latvian court, handed down a judgment which considers the concept of “object” restrictions of competition law in the context of commercial lease agreements.

The case concerned Maxima Latvija (ML), a large Latvian food retailer. ML had entered into leases with various shopping centres that gave it the right, as the “anchor tenant”, to veto leases to other retailers at the centre.

The key issue was whether this was an “object” (or automatic) restriction of competition law (in breach of Article 101(1) Treaty on the Functioning of the European Union). The ECJ referred to the various recent cases on the issue (particularly Carte Bancaire) and concluded that “the essential legal criterion for ascertaining whether an agreement involves a restriction of competition ‘by object’ is therefore the finding that such an agreement reveals in itself a sufficient degree of harm to competition for it to be considered that it is not appropriate to assess its effects.”

On this basis, an object restriction did not arise since it was not clear that a sufficient degree of harm would automatically arise from such provisions: “The agreements at issue … are not among the agreements which it is accepted may be considered, by their very nature, to be harmful to the proper functioning of competition … Even if the clause at issue … could potentially have the effect of restricting the access of Maxima Latvija’s competitors to some shopping centres in which that company operates a large shop or hypermarket, such a fact, if established, does not imply clearly that the agreements containing that clause prevent, restrict or distort, by the very nature of the latter, competition on the relevant market, namely the local market for the retail food trade.”

However, such a provision could have anti-competitive effects and be ruled illegal under competition law for that reason. This would require the normal full analysis of the economic and legal context and the specificities of the relevant market and a consideration of whether the agreements make an appreciable contribution to the closing-off of that market. The extent of the contribution of each agreement to that closing-off effect depends, in particular, on the position of the contracting parties in that market and the duration of that agreement (following the seminal Delimitis case in particular).

Carte Bancaire , an ECJ judgment from 2014, is generally seen as limiting the range of circumstances in which a provision may be found to be an object restriction of competition law. The implications of that case are still being worked through. The Maxima Latvija case, since it concerns vertical arrangements, was arguably not a difficult test for the ECJ in applying the Carte Bancaire principles. However, Carte Bancaire was extensively relied on, and it’s interesting that the Latvian competition authority, in the initial decision that gave rise to the court appeal in Latvia and, subsequently, the ECJ case, had found an object restriction and fined ML. That was presumably after consulting the European Commission (EC) as part of the European Competition Network cooperation arrangements, so the EC may have analysed this situation incorrectly, too.

New EU Competition Law Rules on Joint Selling of Olive Oil, Beef and Veal, and Arable Crops

On 27 November 2015, the EC published guidelines on how specific derogations from the EU competition law rules apply to joint selling by farmers and others of olive oil, beef and veal, and arable crops. These are large markets worth more than EUR80 billion annually.

The background is that the 2013 Common Agricultural Policy (CAP) reform introduced these derogations for the sale of olive oil, beef and veal, and arable crops. The Common Market Organisation Regulation (the “CMO” Regulation) sets out the detail and allows producer organisations and associations of producer organisations in these three sectors to jointly sell and set prices, volumes and other trade conditions for these products, if they create significant efficiencies through other joint activities (e.g. distribution, storage).

The new guidelines are aimed at helping farmers, producer organisations and associations of producer organisations in assessing whether they fulfil the conditions to benefit from the derogations.

This will be of interest to upstream and downstream players in these markets and perhaps could be used as a model outside the EU.

Additional European competition law news coverage can be found in our news section.

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