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Anti-competitive practices - overviewEU and UK competition rules
EU competition rules are set out in Arts 101-109 of the Treaty on the Functioning of the European Union (TFEU).
Since 2000 UK competition law has been largely aligned with the EU competition law regime. In the UK, the Chapter I and Chapter II prohibitions in the Competition Act 1998 largely mirror the prohibitions set out in Arts 101 and 102 of the TFEU (ex Treaty establishing the European Community (TEC), Arts 81 and 82). Under Council Regulation (EC) No 1/2003 (the Modernisation Regulation) the UK authorities are obliged and empowered to enforce the EU competition rules as well as the national regime.
Breaches of these prohibitions are punishable by fines of up to 10% of total turnover (UK turnover in the case of Chapter I and Chapter II breaches, and worldwide turnover in the case of breaches of Arts 101 and 102 of the TFEU). Undertakings may be required or orders made as to future conduct. Other sanctions include damages, imprisonment and disqualification from acting as a director.
Anti-competitive agreements and arrangements
Article 101 of the TFEU (ex TEC, Art 81) prohibits agreements, decisions and concerted practices that restrict competition in a substantial part of the EU. The UK equivalent is contained in and Chapter 1 of the Competition Act 1998.
An anti-competitive agreement or arrangement is one that:
may affect trade in the EU or a substantial part of it (TFEU, Art 101), or may affect trade within the UK (Competition Act 1998, Chapter 1), and
has as its object or effect the prevention, restriction or distortion of competition
Particular prohibitions are those that:
fix prices or other trading conditions
limit or control production, markets, development or investment
share markets or sources of supply
apply different terms to equivalent transactions with other trading parties
tie in unconnected additional commitments
Prohibited agreements void
An agreement in breach of Art 101 of the TFEU or Chapter I of the Competition Act 1998 will be void and the whole agreement will be unenforceable unless the offending provision can be severed from the remainder of the agreement under a severability provision.
The prohibition in Art 101(1) of the TFEU is qualified by Art 101(3), which allows exemption from the prohibition in certain circumstances. Similar provisions are found in the Competition Act 1998.
Block exemptions have been given in the case of certain types of agreement or industry sectors where general principles can be set down to avoid repeated detailed review of common terms, eg block exemptions for:
technology transfer agreements
horizontal co-operation agreements
Agreements of minor importance
Certain agreements will fall within the de minimis exemption. The European Commission’s Notice on Agreements of Minor Importance 8 sets out, with reference to the market share held, which agreements will be considered not to have an appreciable restriction of competition under Art 101 of the TFEU (ex TEC, Art 81). The thresholds for the market share held may apply to a relatively small product market or geographical area or locality in which the market share may appear far higher than in a larger product or geographic market .
Abuse of a dominant position
Article 102 of the TFEU (ex TEC, Art 82) prohibits the abuse by any undertaking or undertakings with a dominant position in the market or a substantial part of it. The UK equivalent is contained in and Chapter II of the Competition Act 1998.
Specific examples are:
imposing unfair pricing or other trading conditions
prejudicing consumers by limiting production, markets or technical development
discriminating between trading parties
tying in unconnected additional commitments
An undertaking with a dominant position in the market must act in such a way that does not abuse its position of a dominance in the market.
Action may be taken if an undertaking:
holds a dominant position
abuses that dominant position, and thereby
between member states (TFEU, Art 102 (ex TEC, Art 82)), or
within the UK (Competition Act 1998, Chapter II)
The principal types of abuse are:
exclusionary abuses eg refusal of supply
exploitative conduct eg discriminatory pricing
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