EU TFEU: Competition law: Anti-competitive agreements

The Constitutional Treaty would have offered the citizens of the European Union an internal market where competition is free and undistorted. The EU Treaty of Lisbon does not mention free and undistorted competition among the objectives of the European Union.

Therefore, most of the discussion about EU competition law in the light of the Lisbon Treaty has centred upon the symbolic downgrading of competition, whereas the unchanged substantive provisions have generated sparse comment.

The first competition Article deals with anti-competitive agreements between firms.


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We enter a new Title, Chapter and Section in order to look at competition rules in the EU Treaty of Lisbon.

Article 101 of the Treaty on the Functioning of the European Union (TFEU) is found in the consolidated version of the Treaty on European Union and the Treaty on the Functioning of the European Union, published in the Official Journal of the European Union, OJ 9.5.2008 C 115/88–89:

Part Three ‘Policies and internal actions of the Union’

Title VII Common rules on competition, taxation and approximation of laws

Chapter 1 Rules on competition

Section 1 Rules applying to undertakings

Article 101 TFEU
(ex Article 81 TEC)

1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

— any agreement or category of agreements between undertakings,

— any decision or category of decisions by associations of undertakings,

— any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

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In Article 2, point 75 of the Treaty of Lisbon (ToL) the intergovernmental conference (IGC 2007) laid out the specific amendments to Article 80 TEC and in point 76 Article 85 TEC was amended. Thus, no specific amendments were made to Article 81 TEC (OJ 17.12.2007 C 306/68).

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The TFEU table of equivalences tells us that Article 81 TEC first became Article 81 TFEU (ToL), but later renumbered Article 101 TFEU in the consolidated version (OJ 17.12.2007 C 306/211).

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The current Article 81 of the Treaty establishing the European Community (TEC) is found under Title VI ‘Common rules on competition, taxation and approximation of laws’, Chapter 1 ‘Rules on competition’, Section 1 ‘Rules applying to undertakings’, in the latest consolidated version of the treaties in force (OJ 29.12.2006 C 321 E/73–74).

The only change made by Article 101 TFEU was to replace the words ‘common market’ by ‘internal market’ twice in the first paragraph, according to horizontal amendment 2(g). Cf. above and OJ 17.12.2007 C 306/41.

Therefore, Article 81 TEC is not reproduced here.

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For the sake of a systematic comparison, we look at the Article during the previous treaty reform stages.

First, we turn to the European Convention, which located the provisions on competition in Part III ‘The policies and functioning of the Union’, Title III ‘Internal policies and action’, Chapter I ‘Internal market’, Section 5 ‘Rules on competition’, with Subsection 1 ‘Rules applying to undertakings’.

In Article III-50 of the draft Treaty establishing a Constitution for Europe the words ‘internal market’ were used in the first paragraph instead of ‘common market’. The third paragraph dropped the words ‘The provisions of’, but otherwise the provision was exactly the same as the future Article 101 TFEU (OJ 18.7.2003 C 169/35).

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The location and wording of Article III-161 of the Treaty establishing a Constitution for Europe was the same as for the corresponding provision of the draft (OJ 16.12.2004 C 310/68–69).

The IGC 2007 did not bother to delete the words ‘The provisions of’ at the beginning of the third paragraph, but otherwise the Constitutional Treaty and Article 101 TFEU are identical.

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We have seen that Article 101 TFEU is almost exactly the same as the current Article 81 TEC, the only difference being the systematic use of ‘internal market’ instead of the older expression ‘common market’.

But, this picture would be incomplete if we did not venture outside the wording of the Article.

First, according to Article 3(1)(b) TFEU the EU has exclusive competence in ‘the establishing of the competition rules necessary for the functioning of the internal market’.

Second, we mention the revised objectives of the European Union. According to the Lisbon Treaty version of Article 3(3) TEU:

“The Union shall establish an internal market.”

The current Article 3(1)(g) TEC ‘system ensuring that competition in the internal market is not distorted’ was deleted from the objectives of the European Union. Having satisfied the French demands to make competition not an objective, but a means, the governments of the member states agreed on a Protocol (No 27) on the internal market and competition (OJ 9.5.2008 C 115/309):

PROTOCOL (No 27)
ON THE INTERNAL MARKET AND COMPETITION

THE HIGH CONTRACTING PARTIES,

CONSIDERING that the internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted,

HAVE AGREED that:

To this end, the Union shall, if necessary, take action under the provisions of the Treaties, including under Article 352 of the Treaty on the Functioning of the European Union.

This protocol shall be annexed to the Treaty on European Union and to the Treaty on the Functioning of the European Union.

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In principle, the IGC 2007 followed the agreements of the IGC 2004, but Annex 1 of the IGC 2007 Mandate (Council document 11218/07), point 3 (page 11) contained the wording of Article 2 about the internal market without the words ‘where competition is free and undistorted’. The text of the draft protocol is on the same page.

The Council’s legal service gave the following opinion about the scope of Article 308 of the EC Treaty (the ‘flexibility clause’), dated 22 June 2007 (Council document 11198/07):

1) It results from the practice of the Institutions that, for the implementation of Article 308 of the EC Treaty ("flexibility clause"), the reference to "the objectives of the Community" has been interpreted widely by the Institutions, in order to cover all purposes and objectives coming within the general framework of the Treaty, and not only to cover those listed in Article 3. A recent example of this practice is the adoption of the Regulation establishing the Agency on Fundamental Rights(1). This corresponds to the case law of the Court of Justice(2): the Court of Justice has said that Article 235 of the EC Treaty (now Article 308) "cannot serve as a basis for widening the scope of Community powers beyond the general framework created by the provisions of the Treaty as a whole and, in particular, by those that define the tasks and the activities of the Community".

2) The fact that, in a future Treaty, Article 3 listing the objectives of the Union would not contain a specific reference to "a system ensuring that competition in the internal market is not distorted" would not, therefore, prevent the EU legislator to act in order:

− to "establish an internal market" (future Article 3, paragraph 3), and

− that the activities of the Union "shall include (…) the adoption of an economic policy which is based (…) on the internal market (…) and conducted in accordance with the principle of an open market economy with free competition" (future Article 4).

3) The future IGC may deem it appropriate, for reasons of transparency, to accompany the text of the future Treaty by a Declaration stating that "with regard to the establishment of the internal market as set out in article 3 TEU, the Conference confirms that the Union will, if necessary, take action under Article 308 to ensure that competition is not distorted".

4) The future IGC might also choose to add a Protocol to the future Treaty, in order to confirm the above. Such a Protocol would be in conformity with the Treaty but legally superfluous.


The footnotes:

(1) Regulation No 168/2007 of 15 February 2007, OJ L53, 22.2.2007, p. 1.

(2) See Opinion of the Court of Justice of 23 March 1996, Opinion 2/94 [1996] ECR, p. I-1759.

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What has been said about Article 101 TFEU?


United Kingdom

Professor Steve Peers covered the Treaty of Lisbon in a number of Statewatch Analyses. ‘EU Reform Treaty Analysis no. 3.3: Revised text of Part Three, Titles I to VI of the Treaty establishing the European Community (TEC): Internal Market and competition’ (Version 2, 23 October 2007) includes the current Title VI Common rules on competition, taxation and approximation of laws.

Peers highlighted the amendment to Article 81 TEC and TFEU (ToL), to be renumbered Article 101 TFEU in the consolidated version, without comment (page 24).

The analysis 3.3 and other useful Statewatch analyses are available through:

http://www.statewatch.org/euconstitution.htm

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The Foreign and Commonwealth Office (FCO) offers a convenient source of brief annotations on Lisbon Treaty amendments in ‘A comparative table of the current EC and EU treaties as amended by the Treaty of Lisbon’ (Command Paper 7311, published 21 January 2008). It offers the following comment on Article 101 TFEU, Article 81 TFEU (ToL) in the original Lisbon Treaty (page 11):

“Unchanged from Article 81 TEC.”

The FCO comparative table is available at:

http://www.official-documents.gov.uk/document/cm73/7311/7311.asp

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The UK House of Commons Library Research Paper 07/86 ‘The Treaty of Lisbon: amendments to the Treaty establishing the European Community’ (published 6 December 2007) discussed competition on page 57 to 60, not without doubts being expressed with regard to the abolition of free and undistorted competition from among the EU’s objectives.

The Library Research Paper 07/86 is available at:

http://www.parliament.uk/commons/lib/research/rp2007/rp07-086.pdf

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The House of Lords European Union Committee report ‘The Treaty of Lisbon: an impact assessment, Volume I: Report’ (HL Paper 62-I, published 13 March 2008) discussed the internal market and competition on pages 218 and 219.

The main discussion centred around concerns about the removal of ‘free and undistorted competition’ (according to Article I-3(2) of the Constitutional Treaty objectives), but the Committee’s conclusion was the following:

“9.18. We would be concerned if any possible symbolic downgrading were translated into efforts to depart from the principles of free competition that have formed the cornerstone of the internal market. However, Article 51 of the TEU gives equal weight to the Treaty Articles and Protocols and Articles 81–83 of the TEC will remain the same as Articles 101–103 of the TFEU. Therefore, the change does not appear to be significant.”

The report is accessible at:

http://www.publications.parliament.uk/pa/ld200708/ldselect/ldeucom/62/62.pdf

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Sweden

The consultation paper of the government of Sweden, ‘Lissabonfördraget; Statsrådsberedningen, Departementsserien (Ds), Ds 2007:48’ published 20 December 2007, deals with the internal market on pages 261 to 269, ’22.1 Inre marknaden’. On page 264 the consultation paper describes the Protocol on the internal market and competition (Protokollet om den inre marknaden och konkurrens), and it refers to the opinion of the Council’s legal service (document 11198/07).

The consultation paper ’Lissabonfördraget’ is available at:

http://www.regeringen.se/content/1/c6/09/49/81/107aa077.pdf

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Finland

The Finnish ratification bill, ‘Hallituksen esitys Eduskunnalle Euroopan unionista tehdyn sopimuksen ja Euroopan yhteisön perustamissopimuksen muuttamisesta tehdyn Lissabonin sopimuksen hyväksymisestä ja laiksi sen lainsäädännön alaan kuuluvien määräysten voimaansaattamisesta’ (HE 23/2008 vp), includes only a short comment on the unchanged nature of Article 81 TFEU (ToL), renumbered Article 101 TFEU (on page 207), but mentions competition among the EU objectives on page 19:

”Perustuslakisopimukseen verrattuna unionin tavoitteita koskevasta määräyksestä on poistettu viittaus siihen, että kilpailu unionin sisämarkkinoilla on vapaata ja vääristymätöntä. SEUT 2 b artiklassa sisämarkkinoiden toimintaa varten tarvittavien kilpailusääntöjen vahvistaminen määritellään kuitenkin jatkossakin unionin yksinomaiseen toimivaltaan kuuluvaksi. Tähän muutokseen liittyen sopimukseen on liitetty kilpailua ja sisämarkkinoita koskeva pöytäkirja, jossa sopimuspuolet katsovat, että SEU 2 artiklassa määritelty tavoite sisämarkkinoiden luomisesta käsittää järjestelmän, jolla taataan, ettei kilpailu vääristy. Sopimuspuolet sopivat, että unioni toteuttaa toimenpiteitä tämän tavoitteen toteuttamiseksi.”

More or less the same factual and non-committal remarks are made on page 132, when Article 2 TEU (ToL), renumbered Article 3 TEU, is dealt with.

The Finnish ratification bill is available at:

http://www.finlex.fi/fi/esitykset/he/2008/20080023.pdf

The Swedish language version of the ratification bill ‘Regeringens proposition till Riksdagen med förslag om godkännande av Lissabonfördraget om ändring av fördraget om Europeiska unionen och fördraget om upprättandet av Europeiska gemenskapen och till lag om sättande i kraft av de bestämmelser i fördraget som hör till området för lagstiftningen’ (RP 23/2008 rd), offers the same brief observation about Article 81 TFEU (ToL), the future Article 101 TFEU, on page 209.

The remarks about the role of competition among the objectives of the EU is on page 19:

”Jämfört med det konstitutionella fördraget har omnämnandet av en inre marknad där det råder fri och icke snedvriden konkurrens strukits från bestämmelsen om unionens mål. Enligt artikel 3 i EUF-fördraget ska unionen dock även i fortsättningen ha exklusiv befogenhet när det gäller fastställandet av de konkurrensregler som är nödvändiga för den inre marknadens funktion. I anslutning till denna ändring åtföljs fördraget av ett protokoll om den inre marknaden och konkurrens där de fördragsslutande parterna beaktar att den inre marknaden enligt definitionen i artikel 2 i EU-fördraget innefattar en ordning som säkerställer att konkurrensen inte snedvrids.
De fördragsslutande parterna enas om att unionen ska vidta åtgärder för detta ändamål.”

The description on page 132 of the Finnish version is found on page 135 of the Swedish one.

The ratification bill in Swedish can be accessed at:

http://www.finlex.fi/sv/esitykset/he/2008/20080023.pdf



Ralf Grahn