Introduction 2004. In this essay the article 101 of

Introduction

 

  Since 1993 and the establishment of the European Single Market, the European legislation has evolved in order to maintain auto regulated markets and free competition. The Treaty on European Union and the Treaty on the Functioning of the European Union (TFEU) provides, to this end, three articles: article 101 on Cartel law, article 102 on abuses of dominant positions and article 107 on State aids. Regarding the Merger control, the Council of the European Union has adopted regulation 139 in 2004.   In this essay the article 101 of the TFEU will be studied with the support of two cases where the article has been violated.

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Legislation:

 

The article 101 of the Treaty on the Functioning of the European Union is meant to prevent from threats to free competition due to agreements, cartels or illegal collusions between undertakings within the European internal market. It has been signed on 03/25/1957 at the Treaty of Rome. Since, minor modifications have been done.

The article prohibits any agreement between undertakings that:

 

–        ” (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.”

 

The article 101 is the first article in the chapter on competition rules. Its first paragraph sets the criteria for the anti-competitive agreement that it prohibits. The definition of the agreement is broad. The jurisprudence assumed at an early stage that the economic nature of business collaboration was more important than the legal form of the agreement.

The agreement can take the form of a formal agreement, a concerted practice that is, mostly, hidden and informal, or a business association decision such as, for example, professional unions or the orders of the regulated professions.

Spatial delimitation (“within the internal market”) is a general condition for the applicability of European competition law. The list established by Article 101 is not exhaustive and contemplates the most harmful forms of cartel for competition.

 

The Article 101 cannot lead to a jail sentence, but it can sentence unlimited fines.

Since its signature, the European Commission has fined numerous undertakings.

Among them we are going to focus on two cases where undertakings have been found guilty of charges regarding the cartel law (Article 101 of the TFEU).

 

 

 

I.             Lutèce, Prochamp and Bonduelle cartel settlement

 

 

In this case, the European Commission investigated on the undertakings Bonduelle, Lutèce and Prochamp regarding their suspected anti-competitive activities within the European market.

 

In charge of respecting competition in Europe, the European Commission found that the companies Lutèce, Prochamp and Bonduelle participated in an agreement to coordinate the prices of canned mushrooms in Europe and to divide market shares among them.

 

The purpose of the agreement that caused the fine was to avoid a price drop on the canned mushroom market. It affected sales to retailers all across Europe for more than a year. In order to achieve this endeavour the cartelists agreed on minimum prices and on volumes, allocated market shares and shared confidential bids. It consisted in a “non-aggression pact with a compensation scheme in case of customer transfer and application of minimum prices, which had been agreed beforehand.”

According to Joaquin Almunia, this means that potentially, any European consumer could have suffered the effects of this endeavour.

 

The agreement covered the private label sale of canned mushrooms to food wholesalers and business customers such as food service companies. It lasted from September 2010 to respectively 12/22/2011 for Lutèce and 02/28/2012, for Prochamp and Bonduelle.

 

The decision taken on the fine has been taken based on the Commission’s 2006 Guidelines on fines. The sales made by the undertakings under this settlement, the seriousness of the infringement and the geographic scale of its impact have been taken into account before delivering the final sentence. Considering the acknowledgement of the facts by Bonduelle and Prochamp, the Commission reduced their fine by 10%. Initially, the European Commission investigated on the practices in this sector between 2006 and 2012 but finally decided to sanction the undertakings involved over the period 2010-2012.

 

As a result, the European Commission fined them a total of 32 225 000euros, with Bonduelle being the most severely punished. The Dutchman Prochamp was sentenced to a penalty of 2 021 000euros, while Lutèce escaped the fine for revealing the existence of the cartel.

Bonduelle took note of this decision but, considering the evidence in its possession in the period prior to 2010, it intends to pursue legal actions against the former owner Butler Capital Partners before the Paris Commercial Court.

 

 

 

II.          Eco-Bat Technologies, Campine and Recyclex cartel settlement

 

In this case, the European Commission investigated on the undertakings Eco-Bat Technologies, the world leader in lead recycling, and three of its competitors, the Belgian Campine, the American Johnson Controls International and the French Recylex, regarding their suspected anti-competitive activities within the European market that are forbidden by the article 53 of the EEA Agreement and the article 101 of the TFEU.

 

The companies involved have agreed to maximize the benefits coming from the recycling of waste batteries, by reducing competition on this essential link in the recycling chain. From 2009 to 2012, these four recycling companies participated in an agreement to set the purchase prices for lead-acid automotive battery waste in Belgium, France, Germany and the Netherlands. The aim was to reduce the value of used batteries sold as waste, to the detriment of used battery retailers. Thus the companies penalized by this agreement were mainly small and medium collectors of batteries and scrap metal.

On the contrary of what happens in most agreements, where companies agree to increase their selling prices, here, the four recycling companies have agreed to reduce the purchase price paid to scrap dealers and scrap collectors for used car batteries.

By coordinating downward the prices they paid for battery waste, the four disrupted the normal operation of the market and adversely affected price competition.

 

As the cartel consisted in collusion on the purchase price, the European Commission used the value of the purchases made, rather than the value of sales to set the level of fines. The European Guidelines for setting fines in antitrust cases adopted in 2006 has been at the basis of the Commission decision

 

The investigation started in 2012 and a case has been opened in 2015. In 2017, the Commission has fined Eco-Bat Technologies, Campine and Recylex, of respectively of 32 712 000, 8 158 000 and 26 739 000 euros for conspiracy on the purchase price of automotive battery waste. On the other hand, Johnson Controls avoided a fine as it alerted the European Commission about the cartel.

For having cooperated with the Commission’s investigation, Recylex and Eco-Bat have benefited from a reduction in the amount of their fines by respectively 30% and 50%, whereas Campine’s request for indulgence has been dismissed, as the Commission considered it did not cooperate during the investigation.

 

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