Competition Law Tutorial II

AirBnb: are they separate undertaking or only their people renting the places under it? 
 AirBnB is not considered un undertaking yet but it moves towards that (?) 
 Uber has a higher degree of control. 
 AirBnb: is it a separate undertaking (?) It fulfills the definition of the entity (which is always a starting point!!) making a profit is not a requirement to be considered an undertaking, the absence of the profit is not a necessity. However, as soon as the company makes a profit there is a presumption that the activity is economic. Undertaking: entity engaged in economic activity, which is any activity on the market (Hofner) case. 
 AirBnb and Joan can be considered one entity (?): If they are seen as one art.101 would not apply (Parker Pen case), 
 AirBnb: it is uncertain whether they can be seen as a joint undertaking. Here the questions whether they are together or Joan acts as an agent or a separate entity. 
 For Uber because it is more certain than they can be joint undertaking (most likely) 
 
 Tutorial and Assignment notes: 
 Q1
 Facts of the case: 
 Index website allowing to book camping. The website is free of charge for the customer but companies that exploit camping sites pay the fee. SPORC upgraded its offer to a digital communication system allowing it to easily distribute information and communicate with companies that offer their caping sites on their website. 
 SPORC sends a message to all companies stating that it decided to implement a system-wide discount system. Coming site holders can freely choose the discount between 0 to 5% but discounts above 5% will be reduced. 
 
 A. Analysis of the case on the basis of art. 101 TFEU
 1. First line of defense: Is EU competition law applicable?: The scope of competition/ EU law 
 Ratione personae: undertaking- economic activity: SPORC is an undertaking engaged in the economic activity as it gets profits (from fees paid by companies which want advertise their camping sites in the index). Companies affiliated with SPORC are also advertising as they offer caping accommodation (service)

Ratione materiae (sector): booking services, not excluded. (are we in the sector under specific EU Regulation) Ratione loci: TBMSS:

(jurisdiction/ trade between MS): It provides services to the various

companies via internet, additionally foreigners can also book on the site (there is a possible crossboarder dimension), at least potential effect because discounts are changed, so consumers in different MS may be affected. 
 
 2. Second line of defense: which branch of competition law applies: 
 a) Agreement between undertakings or concerted practices or a decision: distribution of information and communication platform between all sites offering camping 
 i) concerted practice definition: conduct but no contact, (ii) agreement: meeting of the minds —>it makes a difference because of the burden of proof: concerted conduct requires the company to provide that they did not receive the message. 
 * additionally:

para 42 of ETURAS judgement: the concept of concerted practice implies in

addition to the participating undertaking concerning which each other subsequent conduct on the market and the relationship of the cause and the effect between the two: message- lowering the discount applies.
 b) Restriction of the competition: conduct: indirect fixing the price as provided in art. 101(1)(a): the argument about art 101(1)(d): but it does not apply is about transaction. 
 c) restriction by object or effect: (1) price fixing (2) carving up markets (3) limitation of output (choices that consumers make). In here it is a restriction by restriction: price fixing by setting discounts
 
 d) Appreciable effect on the market = de minimis (de minimis notice of Commission)
 - If you have restriction by object there is no no need to look at de minims (recital 2 of the notice says so), de minims applies only to the to the restriction by effect
 explained: 
 First look at Recital 2 = If there is a component which is hard core it does not fall under de minimis See if in a case there are more components (a. hardcore or object component than falls outside of de minimis; b. if nothing under object).; and then at § 8(a).
 
 3. Possible exemptions/exceptions


- BER: Commission Regulation No 330/2010 of 20 April 2010 on application of Art. 101(3) to categories of vertical agreements and concerted practices), it does not fall under Art. 101(1) TFEU. 
 - then article 3: market share threshold not more that 30% 
 - Art. 101(1) does not apply to vertical agreements, except for hardcore restrictions 
 
 B. Position of following undertakings: 
 (i) Camp-R-US: able to prove that it did not read the message. Previously offered 7% 
 para 45 EURAS judgement: if it cannot be established that the entity was aware of the message the participation cannot be inferred from the technical restriction implemented in the system automatically. 
 (ii) Camp!: already offered 5% and did not take any action: para. 44: when the entity was aware of the message it can be regarded as a tacit assent to concerted practice, it can be held responsible for concerted practice
 (iii) SandAhoy: Did not agree with 5% limitation and after the rest it took steps to increase the discount, since it publicly distanced itself from the practice it cannot be hold responsible. Para. 46 of ETURAS judgment: rebuttal a presumption of participation in concerted practice by publicly distancing itself from the practice
 
 Q2. Facts of the case: Medium sized entrepreneur of high quality shoes in the EU. It supplies shoes only to those shops which are able to display shoes properly. Chaussure recommends the price levels at which the price should be sold. The recommendation is not biding upon the seller, but those who follow get access to shoes from the limited editions. Brenda follows the recommendation but is unhappy with the price level and complain about it to the manufacturer. The research shows that the price levels are significantly lower in the NL (compared to Germany)

Legal issues under EU Law. vertical agreement: art. 1(1)(a) definition of vertical agreement 1. First line of defense: is EU law applicable? Ratione personae: Are Chaussures and Brenda undertakings: Yes, they are both engaged in economic activity: trade in goods (they sell shoes) 



 Ratione materiae (sector): sale of(shoes) is not excluded Ratione loci: Is there a cross-border effect: Yes, Chaussures sells its shoes to many EU countries., Brenda possibly has customers coming from different MS. There is an impact on EU market because the prices are not the same in different EU countries, we have cross-boarder dimension, EU competition law applies 
 2. Second line of defense: which branch is applicable in our case?: 
 Art. 101(1) applies: falls under (a) restrictive agreements or (b) concerned practice. - circumstances of the case indicate that the agreement has been concluded - If it is an restrictive agreement, pursuant to the art. 101(2) it will be automatically void unless it can be saved with block exemption regulations under art. 101(3) 


Examine two things: (1) Appreciable restriction (de minims note of the COM) 
 Recital 8(b): agreements between non-competitors allowed up to 15% market share BUT: 
 Recital 2 and 13: de minims does not apply to hardcore components: STM case: hardcore restrictions = object restrictions: In the case at hand possible: 101(1)(a) indirect fix of selling prices or 101(1)(d) application of dissimilar conditions
 (2) Object/Effect Restriction 
 (i) object restriction: everything listed in art. 101(1). Here: 101(1)(a) and 101(1)(d) (ii) effect: think at home. 
 
 3. Third line of defense: Which conditions must be fulfilled to escape sanctions prescribed for those rules? 
 Regulation on application of art. 101(3) of TFEU art. 2 of Regulation No 330/2010 on application of art. 101(3) of the TFEU: art. 101(1) does not apply to vertical agreement (vertical agreement here between shoe manufacturer and shoe shops) 
 BUT restricted: 
 (i) art. 3 up to 30% market share threshold 
 (ii) art. 4 Hardcore restrictions exclude application of the regulation. Especially art. 4 (a) restriction




of buyer’s ability to determine the price 



 Q3. Member of a Dutch powerlifting Federation. The Federation is non-profit with mission to promote healthy, competitive, clean and inclusive sporting environment. Jean is invited to the European powerlifting event for which he would be paid substantial amount of money. Such participation would be against Federation rules, as its members cannot participate in commercial events. 1. First line of defense: Is EU competition law applicable 
 Ratione personae: undertaking- economic activity: The Federation itself is non-profit thus it is (i) not engaged in economic activity. Para 57 of Wauters case: Treaty rules on competition do not apply to activity which by its aim, nature, its aim and the rules to which it is subject does not belong to the sphere of economic activity. Statutory aim of the NPB is to promote healthy and competitive sporting environment it has nothing to do with economic activity. 
 Can Members of the Federation be considered as undertakings: If it is professional activity and they make out it then yes. 
 Hofner: it does not purse an economic activety, 
 Meca-Medina: Undertaking/association of undertaking: the profession, it could be considered as association of undertakings. 
 
 the concept of undertaking is functional one the court says: we look at the specific activity that the body is exercising. 
 decision of association can affect its members that’s why it is listed in art. 101 
 ——————————————————
 IM (Internal Market)/ Free Mvt Law: Cross-border and economic activity otherwise it does not fall into the scope of competition law, it does need not fall into internal market law (the concept is not the same always it depends always on the facts of the case) 
 _______________________________________
 
 For the exam: 
 I First line of defense 
 1. Ratione personae: undertaking- economic activity 
 the guy participating in the economic activity and he has a problem. You have to consider specific situation, not just a general. Hofner case, Medina. 


2. Ratione materiae: the sector is not excluded
 3. Ratione loci: the effect on the trade between MS 
 
 II. Second line of defense: which branch of EU law applies here 
 1. Agreement/ Concerted practice/ Decision of association of undertakings (figure out the definition from para 71) 
 decision of the association of undertaking (Wauters case): the Federation in our case is an association of undertakings with athletes. 
 2. Restriction of the competition 
 
 III. 
 Ratione materiae: sector is not excluded 
 (iii) Ratione loci: (is there EU jurisdiction) Rules of Federation applicable to its members: possibly freedom of movements 2. Second line of defense: Applicable branch of competition law: 
 prohibition to participate in commercial events: decision of federation to prohibit participation in commercial events
 Art. 101(1) : covers decision of association of undertakings (define what a decision is) recommended 
 - governs/influence the commercial behavior of undertakings (here athletes )
 - hardcore restriction/restriction by object weight that part against public/higher interest (§97): “account must first of all be taken of the overall context in which the decision of the association of undertakings was taken or produces effects (…); account must be taken of its objectives which are here connected with the need to make rules relating to organisation, qualifications, professional ethics, supervision and liability, in order to ensure that the ultimate necessary guarantees in relation to integrity and experience.” Not enough to establish the objective of the prohibition but possibly in can be argued 
 - art. 101(1)(b) applies here: restriction by object because it goes in the direction of output restriction. 3. Third line of defense: Is there an exception under 101(3)? Is Art. 101(3) TFEU feasible?

Would be difficult to justify prohibition of participation in

commercial events under following criteria: 
 (i) contributes to improving the production or distribution of good or promoting (=)

(ii) allows consumer a fair share of resulting benefits (no, since price floor does not give incentive for efficiency) (iii) do not impose on undertakings concerned restrictions which are not indispensable to attainment of objectives (measure should seek to achieve the objectives stated above here: not the case; and should be necessary: not necessary, since the alternative would be to keep the system as it is currently without introducing min. fee scale. do I have a less restrictive alternative? If not, condition is fulfilled) not afford undertakings the possibility of eliminating competition in respect of substantial part of the products (look at market) (iv) balance between public interest and anticompetitive effect within framework of Art. 101 TFEU (Wouters §91-110)?
 
 Rule of reason: 
 Medina/ Wouters cases: Important: PARA 97 something similar to the rule of reason is transferred from the exemption phase (art 101(3)) to art 101(1)). The competition law may not be infringed if the professional serve a higher goal. 
 - rule of reason mandatory: 
 - Cassis de Dijon: rule of reason there is internal market concept, proportionality 
 - in competition law there is no rule of reason: US of antirust law: competitive and non-competitive arguments on the case by case basis at the outset. In EU competition law we do sth similar but it is not exactly that (with art. 103(3)) 
 - Metropol judgement there is no such thing as a rule of reason in the eu competition law 
 
 Modernization: 
 - after it art. 101 is directly applicable 
 - before: the federation would have apply to the commission, and then it would have immunity 
 - general court is specialized in competition law questions/ internal market is answered by CJEU 
 - in 2002 the COM had the monopoly to apply 101, even CJEU was not not competent to apply it 
 - Cassis de Dijon: rule of reason and proportionality is applied here