Competition Law

Articles

OECD Competition Division Notion of control

Control over enterprises is generally viewed to be exercised when an individual or group of investors hold more than 50 per cent of the common voting stock of the enterprise or firm. However, "effective control" may be exercised when the investor(s) holds a large block of voting stock even when (...)

European Commission, OECD Competition Division Joint venture

Association of firms or individuals formed to undertake a specific business project. Under the EU competition rules, joint ventures are undertakings which are jointly controlled by two or more other undertakings. In practice joint ventures encompass a broad range of operations, from merger-like (...)

European Commission, OECD Competition Division Cartel

Arrangement(s) between competing firms designed to limit or eliminate competition between them, with the objective of increasing prices and profits of the participating companies and without producing any objective countervailing benefits. In practice, this is generally done by fixing prices, (...)

European Commission, OECD Competition Division Joint control

Joint control exists where two or more undertakings or persons have the possibility of exercising decisive influence over another undertaking. Decisive influence in this sense normally means the power to block actions which determine the strategic commercial behaviour of an undertaking. Joint (...)

European Commission, OECD Competition Division Brand competition

Intra-brand competition Competition among distributors or retailers of the same branded product, be it on price or non-price terms. For example, a pair of Levi’s jeans may be sold at a lower price in a discount store as compared to a department store but often without the amenities in services (...)

OECD Competition Division Anticompetitive practices

Refers to a wide range of business practices in which a firm or group of firms may engage in order to restrict inter-firm competition to maintain or increase their relative market position and profits without necessarily providing goods and services at a lower cost or of higher quality. The (...)

OECD Competition Division Excess prices

Refers to prices set significantly above competitive levels as a result of monopoly or market power. However, in practice, in absence of a conspiracy or price fixing agreement or evidence of market power stemming from high concentration, it is very difficult to establish a threshold beyond (...)

OECD Competition Division Failing firm defence

A firm that has been consistently earning negative profits and losing market share to such an extent that it is likely to go out of business. The concept becomes an issue in merger analysis when the acquiring firm argues that the acquisition of such a firm does not result in substantial (...)

European Commission, OECD Competition Division Intellectual property right (IPR)

General term for the assignment of property rights through, e.g., patents, copyrights or trademarks. These property rights give the holder the exclusive right to exploit the innovation. The holder thus has monopoly power on the use of the item, normally for a specified period of time and within (...)

OECD Competition Division Licensing

Refers to granting legal permission to do something, such as produce a product. The license confers a right which the person or firm did not previously possess. Some licenses are granted free of charge, but most require payment. Licenses are legal agreements which may contain restrictions as to (...)

OECD Competition Division Market

A market is where buyers and sellers transact business for the exchange of particular goods and services and where the prices for these goods and services tend towards equality. In order for a market to "clear" or function properly, the quantity of goods and services demanded and supplied must (...)

OECD Competition Division Price discrimination

Price discrimination occurs when customers in different market segments are charged different prices for the same good or service, for reasons unrelated to costs. Price discrimination is effective only if customers cannot profitably re-sell the goods or services to other customers. Price (...)

OECD Competition Division Price regulation

The policy of setting prices by a government agency, legal statute or regulatory authority. Under this policy, minimum and/or maximum prices may be set. Price regulation also encompasses "guidelines" which specify the magnitude by which prices can increase as in the case of rent controls. The (...)

OECD Competition Division Price-fixing agreement

An agreement between sellers to raise or fix prices in order to restrict inter- firm competition and earn higher profits. Price fixing agreements are formed by firms in an attempt to collectively behave as a monopoly. © OECD See also (...)

OECD Competition Division Refusal to deal/sell

The practice of refusing or denying supply of a product to a purchaser, usually a retailer or wholesaler. The practice may be adopted in order to force a retailer to engage in resale price maintenance (RPM), i.e., not to discount the product in question, or to support an exclusive dealing (...)

OECD Competition Division Privatisation

Refers to transfer of ownership and control of government or state assets, firms and operations to private investors. This transfer takes the form of issue and sale or outright distribution of shares to the general public. Broadly used, the term privatization includes other policies such as (...)

OECD Competition Division Rule of reason

A legal approach by competition authorities or the courts where an attempt is made to evaluate the pro-competitive features of a restrictive business practice against its anticompetitive effects in order to decide whether or not the practice should be prohibited. Some market restrictions which (...)

OECD Competition Division Vertical restraints (or restrictions)

Refers to certain types of practices by manufacturers or suppliers relating to the resale of their products. The usual practices adopted in this regard are resale price maintenance (RPM), exclusive dealing and exclusive territory or geographic market restrictions. Under exclusive dealing (...)

European Commission, OECD Competition Division Abuse of a dominant position

Anti-competitive business practices (including improper exploitation of customers or exclusion of competitors) in which a dominant firm may engage in order to maintain or increase its position on the market. Competition Law prohibits such behaviour, as it damages true competition between firms, (...)

European Commission, OECD Competition Division Entry barriers

Barriers to entry are factors which prevent or hinder companies from entering a specific market. Entry barriers may result for instance from a particular market structure (e.g. sunk cost industry, brand loyalty of consumers to existing products) or the behaviour of incumbent firms. It is (...)

European Commission Periodic penalty payment

The Commission may by decision impose periodic penalty payments in order to compel an undertaking to stop an infringement of competition rules in accordance with an earlier decision. In such a case, a daily amount is fixed which has to be paid for every day the infringement continues after the (...)

European Commission Fine

A monetary penalty imposed by a Commission decision on an see definition forundertaking for a violation of EC see definition forcompetition rules.See in particular: Article 15 of Regulation No 17 and Article 14 Merger Regulation © European (...)

European Commission Vertical agreement

Agreement or concerted Practice entered into between two or more undertakings each of which operates, for the purposes of the agreement, at a different level of the production or distribution chain, and relating to the conditions under which the parties may purchase, sell or resell certain (...)

European Commission, OECD Competition Division Tying or tied selling

Commercial practice of conditioning the sale of one product on the purchase of another product. If tying is not objectively justified by the nature of the products or their commercial usage, such practice may restrict competition. Economic theory suggests that a firm which enjoys market power (...)

European Commission Collecting society

Association, which collects payments made by users of intellectual property rights for the holders of such rights. For instance, a radio station, playing a record for which a record company holds a copyright, has to pay a fee to a collecting society, which then transfers the payments to the (...)

European Commission Services of general economic interest

Services of an economic nature, the provision of which can be considered to be in the general interest. For example: basic, publicly accessible supply of energy, telecommunication, postal services, transport, water and waste disposal services. The Member States are primarily responsible for (...)

European Commission Hard core restrictions

Refers to restrictions of competition by agreements or business practices, which are seen by most jurisdictions as being particularly serious and normally do not produce any beneficial effects. They therefore almost always infringe competition law. Under EU law, the most prominent examples on (...)

European Commission Ancillary restraints

Restrictions on the parties to an agreement (including an agreement to form a concentration), which do not constitute the primary object of the agreement, but are directly related to and necessary for the proper functioning of the objectives envisaged by agreement. In the field of co-operation (...)

European Commission International competition network (ICN)

A project-oriented, consensus-based, informal network of antitrust agencies from developed and developing countries. The ICN serves to share experiences and exchange views on competition issues deriving from an ever-increasing globalisation of the world economy, as well as to encourage the (...)

European Commission Absolute territorial protection

Practice by manufacturers or suppliers relating to the resale of their products and leading to a separation of markets or territories. Under absolute territorial protection, a single distributor obtains the rights from a manufacturer to market a product in a certain territory and other (...)

European Commission, OECD Competition Division Resale price maintenance (RPM)

Agreements or concerted Practices between a supplier and a dealer with the object of directly or indirectly establishing a fixed or minimum price or price level to be observed by the dealer when reselling a product/service to his customers. A provision which foresees resale price maintenance (...)

European Commission, OECD Competition Division Predatory pricing

A (deliberate) strategy, usually by a dominant firm, of driving competitors out of the market by setting prices below production costs. If the predator succeeds in driving existing competitors out of the market and in deterring future entry of new firms, he can subsequently raise prices and (...)

European Commission Concerted practice

Co-ordination between undertakings which, without having reached the stage of concluding a formal agreement, have knowingly substituted practical co-operation for the risks of competition. A concerted practice can be constituted by direct or indirect contact between firms whose intention or (...)

European Commission, OECD Competition Division Market power

Strength of a firm on a particular market. In basic economic terms, market power is the ability of firms to price above marginal cost and for this to be profitable. In competition analysis, market power is determined with the help of a structural analysis of the market, notably the calculation (...)

European Commission Buyer power

Ability of one or more buyers, based on their economic importance on the market in question, to obtain favourable purchasing terms from their suppliers. Buyer power is an important aspect in competition analysis, since powerful buyers may discipline the pricing policy of powerful sellers, thus (...)

European Commission, OECD Competition Division Dominant position

A firm is in a dominant position if it has the ability to behave independently of its competitors, customers, suppliers and, ultimately, the final consumer. A dominant firm holding such market power would have the ability to set prices above the competitive level to sell products of an inferior (...)

European Commission Complaint

Request by a natural or legal person who claims a legitimate interest asking the Commission to investigate an alleged infringement of EU competition law and to bring it to an end. Formal complaints oblige the Commission to act (either to find that there is an infringement or to reject the (...)

European Commission, OECD Competition Division Merger

A concentration arises either where two or more previously independent undertakings merge (merger), where an undertaking acquires control of another undertaking (acquisition of control), or where a joint venture is created, performing on a lasting basis all the functions of an autonomous (...)

European Commission, OECD Competition Division Oligopoly

A market structure with few sellers, who realise their interdependence in taking strategic decisions, for instance, on price, output and quality. In an oligopoly, each firm is aware that its market behaviour will distinctly affect the other sellers and their market behaviour. As a result, each (...)

European Commission Nullity

Under Article 101(1) TFEU agreements between undertakings which restrict competition and may affect trade between Member States are prohibited. According to Article 101(2) TFEU they are void unless they are exempted from the prohibition under certain conditions laid down in Article 101(3) TFEU. (...)

European Commission Notification

Formal information which firms provide to the Commission under EU merger law in certain situations. The Merger Regulation obliges undertakings to notify any concentration of Community dimension to the Commission on the basis of form CO, normally within one week of the conclusion of the (...)

European Commission Single branding

This term covers both non-compete obligations and quantity forcing. A non-compete obligation is an obligation or incentive scheme in a supply or distribution agreement which causes the buyer not to manufacture, purchase, sell or resell products which compete with the contract products or to (...)

European Commission Interim measures

Conservatory measures imposed on firms by the Commission in relation to a competition case, in which a final decision on the substance has not been reached yet, in order to avoid that anti-competitive behaviour leads to irreversible damage before being sanctioned. Interim measures may be taken (...)

European Commission, OECD Competition Division Relevant market

The definition of a relevant market is a tool to identify and define the boundaries of competition between firms. It allows to establish the framework within which competition policy principles are applied by the Commission. The main purpose of market definition is to identify in a systematic (...)

European Commission, OECD Competition Division Bid rigging

Particular form of co-ordination between firms which can adversely affect the outcome of any sale or purchasing process in which bids are submitted. For example, firms may agree their bids in advance, deciding which firm will be the lowest bidder. Alternatively, they may agree not to bid or to (...)

European Commission Trustee

A legal or natural person appointed in merger cases to oversee the implementation of commitments and to contribute to their implementation where required. The trustee is appointed by the parties who have offered commitments the Commission with the Commission’s approval. His powers and duties are (...)

European Commission, OECD Competition Division Franchising

A special type of agreement whereby one undertaking (the franchisor) grants to the other (the franchisee), in exchange for direct or indirect financial consideration, the right to exploit a package of industrial or intellectual property rights (franchise) for the purposes of producing and/or (...)

European Commission Non-competition clause

Contractual clause bringing about a direct or indirect obligation causing the parties to an acquisition agreement, or at least one of them, not to manufacture, purchase, sell or resell independently goods or services which compete with the contract goods or services. Such an obligation on the (...)

European Commission Leniency (programme)

General term for the total or partial reduction of fines applied to firms that co-operate with antitrust authorities in cartel investigations. The current leniency programme of the Commission is the 2006 Notice on immunity from fines and reduction of fines in cartel cases, as amended in 2015 . (...)

European Commission Parallel trade (parallel imports)

Trade in products which takes place outside the official distribution system set up by a particular firm. Through their own distribution system, firms may cause differences in prices for different countries, exploiting national differences in the behaviour of consumers. Parallel traders buy (...)