Glossary of competition terms

This Glossary is based on definitions from DG COMP’s Glossary of terms used in EU competition policy (© European Union, 2002) and the OECD’s Glossary of industrial organisation economics and competition law (© OECD, 1993). Each term is enriched with references of national case laws from the e-Competitions Bulletin and Concurrences Review.

Individual exemption

Decision of the Commission pursuant to Article 101(3) of the TFEU to exempt notified agreements between companies from the prohibition of Article 101(1) of the TFEU, on the basis of an individual assessment. In broad terms, restrictive agreements qualify for exemption if their benefits to general welfare (product improvement, technical or economic progress, benefits to consumer) outweigh their restrictive effects on competition.

© European Commission

The assessment under Article 101 TFEU consists of two parts.

The first step is to assess whether an agreement between undertakings that is capable of affecting trade between EU countries has an anti-competitive object or actual or potential anti-competitive effects. Article 101(3) TFEU becomes relevant only when an agreement between undertakings restricts competition within the meaning of Article 101(1) TFEU. In the case of non-restrictive agreements there is no need to examine any benefits resulting from the agreement. The Commission guidelines on vertical restraints, horizontal cooperation agreements and technology transfer agreements contain substantial guidance on the application of Article 101(1) TFEU to various types of agreement.

The second step, which becomes relevant only when an agreement is found to be restrictive of competition, is to determine the pro-competitive benefits produced by that agreement and to assess whether these pro-competitive effects outweigh the anti-competitive effects. The balancing of anti-competitive and pro-competitive effects is conducted exclusively within the framework laid down by Article 101(3) TFEU. The present guidelines examine the four conditions of Article 101(3) TFEU:

  • efficiency gains;
  • fair share for consumers;
  • indispensability of the restrictions;
  • no elimination of competition.

Given that these four conditions are cumulative, it is unnecessary to examine any remaining conditions once it is found that one of them is not fulfilled. In individual cases it may therefore be appropriate to consider the four conditions in a different order. For the purposes of these guidelines, it is considered appropriate to invert the order of the second and the third condition and thus deal with the issue of indispensability before the issue of pass-on to consumers. The analysis of pass-on requires a balancing of the negative and positive effects of an agreement on consumers. It should not include the effects of any restrictions that already fail the indispensability test and are, for that reason, prohibited by Article 101 TFEU.

© European Commission

Glossary