Concerted practices

 

Author Definition

 

Definition

The term “concerted practice” is a form of anticompetitive market coordination without an agreement necessarily being reached. It may be defined as the coming together of two factors joined by a link of causality, based on the coordination between the parties through a way of contact whether direct or indirect, and the modification of the normal conditions of the market. A concerted practice has the purpose of harming competition where commercially sensitive information, such as an undertaking’s planned future pricing or output or capacity, is exchanged between actual and/or potential competitors.

 

Commentary

The term “concerted practice” was used in Article 85 of the Treaty of Rome of 1957 (Article 101 TFEU). This term can be found in numerous competition laws of EU Member States, but also in many other jurisdictions worldwide, such as Singapore, Malaysia, or Australia.

The concept of a concerted practice, as it has been developed through the jurisprudence of the Court of Justice of the European Union, refers to a form of coordination between undertakings by which, without having reached the stage of a true agreement, a cooperation between competitors is knowingly substituted for the risks of competition. (Dyestuffs)

The parallel behaviour may not by itself be identified as concerted practice. It may however be considered evidence of such practice if it substitutes cooperation between competitors for the risks of competition in the market, having regard to the nature of the products, the size and number of the undertaking, and the volume of the said market. This is especially the case if the parallel conduct enables those economic operators, for example, to stabilize prices at a level different from that which normal competition would have led. (Dyestuffs)

Acting independently is the normal conduct that each undertaking shall adapt in the decision-making process. As the Court stated in the AC-Treuhand AG case, each economic operator must determine independently the policy which he intends to adopt in the market (AC-Treuhand AG and Anic Partecipazioni). This means that a competitor should not be influenced by other competitors while making decisions about future behaviour in the market, for example, about future prices and strategies. (T-Mobile)

The existence of a way of contact or communication, either direct or indirect, between the competitors with a possibility of affecting their independence while making decisions, is a required element to prove the infringement. (Suiker Unie)

The contact or communication which does not occur directly between competitors may happen in form of exchange of commercially sensitive information through third parties, for example, trade associations, distributors or from one retailer to another through their supplier may be considered as an infringement. The English Court of Appeal found that the exchange of information through an intermediary amounted to an infringement by object. (Argos Ltd & Littlewoods and Umbro Holdings Ltd)

In the Cimenteries case, the Court set a requirement of having ‘reciprocal’ behaviour. However, a unilateral disclosure of information may be considered an exchange by one undertaking if it expresses its future intention or conduct, it has received a request from another undertaking with a wish to receive such information, and/or the receiving undertaking accepts the information exchanged. (Cimenteries)

Taking the same approach, the Court stated in Treuhand AG that if an undertaking does not wish to participate in a concerted practice it must oppose the invitation in a clear manner, otherwise tacit acceptance will suffice. (AC-Treuhand). Thus, by not distancing itself publicly from anti-competitive conduct an undertaking will be part of the stated behaviour. This approach tends to affirm that attendance at a meeting can violate Article 101(1) when the receiving undertaking does not make a clear objection. (P. Aalborg Portland)

Information considered harmful to the competitive process typically involves strategic data, such as prices, discounts, rebates, interest rate levels, increases or reductions in prices, volume, capacity, marketing plans, risks, investments, and the customer base. Such information can facilitate collusion by reducing independence in decision-making. (EU Competition Rules on Horizontal Agreements Guidelines 2011)

The distinction between individualized and aggregated data is important. (Jones and Sufrin EU Competition Law – fifth edition (2014), p. 699). The level of details increases the likelihood of coordination between competitors. This means that if precise cost or demand information is exchanged this facilitates collusion, particularly if it is commercially sensitive. (Case AT.39850 — Container Shipping para. 35 and 51). Additionally, both specific and the periodic information exchanges are likely to be anti-competitive (P. Aalborg Portland)

The case-law clearly illustrates that an agreement or concerted practice also infringes Article 85(1) of the Treaty if it has the purpose (and not necessarily the effect) of restricting competition. (JUDGMENT OF 12. 7. 2001 — JOINED CASES T-202/98, T-204/98 AND T-207/98)

To establish concerted practices within the meaning of Article 101 TFEU, it is sufficient to show that competition has been restricted, and unnecessary to prove that it has been prevented. (Suiker Unie)

The mere fact that a party does not fully abide by an agreement or concerted practices, which is manifestly anti-competitive, does not relieve that party of responsibility. (Replica Kit and Toys)

 

Case references

Cases C-194/14 AC-Treuhand AG

Case C-8/08 T-Mobile

Toys and Games case - Competition Appeal Tribunal, Toys and Games - Argos Ltd & Littlewoods Ltd v. OFT

Replica Kit case, Court of Appeal – combined judgment, Replica Kit and Toys 2006, EWCA Civ 1318

Joined Cases C-204/00 P Aalborg Portland and others v. Commission

Judgment of 12. 7. 2001 — Joined cases T-202/98, T-204/98 AND T-207/98

Joined Cases T-25/95 Cimenteries CBR SA and others v. Commission

"Suiker Unie" UA and others v Commission of the European Communities. Joined cases 40 to 48, 50, 54 to 56, 111, 113 and 114-73

Cases 48, 49 and 51-57/69 ICI (Dyestuffs) v. Commission

 

Bibliography

Australian Competition and Consumer Commission - Guidelines on concerted practices (August 2018).

Jones, Alison and Brenda Sufrin, EU Competition Law, 5th edition, Oxford University Press, 2014.

Oliver Black, King’s College London Cambridge University Press, 2005.

Whish, Richard and David Bailey, Competition Law, 8th edition, Oxford University Press, 2015.

William H. Page Facilitating Practices and Concerted Action Under Section 1 of the Sherman Act. Antitrust Law and Economics. (2008).

Author

Quotation

Amira Abdel Ghaffar, Concerted practices, Global Dictionary of Competition Law, Concurrences, Art. N° 12332

Visites 34944

Publisher Concurrences

Date 1 January 1900

Number of pages 500

 

Institution Definition

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 effect is either to influence the conduct of the market or to disclose intended future behaviour to competitors. © European Commission

 
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