Essay Example on This case falls under the branch of the Treaty of the Function of the European Union

Treaty of the Function of the European Union TEU Article 120 states that member states of the European Union shall defend the Market Economy and free competition The purpose of the competition law is to enable effective competition to promote lower prices good resource allocation and increased prosperity Also make sure that companies do not counteract these purposes The Court of Justice of the European Union CJEU has pronounced these purposes in the case Eco Swiss case number C 126 97 The law has direct applicability and does not only regard to member nations but also companies within the nation For the rules to be applicable it must first of all concern a company that engages in economic activities This the CJEU stated in the case of Höfner case number C 41 90 I this case the German Federal office for Employment the CJEU concluded that although being a public body the German Federal Office for employment could be subject to European competition laws Secondly it must affect the trade between member nations of the European Union In the case of Völk v ÉTS J Vervaecke case number 5 59 the CJEU determined that it is enough that the trade is affected indirect or even potentially In a case regarding a cement cartel in Holland the CJEU found that although the cartel cooperation was within the borders of Holland it was meant to difficult import competition from Belgium 

According to article 101 regarding agreements which limits competition it is required that the unauthorised trade has the form om a deal between companies decisions by corporate associations or a coordinated practice In the ICI case case number 48 69 it was stated by the CJEU that a coordinated practice without an actual agreement can be made to deliberately replace the free competition The court added that a coordinated practice in its nature do not need to contain the traditional requirements of a deal but that the results of a coordinated practice can becomes apparent by how the participants behave Coordinated procedure is characterised by that the companies consider themselves free to change how they act by their own judgement Coordinated practise may take many forms However the most common is informal contacts in between companies The criteria of competition limitation mean that the trade in the within the internal market is hindered restricted or distorted In the Case of John Deer v The European Commission case number C 7 95 the court has stated that coordinated practice does not requires that a real plan has been worked out Article 101 strictly prevents that any direct or indirect contact between economic operators with the purpose or result in terms of competition which do not equals the normal condition on the market Five examples of what should be considered limitation of competition is listed in article 101 

These are fix purchase or selling prices cooperate to limit or control production or markets share markets or sources of supply discriminating agreements and supplementary obligations Fix purchase or selling prices regards price cartels between companies price cooperation between branch organisations and preparation and use of lists with recommended prices Sharing markets or sources of supply regards such market sharing cartels which divides geographical areas breakdown into categories of customers and more Agreements between companies in different countries not compete on each other s home markets has not been unusual In praxis exceptions are accepted and practised which refers to de minimis These refers to agreements or procedures off such little importance that they markedly affect the market Both the fact that this case considers limitation of competition and that our company has more than 15 of the national market prevents us from applying these With other words this is not a small agreement Another exception apart from de minimis is the exceptions for vertical supply and distribution agreements The European Commission has been tasked by the European Council to conduct exemptions for vertical supply and distribution agreements The main requirement for article 101 1 to be considered relevant is that the distributor does not have a share of the relevant market which exceeds 30 Dominance on the Market Dominance on the Market itself is not prohibited it is all about abusing your dominant position 

The relevant market is divided in two categories the product and geographically Considering relevant market by product it is the substitutability of products which are substitutable by functions price and usage etc that is considered to be the same market In the case of United Brands case number 27 76 United Brands claimed that bananas belong to the market of fresh fruit rather than the so called banana market However this argument was rejected by the CJEU Regarding geographical relevant market the case of Porto di Genova case number C 179 90 is of importance Dominance of a market has been defined as a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on a relevant market by affording it the power to behave to an appreciable extent independently of its competitors its customers and ultimately of consumers In the case of AKZO case number C 62 86 the CJEU created a dominance presumption for companies with 50 market share The CJEU considers the notion of abuse as objective notion which covers all behaviours by a company with a dominant position that can affect the structure of a market where the competition is already weakened In the Case of United Brands the company was convicted due to the fact that they had prohibited the retailers to export green bananas with the purpose of maintaining the price level In the case of Hoffman La Roche case number 85 76 customers were being treated different based on loyalty In order to be considered loyal a company was not allowed to use other distributors In this case discounts were rewarded to loyal customers