EU Legal Developments:
REVISED DE MINIMIS NOTICE
SUMMARY:
The revised Notice on agreements of minor importance, which do not appreciably restrict competition (“De Minimis Notice”) was adopted by the European Commission (“EC”) on 25 June 2014. The De Minimis Notice excludes certain practices and arrangements between the companies from the general EU law prohibition of anti-competitive agreements under Article 101(1) of Treaty on Functioning of the EU (“TFEU”) depending of the market power of the companies involved.
The main novelty of the revised De Minimis Notice is that it emphasizes that an agreement with an anticompetitive object constitutes an appreciable restriction of competition by its nature at all times and hence can never benefit from the safe harbour set out in the De Minimis Notice.
DE MINIMIS NOTICE HIGHLIGHTS
The De Minimis Notice is aimed at facilitating the self-assessment of the agreements between the companies. It is up to the parties to the agreement to self-assess the effects of their agreement on the EU market and decides whether such agreement falls outside the scope of Article 101(1) prohibition.
To be caught by Article 101(1) TFEU the agreement should have an appreciable effect on competition. As clarified by the Court of Justice of the EU (“ECJ”) in Expedia case C-226/11, certain agreements with an anti-competitive object and which may affect trade between Member States will always constitute, by their nature, an appreciable affect on competition, and hence will fall under Article 101(1) TFEU, unless justified by Article 101(3) exemption.
The new De Minimis Notice reflects the ECJ’s ruling in Expedia 2012 case and provides that any restriction by “object” will be deemed appreciable and will therefore fall outside the safe harbour of the de minimis rule, regardless of the effects of the agreement or market shares of the parties. The previous 2001 version of the De Minimis Notice excluded only certain hardcore anti-competitive agreements (e.g. price fixing and market sharing agreements) from the safe harbour. A restriction “by object” includes any hardcore restrictions as per current or future EU block exemption.
The market share thresholds remain unchanged in the new De Minimis Notice. In particular, companies whose market shares do not exceed 10% for agreements between competitors or 15% for agreements between non-competitors are within the safe harbour and exempt from Article 101(1) TFEU prohibition, unless the agreement has an anti-competitive object.
The De Minimis Notice is accompanied by a Staff Working Document setting out types of practices will generally constitute restrictions of competition by object, such as: agreement between competitors to fix prices of their products; agreement between competitors to allocate markets or customers; agreement between competitors to restrict their supply or production capacity; exchanging future pricing information between competitors etc. This list is not exhaustive, also because the boundary between the object and effect anticompetitive agreements is not always clear-cut.
If the safe harbour applies, the companies can take comfort that an antitrust investigation will be not be opened against them. But a careful self-assessment of their practices/agreements is crutial for this.