Competition and cartel banning
Sufficient competition is important for an effective market. This ensures that companies compete with each other for the chance to sell their products or services. All economic operators wish to acquire a market position which is as advantageous as possible. The intention is that they do not obstruct each other or distort competition. Competition rules have been recorded in order to safeguard this and there is also a cartel prohibition in existence. The granting of state aid
is also governed by competition law.
The cartel prohibition prohibits all cooperation between companies which distorts competition in the EU market and influences trade between the member states.
There must be cooperation in the form of an agreement, a decision of an association of undertakings or mutually coordinated conduct. The cartel prohibition refers to cooperation which limits, prevents or distorts competition. An arrangement which is not made so as to limit competition, but does have this effect, is also prohibited. The European Court of Justice is concerned with cartel banning within the European Union. National law applies to purely local cartels. However, the European Court of Justice will quickly assume that trade is being influenced between member states; influence whether or not actual, or even just the potential for influence, is already sufficient.
Not all arrangements between companies are prohibited. Arrangements between companies which can limit competition can also have positive effects. That is why there are exceptions. It is possible to acquire an individual exemption from the cartel prohibition. A block exemption can also be granted.
Voidness and compensation
If an arrangement or action fulfils the aforesaid description, it falls under the cartel prohibition. The result of this is that the agreements and decisions concerned are void. Voidness means that the agreement has never existed; the agreement is not valid and has no consequences. The national court must establish the consequences that have nevertheless arisen and can award compensation to the duped parties.
Abuse of a dominant position
In addition, it is forbidden to abuse a dominant position in the community market, or a substantial part thereof, which is held by one or more companies and as a result of which abuse competition is limited and trade between the member states of the EU is influenced.
The market must be distinguished in order to be able to determine whether the company occupies a dominant position. It thereby concerns the 'relevant' product or services market from a substantive as well as territorial point of view. The dominant position not only depends on the market share, but also on matters such as company structure, financial power, technological advances and potential competition.
To have a dominant position is not in itself prohibited, but the abuse of a dominant position is prohibited. There is a system of preventative merger control which prevents the abuse of a dominant position. Mergers, takeovers and structural joint ventures must be reported when the companies involved exceed specified turnover thresholds. The European Commission can prohibit the merger if this could cause the strengthening of the dominant position as a result of which competition in the community market would be limited. National law applies to dominant positions that are on a purely local level.
The property specialists of AK Advocaten advise (semi)public authorities and companies in the field of competition. We have a wealth of experience in testing compliance with competition rules. We can additionally negotiate on your behalf, or if it comes to legal proceedings, take care of your interests in court.
Please contact us.