The European Commission has revised its de minimis notice on agreements of minor importance which are not caught under the prohibition provided by the Article 101 TFEU, by limiting its scope, and has published a working document on the concept of restriction by object.
In order to be caught by the prohibition on anti- competitive agreements provided by Article 101 (1) of the Treaty on the Functioning of the European Union, an agreement between undertakings must “have the object or effect of perceptibly restricting competition within the common market and be capable of affecting trade between members states” (CJEU, 13 Dec. 2012, Expedia, C-226/11, para.17).
The Commission notice on minor agreements (the de minimis notice) initially published in 2001, defines the conditions under which agreements may not appreciably restrict competition, and thus do not fall in the scope of Article 101 TFEU.
In the new version of the de minimis notice, published on 25 June 2014, and in the working document on the concept of restriction by object, the Commission does not change its approach in that respect but, drawing conclusions from the Expedia case, it restricts the benefit of the “safe harbor” created by this notice to restrictions of competition by effect.
The market share thresholds remain unchanged
The de minimis notice defines what does not constitute an appreciable restriction on competition within the meaning of the article 101 (1) TFEU by reference to market share thresholds.
This negative definition of appreciability does not imply that agreements between undertakings which exceed the thresholds set out in this notice appreciably restrict competition. Such agreements may still have only a negligible effect on competition and may therefore not be prohibited by Article 101 (1) TFEU.
Under the de minimis notice, the following agreements are not caught by Article 101 TFEU:
- agreements between competitors having an aggregate market share that does not exceed 10% of the relevant market, and
- agreements between non-competitors having a market share that does not exceed 15% of the relevant market .
In cases where it is difficult to classify the agreement as either an agreement between competitors or an agreement between non-competitors the 10 % threshold is applicable.
These thresholds are reduced to 5%, both for agreements between competitors and between non- competitors, in case of parallels networks of similar agreements within the market leading to a cumulative foreclosure effect. These thresholds have not been revised in the new version of the de minimis notice.
The new notice specifies that only undertakings which assumed in good faith that they did not reach the market share thresholds will not be fined. Unlike in the previous version, the “good faith clause” no longer applies where the parties wrongly assumed that the agreement did not contain any restrictions of competition by object.
Any “by object” restriction is now excluded
Just like the Commission’s block exemption regulations, the 2001 de minimis notice provided a list of hardcore restrictions on competition which, if included in an agreement, excluded the application of the de minimis exemption. This implied that, if the market share appreciability thresholds were not exceeded, an agreement which did not contain such hardcore restrictions could benefit from the de minimis exemption, even in the presence of a “by object” restriction.
However, in its Expedia case, the CJEU stated that “an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition” (para. 37).
The concept of anti-competitive object having a wider scope than the concept of hardcore restriction on competition, the approach adopted in the 2001 notice no longer appeared in line with the case law.
As a result, the new notice no longer strictly mentions hardcore restrictions, but excludes all agreements which have as their object the restriction of competition from the benefit of the de minimis exemption, therefore limiting its scope.
However, even if an agreement contains “by object” restrictions, it does not necessarily fall under the prohibition of anti-competitive agreements under Article 101 (1) TFEU, if it does not have an appreciable effect on trade between Member States.
This is, in particular but not exclusively, the case of agreements entered into between companies having an aggregate market share of less than 5 % and a turnover of less than €40 million, as pointed out in the notice with reference to the 2004 Notice on effect on trade.
As regards hardcore restrictions, which usually constitute “by object” restrictions, unless the legal and economic context allows to exclude them in certain particular cases from this qualification, they cannot benefit from the de minimis exemption.
The notice no longer enumerates hardcore restrictions but refers in that respect to hardcore restrictions listed in current and future block exemption regulations of the Commission.
In the working document entitled “Guidance on restrictions of competition ‘by object’ for the purpose of defining which agreements may benefit from the De Minimis Notice”, attached to the new notice, the Commission gives a useful summary of the different anti-competitive restrictions that have been considered as restrictions of competition by object or hardcore restrictions in the case law of the Court of justice, in the block exemption regulations, in the guidelines and decision making practice of the Commission.
As regards agreements between competitors, the working document analyzes agreements on price fixing, market sharing, output restrictions, bid rigging, boycott, information sharing on future prices and quantities and restrictions on carrying out R&D, and specifies the conditions under which the de minimis exemption may apply.
Sales restrictions on buyers, licensees or suppliers and resale price maintenance are caught within the category of agreements between non-competitors.
The de minimis notice is particularly useful for agreements which do not fall under a block exemption regulation or if an agreement covered by a block exemption regulation contains an “excluded restriction”, restrictions that are not covered by the exemption.
However, the “safe harbor” created by the de minimis notice has, in reality, some weaknesses. In fact, this notice only binds the Commission and has no binding effect on national competitions authorities and courts, as pointed out the CJEU in the Expedia judgement. Thus, when a national competition authority takes measures or imposes fines under Article 101 TFEU, it is free to assess the appreciable nature or not of a restriction of competition even if the agreement in question is covered by the notice.