Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Convergence Rule – A Spanish Example

with 4 comments

oil

The convergence rule of Regulation 1/2003 (Article 3(2) sets that:

The application of national competition law may not lead to the prohibition of agreements, decisions by associations of undertakings or concerted practices which may affect trade between Member States but which do not restrict competition within the meaning of Article 81(1) of the Treaty, or which fulfil the conditions of Article 81(3) of the Treaty or which are covered by a Regulation for the application of Article 81(3) of the Treaty“.

Often, I have struggled to find concrete examples of such situations.

Our friend Miguel Troncoso Ferrer (Gomez Acebo Pombo) has offered us a very good illustration of this.

A recent amendment to the Spanish Hydrocarbons Act sets out a blanket prohibition of non-binding price recommendations in distribution agreements in the hydrocarbons industry.

This prohibition covers agreements below the 30% market share threshold.

It thus prohibits conduct which is covered by “a Regulation for the application of Article 81(3) of the Treaty“.

And this amendment purports to regulate competition (according to the Preamble of the new statute).

It thus violates EU law. The full analysis is available here: Analysis_On the compatibility with Eu Law of the new Section 43 A

In light of the Italian Matches case-law, publics authorities, national courts and firms can disregard this legislative provision.

@Alfonso: an apology. I did not mean to promote of a rival shop.

Written by Nicolas Petit

11 September 2013 at 5:45 pm

Posted in Uncategorized

4 Responses

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  1. Well, yes and no. I hadn’t seen this before, but the fact is that Art.3 of Regulation 1 only provides that “the application OF NATIONAL COMPETITION LAW may not lead to the prohibition of…..”.

    That means that strictly speaking Member States can regulate and even prohibit (using tools other than national competition law) arrangements that could potentially be caught under 101 TFEU.

    And this makes sense, particularly given that almost anything can be construed as falling within the scope of Art. 101.

    It’s true that in this specific case the strict wording of the Regulation may lead to an overly formalistic result (which would seem intuitively wrong), but the real question is whether this new Spanish rule deprives Art 3.2 of its “effet utile”. What was the goal of Art 3.2? Was it the humble goal of ensuring formal convergence among national competition laws and EU competition law? Or was it a more ambitious goal of ensuring legislative harmonization over matters related to competition? My instinct reaction is to think that the issue is a bit more complex than the post suggests..

    As to the advertising of a competing firm; no probs at all, Nico. Competition is healthy, which is why I’ll devote my next posts to doing covert advertising for all competition law programs other than Liege’s and the BSC’s, and will start linking to Garrigues’ Antitrust Newsletters… 🙂

    Alfonso Lamadrid

    11 September 2013 at 7:25 pm

    • Well, yes and nol Alfonso. I agree with you: Striclty speaking Member States can regulate and even prohibit agreements authorized by a BER by using tools other than national competition law.

      But let’s read what the preamble of the Law promoting Entrepreneurship says about the goal of the new provision… it only talks about improving competition in the market. There is nothing purely regulatory on it. Not to mention the puzzling reform process… a general rule intending to make the whole economy grow modifies a sectoral – regulatory rule (the Hydrocabons Act), but at the end the real purpose of this new rule is nothing more than a pure competition law/policy one (in a concrete market, true, but competition law, after all).

      Even the humble goal of ensuring convergence between EU and national competition laws would be violated.

      This being said, I did not want to breach the couple’s harmony. Will invite you both to a drink one of these days. 😉

      Miguel Troncoso Ferrer

      11 September 2013 at 8:12 pm

  2. Sure, sure, that (i.e. the apparent wording of the Preamble and the fact that the underlying goal seems to be a competition policy one) is precisely the reason why I’m saying that in this particular case sticking to the wording of the Regulation may not yield what would appear as the right solution.

    I haven’t given this any thought, but I’m inclined to believe that this rule might breach the spirit of Art. 3 of the Regulation (although I think that’s also arguable), even if it clearly does not breach its letter. That was my point; and that’s why I’m saying that it all this is not so straightforward (because you need to identify what “the spirit” was, and that isn’t easy).

    No harmony broken, Miguel! And I’m very happy to accept that invitation (Nico never invites… ; it’s the firm paying, right?)

    Alfonso Lamadrid

    11 September 2013 at 10:39 pm

  3. A further example ffor such a situation comes from Hungary: a law adopted in 2009 – intended to protect suppliers of agricultural products against large supermarket chains – introduced (i) a prohibition to agree on exclusive supply by the supplier vis-a-vis the supermarket chain and (ii) a prohibition to apply most favoured customer clause in the same relationship. Although there are certain exceptions from this rule (when due consideration is provided to the supplier for the exclusivity or when the relationship concerns private label brands), the general rule would also entail a situation where national law prohibits a certain conduct, which is otherwise block-exempted under the EU rules (provided, certainly, that the conditions for block exemption are met).
    Now it is interesting to ask as to what extent this Hungarian law can be regarded as part of the “national competition law” of Hungary and thus falling under Article 3 of Regulation 1/2003/EC. At the same time, I very much agree with the “effect utile” argument: the application of EU law would be made less effective if Member States could circumvent the application of EU law by putting various extra prohibitions in laws other than “national competition law” and thus causing a fragmentation in the internal market.

    Asimo

    12 September 2013 at 10:48 am


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