Origins of the concept of “Concerted Practices” in European Antitrust Law
I. The concept of “Concerted Practices” in European antitrust law was not directly imported from the US
Several leading scholars have hypothesized that the concept of “concerted practice” in European antitrust laws was directly imported from the US antitrust legislation. For instance, D.G. Goyder, professor of European competition law, has asserted that none of the European member states had a concept equivalent to “concerted actions” or “concerted practices” in their domestic laws prior to the enactment of articles 101 and 102 in the Treaty of Rome. (EC Competition Law, Oxford EC Law Library, p.88). In fact, however, France issued in 1953 an executive order prohibiting anti-competitive practices, including “actions concertées” (“concerted actions”). Theories that try to interpret the meaning of the concept of “concerted practices” in Article 101 of the Treaty of Rome are therefore incomplete when they only look at the US Sherman Act or US common law. The legislative history surrounding the implementation of concerted actions in France should not be forgotten, as France had a key role during the drafting of the Treaty of Rome in 1957.
II.- An overview of the European antitrust laws in the 1950’s
Antitrust legislation appeared much later in Europe than in the United States. It was only after World War II that European countries passed comprehensive laws aimed at curbing anti-competitive practice in light of new economic inflationary challenges. Four countries adopted such legislation in the 1950s: the Netherlands, France, Germany and Belgium.
France – August 9 1953 Executive Order (decret)
Netherlands – June 28 1956 Legislation
Germany – July 1957 Legislation (Gesetz gegen Wettbewerbsbeschränkungen “GWB” Law)
Belgium – May 27 1960 Legislation
Significantly, antitrust legislation appeared at the supra national level in the European Coal and Steel Community, created on April 18, 1951 in articles 65 and article 66. Even though the ECSC Treaty applied to only one sector of the economy, underlying principles in relation to anti-competitive practices deeply influenced the redaction of later European antitrust legislations. The concept of “concerted practices” appeared in the redaction of Article 65. France, West Germany, Italy, Luxembourg, Belgium and the Netherlands drafted and negotiated the Paris that led to the creation of the ECSC.
Thereafter, the Treaty of Rome, enacted on March 25 1957, included Article 101 and 102. The concept of “concerted practices” resurfaced in Article 101.
III. The August 9 1953 French Decree
In 1953, France was the first European country to take antitrust measures after World War II. The French executive branch justified the necessity to enact the 1953 antitrust decree by the need to lower inflation in the country at the time.
Article 1 of the 1953 decree prohibits “concerted actions”, “agreements”, “expressed or implied understandings” and “coalitions” whose objects or effects have a negative impact on competition. Under the decree, a negative impact on competition is found when prices on a market are artificially maintained at a high price.
Article 1 also provides certain exceptions. Any company action that could improve “market prospects” or “economic prospects” by “specialization and rationalization” were allowed.
In order to enforce the executive order, a commission was created (Commission Technique des Ententes — “CTE”) that had the authority to investigate potential infringements of Article 1 and make recommendations to the investigated companies on how to change their practices. In the event of repetitive infringements, the Commerce Secretary had the power to prosecute companies that were unwilling to negotiate with the CTE.
The CTE functioned secretively during three years. In 1956, a first report relating to the CTE was released, pursuant to the request of an elected official from the Lower Assembly.
In the report, the Executive branch re-emphasized that investigations led by the CTE were confidential. The Government therefore refused to reveal the name of the companies that were subject to the scrutiny of the Commission. On the other hand, the government published general statistics relating to the CTE. From 1953 to 1956, the Commission had looked into 10 potential violations of the 1953 decree. The executive branch clarified that recommendations of the CTE had been well received by investigated companies. No legal recourse had been necessary to implement the commission’s recommendations.
Interestingly, in the same report, the Executive Branch gave its view of the scope of the applicability of the concept of “concerted actions”. The CTE had to “thoroughly examine of the market conditions” in order to prove the existence of a “concerted action”. In fact, the report clearly stated that the CTE could not rely on presumptions in order to prove a concerted action. (JO du 19 Octobre 1957). Specifically, a price fixing concerted action could not be proven under this standard until pricing of the products had changed and materially affected the market.
From 1954 to 1956, the CTE investigated only three types of concerted actions: distribution monopolies, quotas of production, and the setting of similar minimum prices. (JO du 19 Octobre 1957).
IV. “Concerted Practices” in Early CJEU (formerly “ECJ”) Jurisprudence – Most Significant Cases
In 1969, for the first time, the European Court of Justice interpreted the concept of concerted practices in the Dyestuffs case:
“Article  draws a distinction between the concept of “concerted practices” and that of “agreements between undertakings” or of “decisions by associations of undertakings” ; the object is to bring within the prohibition of that article a form of coordination between undertakings which, without having reached the stage where an agreement properly so-called has been concluded, knowingly substitutes practical cooperation between them for the risks of competition”. 48-69, Imperial Chemical Industries Ltd. v Commission (Dyestuffs) .
In 1975, the CJEU revisited the concept of concerted practices in the Sugar Case and gave a more detailed definition of concerted practices.
“…understood in the light of the concept inherent in the provisions of the Treaty relating to competition that each economic operator must determine independently the policy which he intends to adopt on the common market including the choice of the persons or undertakings to which he makes offers or sells. Although it is correct to say that this requirement of independence does not deprive economic operators of the right to adapt themselves intelligently to the existing and anticipated conduct of their competitors, it does however strictly preclude any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market”. 113-114, Coöperatieve Vereniging “Suiker Unie” UA and others v Commission .
In Pioneer, the Court extended the concept of concerted practice to vertical concentration situations (all previous cases had dealt with horizontal concentrations).
“A company whose purpose is to import and organize the sale of products in several Member States and which to that end attempts to find a distributor in each of the Member States in question, offers it an exclusive distributorship agreement, divides the products imported amongst the national distributors and seeks to coordinate their sales efforts, inter alia by holding regular meetings, is obliged, on account of its central position, to display particular vigilance in order to prevent concerted efforts of that kind from giving rise to practices contrary to the competition rules, even if those activities do not necessarily confer on it a decisive influence on the conduct of each of the distributors.” SA Musique Diffusion française and others v Commission .
The concept of “concerted practices” emerged during the 1950s in the European Union and officially appeared for the first time in Article 65 of the ECSC.
Some scholars have concluded that the concept of “concerted practices”, as it appeared in the Rome Treaty of 1957, was directly influenced by the adoption of the concept in the 1951 ECSC Treaty in the first place.
However, one of the key members of the negotiations leading to the adoption of the Treaty of Rome, France, had already adopted in its national legislation the concept of “concerted actions”. The concept of “concerted practices” had therefore a life on its own in 1957, during the drafting process of the Treaty of Rome. This early legislative history should not be discounted in defining the scope and the meaning of the concept of “concerted practices”.
In an effort to include all forms of potentially anti-competitive coordination, the drafters of Article 101(1) used the terms “agreements,” “concerted practice,” and “decisions by associations of undertakings.”[1. Consolidated Version of the Treaty on the Functioning of the European Union art. 101, Sep. 5, 2008, 2008 O.J. (C 115) 88–89 (hereinafter TFEU)].
The following chart depicts the various forms of coordination that are deemed to violate Article 101(1).
|Different Forms of Coordination:||Definition/Example||Present in T-Mobile Case|
|Explicit Agreement||“TrueClassic” Cartel||A combination of independent commercial or industrial enterprises designed to limit competition or fix prices.||NO|
|Written Agreement||Written contract between two or more parties that has a goal to limit competition or fix prices.||NO|
|Oral Agreement||Agreement without explicit written contract, that has a goal to limit competition or fix prices.||NO|
|Implicit Agreement||Concerted Practice||A form of coordination between undertakings without having reached the stage where an agreement properly so called has been concluded, practical cooperation between them is knowingly substituted for the risk of competition.||YES According the the ECJ there was a CP|
|Unilateral one- time disclosure||A one- time disclosure of market information that could/has the potential of limiting competition or fixing prices.||YES|
The reasoning behind the term “concerted practice” was to prevent corporations from escaping liability under Article 101, simply by avoiding an explicit agreement but still being able to circumvent the risks of competition by sharing competitively sensitive market information with their competitors. Advocate General Kokott in her T-Mobile opinion, as well as the Commission in its 2011 Guidelines, defines a concerted practice as “a form of coordination between undertakings by which, without it having reached the stage where an agreement properly so called has been concluded, practical cooperation between them is knowingly substituted for the risks of competition.”[2. Case C-8/08, T-Mobile Netherlands BV and Others, 2009 E.C.R. I-04529, ¶ 33; ICI v. Comm’n ¶ 60.] In other words, a concerted practice does not reach the level of a formally drawn contract or actual oral agreement, but rather it exists if one party shares confidential competitive information with others. If a competitor shares such information it will be seen as an attempt to reduce the risk of competition, and thus it would be considered a concerted practice in violation of Article 101.
However, the distinction between an agreement or concerted practice is not as important as a proving that there is collusion.[3. See Albertina Albors-Llorens, Horizontal Agreements and concerted practices in EC Competition law: Unlawful and Legitimate contracts between competitors, 51/4 The Anti-Trust Bulletin 837, 843 (2006).] A classic example of Collusion is defined by its result of having parties work together to achieve higher prices than would be expected under normal market conditions. However, as the law currently applies, an increase in prices will not automatically be considered a concerted practice. In order for a concerted practice, i.e. collusion between the parties, to be present, the parties involved must be aware that their actions would replace the normal risks of competition.[4. Since parallel behavior would not be considered a concerted practice, if the parties did not share any information.] The inclusion of concerted practices in Article 101 is an attempt to prevent this type of collusion. By preventing concerted practices, the Commission attempts to reach one of the main goals behind Article 101, the protection of consumers and the creation of a single market. Since collusion, i.e., higher prices than under normal market conditions could be harmful to a market and its consumers.
What does this mean for undertakings in the EU? As Ms. Llorens states, “Undertakings will be well advised neither to communicate to competitors nor accept (tacitly or expressly) information from competitors regarding competition-sensitive matters.”[5. Id. at 875.] Any information sharing of a competitively sensitive matter will be considered a concerted practice and trigger an Article 101 analysis. Sharing of public information, however, will not be considered a concerted practice, as long as the information that is shared with the public is not done in order to circumvent the risk of competition.[6. Undertakings should be aware that public information can also trigger Article 101 if it is used to fix prices/limit competition. See Case C-7/95, John Deere v. Comm’n. 1998 E.C.R. I-03111.] Under the current rules, undertakings should even be careful of disclosing information to suppliers that are also used by competitors, since this could lead to a finding of concerted practices.[7. As was decided by the UK Competition Appeal Tribunal in JBB/Allsports v. Office of Fair Trading, which held that when competitor A made its price changes known to Supplier, and Supplier informed competitor B of the price changes in order to influence competitor B in matching prices, all three parties would fall under Article 101 for concerted practices with an object of circumventing fair competition, if party A could reasonably foresee that Supplier would share such information. See Albors-Llorens, supra note 5, at 863 (citing Competition Appeal Tribunal in JJB Sports/All Sports v. Office of Fair Trading, Case 1021/1/1/03 and 1022/1/1/03, 2004 CAT 17).]
However, undertakings should be aware that not all information sharing will automatically be considered a concerted practice. Prior case law distinguished between an announcement that was followed by immediate implementation and an announcement where the undertakings would then take time to consider the effects, finding that the latter qualified as a concerted practice and the former did not. But, for public announcements undertakings should ensure that an immediate implementation is present, since sharing of information under the T-Mobile decision imputes a concerted practice on those parties present at the meeting who remain in the market. Additionally, the Commission guidelines do allow undertakings to avoid a presumption of concerted practice in these situations by clearly stating that the undertaking does not wish to receive such data, and making a public announcement of what has transpired at the meeting. However, as AG Kokott explains, if the company does not take these actions, the company who receives the information, even if unwillingly, and remains on the market will be presumed to have used that information and thereby be considered to be part of a concerted practice under Article 101.
Thus, even a unilateral one time disclosure can fall under the Concerted Practice prong of Article 101(1); thereby, lowering the standard that a party is required to meet in order to violate Article 101(1). However, the CJEU states that a party must “knowingly substitute practical cooperation for the risk of competition” in order to be caught by Article 101. Therefore, a simple mutual belief is insufficient to fall under a concerted practice. If one undertaking acts because it believes that another undertaking is acting in a certain way, the former’s conduct does not constitute a concerted practice. However, once the parties have communicated their goals, they will be deemed to have engaged in a concerted practice. Since a concerted practice requires the undertakings to “act knowing that all conditions have been satisfied in part because they communicate their reliance and their goals to each other.”[8. William H. Page, Communication and Concerted Practice, 38 Loy. U. Chi. L.J. 405, 427 (2007.]
However, unless the commission has a recording of such communications, the commission will need to prove that such a communication took place by looking at the economic evidence of market structure, conduct, and performance.[9. See id. at 428.] Yet in the T-Mobile opinion, the CJEU clearly states that “there is no need to consider the effects of a concerted practice where its anti-competitive object has been established.”[10. Case C-8/08, T-Mobile Netherlands BV and Others, 2009 E.C.R. I-04529, ¶ 33; ICI v. Comm’n ¶ 30.] This then begs the question, how has the concerted practice been established without considering the effects in the first place?