Turkish Law Blog

Concerted Practices in the Context of EU Competition Law

Alptekin Köksal Alptekin Köksal/ University of Exeter
12 May, 2019

I. Introduction

“All agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market…”[1] are prohibited by Article 101 of the Treaty on the Functioning of the European Union (hereafter TFEU). Article 101 of the TFEU deals with the connection between two or more undertakings.[2] Article 101 of the TFEU is implemented by courts effectively throughout the EU. Additionally, the European Commission Guidelines on the Horizontal Co-operation Agreements[3] and Guidelines on Vertical Restraints[4] draws a basic framework and understanding for anticompetitive practices. This document expresses the main purpose of controlling agreements, and tries to draw a scope of the applicability of Article 101, while supported by EU Case Law.

Thus, the purpose of this paper is to differentiate theoretically and make separate definitions of agreements, decisions and concerted practices as a means of collusion in the context of EU Law. Distinguishing these concepts is a necessity, and it is important before the courts to catch all forms of collusion and to give judgments on an equity basis. Secondly, evidence for the term concerted practice will be discussed, as it is the most complicated and unclear expression in the body of Article 101 of the TFEU. Furthermore, after that part, suitable market conditions for concerted practice and the role of parallel behaviour in concerted practice will be examined. In the last part, the boundary between “innocent” and “collusive” behaviour[5] in terms of concerted practice will be discussed.  As an outcome of this paper, a substantial basis of concerted practice will be drawn.

II. Agreements, Decisions and Concerted Practices

II.I. Agreements

There is an essential stage before defining what an agreement is. Brief information about the meaning of an undertaking should be given in order to analyse Article 101 effectively. Undertaking is not defined in the TFEU, but in case law definitions can be found.[6] According to the Court, in its judgement, an undertaking is defined as an economic entity which is engaged in any kind of economic activity in terms of competition law, regardless of its legal status and how it is financed.[7] This specification is the same as undertakings captured under Articles 101 and 102, and it covers all kinds of natural or legal persons engaged in any economic activity.[8] The definition of undertaking covers businesses, firms, holdings, companies, sole traders and even non-profit making organisations, along with public economic entities[9] (associations of undertakings are also included, and this will be important while defining decisions).

The difference between Article 101 and Article 102 shows up in the content on agreements. If there is an agreement between a parent company and a subsidiary company which is controlled by the same owner, or a couple of undertakings under the control of a third company, this agreement will not be considered in terms of Article 101.[10] The reason behind this is that there are no separately governed and economically independent undertakings involved, since they constitute a single economic entity.[11] In a single economic entity, it is not logical to search for collusive behaviour, because at least one party to an agreement or concerted practice will not have any real freedom to show signs of any independent behaviour.

In terms of moving with the idea of at least two independent undertakings, anticompetitive agreements can be classified in various forms:[12]

  • First, they can be distinguished by their level of market. If undertakings are competitors of each other, anticompetitive agreements concluded between them are called horizontal agreements. If they are not on the same level of market, then a vertical anticompetitive agreement will be formed. Article 101 of the TFEU can apply to both horizontal and vertical agreements.
  • Second, they can be distinguished by the materialisation of an agreement. Proper agreements with joint expressions will form express anticompetitive agreements, and others which have coordinated behaviour but an imprecise expression of wills will form tacit anticompetitive agreements.
  • The final classification of anticompetitive agreements is to separate them as in Article 101 of the TFEU: agreements, decisions and concerted practices. These are fundamental concepts, and it does not matter whether they are vertical or horizontal, or express or tacit.

Article 101 was drafted to cover these three different fundamental concepts when they contain anticompetitive objects, effects, or any kind of collusion in general.[13] Firstly, while searching for a definition of agreement, in the Bayer v Commission Case the General Court stated:

“It follows that the concept of an agreement within the meaning of Article 85(1) [now Article 101(1)] of the Treaty, as interpreted by the case-law, centres around the existence of a concurrence of wills between at least two parties, the form in which it is manifested being unimportant so long as it constitutes the faithful expression of the parties’ intention…”[14]

The expression of the Court clearly demonstrates an agreement. The meaning of agreement in a competition law context looks the same as described in contract law.[15] In contract law, the definition of agreement states that it consists of expressions of ‘common intention’ and ‘will of the parties’, which makes both definitions identical.[16] In the context of Article 101 of the TFEU, common intention alone is not sufficient; joint intention is also needed.[17] The importance of joint intention is stressed in several cases.[18] One important issue here is that the intention of one party might not be voluntary; in other words, that party might be under pressure to sign the agreement, or a similar situation might exist. This situation will not be considered when deciding whether there is an agreement or not. 

As mentioned before, common intention is at the centre of the meaning of agreement, both in contract law and competition law.[19] In contract law, this intention could be traced by offer and acceptance (in other words, communication and commitment).[20] This multi-staged application can be used to find and prove the existence of an agreement in the context of Article 101. This communication and commitment stage can be established in a written way.[21] The existence of this written evidence is usually in the form of contracts written in a formal way which shows a common intention, and this could be through exchanged documents containing communication, saved mail traffic, minutes of meetings, and suchlike.[22] Moreover, it is not necessary to have written proof of an agreement; oral evidence can be used.[23] Statements of parties showing common intention, expressions of any kind of offer, and answers to them are all proofs of agreement. The only difference here is that the latter issue needs more consideration and a deeper analysis.[24]

To summarise, proof of an agreement can be found through direct or indirect findings of joint intention between undertakings.[25] Other issues are not important if there is the concurrence of wills and faithful expressions of undertakings.[26] Therefore, the agreement concept captures a variation of agreements: namely, any agreements which are written or oral, gentlemen’s agreements, legally binding or non-binding agreements, agreements to settle disputes, vertical agreements, spoken arrangements, agreements concluded by employees, and suchlike.[27] To make it more clear, the scope of Article 101(1) is not limited to formal agreements. It applies to both formal and informal agreements and types of cooperation. As mentioned before, it would be wrong to analyse agreements only between actual competitors in the same relevant market. Article 101(1) covers agreements which are signed by undertakings operating at different levels of a market. The idea that ‘Article 101 should not be applied to non-competitors’ was rejected by the European Court of Justice (ECJ),[28] and the Court held the decision that Article 101 could apply to non-competitor undertakings which are vertically connected.[29]

Agreements and concerted practices are certainly distinct, but in some cases collusion may contain the elements of both agreement and concerted practice, in the eyes of the Commission.[30] Moreover, in some instances, the boundaries of agreement and concerted practice are not clear at all. Spotting an agreement or concerted practice and distinguishing them might not affect the judgment in a case. The Court held in the Asnef-Equifax Case that there was no need to distinguish and characterise the type of cooperation as soon as it had negative effects on competition.[31] In the same paragraph, the Court held that distinguishing the meaning of these practices is important in terms of catching all forms of collusion and anticompetitive coordination between undertakings.[32] The intensity and form of collusion may be determinative while distinguishing them from each other.[33] More detailed discussion will be provided in the section on concerted practices.

II.II. Decisions

The role of trade associations is crucial in the commercial life of the EU.[34] As a consequence, Article 101 of the TFEU mentions decisions which have negative objects or effects on competition. In day-to-day conduct, trade associations are harmless, and no distortions arise for investigation by the authorities such as the Commission.[35] This is because these associations and their constitutions are drafted very carefully, and their authorisation limits are drawn to the extent of activities which will not offend any of the provisions of competition law in general.[36] Yet, at the same time, these efforts can also be used as a tool to elude any practices which are used as a cover for the coordination of undertakings (competitors) and their activities.[37] Actually, all of these competing undertakings are aware of the limits and boundaries between unlawful and legitimate contact. However, in some circumstances, associations are used as a tool to conceal cartels. One of the examples that has come before the courts is the Cement Case. In this case, a trade association called Cembureau (Association Européenne du Ciment) played a big role in a cartel which had been established by cement manufacturers.[38]

Decisions taken by associations of undertakings generally try to regulate the behaviours of member undertakings in the market. These member undertakings are competitors, and they operate at the same level of the relevant market. All members have their own independent behaviour and strategies for their conduct in general, but these regulations aim to create specific conduct for specific conditions for these members. This behaviour, namely bringing undertakings together under an associative form, is not prohibited by EU Law unless it has objects or effects on competition and aims to damage and distort it.[39]

In EU law, decisions are interpreted broadly. The meanings of decisions contain various forms, such as regulations, directives, protocols, recommendations and any kind of binding or non-binding issues. Competition Law Guidelines (OFT) state that the daily actions of an association, full membership of an association and participation in general meetings of it, decisions of executive committees, resolutions of management committees or any kind of executive ruling and regulation, are all accepted as decisions made by associations of undertakings.[40] According to Cucu, a decision and an agreement may both find a place in the same body. She expresses that an article of integration-unification of an association may consist of a decision that can affect undertakings which are not members of the association if they wish to join, and also consist of an agreement that regulates the relationship between the association and the member undertakings in the same body.[41]

II.III. Concerted Practices   

Agreements and decisions are comparatively easy to analyse and detect. However, the term concerted practice is not as clear as the previous terms. Courts and law makers have struggled to make this concept clear and distinct. When the Treaty of Rome was signed in 1957, there was no legislation corresponding to the concepts of "concerted practice" or "concerted action" in the regulations of the Member States. For this reason, it can be expressed that the concept of concerted practices was included in the Treaty of Paris and the Treaty of Rome due to effect of US antitrust law, which uses the concept of "concerted actions" in vertical and horizontal agreements.[42]

The very first case to frame the concept of concerted practices was the Dyestuffs Case. In this case, several dyestuff producers in the common market were cooperating, and the relationship between them could be seen very clearly from price increases at similar rates which were made during the same periods.[43] Manufacturers operating in different countries made various price announcements between 1964 and 1967, and increased their prices for dyestuffs three different times, nearly concurrently and in similar proportions.[44] In addition, these producers held a meeting before the last price increase in 1967, and some producers reported their price increases to their actual competitors at this meeting.

The Commission concluded that these price announcements represented concerted practice between the dyestuff producers. It demonstrated that the price increases were in relation to the same products and at similar rates, and the instructions sent by the manufacturers to their subsidiaries and their representatives contained the same statements, thus a meeting had been held between these competitor undertakings.[45]

When the case came before the ECJ, Advocate General Mayras stated the differences between concerted practice and agreement in his opinion.[46] He stressed that concerted practice must have effects on competition in the market, but on the other side agreements can only have objects, which does not need to be proven to have any effects on the market.[47]

Although it is not necessary to have all of the elements of an agreement in any concerted practice for the ECJ, concerted practice can result from any coordination which is obvious from the behaviour of the parties.[48] On the other hand, parallel behaviour alone cannot be defined as concerted practice. However, if parallel behaviour does not reflect the normal conditions of the market, it is now considered strong evidence of concerted practice. In these situations, market conditions need to be analysed very carefully in order to demonstrate the existence of concerted practice. [49]

In its judgment, the ECJ interpreted these price announcements as a sign of co-operation with the intention of reducing market transparency, and stated that these undertakings had announced price increases to remove the risk of future market uncertainty, independent behaviour in the market, and finally to divide the market.[50] As a result of this cooperation, the Court approved the Commission's concerted practice decision, emphasising that the dyestuffs market was divided by country borders, and the price increases which happened at the same rate and time did not reflect the normal conditions of the market.[51]

Following this case, a definition of concerted practice has been made by the Court. According to this definition, concerted practice is:

“a form of co-ordination 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 risk of competition”.[52]

The second important decision in terms of defining the concept of concerted practice is the Suiker Unie Case in 1975.[53] In this case, the Commission found that the market sharing practices of Suiker Unie and 15 other sugar producers in Netherlands, Italy and Germany between 1968-69 and 1971-72 were contrary to Article 81 (now Article 101).[54] These producers were refusing to enter the local markets of their competitors, or were in the process of requesting permission from local manufacturers to enter these markets. The local markets were shared using methods such as selling sugar from one manufacturer to another, or not selling directly to non-producer undertakings in another market.[55]

In addition to parallel behaviour, the Court concluded that the Belgian manufacturer Raffinerie Tirlomontoise and the Dutch producers Suiker Unie and Centrale Suiker Maatschappij had contacted each other and had engaged in concerted practice by removing uncertainties about their future market behaviour for all of them, which could be seen from their letters, telex messages and notes.[56] The sugar producers argued that concerted practice needs a pre-supposed plan to remove independent future predictions of undertakings, and it seems that there was an exchange of information but no proof of any plan made by the undertakings to reduce the competitiveness of the market.[57]

In this case, the Court rejected the arguments of the sugar producers and made a more detailed definition of concerted practice than in the Dyestuffs Case. According to this definition, concerted practice is as follows: while not reaching the stage of the existence of an agreement, any intentional practices which form coordination providing practical cooperation between them against the risks of competition, and which lead to a competition condition that do not reflect the normal conditions of the market considering the structure of the market, structure of the product, and the size and importance of the undertakings.[58]

Another important and unique point of this case is that the ECJ also provided a basic explanation in determining concerted practice, emphasising that there is no need for an actual plan to accept the existence of concerted practice.[59] Accordingly, each undertaking should independently determine the policies which they will follow in the market. This requirement does not prevent companies from keeping up with the behaviour of their competitors.[60] However, it is strictly forbidden to interfere directly or indirectly with the object or effect of an attempt to influence the market behaviour of competitors, or to explain their own market behaviour to competitors.[61] In the context of this interpretation of the Court, the existence of a relationship between undertakings is one of the fundamental elements of concerted practice. This relationship must involve an intentional exchange of information directly between the companies, or indirectly through a third party.[62]

As mentioned before in the section on proof of agreement, proof of agreement applies to concerted practices too. Moreover, according to Albors-Llorens, the decisions in the Dyestuffs Case and the Suiker Unie Case showed the two elements required for concerted practice to have occurred. These elements are the existence of reciprocal contact, which could be direct or indirect, and an action which follows this reciprocal contact and concludes in a concertation in the market. [63] There also exists a third element, a causal link, which was referred to in the following cases.[64] According to Whish, these two decisions provided a legal test for concerted practices. The ECJ has set out the key criteria in determining concerted practice. Concerted practice requires a "mental consensus" that provides a practical business cooperation, but even if this consensus is not expressed in words, it can arise through contact, which can be direct or indirect, between undertakings.[65]

In the context of Article 101 of the TFEU, to summarise the elements of concerted practice, the definition, description and explanation of the Court in the Polypropylene, Dyestuffs and Suiker Unie Cases is as follows:[66]

  • There should be coordination or contact in some way between competitors.
  • This cooperation must result from a direct or indirect link between competitors.
  • The intention and purpose of this link should be to remove the uncertainties regarding the future behaviour of competitors and, in some instances, aim to change the future structure of the market.

In addition to this outline, the Guidelines on Horizontal Cooperation Agreements[67] will be mentioned briefly. In paragraph 60 of the Guidelines, it gives a brief definition of concerted practice based on the cases which have been mentioned before in this paper. In the subsequent paragraph of the Guidelines, concerted practices which reduce the uncertainty of the market and result in a collusive outcome are mentioned. After that, a couple of cases are referred to explain concerted practices which have occurred through the exchange of information.[68] To sum up, this guideline gives brief information about concerted practices, along with agreements and decisions.

At this point, it would not be wrong to stress that it is relatively easy to prove anticompetitive agreements by obtaining direct evidence of an expression from undertakings.[69] Thus, it is an uncomplicated task which can be done by the authorities. On the other hand, it is quite troublesome to reveal concerted practice only through suspicious behaviour without finding any explicit common will of the undertakings involved.[70] Moreover, it is very important for undertakings to realise the boundary between lawful and collusive behaviour, in order to know their limits.[71] In the next section, the focus of this paper will be on such evidence. After that, lawful and unlawful actions will be discussed.

III. Evidence of Concerted Practice

III.I. Parallel Behaviour

As a matter of fact, the Court’s attitude towards parallel behaviour in the Dyestuffs and Suiker Unie Cases made it unclear how to interpret conscious parallelism (tacit collusion).[72] There are no controversial issues in terms of nonconscious parallelism, since it does not conclude in concerted practice in the eyes of the Court, and intentional but non-collusive actions must be considered deeply.[73] In the same direction, it is stated that the notion of an indirect relationship, even though there were documents showing that the undertakings had engaged in a concertation, revealed concerns that legitimate behaviours such as price announcements in oligopolistic markets and price leadership could be evaluated under Article 101 of the TFEU.[74] Furthermore, Black has also expressed that the definitions in these cases are totally unhelpful.[75] These definitions may include oligopolistic dependence, since the term “knowingly” is insufficient, and the implications of the concept of "cooperation” may include lawful actions in the definition of concerted practice in these cases.[76]

In contrast, there are also some commentators who do not agree with these criticisms. According to Alese, the Court’s approach in these two cases shows that parallel behaviour carried out by undertakings in oligopolistic markets should be subject to testing under the concept of concerted practices, since this behaviour is not enough to conclude concerted practice alone.[77] Alese believes that the Court’s interpretation of determination of market behaviour that does not reflect the normal market conditions and why the Court highlights a reciprocal contact between undertakings could be used as a tool to find concerted practice.[78] Thus it shows that oligopolistic dependence is not illegal at all. Also, the Court and the Commission agreed that price competition may not exist in oligopolistic markets; it is a natural consequence, so parallel behaviour alone does not form concerted practice.[79]

The Woodpulp Case ended the debate on oligopolistic dependence, and it played an important role in understanding what kind of evidence the Commission should put forward to prove the existence of concerted practice.[80] This case involved the practices of wood pulp manufacturers in the bleached sulphate pulp market. The Commission concluded that 40 pulp producers and three of their trade associations, 43 in total, had infringed Article 85 [now Article 101].[81] These producers were making price announcements on a quarterly basis, and these price increases were decided following discussions between the wood pulp producers and their customers, who were paper producers.[82] In addition, these announcements were made either simultaneously or almost at the same time (with differences of several hours), and the announced prices were also identical. The Commission argued that the parallel conduct in price announcements between 1975 and 1981 could not be explained by the mutual dependence of the parties in an oligopolistic market.[83] Thus, only these announcements could be proof of concerted practice, according to the Commission.[84]

The Commission, which also found telexes and meeting minutes featuring the direct exchange of information among the manufacturers, reached the conclusion that the 43 wood pulp manufacturers were in concerted practice, especially considering the parallel behaviour that could not be explained by normal market structure.[85] During the ECJ phase, the Commission argued that documentary evidence should be taken as a whole; however, the Court excluded this evidence, since the relationships between the actual parties involved were not fully understood.[86]

Then, the Court requested a report from some experts to examine the relevant market’s structure.[87] In the report, it is stated that the wood pulp market is considerably concentrated, and this oligopolistic market structure was beyond the Commission's thoughts. This market is made up of certain sellers (pulp manufacturers) and certain buyers (paper manufacturers), such that each buyer can deal only with a limited number of sellers and, conversely, each seller can supply only a limited number of buyers.[88] In its decision, based largely on this report, the Court emphasised that the quarterly announcement of the price increases in US dollars was made on the wishes of customers, so that price announcements were derived for a reasonable commercial reason, not because of any intention to make the market artificially transparent to manufacturers.[89] The Court stated that market transparency is a natural consequence of oligopolistic markets, and stressed that only in situations where there is no other plausible explanations could parallel behaviour be proof of concerted practice in the absence of any contact.[90] Resolving and clarifying the oligopolistic dependence issue is one of the main outcomes of the Woodpulp Case. No longer could oligopolistic dependence be considered concerted practice in the context of Article 101.[91]

In conclusion, the Court stated that concertation is not the only “plausible explanation” in considering concerted practice.[92] After the case, several different opinions from the commentary arose. These concerned the relationship between concerted practice and parallel behaviour. Albors-Llorens states that the standard of proof which was composed in this case was very high.[93] According to Jones, the Court and the Commission had different interpretations of the market analysis in terms of competition.[94] Thus, the decision raises a question about the proof level while considering concerted practices.[95] It is obvious that the Commission could have concluded that concerted practice had occurred only on conditional evidence, but such a finding could have been rebutted if there was another explanation for concerted practice.[96] What was still unclear for Jones at that stage was how persuasive the evidence of concerted practice based on market data could be, and how plausible a rebuttal could be.[97] Additionally, Stevens expresses that Darmon, who was the Advocate General in the Woodpulp Case, thought that parallel behaviour as evidence was insufficient to pass the burden of proof alone.[98]  

A later case, namely the CISAC Case[99], showed that the legal burden of proof is on the European Commission to prove the existence of concerted practice. When concerted practice relies only on a parallel behaviour, the accused parties’ defences for alternative explanations should be taken into account, and it must be proved as to why they are not convincing.[100] In this case, the Commission decided that 24 collecting societies were in concerted practice, because the only explanation for their parallel behaviour was collusion.[101] However, the General Court emphasised the failure of the Commission while determining concerted practice to have occurred to the “requisite legal standard”.[102]  According to the court, parallel behaviour could be evidence of concerted practice if there were no other plausible alternatives, but there was actually another explanation for the parallel behaviour of the parties, which was the effort and cooperation required in order to fight the unauthorised use of musical works.[103]

III.II. Market Conditions

Supported by the decisions of the ECJ, it is clear to say that market conditions are crucial when determining concerted practice. Not every cooperated action will form a collusive outcome. Non-collusive actions, oligopolistic dependence, and explicit and tacit collusion all find a place for themselves in real-world markets. It is important to differentiate them from each other. Therefore, market structure must be analysed deeply in every case, as mentioned before. In this context, it is important to discuss markets which are prone to explicit collusion,[104] and what market conditions are likely to form non-collusive actions.

One of the most important factors facilitating coordination between competitors is the concentration in a market. When the number of undertakings operating in a market decreases, the possibility of coordination between undertakings increases.[105] In addition to being easier to coordinate the behaviour of a few undertakings, the slice of the pie which they would receive from a successful collusion is much higher.[106] However, on the other hand, when the number of undertakings increases, interest between them will decrease.[107]

Barriers to entry into a market is another crucial point. Oligopolistic markets seem to be prone to collusion and cartelisation.[108] That is why barriers to entry are always useful for cartels to control the market structure and the number of competitors. Moreover, it can be said that in a market where barriers are diminished, any price increases will attract potential competitors to the market.[109]

Another factor that needs to be taken into consideration when evaluating market structure and barriers to entry is the homogeneity of suppliers. Undertakings with similar market shares, capacities and cost structures (total cost level and distribution of costs between fixed and variable costs) find it easier to reach agreement on the terms of their coordination.[110] The presence of barriers to entry into a market makes it easier for companies to coordinate their behaviours.[111]

Additionally, the homogeneity of goods allows prices to be coordinated easily if the goods are similar, and, as a result, collusion occurs.[112] Many of the decisions of the Commission have dealt with cartels whose products do not offer many choices in terms of variety; usually there has been only one similar product in the market, such as vitamins, sugar, pvc, soda or polypropylene.[113]

Market transparency is an important feature, which could increase the likelihood of coordination between competitors. In markets where the transparency of prices and market strategies is excessive, it is also possible for undertakings to spot cheating competitors which are out of coordination with their counterparts, and to react to them immediately.[114] So, if the market transparency is higher, monitoring competitors is much easier.[115]

In terms of technology and innovation, the higher the level of technology that must be used to produce a product, the less likely it is to be subject to coordination because of the complexity of products and production processes.[116] Unlike markets in which mature technology is present, product innovations in markets where research and development activities are intensive will lead to product differentiation and challenges between competitors.[117]

In light of this information, it would be correct to stress that successful collusion arises from considerable coordination.[118] For instance, members of a cartel might use allocation of markets, allocation of consumers, price-fixing and quota mechanisms for cooperation. However, when evaluating the market, it must also be taken into consideration that the existence of small competitors might create a competitive edge against cartel members.[119] If small competitors in a market have excess capacity, they can respond to price increases which have been made by cartel members by increasing their output.[120] In this way, prices used by undertakings that coordinate with each other will decrease. Mario Monti, the Competition Commissioner, highlighted these factors which can lead to collusive outcome in a speech in 2000.[121]

In markets where demand remains stable or changes very slowly, undertakings can only grow by acquisitions and takeovers of the market share of other undertakings. For this reason, a stabilised market will increase the risk of coordination between undertakings.[122] On the other hand, a growing market will produce new demand, therefore competitors will try to grab a share of this new demand.[123] This challenge will result in a considerably higher amount of competition in the market.

In some markets, buyers create a force against providers' price behaviour, namely countervailing buyer power. For example, if the buyers in a market are more concentrated, buyers can resist the price policies of the suppliers, since the suppliers are more dependent upon the buyers.[124] Another factor that increases the dependence of suppliers on buyers is the fact that long-term contracts are made between the parties. Such contractual relationships increase buyers' bargaining power over suppliers.[125]

III.III. Direct or Indirect Link

When suitable market conditions are established for concerted practice, coordination or cooperation must arise from a direct or indirect link between the competitors in order to prove this collusive practice. This link can be used as evidence, as well as parallel behaviour. To be clear, the aim of this link should be to remove the uncertainties in the market and the future behaviour of the competitors. These have already been mentioned in this paper.

The main element of the link between undertakings is the exchange of information. In the Züchner Case,[126]  in which Mr. Züchner wanted to transfer his money to Italy, nearly all banks demanded the same commission fee from him. The ECJ stated that it was not necessary to establish a real connection between the undertakings in order to reach a verdict of concerted practice.[127] This means that the ECJ extended its own jurisprudence, saying that information exchange alone could be sufficient to prove concerted practice if it has negative effects on competition in the absence of any real contact.[128]

Information sharing between competitors could be beneficial for the market and the competitive structure. Artificial transparency created by undertakings through the exchange of information could shape some considerable efficiencies and benefits for suppliers and consumers.[129] These benefits are transparency for consumers, reduced search costs for improved products, allocative efficiency to some extent, and promotion of innovation. However, the same opportunities may be tools for collusion, which is the other side of the coin. If there is any suspicious activity regarding information exchange in terms of price fixing or market sharing activity, the Commission must investigate it further.[130]

In the Bananas Case[131], there were three major banana importers, namely Chiquita, Dole and Weichert. The Commission concluded that they had engaged in price determination communications related to setting their weekly quotation prices, and that this was concerted practice.[132] When looking at this in more detail, it is more troublesome to categorise practices where there is not a direct passing of information, as there was in the Bananas Case.[133] Information might be disclosed publicly via a website or in a newspaper, and then it can be received by competitors. On those kind of occasions, the facts must be considered very carefully in order to prove concerted practice.[134] There may be independent actions of undertakings only adapting their conduct to that of their competitors in order to compete at a higher level, or there may be an indirect communication for the purposes of collusion.

According to the Court in the T-Mobile Case, undertakings can adapt themselves intelligently to their competitors’ conduct while acting independently, but it is prohibited to influence the conduct of the market, to influence actual and potential competitors, or to disclose information concerning their own strategies to others.[135] This prohibition of contact must include an object or effect on competition which does not reflect the normal conditions of the relevant market.[136]

Another example of a link which is necessary between undertakings to engage in concerted practice is defined in the ICI / Solvay decision.[137] The Commission, which launched an investigation into ICI's sales to the UK and Solvay’s sales to the rest of Europe, found an agreement on market sharing between the two undertakings, which finished in 1972. The Commission, which revealed that the undertakings usually communicated with each other, reached a judgment of concerted practice, since there had been a previous agreement between these companies.[138] Although the agreement had finished, proof of the concerted practice was the market sharing behaviour and communication that continued.[139]

In addition, the Commission's interpretation of the British Sugar decision[140] is important for oligopolistic markets and price leadership defences. Bearing in mind the scope of this paper, price leadership will not be discussed in detail, but briefly speaking it can be used as evidence of lawful actions in a market. In oligopolistic markets, there might be a dominant undertaking, which would be called a price leader. When this undertaking changes the prices of a homogenous product, competitors will usually follow this price policy. Therefore, these are all independent actions, and this behaviour does not form collusion. In the decision, British Sugar was the biggest producer, the price leader.[141] The Commission stated that because of the market structure, which was an oligopolistic market, price competition was limited, and price leadership could not be taken as a sign of concerted practice.[142] On the contrary, the Commission decided that there were common intentions to coordinate the pricing policies of competitors by exchanging information, and to reduce uncertainty and competitive structure.

IV. Legitimate Contact and Unlawful Actions

The decisions of the European Courts and the Commission have tried to draw a boundary between legitimate and unlawful actions.[143] In order to find a breach of Article 101(1), it is highly crucial to separate normal legitimate behaviour in a market and unlawful action which constitutes collusion. The Court has supplied the law with a lot of sources in this area.[144] Nowadays, there are adequate resources in case law to determine whether concerted practice has occurred. For instance, any exchange of information which reduces the uncertainty of a competitor’s behaviours or artificially increases transparency in a market (these are sensitive areas in competition) is liable under Article 101(1).[145] Undertakings must constitute their own conduct in the market independently. Therefore, any contact, any exchange of information or any release of information which helps them to discover their competitors’ practices and conduct would likely become an unlawful action in the context of Article 101 of the TFEU.[146]

Meetings and assemblies between undertakings which are operating in the same market could have legitimate purposes and would not necessarily infringe Article 101(1) in any way. These meetings may have beneficial effects on the market, such as efficiency for consumers, and may raise the level of competitiveness of the market. However, these meetings sometimes involve anticompetitive objects and purposes. In such a situation, simply participating in a meeting which contains some anticompetitive aims would count as reciprocal contact, and this mere attendance would put all undertakings within the scope of Article 101(1).[147] Even if there is no disclosure of an undertaking’s own practices, merely the receipt of information can be evidence of concerted practice.[148] This theory expresses the fact that a company participating in such a meeting would be able to add into account the information it received in order to determine its own strategy.[149] If undertakings want to avoid the circumstances of Article 101(1), they need to inform the competition authorities about such meetings or distance themselves from other participants and from the proposals which were drafted in such meetings.[150]

Concerted practice may start from the time that one competitor publishes its own future market strategy and another competitor accepts that information expressly or tacitly.[151] While analysing concerted practices, it is important to give attention to reciprocal communication and willing receipt of information.[152] This is useful for uncovering hidden coordination examples or concerted practices, but on the other hand, if it is not given enough attention, it may portray legitimate contact between market players as illegitimate contact.[153] Taking into account the consequences of the infringement of Article 101 (1), in terms of the very high monetary penalties imposed by the Commission, legal advice and attention which leads to proper interpretation in this area will always be important.[154]

V. Conclusion

It is impossible to imagine an economy without any connection between undertakings. Connection and cooperation make an economy functional and useful in terms of efficiencies in products, consumers, innovation, and suchlike. However, like with everything, sometimes this cooperation turns into a beast which harms consumers, undertakings and the market itself. This dangerous collusion must be terminated. At this point, in terms of EU Competition Law, Article 101 of the TFEU applies to these practices which restrict competition.

Anticompetitive practices are classified in Article 101. There are three of them: agreements, decisions and concerted practices. Mainly, agreements are defined in case law, and the methods for finding and proving them are considerably clear. Any joint expression of wills between undertakings is enough for validity. Of course, that joint expression must have negative objects or effects on competition to be an anticompetitive practice. As a result, competition law can be used effectively against anticompetitive agreements at an EU level. Since the law is established effectively, the same argument is true about decisions taken by associations of undertakings. The existence of an agreement or a decision can easily be verifiable. The only issue needed here is a good determination of the link between the restriction of competition and the agreement.

However, concerted practice is quite a troublesome concept. In many cases, concerted practice can be found in an agreement or decision. In some circumstances, there is no need to distinguish this in order to issue a cartel member with a fine, for example. Nevertheless, a distinction should be made. It is important to draw a boundary between the different types of collusion to identify them clearly if necessary and catch all kinds of collusive action. In addition, it would be useful in distinguishing legitimate behaviour from collusion.

It is hard to define concerted practice and put it into a certain frame. The substantiation of concerted practice needs more attention and analysis. The difference between agreement and concerted practice is in the intensity of the collusion. In concerted practice, undertakings would not enter an agreement to escape from the scope of Article 101, and they would intentionally substitute cooperation between them for the risks of competition. Confusion arises at this point over whether this cooperation might not contain any contact, which means that there might be independent behaviour, simply in the form of an attempt to compete in the market. On the other hand, there might have been collusive action to establish anticompetitive conditions in the market.

The courts have established some definitions and provided legal jurisdiction for concerted practice to some extent. For instance, parallel behaviour is very strong evidence of concerted practice if there are no other plausible alternatives for the actions of undertakings. Suspicious behaviour of undertakings which does not reflect the normal conditions of the market could also be evidence of collusion. Simply sharing data could be evidence of collusion. In every single case, competitiveness and the structure of the market must be determined carefully. One action could be deemed concerted practice in market X, but the same action could be completely legitimate behaviour in market Y. Consequently, concerted practice lacks a single understanding, unlike agreements or decisions.

It would be completely wrong to determine cases without paying attention to the distinction between these three notions. Moreover, the lack of a single implementation of concerted practice should not be seen as a great deficiency. Further, it may have positive effects on competition law enforcement. Concerted practice does not seem to have specific boundaries in every situation, and courts seem to be very strict on Article 101 issues. A broad interpretation of concerted practices leads to deterrence on one hand and on the other it provides protection to the common market. Implementing a standard which is more permissive of suspicious abnormal behaviour in the market such as concerted practices may lead to unexpected results.

[1] European Union, Treaty on the Functioning of the European Union, 13 December 2007, 2008/C 115/01, Article 101.

[2] Case 6/72 Continental Can v Commission [1973] ECR 215, para.25.

[3] European Commission, Guidelines on the Applicability of Article 101 of the Treaty on the Functioning of the European Union to Horizontal Cooperation Agreements OJ [2011] C 11/1.

[4]  European Commission, Guidelines on Vertical Restraints [2010] C 130/01.

[5] Albertina Albors-Llorens, Horizontal Agreements and Concerted Practices in EC Competition Law: Unlawful and Legitimate Contacts between Competitors [2006] 51 Antitrust Bulletin 837, 839.

[6] Case C-41/90 Hofner and Elser v Macrotron GmbH [1991] ECR I-1979, para. 21.

[7] Ibid.

[8] Guidance on Agreements and Concerted Practices, Office of Fair Trading 401, 1 December 2004, para 2.6, https://www.gov.uk/government/publications/agreements-and-concerted-practices-understanding-competition-law.

[9] Ibid.

[10] Ibid.

[11] Ibid.

[12] Cristina Cucu, “Agreements”, “Decisions” and “Concerted Practices”: Key Concepts in the Analysis of Anticompetitive Agreements [2013] Challenges of the Knowledge Society. Private Law, 215.

[13] Dan Goyder, Joanna Goyder and Albertina Albors-Llorens, EC Competition Law (5th edn, Oxford University Press 2009), 82.

[14] Case T-41/96 Bayer AG v Commission of the European Communities [2000] ECR II-3383, para.69.

[15] Okeoghene Odudu, The Boundaries of EC Competition Law (Oxford University Press 2006), 59.

[16] Ibid, 60.

[17] Case T-41/96 Bayer AG v Commission of the European Communities [2000] ECR II-3383, para 67.

[18] Case 41/69, Chemiefarma v Commission of the European communities [1970] ECR 661, para 112.  Also, Case 209/78 to 215/7 and 218/78, Van Landewyck and Others v. Commission, [1980] ECR 3125, para.86; Case T-7/89, Hercules Chems. v. Commission, [1991] ECR 11-1711, para. 256

[19] Odudu, 61.

[20] Ibid.

[21] Ibid.

[22] Ibid.

[23] Ibid.

[24] Ibid.

[25] Alison Jones and Brenda Sufrin, EU Competition Law (5th edn, Oxford University Press 2014), 150.

[26] Ibid.

[27] Jones and Sufrin, 150.

[28] Highest court of the Court of Justice of the European Union(CJEU) abbreviated [ECJ] further in the essay.

[29] Jones and Sufrin, 151.

[30] Commission Decision of 23 April 1986 relating to a proceeding under Article 85 of the EEC Treaty (IV/ 31.14 Polypropylene) OJ [1986] L 230, para.86.

[31] Case C-238/05 Asnef-Equifax, Administración del Estado v AUSBANC [2006] ECR I-11125, para. 32.

[32] Ibid.

[33] Case C-49/92P Commission v Anic Partecipazioni SpA [1999] ECR I-4125, para. 131.

[34] Goyder, 96.

[35] Goyder, 97.

[36] Ibid.

[37] Ibid.

[38] Case T25/95 – T104/95 Cimenteries CBR and others v Commission [2000] ECR II-491.

[39] Cucu, 219.

[40] Guidance on Agreements and Concerted Practices, Office of Fair Trading 401, 1 December 2004, para 2.9.

[41] Cucu, 220.

[42] Goyder, 88.

[43] Cases 48-57/69 Imperial Chemical Industries Ltd v Commission of the European communities [1992] ECR 619, p.622. abbreviated [ICI v Commission]

[44] Ibid.

[45] Ibid.

[46] ICI v Commission.

[47] Ibid.

[48] ICI v Commission, para. 65.

[49] ICI v Commission, para. 66.

[50] ICI v Commission, para. 101-123.

[51] Ibid.

[52] ICI v Commission, para. 64.

[53] Cases 40-48,50, 54-56,111, 113,114/73 Suiker Unie v Commission [1975] ECR 1663. abbreviated [Suiker Unie v Commission]

[54] Ibid, para 29-30, 74-75.

[55] Ibid, para 31-32.

[56] Ibid, para 269.

[57] Albors-Llorens, 845.

[58] Suiker Unie v Commission, para.26.

[59] Ibid para. 173.

[60] Ibid, para. 174.

[61] Ibid, para.174.

[62] Goyder, 91.

[63] Albors-Llorens, 846.

[64] In one of the polypropylene cases, Case C-199/92P Huls v Commission [1999] ECR I-4287.

[65] Richard Whish and David Bailey, Competition Law (8th edn, Oxford University Press 2015), 118.

[66] Dallal Stevens, Covert Collusion Conscious Parallelism in Oligopolistic Markets: A Comparison of E.C. and U.S. Competition Law [1995] 15 Yearbook of European Law 47, 64.

[67] European Commission, Guidelines on the Applicability of Article 101 of the Treaty on the Functioning of the European Union to Horizontal Cooperation Agreements OJ [2011] C 11/1, para. 60-63.

[68] For more discussion guidelines (n 67), para. 62.

[69] Albors-Llorens, 850.

[70] Ibid.

[71] Ibid.

[72] Trevor Soames, An Analysis of the Principles of Concerted Practice and Collective Dominance: A Distinction without a Difference? [1996] ECLR 24, 26.

[73] Ibid.

[74] Gerwin Van Gerven and Edurne Navarro Varona, The Wood Pulp Case and the Future of Concerted Practices [1994] 31 Common Market Law Review 575, 591.

[75] Oliver Black, Communication and Obligation in Arrangements and Concerted Practices [1992] 5 ECLR 200.

[76] Ibid.

[77] Femi Alese, The Economic Theory of Non-Collusive Oligopoly and the Concept of Concerted Practice Under Article 81 [1999] 7 ECLR 379, 380.

[78] Ibid.

[79] Whish and Bailey, 603.

[80] Case C-89,104,114,116-117,125-129/85 Ahlström Osakeyhtiö and Others v Commission [1993] ECR I 1307.

[81] Ibid, para. 3.

[82] Ibid, para. 13-14.

[83] Ibid, para. 81-82.

[84] Ibid, para. 59.

[85] Ibid, para. 68 and 81.

[86] Ibid, para. 70.

[87] Ibid, para. 75.

[88] Ibid, para. 102.

[89] Ibid, para. 78-79.

[90] Ibid, para. 71.

[91] Soames, 29.

[92] Ahlström Osakeyhtiö and Others v Commission, para. 126.

[93] Albors-Llorens, 857.

[94] Alison Jones, Woodpulp: Concerted Practice and/or Conscious Parallelism [1993] ECLR 273, 277.

[95] Ibid.

[96] Ibid.

[97] Ibid.

[98] Stevens, 67.

[99] Cases T- 442/08 etc. CISAC v Commission ECLI:EU: T: 2013:188.

[100] Whish and Bailey, 605.

[101] Cases T- 442/08 etc. CISAC v Commission ECLI:EU: T: 2013:188, para. 1.

[102] Whish and Bailey, 605.

[103] Cases T- 442/08 etc. CISAC v Commission ECLI:EU: T: 2013:188, para 141-181.

[104] Alison Jones and Brenda Sufrin, EU Competition Law (5th edn, Oxford University Press 2014), 664.

[105] Ibid.

[106] Ibid.

[107] Sigrid Stroux, Is EC Oligopoly Control Outgrowing its Infancy? [2000] 23/1 World Competition 3, 7.

[108] Ibid 107.

[109] Ibid 107.

[110] Stroux (n 110), 8.

[111] Ibid.

[112] Ibid 107.

[113] Ibid 107.

[114] Stroux (n 110), 10.

[115] Jones and Sufrin (n 107), 664.

[116] Stroux (n 110), 13.

[117] Stroux (fn 110), 14.

[118] Jones and Sufrin (fn 107), 664.

[119] Stroux (n 110), 10.

[120] Ibid.

[121] Jones and Sufrin (n 107), 665.

[122] Stroux (n 110), 11.

[123] Ibid.

[124] Ibid.

[125] Ibid.

[126] Case 172/80 Gerhard Züchner v Bayerische Vereinsbank AG [1981] ECR 2021.

[127] Ibid, para.21.

[128] Soames, 26.

[129] Jones and Sufrin, 699.

[130] Ibid.

[131] Case COMP/39188 – Bananas C (2008) 5955.

[132] Jones and Sufrin, 699.

[133] Ibid.

[134] Ibid.

[135] Case C-8/08, T-Mobile Netherlands BV v Raad van Bestuur van de Nederlandse Mededingingsautoriteit [2009] ECR I-4529 para.33

[136] Ibid.

[137] Commission Decision of 19 December 1990 relating to a proceeding under Article 85 of the EEC Treaty (IV/33.133-A: Soda-ash - Solvay, ICI) OJ [1991] L 152

[138] Ibid, para. 58.

[139] Ibid, para. 58.

[140] Commission Decision of 18 July 1988 relating to a proceeding under Article 86 of the EEC Treaty (IV/30.178 Napier Brown - British Sugar) OJ [1988] L 284

[141] Ibid, para. 2.

[142] Whish and Bailey, 604.

[143] Albertina Albors-Llorens, Horizontal Agreements and Concerted Practices in EC Competition Law: Unlawful and Legitimate Contacts between Competitors [2006] 51 Antitrust Bulletin 837, 859.

[144] Ibid, 873.

[145] Ibid, 873.

[146] Ibid, 861.

[147] Case T-1/89 Rhone-Pulenc v Commission [1991] ECR II-867, para. 122-123.

[148] Ibid.

[149] Ibid.

[150] Albors-Llorens (n 146), 873.

[151] Ibid.

[152] Ibid, 875.

[153] Ibid, 876.

[154] Ibid, 876.

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