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yo let's do competition law and before we get started I think it's probably worth going over why we have competition law in the EU and I think politically it comes down to a couple of reasons one which it could be considered politically left-wing and the other is politically right-wing on the left wing you have and protection of consumers it seems really important that companies and undertakings as we'll see them called do not abuse their market position and that has a negative influence on consumers so consumer protection is really important and on the right wing we sort of have the economic idea of having free and fair competition in an open and free trade market so those are the two key reasons to bear in mind as we're going through the video and if you're writing an essay question in particular try and keep those economic ideas at the forefront of your mind and draw them in to any conclusions that you do but let's get started with articles 101 and 102 article 101 first is to do with anti-competitive practices by undertaking so this is where companies get together agree to do something that harms competition within the EU article 102 which we'll look at towards the end is to do with big companies such as Microsoft or Apple who have a dominant market position and they abuse that position in some way for their own gains so let's do article 101 first and of course we start with the definition so we're going to look at undertakings what's meant by an undertaking which is the phrase that the EU use so an inter taking can be any legal person like me or you but in reality it's more likely to be a company and so this broad definition was given in Hertha in 1991 I think another important part of the definition as well is that they have to be engaged in an economic activity so in per se from 1993 the company concerned was dealing with social assistance and so because the main aim of the company wasn't to make money it was to help people and they weren't considers being engaged in economic activity and were therefore not considered undertakings but most companies that you come across they're out to make money and so they can be considered and undertaking so for article 101 there has to be either an agreement a decision or a concerted practice so let's go through each of these in turn first an agreement it's a little bit like a contract between companies this can be a written contract or as in contract law it can be unwritten as well the EU has expanded even further though in the Quinn I'm cartel case I had to look at what Queen I means apparently it's like a medicine for malaria or something but anyway in that case from 1970 there was something called a gentlemen's agreement which was more of like a an acknowledgement between the parties or a sort of underhand agreement between the parties or the undertakings to act in a certain way and so even these types of underhand agreements will be caught decisions don't come up very often so I'm not going to spend long on them but basically a trade association sets instructions for its members so for example if all of the butchers in Ireland agreed to set the price of bacon at a certain cost then this would be a decision by the trade association for butchers and that wouldn't be allowed either as I say it doesn't come up very often we're mainly mainly dealing with agreements and concerted practices and so look at concerted practices these are a little bit like agreements or the gentlemen's agreements and that this is where companies are acting in an even more sort of suspicious way and it's more to do with collusion between undertakings so there might not even be anything expressly stated between the undertakings and but it's clear that they're in some sort of agreement between them or a concerted practice to act in a certain way so I see I in Commission 1972 looked at this idea of collusion undertakings acting together or acting in a very similar way that arouses suspicion and I think that the best definition that comes from the sugar cartel case in 1975 and all we're looking for really is that the undertaking is concerned and not acting independently on the market in other words if this concerted practice wasn't in place then the companies would act in a completely different way so the commission or the court are basically just looking for something that suggests that the undertakings are acting in an unusual way is probably the best way to put it so the next requirement is that the actions have to have an object or effective restricting competition so they might have the object or the intention to restrict competition as in GSK in Commission 2009 and I think the best way of sort of approaching this in an exam is to look for certain types of agreements so there are certain types of agreement that the court or the Commission will almost automatically say have the object of restricting competition so I think in GSK in Commission 2009 the concerted practice was to do with price fixing now price fixing is obviously something that has a negative effect on competition and is potentially very unfair under Article 101 and so even if it doesn't have the effect of restricting competition the fact that price fixing has the object of restricting competition will be enough obviously the effect of restricting competition will also be more than enough as well and I think we can sort of look to US economics here so I've put there the rule of Reason and the idea behind this which is directly taken from u.s. competition law is that the court will look at the pro competitive nature of the agreement and the anti-competitive nature of the agreements so they'll weigh at both sides of the argument and they'll come to a decision about whether it's good competition or if it's bad for competition now obviously if it's bad for competition then it can be the agreement can be declared invalid under article one so the STM case from 1966 a very early case and was a good example of the court taking the opportunity to look at the agreement way up the pro-competitive nature of it and the anti-competitive nature and they came to the decision that overall the agreement was anti-competitive now I think the important thing is well that I've put at the bottom there is that does have to actually have an effect on the market so the de minimis doctrine basically says this if the negative effect on competition is so small then it won't matter and it won't fall under article 101 so in Volk 1969 the court basically said well yes this agreement is anti-competitive but it has such a small effect on competition that it isn't really having a major effect on the market so that's something to bear in mind if it only has a small effect then it won't be caught under article 101 now into article 101 3 there are exemptions that are potentially available for agreements however they have to meet all four is the criteria that I've listed there so they have to improve production or distribution or economic progress or technical progress so that's up for the companies to prove that the consumers have to receive a fair share of the benefit and there has to be a restriction that is in place has to be the minimum needed within those circumstances and also finally it's important and in terms of the wider market that the agreement doesn't eliminate a substantial part of the competition either so all four of those terms have to be met in order for an exemption to be applied so there's different types of exemptions and individual exemptions can apply now up until 2003 the Commission applied individual exemptions so they could look at an agreement and the Commission could apply an exemption however under regulation one slash 2003 it became clear that the this was far too much work for the Commission so they got flooded with applications that such-and-such agreement should be allowed and and the committee just gave the Commission too much work so they got rid of individual exemptions handed out by the Commission in 2003 but these are now applied through the national courts so a company or a group of companies can apply to a national court and the national court can apply an individual exemption themselves again looking at things like balancing the pro-competitive and anti-competitive nature of agreements block exemptions are still applied by the Commission these are for certain types of agreement and that are considered either beneficial to competition or are of such a nature that they are to be allowed under article 101 so put a few examples there research and development is considered important for the progress of the EU and so those types of agreements are allowed franchising agreements are also allowed so we're a big company let's out and shops to small company so in the UK we have a supermarket called Tesco for example and there are different types of Tesco metros which are like smaller versions of Tesco's and these are owned by private companies but they use the Tesco name and so those types of franchising agreements are allowed also vertical restraints I think at this point it's maybe worth mentioning the difference between vertical agreements and horizontal agreements horizontal agreements between companies that do the same thing so for example you might have four or five different companies that all sell sugar those are all operating on the same terms they're selling sugar so that's a horizontal relationship between those undertakings a vertical relationship takes place where there is a supplier and a distributor so to give you another example and my television is made by sharp it's sharp don't have their own stores they are the televisions are distributed by various supermarkets and electronic stores around the country so I got my television from Curry's for example and and so even though the television is made by sharp the distribution is by curries and that's a vertical relationship with sharp making the television and curries distributing it so vertical restraints would be a restraint by sharp on curries saying that you can sell our television but it has to be sold at a certain price for example now these types of restraints are a little bit controversial and there's an argument that the EU shouldn't allow them but nevertheless and generally speaking vertical restraints are allowed by the EU so that's article 101 again I think you can just sort of go through it in the order that I put there and hopefully that will take you through any Exam Question let's have a look at article 102 should be a little bit more straightforward and again we can do a similar thing so there's four requirements there and I think if you go through each of the four in turn then that puts you on your way to a good structure for any exam question or coursework so again there has to be an undertaking and we've already looked at the definition of that as a legal person who is engaged in economic activity so again covers most companies the next point is market dominance and again we can break this down so we have to look at the relevant market first so a product market is important United brands and Commission is my favorite case united brands sold bananas and they said that the relevant product market was fruit and you'll maybe remember from one of my earlier videos that the EU decided in this case that bananas weren't fruits instead they were seeds and so in the United rands case they said that the relevant product market was bananas rather than fruits in general and you'll see this often in the case law that the companies will try and make the product market as broad as they can and the Commission in their arguments will try and narrow it down as far as they can so another example might be for example I have a Kindle now Amazon would argue that the relevant market there would be ebooks but the Commission might argue that the market is actually much broader and concerns books in general and that that's the market that they compete on so you can see how the arguments could go either way and that's something that you might want to do in the exam geographies also relevant as well and Napier and Brown British sugar again they tried to argue that the geographic market was very wide and was across the whole of the EU and but the court eventually decided that Napier in this case the relevant Geographic market was only the UK because they had such a wide broad share of the market within the UK that that was the relevant market and that Napier didn't really export to the rest of the EU time can also be a factor as well for certain products so if you think about harvest fruits only available to certain times of the year and so that might be something to consider especially in a farming context now the not only has to be once you've identified the market you also have to identify whether there is dominance of that market as well now a lot of people tend to think that this means it's above 50% but that isn't necessarily also always the case what we're looking for really is a big difference between the top company and the other companies down below so in British Airways in Commission 2004 this is basically a perfect example so British Airways had 40% of the market so not over 50% and not really dominant in a traditional sense but their next biggest competitor was virgin and virgin only had about five percent of that market so the big difference between 5% of the market for virgin and 40% for British Airways was enough to see there was market dominance so there's the sort of factors that you have to weigh up and when looking at market dominance now there not only has to be market dominance that then has to be abuse of that market dominance so just because a company like Microsoft or Apple are really big isn't necessarily evil in itself it just means that Microsoft have good products or Apple have popular products there has to be an abuse of that position as well and there's four different ways that a company can abuse their dominant position on the market so this can be unfair prices or trading condition it conditions so in British Leyland and the car company charged more for left-handed drive cars than they did for right-hand drive cars and this was seen as an unfair pricing condition that was imposed by the company and therefore an abuse of their market position limiting production markets or technical development again Volvo is a very good example in this case Volvo didn't release details on how their parts for their cars were made and so they limited the market of the second-hand car parts or replacement car parts and the case was brought by Eric Veng who owned a sort of motor repair shop he wanted to fix Volvo cars but because Volvo hadn't released the information he couldn't do that and so that was seen as an abuse of the position by Volvo because they didn't release that information again we can come back to British Airways and Commission 2004 for discriminating between trading partners this is where there's an equivalent transaction but they might charge more for one company because they like don't like them they might charge less for another company because they do like them and so in this case it was to do with how much Commission travel agents received from British Airways and and this was seen as unfair because some travel agents received a higher Commission than others for doing exactly the same thing so there was discrimination between trading partners there making contracts with extra obligations is the final type of abuse in hoffman-laroche they had a particular type of tying in contract so hoffman-laroche whenever they signed a contract with another company they effectively tied that company in for the long term and that was seen as an unnecessary obligation it was an unnecessary part of the contract and that's what you're looking for in terms of the abuse in relation to those extra obligations so the very final point is that has to be an effect on trade between member states and this is given a very wide interpretation so even though in many cases that have concerned this article 102 it appears that the effect on trade between member states has been very minimal or almost non-existent because a company might only operate within one company at one one country so Napier brown British sugar would be a perfect example of that the company only really operated within the UK but because they had such dominance within the UK it affected other companies who might try and import brown sugar to the UK and so even though there wasn't really much of an effect on trade between member states this wide interpretation means that that final test will normally be satisfied hurray you made it to the end of competition law and I think a lot of students get scared away because they don't understand the finer points of high economic theory but I think I've shown in this presentation that you don't really need to degree in economics to pass a question on competition law if you remember it start we just talked about the important thing is it's about protecting consumers and establishing free and open markets that are fair for everyone to take part in so in article when I warned it with basically just about companies not being allowed to gang up with each other and hurting either consumers or smaller companies with a view to making more profit for themselves and similarly with article 102 is about making sure that those big companies like Microsoft or sher ways as we saw aren't allowed to abuse their dominant market position and to hurt consumers or other companies again with a view to making more profit for themselves thanks very much for watching again if you've got any comments or questions then leave them down below and subscribe for more videos and if you enjoyed it then make sure you leave a like thanks very much again bye