- ANTITRUST LAW ORIGINS AND PURPOSE
- US ANTITRUST LAW
- UK ANTITRUST LAW
- EUROPEAN UNION COMPETITION LAW
I. ANTITRUST LAW ORIGINS AND PURPOSE
- The purpose is to ensure (s’assurer) that consumers pay the lowest possible price for the highest quality of the goods (marchandises, biens) and services they consume ;
- It encourages manufacturers (fabricants) and service providers (prestataires de services) to be more efficient, to better respond to the needs (répondre au mieux aux besoins) of their customers ;
- The competition eliminates falling businesses, those that are incompetent or inefficient or too slow ;
- This is the essence of capitalism ;
- The aim is to establish fairness of commercial practices (loyauté des pratiques commerciales) ;
- Competition law originated in the US during the 19th century.
II. US ANTITRUST LAW
- It is bases on capitalism and free enterprise, its law have been created to protect open competition in the marketplace (sur le marché) ;
- It refers to a system of federal and state law intended to promote competition ;
- Prices are the result of consumer (consommateur) demand ;
- The aim is to make sure the consumers’ choices are not unreasonably controlled ;
- The first federal antitrust law to be enacted was the Sherman Act in 1890, followed by the Clayton Act and the Federal Trade Commission Act in 1914, and then the Robinson-Patman Act of 1936 ;
- The Federal Trade Commission Act set up the Federal Trade Commission, which is the only enforcement body (organe de régulation) for the law set out in this Act. It prohibits unfair methods of competition ;
- The Clayton Act and the Sherman Act are enforced by the Antitrust Division of the US Department of Justice : sanctions may be imposed on violators ;
- A private or legal person whose business or property is injured as a direct result of a violation of antitrust laws may also sue in civil court for monetary compensation.
1. Rule of reason v Per se
- The courts generally apply this analysis ;
- While some actions like price-fixing are considered illegal per se, other actions, such as possession of a monopoly (monopole), must be analyzed under the rule of reason and are only considered illegal when their effect is to unreasonably restrain trade (entravent le commerce) ;
- This doctrine played a major role in the 1911 Supreme Court case Standard Oil Company of New Jersey v. United States : to be harmful, a trust had to somehow damage the economic environment of its competitors.
2. Horizontal Restraints among competitors (restrictions horizontales)
- It is an act of collusion between competing partners on the same level of distribution ;
- These are considered serious violations of anti-trust law, and will be considered as per se violation ;
- They may take the form of price fixing (competitors make agreements on prices), allocating markets or customers (competitors divide markets between themselves), or boycotts (2 or more business entities agree not to sell to or to excluse an individual, a business or a group).
3. Vertical restraints (restrictions verticales)
- They exist between suppliers (fournisseurs) and customers ;
- That is between the different levels of the vertical supply distribution chain ;
- Vertical agreements are considered as less serious offenses than horizontal ones ;
- Vertical restraints, such as price fixing between a seller and a buyer are today considered to be violations to which the rule of reason is applied ;
- Exclusive dealing arrangements (= when a seller makes a contract with a particular dealer and agrees to sell only to that dealer) and tie-in sales (= a party agrees to sell one product to a buyer but only on the condition that the buyer also purchases as well another different product) are further examples of vertical market arrangements.
4. Merger and acquisition controls (contrôle des fusions et acquisitions)
- A merger or acquisition occurs when one firm buys the shares or assets (actifs) of another firm ;
- In a merger, there is a combination of 2 companies to create a new company ;
- An acquisition is the purchase of one company by another with no company being formed ;
- Mergers and acquisitions are permissible, but the firms need to obtain prior authorization (autorisation préalable) from the relevant authorities to avoid the creation of monopolies.
5. Horizontal mergers (concentrations horizontales)
- In a horizontal merger, one firm acquires another firm that produces and sells an identical or similar product in the same geographic area and thereby eliminates competition between the two firms ;
- The Herfindahl-Hirschman index (HHI) is a commonly accepted measure of market concentration : the U.S. Department of Justice uses the HHI for evaluating potential mergers issues.
6. Vertical mergers
- A vertical merger is a merger between a manufacturer (fabricant) and a supplier (fournisseur).
- A vertical merger is a merger between two companies that operate at separate stages of the production process for a specific finished product ;
- There are fewer legal conflicts in this category than in the category of horizontal mergers.
III. UK ANTITRUST LAW
- UK Competition law is affected by both British and European elements ;
- The most important statutes for cases with a purely national dimension are the Competition Act 1998 and the Enterprise Act 2002 ;
- The primary regulatory body for Competition Law enforcement (application / exécution) is the Competition and Markets Authority (CMA) ;
- At a European level, articles 101 and 102 of the Treaty on the functioning of the European Union regulate competition ;
- An agreement is prohibited if it is anti-competitive.
TYPES OF AGREEMENT PROHIBITED :
- Cartels (ententes) – It is the most serious form of anti-competitive behaviour. A group of businesses agree to fix prices so they all will make more money ;
- Exemptions (dérogations) – In certain circumstances, the European Union introduces exemptions to competition laws. For example, European law allows a state to provide aid for a particular economic sector only if competition is not disturbed ;
- Abuse of a dominant market position (abus de position dominante) – Abuse of a dominant position occurs whereby a company which holds a dominant position on a certain market uses that position to act in a way and enforce (impose) certain conditions which can severely affect those companies below them in the marketplace.
IV. EUROPEAN UNION COMPETITION LAW
- European competition law promotes the maintenance of competition within the European Union by regulating anti-competitive conduct by companies to ensure that they do not create cartels (ententes) and monopolies (monopoles) that would damage the interests of society ;
- The UK joined the European Community (EC) with the European Community Act 1972, and through that became subject to EC Competition Law ;
- Since the Maastricht Treaty of 1992, the EC was renamed the European Union (EU) ;
Competition Law falls under the social and economic foundations of the treaties.