Welcome to Competition/Anti Trust Law Webinar

1. Welcome to Competition/Anti Trust Law Webinar Tracy Savage

2. 1. Dominant Position? Structure for Art 102/(ChII) Market Share? 2. Abuse of that Position? Relevant Market? Product / Geographic 3. Abuse affects trade between MS? [Ch II = in the UK] 4. Consequences/Advice to Client?

3. Art 101 or ChI? Structure for Art 101/ChI Agreement infringes Comp Law? Avoidance Methods? Consequences of Infringement? NO Remove or Amend Clause / Advise Client of Penalties

4. Article 101[ChI] • 2 or > independent undertakings • Who enter into an agreement, decision or concerted practice • Which may affect trade between MSs [Ch I in UK]; & • Which has as its: • object (see terms); OR • effect (look @ impact on market) the prevention, restriction or distortion of competition in EU [Ch I= in UK]

5. Horizontal Agreements Market Share 30% VR BLOCK EXEMPTION not applicable – vertical agreements only 10% NAOMI: Supplier’s + Supplier’s BUT: Hard Core – lose benefit! 5% NAAT: Supplier’s + Supplier’s (+ 40m aggregate limit) NB: Hard Core – DON’T lose benefit BUT NCA’s may act

6. Distribution Manufacturer Wholesaler Sale Sale Retailer Sale Customer/ End-user

7. Vertical Agreements Market Share 30% BLOCK EXEMPTION: Either Supplier’s OR Distributors BUT: Hard Core – lose benefit! 15% NAOMI: Either Supplier’s OR Distributor’s BUT: Hard Core – lose benefit! 5% NAAT: Supplier’s + Distributor’s (+ Supplier’s turnover under 40 million euros) NB: Hard Core – DON’T lose benefit BUT NCA’s may act

8. Article 101(3) Exemption[s9 CA'98 UK] • Agreement must contribute to an improvement in the production or distribution of goods or the promotion of technical or economic progress • Consumers will get a fair share of resulting benefit • No restrictions which are not indispensible • No possibility of substantially eliminating competition

9. Structure for VRBE question Breach of Comp Law? Y Vertical Agreement? - Art 2.1 Y Check S/D’s Market Share - Art 3.1 Y Check if any restrictions – Art 4 Other prohibited restrictions – Art 5? N Y Agreement Void Agreement benefits from B/E

10. Article 4 Hardcore Restrictions Exemption doesn’t apply AT ALL to the agreement if: • price fixing, or • restrictions on resale, except: • active sales into another’s exclusive territory

11. TTBER – Entry Requirements • Is it a technology transfer agreement? Art 1(1)(b) and (i) • Is the L’ee required to exploit the licenced technology by the production of goods or services? Recital 7 and Art 1(1)(b),(e) and (f) • Is the agreement bi-lateral? Art 2

12. Structure for B/E Breach of Comp Law? Y Technology Transfer Agreement?-Art 1(1)(b)/Art 2 Y Check L’or/L’ee Market Share - Art 3 Y Check if any restrictions – Art 4 Other prohibited restrictions – Art 5? N Y Agreement Void Agreement benefits from B/E

13. TTBER – Broad Elements for Analysis • Actual or potential competitors on RPM/RGM – Art 1(1)(j)(ii) /actual competitors on relevant technology market - Art 1(1)(j)(i) • Market share? Competitors – L’or and Lee = 20% -Art 3.1. Non Competitors L’or or L’ee individually = 30% - Art 3.2 • Reciprocal or non reciprocal? - Art 1(1)(c) and (d)

14. Article 4 Hardcore Restrictions Non - Competitors: • pricing restrictions except RRP/max sale price –Art 4.2(a) • territory – no restrictions on active sales • restrictions on passive sales except into territory reserved for L’or – Art 4.2(b)(i) OR into exclusive territory of another L’ee, for a certain period, where it is ‘objectively necessary’ to allow that L’ee to penetrate a new market (para 126 TTBER guidelines).

15. EU Merger Regulation 1.Jurisdiction • Mergers must be notified where ‘Concentration’ (type) and ‘EU Dimension’ (size) • Concentration = results in lasting change in structure of market • Test in Art 3(1) • EU Dimension – turnover thresholds in Art 1(2) (higher) and 1(3) (lower) • See Jurisdictional Notice para 186 for joint ventures turnover

16. EU Dimension – lower test • Must satisfy all tests • Combinedworldwide turnover of all undertakings over 2,500m • EU turnover of each of at least 2 undertakings over 100m • Combined turnover of all undertakings in each of at least 3 MS over 100m • in 3 MS above turnover of each of at least 2 undertakings over 25m • 2/3+ rule not met

17. EU Merger Regulation2.Substantive Test • Art 2(3) – is the concentration expected to: • significantly impede effective competition • in the EU or a substantial part • in particular as a result of strengthening/creating a dominant position • Commission is required to consider factors in Art 2(1). • Dominance unlikely if combined market share 25% or less NB same basic rules as Art 102 apply to dominance

18. UK Merger Regulation 1.Relevant Merger Situation • 2 aspects 1) transfer of control and 2) size • 3 types Transfer of control: • Material Influence eg 25% + 1 shareholding • De facto control eg where B’s expertise means advice is invariably followed • Legal Control test i.e 50% + shareholding

19. UK Merger Regulation 1.Relevant Merger Situation • 2nd aspect - size • 2 tests for size: • Turnover test – Target’s turnover exceeds £70 million; OR • Share of supply test – where at least 25% of all goods or services are supplied in the UK market/substantial part will be supplied by the merged undertaking AND there has been an increase in share of supply

20. UK Merger Regulation 2.Substantial Lessening Competition • Merger may/will result in substantial lessening of competition in a particular market • Critical Q = whether the merger can be expected to weaken competition to such an extent that customers would be harmed • eg reduced product choice, reduced output, exploitative prices possible