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Brussels, 25 June 2014
Antitrust: Commission adopts revised safe harbours for minor agreements ("De Minimis Notice") and provides guidance on "by object" restrictions of competition - Frequently asked questions
What is the De Minimis Notice?
Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements between companies which have as their object or effect to restrict competition within the Single Market. The EU Court of Justice (EUCJ) has consistently held that Article 101 TFEU is not applicable where the impact of an agreement on competition is not appreciable. In line with this jurisprudence, the Commission sets out in the De Minimis Notice how it determines, with the help of market share thresholds, which agreements have no appreciable effect on competition and are thus outside the scope of Article 101 TFEU. This provides a "safe harbour" for minor agreements between companies below certain market share thresholds.
This does not imply that agreements between companies which exceed the market share thresholds set out in the Notice constitute an appreciable restriction of competition. It only means that such agreements need to be assessed individually. The outcome of this assessment may still be that they have only a negligible effect on competition and are therefore not prohibited by Article 101(1) TFEU.
What is the effect of the De Minimis Notice?
When an agreement remains within the market share thresholds of the Notice, the Commission will not open an antitrust investigation into the agreement. In addition, where the Commission has opened antitrust proceedings but the companies can demonstrate that they have assumed in good faith that the Notice's market shares thresholds were not exceeded, the Commission will not impose fines.
The De Minimis Notice has no binding effect on national competition authorities and national courts and they are therefore not obliged to apply it. However, the Notice is intended to provide guidance to these authorities and courts on the application of Article 101 TFEU.
Why did the Commission revise the De Minimis Notice?
The Commission revised the previous De Minimis Notice issued in 2001 for two main reasons. First, it needed to be updated to reflect recent developments in the jurisprudence and in particular the ruling of the EUCJ in the Expedia case (C-226/11). In this judgment the Court held that "an agreement that may affect trade between Member States and that has an anti-competitive object constitutes, by its nature and independently of any concrete effect that it may have, an appreciable restriction on competition". The Court thus clarified that anticompetitive agreements by object cannot be considered as minor, because they have by definition an appreciable impact on competition. As a result, such agreements cannot benefit from a "safe harbour".
The second reason for the revision of the 2001 De Minimis Notice was the need to align the text of the Notice with other EU antitrust rules adopted after 2001. The revised Notice ensures full consistency with, in particular, the 2010 Vertical and Horizontal Block Exemption Regulations (see IP/10/445, MEMO/10/138, IP/10/1702, MEMO/10/676), providing further clarity to stakeholders.
Which agreements can benefit from the "safe harbour" provided by the Notice?
Agreements between actual or potential competitors benefit from the "safe harbour" – meaning that they are not caught by the general prohibition of anticompetitive agreements under EU competition law – provided that the aggregate market share held by the parties to the agreement does not exceed 10 % on any of the markets affected by the agreement.
For agreements between companies that operate at different levels of the supply chain, like with most distribution agreements, the market share for benefitting from the safe harbour is 15 % (instead of 10%).
In addition, in order to benefit from the Notice both agreements between competitors and non-competitors the agreement must not have an anticompetitive object and thus, in particular, not contain any so-called "hardcore restrictions" of competition such as price fixing and market allocation.
If in a relevant market competition is restricted by the cumulative effect of agreements entered into by different suppliers or distributors, the market share threshold is reduced to 5%, both for agreements between competitors and for agreements between non-competitors.
What are the main changes compared to the previous version of the De Minimis Notice?
The Commission's experience with the application of the 2001 De Minimis Notice has been very positive. This was confirmed by stakeholders. Therefore, the approach and the principles set out in that Notice are maintained, with a few novelties.
First, in order to reflect the ruling of the EUCJ in the Expedia case, the Notice makes it clear that agreements which have as their object the prevention, restriction or distortion of competition within the Single Market do not benefit from the Notice's safe-harbours.
Secondly, unlike the 2001 Notice which listed specific "by object" or "hardcore" restrictions that did not benefit from the safe harbours, the 2014 Notice states that the Commission will not apply the safe harbours to agreements containing any restriction "by object" or any of the restrictions that are listed as "hardcore restrictions" in current or future Commission block exemption regulations. In that context it is clarified that "hardcore restrictions" are considered by the Commission to generally constitute restrictions by object.
Thirdly, the 2014 Notice no longer contains explanations on "effect on trade", because in 2004, the Commission issued specific guidance on this issue (Commission Notice on Effect on Trade). However, the 2014 De Minimis Notice now specifically refers to the rule in the Notice on effect on trade that excludes agreements between parties with an aggregate market share equal to or below 5% and an annual turnover equal or below €40 million from the scope of EU competition law because they are considered to have no effect on trade. This clarifies that agreements which contain a restriction by object may still fall outside the scope of Article 101 TFEU on the grounds that they have no effect on trade.
What is the purpose of the separate guidance paper on restrictions of competition "by object", accompanying the De Minimis Notice?
The Guidance paper on restrictions of competition "by object" provides a list of the types of restrictions that have already been considered as by object restrictions by EU courts or by the Commission in individual cases or as hardcore/by object restrictions in existing block exemption regulations and Commission guidelines. It does not introduce any new requirements. It is simply a practical check-list for companies, especially for SMEs. It reduces companies' burden and costs for complying with EU competition rules and makes it easier for them to assess whether their agreements are covered by the De Minimis Notice.
This paper is without prejudice to developments in the case law and in the Commission's decisional practice. It does not prevent the Commission from finding restrictions of competition by object that are not identified in the guidance paper. The Commission's competition service will regularly update the examples listed in the guidance paper in the light of such further developments that may expand or limit the list of restrictions "by object".