The new De Minimis Notice does not change the market share thresholds under which companies are able to assess whether their agreements have an appreciable impact on competition in breach of the prohibition. Accordingly, agreements entered into between actual or potential competitors whose combined market share does not exceed 10 percent on any of the relevant markets affected by the agreement are exempt. Equally, agreements entered into between non-competitors where the market share of each company is below 15 percent are not caught by Article 101(1) TFEU. For agreements exceeding the market share thresholds set out in the De Minimis Notice, they do not automatically breach the prohibition but they will need to be assessed individually.
The new adopted provisions clarify, however, that the De Minimis Notice will not provide a safe harbor for agreements containing hardcore restrictions of competition referred to as restrictions “by object.” “By object” restrictions are those considered to be so serious that by their very nature and regardless of any effect they may have, they are capable of damaging competition. Any agreements which are restrictive “by object” will always constitute a violation of Article 101(1) TFEU and cannot benefit from the safe harbor.
The revised rules are intended to reflect the latest changes brought by the 2010 vertical and horizontal block exemption regulations and more importantly, the European Court of Justice’s decision in Expedia. In this ruling, the Court held that an anti-competitive agreement “by object” constitutes an appreciable restriction on competition and cannot be considered as minor because they have by definition an appreciable impact on competition. This is a change with the previous case law applying the De Minimis doctrine to all agreements of minor importance restricting competition “by object” or “by effect” to the exclusions of those containing hardcore restrictions.
As further detailed in a separate guidance paper, the Commission provides a list of the types of restrictions that have already been considered as “by object” restrictions in previous cases, knowing that a restriction “by object” also includes any restriction listed as hardcore in any current or future Commission block exemption regulations. While intended to serve as a practical check-list to help companies in assessing whether their agreements are covered by the De Minimis Notice, it does not prevent the Commission or the EU courts from finding new types of agreement as object restrictions that are not listed in the guidance paper.
As a result of the broader definition of “by object” restrictions, agreements which have the object of restricting competition — including those involving small players and likely to have limited impact on competition — cannot benefit any more from the De Minimis safe harbor. Such agreements will no longer be deemed to be of minor importance and will systematically be viewed as contrary to Article 101(1) TFEU.
While the Commission recognizes that businesses are not precluded from claiming that their agreements containing “by object” restrictions may still be permitted if the restrictions are objectively necessary for the existence of the agreements or for the protection of a legitimate goal, in practice, and as stated in the Commission guidance paper, it is unlikely that such restrictions will fulfill the Article 101(1) TFEU exception.
Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and our colleagues. If you have any questions about this update or would like to discuss this topic further, please contact your Foley attorney or the following:
Howard W. Fogt
Alan D. Rutenberg