Download EU Competition Law: Undertaking, Parents & Subsidiaries, and Violation of Article 101 and more Study notes European Union law in PDF only on Docsity! Undertaking “The concept of undertaking encompasses every entity engaged in an economic activity regardless of the legal status of the entity and the way in which it is financed” (Höfner and Elser) The court defined "economic activity" in the FENIN case as offering of products and services on the market. Purchasing of goods is not an economic activity when the goods are not offered for resale but used to perform a public function (FENIN) Parents & Subsidiaries Parents and subsidiaries would be regarded a same entity if the subsidiaries lacked actual autonomy in choosing their own course of action on the market and instead followed the directives/decisions supplied by the parent company/firm overseeing them (Viho Europe v Commission (Parker Pen). According to Guidelines given under the article “ when a company exercises decisive influence over another company they form a single economic entity and, hence, are part of the same undertaking”. In AKZO CJ held that “where a parent company has a 100% shareholding in its subsidiary there is a rebuttable presumption that that parent company exercises a decisive influence over the conduct of its subsidiary”. Violation of Article 101 requires either 1) Agreement 2) A decision of association 3) Concerted practice Agreements Under EU law, the term agreement is given a very broad and flexible interpretation and includes written agreements (both vertical and horizontal as per the case of Consten and Grundling v Commission. There is no requirement that the agreement should be a written or legally enforceable contract. Hence agreements include verbal/Oral ones in the form of gentleman’s promise ( Chemiefarma v Commission) According to the case Hercules v. Commission, firms that did not attend all meetings but voluntarily aligned themselves with the agreement may still be considered part of the overall agreement. In Commission v. Anic, the Court held that the burden of proof is on the company to show that it did not intend to participate in the agreement's execution. Tacit Agreements - If a manufacturer imposes anti competitive requirements on distributors and the distributors continue to operate under these terms, the distributors will be deemed to have consented to these covenants and will be held accountable, following Volkswagen v. Commission. Concerted practice Concerted practice was defined in the Dyestuff case as “a form of co- ordination between undertakings which without having reached the stage where an agreement properly so called has been concluded knowingly, substituting practical co- operation between them for the risks of competition”. In Dyestuff, the Court of Justice rejected the price-following argument on an oligopolistic market. However, "price following" in the oligopoly market was deemed a defense in the Re Woodpulp case because it was the only conceivable explanation for the similar conduct. Hence in a concerted practice scenario where not even an informal oral agreement has been reached between undertakings but where, rather, there is a consensus, an understanding, between the undertakings that they will not compete. In Suiker Unie (Sugar Cartel), the CJ held that it is not necessary to prove an actual plan, it will be labeled as a concerted practice if there is some sort of contact and cooperation between parties. According to the court “any direct or indirect contract… the object or effect whereof is to influence the conduct on the market of an actual or potential competitor or to disclose to such a competitor the course of conduct which they themselves have decided to adopt… on the market”.
