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Size Doesn't Matter - European Commission tightens application of 'De Minimis' safe harbour

EU and UK competition law prohibits agreements which have as their object or effect the restriction of competition and which may affect trade between Member States/within the UK.  For most practical EU and UK competition law prohibits agreements which have as their object or effect the restriction of competition and which may affect trade between Member States/within the UK.  For most practical purposes EU and UK competition law can be regarded as the same.

In the article written below by Jessica Burns in our Competition and EU Regulatory team, Jessica sets out the key differences between restrictions of competition "by object" and restrictions "by effect" and considers the practical importance of this distinction when the competition authorities are investigating the enforcement of commercial agreements, such as franchise and distribution agreements.

European Commission tightens application of 'De Minimis' safe harbor

This article is of particular importance to small and medium enterprises (SMEs), which have relied on the safe harbour available under the "De-Minimus" exemption. The EU Commission has followed an important ruling in 2012 on the concept of "object" restrictions in Case C-226/11 Expedia by issuing a revised De-Minimus Notice in June 2014, which clarifies that the safe harbour will not apply to any restrictions of competition by 'object' or restrictions listed as 'hard-core' in any current or future block exemption.  The EU Commission takes the view that these restrictions are automatically considered appreciable (and in practice infringing Article 101(1) unless justified under Article 101(3)), regardless of the size of the parties, the market coverage of the agreement and its economic realities, or any concrete effects on the market.

SME's are therefore reminded that size does not matter -  smaller companies are not immune from competition law by reason of their size. The same is true for larger companies who engage in limited anti-competitive conduct.  Whilst this may come as little surprise in the context of cartels where it is widely, if not universally, understood that price fixing or market sharing with competitors is prohibited irrespective of the size of the parties, it ups the ante for legal compliance in relation to non-cartel restrictions in commercial agreements.

 

 

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