Anticompetitive agreements - introduction

Article 101 of the Treaty on the Functioning of the European Union (TFEU) is one of the primary articles in EU competition law. It prohibits agreements between companies that prevent, restrict, or distort competition within the internal market of the EU.

Article 101 (ex Article 81 TEC)

1. The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;

(b) limit or control production, markets, technical development, or investment;

(c) share markets or sources of supply;

(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

2. Any agreements or decisions prohibited pursuant to this Article shall be automatically void.

3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:

- any agreement or category of agreements between undertakings,

- any decision or category of decisions by associations of undertakings,

- any concerted practice or category of concerted practices,

which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:

(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;

(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.

Vertical agreements

Restrictions by object

Resale Price Maintenance (RPM) in EU competition law refers to the practice by which suppliers and manufacturers seek to restrict the price at which their goods are resold by retailers. This typically involves agreements that oblige retailers not to sell below a minimum price set by the supplier.

Such arrangements can potentially infringe EU competition law, specifically Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits agreements between companies that prevent, restrict, or distort competition in the EU's internal market. It's worth noting that RPM can also be a concern under the competition laws of individual EU member states.

While there are exceptions under EU law where agreements that might otherwise restrict competition can be justified (for example, if they improve production or distribution, or promote economic progress in some way), these exceptions are relatively narrow. In general, RPM is viewed as a serious infringement of EU competition law because it can reduce intra-brand competition, leading to higher prices for consumers.

However, each case is assessed individually, and factors like market power, the nature of the product, and the specifics of the agreement are all taken into consideration when assessing whether a particular RPM arrangement infringes EU competition law.