The Gazette 1981

APRIL 1981

GAZETTE

Agreements covered range from legally binding con- tracts through to informal co-ordination between traders. Both the supplier/supplier and supplier/person supplied relationships are covered. Where the agreement is shown to be restrictive there is often little difficulty in establishing that the agreement affects trade between member states. Thus, an agreement between two Northern or betwéen two Southern suppliers might have the effect of isolating the Northern or Southern market. Since this would impede the penetration of that market by outside competitors, it could constitute a restrictive trade practice. Prohibited Agreements In a non-exhaustive list, Article 85 (1) sets out five classes of agreements which are prohibited where the above conditions are satisfied — 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 accept- ance by the other parties of supplementary obliga- tions which by their nature or according to com- mercial usage, have no connection with the subject of such contracts. Thus an agreement between persons in the North or South restricting imports to or exports from another member state comes within (a). The most obvious example of an illegal agreement under (b) and (c) is one designed to isolate the Northern or Southern market. Such agreements as those discriminating against cer- tain customers by giving them, for example, less favour- able terms as to prices, discount or credit would come within (d). Under (e), such agreements are prohibited as those requiring the purchaser to buy all or part of his needs of a second (tied) product from a supplier of a first (tying) product. Agreements of minor importance escape the prohibi- tion in Article 85 even where they otherwise come squarely within the terms of the Article. An agreement may be said to be of minor importance where the relevant products do not represent more than 5% of the total market for such products and the aggregate annual turn- over of the participating undertakings does not exceed a certain figure. Exemption The EEC Commission department responsible for competition — Directorate-General IV — can grant or deny exemptions to the application of Article 85 to an agreement. For exemption to be granted, the benefits from the agreement must outweigh the disadvantages from the restrictions on competition.

What Constitutes Unfair Competition? by Gregg Myles, Solicitor

Both North and South, businesses are becoming ever more aware of the provisions of competition law by virtue of recent national legislation. In the South, the legislation is to be found in the Restrictive Practices Act, 1972, and the Mergers, Take- overs and Monopolies (Control) Act, 1978. In the North, the legislation is to be found in the Fair Trading Act, 1973, the Resale Prices Act, 1976, and Restrictive Trade Practices Acts 1976 and 1977 and the Competition Act, 1980. In addition to this national competition law, EEC law makes substantial provision in relation to unfair competi- tion. The EEC law is to be applied together with the rele- vant national legislation above, but where a conflict occurs between EEC and national law, EEC law prevails. EEC Competition Law EEC Competition Law is contained in Articles 85 to 94 of the EEC Treaty and in various regulations, decisions and notices and also in cases decided by the EEC's court - the Court of Justice of the European Communities. This falls into three areas of unfair com- petition - restrictive trade practices (Article 85), fair trading (Article 86) and the regulation of State aid (Articles 92 to 94). This article considers the implications of EEC restrictive trade practice law for the business person. EEC Restrictive Trade Practice Law Article 85 outlaws agreements which affect trade between the nine member states of the EEC and which have as their object or effect the restriction of competi- tion within the EEC. This embraces agreements by sole traders, partner- ships, private companies and public companies.

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