22. Mergers (3): UK law

This chapter provides an overview of the UK system of merger control and explains the procedure of the Competition and Markets Authority (‘the CMA’) when determining whether a merger should be referred for an in-depth ‘Phase 2’ investigation and when deciding to accept ‘undertakings in lieu’ of a reference. It describes how Phase 2 investigations are conducted and discusses the way in which the CMA applies the ‘substantially lessening competition’ (‘SLC’) test in practice. It then explains the enforcement powers in the Enterprise Act 2002, including the remedies that the CMA can impose in merger cases, and discusses various supplementary matters, such as powers of investigation and enforcement. The chapter concludes with a discussion of how the merger control provisions work in practice and provides a brief account of the provisions on public interest cases, other special cases and mergers in the water industry.

18. Abuse of dominance (2): pricing practices

This chapter considers abusive pricing practices under Article 102 TFEU and the Chapter II prohibition in the Competition Act 1998. It discusses cost concepts used in determining whether a price is abusive and deals with excessive pricing; conditional rebates; bundling; predatory pricing; margin squeeze; price discrimination; and practices harmful to the single market. Price discrimination may be both exploitative and exclusionary and an excessively high price may be a way of preventing parallel imports or excluding a competitor from the market; but the division may provide helpful insights into the way in which the law is applied in practice. In each section the application of Article 102 by the European Commission and the EU Courts is considered, followed by cases in the UK. Where appropriate, reference is made to the Commission’s Guidance on the Commission’s Enforcement Priorities in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings.

14. Horizontal agreements (2): oligopoly, tacit collusion and collective dominance

This chapter describes how competition law addresses oligopoly, tacit collusion and collective dominance. This chapter is concerned with the related topics of oligopoly, tacit collusion and collective dominance. Oligopoly exists where a few firms between them supply all or most of the goods or services on a market without any of them having a clear ascendancy over the others. This chapter begins with discussion of the theory of oligopolistic interdependence and of the possible ways of dealing with the ‘oligopoly problem’. It then considers the extent to which Articles 101 and 102 can be used to address that problem. The chapter also discusses UK law and, in particular, the possible use of market investigations to address market failure that may arise in oligopolies.

11. Enterprise Act 2002: market studies and market investigations

This chapter describes the UK system of market studies and market investigation references. It begins by describing the CMA’s ‘general function’ of gathering information about markets, followed by an explanation of what is meant by a ‘super-complaint’. It examines the purpose, procedure and outcomes of market studies, including possible outcomes. Market studies sometimes lead to market investigation references, although there are several other possible outcomes of a market study. The chapter describes the making and determination of analyses and the market investigation provisions under Part 4 of the Enterprise Act 2002. Having briefly considered public interest cases, enforcement and other supplementary matters, the chapter discusses how the market investigation provisions have been working in practice. The final section of the chapter briefly refers to the enforcement and review of undertakings and orders still in force under the monopoly provisions in the former Fair Trading Act 1973.

5. Article 102

This chapter discusses the main features of Article 102 of the Treaty on the Functioning of the European Union (TFEU), which is concerned with the abusive conduct of dominant firms. It begins by introducing the European Commission’s Guidance on the Commission’s enforcement priorities in applying Article [102 TFEU] to abusive exclusionary conduct by dominant undertakings. It then discusses the concept of undertaking, the requirement of an effect on trade between Member States, the concept of a dominant position and the requirement that any dominant position must be held in a substantial part of the internal market. The chapter also considers the meaning of abuse of a dominant position, which is a complex and controversial issue. A discussion of the defences to allegations of abuse is followed by a brief look at the consequences of infringing Article 102.

4. Article 101(3)

This chapter examines Article 101(3) of the Treaty on the Functioning of the European Union (TFEU). Article 101(3) provides a ‘legal exception’ to the prohibition in Article 101(1) by providing that it may be declared inapplicable in respect of agreements, decisions or concerted practices, or of categories of agreements, decisions or concerted practices, that satisfy four conditions. After discussing the burden and standard of proof under Article 101(3) and the application of that provision to agreements, including restrictions of competition by object, this chapter discusses the four conditions in Article 101(3). It then considers the implications of Regulation 1/2003 for undertakings and their professional advisers, and in particular their need to ‘self-assess’ the application of Article 101(3) to agreements. The final section of this chapter describes the system of so-called ‘block exemptions’.

17. Abuse of dominance (1): non-pricing practices

This chapter considers abusive non-pricing practices under Article 102 TFEU and the Chapter II prohibition in the Competition Act 1998. It deals in turn with exclusive dealing agreements; tying; refusals to supply; abusive non-pricing practices that are harmful to the single market; and miscellaneous other non-pricing practices which might infringe Article 102 or the Chapter II prohibition. Reference is made where appropriate to the Commission’s Guidance on the Commission’s Enforcement Priorities in Applying Article [102 TFEU] to Abusive Exclusionary Conduct by Dominant Undertakings.

15. Horizontal agreements (3): cooperation agreements

This chapter discusses horizontal cooperation agreements between competitors. There may be circumstances in which competitors cooperate with one another in a way that delivers economic benefits, not just for themselves but for consumer welfare as well. After a discussion of joint ventures, the chapter discusses the application of Article 101 to horizontal cooperation agreements. It refers, in particular, to the European Commission’s Guidelines on Horizontal Cooperation Agreements and discusses, in turn, information exchange, research and development agreements, production agreements, purchasing agreements, commercialisation agreements, standardisation agreements and other cases of permissible horizontal cooperation. It concludes with a brief look at the treatment of horizontal cooperation agreements under UK competition law.

10. Competition Act 1998 and the cartel offence: public enforcement and procedure

This chapter describes the system of public enforcement under the Competition Act 1998. Reinforced by the Enterprise Act 2002 and Enterprise Regulatory Reform Act 2013, the Competition Act provides a set of procedural rules of investigation for the enforcement of the Chapter I and II prohibitions. After a section on complaints, it considers the extent to which it may be possible to receive guidance from the Competition and Markets Authority (‘the CMA’) on the application of the Act. It then deals in turn with enforcement of the Competition Act 1998, the criminal cartel offence and company director disqualification. This is followed by an overview of the concurrency provisions, stating that the CMA works hand-in-hand with the sectoral regulators. The final two sections discuss the appeal mechanism under the Competition Act and the possibility of Article 267 references to the Court of Justice.

13. Horizontal agreements (1): cartels

This chapter is concerned with the prohibition of cartels, also referred to as ‘hard-core’ horizontal agreements. The chapter begins with a discussion of the widespread consensus among competition authorities worldwide that cartels should be condemned, and gives examples of recent enforcement that has led to the imposition of significant fines and sentences of imprisonment. It also looks at the European Commission’s enforcement activity in relation to cartels. The chapter then considers the application of Article 101 to particular types of cartels: price fixing, market sharing, production quotas and other hard-core cartel practices. The final section of the chapter looks at anti-cartel enforcement and judicial practice in the UK.