Category Archives: S

Substitutability

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Substitutability

Substitutability in the European Union Law

Concept of Substitutability provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Measure of the extent to which products may be seen as inter-changeable from the viewpoint of producers or consumers. A firm's pricing policy for a specific product is disciplined if consumers have the possibility to buy another product, which they judge as being equivalent by its nature, use and/or price (demand-side substitution). Additional competitive constraint on the firm may stem from produc-ers of other products capable of switching their production without delay towards the product in question at negligible cost and willing to enter into competition on the market segment concerned (supply-side substitution). Product substitutability is an important element in defining the relevant product market ( Relevant market).

State measure

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State measure

State measure in the European Union Law

Concept of State measure provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Law, ministerial decree, decision or other administrative act adopted by a Member State. A Member State's omission to act may also constitute a measure. The Commission may start () infringement proceedings if State measures, taken in relation to () public under-takings and undertakings to which Member States grant special or exclusive rights, contravene EU competition law.

Specialisation Agreement

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Specialisation Agreement

Specialisation agreement in the European Union Law

Concept of Specialisation agreement provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): An agreement between undertakings relating to the conditions under which they specialise in the production of a narrow or specific range of goods and/or services. Agreements on specialisation can contribute to improving the production or distribution of goods, because the undertakings concerned can concentrate on the manu-facture of certain products and thus operate more efficiently and supply the products more cheaply. Specialisation agreements are divided into agreements whereby one participant gives up the manu-facture of certain products, or provision of certain services in favour of another participant (unilateral specialisation); agreements whereby each participant gives up the manufacture of certain products, or provision of certain services in favour of another participant (recipro-cal specialisation); and agreements whereby the participants under-take jointly to manufacture certain products, or provide certain services (joint production). The issue is covered by a specific block exemption regulation.

(See: Council Regulation (EC) No 2658/2000 of 29 November 2000 on the appli-cation of Article 81(3) of the Treaty to categories of specialisation agreements (OJ L 304, 5.12.2000).)

Sunk costs

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Sunk costs

Sunk costs in the European Union Law

Concept of Sunk costs provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Sunk costs are () fixed costs that have already been incurred and cannot be recovered. They arise because some activities require specialised assets that cannot readily be diverted to other uses. Second-hand markets for such assets are therefore limited. Examples of sunk costs are investments in equipment that can only produce a specific product, the development of products for specific customers, advertising expenditures and R & D expenditures.

Single branding

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Single branding

Single branding in the European Union Law

Concept of Single branding provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): This term covers both non-compete obligations and quantity forcing. A non-compete obligation is an obligation or incentive scheme in a supply or distribution agreement which causes the buyer not to manufacture, purchase, sell or resell products which compete with the contract products or to purchase at least 80 % of his requirements of that type of product from the supplier. Quantity forcing on the buyer is a weaker form of a non-compete obligation, where incentives or obligations agreed between the supplier and the buyer make the latter concentrate his purchases to a large extent, but less than 80 %, on the brand(s) of one supplier. Single branding may take the form of a direct obligation not to purchase competing brands (often called 'ties'), but may, for example, also take the form of minimum purchase requirements, quantity rebate schemes or loyalty rebate schemes. The possible competition risks are () foreclosure of the market to competing suppliers, facilitation of () collusion between suppliers in the case of cumulative use and, where the buyer is a retailer, a loss of in-store () inter-brand competition.

Selective distribution

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Selective distribution

Selective distribution in the European Union Law

Concept of Selective distribution provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Distribution system whereby a supplier enters into (vertical) agree-ments with a limited number of selected dealers in the same geographic area. Selective distribution agreements, on the one hand, restrict the number of authorised distributors. On the other hand, they prohibit sales to non-authorised distributors: this leaves authorised dealers only other appointed dealers and final customers as possible buyers. Selective distribution is almost always used to distribute branded final products.

The possible competition risks are a reduction in intra-brand compe-tition, the facilitation of () collusion between suppliers or buyers and the foreclosure of certain type(s) of distributors, especially in the case of cumulative effects of parallel networks of selective distribution in a market. Purely qualitative selective distribution is, in general, considered to fall outside the prohibition of Article 81(1) of the EC Treaty, provided three conditions are satisfied. Firstly, the nature of the product in question must necessitate a selective distribution system. Secondly, resellers must be chosen on the basis of objective criteria of a qualitative nature. Thirdly, the criteria laid down must not go beyond what is necessary.

Resources

See also

  • Vertical agreement

Statement of objections

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Statement of objections

Statement of objections (SO) in the European Union Law

Concept of Statement of objections (SO) provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Written communication, which the Commission has to address to persons or undertakings before adopting a decision that negatively affects their rights. This obligation of the Commission flows from the addressee's rights of defence, which require that they be given the opportunity to make their point of view known on any objection the Commission may wish to make in a decision. The SO must contain all objections on which the Commission intends to rely upon in its final decision. The SO is an important procedural step foreseen in all competition procedures in which the Commission has the right to adopt negative decisions.

(See: Article 19(1) of Regulation No 17; Article 18(3) of the merger regulation.)

Spillover effects

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Spillover effects

Spillover effects in the European Union Law

Concept of Spillover effects provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Side effects of an agreement or a merger between two or several firms, which affect competition between them in another relevant market than the one covered by the agreement or the merger in question. Spillover effects are referred to in Article 2(4) of the merger regulation, which concerns the creation of a joint venture that has as its object or effect the coordination of the competitive behaviour of undertakings that remain independent. In that case, the Commission shall appraise this coordination also taking into account whether two or more parent companies retain, to a significant extent, activities in a market which is () downstream or () upstream from that of the joint venture or in a neighbouring market closely related to this market.

Start-up costs

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Start-up costs

Start-up costs in the European Union Law

Concept of Start-up costs provided by the “Glossary of terms used in EU competition policy” (Antitrust and control of concentrations, published in 2002): Costs faced by a firm that intends to start economic activity in a specific market segment. These costs include, for example, the expen-diture to undertake research and development (R & D) activities, the costs of acquiring production and/or distribution facilities, as well as the costs of marketing the product (i.e. advertising).

Scope of the publication

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Scope of the publication

Scope of the publication of the Decision

The Commission has a long established practice to publish its final antitrust decisions on DG Competition's website in order to ensure transparency, predictability and legal certainty, even though the Commission is under no legal obligation to do so. 1

More about Scope of the publication

In addition, all documents published in the OJ are also available on the DG Competition website via a direct link. 2

Resources

See Also

References

  • Information about Scope of the publication in the Antitrust Manual of Procedures for the application of Articles 101 and 102 TFEU (Internal DG Competition)

Notes


[Note 1] See Case T-198/03 Bank Austria Creditanstalt / Commission [2006] ECR II-1429, paragraph 76: “(…) that provision [Art. 21(2) of Regulation 17] does not limit the Commission's power to publish the full text of its decisions, if, resources permitting, it considers it appropriate to do so” and para. 79: “the aim of Article 21(2) of Regulation No 17 is not to limit the Commission's freedom to publish, of its own volition, a version of its decision that is fuller than the minimum necessary and also to include information whose publication is not required, in so far as the disclosure of that information is not inconsistent with the protection of professional secrecy”.
[Note 2] The bibliographic link allows that viewers can choose the format and the language desired.

Further Reading

  • Information about Scope of the publication in “An Introduction to EU Competition Law”, Moritz Lorenz (Cambridge University Press)