The very customary fashion for the development of trade on the market is by concluding agreements between independent undertakings and the contractual freedom is in itself the core of such relations. Its limitation is permissible only rarely where higher values, usually of imperative character and of prime importance, are deemed to have been affected negatively. Competitive relations and in particular the preservation of competition have been naturally raised to an imperative milestone of contractual relations between independent undertakings on the market.
In certain cases agreements, decisions and concerted practices between independent undertakings may also amount to prevention, restriction or distortion of competition, and therefore they are considered prohibited by law.
Delchev & Partners can provide you a thorough competitive analysis and advice you with regard to:
Agreements
Horizontal agreements
Some of the forms of restrictions of competition, which could be achieved on a horizontal level, i.e. between competitors, are in practice considered to be a most severe form of anti-competitive behaviour on the respective market:
- Cartels;
- Oligopoly, tacit collusion and collective dominance;
- Cooperation and specialization agreements.
Vertical agreements
The restriction of competition may also be achieved vertically. However, regard should be had in the first place as to whether an agreement may fall outside the scope of competition rules on vertical agreements, e.g.:
- Vertical integration;
- Agency agreements;
- Sub-contracting agreements.
In other cases an agreement may formally fall within the scope of competition rules on vertical agreements but in practice it may not be capable of appreciably restricting competition, e.g.:
- agreements of minor importance;
- agreements between small and medium sized enterprises.
Once it has been ascertained that the vertical agreement falls within the full scope of competition rules an assessment should be made whether it could be subject to a block exemption in the respective sector or an individual exemption, should it for some reason not meet criteria of the respective block exemption:
- block exemptions in the respective sector normally focus on how big the market share covered by the agreement is on the upstream and/or downstream market and whether or not the vertical agreement contains hard-core restrictions (e.g. resale-price maintenance, partitioning of the market by territory or by customers, etc.) or other vertical restraints (e.g. non-compete clauses);
- individual exemptions would be possible where for some reason the agreement does not meet the criteria of the block exemption but yet its pro-competitive effects could outweigh the anti-competitive ones;
- different types of vertical restraints may take the form for instance of single branding; exclusive distribution, exclusive customer allocation, exclusive sourcing and exclusive supply; selective distribution; franchising; tying; recommended and maximum resale prices, etc. or combination thereof.
Decisions by associations
In certain spheres of commercial activity it is typical for undertakings to establish associations. The establishment of such an association, its existence, decisions and even sometimes its recommendations may be regarded as means of anticompetitive coordination between independent undertakings.
Concerted practices
It is not always necessary for undertakings to reach the stage of an agreement or decision, to contribute to the negative effect on competition. The Court of Justice of the European Communities has defined such a pattern of behavior as “any direct or indirect contact between such operators, the object or effect whereof is either to influence the conduct on the market of an actual or potential competitor or to disclose to such competitor the course of conduct which they themselves have decided to adopt or contemplate adopting on the market“.