Reduction of the substantive scope of Article 85 (1)

The idea of a narrower scope of EC competition law should therefore be qualified by focusing on the specific problems, i.e.

those hampering a decentralised application of EC competition law and those posing a risk of conflict between EC and domestic competition law, notably between EC authorizations and domestic prohibitions. These problems concern Article 85 and not Article

86* “ .

A division can be made between the jurisdictional scope of Articles 85 (1) and 86, involving the concept of "trade between Member States" on the one hand, and the substantive scope of Article 85 (1) , involving the condition of "restriction of

competition" on the other.

It is submitted that the current^” wide concept of "trade between Member States" should be maintained and clarified but that the substantive scope of Article 85 (1) should be narrowed by redefining the concept of "restriction of competition".

An agreement containing a restriction on conduct does not necessarily have the object or effect of restricting competition contrary to Article 85 (1). Many agreements that currently require exemption should be enforceable in national courts. This would reduce the need for notification, exemptions, comfort letters and the need to distort agreements to come within group exemptions. It would, however, not avoid the multiple stop effect caused by domestic prohibitions. Should the need arise, this effect could be mitigated in three ways.

First, by redefining the relationship between domestic prohibitions and the types of clearance referred to at 2.3.2.4. under A above. Those "positive clearances" by the Commission, involving an assessment of the agreement under Article 85 followed by a finding a compatibility, could be given the same status as exemptions (preempting domestic prohibitions) on the

*“ EC authorizations are not possible under Article 86 and the decentralised application of Article 86 poses no jurisdictional problems for national courts. They have the power to apply the Article fully.

The Commission recently reduced the scope of application of Article 85 by changing its Notice on agreements of minor importance as discussed at 3.3. and 6.3.3. below.

basis that they are also "positive f i n d i n g s o r "positive assessments"^*. Under the proposed narrower interpretation of the substantive scope of Article 85 (1) there will be more of such clearances replacing many of the current exemptions. To upgrade their status may require a change in Regulation 17^®%

and would imply an extended interpretation of the Community Court's judgment in Wait Wilhelrd-^^ and perhaps also Perfumes^^’’ but it would enhance efficiency and reduce the problem of conflicting decisions.

Secondly, by aligning the interpretation of domestic competition law and EC competition law, including the proposed, narrower, interpretation of the concept of "restriction of competition". Since nearly all domestic laws now resemble Articles 85 and 86 and nine track exactly the wording of the provisions^®, the same interpretation applied to both systems seems natural. This would facilitate double control by national judges in that the same or a similar assessment would suffice for both systems, thereby achieving a more efficient and streamlined enforcement of the rules of both systems. The domestic competition laws of Sweden, Finland and Italy already require interpretation in accordance EC competition law. It will be illustrated at 6.3.2.1. below that as regards vertical restraints, the domestic competition laws already apply a narrower interpretation of what constitutes a "restriction of

See Walt Wilhelm. 2.3.2.4. under B supra.

-®* This expression was used by Advocate General Tesauro in his opinion in BMW v ALP and Bundeskartellamt v Volkswagen and VAG Leasing quoted at 2.3.2.4. under C.

-®® Waelbroeck, Robert Schumann Centre Annual on European Competition Law 1996. ed Ehlermann and Laudatl, 1997, p 104.

‘®® See 2.3.2. footnote 98, and 2.3.2.4 under B, in particular footnote 116 supra.

^®’ See 2.3.2.4. under A supra.

^®® Dreher, Robert Schumann Centre Annual on European Competition Law 1996. ed Ehlermann and Laudati, 1997, p 242. Dreher mentions eight, but this was before the adoption of the Dutch competition law which came into force on 1.1.98.

competition" and this should accelerate the proposed narrower interpretation of the substantive scope of Article 85 (1) .

Third, by combining a narrower interpretation of the substantive scope of Article 85 (1) with the Italian model as argued under B above. This combined option would completely resolve the uncertainty caused by double or multiple control. Unfortunately, the realisation of this combined option does not

seem likely, even in the long term.

The adoption of a narrower interpretation of the substantive scope of Article 85 (1) in isolation, however, is a realistic possibility and would alleviate many of the problems described in this chapter. It would not require any changes in EC or domestic legislation nor affect the Commission's exemption monopoly but it would reduce the Commission's workload since fewer exemptions would be needed. It would enhance the ability of national courts to deal with cases under Article 85 (1) more fully and reduce the risk of parallel proceedings involving the Commission which causes the problems discussed in Part II of this book (from chapter five onwards) . Part II examines the substantive application of Articles 85 and 86 by national courts. In that context, a narrower interpretation of the substantive scope of Article 85 (1) is advocated at 6.3. and at 7.1. and 7.2. it is shown that the Community Court has already required such interpretation in some of its judgments.

3. PROBLEMS FOR NATIONAL COURTS RESULTING FROM THE ECONOMIC NATURE OF EC COMPETITION LAW

3.1. The economic nature of EC competition law

This chapter and the next are focused on some of the difficulties a national court may face in applying EC competition law.

The application of EC competition law involves methods and legal assessments that differ considerably from the litigation national courts deal with normally.

Art 85 (1) prohibits agreements or concerted practices that