The Boundaries of EC Competition Law The

This monograph addresses the problems surrounding the interpretation and application of Article 81 of the EC Treaty, and how it affects the regulation and limits of EC competition law.

Okeoghene Odudu is a Lecturer in Competition law at King's College London, where he teaches US Antitrust, EC State Aid and State Regulation Law, EC and UK Competition Law, and EU Law. Odudu read law as an undergraduate at Sidney Sussex College, Cambridge, and received an MA in Criminology from Keele University. He was a graduate student at Keble College, Oxford, where he competed a DPhil. He was awarded a Kennedy Scholarship and spent a year at Harvard conducting research in US antitrust. After being awarded a DPhil in law from Oxford University Odudu was elected Fellow in law at Downing College, Cambridge where he taught EU and Administrative law.

Table of Cases

xiii

Tables of Treaties, Legislation, Notices & Guidelines

xxxiii

1. Introduction

1

(8)

I. Self-enforcing legal obligation

1

(1)

II. The uncertain boundaries of Article 81 EC

1

(4)

III. Towards a self-enforcing Article 81 EC

5

(4)

2. The Value of Competition

9

(14)

I. Introduction

9

(1)

II. Competition and efficiency

10

(3)

A. Allocative efficiency

10

(1)

B. Productive efficiency

11

(2)

III. Competition and market integration

13

(1)

IV. Competition and freedoms

14

(2)

V. The hierarchy of values

16

(6)

VI. Conclusion

22

(1)

3. The Meaning of Undertaking Within Article 81 EC

23

(34)

I. Introduction

23

(1)

II. The functional definition of undertaking

24

(2)

III. Economic activity

26

(19)

A. Offer goods or services in the market place

26

(8)

1. Work

27

(1)

2. Consumption

28

(2)

3. Regulation

30

(4)

B. Bear economic (financial) risk

34

(1)

C. Potential to make profit

35

(10)

1. Redistribution

37

(5)

(a) Compulsion

40

(1)

(b) No control over the cost of production

40

(1)

(c) No control over the price

40

(1)

(d) Absence of link between costs and price

41

(1)

2. Public goods

42

(3)

IV. Assessing the functional approach

45

(9)

A. The need for a functional approach

46

(6)

1. The public/private divide in the EC Treaty

46

(1)

2. Challenges to the public/private divide

47

(3)

3. The functional approach as a means of drawing the public/private divide

50

(2)

B. Economic activity as the sole function

52

(2)

V. Conclusion

54

(3)

4. Collusion: Agreement and Concerted Practice

57

(40)

I. Introduction

57

(2)

II. Agreement

59

(11)

A. The meaning of agreement within Article 81 EC

59

(2)

B. Proof of agreement

61

(7)

1. Inference from conduct

63

(8)

(a) Inference of offer from conduct

64

(1)

(i) Unilateral conduct

65

(1)

(ii) Apparently unilateral conduct

65

(2)

(b) Inference of acceptance from conduct

67

(1)

(i) Adherence to the agreement

67

(1)

C. Obtaining evidence of agreement

68

(2)

III. Concerted practice

70

(21)

A. The meaning of concerted practice within Article 81 EC

71

(13)

1. Common intention

71

(10)

(a) The relationship between agreement and concerted practice

72

(3)

(b) Evidence of non-binding common intention

75

(5)

(c) Concerted practice as common intention rejected

80

(1)

2. Reduction of uncertainty

81

(3)

B. Proof of concerted practice

84

(7)

1. Jurisdictional nature of collusion

86

(5)

IV. Collusive outcomes without collusive conduct

91

(4)

A. Identifying a mutually beneficial strategy

93

(1)

B. Monitoring adherence

93

(2)

C. Deterring deviation

95

(1)

V. Conclusion

95

(2)

5. The Meaning and Existence of Restricted Competition

97

(31)

I. Introduction

97

(1)

II. Restriction of competition as a jurisdictional element

98

(4)

III. Restriction of competition as a substantive element

102

(23)

A. Measurement

103

(4)

B. Prediction

107

(6)

1. Own price elasticity

109

(1)

2. Lerner Index

109

(1)

3. Market share and concentration

110

(1)

4. Barriers to entry

111

(2)

C. Presumptions

113

(16)

1. Induction based presumptions

114

(6)

(a) The content of the category

115

(4)

(b) Nature of the presumption

119

(1)

2. Intent based presumptions

120

(14)

(a) Determining intent

123

(1)

(b) Nature of the presumption

123

(1)

(i) Ex post

123

(1)

(ii) Ex ante

124

(1)

IV. Conclusion

125

(3)

6. Article 81(3) EC as a Productive Efficiency Enquiry

128

(31)

I. Introduction

128

(1)

II. The productive inefficiency of firms with market power

129

(2)

A. X-inefficiency

130

(1)

B. Rent seeking

131

(1)

III. The productive efficiency of firms with market power

131

(6)

A. Countervailing power

132

(1)

B. Economies of scale and scope

133

(1)

C. Technological progress

134

(3)

1 Ability to innovate

135

(1)

2 Incentive to innovate

136

(1)

IV. Article 81(3) as a productive efficiency enquiry

137

(20)

A. The need for productive efficiency

137

(5)

B. Assessing productive efficiency

142

(4)

1 Measurement

144

(1)

2 Prediction

145

(1)

3 Presumption

145

(1)

C. The trade-off with allocative efficiency

146

(7)

1 The importance of distribution

148

(3)

2 Determining the consumer's fair share

151

(2)

D. The negative conditions and their function

153

(10)

1 No indispensable restrictions

154

(1)

2 No possibility of eliminating competition

155

(2)

V. Conclusion

157

(2)

7. Article 81 EC and Non-Efficiency Goals

159

(16)

I. Introduction

159

(1)

II. The consideration of non-efficiency goals in Article 81 EC

160

(3)

III. Rejecting non-efficiency considerations in Article 81 EC

163

(10)

A. The illegitimacy of considering additional goals

164

(6)

1 Reconsideration of jurisdictional questions

164

(2)

2 Direct effect by the back door

166

(1)

3 The intended relationship between Treaty provisions

167

(3)

B. Effectiveness of a unitary goal

170

(3)

1 Legal certainty

170

(2)

2 Justiciability

172

(1)

IV. Conclusion

173

(2)

8. The Boundaries of Article 81 Clarified?

175

(6)

Bibliography

181

(36)

Index

217

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The Boundaries of EC Competition Law The Scope of Article 81

Summary

Author Biography

Table of Contents

Supplemental Materials