Antitrust’ competition law punishes practices that are deemed inefficient for the functioning of the market as a whole. (This differs from unfair competition law, which protects you against ‘nasty’, ‘unfair’ or ‘immoral’ behaviour by your competitors – including, for example, aggressive advertising practices).
Antitrust law sanctions two types of behaviour:
- Anti-competitive agreements between companies; and
- Abuse of dominant position.
Each of these offences deserves to be developed in detail, as the subject matter is so abundant (and, let’s face it, relatively complex).
Our purpose here is limited to providing an overview of practices that are clearly illegal or whose legality can legitimately be questioned. (We will go into more detail later).
1. Unlawful agreements between undertakings are :
For the sake of clarity, a distinction is made between agreements between competitors (a) and agreements between suppliers and distributors (b).
a. Illegal agreements between competing companies:
- The cartel, i.e. the agreement between competing companies to interrupt competition between them. The cartel most often takes the form of an agreement to :
- increase prices (e.g.: +20% of the price of mobile phone subscriptions);
- Reduce the quantities sold or produced (e.g. 10% reduction in the quantities of snow tyres);
- define the amount of margins ;
- Pricing of raw materials;
- limit or control investments or technical developments;
- Exchanges of “sensitive” information between competing companies (e.g. exchange of information on prices or other data likely to lead to parallel behaviour between competitors).
- Business-to-business boycotts, where several companies join together to isolate and exclude a competitor from the market (by cutting off its supplies or outlets).
- Public procurement manipulation practices, where several companies coordinate before submitting their price offer to the public authority.
b. Illegal agreements between supplier and distributor :
- Distribution contracts setting a resale price imposed on the distributor, or prohibiting discounts, sales or rebates (as well as “recommended retail prices“, but non-compliance is sanctioned).
- Restrictions on online distribution, whereby the supplier attempts to reserve the use of the internet for the marketing of its products to the detriment of its distributor.
- Exclusivity clauses, when they are too long (usually more than five years), and involve a supplier or distributor with a particularly large market share (more than 30% market share).
2. The following practices constitute abuses of a dominant position, prohibited by competition law
A company with a dominant market position – in simple terms, a company with a market share of more than 40% – has a particular responsibility not to harm competition
Under competition law, the following constitute (prohibited) abuses of a dominant position
- refusal to trade (refusal to supply, to contract, to license, etc.), when the product or service refused is essential to be present on the market. For example, the following can be cited:
- refusal to provide access to a port or airstrip;
- the refusal to provide an approval that is essential to be authorised on the market;
- the refusal to supply a component essential to the production of a complex product (e.g. spare part, rare mineral, etc.);
- refusal to license an essential intellectual property right (e.g. interoperability interface to develop software compatible with the dominant main software; patent integrated in a technical standard);
- Tying – forcing the joint sale of two products instead of one;
- imposing discriminatory prices on different persons without just cause (e.g. imposing different prices on different nationalities of the contracting party, or imposing different conditions on identical distributors);
- excessive pricing, or, conversely, predatory pricing, rebates, discounts and discounts that have the effect of being below cost;
No sector is shielded from competition law
On the contrary! In recent years, the Belgian Competition Authority has made a specialty of sanctioning some of the most respectable professional associations (Order, Bar, trade union, professional confederation, …) but whose regulations had the effect of restricting competition.
Thus, the following were sanctioned
- The College of Pharmacists (for unjustified restrictions on advertising and opening hours);
- the Order of Architects (for imposed scales) ;
- The Order of Veterinarians (for minimum fees imposed on its members);
- the Federation of Interior Architects (for preparing a model contract for its members, setting out rules for remuneration);
- the Fédération professionnelle des auto-écoles (for disseminating studies of the operating costs of driving schools, which could lead to a harmonisation of tariffs).
If your professional association imposes rules on you that restrict your activity, it is possible that it is the professional association that is illegal.
No sector is spared by competition law! Thus, competition law can affect industries as varied as :
Beware! Violation of competition rules is severely punished
Competition law is sanctioned by European law, but also by Belgian competition law. In either case, severe sanctions can be imposed.
Violation of competition law is sanctioned by :
- particularly heavy fines, reaching sums of between ten thousand and several hundred million euros – the supermarket cartel (Carrefour, Colruyt, Delhaize, Makro, Cora, etc.) was recently fined a total of 173 million euros);
- the cancellation of the illegal contract, which can be strategically interesting for refusing to implement a contract (distribution or supply) that has become commercially undesirable;
- an order from the judge to resume deliveries and supplies;
- personal fines, for individuals who are alleged to have committed the offence.
In addition, the violation of competition law is likely to give rise to a (collective) action for compensation for the damage caused to consumers, possibly for substantial amounts.