Agreements © Łukasz Stępkowski

Agreements – a case study An undertaking A, a leading producer of premium Polish vodka, organised a two-day social meeting with its fellow manufacturers (i.e. competitors) and distributors in a mountain resort below Tatra mountains. Needless to say, the official flagship product of A has been made available for everyone concerned in ample quantities. Several of the competitors arrived late to the meeting. During the meeting, A’s CEO proposed that, in order to introduce a new, better approach of the industry as to the consumers, the vodka industry should coordinate its efforts to minimize harmful effects of alcohol consumption. A’s CEO posited that it should be done by way of setting up production quotas, maintaining a certain level of prices and requiring all distributors and retailers to take up ’sobriety’ obligations, e.g. obligatory payments of a portion of proceeds into a fund aimed at financing and providing relief and treatments for alcoholics. No written contracts were entered into. Upon hearing the proposal, one competitor’s CEO, Mrs B, stood up and announced that neither she nor her undertaking will not take part in such an anti-vodka scheme and promptly removed herself from the premises. At the same time, Mr C, another CEO, also vacated the premises, yet without saying a word or taking a sip. He returned for the closing ceremony. As of now and so far, only the ’sobriety’ fund has been set up. Assess the facts under Art. 101(1) TFEU.

101 TFEU and agreements The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market Given the above, the notion of an agreement is one of the key issues in EU Antitrust law However, there is no legal definition of an agreement at the level of the Treaty and what is supposed to be understood as an agreement is mainly defined by the Court of Justice of the European Union

Agreements The notion of an agreement under 101 TFEU is not limited to any notion of an agreement under national civil law Specifically, the notion of an agreement is not limited to any notion of a contract, construed as a written, signed and sealed instrument under any given national law For instance, there are no requirements for agreements within Article 101(1) TFEU that would otherwise apply to a contract, e.g. no requirements as to legal form (notarial deed, written, certified date, certified signatures etc) However, this does not meant that an agreement may not be, according to national law, a contract or an agreement at the very same time it is an agreement within the scope of Article 101(1) TFEU

Agreements An agreement, for the purposes of Article 101(1) TFEU, is defined as a concurrence of wills of at least two parties As such, unilateral measures of a single undertaking are never able to be agreements within the scope of Article 101(1) TFEU, nor are able to be such unilateral restrictions that exist independently of, but at the same time as a neutral agreement between at least two parties (C-2/01 P and C-3/01 P Bundesverband v Bayer, p. 88, 101)

Agreements Agreements within the scope of Article 101 TFEU need not be legally binding, in the sense that one party must be able to demand performance of the agreement by another party As such, it may be that an agreement at issue is, according to national law, a non-binding mutual understanding, or a gentlemen’s agreement Gentlemen’s agreements are caught by Article 101 TFEU (cf. C-373/14 P Toshiba)

Agreements Article 101(2) TFEU stipulates that entering into an agreement within the scope of Article 101(1) TFEU carries a sanction of nullity ’Nullity’ for the purposes of Article 101(2) TFEU applies to clauses that contain restrictions Where such clauses are not severable from the entirety of the agreement, the entirety of it is void However, if such clauses were to be severable from the agreement, national law would specify legal effects of such a nullity in regard to the rest of the agreement

Agreements Blocking participation in an agreement is done by distancing oneself from it Distancing involves a public declaration of non-participation that is made known to other participants Factual distancing, where done for other reasons, does not render Article 101(1) TFEU inapplicable (C-634/13 P Total)