Per Se Illegal Rules Under EU Competition Law

Category behaviours as far as competition law is concerned,such as price fixing and market sharing agreements,have long been regarded in EU competition law as by object restriction of competition.Consequently,no actual anti-competitive effects are required in order for agreements with price-fixing or market sharing clauses to fall within competition law.Following this classification is a heated debate as to whether this “by object box”,which consists of several categories of behaviours,have helped to impede anti-competitive behaviours and thus have benefited markets and eventually consumer welfare.This essay will argue that,with respect to the application in horizontal agreements,rule of by object restriction of competition and per se illegal rules are reasonable but should be restricted to a small scope,while with regard to vertical agreements,rule of by object restriction of competition and per se illegal rules should be abandoned.At the outset,antitrust analysis system within EU will be introduced first,after which the rule of by object restriction of competition,will be analyzed in more details.Further,rationales will be given as to why those rules should be restricted in the analysis of horizontal agreement and be abandoned in the analysis of vertical agreement.The evidence of the “by object box” can be seen in both literature and case law.For example,it is argued that price fixing,market sharing have been seen as by object restriction of competition(Whish baily,2015;T-Mobile;2009).Cases can be seen in Broadcast Music v.Columbia Broadcasting(1979)where supreme court judgecontends that classification is an necessary starting point of Section 1 inquiry.However,the debate as to whether these categories are necessary never comes to an end.It is argued that,in respect of behaivours that amount to by object restriction of competition,enforcement errors can happen.One is characterizing some benign or efficient practices as anti-competitive behaviours,which is referred by economists as Type I error.In Broadcast Music v.Columbia Broadcasting(1979),Broadcasting company CBS claimed that practices of ASCAP and BMI,namely issuing blanket license of music and other composition by fixed prices,fall within price fixing category and are per se illegal.This argument is supported by the court of Appeal holding that blanket license was a form of price-fixing illegal per se.However,this ruling was reversed by supreme court claiming that this arrangement is has its efficiency and therefore reversed the rulings.As John and Kovacic point out(2017),the risk arising from this case is that some completely benign or beneficial behaivours would be deemed as anti-competitive.This error could entail worse consequences if when connected with enforcement system.Though in heated debates,a criminal punishment might be imposed on management of undertakings engaging in agreements that violate Art.101.If a procompetitive practice is seen as price-fixing category without investigation into anti-competitive effects,and the manager of undertaking is therefore given a criminal punishment,it will lead to injustice and dis-incentivize undertakings from pro-competitive coordination.The other typical type of error,which is often referred to as Type II error,is that some undertakings seek to achieve the same anti-competitive goal by avoiding using price-fixing or market sharing practices.It is observed that classification of behaviours sometimes tolerate conducts that in fact are competitively destructive.It is then argued that there is no need to apply those category rules in vertical agreements since pro-competitive effects can often be seen.For example,vertical agreements help entries into new markets,impede free-riders,help enterprises to maintain a good image and also fulfill the needs of consumers from different income groups.When it comes to horizontal agreements,the application of per se rules arereasonable to the extent that it can promote procedural economy and provide a clear guidance to undertakings.However,the application should also be restricted.Further,this essay noticed that there has been a difference in opinions among administrative authorities and judicial body as to what kind of rules should be applied to the analysis of alleged anti-competitive behaviours.While administrative authorities hold on to by object restriction rule,the judicial body has relied on by effect restriction rule in many cases.This essay,based on the understanding of EU competition law,has been trying to provide a new explanation towards the conflict between administrative authorities and the court.In conclusion,this dissertation argued that with respect to the application in horizontal agreements,rule of by object restriction of competition and per se illegal rules are reasonable but should be restricted to a small scope,while with regard to vertical agreements,rule of by object restriction of competition and per se illegal rules should be abandoned.