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Competitive Effect under the Cartel Prohibition in the US and the EU

Müller, Rune LU (2015) LAGM01 20151
Department of Law
Abstract (Swedish)
Den här uppsatsen behandlar begreppet konkurrenspåverkan av konkurrensbegränsande samarbete såsom det regleras i Sherman Act Section 1 och Artikel 101 FEUF. Regleringarna utgör hörnstenar i respektive lands konkurrensrätter. I USA tillämpar domstolar en skälighetsprincip, the rule of reason, under vilken samarbete som resulterar i en negativ konkurrenspåverkan anses oförenligt med Sherman Act Section 1. I EU stadgar den motsvarande effekt-regeln att samarbete som har till syfte att hindra, begränsa eller snedvrida konkurrensen är oförenligt med Artikel 101 FEUF.

Den nuvarande lagstiftningen, såväl i USA som i EU, bygger på neoklassisk nationalekonomi. Konkurrenspåverkan likställs därför med samarbetets effekt på den totala välfärden,... (More)
Den här uppsatsen behandlar begreppet konkurrenspåverkan av konkurrensbegränsande samarbete såsom det regleras i Sherman Act Section 1 och Artikel 101 FEUF. Regleringarna utgör hörnstenar i respektive lands konkurrensrätter. I USA tillämpar domstolar en skälighetsprincip, the rule of reason, under vilken samarbete som resulterar i en negativ konkurrenspåverkan anses oförenligt med Sherman Act Section 1. I EU stadgar den motsvarande effekt-regeln att samarbete som har till syfte att hindra, begränsa eller snedvrida konkurrensen är oförenligt med Artikel 101 FEUF.

Den nuvarande lagstiftningen, såväl i USA som i EU, bygger på neoklassisk nationalekonomi. Konkurrenspåverkan likställs därför med samarbetets effekt på den totala välfärden, det vill säga producenters och konsumenters sammanlagda välfärd. För att kunna fastställa samarbetets effekt på den totala välfärden, undersöks inledningsvis avtalets konkurrensbegränsande effekter. Föreligger en konkurrensbegränsing, är nästa steg att granska avtalets eventuella positiva konkurrenspåverkan. I de fall samarbetet resulterar i negativ såväl som positiv konkurrenspåverkan, måste dessa slutligen vägas mot varandra. Överväger den positiva konkurrensverkan dess negativa motsvarighet, har samarbetet en sammanlagt positiv effekt på den totala välfärden och anses därför lagligt. Följaktligen kan bedömningen under båda regleringarna karakteriseras som en strävan mot effektiv resursfördelning.

Skillnaden mellan regleringarna är att rule of reason uteslutande tolkar begreppet såsom effekten på den totala välfärden, medan effekt-regeln även tar hänsyn till allmänna intressen och säkerställer att konsumenter kompenseras för sina förluster till följd av samarbetet. Ur ett historiskt perspektiv beror diskrepansen på de lagar inom vilka bestämmelserna återfinns. Sherman Act ratificerades med syftet att bekämpa konglomeraten som bildats genom karteller, så kallade trusts. Å andra sidan implementerades Artikel 101 i funktionsfördraget, ett fördrag med integrationen av den gemensamma marknaden som mål samt med flera fördragsövergripande principer som vägledande i tolkningen av de enskilda föreskrifterna. Ur ett ekonomiskt perspektiv är skillnaderna en följd av variationer i institutionernas policy snarare än en kontrasterande syn på ekonomisk teoribildning. Det är, till följd av den pågående debatten gällande vilken effektivitets-standard som ska gälla under rule of reason, osäkert om diskrepansen består. Ett klargörande från Supreme Court under de kommande åren vore både efterlängtat och önskvärt. (Less)
Abstract
This essay concerns the notion of competitive effect of trade restrictive agreements as regulated in the Sherman Act Section 1 and Article 101 TFEU. The provisions on trade restrictive agreements constitute an important part of competition law in the US and the EU. In the US, the Sherman Act Section 1 condemns trade restrictive agreements under a standard of reason, called the rule of reason. The reasonableness of an agreement is based on the competitive effects of the agreement. In the EU, Article 101 TFEU condemns agreements which have as their effect the prevention, restriction or distortion of competition, in this essay called the by effects rule.

The current application of the term competitive effect, in both jurisdictions, is... (More)
This essay concerns the notion of competitive effect of trade restrictive agreements as regulated in the Sherman Act Section 1 and Article 101 TFEU. The provisions on trade restrictive agreements constitute an important part of competition law in the US and the EU. In the US, the Sherman Act Section 1 condemns trade restrictive agreements under a standard of reason, called the rule of reason. The reasonableness of an agreement is based on the competitive effects of the agreement. In the EU, Article 101 TFEU condemns agreements which have as their effect the prevention, restriction or distortion of competition, in this essay called the by effects rule.

The current application of the term competitive effect, in both jurisdictions, is firmly based on neoclassical economic theory. Competitive effect is equated with the effect on aggregate welfare, i.e. the combined wealth of consumers and producers. In order to define the effect of an agreement on aggregate welfare, the first step is to examine the anti-competitive effects of an agreement. Agreements initially found restrictive may encompass countervailing pro-competitive effects, furthering legitimate objectives. If the pro- and anti-competitive effects are of a similar magnitude, they need to be weighed against each other. In cases where it is established that the agreement has a net positive effect on aggregate welfare, the agreement falls outside the Sherman Act Section 1 and Article 101. Additionally, however, the inquiry under the by effects rule entails consideration of non-economic interests as well as a condition requiring consumer compensation.

Consequently, both provisions are applied as efficiency standards. The difference being that the rule of reason devotes itself to this purpose wholeheartedly while the by effects rule additionally considers non-economic efficiencies and consumer compensation. In a historical perspective, the differences can be attributed to the legislative context into which the provisions where introduced. Whereas the Sherman Act came into force exclusively as a reaction against the trusts, the TFEU is part of the integration of the common market and its individual provisions are to be interpreted in the light of overreaching treaty objectives. As such, Article 101 TFEU necessarily incorporates these additional objectives. On the other hand, in an economic perspective, the extent to which the inquiries consider consumer and non-economic interests is a policy discrepancy. Bearing in mind the contentious debate regarding consumer welfare, the discrepancy may not last. The judgements of the Supreme Court on the matter over the next few years will, hopefully, settle matters in a decisive way. (Less)
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author
Müller, Rune LU
supervisor
organization
course
LAGM01 20151
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
trade restrictive agreements, cartels, law and economics, competition law, comparative law, konkurrensrätt, the Sherman Act Section 1, Article 101 TFEU
language
English
id
5431984
date added to LUP
2015-06-05 13:41:00
date last changed
2015-06-05 13:41:00
@misc{5431984,
  abstract     = {This essay concerns the notion of competitive effect of trade restrictive agreements as regulated in the Sherman Act Section 1 and Article 101 TFEU. The provisions on trade restrictive agreements constitute an important part of competition law in the US and the EU. In the US, the Sherman Act Section 1 condemns trade restrictive agreements under a standard of reason, called the rule of reason. The reasonableness of an agreement is based on the competitive effects of the agreement. In the EU, Article 101 TFEU condemns agreements which have as their effect the prevention, restriction or distortion of competition, in this essay called the by effects rule. 

The current application of the term competitive effect, in both jurisdictions, is firmly based on neoclassical economic theory. Competitive effect is equated with the effect on aggregate welfare, i.e. the combined wealth of consumers and producers. In order to define the effect of an agreement on aggregate welfare, the first step is to examine the anti-competitive effects of an agreement. Agreements initially found restrictive may encompass countervailing pro-competitive effects, furthering legitimate objectives. If the pro- and anti-competitive effects are of a similar magnitude, they need to be weighed against each other. In cases where it is established that the agreement has a net positive effect on aggregate welfare, the agreement falls outside the Sherman Act Section 1 and Article 101. Additionally, however, the inquiry under the by effects rule entails consideration of non-economic interests as well as a condition requiring consumer compensation. 

Consequently, both provisions are applied as efficiency standards. The difference being that the rule of reason devotes itself to this purpose wholeheartedly while the by effects rule additionally considers non-economic efficiencies and consumer compensation. In a historical perspective, the differences can be attributed to the legislative context into which the provisions where introduced. Whereas the Sherman Act came into force exclusively as a reaction against the trusts, the TFEU is part of the integration of the common market and its individual provisions are to be interpreted in the light of overreaching treaty objectives. As such, Article 101 TFEU necessarily incorporates these additional objectives. On the other hand, in an economic perspective, the extent to which the inquiries consider consumer and non-economic interests is a policy discrepancy. Bearing in mind the contentious debate regarding consumer welfare, the discrepancy may not last. The judgements of the Supreme Court on the matter over the next few years will, hopefully, settle matters in a decisive way.},
  author       = {Müller, Rune},
  keyword      = {trade restrictive agreements,cartels,law and economics,competition law,comparative law,konkurrensrätt,the Sherman Act Section 1,Article 101 TFEU},
  language     = {eng},
  note         = {Student Paper},
  title        = {Competitive Effect under the Cartel Prohibition in the US and the EU},
  year         = {2015},
}