Competition Law
Third edition
Richard Whish BA, BCL (Oxon)Professor of Law at King's College, University of LondonPartner Watson, Farley and Williams
Brenda Sufrin LLBSolicitorSenior Lecturer in Law at University of BristolConsultant in European Law, Veale Wasbrough
ButtenvorthsLondon, Edinburgh1993
Contents
Foreword vPreface viiTable of Statutes xxxiTable of Statutory Instruments xxxviiTable of European Communities Legislation xxxixTable of Monopolies and Mergers Commission Reports xlvTable of Office of Fair Trading Reports liList of Cases liiiAbbreviations lxxxi
PART 1CHAPTER 1 Introduction 11 The theory of competition 1
A Questioning the theory 4B Questioning competition 6C Empirical evidence 9D Workable competition 10E Contestable markets 11
2 The function of competition law 123 US law 164 UK law 20
A Development of the law 20B Institutions 20
(i) High Court 21(ii) Restrictive Practices Court 21(iii) Director General of Fair Trading 21(iv) Monopolies and Mergers Commission 23(v) Secretary of State 24(vi) Other jurisdictions 24
C UK economic policy and competition law 25(i) Introduction 25
(ii) Removing restrictions on competition 25(iii) Financial Services 26(iv) Broadcasting Act 1990 27
5 EEC law 28A The Rome Treaty 28B Single European Act 1986 30C Maastricht Treaty 31D Institutions 31
(i) Council of Ministers 31(ii) Commission of the European Communities 32
(iii) Court of Justice and Court of First Instance 32
XI
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(iv) Advisory Committee on Restrictive Practices andMonopolies 33
(v) National courts 33E European Economic Area (EEA) 34
(i) Substance 34(ii) Jurisdiction 35
(iii) Procedure and enforcement 36F Modelling of domestic competition law on Articles 85 and 86 36
6 Conflicts between EEC and domestic law 37A Community prohibition; domestic authorisation 38B Community individual exemption; domestic prohibition 38C Community block exemption; domestic prohibition 40D Non-application of Article 85 or Article 86; domestic
prohibition 41E Comfort letters 42F Mergers 42
7 Endemic problems and recurring themes 43A Agreements 43B Restrictions of competition 43C Market dominance, barriers to entry and barriers to exit 44D Horizontal and vertical restraints; intra- and inter-brand
competition 45E Parallel imports; absolute territorial protection 46F Economics 46G Remedies 46
CHAPTER 2 Common law 48
1 The restraint of trade doctrine 48A Content of the doctrine 48
(i) Interest meriting protection 49(ii) Reasonableness between the parties 49(iii) Reasonableness in the public interest 50
B Limitations of the doctrine 51(i) Scope of the doctrine 51 .(ii) The public interest 54(iii) Third parties 55
C The doctrine as part of contemporary competition law 56(i) Horizontal agreements 56
(ii) Vertical agreements 57(iii) Trade associations and trade unions 57
2 Other relevant common law principles 58
CHAPTER 3 The monopoly provisions of the Fair Trading Act 1973 60
1 Introduction 602 Monopoly situations 62
A Monopoly situations in relation to goods 63(i) Structural monopolies 63
(ii) Behavioural monopolies 63B Monopoly situations in relation to Services 64
Contents xiii
C Monopoly situations in relation to exports 64(i) Structural monopolies 64(ii) Behavioural monopolies 65
D Local monopoly situations 65E Supplementary provisions 66F Comments 66
(i) Non-economic meaning of monopoly Situation 66(ii) Structural and complex monopolies 68(iii) Jurisdictional division 70
3 Gathering information about monopoly situations 724 Monopoly references 735 Other references 76
A General references 76B Restrictive labour references 77
6 Investigation by the Monopolies and Mergers Commission 787 Consequences of the Monopolies and Mergers Commission's
report 82A No härm to the public interest 82B Harm to the public interest 83
8 The monopoly provisions in practice 85A The structure of the market 86B Exploitation of monopoly situations 87C Maintenance of monopoly situations 87D Restrictive trade practices in the Services sector 88E Oligopoly 90F No criticism 91
9 Monopoly investigations in the future 92
CHAPTER 4 Competition Act 1980 94
1 Introduction 94A Prices 96B Efficiency audits 96
2 Control of anti-competitive practices 98A Anti-competitive practices 99
(i) Course of business 99(ii) Course of conduct 99(iii) Practices 100(iv) Exclusions 101(v) Restricting, distorting or preventing competition 101
(vi) Division of functions 106B Preliminary investigations by the DGFT 107
(i) Informal investigations 107(ii) Formal investigations 107
C Undertakings in consequence of the DGFT's preliminaryinvestigation 108
D Competition references 110E Outcome of the MMC's investigation 111
3 Competition Act 1980 in practice 112A Number of investigations 112B Competition Act 'case law' 115
(i) Selective distribution 117(ii) Exclusionary tactics 117
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C Success or failure? 118D Relationship between the Fair Trading Act 1973 and the
Competition Act 1980 119
CHAPTER 5 Restrictive Trade Practices Act 1976 121
1 Introduction 1212 Subsequent history of the legislation 1243 Registrable agreements 125
A Restrictive agreements as to goods 126(i) Agreements 127(ii) Restrictions 132
(iii) Two or more persons 135(iv) Carrying on business within the UK 136(v) Restrictions relating to matters specified in s 6 136
(a) Section 6(l)(a) 137(b) Section 6(l)(b) 138(c) Section 6(l)(c) 138(d) Section 6(l)(d) 139(e) Section 6(l)(e) 139(f) Section 6(l)(f) 139
(vi) Supplementary provisions 140(a) Section 6(3) and (4) 140(b) Restrictive Trade Practices Act 1976, section 8 141
(vii) Provisions to be disregarded 142(a) Section 9(1) and (2) 142(b) Section 9(3) and (4) 143(c) Section 9(5) 145(d) Section 9(6) 145(e) Restrictive Trade Practices Act 1977, section 2(1)
and (2) 145(f) Restrictive Trade Practices Act 1977, section 2(3),
(4) and (5) 146(viii) Exempt agreements 146
(a) Schedule 3, paragraph 1 146(b) Schedule 3, paragraph 2 147(c) Schedule 3, paragraphs 3, 4, 5, 5A, 5B 147(d) Schedule 3, paragraph 6 147(e) Section 29 147(f) Section 30 148(g) Section 32 148(h) Section 33 148(i) Section 34 148(j) Competition Act 1980, section 29 148(k) Crown agreements 148
(ix) The time element 149B Information agreements as to goods 149C Restrictive agreements as to Services 151
(i) Section 11(1) 151(ii) Supplementary provisions 153
(a) Section 16 153(b) Section 17 153
Contents xv
(iii) Provisions to be disregarded 153(iv) Exemptions 154(v) Restrictive Trade Practices (Services) Order 1976 154
D Information agreements as to Services 155E The crossover problem 155
4 Registration 1565 Consequences of registration 157
A Non-reference to the Court 158(i) Section 21(l)(a) 158
(ii) Section 21(l)(b)(i) 158(iii) Section 21(l)(b)(ii) 158(iv) Section 21(2) 158
B Reference to the Court 161(i) Gateway (a) 162
(ii) Gateway (b) 162(iii) Gateway (c) 163(iv) Gateway (d) 163(v) Gateway (e) 163(vi) Gateway (f) 164
(vii) Gateway (g) 164(viii) Gateway (h) 164
(ix) The tailpiece 164C The order of the Court 165
(i) Restrictions not contrary to the public interest 165(ii) Restrictions contrary to the public interest 166
(a) Severance 166(b) Injunctions and undertakings 166(c) 'To the like effect' 166(d) Trade associations 168(e) Suspension of the court's order 169(f) Provisional validity 170(g) Interim injunctions 170
6 Enforcement provisions 170A Powers of investigation 171B Failure to register 172
7 Reform 173
CHAPTER 6 Resale Prices Act 1976 175
1 Introduction 1752 Collective resale price maintenance 177
A Unlawfulness of collective resale price maintenance 178B Enforcement 178
3 Individual resale price maintenance 179A Unlawfulness of individual minimum resale price maintenance 179B Patented articles 181C Supplementary provisions 181D Exemption 183E Enforcement 184F Reform 185
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CHAPTER 7 Article 85 186
1 Introduction 1862 Article 85(1) 187
A Undertakings 187(i) Basic definition 187
(ii) Undertakings related by ownership or control 189(iii) Undertakings related by succession 190
B Agreements, decisions and concerted practices 190(i) Agreements 191(ii) Decisions by associations of undertakings 193
(iii) Concerted practices 194(a) Meaning of concerted practice 195(b) Proof 197
(iv) 'Unilateral' conduct and Article 85(1) 199C The object or effect of preventing, restricting or distorting
competition 201(i) Horizontal and vertical agreements 201
(ii) The medium 202(iii) Actual and potential competition 202(iv) External restrictions of competition 202(v) Object or effect 203
(vi) Preventing, restricting and distorting competition 205(vii) Per se rules and the rule of reason 206
(a) Per se rules 206(b) Rule of reason 207
D Checklist of agreements falling outside Article 85(1) 211(i) The Commission's Notices 211(ii) Agreements within a Single economic unit 212
(a) Parent and subsidiary 212(b) Principal and agent 214(c) Contractor and sub-contractor 214
(iii) Objective necessity 214(iv) Commercial risk 214(v) Selective distribution Systems 214
(vi) Mergers 215(vii) Transfers of assets 215
E The effect on inter-state trade 215(i) The STM test 216
(a) Windsurfing International Ine v Commission 216(b) Increases in trade 217(c) Actual or potential effects 217(d) Direct or indirect effects 218(e) National agreements 218(f) Raw materials 220(g) Proximity to the frontier 220(h) Governmental barriers to trade 220(i) Meaning of trade 220(j) De minimis 221
(ii) The structural test 221(iii) Agreements concerning trade outside the common
market 222(iv) Review by the CFI 223
Contents xvii
F The de minimis doctrine 223(i) Introduction 223
(ii) Notice on Agreements of Minor Importance 224(iii) Limitations of the Notice 226(iv) Qualitative appreciability 226
G Special sectors 2273 Article 85(3) 227
A Individual exemption 227(i) The four requirements in Article 85(3) 228
(a) Benefit 228(b) Fair share to consumers 229(c) No indispensable restrictions 230(d) No substantial elimination of competition 231
(ii) Unilateral action and Article 85(3) 232(iii) Article 85(3) and Article 86 233(iv) Proof 234(v) Review by the CFI 234
(vi) The application of Article 85(3) in practice 235B Block exemptions 236
(i) Specialization agreements 239(ii) Exclusive distribution agreements 239(iii) Exclusive purchasing agreements 239(iv) Motor vehicles 240(v) Patent licences 240
(vi) Research and development agreements 240(vii) Franchise agreements 240
(viii) Know-how licensing 240C Opposition procedure 241D Comfort letters 241
4 Article 85(2) 242
CHAPTER 8 Article 86 243
1 Introduction 2432 Undertakings 2463 The effect on inter-state trade 2474 Dominant position 248
A The relevant product market 249(i) The legal test 250(ii) Measuring interchangeability 250
(iii) Demand side substitutability 250(a) Cross-elasticities of demand 250(b) Physical characteristics 251(c) Price 251(d) Intended use 251(e) Structure of supply and demand 252(f) Internal documents 253(g) Statutory markets 253
(iv) Supply side substitutability 253(v) Time 253
(vi) Comments 254(a) Separate uses 254
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(b) Raw materials 255(c) Outside pressures 255
B The geographical market 256C The temporal market 259D Market power 259
(i) The legal test 259(ii) Measuring market power 260
(a) Statutory monopolies 260(b) Market shares 260(c) 'Factors indicating dominance' 263
(iii) Comments 268E A substantial part of the common market 268
5 Small firms and narrow markets 269A Small firms 269B Narrow markets 270
6 Abuse 270A Exploitation 271B Anti-competitiveness 272
(i) Continental Can v Commission 273(ii) Causation 273(iii) Is the conduct related to Performance? 274(iv) The dominant position and the abuse may be in different
markets 274(v) Examples of anti-competitive abuse 275
(a) Mergers 275(b) Price discrimination 275(c) Requirements contracts and tie-ins 276(d) Export and import bans 276(e) Refusal to supply 277(f) Other examples 278
C Objective justification and the principle of proportionality 278D Comments 279
7 Collective dominant positions 2808 Civil consequences of Article 86 2829 Comparison of Article 86 with UK law 282
CHAPTER 9 Articles 85 and 86: enforcement and procedure 285
1 Fact-finding powers 288A Article 11: requests for information 290B Article 14: investigations 291
(i) Voluntary investigations 292(ii) Mandatory investigations 292
C Professional secrecy and business secrets 294D Privilege 295E Self-incrimination 296
2 Decisions 296A Formal decisions 297
(i) Procedural decisions 297(ii) Interim decisions 297
(a) Urgency 297(b) Prima facie case 298(c) Temporary and conservatory measures 299
Contents xix(d) Essential procedural safeguards 299(e) Proportionality and the balancing of interests 299(f) Review 300(g) Enforcement 300(h) Commission's use of interim measures 300(i) 'Fast track' procedure in air transport 301
(iii) Provisional decisions 301(iv) Negative clearance 302(v) Individual exemption 303
(vi) Infringement proceedings 304(a) Statement of objections 304(b) Subsequent procedure 305(c) Termination of infringements 306(d) Fines 307(e) Compliance programmes 309(f) Review by the CFI 309
(vii) Article 90(3) directives and decisions 310B Informal settlements 311
3 The position of complainants 3124 Judicial review by the Court 314
A Article 175: failure to act 315B Article 173: action for annulment 315
(i) Locus standi 316(ii) Acts 316
(iii) Grounds of review 317C Article 172: penalties 317D Interim measures 318
5 Civil law consequences of infringing Articles 85 and 86 318A Introduction 318B The enforceability of agreements 319
(i) Article 85 319(a) No notification 320(b) Notification 321(c) Comfort letters 322(d) Severance 323
(ii) Article 86 324C Third parties 324
(i) A right to damages? 324(ii) Relying on Commission decisions 326(iii) Standard of proof 327(iv) Interlocutory relief 328(v) Other issues 328
(vi) Third party as defendant 328
CHAPTER 10 Special sectors 330
1 The EEC competition rules and State regulation 330A The position of Member States 331
(i) Article 5 331(ii) Article 222 331
(iii) Article 90(1) 332(a) Undertakings 332
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(b) Public undertakings 332(c) Undertakings with Special or exclusive rights 332(d) The Obligation on Member States under Article 90(1) 333(e) Vicarious liability of the State 334(f) Enforcement 335(g) Remedies 335
(iv) Article 90(2) 335(v) Article 90(3) 335
(a) Decisions 335(b) Directives 336
(vi) Articles 92-94 - State aids 337(vii) Transparency Directive 338
(viü) Article 37 - State monopolies of a commercial character 338B The position of undertakings 338
(i) Article 90(2) 339(a) Undertakings within the scope of Article 90(2) 339(b) Scope of the defence 339(c) Article 90(2) in national courts 340
(ii) State compulsion 341(iii) Highly regulated markets 343(iv) Sovereign immunity 343(v) Defences to national laws 343(vi) Challenges to national law 346
2 Telecommunications and postal Services 346A UK law 346
(i) Regulation in the UK 346(ii) Telecommunications 348(iii) Post 349
B EEC law 349(i) Telecommunications 349
(ii) Post and Courier Services 3503 Gas 350
A UK law 350B EEC law 351
4 Water 3515 Electricity 352
A UK law 352B EEC law 353
(i) Action under Articles 85 and 86 353(ii) Other legislative measures 353
6 Coal and steel 3547 Nuclear energy 3558 Defence equipment 3559 Agriculture 355
A Annex II products 357B National market organizations 357C Common market organizations 358
10 Transport 359A Road, rail and inland waterways 360B Maritime transport 361
(i) Legislative regime 361(ii) Practical application 362
Contents xxi
C Air transport 363(i) Introduction 363
(ii) Legislative regime 364(a) Liberalization measures 364(b) Implementing Regulation for Articles 85 and 86 365(c) Block exemptions 366
(iii) Subsequent action 366(iv) EEC Merger Regulation 367
CHAPTER 11 Extra-territoriality 368
1 Introduction 3682 Extra-territorial application of UK and EEC competition law 370
A The theoretical problem 370(i) Subject-matter jurisdiction 370
(ii) Enforcement jurisdiction 374B UK law 375
(i) Restrictive Trade Practices Act 1976 375(ii) Resale Prices Act 1976 376(iii) Fair Trading Act 1973: monopoly situations 377(iv) Fair Trading Act 1973: mergers 378(v) Competition Act 1980 378(vi) Articles 85 and 86 in domestic courts 379
C EEC law 379(i) Subject-matter jurisdiction 379
(a) Economic entity doctrine 380(b) Effects doctrine 380(c) The ECJ's judgment in Wood Pulp 381
(ii) Enforcement jurisdiction 382(a) Initiating proceedings 382(b) Information and investigations 382(c) Final decisions 383
(iii) EC Merger Regulation 3843 Resistance to extra-territorial application of competition law 385
A Introduction 385B Protection of Trading Interests Act 1980 386
4 International Co-operation 387
PART 2
CHAPTER 12 Horizontal restraints - 1 390
1 Horizontal price fixing 391A UK law 393B EEC law 396
(i) Article 85(1) 396(ii) Article 85(3) 399
2 Horizontal geographical market division 400A UK law 402B EEC law 402
(i) Article 85(1) 402(ii) Article 85(3) 404
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3 Quotas and other restrictions on production 404A UK law 405B EEC law 405
(i) Article 85(1) 405(ii) Article 85(3) 407
4 Collusive tendering 407AUKlaw 408B EEC law 409
5 Agreements relating to terms and conditions 409A UK law 410B EEC law 411
6 Information agreements 412A UK law 414B EEC law 416
(i) Article 85(1) 416(a) Agreements to exchange information 417(b) Market structure 417(c) Type of information exchanged 418(d) Alternative sources of information 419(e) Mode of exchanging information 419(f) Exchange of information as evidence of a concerted
practice 419(g) Fines 420
(ii) Article 85(3) 4207 Advertising restrictions 421
A UK law 422B EEC law 425
(i) Article 85(1) 425(ii) Article 85(3) 425
8 Anti-competitive horizontal restraints 426A UK law 427B EEC law 428
CHAPTER 13 Horizontal restraints - 2 429
1 Forms of collaboration: Joint ventures 429A UK law 430B EEC law 430
(i) Impact of the EC Merger Regulation: co-operative andcollaborative Joint ventures 430
(ii) Commission's wide application of Article 85(1) 430(iii) 13th Report on Competition Policy 431(iv) Subsequent experience 431(v) Commission's Notice on Co-operative Joint Ventures 432
(a) The concept of co-operative Joint ventures 432(b) Categories of Joint ventures that fall outside
Article 85(1) 433(c) Analysis of other Joint ventures under Article 85(1) 433
(vi) Ancillary restraints 436(vii) Commission's procedures 437
Contents xxiii
2 Research and development agreements 437A UK law 438
(i) Registrability 439(ii) Treatment of registrable agreements 439
B EEC law 440(i) Application of Article 85(1) 440
(ii) Article 85(3): individual exemption 442(iii) Article 85(3): block exemption 445
3 Specialization agreements 449A UK law 449B EEC law 450
(i) Article 85(1) 450(ii) Article 85(3): block exemption 450(iii) Article 85(3): individual exemption 453
4 Other agreements improving efficiency in production 453A UK law 454B EEC law 454
(i) Article 85(1) 454(ii) Article 85(3) 455
5 Restructuring agreements and crisis cartels 456A UK law 457B EEC law 458
6 Standardization agreements 459A UK law 460B EEC law 461
7 Restrictive covenants 462A UK law 462B EEC law 463
8 Miscellaneous cases 464
CHAPTER 14 Oligopoly 467
1 The theory of oligopolistic interdependence 467A Outline of the theory 467B Criticisms of the theory 469C Possible ways of dealing with oligopoly 471
(i) A structural approach 471(ii) A behavioural approach 471(iii) Regulation 472(iv) Other possibilities 473
D US experience 4732 UK law 476
A Restrictive Trade Practices Act 1976 477B Fair Trading Act 1973 478
(i) Legal possibilities 478(ii) Oligopolistic pricing 480
(a) Parallelism 480(b) Excessive pricing 481
(iii) Other oligopolistic problems 4813 EEC law 483
A Article 85 483B Article 86 486
(i) Collective dominance 486
xxiv Contents
(ii) Establishing collective dominance 486(iii) Practical application by the Commission 488(iv) EEC Merger Regulation 488(v) Abuse of a collective dominant position 489
(vi) Collective dominance and oligopoly 490
CHAPTER 15 Excessive pricing 491
1 Theoretical background 491A Should excessive pricing be controlled directly? 491B Protecting competition 492
2 UK law 493A Fair Trading Act 1973 493
(i) Direct action 493(ii) Protecting competition 497
B Competition Act 1980 498C Special regimes 499
3 EEC law 499
CHAPTER 16 Price discrimination 503
1 Meaning of price discrimination 5032 Forms of price competition 5043 Economic appraisal of price discrimination 505
A Horizontal agreements 506B Income distribution 506C Small businesses 507D Primary line injury 508E Secondary line injury 510F Market division 510
4 US control of price discrimination 5115 UK control of price discrimination 514
A Restrictive Trade Practices Act 1976 514(i) Horizontal agreements 514
(ii) Vertical agreements 515B Fair Trading Act 1973 516
(i) Loyalty rebates and similar discounting practices 516(ii) Predatory price cutting 517(iii) Delivered pricing 519(iv) Harm to consumers 520(v) Legitimate discrimination 521
C Competition Act 1980 522(i) Bonuses and discounts 522
(ii) Predatory pricing 523D Proposais for reform 524
6 EEC control of price discrimination 526A Article 85 526
(i) Horizontal agreements 526(ii) Vertical agreements 527
B Article 86 528(i) Primary line injury 528
Contents xxv(a) Loyalty rebates and similar discounting practices 528(b) Predatory price cutting 530(c) Delivered pricing 532
(ii) Secondary line injury 533(iii) Geographical discrimination 534
CHAPTER 17 Vertical restraints - 1: distribution 536
1 Theoretical background 536A Methods of distribution 537
(i) Vertical integration 537(ii) Distribution through commercial agents 539(iii) Distribution agreements 539(iv) Manufacturing licences 540
B Types of distribution agreement 540(i) Exclusive distribution 541
(ii) Exclusive purchasing 542(iii) Selective distribution 543(iv) Franchising 544
C Distribution agreements and competition policy 544(i) Foreclosure of competition 545
(ii) Harm to consumers 545(iii) Cartels 546(iv) Compartmentalization of markets 547(v) Who decides? 547
(vi) US background 548(a) Resale price maintenance 548(b) Other vertical restraints 549
2 Vertical integration 550A UK law 550
(i) Internal growth 550(ii) External growth 551
B EEC law 551(i) Internal growth 551
(ii) External growth 5513 Agency agreements 552
A UK law 552(i) Restrictive Trade Practices Act 1976 552
(ii) Resale Prices Act 1976 552(iii) Fair Trading Act 1973 and Competition Act 1980 552
B EEC law 552(i) Commission's Notice on Exclusive Agency Contracts 553(ii) Criteria other than risk may be relevant 554
4 Exclusive distribution agreements 555A UK law 555
(i) Restrictive Trade Practices Act 1976 555(ii) Resale Prices Act 1976 557
(iii) Fair Trading Act 1973 and Competition Act 1980 558(iv) Common law 558
B EEC law 558(i) Article 85(1) 559
(a) Vertical restraints 559
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(b) Vertical restraints must be considered in context 559(c) Particular restrictions 560(d) De minimis doctrine 565
(ii) Article 85(3) 565(iii) Block exemption: Regulation 1983/83 566
(a) Article 1 567(b) Article 2 569(c) Article 3 571
(iv) Individual exemption 5745 Exclusive purchasing 575
A UK law 575(i) Restrictive Trade Practices Act 1976 575
(ii) Common law 575(iii) Investigative System 576
B EEC law 577(i) Article 85(1) 577
(ii) Article 85(3) 578(iii) Block exemption: Regulation 1984/83 578
(a) Article 1 579(b) Article 2 580(c) Article 3 580
(iv) Special rules for beer and petrol 581(a) Beer 581(b) Petrol 583
(v) Individual exemption 583(vi) Applicability of Article 86 584
6 Selective distribution Systems 584A UK law 584
(i) Restrictive Trade Practices Act 1976 584(ii) Resale Prices Act 1976 585
(iii) Investigative System 585(a) Fair Trading Act 1973 585(b) Competition Act 1980 586
B EEC law 587(i) Article 85(1) 587
(a) The product 589(b) Qualitative criteria 590(c) Restrictions no more than necessary 591(d) No discrimination 592(e) Horizontal restrictions 592(f) Control 593(g) Selective distribution Systems and Regulation 1983/83 593(h) Economic context 594(i) Conclusion 595
(ii) Article 85(3) 595(iii) Regulation 123/84 on motor vehicle distribution and servicmg
agreements 595(a) Main provisions 596(b) Application of the Regulation 596
(iv) Article 86 5977 Franchising 597
A UK law 597
Contents xxvii
B EEC law 598(i) Article 85(1) 598
(ii) Regulation 4087/88 599(a) Article 1 599(b) Article 2 600(c) Article 3 600(d) Article 4 601(e) Article 5 601(f) Article 6 601(g) Miscellaneous provisions 602
CHAPTER 18 Vertical restraints - 2 603
1 Exclusive dealing and purchasing agreements 603AUKlaw 604
(i) Restrictive Trade Practices Act 1976 604(ii) Restraint of trade 604(iii) Fair Trading Act 1973 and Competition Act 1980 605
(a) Fair Trading Act 605(b) Competition Act 605
B EEC law 606(i) Article 85(1) 606
(ii) Article 85(3) 607(iii) Article 86 608
2 Tie-ins and full-line forcing 608A UK law 609B EEC law 611
3 Refusal to supply 612A UK law 613B EEC law 614
CHAPTER 19 Intellectual property 620
1 Horizontal agreements relating to intellectual property rights 622A Introduction 622B UK law 622C EEC law 623
2 Vertical agreements relating to intellectual property rights 624A Introduction 624B Typical terms in licences of intellectual property rights 625C UK law 628
(i) Patent licences 628(ii) Know-how licences 629
(iii) Copyright and design right licences 630(iv) Trade mark licences 630
D EEC law 631(i) Patent licences 631
(a) Article 85(1) 631(b) Article 85(3) 636
(ii) Know-how licences 639(iii) Copyright licences 640
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(iv) Trade mark licences 641(v) Licences of plant breeders' rights 642
3 Anti-monopoly control of intellectual property rights 643A UK law 643
(i) Patents 643(ii) Copyrights and analogous rights 644
(a) Compulsory licences 644(b) Collecting societies 645
B EEC law 646(i) Compulsory licences 646
(ii) Collecting societies 648(iii) Miscellaneous cases 649
4 Intellectual property rights and the free movement provisions ofthe Treaty of Rome 650A The doctrine of exhaustion 652
(i) Patents 653(ii) Copyrights and analogous rights 655
(iii) Trade marks 657(iv) Unfair competition 659
B The doctrine of common origin 6595 Harmonization of Community law 662
CHAPTER 20 Control of mergers 664
1 Introduction 6642 Merger control and the public interest 665
A The beneficial effect of mergers upon the public interest 666(i) Economies of scale 666
(ii) Other operating efficiencies 666(iii) Management efficiency and the market for corporate
control 666(iv) Barriers to exit 667(v) Other arguments in favour of mergers 668
B The detrimental effect of mergers upon the public interest 668(i) Effect of mergers on competition 668
(ii) Loss of efficiency and 'short-termism' 669(iii) Concentration of wealth 670(iv) Unemployment and regional policy 670(v) Overseas control 670(vi) Special sectors 671
(vii) Empirical research 6713 UK control of mergers 671
A Control of newspaper mergers 672(i) Definition of a newspaper merger 672
(ii) The consent of the Secretary of State 673(iii) Investigation by the MMC 674(iv) Action by the Secretary of State after a newspaper
reference 674(v) The newspaper merger provisions in practice 675
B Control of other mergers 679(i) Definition of a merger 679(ii) Mergers qualifying for investigation 681
(iii) Interim Orders during the MMC's investigation 683
Contents xxix
(iv) Competing bids 684(v) The role of the DGFT and the Mergers Panel 684
(a) Statutory duties 684(b) Confidential guidance 685(c) Voluntary pre-notification 686(d) DGFT's advice 686
(vi) The role of the Secretary of State 687(vii) Undertakings in Heu of a reference ('fix it first') 688(viii) Fees 688
(ix) The MMC's investigation 688(x) Action following the MMC's report 690
(a) Merger not against the public interest 690(b) Merger against the public interest: Orders and
undertakings 690(c) Divestiture 690(d) The Secretary of State's discretion 691
(xi) Analysis of the MMC's reports 692(a) Competition 692(b) The balance of payments 696(c) Mergers with overseas companies 697(d) Efficiency 698(e) Conglomeracy 699(f) Other issues 700
(xii) Litigation under the merger provisions 700(xiii) First Report of the Trade and Industry Committee 701
C Mergers in the water industry 7024 EEC control of mergers 702
A Introduction 702(i) Article 85 703
(ii) Article 86 7035 Main principles of the Regulation 7056 Details of the Regulation 706
A Meaning of concentration 706(i) Article 3(1) 706
(a) Sole control 707(b) Joint control 707(c) Joint to sole control 710(d) Division of a business 710(e) Acquisition of assets 710
(ii) Co-operative and concentrative Joint ventures 710(a) The Regulation 711(b) The Commission's notice 711(c) The positive condition 711(d) The negative condition 712(e) Examples of concentrative Joint ventures 713(f) Examples of co-operative Joint ventures 713
B Scope of Regulation 4064/89: concentrations having a 'Communitydimension' 714
(i) Thresholds 714(ii) World-wide turnover 714
(iii) Business in one Member State 715(iv) Turnover 715
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C When will a concentration be incompatible with the commonmarket? 716
D Pre-notification of concentrations 720E Suspension of concentrations 720F Procedural timetables and powers of decision of the
Commission 721(i) Phase-one investigation 721(ii) Phase-two investigation 721
G Investigation and enforcement 723H One-stop merger control 724
(i) Article 21(3) 724(ii) Residual role of Articles 85 and 86 725
(a) The Commission 725(b) National courts 725
I Referral to the competent authorities of the Member States:the 'German clause' 726
J Article 22(3): the 'Dutch clause' 727K Ancillary restraints 727L Close and constant liaison 728M Relations with non-EEC countries 728N Mandatory review 729
APPENDIX Reform of UK domestic competition law 730
1 Introduction 7302 Restrictive Trade Practices Act 1976 730
A Green Paper 730B White Paper 731
(i) The prohibition 731(ii) Exemptions 732
(iii) Institutions, procedures and appeals 733(iv) Enforcement and penalties 733(v) Transitional arrangements 734
(vi) Timing 734C Comment 735
3 Fair Trading Act 1973 and Competition Act 1980 736A Green Paper 736B The aftermath 737C Comment 737
Bibliography 739
Index 747
