To establish an infringement, does there need to have been an effect on the market?

Cartels

Turkey Small Flag Turkey

Article 4 prohibits any form of agreement that has the ‘potential’ to prevent, restrict or distort competition. This specific feature grants broad discretionary power to the Turkish Competition Board (the ‘Board’). Additionally, Article 4 brings a non-exhaustive list which provides examples of possible restrictive agreements. Article 4 does not refer to additional requirements such as ‘appreciable effect’ or ‘substantial part of a market’, and consequently does not provide for any de minimis exception.

Australia Small Flag Australia

No, cartel conduct is prohibited per se, irrespective of competitive effect.

Mexico Small Flag Mexico

Anticompetitive behaviour under the FCA is divided into two main categories: (i) per se practices or prácticas monopólicas absolutas which, as noted above, are considered illegal per se and are pursued and punished in all cases solely upon demonstration of the forbidden conduct, without the need for economic analysis or a show of harm, although a damages or effects analysis may also be done; and (ii) rule of reason practices or prácticas monopólicas relativas, which are either arrangements and combinations between or among economic agents which are not competitors (i.e., vertical restraints) or unilateral conducts which entail an abuse of market power, and are only illegal to the extent (a) the same are performed by economic agents having market power; (b) the conducts have as an object or effect in the relevant market or other related markets to displace or otherwise substantially impede other market participants to enter the relevant or related markets or establish exclusive advantages to some market participants; and (c) the’ anticompetitive effects related to such practices are not outweighed by the efficiencies arising from the same.

While the FCA does not condition the investigation and sanction of a cartel to the prior demonstration that there has been an effect on the market, the amount of the fines that the competition agencies can impose must take into account the harm to the market caused by the cartel.

Brazil Small Flag Brazil

At the administrative sphere, effects on the market are not relevant to establish an infringement. It is sufficient that the conduct have the ability to produce the following effects even if they are not achieved: (i) to limit, restrain or in any way harm free competition or free enterprise; (ii) to control the relevant market of goods or services; (iii) to arbitrarily increase profits; and (iv) to exercise a dominant position abusively.

Finland Small Flag Finland

No, the Competition Act expressly states that an infringement consists of behaviour which has as its object or effect the restriction of competition. Finnish competition authorities apply the EU principle and decision practice concerning a by-object or by-effect infringement.

Canada Small Flag Canada

The Act was amended in 2009 to remove the need to prove an effect on the market; these are therefore now per se offences. The previous version of section 45 required the prosecution to establish that the conduct “unduly” lessened or prevented competition. Conduct that occurred prior to March 2010 is examined under the previous version of section 45.

China Small Flag China

The AML stipulates that ‘monopoly agreement refers to an agreement, decision or other coordinated action that eliminates or restricts competition.’ According to previous cases, AML enforcement authorities (AMEA) tend to consider any conduct listed in Article 13 and Article 14 of the AML causes damage to the market and is illegal per se, but at the same time allows it to be exempted if it meets certain conditions presented in Article 15. However, in view of the definition of a monopoly agreement (cartel) in the AML, the courts tend to analyze the illegality of cartel, i.e., whether it has the effect of eliminating or restricting the competition case by case.

United States Small Flag United States

Criminal cartel violations do not require an effect on the market and are unlawful per se. By judicial precedent, this includes certain horizontal restraints including price-fixing, bid-rigging, output restrictions, and geographic, market and customer allocation. Other agreements between competitors, such as joint ventures, licence agreements and exchanges of information, fall under the ‘rule of reason,’ which requires analysis of competitive effects.

Japan Small Flag Japan

Yes. As quoted under Section 1.1 above, the Antimonopoly requires cartel activities to cause a substantial restraint of competition in a particular field of trade.

Malaysia Small Flag Malaysia

As briefly introduced earlier, Chapter 1 Prohibition are contained in Section 4 of the CA which prohibits any horizontal or vertical agreement between enterprises that has the ‘object’ or ‘effect’ of an agreement which significantly prevents, restricts or distorts competition in the market and further provides for certain ‘per se’ prohibitions. Hence, in order for the Malaysia Competition Commission (‘MyCC’) to establish an infringement, there is a need to asses that whether the said agreement has the ‘effect’ of significantly preventing, restricting or distorting competition save and unless the said offence falls under the ‘per se’ prohibition.

Switzerland Small Flag Switzerland

The Cartel Act is based on the principle of abuse. To be unlawful, an agreement must either eliminate effective competition or significantly restrict effective competition without being justified on economic efficiency grounds.

The following horizontal and vertical restraints (hard-core restraints) are presumed to eliminate effective competition without actual effect on the market: (a) horizontal agreements that directly or indirectly fix prices; restrict quantities of goods or services to be produced, purchased or supplied; or allocate markets geographically or according to trading partners; and (b) vertical agreements that contain minimum or fixed resale prices; or foreclose geographical markets. The presumption is rebuttable. However, hard-core restraints constitute significant restraints of competition by definition (per se) and are unlawful if they cannot be justified on economic efficiency grounds.

For all other anti-competitive agreements it needs to be assessed as to whether they significantly affect competition and if yes, whether they can be justified on economic efficiency grounds.

Only hard-core restraints may trigger direct sanctions under the Cartel Act.

Israel Small Flag Israel

There is no need to have an effect on the market. The test for the applicability of Section 2(a) of the Competition Law is not to demonstrate actual harm to competition, but rather the "likelihood" to harm competition, i.e. a binding arrangement is an arrangement which can potentially harm competition. Therefore, there is no need for an actual effect on the market in order to consider the arrangement as a binding arrangement. In addition, Section 2(b) of the Competition Law stipulates conclusive presumptions that, to the extent that they exist, there is a risk of harm to competition, and for example – a horizontal arrangement that includes a binding on the price, is considered as a binding arrangement, even if such arrangement does not actually affect the market.

Spain Small Flag Spain

Article 1 of the Competition Act 2007 is breached by agreements between undertakings, decisions by associations of undertakings, concerted practices and consciously parallel practices which either produce an actual or potential anticompetitive effect on the relevant Spanish market or have an anticompetitive object. Therefore, certain agreements, decisions and concerted practices, namely those whose purpose is price-fixing, quantity restriction, market or customer allocation or competitor foreclosure, are deemed to be inherent restrictions of competition and, thus, infringements of Article 1 of the Competition Act 2007 and, where applicable, Article 101 TFEU, there being no need to prove any actual or potential anticompetitive effect.

Romania Small Flag Romania

Under current policy terms, cartels amount to infringements of competition by object, which are thus subject to sanctions irrespective of their effects. However, there has been a notable development in the sense that although the existence of a cartel is sufficient to conclude that an infringement of competition law occurred, the anticompetitive effects thereof are almost always taken into consideration. Nonetheless, given the diminished level of proof required, reliance is had on the "by object" nature of the infringement.

United Kingdom Small Flag United Kingdom

Cartel conduct can constitute an infringement irrespective of whether it had an anti-competitive effect on the market.

Individuals can be criminally prosecuted under the Enterprise Act for agreeing to implement prohibited cartel activities (whether or not they actually took place).

EU Small Flag EU

Cartel conduct can constitute an infringement irrespective of whether it had an anti-competitive effect on the market.

Argentina Small Flag Argentina

The Antitrust Law prohibits certain acts relating to the production and exchange of goods and services if they restrict, falsify or distort competition, or if they constitute an abuse of a dominant position, and provided that in either case they cause or may cause harm to the general economic interest. The majority of these conducts are not unlawful as such, nor must they cause actual damage; it is sufficient that the conduct is likely to, or may potentially, cause harm to the general economic interest. Additionally, in order to enhance cartel prosecution, the Antitrust Law now presumes that there are certain behaviours (hard-core cartels), which are absolute restrictions to competition, and thus, anticompetitive per se.

Norway Small Flag Norway

Cartel conduct is considered to restrict competition by object, and no effects analysis is required.

Belgium Small Flag Belgium

Article IV.1 prohibits practices that have as their object or effect the prevention, restriction or distortion of the competition on the Belgian market. Consequently, there is no requirement of an effect on the market to establish an infringement. It is sufficient that the practice has the object to distort the market. Cartels are considered restrictive of competition by object.

Greece Small Flag Greece

According to the well-established EU competition rules, competition law infringements are categorised as either ‘by object’ or ‘by effect’. The significance of the categorisation is associated with the severance of the infringement, as well as the requirement on the enforcing authority to establish anticompetitive effects in the relevant markets in order to identify an infringement and impose potentially severe penalties. Serious types of competition infringement are treated as amounting to by object infringements, since their actual effects are not relevant to the existence of a competition law infringement. To the contrary, arrangements, which fall outside this category, face a higher evidential hurdle from the enforcer’s perspective in that the competition authority must establish an anticompetitive effect as a direct result of the conduct in question.

As already mentioned, the Greek legal instruments on cartels reflect the EU legislation, with article 1 of the Competition Act being tailored upon article 101 TFEU, to prohibit any agreement, concerted practice or decision of associations, which have as their object or effect the prevention, restriction or distortion of competition within the Greek territory. Therefore, according to the Greek legal framework, arrangements that have an effect on the market are also prohibited and penalised.

India Small Flag India

Yes, there must be an AAEC or a likelihood of an AAEC in India. Cartels are presumed to cause an AAEC, so, once the cartel has been found to exist, the Competition Commission of India (CCI) is not required to assess whether it has or is likely to have an AAEC. The presumption is rebuttable, with the burden of proof then shifting on the parties concerned to establish that the agreement does not cause an AAEC.

Sweden Small Flag Sweden

If it is concluded that an agreement has an anti-competitive object, there is no need to examine its effect on the market. Cartel conduct is normally considered to restrict competition by object, therefore no effects analysis is required.

Cyprus Small Flag Cyprus

According to section 3 of the Competition Act, cartel violations are unlawful per se. The Cyprus Competition Authority applies the EU principle and decision practice concerning a by-object or by-effect infringement.

UAE Small Flag UAE

The Competition Law & Regulation penalized the competition practices which affect the competition level in the relevant market, noting that the Competition Law in UAE defined the “Relevant Market” as products or services or a combination of products or services which - based on their price, characteristics and methods of use – may be replaced with any other goods or services or the alternatives of which may be chosen, to meet a specific requirement of consumers in a certain geographical area.

Accordingly, and in order to establish the infringement, the infringing acts (“anti-competition practices) shall have effect on the relevant market as follows:

1. Restrictive Agreements: The UAE Competition Law and Regulation prohibits the restrictive agreements that restrict and prevent competition in the relevant market (such as for example and not limited, the agreements that specify the purchase or sale prices of goods or services; the agreements that freeze or limit production, development, distribution, marketing and other investment aspects; agreements that restrict the freedom of supply of goods or services in the relevant market, etc). However, the prohibition excludes the “low impact restrictive agreements” in which the total share of the parties to the agreements do not exceed 10% of the total transactions in the relevant market.

2. Abuse of Dominant Position: The UAE Competition Law and Regulation prohibits the companies of a dominant position in the relevant market, or in a substantial or influential part thereof, from carrying out any acts or actions that lead to the abuse of the position in order to prejudice, restrict or prevent competition. The Dominant position is established when the market share of the company exceeds 40% of the total transactions in the relevant market.

Besides the above, the UAE Competition Law and Regulation imposed on companies which intends to carry out the Economic Concentration operations that may affect the competition in the relevant market, to enhance or create a dominant position, to apply for an approval from the Ministry of Economy before the completion of such operations, noting that the Economic Concentration affect the competition in the relevant market when the market share of the parties exceeds 40% of the total transactions undertaken in the relevant market.

Updated: May 8, 2019