Notice of the Commission

relating to the revision of the 1997 notice on agreements of minor importance which do not fall under Article 81(1) of the EC Treaty

(2001/C 149/05)

(Text with EEA relevance)

The Commission invites all interested parties to submit their written observations on the following draft of a revised notice on agreements of minor importance. Observations should be sent in the two months following the date of the present publication to the following address: European Commission Directorate General for Competition

Unit A-2

J 70 - 5/203

Rue de la Loi/Wetstraat 200 B - 1049 Brussels Internet address: Lucas.Peeperkorn@cec.eu.int.

Draft Notice on agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (de minimis)(1)

I

1. Article 81(1) prohibits agreements which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market. The Court of Justice of the European Communities has clarified that this provision is not applicable where the impact of the agreement on intra-community trade or on competition is not appreciable.

2. In the present notice the Commission quantifies, with the help of market share thresholds, what is not an appreciable restriction of competition under Article 81 of the EC Treaty. This negative definition of appreciability does not imply that agreements between undertakings which exceed the thresholds set out in this notice appreciably restrict competition. Such agreements may still have only a negligible effect on competition within the common market and may therefore not be caught by Article 81(1)(2).

3. Agreements may also not be caught by Article 81(1) because they are not capable of appreciably affecting trade between Member States. This notice does not deal with this issue. It does not quantify what does or does not constitute an appreciable effect on trade.

4. In cases covered by this notice, and subject to point 11, the Commission will not institute proceedings either upon application or on its own initiative. Where undertakings assume in good faith that an agreement is covered by this notice, the Commission will not impose fines. Although not binding on them, this notice also intends to give guidance to the courts and authorities of the Member States in their application of Article 81.

5. This notice also applies to decisions by associations of undertakings and to concerted practices.

6. This notice is without prejudice to any interpretation of Article 81 which may be given by the Court of Justice or the Court of First Instance of the European Communities.

7. This notice is without prejudice to the application of national competition laws.

II

8. The Commission holds the view that agreements between undertakings which affect trade between Member States do not appreciably restrict competition within the meaning of Article 81(1):

(a) if the aggregate market share held by all the parties to the agreement does not exceed 10 % on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are actual or potential competitors on any of the affected relevant markets (agreements between competitors)(3); or

(b) if the market share held by each of the parties to the agreement does not exceed 15 % on any of the relevant markets affected by the agreement, where the agreement is made between undertakings which are not actual or potential competitors on any of the affected relevant markets (agreements between non-competitors).

In cases where it is difficult to classify the agreement as either an agreement between competitors or an agreement between non-competitors the 10 % threshold is applicable.

9. Where in an affected relevant market competition is restricted by the cumulative effect of parallel networks of agreements for the sale of goods or services established by several suppliers or distributors and which have similar effects on the market, the market share threshold under point 8 is reduced to 5 %, both for agreements between competitors and for agreements between non-competitors. The agreements of a supplier or distributor with a market share not exceeding 5 % are in general not considered to contribute significantly to a cumulative foreclosure effect resulting from agreements of several suppliers or distributors(4).

10. The Commission also holds the view that the said agreements are not restrictive of competition if the market shares given at point 8 and 9 are exceeded by no more than one percentage point during two successive calendar years.

11. In order to calculate the market share, it is necessary to determine the relevant market. This consists of the relevant product market and the relevant geographic market. When defining the relevant market, reference should be had to the notice on the definition of the relevant market for the purposes of Community competition law(5).

12. Provided that the condition of effect on trade between Member States is fulfilled, agreements containing any of the following hardcore restrictions do not benefit from the thresholds set out in points 8, 9 and 10 and are unlikely to qualify for individual exemption:

(1) horizontal agreements (i.e. agreements between undertakings operating at the same level of the production or distribution chain) which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object:

(a) the fixing of prices when selling the products to third parties;

(b) the limitation of output or sales;

(c) the allocation of markets or customers;

(2) vertical agreements (i.e. agreements between undertakings operating, for the purposes of the agreement, at a different level of the production or distribution chain) which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object:

(a) the restriction of the buyer's ability to determine its sale price, without prejudice to the possibility of the supplier imposing a maximum sale price or recommending a sale price, provided that they do not amount to a fixed or minimum sale price as a result of pressure from, or incentives offered by, any of the parties;

(b) the restriction of the territory into which, or of the customers to whom, the buyer may sell the contract goods or services, except the following restrictions which are not hardcore:

- the restriction of active sales into the exclusive territory or to an exclusive customer group reserved to the supplier or allocated by the supplier to another buyer, where such a restriction does not limit sales by the customers of the buyer,

- the restriction of sales to end users by a buyer operating at the wholesale level of trade,

- the restriction of sales to unauthorised distributors by the members of a selective distribution system, and

- the restriction of the buyer's ability to sell components, supplied for the purposes of incorporation, to customers who would use them to manufacture the same type of goods as those produced by the supplier;

(c) the restriction of active or passive sales to end-users by members of a selective distribution system operating at the retail level of trade, without prejudice to the possibility of prohibiting a member of the system from operating out of an unauthorised place of establishment;

(d) the restriction of cross-supplies between distributors within a selective distribution system, including between distributors operating at different levels of trade;

(e) the restriction agreed between a supplier of components and a buyer who incorporates those components, which limits the supplier's ability to sell the components as spare parts to end-users or to repairers or other service providers not entrusted by the buyer with the repair or servicing of its goods.

(3) vertical agreements entered into between actual or potential competitors if they contain any of the hardcore restrictions listed in paragraph (1) or (2) above.

The above hardcore restrictions may however escape the prohibition laid down in Article 81(1) in particular in cases where the agreement does not affect trade between Member States. Case-law has established, especially with regard to territorial protection in vertical agreements, that there is no violation of Article 81(1) in cases where the agreement has only an insignificant effect on the relevant markets due to the weak positions which the parties concerned have on the markets in question(6). Agreements between small and medium-sized undertakings, as defined in the annex to Commission Recommendation 96/280/EC(7), are rarely capable of affecting trade between Member States.

13. (1) For the purposes of this notice, the terms "undertaking", "party to the agreement", "distributor", "supplier" and "buyer" shall include their respective connected undertakings.

(2) "Connected undertakings" are:

(a) undertakings in which a party to the agreement, directly or indirectly:

- has the power to exercise more than half the voting rights, or

- has the power to appoint more than half the members of the supervisory board, board of management or bodies legally representing the undertaking, or

- has the right to manage the undertaking's affairs;

(b) undertakings which directly or indirectly have, over a party to the agreement, the rights or powers listed in (a);

(c) undertakings in which an undertaking referred to in (b) has, directly or indirectly, the rights or powers listed in (a);

(d) undertakings in which a party to the agreement together with one or more of the undertakings referred to in (a), (b) or (c), or in which two or more of the latter undertakings, jointly have the rights or powers listed in (a);

(e) undertakings in which the rights or the powers listed in (a) are jointly held by:

- parties to the agreement or their respective connected undertakings referred to in (a) to (d), or

- one or more of the parties to the agreement or one or more of their connected undertakings referred to in (a) to (d) and one or more third parties.

(3) For the purposes of paragraph 2(e), the market share held by these jointly held undertakings shall be apportioned equally to each undertaking having the rights or the powers listed in paragraph 2(a).

(1) This notice replaces the notice on agreements of minor importance published in OJ C 372, 9.12.1997.

(2) See for instance the judgment of the Court of Justice in Joined Cases C-215/96 and C-216/96 Bagnasco (Carlos) v Banca Popolare di Novara and Casa di Risparmio di Genova e Imperia (1999) ECR I-135, points 34-35.

(3) On what are actual or potential competitors, see the Commission Notice "Guidelines on the applicability of Article 81 of the EC Treaty to horizontal cooperation agreements", OJ C 3, 6.1.2001, p. 2, paragraph 9.

(4) See also the Commission Notice "Guidelines on vertical restraints", OJ C 291, 13.10.2000, in particular paragraphs 73, 142 and 189. While in the guidelines on vertical restraints in relation to certain restrictions reference is made not only to the total but also to the tied market share, in this notice the market share thresholds all refer to total market shares.

(5) OJ C 372, 9.12.1997, p. 5.

(6) See the following judgments of the Court of Justice: Case 5/69 Völck v Vervaecke (1969) ECR 295; Case 1/71 Cadillon v Höss (1971) ECR 351; Case 19/77 Miller International Schallplatten v Commission (1978) ECR 131; Case C-70/93 BMW AG v ALD Auto-Leasing D GmbH (1995) ECR I-3439; Case C-306/96 Javico International and Javico AG v Yves Saint Laurent Parfums SA (1998) ECR I-1983.

(7) OJ L 107, 30.4.1996, p. 4.