Notice of the EFTA Surveillance Authority

Notice on agreements of minor importance which do not appreciably restrict competition under Article 53(1) of the EEA Agreement (de minimis)

(2003/C 67/06)

A. The present notice is issued pursuant to the rules of the Agreement on the European Economic Area (EEA Agreement) and the Agreement between the EFTA States on the establishment of a Surveillance Authority and a Court of Justice (Surveillance and Court Agreement).

B. The European Commission has issued a notice entitled "Agreements of minor importance which do not appreciably restrict competition under Article 81(1) of the Treaty establishing the European Community (de minimis)"(1). That non-binding act defines when agreements between companies are not prohibited by Article 81(1) of the EC Treaty (EC).

C. The EFTA Surveillance Authority considers the above-mentioned act to be EEA relevant. In order to maintain equal conditions of competition and to ensure a uniform application of the EEA competition rules throughout the European Economic Area, the EFTA Surveillance Authority adopts the present notice under the power conferred upon it by Article 5(2)(b) of the Surveillance and Court Agreement. It intends to follow the principles and rules laid down in this notice when applying the relevant EEA rules to a particular case.

D. The present notice replaces the Authority's previous notice of 1998 on agreements of minor importance which do not fall under Article 53(1) of the EEA Agreement (EEA)(2).

I

1. Article 53(1) EEA prohibits agreements between undertakings which may affect trade between the Contracting Parties to the EEA Agreement and which have as their object or effect the prevention, restriction or distortion of competition within the territory covered by the EEA Agreement. The Court of Justice of the European Communities has clarified that the corresponding Article 81(1) EC is not applicable where the impact of the agreement on intra-Community trade or on competition is not appreciable. By virtue of the provisions of Article 6 EEA and Article 3 of the Surveillance and Court Agreement this principle should also be applied to the interpretation of Article 53(1) EEA, so that this provision is not applicable where the impact on trade between the Contracting Parties to the EEA Agreement or on competition is not appreciable.

2. In this notice the EFTA Surveillance Authority quantifies, with the help of market share thresholds, what is not an appreciable restriction of competition under Article 53 EEA(3). 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 and may therefore not be prohibited by Article 53(1) EEA(4).

3. Agreements may in addition not fall under Article 53(1) EEA because they are not capable of appreciably affecting trade between the Contracting Parties to the EEA Agreement. This notice does not deal with this issue. It does not quantify what does not constitute an appreciable effect on trade. It is however acknowledged that agreements between small and medium-sized undertakings, as defined in EFTA Surveillance Authority Decision No 112/96/COL of 11 September 1996(5), are rarely capable of appreciably affecting trade between the Contracting Parties to the EEA Agreement. Small and medium-sized undertakings are currently defined in that decision as undertakings which have fewer than 250 employees and have either an annual turnover not exceeding EUR 40 million or an annual balance-sheet total not exceeding EUR 27 million.

4. In cases covered by this notice the EFTA Surveillance Authority 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 Authority will not impose fines. Although not binding on them, this notice also intends to give guidance to the courts and authorities of the EFTA States in their application of Article 53 EEA.

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 53 EEA and/or Article 81 EC which may be given by the EFTA Court, the Court of Justice or the Court of First Instance of the European Communities.

II

7. The EFTA Surveillance Authority holds the view that agreements between undertakings which affect trade between the Contracting Parties to the EEA Agreement do not appreciably restrict competition within the meaning of Article 53(1) EEA:

(a) if the aggregate market share held by 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 these markets (agreements between competitors)(6); 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 these 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.

8. Where in a relevant market competition is restricted by the cumulative effect of agreements for the sale of goods or services entered into by different suppliers or distributors (cumulative foreclosure effect of parallel networks of agreements having similar effects on the market), the market share thresholds under point 7 are reduced to 5 %, both for agreements between competitors and for agreements between non-competitors. Individual suppliers or distributors with a market share not exceeding 5 % are in general not considered to contribute significantly to a cumulative foreclosure effect(7). A cumulative foreclosure effect is unlikely to exist if less than 30 % of the relevant market is covered by parallel (networks of) agreements having similar effects.

9. The EFTA Surveillance Authority also holds the view that agreements are not restrictive of competition if the market shares do not exceed the thresholds of respectively 10 %, 15 % and 5 % set out in point 7 and 8 during two successive calendar years by more than two percentage points.

10. 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 EFTA Surveillance Authority's notice on the definition of the relevant market for the purposes of EEA competition law(8). The market shares are to be calculated on the basis of sales value data or, where appropriate, purchase value data. If value data are not available, estimates based on other reliable market information, including volume data, may be used.

11. Points 7, 8 and 9 do not apply to agreements containing any of the following hardcore restrictions:

(1) as regards agreements between competitors as defined in point 7, restrictions which, directly or indirectly, in isolation or in combination with other factors under the control of the parties, have as their object(9):

(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) as regards agreements between non-competitors as defined in point 7, restrictions 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) as regards agreements between competitors as defined in point 7, where the competitors operate, for the purposes of the agreement, at a different level of the production or distribution chain, any of the hardcore restrictions listed in paragraphs 1 and 2 above.

12. (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) OJ C 368, 22.12.2001, p. 13.

(2) OJ L 200, 16.7.1998, p. 55, and EEA Supplement to the Official Journal 28, 16.7.1998, p. 13.

(3) The competence to handle individual cases falling under Article 53 EEA is divided between the EFTA Surveillance Authority and the European Commission according to the rules laid down in Article 56 EEA. Only one authority is competent to handle any given case.

(4) See for instance the judgment of the Court of Justice of the European Communities in Joined Cases C-215/96 and C-216/96 Bagnasco (Carlos) v Banca Populare di Novara and Casa di Risparmio di Genova e Imperia [1999] ECR I-135, paragraphs 34 and 35. This notice is also without prejudice to the principles for assessment under Article 53(1) EEA as expressed in the EFTA Surveillance Authority notice entitled "Guidelines on the applicability of Article 53 of the EEA Agreement to horizontal cooperation agreements", adopted by the Authority's Decision No. 393/01/COL of 6 December 2001 (OJ C 266, 31.10.2002, p. 1, and EEA Supplement to the Official Journal 55, 31.10.2002, p. 1), in particular points 17 to 31 inclusive and in the EFTA Surveillance Authority notice entitled "Guidelines on vertical restraints"(OJ C 122, 23.5.2002, p. 1) and EEA Supplement to the Official Journal 26, 23.5.2002, p. 3, in particular points 5 to 20 inclusive.

(5) OJ L 42, 13.2.1997, p. 33 and EEA Supplement to the Official Journal 7, 13.2.1997, p. 1. This decision corresponds to European Commission Recommendation 96/280/EC (OJ L 107, 30.4.1996, p. 4). It is anticipated that the European Commission will revise its recommendation to increase the annual turnover threshold from EUR 40 million to EUR 50 million and the annual balance-sheet total threshold from EUR 27 million to EUR 43 million.

(6) On what are actual or potential competitors, see the EFTA Surveillance Authority notice entitled "Guidelines on the applicability of Article 53 of the EEA Agreement to horizontal cooperation agreements" (cf. footnote 4), paragraph 9. A firm is treated as an actual competitor if it is either active on the same relevant market or if, in the absence of the agreement, it is able to switch production to the relevant products and market them in the short term without incurring significant additional costs or risks in response to a small and permanent increase in relative prices (immediately supply-side substitutability). A firm is treated as a potential competitor if there is evidence that, absent the agreement, this firm could and would be likely to undertake the necessary additional investments or other necessary switching costs so that it could enter the relevant market in response to a small and permanent increase in relative prices.

(7) See also the EFTA Surveillance Authority notice entitled "Guidelines on vertical restraints" (OJ C 122, 23.5.2002, p. 1), and EEA Supplement to the Official Journal 26, 23.5.2002, p. 7, in particular paragraphs 73, 142, 143 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 of a particular supplier or buyer, in this notice all market share thresholds refer to total market shares.

(8) OJ L 200, 16.7.1998, p. 55, and EEA Supplement to the Official Journal 28, 16.7.1998, p. 3.

(9) Without prejudice to situations of joint production with or without joint distribution, as defined in Article 5(2), of the act referred to in point 6 of Annex XIV to the EEA Agreement and Article 5(2), of the act referred to in point 7 of Annex XIV to the EEA Agreement (respectively Commission Regulation (EC) No 2658/2000, and Commission Regulation (EC) No 2659/2000 (OJ L 304, 5.12.2000, pp. 3 and 7).