Script
Content
Based on the complainant of company A, as the defendant of company B I
will point out some justification of the agreement between company B and
MediaMarkt
- Positive effect on competition Guidelines
Paragraph 106 of the Vertical guidelines states that vertical restraints often
have positive effects, in particular by promoting nonprice competition and
improved quality of service. Paragraph 107 sets out nine situations in which
vertical restraints may help to realise efficiencies and the development of new
markets; the Commission says that it does not claim that the list is complete
or exhaustive:
(i) The free-rider problem
(ii) Opening up and entering new markets
(iii) The certification free-rider issue
(iv) The hold-up problem
(v) The hold-up problem where know-how is transferred
(vi) The ‘vertical externality issue’
(vii) Economies of scale in distribution
(viii) Capital market imperfections
- The de minimis doctrine
Paragraphs 8 to 11 of the Commission’s Vertical guidelines point out that
agreements of minor importance usually fall outside Article 101(1) altogether.
These paragraphs refer to the Commission’s 2001 Notice on Agreements of
Minor Importance. Vertical agreements entered into by non-competing
undertakings whose individual market share does not exceed 15 per cent are
usually regarded as de minimis, although a ‘hard-core’ restriction such as an
export ban might infringe Article 101 (1) even below this threshold.
B falls into this de minimis doctrine since its market share remains around
15%
-Duration agreement exception under Art 101 (3) TFEU
“…, which contributes to improving the production or distribution of goods
or to promoting technical or economic progress, while allowing consumers a
fair share of the resulting benefit, and which does not:
Impose on the undertakings concerned restrictions which are not
indispensable to the attainment of these objectives;
Afford such undertakings the possibility of eliminating competition in respect
of a substantial part of the products in question.”
Specific guidance is given on the application of Article 101(3) to single
branding agreements at paragraphs 144 to 148. Where a ‘client-specific
investment’ is made, a non-compete obligation of more than five years may
be allowed under Article 101(3): this is consistent with the Commission’s past
practice where, because A is the market leader which appr 50% market
share in the Dutch and Belgian market of digital cameras. Which put A as a
dominance position in market of digital camera in Dutch and Belgium. A’s
main competitor B has difficulties to expand its position. Its market share
remains around 15%. So in other words, A has created entry barrier (which
also explain in paragraph 117 of Vertical Guideline) to other competitor which
have smaller market share to to enter the competition such as B
- “Cumulative effect” argument
this argument by the plantiff is not valid, since the buyer market share is only
25% and the seller market share 15% (which fall into de minimis doctrine
category), the plantiff can not just simply accumulate our market share.
Because firstly we’re not in the same position, and secondly the total market
share of buyer is not only the market share of camera. So in the long run,
there is only a small change that it will create anti-competitive measure that
will hurt the market share of B
- Territory exception under Art 4(b)(i) of Regulation 330/2010
“…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,…”
B could use this exception, because this single branded vertical only restrict to
the exclusive territory which is Nederland and Belgium, but not limited sales to
customers of the buyer directly
- passive sales restriction of the internet sales of camera B is only to
satisfy the exclusive territorial restriction on the previous point to agreement,
which is also beneficial to company A. because with the sales of B product in
internet means also open to other geographical territory other than Netherland
and Belgium
with these argument, I hope the competitor authorities could consider this
justification of the agreement between company B and MediaMarkt into
consideration
will point out some justification of the agreement between company B and
MediaMarkt
- Positive effect on competition Guidelines
Paragraph 106 of the Vertical guidelines states that vertical restraints often
have positive effects, in particular by promoting nonprice competition and
improved quality of service. Paragraph 107 sets out nine situations in which
vertical restraints may help to realise efficiencies and the development of new
markets; the Commission says that it does not claim that the list is complete
or exhaustive:
(i) The free-rider problem
(ii) Opening up and entering new markets
(iii) The certification free-rider issue
(iv) The hold-up problem
(v) The hold-up problem where know-how is transferred
(vi) The ‘vertical externality issue’
(vii) Economies of scale in distribution
(viii) Capital market imperfections
- The de minimis doctrine
Paragraphs 8 to 11 of the Commission’s Vertical guidelines point out that
agreements of minor importance usually fall outside Article 101(1) altogether.
These paragraphs refer to the Commission’s 2001 Notice on Agreements of
Minor Importance. Vertical agreements entered into by non-competing
undertakings whose individual market share does not exceed 15 per cent are
usually regarded as de minimis, although a ‘hard-core’ restriction such as an
export ban might infringe Article 101 (1) even below this threshold.
B falls into this de minimis doctrine since its market share remains around
15%
-Duration agreement exception under Art 101 (3) TFEU
“…, which contributes to improving the production or distribution of goods
or to promoting technical or economic progress, while allowing consumers a
fair share of the resulting benefit, and which does not:
Impose on the undertakings concerned restrictions which are not
indispensable to the attainment of these objectives;
Afford such undertakings the possibility of eliminating competition in respect
of a substantial part of the products in question.”
Specific guidance is given on the application of Article 101(3) to single
branding agreements at paragraphs 144 to 148. Where a ‘client-specific
investment’ is made, a non-compete obligation of more than five years may
be allowed under Article 101(3): this is consistent with the Commission’s past
practice where, because A is the market leader which appr 50% market
share in the Dutch and Belgian market of digital cameras. Which put A as a
dominance position in market of digital camera in Dutch and Belgium. A’s
main competitor B has difficulties to expand its position. Its market share
remains around 15%. So in other words, A has created entry barrier (which
also explain in paragraph 117 of Vertical Guideline) to other competitor which
have smaller market share to to enter the competition such as B
- “Cumulative effect” argument
this argument by the plantiff is not valid, since the buyer market share is only
25% and the seller market share 15% (which fall into de minimis doctrine
category), the plantiff can not just simply accumulate our market share.
Because firstly we’re not in the same position, and secondly the total market
share of buyer is not only the market share of camera. So in the long run,
there is only a small change that it will create anti-competitive measure that
will hurt the market share of B
- Territory exception under Art 4(b)(i) of Regulation 330/2010
“…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,…”
B could use this exception, because this single branded vertical only restrict to
the exclusive territory which is Nederland and Belgium, but not limited sales to
customers of the buyer directly
- passive sales restriction of the internet sales of camera B is only to
satisfy the exclusive territorial restriction on the previous point to agreement,
which is also beneficial to company A. because with the sales of B product in
internet means also open to other geographical territory other than Netherland
and Belgium
with these argument, I hope the competitor authorities could consider this
justification of the agreement between company B and MediaMarkt into
consideration
