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13 January 2020

cee overview - eu & competition

Additional competences of competition authorities and competition law concepts used by non-competition authorities: en route to cohesion or collision?

Antitrust authorities are often seen as role models for the public enforcement of rules that are in the consumers' interests. They have broad investigative powers and can levy hefty fines for infringements of the cartel prohibition or abuses of dominance as enshrined in Articles 101 and 102 TFEU (or their national equivalents). They try to enforce rules that seek to ensure consumer welfare by either making products cheaper or better – or at least curb any efforts to impede effective competition, for example by abusing a market dominant position.

In recent years, the powers of antitrust authorities have expanded. Several authorities now ensure fairness in supply relationships even when antitrust rules are not infringed. On the other hand, since the entry into force of the GDPR, national data protection authorities must now impose fines of up to 4 % of turnover of the respective undertaking, whereas 'undertaking' should be understood in accordance with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU).
Fairness in supply relationships and data protection seem like very different issues. Still, they both rely on antitrust law concepts, and in both instances, the transposition of these concepts into the respective laws has led to confusion, as we will explain briefly below.

Competition laws vs UTP laws in the food supply chain
UTP laws want to prevent the abuse of a superior bargaining position in the supply chain by prohibiting unfair terms in the relationship between distributors and suppliers. There is an overlap between UTP and competition law insofar as restrictions and abuses in supply relationships are also regulated in EU competition law.
One gets the impression, however, that laws on unfair trade practices in the food supply chain ("UTP") are often ushered through the legislative process to comply with political demands without proper alignment with existing antitrust laws, so that the outcome is different and at times rules on similar practices deviate, confusing practitioners and enforcers alike.
The major difference between EU competition law and UTP laws is that the first has an established framework for assessing restraints, while the latter is less precise. While UTP laws focus on the issue of fairness, they often do not provide the analytical tools for an assessment of the underlying terms or the proportionality of the quid pro quo. This is where competition law could be of help, but there is usually no guidance on whether antitrust case law on excessiveness of prices or conditions will be applied by way of analogy. Several UTP laws (including the EU UTP Directive) include a "blacklist of practices", which sounds rather menacing.
But a closer look at the wording of the provisions reveals problems of interpretation, which may detract from the UTP Directive's ability to achieve its goals. The hope remains that the interpretation of UTP and antitrust laws when it comes to fairness in dealings between suppliers and distributors will be aligned in the future.  

Competition law vs. data protection
Recital 150 GDPR mentions that the basis for the calculation of fines for data protection violations is the worldwide group turnover, as also enshrined in antitrust law. The belief is that, like in antitrust, only group turnover is a relevant proxy for the economic importance of the entity infringing privacy and consequently a deterrent fine.

The transposition of the concept of a group of undertakings forming a single economic unit into GDPR has sparked criticism:

  • Unlike competition law, the GDPR does not acknowledge privileged data sharing within a corporate group but imposes concrete restrictions on the exchange of data between affiliated companies.
  • One of the consequences of the SEU concept will likely be that, similar to enforcement of antitrust rules, parent companies will be liable for damages caused by subsidiaries that have violated GDPR obligations. It is doubtful whether such liability (which is based on the influence over non-privacy related behaviour) is in line with rules on guilt under tort law.

After all, it seems the main driving force behind the use of the SEU concept for fines un-der Article 83 GDPR is the ability to impose more deterrent fines. Whether this takes into account the criteria required by this provision sufficiently and can properly ensure that fines are in fact proportionate, is doubtful.

Companies and their advisors will have to organise compliance with several distinct, yet partially overlapping if not deviating frameworks at the EU and national level, all aiming at upping the level of fines to be imposed for breaches of the law. In the following, we will tackle a few selected examples of the interplay between antitrust and other consumer related laws and give an outlook of what still is to come.



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