EU Competition Law & Commercial Contracts: Key Concepts
EU Competition Law & Commercial Contracts
Antitrust Law: Functioning of the European Union (TFUE) Against Unfair Competition
1. Collusive Agreements
Two or more undertakings coordinate their behavior, restricting competition.
Cartels: The most serious and harmful anti-competition conduct. Agreements with competitors to:
- Raise prices
- Limit quantities produced
- Geographically divide up customers
2. Abuse of Dominant Position
High market power allows raising prices or worsening quality, damaging competitors, suppliers, and customers.
3. Economic Concentration Control
- Allows economies of scale (EOS)
- Reduces production and distribution costs
- Improves profitability
- Speeds up technical progress
4. Control of State Aid
Economic advantage in many forms from public authorities, using state resources on a selected basis.
European Commission Directorate General for Competition (DGCOMP): In charge of analyzing state aid and deciding on compatibility with the European Single Market.
Unfair Competition
When market participants seek to gain an advantage over rivals.
Acts of Unfair Competition:
- Realized in the market or cause economic injury
- Purpose to produce harm
Against Market Functioning:
- False advertising
- Aggressive acts
- Infringement of laws
- Selling at a loss
- Unlawful publishing
Against Customers:
Misleading Practices
- Causing confusion
- Concerning codes of conduct/quality marks
- Bait advertising & misleading promotions
- Pyramid sale practices
- Convert commercial practices
Aggressive Practices
- Aggressive practices using coercion
- Aggressive practices using harassment (e.g., sales calls at home)
- Aggressive practices & minors
Commercial Contracts
Due conditions of entrepreneur of advertiser & advertising agency, seeking massive diffusion.
Elements:
- Advertiser (Aga): Natural/legal person
- Advertising Agency: Natural/legal person professionally organized to create, prepare, schedule & execute advertising.
Advertisement/Broadcasting Contract:
Advertising media in exchange for a price.
- Media obligated to diffuse advert
- Advertiser pays agreed price
- Only spread in advertising spot
- Liability on advertiser, NOT advertising media
Sponsorship Agreement:
Agreement under which one party makes a contribution to another party (monetary). In exchange = display advert.
Prohibitions: Tobacco, drugs & medicines, illegal adverts, alcoholic beverages with +20ยบ
Breach of Contract:
Affected party can request fulfillment or termination of contract with corresponding compensation for damages.
Illegal Advertising:
Threats to the dignity of a person, violence, values/rights recognized in the constitution; women, children, youth.
Subliminal Advertising:
Ads of images + sound to influence customers without being conscious.
- Illegal if it changes customers’ consumption habits.
Renting:
Related to movable, non-fungible goods (e.g., computer vehicles + computer equipment) with a purchase option.
Engineering Procurement & Construction (EPC)
Construction contract between parties.
Constructor: Responsible for engineering procurement & construction activities.
- Fixed price
- Fixed contemplation date
- Single point responsibility
- Performance guarantee
MUST:
- Detail engineering/design of project
- Procurement of necessary equipment
- Construction of facility guaranteed time & price.
Outsourcing Agreement:
Contract formed between a company & a service provider, where the provider promises to deliver specified services.
Merchandising Contract:
Marketing contract to make the latter’s products more competitive.
- Trademark merchandising
- Personality merchandising
- Merchandising fictional characters
Contract Law Basics
Contract: A legal transaction by which parties create or modify a patrimonial legal relationship.
Aim: To satisfy individual interests & serve a higher social purpose.
Elements: Consent, Object, Cause
Liquidated Damages:
Compensation for damages.
Three functions: Punitive, compensatory, warrantee.
Electronic Contracting:
Formalized by electronic means, telematic networks.
Sales Contract:
A person (seller) delivers an item to another person (buyer) who pays a price.
To be considered a Commercial Agreement:
- Movable things (raw material, speculative – customer buys to resell)
- Buyer is also an entrepreneur & uses the purchased thing for their economic activity
Seller’s Obligation:
Deliver movable goods, provide warranty
Buyer’s Obligations:
Payment of price, receipt of goods
Instalment Sale Contract:
One party sells a good to another, postponing payment of the price fully/partially in +3 months.
- To facilitate the acquisition.
Business Lease Agreement:
One party, in exchange for a price, cedes to another the exploitation of an economically productive unit.
Distribution Agreements:
An entrepreneur acquires in their name & under their risk the products of another entrepreneur (suppliers) to resell them in a given territory.
Commission Agreement:
A commission agent participates in an act of mercantile agreement on behalf of another person.
Brokerage Agreement:
A person is bound to pay a mediator/broker for serving as an intermediary, provided they have effectively contributed to it.
Syndicated Loans:
Financing offered by a group of lenders who work together to provide for a single borrower.
Participative Loans:
A form of financing with quite affordable access requirements & interest is linked to the operation of the company.
Bailment Contract:
Transfer of possession of a good to another person.
Guarantee:
A legal instrument to ensure fulfillment of an obligation like surety, pledge, or mortgage.
IN REM: Debtors offer as a safeguard their own property.
- Mortgage: Price of real estate subjected as assurance. Creditor receives payment from the price of the real estate.
- Pledge: As liability for debt, some chattel goods are deposited in the power of the creditor (e.g., a car).