Open Question 1
Bloemella is the main producer of liqourice and treacle waffles in the Netherlands. Its shops can mainly be found in Dutch train stations. Their success is due to the way the liqourice and treacle waffles are produced and distributed: each shop has a system of unique small boxes, which keep the candy and cookies fresh and delicious up to the moment that they are sold. Bloemella decides to expand its business activities in other European countries, namely Germany, Italy and Spain. Bloemella concludes several distribution agreements with local retailers in these countries, which aim at becoming Bloemella’s official distributors. Bloemella requires the applicant distributor to satisfy two conditions:
One of the employees of the applicant distributor should attend a three-week course in Utrecht to learn Bloemella’s business model.
The distributor is required to introduce the system of small boxes that is used by Bloemella in the Netherlands in order to safeguard the freshness of the flowers in these countries.
Vilanova is a store placed in Barcelona Central station which sells cookes and candy. Vilanova would like to become one of the official distributors of Bloemella. However, it does not have the system of small boxes requested by Bloemella. In addition, Vilanova is not sure if its clients would like to buy the liqourice and waffles. Finally, Vilanova believes that its employees know how to sell their products, without the need to pay for a training course in Utrecht to learn how to do it. Therefore, Vilanova does not consider such investments necessary. Vilanova submits a complaint to the Spanish Competition Authority arguing that the distribution agreement that Bloemella intends to conclude with its distributors is in breach of the competition law rules. At the same time, German and Italian shops submit similar complaints to their national competition authorities. The European Commission is informed of the proceedings in the different Member States. The European Commission would like to avoid national competition authorities reaching different outcomes in the assessment of the compatibility of Bloemella’s network of agreements with competition law.
Open Question 1a
On what legal basis can the European Commission rely in order to claim jurisdiction over the case?
The European Commission obtains jurisdiction over the case and it opens formal investigations. The European Commission defines the product market as the market for the production of liqourices and treacle waffles. This product market has a local geographic dimension. The average market share of Bloemella in these relevant markets is 70-80% in the Netherlands, and 30-40% in Germany, Italy and Spain.
Open Question 1b
What would be the Commission’s assessment on the compatibility of the agreement with the EU competition law rules?
MC Question 1
Bloemella is a leading producer and distributor of liqourice and treacle waffles in the Netherlands. After having received a complaint from a group of competitors of Bloemella, who argued that Bloemella has abused its dominant position, the Commission opens an investigation on a potential breach of Article 102 TFEU. The preliminary question that the Commission has to answer is how to define the product market.
Which of the following elements will be relied on by the Commission to define the product market?
- Liqourice and treacle waffles are sold within the same store.
- Liqourice is sold in the Netherlands.
- Interchangeability between liqourice and treacle waffles
- Liqourice and treacle waffles are sold under the same selling arrangements.
MC Question 2
Statement I: If a measure fulfils the four conditions laid down in Altmark, it will not constitute an advantage within the meaning of Article 107(1) TFEU. The measure will, therefore, not constitute State aid.
Statement II: Due to the economic crisis many local shops in the municipality of Utrecht are facing financial problems. Therefore, the municipality decides to grant a loan to these local shops. If a private investor would have entered into the transaction on the same conditions as the municipality of Utrecht, the measure will not constitute State aid within the meaning of Article 107(1) TFEU.
Pick the right answer:
- Both statement I and II are correct.
- Statement I is correct. Statement II is incorrect.
- Statement I is incorrect. Statement II is correct.
- Both statement I and II are incorrect.
Open Open Questions
Open Question 1a
Art 102 TFEU. Abuse of dominance position. It is prohibited for a company to abuse its dominant position on the market. Due to the effect on the‘’the interstade trade’’ it would be better if the European Commission would study this case.
Open Question 1b
Art 102 TFEU, the prohibition of abuse of the dominant position must be seen in the light of several elements. It is prohibited for:
One or several undertakings
that hold a dominant position
to abuse this position
when this effect interstate trades.
First of all, we use the term undertaking when speaking of an entitity engaged in economic activity, providing goods or searches on the market (Höfner case). Therefore, Bloemella is an undertaking as it is a Dutch company which offers goods on the market, namely candy and cookies.
To determine if Bloemella holds a dominant position, one had to study the relevant market (Market definition). Therefore, it is important what the good/ service entails and what the geographical market is. To assess the product market it is important to look at the interchangeability of the product (Commision notice para 7) and the demand and supply side of the market (Commission notice para. 15-22). The geographical market must constitute a region where there are ‘homegeneous conditions of competition ‘(United Brands).
The next question is if there is a dominant position on the market. Their marketshare in the Netherlands is more than 50%, and in the other 3 countries it is below 40%. Therefore, it has to be assumed that they hold a dominant position in the Netherlands, but this is unlikely in the other three countries (Hoffman la Roche 39-41). Furthermore, it is important to take into account other factors as mentioned in Hoffman par. 48. It is a possibility to mention vertical integration, as Bloemella is an undertaking that operation from production to the actual sale.
Thirdly one has to determine if the proceedings of Bloemella qualify as an abuse. Several options are give in the article, but these are not limitative (par. 91 Hoffman). One can argue that the abuse falls within the scope of art 102 sub a TFEU. It is an ‘exclusionary’ measure which makes it hard to enter the market.
Finally, there must be an effect ont he interstate trade. As this case concern trade between serval member states, this requirement is fulfilled.
Multiple choice
MC Question 1
C.
MC Question 2
B. The first statement is correct. The second statement is incorrect, because it falls under state aid.
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