The Gazette 1993

GAZETTE

SEPTEMBER 1993

The Competition Act and

EEC Block Exemptions

Denis Cagney

j by Denis Cagney, Solicitor*

If your client has a restrictive

agreement that comes within the

| terms of an EEC Block Exemption

Regulation, is he protected from our

own Competition Act? Should he

notify the Competition Authority?

The relationship between EEC and

national legislation where these apply

concurrently to a given field of

activity may at first appear a rather

academic concern to the practising

solicitor or his client. Where that field

is competition policy and the activity

comes within a Block Exemption

Regulation (individual exemptions are

a rare enough animal - particularly in

Ireland) the relationship can become a

S very practical concern. In this article I

| propose to outline the key elements in

this relationship and suggest how

I EEC block exemption may, in certain

circumstances, be a useful guide to

practical compliance with our Com-

I petition Act and may even - dare I

say it - reduce the workload of

businesses and their legal advisers.

But beware, not all the greyness

which enshrouds this area will be

dispersed.

Essential Structure of Competition

Rules

The essential structure of the

competition rules is the same in the

Treaty of Rome as in the Act and need

not detain us long:

(i) Anti-competitive agreements or

concerted practices between firms

are prohibited.

(ii) This prohibition can be suspended

where the 'four conditions" are

met:

• resulting economic or technical

benefits

• consumers get a fair share of

these benefits

• restrictions are indispensable

• competition is not eliminated.

(iii) Only the Competition Authority

or, under the Treaty, the

Commission can decide if the

conditions for suspension are met.

If they are met, then the

prohibition will be suspended

either by way of individual

decision on the case or by a

block/category decision. An

individual decision to suspend the

prohibition will only be given if

the arrangement is notified in the

first place.

(iv) Restrictive arrangements can

qualify automatically (i.e. no need

for prior notification) under

Article 85.3 of the Treaty for a

suspension of the prohibition in

Article 85.1 by complying with

the terms of one of the 12 Block

Exemption Regulations issued to

date by the Commission. These

covered a range of well recognised

categories of commercial

behaviour whose restrictive effects

are deemed to be more than offset

by the economic efficiencies they

give rise to. Examples are

exclusive distribution, exclusive

purchasing, franchising, motor

vehicle distribution and servicing,

know-how licensing etc. Under

the Competition Act, the

Competition Authority is

empowered to issue category

licences, the domestic equivalent

of EEC block exemptions. To

date, the Authority has issued one

category licence on motor fuel

supply arrangements and recently

circulated a draft one covering

exclusive distribution agreements,

(v) The Competition Act covers

arrangements whose objects or

effect arise within the State,

whereas Article 85 of the Treaty is

confined to arrangements to the

extent that they affect trade

between Member States.

Before focusing on EEC block

exemptions, it is worthwhile reiterating

that the Irish and EEC rules represent

two separate laws, despite the near

identity in their substantive wordings

and the "analogy with Articles 85 and

86 of the Treaty" cited in the long title

to the Competition Act. The Act, is the

exclusive creation of the Oireachtas

which was under no Community

obligation to enact it. The Oireachtas

chose to follow the Treaty model for

our domestic competition rules.

Precedents under EEC competition law

will obviously be of persuasive value

in interpreting the Act but they will not

in any way fuse the two codes into one

legal order.

Article 85.3 Exemptions and

National Competition Rules - Views

of Commentators

It is interesting to note the hesitancy

among some of the main commentators

in drawing conclusions on this

question. The following excerpts give

the flavour:

"In conclusion, it would appear

that the position as regards the

status and effects of Community

exemptions is undecided as to

whether all, some or none need

necessarily be respected by

national law."

273