A. Introduction

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Art. 101 para. 3 TFEU sets out an exemption rule, which provides a defence to undertakings against a finding of an infringement of Art. 101 para. 1 TFEU, whereas positive economic effects of restrictive agreements occur (i.e., they lead undertakings concerned to offer cheaper or better products to consumers, compensating the latter for the effects of the restrictions of competition).

The undertakings are required to find arguments and facts to fulfil cumulatively all the specific criteria established by Art. 101 para. 3 TFEU. Nevertheless the authorities are required to define the balance between Art. 101 para. 1 and 3 TFEU, and sometimes this means a detailed refutation of facts and arguments pointed out by the undertakings.

B. The Criteria Established by Art. 101 para. 3 TFEU

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The application of the exception rule is subject to four conditions (two positive and two negative) that the undertakings need to prove on a case-by-case basis:

I. Achievement of benefits

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First of all these agreements are supposed to achieve benefits, in particular to achieve an improvement in the production or distribution of goods or the promotion of technical or economic progress.

Improvements in production and distribution are considered as productive efficiencies, while technical and economic progress are related to dynamic efficiencies. The latter are harder to prove, since the scientific and technological progress is generally not completely predictable.

Only objective benefits can be taken into account: efficiencies (such as cost efficiencies and qualitative efficiencies) are not assessed from the subjective point of view of the parties.Meaning that such efficiencies would only benefit the companies themselves.

The aim of the analysis of individual exemptions is to ascertain what are the objective benefits created by the agreement and their economic importance. Moreover, it is necessary to “verify what is the link between the agreement and the claimed efficiencies and what is the value of these efficiencies”. 

Such efficiencies are often likely in cases in which the parties enter into a joint venturewhere the parties are required to convince the Commission and the ECJ of great productive and dynamic efficiencies by building part of their cars together.

II. Consumers must receive a fair share of the resulting benefits.

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Consumers must obtain benefits from the efficiencies gained; this criterion excludes arguments where these would only benefit the undertaking involved or “overall welfare”.

The notion of consumers is broadly interpreted; it considers not only the final consumers of the product, but also intermediary consumers such as wholesalers, dealers and retailers are included (persons or undertakings).

It is important to underline that the analysis of this criterion does not consider only single consumers but instead is relating to the effects on a group of consumers, within the relevant market.The guidelines to Art. 101 para. 3 TFEU consider it as a “passing on” criterion, since it implies that “pass-on of benefits must at least compensate for any actual o likely impact caused by the restriction of competition found under Article 101 (1) … The net effect of the agreement must at least be neutral from the point of view of those consumers directly or likely effected by the agreement”. The positive effects must be balanced against and compensate for its negative effect on consumers.

This second condition of Art. 101 para. 3 TFEU incorporates a type of proportionality, since the greater the restriction of competition found under Art. 101 para. 1 TFEU, the greater must be the efficiencies and the pass on the consumers.

III. The restrictions must be indispensable to the attainment of these objectives

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According to this criterion any benefits must only be attainable using restrictions, and not by means of less invasive or restrictive means to achieve the efficiency goals.

Thus, the restrictive agreement as such must be reasonably necessary in order to achieve the efficiencies.

In addiction, the individual restrictions of competition that flow from the agreement must also be reasonably necessary for the attainment of the efficiencies.

IV. The agreement must not afford the parties the possibility of eliminating competition in respect of a substantial part of the products in question

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The agreement may not eliminate long-term competitive forces in order to achieve short-term efficiencies (in this case it is necessary to use behavioural, structural and market factors to try to establish the effect of the agreement on the market and the long-term intensity of competition.

According to the guidelines mentioned above, this condition “recognises the fact that rivalry between undertakings is an essential driver of economic efficiency, including dynamic efficiencies in the shape of innovation… the ultimate aim is to protect the competitive process. When competition is eliminated, the competitive process is brought to an end and short-term efficiency gains are outweighed by longer-term losses”. 

C. CONCLUSION

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If these conditions laid down in Art. 101 para. 3 TFEU are fullfilled, the undertakings could benefit from an individual exemption; consequently their agreements/decisions/concerted practices are compatible with the internal market .

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