Commercial Law and Practice

Introduction.

The aim of European Union is to create a common, single market, in Europe, to allow the free movement of people, services, goods and capital between the Member States. To achieve this goal and to ensure fair treatment to consumers, with the efficient allocation of resources, there are certain competition laws included in the EC Treaty, known as the “Treaty on the Functioning of the European Union” (TFEU). Amongst these competition laws, most important are Articles 101 and 102. In short, Restrictive Agreements are prohibited by Article 101 while 102 prohibit Dominant Position abuse.

Question One

Part A

In our present case Kompact Skooter Ltd (KS) is the designer and manufacturer of rechargeable electric scooters and is targeting adults. KS’s scooters captured 25% market share of the compact scooter market in UK, very quickly. With this success KS made negotiations with a company named FR in France and SP in Spain to buy and resell their scooters in their countries. The terms of negotiation were as below.

1. KS agrees not to sell scooters or appoint any other business in Spain and France for selling scooters.

2. A minimum amount of 20,000 Euros is to be spent yearly by these companies for promoting KS’s scooters but only within Spain or France.

3. The selling price of scooters will be notified to FR and SP and they must sell scooters only at those prices previously notified by KS.

  4. Neither FR nor SP will sell scooters outside France and Spain respectively.

  5. FR and SP will not sell scooters of other manufacturers.

6. After-sale service is provided by FR and SP and they shall buy all spare parts from KS.

 The issue is, whether any of these provisions are in violation of Article 101 of TFEU and the extent to which European Commission Notice of Guidelines on Vertical Restraints, are applicable in this case.

Solution

Article 101 (1)[1] prohibits infringement and for establishing infringement under this...