In US antitrust law, 1 Sherman Act 1890[1] proscribes every 'contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce.' On literal interpretation, this would render illegal every agreement between two or more undertakings.[2]

To avoid this extreme effect, in applying 1, the US courts evaluated the competitive effect of agreements by reference to the facts peculiar to the business, the history of the competition restraint and the reasons why it was enforced[3] - the so-called 'rule of reason'. The 'rule of reason' turned out to be a major obstacle in the effective enforcement of antitrust law, so the courts developed various 'per se' rules.[4]

'Per se' rules presume the illegality of agreements whose nature and necessary effect are so plainly anti-competitive that they do not need to be subjected to the analysis under the rule of reason to establish their illegality.[5] The present essay will discuss whether there are comparable 'per se' rules in EU competition law by looking at the structure of the relevant provisions (Part 2) and comparing the treatment of similar restrictions in the two jurisdictions (Part 3).

The Structure of Art.101 Treaty on the Functioning of the European Union[6] (TFEU)

Art.101(1) TFEU proscribes 'all agreements between undertakings, decisions by associations of undertakings and concerted practices' whose object or effect is to prevent, restrict or distort competition and which may affect the trade between the EU Member States.

The provision then sets out a number of examples of practices that are specifically prohibited - price fixing,[7] output controls,[8] market allocation,[9] applying dissimilar conditions to similar transactions[10] and tying.[11] Some of these restrictions have been held to be 'per se' illegal by the US courts, such as horizontal price fixing,[12] output reduction and geographical market allocation.[13]

The similarities may suggest that 'per se' rules are enshrined in Art.101(1) TFEU. This may have been the case if it was not for Art.101(3) TFEU. Art.101(3) sets out an exemption from Art.101(1) for agreements, decisions and concerted practices which prevent, restrict or distort competition, but at the same time contribute to the production or distribution of goods or technological or economic progress while benefiting consumers.

Providing that these objectives cannot be achieved by less restrictive means and that it is not possible for the undertakings involved to eliminate competition in respect of a substantial part of the products concerned. Since practices falling within the scope of Art.101(1) TFEU may be exempted by Art.101(3), there is no 'per se' illegality enshrined in the text of Art.101 TFEU.

Restrictions by Object and 'Per se' Restrictions

Art.101(1) TFEU distinguishes between agreements that are restrictive by object and agreements that are restrictive by effect and the two are alternative conditions which trigger the prohibition under Art.101(1).[14] Jones, Sufrin and Dunne[15] have argued that the treatment of restrictions by object in the EU closely resembles the treatment of restrictions subject to 'per se' rules in the US.[16]

The basis of their argument is that while such restrictions are theoretically justifiable under Art.101(3) TFEU, in practice the Commission has blacklisted them in block exemptions or has identified them as hardcore restrictions.[17] Restrictions by object are presumed not to satisfy the conditions of Art.101(3)[18] and the guidance as to when they might satisfy the conditions of Art.101(3) and therefore, escape Art.101(1), is sparse, so undertakings perceive restrictions by object as prohibited or at a minimum, extremely risky to use.[19]

The case law of the Court of Justice of the EU (CJEU) on restrictions by object and in particular Cartes Bancaires,[20] largely confirms that once it is established that a restriction is a restriction by object, it is condemned without an assessment of its effect.

In Cartes Bancaires, the CJEU held that a restriction by object is one that reveals a sufficient degree of harm to competition.[21] Further to this, restrictions revealing a sufficient degree of harm can be regarded by their very nature as harmful to competition and therefore, their actual effects do not need to be examined.[22]

Contrary to Jones, Sufrin and Dunne, Professor Colomo has argued against the treatment of restrictions by object as the EU version of 'per se' restrictions in the US.[23] The reason for this is that the CJEU carries out a context-specific analysis before it categorises a restriction as a restriction by object and therefore, one that by its very nature is considered harmful to competition.[24]

Even in Cartes Bancaires, which is often cited as an example of a case in which the CJEU showed willingness to impose 'per se' rules in EU competition law, the court stressed that to determine that a given restriction is a restriction by object, the content of its provisions, its objectives, economic and legal context, the nature of the goods or services affected, the conditions of functioning and the structure of the relevant market[25] and the intention of the parties[26] must be taken into account. This was further confirmed in Dole.[27]

According to Professor Colomo, the inquiry that the CJEU carries out to determine whether a restriction is one by object is more similar to the rule of reason employed by the US courts to assess the effects of restrictions outside of the scope of 'per se' rules. It is submitted that Professor Colomo's argument is more convincing than that of Jones, Sufrin and Dunne since Jones, Sufrin and Dunne ignore the inquiry that the CJEU carries out to establish that a given restriction is a restriction by object. It is that inquiry that differentiates the EU restrictions by object from the US 'per se' restrictions.

In the EU, the inquiry aims to ascertain what the objective purpose of a restriction is. In contrast, in the US, in the case of restrictions subject to 'per se' rules, the courts aim to establish whether a restriction falls within a previously determined category of 'per se' illegal restrictions. Further to this, the fact that the Commission has identified a restriction as a hardcore restriction does not mean that it is inevitably a restriction by object.[28]

The categorisation of a restriction as a hardcore one means that the restriction is caught by Art.101(1) and that there is a rebuttable presumption of its illegality since it is less likely to satisfy the conditions of Art.101(3). Moreover, even restrictions by object can be justified under Art.101(3).

In contrast, in the US, once a restriction has been categorised as a 'per se' one, there is an irrebuttable presumption of its illegality.[29] Consequently, there is a substantial difference in terms of the categorisations of restrictions in US antitrust law and EU competition law and the type of presumptions that stems for these categorisations.

Conclusion
There is no 'per se' illegality embedded in the text of Art.101 TFEU since Art.101 contains both a prohibition and an exemption from the prohibition. In contrast, 1 Sherman Act 1890 does not envisage an exemption, so there is room for 'per se' illegality in US antitrust law.

Moreover, restrictions by object in EU competition law cannot be equated with 'per se' restrictions in US competition law since in establishing whether a restriction is one by object, the CJEU engages in context-specific inquiry, where the US courts seek to ascertain whether as a matter of fact a restriction fits a pre-determined category of 'per se' restrictions. There is also a different categorisation of restrictions in the two contexts and different types of presumptions that the different categories of restrictions give rise to.

In light of the above, it cannot be said that there is a system of 'per se' illegality in EU competition law that is comparable to the one in place in US antitrust law.

Cases:

• EU Case Law
  Decisions of the CJEU
  Cartes Bancaires v European Commission (Case C-67/13P) [2014] ECLI:EU:C:2014:2204
  Dole Food Company Inc v European Commission (Case C-286/13P) [2015] ECLI:EU:C:2015:184
  Opinions of Advocates-General
  T-Mobile v Nederlandse Mededingingsautoriteit (Case C-8/08) [2009] ECR I-4529, Opinion of AG Kokott
  Pierre Fabre Dermo-Cosmtique v Autorit' de la concurrence (Case C-439/09) [2011] ECLI:EU:C:2011:113, Opinion of AG Mazak
   
• US Case Law
  Chicago Board of Trade v US, 246 US 231 (1918)
  Northern Pacific Ry v United States, 356 US 1 (1958)
  Standard Oil of New Jersey v US, 221 US 1 (1911)
  US v Socony-Vacuum Oil, 310 US 150 (1940)

Table Of Legislation

• EU Legislation
  Treaty on the Functioning of the European Union [2012] OJ C326/47
• US Legislation
  Sherman Act 1890, 15 USC 1-7

Bibliography
Books

• Hovenkamp H, Federal Antitrust Policy: The Law of Competition and its Practice (5th edn, West Academic Publishing, 2016)
• Jones A, Sufrin B and Dunne N, Jones & Sufrin's EU Competition Law: Text, Cases, and Materials (7th edn, OUP, 2019)

Journal Articles

• Black O, 'Per se rules and rules of reason' (1997) 18(3) ECLR 14
• Christiansen A and Kerber W, 'Competition Policy with Optimally Differentiated Rules' (2006) 2(2) JCL&E 215
• Hill L, 'Per se versus Rule of Reason: An Analysis' (1970) 28(2) RevSocEcon 207

Guidance to the Legislation

• European Commission, 'Guidelines on the application of Article 81(3) of the Treaty' [2004] OJ C101/97

Posts in Specialised Law Blogs

• Colomo P, 'Generics vs Actavis: Why the 'by object' and per se categories are different', Chillin' Competition Law Blog (10 April 2020) Accessed 29 October 2021
   
• Vesey C, 'Per se Rules in U.S. and EU Antitrust/Competition Law', New York Law School EU Competition Law Blog Accessed 29 October 2021

End-Notes:

1. Sherman Act 1890, 15 USC 1-7
2. Standard Oil of New Jersey v US, 221 US 1, 16 (1911)
3. Chicago Board of Trade v US, 246 US 231, 239 (1918)
4. O Black, 'Per se rules and rules of reason' (1997) 18(3) ECLR 145, 149;
    A Christiansen and W Kerber, 'Competition Policy with Optimally Differentiated Rules' (2006) 2(2) JCL&E 215, 217
5. H Hovenkamp, Federal Antitrust Policy: The Law of Competition and its Practice (5th edn, West Academic Publishing, 2016) 226;
   Northern Pacific Ry v United States, 356 US 1, 5 (1958)
6. Treaty on the Functioning of the European Union [2012] OJ C326/47
7. ibid Art.101(1)(a).
8. ibid Art.101(1)(b).
9. ibid Art.101(1)(c).
10. ibid Art.101(1)(d)
11. ibid Art.101(1)(e).
12. US v Socony-Vacuum Oil, 310 US 150, 223 (1940)
13. C Vesey, 'Per se Rules in U.S. and EU Antitrust/Competition Law', New York Law School EU Competition Law Blog Accessed 29 October 2021
14. Case C-8/08 T-Mobile v Nederlandse Mededingingsautoriteit [2009] ECR I-4529, Opinion of AG Kokott, para.43
15. A Jones, B Sufrin and N Dunne, Jones & Sufrin's EU Competition Law: Text, Cases, and Materials (7th edn, OUP, 2019)
16. ibid 216.
17. European Commission, 'Guidelines on the application of Article 81(3) of the Treaty' [2004] OJ C101/97, para.23
18. ibid paras.46, 79 and 105.
19. A Jones, B Sufrin and N Dunne, Jones & Sufrin's EU Competition Law, 216-217
20. Case C-67/13P Cartes Bancaires v European Commission [2014] ECLI:EU:C:2014:2204
21. ibid para.57.
22. ibid paras 49-51.
23. P Colomo, 'Generics vs Actavis: Why the 'by object' and per se categories are different', Chillin' Competition Law Blog (10 April 2020) Accessed 29 October 2021
24. ibid.
25. Case C-67/13P Cartes Bancaires, para.53
26. ibid para.54.
27. Case C-286/13P Dole Food Company Inc v European Commission [2015] ECLI:EU:C:2015:184, paras.117-118
28. Case C-439/09 Pierre Fabre Dermo-Cosmtique v Autorit de la concurrence [2011] ECLI:EU:C:2011:113, Opinion of AG Mazak, para.29
29. L Hill, 'Per se versus Rule of Reason: An Analysis' (1970) 28(2) RevSocEcon 207, 208-209

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• Evolution of Competition Law in US and EU
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