Article 101 of the Treaty on the Functioning of the European Union

Article 101

1. The following shall be seen as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:
which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
Businesses infringing the provisions of Article 101 are liable to a fine of up to 10% of its worldwide annual turnover by the European Commission. However, Member States usually have their own domestic competition law which they may enforce, provided it is not contrary to EU law. The role of the Commission is the area is quasi-judicial and subject to appeal to the ECJ.
In Courage v. Crehan, the Court ruled that article 101 TFEU has direct horizontal effect and that individuals can invoke article 101 TFEU to claim damages as a result of a breach of said article by another party.

Aims and objectives

Conventional wisdom declares that the aim of domestic competition law is to provide a remedy to litigants whose interests are damaged by the anti-competitive behaviour of others, whereas the EU takes a broader view and has the goal of maintaining transparent markets and a "level playing field". Thus, the main objectives of the EU competition law are to maintain openness and to unify the internal market; to ensure economic efficiency in the marketplace; to ensure the conditions of effective competition and competitiveness; and to protect consumers.
However, some argue that the goals of Article 101 TFEU are unclear. There are two main schools of thought: the predominant view is that only consumer welfare considerations are relevant there. An alternative view is that other Member State and European Union public policy goals should also be considered there.

Undertakings

Article 101 TFEU does not specifically ban cartels, instead declaring as illegal all "agreements, decisions and concerted practices" which are anti-competitive and which distort the single market. The term "undertaking" is a Eurospeak word for any person or firms in an enterprise, and is used to describe those "engaged in an economic activity". The term excludes employees, who are by their "very nature the opposite of the independent exercise of an economic or commercial activity", and public services based on "solidarity" for a "social purpose".

Collusion

Undertakings must then have formed an agreement, developed a "concerted practice", or, within an association, taken a decision. Like US antitrust, this just means all the same thing. According to Advocate General Reischl in Van Landewyck there is no need to distinguish an agreement from a concerted practice, because they are merely convenient labels. Any kind of dealing or contact, or a "meeting of the minds" between parties could potentially be counted as illegal collusion.
This includes both horizontal and vertical agreements, effectively outlawing the operation of cartels within the EU. Article 101 has been construed very widely to include both informal agreements and concerted practices where firms tend to raise or lower prices at the same time without having physically agreed to do so. However, a coincidental increase in prices will not in itself prove a concerted practice, there must also be evidence that the parties involved were aware that their behaviour may prejudice the normal operation of the competition within the common market. This latter subjective requirement of knowledge is not, in principle, necessary in respect of agreements. As far as agreements are concerned the mere anticompetitive effect is sufficient to make it illegal even if the parties were unaware of it or did not intend such effect to take place.

State measures

In exceptional cases, article 101 TFEU can also be applied to government regulation. In Van Eycke v. ASPA, the Court has found that article 101 "require the Member States not to introduce or maintain in force measures, even of a legislative nature, which may render ineffective the competition rules applicable to undertakings". The Court continues, saying that such would be the case "if a Member State were to require or favour the adoption of agreements, decisions or concerted practices contrary to Article 85 or to reinforce their effects, or to deprive its own legislation of its official character by delegating to private traders responsibility for taking decisions affecting the economic sphere".

Trade between Member States

Article 101 covers agreements and anti-competitive practices that might affect "trade between Member States". This provision has been interpreted broadly: for example, several agreements amongst firms with no production in the EU have been considered to affect trade between Member States. In the Webb-Pomerene case, EU law was applied to a US cartel with no production in the EU. The ECJ has also held that "trade between Member States" includes "trade between regions of a Member State", to prevent cartels "carving up" territories for their own benefit.

Exemptions

Exemptions to Article 101 behaviour fall into three categories. First, Article 101 creates an exemption where the practice is beneficial to consumers, e.g., by facilitating technological advances, but does not restrict all competition in the area. In practice very few official exemptions were given by the Commission and a new system for dealing with them is currently under review. Secondly, the Commission has agreed to exempt 'Agreements of minor importance' from Article 101. This exemption applies to small companies, together holding no more than 10% of the relevant market in the case of horizontal agreements and 15% each in the case of vertical agreements. In this situation as with Article 102, market definition is a crucial, but often highly difficult, matter to resolve. Thirdly, the Commission has also introduced a collection of block exemptions for different types of contract and in particular in the case of vertical agreements. These include a list of permitted contract terms, and a list of those banned in these exemptions.