This thesis aims to examine the controversy of the so-called crisis cartels in the EU. Crisis cartels are one of the most challenging issues for competition practitioners, as it requires a balance between strict antitrust considerations and non-economic objectives in relation to the formation of cartels in which can arise in declining industries under certain rare conditions. In 1984 the Commission exempted the first classic crisis cartel in the Synthetic Fibres case. Since then, a number of cases have been dealt with at EU level and the applicable law within the field is troublesome. The purpose of this thesis is to analyse existing EU case law through a doctrinal legal analysis. The aim is to examine how crisis cartels can be compatible with EU competition law in order to identify the applicable law within the area. Based on microeconomic methods the thesis will examine the economic effects that these types of agreements result in. Furthermore, through a game theoretic analysis the thesis will aim to identify which incentives companies have to create and maintain crisis cartel agreements in times of crisis. Through the doctrinal legal analysis the thesis concludes that all crisis cartels have been covered by the prohibition in TFEU art. 101(1), and their purpose have been to restrict competition by object, which categorizes these agreements as hard-core restrictions. Furthermore, exempted agreements, which have been found to live up to the four cumulative conditions in TFEU art. 101(3), have been object to four supplemental conditions enforced by the Commission. However, existing case law is considered outdated since it does not reflect the transition towards the effect-based approach in the application of the competition rules initiated by the Commission in the late 90’s. The economic analysis concludes that a reduction in capacity will lead to a lower amount of output, which will eventually raise prices, in disadvantage to consumers. In order for a crisis cartel agreement to be welfare-enhancing, the cost reductions obtained by the companies must be larger than the losses incurred by the consumers thus leading to an increase in aggregate welfare. This corresponds with the efficiency view stated by the Kaldor-Hicks criteria. The thesis concludes that it is more difficult to sustain a cartel in times of crisis, as the decline in demand will affect the weighting of future vs. current profits. The integrated analysis concludes that there are conflicting costs and benefits related to the allowance of crisis cartels; the agreements can improve and sustain economic efficiency within a given industry, however consumers will generally be harmed through increased prices. The thesis analyses three alternative solutions to crisis cartels, which are less restrictive, and suitable in solving a number of the same issues under certain conditions. Based on the conflicting benefits and costs related to allowing crisis cartels, the thesis concludes that there is a need for a coherent and transparent application of TFEU art. 101(3) in the assessment of crisis cartel agreements. The thesis presents a judicial policy recommendation encouraging the Commission to issue a notice on the guidance of the application of TFEU art. 101(3) in cases involving crisis cartels. This will ensure an efficient assessment of crisis cartel agreements.
|Educations||MSc in Commercial Law, (Graduate Programme) Final Thesis|
|Number of pages||147|
|Supervisors||Grith Skovgaard Ølykke & Marcus Asplund|