De Minimis Vertical Agreements

In July 2012, the OFT issued a statement of objections alleging that Booking.com BV and Expedia Inc had entered into agreements with Intercontinental Hotels Group plc, which limited the possibility for online travel agencies to reduce the price of hotel rooms. The OFT`s acceptance of the parties` obligations was then annulled by the Competition Appeal Tribunal for procedural indecency. Following the reopening of the investigation in October 2014, the CMA closed it in July 2015, after accepting in April 2015 the Booking.com commitments made by the French, Italian and Swedish competition authorities and announcing Booking.com the abandonment of the price parity rules applicable to online travel agencies throughout Europe. (In August 2015, Expedia also waived its pricing, conditional and parity of availability clauses with hotel partners for a period of five years.) Describe all formal procedures for the notification of agreements that involve vertical restraints to the competent authority responsible for the enforcement of anti-dominant rules. It should also be noted that UK agents may enjoy substantial protection under the Council Directive 1993 when entering into commercial agent contracts. What are the consequences of a breach of anti-cartel rules on the validity or enforceability of a contract with prohibited vertical restraints? The main legal source is Article 101 of the Treaty on the Functioning of the European Union (TFEU). Article 101(1) prohibits agreements between undertakings which affect trade between Member States of the Union and which have as their aim or effect the preventing, restricting or distorting competition within the Union. Article 101(2) TFEU annuls such agreements, unless they fulfil the conditions for exemption provided for in Article 101(3) (i.e. the economic benefits of an agreement outweigh their anti-competitive effects). (5) It should be noted that agreements concluded between small and medium-sized enterprises (SMEs) within the meaning of the Commission Recommendation of 6 May 2003 on the definition of `micro-enterprises`, `small and medium-sized enterprises` or a future Recommendation which will replace them (OJ L 347, 31.12.2003, p. 1). 124, 20.5.2003, p. 36), are also normally not such as to affect trade between Member States.

See in particular point 50 of the Communication on the Effect of Trade. where the other conditions of the vertical block exemption are fulfilled (including the market shares of suppliers and buyers below 30%), provided that the restrictions concern only active sales (i.e. they do not limit passive or unsolicited sales) and that the restrictions concern only sales in areas exclusively allocated to another buyer (or to the supplier itself); these agreements are covered by the port of refuge created by the vertical block exemption. . . .