Price Discrimination Under International Laws

• Pages: 209-286

209

CHAPTER IV

PRICE DISCRIMINATION UNDER

INTERNATIONAL LAWS

Many jurisdictions and countries throughout the world have laws

regulating price discrimination. These laws vary widely with respect to

their specific provisions and the circumstances under which price

discrimination is prohibited or regulated. This chapter provides a brief

overview of the approach to the regulation of price discrimination in

each of the following regions: Europe (including the European Union,

Germany and Sweden); the Middle East and Africa (Israel and South

Africa); Asia (China, India, Japan, South Korea and Indonesia); North

America (Canada and Mexico); and South and Central America (Brazil

and Argentina).

A. Europe

The European Union (EU) is an economic and political partnership

between 27 European countries. The European Commission is one of the

main institutions of the EU and, working with national competition

authorities, directly enforces EU competition rules, Articles 101 and 1021

of the Treaty on the Functioning of the European Union (TFEU).2

1. These provisions were formerly Articles 85 and 86 of the Rome Treaty

signed March 25, 1957, which established the European Economic

Community effective January 1, 1958 among Belgium, France, Italy,

Federal Republic of Germany, Luxembourg, and the Netherlands.

Articles 85 and 86 were included in subsequent treaties relating to the

expanding European Economic Community, subsequently referred to as

the European Community and then the European Union. Effective May

1, 1999, the Amsterdam Treaty, signed October 2, 1997, available at

http://www.europarl.europa.eu/topics/treaty/pdf/amst-en.pdf, resulted in

renumbering Articles 85 and 86 as Articles 81 and 82 of what was then

generally referred to as the Treaty establishing the European Community

(TEC) or the EC Treaty. The Treaty of Lisbon, signed by the 27 EU

member states on December 13, 2007, went into effect on December 1,

2009 and resulted in the renumbering of Articles 81 and 82 of the TEC as

210 Price Discrimination Handbook

All national competition authorities in the EU are empowered to

fully apply the provisions of the TFEU to ensure effective competition.

In addition, national competition authorities administer and enforce the

member states’ own antitrust laws. National courts also may apply the

TFEU to protect the individual rights conferred to citizens by the TFEU.

In addition to the provisions of the TFEU pertaining to joint and

unilateral conduct (Articles 101 and 102), entities operating in the EU

must be mindful of member state laws that address price discrimination.

Member state laws are likely to continue to evolve as more state

governments seek to harmonize their competition laws with those of the

EU. It is beyond the scope of this handbook to address the relevant laws

of all 27 member states, but the laws of Germany and Sweden are

discussed below by way of example.

1. European Union

In contrast to the United States, the EU does not have a separate

statute addressing price discrimination. Articles 101 and 102 of the

TFEU are the general provisions addressing joint and unilateral

anticompetitive conduct. These provisions cover price discrimination

and are loosely equivalent to Sections 1 and 2 of the Sherman Act.

The European Commission (Commission) is charged with

investigating potential violations of Article 101 or 102, either on its own

initiative or in response to a member state’s request.3 Where it finds a

violation, the Commission is responsible for enforcing Articles 101 and

102 by issuing decisions that prohibit the conduct at issue, imposing a

fine, or both.4 Private European citizens also are entitled to bring actions

for damages caused by anticompetitive conduct, but such actions are not

Articles 101 and 102 of the Treaty on the Functioning of the European

Union [2002 O.J. (C 325) 33-184], available at http://eur-

lex.europa.eu/JOHtml.do?uri=OJ:C:2007:306:SOM:EN:HTML. All EU

materials cited in this section are available at the EU’s website,

http://europa.eu.

2. Consolidated Version of the Treaty on the Functioning of the European

Union, 2008 O.J. (C 115/01), available at http://eur-

lex.europa.eu/JOHtml.do?uri=OJ:C:2010:083:SOM;EN;HTML.

3. Id. art. 105.

4. Id.; Commission Regulation 773/2004, 2004 O.J. (L 123) 18, amended by

Commission Regulation 1792/2006, 2006 O.J. (L 362) 1 and Commission

Regulation 622/2008, 2008 O.J. (L 171) 3.

Price Discrimination Under International Laws 211

common as it is left to the individual member states to establish the

procedures for prosecuting such actions.5

a. Price Discrimination under Article 101

Article 101 of the TFEU prohibits agreements that restrict

competition and have an effect on trade between member states,

including agreements that “apply dissimilar conditions to equivalent

transactions with other trading parties, thereby placing them at a

competitive disadvantage.”6 However, Article 101(3) states that Article

101(1) may not apply if the agreement has procompetitive benefits, is not

unduly restrictive and does not have the potential to eliminate

competition for a substantial portion of the relevant market. Certain

regulations regarding this block exemption may limit its effect. For

example, vertical agreements are generally exempt, but not when they fix

minimum resale prices.7 Thus, Article 101’s prohibition on price

discrimination applies to all persons and entities if the practice is the

result of an agreement, but the provision allows procompetitive

justifications to overcome that prohibition in certain circumstances.

b. Price Discrimination under Article 102

Although price discrimination can violate Article 101, it often takes

the form of unilateral conduct and is, therefore, subject to Article 102.

Article 102 of the TFEU prohibits “[a]ny abuse . . . of a dominant

position within the internal market or in a substantial part of it” that may

affect trade between the member states.8 An example of such abuse of a

dominant position is “applying dissimilar conditions to equivalent

transactions with other trading parties, thereby placing them at a

competitive disadvantage.”9 Article 102 is stricter than Article 101 in its

application to price discrimination in that Article 102 has no potential

5. Case C-453/99, Courage Ltd. v. Crehan, 2001 E.C.R. I-06297, ¶ 23 (“the

Court has held that Article 85(1) of the Treaty and Article 86 of the EC

Treaty (now Article 82 EC) produce direct effects in relations between

individuals and create rights for the individuals concerned which the

national courts must safeguard”); Commission White Paper on Damages

Actions for Breach of the EC Antitrust Rules, COM (2008) 165 final (Feb.

4, 2008), at 2.

6. TFEU, 2 008 O.J. (C 115) art. 101(1)(d).

7. Commission Regulation 330/2010, 2010 O.J. (L 102) 1, art. 4(a).

8. TFEU, 2008 O.J. (C 115) art. 102.

9. Id. art. 102(c).