Prohibited agreements are the contractual relations mentioned in the first paragraph of Article 101, of the Treaty on the functioning of the EU (ex Article 81 TEC) and are not exempted by the Commission on the basis of the third paragraph of the same Article [see section 15.3]. We shall not attempt, here, to describe all the forms of horizontal agreements which are prohibited by the rules of competition of the Treaties. Each case differs depending on the product concerned, the market involved and the imagination of the executives of the participant undertakings. We shall confine ourselves to a few characteristic cases of agreements incompatible with the common market, as emerging from Commission decisions. The Commission judges the advantages and disadvantages of an agreement or category of agreements not on the basis of purely legal criteria, but also using the criterion of the general interest of the producers and consumers in a sector. In addition, it applies the "de minimis" rule, discussed above, to agreements that infringe the rules of competition but the economic impact of which is insignificant.
The sharing of markets is particularly restrictive of competition and at variance with the objectives of the common market, as agreements based on the principle of reciprocal respect of national markets for the benefit of the participants established there have the effect of obstructing intra-Community trade in the products concerned. Through the system of fixing supply quotas on the basis of the total sales of members of the agreement, those members waive the freedom to apply an independent sales policy, but have, on the other hand, the possibility of applying a prices policy shielded from the competition of their partners. The following are celebrated cases of penalised market-sharing agreements: the case of the Community quinine producers, who had decided amongst themselves, by gentleman's agreements, on price regulation and quotas covering all their sales on the internal market and abroad [Decision 69/240]; and the case of the major sugar undertakings, which controlled intra-Community trade in sugar for human consumption [Decision 73/109]. Other important cases of prohibited and penalised market sharing agreements are:,that concluded under the aegis of Cembureau, the European Cement Federation covering 9 associations of undertakings and 33 European cement producers [Decision 94/815]; that of the Japanese video games maker Nintendo and seven of its official European distributors [Decision 2003/675]; the cartel of the plasterboard producers [Decision 2005/471], and the minimum fees determined by the Belgian Architects Association [Decision 2005/8].
Agreements on the fixing of prices or of other conditions of transactions seriously limit competition, because they prevent purchasers from benefiting from the competitive behaviour that producers would have shown had the agreement not existed. As they are coupled with reciprocal respect for national markets, they are also likely to have an adverse effect on intra-Community trade. The Commission has therefore prohibited: concerted practices for the purpose of the application by the participating undertakings, on the same dates and in respect of the same categories of product (colorants), identical rates of price increases Decision 69/243]; horizontal price fixing agreements and horizontal exclusive dealing agreements [Decision 95/551]; the publishing by trade associations of tariff schedules or recommended charges without regard to any differences in firms’ cost structures [Decision 96/438]; and concerted methods for calculating a price supplement, as was the case of a price cartel in the stainless steel sector [Decision 98/247]. It should be noted that many cases of prohibited cartels combine market sharing and fixing of prices, notably: the one concerning the world market for graphite electrodes [Decision 2002/271], the cartel of industrial tube producers [Decision 2004/421], and the cartel of the main producers of copper plumbing tubes [Decision 2006/485].
Restrictions on access to the market by new entrants are also prohibited. Access to the market can be impeded where a large number of retailers on this market are tied by an obligation to sell only the products of the manufacturer with whom they have a contract or vertical arrangements having a similar exclusionary effect on third parties. This is why, the Commission condemned the exclusivity conditions imposed by Unilever as part of its terms for supplying freezer cabinets to its Irish retailers [Decision 98/531]. In other cases, new competitors can be prevented from entering the market through a horizontal agreement or concerted practice, as in the aforementioned case of the Dutch crane-hire market [Decision 95/551].
The most complicated cases are those of exclusive distribution agreements, which are covered by a category exemption, but not where they provide for absolute territorial protection which prevents parallel imports. This is the case of agreements, which stand in the way of the distributor re-exporting the products in question to other Member States or of such products being imported from other Member States in the concessionaire's area and being distributed there by persons other than the concessionaire. Commission policy on the matter was clearly set out in its decision of 23 September 1964 in the "Grundig-Consten" case [Decision 64/566], essentially upheld by the Court of Justice in its judgment of 13 July 1966 [Joined cases 56 and 58/64]. The Commission continues to fight against distribution systems which impede parallel trade, such as that of Volkswagen, which prohibited its Italian dealers from selling Volkswagen and Audi cars to foreign buyers, thereby restricting intra-Community trade [Decision 98/273] or DaimlerChrysler, which instructed the members of its German distribution network for Mercedes passenger cars not to sell cars outside their respective territories and to oblige foreign consumers to pay a deposit of 15% to DaimlerChrysler when ordering a car in Germany [Decision 2003/792].
Isolation of a market within the Community can also occur, without exclusive business relations being agreed upon as in the previous case, through agreements concluded between producers from a Member State in order to grant habitual customers rebates whose levels are fixed collectively on the basis of total purchases from those producers during the reference period. This was the case of the agreement of German manufacturers of ceramic tiles [Decision 71/23]. The aggregation of the discount bases induced customers not to consider offers, even if more favourable, from producers in the other Member States, so as to group their purchases with producers participating in the agreement and thus secure the highest possible levels of rebate.
Joint selling is, as a general rule, permitted by the Commission in the context of association agreements, as referred to above. The same is not true, however, of joint sales agreements through which the participating undertakings share amongst themselves, in accordance with a specific scale, the total quantity of products on offer through a sales point at uniform prices and on uniform sales terms. The three factors together - the action of the joint body, the apportionment of supply quotas and price-fixing - prevent any competition between the participants on the markets concerned and deprive purchasers of any choice between different offers. For that reason, the Commission penalised the three main French fertiliser producers, the purpose of whose cooperation was to ensure the distribution of their complex fertilisers in Germany solely through the intermediary of a joint commercial company called "Floral" [Decision 80/182].
Joint purchasing agreements may also result in a restriction of competition where the large purchasing capacity of the participating undertakings enables them to abuse their strength vis-à-vis the suppliers. That was the case with the wholesalers participating in the Dutch cooperative VBA, the world's largest flower auction, who had undertaken not to market any products other than those supplied through the VBA [Decision 88/491]. On the other hand, the Commission authorised the Eurovision system of joint purchasing of broadcasting rights for international sporting events. Although the system restricts competition, because of the combined purchasing power enjoyed by the European Broadcasting Union, the Commission accepted it, because it contributes to the development of a genuine European broadcasting market and facilitates cross-border broadcasting, particularly important for the members of the EBU from smaller countries [Decision 93/403].
There are, of course, several other types of unauthorised horizontal agreements, such as those which fix discriminatory conditions in transactions with third parties competing with each party in the agreement, or those aimed at ousting a current competitor from the market or closing it to a potential competitor. Other types of agreements which are normally exempt are liable to come within the scope of Article 81 paragraph 1 (TEC) if they restrict competition and are not covered by the "de minimis" rule, e.g. joint advertising agreements, if they prevent the participants from also promoting their products independently; agreements for the use of a common quality label, if that label may not be used by all manufacturers whose products meet the quality standards in question, and even agreements on the exchange strategy of the participants. In the event of doubt as to the legitimacy of an agreement, undertakings concerned that wish to avoid fines would be well advised to notify the agreement to the Commission and ask for a negative clearance. According to the Court, Article 81 EC must be interpreted as meaning that any individual can rely on the invalidity of an agreement or practice prohibited under that article and, where there is a causal relationship between the latter and the harm suffered, claim compensation for that harm [Joined cases C-295/04 to C-298/04].
The Commission acts cautiously with regard to agreements that it considers incompatible with the Treaty. It tries to gather indisputable evidence of the infringement of Article 81 paragraph 1 (TEC), which can, on occasion, take several years, as nowadays restrictions of competition rarely take the form of written agreements obliging contractors to carry out unlawful acts on pain of penalty. They usually take the form of concerted practices based on "gentlemen's agreements", material evidence of which is difficult to find. The Commission's cautious approach on the matter [see section 15.2.1.] has the disadvantage of being slow, but it adds weight to its decisions which are usually upheld by the Court of Justice in the event of the undertakings charged bringing proceedings before it. Those decisions therefore make clear the Community's policy on major types of prohibited agreements. It should be noted that, according to the Court, actions taken by several undertakings may be the expression of a single complex infringement covered partly by the concept of "agreement between undertakings" and partly by the concept of "concerted practice" both of which are prohibited by Article 81 (TEC) [Cases C-49/92, C-199/92, C-23/92].