A company that has participated in an anti-competitive agreement, in breach of competition law, may be required to pay a fine. The Commission`s sanctions policy is aimed at punishing and deterring. Fines reflect the seriousness and duration of the infringement. They are calculated as part of a set of guidelines last revised in 2006. Horizontal agreements (i.e. agreements between undertakings operating at the same level of production or trade) may affect competition and are subject to EU competition rules, in particular Article 101 of the Treaty on the Functioning of the European Union. In 2011, the European Commission adopted guidelines for the evaluation of agreements related to cooperation between competitors. These guidelines complement the block exemption regulations for research and development (R&D) agreements and specialisation agreements. Severe forms of restrictions of competition (so-called basic restrictions) such as price cartels, production restrictions, market shares or customer groups are prohibited, regardless of the parties` position in the market. Article 101 of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements between undertakings which may prevent, restrict or distort competition in the EU and affect trade between Member States (anti-competitive agreements). These include, for example, price cartels or market sharing cartels. Anti-competitive agreements are prohibited, whether they are concluded between companies operating at the same level of the supply chain (horizontal agreements) or at different levels (vertical agreements).
All agreements between undertakings, decisions of associations of undertakings and concerted practices of economic undertakings the object of which is to prevent, restrict or significantly distort competition or to prevent, restrict or distort competition are prohibited under Article 5 of the Competition Act. Price-fixing agreements between competitors (collusion), market shares and restrictions on supply are prohibited. These horizontal agreements generally prevent, limit or significantly distort competition. Anti-competitive cooperation leads to higher prices, reduced choice and lower quality of products and services. This is due to the fact that companies collaborate to eliminate the process of competition (rivalry) that would have to exist between them to make sales. Eliminating competition reduces the innovation potential of firms. Agreements therefore directly harm the consumer. And stifle economic growth and hinder progress. Other examples of market sharing are agreements between competing firms, without competing with established customers who are related, or not producing each other`s products or services or expanding into a competitor`s market. The horizontal agreement is an agreement between undertakings operating in the same market and competitors in the market.
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