Business Law II Recall Questions

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1 - EU History & Brexit 2 - EU Lawmaking & Institutions Lawmaking Addendum: Human Right in the EU EU Institutions (Artt. 13 TEU)3 - Internal Market & Five Freedoms Free Movement of Goods Art. 28 TFEU Free Movement of Services Artt. 56 TFEU Free Movement of Workers / Persons Art. 21 TFEU and 45 TFEU Freedom of Establishment Art. 49 TFEU Free Movement of Capital Artt. 63 TFEU 4 - EU Company Law Areas of EU company law Customs Union and Commercial Policy EU Competition Law Ban of Cartels Art.101 TFEU (Antitrust Law I)Abuse of dominant Market Position Art. 102 TFEU (Antitrust Law II)Merger Control, EU Merger Control Regulation (139/2004) (Ex Ante)Additional: State Aids Art. 107 et seq TFEU 5 - The Euro & Central Bank The Euro Central Bank Art. 123 et seqq TFEU 6 - Common Agricultural Policy & Security Regulations CAP Security Regulations 7 - EU Intellectual Property Law Introduction Patent Law The European and International Patent Trade secret law Other intellectual property rights

1 - EU History & Brexit

What are and where can you find the political aims of the EU?

TEU (Art.3) Treaty of the European Union (Eu Vertrag)

Promote peace, values and well-being

Union shall offer to citizens; Freedom, Security, Justice, Free Movement of persons

Establishment of internal market

Establish economic and monetary union whose currency is the euro

What and when was the first steps towards common european policy?

1949 → Coucil of Europe: cooperation and trading between french and german coal and steel production

1950 → Schuhmann Plan: Common Goal to keep peace and protect against russia.

What was the first treaty signed in 1951? What did it regualte?

Treaty on the european coal and steel community (ECSC)

between BEL; GER; FRA; ITA; LUX; NET

What other two communities followed later that eventually formed the foundation of europeans communities of 3 pillars of unification? What is the name of the treaty manifesting it?

1957 → Treaty of Rome

European economic community (EEC)

European atomic energy community (Euratom)

What effect did the establishment of the customs union in 1968 have?

Shared border controls with unified customes system

What treaty was signed in 1992? What is the EEA and what did it consist of? What was replaced?

Treaty of Maastricht:

European Economic Area (EEA) replacing the european economic community (EEC)

Consisted of european communities (EC) and
European Free Trade Association (EFTA)

What did the schengen agreement allow from 1995 onwards?

Abolishment of mandatory border controls → Free movement of persons

What treaty was singed in 2009? What was the european communities treaty replaced with?

Treaty of Lisbon

Replacing the EC treaty with the Treaty on the Functioning of the EU (TFEU)

What two financial stability machanisms were created between 2010-13 after the euro crisis?

European financial stabilisation mechanism (EFSM) (equity)

common EU instrument providing 60 billion from the EU Budget

accessed by the comission

European Fianncial Stability Facility (EFSF) (debt)

possible to lend up to 440 billion euros from capital markets and provide this money to individual states

investors lend money to the EFSF instead of lending it to the individual states

lends money from the capital markets

follows clear regulations and gurantees refinanciation

⚠️

At the end of 2013 both financial stability measures were replaced with the ESM = European Stability Mechanism (more on that later)

What EU Law provides you with the right to leave the EU?

Art.50:

Any Ms may decide to withdraw from the union in accordance with its own consitutiiona requirements

How did GB violate Art.50 III?

After notification of leaving the EU, there is actually only a two year period to create an agreement with the council → if that period is exceeded an exit without agreement should be done

What are some legal issues for GB?

Probelems with market access of businesses and free movement of persons

EU residents living in UK

End of EU passporting

Future payment obligaitons

annual contribution for access to EEA?

Which of the EU freedoms do not apply to the UK anymore

Freedom of movement of persons

No Free movement of goods

coutry of origin regulation is not valid anymore

custom duties

No more free movement of services and capital

no more freedom of establishment

2 - EU Lawmaking & Institutions

Lawmaking

What law text fall under primary EU Law? What do they cover? How is primary law construed (gebaut)?

TEU = Treaty on the EU → general principles, democracy, EU institutions, cooperation and principles

TFEU = Treaty on the functioning of the EU → Rules on Freedom, instutional powers, responsibilities, Company and Business Rules

What is a supranational organisation? How is it different from a state?

Supranationality (of the EU} concerns the competence of an international organisation ( here the EU) to (1) autonomously enact legal rules binding on it in certain areas which have been (2) conferred upon it

A state is a community of persons in its political organization, which requires a state territory, a state people and a state power

What are two other international organisations?

ASEAN - Associatino of Southeast Asia Nations

also intergovernmental orgnization

makes decision by consensus

African Union:

also 55 member states that make up the countires of the african continent

What is required for supranational actions of the EU? What principles limits it?

Suprationality is only given if aims of actions in question cannot be achieved adequately on MS level (Principle of subsidary).

Also those actions can be handled more efficienly on supranational level

What does the principle of conferral say?

General framework of the EU as supranational organization:

= EU may only act within the limits of competences, the EU Member States have conferred upon it by the founding treaties

What two principles define the competences of the EU as supranational organisation?

Principle of subsidary → Art. 5 TEU

EU does not take action (except in areas where it has exclusive competence), Unless it is more effective than any action that could be taken on the national, regional or local level

Principle of proportionality → Art. 5 TEU

Any action taken by EU should no go beyond what is necessary to achieve the objectives laid down in the Treaties

Legitimate aim, suitable means, necessity

⚠️

This is to test in the last step of the 5 Freedom Schemes.

What does the principle (duty) of sincere cooperation regulate? Art. 4 TEU?

Mutual legal obligation between EU and MS to assist in carrying out the tasks which flow from the treaties

⇒ Relationship between EU as supranational organization and the underlying member states

What is the application power of Primary EU Law?

Overruling of National Law, thus for any case to solve direct applicablity of EU law is generally given for primary law

What 4 things are considered as secondary EU law? In which provisions are they laid out?

Regulations (Art. 228 II)→ Also directly applicable and binding like primary laws. Also derogates national laws (overruling)

Directives (288 III) → Obligations for MS to implement / transfer into national law within certain period → Can be binding, direct applicability is to test depending on certain requirements

Decisions / Resolutions (288 IV) → Not necessarly binding for specific person,

Unwritten EU law principles

e.g fundamental right, rule of law, effet utiile

What happens if directives are not transposed/ or transposed too late?

Fines

Cintizens may claim damages from their MS, if they experience disadvantages due to lack of transposition (Franchovich-Judgement) compared to nationals of other states

What is race to the bottom?

Negative spiral of lowering EU law standarts

domestic policies are in competition with EU Law, companies choose to move to places where law requirements are the lowest

What is minimum harmonisation? What is maximum harmonisation?

Usually for EU directives

Min harmonazation:

Directives needs to be implemented into the national law of the specified MS

To ensure harmonized implementation and tackle race to the bottom, directives are set out with minimum law requirements for all the states
Stricter rules are possible, however the minimum requirement needs to be met for all states.

Max harmonization

directive implementation should not exceed the terms when transposing them into national lwa

What is the difference between a direct effect of EU law and an indirect Effect of EU law?

Direct Effect: European provisions create direct legal consequences (claims, invalidity of actions, legal transactions)

EU citizens can refer to and rely directly on treaty provisions and invoke those in front of their national courts

indirect Effect: National rules are interpreted while keeping EU standarts and rules in mind (interpretation in conformity with union law)

In case of a collision between EU and national law, what requirements needs to be met for direct applicability of EU law (supermarcy over national law? E.g for a company to refer to free movement of goods over some kind of national law?

The EU standart becomes the relevant norm if the:

obligation imposed on the MS in the (primary law, regulation, or directive) is:

sufficiently clear and precise
unconditional (not-temporal) and
does not leave any margin of discretion in it's implementation (Beurteilungsspielraum)

⚠️

If the case concerns one of the 5 freedoms, the above conditions are generally acknowledged. You should rather test them more extensively for secondary law and here especially directives.

What does "primacy of application" mean?

In case of a collsion of natinoal and directly applicable (test conditions before) EU law, applicability of national is excluded

merly on domestic situations national legal norm remains applicable.

What is the principle of non-discrimination? What are the two (three) way in which it can occur?

The principle of non-discrimination prohibits discrimnation (of people, companies, ...) on grounds of nationality

Open discrimination → Measures by states with explicit reference to certain nationalities (rare cases)

Hidden discrimination → Measures by states that are seemingly neutral, but generally and factually only affect non-national of that member sates.

Reverse Discrimination → Measure putting own national at a disadvantage compared to non-nationals

How does ECJ define supremacy of EU Law over national law (constitutional and non constitutional)?

= absolute, underconditional supremancy of PRIMARY AND SECONDARY EU law over ANY law, including constitutinoal law

Argumentation based on:

Principle of conferral

Maintenance of EU law order

Principle of subsidary

How does the german BverfG (FCC) define supremacy?

FCC does not aknolwedge absolute supremancy over ANY law

It sets out three limits to absolute supremacy that could justify inadmissability of claims based on EU secondary Law

What are the three limits to absolute supremacy? How does the BverfG justify jurisdiction against EU secondary Law? Which ones apply to secondary EU law? Which ones to primary EU law?

Absolute supremacy of EU law is justified to be (at least) tested, if:

Protection of fundamental rights of citizens→ Artt. 1-19 GG (Solange II - Judgement)

Solange II: As long as EU secondary law ensures effective protection of fundamental rights similar to the protection scope of german fundamental rights, the FCC DOES NOT exercise jurisdiction

Solange I:Only if EU were to deprive EU citizens fundamental rights entirely or severely compromise them permanently in secondary legislation, FCC acts

Result: Consitutional claims based on that specific secondary EU Law against breaches of german national are inadmissable (unzulässig)

Possible ultra-vires acts of the EU in regards of secondary law

EU organs may only act within the limits of competencies that have been conferred to them (principle of conferral) and the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties (principle of proportionality)

Further the union only had rights and powers that MS conferred upon the institution but cannot grant new competences to itself → any areas not conferred remain with the member states (principle of subsidary)

FCC exercises jursidcation to review EU actions that potentially exceed limits

Constitutional Identity is in question

EU primary law must respect the inviolable core content of the constitutional identity of the national basic law

In germany Art. 23 in conjuction with Article 79 GG

Addendum: Human Right in the EU

What are the values of the EU preseneted in Art. 2 TEU?

Respecting human dignity, freedom, democracy, rule of law and preserving human rights

How does the EU externally promote human rights?

EU contributes to abolishing poverty and safeguarding right by

strict observance and development of international law, i.e especially the united national human rights charta

What is the EU Charter of Fundamental Freedom? What legal power does it have?

= Source of EU human rights law

Binding as primary law from 2009 onwards

⇒ directly applicable for all EU institutions, bodies and member states

What is the European Convention for the Protection of Human Rights and Fundamental Freedoms?

international treaty which came into place 1953 and regulates classical freedoms (poverty, right to live, assembly, vote, ...)

regualted and enforced by the european court of human rights in strassbourg.

EU Institutions (Artt. 13 TEU)

What is the role and status of the European Council? What are the participants?

Role → Discussion of greater political issues and major policies in EU

Heads of member states meet twice a year together with thte president of the comission

What is the role and status of the council of the european union? What is the voting structure?

primary legislative body of the EU who works together with the parliment

formed by minisiters of the member states

legislative decisions are made with

qualified majority

55% of member states, representing at least 65% of the EU population, vote in favour

unanimous vote (Einstimmig)

What is the role and status of the parliament? What are participants? What is degressive proportionality?

second legislative body of the EU, with three main competences:

Budget power → with council approves or reject budget suggestion from comission

Legislative power → Approves or rejects legislative suggestions from comission

Supervision power → supervises and approves comission in general

751 members with 3-96 per member state depending on size

however degressive proportionality reduces the voting power of each seat with increasing size → ensures level voting for all states

What is the role and status of the comission? Who participates? What does guardian of the treaties mean?

Executive branch of EU with day to day busienss

initiates and suggests legislation to parliment and council

guardian of the treaties → supervision of MS to fulfill obligations of directives and regulations

From each MS there is one comissioner

What is the role and status of the ECJ?

judicative branch of the EU → controls validity of EU law

ensures supranationality of EU lwa

handles proceedings filed from EU institutions against member states or between member states

Read Art. 263 TFEU carefully. What does this provision provide for? Name the organs involved and the actions the annulment action applies to. (ECJ)

Goal: ECJ is competent to hear actions for annulment brought by a Member State, the European Parliament, the Council or the Commission "on grounds of lack of competence, infringement of an essential procedural requirement, infringement of the Treaties or [...] misuse of powers" (Art. 263 (2) TFEU).

Acts or legal acts of the Community institutions can be reviewed in this context for their compatibility with primary Community law and declared null and void, i.e. annulled

Competence: Within the framework of the action for annulment, the competence of the institutions, the formal requirements, possible infringements of the Treaty and misuse of powers are examined in detail.

also applies to recommendations and opinions, insofar as these have legal effect vis-àvis third parties

What is and what are the goals of the ECB?

Central bank managing a capital stock with is paid up by the euro zone central banks

goals

price stability
define and implement monetary policy → inflation rates at 2%
issue and print bank notes

What is the role of european court of auditors?

auditors supervising eu finance and financal mangement

Who is the High Representative?

one of the vice preseidents from comision

foreign representation

3 - Internal Market & Five Freedoms

What is (what are the goals of) a common market? What are 4 things ensure it?

Goal:

Highly competitive social market with full employment

no internal fronties, and guarantee of five freedoms

customs union with unitary duties vis a vis third countires

economic AND monetary union

What ensures it?

Fundamental freedoms

Economic Policy (Art.3, 119 TFEU)

Competition Policy (Art. 101 TFEU)

Border Control (Art. 67 TFEU)

Free Movement of Goods Art. 28 TFEU

What is the definition of a good?

All physical products that have a monetary value and can be the subject of commercial transactions

I. Good originating from a member state

II. Goods from third countries free in circulaiton

What are the three ways in which the free movement of goods can be infringed?

Measured having equivalant effect are specified in dassonville and their scope is reduced by the Keck formula

Can actions infringing the free movement of goods be justified?

Summarise the main findings of and consequences of Dassonville

Summarise the main findings and consequences of Keck

Summarise the main findings and consequences of Cassis-de Dijon

What is the principle of mutual recognition / country of origin? What might it cause?

Good that comply with legal manufacturing rules of one MS, generally also comply with those of any other MS

Thus those goods are marketable without major restrictions in any other MS

Might cause a race to the bottom in terms of producing in those MS where regulaitons are the lowest to save costs

Free Movement of Services Artt. 56 TFEU

What is the definition of a service?

“any independent service which is normally provided for remuneration and which does not merely constitute a service ancillary to the pursuit of an activity which is covered by the scope of another fundamental freedom

How can freedom to provide services be infringed?

Prohibition of discriminatory measures → unqueal treatment of non-nationals and their services compared to national services

Prohibition of other restrictions (non-discriminative)

Gebhardt / Dassonville

all actions enacted by Member States which are hindering directly or indirectly, actually or potentially, the freedom to provide services

Broad scope limited by Gebhard / Keck:

Mere modalities regarding the specific provision/receipt of a service are excluded according to the Keck judgement in conjunction with the Gebhard judgement

What rights do freedom of service entitle citizens have?

Right to temporarily exercise services

In another member state than the state of residence (active freedom)

where only the service crosses the border

where the recipient needs to cross the border to the country of residence of the service provider

so both the service provider and recipient are granted the freedom of services, in particular crossing borders without changing place of permanent residence

What is the freedom of services a catch-all provision?

It covers all those services which do not fall under

freedom of establishment

free movement of capital

free movement of goods

What separates freedom of services from freedom of persons and workers?

Like the freedom of establishment, freedom to provide services refers to activities carried out for remuneration, free of instructions and on one's own responsibility.

Works are provide a service against renummeration, HOWEVER

they are bound by a contract and
are dependend on an employer

What kind of services are not protected by the freedom?

According to Art.62 and 51 TFEU, the freedom to provide services does not apply to activities which, in a Member State, are linked to the exercise of official authority

Can measures infringing the free movement of services be justified?

Written justification Art.62 TFEU

⚠️

Different here: Reference to Art. 52 TFEU and it's ordre public reservation

Unwritten justification

Free Movement of Workers / Persons Art. 21 TFEU and 45 TFEU

What is the definition of a worker?

A citizen of the Union is an employee if he/she performs services for another person in return for remuneration for a certain period of time

Essential is thus, the dependence on an employer and being bound by instructions (lack of independence

In what ways can the free movement of workers be infringed?

Direct/indirect discrimination

Restricting right to work in another MS without a work permission and move there

Restricting the right to reside in another MS for the purpose of Employment

Restrict residence in another MS after employment has ended.

Restricting ascess to employment, force stricter working conditions

Other restrictions pursuant to the Dassonville Formula in conjunction with the Gebhard formula

How might third country citizens also benefit from the free movement of workers?

There are transitional arrangements for Union citizens from the Eastern European Member State = family members of a Union citizen who are not Union citizens themselves have their own rights of entry and residence through the free movement of workers of their family member with Union citizenship

What does the Gebhard formula say?

national measures which hinder or make less attractive the exercise of the fundamental freedoms guaranteed by the Treaty must fulfil four conditions. If those conditions are not met, an infringement of a fundamental freedom is generally given.

The conditions are:

Measure applied non-discriminatory

Measure justified by public interest

Measure is suitable for attaining the objective pursued

Measures does not go beyond what is necessary

Can actions infringing the free movement of workers be justified?

Written grounds Art. 45 III

ordre public reservation

Unwritten Grounds

= Cassis de Dijon in conjunction with Gebhard Formula

What kind of work is not protected?

any work or actions directly and specifically related to exercises of official authority

Freedom of Establishment Art. 49 TFEU

What is the definition of establishment? (material protection)

According to Art. 49 I 1

= The actual pursuit of an economic activity through a fixed infrastructure with its main activity in the state of destination for an indefinite period

Primary Establishment

Secondary Establishment → agencies, branches, subsidaries

Who is protected by the freedom of establishment? (personal protection)

EU citizens

Legal entities

Existing company or firm (Art. 54 II TFEU)

Formed in accordance with the law of a Member State (Art. 54 I TFEU)

A seat in the EU (Art. 54 I TFEU)

How can the freedom of establishment be infringed?

E.g restricting the ability to establish a new business based on some criteria

Can actions infringeing the freedom of establishment be justified?

Written Art.52

ordre public

Unwritten

Cassis Gebhardt

What is the difference between real seat theory and incorporation theory? What do they try to solve?

if a company is relocating it's central administration from one state to another it is questionable what law is governing the companies internal matters

Real seat theory: The law of the state in which the central adiminstration was moved into

Incorporation: The law of the state in which the company was established

Summarize and state the main effects of the case Überseering

Case:

Dutch company überseering got shares aquired by two germany nationals and thus decided to move central adim to germany → real seat theory required german law to apply

germany restricted legal proceding, as company was not established in germany

Ruling:

A company incorporated in member state A and deemed (under the laws of member state B) to have moved its central administration to member state B cannot be denied legal capacity by member state B

Summarize and state the main effect of the case Daily Mail

Case:

UK holding Daily Mail wanted to move central admin to netherlands in order to receive tax benefits, but wanted to remain legal status of UK company

British minstry refused consent

Ruling:

Member state A can prevent a company from moving its central administration to member state B.

The freedom of establishment does not grant a company incorporated under the laws of and keeping its registered seat in member state A the right to transfer its central administration to member state B

Free Movement of Capital Artt. 63 TFEU

What is the definition for a movement of Capital or movement of payment?

What can be an infringement of the free movement of capital or payment?

= No specific infringement but generally: (especially gebhardt)

Can actions infringing the free movement of capital/payment be justified?

Written justification Art.65 TFEU

Tax law

prevent infringements of national law and regualtions

purposees of administrative or statistical information

"ordre-public reservation"

if justifications grounds related to freedom of establishment apply

HOWEVER, measure needs to be non-discriminatory

Unwritten justificaiton

= Obstacles to the internal market shall be accepted to the extent such provisions are necessary to satisfy mandatory requirements, in particular: effective fiscal control, public health, fair trading, public interest, consumer protection, fundamental rights of third parties

4 - EU Company Law

Areas of EU company law

What is the goal of EU company law?

harmonization of member states company laws to

promote freedom of establishment and level playing field
establish minimum requirements for e.g setting up branches, financial reporting, disclose, reorganization ...

What is the purpose and requirement of an European econmic interest grouping?

What is the regulatory mix behind the societas europeae? What is regulated by EU law, what by e.g german national law?

How do you create an SE? What are the requirements to set it up?

Create by:

merging existing publicly listed companies

form a holding promoted by plcs

forming subsidaries

convert a plc which had a subsidary in another member state for 2 years to a SE

Requirements:

Two member states

capital of 120.000€

Where does employee participation in a SE work?

participation at board level in supervisoin → not involved in management

What is the principle of no absolute participation?

applies when negotiating employee participation in a newly formed SE

Concerning also the board structure (one or two boards)

pre-existing employee rights shall still be the same after formation of SE

if no agreement is reached standart national employee participation rules apply

Exception: SE via merger → possibility to waive national employee participaition solution → if so, their negotiations NEED to be successfull → otherwise establishment not possible

What is the societas privata europea and the societas unius personae?

Customs Union and Commercial Policy

What is the EFTA? What does it grant?

Free trade association

No duty on imports from MS, but each MS is competent to charge different duties on imports from non-MS

What characterises a customs union?

trade policy centralized at union not each MS

unified duties on imports from non-MS

What is the goal of a common market?

The 5 freedoms

What characterises an economic union?

common market with common economic policy

What does the EU common commercial policy say?

competence to negotiate foreign trade relations lies within EU, not each MS

What is the schengen agreement?

= no fixed border controls between MS, but possibility to reintroduce for up to 30 days in case of serious threat to public policy

What is the doublin agreement?

EU Competition Law

Why is there competition Law on EU level?

ensure effective comeptition to achive internal market

fundamental freedoms can only be safeguarded if they are accompanied by competition rules

harmonization of competition law provides equal playing field

What are the two steps of defining the correct market?

Identify the products included with the SNIPP test

imagine product and here small but significant, non-transitory increase in price

Question: "Would customers switch to another falvor or type of the product?"

If yes, then this other type is also included in the market
If no, the test is complete and the product palette for the market is defined

Identify the relevant geographical and time-related market

worldwide and subject to worldwide regulations?

national and subject natinoal regulations?

regional and subject to regional laws?

Does the market consist of a temporal element?

What role do market shares play in the application of competition law rules?

determine the impact on the defined maket of the undertaking

What is the difference between ex ante and ex post?

Ban of Cartels Art.101 TFEU (Antitrust Law I)

What are gentlemen agreements?

informal agreemens between different parties which are often non-written

attendence at the meeting where agreement is made is sufficient for an anti-competitive conduct under 101 TFEU

How might a company infringe 101 TFEU?

What are block exemption regulations?

Regulations specifically adressing certain industries, companies, or types of agreements (e.g vertical agreements)

provide reasons for exempting the prohibition of agreements that have been made between undertakings → allow those agreements → to test in last step of antitrust law case

hardcore restrictions on competition cannot be exempted by BER's → the whole agreements remains void

What is an undertaking according to the ECJ?

any entity engaged in an economic activity, regardless of its legal status and the way in which it is financed

What is an effects docrine?

According to this doctrine, domestic competition laws are applicable to foreign firms — but also to domestic firms located outside the State's territory, when their behaviour or transactions produce an 'effect' within the domestic territory.

What are vertical and horizontal agreements?

What are concerted practises?

catch-all practice, coordination between undertakings without formal agreement (so called practical cooperation)

What are associations of undertakings?

association of undertakings means any company, partnership, association, society, institution or body of persons having legal personality or not, which represents the trade interests of autonomous undertakings and takes decisions or enters into contracts for the promotion of those interests;

What are hard-core restrictions?

What are restrictions on competition?

is any restriction of one of the free competition • e.g. price, product range, product features, terms and conditions, research, sales, marketing, cooperation with other market participants

Benchmark: effect of agreement

What is distortion of competition?

market participant deliberately favours other market participants or hinders such in a targeted manner

What is a restriction by object?

Object of restriction given, when express goal of a certain agreement

What is a restriction by effect?

Restriction of competition effected where it is a causal consequence of agreement

What is the de-minimis-rule?

agreements will not appreciably restrict competition if the aggregate market share of the parties to the agreement does not exceed 10%, where the agreement is made between actual or potential competitors.

What is an appreciable effect?

If the market share is larger than 10%

What are the requirements for the legal expemption of Art. 101 III to apply

What are the requirements for a block exemption to apply?

What are possible sactions for infringements of competition law?

Abuse of dominant Market Position Art. 102 TFEU (Antitrust Law II)

How might a company infringe 102 TFEU?

“Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.”

What are the two steps of testing for an abuse of dominant market position?

Definition of the relevant market → Recall this question

Determine if there is market dominance

= “A position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers”

hereby market share plays a big role → in DE dominance is assumed with market share above 40%

What are consequences abusing dominant market position?

Merger Control, EU Merger Control Regulation (139/2004) (Ex Ante)

What is the difference between mere cooperation and a merger between undertakings?

What is the concept of merger control?

Controlling a market structure not a certain behavior

not only behavior but also mergers and aquisitions can affect competition

mergers can lead to monopolisation and thus significant lessening or even elimination of competition

What are the three types of mergers?

What are the two necessary questions to ask at the beginning of a merger?

Is tere a merger control filing obligation in general?

Where does the transaction have to be notified?

What are the two conditions for a merger control filing oblugation in the EU?

Concentration (Art. 3 ECMR)

A concentration shall be deemed to arise where a change of control on a lasting basis results from:

the merger of two or more previously independent undertakings or parts of undertakings

the acquisition by one or more persons already controlling at least one undertaking by any means of acquisition (shares, purchase, ...)

Turnover thresholds (Art.1 ECMR)

What are "stand still obligation" in merger control?

Merger of undertakings that fulfils conditions of Community-wide relevance, cannot be implemented until it has been declared compatible with common market

Undertakings have to wait out Commission’s decision before they implement their planned transaction

When and if so how may the european comission refer merger cases to the Member states?

If the merger significantly affect competition in a market within a MS

When and if so how may multiple MS refer merger cases to the comission?

One or more Member States may request the Commission to examine any concentration as defined in Article 3 that does not have a Community dimension within the meaning of Article 1 but affects trade between Member States and threatens to significantly affect competition within the territory of the Member State (Art. 22 I ECMR)

example whatapp / facebook → whatsapp did not meet turnover threshold community wide, but in cyprus, spain and UK

After the conditions for a merger filing obligation are met, what test is applied to determine whether the merger will be cleared?

SEIC-test: Test for significant impediment to effective competition (regarding a merger)

The current pre-transaction competitive situation is being compared with the future post-transaction situation

Additional: State Aids Art. 107 et seq TFEU

What is a state aid? What are forms?

What is the problem with state aids? Are they allowed?

In an internal market state aids provide competitive advantages for receiving undertakings over competitiors.

⇒ They are generally prohibited by 107 I TFEU

State aids that affect trade between Member States and that threaten to distort competition by favouring certain undertakings are incompatible with the internal market

Where do you find justification ground for state aids?

Art. 107 II, III TFEU → There is a catalogue of things that could justify state aids

Who is in charge of reviewing aid systems of Member States? Refer to the relevant legal provision

5 - The Euro & Central Bank

The Euro

What where the three stages to remedy insufficiencies in economic convergence?

Closer econmic integration & membership of all EC members in exchange rate mechanims from 1990

European bank system of central banks with more coordination form 1994

Lock of currency exchange rates leading to one single currecy with different denominaitions from 1999

What are the theoretical effects of a single currency for business?

Possibility of influencing decision making where to set up business

Price stability might be enhanced

Transaction costs between states may be reduced

may increase ability to pin down costs when quoting

What are some of the 5 "Maastricht Criteria?" Are states complying with them?

Eurozone members are obliged to limit their deficit spending and debt levels

Government budget deficit max 3% in relation to national GDP → general max debt ratio not more than 60% of GDP

Inflation rate not more than 1,5pt above rate of 3 eurozone members with lowest inflation rate

Form 1990s onwards stats started violating criteria, however comission never took action against it

Central Bank Art. 123 et seqq TFEU

What are objectives and tasks of the central bank?

How does the "no bail-out" clause apply to the central bank?

ECB is not allowed to directly intervene in state finances

any liability of EU (here ECB) for member states is exluceded.

monetary state financing is not allowed Art. 123 TFEU

What was the classical approach of monetary policy in times of Crisis?

ECB lowered interest rates to zero to avoide credit crunch → foster money lending and thus economic growth

What is quantitative easing? What is full strerilization?

New approach in times of crisis when interest rates are already at 0

ECB buys bonds from commercial banks in member states and thus increases prices for them → limit of 60 million per month and not more than 1/3 of one single states debt.

money is created, loans become cheaper which eventually boost consumption

full sterilization is a promise by the ECB to eventually fully absorb the money pumped in.

What are outright moneatary transactions? What is the ECJ judgement about them?

Also bond purchase programm by ECB, however allowing the ECB to UNLIMITLY buy short-term bonds from member states

So difference to QE: here no limit, while QE is 60 million per month. Also QE cannot cover more than 1/3 of one state's debt. Also promise of full sterilization with QE.

ECJ defined them as compatible with 123 TFEU.

What happened to the Maastricht criteria during covid?

First time ever that the general excape clase was applied and "measures necessary to adequately adress crisis" were allowed starting 2020-

What is the Corona recovery fund? How is it moving away from Art.123 TFEU?

Council agreed that grants and loans to member states are allowed to repair immediate economic and social damages caused by the corona crisis and foster digital transformation

To finance grants and loans the comission is authorized to issue EU bonds on the market of up to 750 billion

first time that EU will be able to borrow funds on open market → like a state

This could be an ultra vires act against 123 TFEU as direct grants and loans are normally not allowed.

6 - Common Agricultural Policy & Security Regulations

CAP

What are the goals of CAP?

− Safeguarding agricultural productivity and assuring availability of supplies in EU − Ensuring EU farmers’ fair income and fair prices for EU consumers − Stabilising agricultural markets

What are the three CAP principles?

Single agricultural market Art. 40 I TFEU

free movement of ag good in EU

Union Preference

MS encouraged to give preference to consumption of ag products from EU

encouragement through taxes and duties on non-eu products

Financial solidarity

all member states contribute to CAP, as EU budget allocates 36% to agriculture → still biggest item

What are problems with CAP?

Oversupply

Unfair focus on farming instead of other areas such as digitazation

Artificially high food prices due to union preference → Products form non-eu could be cheaper and thus prices for consumers lower

Large farms are more supported than small farmers

Security Regulations

What is security regulation?

The regulation of offering and trading of financial product

What are three objectives and aims of Security regulation?

protect investors

ensure fair, efficient and transparent markets

reduce systematic financial risks

What are the three measures of security regulation?

Adressing information asymmetries

disclosure requirements for companies

Regulate market behavior

ban of insider dealing, market manipulation and (in-parts) short selling

Ensure market participant hygiene

license requirements for intermediaries (brokers, financial advisors, ...)

skill requirement tests for market participants

What is an prospectus requirement? What happens if companies do not comply?

Art. 3 I Reg 2017/1129:

all offers to the public require a prospectus before the emission starts

public companies must issue a document containing material information for potential investors to make informed decisions.

if requirements are not met, the securities issued can be returned for original purchase prices

also fines up to 700.000€ possible

What is ad-hoc disclosure?

Listed companies shall disclose all information relevant to the markets

when companies are then publicly traded, they need to issue publicly all information that are likely to significantly effect the price of financial instruments immediately

What is insider dealing? What is prohibited?

possesing of insider information

allowed is not:

buying or selling based on that information
recommend buying or selling to others using that information
unlawfully disclosing those information

What is market manipulation?

prohibition of misleading the markets by:

releasing misleading information or statements
placing buy or sell order to provoke market reactions

7 - EU Intellectual Property Law

Introduction

What are intellectual property rights?

Subjective (only you right, not public), absolute rights that grant a person the exclusive right to use an intellectual property

Is every intellectual property protected by a right?

No, as there must be a balance between the protection of intellectual property and the public interest in the use of IP

What is the purpose of protecting IP creations by IP rights?

Protection of the effort that some creator has put into his work. Efforts are attributed a value and this value should be protected

Are IP rights only nationally protected?

no there is national legislation but also EU and internaltional Ip right (WIPO, WTO)

high level of minimum requiremets due to TRIPS agreement → harmonization

What are the most common IP rights?

utility models → first step of patents, rough outlines

What are licenses? What are the two types of licencing?

Exclusive licenses = only one licensee

non-exclusive = more than one licensee

cross

IP owner grants the licensee the permission to use the IP, who then pay royalities or license fees to the IP owner

most important element in knowledge sharing economy

What is the problem with licenses and compeition law?

exclusive and cross licensing can have an anticompetitive effect, Art .101 TFEU

licensee providers need to issue their IP in a FRAND way → Fair, resonable and non-discriminative way

What are remedies for infringement of IP rights?

Injuction = Stop the other from using your IP proporty

Destruction or removal

Acess to information of infringing acts

Monetary remedies

own damages or losses based on infringemnt

license analogy

infringers profits

What is the background, problem and solution of the essential facilities doctrine?

Background (Scenario): undertaking as exclusive access to facilities (access to data, information, products, ...) and refuses access to downstream market and strengthen market power

Problem: Generally no dominant player can be coerced (gezwungen) into sharing resources that have been legitimately earned in performance competition (e.g through R&D) → However this exclusive access can distort competition

Under special conditions a prohibition of Art. 102 TFEU is NOT given:

Facilities must be "essential," i.e can be dispensed with some other facility

If this is however the case, one must still consider objective grounds mentioned by the company that validate a rejection of access to their facilities.

Patent Law

What is a patent?

Subjective absolute right relating to an immaterial object or invention

has form of a description and drawing of a technical invention

What rights do patentees have?

right to prohibit others from commercially using an inverntion

does not provide regual permission

What are the 4 "classical" patent law theories?

Disclosure → Big library of all technical inventions. After 10 years everyone can copy that patent

Reward → Inventors are rewarded as "inventor of the nation"

Incentive → Patents motivate investors and industry to invent, as they are at least guaranteed that once they publish a new invention, no one else can easily steal it

Property → natural right for having patents → However, today there are regualtions that need to be applied before you have a patent.

Why can patent law be viewed as economic development law?

promotes innovation and thus fosters innovative industries and sustainable econmic growth

mere "copy society" might be innovative in the short run, however sustainable growth is only possible if technological inventons are protected

How does the application process of a patent look like?

why 18 months in the beginning? → able to withdraw patent application if you think innovation will lead nowhere

if you get exposed by the authorities for not involving any new teachings in the patent, you can scilently withdraw your patent without anyone knowing about it

you have 7 years to file publicaiton or examination, which you can also start right from the beginning to speed up the process

in the end you are grated a patent

What are the 5 requirements for being granted a patent?

Invention Sec. 1 PatG

discovery

technical with physical effect

NOT: patents regarding the human genome

Novelty Sec. 3 PatG

invention idea can't be found in any kind of literature or other source. Anywhere around the world in any language

Incentive Step Sec.4 PatG

Invention was not obvious for an expert in that field

Commercial Exploitation possible Sec. 5 PatG

Not Contrary to public policy Sec. 2 PatG

What happens with innovations made by employees?

most innovations are made by employees

inventions need to be attributed to employers because they are most often the applicant of the patent

In germany the german employee invention act specifies that since 2009 employees making innovations need to receive due compensation

What are pros and cons of filing a patent?

protection of invention

competition gets restricted

protection against competitiors working on similar inventions

first to file rule → first patent wins over competitiors

Disclosure of invention after 18 months → in time frame you can still decide to withdraw patent filing and public will never see invention idea

High costs of application

enforcement costs of patent

When does IP protection begin? How is this different for medical or plant related products?

As soon as the granted patent is published for 20 years

however, third parties using the invention before granted patent with knowledge about filing procedure, might need to pay fines before or after patent is granted.

medical inventions are often patented early but require a lot more medical authorisation to be states as safe for the public

this can take up to years and it would be unfair if the patent protection would count down while there is not even a product on the market → there is a supplemetary protection (NOT a prolongation of the patent) that covers that authorization period

What are the two types of patent infringements?

if someone makes use of all the features of the claimed invention → read patent claim

direct infringement: all features of the patent claim are used by the infringer

indirect: infringer sells essential means of a patented device or process

What are defenses against patent infringements?

Non-infringement → not all features are realized by me

Exhaustion → I bought license to use. I am allowed to use the invention

Right of prior use → invention was practised before the application

FRAND defense → fair resonable and non discriminatory defense

Compulsory license → infringer unsuccessfully filed a license

What is an injunction gap? What measure was introduced to tackle it?

injuction gap = injunction courts handle infringements of patents. federal court handle validity of patents

injunctions courts work faster, thus there was a gap between decision of infringement and validity of patent.

Reform in 2021 forces supreme court to issue a preliminary opionin 6 months after filing the validity complaint.

The European and International Patent

What is the european patent?

A bundle of national patents (from 38 contracting states) granted by a centralized authority (called European Patent Office)

after granting of bundle each national court needs to enforce the patent under national law

There is only a centralized grant, no centralized enforcement

What is the idae behind a unified patent court?

court by 25 MS of european member states

has exclusive jurisdiction for disputed concering both unitary patens (new) and old european patents with unitary effect

idea to relief ECJ with IP claims, as they are not specialized in that. Rather create a separate court that spcifically handles those transctions

⚠️

Invalidity as defense claim can lead to inprisonment in germany.

Trade secret law

What sectors often apply trade secret law? What advantages does it bring for them?

Often used by software, food and chmistry industry

Advantage

no disclose of the innovation
reducing administrative costs
no time limit (in theory)

What are the requirements for a successful trade secret protection?

Documented comprehensive legal protection measures (NDA, internally binding policies)

Documented comprehensive de-facto protection measures

access control and restriction to the innovation

acess monitoring and evalution

encryption

Permanent and documented monitoring of the effectiveness of all measures

PROACTIVE and documented improvement in case of self-identified deficits.

Other intellectual property rights

What is a utility model?

Alternative or addition to patent protection

How is the appication process different from a patent filing?

Examination of novelt, inventive step and industrial applicability is not required

however subsequent examinations in case of infringements or invalidities is possible

What are pros and cons?

Pro

easier, lower cost and faster than apply a patent

can be used as "flanking protection" in the period between patent application and grant

Con

increased risk of infringing actions and higher probablity of cancellation

What is a trademark? What are examples?

Distinguishment of the products from one undertaking from those of another

⇒ protection of marketing investments

Can be

pictures, terms, colors, sounds, positions of objecsts

threshold: needs to be distinctive and there can't be a breach of public policy

What are pros and cons?

Pro

no time limit as long as annuity fee is paid

guarantees quality

very easy to litigate (einzuleiten)

Con:

trademark piracy

annuity fees

What is the idea of EU trademarks?

How does the application for trademarks work? What are the two ways?

Official registration

here the good or service class is important to consider. Different goods can have the same name but are completely different in nature

existance via market penetration and gaining authority → however here any competitor can file a trademark on the same thing

What is concept and protection of design law?

incentivize crativity in product design by protecting

design of a part, outward appearance, lines, colors, shapes, ...

available protection on EU and national level

What is a copyright?

Preventing copying of:

works → something created by an author (novels, visual arts, music, ...)

What are advantages?

no need to apply for protection

protection is granted as sson as the author created the work

What are issues?

idea of the work is not protection only the result in the end

hard to find infringer on internet