Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the Treaty Establishing the European Community) prohibits cartels and other agreements that could disrupt free competition in the European Economic Area's internal market.
Aims and objectives
Conventional wisdom declares that the aim of domestic competition law (such as that of the UK) is to provide a remedy to litigants whose interests are damaged by the anti-competitive behaviour of others, whereas the EU takes a broader view and has the goal of maintaining transparent markets and a "level playing field". Thus, the main objectives of the EU competition law are to maintain openness and to unify the internal market; to ensure economic efficiency in the marketplace; to ensure the conditions of effective competition and competitiveness; and to protect consumers.
However, some argue that the goals of the Article are unclear. There are two main schools of thought: the predominant view is that only consumer welfare considerations are relevant there. An alternative view is that other Member State and European Union public policy goals (such as public health and the environment) should also be considered there.
Text of Article 101
Article 101 reads,
1. The following shall be seen as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply; (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: any agreement or category of agreements between undertakings, any decision or category of decisions by associations of undertakings, any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives; (b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
Businesses ("undertakings") infringing the provisions of Article 101 are liable to a fine of up to 10% of its worldwide annual turnover by the European Commission. However, Member States usually have their own domestic competition law which they may enforce, provided it is not contrary to EU law. The role of the Commission is the area is quasi-judicial and subject to appeal to the ECJ.
In Courage v. Crehan, the European Court of Justice (ECJ) ruled that article 101 TFEU has direct horizontal effect and that individuals can invoke article 101 TFEU to claim damages as a result of a breach of said article by another party.
Undertakings
Article 101 TFEU does not specifically ban cartels, instead declaring as illegal all "agreements, decisions and concerted practices" which are anti-competitive and which distort the single market. The term "undertaking" is a Eurospeak word for any person(s) or firms in an enterprise, and is used to describe those "engaged in an economic activity". The term excludes (i) employees, who are by their "very nature the opposite of the independent exercise of an economic or commercial activity", and (ii) public services based on "solidarity" for a "social purpose".