7015CLS: EU Competition Law Analysis of Coffee Market Agreement

This report delves into the intricacies of EU Competition Law, examining a case study involving two major coffee brands and their agreement to fix prices and divide the market. It analyzes whether this agreement constitutes anti-competitive behavior under Article 101 of the Treaty on the Functioning of the European Union (TFEU), considering the potential for market distortion and consumer harm. Furthermore, the report discusses the impact of measures proposed by the EU Commission in response to the COVID-19 pandemic on such agreements, considering the need for essential services and the balance between competition and cooperation. The report also addresses the principles of market definition, the evidence used in assessing markets, and the limitations of this analytical tool, with a focus on the challenges of applying current market definition rules in multi-sided markets and the digital economy, referencing the Google Shopping Case. Overall, the report provides a comprehensive analysis of EU Competition Law principles and their application in real-world scenarios, highlighting the complexities of balancing competition with other societal needs.

7015CLS

Table of Contents
INTRODUCTION...........................................................................................................................................3
QUESTION 1.................................................................................................................................................3
a) Discuss whether this agreement will be considered anti-competitive under EU Competition Law.....3
b) Also, discuss the likely impact of measures proposed by the EU Commission in the light of COVID-19
on this agreement...................................................................................................................................5
QUESTION 2.................................................................................................................................................7
a) In answering this question, specifically address the guiding principles for defining a market, the
types of evidence are relied upon in assessing the market; and the main fallacies or limitation to be
aware of in relation to market definition as an analytical tool................................................................7
b) In light of the Google Shopping Case.................................................................................................10
discuss the challenges that are likely to arise in applying present market definition rules in multi-sided
markets and the digital economy..........................................................................................................10
CONCLUSION.............................................................................................................................................12
REFERENCES..............................................................................................................................................13

INTRODUCTION
Law and regulation are commenced by legislative body of the nation which simply says
that any law which are formed must be followed. In current scenario, working according to rules
and policy is important because it is the only way through which any of the nation can provide
equal opportunity each of the person. There are different types of penalties for the one who
breaches the law in any of the circumstances. In context of United Kingdom, there are different
sources which commences law and policies within the premises of UK which must be followed.
Some of the main sources of UK for commencing law are Parliament, European Union Law,
Common law and many more.
In context of the file, there are two different questions which will be addressed. Talking
about the first question it will simply focus towards agreement and EU Competition law and
what are the necessary guidelines which must be followed including the imposed of COVID-19
on different types of agreement. Secondly, in another question the main focus will be towards
discussion on market which is quite important for Art 102 EU Competition Law.
QUESTION 1
Strong Coffee Ltd and Good Coffee Ltd are the two main coffee brands in Europe
with a share of 30 and 40 percentage of the European coffee market respectively. In late
2019, the two companies entered into an agreement to fix the price of their coffee at GBP 7
per 100 grams. They also agreed that Strong Coffee Ltd will supply coffee to all retailers in
France, while Good Coffee Inc will supply coffee in Germany and that neither company
would interfere in the supply of the other in these two countries
a) Discuss whether this agreement will be considered anti-competitive under EU Competition
Law
In present scenario, laws and regulation has huge importance as it simply guides that how
any of the decision is required to be taken in any of the circumstances. For any of the nation, the
main motive of forming law is just to ensure that each of the people or organisation gets equal
and fair opportunity which is quite necessary in current circumstances1. In context of United
Kingdom, European Union has already played a huge role before the exit of Brexit. Almost more
1 Robert A. G Monks and Nell Minow, Corporate Governance (Wiley 2019).

than half of the law which has been commenced till date has been introduced by EU law. Even
this law is effective as well as they are result oriented which is quite important by looking at the
scenario. In the same manner, it needs to be understood that EU have not formed effective law
just for United Kingdom but they form laws and regulation for more than 25 European Nations.
EU Competition law: It is the law which has been derived the European Union for the
different nation where are its members. The main motive of commencement of this law is just to
ensure that any sort of monopoly will not be created in any of the market. Also, this law will not
allow to create any sort of cartels in the market as both monopoly and cartels can create issue for
damaging the interest of the society. There are different types of motive of the EU Competition
law which has been further discussed below:
 It mainly tries to protect the interest of consumers as well as small investors who always
plays te crucial role within any of the competitive market.
 This particular law certainly allows to maintain competition in the market and always
tries to improve the economic condition of the nation.
 It mainly works in the market which each types of investor gets the opportunity to
compete with rivalry firm which is quite important2.
 Even it helps to build confidence among the local investor that their rights can be easily
protected once they try to enter into the market.
This are some of the main motive of this particular law but at the same time, it tries to ensure
that any of the company will not try to create any of the circumstances due to which customers
has to face problem while purchasing any of the product.
According to the Article 101 of European Union, it restricts any of the organisation
to form any of the contract or agreement which restrict or distort competition within the
EU nations. It means that any of the organisation dealing in the same market is not allowed to
form any of the contract because it will certainly bring monopoly in the market which can
certainly affect society or customers3. If in any of the situation, if any of the organisation does
that then in that particular situation customers can file complain against defaulter where
European commission gets the right to investigate the case in detail. Whole of this case will be
2 Emerald Group Publishing., Corporate Governance (Emerald Group Publishing 2015).
3 Philip Stiles and Bernard Taylor, 'Maxwell ? The Failure Of Corporate Governance' (2016) 1 Corporate
Governance: An International Review.

regulated as per the guidelines of Antitrust Regulations. Here, according to the law if in any of
the circumstances, this particular situation arises then in that particular situation heavy penalty
can be imposed which can be up to 30% of the total sales. In addition, rights are given to the
customers for claim of damages. It is because customers have to suffer just because of the
monopoly of the company.
After understanding the EU Competition law and the given case study, it can be easily
determined that the decision which has been taken by Strong Coffee Ltd and Good Coffee Ltd is
an anti-competition as per EU Competition law. Both of the company has formed agreement as
per their person benefit which means that they are trying to create monopoly in the market which
is against the law. In any of the circumstances, any of the entity is not entitled to form any of
those agreement due to which disorder can be brought in the market and both of the mentioned
company were trying to do so. Here, forming the agreement to conduct business in Germany and
France, it would have been effective for the companies to form the agreement where they could
have decided the amount for which their coffee product can be sold in the market. This type of
agreement would have been beneficial because company could have allowed themselves to earn
huge amount of profit and even customers could have obtained profit at a reasonable price.
In short, in any of the circumstance business entity are not allowed to form any sort of
agreement or contract which can create issue for customers4. This type of condition always falls
under the category of anti-competition as of EU Competition law. If it is found so then legal
action can be taken against the defaulter company.
b) Also, discuss the likely impact of measures proposed by the EU Commission in the light of
COVID-19 on this agreement
EU Competition law is applicable for each of the organisation which means that it is
necessary for any of entity to ensure that they are not having any sort of agreement with other
industry for the purpose of earning profit. If in case any of the entity does this then in that
respective circumstances legal action can be taken against thee entity.
Talking about the present scenario, the Global Pandemic COVID-19 is increasing at a
rapid speed where millions of people has to surrender their life. It is one of the phases where
each of the sector has been affected as working grounds has been changed in past few months as
4 John Zinkin, Challenges In Implementing Corporate Governance (Wiley 2017).

it is necessary to use proper precaution working within the industry. It was also found that
number of industries were trying to take different types of benefit of the situation just to earn
higher amount of profit in a very short time period. Below, there is a detail discussion about the
topic.
It is necessary to deliver all of the essential services to the customers and looking at the
scenario at looking at circumstances, some of the changes has been brought by the EU
Competition law where organisation has the right to have proper discussion. This right was not
allowed early because there was huge possibility that companies could have taken some of those
decision due to which customers has to suffer. Although, changes have allowed to take those
decision due to which different entity can come closure to take decision that how essential
product and services can be delivered to the customers5. But at the same time, it is crucial for the
entity to ensure that they are not allowed to take those action due to which customers has to pay
addition amount of fee for any of the product and services. It is because increase in price of the
product will certainly create issue for the customer to purchase it. For example: there is a
requirement of medical services industry to manufacture all of the necessary medicines which
can be effective in dealing with COVID-19. Bu, company at the same time should be aware that
they are not allowed to sell those medicines higher than the market price. If this will be found so
then legal action can be taken as per the EU Commission.
Looking at the scenario, there are different relief fund or support fund has been
introduced by EU Commission so that entity can allow themselves to supply the products even at
the same rate which is quite important. For example, EUR 300 billion is the amount which is
being contributed to France economy which means that even if company will sell medicines at a
higher rate then also any of the issue will not arise. In the same manner contribution has been
given to other nation as well.
After looking at the changes in the plans and policies of EU Competition law looking at
the present scenario of COVID-19, number of agreements has been changed due to which
different impact can been seen and those impact has been mentioned below:
5 Andrew Johnston, EC Regulation Of Corporate Governance (Cambridge University Press 2018).

 The changes in agreement has given authority to the company to have a discussion with
each other where they can easily decide that how they can manufacture the product and
distribute them in the market.
 Secondly, organisation have also got the opportunity where they can easily decide the
selling price of the product but at the same time it is necessary that while fixing the price,
monopoly should not be created because that certainly increases the problem within the
market.
 One of the major impacts which has been seen is that although law is required to be
followed by each of the organisation but still there are number of entities which has been
increasing the price of product due to which condition of volatility can be seen easily.
Overall, it can be understood that COVID-19 is one of the global Pandemic which has
created lots of issues within the market. Looking at the scenario, it is necessary for EU
Commission to being some of the changes within plans and policies just for the purpose of
dealing with the situation in best possible manner6. Still, there are multiple number of impact
which can be seen upon the organisation but it will be crucial for them to ensure that in any of
the circumstance they are not allowed to increase the price of the product as it bring disorder to
the market even in the worse situation where deliverable product must be given at a reasonable
price.
QUESTION 2
Defining a market is very important for Art 102 EU Competitive Law. Discuss
a) In answering this question, specifically address the guiding principles for defining a market,
the types of evidence are relied upon in assessing the market; and the main fallacies or limitation
to be aware of in relation to market definition as an analytical tool
Market can be defined as the place where buyer and seller meet for the purpose of
fulfilling their needs. It is necessary to understand that whenever any of the seller enters into the
market, they must be able to ensure that they are going to perform their work as per the
requirement. If in any of the situation company do not perform as per the requirement then
6 Philip Stiles and Bernard Taylor, 'Maxwell ? The Failure Of Corporate Governance' (2015) 1 Corporate
Governance: An International Review.

different penalties can be imposed. In European nation, Competition law has a huge importance
as it discusses about the market and all of the necessary terms under Article 102.
Talking about the guiding principles for defining the market, it means that any of the
market can be run successfully if all of the guidelines are being followed in a systematic manner
without creating any of the problem. It is essential to understand that position of the market
changes as per the requirement of situation which is quite important. Article 102 of EU
Competition Law do not permit any of the organization which has a dominant position in the
market prohibits any sort of abusive conducts. According to this particular article, it is necessary
to understand that European Commission or National Competition are the one who has to take
action against the organization for which complain has been registered7. It is crucial to
understand that whenever any of the market is being assessed, the relevant market is required to
be defined and according to that it is being investigated that whether organization has been able
to perform their work as per the requirement or not. The assessment of market dominance allows
the investigating team to identify about existing as well as potential competition in the market.
In present scenario, whenever any of the market is being assesses on the basis of
evidences it is mainly focuses upon two different types of market and they are product market
and geographical market. In context of product market, it is simply the market where different
similar types of product is available as a part of substitution. Different companies fix price of any
product according to their need and want. It is necessary to understand that in this type of
market, any of the entity is not entitled to take benefit from the market for person benefit because
that certainly can create issue. Also, in this particular circumstances, legal action can be taken
against the defaulter due to which entity might have to suffer in different way as investigating
team work for finding out the main issue behind the default. Similarly, Geographical market
represent that particular market where there is condition of the competition is similar in the
market. Here, any of the organization is not allowed to take lead but selling product at a different
price. Although, it can be easily said that there might be some of the organization who product
sales can be increases but way of performing their business activity will be same in any of the
circumstances. In addition, it needs to be understood that dominance position in market is not
illegal but at the same time it needs to be understood that in any of the circumstance’s
7 Susan Parker, Gary F. Peters and Howard F. Turetsky, 'Corporate Governance And Corporate Failure: A Survival
Analysis' (2015) 2 Corporate Governance: The international journal of business in society.

organization is not allowed to conduct any sort of those activity due to which market get
affected. This type of activity is always considered as an abuse to the market.
It is never easy to perform any of the activity in market but it is necessary to understand
that according to EU competition law any of the entity is not allowed to conduct those sorts of
activity due to which person has to suffer. There are different types of fallacies to be aware of in
relation to market definition as an analytical tool are listed below:
 In any of the condition, company is not allowed to create monopoly in the market as it
can certainly increase percentage of issue for the customers. For example: there should
not be any of the circumstances in which buyer or customer has to purchase their product
from single seller only
 Any of the company should not sell their product even at a loss price for the purpose of
creating problem for the rivalry firm, neither companies are allowed to sell any of those
products at a higher price as compared to their requirement. It is because both of this
condition create issue in the market for other existing firms8.
 It is also essential to understand for any of the company that they are not allowed to
refuse to supply the product in the market for the purpose of creating buzz in the market.
This types of action for the organization falls under the category of offence where legal
action can be taken by EU Commission
These are some of the main fallacies where any of the entity should be able to focus. If in any
of the circumstances they fail to do so then huge problem may occur as proper investigation team
can be appointed. The appointed team gets the right to check any of the records which are
available among with it they have the right to check the data and even copies can be taken as a
part of evidence.
b) In light of the Google Shopping Case
discuss the challenges that are likely to arise in applying present market definition rules in multi-
sided markets and the digital economy.
Case Scenario: In past few years, it has been found that Google has changes their search
engine where they have started to do comparison among different product. Also, it was found
8 Kingsley Opoku Appiah and Amon Chizema, 'Remuneration Committee And Corporate Failure' (2015) 15
Corporate Governance: The international journal of business in society.

that company blocked the product of some of the rivalry firm which was the main cause that €2.4
billion fine was imposed upon the entity9. The fine was imposed by European Union as they
were claiming that company was not conducting any of those activity due to which competition
law get affected. In addition, looking at the circumstances not only UK but it was found that US
has also started to investigate the activity which is being performed by leading giant search
engine organisation.
Looking at the scenario of the case, it necessary to understand that any of the organisation
should be able to perform their work as per the requirement of law and policies. Whenever any
of those situations arises where entity is not able to perform effectively then they have to suffer
as it is not possible for the organisation to perform effectively10. Talking about present market
definition, it is explained that any of the entity should not create any of the circumstances due to
which customers has to face different types of problem. It is required to understand that company
must work according to the requirement of situation and should not try to create any of the
circumstances of monopoly in the market as it may affect the business organisation.
Whenever any of the entity perform business activity, they are needed to ensure that they
are able to follow proper rules and regulation and failure in this particular section create number
of problems. But it is equally required to understand that there are different types of challenges
which may occur as multi-sided markets are totally different than other market platform. The
first challenge is that different organisation who wants to connect within the multisided platform
should be aware about all of the necessary steps taken by the rivalry firm. It is needed because it
certainly helps to identify that what should be specific price on which product should be sold.
Multisided business should be able to show the list of all of the organisation which are selling
similar form of product. But after analysing the case study of Google, it was found that they were
not presenting the information of each of the organisation even they are rated as among the
leading brand. Not only this but, it is also necessary that while presenting the product, it should
be based on rating and the quality of product so that customers can identify that whether they are
willing to purchase the product or not.
The second most important thing according to the competition law is that data of any
customers should not be copied without obtaining permission. But it is being seen that digital
9 Luigi Zingales, Corporate Governance (2017).
10 A.M.I. Lakshan and W.M.H.N. Wijekoon, 'Corporate Governance And Corporate Failure' (2015) 2 Procedia
Economics and Finance.

economy creates this particular issue as different data are being collected from customers
without obtaining their consent. This sort of activity has a negative impact upon the market
which is among those challenges due to which market can be easily controlled by some of the
entity and that should not have been done in any of the circumstances.
As per the current scenario, both current market and multi-sided market along with digital
economy are different from each other where different steps are being taken by the organisation
to perform any of the specific task. There are lots of problem or challenges which may occur so
it necessary to identify the necessary steps that can be taken in multi-sided market but at the
same time it needs to be ensure that any of the organisation should not copy the information of
the customers because that can certainly create monopoly in the market 11. In addition, google
was also among one of the organisations which didn’t perform their part of work as per the
requirement. It is because they failed to present their data and information in the market of some
of the organisation who are also connected with the organisation with similar form of product.
11 Indrajit Dube, 'Is Corporate Governance The Answer To Corporate Structural Failure?' [2018] SSRN Electronic
Journal.

CONCLUSION
From the above discussion, it can be concluded that any of the entity can only succeed in
the market if they are able to follow proper law and regulation. It is necessary that proper law
and regulations should be followed because it provides the guidelines that how any of the work
can be performed in a systematic manner. In context of EU Competition law, it is necessary for
each of the organisation that they should not create any of the circumstances due to which
customers has to face problem. According to Article 101, any of the entity is not allowed to form
any of sort of agreement with other firm for earning profit because it may certainly develop the
circumstances due to which monopoly can be created. If any of the organisation found to be
guilty under article 101 of EU Competition law, they can be penalised up to 30% of the total
sales value. At the same time, Article 102 of EU Competition law discusses about the market and
how any of the entity is required to perform within specific market.