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  • Print publication year: 2009
  • Online publication date: June 2012

Introduction

Summary

Any contract between firms limits the freedom of the parties involved. Even a simple contract to deliver 100 widgets next month at price €1,000 restricts the buyer's ability to switch to a lower-cost provider in the meantime and, if there are capacity constraints, also the seller's ability to supply one of the buyer's rivals. This is an example of a simple vertical contract. Such contracts are the essence of everyday business practice. They enhance the efficiency of trade and encourage investment. Freedom to engage in such contracts and the institutional environment that allows them to be enforced are essential ingredients to a well-performing market. The competition problems arise when contracts are used beyond this to include clauses that more directly exclude or suppress competition. Horizontal agreements (i.e. between alternative suppliers) ring a very direct warning bell of coordination for customer exploitation. When the agreement is vertical (i.e. between buyer and supplier) competition concerns usually relate to the potential exclusion of rivals which may then indirectly harm consumers. The common theme in this part of the book is the identification and deterrence of agreements that are harmful in their effects.

All of the cases in the following chapters relate to the enforcement of Article 81 of the EU Treaty (or the equivalent national provision). Article 81 prohibits any agreements or concerted practices ‘which have as their object or effect the prevention, restriction or distortion of competition within the common market’.