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Competition Law Toolkit : Practices Controlled by Competition Law
Anti-Competitive AgreementsThe most obvious target of any system of competition law is agreements between independent firms that are restrictive of competition. It should be noted that agreements between firms within the same corporate group are not usually caught by competition law, since they are regarded as being internal to the economic unit concerned ("intra-enterprise conspiracy.") However, agreements between such an economic unit and third parties can be subject to the law on restrictive agreements, and the behavior of the corporate group could be subject to the law that forbids the abuse of a dominant position. An agreement may restrict competition between the parties to the agreement itself, or may restrict competition between the parties to the agreement and other operators on the market. The term "agreement" in this context refers not only to written and legally enforceable agreements. It also applies to informal agreements, "gentlemen's agreements," oral agreements, and to simple understandings, irrespective of whether they are legally enforceable and whether there is any enforcement mechanism for infringement. Competition law also applies to so-called "concerted practices," whereby the parties substitute practical cooperation between themselves for the risks inherent in competition. Typically, the parties to agreements and concerted practices of this kind will do all they can to keep their behavior secret, making it difficult for the competition authorities to demonstrate that they have been acting illegally. The activities of trade associations—for example, when adopting rules for their members or making recommendations to them—are also covered by the rules against anti-competitive agreements. It is helpful and important when considering the provisions of competition law to distinguish agreements between firms that operate at the same level of the market (e.g., between cement manufacturers, between airlines, or between retail distributors)—so-called horizontal agreements—from agreements between operators at different levels of the market (e.g., between a car manufacturer and its distributors, or between a producer of beverages and its retail customers)—so-called vertical agreements. As a general proposition, competition law is far more concerned with horizontal agreements than with vertical ones, since horizontal agreements between competitors (e.g., to fix prices or to share markets) are the most obviously harmful in terms of consumer welfare. See
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