Agreements or arrangements are only prohibited if they have as their ‘“object” or “effect” the prevention, restriction or distortion of competition. Restrictions of competition can arise either at a horizontal level, i.e. between competitors, or at a vertical level, i.e. between companies operating at different levels of the supply chain.
“By object” restrictions are those which, by their very nature, have the potential to restrict competition regardless of the parties’ intentions or the actual effect of the arrangements on the market. Examples of restrictions by object are agreements fixing purchase or selling prices, allocating markets or customers, or limiting or controlling production.
Where it is not possible to say that the object of an arrangement is anti-competitive, an extensive analysis must be carried out of the effects of the arrangement on the market before it can be found to infringe Article 101 TFEU “by effect.” That assessment will require the competition authority to articulate a theory of harm that demonstrates how the arrangement will lead to anti-competitive effects. The competition authority will also consider what the position would have been in the absence of the arrangement (the “counterfactual”). Finally, account will not only be taken of the effects on existing competition on the market, but also of whether the arrangement might affect potential competition on that market.