Article 101 TFEU

Article 101 TFEU

The European prohibition of anti-competitive agreements. It is the text that decides what a franchisor is entitled to impose on its network.

In brief

Prohibits agreements, decisions and concerted practices which affect trade between Member States and have “as their object or effect” the distortion of competition.
Formerly Article 81 EC, formerly Article 85 of the Treaty of Rome — the three numberings refer to the same text.
§ 2: prohibited agreements are “automatically void” — absolute nullity, which any interested party may invoke.
§ 3: exemption possible if the agreement improves production or distribution, allows consumers a fair share of the benefit, imposes no restrictions that are not indispensable and does not eliminate competition.
Block exemption regulations presume these conditions to be met. For franchising, this is Regulation (EU) 2022/720, applicable from 1^st June 2022 to 31 May 2034.

From the point of view of competition law, a franchise agreement is an agreement between independent undertakings that restricts the commercial freedom of one of them. It therefore falls, in principle, within the scope of Article 101 — and an exemption is needed for it to be lawful.

The Pronuptia judgment (1986) drew the dividing line: clauses indispensable to protecting the know-how and identity of the network do not restrict competition within the meaning of § 1. Those that go further — market sharing, imposition of resale prices — are prohibited.

The 2022 regulation organises this exemption. One point in it has remained constant for forty years: the franchisor may recommend a price, or set a maximum price; it may not impose a selling price. Resale price maintenance is a so-called “hardcore” restriction, which causes the entire agreement to lose the benefit of the exemption.

Sources

Where this comes up in the case file

Other glossary entries — Legal concepts