European business law: agreement limiting competition.

The Supreme Court of Latvia asked a prejudicial question, whether article 101 item 1 of the Treaty on the Functioning of the European Union (TFEU) should be construed in such a way that a condition, when a leasing agreement for a large shopping space in a mall, includes a resolution, entitling the Tenant to object the tenancy of shopping spaces to other tenants results in a situation that the agreement limits competition in the meaning of article 101 item 1 of TFEU.


Pursuant to article 101 item 1 of TFEU an agreement, aimed at preventing, limiting or disturbing competition inside the common market is forbidden.


The State Tribunal (ST) decided that a two level analysis of the said question in the aspect of competition limiting is necessary: in terms of its objective and result.


The agreements considered in the main proceedings, are leasing agreements, concluded between the malls and a Latvian company. The companies do not compete with each other. The judicial decisions of the ST show that this circumstance does not prevent a situation, when a particular agreement might limit competition "in view of the purpose" (the sentence of Allianz Hungária Biztosító et alia, item 43).


The State Tribunal decided that article 101 item 1 of the Treaty on the Functioning of the European Union (TFEU) should be construed in such a way that a leasing agreement for a large shopping space in a mall entitle the Tenant to object the tenancy of shopping spaces to other tenants does not mean itself that the aim of the agreement is to limit competition in the meaning of this provision.


Then the ST referred to the doubt of the appealing court regarding the circumstances when the disputable leasing agreements may have the signs of an agreement, the result of which is preventing, limiting or disturbing competition in the meaning of article 101 item 1 of the TFEU.


The State Tribunal said that the leasing agreements, as those considered in the main proceedings may have the signs of an agreement, the result of which is preventing, limiting or disturbing competition in the meaning of article 101 item 1 of the TFEU, if after a deep analysis of the business and legal context, the agreements fall within, and also the particular properties of a particular reference market it becomes apparent that they support market barriers. The degree a particular agreement supports the market barriers, depends on the market position of the parties to the agreement and the duration of the agreements.

 
 

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