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The de minimis principle originated from Court of Justice of the European Union (CJEU) jurisprudence which has specified that EU competition laws, specifically Article 101 (1) Treaty on the Functioning of the European Union, (TFEU), are not applicable where the agreement between undertakings does not appreciably restrict competition.1 As a result, the Commission has created the De Minimis Notice,2 which creates so called safe harbours for certain agreements between undertakings that fall under the market threshold criteria.
The market threshold criteria is different depending on the relationship between the undertakings. If the aggregate market share of the undertakings which are actual or potential competitors does not exceed 10 %, an agreement is allowed between the parties.3 If the market share of the undertakings which are on different levels of the supply chain (specifically vertical agreement) does not exceed 15 %, an agreement is allowed.4 Finally, if the cumulative effect of agreements entered into by different suppliers and distributors does not exceed 5%, then the agreements are allowed.5
However, agreements that will constitute a restriction by object do not enjoy safe harbor.6 Hardcore restrictions in the Commission’s Block Exemptions constitute a restriction by object as well.7
The De Minimis Notice is preventative in nature, in that it informs the Commission of the standing of the company in good faith and thus deters the Commission from opening an antitrust investigation. However, the notice does not preclude national competition authorities from initiating their own investigation.8
To conclude, when a franchisor creates a franchise agreement (which is considered a vertical agreement) with its franchisee, the franchisor may submit a De Minimis Notice to the Commission if they hold a market share of no more than 15 %. and the agreement does not constitute a restriction by object. Vertical agreements fulfill the criteria stated in paragraph 8 (b) of the De Minimis Notice 2014/C 291/01. The Commission decisions listed in sections 2.2.2-2.2.5 are good examples of businesses that successfully qualified for a safe harbor.
1. Judgment of the Court (Second Chamber), Expedia Inc. v Autorité de la concurrence and Others, Case C‑226/11, 2012, Paragraph 4 (2)
2. Commission’s De Minimis Notice (reference 32)
3. Commission’s De Minimis Notice (reference 32), Paragraph 8 (a)
4. Ibid, Paragraph 8 (b)
5. Ibid, Paragraph 10
6. European Commission. Commission staff working document, Guidance on restrictions of competition “by object” for the purpose of defining which agreements may benefit from the De Minimis Notice Accompanying the document communication from the Commission, Notice on agreements of minor importance which do not appreciably restrict competition under Article 101(1) of the Treaty on the Functioning of the European Union (De Minimis Notice). Brussels, 2014
7. Commission’s De Minimis Notice (reference 32), Paragraph 13
8. European Commission Memo. Antitrust: Commission adopts revised safe harbours for minor agreements (“De Minimis Notice”) and provides guidance on “by object” restrictions of competition – Frequently asked questions. Brussels, 2014
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