Advisory Opinion on the interpretation of Article 74, 75, 76 of the Treaty of the Eurasian Economic
Name and Surname: Alisher Juzgenbayev
Date: 25 January 2018
Word count: 485 (excluding references)
Research Task One: Primary Legislative Acts
Document:
Act: N СЕ-2-1/1-17-БК
Institution: Court of Eurasian Economic Union
Title: Advisory Opinion on the interpretation of Article 74, 75, 76 of the Treaty of the Eurasian Economic Union
Commentary:
The Court of the Eurasian Economic Union was asked to clarify the articles 74, 75, 76 of the Treaty of Eurasian Economic Union. Specifically, relating to the issue of “vertical agreements”, Ministry of Justice of Belarus sought the clarification of whether member states can establish admissibility criteria of “vertical agreements” other than those already in place in accordance with the Treaty (Advisory Opinion, 2017, p. 2). This was the first opinion the Court released regarding competition policy, and it ruled that the Treaty does not provide for the right of the member states to establish other admissibility criteria (Advisory Opinion, 2017, p. 10).
In status quo, according to the Treaty and additional protocols “vertical agreements” are forbidden when such agreements seek to 1) establish the price of resale of goods, except for the case when the seller establishes a ceiling price of resale or 2) stipulate the obligation of the buyer not to sell goods of the competitor of the seller (Advisory Opinion, 2017, p. 7). At the same time, there are two criteria of admissibility when these agreements are 1) franchise agreements or 2) agreements in which both parties’ share of the goods market of the good does not exceed twenty percent (Advisory Opinion, 2017, p. 7). The court has decided that other criteria of admissibility cannot be put in place by the member states.
This decision has several implications for the integration of competition policy. First of all, it draws a difference between “prohibitions” and “criteria of admissibility”, whereby on markets that exist on geographical territory of two or more member states (“трансграничные рынки”), member states are given reasonable freedoms to institute additional prohibitions and limitations on prohibitions, while latter is decided and amended on a supranational level. This means that member states can both relax and tighten the restrictions on “vertical agreements”, but not to institute different admissibility criteria in place. Secondly, the Court had concluded that member-states cannot impose national legislation that market share should be analyzed on any goods market since it would give unlimited discretion to the national government and is contrary to the aims of the union under Article 4. All this implies that in the case of domestic legislation conflictual with the criteria of admissibility precedence is given to the Union law, or else state violate their obligation under the Treaty.
Importantly, Entin and Dyachenko (2017, p. 4) note that the court’s ruling is also significant since it reaffirms the competition rules as having “direct effect” on national legislatures. The Court rules that “common competition regulations have direct effect and must be immediately applied by member-states as norms enshrined in the international agreement” (Advisory Opinion, 2017, p. 6). Similar to EU’s “direct effect” principle, which was established in a landmark Van Gend en Loos case (Van Gend en Loos v Nederlandse Administratie der Belastingen, 1963), this has significance since individuals can protect their interests, referring to competition rules of EAU. The court interpreted the treaty so that market subjects can refer to these rules in national courts and anti-trust proceedings, thereby increasing the relevance of EAU laws and creating incentives for further integration.
Reference List
Advisory Opinion (Court of Eurasian Economic Union April 4, 2017). Retrieved from https://docs.eaeunion.org/docs/en-us/01414091/ac_05062017
Entin, K., & Dyachenko, E. (2017). Суд ЕАЭС о защите конкуренции. Соотношение национального и наднационального права. Конкуренция и право, (4), 63–71.
Van Gend en Loos v Nederlandse Administratie der Belastingen, No. 26/62 (European Court of Justice February 5, 1963).