Article 101 TFEU prohibits agreements between two or more independent market operators that restrict competition. This provision applies to both horizontal agreements (i.e. between companies operating at the same level in the market such as wholesalers) and vertical agreements (i.e. between companies operating at different levels, such as producer and distributor). Article 101 prohibits those agreements which have as their “object or effect the prevention, restriction or distraction of competition within the internal market.” They may be exempted only if they have a redeeming virtue such as improving the production or distribution of goods, contributing to technical or economic progress or allowing consumers a fair share of any benefit. At the same time exempted agreements may neither impose restrictions on the parties nor give the parties the possibility to eliminate competition.
The Commission has three possible courses of action in case of a violation: it can launch an infringement procedure, give clearance to the agreement after examination, or issue an exemption (or a block exemption for a whole sector, e.g. the car industry).
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