Standard form contracts between unfair terms control and competition law

Abstract:

The use of standard form contracts may trigger the application of two distinct sets of rules: competition law (in the case, for example, where an association of undertakings drafts standard conditions of sale to be used by all members of the association in their relationship with their dealers, retailers or customers) and unfair terms control. These two sets of rules share one main concern: ensuring customer choice. While, however, unfair terms control does so by addressing 'internal' market failures, i.e. by ensuring that consumers' critical faculties remain unimpaired by violations such as small print, obscure terms, unfair dealing, competition law addresses 'external' market failures, i.e. ensures that the marketplace remains competitive so that a meaningful range of options remains open to consumers, unimpaired by restrictive practices such as, for example, price fixing agreements. This paper investigates the extent to which the use of uniform non-price terms and conditions may be prohibited under Art.81 EC and, if so, in what circumstances it may fall under the exemption contained in Art.81(3) EC. After examining the circumstances under which agreements to use standard form contracts are usually exempted, it comes to the conclusion that such exemptions should be - and often are - inextricably linked with the desire to ensure that the market remains free of 'internal' market failures: accordinglt, when assessing agreements to use standard form contracts under Art.81(3) EC, competition lawyers could (and should) usefully borrow criteria derived from unfair terms control, so as to ensure the market remains free of internal - as well as external - failures.