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Applicability Of European Union Competition Regulations In Jersey

Colin Powell

The question is often posed whether Articles 85 and 86 of the Treaty of Rome are directly applicable within the Bailiwick of Jersey. Article 85 prohibits certain agreements "which may affect trade between Member States". Article 86 prohibits the abuse of a dominant position within the Common Market "in so far as it may affect trade between Member States".

By Article 227(5)(c), the EC Treaty applies to the Channel Islands only to the extent necessary for the implementation of Protocol 3 to the Treaty of Accession of the United Kingdom to the European Community. By Article 1(2) of that Protocol, "in respect of agricultural products and products processed therefrom which are the subject of a special trade regime ... such provisions of Community rules ... as are necessary to allow ... observance of normal conditions of competition in trade in these products shall also be applicable". The second recital of Regulation 706/73 which concerns the Community arrangements applicable to the Channel Islands and the Isle of Man for trade in agricultural products states that "to allow free movement of the aforesaid products ... the United Kingdom and the Islands shall be treated as a single Member State, for the purpose of applying these rules."

The Channel Islands are not treated as part of a Member State or of the Community for the purpose of applying Articles 85 and 86 save in the case of trade in agricultural products falling within Article 1(2) of the Protocol. For these purposes, the Islands are treated as though they and the United Kingdom constituted a single Member State. The description of agricultural products is set out in Annex II to the EC Treaty.

When considering the application to the Island of Articles 85 and 86 it is necessary therefore to consider the case of trade in non-agricultural products or services separately from the case of trade in agricultural products. In the former case, three situations can be envisaged:

  1. where the restrictive agreement or abusive conduct covered by Articles 85 and 86 affects trade between Jersey and the United Kingdom and could not, even potentially, have any effect on trade with another Member State. In this situation, Articles 85 and 86 are not brought into play;

  2. where the restrictive agreement or abusive conduct affects trade between the Channel Islands and could not, even potentially, affect trade with the United Kingdom and another Member State. Here again Articles 85 and 86 do not come into play;

  3. where the restrictive agreement or abusive conduct affects trade between Jersey and a Member State other than the United Kingdom (e.g. France) and could not even potentially affect trade between other Member States (e.g. the United Kingdom and France). Jersey is not to be treated as part of the same Member State as the United Kingdom for the purpose of trade in non-agricultural products. Articles 85 and 86 are not brought into play in this situation.

Where trade in agricultural products is concerned, the same three situations as above need to be considered but for these purposes Jersey and the United Kingdom are regarded as a single Member State. Hence, a restrictive agreement or abusive conduct which affects only trade between the Channel Islands and the United Kingdom, or between the Channel Islands themselves, and which could not even potentially affect intra-Community trade, falls outside the scope of Articles 85 and 86. Conversely, a restrictive agreement or abusive conduct which affects trade between the Channel Islands and France falls subject to those Articles.

However less significance than at first appears is to be attached to the fact that the Channel Islands do not form part of the territory of the Community for the purpose of applying Articles 85 and 86 to trade in non-agricultural products. Those Articles can apply to restrictive agreements reached or abusive conduct occurring outside the Community’s territory, wherever the agreement or conduct is implemented in the Community. There is also a powerful body of legal opinion supporting the view that a restrictive agreement reached or abusive conduct occurring outside the Community is subject to Articles 85 and 86 whenever it produces an effect within the Community, even if it is not implemented in the Community.

Thus, if a Jersey company agreed in Jersey with an English company to divide between themselves the market for the English company’s product in Normandy, the agreement would be subject to Article 85 for it would be implemented in the Community. Further, if the English company were to agree in Jersey with the Jersey company to divide the market for the English company’s product generally in Jersey, the agreement would probably be subject to Article 85, even though it was to be implemented in Jersey, for its effect would be perceived in such countries as France and Belgium where producers of the same product would be denied access to the Jersey market.

Colin Powell, OBE, is Chief Adviser to the States of Jersey

Page last updated 20 Oct 2014