Last week, the European Parliament completed its Trade and Competition Annual Policy Review, codifying policies at the EU level which relate to trade and competition for each constituent state and business. Section 149 of the report states that “The European Parliament. . .[u]nderlines the need to fight against unfair collective boycotts, defined as a situation in which a group of competitors agree to exclude an actual or potential competitor, as restrictions of competition by object.”
This conclusion of Section 149 derives from Article 101 of the Treaty on the Functioning of the European Union (TFEU), which prohibits any form of collusion between undertakings (or association of undertakings) whose object or effect is the prevention, restriction or distortion of competition. The European Commission considers all collective boycotts, by their very nature, a distortion of normal market conditions, harmful to EU consumers. Business violating this provision incur fines of up 10% of their total turnover in the preceding business year.
BDS-inspired boycotts meet all the conditions of Article 101(1), and are precisely the type of economic collusion that is outlawed by Article 101 of the TFEU, because they involve restrictions of competition “by object.” Therefore, when a boycott is found, it is entirely irrelevant whether the boycott is advanced for ostensibly political or moral reasons, or whether it is allegedly aimed at remedying an illegal situation. When the BDS movement claims victory for business decisions which limit commercial relations with Israel or the territories it controls, a violation may likely be found.
The adoption of this provision in the annual report demonstrates that recent arguments made to the European Parliament and Trade Commission, pointing out that these institutions are accountable to their domestic constituencies — European businesses and consumers — and must protect those businesses from foreign-policy inspired discrimination, have been well received.
The Lawfare Project will remain vigilant in alerting the relevant European regulatory authorities when such anti-competitive activities are undertaken by European businesses, and will take all action necessary to ensure that the debilitating fines are collected.
This victory is yet another reminder that the underlying conduct of BDS is illegal, and that the legal and financial risks of such commercial behavior will be disproportionately painful for the boycotters.