Competition law is the body of legislation intended to prevent market distortion caused by anti-competitive practices on the part of businesses. In the United States,Canada and the European UnionEuropean UnionThe European Union is a political and economic union of 28 member states that are located primarily in Europe. It has an area of 4,475,757 km and an estimated population of about 513 million. The EU has developed an internal single market through a standardised system of laws th…en.wikipedia.org,competition law is also known asAntitrust law.
What are the rules of the European Union?
The European Union is based on the rule of law. This means that every action taken by the EU is founded on treaties that have been approved voluntarily and democratically by all EU countries. The treaties are negotiated and agreed by all the EU Member States and
What is the EU law?
Under the EU law, governments would be able to request companies take down a wide range of content that would be deemed illegal, including material that promotes terrorism, child sexual abuse, hate speech and commercial scams.
What does European Union law mean?
European Union law is a system of rules operating within the member states of the European Union.Since the founding of the European Coal and Steel Community following World War II, the EU has developed the aim to promote peace, its values and the well-being of its peoples. The EU has political institutions, social and economic policies, which transcend nation states for the purpose of …
What is EU competition?
European Union, or EU, competition law is the law regulating the power of corporations and other entities within Europe. Seeking to provide a fair business environment for companies and consumers within the EU’s member states, the European Union places various restrictions on corporations and governments.
What is competition law?
In a truly competitive market, consumers benefit from price competition, greater product development, improved product specifications and better quality of service between competitors.
What are the sanctions for infringing competition law?
The European Commission in Brussels is the primary enforcement body for EU competition law.
Background – the basic competition prohibition and the legal exemption
Article 101 (1) of the Treaty on the Functioning of the European Union (TFEU) prohibits agreements between two or more undertakings, decisions by associations of undertakings, or concerted practices:
Dealing with competitors
Examples of prohibited or risky practices between a business and its competitors from an EU competition law perspective are set out below. These are known as "horizontal issues" because they arise between businesses operating at the same level in the supply chain.
Information exchanges, meetings and trade associations
Any direct exchange of commercially sensitive information between actual or potential competitors is likely to infringe competition law. In some circumstances even unilateral disclosure of such information may constitute an infringement.
Article 102 of the TFEU prohibits the abuse of a dominant position by one or more undertakings having a dominant position in a particular market within the EU, or in a substantial part of it, insofar as it may affect trade between EU Member States.
A price will be deemed to be unfair and an abuse of a dominant position under EU competition law if it bears no reasonable relation to the economic value of the service supplied. The abuse may occur not only where prices are too high but also where they are too low. Examples of unfair pricing include:
Why is Article 107 of the TFEU banned?
Article 107 of the TFEU contains a general prohibition of State aid (paragraph 1) in order to prevent distortions of competition in the internal market that could result from the granting of selective advantages to certain companies. All direct aid granted by Member States (e.g. non-repayable subsidies, loans on favourable terms, tax and duty exemptions, and loan guarantees) is banned. So are any other advantages granted as preferential treatment to given undertakings or sectors which distort, or are likely to distort, competition and adversely affect trade between Member States.
What are the Articles 37, 106 and 345 of the TFEU?
Articles 37, 106 and 345 of the TFEU for public undertakings and Articles 14, 59, 93, 106, 107, 108 and 114 of the TFEU for public services, services of general interest and services of general economic interest; Protocol No 26 on services of general interest; Article 36 of the Charter of Fundamental Rights of the European Union.
What is competition policy?
Competition policy is thus a key instrument for achieving a free and dynamic internal market and promoting general economic welfare. EU competition policy also applies to non-EU businesses that operate in the internal market. Societal, economic, geopolitical and technological changes constantly pose new challenges to EU competition policy.
Why is it important to enforce EU competition rules?
Rigorous and effective enforcement of the EU competition rules is essential to ensure the achievement of the competition policy objectives. The Commission is the main body responsible for ensuring the correct application of these rules and has wide-ranging inspection and enforcement powers.
How does Parliament influence competition policy?
With regard to the adoption of competition policy legislation, Parliament is usually involved only through the consultation procedure. Its influence is thus limited compared to the influence of the Commission and the Council. Parliament has called, on several occasions, for the ordinary legislative procedure to be extended to cover competition law, for example in its yearly resolutions on the Commission’s Annual Report on Competition Policy.
What is the main objective of the EU competition rules?
Competition policy. The main objective of the EU competition rules is to enable the proper functioning of the EU’s internal market as a key driver for the well-being of EU citizens , businesses and society as a whole. To this end, the Treaty on the Functioning of the European Union (TFEU) contains rules that aim to prevent restrictions on …
Why are mergers and acquisitions beneficial?
Mergers or acquisitions can be beneficial for companies and the economy as a whole, as they can create efficiencies, synergies and economies of scale. However, if they result in strengthening market power or increasing market concentration, they can also weaken competition. This is why certain mergers and acquisitions must be reviewed and may not be completed until authorisation is granted.
Why is predatory pricing important?
The case of predatory pricing illustrates a crucial distinction between European and American competition law. The recoupment requirement embodied in American antitrust law serves to differentiate aggressive pricing behavior that improves consumer welfare—because it leads to overall price decreases—from predatory pricing that reduces welfare with higher prices. It is, in other words, entirely focused on the welfare of consumers.
What is the European approach to consumer welfare?
The European approach, by contrast, reflects structuralist considerations far removed from a concern for consumer welfare. Its underlying fear is that dominant companies could use aggressive pricing to engender more concentrated markets. It is simply presumed that these more concentrated markets are invariably detrimental to consumers. Both the Tetra Pak and France Télécom cases offer clear illustrations of the ECJ’s reasoning on this point:
How does consumer choice affect antitrust?
By selecting, in this instance, “consumer choice” as the standard to be judged, the commission was able to evade the constraints that might have been imposed by a more robust welfare standard. Thus, the commission can essentially pick and choose the objectives that best serve its interests in each case. This vastly enlarges the scope of potential antitrust liability, while also substantially decreasing the ability of firms to predict when their behavior may be viewed as problematic. It leads to what, in U.S. courts, would be regarded as an untenable risk of false positives that chill innovative behavior and create nearly unwinnable battles for targeted firms.
What is the contribution of the earlier literature on vertical restraints?
Another major contribution of the earlier literature on vertical restraints is to have shown that per se illegality of such restraints has no economic foundations.
What is vertical restraint?
and EU competition law relating to vertical restraints—that is, contractual restraints between firms that operate at different levels of the production process.
How does knowledge help economics?
As Friedrich Hayek demonstrated in his influential 1945 essay The Use of Knowledge in Society, economic agents use information gleaned from prices to guide their business decisions. It is this distributed activity of thousands or millions of economic actors that enables markets to put resources to their most valuable uses, thereby leading to more efficient societies. By comparison, the efforts of central regulators to set prices and margins is necessarily inferior; there is simply no reasonable way for competition regulators to make such judgments in a consistent and reliable manner.
Why are firms found to have infringed competition law?
This contrasts with European competition-law cases, where firms may be found to have infringed competition law because they charged excessive prices. As the European Court of Justice (ECJ) held in 1978’s United Brands case: “In this case charging a price which is excessive because it has no reasonable relation to the economic value of the product supplied would be such an abuse.”