Eu Competition Law: Who Enforces It?

The primary authority for applying EU competition law rests with the European Commission and its Directorate-General for Competition. The Directorates can mandate that improperly-given state aid be repaid, as was the case with Malev Hungarian Airlines in 2012. The Commission has the power to conduct investigations, impose fines, and take copies of documentation, electronic files, and emails. It can also seize original documents and inspect the premises of businesses that are not under suspicion but may have evidence relevant to an investigation.

The EU competition rules focus on prohibiting agreements or understandings between competitors that are likely to prevent or restrict competition, prohibiting certain abusive practices by businesses with a strong market position, and prohibiting or modifying mergers, acquisitions, or the creation of joint ventures that may restrict competition.

The European Commission and its Directorate-General for Competition are the primary authorities for applying EU competition law

The Directorate-General for Competition plays a crucial role in promoting and maintaining competition within the European Single Market. This involves regulating anti-competitive conduct by companies, including the prevention of cartels and monopolies that could harm the interests of society. The Directorate also handles issues related to market dominance, mergers, and state aid, as outlined in Articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU).

The European Commission's role as the central enforcement authority is essential to ensure consistent application of EU competition law across all member states. The Commission has the power to investigate and enforce competition rules, working in collaboration with National Competition Authorities (NCAs) in each member state. This coordination is facilitated through the European Competition Network (ECN), which manages the flow of information between NCAs and maintains the coherence of the competition law system.

The European Commission's enforcement powers include the ability to impose significant fines, void contractual restrictions, and conduct investigations at business premises. They also have the authority to review entire markets and propose improvements to competitive conditions, even in the absence of specific competition infringements. Additionally, the Commission has exclusive jurisdiction over issues concerning state aid, as per EU law.

The Directorate-General for Competition's work is guided by two central rules set out in the TFEU: Article 101 and Article 102. Article 101 prohibits agreements between independent market operators that restrict competition, with the most flagrant example being the creation of cartels. On the other hand, Article 102 prohibits firms with a dominant market position from abusing their power, such as by charging unfair prices or limiting production to the detriment of consumers.

EU competition law is based on articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU)

The European Union's competition law is based on articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU). The law promotes the maintenance of competition within the European Single Market by regulating anti-competitive conduct by companies to ensure that they do not create cartels and monopolies that would damage the interests of society. The four main policy areas of the EU competition law are:

• Cartels, or control of collusion and other anti-competitive practices, under article 101 TFEU
• Market dominance, or preventing the abuse of firms' dominant market positions under article 102 TFEU
• Mergers, control of proposed mergers, acquisitions and joint ventures involving companies that have a certain, defined amount of turnover in the EU, according to the European Union merger law
• State aid, control of direct and indirect aid given by member states of the European Union to companies under TFEU article 107

Article 101 of the TFEU prohibits agreements between two or more independent market operators that restrict competition. This includes cartels, which are considered the most flagrant example of illegal conduct infringing Article 101. Cartels involve price-fixing and/or market sharing. Article 102 of the TFEU prohibits firms that hold a dominant position in a given market from abusing that position, for example, by charging unfair prices, limiting production, or refusing to innovate to the prejudice of consumers.

The primary authority for applying competition law within the European Union rests with the European Commission and its Directorate-General for Competition. However, state aids in some sectors, such as agriculture, are handled by other Directorates-General. The Directorates can mandate that improperly given state aid be repaid, as was the case with Malev Hungarian Airlines in 2012.

EU competition rules focus on prohibiting anti-competitive agreements or practices that distort competition within a market

The EU's competition rules are primarily designed to ensure the proper functioning of the internal market, as outlined in the Treaty on the Functioning of the European Union (TFEU). These rules focus on prohibiting anti-competitive agreements and practices that distort competition within a market. The EU aims to protect free competition and ensure that companies operate independently, promoting efficiency, innovation, and lower prices for consumers.

Articles 101 and 102 of the TFEU form the basis of EU competition law, targeting anti-competitive practices and the abuse of dominant market positions. Article 101 prohibits agreements between independent market operators that restrict competition, including cartels, price-fixing, and market sharing. On the other hand, Article 102 addresses firms with dominant market positions, preventing them from charging unfair prices, limiting production, or refusing to innovate to the detriment of consumers.

The EU's competition rules are not limited to businesses but apply to all organisations engaged in economic activity, such as trade associations and industry groupings. The rules are enforced by the European Commission and its Directorate-General for Competition, with support from National Competition Authorities and national courts.

The EU takes a strict approach to enforcing its competition rules, with significant fines of up to 10% of a company's annual worldwide turnover for infringements. It is important for companies to understand and comply with these rules to avoid legal consequences and promote a fair and dynamic internal market.

EU competition law also prevents firms with a dominant market position from abusing that position to the detriment of consumers

The European Union's competition law is derived from articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU). Article 102 of the TFEU prohibits firms that hold a dominant position in a given market from abusing that position to the detriment of consumers.

A dominant position is defined by the Court of Justice of the EU (CJEU) as:

> a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by giving it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.

The European Commission's first step in an Article 102 investigation is to assess whether the undertaking concerned is dominant in any given market. The Commission defines the product market and the geographic market, with the relevant product market comprising all products/services that the consumer considers to be a substitute for each other due to their characteristics, prices, and intended use. The relevant geographic market is an area in which the conditions of competition for a given product are homogenous.

Market shares are a useful first indication of a firm's importance in the market in comparison to others. The Commission's view is that the higher the market share and the longer it is held, the more likely it is to be a preliminary indication of dominance. If a company has a market share of less than 40%, it is unlikely to be dominant. Other factors the Commission takes into account in its assessment of dominance include the ease with which other companies can enter the market and the existence of countervailing buyer power.

Holding a dominant position in any given market is not illegal in itself. However, a dominant company has a special responsibility to ensure that its conduct does not distort competition. Examples of behaviour that may amount to an abuse of a dominant position include:

• Setting prices at a loss-making level (predation or predatory pricing)
• Charging excessive prices
• Tying and bundling
• Refusing to deal with certain counterparts
• Requiring buyers to purchase all units of a particular product only from the dominant company (exclusive purchasing)
• Refusing to supply input indispensable for competition in an ancillary market

The Commission's investigative powers to enforce Article 102 are detailed in Chapter V of Regulation 1/2003, which includes the power to enter the premises of companies, examine and take copies of records, and ask members of staff questions relating to the subject matter of the inspection.

EU competition law prohibits or modifies mergers, acquisitions, or joint ventures that are likely to prevent or restrict competition

The European Union's competition law is derived from articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU), with the primary authority for applying this law resting with the European Commission and its Directorate-General for Competition. This law aims to promote and maintain competition within the European Single Market by regulating anti-competitive conduct by companies, including mergers, acquisitions, and joint ventures that are likely to prevent or restrict competition.

The EU's competition law applies to all mergers, regardless of where the merging companies are registered or headquartered, as long as their business activities impact markets within the EU. The law seeks to prevent combinations of companies that reduce competition in a market, typically by creating or strengthening a dominant player. This is to protect consumers from potential negative consequences such as higher prices, reduced choice, lower quality, or less innovation.

The objective of merger control is to examine whether proposed mergers will have harmful effects on competition. If a merger is deemed harmful, it must be prohibited to protect businesses and consumers. On the other hand, if a merger is not considered harmful, it is approved unconditionally. In some cases, merging firms may propose commitments to remove the potential harm, leading to conditional approval.

The creation of joint ventures is subject to mandatory notification and review under the EU Merger Regulation (EUMR) or ongoing assessment under Article 101 of the TFEU. The structure of the joint venture determines which of these applies. The EUMR requires concentrations with an EU dimension to be notified to and approved by the European Commission before implementation, providing a 'one-stop shop' system.

Joint ventures are assessed on their potential impact on competition, including the combination of contributed resources, the broader competition between parent companies, and the potential for efficiencies that benefit consumers. The Commission also considers the relationship between the joint venture and its parents, as well as the potential for restrictive practices such as non-compete obligations and exclusive purchasing.

Overall, the EU competition law prohibits or modifies mergers, acquisitions, or joint ventures that are likely to prevent or restrict competition, with the aim of protecting consumers and promoting a competitive market.

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