EU Economic Law
Course – Prof. dr. Wouter Devroe
Session 1 – Essentials of EU competition law
Essentials
Competition is the lifeblood of the European Single Market, fostering innovation, efficiency,
and ultimately, benefits for consumers. However, unfettered competition can sometimes lead
to harmful practices like cartels or predatory pricing.
Therefore, EU competition law plays a crucial role in balancing these forces. It aims to:
➢ Promote fair competition: This encourages businesses to compete on their merits,
leading to better products, services, and prices for consumers.
➢ Prevent and address anti-competitive practices: This includes agreements between
companies that harm competition (cartels), dominant companies abusing their market
power, and state subsidies distorting the market.
The key elements of EU competition law are:
1. Prohibited Agreements and Practices (Article 101 TFEU): This tackles agreements
between companies that restrict competition, like price fixing or market-sharing.
2. Abuse of Dominant Position (Article 102 TFEU): This prevents dominant companies
from leveraging their market power to unfairly disadvantage competitors or impose
unfair terms on customers.
3. Merger Control (Regulation 139/2004): This assesses planned mergers and
acquisitions to ensure they don’t create undue market power or harm competition.
4. State Aid Control (Article 107-108 TFEU): This regulates government subsidies to
avoid distorting competition and favouring specific companies or sectors.
5. Public Undertakings and Services of General Interest (Article 106 TFEU): This
recognizes the specific role of public companies and essential services while ensuring
they don’t abuse their position.
It’s important to remember that competition law is complex and nuanced. Rules can be open
to interpretation, and each case requires careful consideration of context and potential
justifications.
Competing justifications fuel the debate
While some advocate for minimal regulation, others see competition law as crucial for
enhancing consumer welfare. However, defining “consumer welfare” itself isn’t
straightforward. Other priorities, such as choice, innovation, and fairness, also factor into
competition law’s development. Interestingly, concerns about these other issues often receive
less attention than competition worries.
Illustrative examples
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, ➢ Facebook/WhatsApp merger (€110 million fine): The EU focused solely on
competition concerns (potential strengthening of its online advertising position) and
deemed privacy concerns outside its scope, leaving them to data protection regulations.
➢ Bayer/Monsanto merger: Despite receiving over 55,000 messages expressing
concerns about food safety, consumers, the environment, and climate change, the EU
Commission’s mandate limited its assessment to competition perspectives.
➢ Intel cases: Judgments across various courts highlighted concerns about anti-
competitive practices by Intel.
➢ Car Emissions cartel (€875 million fine): This case exemplified the high penalties for
collusive anti-competitive behaviour.
Emerging trends
➢ Hipster Antitrust: This movement takes aim at tech giants, arguing traditional metrics
underestimate their power. Key issues revolve around defining dominance in the digital
age and balancing innovation with competition, requiring international cooperation for
effective regulation.
➢ Sustainability: Competition law traditionally prioritizes economic welfare. Now, the
debate rages on how to incorporate environmental and social concerns. Potential
approaches include carving out exemptions for green collaborations, factoring
sustainability into merger assessments, and navigating green subsidies.
Balancing competing interests, defining, and measuring sustainability, and navigating
enforcement uncertainties remain hurdles.
Remember the cost
The EU champions fair competition yet complying with its labyrinthine regulations can be
financially daunting for businesses.
➢ Understanding the Costs:
o Compliance programs, legal advice, and potential investigations can strain
finances, especially for smaller players. Fines in 2023 topped €3.4 billion.
o Employee training and awareness necessitate ongoing investment.
➢ Minimizing the Burden:
o Leverage resources offered by EU and national authorities to understand
regulations and compliance measures.
o Prioritize prevention with comprehensive compliance programs and risk
assessments.
o Seek legal expertise when navigating potential violations or investigations.
➢ Beyond the Costs – Remember, competition law fosters:
o Level playing field: Protects smaller players and encourages innovation.
o Consumer welfare: Drives lower prices, wider choices, and better quality.
o Market efficiency: Promotes resource allocation and economic growth.
➢ Striking the Balance – The EU strives to balance effective enforcement with
manageable costs. Ongoing efforts include:
o Streamlining compliance for small and medium-sized enterprises.
o Enhancing regulatory clarity for businesses.
o Fostering dialogue between stakeholders.
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,Balancing Competition with Broader Goals
While competition itself isn’t the ultimate objective of the EU, it serves as a crucial tool to
achieve wider societal goals. This necessitates a nuanced approach, prioritizing balanced and
workable competition, not unfettered market forces. Reconciling competition with
environmental protection, regional development, and research & development fosters an
ecosystem that benefits not just businesses, but society. Additionally, competition law plays a
vital role in social inclusion by promoting access to essential services while safeguarding
public interests.
Unique Approach to Antitrust
The EU’s prohibition-based system differs from the US’s “rule of reason” approach. Instead
of analysing the overall impact of conduct, the EU identifies specific forbidden practices. This
clarity provides businesses with a clear framework, even though surrounding exceptions and
exemptions add layers of complexity.
A Multifaceted Legal Landscape
EU competition law draws from various sources, including primary legislation like treaties and
regulations, and secondary legislation enacted by the Council and Commission. Numerous
other elements like court judgments, guidelines, and soft law documents further contribute to
its intricate tapestry.
Key Players and Powers
The European Commission serves as the central driver, acting as investigator, prosecutor, and
enforcer. This “dual model” grants it broad power, often overshadowing the limited review
role of the Court of Justice and General Court. While national courts and authorities play
supporting roles, the Commission remains the dominant force.
Instruments and Procedures
Regulations and decisions form the backbone of EU competition law, with directives and
recommendations playing a lesser role. The inclusion of “soft law” instruments like guidelines
adds flexibility and adaptability. Judicial review mechanisms ensure accountability and
safeguard legal interpretations.
Impact and Innovation
EU competition law serves as a leading example for other areas of EU law, showcasing
effective enforcement and comprehensive legal frameworks. Its multi-layered structure caters
to various vertical dimensions and horizontal issues, allowing for complex situations to be
addressed through diverse procedures. Moreover, competition law boasts exceptional powers,
allowing for strong intervention when necessary.
The Symbiotic Dance of Competition and the Internal Market: Balancing Fairness and
Growth
Competition law and the internal market are not just intertwined, they are inseparable partners
in fostering a healthy and thriving European economy.
More Than Just Two Rulesets
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, Historically, these areas appeared distinct: internal market law prevented discrimination and
restrictions on free movement, while competition law focused on preventing anti-competitive
behaviour by businesses. Today, they work in unison. Competition law’s rules indirectly
enforce the internal market by ensuring fair competition across member states, promoting
efficient resource allocation, and ultimately benefiting consumers.
Case Studies in Collaboration
Consider monopolies, fixed book prices, and the Becu case, where competition law prevented
member states from unfairly hindering free movement within the market. This collaboration
fosters a level playing field, encouraging innovation and economic growth across the union.
Defending and Challenging in the Competitive Arena
When evaluating potential violations, competition law follows a three-pronged approach:
1. Applicability: Does EU competition law apply to the specific situation?
2. Relevant Prohibitions: Are specific legal provisions like cartels or abuse of dominance
violated?
3. Justifications: Can the behaviour be justified under specific exemptions?
Navigating a Changing Landscape: While traditionally open, the EU’s landscape is
evolving
➢ Competition and Sustainability: Integrating environmental and social considerations
into competition assessments.
➢ Digital Markets Act (DMA): Addressing imbalances in the digital market and
promoting fair competition.
➢ External Dimension: Regulating foreign direct investments and state subsidies to
protect market integrity.
➢ Refined Regulatory Framework: Modernizing rules for vertical agreements and
block exemptions.
➢ Enhanced Enforcement: Addressing “gun jumping” and “killer acquisitions” in
merger control and establishing new fining practices.
➢ Shifting Case Law: Recognizing self-preferencing as potential abuse of dominance
(e.g., Google cases).
Field of application
The reach of EU competition law is broad, encompassing a significant portion of economic
activity within the European Union. But who exactly falls under its purview? Simply put, it
applies to undertakings.
Understanding what constitutes an undertaking is crucial. Don’t let the legal jargon fool you –
it’s any entity actively engaged in economic activity, regardless of its legal structure or
funding source. So, whether it’s a large corporation, a small business, a non-profit organization,
or even a state-owned enterprise, if they’re actively involved in economic activity, they could
be subject to EU competition law.
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