28-08 Lecture 1
Article 101: prohibition of cartels and restrictive agreements
Article 201: prohibition of abuses of dominant position
Competition is typically seen as contest, struggle, rivalry etc. In Competition law there
is a different view of what competition is. It is competition between economic rivals. In
economic therms, it is often seen as a steering process. In the EU there are 5
million people, countless firms. All these people interact, Competition is a way to
organize society. You make sure that the economic actors feel that they have to
compete with other economic actors. This causes uncertainty amongst competitors,
you always have to keep an eye on them. Ultimately it drives prices towards margical
cost.
But this classic view is a bit static. Competition is also seen as a discovery process.
It is not impossible to steer a big economy, but it is also a neat way to discover things
we don't know. Think for example about apple creating a watch, and google creating
glasses. We don't know whether or not it will sell. We still have to find out, innovation
is taking place so there is room for discovery.
A competitive market means that you can try your luck. You can enter the market and
try to sell your product. So competition is also an enducement to entry. The market
is self healing to some extent, you can solve a problem by entering the market and
offering a new product.
Countries have made the choice that market economy is the form that they prefer.
Competition is a central element in market economy. This fundamental element is
there in all of the EU countries. The aim is to ensure that markets deliver what they
are expected to deliver. Competition law is part of the framework that ensures that
markets deliver.
Next to competition law you have more specific legislation concerning sectors: media
regulation for example. There is a whole set of state interventions that is also part of
this framework.
Sometimes competition law is also attached to criminal law, public law or private law.
In Germany or France it is for example derived from private law, whereas in the US it
is more criminal law.
Issues covered by competition law:
In a market economy things can go wrong. Firms compete so often problems arise.
Firms coordinate instead of competing: Restrictive agreement (article 101
TFEU, section 1 of the US Sherman act). System assumes that firms
compete. But firms can also work together and arrange a price. Firms can talk
and colude instead of competing.
One firm is too large and escapes competitive pressures: Dominance (Article
102 TFEU and section 2 of the US Sherman Act) . Another problem that can
arise is when the number of firms is not what we had in mind. There is for
example 1 big firm, instead of small ones. This means that the big firm is not
subject to competition law and doesn't lead to uncertainty.
Firm growth: exogenous instead of endogenous: Merger control (MCR and the
Hart-Scott - Rodino act). New problem, since the 70s. Firms can grow, for
example apple: they grow by having success. But firms can also grow by
buying their competitors. This also causes problems because competition will
decrease.
;Other issues: Oligopolies, 'Lazy' markets, sector-specific market failures.
,Competition law as part of EU law
Competition law is part of the TFEU, covered in articles 101-106. Besides these
articles there are also other important provisions. In article 3b TFEU we can also find
rules about competition: the EU has competence to make competition law. Protocol
27 on the internal market is also an important protocol concerning competition law.
Article 3(b) TFEU decides that the EU has exclusive power, but this is restricted by
the wording. ".. the establishing of competition rules necessary for the functioning of
the internal market".
Also article 352 TFEU is important, which is the legal basis for the merger control
regulation (MCR).
Competition law overtime is one of the original areas of EU law, it has always been
there. In the original EEC treaty in 1957 it was already included. In the 1960s there is
a discussion about how to implement competition law. In the 60s competition law
took its firsts steps. There was a lot of discussion about the economics of competition
law. In the 70s the EU was paralyzed, and the ECJ takes over. In 1986 there was a
renewal of the legislative activities, and that is when the single European act and the
Single Market rose. With the Maastricht treaty the EU as we now know is born, 1991.
The internal market is not the main concern of the EU anymore. In the 90s the idea
was born to make competition law autonomous. Since the end of the end of the 90s
competition law has been through a lot of changes: lot of reform of competition law.
In 2000 competition law goes on. What might change competition law is the Lisbon
treaty. In the 1990s the competition law becomes more atonomous. In the Lisbon
treaty they want to restore the link between the internal market and competition law.
Major principles: conferral, supremacy, subsidiarity, proportionality and direct
application. Even when the rules come from EU level MSs still have a big role in the
application of competition law.
Fundamental rights is a big theme in EU law now. It has been growing since the 70s
and since the Lisbon treaty we now have the charter of fundamental rights.
Institutions
The institutions of the European Union that deal with competition law are the
European Commission and the Court of Justice of the European Union. The
European Commission consists of the DG COMP and the Legal Service. They often
don't agree but both are involved in making competition law. The Court of justice is
involved because the decisions of the Commission can be reviewed. But the Court of
Justice can also answer preliminary questions.
Commission: In the application of competition law DG COMP doesn't take the
decisions. They work on the decisions, but they don't eventually make the decision:
the whole commission must approve. The commission has an interface with the MSs,
because it works with two different entities:
1. European Competition Network (ECN)
2. Consultative committee: MSs delegates, so MSs have a way to keep an eye on
what is going on.
Court: There are two courts important. The General Court and the Court of Justice.
In the ECJ the advocates general is important, who gives his opinion before the
ruling of the court takes place. Procedures used in competition law are
1. Annulment: article 263 TFEU
2. Preliminary ruling: article 267 TFEU
The content of these articles above however hasn't changed.
Provisions:
Primary provisions are:
1. Art. 3(b) TFEU
2. Art. 101 - 103 TFEU
But in EU law the interpretation of law often changes, so soft law is also important to
get to know competition law. Important in soft law is:
1. Relevant market notice
2. Relating to artlce 101-102 TFEU
;De minimis notice
;Guidelines relating to block exceptions
;Fining guidelines, leniency notice and settlement notice
;Access to file
;Guidance paper on exclusionary abuses under 102 TFEU.
3. Relating to Mergers there is also soft law. Important are: horizontal Merger
Guidelines and non- horizontal Guidelines.
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