European Union Competiton Policy

the power to examine mergers before they take place, in order to decide whether they are compatible with the internal market. This involves defining the relevant product market, defining the relevant geographic market, and assessing the compatibility of the merger with the internal market on the basis of the principle of dominant position . If a particular merger creates or strengthens a dominant position that may impair competition in the EU or a substantial part of it, the proposal can be prohibited indefinitely . Surprisingly there have been a low number of cases in which the merger has been prohibited, or changes have been required. This is to the credit of those who have requested mergers, and the soundness of their proposals. However, when the Commission has been called on to enforce the EU competition policy specifically on the subject of mergers, they have been subject to controversy. The major issue concerns the criteria that the Commission uses for considering the desirability of mergers. The Commission often restricts criteria to the issues relating to competition, but it is necessary to evaluate other surrounding issues in order to ensure a suitable decision . An inappropriate judgment by the Commission could potentially produce a dominant firm in the market, with intentions to abuse their dominance. With pressures from both potential monopoly situations and proposed mergers, the Commission spends much of its time focusing on firms within the EU. Still, the Commission must not situate their attention solely on private firms, but also the governments of Member States. Government’s grant subsides, known as ‘state aid’, to domestic firms that may correct market failures, steer their economies, or attain social objectives by influencing private economic decision-making. The Commission worries that assistance from national governments to their domestic firms, will affect trade between member states . As outlined in Article 87 (formerly Article 92) of the treaty, “Subsidies (‘state aids’) which distort competition by favoring certain enterprises and giving them an artificial advantage are considered incompatible with the common market, and the Commission can require such aid to be abolished or modified” . Although Article 92 condemns all state aids which distort competition, it is difficult to enforce controls on state aid and impossible to ban it completely. Any advantage granted by the State or through State resources is considered as State aid where it confers an economic advantage on the recipient, it is granted selectively to certain firms or to the production of certain goods, it could distort competition, or it affects trade between Member States . The commission must ensure that Member States only grant aid that is

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