European Union Competition Policy
The European Union (EU) has had a direct and profound effect on the economies of member states. The main objective of the EU is to enhance the allocational efficiency of the economies of the member states by removing barriers to the movement of goods, services, and production . The regulation of competition is administered by the EU’s competition policy. The aim of the policy is to create and maintain a system permitting undistorted competition within an economic region . The notion of pure competition in the EU is governed by The European Commission. They are the guardians of competition and exist within the structure of competition policy. The importance of a policy regulating competition was recognized early, and explicitly outlined in Articles 85-94 in the Treaty of Rome . The purpose was to prevent private economic actors and national public authorities from dividing up the large European market, thus jeopardizing or even canceling the benefits of integration . Nonetheless, even in the most ideal economic conditions, economists accept that perfect competition cannot be achieved. Consequently, the concept of ‘workable competition’ has been developed. Although not perfect, firms and go
vernments are encouraged to work towards the most competitive structure possible. This structure can be achieved by policing business within the European Union, and thereby eliminating practices deemed as anti competitive. The EU competition policy secures the benefits of European integration by effectively regulating anti competitive practices, namely monopolistic behavior, mergers and state aids, however does not ensure that Europe will remain competitive in international markets. One of the most commonly recognized forms of anti competitive activity is monopolistic behavior. Identified as a company who has established a dominant position in its respective industry, and abuses their position in a manner that may have an effect on trade between member states. “Forms of abuse of dominant position include unfair pricing, exclusion or limitation of supply, and discrimination among trade partners” . The rules of competition regulating monopolistic behavior are outlined in Article 82 (formerly Article 86) of the EC treaty. It reads: “Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States” . Although Article 86 does not define what a ‘dominant position’ is, past decisions by the Commission suggest that a firm with less than 40% of the market will not be regarded as dominant . ‘The Commission’ refers to The European Commission, who police EU competition rules. In cases of possible monopolistic activity, the Commission must assess the degree of market dominance by deciding the boundaries of the relevant market both in terms of the products involved and its geographic extent. The boundaries are ambiguous at times as high market share does not automatically give monopoly power. However, the dominant position itself is not illegal, only the abuse of dominance . Abuse of dominance is formally defined as, the conduct of a firm that may influence the structure of the relevant market or its degree of competition, even if such conduct is favored by a provision of national law . Those found guilty of abusing dominant position, can receive a penalty from the Commission, which may consist of various fines or dividing the company. Before taking a decision, the Commission gives the firm and Member State the opportunity to explain their position at specially organized hearings. Also, the firms or Member States that are subject to the Commission’s decision may challenge the decision before the Court of First Instance. It is also possible for individuals or firms that believe they are the victims of anti-competitive behavior to take their case before the national courts . Alth
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Approximate Word count = 1863
Approximate Pages = 7 (250 words per page double spaced)
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