Competition Law: Introduction

Competition Law: Introduction

• Competition law aims for fair market competition, preventing monopolies, price-fixing, and cartels,
• It ensures consumers have a variety of goods and services at fair prices.
• Back in the 80's, consumers had fewer options but now there is more competition in the market
• Competition motivates companies to improve and lower prices, improving economic welfare,
• Competition law is concerned with market optimal functioning.

Underlying Economic Rationale

• Competition law ensures undertakings do not distort competition, optimizing market function.
• Perfect competition is the ideal, where many undertakings compete with few restrictions.
• Monopoly is on the opposite side of the spectrum, where one undertaking controls the market.

Main Fields of EU Competition Law

• Agreements, including cartels,
  • Agreements that restrict competition are void unless they produce economic efficiencies
  • Cartels are the most critical infringements.
• Abuses of dominant position
  • Unilateral, market-power conduct.
  • Control of concentrations
• State aid and foreign subsidies
  • Regulates public grants to undertakings, preventing market distortions.

Control of Concentrations

• Competition authorities review mergers and acquisitions to ensure they do not harm competition.
• Concentrations (mergers) are not completed in the EU until cleared by the competition authority
• Fines for violations can result from these actions.

State Aid and Foreign Subsidies

• Pubic bodies’ subsidies and grants.
• These are checked to prevent distortions by the EU competition authority

Hierarchy of Norms in the EU

• The Treaty on the Functioning of the European Union (TFEU) is the primary legislation in the EU, dealing with competition law with articles 101-109
• Secondary legislation (regulations, directives etc) follows the TFEU

Institutions

• EU level institutions like the European Parliament, Council of Ministers, and the European Commision hold roles in lawmaking and enforcement.
• National Competition Authorities are present in each member state of the EU.

Basic Concepts

• Undertaking: encompasses entities involved in economic activity (regardless of legal status or finance).
• Market definition: Relevant geographical (area where competition occurs). Relevant product market (products viewed as interchangeable or substitutable based on pricing and function).
• Competition Laws: differentiate inter-brand and intra-brand competition, as well as actual and potential competition.

Session 2: Agreements

• Article 101(1) : prohibits agreements that restrict competition, unless exempted.
• Article 101(3) : exemptions for agreements that produce positive effects out weighing their negative effects.
• Example: manufacturers agreeing to develop joint eco-friendly solutions complying with EU regulations to meet environmental compliance.

Session 4: Cartels

• Cartels are the most serious infringements in competition law, causing considerable damage to consumers.
• Statistics on fines, damages cases and other information in case of infringement are available on the Commission's site.

Session 5-6: Abuse of Dominant Position

• Article 102 prohibits abusive conduct of dominat undertakings.
• Dominating companies must respect the competitive market and avoid exploitative uses of their dominance.
• Factors to determine dominat position: market shares, potential competition and countervailing buyer power.
• Types of abuses: price fixing, discriminatory pricing, refusals to deal and tying (bundling).

This quiz provides an overview of competition law, highlighting its significance in ensuring fair market practices and preventing monopolies. It discusses the economic rationale behind competition laws, the ideal of perfect competition, and key areas of focus in EU competition law. Test your understanding of how competition impacts the economy and consumer welfare.