COMPETITION

Competition

Competition

Discuss how and why the European Union controls dominance?

Introduction

The competition law of the EU responded to Europe's mid-century economic conditions. Its development, driven by the imperative of market integration, profited from the symbiosis between the protection of competition and the promotion of open trade. Decisions of the European Court of Justice (ECJ), pursuing the goals of strengthening the community and eliminating trade barriers, established the legal framework underpinning an ambitious Community competition policy. The European Commission's Competition Directorate (DG Comp, formerly DGIV) is in a nearly unique position in the European Community system, because in the area of competition policy the Commission can apply direct enforcement power that is not dependent on national governments. Community competition law is undergoing a profound transition, after moving beyond the initial goals of opening markets and establishing a competition culture to become a mature, comprehensive enforcement structure centred on the European Commission. The substantive principles that the Community institutions developed have now become a common legal framework shared with the national laws of the Member States. In the future, the law will evolve within the network of national and Community agencies that share responsibility for applying it. The principal focus of this study is the European Commission, as the administrative organ of the 25-country European Union. Most of the discussion would also apply in the context of the EEA, with its 3 additional countries and closely co-ordinated competition policy and enforcement.

Context and history

The Common Market used the ECSC as a model for basic policies and rules. The discussions preparing the European common market recognised that controlling anticompetitive practices was a critical prerequisite. The preparatory documents described the problems of monopoly and the need for rules against discrimination, market division and suppression of output or technology. The fundamental goals that the Treaty of Rome set for the Common Market include preventing national discrimination and establishing a system to ensure that competition is not distorted. The competition rules in the Treaty of Rome build on those of the ECSC about agreements, dominance and subsidies, though not the ones about merger control. The rules for the Common Market add some precision to the prohibition of restrictive agreements, while strengthening rule against abuse of dominance into a prohibition. These basic articles were conceived as constitution-like, anticipating that their content would be determined in practice. Generality was also prudent, as the Treaty necessarily bridged or avoided some differences among the Members' views. Some favoured a strict competition law and envisioned the Treaty rules as legal norms to be applied in judgments by courts. Others saw the Treaty provisions as programmatic statements about policy intentions to guide administrative discretion (Gerber, 2009: 150).

Increasing confidence in EU competition policy culminated in the 1989 merger regulation, completing the European competition-policy "toolkit". After 20 years of laying the foundation, by the 1980s the Commission was taking stronger enforcement actions. The single-market program and the Single European Act of 1986 reinforced the market-integration objective and thus provided additional momentum for active competition ...