Competition Law
Art 101 TFEU
1. The following shall be prohibited as incompatible with the internal market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:any agreement or category of agreements between undertakings,any decision or category of decisions by associations of undertakings,any concerted practice or category of concerted practices,which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
END
Meca Medina and Majcen: Swimmers were fined and banned from Olympics because illegal substances were found in their blood. They argued that this was restrictive of competition law and so breached Art 101.
European Union competition law arose out of the desire to ensure that the efforts of government could not be distorted by corporations abusing their market power. Hence under the treaties are provisions to ensure that free competition prevails, rather than cartels and monopolies sharing out markets and fixing prices. Four main policy areas include:
Article 106(2) of the TFEU states that nothing in the rules can be used to obstruct a member state's right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else.
Services of general economic interest is more technical term for what are commonly called public services. The settlement under the European Treaties was meant to preserve Europe’s social character and institutions. Art 86 refers first of all to 'undertakings', which has been defined to restrict the scope of competition law’s application. In Cisal, a managing director challenged the state’s compulsory workplace accident and disease insurance scheme. This was run by a body known as INAIL. The ECJ held that the competition laws in this instance were not applicable. 'Undertaking' was a term that should be reserved for entities that carried on some kind of economic activity. INAIL operated according to the principle of solidarity, because for example, contributions from high paid workers subsidise the low paid workers. Their activities therefore fall outside competition law’s scope.
The substance of Article 86(2) also makes clear that competition law will be applied generally, but not where public services being provided might be obstructed. An example is shown in the ‘’Ambulanz Gloeckner’’ case. In Germany, ambulances were provided exclusively by a company that also had the right to provide some non-emergency transport. The rationale was that ambulances were not profitable, not the other transport forms were, so the company was allowed to set profits of one sector off to the other, the alternative being higher taxation. The ECJ held that this was legitimate, clarfiying that,
'The extension of the medical aid organisations’ exclusive rights to the non-emergency transport sector does indeed enable them to discharge their general-interest task of providing emergency transport in conditions of economic equilibrium. The possibility that would be open to private operators to concentrate, in the non-emergency sector, on more profitable journeys could affect the degree of economic viability of the service provided and, consequently, jeopardise the quality and reliability of that service.'
The ECJ did however insist that demand on the subsidising market must be met by the state’s regime. In other words the state is always under a duty to ensure efficient service. Political concern for the maintenance of a social European economy was expressed during the drafting of the Treaty of Amsterdam, where a new Article 16 was inserted. This affirms, 'the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion.' The ongoing debate is at what point the delicate line between the market and public services ought to be drawn.
British Airways and Iberia merged to improve flights. When Aer Lingus and RyanAir tried to merge they were not allowed because it was decided that it would not be economically improved and would make prices higher.
1. The following shall be prohibited as incompatible with the internal market all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this article shall be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of:any agreement or category of agreements between undertakings,any decision or category of decisions by associations of undertakings,any concerted practice or category of concerted practices,which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
END
Meca Medina and Majcen: Swimmers were fined and banned from Olympics because illegal substances were found in their blood. They argued that this was restrictive of competition law and so breached Art 101.
European Union competition law arose out of the desire to ensure that the efforts of government could not be distorted by corporations abusing their market power. Hence under the treaties are provisions to ensure that free competition prevails, rather than cartels and monopolies sharing out markets and fixing prices. Four main policy areas include:
- Cartels, or control of collusion and other anti-competitive practices that affect the EU (Art 101).
- Monopolies, or preventing the abuse of firms' dominant market positions (Art 102).
- Mergers, control of proposed mergers, acquisitions and joint ventures involving companies that have a certain, defined amount of turnover in the EU.
- State aid, control of direct and indirect aid given by EU member states to companies (Art 107).
Article 106(2) of the TFEU states that nothing in the rules can be used to obstruct a member state's right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else.
Services of general economic interest is more technical term for what are commonly called public services. The settlement under the European Treaties was meant to preserve Europe’s social character and institutions. Art 86 refers first of all to 'undertakings', which has been defined to restrict the scope of competition law’s application. In Cisal, a managing director challenged the state’s compulsory workplace accident and disease insurance scheme. This was run by a body known as INAIL. The ECJ held that the competition laws in this instance were not applicable. 'Undertaking' was a term that should be reserved for entities that carried on some kind of economic activity. INAIL operated according to the principle of solidarity, because for example, contributions from high paid workers subsidise the low paid workers. Their activities therefore fall outside competition law’s scope.
The substance of Article 86(2) also makes clear that competition law will be applied generally, but not where public services being provided might be obstructed. An example is shown in the ‘’Ambulanz Gloeckner’’ case. In Germany, ambulances were provided exclusively by a company that also had the right to provide some non-emergency transport. The rationale was that ambulances were not profitable, not the other transport forms were, so the company was allowed to set profits of one sector off to the other, the alternative being higher taxation. The ECJ held that this was legitimate, clarfiying that,
'The extension of the medical aid organisations’ exclusive rights to the non-emergency transport sector does indeed enable them to discharge their general-interest task of providing emergency transport in conditions of economic equilibrium. The possibility that would be open to private operators to concentrate, in the non-emergency sector, on more profitable journeys could affect the degree of economic viability of the service provided and, consequently, jeopardise the quality and reliability of that service.'
The ECJ did however insist that demand on the subsidising market must be met by the state’s regime. In other words the state is always under a duty to ensure efficient service. Political concern for the maintenance of a social European economy was expressed during the drafting of the Treaty of Amsterdam, where a new Article 16 was inserted. This affirms, 'the place occupied by services of general economic interest in the shared values of the Union as well as their role in promoting social and territorial cohesion.' The ongoing debate is at what point the delicate line between the market and public services ought to be drawn.
British Airways and Iberia merged to improve flights. When Aer Lingus and RyanAir tried to merge they were not allowed because it was decided that it would not be economically improved and would make prices higher.