competition policy

(EU)

the competition policy of the European Union (EU). It is no different in principle from national measures. The ideas and issues are the same – to allow everyone the benefits of larger markets without the disadvantage of monopolies and the like. The legal regime is unique and is a major contribution to commercial law. It focuses on rules in relation to undertakings and rules applying to state aids. The rules relating to undertakings are divided into two sets of provisions – those relating to cartels under Article 81 (formerly 85) and those to what is called abuse of a dominant position under Article 82 (formerly 86).

In relation to cartels, in strict law the treaties apply to agreements between undertakings and concerted practices principally under Article 81. Cartels are automatically void if they can affect inter-member state trade and have as their object or effect distortion of competition. If the agreement is a binding legal obligation, then it need not actually affect trade and may yet be void. If there is no legally binding agreement, then the cartel can be restricted only if there is established a concerted practice and one that is not the ordinary coincidental operation of the market, as where all prices of a product tend to go up at the same time: see Hoffman-La Roche v . Commission [1972] ECR 619. Agreements can be given individual exemptions from these rules if production or distribution or technical and economic progress is made; consumers obtain a fair share of the resulting benefit; no extra obligations are imposed; and the agreement does not allow the parties to eliminate competition. Certain categories of agreements are given a block exemption, an example being exclusive dealing agreements.

Abuse of a dominant position exists under Article 82 of the European Communities when an undertaking can hinder the maintenance of effective competition on the relevant market by allowing it to behave to an appreciable extent independently of its competitors and customers and ultimately of consumers: see Michelin v. Commission [1983] ECR 3461. However, it is the abuse of this position that is controlled. Abuse is an objectively determined criterion and relates to the effect on the market. The essence of it is that there are actings to diminish or distort competition: Hoffman-La Roche v . Commission [1979] ECR 461.

mergers were not clearly controlled by either of the foregoing concepts, although they have been considered under Article 81 and Article 82. A new regulation, which came into force in 1990, controls mergers and concentrations. It requires referral to the Commission of the European Union if there is a Community dimension.

By virtue of the Competition Act 1998, UK competition law now closely follows EU competition policy, striking at cartels and concerted practices and prohibiting the abuse of a dominant position. See also antidumping, state aids.