EPRSauthor By / June 9, 2014

EU competition policy: key to a fair Single Market

The aim of EU competition policy is to safeguard the correct functioning of the Single Market. In essence it ensures…

©grechka27 / Fotolia

The aim of EU competition policy is to safeguard the correct functioning of the Single Market. In essence it ensures that enterprises have the possibility to compete on equal terms on the markets of all Member States.

EU competition policy: key to a fair Single Market
©grechka27 / Fotolia

Competition policy encompasses a wide range of areas: antitrust and cartels, merger examination, state aid, the liberalisation of markets and international cooperation. The European Commission enforces competition rules through its powers of investigation and sanction. Competition cases can be taken to the General Court with appeals heard by the Court of Justice. The European Parliament is only involved in the adoption of relevant legislation under the consultation procedure.

EU antitrust policy prohibits agreements between two or more independent market operators if they restrict competition. Furthermore, it prohibits abuse of a dominant market position by one or more undertakings. The most obvious example of infringement of antitrust rules is the creation of a cartel between market competitors, who join together to fix prices, collude on tender bids, limit production or share markets or customers between them. Between 1969, when the first cartel decision was adopted, and October 2013, 820 companies have been fined by the Commission for a total amount of over €19 billion.

The Commission also monitors planned mergers and acquisitions of companies if their combined businesses exceed specified revenue thresholds. Since 1990, the EC has been informed of more than 5 000 mergers, 24 of which were blocked for their possible anti-competitive effects. The EC also has the right to assess mergers between non-EU companies if they carry out a significant part of their business in the EU.

Member States are required to notify the Commission of any plan to grant or alter state aid unless it is of a type covered by the General Block Exemption Regulation. The Commission decides on the legality of state aid: it can monitor, restrict and recover any forms and levels of aid and must approve aid grants before they can be implemented. Between 2009 and 2012 aid granted in the context of the financial and economic crisis constituted the vast majority of state aid.

Liberalisation means opening up previously closed markets to competition. The liberalisation of network industries is especially challenging, with the impact of competition rules on the consumer benefits of such liberalisation being strongly debated.

Recent developments in competition policy include the private antitrust damages actions directive, the recommendation on collective redress and complex modernisation of the state aid rules. Even though the Commission has made progress in detecting cartels, finding an effective deterrent remains a challenge. Settlements, commitments and leniency programmes all have advantages and disadvantages.

Undoubtedly the EU has one of the strongest systems of competition policy worldwide. Competition itself has been found to contribute to long-term economic growth. In these times of crisis, the Commission arguably has ensured the proper application of state aid.

Read the whole In-Depth Analysis here


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