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UNIQUE FEATURES OF COMPETITION LAW IN THE EUROPEAN UNION

INTRODUCTION

Competition law in the European Union is an important legal framework that promotes rational competition within the country’s market and legislation is called the Treaty on the Functioning of the European Union (TFEU). Constantly amended to investigate evolving economic dynamics, this legislation aims to prevent anti-competitive agreements and abuse of dominance that benefits consumers and businesses. Competition law prohibits activities that may be against the competition such as anti-competition agreements, abuse of dominant position, and mergers that lessen the competition.

LEGAL REGIME

The TFEU’s Articles 101 and 102 constitute the basis of the European Union’s competition law framework. Article 101 forbids agreements to fix rates, limit or regulate output, allocate market space, or discriminate amongst players with comparable backgrounds. Abuse of dominance is prohibited under Article 102. Article 101 is triggered only if the undertaking has market power, as there can be no market effect without market power. Market power is defined by the European Union horizontal cooperation guidelines as “the ability to profitably maintain the cost beyond competitive rates for a period of time or to profitably take care of output in terms of goods quantities, goods quality and range of our creativity below competitive levels for a period of time.” The EC has interpreted market power differently than dominance in the framework of anti-competitive agreements. According to the EU horizontal cooperation guidelines, this distinction is a matter of degree. According to article 102 of the TFEU, collective dominance has been recognized and accepted as a legal concept.  The concept of collective dominance solves anti-competitive issues that are neglected by Article 101. Article 101 requires the existence of an understanding agreement, whether express or implied. The EU merger regulation is the main regulation that acts as the basis for the merger control system. The EU merger regulation prevents concentration that impacts trade between EU member states and threatens to significantly influence competition within member states’ territories. When investigating an anti-competitive mindset, national competition agencies in the EU are expected to abide by Articles 101 and 102.

ENFORCEMENT

The EC is in the position of enforcing Articles 101 and 102 of the TFEU and has been granted the authority to examine alleged anti-competitive conduct and propose suitable measures to stop it. The EC can issue a reasoned judgment to stop any anti-competitive activities and order EU member states to implement the decision. The EC’s judgment might be challenged to the General Court. The EC has the authority to issue orders of any kind to halt anti-competitive activities and to levy fines. The EC has broad discretion in levying penalties. The European Commission developed rules for issuing penalties in 1998. In 2006, the 1998 guidelines were amended and modified. The EC might think about an Undertaking’s capacity to pay or its financial sustainability when issuing a punishment, and may even issue symbolic fines in some situations. In extraordinary circumstances, and in the public interest, the EC may issue a judgment in the form of a statement saying that Articles 101 and 102 do not apply to the case. This practice explains the law and guarantees that the TFEU is applied consistently. In addition to the leniency procedure, the EC offers the choice of settlement in cartel proceedings. The goal of the settlement procedure is to shorten the decision-making process. The EC provides a ‘statement of objections’ in the settlement, and the parties must agree with the EC’s findings and complaints. In exchange, the party received a 10% discount on the fine. Settlements vary from commitment judgments in that they entail a declaration of guilt and so prove the TFEU’s participation. Individuals may file lawsuits for damages or compensation in national courts.

MERGER CONTROL

The director general has the authority for examining transactions. Transactions that are in concentrations and which exceed the specified turnover thresholds are required to be notified to the EU. According to the EU merger regulation and the EU merger notice, only full function joint ventures must be notified. A full function joint venture operates on a market, performs functions performed by other undertakings functioning on the same market, has an administration dedicated to its day-to-day operation, and has possession of adequate funding including finance, staff, and assets to conduct its business activities on a long-term basis. There is no time limit for declaring a transaction, but the regime is suspended. In phase 1, the EC has 25 working days to authorize a transaction, which can be prolonged to 35 working days. If the EC believes that a transaction rises competition issues, it can launch a phase 2 inquiry. The EC has 90 working days from the start of the phase 2 inquiry to approve a transaction.

INTERNATIONAL COOPERATION

The EC undertakes international cooperation by entering into formal inter-governmental agreements with the U.S. in 1991, Canada in 1999, and Japan in 2003. Entering into memoranda of understanding with different countries like South Korea, India, and China and entering into trade agreements and informal mechanisms with Australia. To be able to coordinate investigations with other competition agencies, the EC asks leniency applicants to give details regarding applications they submitted or intend to file in other countries. In addition, the EC requests a confidential waiver in merger filings so that it may exchange facts with other competition regulators and coordinate the assessment process.

CONCLUSION

Competition law in the EU is based on articles 101 and 102 of the treaty on the functioning of the European Union (TFEU). These articles establish regulations to promote rational competition and protect the consumers of the country. Article 101 and Article 102 has a major difference in that Article 101 prohibits anti-competition agreement and practices such as price fixing, and market allocation. On the other hand, Article 102 prohibits the misuse of a dominant market position, preventing practices such as excessive pricing or exclusionary conduct. The goal of competition law enforcement is to create a fair playing field, stimulate innovation, safeguard consumer welfare, and preserve the credibility of the EU’s domestic market. It covers market power issues, anti-competitive agreements, and misuse of monopoly.

Author(s) Name: Sai Krishna Cheekati (Amity University, Noida)