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Flashcards in Competition Policy Deck (12):
0

Objectives of Competition Policy

free trade is best (most efficient)--OVERSEE flows of goods and services

ensure that companies COMPETE FAIRLY and equally in Europe's internal market

Treaty of Rome in 1957- "A system ensuring that competition in the common market is NOT DISTORTED"

ensure that European market functions properly and to provide consumers with the benefits of a FREE MARKET system

APPLYING rules to make sure that companies compete FAIRLY with each other

**creates wider choice, lower price, better quality, more innovation, and helps EU compete globally

1

Illegal/Permitted under Article 101 (cases)

restrictive agreements and concerted practices

no cartels: when companies come together in order to "control the market"

NO FIXING PRICES

NO UNFAIR CONDITIONS OF PURCHASE

NO CONTROLLING SUPPLY

NO COORDINATING INVESTMENTS


if companies are behaving in a way that makes it obvious, that is enough for the Eu

ex: Volkswagon and Audi (also 102)--don't sell to Germans
ex2: vitamin companies--fixed prices

2

Illegal/Permitted under Article 102 (cases)

abuse of a dominant position in the market

ex: Microsoft--dumping and not making system compatible
ex2: Nintendo--sectioning off market
ex3: Sky--only place to watch soccer


**dependent on whistle blowers

ie 
charging UNREASONABLY HIGH PRICES

selling at ARTIFICIALLY LOW PRICES with the aim to squeeze competitors out of the market

REQUIRING customers to buy a product that is related to another in-demand product which screws out competitors

REFUSING to deal with customers or offering special deals to those who buy most or all of supplies from the dominant company

making sale of one product CONDITIONAL over the sale of the other

3

Illegal/Permitted under Article 107 TFEU

state aid--prevent state aid from bailing out industries or companies 
Commission governs decisions over state aid (assistance to business).

loans and grants
tax breaks
goods and services provided at preferred rates
government guarantees  (enhance credit rating among competitors)
**no state aid for companies who have no hope of becoming economically viable

ex: Airplanes--state aid to land in certain airports (stimulates growth)

4

Commission's Investigative Powers

ENTER company premises, means of transport, etc

EXAMINE books and other records

TAKE or seal any of these books or records

ASK any employee about these records or the investigation (and record answer

5

European Commission: General Powers

pursues trans-EU cases (national competition authority or NCA if in only one country)

power to investigate possible competitive behavior (1962) but also make binding decisions and impose fines (up to 10% of turnover); jurisdiction over large mergers (1990)

enforces EU competition rules with NCAs (EU Competition Network for consistency and best practices)

6

European Commissions General Focus

anti Cartels
dominant companies abusing power in the market
scrutiny of proposed mergers
control of state support for sectors and companies
help individuals and companies get compensation when they are victims of anti competitive conduct

7

European Commission: investigation process


someone alerts Commission (or given from NCA)---via email or letter
formal complaints from individuals
formal complaints for consumer association (with complaints from several individuals)
Commission sends a letter
Commission launches investigation

8


Mergers and Acquisition: Commission's Criteria

opposed or restricted if they would limit or significantly weaken competition in the EU

9

Mergers and Acquisition Cases

???????!???

10

Mergers and Acquisition: Clash with US


>65% for US is abuse of power
>38% for EU is abuse of power

must tell commission at specified size in EU
go along with merger until govt says "no" in US

11

Mergers and Acquisition: Whistle blowing strategies

if you admit wrong, REDUCTION in fee
if break cartel and tell, AMNESTY CLAUSE

*commission can fine 10% of sales from action (not profit); if do not pay, charge interest