Competition law and antitrust regulation in the European Union

1.

COMPETITION LAW AND ANTIMONOPOLY
REGULATION IN THE EUROPEAN UNION
1. EU competition law: the concept, objectives and sources of legal
regulation.
2. The powers of the EU authorities in the implementation of antitrust
policy.
3. EU competition law subjects. The concept of "enterprise".
4. The system of measures aimed at countering anti-competitive
practices: general characteristics.
5. Prohibition of monopolistic activity of enterprises. Cartel practice.
6. Abuse of a dominant market position: the concept and practice of
regulation. The concept of product, geographic and temporary
markets.
7. Control over the concentration of enterprises: the concept, legal
regulation, analysis of judicial practice
8. State aid control. Regulation of the activities of public enterprises
and branches of natural monopolies

2.

1. EU competition law: the concept, objectives
and sources of legal regulation
EU competition law is a set of
EU regulations that regulate the
coordination at the legal level of
actions and plans aimed at
preventing
violations
of
competition within the common
market.

3.

The Goals and Values of EU Competition Law

4.

The objectives of the general competition policy
The objectives of the general competition policy are:
- eliminating threats to the free market;
- improving the production or distribution of goods;
- technical and economic progress;
- increasing the efficiency of the economy;
- strengthening the competitiveness of goods, services
and businesses from the united Europe.

5.

Competition law
Competition law regulates the rights and obligations
of market participants:
a) imposes restrictions on their economic activities;
b) establish the conditions and procedures for the
establishment and reorganization of the company;
c) provides for the possibility of restricting the use of
intellectual property rights;
d) introduces the grounds and consequences of the
invalidity of transactions.

6.

Competition law
Competition law establishes a system for monitoring
compliance with competition rules and, accordingly, a system
of administrative penalties imposed by the European
Commission for their violation.
The object of regulation of competition law
is economic relations and actions that affect
competition in the common market.
The subject of regulation is the rights and
obligations of participants in economic
relations and actions.
EU competition law prohibits anti-competitive
agreements and abuse of dominance.

7.

European competition law
European competition law today derives mostly from articles 101 to
109 of the Treaty on the Functioning of the European Union (TFEU),
as well as a series of Regulations and Directives.
Four main policy areas include:
Cartels, or control of collusion and other anti-competitive
practices, under article 101 TFEU.
Market dominance, or preventing the abuse of firms' dominant
market positions under article 102 TFEU.
Mergers, control of proposed mergers, acquisitions and joint
ventures involving companies that have a certain, defined amount
of turnover in the EU, according to the European Union merger
law.
State aid, control of direct and indirect aid given by Member States
of the European Union to companies under TFEU article 107.

8.

2. The powers of the EU authorities in the
implementation of antitrust policy
• The Council, together with the Parliament, has the
right to adopt an act of secondary law. In some cases,
this right is delegated to the European Commission.
• The European Commission has the right to
investigate possible violations of competition by
subjects of competition law both on its own initiative
and at the request of others.
• As part of its competition policy, the Commission
monitors both public and private enterprises, as well
as controls the possible provision of subsidies by
Member States to national enterprises.

9.

Preserving and promoting fair competition
practice
The EU's rules on competition are designed to ensure fair and equal
conditions for businesses, while leaving space for innovation, unified
standards, and the development of small businesses.
The European Commission monitors and investigates anticompetition practices, mergers and state aid to ensure a level
playing field for EU businesses, while guaranteeing choice and fair
pricing for consumers.
Large firms are barred from using their bargaining power to impose
conditions that would make it difficult for their suppliers or customers
to do business with their competitors. The Commission can fine
companies for this practice, because it leads to higher prices and/or
less choice for consumers.

10.

Preserving and promoting fair competition
practice
The Commission's powers to
investigate and halt violations of EU
competition rules are subject to a
number of internal checks and
balances, as well as full judicial
review by the European Courts.

11.

Powers of the European Commission in the
area of competition law:
1) the right to investigate possible violations of competition by
enterprises, both upon request and on their own initiative.
Enterprises are obliged to provide the inspection officials of the
Commission with access to the entire territory of the enterprise, all
the requested information, including accounting, as well as give oral
explanations.
2) the right to impose penalties (in the form of a fixed amount and /
or penalties) both for violations of competition and for failure by
enterprises to fulfill their obligations in relation to representatives of
the Commission during the investigation.
3) transactions between enterprises located outside the EU, but
whose activities affect the competitive environment of the EU
internal market, also fall under the control of the Commission.

12.

The practice of imposing penalties on
businesses by the European Commission
• 2016 - Volvo / Renault, Daimler, Iveco, DAF and
Scania (cartel agreement) - € 3.9 billion
• 2017 - Google (abuse of dominance) - € 2.4 billion
• 2018 - Google (abuse of dominance) - € 4.34 billion
(penalty has been challenged in the Courts of Justice)
• 2019 - Google (abuse of dominance) - € 1.49 billion
• 2021 - Apple (the investigation has not been
completed)

13.

EU competition cases

14.

3. EU competition law subjects. The concept of
"enterprise".
The main
competition
enterprise
subject
law is
of
an

15.

The concept of "enterprise"
An enterprise is «any entity engaged in an economic activity,
irrespective of its legal form».
This wording reflects the terminology used by the European
Court of Justice in its judgments.
It is the economic activity that is the determining factor, not
the legal form.
In practice, this means that the self-employed, family firms,
partnerships and associations or any other entity that is
regularly engaged in an economic activity may be considered
as enterprises. An economic activity is usually seen as «the
sale of products or services at a given price, on a given/direct
market».

16.

EU competition law subjects
Member States may also act as a subject of EU
competition law if they act as an economic entity.

17.

4. The system of measures aimed at countering
anti-competitive practices: general characteristics
1. Measures aimed at counteracting unfair competition
from imported goods (countervailing measures, anti-dumping
measures)
2. Measures aimed at countering the sharply increased
imports (special protective (safeguard) measures).
The most common measures are anti-dumping. In recent
years, the EU has practically refused to introduce special
protective measures.
An EU member state is obliged to inform the EU Commission
of all cases when import trends are unfavorable for the EU
market and in the future may require import control measures.

18.

Countervailing measures
Countervailing
measures
are
measures that can be undertaken
whenever an investigation, by the
investigating authority of the
importing country, has led to the
determination that the imported goods
are benefiting from subsidies, and
that they result in an injury

19.

Countervailing measures
Regulation (EU) 2016/1037 of the European
Parliament and of the Council of 8 June 2016 on
protection against subsidised imports from
countries not members of the European Union
A subsidy is a financial contribution made by (or on behalf of) a
government or a public body that gives the recipient a benefit.
Some subsidies are used to pursue domestic or social policies, for
example supporting industries that help create new jobs. However,
unfair subsidies can distort the EU market, create unfair competition
and therefore damage European industry.
The EU can impose duties to counteract a subsidy, but only if it is
limited to a specific firm, industry or group of firms or industries.
Export subsidies, and subsidies based on using domestic goods over
imported ones, are specific.

20.

Types of subsidies
The recipient benefits when financial contributions are provided
on more favourable terms than those available on the market
a direct or potential transfer of funds (e.g. grants, loans,
equity injection or loan guarantees)
A financial
contribution
can be:
government revenue abandoned or not collected (e.g. tax
credits)
a government providing goods and services, apart from
infrastructure
a government purchasing goods
any of the above done by a private company on the
instruction of the government
A specific subsidy is limited to a particular sector (e.g. ceramics or chemicals). A
subsidy that is broadly available, like helping small businesses regardless of the
industrial sector, isn't considered specific.

21.

Types of countervailing measures
Countervailing measures counteract the effects of
subsidised imports on the EU market and restore
fair competition.
The measures can be:
adding a percentage of the price to the
goods
a fixed amount per unit
applying a minimum import price
'price undertaking' where the exporter
commits to sell the product under
investigation above a minimum price. In
return, the Commission doesn't impose a
duty.

22.

Anti-dumping measures
Regulation (EU) 2016/1036 of the European
Parliament and of the Council of 8 June 2016 on
protection against dumped imports from
countries not members of the European Union

23.

Anti-dumping measures
A non-EU company is 'dumping' if it exports a product to the EU at a price lower than the
normal value of the product. The normal value is either product's price as sold on the home
market of the non-EU company, or a price based on the cost of production and profit.
The European Commission is responsible for investigating dumping claims and imposing
measures.
It opens an investigation after receiving a complaint from the European producers of the
product concerned. The Commission can also do so on its own initiative.
If the Commission is satisfied that the complaint contains enough evidence, it opens an antidumping proceeding (investigation) by publishing a notice in the EU's Official Journal
The investigation checks if:
• there is dumping by the producers in the country/countries concerned
• the European industry concerned suffers 'material injury'
• there is a causal link between dumping and injury
• putting measures in place is not against the European interest
It is only when all four conditions are met that the Commission may put anti-dumping
measures in place.
The time limit for the Commission's investigation is 15 months. The results are then
published in the Official Journal.

24.

Anti-dumping measures
Anti-dumping measures can be put on imports of specific products
if the Commission's anti-dumping investigation justifies it.
These measures are usually in the form of an 'ad valorem' duty. Other
measures that can be applied include a fixed or specific amount of duty
or, in some cases, a minimum import price.
• Price undertakings may also be accepted instead of anti-dumping duties.
This is where the exporter agrees not sell products in the EU at prices
below a minimum amount.
• If the Commission agrees to an undertaking then the anti-dumping duties
will not be collected on those imports. The Commission is not obliged to
accept an offer of an undertaking.
• The importer in the EU pays the duties and the national customs authority
of the EU country collects them. The Commission monitors measures to
make sure they are effective and respected by exporters and importers.

25.

Special protective (safeguard) measures
Regulation (EU) 2015/478 of the
European Parliament and of the Council
of 11 March 2015 on common rules for
imports
Regulation (EU) 2015/755 of the
European Parliament and of the Council
of 29 April 2015 on common rules for
imports from certain third countries
Imports from
WTO
countries
Imports from
non-WTO
countries
Safeguards are intended for
situations in which an EU industry
is affected by an unforeseen, sharp
and sudden increase of imports

26.

Safeguard measures
Unlike anti-dumping and anti-subsidy measures, safeguards do
not focus on whether trade is fair or not, so the conditions for
imposing them are more stringent.
The EU has to show
that the increase in
imports is:
sharp
due to unforeseen developments
causing (or threatening) serious injury to domestic industry (a
higher level of injury than the material injury required for antidumping and anti-subsidy)
and that safeguards are in the interest of the EU (a requirement
beyond WTO obligations)
Another essential feature of safeguards is that they apply to all
such imports from all countries (this is called erga omnes).

27.

5. Prohibition of monopolistic activity of
enterprises. Cartel practice
Article 101 of the TFEU prohibits agreements between enterprises that
are capable of affecting trade between Member States and have the
purpose or result of preventing, restricting or disrupting competition
within the common market.
To apply this article, four conditions must be met.
1. First of all, Article 101 of the TFEU regulates the behavior of enterprises,
therefore, participants in legal relations must be enterprises within the
meaning of this article.
2. These enterprises must conclude an agreement among themselves,
participate in the "decision taken by the association of enterprises" or
"coordinated actions". In other words, there should be an agreement of
intentions between enterprises.
3. The conduct of enterprises should be "capable of influencing trade
between Member States".
4. These actions must have the "purpose" or "result" of "preventing,
restricting or disrupting competition within the common market"

28.

FORMS OF COLLECTIVE MONOPOLISTIC ACTIVITY
Article 101 TFEU establishes three forms of collective
monopolistic activity:
- agreements between enterprises;
- decisions taken by associations of enterprises;
- cartel practice

29.

Agreements between enterprises are usually divided
into horizontal and vertical
Horizontal agreements are concluded between enterprises when
the contracting parties are at the same market level, i.e. in the
same link of the trade and production chain (for example,
manufacturers of cars or other goods of the same class).
Vertical agreements usually link enterprises located at different
levels of production or trade (for example, bicycle manufacturers
and bicycle tire manufacturers).

30.

CARTELS
A cartel is a group of
similar,
independent
companies which join together
to fix prices, to limit
production or to share markets
or customers between them
Cartelists can also collude on product quality or innovation. Action
against cartels is a specific type of antitrust enforcement.
Instead of competing with each other, cartel members rely on one
another’s agreed course of action, which reduces their incentives to
provide new or better products and services at competitive prices

31.

Exceptions from the general prohibition provided for in § 3 of
Article 101 of the TFEU
An exception to the rule is agreements that meet four
requirements simultaneously, namely:
a) are aimed at improving the production or distribution of goods
or at promoting technical or economic progress;
b) provide commensurate benefits to consumers;
c) do not impose disproportionate restrictions on enterprises;
d) do not provide an opportunity to protect a significant part of
goods from competition.
The European Commission has the exclusive right to grant
individual exemptions

32.

GROUP EXEMPTIONS
Another method of reducing the number of petitions to
the Commission and establishing a certain legal stability
is group exemptions, the possibility of which is
provided for in Article 101 of the TFEU, according to
which such exemptions can be carried out in relation to
certain categories of agreements.
Group exemptions are established by the
Commission's regulations, and the agreements specified
in them fall under the exemption automatically: they do
not require a petition to the Commission.

33.

6. Abuse of a dominant market position: the concept and practice
of regulation. The concept of product, geographic and temporary
markets
Article 102 is aimed at preventing violation of
competition by one enterprise. Such a violation, in
principle, is possible in the case when the company is
able to act in the market, to some extent ignoring the
behavior of competitors.

34.

To establish whether there has been a violation of Article 102 of
the TFEU, it is necessary to answer four main questions:
1) what is the corresponding product market;
2) is the company's position in the commodity market
dominant;
3) does the enterprise abuse its dominant position in the
commodity market;
4) whether this affects a significant part of the EU
internal market.
Only if the answer to the last three questions is
positive, the company will violate the EU competition
rules.

35.

The definition of a commodity market occurs by
establishing its boundaries
It is traditional in the antimonopoly legislation to define the
relevant market as a combination of the market of the type
of goods under consideration and the markets of goods that
are interchangeable with it. At the same time, the opinion of
consumers of the product is of crucial importance when
establishing the fact of interchangeability.
- Product market
- Geographic market
- Temporary market

36.

It should be borne in mind that the market share that an enterprise
controls is not the only indicator for determining a dominant position
In this regard, the EU institutions take into account a number of
other market factors, including:
• - obstacles to entering the market for competitors;
• - possession of technologies and know-how that competitors do
not have;
• - the presence of a protected and widely known trademark
(brand);
• - the presence of a developed sales system and a number of
other circumstances.

37.

7. Control over the concentration of enterprises: the concept,
legal regulation, analysis of judicial practice
Collective actions of enterprises, especially
those that are executed in the form of an
agreement, can pose a significant threat to
the freedom of competition.
Meanwhile, the coordination of the
behavior of enterprises in the market often
leads to the organizational formalization of
cooperation — the creation of a joint venture
or even a merger of enterprises.

38.

Mergers
While companies combining forces and creating mergers or joint
ventures can expand markets and bring benefits to the economy,
some combinations may reduce competition. Combining the
activities of different companies may allow the companies, for
example, to develop new products more efficiently or to reduce
production or distribution costs.
However, some mergers may reduce competition in a market,
usually by creating or strengthening a dominant player. The
objective of examining proposed mergers is to prevent harmful
effects on competition.

39.

Since the early 1970s, the European Commission's
attempts to extend the EU's powers to the sphere of
merger control have met with a negative attitude of the
EU Court of Justice, which recognized the applicability
of EU competition rules in this area, but only if certain
conditions are met

40.

CONCENTRATION
Concentration is defined by the
Regulations as the merger of two
independent enterprises or the
acquisition by one enterprise of control
over another

41.

8. State aid control. Regulation of the activities of
public enterprises and branches of natural monopolies
Article 107 of the TFEU contains a
general prohibition on the provision
of any assistance to enterprises by
Member States or at the expense of
their resources. In accordance with
the general rules of application of
EU law, this prohibition applies to
cases of a real or potential threat to
free competition in the common
market or to intra-communal trade.
The TFEU prohibits state assistance that creates certain advantages for
an enterprise or a group of enterprises.
At the same time, the EU Court proceeds from a broad understanding of the
term "advantage" and includes any benefits for the enterprise that it could
not count on in the normal course of events.

42.

EXCEPTIONS
• Any state aid is incompatible with the EU competition rules only if it
does not fall under the exceptions established in the TFEU, or is
explicitly allowed by the European Commission. The first category
includes individual social assistance (for example, subsidizing
producers of cheap food products, provided that such assistance is
distributed non-discriminatively), as well as assistance for the
elimination of the consequences of natural disasters.
• The Commission also has the right to recognize certain types of
assistance that are compatible with EU competition rules. Such
exemptions are granted at the request of States and can be grouped
into the following main categories: assistance in the economic
development of underdeveloped regions, assistance in the
implementation of projects of pan-European significance; assistance
to industries (shipbuilding, steel, coal, textile, etc.).

43.

REGULATION OF THE ACTIVITIES OF ENTERPRISES OF
THE PUBLIC SECTOR OF THE ECONOMY AND NATURAL
MONOPOLIES
• The Commission has the authority to monitor the application of the
provisions of Article 106 of the TFEU and has the right to address
appropriate directives or decisions to the Member States, as
necessary. Most often, the granting of special powers by the state to
enterprises is due to the fact that they are operators of some
infrastructure that has no analogue due to the economic
disadvantage of its creation (railways, oil and gas pipelines,
communications facilities).
• In order to prevent monopolization of access to such infrastructure,
the Commission is working on gradual liberalization in the areas of
production and distribution of gas and electricity, transport and
communications.