Competition law
= a set of norms which prevent monopolies and maintain a fair market.
à applies if trade between member states is affected!
- TFEU 101 – anti-competitive agreements – undertakings
- TFEU 102 – abuse of dominance – undertakings
- TFEU 107 – state aid – member states
- Merger regulation – mergers/acquisitions – undertakings
- SGEI – natural monopolies
TFEU 101: anti-competitive agreements
à prohibits undertakings and associations of undertakings to enter agreements with anti-competitive
object or effect, unless they contribute to improvement or promoting technical/economic progress with
the consumer having a fair share of the benefit!
Undertaking = entity engaged in economic activity in offering goods or services
Association of undertakings = group of independent undertakings à EFPIA (European federation of
pharmaceutical industries and associations)
Agreements = explicit agreements / “concerted practices”
Concerted practices = evidence of conduct but no communication or evidence of communication but no
evidence of conduct.
à agreements can be horizontal (between same sort undertakings) or vertical (undertaking and other
level of distribution chain) à horizontal agreements are likely to be anti-competitive!
Anti-competitive agreements:
By object = price fixing or agreements not to compete
By effect = the European commission and ECJ apply economic analysis to test the effects
Balancing pro-competitive effects:
Anti-competitive effects are being weighed against pro-competitive effects
- Block exemptions (pro effects generally overweigh anti effects)
- Individual exemptions (pro effects of individual agreement overweigh anti effects)
- De minimis (anti effects are negligible)
TFEU 102: abuse of dominance
à Prohibits abuse of dominance by the undertakings if it affects trade between member states
Abuse:
- Unfair prices or conditions
- Discrimination
- Tying
- Limitation of production supplies
- Limitation of technical development
à If the position is dominant is defined through the share at the market.
- Market = combination of a product market, geographical market (rarely temporal market)
Product market:
- Can consumers switch between products? à demand substitution
- Can suppliers switch between products? à supply substitution
- SSNIP test – small but significant non-transitory increase in price
, Geographical market:
In combination with the product market.
- In which the conditions of competition are homogenous and can be distinguished from
neighboring areas because the conditions of competition are different in those areas.
Market share:
- Absolut market share
- Market share relative to other competitors
- Dominance is not likely if below 40% of the relevant market à market power is 50% of the
relevant market!
Merger regulation: mergers and acquisitions
Companies cannot avoid competition by buying their competitors à Prohibits concentrations of
undertakings which may create significant impediment to effective competition if they do not create
efficiencies which are beneficial for the consumers.
Significant impediment = hinder
- Market share, barrier to entry, actual/potential competition
- Creates a dominant position
TFEU 107: state aid
Prohibits member states to selectively provide aid to undertakings in any form if it distorts or threatens
competition unless it is provided in exceptional circumstances (natural disasters etc.) or creates
efficiencies (promotes culture, development).
Selectively = favoring certain undertakings, not affecting all undertakings
Aid = any aid in any form – subsidy or economic advantage like tax advantage or loan
à The Dutch government gave money to KLM, it was legal due to special circumstances, covid-19
SGEI – services of general economic interest – natural monopolies
In some areas monopolies are unavoidable or more efficient than the competitive markets.
- Natural monopolies = monopolies at the market with high infrastructural costs and other barriers
which provide advantage to one undertaking over its competitors.
à railroad
- Exempted from certain limits
- Have public obligations
= a set of norms which prevent monopolies and maintain a fair market.
à applies if trade between member states is affected!
- TFEU 101 – anti-competitive agreements – undertakings
- TFEU 102 – abuse of dominance – undertakings
- TFEU 107 – state aid – member states
- Merger regulation – mergers/acquisitions – undertakings
- SGEI – natural monopolies
TFEU 101: anti-competitive agreements
à prohibits undertakings and associations of undertakings to enter agreements with anti-competitive
object or effect, unless they contribute to improvement or promoting technical/economic progress with
the consumer having a fair share of the benefit!
Undertaking = entity engaged in economic activity in offering goods or services
Association of undertakings = group of independent undertakings à EFPIA (European federation of
pharmaceutical industries and associations)
Agreements = explicit agreements / “concerted practices”
Concerted practices = evidence of conduct but no communication or evidence of communication but no
evidence of conduct.
à agreements can be horizontal (between same sort undertakings) or vertical (undertaking and other
level of distribution chain) à horizontal agreements are likely to be anti-competitive!
Anti-competitive agreements:
By object = price fixing or agreements not to compete
By effect = the European commission and ECJ apply economic analysis to test the effects
Balancing pro-competitive effects:
Anti-competitive effects are being weighed against pro-competitive effects
- Block exemptions (pro effects generally overweigh anti effects)
- Individual exemptions (pro effects of individual agreement overweigh anti effects)
- De minimis (anti effects are negligible)
TFEU 102: abuse of dominance
à Prohibits abuse of dominance by the undertakings if it affects trade between member states
Abuse:
- Unfair prices or conditions
- Discrimination
- Tying
- Limitation of production supplies
- Limitation of technical development
à If the position is dominant is defined through the share at the market.
- Market = combination of a product market, geographical market (rarely temporal market)
Product market:
- Can consumers switch between products? à demand substitution
- Can suppliers switch between products? à supply substitution
- SSNIP test – small but significant non-transitory increase in price
, Geographical market:
In combination with the product market.
- In which the conditions of competition are homogenous and can be distinguished from
neighboring areas because the conditions of competition are different in those areas.
Market share:
- Absolut market share
- Market share relative to other competitors
- Dominance is not likely if below 40% of the relevant market à market power is 50% of the
relevant market!
Merger regulation: mergers and acquisitions
Companies cannot avoid competition by buying their competitors à Prohibits concentrations of
undertakings which may create significant impediment to effective competition if they do not create
efficiencies which are beneficial for the consumers.
Significant impediment = hinder
- Market share, barrier to entry, actual/potential competition
- Creates a dominant position
TFEU 107: state aid
Prohibits member states to selectively provide aid to undertakings in any form if it distorts or threatens
competition unless it is provided in exceptional circumstances (natural disasters etc.) or creates
efficiencies (promotes culture, development).
Selectively = favoring certain undertakings, not affecting all undertakings
Aid = any aid in any form – subsidy or economic advantage like tax advantage or loan
à The Dutch government gave money to KLM, it was legal due to special circumstances, covid-19
SGEI – services of general economic interest – natural monopolies
In some areas monopolies are unavoidable or more efficient than the competitive markets.
- Natural monopolies = monopolies at the market with high infrastructural costs and other barriers
which provide advantage to one undertaking over its competitors.
à railroad
- Exempted from certain limits
- Have public obligations
