United Kingdom Competition Law - European Union Law

European Union Law

The United Kingdom joined the European Community (EC) with the European Community Act 1972, and through that became subject to EC competition law. Since the Maastricht Treaty of 1992, the EC was renamed the European Union (EU). Competition law falls under the social and economic pillar of the treaties. After the introduction of the Treaty of Lisbon the pillar structure was abandoned and competition law was subsumed in the Treaty on the Functioning of the European Union (TFEU). So where a British company is carrying out unfair business practices, is involved in a cartel or is attempting to merge in a way which would disrupt competition across UK borders, the Commission of the European Union will have enforcement powers and exclusively EU law will apply. The first provision is Article 101 TFEU, which deals with cartels and restrictive vertical agreements. Prohibited are...

"(1) ...all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market..."

Article 101(1) TFEU then gives examples of "hard core" restrictive practices such as price fixing or market sharing and 101(2) TFEU confirms that any agreements are automatically void. However, just like the Statute of Monopolies 1623, Article 101(3) TFEU creates exemptions, if the collusion is for distributional or technological innovation, gives consumers a "fair share" of the benefit and does not include unreasonable restraints (or disproportionate, in ECJ terminology) that risk eliminating competition anywhere. Article 102 TFEU deals with monopolies, or more precisely firms who have a dominant market share and abuse that position. Unlike U.S. Antitrust, EU law has never been used to punish the existence of dominant firms, but merely imposes a special responsibility to conduct oneself appropriately. Specific categories of abuse listed in Article 102 EC include price discrimination and exclusive dealing, much the same as sections 2 and 3 of the U.S. Clayton Act. Also under Article 102 EC, the European Council was empowered to enact a regulation to control mergers between firms, currently the latest known by the abbreviation of ECMR "Reg. 139/2004". The general test is whether a concentration (i.e. merger or acquisition) with a community dimension (i.e. affects a number of EU member states) might significantly impede effective competition. Again, the similarity to the Clayton Act's substantial lessening of competition. Finally, Articles 106 and 107 TFEU regulate the state's role in the market. Article 106(2) EC states clearly that nothing in the rules cannot be used to obstruct a member state's right to deliver public services, but that otherwise public enterprises must play by the same rules on collusion and abuse of dominance as everyone else. Article 107 TFEU, similar to Article 101 TFEU, lays down a general rule that the state may not aid or subsidise private parties in distortion of free competition, but then grants exceptions for things like charities, natural disasters or regional development.