This chapter considers the economics of monopoly abuse. A monopolist is a firm which is the sole supplier in a relevant market. Monopolists are able to determine the market price. This will be higher than the competitive price, with the quantity supplied being lower. This situation leads to a loss of welfare to society as a whole, and also a redistribution of income from some of the monopolist’s customers to the monopolist. The monopolist may also engage in wasteful strategic behaviour to protect its privileged position. In both the EU and UK regimes, competition enforcement is largely complaint driven. This forces the courts, and therefore economists as expert witnesses, to consider the (anti-)competitive impact of short-run activity that might be expected to have little in the way of long-run repercussions.
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Justine Pila and Paul L.C. Torremans
This chapter focuses on EU law on unfair competition. Unfair competition law is concerned with fair play in commerce. It normally acts in tandem with its more powerful, but much more narrowly focused, counterpart competition law. Together they are generally regarded as necessary in order to steer competition along an orderly course. And they thereby contribute to promoting an efficient market system that serves the interests of all participants. While there is no single EU instrument that deals with unfair competition law as a whole, there is a significant level of EU legislative intervention in relation to comparative and misleading advertising and in relation to unfair business-to-consumer commercial practices; each of these are discussed in detail.
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This chapter discusses the application of competition law to mergers, focusing on the UK system. Where a relevant merger situation is created, the Competition and Markets Authority (CMA) has the power to review the merger. Unlike in the EU, notification is not compulsory. The CMA may clear the merger, clear it subject to conditions, or refer it for further consideration to an independent Inquiry Group made up of members of the CMA Panel. The Inquiry Group may clear the merger, clear it subject to conditions, or block it. The test of a merger’s acceptance is that of whether it substantially lessens competition. UK merger decisions may be appealed to the Competition Appeals Tribunal.
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This chapter discusses competition law in the European Union and United Kingdom. ‘Undertakings’ are the sole subjects of the substantive law relating to agreements and the abuse of dominant positions. This is the word used in the Treaty on the Functioning of the European Union (TFEU) and in EU secondary legislation, and has been adopted in the UK Competition Act 1998 (CA). Market integration has been highly influential in the shaping of EU competition policy. UK competition laws are not governed by similar concerns. The role of the European Commission in competition law is fundamental, and the European Courts have contributed to clarifying the interpretation of competition law provisions. In the United Kingdom, the Competition and Markets Authority (and the sectoral regulators) and the Competition Appeals Tribunal are the principal enforcers.
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This chapter focuses on the rights of those wishing to take action against an infringement of competition law, potentially with a view to being compensated for the harm they may have suffered. One option is going to the relevant competition authority and filing a complaint to trigger the public enforcement route, saving the cost of litigation. The other option is to seek competition law enforcement in private claims before the courts. Claimants may seek damages or other remedies, including injunctions. In the UK, damages may be sought before the Competition Appeals Tribunal (CAT) and before the national courts. Collective claims can only be brought before the CAT. The number of private actions is increasing, and efforts have been made both by the EU and UK legislators to encourage more private litigation.
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This chapter focuses on the current interaction between European Union and UK law. EU law is currently a source of UK law. However, the relationship between the two regimes is expected to change in the future as a consequence of the UK’s decision to withdraw from the EU. The European Union (Withdrawal) Act 2018 stipulates that the European Communities Act 1972 will be ‘repealed on exit day’, which would be 29 March 2019 provided that the two-year period since Article 50 TEU was triggered is not extended. Once the European Communities Act 1972 has been repealed, EU law will cease to be a source of UK law. No major immediate changes to the national competition legislation are to be expected, but future reforms could distance the UK system from the EU rules.
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This chapter explores the financial penalties imposed for breaches of competition law in the EU and the UK. Broadly speaking, enforcers have three kinds of ‘weapons’ in their arsenal to use against those who attack competition: remedies, imprisonment, and fines. The first of these weapons may be the most powerful, and includes conduct, structural, and third-party remedies. Incarceration — the second weapon — is a well-publicized feature of the US system, and has been an option in the UK in relation to hard-core cartel conduct since the entry into force of the Enterprise Act 2002 (EA). The argument in favour of the efficacy of fines, the third weapon, is a persuasive one: companies take part in anti-competitive conduct in order to boost profits; remove those profits and the incentive for illegal conduct vanishes.
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This chapter discusses market studies and market investigations. Market studies and market investigations are tools available to the Competition and Markets Authority (CMA) in the event that a market failure is identified in a specific market. Market studies examine the causes of specific markets not working well for consumers, and make specific proposals for improvement. A market investigation reference is a feature of UK law by virtue of which a market ‘failing’ to operate competitively as a whole may be investigated by the CMA. The CMA has very wide powers to order changes to the way the market operates, or to accept undertakings to remedy defects. No penalties may be imposed for past behaviour, and no rights arise for third parties in relation to conduct found to be in need of change.
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Competition law in the EU also exerts some degree of control over the actions of the Member States when they intervene in the market in ways which could harm the competitive process. The Member States commit to complying with these and other obligations the moment they agree to be bound by the acquis unionaire, which is a prerequisite for EU membership. There are two main provisions in this regard: Articles 106 and 107 TFEU. This chapter covers the basic principles underlying the application of Articles 106 and 107 TFEU, and explores the interplay between the general prohibitions they contain and their multiple exceptions. Article 106 ensures that undertakings owned, established, or regulated by the State are not protected or advantaged vis-à-vis private competitors, while Article 107 TFEU contains a general prohibition of state aid.
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M P Furmston
This chapter discusses two types of contracts rendered void by statute: wagering contracts and agreements prohibited by competition law (EU competition rules and UK competition rules).
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This chapter deals with the way in which infringements of Articles 101 and 102 TFEU and Chapter I and II Prohibitions of the Competition Act 1998 are investigated and attacked. The European Commission has its own powers to investigate infringements of EU competition law by virtue of Regulation 1/2003. It may cooperate with national competition authorities (NCAs), who also have their own powers by virtue of EU law and their respective national competition laws. NCAs and the European Commission cooperate through the European Competition Network (ECN). The European Commission and the Competition Markets Authority (CMA) may obtain information, or may investigate on-site. The CMA also has criminal jurisdiction in some cases. Undertakings subject to investigation have rights that must be observed.
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This chapter presents an introduction to competition law covering the development of competition law, the experience of the United States, economics and competition law, and competition law resources. Competition law is the legislation that ensures competition is protected from unrestrained market power in free market economies. The primary purpose of competition law is to remedy some of the situations in which the free market system — in which supply and demand, and not government intervention, determine the allocation of resources — breaks down. The point was well made in the House of Lords debate during the passage of the Competition Act 1998 (CA) that ‘competition law provides the framework for competitive activity. It protects the process of competition’.
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This chapter focuses on block exemption regulations, which have become crucial in the application of the exception contained in Article 101(3) TFEU to agreements whose pro-competitive effects may outweigh any potential threats to competition. The current block exemptions represent an attempt to reconcile economic considerations and the needs of business. They are therefore less prescriptive than earlier versions, and tend to set a benchmark share of the relevant market within which they are applicable. The chapter fleshes out the details of the principal block exemptions presently in force, and provides a step-by-step guide to their application in the shape of a general flow chart. It covers legal basis and withdrawal, block exemptions for vertical agreements, and horizontal block exemptions.
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This chapter discusses the application of competition law to mergers, focusing on the EU and the EUMR. In the EU, where a merger (‘concentration’) meets the relevant thresholds, it falls within the exclusive competence of the European Commission to examine the merger. Undertakings contemplating such a merger are required compulsorily to notify the Commission. The test of a merger’s acceptance is that of whether it substantially impedes effective competition in the internal market, in particular, but not exclusively, by creating or strengthening a dominant position. Using the powers set out in the Merger Regulation the Commission may authorize, or block, the merger over a two-stage process. Tight time limits apply. Appeals against Commission decisions are to the General Court.
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A group of firms can act together and damage the market and produce unwelcome welfare effects. This is known as a ‘cartel’ or ‘cartelization’. However, multi-firm conduct is often a more difficult phenomenon to analyse and identify than single firm or monopoly behaviour. This chapter discusses horizontal restraints, vertical agreements, and vertical restraints. Horizontal agreements may raise concerns that competition is being harmed, but collusion may be difficult to detect. The problems of policing horizontal conduct may be exacerbated in oligopoly markets, where there are few competitors which frequently mimic each other’s conduct without necessarily coordinating. Cartel arrangements may be difficult to put in place, but may have long-term success. Vertical agreements are less likely to raise competitive concern, unless they are linked to the exercise of market power, or contribute to the exclusion of competitors from a market.
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This chapter provides an introduction to Competition Policy and law in the European Union (EU). There are three sets of rules: one relating to the activities of legal persons—that is, the business undertakings, which now includes rules on concentrations and mergers; one relating to anti-dumping measures; and, finally, one relating to the activities of the member states, principally state aid. The rules concerned with private undertakings are further subdivided into: Article 101 TFEU for agreements between cartels involving more than one entity; Article 102 TFEU, concerned with dominant positions, dealing predominantly with one entity but also applicable to one or more undertakings; and the rules applicable to concentrations and mergers.
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This chapter provides an overview of the tension between the application of competition law and the exercise of IPRs. Key issues are the circumstances in which competition law may be applied to moderate the exercise of IPRs in the relevant market; clauses in intellectual property (IP) licensing agreements between undertakings that might be permissible in terms of EU competition law and those which are not; the conditions under which a refusal to supply products protected by an IP right might constitute an abuse of a dominant position by the right holder; and when competition law can provide a defence to an infringement action.
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The Concentrate Questions and Answers series offer the best preparation for tackling exam questions. Each book includes typical questions, bullet-pointed answer plans and suggested answers, author commentary, and illustrative diagrams and flowcharts. This chapter presents sample exam questions along with examiner’s tips, answer plans, and suggested answers about EU competition. The questions on competition law range from a general overview question, to questions which surveys the basic concepts and requirements of Arts 101 and 102 TFEU. The 2007 Lisbon Treaty made little substantive change to the competition law provisions, which can be found in Arts 101–106 of the TFEU. More significant is the Competition Regulation 1/2003 and the Merger Regulation, 139/2004.
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This chapter discusses the international and European aspects of trade marks. Trade mark law is based on the Paris Convention and the TRIPS Agreement, with the Madrid system offering an international registration system. Inside the EU, one can also register a single trade mark for the whole of the Community by means of the Community Trade Mark Regulation. Trade mark law also has a substantial interaction with the Treaty provisions on the free movement of goods, but minimal conflict with competition law.
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This chapter draws a distinction between public, institutional enforcement of competition law, which may raise issues of public international law, and private actions before national courts. The coexistence of competition law regimes around the world means that companies that trade internationally may find themselves subject to the law of a ‘foreign’ state. While in the US the effects doctrine is relied on to assert jurisdiction, in the EU there has been no explicit adoption of the effects doctrine. Instead, the EU relies upon an ‘implementation’ doctrine. Under principles of comity a state may recognize the interests of another state when applying its competition law. Multilateral initiatives have been taken to try to resolve difficulties, but there is at present no single global agreement on competition law.
