European Competition Law provides a wide-ranging review of the European rules relating to competition: restrictive agreements, abuse of a dominant position, impact of intellectual property rights, procedure, merger control, State aid.

European Competition Law

The EC Treaty has been in application since the founding of the European Economic Community on the territory of the original six Member States: Germany, Belgium, France, Italy, Luxembourg and the Netherlands. Other European States have progressively joined the founding States: Denmark, Ireland and the United Kingdom  joined on 1 January 1973; Greece on 1 January 1981; Spain and Portugal on 1 Janua …

Relations with Member States

The Treaties of Rome signed on 25 March 1957 , established the European Economic Community (EEC), which, since the Treaty of Maastricht, has become the European Community (EC) and the European Atomic Energy Community (EAEC or Euratom), respectively, thereby generalizing at the level of the economy as a whole, the fundamental principles laid down by the Treaty of Paris of 8 April 1951 for the coal and steel industry (ECSC), i.e. - abolition of trade restrictions, regulation of competition and joint economic policy -. Although each Community remained legally distinct, they were to share common institutions under the Treaty of Brussels of 8 April 1965. When the ECSC Treaty expired on 23 July 2002, the ECSC's competencies were transferred to the European Community.

Since then, all development in the construction of the Community has consisted in doing away with its exclusively economic dimension, by consistently transferring new responsibilities to the EU authorities. However, the European Community remained the major organization. Alongside the so-called first Community pillar, a second pillar could be distinguished which handled common foreign and security policy (CFSP) and a third pillar devoted to cooperation on justice and home affairs, which finally only included police and judicial cooperation in criminal matters as the Treaty of Amsterdam included the other provisions in the EC Treaty itself.

Following the Treaty of Rome, the Single European Act of 14-28 February 1986, which entered into force on 1 July 1987 relaxed the procedure for the harmonization of national legislations and put in place new policies underpinning the single market: on political and social cohesion, the environment and research and development policy. The European Union, which was set up by the Treaty of Maastricht of 7 February 1992 and which created in particular European citizenship and provided for the adoption of the single currency from 1 January 1999 included but did not replace the Communities. The texts were amended by the Treaty of Amsterdam of 2 October 1997 and the Treaty of Nice of 26 February 2001, which came into force on 1 May 1999 and 1 February 2003 respectively.

The Treaty of Lisbon, which has been the new foundation stone of the European Union since 1 December 2009, amends the provisions of the Treaty on European Union (TEU) and those of the Treaty establishing the European Community, now the Treaty on the Functioning of the European Union (TFEU). It includes significant institutional changes, such as the creation of a permanent president and a representative for foreign affairs. The allocation of votes between the Member States is modified, the Commission's powers are extended and the participation of the Parliament in the law-making process is reinforced.

Articles 1 to 17 TFEU lay down the “principles” governing the European Union. The preamble of the Treaty on the Functioning of the European Union provides “the removal of existing obstacles calls for concerted action in order to guarantee steady expansion, balanced trade and fair competition”. The competition rules can be found in Articles 101 et seq. TFEU and those relating to the abolition of restrictions to the free movement of goods in Articles 34 et seq.

From its entry into force, the EC Treaty introduced a system of rules making undistorted competition one of the objectives of the Community. New Article 3 TFEU (Treaty on the functioning of the European Union) no longer refers to “undistorted competition” merely providing that the Union has exclusive competence for the establishing of the competition rules necessary for the functioning of the internal market. Under the new treaty, exclusive jurisdiction means that only the EU has the power to legislate in this area, the role of Member States being limited to the implementation of the acts of the Union unless authorized by it to adopt, in the area concerned, legally binding acts.

Under Article 26 TFEU, the internal market, which has replaced the concept of common market, comprises an area without internal frontiers in which the free movement of goods, persons, services and capital is ensured in accordance with the provisions of the Treaties. The Union must adopt measures with the aim of establishing or ensuring the functioning of the internal market. The concept of non-distorted competition is however used in the protocol on the internal market and competition of the Treaty of Lisbon.

The Treaties

The Treaty of Rome came into force on 1 January 1958.

The EC Treaty has been in application since the founding of the European Economic Community on the territory of the original six Member States: Germany, Belgium, France, Italy, Luxembourg and the Netherlands. Other European States have progressively joined the founding States: Denmark, Ireland and the United Kingdom  joined on 1 January 1973; Greece on 1 January 1981; Spain and Portugal on 1 January 1986; Austria, Finland and Sweden on 1 January 1995; Hungary, Poland, the Czech Republic, Slovakia, Slovenia, Lithuania, Estonia, Latvia, Cyprus and Malta on 1 January 2004; Bulgaria and Romania on 1 January 2007 and Croatia on 1 July 2013. The European Union now has 28 members and represents 510.1 million inhabitants.

The transferring of certain competencies from the States to the institutions of the European Community has been carried out partially and progressively.

The TFEU sets limits to the Union's powers even relative to its scope of application. The adoption of the Treaty does not therefore entail a simple substitution of European law for national law but is a superposition of the two bodies of complementary and sometimes, concurrent rules. Therefore, the creation of European competition law has not meant the suppression of national laws in that field. The TFEU includes provisions making it possible to conciliate the European Union legal order with national legal orders. However, where conflicts arise, they are usually easily solved by application of the primacy rule: i.e. European Union law - Treaties, regulations, directives - always prevail over conflicting national law, regardless of the position of the latter in the hierarchy of norms; the national authorities must therefore leave the national rule unapplied.

The EC Treaty was intended by its drafters to be a framework-treaty and be supplemented in order to achieve the objective of the European Union, in particular through secondary law. The EU judicature has significantly contributed to the emphasis on integrating aspect of European competition law. The Court of Justice has gone beyond the traditional methods of interpretation of international courts by systematically adopting a dynamic teleological approach which has allowed it to extend to the fullest the jurisdiction of the EU authorities. Even before the adoption of the Community regulation on merger control, the Court had instituted rules on mergers, which were not provided for in the EC Treaty, relying on “[the spirit, general scheme and wording of Article 82 [102], as well as [on] the system and objectives of the Treaty”.

The EU authorities now seem to be ready to allow the national authorities greater independence in implementing competition law based on the principle of subsidiarity, expressly mentioned in Article 5 TFEU, which involves only bringing essential matters to the forefront and pushing to the periphery those which seem less significant.

The United Kingdom decided to leave the Union (Brexit). In a letter dated 29 March 2017, the head of the British government informed the authorities of the Union, in accordance with the provisions of Article 50 of the Treaty of Lisbon, of its decision to initiate the process of withdrawal of the United Kingdom which should be effective after a negotiation period of two years. An agreement concluded between the EU and the UK on 24 December 2020 and published in the Official Journal on 31 December establishes the principle of zero tariffs and no quantitative restrictions on the flow of goods, and outlines the relations of the parties in all areas from 1 January 2021. Some rules remain, such as free trade; others disappear, such as the free movement of persons or Erasmus exchanges. This agreement complements the withdrawal agreement of October 2019, which settled the question of the rights of European and British nationals, mutual financial commitments and stability in Ireland.

In 1992, the European Communities and the Member States of the European Free Trade Association (EFTA) signed the Agreement on the European Economic Area, which came into force on 1 January 1994. The purpose of this agreement was specifically to establish the free movement of goods, persons, services and capital between the signatories and to set up a system of undistorted competition. After the accession of Austria, Finland and Sweden to the European Community on 1 January 1995, only Iceland, Norway and Lichtenstein now remain members of the EEA. Switzerland, which had signed the Agreement, ended up withdrawing from the EEA following a negative referendum.

Articles 53, 54 and 59 of the EEA Agreement reproduce Articles 101, 102 and 106 of the TFEU. Article 61 EEA is identical to Article 107 TFEU on State aid. Most of the EU regulations, notices and guidelines on competition have been transposed into the EEA. The EEA competition rules, which are implemented by the EFTA Surveillance Authority, may be directly relied upon in the national courts of the Members States of the European Union.

Article 56 of the EEA Agreement lays down the rules of allocation of jurisdiction between the Commission and the EFTA Surveillance Authority. Where only trade between Member States of the EU is affected, the Commission has exclusive jurisdiction. The same principle applies for the EFTA Surveillance Authority where only trade between EEA or EFTA States is affected. If trade between EU and EEA Member States is affected, the Commission has jurisdiction to apply the two sets of rules where the turnover of the undertakings concerned in the territory of the EFTA is less than 33% of their turnover in the EEA.

The European Economic Area (EEA)

Any anticompetitive behavior which affects the territory of the Union falls within the Union competence even if the perpetrators have their registered office in a non-Member State. What limits are the EU authorities likely to encounter in the exercise of their jurisdiction? When defining those limits, reference is traditionally made in public international law to the distinction between jurisdictio (the power to say what the law is) and imperium (the power to order). Where an anticompetitive effect is located on the territory of a State, that State has full control of its jurisdictio power. By contrast, its imperium is limited to its territory.

Therefore, by delegation of the Member States, the Commission has the power to ask for information, to order that an infringement be brought to an end or to impose sanctions. However, it should not exercise its powers of enforcement outside the internal market. Furthermore, even in exercising its jurisdictio power, a principle of international comity imposes that it takes account of the legitimate interests of the third countries concerned. Agreements entered into between the Union and certain non-Member States have provided greater details of what is involved in that duty of cooperation .

The best example is to be found in the Agreement of 23 September 1991  between the Community and the United States regarding the application of their competition laws, supplemented by the Agreement of 4 June 1998  on the application of positive comity principles in the enforcement of their competition laws.

The Agreement states that one party must notify the other of any enforcement activities contemplated by its competition authorities that may affect important interests of the other party. The Agreement also provides for procedures for the exchange of information between the competition authorities. If both parties are proceeding for the same anticompetitive practice, they may decide to coordinate their actions so that each of them carries out enforcement activities compatible with the other's objectives. Where it appears that one party's enforcement activities may affect important interests of the other party, the signatories will consider, inter alia, the following factors in seeking an appropriate accommodation of the competing interests:

- the relative significance of the conduct within the enforcing party's territory as compared to conduct within the other party's territory;

- a purpose on the part of those engaged in the anticompetitive activities to affect consumers, suppliers, or competitors within the enforcing party's territory;

- the relative significance of the effects of the enforcement activities on the enforcing party's interests as compared to the effects on the other party's interests;

- the existence of reasonable expectations that would be furthered by the enforcement activities;

- the degree of conflict between the enforcement activities and the other party's laws or economic policies and

- the extent to which enforcement decisions of the other party with respect to the same persons, including judgments or undertakings resulting from such decisions, may be affected.

Lastly, the Agreement provides for bilateral consultation but not for any mechanism for conciliation. Since 2013, the European Union and the United States have been in negotiations for a new free trade agreement: the TAFTA (Transatlantic Free Trade Agreement), also known as the TTIP (Transatlantic Trade and Investment Partnership), which aims to create a unified market of 820 million consumers. However, the discussions have been dormant since the United Kingdom decided to leave the EU (Brexit).

The globalization of competition law is currently in the process of happening and in 2008 culminated in the creation of an international network of competition authorities (the International Competition Network - ICN) having more than a hundred members to-date.

See also the agreements entered into with Canada (OJ L175/1999) and Japan (OJ L183/2003) and the recommendation adopted by the OECD on 27 July 1995 (C(95)/130 final).

Relations with non-Member States

Some sectors may be referred to as “specific” because competition law does not apply to them at all or does not apply with the same intensity as elsewhere.

Sometimes, for general, national or EU political reasons, the Treaty itself provides for true exceptions to the enforcement of competition rules, for example in the case of defense or agriculture. In other cases, the economic reality of the sector lends itself to the application of some relaxing of the rules, either because in the insurance sector for instance , the activity naturally involves exchanges of information, or because, it calls for considerable level of cooperation of the undertakings' conduct for efficiency reasons as in the transport sector.

The enforcement of competition rules may also be modulated, not due to a desire to shield the economic sector in question but, on the contrary, to subject it the competition rules progressively. In that case, the special system is a tool for liberalizing sectors which had traditionally been monopolies. In the so-called network industries - rail transport, energy, postal services and electronic communications -, the natural monopoly theory therefore progressively loses ground to the benefit of the market economy. Nowadays, it is felt that in those sectors, although the essential infrastructures may still fall within a monopoly, the conditions of access to the network should on the other hand be opened up to competition under the control of national regulation authorities, with an obligation of universal service being imposed on the suppliers of these essential services.

Article 346(1)(b) TFEU provides that, “any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes”. The Council has drawn up a list of the products to which the provisions of paragraph 1(b) apply, which may be changed by the Council acting unanimously on a proposal from the Commission.

Like any exception, Article 346, which can only be asserted by Member States and not by undertakings, must be strictly interpreted; where products can have both a civil and military use, the competition rules will apply .

The TFEU provides that the enforcement of competition rules should not prevent the objectives of the common agricultural policy from being attained (Article 39 TFEU).

By application of that principle, Article 42 provides that, “the provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council”. According to Regulation No 26/62 of 4 April 1962, replaced by Regulation No 1184/2006 of 24 August 2006 , the prohibition of restricted practices shall not apply to “agreements, decisions and practices as form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article [39] of the Treaty”. However, the agreement or practice concerned must also have been implemented by an entity that is actually approved to do so by a Member State in order to achieve the objectives of the common organization of the market. Thus, the responsibilities which may be assigned to a producer organization (PO) under the rules applicable to the common organization of the market concerned can justify certain forms of coordination or concertation, including those relating to prices or quantities put on the market, only between producers that are members of the same PO and not between several of those organizations. In addition, the collective fixing of minimum sale prices within a PO cannot be considered to be proportionate to the objectives of stabilizing prices and concentrating supply where it does not allow producers selling their own products themselves to sell at a price below those minimum prices .

Article 100(1) TFEU provides that transport by rail, road and inland waterway are governed by Title VI of the Treaty and Article 100(2), that the Treaty confers upon the European Parliament and the Council, acting in accordance with ordinary legislative procedure, the power to decide “appropriate provisions for sea and air transport”.

Regulation No 17/62 had excluded the transport sector from its scope of application and made each type of transport - land, air and sea - subject to specific regulations. Regulation No 1/2003 has only left the substantial provisions of those specific regulations  and has removed specific procedural rules. The Commission's current policy consists in progressively putting an end to exemptions in the field of transports  and in adopting directives for the liberalization of the sector .

Although Article 1 of Regulation No 141  declared that competition law did not apply to agreements, decisions or concerted practices in the transport sector which have as their object or effect the fixing of transport rates and conditions, the limitation or control of the supply of transport or the sharing of transport markets, or to the abuse of a dominant position within the transport market, the Court of Justice did not consider that the exemption covered services distinct from the transport operation in itself. Accordingly, a cartel relating to the fixing of the rates and conditions of the services provided by freight forwarders, whose activity consists in supplying, in one package, a number of services that are distinct from the transport operation in itself, is not excluded from the scope of the competiton rules .

Both the electricity  and gas  directives lay down the principle of the distinction between undertakings which own transmission or storage facilities from transmission system operators, which involves, for vertically integrated undertakings, distinguishing between entities. The opening up of competition between electricity and gas suppliers has been total for undertakings since 1 July 2004, and for other users since 1 July 2007. Network access must be non-discriminatory, and the effective function of the market is ensured by independent regulatory authorities.

5º) Postal and electronic communications

The objective of the telecommunications directives  is to guarantee equal access by all operators to the various telecommunication services and networks. To that end, the national regulatory authorities must identify in particular the markets on which operators “with significant market power” are active (former incumbent operators) and which have specific obligations aimed at facilitating third parties' access to the network. The opening up to competition must be carried out whilst maintaining a universal service, which must be permanently provided at all points in the territory at affordable prices for the benefit of all users . In addition, the Commission also aims to ensure effective competition between mobile communication networks within the Union which has led to the adoption of a number of regulations .

See Commission Decision No M.529 of 7 December 1994, GEC/VSEL, LawLex200700001393JBJ; M.724 of 15 May 1996, GEC/Thomson CSF; M.3985 of 7 February 2006, EADS/BAES/FNM/NLFK.

Directive No 2009/73 of 13 July 2009, OJ L 211 of 14.08.2009, which codifies amendments made to Directive No 2003/55 of 26 June 2003 and repeals it.

Common regulatory framework Directives, No 2002/21 of 7 March 2002, OJ L108, 2002; Directive No 2002/19 access (…), OJ L108, 2002; Directive No 2002/22, universal service (…), OJ L108, 2002; Directive No 2002/77 of 16 September 2002, competition, OJ L249, 2002.

See Directive No 97/67 of 15 December 1997, OJ L15, 1998 amended by Directive No 2002/39 of 10 June 2002, OJ L176, 2002.

See in particular Regulation No 2015/2120 of 25 November 2015  laying down measures concerning open internet access and amending Directive 2002/22/EC on universal service and users’ rights relating to electronic communications networks and services and Regulation No 531/2012 on roaming on public mobile communications networks within the Union; Regulation No 2015/2352 of 16 December 2015 setting out the weighted average of maximum mobile termination rates across the Union.

OJ L214, 4.08.2006, 7: Regulation the scope of application of which was modified by Regulation No 1234/2007, OJ L 299, 16.11.2007, 1.

Case C-671/15 Association des producteurs vendeurs d'endives (APVE), Judgment of 14 November 2017, LawLex201700001934JBJ.

Regulations No 1017/68, 479/72, 4056/86 and 3975/87 amended, in connection with air transport between the Community and third countries by Regulation No 411/2004, which repealed Regulation No 3975/87. Regulations No 1017/68 and 479/92 were replaced by Regulations No 169/2009 of 26 February 2009 applying rules of competition to transport by rail, road and inland waterway (OJ L61, 5.03.2009) and 246/2009 on the application of Article 81(3) of the Treaty to certain categories of agreements, decisions and concerted practices between liner shipping companies (consortia) (OJ L79, 25.03.2009).

See Regulation No 1419/2006 of 25 September 2006 for line shipping conferences; Regulation No 1459/2006 of 28 September 2006 for air transport services.

See for example Directive No 2007/58 of 23 October 2007 providing for the opening of the market of international railway services from 1 January 2010.

Regulation No 141 exempting transport from the application of Council Regulation No 17, OJEC L 124 of 28 November 1962, 2751.

Case C-261/16 P Kühne + Nagel International AG, Judgment of 1 February 2018, not available in English; C-263/16 P Schenker Ltd, Judgment of 1 February 2018, LawLex201800000200JBJ.

Directive No 2009/72 of 13 July 2009, OJ L 211 of 14.08.2009, which codifies amendments made to Directive No 2003/54 of 26 June 2003 and repeals it.

Specific sectors

The Council, the Court of Justice and the Commission are responsible for ensuring the achievement of the tasks entrusted to the Union (TFEU, Article 119). The Council, which ensures definition of policies and coordination, consists of a representative of each Member State at ministerial level, authorized to commit the government of the Member State he represents and to exercise a voting right (TFEU, Article 16).

The Court of Justice of the European Union consists of the Court of Justice, the General Court and specialized tribunals which, each within its jurisdiction, ensure that the law is observed in the interpretation and application of the Treaty (TFEU, Article 19). In particular, the General Court has jurisdiction to hear and determine at first instance direct actions or proceedings instituted by natural or legal persons against acts of the Union institutions or actions brought by Member States against the Council for acts in the field of State aid, which may be subject to a right of appeal to the Court of Justice on points of law only (TFEU, Article 256). It reviews the legality of decisions subject to its assessment and may decide that they are null and void or find that the prosecuted Union body has failed to act.

The Commission consists of twenty eight members who are chosen on the grounds of their general competence and whose independence is beyond doubt (TFEU, Article 245). DG Competition, headed by Alexander Italianer, current Director General, is subdivided in several departments: Operations, Mergers and Antitrust, State aid, Policy and Strategy, Strategy and Delivery, Registry and Resources, Markets and Cases. The Commission publishes a report each year which reviews the main political and legislative initiatives and the decisions adopted in the field of competition.

As an administrative authority in charge of the implementation and orientation of the EU competition policy (Article 105 TFEU and Regulation No 1/2003, Article 4), the Commission ensures that the competition rules are applied. To that end, it has extensive powers and combines investigatory and decision-making functions. It establishes the existence of infringements to the rules and then makes a decision, which may be accompanied by a sanction, in the light of the evidence gathered. The fact that the functions are combined is not deemed contrary to Article 6 of the ECHR insofar as the Commission is not regarded as a tribunal within the meaning of that article .

The Commission does not have limitless jurisdiction in its application of the rules of competition; it assumes jurisdiction where the effects of the anticompetitive agreement are produced on the Union territory, it is implemented on the internal market and it has an appreciable effect on trade between Member States .

In addition, Regulation No 1/2003 set up a decentralized system of application for the EU competition rules granting parallel jurisdiction to the national competition authorities, which together with the Commission, form a network of competition authorities . In accordance with the principle of subsidiarity, this means that the most competent authority applies the EU rules and not only the EU authorities themselves. The competent authorities of the Member States are responsible for ensuring that EU law is applied and respected in the national legal system (TFEU, Article 5) . Each member of the network retains the discretion to decide whether or not to investigate a case. In this context, cases are handled either by one national authority, possibly with the assistance of authorities of other Member States, or by several national authorities acting in parallel, or by the Commission. However, reallocation of a case is envisaged if necessary to ensure the effectiveness of the procedure. This is carried out according to the principle of the most “well placed” authority to deal with a case. There must be a direct link between the infringement and the territory of the Member State in question for the case to be reallocated to it.

The Commission will be considered to be the best placed authority where:

- one or several agreement(s) or practice(s), including networks of similar agreements or practices, have effects on competition in more than three Member States ;

- or it is closely linked to other EU provisions which may be exclusively or more effectively applied by the Commission, or if the EU interest requires the adoption of a Commission decision to develop EU competition policy when a new competition issue arises or to ensure effective enforcement .

 See Case T-25/95 Cimenteries CBR (SA) v Commission [2000] ECR II-491, LawLex200400003586JBJ.

Commission Decision No 94/601/EC of 13 July 1994, Cartonboard, LawLex200400003662JBJ; OJ L 243, 19.09.1994, p. 1: in this case, the restricted agreements in question were applied in the European Community. See Case 89/85 Ahlström Osakeyhtiö and others v Commission [1988] ECR 5193, LawLex200500003941JBJ.

See EC Commission Notice No 2004/C 101/03 of 27 April 2004, Guidelines on cooperation within the network of competition authorities.

See Case C-234/89 Delimitis v Henninger Bräu [1991] ECR I-935, LawLex200500003931JBJ.

See Commission Notice No 2004/C 101/03 of 27 April 2004, Guidelines on cooperation within the network of competition authorities, at pt 14.

See Commission Notice No 2004/C 101/03 of 27 April 2004, Guidelines on cooperation within the network of competition authorities, at pt 15.

Supervisory authorities

According to a distinction that is both logical and chronological, from the most ancient and subjective law to the most recent and objective law, EU Competition law has two branches: the law on cartels and abuse of dominant position (Part 2) and merger control (Part 4). The first branch involves specific litigation procedures implemented by the Commission under the control of the EU courts (Part 3). In parallel to the rules applicable to undertakings, a control of State aid, which create inequalities in competition, has also been instituted (Part 5).

European Competition Law

7. Relations with Member States

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Les notions juridiques connexes

7. Relations with Member States

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Les notions juridiques connexes

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