Competition Policy in the European Union

The Commission, together with the national

competition authorities, directly enforces EU
competition rules, Articles 101-109 of the Treaty
on the Functioning of the EU (TFEU), to make
EU markets work better, by ensuring that all
companies compete equally and fairly on their
merits. This benefits consumers, businesses and
the European economy as a whole.
Within the Commission, the Directorate-General
(DG) for Competition is primarily responsible
for these direct enforcement powers. There are
strict limits to its powers DG Competition can
only intervene if it has evidence of an
infringement of the competition rules and its
decisions are subject to appeal before the Court
of Justice of the European Union. DG
Competition is therefore unlike most parts of the
Commission in that, rather than proposing
legislation, its work is concentrated on action
against companies or Member States if it believes
they are breaching the rules.
DG Competition can act against several types of
anti-competitive activity if it affects cross-border
trade.
Anti-competitive agreements and abuse of
dominance
Article 101 TFEU prohibits anti-competitive
agreements between companies (for example,
cartels and market-sharing). Often, cartel cases
start following a leniency application by a
company admitting its wrong-doing in order to
gain lenient treatment.
Article 102 prohibits abusive conduct by
companies that have a dominant position on
a market, for example forcing consumers to buy
a bundle of products that could be sold
separately or forcing competitors off the market
by entering into exclusive arrangements. If a
company has a market share of less than 40%, it
is unlikely to be dominant.

National competition authorities also apply

Article 101 and 102 where they are well placed to
do so, typically where the case is essentially
national.
Merger control
The Merger regulation prohibits mergers or
acquisitions that would significantly reduce
competition. Most cross border transactions
must be notified to the Commission before they
are implemented. If the Commission finds the
transaction would distort competition, it may
stop the deal unless the company proposes
remedies to solve the competition problem.
State aid control
State aid or other State intervention that
distorts competition is prohibited: this helps to
ensure that competition between companies
takes place on a level playing field, and also helps
to protect the internal market and taxpayers
interests. Aid can be useful if targeted correctly
and kept to a minimum, for example aid to
improve the environment or support a strong
SME sector. But some forms of aid are
particularly harmful, particularly operating aid where a government simply hands cash to a
company to fund its day to day operations. Such
operating aid does not create incentives for new
investment or business models and is inefficient
and harmful to competitors.
Special rescue and restructuring provisions exist
for industries or companies in difficulty - an
important issue given the current economic
climate.
Rescue aid, which often takes the form of
operating aid, can be allowed for a short time:
after six months the company must either
reimburse it or produce a plan for restructuring
and moving back to viability. Restructuring aid
should be accompanied by measures that limit

competition distortions and preserve the internal

market.
Monitoring liberalised markets
Some services such as telecoms, transport and
energy have previously been provided by national
monopolies. Opening up these markets to
competition has given consumers greater choice,
leading to new services and lower prices, for
example in the airline sector and in calls from
fixed telephones.
Public services play a key role in the European
social model and while the internal market and
competition rules can help making those services
both better and cheaper, the design and
operation of these services is almost entirely a
matter for the Member States.

How DG Competition works

DG Competition has around 900 staff and costs
less than 100 million a year to run.
Cases
In mergers and State aid, DG Competition
mostly deals with notifications; in Article 101 and
102, it opens cases on its own initiative, or
following a leniency application or a complaint.
When DG Competition is working on a case,
details of the case have to be kept confidential.
DG Competition is under a legal obligation to
protect the business secrets of the companies
with whom it is in contact.
If DG Competition concludes that a company or
Member State has breached the competition rules
or - in the case of a merger - would significantly
reduce competition, it can propose that the
College of Commissioners adopts a formal
decision. The decision can prohibit the conduct,
and can require remedial action. In antitrust
cases, the Commission can also impose a fine as
both a punishment and a deterrent.

allows DG Competition to better understand

markets and ensure a more effective enforcement
by pro-actively detecting cases which are most
harmful to consumers.
Policy development
DG Competition produces documents that
explain how the competition rules set out in the
Treaty and interpreted by the Court apply. These
include implementing
regulations, block
exemptions, guidelines and communications.
When these are revised, DG Competition
consults widely before issuing new versions.
Co-operation with other authorities
DG Competition works with national
competition authorities in the Member States to
ensure a coherent and co-ordinated enforcement
of the competition rules in Europe, and works
with other agencies around the world to
exchange information, promote best practice,
and co-operate in individual cases.
Advocacy
DG Competition works to embed competition
principles into regulation and legislation and with
other DGs to determine which markets DG
Competition should investigate.
Annual Report to the European Parliament
Each year, DG Competition prepares a report of
its activities, and its assessment of upcoming
issues for the European Parliament. This is in
addition to the detailed information that DG
Competition makes available to the general
public on a daily basis on its website and in its
press releases. The Commissioner for
Competition also appears before the Economic
and Monetary Affairs Committee (ECON) three
times a year to discuss current policy
developments and answer questions.

More information

Market monitoring
DG Competition monitors markets and
conducts sector inquiries (recent examples
include energy, financial services and
pharmaceutical markets) to see where
competition problems might be occurring. This

European Commission Competition policy website

http://ec.europa.eu/competition
DG Competition website
http://ec.europa.eu/dgs/competition
Information as at 3/2/2011 (EN)