Competition

Question 1

Antitrust

Answer 1

Antitrust rules prohibit agreements between market operators that would restrict competition, and the abuse of dominance. European Antitrust policy is developed from two central rules set out in the Treaty on the Functioning of the European Union:

Article 101 of the Treaty prohibits agreements between two or more independent market operators, which restrict competition.

The most flagrant example of illegal conduct infringing Article 101 is the creation of a cartel between competitors, which may involve price-fixing and/or market sharing.

Article 102 of the Treaty prohibits firms that hold a dominant position on a given market to abuse that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to the prejudice of consumers.

Question 2

Mergers - definition

Answer 2

Combining the activities of companies through mergers, acquisitions or creating joint ventures can expand markets and bring benefits to the economy. It may allow companies to develop new products more efficiently or to reduce production or distribution costs, ultimately resulting in higher-quality goods or services for European customers.

However, some combinations of companies may reduce competition in a market, usually by creating or strengthening a dominant player. This is likely to harm consumers through higher prices, reduced choice or quality, or less innovation.

The objective of merger control is to examine whether proposed mergers will have harmful effects on competition. If it is considered that a merger will not harm competition, it is approved unconditionally. Conversely, if a merger would harm competition, suitable commitments will be proposed by the merging firms to remove the harm. In the absence of such commitments, problematic mergers must be prohibited to protect businesses and consumers.

Question 3

State aid - overview

Answer 3

A company that receives government support gains an advantage over its competitors. Therefore the Treaty generally prohibits State aid unless it is justified by reasons of general economic development. To ensure that this prohibition is respected and exemptions are applied equally across the European Union, the European Commission is in charge of ensuring that State aid complies with EU rules.

Question 4

To be State aid, a measure needs to have these features:

Answer 4

1. there has been an intervention by the State or through State resources which can take a variety of forms (e.g. grants, interest and tax reliefs, guarantees, government holdings of all or part of a company, or providing goods and services on preferential terms, etc.);
2. the intervention gives the recipient an advantage on a selective basis, for example to specific companies or industry sectors, or to companies located in specific regions
3. as a result, competition has been or may be distorted
4. the intervention is likely to affect trade between Member States

Question 5

The Foreign Subsidies Regulation in a nutshell

Answer 5

The Foreign Subsidies
Regulation started to apply
on 12 July 2023 and the
obligation to notify certain
large concentrations kicked
in on 12 October 2023.

Under the Regulation, the Commission has the power to investigate financial contributions granted by non-EU governments to companies active in the EU. If the Commission finds that such financial contributions constitute distortive subsidies, it can impose measures to redress their distortive effects.

Question 6

The Foreign Subsidies Regulation introduces three procedures:

Answer 6

1. A notification-based procedure to investigate concentrations involving financial contributions granted by non-EU governments, where the acquired company, one of the merging parties or the joint venture generates an EU turnover of at least €500 million and the parties were granted foreign financial contributions of more than €50 million in the last three years;
2. A notification-based procedure to investigate bids in public procurement procedures involving financial contributions by non-EU governments, where the estimated contract value is at least €250 million and the bid involves a foreign financial contribution of at least €4 million per third country in the last three years;
3. An ex officio procedure to investigate all other market situations, where the Commission can start a review on its own initiative.

Question 7

European Competition Network (ECN)

Answer 7

The European Commission and the national competition authorities in all EU Member States cooperate with each other through the European Competition Network (ECN).

This creates an effective mechanism to counter companies that engage in cross-border practices restricting competition. All members of the ECN apply European competition rules and the ECN provides a means to ensure their effective and consistent application. Through the ECN, the competition authorities inform each other of proposed decisions and take on board comments from the other competition authorities. In this way, the ECN allows the competition authorities to pool their experience and identify best practices.

The ECN was established as a forum for discussion and cooperation for European competition authorities in cases where Articles 101 and and 102 of the Treaty of the Functioning of the European Union are applied. The ECN ensures an efficient division of work and an effective and consistent application of EU competition rules. The European Commission and the competition authorities from EU member states cooperate with each other through the ECN by:

informing each other of new cases and envisaged enforcement decisions;
coordinating investigations, where necessary;
helping each other with investigations;
exchanging evidence and other information; and
discussing various issues of common interest.