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INTRODUCTION TO COMPETITION LAW
1. WHAT IS COMPETITION AND WHAT IS THE PURPOSE OF COMPETITION LAW?
- Competition: relationship between undertakings which sell goods or services of the same kind to an identifiable group of consumers
- 'Anti-trust paradox': Competition lets market forces operate freely, but at same time if those forces lead to behaviour like 'price fixing' and 'share markets' competition law has to intervene. E.g: British Airways/Virgin and fuel surcharges, Asda, Morrisons, Tesco et al, OFT investigation, Replica football kitDifferent policy goals will determine in each system when the law should intervene.
2. THE THEORY OF COMPETITION
2.1 The basic economics of Competition law Two extremes on a spectrum: Neo-classical:
- consumer welfare protected by perfect competition: large number of sellers, homogenous product, full information for consumers, individuals seller is not important. Results in allocate and productive efficiency (distributed according to consumers wishes and produced at lowest possible cost)
- Disadvantage: Not realistic!
- One seller, controls price, controls output. Reality always between two poles! In US, prefer term "workable competition" inovling analysis of behaviour of undertakings and not just effects of market. But how do you decide was as an appropriate level of competition?
2.2. The politics of Competition lawAlso political goes?
Harvard School Excessive concentration of market power = poor profits = Markets are fragile + Antitrust policy which intervenes to protect small firms. Governments should be given the power to break up large corporations.(Kaysen and Turner) Chicago School Markets are not fragile + The pursuit of consumer welfare should be the sole goal of antitrust policy. The focus of anti-trust should be on price fixing agreements and mergers that make it easier the existence of price fixing agreements by reducing the number of
players in the market (Bork and Posner). No compassion here, 'survival of fittest'.eg would be very much against price fixing agreement.
- It is undeniable that prevention of the concentration of economic power; protection of consumers, regional policy objectives, protection of small and medium undertakings, form part of competition policy
Monti 2002: Argues that in reaching competition decisions, the E Commission can legitimately take into account policy objectives in regulating anti-competitive agreements formerly under Art 101 that are broader than protection of competition but designed to contribute to econ policy of EU in wider sense, like econ freedom, efficiency, and market integration. There objectives are reviewd by Townley in 2009 Book "Art 81EC and Public Policy"
Townley 2009 "Art now 101 and Public Policy"
PART A: IF 42)
Part B: Part C: Townley's own theory of how public policy balancing should be performed under 101: argues that there is no room within consumer welfare standards, to accommodate public policy objectives. Any loss of legal certainty is mitigated by sensible use of presumptions, BE (p 236). argues that 101(1) should only be about consumer welfare, and further public policy should take place in Art 101(3)
PUBLIC POLICY GOALS INCLUDED IN COMPETITION, THEY MUST BE TRANSPARENT.
3. AN OVERVIEW OF EU COMPETITION LAW
3.1. The Basis and Objectives of EU Competition Law: Preamble TFEU: "balanced trade and fair competition within the EU" Old Article 3(g) EC wanted to prevent "distortion" of competition, but TFEU protocol 27 now added an "if necessary" wording, this was compromise because French President Sarkzoy wanted removal of word competition from activities of Union, competition should only be relevant to help achieve single market but not on its own. This idea of "necessary" is now enshrined in 3(1)(b) TFEU. Initially, strong ordo-liberalist influence and objectives of EU policy were I.a:
- (a) enable goods to flow freely amongst MS
- (b) to protect and encourage small and medium sized undertakings
- (c) to help the achievement of the single market objective in the EU Treaties (Volkswagen.) Recent years: shift to consumer welfare based approach away from protecting competitors
3.2. An overview of the TFEU provisions on competition: (1)
The competition rules in the Treaty can be divided in two main groups: Focus on activities of undertakings:
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