Competation Law - Coursework Example

?Competition Law Discuss the ment, explaining how far you agree that it is an accurate reflection of the purpose and application of Article 102.Introduction: According to my own viewpoint, very first thing is that it is a competition and not competitors so that it is to be protected. And also the ultimate aim of every business is to please the customers so that it is very much necessary to avoid the customers harm. “I like aggressive competition – including by dominant companies – and I don’t care if it may hurt competitors – as long as it ultimately benefits consumers. That is for the reason that the chief and ultimate aim of Article 82 is to protect customers and this does, of course, need the defense of the undistorted competitive practice on the market. There are two main laws in UK that defending competitions that are, the Competition Act in the year of 1998 and the Enterprise Act in the year of 2002. These are laws are, supported by Articles 101 and 102 of the “TFEU” (Treaty on the Functioning of the European Union (TFEU) 1990) that are, previously the Articles 81 and 82 of the Treaty of the EC. “The Competition Act 1998 prohibits anti-competitive agreements between businesses. You must not, for example: agree to fix prices or terms of trade, eg agreeing price rises with your competitors agree with your competitors to limit production in order to reduce competition Share out markets or customers with your competitors - eg agreeing with a competitor that you'll bid for one contract and they'll take another” (Competing Fairly: The Basis of Competition Law n.d.). The law mostly applies to contracts among businesses with an important presence in the marketplace. But even the smallest company requires avoiding anti-competitive contracts like price fixing. In addition to formal contracts, the law also relates to other looser types of cooperation among businesses. The “Competition Act” (Competition Act 1998) forbids the mistreatment of a dominant position in a marketplace. This can apply to companies that have an extremely big market share. It is also an illegal and illicit offence for persons fraudulently engaged in certain kinds of cartel behavior in the “Enterprise Act 2002” (Enterprise Act n.d.). Fundamental aim of Article 82, when examining exclusionary conduct is the defense of competition on the marketplace as a way of enhancing wellbeing of the customer and of guaranteeing a well-organized distribution of resources. “Adopting an economics-based approach to Article 82 will also unify and provide a clearer and more consistent enforcement approach of the Treaty provisions on competition law” (The Reform of Article 82: Recommendations on Key Policy Objectives 2005, p. 4). The concern is to stop exclusionary behavior of the dominant organizations which is expected to limit the remaining competitive constrictions on the dominant organizations, consisting of entry of beginner, so as to avoid that customers are harmed. This denotes that it is competition and not merely competitors as such, that is to be confined and protected. In addition, “the purpose of the Article 82 is not to be protect competitors from dominant firms genuine competitions based on factors such as higher quality, novel products, opportune innovation or otherwise better performance but to ensure that these competitors are also able to expand in or enter the market and compete therein on the merits, without facing competition conditions which are distorted or impaired by dominant firm” (Jones & Sufrin 2008, p. 327). And also, Anti-competitive activities are injurious not only to customers but also to companies that contend moderately or which are themselves consumers of certain goods or services. So that in order to assess this statement, we require to be considered not only the short term harm but also both long and medium harm that may arise from the exclusion of competitors. Failure to obey with UK or EU competition law can have extremely grave consequences. “The key competition law provisions are: • Article 101, which prohibits restrictive agreements; and • Article 102, which prohibits the abuse of a dominant position” (EU Competition Law: Article 101 and Article 102 2010, p. 2). There are three key necessities which must be fulfilled in order for the Article 102 prohibition to be valid: an enterprise should possess a dominant position; there should also be an mistreatment of that dominant position; and There must be a result on trade among Member States. Article only applies where an enterprise has a “dominant position”, which successfully denotes market power. To resolve whether or not this is the case it is essential to inspect the pertinent market, the enterprise’s position in that marketplace, and whether the dominant position is in a “considerable division of the common market”. In Hoffman-La Roche v Commission case, the Court of Justice described the concept of supremacy as a position of financial power enjoyed by an undertaking, which facilitates it to behave to a considerable extent in separately of its participants, its consumers and finally of consumers. The Court of Justice further declared that in Hoffman-La Roche: furthermore even though the significance of the marketplace shares may differ from one market to another the vision may legally be taken that extremely huge shares are in themselves, and put aside in exceptional situation, proof of the existence of a dominant position. An enterprise which has an extremely large marketplace share and holds it for some occasion is by virtue of that share in a place of power. The report from Hoffman-La Roche encloses no description of what is to be concerned as “some occasion”. Therefore, the lack of a reliable definition might effect in an arbitrary explanation. The authorized definition of dominance position has been addressed to numerous cases that have been brought before the Court. In Continental Can case, the Commission, in describing a “dominant position”, gave attention on the capability of entities to behave separately in making judgments that influence the market as a entire. As regards its definition in amalgamation cases, the formulation of dominance in unified Brands was echoed in the Court judgment on Kali-Salz regarding combined dominance. “Under Article 102 TFEU, by contrast, EU Courts early on gave an open-textured definition of exclusionary abuse that has the potential of capturing virtually any commercial practice and does not provide guidance as to the distinction between pro- and anti-competitive behavior” (Art & Colomo, n.d., p. 2). The European Court of justice and Commission have followed their conventional method in the application of Article 102 TFEU (mistreatment of dominant position). For instance, they have continual to apply the theory of margin squeeze to cases where inputs are mainly managed by dominant organizations are necessary for downstream rivalry or must be offered pursuant to regulatory responsibilities. Some cases may on the other hand create debate. In, France Telecom v. Commission, E.C.R., 2007 case, unlike antitrust law United State, EU competition law accommodates illogical predation situations. In this particular case the Court held that the evidence of recoupment was not a “prerequisite” to establish a mistreatment. Article 102 has been more often applied to activities which are exclusionary and intended at eradicating existing competitors or stopping new competitors to a market. Examples of exclusionary mistreatment consist of tie-ins; negative responses to supply, necessities agreements, predatory pricing and discrimination of price .Both UK and EU competition law forbid businesses with important market shares unfairly utilizing their strong marketplace positions. Breach of Article 102 can have grave consequences for an organization’: “Firms engaged in activities which breach these provisions can face fines of up to 10% of group global turnover; conduct in breach of Article 102 or Chapter II can be stopped by court injunction; firms in breach of Article 102 or Chapter II also leave themselves exposed to actions from third parties who can show they have suffered loss as a result of the anti-competitive behavior; and Breach of Chapter II can result in individuals being disqualified from being a company director” (Competition Law – The Basics n.d.). According to the decision of the Court of the European Union, any individual or business establishment who undergoes damage as an effect of a breach of the European Union antitrust rules and regulations (Articles 101 and 102 TFEU) must be capable to receive compensation from the party involved, who caused any kind of the harm. On the other hand, despite this need under the EC to build up an efficient legal structure enabling the sufferers to work out their lawful to compensation, suffers of EU antitrust violations today very frequently do not acquire reparation for the damage suffered. The sum of compensation that these sufferers are foregoing is in the range of numerous billion Euros a year. The nonexistence of an efficient legal structure for antitrust damages events hampers the complete enforcement of the antitrust regulations and so has a negative or pessimistic bearing on energetic rivalry in an open internal marketplace. The current ineffectiveness of antitrust damages processing is best addressed by a mixture of actions at both EU and nationwide level. “These measures should achieve effective minimum protection of the victims’ right to damages under Articles 101 and 102 in every Member State, create a more level playing field and provide greater legal certainty across the EU” (Antitrust: Actions for Damages 2011). So, the Commission has taken numeral steps since in the year of 2004 to arouse the debate on that subject and elicit criticism from stakeholders on numerous possible alternatives which could assist antitrust damages proceedings. Application of Articles 101 and 102 TFEU (previously Articles 81 and 82 of the European Union Treaty) The new arrangements such as Articles 101 and 102 for applying the various anti-trust measures, which were commenced by Council Regulation (EC) No 1/2003, are planned to guarantee more effectual enforcement of the European Union (EU) policy of the competition in the interest of customers and industries, at the same time as easing the managerial burden of organizations doing business in Europe. “This regulation lays down rules implementing the provisions of the TFEU relating to agreements, decisions by associations of undertakings and concerted practices which may restrict competition (Article 101 TFEU) and abuses of a dominant position (Article 102 TFEU)” (Application of Articles 101 and 102 TFEU (Formerly Articles 81 and 82 of the EC Treaty 2011). In Article 102 of the TFEU, judgments of the court do not look to have a limiting impact on the extent of action of the Commission. Article 102 states that, Any mistreatment by one or more enterprises of a dominant position inside the internal marketplace or in a considerable part of it shall be forbidden as mismatched with the internal marketplace so far as it may influence trade among Member States. Such mistreatment may, in particular, include in: (a) “Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) Limiting production, markets or technical development to the prejudice of consumers; (c) Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (d) Making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts” (Introduction to Article 102 n.d., p. 261). Article 82 is the device used in the European Community to manage the mistreatment of a dominant position. The provision aimed at eradicating abusive conduct by keeping out any mistreatment by one or more enterprise of a dominant position in the marketplace so far as it influences trade among Member states. “Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) prohibit agreements that restrict competition and abuse of dominant position” (Competition Law 2012). Article 102 deals with the behavior of activities with market power, formerly this article was known as article 82EC. While justifying the statement off neelie Kroes, I would definitely say that aggressive competition is good. Ultimately it is giving benefits and advantages to the customer. Article 102 is intended to contract with monopoly and market authority. It concentrates not on contracts between deeds like article 101 but on the one-sided performance of activities which embrace a leading place. Article 102 is structured at avoiding activities who embrace a governing place in a market from exploiting that place. The major role of this article is to control monopolies that limits the competition in the market or industry and manufactures poorer products/services for consumers. Article 102 and 82 has lot of things in common; article 82 deals with independent behavior by an enterprise with market control which limits competition on the market. Commissioner Neelie Kroes on September 23rd 2005 said that she is “convinced that the exercise of market power must be assessed essentially on the basis of its effects in the market, although there are exceptions such as the per se illegality of horizontal price fixing. This is consistent with the way we apply Europe’s rules on collusive behavior, laid down in Article 81 of the EC Treaty, as well as other instruments of European competition law” (Kroes 2005). Article 82 only concerns to companies in a leading market position, to wrap up that a company has considerable market power. One should carry out a comprehensive examination of significant problems like the market place of the supposedly leading company, the market place of challengers, barriers to development and entrance, and the market place of customers. The purposes of article 82 are guarding of competition on the market as a means of developing consumer happiness and guaranteeing a well-organized distribution of resources. It is resonance for the enforcement policy to give main concern to exclusionary abuses, because elimination is frequently based on soon after mistreatment of customers. “Such abuses may, in particular, consist of: (a) Directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions; (b) Limiting production, markets or technical development to the prejudice of consumers; (c) Applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage” (Article 82 of the EC Treaty (ex article 86 n.d., p. 1). The main thing we should discuss is the fundamentals of dominant position. Abuses are mostly complicated both to describe and institute. The holding of a dominant position is not illegal or forbidden, but abuse of the dominant position is illegal and forbidden. It is required “to take into account not only short term harm, but also medium and long term harm arising from the exclusion of competitors” (Kroes 2005). It is difficult to predict medium or long term harm, but the main focus should be given to both the short term price effects of a particular form of manner and the medium to long term effects. “It can be seen from the text of Article 102 that elements must be established before the prohibition applies. They are (a) One or more undertakings; (b) A dominant position; (c) The dominant position must be held within the internal market or a substantial part of it; (d) An abuse; and (e) An effect on inter-State trade” (Introduction to Article 102 n.d., p. 261). UK and European Union competition law forbid two major types of anti-competitive actions. One is an anti-competitive agreement that comes under article “101 prohibitions and the second one is abuse of dominant market position, this comes under article 102” (Competition Law - The Basics n.d.). When we focus on the marketing aspect of the statement that we are discussing in this paper, competitions are good because it gives better and good quality products to the customers. If there is a monopolistic situation it would negatively affect the customers. In monopolistic situation, customers have to use or buy the products or services of that single company; it doesn’t matter whether the products/services are good or bad. It is the consumers need to buy/use the monopoly products or services. Competition will prevent the monopolistic situation, and it would help the consumers to choose good quality products/services. So it is good for the consumers to buy good quality products because of tight competition between companies. While looking through the aspect of companies, this competition is struggle for existence. They need to exist in the market for making profit and run their organization. Conclusion: It is at the present commonly accepted that Article 82 is to defend customers rather than its present contestants in the market and this needs defend the competitive procedure from foreclosure. Arbitration in Article 82 nevertheless engages difficult problems connecting to definition of market, the determination of ascendancy, and the meaning of mistreatment. There is in addition ongoing debate as to the degree to which Article 82 should be based on lawful from economic consequences and on the realistic detailed ramification of move from the earlier to latter. Unlike in the antitrust law in US, a major competition law in EU is to guarantee that dominant organizations do not straightly exploit their consumers by charging supra-competitive costs and other anticompetitive commercial circumstances. Article 102(a) of the TFEU offers to this result that dominant organizations shall not straightly or not directly imposing unjust purchase or selling costs or any of the other unfair trading circumstances. Of course, Article 102 of the TFEU merely applies to dominant organizations conduct. Competition law of the EU proposes no means to eliminate shrouding practices which, as revealed by behavioral economics, may happen in oligopolistic marketplaces where no organizations individually occupy a leading position. Reference List Antitrust: Actions for Damages. 2011. European Commission Competition. [Online] Available at [Accessed on 15 January, 2012]. Art, JY & Colomo, PI n.d. Chapter 6: Judicial Review in Article 102 TFEU. Available at [Accessed on 15 January, 2012]. Application of Articles 101 and 102 TFEU (Formerly Articles 81 and 82 of the EC Treaty. 2011. Europa. [Online] Available at [Accessed on 15 January, 2012]. Article 82 of the EC Treaty (ex article 86. n.d. Competition. 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