The Competition Law in the European Union - Essay Example

EU LAW: who are articles 101 and 102 of TFEU designed to protect? Give reasons for your answer and illustrate with the relevant case law Confluence of economics and law is reflected by the competition law in the European Union. Economics entails different types of markets in which various kinds of competitions exist and function. The fundamental objective is to highlight and detail the markets and participants involved in buying and selling of goods and services. Additionally, this commercial activity of buying and selling is mainly influenced and affected by the firms involved at different layers of business operations. For example, some are producers, retailers, and whole sellers while others are suppliers and consumers. However, the scope of economics is only restricted to defining the types of businesses and individuals involved in this kind operations but has no authority to detect and prevent the functioning of cartel (a price setter illegal group)1, which work at the cost of healthy competition in the market besides working to benefit a few members at the cost of consumers. In other words, this requires the role of law to regulate competition and ensure healthy competition among competitors and other stakeholders involved in the business operations especially the interests of consumers who remain the biggest shareholders in this kind of activity. Compensation and right to receive compensation are inalienable prerogative of the injured party. In this regard, it is important to mention that European Commission is clearly defined the legal boundary of compensation relating to the aggrieved party in cases reported under the framework of the Article 101 and 102; compensation refers to placing the aggrieved party in a situation it would have been in had there been no violation of the Article 101 or 102.2 This definition clearly signifies that the objective of this definition is to provide maximum relief and minimise maximum loss or damages faced by the aggrieved or injured party and this can only be done through taking away the effect of damages on the injured party. And for this purpose, the role and application of both articles are of crucial significance for determining type and level of damages paid by the injured party and in order to provide compensation, the legal proceedings will ascertain remedy for providing equitable compensation to the injured party. The Article 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) extends right to receive compensation anyone is harmed within their jurisdiction.3 “The following shall be prohibited as incompatible with the internal market: all agreements between undertakings, decisions by associations of undertakings and concerted practices with may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of compensation within the internal market, and in particular those which: (a) directly or indirectly fix purchase or selling prices of any other trading conditions; (b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply.”4 The above mentioned description highlights various aspects within the ambit of Article 101. For example, the overall objective is to discourage illegal practices and methods that lead to unhealthy competition within the EU markets. For example, the description entails the term ‘internal market’ which is sufficient to understand the scope of this Article and all those involved in this activity. For example, it is inbuilt to this description that all suppliers, dealers, producers, consumers, retailers, buyers and sellers who buy or sell goods and services within the EU market are subject to come under this framework. In this regard, it is important to mention that there are two types of markets: physical and virtual as well. The physical market includes all those activities that take place in physical locations, such as shopping malls, open market where face to face interaction is used for the purpose of buying and selling goods. On the other hand, the virtual market functions through the support of the Internet where electronic commerce, known as buying and selling of goods and services, takes place in which websites, electronic mails and virtual payment systems are used for entering into a business relationship; at the same time, virtual buyers and sellers use their remote location to surf, select, purchase and pay for the goods and services. Since both markets come under the jurisdiction of the Article 101, infringement of Article 101 whether direct or indirect would invoke the Article and law would take due course to establish the infringement and carry out the subsequent process. Additionally, the declared objective of EU competition law is to achieve the single market goal within the physical and non-physical boundaries of the member states.5 This emphasis of this objective is not only to tightly control and regulate the trading practices within the EU market but it also insists that all those involved in any kind of commercial activity should follow the EU competition law and abide by those provisions which are directly applicable to their trading activities. Moreover, it can also be deduced that the objective of single market is to bring maximum transparency and uniformity across all member states. In this regard, it is relevant to mention that every member state has its own national competition regulatory framework which is applicable within that member state whereas the EU Article 101 is macro framework which works at the EU level. More importantly, EU wide application is a slow process.6 Additionally, Article 101 (3) gives priority EU Competition law over national competition law of member states.7 Since each member state has its own competition framework and it is not a remote possibility that the national competition framework of one state would be considerably different from the competition framework of other states, the EU competition regulatory framework would endeavour to remove differences and bring uniform application of competition within the member states. “Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States; such abuse may, in particular, consist 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 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 contract.”8 Article 102 primarily deals with specific undertakings and their overwhelming market strength.9 The broader scope and understanding of dominant position of firm is understandable through the “Continental Can Company” case10 and in the case of “United Brands Company v. Commission.”11 The scope of relevant market is considerably significant for determining the extent of market for any product. In the Hoffman-La Roche v. Commission12 case elucidates that each vitamins group comprise of a different market and one commodity can be sold and purchased in different markets on the condition that it has numerous applications and uses. The Article 101 (3) is not available to those firms which abuse dominant position.13 Abuse of dominant position is also a common illegitimate practice across markets. The abuse can be a behaviour, policy, action and strategy to work at the cost of market and competition and only work to serve organisational or individual interests at the cost of competition and other stakeholders. For example, if a supplier intends to increase price of food products and for this purpose, the supplier starts to control the supply of food products in a particular market. The consequent result of this action appears in the form of increased price of food products as the shortage of supplies in the market increases their prices. At the same time, the supplier secretly enters into an illegal agreement with the other suppliers of food for simultaneously controlling and restricting the supply of food. This situation directly challenges the competition as the many stakeholders would not be able to have equitable and level playing field for competing with that group of suppliers. At the same time, this situation would also be challenging for the retailers as well. If the prices of food products are not appropriate and they experience sudden increase in a matter of few days, this would directly affect their sales revenue as well as the consumers would buying such products which directly affect their budget. As a result, such unhealthy and monopolistic competition would directly affect the revenue of all those involved in the trade of food items. Additionally, the major affected would be the consumers of food products as they would experience increase in food prices which take away all food items which would have been normally available to them had there been no abnormal price increase. Based on this, it can be deduced that the major beneficiary of this monopolistic competition would be the group of suppliers controlling the mobility of food products. On the other hand, in the event of uniform and total application of the Article 101 and 102, the main beneficiaries would be all those who are the stakeholders in all market transactions. For example, the retailers would be in a position to receive a fair chance to effectively and legally compete with the other retail competitors and for this purpose, they can increase and decrease their marketing and promotion activities for attracting and retaining consumers. In this regard, it is important to mention that this practice of marketing would be carried out within the pre-determined and defined boundary of EU competition laws; similarly, this practice would not and should not be in contradiction with any of provisions of EU competition law and the Article 101 and 102. And most importantly, the consumers, who buy products within the boundary of the EU, are and will be the main beneficiaries of the full application of Article 101 and 102. Directly, the consumers do not have authority to ask retailers, suppliers and producers to provide competitive prices of products because the regulation of prices and implementation of healthy and productive competition in the market is the sole responsibility of the regulator- Competition Commission. Under this situation, if the consumers find any price unfair, they have legal authority to lodge complaint and the regulator will start investigating the matter and ensure that only fair and just prices of products are provided to consumers besides full compliance with the application of the Article 101 and 102. Bibliography Cahill, D, Connery, N, Kennedy, T P, O’Loughlin, R, & Power, V, European Law, 5th ed, Oxford, Oxford University Press, 2011, Chalmers, D, Davies, G, &, Monti, G European Union Law, 2nd ed, Cambridge, Cambridge university press, 2010, European Commission, Quantifying Harm in Actions for Damages Based on Breaches of Article 101 or 102 of the Treaty of the Functioning of the European Union, Commission staff working document, practical guide, 2013, European Union, Consolidated Version of the Treaty of the Functioning of the European Union, Official Journal of the European Union, 2012, p. 88. Ferretti, F, EU Competition Law, the Consumer Interest and Data Protection: The Exchange of Consumer Information in the Retail Financial Sector, London, Springer, 2014, Jones, A, Sufrin, B, EU Competition Law: Text, Cases and Materials, 5th ed, oxford: Oxford University press, 2014, Simanovsky, S, Microeconomics for Beginners, Grandville, Global Finance School, 2010, Wendt, I, E, EU Competition Law and Liberal Professions: an Uneasy Relationship?, Miami, Martinus Nijhoff Publishers, 2013, Case Laws Continental Can Company Case 6-72 United Brands Company v. Commission case no. 27/76 Hoffman-La Roche V. Commission case 85/76 Read More