Competition Law and Unfair Competition Law (EU). Introduction and Antitrust. Notes for non jurists

el 23 agosto, 2016 en Derecho de los Negocios Internacionales International Business Law. Grado Comercio Internacional, DM2- Derecho de la Competencia, propiedad industrial e intelectual. Grado en Derecho

Lesson 3 (I). IBL. Free Competition Law. Unfair Competition Law: Introduction and Antitrust

Introduction

Free and Fair Competition Laws are  at the heart of Commercial Law in Western Legal Systems. Both areas of Law  deal with the need to create “level playing fields” for commerce, industry, etc. in order for such activities to develop in accordance with Free Market Principles.

  • Please note: When dealing with Competition, the Law acknowledges that some practices can affect some geographical zones, but not others, and viceversa. So, obstacles to Free Competition and Unfair Commercial Practices can affect a Region, a Country, a Continent, or the whole World!!. Such circumstances  imply that, the legal applicable systems, the supervirory Institutions, and the competent Courts can be regional, national, european and international, depending on the scope to the consequences of each  barrier and /or conduct.

Notwithstanding the above,  Free and Fair Competition Law and Systems allow for some monopolistic situations, for instance in the fields of  Patent Law, Trademarks Law,  and other regulated matters where competition is somehow restricted. However, such accepted obstacles to free competition are limited by law: they are exceptions. 

  • This Lesson 3 (IBL) can be divided in two great and general sections: Free Competition Law, and  Unfair Competition Law
    • Free Competition, is the perspective of Competetition Law specially related to public interests in trade and business. In this sense, Free Competition amounts to creating and maintaining Free markets to pursue general economic development. Within Free Competition we find Antitrust Law, (Practices against Free Competition,  as well as Control over abuse of Dominant Positions); also Mergers’ Control Law, and State Aids Law.
    • Unfair Competiton is a perspective that, taking into account general insterest of the economy, it is rather centered on the relationship among private business, companies, etc, in the markets and also vis à vis business and consumers.

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Free competition. Antitrust.

Free Competition benefits the market in so far as it encourages the offer of products and services at the most favourable terms for of the participants in that market, as well as the access to products and services under non discriminatory terms and conditions. To be effective, it requires companies to act independently of each other, and within a market where competitive pressures are exerted by its agents (producers, distributors, financiers, etc) operating in a level playing field. European antitrust policy is  based in two central rules  in the Treaty on the Functioning of the European Unión (Art 101 and Art 102 TFUE); as well as in secondary legislation (mainly Regulation (EU) 1/2003). The main Spanish Law in this area is  Ley de Defensa de la Competencia, Ley 15/2007, here

  • Article 101 of the TFEU prohibits agreements between two or more independent market operators which restrict competition. This provision covers both horizontal agreements (between actual or potential competitors operating at the same level of the supply chain) and vertical agreements (between firms operating at different levels, i.e. agreement between a manufacturer and its distributor).
    • One of the most clear cases of illegal conduct infringing Article 101 is the creation of a “cartel” between competitors, which may involve price-fixing and/or market sharing. A cartel is a group of similar and independent companies which join together to fix prices, to limit production or to share markets or customers between them.
    • EU Commission has powers and is competent for investigating markets and for imposing fines and penalties upon infringent companies
    • Limited exceptions to Antitrust rules are provided for by Regulation (Reglamentos).
    • Also, there are special situations where agreements can be reached between infractors and Competition authorities:
  • Article 102 of the Treaty prohibits that  companies or  firms that hold a dominant position on a market to abuse such  position. Ie, by charging unfair prices, by limiting production, by refusing to innovate to the prejudice of consumers. The main rules on procedures to implement this article (secondary EU Law) are set out in Council Regulation (EC) 1/2003.

Authorities that supervise and control Antitrust Law  

  • The Commission is empowered by the Treaty to apply these rules and it has investigative powers (a.e. inspection at business and non-business premises, written requests for information, etc.). The Commission may also impose fines on undertakings which violate the EU antitrust rules.
  • European Court of Justice is competent in Antitrust EU cases
  • National Competition Authorities (NCAs) such as in Spain the CNMC (Comisión Nacional de Mercados y Competencia) are empowered to apply Articles 101 and 102 of the Treaty fully, to ensure that competition is not distorted or restricted.
  • National courts:
    • may apply EU and National provisions to protect the individual rights conferred on citizens by the Treaty.
  • Competition law does not only involve administrative sanctions. It also involves actions for damages before national courts (both stand alone actions and follow up actions).

EU competition laws must be applied coherently throughout the EU.

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