Chillin'Competition

Relaxing whilst doing Competition Law is not an Oxymoron

Collective Amnesia

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The forgotten reason why national competition laws should – literally – not exist.

Article 3 TFEU: 1. The Union shall have exclusive competence in the following areas: (b) the establishing of the competition rules necessary for the functioning of the internal market;

Or why they should be abolished when the internal market will be effective (will it ever?).

Written by Nicolas Petit

18 October 2013 at 2:07 pm

Posted in Uncategorized

9 Responses

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  1. Actually, but that’s just my view, I have difficulties with this.

    Essentially, the provision limits exclusive competence to the EU while at the same time limits the extent of the competence too (ie. “rules necessary for the functioning of the internal market”). In other words, there is room for national competition rules NOT necessary for the functioning of the internal market. Boiling down to: how d’you define internal market competences.

    One extreme would be to argue that as long as the EU has taken no action to take internal market integration a step further in an economic sector a member state would always have competence to issue competition rules.

    The provision raises more questions than it actually solves 😀

    Raphael Fleischer

    18 October 2013 at 2:18 pm

  2. Dear Nicolas,

    You appear to have forgotten that the applicability of EU competition law requires an effect on trade between Member States. In the absence of such an effect restrictions of competition will not affect the functioning of the internal market and can thus only be dealt with under national competition law (there IS a limit to how far the internal market / effect on trade can be stretched). This of course follows from the good old EEC Treaty and judgment in Consten & Grundig, but not everyone may remember this…..

    Have a good weekend,
    Hans

    Hans

    18 October 2013 at 2:39 pm

  3. Isn’t the key phrase “necessary for the functioning of the internal market”? One may argue that purely domestic laws do not affect the functioning of the internal market; an effect on inter-state trade will necessarily trigger the application of EU competition law. It would be an odd (and wide) lacuna indeed if anti-competitive practices were permitted so long as they didn’t cross Member State borders and affect inter-state trade.

    Colm

    18 October 2013 at 4:17 pm

    • I’ll have to side with Colm on this one. (P.S. With Raphael and Hans too, but for some reason their comments were not visible when I wrote the following).

      That phrase is obviously the key, because arts 101 and 102 only cover conduct that may appreciably affect trade between Member States.

      And the criteria to interpret this requirement (as developed in the case law and in the ad hoc Notice) are not as flexible as those applicable in other domains (e.g State aid); in other words, it is a meaningful jurisdictional criterion. In the absence of national competition laws, many (most?) anticompetitive practices would fall out of the scope of EU law.

      The only question is whether it makes sense to apply national law in parallel to EU law to practices that fall under the scope of the latter. That was a contested issue at the time of the adoption of Reg 1/2003, and the solution given may not appear optimal (even if in practice it’s arguably irrelevant), but that is unrelated to the attribution of exclusive competences done by mens of Art. 3 TFEU.

      Alfonso Lamadrid

      18 October 2013 at 6:13 pm

      • I agree with Colm and Alfonso re the need for national competition laws. Its repeal would bring about a worrying retreat in enforcement (also in private enforcement) and, in our country (Alfonso’s and mine – Spain) it would entail the disappearance of the regional competition authorities, which would be a pity since I think they are doing a good job. Very best, Pablo

        Pablo Figueroa

        19 October 2013 at 1:31 pm

  4. I think Raph is right. Article 3 implies that MS cannot adopt competition rules that seek to ensure the functioning of the internal market.

    Key question is: what’s left for MS to regulate?

    Competition law necessary for national/local markets? As Raph says, this could lead to have national competition laws for sectors where the EU market is not integrated, and EU competition law for sectors where the internal market is achieved. The trick is that in some sectors, you have national markets that form part of an integrated EU market.

    Competition laws not necessary for the functioning of markets? There, I fail to see what this can be: competition statutes that seek to protect consumers?

    In passing: the effect on trade condition has nothing to do with Article 3 TFEU. This provision is about the distribution of statutory competence between the EU and the MS. Article 3 provides for the inability of MS to adopt rules of competition necessary for the functioning of the internal market. But it leaves untouched the ability of MS organs to apply EU rules on competition (remember, those rules have direct effect). Under Article 3, you could have EU competition law applied accross EU territory by courts and NCAs. Or national competition laws, but defined in EU law instruments by EU institutions.

    A better way to think about this, and get those subtle differences, is to think of competition rules as monetary policy for the Member States whose currency is the euro (article 3 c :)). And to question if MS still have their own monetary policy and their own currency.

    Nicolas Petit

    19 October 2013 at 7:49 pm

    • I might be missing something but I would tend to think the “market” which the competition rules would protect according to your post is not necessarily the same concept as the “internal market” referred to in the provision you refer to. Unlike, let’s say in the US, where the Sherman Act was not enacted as a broader effort to foster interstate trade, the EU Competition rules were directly linked to the creation of a single / internal market MS. Incidentally, some argue that, as a result of this link, the EU rules, e.g, in the treatment by EU competition law of absolute territorial protection in vertical restraints are to the detriment of consumers.

      Moreover, I have never studied this in detail but I would tend to assume that it was not the TFEU which rendered competition policy an “exclusive” competence of the EU. Put it differently, the fact that it now is probably does not detract from the relevance of the importance of the concept of “effect on trade between MS”, even after the adoption of this provision. I am no doubt missing something but I fail to see the alleged relevance of the provision (said he, two days before the CJEU passed a ruling making it the cornerstone of EU Competition law ;)).

      Very Best,

      Pablo

      Pablo Figueroa

      19 October 2013 at 9:23 pm

      • P.s. re the comparison with the Euro I would tend to think that MS retain more powers under Regulation 1/2003, at least re abuse of dominant position, than in the domain of monetary policy.

        Pablo Figueroa

        19 October 2013 at 9:32 pm

  5. In my view Article 3 TFEU (list of exclusive competences of the EU) establishes what the UE legislator can do but it does not in itself setting the current substantive rule.

    And the EU legislator decided – under its exclusive competence – to allow concurrent application of EU and national competition laws in such cases and under certain conditions (article 3 Reg. 1/2003), it is a sort of self-retraint which for me is totally legal from an EU Law point of view.

    This may of course change in the future, a qualified majority in the Council is just required… (art. 103.2.e) TFEU)

    Anonym

    21 October 2013 at 4:32 pm


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