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KATSYN M. / THE ROLE OF THE COMPETITION POLICY IN THE INTEGRATION OF THE SINGLE MARKET OF THE EUROPEAN UNION

31.07.14 21:38


Mykhailo Katsyn,

                                          Assistant at the European and Comparative law department, National University ‘Odessa Law Academy’




The actuality of the research in the field of the EU competition policy is very significant as it has a great impact on the functioning of the single market, and efficiency of the economical development. Competition is an essential aspect of the market mechanism because the availability of choice between goods and services establishes a link between the success of an undertaking and its ability to satisfy consumer wishes.

The aim of this article is to give an insight into the goals of the EU competition policy and to investigate how the competition policy affects the single market of the European Union.

The theoretical contribution to the research in the sphere of EU competition policy and law was made by Paul Creig,  Grainne de Burca, Richard Whish, David Bailey, Damian Chalmers, Gareth Davies, Giorgio Monti, Marise Cremona, Mario Monti, Neelie Kroes, Jo Shaw, J.H.H. Weiler.

European Competition policy is a highly visible element and important element of EU policy. An active protection of competition in and across Member States was recognized in the Treaty of Rome of 1957 as an important basis for a unified European Economic Community (EEC). 

In the introduction its First Report on Competition Policy the Commission wrote: ‘Competition is the best stimulant of economic activity since it guarantees the widest possible freedom of action to all. An active competition policy pursued in accordance with the provisions of the Treaties establishing the Communities makes it easier for the supply and demand structure continually to adjust to technological development. Through the interplay of decentralized decision making machinery, competition enables enterprises continuously to improve their efficiency, which is the sine qua non for a steady improvement in living standards and employment prospects within the countries of the Community. From this point of view, competition policy is an essential means for satisfying to a great extent the individual and collective needs of our society’[5].

There are considerable debates regarding the functions of competition law. A very clear statement to this effect can be found in a speech of the former European Commissioner for competition policy, Neelie Kroes, given in October 2005: ‘Consumer welfare is now well established as the standard the Commission applies when assessing mergers and infringements of the Treaty rules on cartels and monopolies. Our aim is simple: to protect competition in the market as a means of enchansing consumer welfare and ensuring an efficient allocation of resources’[10].

The Lisbon strategy, adopted in 2000, called for making the EU ‘world`s most competitive and dynamic knowledge-based economy’ by 2010[4].  While, the ‘Europe 2020’ strategy for the decade 2011-2020, proposed by the Commission on 3 March 2010 and adopted by the European Council on 26 March 2010, identifies three priorities, one of which is sustainable development, which includes the increase in the effectiveness of competitive economy[5]. 

Also, in 2004 the Commission set out its ideas for a “proactive competition policy”, characterized by:

improvement of the regulatory framework for competition which facilitates vibrant business activity, wide dissemination of knowledge, a better deal for consumers, and efficient restructuring throughout the internal market; 

enforcement practice which actively removes barriers to entry and impediments to effective competition that most seriously harm competition in the internal market and imperil the competiveness of European enterprises[11].

          The goal of such policy can be seen as the willing to support the competitive process in the single market and to induce the undertakings to engage in competitive environment.

The essence of the  HYPERLINK "http://europedia.moussis.eu/books/Book_2/3/6/index.tkl?term=&s=1&e=10&pos=60&all=1" single market lays in the possibility of  HYPERLINK "http://ec.europa.eu/competition/international/legislation/protocol_22.pdf" undertakings to compete on equal terms on the markets of all the  HYPERLINK "http://europa.eu/abc/european_countries/index_en.htm" member states of the European Union. Therefore, the  HYPERLINK "http://europa.eu/pol/comp/index_en.htm" common competition policy is vital to the achievement and maintenance of the single market. The crucial idea of the single market is that internal barriers for trade should be dismissed in order to allow the free circulation of the factors of production (goods, service, workers and capital) [9, 23]. Competition law has both a negative and a positive role to play in the integration of the single market. On the one hand, the negative one is that it can prevent measures which attempt to maintain the isolation of one domestic market from another, on the other hand, the positive role is that competition law can serve as a way of the encouraging of the trade between member states by facilitating cross-border transactions and integration [9, 24].

Some authors argue that it is possible to define three main objectives which are pursued by the competition policy in the European Union:

to enhance efficiency in the sense of maximizing consumer welfare and achieving the optimal allocation of resources;

to protect consumers and smaller firms from large aggregations of economic power, whether in the form of monopolies, or through agreements whereby rival firms coordinate their activity so as to act as one unit;

to facilitate the creation of a single European market, preventing it from frustration brought by private undertakings. [7, 960].

The EU Treaties set out the rules establishing the objectives, tasks, and institutions governing the EU. Article 3(3) Treaty on the European Union (TEU) identifies as one of the general objectives of EU the achievement ‘a highly competitive social market economy’ [1]. The provision is further clarified by the Protocol No.27 attached to the Treaties that, recalling the wording of previous versions of the EU Treaty, states that ‘internal market as set out in Article 3 of the Treaty on European Union includes a system ensuring that competition is not distorted’ . The primary provisions in which the substantive law on competition is to be found are Articles 101-109 (TFEU) [2]. Together, these form the framework for EU competition law and applicable to private undertakings, public enterprises and states. In addition, EU secondary legislation provides the detailed substance for merger control and enforcement action.

The TFEU today provides for different systems for the adoption of legislative acts (Regulations and Directives). In case of competition law, Article 103TFEU explicitly refers to the consultation procedure for the adoption of the ‘the appropriate regulation or directives to give effect to the principles set out in Article 101 and 102’.

         Concluding, it is necessary to think about the consequences of the financial crisis in terms of the further development of EU competition policy. Potentially, the economic recession the world has found itself in since 2008 places much pressure on competition law, as member states are tempted to deploy protectionist policies to safeguard jobs and traditional national industries. Reflecting this tendency, the Commissioner Neelie Kroes, pointed out that it is essential to reject the easy road of protectionism and willingness to go soft on the competition rules in order to keep  social market economies in safe maintaining their competiveness.


 

        Bibliography:


Consolidated version of the European Treaty on the European Union, available at http://eur-lex.europa.eu

Treaty on the functioning of the European Union, available at http://eur-lex.europa.eu

European Commmission Annual Competition Report, available at  HYPERLINK "http://ec.europa.eu/competition/publications/" http://ec.europa.eu/ 

Lisbon strategy, available at http://ec.europa.eu/information_society/

Europe 2020 strategy, available at  HYPERLINK "http://ec.europa.eu/europe2020/" http://ec.europa.eu/europe2020/

Paul Creig,  Grainne de Burca, EU law: Text, Cases and Materials, – Oxford University Press, New York, 2011, 917

Paul Craig, Grainne de Burca, The evolution of European Union Law, – Oxford University Press, New York, 2011, 1116

 Damian Chalmers, Gareth Davies & Giorgio Monti. European Union Law,– ‘Cambridge University Press’, New York, 2010, 1156

Richard Whish, David Bailey, Competition law,  – Oxford University Press, New York, 2012, 1015

 Neelie Kroes, – Speech/05/512 of 15th September 2005, ‘European Competition Policy – Delivering Better Markets and Better Choices’, available at  http://ec.europa.eu/competition/speeches/ 

 Mario Monti, – Speech/04/212 of 29th April 2004, ‘Proactive Competition Policy and the role of the Consumer European competition day, available at

http://ec.europa.eu/competition/speeches/





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