Preserving and promoting fair competition practice

The EU’s rules on competition are designed to ensure fair and equal conditions for businesses, while leaving space for innovation, unified standards, and the development of small businesses.

The European Commission monitors and investigates anti-competition practices, mergers and state aid to ensure a level playing field for EU businesses, while guaranteeing choice and fair pricing for consumers.

Large firms are barred from using their bargaining power to impose conditions that would make it difficult for their suppliers or customers to do business with their competitors. The Commission can fine companies for this practice, because it leads to higher prices and/or less choice for consumers.

The Commission’s powers to investigate and halt violations of EU competition rules are subject to a number of internal checks and balances, as well as full judicial review by the European Courts.

The EU is also at the forefront of international cooperation in the competition field to promote and propose best practice. It was a founding member of the International competition network (ICN), and partners with global and national bodies to assess possible competition breaches.

Competition rules in the EU

The EU has strict rules protecting free competition. Under these rules, certain practices are prohibited.

If you infringe the EU’s competition rules, you could end up being fined as much as 10% of your annual worldwide turnover. In some EU countries individual managers of offending firms may face serious penalties, including prison.

EU competition rules apply directly in all EU countries – the courts in your country will uphold them. These rules apply not only to businesses but to all organisations engaged in economic activity (such as trade associations, industry groupings, etc).

You can read about some examples of EU competition cases on the DG Competition’s portal.

Illegal contacts and agreements

These agreements are known as cartels. They are forbidden because they restrict competition. They can take many forms, and need not be officially approved by the companies involved. The most common examples of these practices are:

Price fixing

Market sharing

Agreement on customer allocation

Agreement on production limitation

Distribution agreements between suppliers and re-sellers where, for example, the price charged to customers is imposed by the supplier

All agreements and exchanges of information between you and your competitors that reduce your strategic uncertainty in the market (around your production costs, turnover, capacity, marketing plans, etc.) can be seen as anti-competitive.

To be on the safe side:

* Do not fix prices or other trading conditions

* Do not limit production

*Do not share markets

* Do not exchange strategic information about your company

Some agreements are not prohibited – if they can be justified as benefiting consumers and the economy as a whole. One example is agreements on research & development and technology transfer. These cases are covered by the Block Exemption Regulations .

Sources

https://europa.eu/european-union/topics/competition_en (23.12.2019)

https://europa.eu/youreurope/business/selling-in-eu/competition-between-businesses/competition-rules-eu/index_en.htm (23.12.2019)