Competition Policy in EU

1. Competition Policy in EU The EU's control over competition policy gives it the power to rule on mergers, takeovers, cartels and the use of state aid.

2. History • The EU's role in competition policy was set out in the Treaty of Rome(1957), which gave it wide-ranging powers to oversee and prevent activities that it judges likely to stop competition between firms. • During the 1990s, the EU became much more active in its pursuit of breaches of competition law, increasing the number of prosecutions it brought. • In May 2004, the EU's powers were reformed following criticism that the EU was too unaccountable in its pursuit of breaches of competition law.

3. How does EU Competition Policy work? • Under the Treaty of Rome, the Commission is empowered to investigate price fixing, the abuse of market position by dominant companies and agreements that fix market share, limit production or technical development. • It is run by a part of the EU Commission called the Directorate-General for Competition. Along with the European Court of Justice (ECJ), they investigate potential breaches of competition law and prosecute companies that fail to reach the required standard. • Its main sanction is to impose fines on those who do not comply.

4. Some Facts and Figures • Between 2007-2011, the EU imposed €10.5 billion of fines for illegal cartels. • Between 1990 and 2005 the EU prevented 18 mergers, however between 2005 and 2011 only 2 mergers were prevented. • The EU has imposed a number of fines on Microsoft for abusing its dominance of the market, including: €497 million in March 2004; €280 million in July 2006; and €899 million in February 2008. • The EU's largest fine to date was the fine of €1.06 billion for Intel in May 2009. The company was fined for uncompetitive practices.

5. Two central rulesset out in the Treaty on the Functioning of the European Union • Agreements between two or more independent market operators which restrict competition are prohibited by Article 101 of the Treaty. • Article 102 of the Treaty prohibits firms holding a dominant position on a determined market to abuse that position, for example by charging unfair prices, by limiting production, or by refusing to innovate to the prejudice of consumers.

6. Advantages • Competition is vital to promoting economic growth because it forces companies to become more efficient. • Competition is central to a properly functioning free market economy. • Because competition policy is a cross-border issue, it makes most sense to run it at a European level

7. Disadvantages • Competition is not always a good thing - some industries, for example defence, healthcare or nuclear power, are so sensitive that they should be protected from market forces. • The Commission has taken its remit too far in pursuing cases outside its jurisdiction. This dilutes the authority of the EU. • The EU has been too activist in hunting out problems, thus creating extra costs for taxpayers and businesses.

8. Competition policy in Romania • In 1996 the country established the Romanian Competition Council (RCC), an agency charged with actively guaranteeing market competition, enforcing compliance with the laws, ensuring that state aid does not distort competition, and promoting a broader understanding of competition policy and its benefits. • Today, the RCC is the key agency within Romania for advocating pro-competitive government policies. It is making progress toward its goal of meeting EU standards and comparing favorably with counterpart European competition agencies. For example, RCC is actively involved in removing anti-competitive procedures within the Romanian energy sector and supports its liberalization towards the EU market.

9. Competition policy in Romania(Positive outlook) • Investors both from within and from outside Romania will consider the proper functioning of markets crucial for their activities. • "Enforced competition rules will protect producers and consumers alike from anticompetitive behaviors such as price fixing and other cartel like activities, bid rigging, abuse of dominance and monopoly behavior, establishment of barriers to entry and all the other actions which can distort the market and keep consumers and firms from benefiting from the lowest possible prices and highest quality for goods and services." underlines De Rosa.