The E.U. Competition Policy.

Essay by jumathieUniversity, Bachelor'sC+, November 2005

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What are the major elements of EU competition policy ?

Explain why all these elements are necessary for the effective operation of the Single Market?

The origins of EU competition policy date back from the 1990s when few member States had developed competition policies. Today the continuing reduction of trade barriers to achieve a Single European Market (SEM) has incited many firms to increase the competitive pressures. Within this new competitive environment firms may have two different behaviours. Indeed they can take advantage of the opportunities that the internal market offers to them, in this case the benefits of consumers are large. Alternatively, they also may have a defensive approach in order to protect themselves from the growing competition. In adopting this second way firms will act anti-competitively in establishing restrictive agreements or monopolistic practises. In addition, National government plays a crucial role in this policy because they may try to give to the domestic firms subsidies or other form of assistance in order to protect them from this competition.

Today this competition policy is sharing with the European Member States under the EC treaty (Articles 81 to 90). The application of the EU competition rules is centralized in the hand of the European Commission. Moreover, requests can be made against its decisions to the European Court of Justice. This essay will first examine the objectives of the EU competition policy. The second part will underline the major elements of the EU competition policy; we will try to explain briefly the principle and the basic rules of each element. In the third part we will try to understand why the EU competition policy is so necessary for the effective operation of the single market. Finally we will discuss about the potential perverse effects of the competition.

1/ Objective of the...