In the European Union, competition law promotes the maintenance of competition within the European Single Market by regulating anti-competitive conduct by companies to ensure that they do not create cartels and monopolies that would damage the interests of society.

European competition law today derives mostly from articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU), as well as a series of Regulations and Directives. Four main policy areas include:

Cartels, or control of collusion and other anti-competitive practices, under article 101 TFEU. Market dominance, or preventing the abuse of firms' dominant market positions under article 102 TFEU. Mergers, control of proposed mergers, acquisitions and joint ventures involving companies that have a certain, defined amount of turnover in the EU, according to the European Union merger law. State aid, control of direct and indirect aid given by Member States of the European Union to companies under TFEU article 107.

Primary authority for applying competition law within the European Union rests with the European Commission and its Directorate-General for Competition, although state aids in some sectors, such as agriculture, are handled by other Directorates-General. The Directorates can mandate that improperly-given state aid be repaid, as was the case in 2012 with Malev Hungarian Airlines.

Leading ECJ cases on competition law include Consten & Grundig v Commission and United Brands v Commission. See also List of European Court of Justice rulings#Competition for other cases.

History

One of the paramount aims of the founding fathers of the European Community—statesmen around Jean Monnet and Robert Schuman—was the establishment of a Single Market. To achieve this, a compatible, transparent and fairly standardised regulatory framework for Competition Law had to be created. The constitutive legislative act was Council Regulation 17/62 (now superseded). The wording of Reg 17/62 was developed in a pre Van Gend en Loos period in EC legal evolution, when the supremacy of EC law was not yet fully established. To avoid different interpretations of EC Competition Law, which could vary from one national court to the next, the commission was made to assume the role of central enforcement authority.

The first major decision under Article 101 (then Article 85) was taken by the Commission in 1964.64/566/CEE: Décision de la Commission, du 23 septembre 1964, relative à une procédure au titre de l'article 85 du traité (IV-A/00004-03344 «Grundig-Consten») They found that Grundig, a German manufacturer of household appliances, acted illegally in granting exclusive dealership rights to its French subsidiary. In Consten & Grundig the European Court of Justice upheld the commission's decision, expanded the definition of measures affecting trade to include "potential effects", and generally anchored its key position in Competition Law enforcement alongside the commission. Subsequent enforcement of Article 101 of the TFEU Treaty (combating anti-competitive business agreements) by the two institutions has generally been regarded as effective. Yet some analysts assert that the commission's monopoly policy (the enforcement of Art 102) has been "largely ineffective",See, Cini & McGowan because of the resistance of individual Member State governments that sought to shield their most salient national companies from legal challenges. The commission also received criticism from the academic quarters. For instance, Valentine Korah, an eminent legal analyst in the field, argued that the commission was too strict in its application of EC Competition rules and often ignored the dynamics of company behaviour, which, in her opinion, could actually be beneficial to consumers and to the quality of available goods in some cases.

Nonetheless, the arrangements in place worked fairly well until the mid-1980s, when it became clear that with the passage of time, as the European economy steadily grew in size and anti-competitive activities and market practices became more complex in nature, the commission would eventually be unable to deal with its workload.See Gerber & Cassinis The central dominance of the Directorate-General for Competition has been challenged by the rapid growth and sophistication of the National Competent Authorities (NCAs) and by increased criticism from the European courts with respect to procedure, interpretation and economic analysis.See Wallace & Pollack These problems have been magnified by the increasingly unmanageable workload of the centralised corporate notification system. A further reason why a reform of the old Regulation 17/62 was needed, was the looming enlargement of the EU, by which its membership was to expand to 25 by 2004 and 27 by 2007. Given the still developing nature of the east-central European new market economies, the already inundated Commission anticipated a further significant increase in its workload.

To all these challenges, the commission has responded with a strategy to decentralise the implementation of the Competition rules through the so-called Modernisation Regulation. EU Council Regulation 1/2003 places National Competition Authorities and Member State national courts at the heart of the enforcement of Articles 101 and 102. Decentralised enforcement has for long been the usual way for other EC rules, Reg 1/2003 finally extended this to Competition Law as well. The Commission still retained an important role in the enforcement mechanism, as the co-ordinating force in the newly created European Competition Network (ECN). This Network, made up of the national bodies plus the commission, manages the flow of information between NCAs and maintains the coherence and integrity of the system. At the time, Competition Commissioner Mario Monti hailed this regulation as one that will 'revolutionise' the enforcement of Articles 101 and 102. Since May 2004, all NCAs and national courts are empowered to fully apply the Competition provisions of the EC Treaty. In its 2005 report, the OECD lauded the modernisation effort as promising, and noted that decentralisation helps to redirect resources so the DG Competition can concentrate on complex, Community-wide investigations. Yet most recent developments shed doubt on the efficacy of the new arrangements. For instance, on 20 December 2006, the Commission publicly backed down from 'unbundling' French (EdF) and German (E.ON) energy giants, facing tough opposition from Member State governments. Another legal battle is currently ongoing over the E.ON-Endesa merger, where the commission has been trying to enforce the free movement of capital, while Spain firmly protects its perceived national interests. It remains to be seen whether NCAs will be willing to challenge their own national 'champion companies' under EC Competition Law, or whether patriotic feelings prevail. Many favour ever more uniformity in the interpretation and application of EU competition norms and the procedures to enforce them under this system.See Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 to empower the competition authorities of the Member States to be more effective enforcers and to ensure the proper functioning of the internal market (Text with EEA relevance.) OJ L 11, 14.1.2019, p. 3–33. However, when there are such differences in many Member States' policy preferences and given the benefits of experimentation, in 2020 one might ask whether more diversity (within limits) might not produce a more efficient, effective and legitimate competition regime.See Townley, A Framework for European Competition Law: co-ordinated diversity, (2018) Hart Publishing, Oxford .

Mergers and abuse of dominance

Scope of competition law

Because the logic of competition is most appropriate for private enterprise, the core of EU competition regulation targets profit making corporations. This said, regulation necessarily extends further and in the TFEU, both articles 101 and 102 use the ambiguous concept of "undertaking" to delimit competition law's reach. This uncomfortable English word, which is essentially a literal translation of the German word "Unternehmen", was discussed in Höfner and Elser v Macrotron GmbH. ECR I-1979 (C-41/90) The European Court of Justice described "undertaking" to mean any person (natural or legal) "engaged in an economic activity", which potentially included state run enterprises in cases where they pursued economic activities like a private business. This included a state run employment agency, where it attempted to make money but was not in a position to meet demand. By contrast, in FENIN v Commission, public services which were run on the basis of "solidarity" for a "social purpose" were said to be outside the scope of competition law. Self-employed people, who are in business on their own account, will be classed as undertakings, but employees are wholly excluded. Following the same principle that was laid down by the US Clayton Act 1914, they are by their "very nature the opposite of the independent exercise of an economic or commercial activity".Albany International BV (1999) , per AG Jacobs This means that trade unions cannot be regarded as subject to competition law, because their central objective is to remedy the inequality of bargaining power that exists in dealing with employers who are generally organised in a corporate form.

FNV Kunsten Informatie en Media v Staat der Nederlanden (2014) C-413/13 Viho Europe BV v Commission (1996) C-73/95 P ECR I-5457 Societe Technique Miniere v Maschinenbau Ulm GmbH ECR 234 Javico International and Javico AG v Yves Saint Laurent Parfums SA ECR I-1983 Wouters v Algemene Raad van de Nederlandse Orde van Advocaten (2002) C-309/99, ECR I-1577 Meca-Medina and Majcen v Commission ECR I-6991, C 519/04 P

Mergers and acquisitions

According to Article 102 TFEU, the European Commission has the power to regulate behaviour of large firms it claims to be abusing their dominant position or market power, as well as, preventing firms from gaining the position within the market structure that enables them to behave abusively in the first place. Mergers that have a "community dimension" are governed by the Merger Regulation (EC) No.139/2004, all "concentrations" between undertakings are subject to approval by the European Commission.  

A true merger, under to competition law, is where two separate entities merger into an entirely new entity, or where one entity acquires all, or a majority of, the shares of another entity, and is able to have control over that entity. Notable examples could include Ciba-Geigy and Sandoz merging to form Novartis,Case M 737, decision of 17thJuly 1996 as well as Dow Chemical and DuPont merging to form DowDuPont.Case M 7932, decision of 27thMarch 2017

Mergers can take a place on a number of basis. For example, a horizontal merger is where a merger takes place between two competitors in the same product and geographical markets and at same level of the production. A vertical merger is where mergers between firms that operate between firms that operate at different levels of the market. A conglomerate merger is merger between two strategically unrelated firms.