Eu Competition Policy Essay

2416 Words Apr 24th, 2008 10 Pages
EU Competition Policy

European competition law and policy have changed significantly in recent years. With an enlarged EU of 27 member states, new rules, policies and administrative procedures have become increasingly important to ensure that this fundamental legal regime continues to promote competition and protect consumer welfare. In an attempt to define Competition policy, Massimo Motta described it as follows: “the set of policies and laws which ensure that competition in the market place is not restricted in such a way as to reduce economic welfare.”

European Competition policy is concerned with setting common standards of conduct among member states and its main goal is to ensure free and fair competition within the EU. It
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Article 81 is an anti-cartel instrument and is made up of three parts: part one contains the basic prohibitions on agreements and concerted practices between firms that prevent, restrict or distort competition within the Single Market; part two declares the prohibited agreements void; and part three describes the specific exemptions.

Fines of up to 10% of their worldwide turnover may be imposed on the guilty parties. The restrictive practices referred to in Article 81 are collusive arrangements between firms that ultimately aim at price fixing for market exploitation. These agreements are mostly horizontal, that is between firms at the same level of production, or at times there is a vertical element between producers and dealers. The proceeds of the fines are paid into the Community budget, helping to finance the EU and hence reduce the tax burden on citizens.

Between 1995 and 2002, the four leading tobacco processors in Italy colluded on their overall purchasing strategy, agreeing between themselves purchase prices and allocating their suppliers on a preferential or exclusive basis. They also rigged their bids in respect of public auctions organised by public authorities for the sale of tobacco in 1995 and 1998. In 2005 the European Commission fined the four a total of €56 million, for colluding over a

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