Competition Law

2 Overview of EU and UK competition law 1. Introduction 49 5. The Institutional Structure of EU 2. EU Law 49 and UK Competition Law 79 3. UK Law 58 4. The Relationship Between EU Competition Law and National Competition Laws 75 1. Introduction Th is chapter will provide a brief overview of EU and UK competition law and the rele- vant institutions; it will also explain the relationship between EU competition law and the domestic competition laws of the Member States, in particular in the light of Article 3 of Regulation 1/20031. Th e rules of the European Economic Area are briefl y referred to, and the trend on the part of Member States to adopt domestic competition rules modelled on those in the EU is noted. Th ree diagrams at the end of the chapter explain the institutional structure of EU and UK competition law. 2. EU Law (A) The Treaty on the Functioning of the European Union Th e Rome Treaty of 19572 established what is now known as the European Union3. Th ere are currently 27 Member States4. Th e Rome Treaty was renamed the Treaty on the Functioning 1 Council Regulation 1/2003 on the implementation of the rules on competition laid down in Articles [101 and 102 TFEU] OJ [2003] L 1/1, available at www.ec.europa.eu. 2 Th e Treaty of Paris of 1951 had earlier established a special regime for coal and steel which contained provisions dealing specifi cally with competition; this Treaty expired on 23 July 2002: it is discussed briefl y in ch 23, ‘Coal and Steel’, p 967. 3 Th e original name ‘European Economic Community’ was replaced by the ‘European Community’ by the Maastricht Treaty of 1992, which, in turn, was subsumed into the European Union by the Lisbon Treaty of 2009; it follows that references are now to EU, not to EC, competition law. 4 As to the position of territories such as the Isle of Man and Gibraltar under EU Law see Murray EU & Member State Territories – Th e Special Relationship under Community Law (Palladian Law Publishing, 2004). 50 2 OVERVIEW OF EU AND UK COMPETITION LAW of the European Union (‘TFEU’) by the Lisbon Treaty5 with eff ect from 1 December 2009. Th e Lisbon Treaty also renumbered the Treaty Articles and renamed various institutions; for example the Court of First Instance is now known as the General Court; as with the rest of this book, this chapter will use the post- Lisbon terminology. Th e TFEU consists of 358 Articles. It is a complex document, the predecessors of which have generated a considerable body of jurisprudence6. Much of EU law is concerned with the elimination of obstacles to the free movement of goods, services, persons and capital; the removal of these obstacles in itself promotes competition within the Union. Initiatives such as the establishment of a public procurement regime7, the creation of the Euro8 and the ‘EU 2020 Strategy’9 with its emphasis on ‘smart, sustainable and inclusive growth’ also contribute substantially to greater competition within the European economy. However, quite apart from this ‘macro’ eff ect on competition, the TFEU also contains specifi c competition rules that apply to undertakings and to the Member States themselves. (i) The competition chapter in the TFEU EU competition law is contained in Chapter 1 of Title VII of Part Th ree of the TFEU, which consists of Articles 101 to 109. It is necessary to read these provisions in conjunction with the objectives and principles laid down in the TFEU and also the Treaty on European Union (‘TEU’). Article 3(3) TEU provides that one of the EU’s objectives is a highly competitive social market economy. Article 3(3) TEU also states that the EU is to establish an internal market, which, in accordance with Protocol 27 on the internal market and competition, annexed to the TEU and the TFEU, is to include a system ensuring that competition is not distorted. Th e Protocol has the same force as a Treaty provision10. Th e Lisbon Treaty repealed Article 3(1)(g) of the EC Treaty that established as one of the activities of the European Community the achievement of a system of undistorted competition. In Konkurrensverket v TeliaSonera Sverige AB11 the Court of Justice referred to Article 3(3) TEU and Protocol 27 as though there was no diff erence from Article 3(1)(g) EC12. Article 3(1)(b) TFEU provides that the EU shall have exclusive competence in estab- lishing the competition rules necessary for the functioning of the internal market. Article 119(1) TFEU provides that the activities of the Member States and the EU shall be conducted in accordance with the principle of an open market economy with free competition. Th ese references to competition in the TEU and the TFEU have a signifi cant eff ect on the decisions of the European Commission (‘the Commission’), and judgments of the General 5 [2007] OJ C 306/1; on the Treaty reform process that led up to the Lisbon Treaty and its legal eff ects see Craig ‘Th e Treaty of Lisbon, process, architecture and substance’ (2008) 33 EL Rev 137. 6 For comprehensive analysis of EU law in general see Wyatt and Dashwood’s European Union Law (Hart Publishing, 6th ed, 2011, eds Dashwood, Dougan, Rodger, Spaventa and Wyatt); Chalmers, Hadjiemmanuil, Monti and Tomkins European Union Law (Cambridge University Press, 2006); Craig and de Búrca EU Law: Texts, Cases, and Materials (Oxford University Press, 4th ed, 2007). 7 On public procurement see Bovis EC Public Procurement: Case Law and Regulation (Oxford University Press, 2005); Arrowsmith Th e Law of Public and Utilities Procurement (Sweet & Maxwell, 2nd ed, 2005); Trepte Public Procurement in the EU (Oxford University Press, 2nd ed, 2007); Graells Public Procurement and the EU Competition Rules (Hart Publishing, 2011). 8 On the Euro see Herdegen ‘Price Stability and Budgetary Restraints in Economic and Monetary Union: the Law as Guardian of Economic Wisdom’ (1998) 35 CML Rev 9; Louis ‘A Legal and Institutional Approach for Building a Monetary Union’ (1998) 35 CML Rev 33; Swann Th e Economics of Europe (Penguin Books, 9th ed, 2000), ch 7; see further ‘Economic and monetary union’, p 52 below. 9 See Europe 2020 COM(2010) 2020 fi nal; see also A Pro- active Competition Policy for a Competitive Europe COM(2004)293 fi nal, both available at www.ec.europa.eu. 10 See Article 51 TEU. 11 Case C- 52/09 [2011] ECR I- 000. 12 Ibid, paras 20–22. EU LAW 51 Court and the Court of Justice (together, ‘the EU Courts’), which have oft en interpreted the specifi c competition rules teleologically from the starting point of what are now Articles 3(3) TEU and Protocol 2713. Within Chapter 1 of Title VII of Part Th ree of the TFEU, Article 101(1) prohibits agreements, decisions by associations of undertakings and con- certed practices that have as their object or eff ect the restriction of competition14, although this prohibition may be declared inapplicable where the conditions in Article 101(3) are satisfi ed15. Article 102 prohibits the abuse by an undertaking or undertakings of a dom- inant position16. Article 106(1) imposes obligations on Member States in relation to the Treaty generally and the competition rules specifi cally, while Article 106(2) concerns the application of the competition rules to public undertakings and private undertakings to which a Member State entrusts particular responsibilities17. Articles 107 to 109 prohibit state aid to undertakings by Member States which might distort competition in the internal market18. An important additional instrument of EU competition law is the EU Merger Regulation (‘the EUMR’) which applies to concentrations between undertakings that have a Community dimension19. (ii) The single market imperative As mentioned in chapter 120, it is important to stress that EU competition law is applied by the Commission and the EU Courts very much with the issue of single market integration in mind. Th e single market has been described by the Commission as one of the ‘EU’s biggest assets’21 which it is determined to protect22. Agreements and conduct which might have the eff ect of dividing the territory of one Member State from another will be closely scrutinised and may be severely punished. Th e existence of ‘single market’ competition rules as well as ‘conventional’ competition rules is a unique feature of EU competition law. Th e fact that ten further countries acceded to the European Union on 1 May 2004 and two more on 1 January 2007, together with the possibility of future accessions, for example by some of the Balkan states and Turkey, means that single market integration is likely to remain a key feature of competition policy23. Th e arrival of the economic crisis in 2008 reinforced the Commission’s determination to act as guardian of the single market; or, to put the point another way, to prevent a retreat into economic nationalism24. Th e Court of Justice reaffi rmed the importance of the single market imperative in GlaxoSmithKline Services Unlimited v Commission25. 13 For examples of teleological interpretation of the competition rules see Cases C- 68/94 and 30/95 France v Commission [1998] ECR I- 1375, [1998] 4 CMLR 829, paras 169–178; Case T- 102/96 Gencor v Commission [1999] ECR II- 753, [1999] 4 CMLR 971, paras 148–158; Case T- 99/04 AC- Treuhand AG v Commission [2008] ECR II- 1501, [2008] 5 CMLR 962, paras 124–150.

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