Competition Cases în the EU

Competition is a basic mechanism of the market economy and encourages companies to provide consumers products that consumers want. It encourages innovation, and pushes down prices. In order to be effective, competition needs suppliers who are independent of each other, each subject to the competitive pressure exerted by the others

Competition law is one of the areas of authority of the European Union. It comprises three main policy areas:

• Antitrust: control of collusion and other anti-competitive practices which has an effect on the EU (or, since 1994, the European Economic Area). This is covered under Articles 81 and 82 EC respectively.

• Mergers: control of proposed mergers, acquisitions and joint ventures involving companies which have a certain, defined amount of turnover in the EU/EEA. This is governed by the Council Regulation 139/2004 EC (the Merger Regulation).

• State aid: control of direct and indirect aid given by EU Member States to companies. Covered under Article 87 EC (ex Article 92).

This last point is a unique characteristic of the EU competition law regime. As the EU is made up of independent member states, both competition policy and the creation of the European single market could be rendered ineffective, were member states free to support national companies as they saw fit.

Primary competence for applying EU competition law rests with European Commission and its Directorate General for Competition, although state aids in some sectors, such as transport, are handled by other Directorates General. On 1 May 2004 a decentralized regime for antitrust came into force which is intended to increase the application of EU competition law by national competition authorities and national courts.

A. European airlines raided under cartel suspicions

EU and US investigators have launched a probe into several leading European airlines due to suspicions of cartel-type behaviour, such as price-fixing.

Passenger and cargo airlines British Airways, Lufthansa, SAS, Air France, KLM and Cargolux were targeted by the early morning raids carried out on Tuesday (14 February).

The world's two biggest airlines, US carriers American Airlines and United Airlines, also said they had received inquiries as part of the probe, according to Reuters.

The European Commission spokesman for competition issues, Jonathan Todd, said there had been concerns that "the companies concerned may have violated rules on cartels and restricted business practices," the BBC reported.

He pointed out that the launch of the probe does not itself mean that "the companies are necessarily guilty of anti-competitive behaviour and it does not pre-judge the outcome of our investigations." Experts warn the investigation itself could have a harsh economic impact on the airlines already suffering from low-cost competition pressures and high fuel costs.

The European Commission could levy a fine of up to 10 percent of the annual sales of the airlines involved if they are found guilty, but in the US the process could lead to prison sentences.

B. Big fines for vitamins cartel

The Commission imposed a record fine of more than 855 million euros on 8 pharmaceutical companies for illegal cartel agreements on vitamins.

A cartel is an agreement on prices whereby companies fix price levels jointly so that consumers are unable to take advantage of competition between suppliers to obtain competitive prices. After having started an investigation into price-fixing practices in the vitamins sector in 1999, the Commission sent statements of objections to 13 bulk vitamin producers on suspicion of a price-fixing cartel in this sector.