How has cooperation between member states evolved?
The creation of a common space for cooperation between member states has been the primary objective of the European Community since the Treaty of Rome (the Treaty that established the European Economic Community (EEC), signed by France, West Germany, the Netherlands, Italy, Belgium, and Luxembourg on March 25, 1957).
The effort has consistently aimed at replacing the mosaic of national markets with a “common market.” The establishment of a “system to prevent the distortion of competition” was proposed even then, as creating a common market and a competitive environment encourages business initiatives, increases efficiency, allows consumers to benefit from a broader range of offers, reduces prices, and improves quality.
What rules does the Treaty on the Functioning of the European Union (TFEU) ensure?
To this end, a set of rules was created to ensure market unity and, at the same time, the existence of a competitive environment that encourages economic progress and protects consumer interests. These rules are contained in the Treaty on the Functioning of the European Union (TFEU) and are implemented in each member state’s legal system, forming a distinct branch of law, that of commercial competition law.
What are the effects of the TFEU?
The most important aspect is that, by virtue of the principle of direct effect of European Union law, established and defined by the case law of the Court of Justice of the European Union, the provisions of European competition law can be directly invoked in relations between individuals before national courts, without the need for transposition into national legislation (horizontal direct effect). Therefore, violations of competition rules that cause harm to the property of individuals give them the right to seek damages – but only under the conditions of Directive 2014/104/EU, which has been transposed into the legislation of each member state.
What are the main competition rules at the EU level?
1. European Competition Law – Articles 101 and 102 TFEU
The main rules regarding competition at the EU level are contained in Articles 101 and 102 TFEU.
Article 101 TFEU prohibits anti-competitive agreements, i.e., all agreements that limit competition, regardless of the parties’ intentions. For example, anti-competitive agreements include those in which the parties agree: to fix prices, to limit production, to divide markets or consumers, to set resale prices (between a producer and its distributors), etc. Enterprises in cartels that control prices or divide markets try to protect themselves from competitive pressure that forces them to launch new products, improve quality, and maintain low prices. Therefore, consumers will pay more for lower-quality products.
It should be noted that, when analyzing whether a specific agreement violates the provisions of Article 101, the following three elements should be considered: (i) whether there is indeed an agreement, decision, or concerted practice between certain economic agents; (ii) whether there are arguments that competition within the internal market can be significantly hindered, restricted, or distorted as a result of the agreement; (iii) whether trade between member states has been or may be affected.
Article 102 TFEU provides that any abuse by one or more economic agents in a dominant position on a market or in a significant segment of it is prohibited, as long as it may affect trade between member states. For example, abuse of a dominant position includes: charging excessively high prices, artificially selling at low prices to harm or even exclude competitors from the market, forcing consumers to buy a product that is artificially linked to another better-known one – thus excluding similar products, distorting competition – refusal to accept certain customers or offering special discounts to customers who buy all or almost all the products they need from the enterprise holding the dominant position.
As can be seen, Article 102 TFEU constitutes a tool for controlling the exercise of monopoly power on a market. It involves the analysis of two elements: (i) the existence of an economic agent in a dominant position; (ii) the behavior of that economic agent, which has the effect of affecting competition in the respective market.
It is important to emphasize that Article 102 prohibits only the abuse of a dominant position, not merely its existence. A dominant position is not anti-competitive in itself, but the behavior of the company can be considered abusive if it exploits its position to eliminate competition. For example, when a major player tries to eliminate its competitors from the market, this is abuse of a dominant position. This will lead to higher prices and a reduction in the offer for consumers.
2. National Competition Law – Law No. 21/1996 on Competition
The national laws of the member states in the field of competition and their application must not contradict European rules.
In this context, Romanian legislation almost fully transposes the European provisions on competition. In Romania, the national equivalent of Articles 101 and 102 TFEU is found in the provisions of the Competition Law No. 21/1996, republished. As mentioned in Article 1, the main objective of the law is the protection of consumers. The law regulates agreements and concerted practices (Article 5) as well as abuse of dominant position (Article 6), almost identically to the European legislator.
In brief, any agreements between economic agents and concerted practices that have as their object or may have the effect of restricting, preventing, or distorting competition on the Romanian market or part of it are prohibited.
Holding a dominant position on the Romanian market is not prohibited. Economic agents fall under the law to the extent that they abuse their dominant position by engaging in anti-competitive practices that affect trade or harm consumers.
It should be emphasized that the legislation of most member states fully incorporates the provisions of Articles 101 and 102 TFEU, thus ensuring the creation of a common market and an undistorted competitive environment.
