The main reason to develop a Competition Policy in the EU is to prevent a number of actions which disturb the economy and the market.

The competition policy developed by the Union has a big amount of goals. This policy ensures a diversity of mass market consumer goods and also low prices for the final customer.

Through the State aids they create and promote durable jobs. The Union wants to obtain an impact on the structure of markets and the behaviour of market players, it also wants to create innovation, reduce production costs, increase economic efficiency and increase competitiveness of the European economy.9

           2.2.2 What are the four areas of the EU

                  Competition Policy?

                  Develop and explain your answer giving

                  an example for each area.

The four main areas of the EU Competition Policy are:

• The elimination of agreements which restrict competition and of abuses of a dominat position.

• Restrictive agreements

Sometimes enterprises reach agreements which damage competition. An example would be an agreement of prices, so the prices won’t be competitive. The consequence for the final consumer would be higher prices.

This is due to the lack of competence in the market, firms must not care about innovation or to have to reduce the production costs.11

An example for this actions is the investigation of the European Union whether the world  largest memory makers agreed to raise chip prices in 2001.

The Union has been investigating since April 2003 enterprises like Micron, Samsung and Infineon, which  collaborate to drive up prices.

• Abuse of a dominant position

One of the main aims of businesses is to conquer markets, which can lead to very strong positions. A dominant position is not wrong, the problem is when the firms abuses of this position and so damage competition.

Businesses in this situation have such economic power that they can take decisions without taking in to account the competitors.12

In 2001, for example, the Belgian postal operator La Poste was damned by the European Commission to pay 2,5 million euro for abusing its dominant position.13

• The control of mergers between firms

Nowadays firms are almost obliged to merger to reach a size which allows being competitive in the market.

This is due to the globalisation of trade and the development of the single market in the Community.

Through a merger of companies we will find a large list of benefits like the enhance of research and the development of new products, the implementation of restructuring measures which will distribution and production costs, etc.14

An example of this merger is the software company Symantec, which take over Veritas software for $ 13,5 billion.15

• The liberalisation of monopolistic economic sectors.

 The Member States public authorities have monopoly rights. They can perform services of general economic interest like postal deliveries, rail transport or electricity.

This situation creates poor quality, high prices and less innovation and investment.

The European Union wants to introduce competition in the monopoly industries.

• Scrutiny of State aid.

If the State aid affects the intra-Community competition, it will be prohibited by the Union.

This occurs when companies or products are treated better, to the damage of other companies or products. This  actions seriously disrupts normal competitive forces.

But there are some exceptions in the Treaty which the European Commission will allow, to reach a beneficial impact of an aid.

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