EU Competition Law and Economics

Discuss the use of acceding fatigued from economics in the jurisprudence of the European Court of Justice, which chronicle to the estimation of Articles 101 and 102 of the Treaty on the Functioning of the European Union. Examine, in accurate the role such acceding comedy in the acknowledged argument.

This article will appraise the bread-and-butter theories, both from a classical point of appearance and neo-classical to actuate the underpinnings of antagonism law. Through the works of Adam Smith apropos monopolies in the Wealth of Nations[1] and John Stuart Mill through his theories on restraints of barter in ‘On Liberty’[2] this will authenticate some bread-and-butter objectives in advancing laws apropos antagonism law. This will be supplanted with the neo-classical theories that accept accustomed added affidavit through bread-and-butter acceding for laws apropos competition. This will accommodate a basement for an assay of Articles 101 and 102 of the Treaty on the Functioning of the European Union (‘TFEU’), which accept been acclaimed as the two arch Articles ambidextrous with antagonism law in the European Union (‘EU’).[3] The axiological acumen for accepting antagonism law in the EU is to acquiesce for a blooming chargeless bazaar and to ensure that accumulated enterprises do not accept disproportionate access or ascendancy in the bazaar or alike through political influence.[4] This assay of Articles 101 and 102 of the TFEU through the cases that accept appear through the Court of Amends of the European Union (‘CJEU’) will be looked at through the prism of the bread-and-butter theories that accept been outlined. By attractive at it through that prism, it will acquiesce for a assurance in acceding of whether the role of the bread-and-butter acceding are brought into the acknowledged arguments. It has been appropriate that the attorneys and the economics are ‘co-pilots’ of the antagonism law aeroplane[5] and this article will actuate whether that is accurate by attractive at the bread-and-butter theories and the cases through the EU framework on antagonism law.

Economic Approach and Antagonism Law

Prior to delving into how antagonism law has adopted bread-and-butter acceding and theories, it is acute to accept how economics operates vis-à-vis antagonism law. The classical bread-and-butter theories, as acclaimed by John Stuart Mill accompaniment that it is through antagonism that the political abridgement can accept a accurate base through which wages, hire and prices can be regulated. Whilst Mill does not accommodate a analogue on what he meant by antagonism his approach on what laws surrounding antagonism could accomplish were indicative. Smith took this added in ‘Wealth of Nations’ back he declared it is the appropriate of every man to access into antagonism with any alternative man insofar as it does not aperture the laws of amends and the abstraction of antagonism was to ensure that those in business bought dearer and awash for cheaper rather than accepting a cartel with the adverse occurring. This approach was acclaimed as a annual of absolute competition. This demonstrates the classical theories that abide but as time as gone on there accept been neo-classical theories that accord added authentic responses.

In acceding of the neo-classical theories, the USA has acutely declared that antagonism law should be interpreted alone through what the theories in economics dictate;[6] however, this is questioned in the EU structures. The aggressive angle in the EU attending at the efficiencies as able-bodied as alternative apropos such as the ambiance and the aftereffect on employment.[7] In acceding of demography into annual the aftereffect of accepting absolute competition, it has been declared that ‘allocative’ and ‘productive’ ability is accomplished which leads to the maximisation of amusing welfare.[8] In acceding of ‘allocative efficiency’ this is an bread-and-butter appellation that agency the assets will be allocated to altered appurtenances and casework but will be disconnected insofar as it charcoal abreast assisting to do so.[9] The additional is that of ‘productive efficiency’ which agency that appurtenances and casework in association will be produced at the everyman cost.[10] In this regard, antagonism is apparent as benign for the advantageous ability because if monopolies abide again it is acceptable that they will be aerial amount producers and they can canyon that on to the consumer.[11] A third ability has been put advanced that explains the charge for competition, that actuality ‘dynamic efficiency’ which cannot be accurately proved[12] but states that antagonism allows for articles to be developed and created to accretion the custom of consumers. This theory, in all but name, had been put advanced by Smith back he declared that antagonism allows for ‘new improvements of art’[13] assuming that this ability has continued been announced of. This has been questioned as monopolies accept the money to backpack out research[14] and area there are monopolies others will try to arbitrate to get their custom.[15] On this basis, how the EU and CJEU accept dealt with situations area monopolies appear charge be advised to actuate whether the bread-and-butter acceding accept led to the accommodation that has been made.

Article 101 TFEU

In acceding of Article 101 of the TFEU, this is advised to ensure that akin practices are accounted adverse with the accepted market. The restrictions that are placed on ‘undertakings’, which awning all entities that are complex in business,[16] accept been apparent to be baffled for a cardinal of reasons. In the case of Wouters & Others v Algemene Raad van de Nederlandse Orde van Advocaten[17]it was captivated that admitting a brake on the acknowledged profession, it was advancing a accepted cold in ensuring able acknowledged convenance and accordingly was allowed. It has been acclaimed that this abstraction of a accepted cold will break aural the antagonism law of the EU,[18] however, it is what constitutes a accepted cold that can accept implications for bread-and-butter acceding actuality acclimated in the CJEU. In acceding of a award a accepted objective, it has been acclaimed that it is not all-important to attending at the bread-and-butter and non-economic objectives as they about go duke in hand.[19] In cases involving able casework such as Wouters and alternative cases such as Asnef Equifax[20]it was acclaimed that the CJEU took into annual the affair of advice aberration whereby admitting the actuality that there is a brake on antagonism which could access the amount the consumer, the affection will go up which is abnormally accustomed in able services.[21] These decisions tend to go adjoin the advantageous ability in that the amount will go up by acceptance added brake on barter in able services, however, the allocative ability would be apparent to advance as the affection accustomed to the customer improves. This demonstrates that Article 101 of the TFEU has taken the bread-and-butter angle into annual in ensuring that the Treaty does not act durably vis-à-vis antagonism law.

The apparatus of Article 101 has not absolutely followed the bread-and-butter arguments and this is apparent with cases involving ‘free riders’. This was apparent in the case of Consten and Grundig v Commission[22]which complex Consten who was to be the absolute benefactor in France of Grundig electrical appurtenances with the aftereffect that chargeless riders, who would delay for Consten to advance the appurtenances afore again affairs the Grundig electrical appurtenances at a lower amount than Consten.[23] The chargeless addition bread-and-butter arrangement has been accustomed in the United States of America in the case of Continental TV v GTE Sylvania[24] on the base that it was economically sound. However, this was alone in Consten on the base that the axiological cold of the EU plan is to accept greater affiliation aural the distinct bazaar and not aloof to access customer aegis and welfare.[25] Indeed, in the added contempo case this angle was reaffirmed in the case of GlaxoSmithKline v Commission[26]where the advice from the EU was advised and it was acclaimed that companies are not accustomed to authorize clandestine barriers aural the distinct bazaar of the EU.[27] These decisions from the CJEU authenticate that whilst the bread-and-butter considerations accept to be taken into account, they are accessory to the axiological aim of the EU activity to accept anytime afterpiece Union[28] and to ensure that there are no clandestine barriers aural the distinct market. To analyze this to the co-pilot affinity at the alpha of this essay, these decisions would advance that the action makers of the EU are the pilots and the advocate and economist are bald passengers.

It charge be acclaimed that Article 101 has a defence apparatus at 101(3) which is primarily based on the bread-and-butter considerations that accept been outlined. This defence is for a actor to prove but all agreements fabricated are acceptable to authorize beneath Article 101(3) if the requirements are met.[29] The requirements accompaniment that abstruse and bread-and-butter advance charge be bigger which links with the activating ability approach of antagonism law economics.[30] The alternative requirements absorb not eliminating antagonism on the bazaar as able-bodied as ensuring that consumers accept a fair allotment of the allowances from the agreement. This ties in with Smith’s approach on monopolies and convalescent the bazaar through antagonism laws as able-bodied as the allocative and advantageous efficiencies acclaimed in the added neo-classical theories apropos economics and antagonism law. Indeed, this defence beneath Article 101(3) has been accustomed a advanced estimation as apparent in CECED[31]where the bread-and-butter efficiencies were axial to the acumen in declaring that the ecology allowances had to be looked at in acceding of their aftereffect on the consumer.[32] As this defence is couched in acceding that are readily identifiable with the bread-and-butter theories, it demonstrates that the bread-and-butter acceding accept a huge role in antagonism law aural the EU.

Article 102 TFEU

In acceding of Article 102 of the TFEU, its accomplished base is in bread-and-butter acceding as it is advised to stop ascendancy and abuse. The use of the appellation ascendancy in economics is accounted to be added than that of a monopoly[33] and is a position of bread-and-butter backbone that prevents able antagonism actuality maintained.[34] This blazon of ascendancy goes aloft aloof a distinct article and the CJEU can attending at added than one bread-and-butter action to see whether there is dominance, with what is accepted as aggregate dominance.[35] In this regard, the bread-and-butter appellation of aggregate ascendancy and ascendancy about was apocalyptic in the case of Italian Flat Case to appearance that there was a aperture of Article 102.[36] The additional bread-and-butter appellation alongside ascendancy in Article 102 is that of abuse, which is area a ascendant article can use its bread-and-butter backbone to access added allowances that it would accept if it was a abate entity.[37] The use of bread-and-butter acceding in Article 102 cases can be apparent back corruption is discussed. Article 102 makes advertence to arbitrary prices but the CJEU has looked aloft this to see situations area there has been bloodthirsty pricing[38] and boundless appraisement that attending at bread-and-butter acceding in acceding of how undertakings with abundant bread-and-butter backbone may attack to amount their competitors out of the market.[39] This tends to authenticate that there are some bread-and-butter acceding that are acclimated not alone in Article 102 itself but additionally by the CJEU in its estimation of the Article. However, this appearance has not been absolutely replicated beyond the spectrum.

The use of the bread-and-butter acceding in invoking Article 102 has been apparent as haphazard[40] and this can be apparent through the cases area there has been some assurance on bread-and-butter acceding such as bloodthirsty appraisement acclaimed aloft but there are others area it has been based added on the acknowledged concepts such as area there is agency absorbed for affairs a assertive brand.[41] In this regard, back Article 102 is looked at alone it can be apparent that it is couched in bread-and-butter acceding such as ascendancy and others accept appear in through cases such as bloodthirsty appraisement but back it is compared to its counterpart, Article 101, the aftereffect of economics on its estimation has not been as widespread.[42] Accordingly, back it comes to the aeroplane affinity with Article 102 it is actual abundant that the advocate takes the arch pilot’s role admitting the economist operates as a co-pilot that attempts to bolster any acknowledged arguments that accept been made.

Conclusion

This article has advised EU Antagonism Law to actuate whether the role of economics or law is prevailing in its application. The bread-and-butter theories, both classical and neo-classical, authenticate that the base for antagonism law is acceptance a chargeless bazaar to ensure that the consumers are able to accept articles at a low amount and alternative individuals are able to attempt with the beyond firms. In affiliation to Article 101 it can be apparent through the use of accepted aim and the defence accustomed in Article 101(3) that the bread-and-butter acceding accept a abundant role to comedy in how the case would be absitively by the CJEU. However, as acclaimed with the chargeless addition cases such as Consten it is readily identifiable that the economics will alone be taken into annual afterwards the axiological aim of the EU, that actuality anytime afterpiece Union, is dealt with. This shows that the bread-and-butter acceding as able-bodied as the acknowledged acceding are actual abundant accessory to the axiological aims of the EU project. Back the action affair is put to one side, it can be apparent that the bread-and-butter acceding and the acknowledged acceding in chief a antagonism law case beneath Article 101 are co-pilots ensuring that the actual accommodation is made. In acceding of Article 102, the use of economics has not been as accustomed as with Article 101 but this is abundantly due to the actuality that there is a abridgement of a accepted theme. Perhaps as the law develops vis-à-vis Article 102, the bread-and-butter acceding will accept a greater role to play.

Bibliography

Legislation

Treaty on the Functioning of the European Union

Cases

Akzo Chemie BV v Agency [1991] ECR I-3395

Asnef Equifax Servicios de Informacion sobre Solvencia y Credito SL v Asociacion de Usuarios de Servicios Bancarios [2006] ECR I-11125

British Airways Plc v Agency [2007] ECR I-2331

CECED [2000] OJ L187/47

Consten and Grundig v Agency [1966] ECR 299

Continental TV v GTE Sylvania (1977) 433 US 36

GlaxoSmithKline v Agency [2009] ECR I-9291

Klaus Hofner & Fritz Esler v Macrotron GmbH [1991] ECR I-1979

Matra Hachette v Agency [1994] ECR II-595

PPG Vernante Pennitalia Spa v Agency [1992] ECR II-1403

United Brands Company v Agency [1978] ECR 207

Wouters & Others v Algemene Raad van de Nederlandse Orde van Advocaten [2002] ECR I-1577

Books

Akman P, The Concept of Corruption in EU Antagonism Law: Law and Bread-and-butter Approaches (Bloomsbury 2015)

Bork RH, The Antitrust absurdity (The Chargeless Press, 1978)

Chalmers D, Davies G & Monti G, European Union Law (2nd edn, CUP 2010)

Jacobs K (ed), Effective Standardization Management in Accumulated Settings (IGI Global, 2010)

Galbraith, American Capitalism: The Concept of Countervailing Power (Houghton Mifflin, 1952)

Huerta de Soto J, The Approach of Activating Ability (Routledge 2009)

Jones A & Sufrin B, EU Antagonism Law: Text, Cases and Materials (6th edn, OUP 2016)

Kaczorowska A, European Union Law (Routledge 2008)

Kaczorowska-Ireland A, Competition Law in the CARICOM Distinct Bazaar and Abridgement (Routledge 2012)

Mill JS, On Liberty (Vail-Ballou Press, 2003)

Scherer & Ross, Industrial Bazaar Structure and Bread-and-butter Performance (3rd edn, Houghton Mifflin, 1990)

Schulze R, An Introduction to European Law (2nd edn, CUP 2015)

Schumpter, Capitalism, Socialism and Democracy (Taylor & Francis, 1976)

Smith A, An Enquiry into the Nature and Causes of the Wealth of Nations (Penguin, 1999)

Whish R & Bailey D, Competition Law (8th edn, OUP 2015)

Articles

Apostolakis I, ‘E-Commerce and Chargeless Addition Considerations Beneath Article 101 TFEU’ (2016) ECLR 114

Ibanez Colomo P, ‘Market Failures, Transaction Costs and Article 101(1) TFEU Case Law’ (2012) 37(5) ELR 541

Janssen C & Kloosterhuis E, ‘The Wouters Case Law, Special for a Altered Reason?’ (2016) ECLR 335

Lianos I, ‘In Memoriam Keck: The Reformation of the EU Law on the Chargeless Movement of Goods’ (2015) EL Rev 225

Nowag J, ‘Wouters, Back the Condemned Live Longer: A Comment on OTOC and CNG’ (2014) 36 ECLR 39

O’Donoghue R, ‘Defining Accepted Competition: How to Clarify Appraisement Abuses beneath Article 83 EC’ (2002) 26 Fordham Int’l LJ 83

Posner RA, ‘The Amusing Costs of Cartel and Regulation’ (1975) 83 JPE 807

Ratliff J, ‘Major Events and Action Issues in EC Antagonism Law, 2001: Part 1’ (2002) ICCLR 6

Stigler G, ‘Perfect Competition, Historically Contemplated’ (1957) 65(1) J Pol Eco 1

Temple Lang J, ‘Some Aspects of Corruption of a Ascendant Position in EC Antitrust Law’ (1979) 3 Fordham Int’l LF 1

Tsoulfidis L, ‘Classical vs Neoclassical Conceptions of Competition’ (2011) MPRA 1

Vickers J, ‘Concepts of Competition’ (1995) 47 Oxford Bread-and-butter Papers 1

Miscellaneous

Commission, ‘Notice – Guidelines on Vertical Restraints’ (2010) OJ C130/1

de la Mano M, For the Customer’s Sake: The Competitive Effects of Efficiencies in European Merger Control (Enterprise Paper No 11, 2002)


[1] A Smith, An Enquiry into the Nature and Causes of the Wealth of Nations (Penguin, 1999).

[2] JS Mill, On Liberty (Vail-Ballou Press, 2003).

[3] D Chalmers, G Davies & G Monti, European Union Law (2nd edn, CUP 2010) p. 962.

[4] RA Posner, ‘The Amusing Costs of Cartel and Regulation’ (1975) 83 JPE 807.

[5] R Whish & D Bailey, Competition Law (8th edn, OUP 2015) p. 2.

[6] RH Bork, The Antitrust absurdity (The Chargeless Press, 1978).

[7] I Lianos, ‘In Memoriam Keck: The Reformation of the EU Law on the Chargeless Movement of Goods’ (2015) EL Rev 225, 244.

[8] Scherer & Ross, Industrial Bazaar Structure and Bread-and-butter Performance (3rd edn, Houghton Mifflin, 1990) Ch. 1.

[9] R Whish & D Bailey, Competition Law (8th edn, OUP 2015) p. 5.

[10] M de la Mano, For the Customer’s Sake: The Competitive Effects of Efficiencies in European Merger Control (Enterprise Paper No 11, 2002) p. 8.

[11] J Vickers, ‘Concepts of Competition’ (1995) 47 Oxford Bread-and-butter Papers 1.

[12] J Huerta de Soto, The Approach of Activating Ability (Routledge 2009) p. 1-2.

[13] Smith (n 1) p. 706.

[14] Galbraith, American Capitalism: The Concept of Countervailing Power (Houghton Mifflin, 1952).

[15] Schumpter, Capitalism, Socialism and Democracy (Taylor & Francis, 1976).

[16] A Jones & B Sufrin, EU Antagonism Law: Text, Cases and Materials (6th edn, OUP 2016) p. 116.

[17] [2002] ECR I-1577.

[18] J Nowag, ‘Wouters, Back the Condemned Live Longer: A Comment on OTOC and CNG’ (2014) 36 ECLR 39.

[19] P Ibanez Colomo, ‘Market Failures, Transaction Costs and Article 101(1) TFEU Case Law’ (2012) 37(5) ELR 541, 560.

[20] Asnef Equifax Servicios de Informacion sobre Solvencia y Credito SL v Asociacion de Usuarios de Servicios Bancarios [2006] ECR I-11125.

[21] C Janssen & E Kloosterhuis, ‘The Wouters Case Law, Special for a Altered Reason?’ (2016) ECLR 335, 337.

[22] [1966] ECR 299.

[23] Chalmers (n 3) p. 979.

[24] (1977) 433 US 36.

[25] I Apostolakis, ‘E-Commerce and Chargeless Addition Considerations Beneath Article 101 TFEU’ (2016) ECLR 114, 116.

[26] [2009] ECR I-9291.

[27] Commission, ‘Notice – Guidelines on Vertical Restraints’ (2010) OJ C130/1.

[28] A Kaczorowska, European Union Law (Routledge 2008) p. 86.

[29] Matra Hachette v Agency [1994] ECR II-595.

[30] R Schulze, An Introduction to European Law (2nd edn, CUP 2015) p. 318.

[31] [2000] OJ L187/47.

[32] J Ratliff, ‘Major Events and Action Issues in EC Antagonism Law, 2001: Part 1’ (2002) ICCLR 6.

[33] Klaus Hofner & Fritz Esler v Macrotron GmbH [1991] ECR I-1979.

[34] United Brands Company v Agency [1978] ECR 207, para. 65.

[35] A Kaczorowska-Ireland, Competition Law in the CARICOM Distinct Bazaar and Abridgement (Routledge 2012) p. 170.

[36] PPG Vernante Pennitalia Spa v Agency [1992] ECR II-1403.

[37] J Temple Lang, ‘Some Aspects of Corruption of a Ascendant Position in EC Antitrust Law’ (1979) 3 Fordham Int’l LF 1, 9.

[38] Akzo Chemie BV v Agency [1991] ECR I-3395.

[39] P Akman, The Concept of Corruption in EU Antagonism Law: Law and Bread-and-butter Approaches (Bloomsbury 2015) p. 188.

[40] R O’Donoghue, ‘Defining Accepted Competition: How to Clarify Appraisement Abuses beneath Article 83 EC’ (2002) 26 Fordham Int’l LJ 83.

[41] British Airways Plc v Agency [2007] ECR I-2331.

[42] Chalmers (n 3) p.1007.

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