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Competition

Overview: making markets work better

Competition policy in Europe is a vital part of the internal market. Its aim is to provide everyone in Europe with better quality goods and services at lower prices. Competition policy is about applying rules to make sure companies compete fairly with each other. This encourages enterprise and efficiency, creates a wider choice for consumers and helps reduce prices and improve quality. These are the reasons why the EU fights anticompetitive behaviour, reviews mergers and state aid and encourages liberalisation.

The Commission mobilise competition policy tools and market expertise so that they contribute to the Union's jobs, growth and investment agenda, including in areas such as the digital single market, energy union, financial services, industrial policy and the fight against tax evasion.

The Commission pursues an effective enforcement of competition rules in the areas of antitrust and cartels, mergers and state aid, maintaining competition instruments aligned with market developments, as well as promoting a competition culture in the EU and world-wide. The Commission follows an economic as well as a legal approach to the assessment of competition issues.

The Commission has also put forward measures to improve the right for consumers and businesses to get damage compensation when they are victims of anti-competitive conduct, and has strengthened and streamlined state aid investigation procedures.

Why we need a European competition policy

Low prices for all: The simplest way for a company to gain a high market share is to offer a better price. In a competitive market, prices are pushed down. This is not only good for consumers — when more people can afford to buy products, it encourages businesses to produce and boosts the economy in general.

Better quality: Competition also encourages businesses to improve the quality of goods and services they sell — to attract more customers and expand market share. Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service.

More choice: In a competitive market, businesses will try to make their products different from the rest. This results in greater choice — so consumers can select the product that offers the right balance between price and quality.

Innovation: To deliver this choice, and produce better products, businesses need to be innovative — in their product concepts, design, production techniques, services, etc.

Better competitors in global markets: Competition within the EU also helps make European companies stronger outside the EU — and able to hold their own against global competitors.

Competition: a Europe-wide issue

Sometimes violations of competition rules happen within just one country, so a national competition authority (NCA) would often handle the case. But with the growth of the internal market and globalisation, the effects of illegal behaviour, like running a cartel, are often felt in many countries across the EU and beyond.

The Commission is often well placed to pursue these trans-EU cases. The Commission has the power not only to investigate but also to take binding decisions and impose substantial fines. The Commission enforces the EU competition rules together with the NCAs of the EU countries. These authorities and the European Commission exchange information on implementing EU competition rules through the European Competition Network (ECN).

National courts also have the power to decide whether a particular agreement complies with EU competition law or not. Companies and consumers can also claim damages if they have suffered as a result of illegal behaviour restricting competition.

What are the consequences?

The Commission investigates whether companies are violating or could potentially violate the competition rules. This means it can act either before or after the rules are broken, in order to safeguard a competitive market. As a result of the Commission’s investigations, it can decide to prohibit a certain conduct, require remedial action or impose a fine, depending on the situation. So the Commission acts both to prevent and to punish competition violations in the EU. The EU competition laws are directly applicable in all the countries in the EU. National competition authorities can apply EU rules as well as their own competition laws.

Anticompetitive conduct must have an effect on trade between EU countries for the Commission to be able to act. The Commission has strong competition law enforcement powers, given to it under the treaties by the EU countries. Its decisions are binding on both companies and national authorities that violate the rules, but the decisions can be appealed to the EU’s General Court and further (on points of law) to the Court of Justice. Companies and EU governments regularly lodge and sometimes succeed in appeals against Commission decisions.