Competition Law under EU Law

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Competition means that businesses are under constant pressure to be better than their competitors, in order to win customers. Competition acts as a driver for innovation and technological progress, and this improves consumer welfare. Therefore, the interests of consumers are at the heart of competition policy. In a competitive market, each firm tries to be "optimal" and attract consumers through lower prices and improve the quality of its products or services. With the help of consumers, authorities such as the European Commission can take more effective action to prevent or prohibit anti-competitive practices sometimes observed on the market. Competition law in the theoretical model in a society sellers produce homogeneous products and all relevant consumers are fully informed before buying a product. Some objectives of competition law is
  1. Workable competition, No prevention, restriction or distortion of competition, Low prices, Good quality, Protection of consumers, Economic efficiency, Protection of competitors, Protection of SMEs, Economic development of all geographical areas, Employment, Freedom of contract, Competitiveness on other markets, Democratic values ,Protection of internal market. Also EU competition law is primarily concerned with the problems that may occur when an undertaking or two or more undertakings have or obtain substantial market power (+ internal market) and undertakings that have substantial market power enjoy some of the benefits available to a true monopolist (Market power enables undertakings to limit output and raise prices, harmful to economic, efficiency and consumer welfare.
In EU accession include the Utmost importance of competition law – harmonization ,Stabilization and association agreement, Importance of implementation, Practice, Administrative capacity, Application of European law before accession Art 74 Croatian Competition act. EU competition law are includes Arts 101-106. Article 101 (ex Article 81 TEC): In this article prohibits what follows as not compromised. Substantially prevent any movement or decision of undertakings which may affect, restrict and restrain trade between countries negatively. Article 102 TFEU provides: Any operation undertakings of a dominant position into the internal market or in one of the significant part of it must be forbidden as Non-compromised energy to the internal market in so far as it may influence commerce between States. Such abuse may, in especially, consist in:
  1. According to EU Competition Law “Directly or indirectly commanding unfair market or selling prices or other unfair trading conditions; (b) Limiting manufacture, markets or technical growth to the prejudice of consumers; (c) Applying disparate conditions to parity transactions with other trading parties, therefrom placing them at a competitive disadvantage”.[1]Some "new markets" economy has resulted in the network externalities.
Network effect: Microsoft (2007): EU Competition defines that “In industries exhibiting strong network effects, consumer demand depends critically on expectations about future purchases. If consumers expect a firm with a strong reputation in the current (product) generation to succeed in the next generation, this will tend to be self-fulfilling as the consumers direct their purchases to the product that they believe will yield the greatest networks gains”[2] Article 106 (ex Article 86 TEC): In the case “of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaties, in particular to those rules provided for in Article 18 and Articles 101 to 109”.[3] “National courts can apply Articles 101 and 102 TFEU without it being necessary to apply national competition law in parallel. However, where a national court applies national competition law to agreements, decisions or practices which may affect trade between EU countries within the meaning of Article 101(1) TFEU (ex-Article 81(1) TEC) or to any abuse prohibited by Article 102 TFEU, they also have to apply EU competition rules to those agreements, decisions or practices. The parallel application of national competition law to agreements may not lead to a different outcome from that resulting from the application of EU competition law.”[4] Microsoft is one of the most famous companies in the world which provides operating systems for desktops and laptops. In 1998 accepted the first complaint by an equally dynamic company which providing software, programming languages (such as her own creation of Java) and sells market computers, the Sun Microsystems Inc. The complaint that received the DG Group refers to the abuse of dominance made by Microsoft's OS market and refusing to provide the information interoperability about the software products provided. This resulted affect disadvantaged and negative competitive companies since they could develop their products were compatible with the operating systems Windows. “However, the Commission reaching the February 2000 opened Microsoft's case, on its own initiative, under Regulation No 17, which was patented as Case COMP/C-3/37.792 which was related to the integration of Windows Media Player in OS of Windows 2000. After a year in August 2001, an announcement of objections (SO) was sent to Microsoft relating to the Media Player evolving, and the Commission incorporated into this an earlier SO relating to the interoperability issue. Microsoft responded to the Statement of Objections on17 November 2000.1.”[5] The Commission later proved that apart from the Sun there were other companies had refused this information, and continuous non-disclosures by Microsoft were a strategic target was the deviation of competitors from the market. The tying of Microsoft's media player product resulted besides the foreclosure of competitors, was also reduced consumer choice, on the ground that the other competitors at a disadvantage without it being related to the value and quality. Many are the elements that already show a trend that prevails in favor of Windows Media Player and general technology of Windows. If there was no intervention by the Commission, the connection of Windows Media Player with Windows is sure to be made the purchase definitively in favor of Microsoft and of course there would be the case with a monopoly. This way allows Microsoft to inspect related markets in the digital media, such as encoding technology, software for broadcasting of music over the Internet and digital rights management etc. According to Osterud (2010) “The Commission noted that Microsoft’s behavior should be analyzed in the light of two key circumstances. And The European Commission has decided, after a five-year investigation, that Microsoft Corporation insolvent European Union competition law by leveraging its too close to monopoly in the market
  • Firstly, Microsoft enjoyed a position of extraordinary market strength on the market for client PC operating systems.
  • Secondly, interoperability with the client PC operating system was of significant competitive importance in the market strength on the purchase of some function of a working group on servers systems”[6]
as for the interoperability remedy, where Microsoft has to disclose absolute and exact information on all the interfaces that will allow non-servers of Microsoft workgroup to achieve the complete interoperability with Windows PCs and servers, his expertise might be used in assessing whether Microsoft’s protocol disclosures are full and exact and whether the terms under which Microsoft makes the protocol specifications available are logical and non-discriminatory. On tying, the Trustee might be asked to examine whether Microsoft has duly implemented the demand to suggestion to PC constructors a version of its Windows client PC operating system without Windows Media Player. Also the commission required it by Microsoft to set remedies in relation to both work group server operating systems and media players. For these reasons, Microsoft has been forced to allow all European users the freedom to choose yourself which browser they want and allow all computer manufacturers not to incorporate the Internet Explorer or disable it. “Specifically for the continuous illegal behavior Microsoft it ordered to reveal to competitors, within 120 days, the borders obligatory for their products to be able to 'talk' with the omnipresent Windows OS. Also within 90 days, Microsoft must make the proposal to issue Windows without integrating Windows Media Player or sell as isolated” Overall a fine up to Microsoft for abuse of power in the EU market amounted to €497 million. Microsoft is also going to publish commitment today which allows the publication of information about interoperability issues. According to European Commission “The General Court essentially upheld the Commission's main findings that Microsoft's pricing of interoperability information was not compliant with the 2004 Microsoft Decision, whilst reducing the penalty payment marginally from €899 million to €860 million. In particular, the General Court confirmed that in the absence of convincing evidence as to the innovative character of Microsoft's non-patented interoperability information, Microsoft's remuneration schemes prior to 22 October 2007 were unreasonable under the 2004 Microsoft Decision. In this regard, the General Court confirmed that allowing Microsoft to charge for merely interoperating with its dominant PC and work group server operating system – the very essence of the original abuse – would in effect allow it to transform the benefits of the abuse into remuneration”[7]. Finally, Although Microsoft has violated the laws of competitiveness The Court nevertheless reduced the fine marginal considering the fact that Microsoft had to do with the availability of interoperability to third parties. This judgment corroborate that non-compliance with an antitrust decision makes up important misconduct which the Commission is entitled to sanction in order to obligate compliance. Bibliography European Competition Law Prof. Fabio Bassan a.a. 2013‐14 European Competition European Commission IP/04/382 Brussels, 24 March 2004 Commission concludes on Microsoft investigation, imposes conduct remedies and a fine EU Commission: Antitrust: Commission welcomes General Court judgment in Microsoft compliance case EU Competition Law Rules Applicable to Antitrust Enforcement Volume I: General Rules Situation as at 1st July 2013 pp.11 Eric Osterud (2010) Identifying Exclusionary Abuses by Dominant Undertakings under EU Competition Law: The spectrum of tests (chapter7) pp.238

Sandra M. Colino(2011)Competition Law of the EU and UK(7th edition) pp.446

Links http://europa.eu/legislation_summaries/competition/firms/l26110_en.htm Cardiff Met University
[1] European Competition Law Prof. Fabio Bassan a.a. 2013‐14 [2] European Competition [3] EU Competition Law Rules Applicable to Antitrust Enforcement Volume I: General Rules Situation as at 1st July 2013 pp.11 [4] http://europa.eu/legislation_summaries/competition/firms/l26110_en.htm

[5] Sandra M. Colino(2011)Competition Law of the EU and UK(7th edition) pp.446

[6] Eric Osterud (2010) Identifying Exclusionary Abuses by Dominant Undertakings Under EU Competition Law: The spectrum of tests(chapter7) pp.238 [7] EU Commission: Antitrust: Commission welcomes General Court judgment in Microsoft compliance case
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