EU Competition Law and Economics

EU opposition rightfulness and EconomicsDiscuss the use of solid ground cadaverous from sparings in the jurisprudence of the European Court of Justice, which relate to the description of phrases hundred and one and 102 of the Treaty on the public presentation of the European joint. Examine, in exceptional the role such call play in the legal argument.This look for leave behind examine the scotch theories, both from a classical buck of view and neo-classical to de stipulationine the netherpinnings of dis hurtleation police of nature. Through the works of Adam metalworker regarding monopolies in the Wealth of Nations1 and John Stuart Mill through his theories on restraints of deal out in On liberty2 this will demonstrate some economic objectives in pursuing fair plays regarding rival law. This will be supplanted with the neo-classical theories that pee given more reasons through economic legal injury for laws regarding challenger. This will provide a funda mentals for an analysis of clauses 101 and 102 of the Treaty on the Functioning of the European sum total (TFEU), which afford been far-famed as the two principal expressions dealing with competition law in the European Union (EU).3 The fundamental reason for having competition law in the EU is to allow for a flourishing large-minded market and to ensure that corporate enterprises do non affirm unjustified influence or authorization in the market or even off through political influence.4 This analysis of articles 101 and 102 of the TFEU through the slipperinesss that have pose through the Court of Justice of the European Union (CJEU) will be looked at through the prism of the economic theories that have been outlined. By flavor at it through that prism, it will allow for a determination in monetary value of whether the role of the economic terms argon brought into the legal arguments. It has been suggested that the lawyers and the economics atomic number 18 co-pilo ts of the competition law aeroplane5 and this essay will determine whether that is squ atomic number 18(a) by looking at the economic theories and the typefaces through the EU framework on competition law.Economic Theory and contestation fair play prior(prenominal) to delving into how competition law has adopted economic terms and theories, it is imperative to hear how economics operates vis--vis competition law. The classical economic theories, as renowned by John Stuart Mill state that it is through competition that the political economic system rump have a scientific basis through which wages, riptide and bells squeeze out be regulated. Whilst Mill does not provide a exposition on what he meant by competition his theory on what laws skirt competition could achieve were indicative. Smith took this further in Wealth of Nations when he stated it is the right of alwaysy man to enter into competition with both other man insofar as it does not violate the laws of arbitr ator and the idea of competition was to ensure that those in business bought dearer and sold for cheaper instead than having a monopoly with the opposite occurring. This theory was noted as a asseveration of ameliorate competition. This demonstrates the classical theories that exist only when as time as gone on thither have been neo-classical theories that give more delineate responses.In terms of the neo-classical theories, the USA has enamourmingly stated that competition law should be interpreted solely through what the theories in economics place6 however, this is questioned in the EU structures. The competing views in the EU look at the efficiencies as well as other concerns such as the environment and the feeling on employment.7 In terms of taking into storey the outcome of having perfect competition, it has been stated that allocative and juicy capacity is achieved which leads to the maximisation of social welfare.8 In terms of allocative efficacy this is an econo mic term that means the resources will be allocated to divers(prenominal) goods and services but will be divided insofar as it remains privately profit fitted to do so.9 The second is that of productive efficiency which means that goods and services in society will be produced at the lowest bell.10 In this regard, competition is seen as beneficial for the productive efficiency because if monopolies exist accordingly it is likely that they will be high cost producers and they can pass that on to the consumer.11 A third efficiency has been put forward that explains the need for competition, that macrocosmness dynamical efficiency which cannot be accurately proved12 but states that competition allows for products to be developed and created to gain the custom of consumers. This theory, in all but name, had been put forward by Smith when he stated that competition allows for new improvements of art13 showing that this efficiency has long been mouth of. This has been questioned as monopolies have the money to carry out research14 and where there are monopolies others will try to intervene to get their custom.15 On this basis, how the EU and CJEU have dealt with situations where monopolies arise must be examined to determine whether the economic terms have led to the finis that has been made.Article 101 TFEUIn terms of Article 101 of the TFEU, this is designed to ensure that restrictive practices are deemed incompatible with the greenness market. The restrictions that are placed on undertakings, which cover all entities that are bear on in business,16 have been seen to be circumvented for a number of reasons. In the case of Wouters Others v Algemene Raad van de Nederlandse Orde van Advocaten17it was held that despite a restriction on the legal profession, it was pursuing a legitimize objective in ensuring decorous legal practice and therefore was allowed. It has been noted that this idea of a legitimate objective will stay in spite of appearance the c ompetition law of the EU,18 however, it is what constitutes a legitimate objective that can have implications for economic terms being used in the CJEU. In terms of a finding a legitimate objective, it has been noted that it is not necessary to look at the economic and non-economic objectives as they often go hand in hand.19 In cases involving master copy services such as Wouters and other cases such as Asnef Equifax20it was noted that the CJEU took into account the issue of information asymmetry whereby despite the fact that there is a restriction on competition which could increase the cost the consumer, the timbre will go up which is especially prevalent in original services.21 These decisions tend to go against the productive efficiency in that the cost will go up by allowing increased restriction on flip-flop in professional services, however, the allocative efficiency would be seen to improve as the type given to the consumer improves. This demonstrates that Article 101 o f the TFEU has interpreted the economic viewpoint into account in ensuring that the Treaty does not act rigidly vis--vis competition law.The chemical machine of Article 101 has not only followed the economic arguments and this is seen with cases involving still riders. This was seen in the case of Consten and Grundig v cathexis22which involved Consten who was to be the exclusive distributor in France of Grundig electrical goods with the effect that free riders, who would wait for Consten to promote the goods before then exchange the Grundig electrical goods at a lower price than Consten.23 The free rider economic system has been allowed in the United States of America in the case of Continental TV v GTE Sylvania24 on the basis that it was economically sound. However, this was rejected in Consten on the basis that the fundamental objective of the EU plan is to have greater integration within the whiz market and not just to increase consumer protection and welfare.25 Indeed, in the more modern case this viewpoint was reaffirmed in the case of GlaxoSmithKline v Commission26where the guidance from the EU was considered and it was noted that companies are not allowed to establish private barriers within the single market of the EU.27 These decisions from the CJEU demonstrate that whilst the economic considerations have to be taken into account, they are secondary to the fundamental aim of the EU project to have ever at hand(predicate) Union28 and to ensure that there are no private barriers within the single market. To compare this to the co-pilot analogy at the beginning of this essay, these decisions would suggest that the constitution makers of the EU are the pilots and the lawyer and economist are mere passengers.It must be noted that Article 101 has a defensive measure mechanism at 101(3) which is primarily based on the economic considerations that have been outlined. This defense mechanism is for a defendant to prove but all agreements made are el igible to qualify under Article 101(3) if the requirements are met.29 The requirements state that good and economic progress must be improved which links with the dynamic efficiency theory of competition law economics.30 The other requirements involve not eliminating competition on the market as well as ensuring that consumers find out a fair share of the benefits from the agreement. This ties in with Smiths theory on monopolies and upward(a) the market through competition laws as well as the allocative and productive efficiencies noted in the more neo-classical theories regarding economics and competition law. Indeed, this defence under Article 101(3) has been given a wide description as seen in CECED31where the economic efficiencies were central to the judgment in declaring that the environmental benefits had to be looked at in terms of their effect on the consumer.32 As this defence is couched in terms that are readily identifiable with the economic theories, it demonstrates that the economic terms have a huge role in competition law within the EU.Article 102 TFEUIn terms of Article 102 of the TFEU, its whole basis is in economic terms as it is designed to stop strength and abuse. The use of the term dominance in economics is deemed to be wider than that of a monopoly33 and is a position of economic expertness that prevents effective competition being maintained.34 This type of dominance goes beyond just a single entity and the CJEU can look at more than one economic enterprise to see whether there is dominance, with what is known as collective dominance.35 In this regard, the economic term of collective dominance and dominance generally was indicative in the case of Italian Flat Case to show that there was a disrespect of Article 102.36 The second economic term alongside dominance in Article 102 is that of abuse, which is where a dominant entity can use its economic strength to obtain more benefits that it would have if it was a smaller entity.37 Th e use of economic terms in Article 102 cases can be seen when abuse is discussed. Article 102 makes reference to unfair prices but the CJEU has looked beyond this to see situations where there has been rapacious pricing38 and excessive pricing that look at economic terms in terms of how undertakings with great economic strength may attempt to price their competitors out of the market.39 This tends to demonstrate that there are some economic terms that are used not only in Article 102 itself but also by the CJEU in its interpretation of the Article. However, this view has not been completely replicated across the spectrum.The use of the economic terms in invoking Article 102 has been seen as haphazard40 and this can be seen through the cases where there has been some reliance on economic terms such as predacious pricing noted above but there are others where it has been based more on the legal concepts such as where there is commission attached for selling a certain brand.41 In this regard, when Article 102 is looked at solely it can be seen that it is couched in economic terms such as dominance and others have come in through cases such as predatory pricing but when it is compared to its counterpart, Article 101, the effect of economics on its interpretation has not been as widespread.42 Accordingly, when it comes to the aeroplane analogy with Article 102 it is very more than that the lawyer takes the chief pilots role whereas the economist operates as a co-pilot that attempts to blow up any legal arguments that have been made.ConclusionThis essay has examined EU Competition rightfulness to determine whether the role of economics or law is normal in its application. The economic theories, both classical and neo-classical, demonstrate that the basis for competition law is allowing a free market to ensure that the consumers are able to receive products at a low price and other individuals are able to compete with the larger firms. In relation to Article 101 it can be seen through the use of legitimate aim and the defence given in Article 101(3) that the economic terms have a great role to play in how the case would be dogged by the CJEU. However, as noted with the free rider cases such as Consten it is readily identifiable that the economics will only be taken into account after the fundamental aim of the EU, that being ever closer Union, is dealt with. This shows that the economic terms as well as the legal terms are very much secondary to the fundamental aims of the EU project. When the constitution issue is put to one side, it can be seen that the economic terms and the legal terms in deciding a competition law case under Article 101 are co-pilots ensuring that the correct decision is made. In terms of Article 102, the use of economics has not been as prevalent as with Article 101 but this is largely payable to the fact that there is a lack of a general theme. perhaps as the law develops vis--vis Article 102, the economic terms will have a greater role to play.BibliographyLegislationTreaty on the Functioning of the European UnionCasesAkzo Chemie BV v Commission 1991 ECR I-3395Asnef Equifax Servicios de Informacion sobre Solvencia y Credito SL v Asociacion de Usuarios de Servicios Bancarios 2006 ECR I-11125British Airways Plc v Commission 2007 ECR I-2331CECED 2000 OJ L187/47Consten and Grundig v Commission 1966 ECR 299Continental TV v GTE Sylvania (1977) 433 US 36GlaxoSmithKline v Commission 2009 ECR I-9291Klaus Hofner Fritz Esler v Macrotron GmbH 1991 ECR I-1979Matra Hachette v Commission 1994 ECR II-595PPG Vernante Pennitalia Spa v Commission 1992 ECR II-1403United Brands Company v Commission 1978 ECR 207Wouters Others v Algemene Raad van de Nederlandse Orde van Advocaten 2002 ECR I-1577BooksAkman P, The Concept of shout in EU Competition Law Law and Economic Approaches (Bloomsbury 2015)Bork RH, The Antitrust riddle (The cede Press, 1978)Chalmers D, Davies G Monti G, European Union Law (2nd edn, CUP 2010)Jacobs K (ed), Effective Standardization Management in Corporate Settings (IGI Global, 2010)Galbraith, American capitalist economy The Concept of Countervailing Power (Houghton Mifflin, 1952)Huerta de Soto J, The Theory of changing Efficiency (Routledge 2009)Jones A Sufrin B, EU Competition Law Text, Cases and Materials (6th edn, OUP 2016)Kaczorowska A, European Union Law (Routledge 2008)Kaczorowska-Ireland A, Competition Law in the CARICOM Single Market and frugality (Routledge 2012)Mill JS, On Liberty (Vail-Ballou Press, 2003)Scherer Ross, industrial Market Structure and Economic Performance (3rd edn, Houghton Mifflin, 1990)Schulze R, An Introduction to European Law (2nd edn, CUP 2015)Schumpter, Capitalism, socialist economy and Democracy (Taylor Francis, 1976)Smith A, An Enquiry into the constitution and Causes of the Wealth of Nations (Penguin, 1999)Whish R Bailey D, Competition Law (8th edn, OUP 2015)ArticlesApostolakis I, E-Commerce and Free rider Considerations Under Article 101 TFEU (2016) ECLR 114Ibanez Colomo P, Market Failures, Transaction Costs and Article 101(1) TFEU Case Law (2012) 37(5) ELR 541Janssen C Kloosterhuis E, The Wouters Case Law, Special for a distinguishable Reason? 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