Question

When new European Union member countries join the EU they become subject to the European Union competition law--a law that regulates anticompetitive behavior and keeps markets within Europe more competitive (meaning firms have less market power). Using an AS-AD framework, briefly discuss the effect of the competition law on a country's decision to become an EU member country. Your (brief) discussion should include effects on the labor market as well as prices and output. You may find a graph or two helpful in keeping track of these effects.

Answer 1

European competition law is the competition law in use within the European Union. It promotes the maintenance of competition within the European Single Market by regulating anti-competitive conduct by companies to ensure that they do not create cartels and monopolies that would damage the interests of society.

European competition law today derives mostly from articles 101 to 109 of the Treaty on the Functioning of the European Union (TFEU), as well as a series of Regulations and Directives. Four main policy areas include:

• Cartels, or control of collusion and other anti-competitive practices, under article 101 TFEU.
• Market dominance, or preventing the abuse of firms' dominant market positions under article 102 TFEU.
• Mergers, control of proposed mergers, acquisitions and joint ventures involving companies that have a certain, defined amount of turnover in the EU, according to the European Union merger law.^[1]
• State aid, control of direct and indirect aid given by Member States of the European Union to companies under TFEU article 107.

Primary authority for applying competition law within the European Union rests with European Commission and its Directorate General for Competition, although state aids in some sectors, such as agriculture, are handled by other Directorates General. The Directorates can mandate that improperly-given state aid be repaid, as was the case in 2012 with Malev Hungarian Airlines.

Leading ECJ cases on competition law include Consten & Grundig v Commission and United Brands v Commission.