competition policy

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competition policy

the competition policy of the European Union (EU) is designed to maintain an open market economy with free competition favouring an efficient allocation of resources. Articles 81-89 of the EC Treaty set out competition policy which is based on five main principles: the prohibition of concerted practices, agreements and associations between undertakings which may affect trade between Member States and prevent, restrict or distort competition within the internal market; the prohibition of abuse of a dominant position within the internal market, in so far as it may affect trade between Member States; supervision of aid granted by the Member States, or through State resources in whatever form whatsoever, which threatens to distort competition by favouring certain undertakings or the production of certain goods; preventive supervision of mergers with a European dimension, by approving or prohibiting the envisaged alliances; liberalization of certain sectors where public or private enterprises have hitherto evolved monopolistically, such as telecommunications, transport or energy.

The prohibition on concerted practices and the prohibition of abuse of dominant position maybe subject to derogation if an agreement between undertakings improves the production or distribution of products or promotes technical progress. State aid schemes may also involve less strict application of community rules. Of particular importance is Regulation (EC) No 1/2003 on the implementation of antitrust rules, and Regulation (EC) No 139/2004 on merger control. These Regulations ensure national authorities and courts are involved in the implementation of competition law.

By virtue of the Competition Act 1998, UK competition law now closely follows EU competition policy, striking at cartels and concerted practices and prohibiting the abuse of a dominant position. See also ANTIDUMPING, STATE AIDS.

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