Evolution of European

Competition Law
Prof. S. P. Srivastava
THE ECSC Treaty
 The Treaty Establishing the European Coal
and Steel Community (also known as“Paris
Treaty”), was signed in the year 1951.
 The treaty was signed by France, Germany,

Italy, Netherlands, Belgium and Luxembourg

and it helped in the creation of a new
economic community in Europe.
 The ECSC treaty was amended by different

treaties and the treaty finally expired in July

2002.
Reasons For ECSC Treaty
 To ensure equal access to essential production
inputs like coal and steel for all European
countries and thereby to diminish the power of
Germany.
 Changing perspectives regarding the benefits of

free competition.
 success of the US economy have influenced

European law makers for which led to

development of community level competition
regulations.
 The goal of strengthening the solidarity between
 France and Germany, also influenced the political

decision making process.

Institutions under ECSC Treaty
 High Authority
 Common Assembly
 Special Council and
 Court of Justice
Scope of ECSC Treaty
 Anti-competitive agreements-Art. 65
 Abuse of a dominant position- Art. 66(7)
 Concentration and Merger Art. 66

 Art 65 The treaty prohibited anti-competitive agreements

between undertakings that tend to directly or indirectly
prevent, restrict or distort normal
competition within the market.
 The provision particularly highlighted agreements with
regard to fixing or determination of prices, restrictions or
control on production, technical development or
investment and agreements to share markets, products,
customers or sources of supply.
 The treaty considered all such agreements and decisions
as automatically void.
Continued:
 The treaty allowed the High Authority to
exempt certain specific specialization
agreements and joint-buying/ joint-selling
agreements in respect of particular products,
under specific circumstances. E.g. If such
specialization or such joint buying or selling
provided for substantial improvement in the
production or distribution of the products.
Continued:
 Art. 66(7)-The treaty allows the High
Authority to interfere in instances wherein the
public or private enterprises have acquired a
dominant position that protects them from
effective competition in a substantial part of
the common market and where they uses
such position for purposes contrary to those
of the treaty
 Continued:
 Art. 66 of the Treaty mandated that any transaction which would
have in itself the direct or indirect effect of bringing about a
concentration within the territories should have prior
authorization of the High Authority.
 This obligation shall be effective irrespective of whether or not
the operation in question is carried out by a person or an
enterprise, or a group of persons or enterprises, or whether it
concerns a single product or different products, or whether it is
effected by merger, acquisition of shares or assets, loan,
contract, or any other means of control.
 The authorisation from the High Authority depended on the
analysis of whether the transaction will result in giving power to
the entities to control prices, restrain production or distribution,
impair the maintenance of effective competition in a substantial
part of the market for such products and whether it will create
an artificially privileged position involving a material advantage
in access to supplies or markets
European Economic Community (EEC)
Treaty 1957
 It was signed by France, Germany, Italy,
Netherlands, Belgium and Luxembourg.
 The EEC Treaty (also known as “Rome Treaty”)

aimed at the creation of a common market, a

customs union and common policies.
 Four major Institutions facilitated to achieve

objectives of this treaty- the Assembly (the

European Parliament), the Council, the
Commission and the Court of Justice.
Scope of EEC Treaty
 Art. 85- prohibited agreements, decisions and
concerted practices which are likely to affect trade
between the Member States and which have as their
object or result the prevention, restriction or distortion
of competition within the Common Market.
 Outflawed act- direct or indirect fixing of prices or any

other trading conditions; limitation or control of

production, markets, technical development or
investment; market-sharing or the sharing of sources
of supply; and the application to parties to
transactions of unequal terms in respect of equivalent
supplies, thereby placing them at a competitive
disadvantage.
 All such agreements ordecisions shall be null and void.
Continued:
 Exempt Act-
 The treaty exempted from the prohibition those
agreements and concerted decisions which
contribute to the improvement of production or
distribution of goods or the promotion of technical
or economic progress, while reserving to users an
equitable share in the profit resulting there from.
 Those agreements cannot impose on the
concerned enterprises any restrictions which are
not indispensable to the attainment of the above
mentioned objectives.
Continued:
 Article 86- Abuse of Dominant Position
 Prohibited Practices-direct or indirect imposition of any
inequitable purchase or selling prices or of any other
inequitable trading conditions; limitation of production,
markets or technical development to the prejudice of
consumers; application to parties to transactions of
unequal terms in respect of equivalent supplies, thereby
placing them at a competitive disadvantage; and
subjecting of the conclusion of a contract to the
acceptance, by a party, of additional supplies which,
either by their nature or according to commercial usage,
have no connection with the subject of such contract
State Aid and EEC
 The EEC treaty also addressed the issue of
extent of support that can be given for public
 enterprises and the treaty also outlawed state

aids that can distort competition, except

those specifically allowed under the Treaty.
Treaty for the functioning of the European
Union’ (TFEU) – Lisbon Treaty-2007
 Article 101 of the TFEU prohibits agreements,
decisions by associations of undertakings and
concerted practices which may affect trade
between Member States. As one may clearly notice
from the wordings from the article (which is
provided in the textbox below), one can trace back
the roots of the provision to earlier treaties. As in
the case of previous treaties, the general position
is that anti-competitive agreements and decisions
shall be automatically void, unless they fall under
the specific exemptions provided under Art. 101.
Continued:
 Art. 102of the TFEU deals with abuse of a
dominant position by one or more
undertakings. Examples of abuse provided by
the provision include directly or indirectly
imposing unfair purchase or selling prices or
other unfair trading conditions; limiting the
production, markets or technical development
to the prejudice of consumers; applying
dissimilar conditions to equivalent transactions
with other trading parties and thereby placing
them at a competitive disadvantag.
 Continued:
 Art. 107 TFEU prohibits state aid. It provides, “any aid
granted by a Member State or through State resources in any
form which distorts or threatens to distort competition by
favouring certain undertakings or the production of certain
goods shall, in so far as it affects trade between Member
States be incompatible with the internal market.
 However, Art. 107 also provided certain specific exemptions

like (a) aid having a social character, which are granted to

individual consumers, provided that such aid is granted
without discrimination relating to the origin of the products
concerned; (b) aid to make good the damage caused by
natural disasters or exceptional occurrences; and (c) aid
granted to the economy of certain areas of the Federal
Republic of Germany affected by the division of Germany, in
so far as such aid is required in order to compensate for the
economic disadvantages caused by that division.
The EC Merger Regulation (commonly
referred to as ‘ECMR’)
 The regulation prohibits mergers and
acquisitions which would significantly reduce
competition in the common market. While the
merger regulation provides guidelines for
assessing concentrations, the implementation
regulation looks at the various procedural
aspects like notifications and deadlines.