LAW

COMPETITION LAW

Evolution of competition regulations in the US

and Europe
 Q1E-TEXT
Module ID 4: Evolution of Competition Regulations in the US and Europe

Subject Name: Law

Paper Name: Competition Law
Module Name: Evolution of Competition Regulations in the US and Europe
Module ID: 3
Pre-requisites: None
Objectives: Provide an overview of the evolution of anti-trust law in the US and community
level competition law in Europe

Keywords: History, Competition Regulation, Anti-trust law, Community Level Competition

Law in Europe

1. Introduction

Two jurisdictions that have substantially influenced the evolution of competition law in India
are the United States of America and Europe. This module intends to provide a brief overview
of the historical evolution of competition related regulationsin these two important
jurisdictions. While the first part of the module will provide an overview of the historical
evolution of anti-trust law in the US,the second part of the module provide will provide an
overview of the historical evolution of the community level competition law in Europe. This
brief discussion on the historical evolution of competition law in two different jurisdictions is
provided with the aim of helping students to get some glances of the diverse growth
trajectories of competition regulations in different jurisdictions and thereby also help them to
learn the subject of competition law from a comparative perspective.

2. Learning outcomes

This module intends to provide students an introduction to –

- the historical evolution of anti-trust law in the US

- the historical evolution of community level competition law in Europe
3. Evolution of anti-trust law in the United States of America

Image source: Joseph Keppler, ''The Bosses of the Senate'‘ (1889) –

http://upload.wikimedia.org/wikipedia/commons/e/e5/The_Bosses_of_the_Senate_by_Jo
seph_Keppler.jpg

Many scholars consider the Sherman Act of 1890 as one of the most significant turning points
in the evolution of modern competition law. The Sherman Act was legislated in the context of
rapid industrialisation in the nineteenth century. Rapid industrialisation resulted in the
accumulation of wealth in the hands of many corporations and individuals. It also resulted in
fast developments in corporate organisation, which in effect provided much more
opportunities for combinations among competitors to avoid competition in the
market.iCombinations under the disguise of ‘trusts’ multiplied swiftly in different important
sectors like oil, steel and finance with the aim of curtailing competition. Their increasing
economic power created widespread fears about the oppression of individuals and general
injury to the public.iiThe Sherman Act was enacted with the aim of breaking up such trusts
and restoring competition in the market.iiiThough many state level laws already existed in this
area, they were limited to intra-state commerce and the Sherman Act was the first federal
legislation to address the issue. The Sherman Act was legislated under the power vested on
the Congress by the U.S. Constitution to regulate interstate commerce.

The most important provisions of the Sherman Act, Sections 1 and 2, read as follows:

Section 1: Every contract, combination in the form of trust or otherwise, or

conspiracy, in restraint of trade or commerce among the several States, or with
foreign nations, is declared to be illegal.Every person who shall make any contract
or engage in any combination or conspiracy hereby declared to be illegal shall be
deemed guilty of a felony, and, on conviction thereof, shall be punished by fine not
exceeding $10,000,000 if a corporation, or, if any other person, $350,000, or by
imprisonment not exceeding three years,or by both said punishments, in the
discretion of the court.

Section 2:Every person who shall monopolize, or attempt to monopolize, or combine

or conspire with any other person or persons, to monopolize any part of the trade or
commerce among the several States, or with foreign nations, shall be deemed guilty
of a felony, and, on conviction thereof, shall be punished by fine not exceeding
$100,000,000 if a corporation, or, if any other person, $1,000,000, or by
imprisonment not exceeding 10 years, or by both said punishments, in the discretion
of the court.

As one may notice from the provisions, while Section1 prohibits agreements that restrain
trade, Section 2 focus on monopolisation. Sherman Act has seven sections in total and the Act
is remarkable for the simple language used.iv
 Standard Oil Company Case
[Standard Oil Company of New Jersey v. United States, 221 U.S. 1 (1911)]
Standard OilCompanycase is one of the early cases that clarified the scope and ambit of the
Sherman Act of 1890. It is also one of the cases that can clearly illustrate the historical
context of Sherman Act and hence it is considered as a must-read for all students of
competition law.
This case was an appeal against the decision of a lower court, which had directed the
dissolving of a holding company for violation of the provisions of ShermanAct. The
defendants in the case had formed a trust and entered into different anti-competitive
agreements to fix the price of crude oil, refined oil and various other petroleum products.
They had also limited the production and distribution of those products to increase profits.
Through the majority decision in this case, the US Supreme Court introduced the use of rule
of reason approach for interpreting the provisions of the Sherman Act and clarified that the
Sherman Act prohibits only contracts and combinations that amount to unreasonable or
undue restraints of trade. Based on extensive analysis of the facts of the case and the
relevant legal provisions, the court came to conclusion that the defendants in the case had
imposed unreasonable and undue restraints on trade in petroleum and related products
and thereby violated the provisions of the Sherman Act. For the full text of the decision,
click here

In 1914, the US Congress enacted the Clayton Act and the Federal Trade Commission Act to
overcome some of the shortcomings in the Sherman Act and to bring more clarity on the
specific business actions covered by the anti-trust laws.

The Clayton Act specifically addressed issues like price discrimination, tying and exclusive
dealing contracts.vThe Clayton Act also regulated mergers and acquisitions that may affect
competition or tend to create monopolies in any segment.vi The Clayton Act provided private
right of action and allowed recovery of threefold the damages she or he has sustained, along
with costs and attorney’s fee.vii

On the other hand, the Federal Trade Commission Act of 1914is remarkable for introducing a
consumer protection aspect to the competition laws. The Federal Trade Commission Act
established the Federal Trade Commission, which aims at protecting consumers from unfair,
deceptive or fraudulent practices. The Federal Trade Commission is envisaged as a bipartisan
federal agency and it is headed by five commissioners who are nominated by the President.
The Federal Trade Commission can order investigations against corporations or persons who
are suspected to be engaging in unfair, deceptive or fraudulent trade practices which are
against the provisions of the FTC Act.viii

The Clayton Act was amended in the years 1936 and 1950. The 1936 Amendment through
Robinson Patman Act prohibited certain forms of price discrimination. The historical context
of this legislation shows that it was primarily aimed to protect small-scale retailers, who were
facing considerable threat to their existence from large-scale chain stores, who were receiving
highly discounted prices for goods due to their bigger procurements. The Robinson Patman
Act made it unlawful to discriminate in prices between different purchasers of commodities
of like grade and quality, where such commodities are sold for use, consumption, or resale
and where it may substantially lessen competition or tend to create a monopoly or injure,
destroy or prevent competition. ix However, the legislation also clarifies that the price
differences that arise from differences in manufacturing costs or other costs, do not come
within the ambit of the prohibition.x For a successful claim under the Robinson Patman Act, it
is very important to prove that the products on which the alleged price discrimination
happened are of like grade and quality.
 Morton Salt v. FTC
334 US 37 (1948)
Morton Salt v. FTC is one of the landmark cases that has addressed in detail the scope and ambit of the
Robinson Patman Act. The respondent in the case was engaged in the manufacture of different brands of
table salt. One of their brands, Blue Label, was sold to customers on a quantity based discount system and
the prices were as follows:
Per case
Less-than-carload purchases $1.60
Carload purchases 1.50
5,000-case purchases in any consecutive 12 months 1.40
50,000-case-purchases in any consecutive 12 months 1.35

Only five companies who were operating large-scale retail stores managed to procure the table salt at $1.35
and they were able to sell the product to consumers at a much lesser price, when compared to other retailers.
The respondent used different quantity discount systems in other brands also and in those cases carload
purchasers enjoyed better discounts as compared to less than carload purchasers. Those purchasing above
$50,000 worth of all brands of salt within a period of 12 months also benefited from nearly 10 per cent
discount. While the offered discounts could theoretically have been availed by anyone, practically it resulted in
price discrimination between large-scale retailers and small-scale retailers. The Federal Trade Commission
found the price discriminations to be in violation Sec. 2 of the Clayton Act, as amended by the Robinson-
Patman Act. The respondent approached the Circuit Court of Appeals and the Court set aside the
Commission's findings and order. Finally the matter reached the Supreme Court and as the case involved
important issues of interpretation of the statute, the Court granted certiorari.
One of the most important findings of the Court was that the Robinson Patman Act does not require that the
discriminations must in fact have harmed competition, but only that there is a reasonable possibility that they
‘may’ have such an effect. The Court agreed with the findings of the Commission that the competitive
opportunities of certain merchants were injured when they had to pay the respondent substantially more for
their goodsthan what their competitors had to pay. The Court clarified that the burden of proof is upon the
seller to prove that its quantity discount differentials were justified by cost savings. According to the Court, the
Commission need to only prove that a seller had charged one purchaser a higher price for like goods than he
had charged one or more of the purchaser's competitors. The Court also noted that “[i]n enacting the
Robinson-Patman Act, the Congress was especially concerned with protecting small businesses which were
unable to buy in quantities, such as the merchants here who purchased in less-than-carload lots. To this end it
undertook to strengthen this very phase of the old Clayton Act.”
The Court reversed the order of the Circuit Court of Appeals and remanded the matter to that court to be
disposed of in the light of the decision. For the full text of the judgement, click here

Later, in the year 1950,CellerKefauver Act was introduced to address some of the loopholes
in the anti-merger provisions with regard to asset acquisitions. Under the original version of
Section 7 of the Clayton Act 1914, even though acquisition of “stocks” of one corporation by
a competitor was prohibited, it had not explicitly included the acquisition of “assets” and
many corporations were misusing this loophole. The Celler-Kefauver Act addressed this issue
by amending Section 7 of the Clayton Act and it explicitly included assets within the ambit of
Sec. 7 of the Clayton Act.

The Hart-Scott-Rodino Antitrust Improvements Act of 1976 is also notable for making some
substantial changes in the federal anti-trust laws. The HSR Act insisted mandatory filings
before the US Federal Trade Commission and Department of Justice for completing certain
mergers, acquisitions and transfers of securities or assets, so that FTC and DOJ could ensure
that those transactions will not violate the anti-trust laws or adversely affect competition in
the market. Substantial costs are involved to restore competition in any market after the
completion of an anti-competitive merger and this was the primary factor that necessitated the
formulation of these pre-merger notifications. The value of the transaction and the size of the
parties to the transaction play a major role in determining whether a transaction is subject to
the requirements under HSR Act and these are adjusted from time to time. The waiting period
is generally thirty days from the date of filing of the notification and in the case of cash tender
offers, it is generally fifteen days.xi

Before concluding this brief discussion on the evolution federal anti-trust laws in the US, it is
also important to note that every student of US antitrust law must also keep in mind the
important role played by case laws in the interpretation of anti-trust laws in the US. The
judicial interpretation of the antitrust provisions over the years have brought in many radical
changes in the interpretation of the anti-trust provisions and students must try to find the latest
available case laws to determine the current interpretation of any legal provision within the
realm of anti-trust law.

4. Evolution of community level competition law in Europe

Image source: “Map of EU Member States - the countries of the Euro area 01/01/2015”
http://ec.europa.eu/avservices/photo/photoDetails.cfm?sitelang=en&mgid=38#0

Competition within Europe is regulated at two levels – at national level and at community
level. While the national level regulations continue to govern matters whose effects are
limited to the territories of those respective member states, the European Community level
regulations deal with matters affecting trade between member states. As one could imagine,
this position also make many of the contemporary commercial transactions subject to scrutiny
of both national regulations as well as community level regulations. In this brief overview, we
will be focusing only on the evolution of competition law at the European community level.

The Treaty Establishing the European Coal and Steel Community (also known as “ECSC
Treaty” or “Paris Treaty”), which was signed in the year 1951, is considered as one of the
founding blocks of modern European competition law. xiiThe treaty was signed by France,
Germany, Italy, Netherlands, Belgium and Luxembourg and it helped in the creation of a new
economic community in Europe. While there are diverse political and historical reasons
behind the enactment of this treaty, there were two major reasons for the introduction of
competition related provisions under this treaty. The most important one was ensuring equal
access to essential production inputs like coal and steel for all those European countries and
thereby also diminish the power of Germany. Another important aspect was the changing
perspectives regarding the benefits of free competition. Some scholars also tend to view that
the success of the US economy, which was extensively relying on strong ant-trust rules for
bringing more efficiency to the market, might have influenced European law makers for
community level competition regulations. The goal of strengthening the solidarity between
France and Germany, and there by paving way for better European integration, might have
also influenced the political decision making process in this regard. xiii The ECSC treaty
established four major institutions for the community - High Authority, Common Assembly,
Special Council and Court of Justice.xiv

The ECSC treaty in particular dealt with three issues that are commonly addressed in most of
the modern competition laws we see now – anti-competitive agreements, concentrations and
the abuse of dominant positions.xvArt. 65 of the treaty prohibited anti-competitive agreements
between undertakings that tend to directly or indirectly prevent, restrict or distort normal
competition within the market. In this regard, 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. xvi However, the treaty allowed the High Authority to exempt certain
specific specialisation agreements and joint-buying/ joint-selling agreements in respect of
particular products, under specific circumstances. This includes the cases wherein the High
Authority finds that such specialisation or such joint buying or selling provided for substantial
improvement in the production or distribution of the products; the agreement in question was
essential to achieve those results and it was no more restrictive than what is necessary for
achieving that purpose; and that such agreement is not susceptible of giving the concerned
undertakings the power to determine the prices or to control or restrict the production or
marketing of a substantial part of the products in question within the common market or of
shielding them from effective competition from other undertakings within the common
market.xvii

Art. 66(7) of the ECSC Treaty dealt with abuse of a dominant position. 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.xviii

Art. 66 of the ECSC Treaty dealt with concentrations and mergers. 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 authorisation of the
High Authority.xixThe treaty also clarified that 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.xxThe 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.xxiThe ECSC treaty
was amended by different treaties and the treaty finally expired in July 2002.xxii

The ECSC treaty was followed by another attempt to create a European Defence Community.
But this effort did not materialise.xxiii However, the dialogues for more economic integration
continued at different levels and a committee was appointed in the year 1956 to prepare a
report on the formation of a European Common Market. In April 1956, the committee
produced two drafts recommending the creation of a general common market and an atomic
energy community respectively. xxiv This paved way for the establishment of the Treaty
Establishing the European Economic Community (EEC), which was signed at Rome in
1957by all the original six member states - 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.xxvThe objectives of the treaty were to be carried out
with the help of four major institutions – the Assembly (the European Parliament),the
Council, the Commission and the Court of Justice.xxviWhile the European Parliament had an
advisory role, the Council was envisaged to prepare the standards and the Commission was
envisaged to draft the proposals. The EEC treaty consisted of 240 articles. The most
important competition related provisions in the treaty were Art. 85 and Art. 86. 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. xxvii Some of the acts specifically
outlawed under this provision include 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. xxviii The EEC treaty also clarified that all such agreements or
decisions shall be null and void.xxix However, 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.xxxIt is also made clear that those
agreements cannot impose on the concerned enterprises any restrictions which are not
indispensable to the attainment of the above mentioned objectives. xxxi Moreover, it is also
clarified that they should not enable such enterprises to eliminate competition in respect of a
substantial proportion of the goods concerned.xxxii

Article 86 of the treaty prohibited the abuse of dominant position. Some of the practices
specifically prohibited under the provision include 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.xxxiii

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.xxxivOne of the important and interesting aspects one
may observe from the EEC Treaty is the absence of merger regulations and this was due to
lack of consensus in this regard among the member states.

The EEC treaty was amended by different treaties and one of the most prominent ones in this
regard include the Treaty on European Union in 1992 (also known as “TEU” or “Maastricht
Treaty”), which presented the next major step in European integration. It channelised more
cooperation in the fields of foreign policy, defence, police and justice together under a single
framework - the European Union. It also launched the economic and monetary union (EMU)
and EEC was renamed as European Community (EC).

There were further amendments in the community level law and the most important one to be
mentioned in the context of discussion in this module is the Lisbon Treaty, which was signed
in the year 2007. Apart from engaging in a more democratisation process within the
community, the Lisbon treaty also tried to better demarcate the powers belonging to the EU
and the powers that belong to the member countries. The treaty renamed the Rome treaty as
‘Treaty for the functioning of the European Union’ (TFEU).

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(3).
 Art. 101

(1) The following shall be prohibited as incompatible with the internal market: all
agreements between undertakings, decisions by associations of undertakings and
concerted practices which may affect trade between Member States and which have
as their object or effect the prevention, restriction or distortion of competition within
the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties,
thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this Article shall be
automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case
of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of undertakings,
- any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or to
promoting technical or economic progress, while allowing consumers a fair share of
the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to
the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a
substantial part of the products in question.

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
disadvantage.
 Article 102
Any abuse by one or more undertakings of a dominant position within the internal
market or in a substantial part of it shall be prohibited as incompatible with the
internal market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair
trading conditions;
(b) limiting production, markets or technical development to the prejudice of
consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts.

Art. 107 TFEU prohibits state aid. According to Art. 107, 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. xxxv Art. 107 also mentions some of the additional categories of aid that may be
considered as compatible with the internal market.xxxvi

It is important to mention here that sector specific regulations may also have important
competition related provisions and this needs to be borne in mind while analysing the legality
of specific types of conduct in some sectors.

The EC Merger Regulation (commonly referred to as ‘ECMR’) and the implementing

regulation currently deal with mergers between undertakings that may have a community
dimension. 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. In general, after completing the investigations, the
Commission may either clear the merger without any conditions or it may approve the merger
with certain conditions. However, in cases wherein no adequate remedies to the competition
concerns have been proposed by the merging parties, the commission may prohibit the
merger. All the decisions of the commission are published online and all the decisions of the
Commission can be subject to review by the General Court and some of the decisions may
even go on appeal to the Court of Justice of the European Union.

There have been many landmark decisions from the European Commission, the Court of First
Instance and the Court of Justice of the European Union (formerly ‘ECJ’) on diverse aspects
of European competition law and the students of this module are strongly encouraged to go
through those case laws to get a broader perspective of the evolution of competition law in
Europe.
 Art. 101

(1) The following shall be prohibited as incompatible with the internal market: all
agreements between undertakings, decisions by associations of undertakings and
concerted practices which may affect trade between Member States and which have
as their object or effect the prevention, restriction or distortion of competition within
the internal market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties,
thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this Article shall be
automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case
of:
- any agreement or category of agreements between undertakings,
- any decision or category of decisions by associations of undertakings,
- any concerted practice or category of concerted practices,
which contributes to improving the production or distribution of goods or to
promoting technical or economic progress, while allowing consumers a fair share of
the resulting benefit, and which does not:
(a) impose on the undertakings concerned restrictions which are not indispensable to
the attainment of these objectives;
(b) afford such undertakings the possibility of eliminating competition in respect of a
substantial part of the products in question.

Art. 102of the TFEU deals with abuse of a dominant position by one or more understakings.
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
disadvantage.
 Article 102
Any abuse by one or more undertakings of a dominant position within the internal
market or in a substantial part of it shall be prohibited as incompatible with the
internal market in so far as it may affect trade between Member States.
Such abuse may, in particular, consist in:
(a) directly or indirectly imposing unfair purchase or selling prices or other unfair
trading conditions;
(b) limiting production, markets or technical development to the prejudice of
consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading
parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts.

Art. 107 TFEU prohitbits state aid. According to Art. 107, 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.xxxvii Art. 107 also mentions some of the additional categories of aid that may be
considered as compatible with the internal market.xxxviii

It is important to mention here that sector specific regulations may also have important
competition related provisions and this needs to be borne in mind while analysing the legality
of specific types of conduct in some sectors.

The EC Merger Regulation (commonly referred to as ‘ECMR’) and implementing regulation

currently deal with mergers between undertakings that may have a community dimension.
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. In general, after completing the investigations, the
Commission may either clear the merger without any conditions or it may approve the merger
with certain conditions. However, in caseswhereinno adequate remedies to the competition
concerns have been proposed by the merging parties, the commission may prohibit the
merger. All the decisions of the commission are published online and all the decisions of the
Commission can be subject to review by the General Court and some of the decisions may
even go on appeal to the Court of Justice of the European Union.

There have been many landmark decisions from the European Commission, the Court of First
Instance and the Court of Justice of the European Union (formerly ‘ECJ’) on diverse aspects
of European competition law and the students of this module are strongly encouraged to go
through those case laws to get a broader perspective of the evolution of competition law in
Europe.

5. Summary

The basic objective of this module was to introduce students to the historical evolution of
competition regulations in two important jurisdictions. As one may observe from the
discussions, the evolution of competition laws in both jurisdictions, unique circumstances and
diverse incentives have led to the growth of competition regulations in different jurisdictions.
The same is observable if one looks at the history of competition law in India. The diverse
historical experiences from the two jurisdictions we discussed in this module have
considerably influenced the evolution of competition law in India and hence the students of
this course are strongly encouraged to read further on the history of competition law in both
these jurisdictions.

i221 U.S. 1, 31 S.Ct. 502, 512.

iiIbid.
iiiMichelle Floyd, ‘United States of America’ in Marjorie Holmes (ed), Competition Law and Practice:
A Review of Major Jurisdictions (CMP Publishing 2009) 341.
iv For the full text of the legislation, http://www.linfo.org/sherman_txt.html (Last visited 28 June

2014)
v 15 U.S. Code § 14
vi 15 U.S.Code § 18.
vii15 U.S. Code § 15.
viii 15 U.S.Code§ 46(a)
ix15 U.S. Code § 13 (a)
x Ibid.
xi15 U.S. Code § 18a
xii Marjorie Holmes, Hugh Mercer QC, and Iain Quirk, ‘Europe’ in Marjorie Holmes (ed), Competition
Law and Practice: A Review of Major Jurisdictions (CMP Publishing 2009) 109.
xiii http://europa.eu/legislation_summaries/institutional_affairs/treaties/treaties_ecsc_en.htm
(Last visited 11 August 2014). See, also, Art. 3(b) of the ECSC Treaty.
xiv See Art. 7 of the ECSC Treaty.
xv See, for example, Arts. 4, 65 and 66 of the ECSC
Treaty.http://www.cvce.eu/obj/treaty_establishing_the_european_coal_and_steel_community_pa
ris_18_april_1951-en-11a21305-941e-49d7-a171-ed5be548cd58.html
xvi See Art. 65(4) of the ECSC Treaty.
xvii Art. 65 (2) of the ECSC Treaty.
xviii Art. 66(7) of the ECSC Treaty.
xix Art. 66 of the ECSC Treaty.
xxIbid.
xxiIbid.
xxii http://europa.eu/legislation_summaries/institutional_affairs/treaties/treaties_ecsc_en.htm
(Last visited 11 August 2014).
xxiiiIbid.
xxivIbid.
xxv See Arts. 2 and 3 of the EEC Treaty.
xxvi See Art. 4 of the EEC Treaty.
xxvii See Art. 85 of the EEC Treaty.
xxviii See Art. 85 (1)(a) of the EEC Treaty.
xxix See Art. 85(2) of the EEC Treaty.
xxxSee Art. 85(3) of the EEC Treaty.
xxxiIbid.
xxxiiIbid.
xxxiii See Art. 86 of the EEC Treaty.
xxxiv Art. 90 and 92 of the EEC Treaty.
xxxv See Art. 107 (2) of the TFEU.
xxxvi See Art. 107 (3) of the TFEU.
xxxvii See Art. 107 (2) of the TFEU.
xxxviii See Art. 107 (3) of the TFEU.