COMPARATIVE
COMPETITION
LAW
Prof. Margherita Colangelo
Fall 2025
Module I
I MODULE - CONTENTS
1) INTRODUCTION
2) THE ORIGINS OF COMPETITION LAW
3) BASIC ECONOMIC PRINCIPLES
4) MARKET DEFINITION AND MARKET POWER
5) BARRIERS TO ENTRY AND EXPANSION
INTRODUCTION
What is competition law?
• Competition law consists of a set of rules aimed at
protecting competition in a free market economy.
• A free market economy is an economic system in which
the allocation of resources is determined by supply and
demand in free markets and is not directed by
government regulation.
• A central concern of competition law is that firms
operating in the free market economy do not restrict
competition in a way that prevents the market from
functioning in an optimal way.
Competition Laws in the World
Source: [Link] see
[Link].
Practices controlled by competition law
• anti-competitive agreements;
• abusive behaviour;
• mergers;
• public restrictions of competition.
THE ORIGINS
OF
COMPETITION LAW
The adoption of competition laws in North America
• The first bodies of modern competition rules appeared in
Canada (1889) and in the US (1890) at the end of the
nineteenth century.
• With the second industrial revolution (second half of 19th
century), the development of modern transport and
telecommunications led US firms to operate across several
regions of the US territory, abandoning the mere local level.
Operators used to form trusts (i.e. legal organizations in which
several independent firms of the same sector cooperated to
determine their commercial policies) and also major mergers
and acquisition were implemented to reduce overcapacity in a
number of firms (e.g. the steel industry). These policies
harmed farmers and small undertakings. Moreover the
monopolization of the petrol industry by John Rockfeller’s
Standard Oil raised concerns for the US government, fearing
that his economic power could influence decision making in a
number of policy areas and thus threatening the democratic
process.
Source: [Link]
The Sherman Act
• Those concerns led to the adoption of the Sherman
Act in 1890.
• Section I: prohibition of inter-firm contracts,
combinations, and conspiracies (such as trusts and
other forms of agreements) which restrain trade
between US States.
• Section II: outlaws the monopolization, or attempts
to monopolize, of any part of the trade or
commerce.
Senator John Sherman
Other sources of US antitrust law: Clayton
Act
n Clayton Act (1914):
- prohibits mergers if their effect “may be to substantially
lessen competition, or tend to create a monopoly”;
- forbids other practices, such as price discrimination, if
lessens competition;
- forbids exclusive dealings (i.e. when the buyer or lessee
does not deal with the competitors of the seller or
lessor) or tying (i.e. when the buyer also purchases
another different product) but only when these acts
substantially lessen competition;
- empowers private parties injured by violations of the Act
to sue for treble damages.
Other sources of US antitrust law: FTC
Act
• FTC Act (1914): established a new agency, the Federal
Trade Commission.
• FTC may bring actions challenging unfair methods of
competition under § 5 of the FTC Act (which has been
interpreted to cover every conduct included in the Sherman
Act).
• Two government agencies enforce U.S. antitrust laws, i.e.
the FTC and the Department of Justice (DoJ). They share
some authority and overlap, but each has certain exclusive
functions (e.g. only the DoJ has power to seek criminal
sanctions, whereas the FTC may refer matters for criminal
enforcement; the FTC can start with an internal
administrative proceeding, whereas the DoJ has not an
administrative alternative).
• FTC is a competition commission, functioning as an ex ante
watchdog of competition; DoJ works as an ex post
adjudicatory agency filing lawsuits to enforce the antitrust
laws.
Other sources of US antitrust law
• Robinson-Patman Act (1936): amended rules on price
discrimination of the Clayton Act. It was designed to
protect small firms.
• Hart-Scott-Rodino Act (1976): provided a set of
amendments to antitrust laws, mainly to the Clayton Act
by giving the DoJ and the FTC the power to review ex
ante all mergers of firms above a certain size threshold.
The emergence of competition law in
Europe
• Basis: North American experience and the insights of the
ordo-liberalism.
• First competition rules have been set in 1951 Treaty of Paris
establishing the European Coal and Steel Community
(ECSC).
• 1957 Treaty of Rome: established the European Economic
Community (EEC) and provided a sophisticated system of
competition law, which came into force in 1958 (however
such rules have not been enforced by the Community
institutions until after Regulation 17/62 was approved 4 years
later).
The emergence of competition law in
Europe
• The competition rules of the EEC Treaty are the result of a political
compromise between the German ordo-liberal view (according to
which the rules of competition should be enshrined in a
constitutional instrument, being this view clearly reflected by the
Treaty) and the French position (which was reluctant to surrender
its freedom to intervene in market issues, so that the Treaty did not
provide for a specific European enforcement structure).
• Lenghty negotiations have been conducted on enforcement issues
between Germany [supporting the adoption of an
authorization/notification system, through which the European
Commission would ex ante review all transactions potentially
violating Article 81 (now 101) on anticompetitive agreements] and
France (supporting a legal exception system, through which the
Commission would pursue infringement of competition rules ex
post).
Regulation 17/62
• Regulation 17/62 is the result of those negotiations and
provided a centralized enforcement system, in line with the
German position: the Commission was entrusted with
significant enforcement powers, including the power to
scrutinize ex ante agreements between undertakings
(mandatory notification procedure).
• The Commission received a very huge number of
notifications. As a consequence, it developed several
administrative measures to speed up case processing
(block exemption regulations and guidelines, de minimis
notices, etc.)
Modernization of competition law in the
EU
• 1999, White Paper on the modernization: the Commission
undertook a review of the EC competition enforcement.
According to its main findings, the Commission had spent a lot
of times investigating a high amount of agreements, including
benign ones and being in difficulty on serious agreements due to
the lack of available resources; moreover, the notification
procedure imposed significant costs on companies.
• Regulation 1/2003 (in force from 1 May 2004): has decentralized
the enforcement of competition rules, replacing the ex ante
notification system with an ex post legal exception system (firms
are no longer required to request the Commission’s review of
their agreements, but are required to conduct a self-assessment
of their business practices).
EU competition rules and the Single
Market
• Competition policy has been conceived as a crucial policy
instrument oriented towards the goal of single market
integration.
• This is reflected into the Treaty provisions, specific rules
and case law.
• The recent modernization process has led to the
competition rules being applied in a more economically
rigorous way, based mainly on consumer welfare and
efficiency standards.
Competition Law and Regulation
• For almost a century, network industries were organized as
State monopolies for several reasons (e.g., there was a
belief that such industries were natural monopolies, i.e. that
there was only space for one undertaking in the market;
exclusive rights were often granted in return for the
monopolist to provide universal service; because of the
importance of these industries from several viewpoints
governments believed it was important to consolidate
various actors in one firm, which they would control).
Source: D. Geradin, Twenty years of liberalization of network industries in the European Union:
Where do we go now?, November 2006
Competition Law and Regulation
• In the late 1970s, the basic tenets of the monopoly model
started to be challenged by economists, lawyers, policy-
makers, industrialists and consumer organizations.
Governments in many parts of the world have engaged in the
liberalization of network industries (telecommunications, postal
services, energy, and transport), meaning the opening up of
sectors previously monopolized by State enterprises legally
protected by competition.
• This liberalization process (first observed in the US in the late
1970s and in the UK in the early 1980s) became a central
concern of the European Commission at the end of the 1980s.
• In the EU some sectors, such as telecommunications and air
transport, are now fully liberalized. Others sectors, such as
energy, postal services, and rail transport, are not yet fully
liberalized.
The current European framework
• The EU competition rules are primarily contained in Title VII,
Ch. 1 of the current TFEU (Treaty on the Functioning of the
European Union, which followed the ratification of the
Lisbon Treaty in 2009).
• The main Treaty Provisions are:
i) Articles 101-106, applying to undertakings;
ii) Articles 107-109, concerning State aid.
• Mergers are regulated by Council Regulation 139/2004 (the
EUMR) (primary source Articles 103 and 352 TFEU).
• There are specific provisions with regard to special sectors.
Substantive and procedural provisions
• Substantive competition provisions: Articles 101, 102, 106,
37 TFEU.
• Procedural provisions: Article 103 (conferring the general
power on the Council to adopt secondary legislation to give
effect to the principles laid down in Articles 101 and 102),
Article 104 (enabling Member States to apply Articles 101
and 102 prior to the Council’s adoption of implementing rules
à transitional provision), and Article 105 (imposing a general
duty on the Commission to ensure compliance with the
competition rules).
• Other instruments (soft law): notices and guidelines issued
by the Commission.
Article 101(1)
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.
Article 101(2),(3)
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.
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.
EU institutional asset
• EU competition law is primarily enforced by specialized
administrative agencies at the EU – the Commission – and the
national levels – NCAs.*
• The primary method to guarantee the effectiveness of
competition rules is by a public enforcement system.
• At the EU level, competition rules are enforced mainly -but not
exclusively- by the European Commission, operating through
its Directorate General for Competition (DG COMP).
• EU competition law is also enforced in the context of ordinary
litigation before national courts (provisions with direct effect).
• The powers of DG COMP are laid down in Regulation 1/2003
and include: investigations, infringement decisions, fines,
settlements, remedies, interim measures, powers on NCAs.
• No criminal sanctions but fines and remedies.
Interplay between the EU and the national
level
• Interplay with NCAs: the enforcement of competition rules
is now decentralized to the NCAs of the Member States
which form, together with the Commission, the European
Competition Network(ECN).
• The competition rules are directly applicable and can be
enforced in national courts.
• Under Regulation 1/2003, NCAs and national courts are
required to apply, together with national competition law,
also Article 101and 102 TFEU where applicable.
• ECN+ Directive
Over- and Under- Enforcement
• Over–enforcement means prohibiting agreements,
conduct or mergers where there is no anti-competitive
harm (Type 1 errors: false positives).
• Under-enforcement means failing to prohibit agreements,
conduct or mergers where there is anti-competitive harm
(Type 2 errors: false negatives).
