The document discusses the objectives of EU competition law. It examines what the EU treaties say about objectives, noting they primarily refer to undistorted competition and efficient allocation of resources. It explores who determines objectives, with roles for the Court, Commission, Council, and changing economic and academic environments. The Commission's guidelines increasingly refer to consumer welfare as the primary objective, while public statements also mention competitiveness and the single market.

1. The Objectives of EUThe Objectives of EU
Competition LawCompetition Law
Some ThoughtsSome Thoughts
by Marc van der Woudeby Marc van der Woude
King’s College, LondonKing’s College, London
13 February 201413 February 2014

2. Some recent events
Speech Almunia, Competition policy for the post-crisis world, 17Speech Almunia, Competition policy for the post-crisis world, 17
January 2014:January 2014:
•
Defence of policy in context of crisis and de-industrialisationDefence of policy in context of crisis and de-industrialisation
Slovak Banks C/68/12, 7 February 2013:Slovak Banks C/68/12, 7 February 2013:
•
not for private market operators to enforce public rulesnot for private market operators to enforce public rules
1. garantovaná T-392/09, 12 December 2012:1. garantovaná T-392/09, 12 December 2012:
•
fines leading to market exitfines leading to market exit
Guidelines on horizontal cooperation 2011:Guidelines on horizontal cooperation 2011:
•
No examples on environmentNo examples on environment

3. Objectives of competition lawObjectives of competition law
1. Do objectives matter?1. Do objectives matter?
2. What does the Treaty say about2. What does the Treaty say about
objectives?objectives?
3. Who determines the objectives?3. Who determines the objectives?
4. Which objectives?4. Which objectives?
5. Some personal reflections5. Some personal reflections

4. Part IPart I
Do objectives matter?Do objectives matter?

5. Guiding PrincipleGuiding Principle
Guiding principle of interpretation inGuiding principle of interpretation in
Toshiba C-17/10, 14.02.2012, para 73:Toshiba C-17/10, 14.02.2012, para 73:
““In interpreting a provision of EU law, it isIn interpreting a provision of EU law, it is
necessary to consider not only its wording, butnecessary to consider not only its wording, but
also the context in which it occurs andalso the context in which it occurs and thethe
objectives pursued by the rules of which it isobjectives pursued by the rules of which it is
partpart ...”...”
GlaxoSmithKline C-501/06 P, 6.10.2009GlaxoSmithKline C-501/06 P, 6.10.2009

6. Certain examples of the rulesCertain examples of the rules
Debate on restriction of contractual freedom and impactDebate on restriction of contractual freedom and impact
on competition:on competition:

Delimits C-231/89Delimits C-231/89

Remia C-42/84Remia C-42/84

Issue of joint venturesIssue of joint ventures
Debate on predatory pricing: France Télécom C-202/07Debate on predatory pricing: France Télécom C-202/07
Efficiency defence in merger control (Section VII,Efficiency defence in merger control (Section VII,
Horizontal Guidelines)Horizontal Guidelines)
Public policy issues: Albany C-67/96, Wouters C 309/99‑Public policy issues: Albany C-67/96, Wouters C 309/99‑

7. Origin, evolution and projectionOrigin, evolution and projection
Giuliano Amato, Antitrust and the bounds of power,Giuliano Amato, Antitrust and the bounds of power,
1997, page 2:1997, page 2:
““But I am also writing them [the candid pages] to remind the expertsBut I am also writing them [the candid pages] to remind the experts
of the genetic origins of antitrust law; and especially to bring themof the genetic origins of antitrust law; and especially to bring them
to a recognition of the traces of that DNA in the complex technicalto a recognition of the traces of that DNA in the complex technical
arguments they make choices among in order to resolve dilemmasarguments they make choices among in order to resolve dilemmas
facing them.facing them. For the choices they make do not involve thoseFor the choices they make do not involve those
arguments alone, but continue to find their roots in the greatarguments alone, but continue to find their roots in the great
political and philosophical options with which antitrust law stillpolitical and philosophical options with which antitrust law still
remains bound upremains bound up”.”.

8. Part IIPart II
What does the Treaty sayWhat does the Treaty say
about objectives?about objectives?

9. From objective to protocolFrom objective to protocol
From priority to addendum?From priority to addendum?
Rome: main aim of Art. 2 and ensuing policies listed in Art. 3Rome: main aim of Art. 2 and ensuing policies listed in Art. 3
Lisbon:Lisbon:

two treaties, with principles listed at the beginning of TFEUtwo treaties, with principles listed at the beginning of TFEU

competition policy not listed amongst general EU values, unlikecompetition policy not listed amongst general EU values, unlike
prohibition of discrimination, environmental protection andprohibition of discrimination, environmental protection and
animal wellbeinganimal wellbeing

Protocol n° 27: “Protocol n° 27: “Considering that the internal market as set out inConsidering that the internal market as set out in
Article 3 of the Treaty on the European Union includes a systemArticle 3 of the Treaty on the European Union includes a system
ensuring that competition is not distorted…”ensuring that competition is not distorted…”

10. Concept of undistorted competitionConcept of undistorted competition
present in other Treaty provisionspresent in other Treaty provisions
Part III, Title VII: Common Rules on CompetitionPart III, Title VII: Common Rules on Competition
Taxation and Approximation of Laws, Chapter 1, RulesTaxation and Approximation of Laws, Chapter 1, Rules
on Competition, two sections.on Competition, two sections.
Part VII, Chapter 2: Art. 113 harmonisation of indirectPart VII, Chapter 2: Art. 113 harmonisation of indirect
taxation “taxation “to ensure the establishment and the functioningto ensure the establishment and the functioning
of the internal market and to avoid distortion ofof the internal market and to avoid distortion of
competitioncompetition.”.”
Part VII, Chapter 3 approximation measures withinPart VII, Chapter 3 approximation measures within
meaning of Chapter 3 (see Art. 116 and 117): “meaning of Chapter 3 (see Art. 116 and 117): “distortingdistorting
the conditions of competitionthe conditions of competition”.”.

11. Title VII on economic andTitle VII on economic and
monetary policymonetary policy
Art. 119 sets out basic principles of the economic andArt. 119 sets out basic principles of the economic and
monetary policy of Member States and Union:monetary policy of Member States and Union:
coordination, internal market, definition of commoncoordination, internal market, definition of common
objectives “objectives “conducted in accordance with the principle ofconducted in accordance with the principle of
an open market economy with free competitionan open market economy with free competition””
Art. 120 onArt. 120 on nationalnational economic principles: “economic principles: “the Memberthe Member
States and the Union shall act in accordance with theStates and the Union shall act in accordance with the
principle of an openprinciple of an open market economy with freemarket economy with free
competition, favouring an efficient allocation ofcompetition, favouring an efficient allocation of
resourcesresources, and in compliance with the principles set out, and in compliance with the principles set out
in Article 119in Article 119”.”.
Art. 127 idem as regards monetary policy.Art. 127 idem as regards monetary policy.

12. Objectives in the Treaty:Objectives in the Treaty:
SummarySummary
Competition law is listed as an integralCompetition law is listed as an integral
part of the internal market project.part of the internal market project.
But what does a system of undistortedBut what does a system of undistorted
competition mean?competition mean?
Efficient allocation of resourcesEfficient allocation of resources
specifically referred to respecifically referred to re nationalnational
economic policieseconomic policies but not rebut not re EUEU
competition rulescompetition rules..

13. Part IIIPart III
Who determines theWho determines the
objectives?objectives?

14. Who decides what?Who decides what?
Competition lawCompetition law  competition policycompetition policy
Competition policyCompetition policy  other public policiesother public policies
Court (Art. 19 TEU)Court (Art. 19 TEU)  Commission (Art.Commission (Art.
101-109 TFEU)101-109 TFEU)
Judicial enforcementJudicial enforcement  administrativeadministrative
enforcementenforcement
AbuseAbuse  Prohibition systemProhibition system

15. Court GuidanceCourt Guidance
Commission/Italy C-496/09 (ground 60) protocol doesCommission/Italy C-496/09 (ground 60) protocol does
not affect fundamental nature of competition rules:not affect fundamental nature of competition rules:

““As to the seriousness of the infringement, the vital nature of theAs to the seriousness of the infringement, the vital nature of the
Treaty rules on competition must be recalled, in particular thoseTreaty rules on competition must be recalled, in particular those
on State aid, which are the expression of one of the essentialon State aid, which are the expression of one of the essential
tasks with which the European Union is entrusted. At the time oftasks with which the European Union is entrusted. At the time of
the Court’s assessment of the appropriateness and the amountthe Court’s assessment of the appropriateness and the amount
of the present penalty payment, that vital nature is apparent fromof the present penalty payment, that vital nature is apparent from
Article 3(3) TEU, namely the establishment of an internal market,Article 3(3) TEU, namely the establishment of an internal market,
and from Protocol No 27 on the internal market and competition,and from Protocol No 27 on the internal market and competition,
which forms an integral part of the Treaties in accordance withwhich forms an integral part of the Treaties in accordance with
Article 51 TEU, and states that the internal market includes aArticle 51 TEU, and states that the internal market includes a
system ensuring that competition is not distorted”system ensuring that competition is not distorted”
See also Telia C-52/09See also Telia C-52/09

16. Academic EnvironmentAcademic Environment
Freiburg: price taking and market entryFreiburg: price taking and market entry
Harvard: structural approachHarvard: structural approach
Austria: the time factorAustria: the time factor
Chicago: price theory and efficiencyChicago: price theory and efficiency
What next? Toulouse, Israel?What next? Toulouse, Israel?

17. Economic environmentEconomic environment
Economic CyclesEconomic Cycles EU IntegrationEU Integration
1955-19701955-1970 The miracle still at workThe miracle still at work Customs union andCustoms union and
empty chairempty chair
1970-19901970-1990 Stagflation and restructuringStagflation and restructuring First enlargements andFirst enlargements and
money issuemoney issue
1990-20081990-2008 Opening up marketsOpening up markets The internal market andThe internal market and
€ at work€ at work
2008-20152008-2015 Crisis and recessionCrisis and recession Unwanted cooperationUnwanted cooperation

18. A number of factorsA number of factors
Plurality of actorsPlurality of actors
Role of law and economicsRole of law and economics
Evolving economic insight and thinkingEvolving economic insight and thinking
Changing market conditionsChanging market conditions

19. Part IVPart IV
Which objectives?Which objectives?

20. The CouncilThe Council
From Reg. 17 to Reg 1/2003: from exemptionsFrom Reg. 17 to Reg 1/2003: from exemptions
to hard core restrictionsto hard core restrictions
Reg. 4064/89: “Reg. 4064/89: “..reorganisations are to be..reorganisations are to be
welcomed to the extent that they are in line withwelcomed to the extent that they are in line with
the requirements of dynamic competition andthe requirements of dynamic competition and
capable of increasing the competitiveness ofcapable of increasing the competitiveness of
European industry, improving the conditions ofEuropean industry, improving the conditions of
growth and raising the standard of living in thegrowth and raising the standard of living in the
Community.”Community.”

21. The Commission (I)The Commission (I)
Aspirin approach in the Comp. reports:Aspirin approach in the Comp. reports:

70s: the internal market and (global)70s: the internal market and (global)
competitivenesscompetitiveness

80s: competitiveness and the competitive80s: competitiveness and the competitive
processprocess

90s: internal market and appearance of90s: internal market and appearance of
consumer welfareconsumer welfare

>2000: maintenance of competitive market>2000: maintenance of competitive market
and single marketand single market

22. The Commission (II)The Commission (II)
De Minimis notice: market share thresholds &De Minimis notice: market share thresholds &
favourable view on SMEfavourable view on SME
Vertical restraints guidelines (2000): consumerVertical restraints guidelines (2000): consumer
welfare primary objective and market integrationwelfare primary objective and market integration
as additional goal (para 7)as additional goal (para 7)
Technology transfer guidelines (2004): “Technology transfer guidelines (2004): “tthe aimhe aim
of Article 81 as a whole is to protect competitionof Article 81 as a whole is to protect competition
on the market with a viewon the market with a view to promotingto promoting
consumer welfare and an efficient allocation ofconsumer welfare and an efficient allocation of
resourcesresources..”” (para 5)(para 5)

23. The Commission: MergersThe Commission: Mergers
Horizontal mergers guidelines (2004):Horizontal mergers guidelines (2004):
““Effective competition brings benefits to consumers, such as lowEffective competition brings benefits to consumers, such as low
prices, high quality products, a wide selection of goods andprices, high quality products, a wide selection of goods and
services, and innovation. Through its control of mergers, theservices, and innovation. Through its control of mergers, the
Commission prevents mergers that would be likely to depriveCommission prevents mergers that would be likely to deprive
customers of these benefits by significantly increasing the marketcustomers of these benefits by significantly increasing the market
power of firmspower of firms.” (para 8).” (para 8)
Non horizontal merger guidelines (2008):Non horizontal merger guidelines (2008):
““Consequently, the fact that a merger affects competitors is not inConsequently, the fact that a merger affects competitors is not in
itself a problem. It is the impact on effective competition thatitself a problem. It is the impact on effective competition that
matters, not the mere impact on competitors at some level of thematters, not the mere impact on competitors at some level of the
supply chain. In particular, the fact that rivals may be harmedsupply chain. In particular, the fact that rivals may be harmed
because a merger creates efficiencies cannot in itself give rise tobecause a merger creates efficiencies cannot in itself give rise to
competition concernscompetition concerns.” (para 16).” (para 16)

24. The Commission: Art. 102The Commission: Art. 102
Article 102 guidelines on exclusionary practicesArticle 102 guidelines on exclusionary practices::
““Article 82 is the legal basis for a crucial component of competitionArticle 82 is the legal basis for a crucial component of competition
policy and its effective enforcement helps markets to work betterpolicy and its effective enforcement helps markets to work better
for the benefit of businesses and consumers. This is particularlyfor the benefit of businesses and consumers. This is particularly
important in the context of the wider objective of achieving animportant in the context of the wider objective of achieving an
integrated internal marketintegrated internal market.” (para 1).” (para 1)
““In doing so the Commission is mindful thatIn doing so the Commission is mindful that what really matters iswhat really matters is
protecting an effective competitive process and not simplyprotecting an effective competitive process and not simply
protecting competitorsprotecting competitors. This may well mean that competitors who. This may well mean that competitors who
deliver less to consumers in terms of price, choice, quality anddeliver less to consumers in terms of price, choice, quality and
innovation will leave the marketinnovation will leave the market.” (para 6).” (para 6)

25. Findings on Commission policyFindings on Commission policy
Aspirin view of competition policy in reports and publicAspirin view of competition policy in reports and public
speechesspeeches
Difference between public statements and technicalDifference between public statements and technical
documents; in the latter clear choice for consumerdocuments; in the latter clear choice for consumer
welfare as prime objectivewelfare as prime objective
101(3) gradually reduced to efficiencies101(3) gradually reduced to efficiencies
Favourable view on SMEsFavourable view on SMEs
Two recurring themes: global competitiveness and theTwo recurring themes: global competitiveness and the
internal market as a means to ensure that positioninternal market as a means to ensure that position

26. The Court: Founding YearsThe Court: Founding Years
Grundig & Consten 56 & 58/64: market integrationGrundig & Consten 56 & 58/64: market integration
Contintental Can 6/72 (and Zoja 6 & 7/73): structure ofContintental Can 6/72 (and Zoja 6 & 7/73): structure of
competitioncompetition “…not only aimed at practices which may“…not only aimed at practices which may
cause damage to consumers directly, but also thosecause damage to consumers directly, but also those
which are detrimental to them through their impact onwhich are detrimental to them through their impact on
effective competition…”effective competition…”
Metro 27/76, workable competitionMetro 27/76, workable competition
Turning competition into a constitutional norm: 3f, 5 andTurning competition into a constitutional norm: 3f, 5 and
85/86, GVL, 7/8285/86, GVL, 7/82

27. The Court: Market YearsThe Court: Market Years
Opening up specific sectors to competition
Limits of formalism and the notification system:
Nungesser 258/78, Coditel 262/81, Pronuptia 161/84,
Delimitis C-234/89
Impact on merger control (Airtours, T-342/99)
Controlling a revived Commission (cartels, 102 TFEU)
Balancing competition with other interests (Wouters C-
309/99)

28. The Court: stare decisisThe Court: stare decisis
GSK C-501/06GSK C-501/06
““With respect to the [CFI’s] statement that, while it is accepted thatWith respect to the [CFI’s] statement that, while it is accepted that
an agreement intended to limit parallel trade must in principle bean agreement intended to limit parallel trade must in principle be
considered to have as its object the restriction of competition, thatconsidered to have as its object the restriction of competition, that
applies in so far as it may be presumed to deprive final consumersapplies in so far as it may be presumed to deprive final consumers
of the advantages of effective competition in terms of supply orof the advantages of effective competition in terms of supply or
price, the Court notes that neither the wording of Article 81(1) ECprice, the Court notes that neither the wording of Article 81(1) EC
nor the case-law lend support to such a position.nor the case-law lend support to such a position.” (para 62)” (para 62)
“…“…Article 81 EC aims to protectArticle 81 EC aims to protect not only the interests ofnot only the interests of
competitors or of consumers, but also the structure of thecompetitors or of consumers, but also the structure of the
market and, in so doing, competition as such.market and, in so doing, competition as such. Consequently, forConsequently, for
a finding that an agreement has an anti-competitive object,a finding that an agreement has an anti-competitive object, it is notit is not
necessary that final consumers be deprived of the advantagesnecessary that final consumers be deprived of the advantages
of effective competition in terms of supply or priceof effective competition in terms of supply or price …”…” (para 63)(para 63)

29. The Court: Stare decisis
T-Mobile, C-8/08
“With regard to the assessment as to whether a
concerted practice is anti competitive, close regard must‑
be paid in particular to the objectives which it is intended
to attain and to its economic and legal context.” (para 27)
“...in order for a concerted practice to be regarded as
having an anti competitive object, it is sufficient that it‑
has the potential to have a negative impact on
competition.” (para 31)
“... Article 81 EC, like the other competition rules of the
Treaty, is designed to protect not only the immediate
interests of individual competitors or consumers but also
to protect the structure of the market and thus
competition as such.” (para 38)

30. The Court:The Court: Post Danmark C 209/10‑Post Danmark C 209/10‑
““Thus, not every exclusionary effect is necessarily detrimental toThus, not every exclusionary effect is necessarily detrimental to
competition (…).competition (…). Competition on the meritsCompetition on the merits may, by definition,may, by definition,
lead to the departure from the market or the marginalisation oflead to the departure from the market or the marginalisation of
competitors that are less efficient and so less attractive tocompetitors that are less efficient and so less attractive to
consumers from the point of view of, among other things, price,consumers from the point of view of, among other things, price,
choice, quality or innovation.choice, quality or innovation.” (para 22)” (para 22)
“…“…Article 82 EC applies, in particular, to the conduct of a dominantArticle 82 EC applies, in particular, to the conduct of a dominant
undertaking that,undertaking that, through recourse to methods different fromthrough recourse to methods different from
those governing normal competition on the basis of thethose governing normal competition on the basis of the
performance of commercial operatorsperformance of commercial operators, has the effect, to the, has the effect, to the
detriment of consumers, of hindering the maintenance of the degreedetriment of consumers, of hindering the maintenance of the degree
of competition existing in the market or the growth of thatof competition existing in the market or the growth of that
competition.competition.” (para 24)” (para 24)

31. Findings on Court’s positionFindings on Court’s position
Plurality of objectives:Plurality of objectives:

market integrationmarket integration

protecting the structure of competitionprotecting the structure of competition
Structure of competition:Structure of competition:

primary consideration rather than consumer welfareprimary consideration rather than consumer welfare

competition as a process with an intrinsic normative valuecompetition as a process with an intrinsic normative value

constitutional componentconstitutional component

32. Part VPart V
Some personal reflectionsSome personal reflections

33. Defining and redefining theDefining and redefining the
objectivesobjectives
Competition rules embedded in Treaty system:Competition rules embedded in Treaty system:

obligation to ensure consistency and role ofobligation to ensure consistency and role of
CommissionCommission

not surprising that system pursues multiplenot surprising that system pursues multiple
objectivesobjectives
Internal market is main objective, especiallyInternal market is main objective, especially
when related to the concern of ensuring globalwhen related to the concern of ensuring global
competitiveness:competitiveness:

Commission’s attempt to focus on consumerCommission’s attempt to focus on consumer
welfare in last decadewelfare in last decade

GSK case reminds GC of the foundationsGSK case reminds GC of the foundations

34. Defining and redefining theDefining and redefining the
objectivesobjectives
Within internal market, rules must protect theWithin internal market, rules must protect the
structure of competition:structure of competition:

Effective or workable competitionEffective or workable competition

Protecting competition can sometimes imply theProtecting competition can sometimes imply the
protection of competitorsprotection of competitors

Role of SMEsRole of SMEs
Constitutional and normative dimension of theConstitutional and normative dimension of the
rules (rules (OrdnungspolitikOrdnungspolitik?):?):

Applicable to StatesApplicable to States

Competition on the meritsCompetition on the merits

Unfair trading conditionsUnfair trading conditions

No discrimination by nationalityNo discrimination by nationality

35. Defining and redefining theDefining and redefining the
objectivesobjectives
What about more economic approach?

Economics provide analytical tools (Airtours,
Post Denmark)

Economic thinking influences the process
(from Eucken to Kahneman)

Economic theory not value-free
Welfare analysis: what welfare?
Chicago School and Ayn Rand

Micro and macro-economics
e.g. implicit state guarantees (RJB Mining)

36. Defining and redefining theDefining and redefining the
objectivesobjectives
What about effects-based approach?

Discussion on objectives of rules is related to,
but does not correspond to object/effect
debate

Always need to take into account economic
and legal context which differs from one
sector to another
Changing geopolitical conditions

Jurisdiction and imperium

37. Concluding remarksConcluding remarks
Objectives are important: they determine the orientationObjectives are important: they determine the orientation
of the lawof the law
Plurality of objectives:Plurality of objectives:

a system of undistorted competition is one of thema system of undistorted competition is one of them

internal market objectivesinternal market objectives

reconciled with other objectivesreconciled with other objectives
Evolution in time and influenced by numerous factorsEvolution in time and influenced by numerous factors

38. NEVER BE TOO DOCTRINAL !