A market where there is free competition is a market on which mutually independent businesses engage in the same activity and contend to attract consumers. In other words, each business is subject to competitive pressure from the others. Effective competition thus gives businesses a level playing field but also confers many benefits on consumers (lower prices, better quality, wider choice, etc.).
European competition policy is intended to ensure free and fair competition in the European Union. The Community rules on competition (Articles 101 to 109 of the Treaty on the Functioning of the European Union - TFEU) are based on five main principles:
- prohibition of concerted practices and agreements and abuse of a dominant position liable to affect competition within the common market (antitrust rules);
- preventive supervision of mergers with a European dimension, to determine whether they restrict competition;
- supervision of aid granted by the Member States which threatens to distort competition by favouring certain undertakings or the production of certain goods;
- liberalisation of sectors previously controlled by public monopolies, such as telecommunications, transport or energy;
- cooperation with competition authorities outside the Union.
The European Commission and the national competition authorities enforce the Community competition rules. Cooperation between them, within the European Competition Network (ECN), ensures effective and consistent application of the rules.