The EU's rules on competition are designed to ensure fair and equal conditions for businesses, while leaving space for innovation, unified standards, and the development of small businesses.
Under EU rules, businesses cannot:
Large firms are barred from using their bargaining power to impose conditions that would make it difficult for their suppliers or customers to do business with their competitors. The Commission can (and does) fine companies for this practice, because it leads to higher prices and/or less choice for consumers.
EU investigations into anti-competitive practices cover not only goods but also professions (doctors, lawyers, etc.) and services – including financial services, such as retail banking and credit cards.
The Commission also monitors how much assistance EU governments give to businesses (‘state aid’), for example:
The risk with such assistance is that it may favour well-connected vested interests, at the expense of those who compete on their own merits – with the bill footed by the taxpayer. Reining in such undeserved subsidies is a cheap and effective way to make Europe fairer and promote economic growth.
These rules are applied with common sense and flexibility. The main consideration is whether consumers will benefit or other businesses will be harmed. For example, governments are allowed to help firms in difficulty – or new ventures – if they have a real chance of eventually being profitable, and so saving, even creating, jobs. What is not allowed is help for ailing businesses that have no hope of being viable.
Other exceptions to the general rules include:
In 2014, the Commission fined French pharmaceutical company Servier and 5 other producers of generic medicines almost €430 million for concluding a series of deals to protect Servier's bestselling blood pressure medicine, perindopril, from price competition from other generics in the EU.
The Commission has also investigated cartels in the market for financial derivatives, priced by reference to certain benchmark rates (EURIBOR (EIRD), JPY Libor, Euroyen TIBOR (YIRD) and Swiss franc Libor (CHIRD)).
It has taken several decisions in these cases over the past few years, against banks such as Barclays, Deutsche Bank, RBS, Société Générale, UBS, Citigroup and JPMorgan. Fines totalled about €1.8 billion (some banks had their fines reduced for cooperating with the investigation and agreeing to settle).
The Commission's extensive powers to investigate and halt violations of EU competition rules are subject to a number of internal checks and balances, as well as full judicial review by the European Courts. Companies and EU governments regularly lodge appeals against Commission decisions, which are sometimes successful.
Updated in November 2014
This publication is part of the 'European Union explained' series