Competition rules in the EU
Affected by Brexit?
The EU has strict rules protecting free competition. Under these rules, certain practices are prohibited.
If you infringe the EU's competition rules, you could end up being fined as much as 10% of your annual worldwide turnover. In some EU countries individual managers of offending firms may face serious penalties, including prison.
EU competition rules apply directly in all EU countries - the courts in your country will uphold them. These rules apply not only to businesses but to all organisations engaged in economic activity (such as trade associations, industry groupings, etc).
You can read about some examples of EU competition cases on the DG Competition's portal.
Illegal contacts and agreements
These agreements are known as cartels. They are forbidden because they restrict competition. They can take many forms, and need not be officially approved by the companies involved. The most common examples of these practices are:
- Price fixing
- Market sharing
- Agreement on customer allocation
- Agreement on production limitation
- Distribution agreements between suppliers and re-sellers where, for example, the price charged to customers is imposed by the supplier
All agreements and exchanges of information between you and your competitors that reduce your strategic uncertainty in the market (around your production costs, turnover, capacity, marketing plans, etc.) can be seen as anti-competitive.
Even disclosing this kind of strategic information unilaterally via mail, phone or meetings could be seen as infringing this rule.
To be on the safe side:
- Do not fix prices or other trading conditions
- Do not limit production
- Do not share markets
- Do not exchange strategic information about your company
Some agreements are not prohibited - if they can be justified as benefiting consumers and the economy as a whole. One example is agreements on research & development and technology transfer. These cases are covered by the Block Exemption Regulations .
Abuse of a dominant position
If your company has a large market share, it holds a dominant position and must take particular care not to:
- charge unreasonably high prices which would exploit customers
- charge unrealistically low prices which may drive competitors out of the market
- discriminate between customers
- force certain trading conditions on your business partners