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A free market makes business a very competitive game. There are times when businesses may find themselves in the temptation of avoiding the prevailing competition and instead create own rules of the game. In other cases, major players in the market undertake measures meant to outdo the small competitors by squeezing completely from the market. In view of the possibility of unethical practices in the market, the European Commission plays the role of a referee in to ensure that fair play is upheld by all companies by observing same set of rules in their play. For instance, the formation of cartels makes firms with similar products to exercise strong control of the market in terms of prices as well as wiping any form of competition. With no competition in the market, the cartels are able to set high prices for low quality products (Bodewig 2006). The negative impacts of cartels have made it illegal under the EU laws on competition. In fact, heavy fines are often imposed by the EU Courts to companies that form cartels.
In view of the noble pursuits of the EU Competition law, there has been considerable doubt on the exact goals of the law as elaborate answers have not been identified since its inception more than half a century ago. In fact, a comparison of laws in the decentralized EU Competition law enforcement with the individual national laws on competition and their application reveals parallel pursuits. Due to the prevailing contrasting pursuits between the EU Competition laws and those of the Member States, there has been an absence of clarity on the exact goals that the EU Competition law actually pursues (Ehlermann & Laudati 1998). The process of harmonizing the goals of Commission and those of the Member States is unique in such a way that it has to accommodate the different regulatory competition that each member embraces. In fact, there is intense need for an active comparative on the existing competition laws from every Member State as well as the Commission's own Competition laws. The process of analytical comparison is worthwhile due to the fact that they have been embraced recently occurring in an environment of decentralized enforcement (Ehlermann & Laudati 1998). Moreover, the enforcement system has been transformed into multi-level system of governance from the supranational Policy of the EU.
According to the EU Policy, the enforcement of competition law has to occur in setting which is multi-layered. The setting comprises the EU as well as the National rules under the supervision of the Commission alongside the 27 authorities of national competition. The EU substantive rules are similar portraying a substantial convergence with the member states' legislations. However, there are differences in the procedures as well as the rules forming the framework for the enforcement between the commission and the national legislations on competition. As a result, there are various challenges in process of comparative analysis of competition laws. The EU is responsible for the continuous analysis and comparison of methods of enforcement embraced by each member state.
An overview of competition laws by EU and member states
For a long time, competition law has posed a great challenge for comparative researchers. Several factors have contributed to the presence of the challenges. To start with, most of the member states in the EU lacked elaborate laws on competition as well as the absence of any regime for enforcing competition laws (Jacobs 1999). Additionally, the most of the member states are yet to regard competition law as a policy towards economic development. As such, most do not find the relevance of the enforcement of competition laws. Moreover, the convergence and divergence among diverse national regimes has had little redress thus presence of significant economic and legal consequences. Nevertheless, the enlargement process coupled with modernization made on EU laws on competition has caused reasonable levels of change.
The modernization of the EU laws on competition in 2004 was a turning point for the improvement of relations between the member states (Mestmacker 2000). Prior to the modernization process, there was no mechanism to address the relations between the national laws on competition as well as the EU competition laws. Furthermore, the policy on competition was immune to any governance at the EU multi-level. The member states applied their own competition laws often parallel to the goals of the other member states. The enforcement of the EU competition laws by the authorities of the member states created a loophole for the states to pursue practices that would yield better and favorable results to them without regarding the needs of the other member states (Buttigieg 2009). The major challenge with such an enforcement system was the fact that there was no way to address the relations between the national competition laws and the European Union community. In addition, the policy on competition remained immune from the doctrine of judicial supremacy of the EU laws. As a matter of fact, the prevailing system of the EU competition law failed to impose obligations to the member states to apply laws on competition that would contravene their own national laws.
The establishment of the EU competition laws remained goalless and without any substantial influence of the practices of the member states. Various factors contributed to the scenario. For instance, the absence of a convergence rule to intervene in the legal systems of the member systems posed a major challenge for the EU competition policy to be imposed on the member states that engaged in improper actions (Mavromati 2008). Moreover, the absence of a system to accelerate the process of convergence and eradication of abusive and ineffective competition laws meant that only a few member states were willing to be committed to the entire process of EU competition policy enforcement. The Europeanization of the substantive competition policy was also hindered by the fact that contradictions existed between the individual member states and the EU policies on cartel formation. In addition, there were diversities in the national legal procedures as well as the design of the individual national institutions. The two factors: diversity of national legal procedures and differing institutional design have still remained major challenges to the proper articulation of envisaged goals by the EU competition policy.
The challenge posed by the differences in institutional designs and diverse legal procedures were more evident during the 2004 enlargement process meant to enforce EU competition laws effectively (Baskoy 2005). There were various variations among the EU member states not only in their competition laws but also their consumer laws. According to principles of the EU Community, Member state institutional structures as well as the enforcement mechanisms were supposed to remain wholly under the state's competence. Thus the community provided for the autonomy of procedures as well as neutrality of institutions. Nevertheless, the enlargement process has brought the effect of pushing the freedom of diversified enforcement and choice of institutions into the major discussion for the EU Commission. In fact, there is no clear blueprint as to the right methods of enforcement as well as the institutional design regarded optimal for the EU. As a result, considerable leeway was given to the member states to acquire the institutional designs as well as the systems of law deemed best for them.
The regulation framework of EU Competition laws
The EU has always endeavored to foster an obligatory requirement for the member state to embrace a converged form of substantive procedures of enforcement of the competition laws. However, the leeway offered to the Member states has always posed a major challenge on the realization of unified competition laws in the EU Community. The National laws on competition have been have been radical towards the establishment of right policies on competition laws. National competition laws have been regarded as relevant for attention of the commission in deliberating on the effective policies on competition (Togan & Hoekman 2005). Each member state is mandated by the commission to adhere to own self imposed sanctions as well as remedies on competition according to the legal system embraced. In relation to the application of independence of the Member states in embracing own competition policies, the EU Community has had to deliberate on the enforcement of consistent policy with effective and functional network of legislations and policies towards the harmonization of procedures, policies, resources as well as the independence of National Competition Authorities (NCAs).
The reliance of the commission on effective enforcement administration towards the EU Competition law and into the National procedures and institutions has led to the absence of clarity in the goals of EU competition laws. The national procedure rules as well as the system of institutions have become crucial for the creation of uniform EU competition laws consistent with comparative analysis (Andreangeli 2008). From the available evidence, the drafters of the EU Competition laws did not have a clear focus on the goals the competition laws would pursue. In fact, the drafters failed in their part to think about the best enforcement regime would be suitable for the commission as well as the Member states. In spite of the absence of a common goal to foster unity in the EU competition policy, the drafters envisaged a common market that would be devoid of destructive competition among the Member states. As a matter of fact, the very survival of Europe in the post-war period highly depended on the establishment of a common market.
The choice by the drafters of an enforcement mechanism administered by the EU Commission whose mandate was under the scrutiny of Member states' courts meant that the Commission lacked the power to completely establish competition laws that would foster uniform practices to all the states involved (Larragan 2010). From the inception, the system of enforcement established by the drafters of the Competition policy attained some reasonable extent of success. However, the policy seemed overcautious in its pursuit of uniform competition legislation in the EU Community. In order to foster adequate development, the EU judiciary sought to endorse an approach towards the development of the market through a policy of competition devoid of dogmatic enslavement which was viewed to be short-term. On the contrary, the commission sought to a market that would preserve the pluralistic, dynamic as well as open structure of a market (Almunia & Reding 2010). Consequently, the EU market has remained a market devoid of pure market-integrationist mechanism. This is regardless of the fact that the market derives its explanation from the underlying objectives of the internal market.
In spite of the existence of variations between the Member states' competition laws with the EU policy about competition, immense success has been attained through the establishment of EU competition laws (Gormsen 2006). For instance, the adoption of merger regulation in 1989 was a major achievement of the EU Competition law. Moreover, the modernization of the EU Competition laws in 2003 market the beginning of new dimension on the competition laws. In fact, new enforcement as well as convergence mechanism was established to take the EU competition laws into a whole new level. From this perspective, there seems to be some underlying goals of the EU competition policy with a major focus on the internal market. Additionally, it has been projected that the establishment of a strong, efficient, sustainable as well as competitive market will wholly depend on the state of the internal market. The type of economic model established in the EU Competition law calls upon policy that is duo oriented: functional and effective internal market. As a result, the establishment of the competition law has immense benefits to the people of Europe ranging from employees, shareholders as well as the consumers. Notwithstanding the agenda of market-integrationist, the EU competition policy was mainly concerned with the vertical restraints in an extent that lacks adequate explanation. In fact, the abolishment of monopoly by the commission through procedural regulation reduced efficiencies to a great extent.
Comparison of EU Competition laws and Member states
The incentives of the commission alongside member states towards the establishment effective competition laws can be addressed through functional regulation. The formation of a network of National and EU Competition laws has facilitated the formation of a forum to address the enforcement of competition laws (Hoekman & Mattoo 2002). The forum has been instrumental in the exchange of information as well as allocation of cases. There are details on the jurisdiction of mechanisms of cooperation of the authorities charged with enforcement of competition laws. From the comparative analysis done on the elaborate goals of EU Competition laws, it is evident that the community lacks competence in terms of legal matters. In fact, there is astonishing diversity and underdeveloped of national private action of damages with the EU (Mestmacker 2000).
The EU fails to address the issue of private violation of competition due to the presence of hurdles on the legal procedures to be applied among the member states. In addition, the variations in the models of tort legislations among the member states have proven to jeopardize the process of attaining effective enforcement of EU competition laws. Furthermore, the diverse tort laws within the member states have presented a clear contrast with the high level of convergence in terms of competition laws. It is also evident that the extremely low level of litigation has been a major cause of continued harmful competitive practices as there has not been any reasonable compensation. Thus the EU competition laws have failed to be effective due to the presence of different approaches by the member states.