Competition & EU law
14 February 2014
10 October 2013
21 October 2013
23 July 2013
India’s Competition Act takes shape with enforcement actions and appeals: key cases, key points for international companies
22 November 2013
What’s it all about?
Competition law is largely about making markets work better for consumers.
The best way to guarantee that the economy’s resources are most effectively used is through competitive markets, whose purpose is to promote enterprise and efficiency, and ensure choice for consumers. Efficient and free markets encourage strong performance, bringing incentives for companies to increase productivity, lower prices and innovate. Safeguarding consumer welfare is the key competition objective.
Competition lawyers advise companies on whether their existing or proposed agreements or practices have actual or potential restrictive effects on market dynamics and, when carried out by companies that enjoy market power, actually or potentially abuse their market power; if they do, competition lawyers can advise on solutions. Market power occurs when one, or a limited group of, companies dominate a market and it is therefore difficult, or impossible, for other companies to enter or expand, although enforcement authorities have lowered the threshold over the years.
The UK’s competition law regime is one of the toughest in the world. This is largely as a result of the entry into force of the Competition Act 1998 on 1 March 2000, which combines the Chapter I and II prohibitions (based on Articles 101 and 102 of the Treaty on the Functioning of the European Union) with controls on mergers and monopolies (previously contained in the Fair Trading Act 1973 and now in the Enterprise Act 2002).
The UK and EU regulatory authorities ensure that markets work efficiently on the basis of transparent and fair competition.
UK and EU competition law are based on the same substantive principles. However the UK authorities (primarily the Office of Fair Trading (OFT) and the Competition Commission) deal with matters that have a mainly domestic impact, whereas the European Commission focuses on issues that produce cross-border effects. There are also industry-specific sectoral regulators, including Ofgem for the energy markets and Ofcom for telecommunications.
The Secretary of State for Trade and Industry sets the overall policy framework for competition, but only has involvement in cases raising public interest issues under the Enterprise Act 2002.
The regulatory authorities have extensive powers to investigate suspected infringements of competition law (such as carrying out dawn raids or market-wide reviews) and they can impose substantial fines. The OFT and the European Commission are becoming increasingly proactive in searching out competition law infringements and failure to comply with UK or EC competition laws can have very serious consequences (see Intel’s record €1.06bn fine imposed by the European Commission in May 2009 for abusing its dominance in the computer chip market: the fine was the largest ever for breach of competition law in the EU and a reminder of the emergence of European regulators as some of the most active enforcers of competition law, as well as an additional sign that the authorities have the ability to challenge the business and growth strategies of large corporates).
Competition lawyers’ work is very varied, including, principally:
1- reviewing practices or agreements that might restrict free trading and competition (especially cartels and other anti-competitive agreements), advising how to restructure such practices and agreements to comply with competition law, and attacking or defending such practices or agreements before the competent regulators;
2- advising on how to avoid abusive behaviour by a company dominating a market, including, for example, exclusionary practices, such as predatory pricing and refusals to deal;
3- merger control, which involves obtaining clearances for acquisitions, mergers and joint ventures; transactions that might threaten competition can be outright prohibited, or approved subject to “remedies”, e.g., an obligation to divest part of the merged entity.
In addition, competition lawyers advise on state aid and general EU law issues; cross-border trade or anti-dumping measures (preventing companies exporting products at a lower price than they normally charge in their domestic market); and litigation of competition related disputes, such as bringing or defending claims for damages before the Competition Appeal Tribunal.
The working culture
Competition lawyers’ work is closely linked to the regulatory authorities’ framework and so the hours that competition lawyers work vary depending on, for instance, the authorities’ deadlines. Competition lawyers may well have to work late into the evening towards the final stages of a deal, for example to meet filing deadlines. However, while this can be demanding, it is very satisfying to work with a client to close a deal successfully. Teamwork is, needless to say, vital.
A typical deal could involve gaining clearance for an international merger, which could entail having to make notifications in numerous jurisdictions. On this type of transaction, a junior lawyer could, for example, be asked to assess the need to notify a transaction in various jurisdictions, to assist with market definition (as defining the market for the client’s product or service is crucial in competition law), as well as help draft notifications and attend meetings with economists, who are equally engaged.
To become a competition lawyer, prerequisites are having a very keen interest in economics (recent years have seen a trend toward an ‘economics-based’ approach to the enforcement of European and UK competition law), business, and politics (a country’s competition laws are, inevitably, in large part a result of that country’s political situation) and a passion for the rapidly changing law in this area. Competition lawyers need to combine top-notch academic intellect with commercial awareness and a hardworking attitude, so as to be able to gain an understanding of how the markets work and the commercial reality of their clients’ business. Excellent communication skills are also vital to provide workable commercial advice to the client and to present cases to regulators. At international law firms you are likely to get to work abroad, for instance to attend crucial client meetings, or work in Brussels. Being adept in foreign languages can therefore be very helpful.
The competition sector is constantly evolving and competition matters are increasingly complex and vital to the success of business. Increasing awareness on the part of clients makes this an ever more interesting and dynamic area to work in. Two of the most recent important trends are, firstly, more private enforcement of competition law through the courts and, secondly, sector-wide investigations where competition issues in an industry result not from the actions of particular companies, but from general features of the industry itself (e.g., customer inertia).