The Gazette 1985

GAZETTE

JULY/AUGUST 1985

The Competition Policy of the

European Community

Part I

Peter D. Sutherland

Member of the Commission of the European Communities

(The following is an edited version of an article first published in the St. Louis University Law Journal.)

Introduction

HE competition policy of the European Community

is part of the wider endeavour of European

integration on which repose the hopes of our citizens for

recovery and sustained prosperity

. Article 3(0 of the

EEC Treaty included "the institution of a system ensuring

that competition in the common market is not distorted"

among the activities of the Community to achieve the

purposes set out in Article 2 \ The Treaty is the Constitu-

tion of the EEC and its substantive provisions should be

regarded as constitutional in scope and importance.

I propose in this article to describe how competition

law and policy contribute to the Community's economic

recovery strategy based on the dual objectives of the

completion of a large, unfettered internal market and the

enhancement of the competitiveness of European

industry.

The role of competition policy in the Commission's

overall strategy for the Community may be seen in terms

of concentric circles. From the core, anti-trust rules

applied to companies

, one moves outwards to the other

competition rules applied to States in respect of public

monopolies

and aid schemes

, and then to other policies

laid down by the Treaty and developed by the

Community institutions. Of the policies which interact

closely with competition policy in their common pursuit

of the Community's objectives, I would mention specifi-

cally those dealing with industrial, internal market and

fiscal matters. It must be stressed that competition policy

is neither developed nor applied in a vacuum and that it

interacts constantly with the Community's economic and

even social policies.

The Commission will continue to combat agreements

and other restrictive practices which lead to a partitioning

of markets within the Community. Attempts to thwart

the objectives of the common market by cross-frontier

price or quota fixing will meet with a vigorous response,

as will measures impeding the free flow of goods and

services within the large market which our industries have

called for and needed for so long. Restrictions of output

or consumer choice within the common market will be

tolerated only in exceptional circumstances. However, it

is not sufficient in terms of competition policy to punish

violations and abuses. Part of our task is also to create

and foster conditions in which undistorted competition

may thrive. This may take the form of permitting, even

encouraging coordinated measures to reduce surplus

capacity in certain industries or of taking action against

Member States in order to break down national attempts

to distort competition by favouring domestic industries.

The Commission is not just a law enforcement agency:

it is an executive body which instigates legislation in the

Community to give legal expression to its policies. The

Commission has been active recently in adding to the

legislative framework of competition policy by enacting

some important Regulations concerning Patent

Licensing, Research and Development, Specialisation

and Motor Vehicle Distribution and Servicing

agreements

. In the State Aids sector too, legislation has

been enacted concerning the "transparency" of public

sector funding and aids to specific industries such as steel

and shipbuilding.

We are nowengaged in monitoring the implementation

of the recently enacted Regulations to which I have

referred. The enactment of these Regulations will enable

us to work rapidly through the backlog of notifications

under Article 85 of the Treaty: this is already being done.

In addition, the opposition procedure contained in the

Research and Development patent licensing and

specialisation Regulations, whereby in general the

Commission has six months in which it may raise an

objection, will lead to a much more rapid treatment of

notifications in areas covered by those Regulations. Some

other areas at which we are looking at present with a view

to considering how best to formulate our policy in legal

terms are joint ventures, know-how licensing, and

franchising. Our concern is to provide a clearly

understood framework for the dissemination of

technology in ways which respect the imperatives of the

common market, benefit the European consumer and

make a contribution to the competitiveness of European

industry. As regards competition policy towards state

aids, state monopolies and public undertakings, we shall

be concentrating on the battle against distortions of

competition and internal protectionism. Enforcement

policy will therefore focus on detailed examination of the

extent to which national aids distort competition within

the Community and, if so, whether the distortions to

which the aids give rise are outweighed by their benefits.

Among the legislative, explanatory and procedural

changes already introduced or contemplated in this sector

are the following:

- Guidelines on research and development support

schemes which will describe the conditions and

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