Recent Competition Cases in European Union

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Professional Bachelor's programme

“Europien Business Studies”

ESSAY

Nesenākās konkurences lietas Eiropas Savienībā

Recent Competition cases in European Union

Riga, 2017

European Union’s one of the main goal is to achieve and maintain a single market. The Single Market refers to the EU as one territory without any internal borders or other regulatory obstacles to the free movement of goods and services. A functioning Single Market stimulates competition and trade, improves efficiency, raises quality, and helps cut prices. The European Single Market is one of the EU’s greatest achievements. It has fuelled economic growth and made the everyday life of European businesses and consumers easier. (EC, 2015)

With the single market in place, the EU need to make sure that consumers are always getting the best value for their money, and also that the small and medium sized enterprises can be a part of EU market, since SME’s are 99% of all EU companies, that’s why EU acts to monitor and control competition between producers and service providers so that everyone has the same rules and benefits within EU market. Competition encourages companies to offer consumers goods and services at the most favourable terms. It encourages efficiency and innovation and reduces prices. To be effective, competition requires companies to act independently of each other, but subject to the competitive pressure exerted by the others. (EC, 2015)

To give EU Commission legislative power over the market and its participants a competition policy is used therefore the EU has power to dictate rules for foreign companies operation within EU’s single market. Within the commission, Directorate-General (DG) for Competition is primarily responsible for these direct enforcement powers and it is led by a German-  Johannes Laitenberge. DG Competition can utilise various policy tools and market expertise to investigate and prevent any kind of unfair competition which could be harmful to consumers or other producers. But the most known person regarding EU competition enforcement is commissioner Margareth Vestager, she is the leading enforcer which oversees all the cases and also represents European Commission in public events whenever competition issues are raised. (Ann-Christin Richter, 2017)

EU Commission investigates a number of cases each year, regarding anticompetitive behaviour and the four main issues for EU regarding competition are:

    1. Antitrust policy, which is made up from two articles of Treaty on the Functioning of the European Union which imply prohibition on agreements between two or more independent market operators which restrict competition and also for a company which has a dominant position of the market to abuse the position.

    2. Cartels which are secret and unofficial groups of individual market operators that work together to fix prices and limit production so that the market would work in their favour. This issue closely ties together with antitrust policy.

    3. Mergers, which refer to individual companies combining their forces to be more competitive in the market including takeovers and trade of company assets, this issue is examined within EU to ensure that merger does not strengthen a dominant market operator and decreases competition,
   4. State aid, EU examines that government funds are in line with EU trade rules and wont unfairly benefit market operators position in market  (Commission, Competition, 2015)

We are going to discuss some of the most recent and notable cases, mostly things happening in 2017 in EU markets regarding competition and violating its laws involving large multinational and local corporations, and also how the EU has acted upon discovering unfair behaviour regarding competition in its markets and how this has affected the market and political environment. And also the effect on consumer and producer relationships. The data gathered is mostly from different news providers and official EC publications found online. The main goal of this essay is to evaluate European Commissions standing and power in the ever-evolving global markets and ability to protect the interests of every EU citizen.

We’re going to start by looking at the technology giant Google has been charged with three different antitrust cases since 2010 and two of them are still ongoing investigations, one, concerns Android, that all Android devices have pre-installed Google services on them which is unfair usage of their own service promotion, and other is concerning AdSense which allows small business owners to earn money by placing Google advertisements in their websites, but also ties them in exclusivity arrangement blocking competition to attempt to gain their share of the market. But a remarkable turn happened in the first case introduced in 2010, during the summer of 2017 on June 27th EU Commission charged a record size fine of 2.42 billion euros to Google due to using its dominant position as a search engine monopoly, for its own benefits and blocking competitors from being exposed to consumers. The fine received by Google is more than two times higher than what anyone else has received regarding the competition laws. A microchip company- Intel received a fine of 1.06 billion euros in 2009 for using its market dominance to force computer manufacturers to use only their microchips in their products. The third highest fine of 561 million euros belongs to Microsoft for bundling their web browser with their operating system. From these, in the most recent case, what technology giant - google did was promoting its own price comparison services ‘Google Product Search’ on the first page of search results but demoted competitor services to fourth page of search results. This action was done by the search engine giant to push their own product because it was not getting any traffic and since Google earns 90% of its revenue from advertisements, that was an issue.  As research shows the genetic consumer clicks the first result in approximately 90% of time and the number of clicks to 3rd result is about by 50% lower (Commission, 2017) so you can imagine what kind of traffic fourth page receives, it is only about 1%. Google competitors could notice the dramatic decrease of their website traffic by 60-90% as soon as Google implemented the changes in each of the 13 countries that operated ‘Google Product Search’. At the same time ‘Google Product Search’ traffic increased on average 30 times. This investigation was undertaken for seven years due to time spent collecting evidence that competition laws had been broken, but Google tried to convince EU that it had not used its leading position in selfish ways. The latest turn in this case shows that Google is trying to appeal the case and deny their fault, but still they had 90 days to stop unfairly promoting their services otherwise they could receive a fine of 12 million for each day they keep on doing so. This case could still go on for some time due to the huge amount of legislation involved. A lot of people in US consider this as attack by Europe on giant US technology companies but in fact EC is only trying to maintain a honest and fair single market that is so beneficial for everyone in it and appealing for everyone who is yet not in it. All this commotion regarding this investigation has lead to many conclusions about European Union standing on international companies and its law regarding competition. Because as the EC it self recognizes Google as a major innovator which has developed a number of things and technologies that make consumers life’s easier, but the company is still treated as equal regarding the market competition and it is not receiving any free rides on breaking EU laws. As Margrethe Vestager, European Commissioner regarding competition said: “That word is difficult. But I do think the world can be a better place” (Vestager, 2017) And this clearly shows that EC stands on the side of equality and society which makes EU a great place to do business because of a equal chance to succeed. [pic 2][pic 3]