CH7 competition_policy_EU - Competition Policy in the...

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Competition Policy in the European UnionEffective competition is crucial to an open market economy. It cuts prices, raises quality and expands customer choice. Competition allows technological innovation to flourish. For this to happen, fair play on the part of businesses and governments is essential. The European Commission has wide powers to make sure they stick to European Union rules on fair trade in goods and services.The main areas of competition policy are:antitrust and cartels merger control liberalisation state aidsAntitrust and cartelsIt is illegal for businesses, including the professions, to collude with each other to fix prices or carve up markets between them. If a single company has a dominant position in a particular market, it may not abuse its market power to drive out competitors. Nor may a large company exploit the weaker negotiating position of its smaller customers and suppliers. This makes it illegal for a big firm to impose conditions on its suppliers which make it difficult for them to do business with other companies. The Commission can (anddoes) fine companies for these practices. Some exceptions are allowed. The Commission can allow companies to cooperate in developing technical standards if the end-result is an agreed single standard for the market as a whole. It can allow smaller companies to cooperate if this strengthen their ability to compete with larger ones. Some types of cooperation deal need specific Commission approval, but others are covered by rules on blanket exemptions. The overriding consideration is whether consumers will benefit.

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