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Competition Law: Vertical Restraints and Vertical Mergers - Essay Example
Pages 13 (3263 words)
Competition stimulates firms to become more efficient and to offer a wider choice of products and services at lower prices and aid in growth and development. In its First Report on Competition Policy European Commission emphasised the value of effective competition in the community…
Abusive practices by such businesses may have a large impact on cross-border trade. Vertical Restraints and Vertical Mergers are two ways in which corporations may seek to increase their influence in the market. Although Vertical Restraints and Vertical Mergers are not per se anti-competitive or pro-competitive, but in this paper we examine the anti-competitive risks of each. The hypothesis is that since the anti-competitive risks of both are same, so they should be subject to the same principles.
The EC Community Competition Policy is targeted towards three kinds of anti-competitive activity. The laws applicable to each are also different. First, Restrictive Trading agreements between otherwise independent business undertakings which may affect trade between Member States and which distort competition within the common market (Art 81 EC Treaty) Second, Abusive, anti-competitive practices of large undertakings that dominate markets for goods or services which affect trade between Member States. (Art 82 EC Treaty), and lastly, major mergers of undertakings resulting in positions of market dominance in the Community. (EC Merger Regulation 139/2004, which replaced Regulation 4064/89)
In 2004, the laws relating to both restraints and mergers were changed profoundly. ...