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It is illegal under European Union competition rules for businesses to fix prices or carve up markets between them. Companies with a dominant position in a particular market may not abuse that power to squeeze out competitors.
Big companies may not merge if that would put them in a position to control the market, though in practice this rule only prevents a small numbers of mergers going ahead. Larger companies, with a large European dimension, planning to merge need prior approval from the European Commission – irrespective of where they are headquartered: the criterion is size of the annual turnover within the EU.
The European Commission’s Directorate General for Competition (DG Competition), working in cooperation with EU Member States’ national competition authorities, is responsible for the investigation and enforcement of EU competition rules. The key aim is to ensure that markets operate as efficiently as possible to the benefit of consumers, and to target factors which lead to a distortion of competition. This enhances the welfare of consumers and the competitiveness of European business and the European economy.
The Department for Business, Innovation and Skills (BIS) has responsibility for competition policy both at the UK and EU level. The Office of Fair Trading is the UK’s leading national competition authority with responsibility for enforcement policy and enforcement of competition rules, and deals directly and independently with the Commission on individual competition cases.
The European Community Merger Regulation (ECMR) gives the European Commission jurisdiction to make decisions on those larger mergers with a Community dimension and that breach certain thresholds relating to the size of annual turnover. Under this regulation the test applied by the EC is that mergers will only be prohibited if they result in a significant impediment to competition. All EC decisions on mergers under its jurisdiction are based on competition only. However, Member States are able to take measures in order to protect legitimate interests (Article 21). When investigating mergers, the EC will as part of its normal procedures, gather evidence and views from all Member States.
