EC Competition Law

The European Community has rules to ensure free competition in the Single Market.

The European Commission is responsible for applying these rules throughout the Community, working closely with national governments. In doing this, they work closely with national governments. The EC competition rules are set out in Article 81 (formerly Article 85) and Article 82 (formerly Article 86) of the Treaty of Rome.

Article 81 prohibits anti-competitive agreements which may have an appreciable effect on trade between Member States and which prevent, restrict or distort competition in the Single Market. The Commission can grant individual or group exemptions from this prohibition if there are overriding countervailing benefits such as an improvement in efficiency or the promotion of research and development. Article 82 prohibits the abuse of a dominant position insofar as it may affect trade between member states. There is no possibility of exemption.

The EC Merger Regulation (ECMR) provides that a merger which creates a dominant position as a result of which effective competition would be significantly impeded in the common market or in a substantial part of it shall be declared incompatible with the common market. The Regulation applies to all mergers with a "Community dimension", defined by reference to turnover criteria. The European Commission has exclusive competence over such mergers although there are provisions for Member States to take action in special circumstances.

In general, the DTI is the Commission's main contact on policy and block exemptions. The Office of Fair Trading deals with the Commission on individual cases. Neither the DTI or the OFT can advise individuals on the merits of a specific case but the OFT can provide advice on procedures for approaching the European Commission.

The current regime is in the process of being reformed. See below for more information.

Reform of EC competition regime

The Commission published on 27 September 2000 a draft revised regulation to replace the current Regulation 17 (which implements Articles 81 and 82, the competition articles, of the EC Treaty). The draft revised Regulation 17 formalises the Commission's White Paper, published in April 1999 which outlined its proposals to modernise the Community competition regime.

The main elements of the reforms are;

• the end of the effective requirement of prior administrative authorisation of restrictive agreements. Restrictive agreements will be deemed either to meet the terms of Article 81 from the outset and be legal, or not to do so and be prohibited; and consequently
• the end of the notification regime for non-merger cases
• the end of the Commission monopoly in granting authorisations
• an enhanced role for national courts and authorities in enforcing Community competition law
• a requirement for national authorities to use Community rather than national law in pursuing cases where there is an effect on trade between Member States.

The draft revised Regulation 17 is available on the 'Europa' website.

Other links:

• Commission's White Paper
• Commission Press Release on draft revised Regulation 17 
• Initial UK Response to the White Paper
• House of Lords Report (HL Paper 33)

Replacement of the EC Competition Law (Articles 88 and 89) Enforcement Regulations 1996

In keeping with the Government's widely stated aim of placing decision-making power in competition cases in the hands of the independent competition authorities, we announced in the Productivity and Enterprise White Paper our intention to replace the existing 1996 Regulations governing the investigation and enforcement of EC competition law in its application to civil aviation and tramp shipping with third countries. These are special cases under the current EU Treaties, where enforcement of EU law must primarily be undertaken at national level.

The 1996 Regulations have now been revoked and replaced with new regulations, entitled the EC Competition Law (Articles 84 and 85) Enforcement Regulations 2001 (S.I.2001/2916). These new regulations came into force on 17 August 2001 and are available from the Stationery Office.

The most significant change is the removal of Ministers from decision making under the regulations. The new regulations set out procedures which essentially mirror the procedures in the Competition Act 1998 with the Director General of Fair Trading having the final decision making role, subject to appeal to the Competition Commission Appeals Tribunal.

The 1998 Act continues to apply domestic competition law to these sectors. The new regulations do not provide that an exemption granted under the Regulations will also serve as an exemption under the 1998 Act. DTI also intends to make a provision to this effect in a separate SI under Section 11 of the 1998 Act.

The new S.I, like its predecessor, does not provide for fines. However, as domestic law continues to apply fines may be imposed under the 1998 Act.

For further information on the operation of the new regulations, please consult the Office of Fair Trading.

Technology Transfer Block Exemption Regulation (TTBER)

This regulation sets out types of agreements which fall within the scope of a block exemption and are therefore not anti-competitive under Article 81 of the Treaty.

It is based on an examination of what the technology transfer agreement contains.  In particular it sets out a "white list" of terms which if included in agreements are not anti-competitive, a "black list" of terms which are deemed to be anti-competitive, and a "grey list" of terms which, if an agreement contains any of them, have to be notified to the European Commission.

If the Commission does not object to the agreement's terms within four months then the agreement is deemed to be cleared.

The existing block exemption on technology transfer is due to expire in 2006.  However, the European Commission is proposing to replace the existing regulation with a new one ahead of its expiration date, principally to ensure consistency with changes made under the Commission's modernisation agenda.

Consequently, the Commission has published a draft regulation and guidelines which it proposes should come into force on 1 May 2004, at the same time as changes made under the modernisation agenda.

The new proposal moves away from an approach based on the text of the agreement and aims instead to offer a "safe harbour" to agreements which will not have anti-competitive effects.

In particular: there is an amended "black list" of terms whose inclusion means that the agreement will not benefit from falling within the scope of the block exemption regulation; there are market share thresholds - the parties to an agreement must have combined relevant market shares below the thresholds in order to benefit from the block exemption.

If an agreement falls outside the scope of the block exemption it does NOT mean that the agreement is necessarily anti-competitive. It means that it does not fall within the terms of the block exemption, and the parties to the agreement will have to reach their own view on the legality of the agreement.

If it does fall within the scope of the block exemption then the agreement is deemed not to be anti-competitive.

The draft regulation and guidelines.The UK response to the consultation.

EC Cars Block Exemption

Supply of cars

Please click the button to view our FactSheet and FAQ (Frequently Asked Questions) on the EC Block Exemption for Cars.

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