The Competition Laws

Abstract

Consumer protection is the prevention of the groups or companies which try to control the market regulating the market price and quality in a manner that will favor them. These groups have been slowly eradicated by the European commission using hefty fines to those found participating in such activities while offering refuge to those who come out first. This paper looks at how the European Commission has tried to protect its consumer and their welfare by ensuring they receive all that they require at right pricing. The steps which the European Commission has taken to ensure will be looked into including all the actions it taken to prevent while also listing all the constraints it encounters in the process. What are some of the competition laws set in place to ensure European consumers welfare?

Introduction

In economic terms the welfare of a consumer can be classified as surplus which is required by the consumer. By this it implies the amount which the consumer will be willing to pay for a product in relation to the amount which is set in the actual sense. This will also include the range of products with its related service and the quality which is required according to the set down standards. To consider all these factors equally and come up with the best resolution can be very tricky especially for the relevant authorities. When talking about consumers do include all the third parties which are involved in the trade process but are not involved when it comes to agreements which are made in the anticompetitive scenes. In the case where it about the European commissions the talk will involve all the member states. The relationship between the welfare of the affected consumer and the creation and enforcement of such competitive laws will sometimes creates a competitive gap between the actual practice and the policies which have been put up in theory.

Most regulation bodies on the national level have the duty to enforce duties which are related to maintaining the competition of the markets which will ultimately result in benefit to the consumer. The laws which are set down for competition are set in manner that will allow the free market competition in the hope of achieving the efficient allocation   of the scarce economic resources. The aim of this is to ensure the efficiency will benefit the consumer in a manner that will include improvements and innovations while the lowering of the costs in terms of pricings which are involved are lowered. This will be done concurrently whilst ensuring the quality, choice and services being offered are maintained.

Fairness and Welfare

Competition is basically about competition law, this implies that the there is more to it than just consumer welfare. By this it means the process is a two stage thing that will require the first stage to concentrate on the more open approach and the second option to concern directly with the benefits of the consumer. According to the law of the European Union (EU), the competition is set in a manner that it will serve the interests of the consumer welfare. By virtue this is the primary target but the law covers more that this, it has the effect to protect individuals who most of the time are not exactly consumers against a certain abuse from the market power and its controllers. This control powers which include the decartelization of situations will be demonstrated. The distinguishing of welfare and fairness can be further clarified by the one concept; the accommodation of any advantages which come about due to the furthering of well being of individuals. This concept of welfare is able to integrate judgment values of a law maker and assist in the overcoming of existing problems in terms of communication between the proponents of competition and welfare models in the policies(3).

Law and Consumer Protection

Competitor laws is traditionally set up with the intention of regulating the market place and by this ensure the private organizations don't end up doing business in a manner that will oppress and suppress the free trade and competition. The protection of the consumer (4) means it's a framework that is et up to ensure that the consumers interests are considered and by consumer level it implies the level of the individual transaction. The laws and consumer protection normally sue different means but with one aim. The harm in the consumer as applied to the consumer protection will vary in comparison to the competition law. In consumer protection, the definition of such is very easy as it will entail the relation of the products in terms of pricing, quality and relating this to welfare of the consumer. While in competition law it may be defined by the prevention of harm from affecting the competition and the result will be welfare of the consumer be assisted by the market where a good service provider replaces a poor one hence solves the issue.

Factors Hindering Welfare of the Consumers

Cartels

These are groups of similar companies who decide to come together with the interest of controlling the market in terms of competition and reducing it. The aim of the union is to split the market and end up with control of prices and market share. The interested parties will always rely on the agreements made between each other to facilitate the hence leading to no introduction of new products in the market that would otherwise interfere with the pricing and the quality of the services being offered. Through this the consumers will end up spending more to get products which are very low in quality. Due to this the cartels have been declared in the European Union by its member states. The presence of any will result in the imposing of hefty fines to the companies involved. Due to the sanction that would arise from such incidents tracing such cartels is very difficult as it's kept very secretive and evidence needed for this cannot be traced easily. In the recent years the cartels that had been in existence have been since detected due to the introduction of a policy by the EU in which the first company in a cartel to hand in evidence of existence of the same will result in its exclusion form such fines in what has become to be a leniency policy. This has led to destabilization and eventual collapse of most of the cartels hence implying the success of the policies being put in place.

Company Agreements

The agreements between companies have sometimes resulted in harmful competition between them that result in the negative effect on the consumer. This is a form of secretive cartels in which the involved parties agree to fix prices while at the same time trying to control the product quantity ion the market. The other means which are also used include the limit the sharing of markets and consumers hence limiting the available options. By this the companies end up banning the sale of products between the produce and distributor except for the laid down channels according to them. Legally not all such agreements are illegal but some of them lead to vey negative effects hence raise question on its legality. Most of these kinds of agreements occur between rival companies in which the competition is restricted. In some cases this is necessary if innovation is to prevail in terms development of new products and improvements to be done on the readily available ones. This for example can be seen in an instance where companies pool their resources to research on an e w product and by doing this, the cost of innovation is shared hence reduced per company. Other similar type of cooperation and agreements include those between retailers and suppliers where the distribution and training of personnel required for some products. By this the point of doing it is to avoid one distributor from benefitting from the actions of the other in terms of promotions.

Law regulators in the European Union

The EU Commission is the one which doe the regulation and the implementation of the law which are required for the necessary control of the market and its competition wars. This is done in a manner in which the EU will carry out impromptu inspection on the office premises, this is done with a court order to allow the inspection process and in some situations if need arises it can be continued to residential areas of the personnel involved. If any evidence of any illegal business practices are found then the company will liable to being fined figures which may be as high as 10% of the total generated revenue.  This may arise of the company is found to have participated in the price fixation or an agreement on the rates to be sued in the sharing of the consumer market. Not all the laws will be enforced by the EU commission but some of the regulation will be followed up and ensure by the relevant bodies which are already existing in the member states.

These organizations have a network which is used to inform each other on new and existing cases to avoid the double investigation in what has come to be known as the ECN (European Commission Network). Using this,, necessary information is passed from one authority to the next and by this, it ensures that all the laws are enforced with the companies found to be breaking these laws being fined while all the practices which have been set up to impede proper competition being brought to a halt. These companies which have been found to flaunt the set regulations need not be prosecuted by the EU but it can be done by the relevant local courts. This network also assists in tracing and investigation of cross-border companies in which through there practices the necessary competition is restricted. The network has a group of experts who are used in the formulation of methods to be used in the analysis of companies and their practices. Through this, consistence is maintained in the EU hence ensuring the necessary standards are applied to all.

Merger Review

In some cases companies do come together and combine activities with the aim of developing new products which maybe more economical in relation to the cost of production. This can easily increase the efficiency of the production of the companies resulting in production of good of very high quality. Sometimes some of these mergers will reduce the competition the market. The result of this is the creation of a of one giant production unit that has the monopoly in the market scene.

Normally the increased competition in the market results in the increased pull to form such like mergers.  In such situations then the mergers are very welcome as they don't impede but increase competition due to the increased production of better goods. At the same time all of these mergers have to be thoroughly examined and sanctioned by the approval bodies. This is down to the fact that some of them may bring about harmful effects to competition spirit in the market. If the merger will take place between compan9ies which are in different countries, the need for the EU to sanction these mergers is crucial. The organization will also need to approve mergers for companies which are outside the European Union if there business activities take place in the EU. The need for this is due to the merger may affect markets within the EU. Mergers in some instance can be prohibited if this will have significant drawbacks in the competition in the EU. Some mergers have been known to restore competition in the market and in such cases they are approved without any pre-conditions.

Market Liberalization

In the European Union member states there are services which have bee n known to be left and exclusively provided by national organizations. Some of the services include postal service and the telecommunication industry, but if the same markets are opened up to the international arena then consumers will end up with an array of service providers hence improving the quality of the service in the market due to the stiff competition. This also creates a situation where the consumer ends up with lowered prices with better quality in terms of the services and products being offered. But what is to be noted is that by opening up of such markets the need for better regulations will come into play. This because the companies which had monopoly over the market usually ended up enjoying some benefits which have to be removed for equal and fair competition. This is because in the incident of state owned corporations which are obligate to provide service to the market sometimes ended up getting bail out find sin the scenario where it was not making profit and such situations have to altered to avoid biased handling.

State Aid

Companies which are State affiliated and receive some assistance to ensure it stays afloat is called state aided companies and the whole process being 'state aid.' Such companies will tend to have an unfair advantage in comparison to its competitors implying that despite having liabilities or running at a loss they will be assisted by the parent company. This has resulted in this process being prohibited by the European Commission as due the economical reasons as such companies will not be operating within their means hence offering an unfair competition with competitors which have to work within the allocated budget. The EU has put in place measure to ensure no company is operating within its markets is aided by the state. Some of the forms of state aid that are in existence include grants, tax reliefs and other guarantees.

Such assistances normally affect the trade in other member states due to the advantage accrued by the company receiving this and hence ensuring that the competition is distorted as the market leader which may have the highest sales hence high income but this will not be reflected due to the same spending patterns by the state aided company. The only conditions in which the state aid is granted is when the governments are trying to boost regions which are underdeveloped  due to poor economic conditions and the upgrading of small and medium enterprises into large enterprises. In the same context there are aids that bring a lot controversy if they arise, some of these include the rescue aid when a company is almost collapsing, others include the restructuring process. All these are shied upon because they will result in unnatural growth of the company which is unfair to the ones which rose naturally through the productivity and good service provision.

The commission to try and alleviate the state aid, has put in measures in place in it advises the states to give grants in relation to the certain limits as this will boost the economy. The commission also requires as a formality for the parent state to inform it before the aid is given as a safe mechanism to ensure that a transparent procedure is followed. The creation of regulations that allow the commission to order the withdrawal o such aids also has assisted further in the ensuring the proper process is followed (9).

International cooperation and coordination

The fact that all economic activities which affect the trade and competition within the EU means that it has to coordinate with other agencies to ensure that all the state aids, cartels and mergers happening outside the European Union jurisdiction does not affect the EU market and its competition. To ensure this the European Commission has ensured that irrespective of not conducting business in the EU but its activities affect the rate of competition within the EU then such a company is subject to the policies set by the European Commission. Be it a cartel and its actions are affecting the European market, then the European commission ha to take action to protect its market and interests in terms of the consumers.

Due to the fact that for most global companies the EU is a major target in elation to the market target they have no option but adhere to the regulations set or risk such a lucrative market due to sanctions. All trading blocks or regions have trading policies which are met using the global network of international competition (ICN). Through this, the regions ensure companies from respective regions have met the regulations required in the region or intended market. Hence the encouraging of these agencies to pool up their energies and resources to ensure proper regulation these policies while a healthy competition is maintained. Due to this cooperation the consumers will end up with reasonable prices for the products coming from this regions and end up with means of taking decisive action which is uniform to ensure the cartels and companies breaking the required regulations are dealt wit. By doing this, the market does not end up controlled by groups who will end up abusing such power at their disposal.

Conclusion

The European Union has tried to set up laws which are aimed at consumer protection. Despite all these laws in there are groups who try to ensure they control the market and competition and by this they will control the pricing and quality all of which will end up affecting the welfare of the consumer. Hence the EU has tried to put up measure s that so far has reduced if not alleviated the problem within member countries. Furthermore other groups or companies may try to control the same but outside the EU and this will affect the competition in the European market hence the need to work with other regulatory bodies to ensure the welfare if the consumers are met. All this actions and fins which are given to companies participating in such illegal activities are all aimed to ensure its consumers get services and goods n the required price and quality. Despite all these some of these actions like some mergers actually bring the opposite like improved competitions but such cases have to be approved after scrutiny.