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The Concept of Fairness in the EU Competition Law

Introduction

Competition is the engine of scientific progress and a mechanism for promoting economic development. Insufficient competition causes a lack of motivation of entities to reduce costs, search for new markets, introduce innovations, and, as a result, inefficient operation of the industry in which such enterprises operate. At the same time, the monopoly position of a certain company can lead to unfavorable conditions for other participants in market relations. In such circumstances, the state, with the help of competition policy, is called to find the necessary balance and ensure optimal regulation.

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Within the given scope, the notion of fairness in the framework of competition law and the related enforcement is essential, especially when it comes to the affairs of developed countries. For the members of the EU, the mentioned concept has become considerably relevant and important these days, which is evident from their policy, law, and the policymakers’ speeches. In her significant article, Niamh Dunne provides a comprehensive discussion on fairness as a foundation for competition law, enforcement, and reasons for such a shift in the current policy of the EU. Below, the review of this article will be given, explaining Dunne’s approach to the issue, rationale, and the relevance of the latter through the critical perspective.

Dunne’s Key Arguments

It might be assumed that Dunne develops the following key arguments in her article. The first one is that competition in the EU – according to the Community’s position and various studies – is founded on the concept of fairness (Dunne, 2020). Generally, this notion is referred to as rules of fair play, which, within the economic scope, means the provision of equal opportunities for businesses. In this regard – the concept’s definition – Dunne has a particular position as well, but this will be presented later. Now, it is rational to discuss the abovementioned argument.

Dunne seems to be right while claiming that fairness is an essential element of the EU economy. This concept as a goal of Community competition policy appears to be implemented in three directions. First, it is equality of opportunity; second, it is the protection of small and medium enterprises; third, it is the development of consumption in general (Graef et al., 2018). Equality of opportunity is achieved with the help of fairness in relations between member states. Also, through the outlined approach, there is an appropriate relationship between the private and public sectors of the economy. Then, equal rights are being introduced for non-European merchants operating within the EU – that is, in this way, there are fair relations between merchants from countries inside and outside the EU.

Then, according to Articles 107-108 of the EU Treaty, none of the Member States has the right to assist (financial or otherwise) their businesses, causing obvious damage to their competitors from other countries. The Commission monitors this, however, as well as the prevention of any benefits for state-owned enterprises, and the observance of equal conditions for public and private companies is achieved through financial transparency in relations between public and public institutions (Ezrachi, 2018). For businessmen from outside the EU, the same rules apply to entrepreneurs from EU countries. The given rationale allows suggesting that Dunne’s first key argument is reasonable.

The second crucial idea contained in the article is that the notion of fairness is substantially broad, and there is no unified approach to determine it. Dunne (2020) claims, “Fairness is not defined in EU law” and it “is an inherently malleable concept, meaning different things to different people” (p. 5). A critical point here is that this notion is to be interpreted as wide as it can be so that it could bring the expected significant result of the social market economy.

Indeed, the application of the principle of fairness in the regulation of competition has led to the expansion of the scope of dispositive in the law of competitive legal relations, improvement, and theoretical justification of socio-economic changes in social and economic life. Along with well-defined antitrust regulations, this approach in competition law acts as a buffer between administrative and organizational-economic influence on competition and self-regulation, which is inherent in the free market interests of private consumers and the state. This justifies the “more economic approach” to fairness (Dunne, 2020, p. 3), which means the focus mainly on the material and beneficial outcomes of fair competition and related activities.

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On the other hand, if the subject of assessment is the behavior of a particular entity in a contractual relationship, in particular, in the process of concerted action, along with the criteria of goodwill, general standards of fairness must be applied. These are characterized by a concern for the rights and interests of the counterparty, reasonable anticipation of the possibility of harm to these rights, and interests to prevent a violation of the fair balance of the parties to the contractual obligation (Colino, 2018). At the same time, it is necessary to check the compliance of the content of the agreement or actions of the participants of the competition and their consequences with the established moral principles of the social market economy that is claimed to be an integrated element of the EU policy. Hence, it seems apparent that the notion of fairness in competition has a considerable scope of application, and from many perspectives, it brings a plethora of benefits.

Finally, the third key argument is the application of fairness as “an enforcement standard where the competition rules are applied proactively to address unusual forms of bad business behavior in innovative or emerging markets” (Dunne, 2020, p. 32). As mentioned above, Dunne suggests interpreting this notion as wide as possible, which – as it is visible from the latter citation – is also justified by the complexity and ambiguousness of the recent legal cases of Google and Android.

This assumption is founded on the previous two and seems to reflect the needs of the current state of the art of EU competition law. The rise of the digital economy – which is discussed as a supportive argument in the article – implies several issues that were not regulated in the founding documents of the European Union, given the absence of such cases. Today, there are many regulations aimed to address the related problems, and the increase in their number may cause complications. The broad concept of fairness in this regard might be a solution, taking into account its scope and flexibility. To summarize, the presented three key ideas of Dunne are interconnected and support each other, which results in a coherent train of thought and rationale.

Dunne’s Reasons for Holding the Position

With the development of globalization and integration processes in the economy, the issue of ensuring the development of fair competition is crucial because only the use of new innovative technologies in product development and production, high-quality requirements for goods, works, services, and European service standards can ensure the appropriate level of competitiveness at the national and international levels. At the same time, realizing their economic interest by increasing the competitiveness of their products, producers contribute to the modernization of the entire financial system of the state, which has a positive effect on the development of society as a whole. Such a state of affairs inevitably leads to complicated legal cases that come from transnational companies, mostly in the “Big Tech” sphere (Donne, 2020, p. 27). However, the diversity of social relations – especially in the field of competition – goes beyond this “Big Tech” and requires a manifold approach to legal regulations that fairness offers.

Dunne’s position may be acceptable, given the following rationale. The key to economic efficiency is to improve the qualitative and quantitative parameters of the environment in which business entities interact and the latter comply with certain conditions of economic activity. One of the means of balancing and coordinating these processes is to support and protect fair competition, and the formation of civilized relations between producers, consumers, and the state. By interfering in the regulation of economic entities, the state must balance the objective requirement for entities to comply with specific rules of conduct and interaction, on the one hand, and to guarantee the freedoms of a market economy (freedom to choose a business, freedom to invest, etc.) – on the other. This, again, justifies the appropriacy of the breadth of fairness in the context given.

Then, considering the problem of legal support for fair competition, it is necessary to pay attention to the fact that the origins of the concept of fair competition are laid down in Roman law. Many researchers of competition law emphasize the close connection between the principle of fairness, which became the basis for building the entire system of civil and economic turnover in Germany, France, Italy, and Switzerland, and the development of competition law in these countries (Chiriţã, 2014). Recognition of the paramount importance of the principle of fairness in the actions of participants in economic turnover has necessitated the protection of their rights and legitimate interests from the manifestations of unfair competition. And although each country has its unique system of protection against unfair competition, in most of them, unfair competition is seen as a form of abuse of rights, tort, or misconduct in contrast to fair competition, which is protected by international treaties, the current competition legislation, and customs of business.

Thus, the implementation of the principle of fairness is due to the awareness at the state level of the need to support small and medium enterprises through their protection and promotion. Thus, the Community’s competition policy is a manifestation of a fair approach to various forms of market relations. Adherence to this approach, which is incompatible with the upward movement (market concentration in all its manifestations), acts as a safeguard against the threat of self-destruction of competition.

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Comparison with Positions Taken by Others

Here, it should be emphasized that the critical distinguishing feature of Dunne’s position is the suggestion to utilize the full scope of the notion of fairness in the EU competition law. Previously, the scholars tended to lessen the range of the concept in the competition framework. For instance, Nozick (1976) perceived the fairness of an individual distribution through the lens of how it occurred – moral prerequisites are crucial in this regard. Then, Kaplow and Shavell (2002) consider fairness through the perspective of outcomes for overall well-being, emphasizing the importance of beneficial results of fair competition when how it is achieved is not important. Moreover, Kahneman et al. (1986) focused on how economic activity is precepted by consumers, indicating that fairness exists when they believe it does.

In more recent studies (Ezrachi, 2018; Graef et al., 2018; Colino, 2018), scholars tend to explore the concept and find more implications for it. However, the focus is still either on moral or economic aspects, which distinguishes Dunne’s work one more time. She suggests using the breadth of fairness as a standard to regulate social relations within competition affairs. This aligns with the current position of the EU representatives, which is evident from their speeches and initiatives – from Vestager’s ones, in particular (Dunne, 2020).

Overall Evaluation of Dunne’s Position

Given the fact that Dunne’s position might be considered unique, it could be a novelty in the framework of existing law. In the EU competition law, fairness is not defined as mentioned above; thus, it is not currently applied as an established standard for particular legal cases. Dunne’s idea would require substantial changes in the law – in particular, regarding the provisions that interpret the Treaty on the Functioning of the European Union within the scope of competition. This may cause many complications while providing a specific verdict on a particular case, but due to the complexity of the contemporary “digital economy” fair competition issues, Dunne’s option seems reasonable.

Conclusion

To conclude, the critical review of Dunne’s article on the concept of fairness in the EU competition law under current market conditions was provided. The author’s three key arguments were explored and claimed to be convincing and reasonable. It was stated that her position is unique and would require considerable changes in existing law; yet, it would bring substantial benefits.

References

Chiriţã, A. B. (2014). A legal-historical review of the EU competition rules. The International and Comparative Law Quarterly, 63(2), 281–316.

Colino, S. M. (2018). The antitrust F word: fairness considerations in competition law. SSRN. Web.

Dunne, N. (2020). Fairness and the challenge of making markets work better. Modern Law Review, 1–35. Web.

Ezrachi, A. (2018). EU competition law goals and the digital economy. SSRN. Web.

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Graef, I., Clifford, D., & Valcke, P. (2018). Fairness and enforcement: bridging competition, data protection and consumer law. International Data Privacy Law, 8(3), 200–223.

Kahneman, D., Knetsch, J. L., & Thaler, R. (1986). Fairness as a constraint on profit seeking: Entitlements in the market. The American Economic Review, 76(4), 728–741.

Kaplow, L., Shavell, S. (2002). Fairness versus welfare. Harvard University Press.

Nozick, R. (1976). Distributive Justice. Philosophy & Public Affairs, 3(1), 45–126.

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