Saturday, 2 January 2010

Competition law and the Lisbon Treaty

The Treaty of Lisbon which came into force on the 1st December 2009 amending the Treaty on European Union (TEU) and creating a new Treaty on the Functioning of the European Union (TFEU) has important implications for all those engaged in the study and practice of competition law. Some of this is necessary, but not very interesting, consequential changes to which we will all have to adapt. So, there are a new set of Treaty numbers to remember and we will no longer refer to the Court of First Instance, which has become the General COurt.

The more interesting question is whether or not these changes herald an increased emphasis on the internal market objectives for competition law as opposed to the "more economic" approach which the Commission has been pushing and which seems to represent the favoured consensus amongst competition law practitioners? There is certainly a change in the language of the Treaties. The old Article 3 (g) of the European Community Treaty, which talked about a system ensuring the competition in the internal market is not distorted and was often referred to in the case law, has been removed and replaced by Article 3 (1) (b) TFEU which talks about establishing the competition rules necessary for the functioning of the internal market. Article 3 of the new TEU says that the EU shall work for the sustainable development of Europe based on, among other things, a highly competitive social market economy, a concept which, at least from and English perspective, obscures more than it clarifies. The concept of a "social market economy" has been used in political science and economic literature to describe the German economy and often to contrast it with what is labelled the Anglo-American model of capitalism. Within this way of framing the issues, the focus would be on competition as a process and trying to ensure the commercial freedom of participants in a market, rather than focusing exclusively on the consumer welfare effects of a practice. So these changes could be seen as a move back to an approach to competition law which was characteristic of enforcement policy in the early years of the EU, focusing on preventing barriers between national markets emerging and protecting competitors to dominant companies.

The Treaty texts do not, however, all point in this direction. Article 119 TFEU says that an economic policy shall be adopted which is based on the principle of an open market economy with free competition, which certainly seems a different conception from a "social market economy." Protocol 27 to the Treaties states that the Member States consider that the internal market includes a system ensuring that competition is not distorted and the background to this Protocol was that it was inserted to respond to worries that deleting the reference to undistorted competition represented a significant shift in EU competition policy and therefore this Protocol was needed to demonstrate that no such change had been made.

It would be regrettable if the progress that has been made in the substantive, as opposed to procedural, reform of EU competition law was lost by the changes introduced by the Lisbon Treaty, particularly as there was little or no debate at the time about the possible implications of the changes. Although the financial crisis has damaged many peoples' faith in competitive markets, no alternative approach for organising economies has been suggested. One might perhaps paraphrase Winston Churchill and say that competition is the worst form of economic organisation except for all the others that have been tried!


  1. Dear Cosmo
    I have read your blogs with interest.
    I am looking at doing a series of webinars on Competition law.
    I wondered if I could telephone you at a time of your convenience to discuss the area
    Alternatively, you can contact me on

    Many thanks,
    Britha Parekh (webinar producer)

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