COMPETITION • EUROPEAN LAW • SCOPE OF APPLICATION
Some sectors are considered as “specific” because competition law does not apply to them at all or does not apply with the same intensity as elsewhere. Sometimes, for general, national or EU political reasons, the Treaty itself provides for true exceptions to the enforcement of competition rules, for example in the case of defense or agriculture. In other cases, the economic reality of the sector lends itself to the application of some relaxing of the rules, either because in the insurance sector for instance, the activity naturally involves exchanges of information, or because, it calls for considerable level of cooperation of the undertakings’ conduct for efficiency reasons as in the transport sector. The enforcement of competition rules may also be modulated, not due to a desire to shield the economic sector in question but, on the contrary, to subject it to the competition rules progressively. In that case, the specific sector-based system is a tool for liberalizing sectors which had traditionally been monopolies. In the so-called network industries – rail transport, energy, postal services and electronic communications -, the natural monopoly theory therefore progressively loses ground to the benefit of the market economy. Nowadays, it is felt that in those sectors, although the essential infrastructures may still fall within a monopoly, the conditions of access to the network should on the other hand be opened up to competition under the control of national regulatory authorities, with an obligation of universal service being imposed on the suppliers of these essential services.
1) Defense industries
Article 346(1)(b) TFEU provides that, “any Member State may take such measures as it considers necessary for the protection of the essential interests of its security which are connected with the production of or trade in arms, munitions and war material; such measures shall not adversely affect the conditions of competition in the internal market regarding products which are not intended for specifically military purposes”. Like any exception, Article 346, which can only be invoked by Member States and not by undertakings, must be strictly interpreted; where products can have both a civil and military use, the competition rules will apply.
2) Agriculture
Article 39 TFEU provides that the enforcement of competition rules should not prevent the objectives of the common agricultural policy from being attained. By application of that principle, Article 42 provides that, “the provisions of the Chapter relating to rules on competition shall apply to production of and trade in agricultural products only to the extent determined by the European Parliament and the Council“. According to Regulation No 1184/2006 of 24 August 2006, the prohibition of restricted practices shall not apply to “agreements, decisions and practices as form an integral part of a national market organization or are necessary for attainment of the objectives set out in Article 33 of the Treaty”. The Court of Justice has specified that, in order to escape Article 101 TFEU, practices involving concerted action on prices or quantities placed on the market or exchanges of strategic information must be agreed between members of the same producer organization (PO) recognized by a Member State and must be strictly necessary for the pursuit of the objective(s) assigned to it. However, the collective fixing of minimum sale prices within a PO cannot be considered to be proportionate to the objectives of stabilizing prices and concentrating supply where it does not allow producers selling their own products themselves to sell at a price below those minimum prices
3) Transport
Article 100(1) TFEU provides that transport by rail, road and inland waterway are governed by Title VI of the Treaty and Article 100(2), that the Treaty confers upon the European Parliament and the Council, acting in accordance with ordinary legislative procedure, the power to decide “appropriate provisions for sea and air transport“. Regulation No 17/62 had excluded the transport sector from its scope of application and made each type of transport – land, air and sea – subject to specific regulations. Regulation No 1/2003 has only left the substantial provisions of those specific regulations and has removed specific procedural rules. The Commission’s current policy consists in progressively putting an end to exemptions in the field of transport and in adopting directives for the liberalization of the sector.
4) Electricity and gas
Both the electricity and gas directives lay down the principle of the distinction between undertakings which own transmission or storage facilities from transmission system operators, which involves, for vertically integrated undertakings, distinguishing between entities. The opening up of competition between electricity and gas suppliers has been total for undertakings since 1 July 2004, and for other users since 1 July 2007. Network access must be non-discriminatory, and the effective function of the market is ensured by independent regulatory authorities.
5) Postal and electronic communications
The objective of the telecommunications directives is to guarantee equal access by all operators to the various telecommunication services and networks. To that end, the national regulatory authorities must identify in particular the markets on which operators “with significant market power” are active (former incumbent operators) and which have specific obligations aimed at facilitating third parties’ access to the network. The opening up to competition must be carried out whilst maintaining a universal service, which must be permanently provided at all points in the territory at affordable prices for the benefit of all users. In addition, the Commission also aims to ensure effective competition between mobile communication networks within the Union which has led to the adoption of a number of regulations.
