- May 7, 2014
- Posted by: essay
- Category: Term paper writing
Hence, the EU attempts to protect the EU economy and markets from the implementation of such unfair competition practices as was the case of the AMD. The prevention of unfair competition practices helps the EU to maintain the stable economic development because the fair competition creates favorable conditions for the economic progress as companies have to improve their performance, quality of their products and services and to struggle for the customer satisfaction, if the competition is fair. The tight but fair competition stimulates the faster progress of companies and, therefore, the faster progress of economy along with the enhancement of the position of companies not only in the EU market but also in international markets as well. Therefore, the EU encourages the fair competition, while the EU competition law restricts substantially opportunities for unfair competition practices, while companies applying such practices are liable to the legal prosecution as would be the case of the AMD, if the company operated and committed its illegal activities in the EU.
The EU competition law focuses on four major areas, including cartels, monopolies, mergers, and state aid. These four areas are crucial for the development of the effective competition law because these areas have to be controlled by the state in order to prevent the emergence of cartels, monopolies and other trends that violate principles of the fair competition. Hence, four major principles of the EU competition law are the prevention of cartels, monopolies, regulation of mergers to prevent the rise of monopolies, and the fair state aid.
In fact, cartels are extremely dangerous for the fair competition in the EU and the EU competition law aims at the prevention of cartels and their unfair policies in the market. Cartels have a negative impact on the development of the market because cartels can regulate pricing policies and fix prices that will put other companies in a disadvantageous position, while consumers will have to pay eventually higher price to increase profits of cartels (Rozen, 2009). In this regard, the AMD is a typical example of the cartel because directors of the company came to agreement with other companies and created schemes which helped the company to influence pricing policies and coordinate actions of the company with other major companies operating in the market. Regular meetings conducted by directors of the AMD and other major companies operating in the industry aimed at the coordination of their policies. In such a situation, the policy of the AMD as a member of the cartel would affect consistently European customers because they would be limited in their choices and they would have to pay the higher price for products and services of the company (Cavicchioli, 2000). Cartels have destructive impact on the economy because they undermine the fair competition principle and they put companies that are not cartel members into a disadvantageous position, whereas cartel members benefit from the membership because of the coordinated policies conducted by companies cartel members.
Furthermore, the EU competition law focuses on monopolies as the mahor threat to the competition in the EU. In fact, monopolies are ruinous for the competition. In fact, they eliminate competition that provokes numerous problems for consumers and the economy at large. This is why the EU competition law aims at the elimination of monopolies and prevention their appearance in the EU (Monti, 2007). In fact, monopolies have negative impact on the situation in the market because monopolies exclude the very opportunity of competition. Monopolies hold the full control over the market. Therefore, they can establish the price that matches their interests and consumers will have to pay the price whatever high it is. In fact, monopolies can raise prices as high as consumers can afford to pay, even though the quality of products may be far from perfect. In such a situation, the development of monopolies in the market of the EU threatens to the economic development of the EU because they become less competitive in international markets. Therefore, the EU economy becomes less competitive compared to other economies, where the competition is tight. In fact, the EU may face a problem of the backwardness of its monopolies compared to companies operating in the same industry in other countries, where the competition is tight. This is why the EU competition law bans monopolization of the market.