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Analysis

EU looks out for consumers, not just big business

by Joel Baccas | 21.02.2019

Critics of the EU, particularly “Lexiters” on the political left, often claim the EU only looks out for big business. They ignore the EU’s competition law, which benefits consumers by encouraging firms to cut costs and innovate.

It is illegal under EU competition law to enter into any agreement, either written or unwritten, that is anti-competitive. The sorts of agreements this applies to are covered in Article 101 TFEU, and it essentially boils down to anything that would prevent, restrict or distort competition within the EU’s single market.

This includes, for example, price fixing, bid rigging and attempts to limit or control production, markets, technical development or investment.

By prohibiting such agreements, the EU can better tackle cartels – a very serious form of anti-competitive behaviour. In this context, a cartel is described as an informal association or arrangement between two or more firms, in which firms share confidential commercial information about their own businesses and come to some kind of agreement about how to do business in the future in a way that reduces the competition between themselves. This increases prices so they all benefit from increased profits, while on the face of it appearing to compete. That is effectively cheating us, the consumers.

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Taking on the tech giants

Another bit of EU competition law, Article 102 TFEU, prohibits firms that hold a “dominant position”. This is when a firm enjoys such economic power that it can behave, to a large extent, independently of effective competition pressures from its rivals. Again, this can lead to things like charging unfair prices, limiting production or refusing to innovate – all to the detriment of consumers.

The prime example of firms like this in the 21st century are the tech giants. The EU is leading the way in challenging these corporate behemoths.

Take the example of Google, which began pursuing an anti-competitive strategy for its comparison shopping service. Its dominance in general internet searches meant Google could make sure that its own shopping service was given more prominence over competitors.

The European Commission has the power to investigate possible breaches of the law and fine companies a percentage of annual turnover. For Google, this resulted in a fine of £2.1 billion.

After Brexit, the EU anti-competition laws will still apply for businesses that operate within the bloc. But, depending on the type of deal struck, the European Commission will probably not have the power to carry out investigations in the UK, nor ask the UK competitions authority to do so on its behalf. That is especially true in the case of a no-deal Brexit.

Just scratch the surface, and the favourite Lexiter argument that the EU only looks out for big business falls apart very quickly. Making anti-competitive behaviour illegal and standing up to corporate titans shows the EU putting citizens first. Who knows whether a future government in post-Brexit Britain will be as concerned with fairness for the UK consumer?

Edited by Luke Lythgoe

6 Responses to “EU looks out for consumers, not just big business”

  • Funny how all these important benefits of being an EU member as a nation, are being wheeled out 30 days before the UK is likely to nosedive out of the EU. And I’m pretty sure it still makes no impact because the great unwashed and a few wide boys simply don’t like the “foreign” regulatory powers of the EU.

  • Right again, Peter. Well said.
    In terms of Lexiters, the person who really annoys me is Kate Hoey, Labour MP for Vauxhall which voted overwhelmingly to remain. If you email her she will reply by saying that she is sick of big business dominating the EU. Leaving the EU is not, however, going to make ‘dark’ capitalism go away. Here in a post Brexit Britain dark capitalism will revel in the lack of regulation,; it’s why the ERG wants to leave at any cost. Ms Hoey has appeared in the US media posing as a senior politician propagating the myths invented by the Leave campaign. She has appeared at numerous publicity events alongside Farage and co (Boat trip on the Thames etc). She appears to be angling (pun intended) for personal glory. Beggars belief that anyone could be so naive. She is a danger to the country and I would put her in the same bracket as Redwood, Johnson, Baker, Cash, Braverman and Mark (I’m not surrendering to any German) Francois.

  • Just because you think no-one listened to these arguments pre June 2016, doesn’t mean that they haven’t since. You won’t know until you ask them.

  • Anyone seriously interested in the way the EU is allegedly dominated by big business should take a look at how Ms. Margrete Vestager gave both Alstom & Siemens a black eye in their effort to merge and create a virtually unassailable power in the rail traction market, notably here in Europe. Thereby also upsetting France and Germany. As is typical for what happened during the run-up to the 2016 referendum and what followed thereafter; half the population in this country is not interested and thought the sneering of certain brexiteers more to their liking than the project fear issues brought forward by careful and better informed people. This lack of serious engagement from the side of the electorate, incidentally, is what now enables May to slide the UK to an economical sinkhole by simply doing nothing useful. And lefty brexiteers then are the people complaining about the lack of democracy in the EU. What a sad joke to see Britain exposed as the Great Incompetents this way.

  • As far as UK politicians is concerned: try John Penrose. Vote remain, finds out that North Somerset is a Brexit hotbed and consequently swings around like a tattered flag on a pole. Try emailing him and get an answer that makes any sense: can’t do that because he’s defending his future in post Brexit Somerset. The one thing I like about what happened is the principal lack of an ethos of competence in politicians. See the GOP in the USA for an even worse example. But democracy is what is the big loser in both cases.