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Restrictive Agreements and EU Competition: What You Need to Know
The European Union (EU) has strict competition laws to protect consumers and promote fair competition. One of the key areas that the EU monitors is restrictive agreements between businesses, which can harm competition and limit consumer choice.
What are Restrictive Agreements?
A restrictive agreement is a contract or arrangement between two or more businesses that restricts competition. These agreements may include price-fixing, market-sharing, or even a boycott of a competitor. Such agreements can be made in writing or orally.
Why are Restrictive Agreements Illegal?
Restrictive agreements are illegal because they harm competition. When businesses agree on prices, territories or customers, it reduces the incentive for competition, and can lead to higher prices for consumers. These agreements can also limit consumer choice by restricting access to certain products or services.
What is EU Competition Law?
EU competition law is designed to promote competition within the EU. The EU`s competition laws are enforced by the European Commission, which has the power to investigate and punish companies that breach these laws. The EU`s competition laws apply to businesses operating within the EU, and also to those that are headquartered outside of the EU, but which have a significant presence in the EU.
What Happens if You Breach EU Competition Law?
If a business breaches EU competition law, it can face significant fines. The European Commission has the power to fine businesses up to 10% of their global turnover. In addition, companies may be ordered to change their behavior or even be broken up if they are found to be in breach of EU competition law.
How Can You Avoid Breaching EU Competition Law?
To avoid breaching EU competition law, businesses should:
– Ensure that all agreements are compliant with EU competition law
– Avoid price-fixing agreements with competitors
– Do not agree to divide up markets or customers with competitors
– Avoid boycotts of competitors
– Ensure that pricing decisions are made independently of competitors
In conclusion, restrictive agreements can harm competition and limit consumer choice. The EU`s competition laws are designed to promote competition and protect consumers. If you are a business operating within the EU, it is essential that you are aware of and comply with EU competition law to avoid significant fines and damage to your reputation.
