Survey of competition policy development in an emerging economy of Europe

Table of Contents

I. History of Slovenia

II. Competition Law in the European Union
1. The Founding of the European Economic Community
2. Competition Regulatory in the Treaty of Rome
3. Today’s Competition Policy of the European Union
a Competition policy based on the Treaty of Rome
b Merger policy
c Reforms and newer developments in the EU’s policy
d Subjects of competition policy within the European Union

III. Competition Policy of the Republic of Slovenia
1. Background of Competition Regulatory in Slovenia
2. Current Competition Policy
3. Responsible Government Institution
4. Results of Slovenian’s Competition Policy
a Success
b Outlook: topics for the future

IV. Bibliography

I. History of Slovenia

Until 1918 Slovenia was not on the maps. In ancient time, the landscape of the today’s Republic belongs to the territory of the Celts, Illyrians and later to the Roman Empire. The most important ancient Roman cities in the area included Celeia (Celje), Emona (today’s capital Ljubljana), Nauportus (Vrhnika) and Poetovia (Ptuj). Later it felt under the co-operative control of Bavarian dukes and the Venetian Republic. The Slovenes living in the provinces of Carinthia, Carniola and Styria, lived under the rule of the Habsburg dynasty belonging to the Dual Monarchie of Austria-Hungaria from the 14th century until 1918, with the exception of Napoleon's 4-year tutelage of parts of modern-day Slovenia and Croatia — the "Illyrian provinces".^[1] For an understanding of the cultural development of the Slovenian territory it is important to keep in mind, that it belongs to two basic cultures: the Mediterranean as to a land of rock and an inner landscape where a preponderance of timber is.

In the middle of the 19th century, many economic changes occurred. The old iron works fell into ruin because of a deficiency in coal mining. The construction of the Vienna – Trieste railroad suppressed the old rural transport system, while industrial development, especially competition of the more developed parts of Austria destroyed domestic industry. After World War I according to the London Pact a good third of the Slovenian territory felt to Italy, the majority of Slovenian Corinthian did not want to join Yugoslavia and some Slovenes remained in Hungary, while some Hungarians joined Yugoslavia.^[2] “Slovenes joined with other southern Slav peoples in forming the State of Slovenes, Croats and Serbs (29 October 1918) and then the Kingdom of Serbs, Croats and Slovenes (1 December 1918) under King Peter I of Serbia. Renamed in 1929, the Kingdom of Yugoslavia fell to the Axis powers during World War II, when Germany, Italy and Hungary each annexed parts of Slovenia.”^[3]

After World War II Slovenia continued to form Yugoslavia’s most prosperous and advanced republic throughout the era of communism. After the death of dictator Tito during the 1980s, however, the Serbs in Belgrad (capital of Yugoslavia) persued planes to concentrate political and economic power in its hands. After the political changes in the Eastern Bloc, especially in the Sovjet union, in September 1989, the General Assembly of the Yugoslav Republic of Slovenia adopted an amendment to its constitution asserting Slovenia’s right to secede from Yugoslavia.

On December 23, 1990, 88% of Slovenia’s population voted for independence from Yugoslavia in a referendum. Since the declaration of independence on June 25, 1991 for the first time in history the Republic of Slovenia is independent. After becoming independent the two most important events in the history of this young republic were becoming a member of the NATO in March 2004 as well as a Member State of the European Union on May 1, 2004.^[4] As a Member State of the European Union Slovenia had to adopt the European regulatory that affects beside political system, judicial branch, cultural and social concerns especially economical regulation. Hence I would like to analyse the competiton regulatory of the European Union that very strong affects the law of Member States like Slovenia.

Today Slovenia counts nearly 2 million inhabitants.^[5] The most successful enterprise is Gorenje, a well-known brand for household appliances.

II. Competition Law in the European Union

1. The Founding of the European Economic Community

The framework for competition law in the European Union was set in the “Treaty of Rome” that was signed by Belgium, France, Italy, Luxembourg, the Netherlands and Western Germany in March 25, 1957. The original full name of the agreement was “Treaty establishing the European Economic Community” (EEC), however among several considerations the word “Economic” was removed.^[6] The Treaty of Rome’s importance was that it was the basis for founding the European Community as an organisation for economic cooperation. Under these conditions, the idea of a common regulatory for the shared market and rules for market participants had to be developed. So it is not a surprise that these contracts include the first competition policy agreement for the EEC. The EEC was the prequel of the today’s European Union that contains much more than economical concerns. Current EU regulation affects not only business, but i.e. social, military or foreign affairs. Economic policy and rules however still are a major part of the EU’s responsibilities.

2. Competition Regulatory in the Treaty of Rome

“The European Union has rules to ensure free competition in the Single Market.”^[7] The relevant articles of the Treaty of Rome are in origin article 85 (“Restrictive Practises”) and 86 (“Abuse of dominant market power”). After renumbering now it are article 81 and 82.^[8]

Article 81 (former 85) rules the creation of monopolies, prohibits anti-competitive agreements which my affect the trade between member states and which prevent, restrict or distort competition in the Single Market^[9]:

1. Article 81. “1. The following should be prohibited as incompatible with the common market; all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention restriction or distortion of competition within the common market, and in particular those which:

(a) directly or indirectly fix purchase or selling prices or any other trading conditions;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”^[10]

In addition in this article is defined, which other activities are prohibited based on the rules above. Article 82 (former 86) completes the regulatory as it contains rules for dominant market participants and prohibits abuse of such a position insofar it may affect trade between member states^[11]:

Article 82. “Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or unfair trading conditions;
(b) limiting production, markets or technical development to the prejudice of consumers;
(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”^[12]

3. Today’s Competition Policy of the European Union

a Competition policy based on the Treaty of Rome

Although the EEC changed and mutated to the EU, the basis for Competition Policy still is the regulatory of the two articles mentioned above. However in difference to the United States of America, the relation between the members of the EU are not as close like in the U.S. As a result beside the EU regulatory national law is still relevant. The EU order sets a binding framework for the members. They have to consider the EU regulatory in their national legislation. In general the EU decides about general rules that influence all members, meanwhile details are the responsibility of national legislatives.

[...]

^[1] See http://en.wikipedia.org/wiki/History_of_Slovenia

^[2] See Granda, Stane, http://www2.arnes.si/~krsrd1/conference/Speeches/Granda_a_brief_history_of_slovenia.htm

^[3] http://en.wikipedia.org/wiki/History_of_Slovenia

^[4] See http://en.wikipedia.org/wiki/History_of_Slovenia

^[5] See http://www.pressreference.com/Sa-Sw/Slovenia.html

^[6] See http://en.wikipedia.org/wiki/Treaty_of_Rome

^[7] http://www.dti.gov.uk/ccp/topics2/ecpolicy.htm

^[8] See http://en.wikipedia.org/wiki/Competition_policy

^[9] See http://www.dti.gov.uk/ccp/topics2/ecpolicy.htm

^[10] http://www.hri.org/MFA/foreign/traeties/Rome57/3title5.txt

^[11] See http://www.dti.gov.uk/ccp/topics2/ecpolicy.htm

^[12] http://www.hri.org/MFA/foreign/traeties/Rome57/3title5.txt