Assessing the Limits of EU Competition Law: A Brief Analysis

Abstract

The following paper underscores the inherent limitations of European Competition law, designed to protect the internal market and primarily outlined in articles 101-109 of the TFEU. This essay critically assesses key issues of EU Competition Law, including the tensions between Member States and the Union, the lack of judicial specialization, and whether the discipline adequately addresses emerging issues concerning privacy, innovation, and human rights. The essay also considers the extent to which the protection of the single market justifies the interference into other legal spheres.

Introduction

European Competition Law regulates cartels, market dominance, mergers, state aid, monopoly, and how to report anti-competitive behavior. It is the European Commission that formulates EU Competition policy, and that, in cooperation with the competition authorities of the Member States, enforces competition rules, decides on infringements, and imposes fines.

Historically, the issue of competence division has significantly shaped European integration, emerging terms of EU Competition law as well, where the tension between the EU and its Member States is remarkable, given EU Competition Law coexists alongside National Competition Authorities (NCAs), tasked to enforce Articles 101 and 102 TFEU.

The Court of Justice of the European is equally engaged: in fact, the General Court hears actions for annulment and other direct actions challenging the legality of decisions adopted by the European Commission and other EU institutions, while the Court of Justice of the European Union (CJEU) receives appeals on matters of law from the decisions of the General Court.

In today’s globalized context, Competition Law must quickly adapt to address emergent issues, such as digitalization, innovation, data and privacy protection, and sustainability.

Tensions Between Member States and the Union

In the aftermath of World War II, global powers sought to prevent another devastating conflict through treaties and mutual agreements. In Europe, this was done first with the ECSC to pool crucial resources such as coal and steel. Eventually, the idea of international cooperation advanced with the Treaty of Rome of 1957. The geopolitical context of those years was characterized by the central role of the six founding states of the EEC and Euratom, by the other European States who were not part of this project of integration at the time and formed the European Free Trade Association (EFTA), and by the Cold War, dominated by the United States and the Soviet Union.

National borders had become increasingly blurred, and a centralized regulatory framework was deemed more suitable for addressing emerging economic challenges. After the initial intergovernmental approach, there was a shift towards a prevalence in supranationalism to pursue shared goals, amongst which is competition law, under the domain of exclusive competence of EU Law. This was achieved through legislation and the principles of supremacy and direct effect of European Union Law, established in the landmark Van Gend en Loos (1963) and Costa v. ENEL (1964).

This shift purported a more harmonized enforcement of competition rules across the Union. Yet, even after fifty years, this remains an inherent limitation within EU competition law. The relationship between articles 101 and 102 of the Treaty and national competition laws is determined by Art. 3 of Reg 1/2003, which relies on the principle of precedence of European Union law over the national laws of the Member States to solve conflicts of Laws. Although Art. 3 of Reg 1/2003 does not formally exclude the laws of the Member States, European Competition Rules override national ones, however, Art 3(2), while establishing an obligation of convergence between Art 101 TFUE and national competition rules in relation to agreements and concerted practices, does not prevent Member States from adopting and applying stricter national competition laws than Article 102 to prohibit or sanction unilateral conduct. Recently, Member States have made increasing use of this possibility to address competition concerns in digital markets, adopting new national competition rules aimed at curbing the power of digital platforms (e.g. new Section 19a in the GWB in Germany). This growing fragmentation of national laws poses significant challenges from an internal market perspective, entailing the risk of divergent approaches, inconsistent and non-uniform enforcement of competition rules across Member States, market fragmentation, and legal uncertainty, which run counter to the objective of a well-functioning digital single market’.

Such frictions are visible in enforcement, especially in Mergers and Acquisitions, which have developed transnationally. The EU Merger Regulation endows the Commission with extensive powers but lacks a clear distinction between EU and non-EU investment, merely allowing prohibitions on transactions hindering effective competition. By contrast, Member States have broader powers to assess the impact of mergers, including foreign M&As, both for competition and their public interest, producing a protectionist effect in favor of so-called national champions. This raises the question of which authority, EU or national, should exercise market control and under what conditions.

The TFEU grants the Union exclusive competence over competition law as necessary for the establishment of an internal market. However, such exclusive competence does not preclude Member States from adopting or maintaining in force merger, regulatory or foreign investment rules if they do not encroach on the EU’s exclusive competence within the field of competition. The ECJ’s consistently pro-integrationist interpretation has resulted in strong EU control over national laws. Yet this framework can appear incompatible with EU law itself, unless the Member State shows that the measure is justifiable and proportionate.

From a different perspective, in a series of golden shares cases, the Court has nonetheless acknowledged the interest of Member States in maintaining influence over a shareholding to ensure a minimum “services in the public interest or strategic services”, as was true for the Belgian Golden Shares and the French Golden Shares cases.

The key and exemplifying issues examined above render the intricate picture of competition law in the European Union, showing how incongruencies between Member States’ interests and EU interests must be addressed to avoid tensions which are potentially harmful to the market. These issues (which reflect the tension between Member States and the Union) discussed in this first paragraph are currently receiving attention in the ongoing review processes of the competition rules. In particular, the lack of a convergence rule between Article 102 TFEU and national antitrust rules on unilateral conduct is being addressed in the revision of Regulation 1/2003, and the Commission is assessing whether to strengthen the coordination and information-sharing mechanisms between national competition authorities and the Commission provided for by the same regulation. The issue of the “public interest”, that is, the possibility for Member States, on the basis of Article 21(4) of the EUMR, to assert legitimate national interests in merger control proceedings, is at the center of the debate accompanying the review of the merger guidelines.

Between Expertise and Generalism: Assessing the CJEU’S Preparedness for Competition Law Challenges

Having the Court of Justice of the EU enforce competition law is arguably one of its greatest constraints on EU competition law itself. Both the General Court and the Court of Justice have a generalized composition and deal with competition law issues alongside a wide range of other legal matters.

The inherent weakness in the EU competition law structure is that there is no specialized court for competition matters composed of legal and economic experts. The OECD has noted that specialized courts are more efficient “due to the repetition and standardization of tasks” and the “judges’ extensive experience in hearing and understanding economic evidence and arguments that underpin competition cases”. Several jurisdictions have specialized competition tribunals, six of which in the EU. In other jurisdictions, competition law cases benefit from the greater expertise of distinct bodies of justice, agencies such as the Federal Trade Commission (FTC) and the Antitrust Division of the Department of Justice (DoJ), which only reach generalist courts in instances of appeal. Findings by Baye and Wright suggest that tasks linked with economic knowledge, such as the competitive effects of horizontal mergers or vertical restraints, pose a significant challenge to the generalist judges who are not equipped to face them. Even Judge Richard Posner, as early as 1999, had concluded that “econometrics is such a difficult subject that it is unrealistic to expect the average judge or juror to be able to understand all the criticisms of an econometric study”. Economic complexity, therefore, often impacts the quality of judicial fact-finding, and antitrust analysis is often too complex for generalist judges to evaluate. Appeal rates rise with economic complexity but fall with proper judicial training.

A remarkable instance of backlash received by the European Union concerns the use of the “as-efficient competitor” (AEC) test, elaborated by Areeda and Turner to assess whether the discounts offered by leading firms (e.g., loyalty discounts, bundle discounts, etc.) foreclose smaller rivals, in the Intel case, concerning large rebates and other conditional payments. The test is more of a screening tool and rather narrow in scope, and its application in Intel attracted substantial criticism. Concerns focused on the test’s numerous assumptions, as well as on the Commission’s reliance on specific hypotheses regarding purchase volumes, rebate losses, and firms’ cost structures. This case, alongside others such as Microsoft and Google Shopping, highlights the difficulties faced by generalist courts when adjudicating matters deeply embedded in economic analysis, increasingly intertwined with digitalization. For undertakings, this translates into heightened uncertainty regarding how their conduct will be assessed under EU law, coupled with a consequent erosion of legal certainty.

From Cartels to Algorithms: Can EU Competition Law Keep Up With Digitalization?

Today, scholars question whether European antitrust authorities can cope with digital market failures. The prevalent view is largely pessimistic, with commentators referring to it as a “regulatory dilemma”. The immense quantity of data and the digital power over the economy raises challenges both for society and the law. Contrarily to the United States, Art. 102(a) of the Treaty on the Functioning of the European Union (TFEU) sanctions “unfair trading conditions” imposed by dominant firms on their customers.

An exemplary case in terms of discontinuity amongst member states for what concerns abuse of dominant position is the so-called “Facebook dilemma”. The German Competition Authority sanctioned the platform with the tools of competition law, whilst the Italian Competition Authority decided under consumer law. Here is thus evident another limit of EU competition law, which has failed to harmonize NCA responses.

Market failures in digital economies remain a major obstacle. A structural limitation arises from the decentralized enforcement system of Regulation 1/2003, under which the European Commission and the 45 national competition authorities (NCAs) apply Articles 101 and 102 TFEU in parallel. The challenge of the institutional fragmentation was compounded through the Asnef-Equifax ruling, in which data sensitivity issues were deemed outside competition law, to be resolved under data protection law. This strict separation between competition, consumer protection, and data protection constrains authorities from assessing digital markets holistically. Scholars therefore advocate for deeper cooperation and coordination among competition authorities, consumer protection bodies, and data protection regulators. The need for cooperation was recently confirmed by the Court of Justice in the Meta Platforms case (CJEU, Case C-252/21, 4 July 2023), which stems from the 2019 Facebook case. The Digital Markets Act (DMA) represents a step forward: by introducing an ex ante regime for designated gatekeepers, the DMA complements traditional competition law to address data-driven market failures. While not a substitute for Articles 101–102, the DMA provides a more integrated toolbox to address structural problems in the digital economy.

Digitalization raises issues of market dominance, abuse of market power and AI cartels. In the context of Big Data, their characteristic of non-exclusivity, substitution, timeliness, competition and risk of forming entry barriers, make them apt to influence competitiveness in some way. Abuse of market power may occur if firms restrict competitors’ access to important data. Anticompetitive behavior may also be determined by AI pricing algorithms, akin to cartel collusion. These questions remain major challenges for the traditional competition law toolbox. Insights drawn from non-EU regulatory approaches may uncover more effective enforcement tools. For instance, in Japan, market authorities employ the Small but Significant Non-transitory Decline in Quality (SSNDQ) test as a quantitative method to assess and measure market dominance. Unlike traditional price-based tests, the SSNDQ focuses on quality reductions, an aspect particularly relevant in digital markets where services are often offered for free. To better reflect competitive dynamics in digital markets, the Commission has increasingly complemented the traditional SSNIP test with qualitative methods such as the SSNDQ test. In Google Android (Case AT.40099, points 284–305), the Commission used the SSNDQ test to assess whether manufacturers, users, and app developers would switch from Android app stores to alternative mobile operating systems in response to a slight but significant and non-transitory deterioration in quality. The 2024 Notice on the definition of the relevant market (C/2024/1645) similarly recognizes that quantitative techniques like the SSNIP test are often difficult to apply when firms compete on non-price parameters—such as quality or innovation, especially in digital or highly innovative markets—and that qualitative tools, including the SSNDQ test, may therefore be appropriate (§§ 30– 31, n. 54).This approach aims to capture competitive harm more transparently and could inspire more nuanced policy choices in the EU. Moreover, given the inherently cross-border nature of AI and Big Data, it may be wise for the EU to pursue realistic forms of international cooperation to ensure coherent and effective regulatory outcomes.

Conclusion

The main limitations of EU competition law lie in the persistent tension between Member States and the Union over sovereignty, aggravated by the lack of specialized adjudicatory bodies. The current structure may not be fully equipped to address emerging issues adequately equipped to face challenges linked to digitalization and innovation, which demand rapid and technically informed responses. A more forward-looking approach, drawing insights from non-EU jurisdictions, may help develop mechanisms capable of addressing these evolving issues, to which both society and law must adapt.

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