Where competition is free and undistorted

Last Friday Skip posted a blog referring to the extension of negotiations over the EU Commission white paper on sport, which most of the European sports governing bodies want to give them an antitrust exemption. The first draft did not deliver what they were asking for, as can be seen from the outraged tones of the UEFA press release. While they may still fail to get what they want explicitly, the agreement on the new EU Treaty reached last night may have given them what they want indirectly.

This all relates to the proposed EU Constitution which was rejected by French and Dutch voters two years ago. The new Treaty effectively implements almost everything that was in that Constitution. The original draft identified one objective of the EU as the creation of “an internal market where competition is free and undistorted” . The French President Sarkozy has now secured agreement to the deletion of the words “where competition is free and undistorted”. He has declared that this is a major shift in policy

“ Perhaps we had to reflect. I believe in competition, I believe in the market, but I believe in competition as a way, not an end in itself. ..Perhaps it will remind European leaders that Europe is there to protect, not to worry people.”

In the end, all this is a matter of interpretation. The existing Treaty did not explicitly include a commitment to free and undistorted competition, but contained phrases such as a commitment to creating “a system ensuring that competition in the internal market is not distorted”. These phrases are commonly quoted by institutions such as the European Court of Justice in their decisions. Optimists in the pro-competition camp say that there are enough references to maintaining competitive markets elsewhere in the Treaty and that the addition of an extra protocol last night will ensure that there is no watering down of competition enforcement. Pessimists see French protection around the corner.

The rights of governing bodies in sports would be a good test case. The decision to concerning the rule of a governing body, such as enforcing collective selling against the wishes of larger clubs, might be consistent with the creation of an internal market, even if some might judge that it were a restriction on free competition.

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Author: Stefan Szymanski

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