Page 81 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

The possibility of applying antitrust law to private behavior that

originates from some legally binding rule or regulation is even stronger in
the European Union. The Treaty of Rome, as interpreted by the

jurisprudence, limits the possibility for member states to provide firms with

special and exclusive rights in order to avoid conflict with other provisions in
the treaty, including those on competition. In particular, a government

decision can be challenged under EU rules if it leads to behavior by private
firms that contradicts competition principles.

Thus public monopolies or the licensing of special and exclusive rights
have been considered unlawful if they lead to a company abusing its

dominant position to the disadvantage of consumers. In one case the

European Commission ruled that a telecommunications service provider
could not be given the power to set standards for telecommunications

equipment of which it was a major supplier. Such power would inevitably be

abused by the service provider, since it could decide whether the products of
its competitors could enter into specific markets.

The concept of abuse developed by the European Court of Justice
extends into broader applications in situations in which government action

improperly restricts entry into a market. In the case Hofner and Elser the
European Commission held and the European Court of Justice confirmed

that the Federal Republic of Germany contravened article 90 of the Treaty of

Rome when it granted exclusive rights to an employment agency. The
European Commission concluded that the agency abused a dominant

position because it was unable to fulfill consumer demand, an abuse that
could exist only because entry into the market was forbidden by law. To

eliminate the abuse, the court ruled that the market be opened up to
competition.

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