XXIXth Report on Competition Policy 1999 : published in conjunction with the 'General Report on the activities of the European Union - 1999'

The Report on Competition Policy is published annually by the European Commission in response to the request of the European Parliament made by a resolution of 7 June 1971. This report, which is published in conjunction with the General Report on the Activities of the European Union, is designed to give a general view of the competition policy followed during thOn 1 January, 11 Member States adopted the euro as their common currency. The changeover took place smoothly and the new currency rapidly became established on the financial markets. Competition policy contributed to this process by continuing the drive to modernise Community competition law and by pursuing the two principal objectives that underlie its approach. The first objective of competition policy is the maintenance of competitive markets. Competition policy serves as an instrument to encourage industrial efficiency, the optimal allocation of resources, technical progress and the flexibility to adjust to a changing environment. In order for the Community to be competitive on worldwide markets, it needs a competitive home market. Thus, the Community's competition policy has always taken a very strong line against price-fixing, market-sharing cartels, abuses of dominant positions, and anticompetitive mergers. It has also prohibited unjustified State-granted monopoly rights and State aid measures which do not ensure the long-term viability of firms but distort competition by keeping them artificially in business. The second is the single market objective. An internal market is an essential condition for the development of an efficient and competitive industry. As the Community has progressively broken down government-erected trade barriers between Member States, companies operating in what they had regarded as 'their' national markets were, and are for the first time, exposed to competitors able to compete on a level playing field. There are two possible reactions to this: either to seek to compete on merit, looking to expand into other territories and benefit from the opportunities offered by a single market, or to erect private barriers to trade - to retrench and act defensively - in the hope of preventing market penetration. The Commission has used its competition policy as an active tool to prevent this, prohibiting, and fining heavily the parties to two main types of agreement: distribution and licensing agreements that prevent parallel trade between Member States, and agreements between competitors to keep out of one another's 'territories'. Moreover, the objectives of competition policy have been integrated into the Commission's new strategy for the European single market adopted on 24 November. The aim is to prevent anticompetitive practices from undermining the single market's achievements. The implementation of these two principal objectives and the drive to modernise Community competition rules are described in some detail in this report. past year.