State-Initiated Restraints of Competition
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State-Initiated Restraints of Competition

Edited by Josef Drexl and Vicente Bagnoli

States influence competition in the market in various ways. They often act themselves as market participants through state-owned enterprises. They regulate markets and specific sectors of the economy such as public utilities in particular. In some instances, market regulation explicitly aims to promote competition in the market. In other instances, regulatory schemes and decisions may inadvertently distort competition or openly promote conflicting objectives and even anti-competitive goals. Furthermore, states can distort competition among firms when they act as purchasers of goods and services as well as when they grant subsidies to individual firms. This book assembles contributions by competition law scholars who present new insights on the diversity of problems and challenges arising from state-initiated restraints of competition in jurisdictions from all around the world, not only including the EU and the US, but also Latin American countries, China, India and Australia.
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Chapter 5: Deepening the freedom of services through pro-competitive regulation: the case of the EU Services Directive

Maria Manuel Leitão Marques and Leonor Bettencourt Nunes


In the European Union, the enforcement of competition law has had an underlying objective in addition to the guarantee of conditions of fair competition in the market: the establishment and maintenance of a European internal market. Therefore, the Union’s policy for the establishment of the internal market and its competition policy are so intrinsically linked that they inevitably produce reciprocal effects. Removing obstacles to the free movement of goods, services, capital and persons guarantees wider access to the market, while the EU’s competition policy prevents undertakings from reintroducing those obstacles through unilateral or bilateral behaviour. In the field of the fundamental freedoms, it has been demonstrated that the mere removal of barriers to free movement is not enough to achieve a cohesive single market. There is a need for positive integration through harmonisation and regulation of the internal market in order to create a ‘level playing field’. Nonetheless, regulation has commonly been considered as undesirable from the perspective of competition policy. Traditionally, deregulation and liberalisation were encouraged in order to promote free market access, remove distortions and assure the well-functioning of the market. However, regulation is not incompatible with competition; on the contrary, there are certain economic sectors in which regulation is the most adequate means to assure undistorted competition and free access to the market, namely in network sectors such as telecommunications and energy, among others.

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