Introduction

The inclusion of a Treaty chapter on competition stemmed from the “general agreement that the elimination of tariff barriers would not achieve its objectives if private agreements of economically powerful firms were permitted to be used to manipulate the flow of trade”. Originally, European competition law was thus primarily conceived as a functional complement of the European law governing the internal market. While the free movement provisions were to protect the internal market from public interferences, the rules on competition were designed to protect it from private power. This link between the internal market and European competition law continues to be textually anchored in the Treaties. For the principal provisions on European competition law are found in Chapter 1 of Title VII on “Common Rules on Competition, Taxation and Approximation of Laws”. The Chapter is thereby divided into two Sections – one dealing with classic competition law, that is: “[r]ules applying to undertakings”; the other with public interferences in the market through “[a]ids granted by States” to private undertakings. Chapters 11 and 12 of this book will deal with the Treaty’s section on undertakings.

The English word “undertaking” has traditionally not meant what the European Treaties want it to mean. The word is a translation from the German and French equivalents, and was deliberately chosen to avoid pre-existing meanings in British company law. According to the European Court, an undertaking is “every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed”. This definition ties the notion of undertaking to an activity instead of the institutional form of the actor. This functional definition broadens the personal scope of the competition rules to include entities that may – formally – not be regarded as companies. However, by concentrating on economic activities, the Court has excluded activities of a public nature. The advantage of a functional definition is its flexibility; its disadvantage however is its uncertainty. For depending on its actions, an entity may or may not be an “undertaking” within the meaning of EU competition law.