applicability of competition law principles on public sector ...

esources to flow to efficient producers and maximizes consumer welfare. It also forces
government businesses to be more transparent and addresses private competitor concerns about
equity and the level playing field for <strong>competition</strong>. 5
While competitive neutrality is desirable in general, there are instances where its strict
application may hamper the achievement <strong>of</strong> important societal goals, such as in crisis situations
or when dealing with market failures. Thus, certain amount <strong>of</strong> Government intervention is
required to stabilize the economic system and to avoid the unacceptable social consequences
which would occur if market forces were left to operate freely. 6 The <strong>competition</strong> <strong>law</strong> regime that
has been introduced in many <strong>of</strong> the world’s jurisdictions typically regulate business, and not state,
behaviors. 7 There are a very few <strong>competition</strong> <strong>law</strong> regimes that attempt to regulate government
intervention in the market and that have rules and <strong>principles</strong> allowing courts and <strong>competition</strong>
authorities to establish whether such intervention is necessary, helpful or harmful to consumer
welfare. Methods <strong>of</strong> ensuring that government bodies do not obtain an advantage over private
enterprises include privatization, effective governance, improving independence, accountability
and disclosure. 8 The most far-reaching and successful organization in controlling and regulating
the economic behavior <strong>of</strong> states and their governments is in the European Union. 9
2.2 Competitive Neutrality under EU Legal Regime
Meaning <strong>of</strong> ‘undertaking’ under Article 101(previously section 81 <strong>of</strong> the EC treaty):
Article 101 applies to agreements and concerted practices between two or more independent
‘undertakings’ and to the decisions by ‘association <strong>of</strong> undertakings’. The definition accorded to
‘undertaking’ directly determines the scope <strong>of</strong> <strong>applicability</strong> <strong>of</strong> Article 101. The Treaty does not
define the term Undertaking. There has been a wide interpretation given to the term by European
Courts and Commission. The widely accepted interpretation is, “the concept <strong>of</strong> an undertaking
encompasses every entity engaged in an economic activity regardless <strong>of</strong> the legal status <strong>of</strong> the
5 Ibid.
6 ABA Section <strong>of</strong> Antitrust Law, ‘Competition as Public Policy’, 1 st Edition, 2010, pp.34-56.
7 Ibid.
8 OECD 2012 report on National Practices on Competitive Neutrality, available at
http://www.oecd.org/<strong>competition</strong>/competitiveneutralitymaintainingalevelplayingfieldbetweenpublicandprivatebusin
ess.htm
9 Ibid.
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