Competition law must ensure free competition and the proper functioning of the market.
The fight against obstacles to fair trading seeks to eliminate anti-competitive practices. The goal is to eliminate certain behaviours as well as agreements between businesses which restrict competition (between 2 companies or with third parties). Competition law also covers business mergers and concentrations that could paralyse competition and lead to the abuse of a dominant position.
In principle, prices are set by free market competition. However, the executive branch of government can regulate prices under certain circumstances or in certain sectors (e.g. in the pharma industry) if the price competition is insufficient.
Any agreement between businesses, any decision by associations of undertakings as well as any concerted practice, the object of which is to prevent, restrict or distort competition in a market is prohibited and automatically null and void.
For example, it is prohibited to:
Example 1: business A and business B both manufacture toothbrushes. Instead of competing, they agree not to sell any toothbrush for less than EUR 2.
Example 2: the same businesses A and B split up the Luxembourg market between them. A takes the South and the East, whilst B takes the Centre and the rest of the country.
Under certain conditions, agreements, decisions and concerted practices may be permitted if a fair share of the profits is paid out to its users or if they contribute to the improvement of technical or economic progress.
It is prohibited for one or more businesses to abusively exploit a dominant position in a market.
Such abusive practices include:
The Competition Authority (Autorité de la concurrence) is an independent administrative body whose mission is to ensure that competition rules are respected.
It bans and sanctions any anti-competitive practice which may distort the mechanisms of the free market. Anti-competitive practices may take the form of agreements between economic entities, or the abuse of a dominant position which an economic entity may hold on a particular market.
The Competition Authority has significant resources at its disposal to carry out its duties. It can, for example:
The Competition Authority may impose fines to the businesses concerned if: