Competiton Law Case "Needles"

The European Commissions decision in the
competition policy slickness 38388 Needles.

Maastricht University
School of Business and Economics
Maastricht, 3 December 2011
Dethleff, F.
ID number: i6032825
instruct: Economics
Course code: EBC1010
Group number: 15
Tutor produce: EG. Dow
Writing Assignment: Main paper

1

On 26 October 2004, the European Comission fined three companies, namely William
Prym GmbH & Co. KG and Prym Consumer GmbH & Co. KG (from now on cognise as
Prym), Coats Holdings Ltd and J & P Coats Ltd (from now on known as Coats), Entaco
Ltd and Entaco Group Ltd (Entaco) a total amount of 67.5 one million million million Euros. The latter firms
entered into a series of written, formally bilateral, accordances between phratry 1994
and December 1999, amounting in practice to a tripartite agreement under which these
undertakings shared or contributed to sharing product merchandises (European market for hard
haberdashery products) and geographic markets (European market for ne edles).
The mentioned agreements satisfy the car park definition of a cartel as a formal
system of rules of producers and manufacturers that agree to fix prices, marketing, and
production (Sheffrin, 2003).




This paper evaluates the decision of the European Comis sion from an economic point of
view, especially with respect to the underlying surmisal of cartels, monopolies, welfare
effects and consequences for the consumer.
First the theory of perfect competition is discussed to clear up the goals of EU competition
policy and why they took action in this case, followed by an overview on the
infringements this companies were involved in.
The case at hand accompanies the abstractive approach with examples and illustrations to
create a link between the motive of the EU Co mission and economic forces at work.
A short introduction to monopoly theory helps to understand how the formation of cartels
affects consumer excerption and supposedly reduces societal welfare.
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