Hotel Marketing Plan
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When companies are Left to their own devices, they will attempt to limit competition as so to boost profits. Due to this competition needs to be protected and promoted. In order to accomplish this, the competition policy was created. The treaty of Rome was set out in 1957 and focused largely on economic growth for Europe; it was on this Treaty that the EUs role in the competition policy was set (Tilford, 2008).
The objective of the European Communitys competition policy is to protect and develop effective competition in the common market. Competition is a essential method of the market economy and involves supply and demand. Suppliers, such as producers offer goods or services to the market to try to meet the demand of customers or consumers. The consumers will seek the best combination of quality and price form the products it requires, thus Rivalry between suppliers also referred to as competition is created and leads to the most efficient response to demand.
Not only does competition lead to being a simple and efficient means of guaranteeing consumers the best choice in terms of quality and price of goods and services, but it also forces businesses to strive for competitiveness and economic efficiency.
The legislative framework of European competition policy is provided by the EC Treaty and comprises of Articles 81-89. Additional rules are provided by Council and Commission regulations. In total the European competition policy consists of four main sections.
The first article which affects the competition policy is article 81; this article prohibits actions such as cartels and price-fixing which has the effect of restricting competition within the common market. The article states that such practices are “incompatible with the common market” therefore the article forbids any and all agreements which prevents, restricts or distorts competition (Mercado, Welford, Prescott, 2009).
The second article which affects the competition policy is article 82 (replaced, this article addresses the problem of a dominating position, such as larger firms causing problems for smaller business to stay afloat, therefore in order to guard the smaller business article 82 prohibits abusive actions such as low pricing with the objective to eliminate a competitor and unjustified refusal to supply goods or services.