Functioning of the internal market and competition

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This area is concerned with the likely impacts of policy measures on the pursuit of the economic objective of achieving fair and free competition within the European Union. This market condition facilitates the movement and efficient allocation of production factors and ensures an adequate share of economic benefits of free and fair competition accrue to consumers through the creation of normative and regulatory conditions for the improvement of market conditions (ample consumer choice, stabilisation of low prices...)

The well-functioning of the market under conditions of free competition, stimulates innovation and boosts therefore the competitiveness of European firms on the international markets. Free competition within the European Union can be hindered by monopolistic behaviours, technical barriers to trade and business establishment (Question 2). Therefore, EU policies most directly affecting competition include: Competition policy, Product law harmonisation policy (removing technical barriers to trade) and Consumer policy (protection of health, safety and economic interests of consumers, protecting the consumers´ right to information and education).

The Impact Assessment Guidelines of 2005 have been reformed in 2009. Regarding the key questions of the area “Internal Market and Competition” the question has been divided into two questions.

This impact area is further specified by the taxonomy terms: EU Wide Movement of Goods, Services, Capital and Workers and Level of Competition within the EU Internal Market.

Relevant Policies

The EU adopted a joint recovery plan after the economic crisis has taken place. The aim is to stimulate demand though public investment, to better regulate the financial sector and to create sustainable jobs.
For more information on the treaty provisions and relevant policies adopted by the community, please refer to or
This text is for information only and is not designed to interpret or replace any reference documents.

Legal Basis for the Commission to Act

Treaty Establishing the European Community: Art. 2c, 14, 18, 23 and 24, Title III, Title IV, Art.94 and 95 and Art. 81 to 89
“Promote economic and social progress (…) to achieve balanced and sustainable development, in particular through the creation of an area without internal frontiers, through the strengthening of economic and social cohesion (…)” is a key task of the European Union (Art. 2 EU). To reach this goal the European Union has established the European Court of Justice where the commission´s extensive powers to investigate and halt violations of the EU competition rules are subject to judicial review. On the one hand the European Union tries to hinder monopolies and over market barriers but in the other hand the European Commission finances a so called “state aid”. “State aid” is the assistance EU governments make available to business in forms of loans, grants, tax breaks, goods and services provided at preferential rates. Another objective of the European Union in the Area competition and internal market is the protection of its Single markets, which chiefly relies on competition and regulatory authorities to guarantee the free movement of goods and services. The free movement of people is guaranteed under the Schengen agreement and the establishing of the Europol, the European police force.

Web Resources

  • Overview of European Union Activities: Competition

  • Activities of the European Union: Competition

  • European Commission: DG Competition

  • Summaries of EU Legislation

  • Recent case law of the Court of Justice and the Court of First Instance



Related Terms

EU Wide Movement of Goods, Services, Capital and Workers

Level of Competition within the EU Internal Market