Market failures, transaction costs and Article 101(1) TFEU case law

EU competition law is increasingly informed by economic analysis. However, the tools of this discipline are rarely ever used systematically for positive purposes. This article gives a unifying picture of art.101(1) TFEU judgments based on familiar economic concepts (market failures and transaction costs). It is submitted that a formalisation of case law based on these concepts has greater explanatory power than the prevailing approaches currently found in textbooks and policy instruments. The article shows, first, that the availability of an efficiency explanation for an agreement is the default starting point followed by EU courts when drawing the line between restrictions of competition by object and by effect. Secondly, it explores how market failures and transaction costs influence the analysis of restrictive effects on competition under art.101(1) TFEU. These insights are equally useful to define the scope of art.101(3)TFEU and the relevance of non-economic considerations.