This report examines the policy of the European Union towards agreements between firms from three perspectives. First, it considers what the literature in industrial economics has to say about the effects of such agreements on competition, and about the consequent rationale for public intervention. Second, it examines the decisions of the European Commission and the European Court, asking to what extent these are consistent with the recommendations that emerge from the scientific literature. Third, it looks at the procedures of the Commission and the way it undertakes investigations and reaches decisions, in order to see to what extent these procedures represent an appropriate means of implementing a defensible policy.