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About this book

Competition Policy in the European Union provides a comprehensive introduction to the European Union's policies on restrictive practices, mergers monopolies and state aid. The authors offer a wide ranging analysis of the evolution, operation and regulation of one of the EU's most important policies in a clear and accessible format.

Table of Contents

Chapter 1. Introduction

Abstract
European competition policy is one of the success stories of the European integration process. This is not to say, however, that the policy always works effectively; that it is always transparent and legitimate; nor indeed that its constituents and stakeholders universally approve of the framework which structures the policy, the procedures that govern its implementation, or the way it is enforced from day to day. Nevertheless, European competition policy is perhaps the most supranational of all EU policies and has become something of a flagship for the EU. For that reason alone it is important for students of European integration and EU politics, among others, to engage with this policy area.
Michelle Cini, Lee McGowan

Chapter 2. The Evolution of the European Competition Regime

Abstract
The history of European competition policy makes a truly fascinating story, involving the incremental emergence of a body of case-law, close-knit inter-institutional relations, and both institutional passivity and institutional activism on the part of the Commission’s Directorate-General for Competition. Moreover, there is a broader tale to be told, involving DG Competition’s reaction to and interaction with its external political, legal and economic environment. In charting the chronological development of European competition policy from the early 1950s to 2007, this chapter highlights both the internal dynamics of the policy and the exogenous factors that have influenced its effectiveness over the last six decades. The chapter begins by examining the origins of competition policy, then introduces briefly the legal provisions of the first European competition policy, that of the European Coal and Steel Community (ECSC). The rest of the chapter concentrates on the European Economic Community (EEC) rules, first identifying the legal provisions that have shaped the policy, and then providing an overview and analysis of its evolution. The chapter concludes by focusing on the revitalization of the European competition regime over the course of the 1980s; finally, it summarizes more recent developments and priorities since then.
Michelle Cini, Lee McGowan

Chapter 3. The Institutions of European Competition Governance

Abstract
At the institutional heart of the supranational enforcement of competition policy sit the European Commission and the European Courts. The relationship between these institutions is pivotal both in day-to-day administration and for the broader evolution of policy. Yet while the interaction between the Commission and the Courts makes for a fascinating case-study of European policymaking, it also poses important normative questions about the accountability of governance in the competition sphere. With both the EU Council and the European Parliament (EP) on the sidelines insofar as much of competition decision-making is concerned, the European-level bureaucratic and judicial politics of competition regulation has taken centre-stage and at times become extremely contentious. Since the mid 1990s, however, this top-down model of competition governance has been within a framework, which leans towards a more network-orientated approach to decision-making and enforcement. National Competition Authorities (NCAs) and domestic (national) courts perform an important role within this emergent network. While it may be too early yet to classify the Commission as a ‘network organization’ (Metcalfe 1996) or network manager, there has been a notable shift across the board in how competition decision-making operates.
Michelle Cini, Lee McGowan

Chapter 4. Restrictive Practices Policy

Abstract
Cartels and other forms of restrictive practice have long represented a standard feature of business activity. Today all forms of such collusive and secret agreements to undermine the competitive process are generally condemned, but this has not always been the case. Any assessment of national cartel laws in Europe need to be placed within two distinct time frames. Prior to 1945 cartels and restrictive practices were tolerated across Europe and even encouraged in the German-speaking states. In the period after 1945, however, a new anti-cartel ethos took hold, with the active support of the US Administration and further encouraged in the cartel provisions of the ECSC.
Michelle Cini, Lee McGowan

Chapter 5. Monopoly Policy

Abstract
EU monopoly policy or, more accurately, the pursuit of undertakings who abuse their dominant position in the marketplace, has constituted the weakest link in the Commission’s competition policy chain. Although the regulation of exploitative and abusive monopolies has much in common with the control of restrictive practices, there has been a marked difference in the evolution of these two policies. Whereas the Article 81 regime developed rapidly in the early years of the Community, monopoly policy, as laid down in Article 82 of the Treaty, lagged very much behind. Considerably fewer cases were pursued. In practice, the Commission found the application of Article 82 more problematic than Article 81. The difficulties in implementing the policy centred on identifying and defining the characteristics of both abusive behaviour and dominance. The Commission’s handling of the application of Article 82 has given rise to considerable controversy.
Michelle Cini, Lee McGowan

Chapter 6. Merger Policy

Abstract
Merger policy is arguably the most dynamic and most high-profile aspect of EU competition policy. Merger control as a weapon in DG Competition’s policy armoury is a recent development that dates only to 1990. The European Community Merger Regulation (ECMR) applies to ‘concentrations’ of economic power where two or more formally independent companies combine to create a single entity or where there is a change in control of one undertaking by another. The purpose of merger control is to enable competition authorities to regulate market structure. They do this by determining whether mergers should be allowed to take place. Mergers judged to have an adverse affect on competition will be prohibited. The pursuit of mergers involving household names such as Time Warner/EMI, PriceWaterhouse/Coopers & Lybrand, Boeing/McDonnell Douglas and General Electric/Honeywell attract huge media attention and frenzied political lobbying, ending up as quasi-theatrical events of almost Shakespearean power and intensity (Wilks 2005b:120). Mergers are as much about politics (see Zweifel 2003) as they are about economics and EU merger policy often involves heated interchanges between national governments and the Commission and open confrontation between the EU and the United States. The Commission’s merger policy is perhaps the most potent weapon at DG Competition’s disposal.
Michelle Cini, Lee McGowan

Chapter 7. State Aid Policy

Abstract
State aid control is arguably the most unusual of the EU’s competition policies as it involves governments rather than firms. As a consequence it is extremely sensitive politically. By restricting the capacity of governments to intervene in their own economies, state aid policy sounds the death-knell of purely national industrial strategies. It does so by endowing the European Commission with the task of ensuring that subsidies granted in the EU are compatible with the single market. The logic of state aid control is that a firm gaining government support earns a potentially unfair advantage over its competitors (Commission 2007c). The argument that the Single European Market (SEM), and indeed European Monetary Union (EMU), are jeopardized by unchecked state aid is almost a truism. Even were all physical, regulatory and fiscal barriers to European trade to be removed, national subsidies would remain as one of the few protectionist and market-fragmenting instruments at the disposal of national and sub-national authorities. Yet there is no expectation that EU state aid policy will eliminate aid altogether — or even that this might be a desirable outcome. Rather, the policy’s purpose is to protect the integrity of the single market and prevent subsidy races developing across the member states. Since 2000 and the introduction of the Lisbon Strategy, and particularly since 2005 when the ten-year Lisbon Strategy was re-launched midterm, state aid control has been justified in terms of the contribution it can make to industrial competitiveness. This emphasis is not entirely new, as state aid control has always been considered both a negative (prohibitive) policy and a policy contributing to more positive EU objectives, as in the case of services of general interest (Scott 2000).
Michelle Cini, Lee McGowan

Chapter 8. Theoretical Perspectives

Abstract
Academic research on European integration has never been richer (Nelson and Stubb 2003; Wiener and Diez 2004). This book has added to this ever growing literature and has provided new insights into the history, the institutional actors, the main policy areas and the politics of EU competition policy. However, there remains one noticeable gap, which relates to the absence of non-economic theoretical perspectives on the policy’s development. It is only in very recent times that such theoretical contributions have been made (see Blithe and Swank 2005; Doleys 2007; McGowan 2007). Indeed, the first edition of this book deliberately omitted discussion of theoretical approaches. Competition policy is far from being unique in its neglect of theory, however. Indeed, it is striking that many of the core EU market-related policies, such as agriculture, energy, fisheries and trade policy, not only remain marginal to the interests of many political science scholars and students, but have also been underdeveloped theoretically. This observation may be explained by the reluctance of some researchers to venture into highly complex policy arenas where economics, law and politics intermingle. It may also be a consequence of the decline of EU-focused public policy analysis since the late 1990s (Carter and Smith 2008).
Michelle Cini, Lee McGowan

Chapter 9. Conclusions

Abstract
This chapter highlights the most important developments, trends and issues in the field of EU competition policy. In it we return to discuss the four themes identified in the introduction — modernization, Europeanization, decentralization and liberalization — but will also address other issues of relevance, particularly where these are not discussed at length in the chapters above.
Michelle Cini, Lee McGowan
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