EU Competition Rules: promoting and policing the Internal Market

In this chapter, we will examine competition law as an instrument of industrial policy in the EU. As competition law and industrial policy are often held to be in contradiction, and were originally pursued at different levels of government, this requires a brief explanation of how their relationship has developed in the EU. Industrial policy has traditionally been equated with national planning efforts and public intervention in the economy, ranging from outright state ownership of ‘strategic industries’ to preferential public procurement schemes. Largely discretionary in nature, its contents were defined by the national political agenda of the day, constantly at odds with the EU’s internal market objective. Competition law is usually viewed as being focused on private distortions of the market process, not on distortions caused by state policy. With few exceptions (notably Germany), a true competition policy was long pursued only at Community level, under Articles 85 and 86 of the EC Treaty. In recent years, however, these apparently clear dividing lines have dissolved: National competition rules: All Member States now accept that state intervention and closeted private arrangements are a poor substitute for the market allocation of resources guided by competition. Hence, nearly all Member States have adopted national competition rules (often legal transplants of the EC model), and are now working toward their effective enforcement. The ‘public turn’ of EU competition law: Encouraged by these developments, and by the success of the internal market programme, the Commission has increasingly targeted public undertakings and state intervention under its competition policy. EU industrial policy as structural adjustment: In Article 130 EC, the EU has adopted a definition of industrial policy that is based on the promotion of structural adjustment, and guarantees the primacy of competition norms.