Competition Policy and Merger Analysis in Deregulated and Newly Competitive Industries

Competition Policy and Merger Analysis in Deregulated and Newly Competitive Industries

Edited by Peter C. Carstensen and Susan Beth Farmer

This comprehensive book contains case studies on the evolution of competition policy, with an emphasis on merger policy, for seven major US industries that have experienced substantial deregulation in the past forty years – electricity, natural gas, telecommunications, railroads, airlines, hospitals and banking. Also included is a comparison of the EU’s experience in attempting to bring about competition in the energy, finance, and airline industries.

Chapter 9: The European Experience with Merger and Deregulation

Susan Beth Farmer

Subjects: economics and finance, competition policy, industrial organisation


Susan Beth Farmer INTRODUCTION The modern European Union, now comprising 27 Member States, provides a useful example of a supra-national effort to simultaneously integrate previously independent nations and their respective legal systems and break down trade barriers among these states while promoting free market economic conditions and economic competition. The European project is proceeding primarily in a highly regulatory, top-down fashion directed by the executive and administrative bodies of the Community, which enforce European statutory law and jawbone national governments to bring competition to previously regulated industries and to eliminate subsidies that benefit their national champion industries. In key sectors of the economy, including such important industries as gas and electric utilities and banking, the goals of competition on the one hand, and national protectionism, on the other, continue to clash despite the best hopes of the original architects and modern leaders of the European Union (Norris 2006, p. C1). By comparison, the market for airline transportation has become increasingly competitive since deregulation, reflected in increasingly substantive review and ultimate approval of a series of mergers in the industry. The policy of deregulation in the European Union was a deliberate choice. The European project offers an illuminating contrast to deregulation in American industries described in previous chapters for four reasons: (1) it is the result of conscious economic policy choice adopted from the outset of the Union, (2) it paints with a broad brush, encompassing many industries, (3) issues of federalism are more acute as the...

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