European Merger Control, Political Discretion, and Efficient Market Structures

Abstract

From the beginning of European integration it was clear that without a set of well-developed and effective competition rules, a European common market would not function properly. Thus, already the founding fathers of the European Coal and Steel Community¹ included a chapter on competition in the 1951 Treaty of Paris. Articles 65 and 66 of that Treaty anticipated in some respects the corresponding Articles 85 and 86 of the Treaty of Rome which, for more than thirty years, should be the “twin pillars of the competition law of the European Community” (Goyder 1993, p. 15). Articles 85–94 of the Treaty of Rome², also incorporated in the 1992 Treaty on the European Union (EU), gave the European Commission extensive powers to deal with anti-competitive practices by private enterprises, as well as certain behavior of Member State governments or state owned enterprises that distort competition and inhibit the integration of markets across Europe. Whilst Article 66 dealt explicitly with the problem of mergers and concentration of undertakings, Article 86 was silent on the question of mergers. Those responsible for the drafting of Articles 85 and 86 obviously did not intend that they should give control of mergers to the Commission.³ It was, however, widely agreed that competition policy within the European Community needed a single merger policy. Directorate General IV (DG IV), under the authority of the Commissioner responsible for competition policy, was aware of this apparent gap in its powers and tried to get a ruling from the European Court that Article 86 would enable the Commission to issue a decision prohibiting a merger.