From Embedded Liberalization to Global Reregulation: The EU’s Competition System

• In Event: Governing without Max Weber: Legal, Security, and Single-Market Power in the EU

Abstract

This paper traces the transformation of the European Union’s competition law system from its establishment in the 1950’s as an instrument of economic liberalization to its present role as a central tool of global re-regulation. I explain this institutional transformation by examining the strategic interactions between two broad coalitions: one made up of producer groups and member states interested in preserving established production regimes and national industrial policy; another composed of EU officials and other actors committed to European integration and the market competition principle. I first identify two sequential, partially overlapping periods of EU competition law development: a first phase characterized by embedded liberalization; a second phase characterized by global re-regulation. I then show that each coalition’s interests and strategies evolve across the two periods in response to secular changes in global capitalism. During the first period, producer group coalitions seek to be excluded from supranational competition rules perceived as limiting inter-firm coordination and national industrial policies viewed as essential to economic development. The European Commission and ECJ respond by developing broad exemptions for many types of inter-firm coordination, while nevertheless gradually expanding the scope and application of the liberal regime. During the second period, the prevailing political settlement shifts in the wake of the completion of the single market project and intensified international competition stemming from globalisation and the ICT revolution. As producer group coalitions demand more economic protection, EU regulators respond by tightening abuse of dominance rules that primarily affect American companies, pursuing more foreign corporate prosecutions, and developing a more forceful European industrial policy. The paper points to the central role of competition law in the evolution of capitalism, acting at once as a structure that shapes economic organization, and also a political outcome that is influenced by economic interests.

Author

• Chase Michael Foster, SOAS University of London