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EU Competition Policy Revisited: Economic Doctrines Within European Political Work


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European Union competition policy is often described as neoliberal, without this leading to more investigation. This paper highlights how the European Competition policy doctrine has been shaped, how the ordoliberal movement and the Chicago school ideas have been implemented and supported by the political work of some key actors. We show that, contrary to what is sometimes said in literature, ordoliberal actors were neither hegemonic nor leaders between Rome Treaty and the eighties, even if some neoliberal principles were introduced in antitrust law. These laws are much more a compromise between French and German representatives, and between neo-mercantilists and ordoliberals. However, things have dramatically changed since the eighties, when both (1) new political work from members of the Commission introduced in the European competition policy elements of Chicago School doctrine to complete the European market and (2) some decisions from the ECJ clarified the doctrine of EU Competition law. Nowadays, European competition policy is a mix between an ordoliberal spirit and some Chicago School doctrinal elements.
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EU Competition Policy Revisited:
Economic Doctrines Within European Political Work
Université de Bordeaux
Università Bocconi
Andy Smith
Centre Emile Durkheim,
Cahiers du GREThA
n° 2011-33
Cahiers du GREThA 2011 – 33
G R E T H A U M R C N R S 5 1 1 3
Universi t é Monte s q u i eu Bor d e a u x I V
Ave nu e Lé on Du gu i t - 33 6 0 8 PE S S AC - FR ANCE
Te l : + 33 (0 )5 .5 6 .8 4 .2 5 .75 - F ax : + 3 3 (0 )5 .5 6 .84 .86 .4 7 - w ww . g r e th
La politique européenne de la concurrence revisitée:
les doctrines économiques dans le travail politique européen
La politique de la concurrence européenne est souvent décrite comme néolibérale sans
véritable investigation. Cet article explique comme la doctrine de la politique de la
concurrence européenne a été construite, et comment le mouvement ordolibéral et les idées
de l’école de Chicago ont été implémenté et soutenues par le travail politique d’un certain
nombre d’acteurs clés. Nous montrons que contrairement à ce qui est parfois dit dans la
littérature, les acteurs ordolibéraux n’étaient ni leaders ni hégémoniques pendant la période
qui va des négociations du Traité de Rome au début des années 1980, même si un certain
nombre de principes néolibéraux furent introduits dans le droit de la concurrence. Ces règles
apparaissent plus comme un compromis entre représentants français et allemands, et entre
des positions néo-mercantilistes d’un côté et ordolibérales de l’autre. Cependant, les choses
changèrent fortement à partir des années 1980, quand, en même temps, (1) un travail
politique des membres de la Commission pour compléter le marché intérieur est relancé et
(2) des décisions de la CJCE clarifièrent la doctrine du droit de la concurrence européen.
Désormais, la politique de la concurrence européenne apparaît comme un mélange entre un
esprit ordolibéral et des éléments doctrinaires issus de l’école de Chicago.
Mots-clés : politique, concurrence, Union Européenne, néolibéralisme, ordolibéralisme,
travail politique.
EU Competition Policy Revisited:
Economic Doctrines Within European Political Work
European Union competition policy is often described as neoliberal, without this leading to
more investigation. This paper highlights how the European Competition policy doctrine has
been shaped, how the ordoliberal movement and the Chicago school ideas have been
implemented and supported by the political work of some key actors. We show that,
contrary to what is sometimes said in literature, ordoliberal actors were neither hegemonic
nor leaders between Rome Treaty and the eighties, even if some neoliberal principles were
introduced in antitrust law. These laws are much more a compromise between French and
German representatives, and between neo-mercantilists and ordoliberals. However, things
have dramatically changed since the eighties, when both (1) new political work from
members of the Commission introduced in the European competition policy elements of
Chicago School doctrine to complete the European market and (2) some decisions from the
ECJ clarified the doctrine of EU Competition law. Nowadays, European competition policy is a
mix between an ordoliberal spirit and some Chicago School doctrinal elements.
Keywords: competition, policy, European Union, neoliberalism, ordoliberalism, political
JEL: L4, N4
Reference to this paper: MONTALBAN Matthieu, RAMIREZ-PEREZ Sigfrido, SMITH Andy (2011), EU
Competition Policy Revisited: Economic Doctrines Within European Political Work, Cahiers du
GREThA, n°2011-33.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
The European Union’s (EU) competition policy is clearly trans-industry because it applies
horizontally to all the domains of economic activity within this territory. Moreover, as existing
research underlines (Wilks, 2005), a great deal of inter-firm competition in Europe has come to be
governed at the scale of the EU. Indeed, this form of trans-industry regulation has constituted a
central instrument in the institutionalization and the regulation of a single European market (Wigger,
However, what is much less clear is the role played by economic doctrines in this highly
important political process. Many accounts of EU competition policy by political scientists
concentrate upon the publicized clashes between ‘neo-liberal’ and ‘neo-mercantilist’ protagonists
that have occurred during the history of the EU (Cini and McGowan, 2009). Some historians
meanwhile have underlined how ‘German ordoliberals’ were largely successful in transposing the
principles of a ‘social market economy’ upon the European Communities in the 1950s and, in so
doing, defeating the ‘planning’ variant of neo-mercantilism from interventionist France, Italy and
Belgium (Gerber, 1998). Others, however, dispute this thesis strongly by arguing that ordoliberalist
influence on EU competition law and policy is overstated (Ramirez Perez, 2007).
Notwithstanding the quantity and quality of all this research, unfortunately much uncertainty
and even confusion still remains over the precise ideological content of the economic doctrines used
to build, legitimate and implement the EU’s competition policy throughout the whole of its history.
Indeed, especially when analyzing developments since the mid 1980s, academic analysis has rarely
attempted to fully unpack the doctrines concerned
. Moreover, much of this literature shares two
problematical traits.
First, authors have either neglected the politics of competition policy norms and rulings that
occurs around the substance of competition policy, or reduced this politics to the formal intervention
of politicians
. As we have underlined elsewhere, when studying economies it is more heuristic to
define politics instead as behaviour that is both discursive and interactive which seeks to change or
reproduce institutions by mobilizing values’ (Jullien & Smith, 2011: 15).
Second, and especially more recently, specialists of EU competition policy have frequently
reduced explanation on change policy substance to ‘a rise in the use of economic analysis’ during
decision-making (Wilks, 2007; Cini & McGowan, 2009). In so doing, however, precise knowledge has
not been produced about what doctrines from economics this ‘rise’ has contained.
Overall then, a black box still remains around the processes of ‘political work’ through which
economic doctrines have been translated over the six decades of EU competition policy’s history into
Indeed, there is a contrast here with work on the development of US competition policy which emphasizes both the role of economic
doctrine and representatives of firms (Fligstein, 1990 & 2001).
For a typical example of this use of the term politics see Damro & Guay who reduce it to the intervention of politicians in debates over
competition policy (2009: 2). For a critique of this trend see (Bush-Hansen & Wigger, 2009: 3 & 6-7).
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
the institutionalized policy instruments of today’s EU government of inter-firm competition. Through
defining political work as a process that entails both the construction of industrial issues as ‘public
problems’ (problematization) and their legitimation through politicization or depoliticization, this
concept guides empirical research to produce knowledge on the argumentation and alliance-building
activity of the actors concerned (Jullien & Smith, 2008: chapter 1). Analyzing political work in this way
thus provides a means of understanding the production of the ‘instruments’ (Lascoumes & Le Galès,
2007) of the EU’s government of interfirm competition and, thereby, the ‘governmentality’ (Foucault,
2004) it reflects and encapsulates.
More specifically, written by an economist, a historian and a political scientist and using initial
findings from their ongoing interdisciplinary research
, in this paper the concept of political work will
be used to shed light upon the relationship between economic theory and doctrine on the one hand
and EU competition policy on the other. This goal is sought by developing and defending the
following claim: the key debates over this policy have not only been the much publicized ones
between neo-mercantilists and neo-liberals (Kariagiannis, 2009). Rather since the beginnings of the
EU a crucial debate over competition policy has been located within neo-liberalism itself. More
precisely, ‘ordo-liberalism’ –a theory often mentioned but rarely analyzed- needs to be seen both as
a theory of, and a doctrine for orienting, economic activity which is best understood as a distinctive
strand of neo-liberal thought.
The first part of this paper develops and explains this claim whilst highlighting its
consequences for studying the government of inter-firm competition in general. Three empirical
illustrations of our argument then follow, each of which retraces key episodes from the
institutionalization of the EU’s government of inter-firm competition.
Through re-examining the establishment of EC competition law between 1950-62, part 2 of the
then paper underlines the impact of an initial cleavage between ordo-liberals and neo-mercantilists
in the negotiations of the ECSC and EEC Treaties. In contrast to standard accounts of this founding
period which claim an initial ‘victory’ for German ordo-liberals (Seidel, 2009); Quack & Djelic, 2005),
we argue that the historical evidence points to a more complex and interesting relationship between
economic doctrines and European-wide political work. Indeed, our analysis of the effects of this
interplay seeks instead not only to better explain the actual content of the general articles and
regulations on competition adopted at this time, but also, and more fundamentally still, to grasp the
causality behind the limited impact of policy towards cartels and monopolies developed by the
European Communities during the subsequent period that extended until the mid 1980s.
As is well known, the EU’s competition policy came to be fully activated in the late 1980s and
early 1990s. Here, however, the role played by economic doctrines has again tended to be treated in
over-general terms – this time by invoking a ‘neo-liberal victory’ over neo-mercantilism (Cini &
McGowan, 2009). In part 3 of this paper, we begin to set out a programme for research which argues
instead for better analysis of the interaction between economic doctrine and European-wide political
work that occurred during this period. More specifically, we defend a research perspective that
better encompasses the arrival in pre-existing debates of a ‘new’ set of neo-liberals driven by the
economic doctrines of ‘the Chicago school’.
Finally, in order to bring this analysis up to the present day, social science needs to produce
knowledge about how and why the EU’s competition policy has been reinstitutionalized since the
turn of the century (part 4). Here it will be argued not only that the importance of neo-mercantilism
This paper is based partly on previous empirical investigations (Ramïrez-Përez, 2007; Joana & Smith, 2002; Smith, 2009). But it is also
heavily informed by new work currently being carried out within a research project Le gouvernement européen des industries’ (GEDI). The
latter is funded by the French Agence Nationale de la Recherche (ANR). http://www.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
doctrine has steadily continued to decline. Instead, we go further in hypothesizing that the cause of
change since 2000 is to be found in 1) a doctrinal victory by partisans of the Chicago approach to
competition over ordoliberal thinkers and actors and 2) the translation of this victory into new
instruments of EU governmentality.
Overall, through highlighting the role played by struggles over economic doctrine, and thus
within political work, during each of these periods, our aim is to reproblematize analysis of the
institutionalization of the EU’s government of competition with a view to launching new research in
this subject area and, thereby, producing wider and deeper knowledge about its politics.
1. Studying the role of economic theory and doctrine within EU
competition policy
The EU’s competition policy of today is of course the cumulative result of a long process of
compromise between actors claiming to represent interests of varying types. However, throughout
these processes of interest interpretation and defence, inspiration has also been taken from theories
and doctrines taken from the science of economics. Indeed, these doctrines have shaped the specific
instruments of ‘governmentality’ (Foucault, 2004) which, in turn, have structured the practices of the
EU’s policy in this area.
Every economic policy, including that of competition, is generally founded upon one or several
economic doctrines which themselves stem from economic theories. An economic theory is an
abstract and simplified representation of how the economy functions that is structured around a set
of hypotheses. Economic theory can take the form of economic models which are a specific
formalisation of the theory that is based upon the exogenous and endogenous variables and
parameters contained in the model. Economic theory’s principal aim is heuristic in that it seeks to
understand how an economy functions. In contrast, the aim of economic doctrines is normative
because they seek to promote or favour a situation that is considered optimal from the point of view
of social welfare, efficiency and/or social justice. Most often founded upon an economic theory, an
economic doctrine is thus a rationality, but also a set of practices and rules designed to shape public
intervention and economic policies.
The strong ideological content of such doctrines and the objectives they seek to attain in the
economy, and through competition policy in particular, takes its first effect by shaping the
government of inter-firm competition as a ‘public problem’ and guiding the design of policy
instruments (laws, norms). Economic theory and doctrine also, and often simultaneously, can act as a
means of legitimating the construction of problems and instruments. This takes place through their
inscription within the two dimensions of what we call ‘political work’: the building of arguments and
of actor-alliances (Jullien and Smith, 2008).
Competition policies are thus heavily structured by economic doctrines. However, like all
economic policies, they are also the cumulative result of compromises between interests held by
actors that are often in conflict or contradiction. Compromise-making frequently has the effect of
creating a gap between policy and the doctrines and theories used during their formulation. Indeed,
and for precisely this reason, today’s competition policy of the EU is the product of both neo-
mercantilist and neo-liberal economic doctrines. In order to show the consequences of this
perspective for research, this section first sets out the general objectives and interventions of
competition policy before proceeding to unpack how different economic theories have given rise to
conflicting doctrines in this field.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
1.1. The general aims and instruments of competition policy
Any competition policy shares the following general objectives:
- ensuring that the rules that govern the relationship between economic competitors are fair
and equal;
- protecting the consumer;
- protecting the economic freedom of collective actors and individuals (firms and consumers);
- encouraging economic efficiency.
However, the hierarchy established between these objectives is the result of the doctrines
mobilized and the negotiations that have taken place within the polity in question, as well as the
rules that have progressively been institutionalized during this process. In particular, the extent to
which the criteria of ‘economic efficiency’ has structured these rules correlates to the extent to
which certain economic theories are explicitly referred to by competition authorities during decision-
The instruments of any competition policy essentially seek to control:
- monopolies and the abuse of dominant positions;
- cartels and other forms of inter-firm collusion;
- vertical restrictions and discriminatory practices.
As for the implementation of any competition policy, it can take several forms which vary
around three variables. The first concerns the eligibility and the legitimacy of decision-makers. In
certain cases, such as the EU, one or several competition agencies can take decisions leaving only a
secondary role of judicial review to the courts and jurisprudence. In other cases, such as the US, the
courts and jurisprudence have a more primary role.
A second variable concerns the dominant logic of action. Eligible decision-makers apply
competition policy either according to the principle of written rules (per se) or according to the ‘rule
of reason’. In the first of these instances, the competition authority punishes an infringement of the
rule itself (eg. the forbidding of bundled sales), whereas in the second the authority analyzes the real
or potential anti-competition effects of the incriminated practice, as well as its impact upon
efficiency (eg. by ascertaining whether restricted sales have an anti-competition effect, reduce the
efficiency of the market or result in a loss of consumer well-being).
A third variable concerns the procedures of decision-making. In the case of concentrations
(mergers and joint ventures), competition policies can function through demanding firms to 1) make
ex ante notifications and authorizations, 2) through ex post verifications, ie. regimes of legalized
exceptions. In the first instance, a merger is considered not to be complete until the relevant
competition authority has validated it. In the second, the concentration will take place but remains
under threat of a control. In the third, the inter-firm agreement can only be challenged if the
competition authority decides to do so. This variation in procedures has numerous consequences.
For example, regimes of legal exemption tend strongly to increase the role of third party
complainants. More generally, each procedure tends to bias the burden of proof towards different
protagonists and accord a varying role to the courts.
The fourth variable concerns the hierarchy established between the different objectives of
competition policy and its effects upon the relationship between its respective instruments and
principles. For example, if monopolies are authorized so long as they improve economic efficiency
and consumer welfare, the principles of per se rules and regimes of legalized exception tend to apply.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
In summary, competition policy can and does take many forms. As a form of intervention in
the economy, it is sometimes seen as contradictory with liberal economic and political theory.
However, the minute one looks more closely things become far more complex. As we set out below,
the main reason for this is heterogeneity within neo-liberalism: although reasoning from the general
precepts of liberal theory, and initially in opposition to neo-mercantilist economic theory, actually a
range of liberal and neo-liberal doctrines have been developed. Indeed, particularly since the 1970s,
these tensions and conflicts within liberalism itself have considerably influenced the general
development of competition policies.
1.2. The initial doctrines behind competition policy: structuralism and the neo-
mercantilist/neo-liberal conflict
Formalized competition policies began at the end of the 19
century through the adoption in
the US of the Sherman Act in 1890 and the Clayton Act a generation later in 1914. At that time,
economic theory had yet to explore the issue of competition policy. Instead, politicized ‘objective
necessities’, notably the ‘excessive’ power of large trusts (eg. that of John Rockerfeller’s Standard Oil
or those of merchant bankers like J.P. Morgan), were transformed into public problems that fed into
the institutionalization of instruments first stabilized in the Sherman Act. Very soon thereafter,
however, economic theorists began to invest heavily in this field of study and public action.
The first to do so were specialists of ‘imperfect competition’ who sought to grasp its
consequences. In this vein, ‘structuralists’ such as Mason and Bain gave birth to the paradigm of
research known as ‘Structures-Conducts-Performances’ (SCP) which came to shape US competition
policy for many years around one central tenet: market structures in general, and entry barriers and
concentration levels in particular, determine firm behaviour (and thence prices, growth and
consumer welfare). From this starting point, structuralism gave rise to a competition policy doctrine
that aimed to limit dominant positions because they were seen as causing upso facto abuse of
competition (Brandeis, 1934). Consequently, structuralism as a doctrine strongly encouraged
competition authorities to examine levels of competition (in terms of market share) and, through
implementing per se rules, to forbid categories of practices (eg. monopolies or cartels) – all this in the
name of the beneficial effects this outlawing was considered to procure.
However, structuralist theory had its opponents. Indeed, historically the principal opposition in
economic policy in general, and within competition policy in particular, has been between neo-
in favour of protectionism, state intervention and economic planning on the one hand
and a range of neo-liberals on the other. Neo-mercantilists have never developed a genuine doctrine
for competition policy as such. Rather they have argued in favour of industrial policy and the direct
intervention of the state in the economy as a substitute for competition
. Similarly, centralized
planning was to be used in order to allocate resources with the aim of conserving the advantages of
political freedom so central to liberalism whilst avoiding the ‘anarchy’ of free markets. Taking
theoretical and practical nourishment from the mercantilism of the 16
century and, in the French
case from ‘Colbertisme’, consequently neo-mercantilists developed a form of governmentality based
upon state action via sectoral industrial policies (eg. subsidies, nationalizations, encouraging ‘national
champions’, price controls) (Jobert & Muller, 1987). In the 1930s, these doctrines also took support
from certain socialist and conservative thinkers and actors. But what is important to underline is that
the reformalization of these doctrines at this time, and in particular the importance granted to
This category of thinkers and actors is very wide as it includes those who are generally described as dirigistes or planners. Deeper analysis
would obviously differentiate within neo-mercantilism. For our purposes here, however, they will be grouped together.
Neomercantilism is of course much more a theory of co-operation and corporation. Here we reiterate the point made earlier where we
recognize that it is reductive to categorize as neo-mercantilist all the proposals which derived, in one form or another, from the alternative
models to the market economy which flourished in Europe throughout the 20th century (Maier, 1987).
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
competition policy, also took place through an opposition to changes and reformulations within
liberalism itself.
The genesis of neo-liberalism is an enormous subject that obviously extends way beyond the
scope of this paper. What is important to grasp when looking back at the 1930s is both the
continuing ideological power of liberalism, but also of its perceived ‘failure’ as a means of governing
actual economies. Previously the political power of liberalism had always stemmed from an alliance
of actors who basically agreed on the need to limit the role of government, the positive economic
and political effects of price stability and international peace. However, as Denord relates in detail
(2007), the depression of the 1930s led to a generalised perception that classical liberalism had
‘failed’ and, therefore, that a new form of liberalism needed to be invented. For a range of reasons
related to World War II, the neo-liberalism sketched out at the end of the 1930s only re-emerged
politically in the form of doctrine during the late 1950s. What is important to underline for this paper
is not only that three forms of neo-liberalism emerged from this process, but also that each
possessed its own approach to competition policy:
- a ‘Chicago school’: first developed in the 1930s in opposition to Roosevelt’s planism;
- ultraliberalism (later known as libertarianism): rooted in the neo-marginalist economics of
the Austrians Von Mises and Von Hayek;
- ordoliberalism: first developed within ‘the Freiburg school’ by authors such as Walter Eucken,
Wihelm Röpke, Franz Böhm, Alfred Müller-Armack and Walter Rüstow.
If the partisans of these three neoliberalisms disagreed over several important points of
economic doctrine, they shared a fundamental opposition to neo-mercantilism. In particular,
thinkers and actors from these three ‘schools’ all considered that planning and state intervention
would always be incapable of replacing the market
. Instead, from the 1930s onwards within most
liberal thought economic policy came to be seen as a method of government based upon knowledge
of the practical effects of certain measures upon the economy. Self-limitation on governmental
power was thus to be based upon a principal of truth –the truth as revealed not only by science but
by markets through prices. For this reason, these neoliberals came to see their own theories and
doctrines as an art of government based upon the market as a standard of truth
Overall then, the debate begun in the 1930s between holders of renewed liberal doctrine and
neo-mercantilists updated and extended a centuries-old cleavage between those who doubted the
all-encompassing powers of government and those who believed that such powers were the key to
greater social welfare.
1.3. Debates within neoliberalism: the Austrians, the ordoliberals and the
Chicago School
Ever since the 1930s, developments within the discipline and practice of economics have had a
strong impact upon the economic doctrines of three sets of neoliberal thinkers and actors. Within
this intra-neoliberal debate, doctrines on competition policy have often been at the forefront.
And this because the planner could never hold all the information necessary to run an economy effectively, whereas free markets allowed
preferences and knowledge to be expressed via prices. More fundamentally still, as Foucault underlined (2004), liberalism is a
governmental rationality which came into being as a reaction to mercantilism. Whereas the economic policy of the latter was an art of
government’ founded on maximizing the wealth and the power of the sovereign through state intervention, liberal economic policy
emerged as a means of self-limiting governmental power through law and other policy instruments.
Significantly for this paper, and as Foucault also underlined (2004), neoliberals considered that this form of government should also
extend to international relations through the principles underlying cross-border trade. Here balance between the nation states of Europe
was seen as being best achieved by encouraging free competition and avoiding the protectionism of mercantilists. Whereas the latter saw
international trade either as a zero-sum game or even as having negative impacts upon both domestic wealth and international peace,
liberals saw free trade as contributing to stability between nations.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
1.3.1 The Austrian School: an ultraliberal competition doctrine
If authors such as Von Mises and Von Hayek have always refused the name neo-liberal
(considering themselves to be the descendants of ‘naturalist’ liberalism), the latter in particular is
seen as its ‘patriarch’ (Denord, 2007: 297). Their approach sees markets as spontaneous orders
produced over time by a process of learning and selection strongly linked to competition which
eliminates ‘inefficient’ institutions and reveals relevant knowledge to economic actors. Put another
way, according to this theory, markets are always in a state of disequilibrium within which inter-firm
competition obliges their respective agents to find new knowledge and thence to innovate. It follows
that for such authors all public intervention in the economy is criticized because the ‘constructed
order’ it creates is based on the premise that public authorities are able to marshal all the relevant
information when making their decisions. Instead, for authors like Hayek a market economy is
complex and certain knowledge and information can only come to light through the spontaneous
processes linked to competition and the existence of free prices. For this reason, this school
conceptualizes entrepreneurs as a general category of economic actors all seeking profits within a
world that is uncertain and constantly changing. Indeed, the latter are seen very positively as the
explorers of new productive options and as creators (Kirzner, 1997). The ventures and errors that
mark this process favour exploration and the discovery of new knowledge and attempts to
equilibrate the market, often through seeking monopolies which, however, will always be temporary.
Schumpeterien and evolutionist economics extends this approach to competition by underlining the
positive role in the economy played by entrepreneurs and by innovation. Indeed, according to this
theory, entrepreneurs conduct innovation in the hopes of gaining temporary monopolies.
The consequence of this theory for the doctrine of competition policy is that monopolies per
se are not condemned firstly because they constitute a reward to entrepreneurs for innovation and,
secondly, because their temporary nature results from their generation of follower firms who will
eventually challenge the dominant competitors. More generally, this theory incites the complete
absence of economic policies, including in the field of competition, in the name of pure laissez faire.
If this approach indirectly maintained a certain degree of vitality through its influencing of the
Chicago school (see below), its influence upon the actual government of inter-firm competition has
been even less direct (particularly in the EU).
1.3.2 Ordoliberalism: a competition doctrine designed to build ‘social market economies’
In contrast to the Austrian school, over the last sixty years ordoliberalism a clearly declared
neo-liberalism that breaks with naturalist liberalism- has influenced this field of EU government
considerably. The specific argument consistently made by ordoliberals has been that the market and
competition are not natural, just as free and unfettered competition is not a spontaneous social fact.
Instead, pure competition must be produced by an active form of governmentality: one must govern
for the market not by the market. Consequently, the state must institutionalize competition through
the establishment of rules and institutions and, in particular, the outlawing of cartels and
monopolies. Whilst contesting the argument that competition always leads to monopolies, the aim
of the holders of this approach is to establish and maintain a situation of permanent competition.
Indeed, their ideal is an economy of Small and Medium-sized Enterprises (SMEs) with no monopolies
or cartels. Indeed, from this starting point, according to Foucault (2004) ordoliberals wanted to
establish a societal rather than an economic policy in order to ensure that each segment of society –
whose overall aim was freedom and order- would be subject to the principle of competition.
Crucially, above all competition and economic freedom thus had to be protected – consumer welfare
being only a secondary consequence of fair and free competition. Moreover, according to the
ordoliberals, all the above was to be achieved via the actions of the state.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
Indeed, in order to attain the above-mentioned goals, ordoliberalism proclaimed that an
economic constitution had to be institutionalized which would define ‘the social market economy’
through which the economic rights of individuals would be protected and guaranteed. More
precisely, one of the key constituting principles of this approach was ‘safeguarding free market
access and free competition, a duty to be accorded to an autonomous authority for controlling
monopolies and cartels’. According to Bilger (2005: 4), this dovetailed with a horizontal principle
‘according to which every measure of economic and social policy had to satisfy the criteria of being in
conformity with the logic of the economic system in order to avoid all the incoherencies of public
intervention which generally cause such a system to dysfunction’.
Theoretically ordoliberalism makes a strong distinction between the framework and the
process of economic policy – a distinction which in terms of doctrine translates into a different status
being accorded to ‘ordering’ policies on the one hand and, on the other, to ‘regulatory’ policies such
as that of competition. The latter category was supposed to be established only when they
conformed with the constitutional principles of ordoliberalism and when structured by rigorous legal
rules which would prevent public authority intervening in any way other than that indicated by the
market and the principle of economic freedom. Indeed, for ordoliberals price was the best criteria
upon which to base the regulation of markets. Consequently, competition has to be fair and free
from all distortions caused by state interventions. As with structuralism, the first generation of
ordoliberalism had a strong dislike of cartels and monopolies. Moreover, it was strongly in favour of
per se rules and ex ante authorisations. Indeed, to adopt a helpful distinction developed by
Schweitzer (2007, 18), ordoliberals were committed to forbidding not only the ‘exploitative abuse’ of
competition but also all forms of ‘exclusionary abuse’.
1.3.3 The Chicago School: a neo-classical critique of structuralist competition policy
If, as we shall in Parts 2 and 3, if ordoliberalism played an important role in forging both the
competition policies of West Germany and the European Communities, in worldwide terms the
largest sources of inspiration for doctrines within this policy area are located within the different
neo-classical approaches to economics. The latter is of course vast and first needs unpacking into at
least three strands that are briefly sketched below in chronological order.
The first to emerge was an approach known as ‘Law and Economics’. Developed mainly by
academics at the University of Chicago, at least two periods of work can be distinguished. In the
1930s a sustained critique of the planism of the Roosevelt presidencies was developed. Much of this
critique also attacked the structuralist approach to competition policy that at the time was being
argued for by various economists and lawyers at Havard (eg. Brandeis, 1934) (Wigger, 2008). But
Chicago is even better known for a second wave of publications and political work around
competition policy developed in the 1970s by economists such as Posner (1976) and Bork (1978).
According to this perspective, if monopolies exist this is because they are either ‘natural’ (because
their greater efficiency has legitimately eliminated their inefficient rivals), or because the state has
protected them. For this reason, antitrust laws are only seen as necessary in certain instances.
However, in the main this approach strongly claims that policies aimed at establishing ‘pure’
competition are not efficient. Consequently rules that are too general should be avoided in favour of
more pragmatic ‘rules of reason’. Indeed, the antidote proposed by the Chicago school has been to
incite competition authorities to analyze efficiency within markets, and this by using neo-classical
economic theory in order to determine whether the behaviour of firms is anti-competition or not. To
return to Schweitzer’s distinction, this approach urges competition authorities to discard the concept
This term was invented by Alfred Müller-Armack, not only an ordoliberal economist but also one of the main advisors of W. Eucken and,
as such, one of the key negotiators of the Treaty of Rome. It is important not to confuse the term ordoliberal with social democrat
approaches to society and the economy or, more recently, that of ‘the third way’.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
of ‘exclusionary abuse’ of competition in favour of the discovery and outlawing of ‘exploitative
abuse’ (2007, 18).
A second neo-classical approach developed by Williamson (1975) around the concept of
‘transaction costs’ also provided a set of criticisms of state intervention in the regulation of
competition. According to this theory, ‘hybrid’ forms of economic activity (cartels, vertical
restrictions, alliances etc.) emerge because they are efficient means of reducing transaction costs.
The theory therefore concluded that forbidding them ran counter to the quest for an efficient
Finally, the most recent neo-classical approach developed is that of ‘industrial organization’.
Using the computerized mathematical models and game theory that both began to be formalized in
the late 1970s and 1980s (Baumol, Panzar & Willig, 1982; Tirole, 1988), this approach sets out to
detect imperfect competition by predicting how markets will operate under different scenari (Lyons,
2008). At the heart of the approach is a concern for the efficiency of rules and tariffs. In general, the
approach postulates first that if a market is competitive, and even if pure competition is not in place,
the market is still efficient
; second, that rules tend to create barriers to entry
; and third that
competition policies are often inefficient.
When applied to specific cases of competition, market efficiency is measured here either in
terms of Pareto optimality or using criteria such as consumer, producer or global surpluses. Firstly,
neither of these methodologies leads necessarily to the condemnation of monopolies so long as new
entrants are not discouraged. Secondly, collusions and cartels are not always to be forbidden either.
Using the theory of non-co-operative games, this approach shows that tacit collusions can be just as
important in certain markets and that, therefore, outlawing all collusion is very difficult to achieve.
Thirdly, when applied to the issue of mergers, this approach argues that it is very difficult to predict
in advance the favourable effects of such operations in general, and their potential synergies in
particular. Finally, price discrimination and sales restrictions are not necessarily seen as inefficient
and illegitimate.
Overall, therefore, developments within neo-classical economics has progressively produced a
‘post Chicago’ consensus which concludes 1) that competition policy should not be used to outlaw
many economic practices that other theories, and notably ordoliberalism, would have automatically
forbidden; and 2) that nevertheless competition policy still has an important role to play in certain
types of cases so long as their adjudication is made on the basis of ‘economic’ analysis studied in
terms of efficiency and consumer welfare. On this basis, as Bruce Lyons, a British economist and
participant in this movement, forcefully concludes, not only has ‘a transatlantic consensus’ been
achieved between most economists who ‘draw essentially on the same toolkit’, but ‘a new sub-
discipline of competition economics, much more nuanced to legal ideas and practical policy, has
emerged’ (Lyons, 2008: 7-8)
In summary, this section has begun to problematize the development of competition policies
throughout the world as occurring alongside developments within the science of economics. Indeed,
as table 1 highlights, the latter process has entailed a great deal of division and conflict which has
frequently spilled over into the decision-making arenas of competition policy. In the following parts
of this paper, we seek to follow the intertwined nature of academic and practitioner debates by
retracing its impact upon key developments in the EU’s competition policy. In so doing, particular
attention will be paid to 1) the actors and actor-coalitions who have ‘carried’ economic theories and
Note the similarity here with the theory of the Austrian school (Kirzner, 1997).
Here Stigler’s theory of ‘regulatory capture’ (1971) sought to show that inefficient monopolies were often the production of state
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
doctrines into EU debates or negotiations; and 2) the instruments of regulation that have been put in
place and institutionalized as a result of the compromises this process has entailed.
Table 1: Doctrines of competition policy and their respective governmentality
Chicago &
Austrian School
& Schumpeter
Scope of state
intervention in
No limits: the
state as
organiser of
planning or
policy replaces
Quite strong
Defined &
limited by
constitution &
principle of
Very limited
(minarchists) or
absent state
Theory of
and markets
Markets as
state as
substitute or
supplement to
market, state
seen as
Static and
Markets &
built by state ;
competition as
a process
Static efficiency
(equilibrium &
optimum) with
some dynmaic
game theory
process of
knowledge &
selecting rules;
spontaneous &
catalytic order
Per se rules vs
rules of reason
Per se
dominates but
preference for
without rules
Per se Per se
Rules of
reason ; strong
preference for
common law
Absence of
preference for
common law
Efficiency and
perhaps justice
absence of
distortions &
(growth &
umer & global
surpluses (1)
and freedom
Freedom and
efficiency as its
Ex ante
or legal
Ex ante Ex ante Ex ante
No competition
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
2. Economic Doctrine and political work during the establishment of
EC competition policy: Ordoliberalism vs Neo-mercantilism (1950-
As has been widely documented, the initial institutionalisation of the principle of competition
as organiser of the economic life of European-wide capitalism took place in the period after World
War Two. However, it was the crisis of laissez-faire Liberalism in the 1930s and the perceived threat
of state planning (be it socialist or fascist) which fundamentally provided the ideological debate
within which competition policy became a central plank for the renewal of Liberalism (Denord, 2007;
Dardot & Laval, 2009). Problematizations of this crisis first impacted upon the governmentality of the
new state of West Germany and then upon proposals for the invention of a European-wide scale of
competition regulation.
Most recent research has credited a particular strand of Neo-liberalism -German Ordo-
Liberalism- as being the main intellectual and political force behind the institutionalisation of
competition policy at the European scale (Commun, 2003; Wegmann, 2002; Kolowski, 2000) In
particular, this research shows that at this time Walter Eucken and his Freibourg School had carried
out the most important academic research on competition law and policy from both legal and
economic perspectives. It also shows that the central role of a theory economic development based
on a state designed to ensure competition only became dominant after 1945 because of the
appointment of Ludwig Erhard as Minister of Economic Affairs in Bavaria, and from 1949 of the
whole of West Germany. Erhard’s major adviser was Alfred Müller-Armack, Professor of Economics
and Cultural Sociology at the Universities of Münster and Cologne. This catholic (and former member
of the Nazi Party since 1933) devized in 1946 the concept of Sozialen Marktwirtschaft (social market
economy) which came to act as the cornerstone of a political and intellectual movement. In 1953,
the latter took the form of a network (Community of Action on behalf of the social market economy)
with a strong foothold in the West German governement (Müller-Armack had just been appointed
head of the new planning office (Grundsatzabteilung). At that time Müller-Armack had already
developed an important set of reflections about why competition had to rule all social and human
relations putting the market at the service of free citizens. (Ptak, 2004). These reflections were then
made to have political effects through the adoption of the social market economy’ as a central
objective of the new party which was to rule West Germany for most of post-war period: the CDU.
Other recent historical research, however, has also contributed to a myth that a European-
wide institutionalisation of competition policy was the most important long-term political victory by
German Ordo-liberals over French planers and neo-mercantilists (Gillingham, 2003). According to
what has become a dominant academic and actor narrative, an Ordo-liberal network (headed within
the EEC by the long-serving German Commissioner -Hans von der Groeben- his head of cabinet, Ernst
Albrecht, and legal adviser Ernst-Joachim Mestmäcker-),(Von der Groeben, 1987; Von der Groeben,
1995; Von der Groeben, 2002) managed to make inter-firm competition (Wettbewerbsordnung) into
the pivot around which the European Communities were institutionalized and its member states
transformed. In short, according to this narrative Ordo-liberalism transposed West Germany’s
Ordnungspolitik into the de facto economic constitution for European integration (Gerber, 1998)..
Like all inventions of tradition, the myth of an European competition policy exclusively shaped
and directed by ‘the European Pilgrims of Liberty’ has been widely exaggerated not only by ‘the
Founding Fathers’, but also by their ideological followers and disciples within the discipline of law
(Mestmäcker & alii, 1986; Hrbek, R. & Schwarz, 1998)
Just as significantly, this myth is increasingly
uncritically accepted by a large number of economists, political scientists (Quack & Djelic, 2005) and,
more recently, historians (Leucht & Seidel, 2008, Leucht, 2009; Seidel, 2009; Denord & Schwartz,
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
2009; Dardot & Laval, 2009).
n order to challenge this mythical version of EU history in general, and
that of competition policy in particular, in this section we map the organizations, stakeholders and
dominant actors who actually shaped EU competition law and policy at crucial moments between
1945 and 1984. In so doing we show that EC competition law and policy was not simply the victory of
a transnational cabal directed by German intellectuals turned into policy-makers. On the contrary,
law and policy stemmed instead from a failure of both the original proposals of the ordoliberals and
of their effects upon firm and national government behaviour.
2.1. Competition and the creation of the European Coal and Steel Community
2.1.1. An antitrust policy-network inspired by the USA’s example?
The dominant interpretation of German ordo-liberalism as the cradle of competition policy in
Europe builds upon a previous historiographical myth: that European post-war recovery and
subsequent economic growth was to a great extent the result of the post 1945 “Americanisation” of
Europe. After several decades of debate, this hypothesis has been seriously reviewed, and even the
most ardent tenants of the Americanisation hypothesis no longer attribute to American international
policies and business transfers all the credit for the “catching up” of European countries.
(Eichengreen, 2007)
However, in the field of the introduction of competition law in Europe, the
prevalent view is still that this was part of the institutions which were imported into Europe from the
other side of the Atlantic.
To supporters of this thesis, the most evident channel of such influence was Germany, where
the USA as dominant occupying power had as official policy the decartelisation and deconcentration
of large trusts (Konzerne), mainly steel-coal holdings and this as a means to control the future
rearmament of Germany (Gillingham, 1991). Indeed, from the beginning of 1948 the Americans
pushed to introduce competition law in Germany in order to ensure the continuity of the
deconcentration of German industry. However, this draft bill, the Josten draft, which like in the US
tradition introduced a total ban on cartels, was never approved nonetheless because Erhard opposed
it. (Berghahn, 1986) Moreover, it was not until 1957, when the Treaty of Rome had already been
negotiated, that this first German anti-trust law came to be enacted through the Gesetz gegen
Wettbewerbeschränkungen (GWB) (Marburg, 1964; Voigt, 1962).
Notwithstanding this evident ‘failure’, the most recent historical research has argued that the
anti-trust articles of the Treaty of Paris were the result of a transatlantic policy network made up of
academics, civil servants and statesmen, wherein the legal traditions of American anti-trust and
Ordo-liberalism converged. (Leucht, 2009) It is important that we take this hypothesis seriously
because it claims that there has been a strong path-dependence and continuity in European
competition law and policy for more than half a century. The evidence highlighted by these historians
was that some prominent actors of the German negotiation team of the Treaty of Paris were legal
advisers to its head: Professor Walter Hallstein. These advisors were Professors Hermann Mosler,
Hans-Jürgen Schlochauer and Carl Friedrich Ophüls, all of whom had been involved in academic-
Georgetown University- and Marshall Plan exchanges to introduce laws safeguarding competition in
First of all, it is difficult to argue that Ordo-liberals were at the origin of articles 65 (anti-cartel)
and 66 (anti-monopole) of the Treaty of Paris, because it was not from the German delegation which
came the request to introduce these articles, but from the French delegation headed by the
proponent of the Schuman Plan, Jean Monnet. A possibility to surmount this inconvenient evidence
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
is to argue that Jean Monnet was also part of this precocious anti-trust German-French network
originated and mediated by the American diplomatic and academic establishment due to his well-
known US contacts. In this line, tenants of the Americanisation hypothesis have argued that the
holders of ‘the magic recipe of antitrust’ to Monnet were the American embassy in Paris and all its
European network through the Marshall Plan administration, more particularly the Law Professor
from Harvard, Robert Bowie, member of the American occupation authority of Germany, who would
have drafted the suggested articles.
However, the problem with this vision of Monnet supposedly having an American anti-trust
culture is that in the draft of the Schuman Plan declaration that he had prepared there was already a
very vague mention of cartels which stated that the ECSC did not want to become an international
cartel. Jean Monnet only came with a draft of anti-trust articles four months after the declaration of
May 1950, thus shedding considerable doubt upon this interpretation. If the Americans were
indeed informed of events and even if Bowie have been involved in the drafting of these articles on
competition, the question remains as to why the French delegation would have accepted as early as
October 1950 to become the voice of an anti-trust tradition which was not its own?
For the tenants of the Americanisation hypothesis, Monnet was an admirer of New Deal
legislation and from his position of Commissioner of Planning in France had attempted to introduce
at the beginning of 1949 an anti-trust bill inspired by American anti-trust law (Kipping, 2002).
Historians have yet to find its first draft but Monnet himself mentioned in his memoirs that he looked
for the advice to introduce anti-trust articles from Paul Reuter (Monnet, 1976).
This Christian-
Democrat Lawyer had worked in the cabinet of Pierre-Henri Teitgen and was at the time the legal
adviser of the Quai d’Orsay directed by Robert Schuman, that is, not really a representative of
American anti-trust tradition (Cohen, 1998).
In any case, if there was a French political thrust towards anti-trust clauses at the
supranational scale, they were not linked at all to Ordo-liberalism or the USA, but to French
Socialism. The first prominent politician who requested the French government to introduce anti-
trust legislation to fight against price-fixing was the left-wing Socialist Albert Gazier in a resolution of
December 1948 in the Economic Affairs Commission of the French National Assembly. Moreover, it
was a French Socialist like André Philip, former president of the Socialist Movement for the United
States of Europe and former Minister of Economy and Finances until the end of 1947, the pioneer in
asking anti-trust at European level. He did so during the preparation of the Economic Conference of
the European Movement held in Westminster in 1949, where he defended the creation of an anti-
cartel law for basic industries like steel and simultaneously an authority in charge of implementing it.
Indeed, only a few months before the Schuman Plan negotiations, Philip was the only French policy-
maker who had publicly favoured a European Steel Authority in charge of applying an European anti-
cartel law, and this because he considered the working groups of the Organisation for Economic
Cooperation in Europe would be incapable of preventing the restoration of the international steel
cartel of the interwar period
(Kipping, 2002)..
As it is very difficult to evaluate the actual impact of these antecedents in the introduction of
antitrust articles in the negotiations of the ECSC, most historians agree that the new French proposal
for these articles was directly linked to a perceived national interest which had led, two months
earlier, to a decision taken jointly by the Americans and the French to issue a regulation in occupied
Germany to deconcentrate German steel trusts (Griffiths, 1998). Consequently, the ECSC’s articles on
competition were shaped more by a politically-worked construction of French national interests than
For Kipping, Philip was a man well-informed about the American conceptions of the economy despite being a Socialist planner. Contrary
to his view I do not see any basic contradiction between both elements of Philip’s biography.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
by any German Ordo-liberal influence, previous ‘failures’s of anti-trust activity in Germany or France,
or due to American traditions of Anti-trust.
2.1.2. Articles 60-61 of the Paris Treaty: Constructed national economic interests more
than Ordoliberal ideology
The two anti-trust articles presented by Monnet on 27
October 1950 to the delegations of
the Six were aimed at nothing less than the banning of cartels (article 60 in the original numbering)
and the establishment of merger control (article 61). It is true that the Americans, more precisely
Bowie and the US Department of the State, had the opportunity to check them before their official
presentation and agreed with them. Both articles, however, went much further than the American
requests of avoiding price-fixing. In article 60, the French suggested a total ban on cartels, defined as
all agreements and practices that hindered free competition including price fixing, production
quotas, and the partition of markets, products, customers or material resources.
Article 61 was
even more innovative because it introduced merger controls by the High Authority of the ECSC. This
article aimed to counter all agreements or practices aiming at securing a market-dominating position
for one enterprise, including the concentration of firms. More precisely all mergers had to be
authorised by the High Authority on the basis of contributing to the general interest of the economy,
which in practice would have meant that it was not bound to any condition to take its decisions, even
if a control of more than 20% of the coal and steel market by a single legal entity was forbidden. To
implement this interdiction the High Commission of the ECSC would have large powers to declare
and terminate these agreements or practices with the use of penalty fees.
As these articles went much further in a sense of political intervention in economic sectors
than the US anti-trust, we can conclude that the French position was not simply the one pushed for
by the Americans. More definitive about the real thrust behind these articles are the note of 20
November and some letters exchanged between Schuman and Monnet which confirm that the
French introduced the merger article in order to pursue the deconcentration of the Rhur steel
industry initiated by the occupying authorities of Germany (Witschke, 2001; Witschke, 2003;
Witschke, 2009)
The Ordo-liberal spirit was however definitively present elsewhere than in the negotiations
because a German internal proposal of 21
October 1950 did not favour the banning cartels as such,
but made their approval depending on the High Authority, showing that the French proposal was
more ambitious than what the Germans could tolerate (Schulze & Hoeren, 2000). Moreover, Erhard
did not support tackling monopolies and, instead, defended the viewpoint of large companies that
would be affected by the parallel process of German deconcentration and the anti-trust provisions
for the coal and steel treaty. Whereas the Italian and the Dutch delegations supported the French,
the German, Luxembourgian and Belgian delegations contested both the general ban on cartels and
the attempts to put under control mergers with previous authorisations. According to American
sources, ‘Belgium’ and ‘Luxembourg’ feared that this clause would affect the economic freedom of
their respective steel and coal holdings, the Société Général de Belgique and the ARBED (Witschke,
Finally, after some important negotiations with the other Five, on 7
December, again the
French suggested the final drafts which were ultimately approved with minor modifications in the
Treaty of Paris as articles 65 and 66. Whereas article 65 confirmed a total ban of cartels, the High
Authority retained the right to authorise some precise agreements in very precise and restrictive
circumstances, article 66 gave the High Authority the capacity to authorise a priori all mergers. More
MAEF, DE-CE, 500, Number 18, Propositions relatives à la mise en œuvre du Plan Schuman en ce qui concerne les accords et les pratiques
restrictives ou tendant à la constitution de monopoles, 27-10-1950, quoted inLeucht (2009) p.72.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
interesting was article 67 which allowed members states to make exceptions in period of economic
crises, opening the door for a public-private management of these two central industrial sectors. As
we saw earlier, and will appreciate, later, these were not at all clauses which could be acceptable,
not to say a reference, for German ordo-liberals, given the strong, decisive interventionist power on
crucial industrial sectors awarded to a political authority like the future High Authority, which was to
be chaired by Jean Monnet in person.
Summing up, this section has demonstrated that the inclusion in the negotiations of the ECSC
Treaty of antitrust articles to be applied to European steel and coal industries did not derive from any
previous antecedent coming from Germany or the US, nor from an ordo-liberal network. Instead,
these clauses resulted from the political work carried out by representatives of each member state
armed with perceptions of their respective national interests. These actors included representatives
of Erhard’s ‘Social Market Economy Germany’ who also defended the position of their steel and coal
industries as ‘strategic’ for the general economic development of their national economy. In
contrast, there is no substantial evidence to supports pleas in favour of path dependent causation
between previous attempts to create general anti-trust laws in France and Germany and articles 65
and 66 of the actual ECSC treaty.
2.2. The institutionalisation of competition principles in the Treaty of Rome
Between the ECSC Treaty and the Treaty of Rome the question of institutionalising competition
became salient not only within the ECSC system in charge of implementing articles 65 and 66 but also
within each of its major member states. It is important to briefly review the steps taken by each
country towards creating national anti-trust provision because when the Messina negotiations -
which ultimately gave birth to the EEC- started in 1955, there were already several
institutionalisations of the principle of competition in some ECSC member states (France, Germany
and the Netherlands), whereas in others (Belgium, Italy and Luxembourg) there was not This point is
of fundamental importance to understanding national positions, ideological traditions and the
perceived economic impact of an European anti-trust regulation during the negotiations that
produced the Treaty of Rome. This was largely because a fundamental issue surfaced during these
negotiations: whether the countries without any anti-trust law would have to regulate their
respective economies using the principles set down in the forthcoming Treaty?
2.2.1 Negotiating competition principles from Messina to Val Duchesse
The introduction of competition policy within the Treaty of Rome became from the very
beginning a demand of the German delegation in the 1955 Messina negotiations- and this using the
argument that it was not possible to guarantee a Common Market without rules on competition.
The head of the German delegation was Hallstein, seconded by the German representative in the
drafting of the Spaak report, the ordo-liberal, Hans von der Groeben, (in charge of following the ECSC
in Erhard’s ministry of the Economy). Along with the French Socialist Pierre Uri, von der Groeben
became one of the two hands charged with drafting the Spaak report (the draft Treaty for the
negotiations in Val Duchesse). The synthesis worked out by Uri and von der Groeben was more
marked by their experience of the failure of the ECSC’s anti-trust measures as Pierre Uri was from the
very beginning of the ECSC it director of its section of Economic Analysis and the German
represented its country in the Council of the ECSC.
European Navigator (, doc.24292, Mémorandum du gouvernement fédéral d’Allemagne sur la poursuite de l’intégration,
Witschke, T. (2003), Gefahr für den Wettbewerb? : die Fusionskontrolle der Europäischen Gemeinschaft für Kohle und Stahl (EGKS) und
die "Rekonzentration" der Ruhrstahlindustrie 1950-1963 (Phd EUI Florence, 2003).
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
Chapter III of the Spaak report on “Monopolies” suggested that the simple removal of barriers
would not permit an end to the national discriminations between companies, particularly in
relationship to prices. If national barriers were substituted by private cartels between industrialists,
they could create positions of monopoly which would eliminate the potential gains from the
common market. For this reason the competition articles were to be put to the service of the
construction of the common market by sanctioning at least three precise situations of monopoly
(market sharing, production quotas, monopolistic domination). The institutional structure suggested
was clearly a vibrant hymn to technocratic supra-nationalism. The Nation-States would not have any
word in such policies whose concrete rules derived from the articles of the Treaty would be
elaborated by the European Commission, who would also decide and control only supervised by the
European Assembly (EA) in the rules and the European Court of Justice (ECJ) in case of appeal of a
decision. As the workload was forecast to be very important, the Spaak report included two
technocratic agencies: on the one hand the Commission would be flanked by a Consultative
Committee with a role of arbitration and conciliation, meanwhile the Court would create a
specialised chamber made of lawyers, economists and technicians. If this was not enough, the report
pointed out that the first to be affected by the rules would be state-owned enterprises, opening the
path to a more flexible application to private companies, which would be given a time of
We can conclude that the proposals in the Spaak report largely constituted a ‘perfect’ ordo-
liberal model of European anti-trust law. Actors such as Von der Groeben, who had personally
drafted these clauses, thus had high hopes that the national governments would start the
negotiations leading to the Rome Treaty on this basis. Suffice to say at this point that these proposals
did not coincide at all with the final shape that the member states signed in the Treaty of Rome.
Indeed, analyzing the debate which took place during the negotiation of the Treaty of Rome allows
one to reconstitute the preferences of each country in relationship to the kind of competition articles
their representations desired. The three central questions at issue were cartels, monopolies and the
institutional framework in charge of competition policy. Other important issues concerned the
application of competition rules to State monopolies and public services.
2.2.2. From Val Duchesse to Rome
What was the German ordo-liberal proposal negotiated by von der Groeben and Müller-
Armack in Val Duchesse? The basis was the writing of two articles: one for cartels and other for
monopolies. The first included a general prohibition with very limited exceptions, meanwhile for the
second the Treaty would only sanction the abuse of dominant position, either by a private company
or a state undertaking. The most striking of the German suggestions was that they preferred to deal
with the institutional structure in a separate Treaty to be drafted by the member states within two
years or, if not, one year later the Commission would suggest a regulation to the Council, which
would decide upon it by qualified majority. This lack of definition may have derived from the need to
wait until the definitive approval of the German anti-trust law, which set up a special independent
authority. In addition, Müller Armack was very clear in giving to the European Court of Justice the
responsibility for reviewing cases and ruling upon them
The French delegation, instead, worked politically to put the Council of Ministers in control of
the decisions for competition. According to this plan, the Commission would be in charge of the
actual surveillance of the system through the harmonisation of national legislations, which would
continue to be fully operational given that the articles concerned only when the cartel or monopoly
included more than just one country, and they would not be directly applicable by Member States.
Archives Historiques des Communautés Européennes, (AHCE), CM3/NEGO 236M, « Extrait du rapport Spaak », 21-04-1956.
A preference for judicial intervention shared more by followers of Hayek and Chicago than those of ordoliberalism.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
To avoid paralysis of the system, the Council would decide on these issues by qualified majority.
Coming to the concrete content of the article on competition, the French pleaded for a single article
banning both cartels and monopolies with special emphasis on price fixing, the restriction or control
of production, the partitioning of markets, and the total or partial domination of markets for certain
products by a firm or groups of firms. This general prohibition was, however, derogated by a general
exemption articulated in three cases: that cartels and monopolies led to the improvement of
production or distribution; that they foster technological or economic progress; and lastly, that they
were carried out by state monopolies and public services.
This position of the French delegation
was to a certain extent influenced by its own domestic law (the idea of making the European
Commission just a technical instrument was similar to its own Commission for cartels). Meanwhile
political decision-making was to be returned to national governments which would have strong
leeway to decide on exemptions.
In contrast, Italy, Belgium and the Netherlands were favourable to the European Commission
as the responsible of the harmonisation of national competition laws, and this without waiting three
years due to the insecurity that this project was creating among their business circles. However the
two countries without competition laws, Italy and Belgium, diverged in relationship to the general
ban of monopolies. Like on many other future occasions, the Mediterranean country joined France
arguing that throughout the long transition period, the existence of national monopolies would harm
European competition. On their side, the Benelux countries were favourable to the German thesis of
preserving some monopolies for some time, punishing only the abuse of their dominant position.
In a previous paper dealing with the negotiations of the Treaty of Rome we have already
explained in detail the position of French business in front of this negotiation (Ramírez Pérez, 2006).
Here we will simply underline the main questions concerning the competition articles raised by the
Groupement syndical des constructeurs français de l’automobile (GSCFA), the CSCA and Renault. This
is important to understand that the French position was to a certain extent very distant from what
some of the most important industrial lobbies requested from the Socialist-Radical government of
Prime Minister, Guy Mollet. They advocated for the introduction in the Treaty of anti-monopole
system to control the unfair competition within the new common market of American
This consisted more precisely in the creation of a neo-corporatist Control Commission on
Foreign Investments, which would be introduced within the Treaty and made by representatives of
member states and European business associations by sector. The suggestion was to discriminate
between EEC companies and non-EEC companies. This Commission would authorise all investments
of non-EEC companies by sector and, it forbade that a foreign companies control more than 30% of
the market of a member state, nor more than 25% of the whole EEC market. If so, the superior
amount would have duty imposed upon it (as if the declared EEC production was in reality coming
from outside the EEC).
In the subsequent memorandum sent to the French SGCI, the French private
producers suggested that this Commission received information about all capital transfers coming or
going outside the EEC countries. More crucially, its authorisation would be necessary for any take-
over or merger but respecting the veto right of the host country. Like in the French position during
the negotiations, French industrialists insisted upon a particular surveillance towards a price policy by
companies which would be incompatible with the production condition within the EEC.
This fear of
the abuse of dominant position of American multinationals was also shared by the other automobile
AHCE, CM3/NEGO 236, Secrétariat du Groupe du Marché Commun, « Mémento interne de la réunion du 3 et 4 Septembre 1956 », 07-
09-1956. Idem, Secrétariat de la Conférence intergouvernementale pour le Marché Commun et l’Euratom, « Tableau synoptique des
projets d’articles soumis par les délégations concernant les règles de concurrence applicables aux entreprises », 18-09-1956.
AR 0700 (55), « Projet de mémorandum du GSCFA sur le péril des investissements américains », 13-11-1956.
AHCE, SGCICEE-3114, GSCFA « Mémorandum concernant les problèmes posés par l’implantation de firmes étrangères au sein du marché
commun », 12-12-1956.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
French trade association, the Chambre syndicale des constructeurs d’automobiles (CSCA), which
equally asked for the suspension of the common market vis-à-vis them. Again, this scheme suggested
the creation of a special Commission in charge of monitoring the means to set up ‘fair competition’
between EEC companies and American multinationals.
We know that these business concerns directly contacted the French negotiator Robert
Marjolin, then secretary of the Interministerial Committee for European integration (SGCI), Jacques
Donnedieu de Vabres, and the permanent French representative in Val Duchesse, Jean-François
Marjolin attempted to introduce such a Control Commission on Foreign Investments but
without success given the strong German and Benelux opposition, which only accepted that the
European Commission had to be informed about foreign investments, and that it could just issue
public recommendations to different countries. However, in a presentation of the Treaty of Rome to
Renault’s top management, Marjolin confirmed that the Treaty of Rome included a clause which
allow us to protect the French market against an invasion of German-American or Belgian-American
products: it is the article 86, quoted by M.Dreyfus in his article of this evening on the newspaper Le
Monde, which deals with monopolies, and the general safeguard clause which would allow France the
setting up of protective measures.”
These contacts between French economic circles and the French EC negotiators show very
clearly that the agreement for competition policy within the Treaty of Rome, particularly its article
banning the abuse dominant position, was not just a German ordo-liberal victory. Instead the French
State, both the government and one of its major state-owned industrial companies like Renault,
were more than satisfied with the article against monopolies. If it is certain that the German view
prevailed on several points, it is wrong to conclude that the new articles about competition were
introduced or drafted entirely according to the German proposal. Let us analyse the final articles in
turn and what could be exactly attributed to the ordo-liberal Germans.
The first German success was that there were two distinct articles about cartels (article 85) and
monopolies (article 86). The second was that it was agreed in article 87 to postpone the institutional
decision within three years by unanimity or if later by qualified majority. However, the most
fundamental accomplishment was that Germany convinced France to accept that in article 86
monopolies were not condemned by principle, but just the abuse of dominant position. We note
here that the position of ordoliberalism is complex: clearly, for ordoliberals abuses of dominant
position have to be condemned, because the aim is that dominant firms behave as if they were in a
pure competitive market. However, they also often have a strong structuralist suspicion that
dominant positions would lead to abuses, which explains their preference for per se rules. It could
also be concluded that Germany had been partially successful in also including in article 90 state
undertakings, and not just private companies. But this was far from being an Ordo-liberal sweeping
victory if we look at the French demands introduced within the Treaty.
First of all, in article 86 the Treaty introduced a non-exhaustive list of forbidden practices,
which in fact were those originally proposed by the French: the imposition of inequitable purchase
or selling prices or of any other inequitable trading condition; the limitation of production, markets
or technical development to the prejudice of the consumers; the application to parties of unequal
AHCE, SGCICEE-3114, Lettre du CSCA pour M.Donnedieu de Vabres, 15-01-1957. Sent also to Prime Minister Guy Mollet and other
Ministers of his government.
AR 0700 (55), « Note sur les conversations avec M.Marjolin », 28-12-1956 ;
Archives Robert Marjolin (ARM) ( Fondation Jean Monnet
Lausanne), ARM18/01/04, lettre de Renault à Marjolin, 07-02-1957; ARM, 18/01/05, lettre du GSCFA à Marjolin, 11-02-1957; ARM
18/01/03, Note pour M.Donnedieu de Vabres, 01-02-1957 ; AN, SGCI, 910004/12314, Lettre des Usines Renault à Monsieur Deniau, 07-02-
1957, citée par Castelnau, « Le rôle du SGCI dans les relations de la France avec le marché commun 1956-1961 » in R.Girault et alii, Le
rôle des Ministères des Finances et des Ministères de l’Economie dans la construction européenne (1957-1978) (Paris, 2002), p.211.
ARM 26/03/18, « Conférence de M.Robert Marjolin sur le marché commun au Service central de Formation », 17-07-1957.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
terms in respect to equivalent supplies; and lastly, the conclusion of contracts to the acceptance by a
party of additional supplies without connection with the subject of the contract. Moreover, this list
was not exhaustive, but pointed out as explicitly forbidden these four cases, opening a highway for
further prohibitions in the future. In this way the French managed to obtain as much as they wished
from the Germans in this point despite of having renounced to a total ban of principle of dominant
The same was true about article 85 on cartels which included all the particular French
requests, both on the precise cartels to forbid and on three general, broad exemptions. On the latter
they included the same four exceptions as in article 86, reducing in this way the effect of having
created two different articles, but added another French request, to include market-sharing or the
sharing of the sources of supply as a forbidden practice by companies. The most fundamental French
victory concerned the three exemptions which authorised cartels were exactly those it had
requested during the negotiations. These were much more precise and at the same time of very
broad scope, against the German preference for strict and limited exceptions.
Lastly, on the institutional form of application of the Treaty, the decision was postponed due
to a transitional clause for the next three years (articles 88-90) which de facto gave all the powers of
application of the norms to the member-states in the Council, reducing the European Commission to
a secondary role of surveillance and suggestion of solutions to possible actions going against these
articles. The European Court of Justice was not even mentioned, and neither was any technocratic or
special chamber that had been proposed in the Spaak report. If this was not enough to certify the
extent of the German ordo-liberal defeat, one of the clearest German gains of including State
companies under EC competition law was somehow attenuated by an ill-defined exception towards
services of general interests or fiscal monopolies.
In conclusion, the competition articles ultimately applied to European firms by the Treaty of
Rome were not caused or dominated by ordo-liberal ideas. Rather they were the result of a
compromise between the perceived national interests of negotiating parties, mainly France and
Germany, both of whom reached a synthesis which accommodated all French requests. The most
important conclusion is that basically nothing remained from the Spaak report articles written by von
der Groeben. Crucially, this means it is impossible to consider that from its outset the EEC possessed
a definitive blueprint for competition policy. Instead, this was defined subsequently in and around an
EC Regulation which was subsequently approved in 1961.
2.3 Regulation 17/1962: European business and national interests
As soon as the Treaty of Rome had been approved, different affected business quarters took
public postures as regards the application of the articles on competition. Indeed, there was a clear
sign of rising expectations about their direct effect within their national legal orders as soon as the
Treaty of Rome entered into force in 1958. It is important that we develop here the debates and
positions adopted by the interest associations representing multinational businesses and national
peak associations as they provide us with an external, but interested, viewpoint about what had
ultimately prevailed in the Treaty and the different alternatives which existed for the European
regulation, the future 17/1962 regulation, tackling on competition articles.
The quickest reaction came from the oldest and most prestigious of business institutions, the
International Chamber of Commerce, where the owners of the major trans-national companies of
the world met. Founded in 1919 to stimulate international exchanges, the ICC still has a Secretariat
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
General in Paris and its Presidents have often been Americans or Europeans.
Apart from its national
sections, it created also a series of working groups where European members are prominent such as
the Committee on international business agreements affecting competition and the Committee for
European Affairs. The former was co-president until 1957 by the French President of ELEC, Edmond
Giscard d’Estaing, when he was appointed new President of the ICC for a period of two years.
Indeed, it was under Giscard’s presidency at the ICC Council of Mai 1958 that this global forum
of multinational corporations from all continents issued a resolution on the articles on restrictive
practices in the Treaty of Rome, restating the previous position adopted by its Committee on
international business agreements affecting competition some months earlier in December, after a
detailed study presented in April by its rapporteur, Lucien Sermon. For this secretary general of the
ELEC, the business branch of the European Movement, the problem was the general ban on cartels
envisaged by article 85 and their automatic declaration as null and void. Multinational companies
would have preferred, like in article 86 on monopolies, the condemnation of their abuse or negative
effect. Moreover, they rightly saw in the French exemptions the door open to the arbitrary
intervention of member states. But their worst case scenario was that these two articles would
become the norm for those countries without competition law like Belgium, Italy and Luxembourg.
For this reason the ICC requested that the European Commission publicly stated the general and non-
compulsory nature of these articles before the drafting of the exact regulation developing articles 85
and 86, as foreseen by article 87.
The May 1958 resolution of the ICC Council provided also an important corroboration of the
French victory over the German ordo-liberals in the question of public enterprise and service of
general economic interest as they “would benefit, following article 90, from a less rigorous treatment
than some private enterprises in similar positions.” But more importantly the ICC confirmed the fears
of the Benelux and Italian delegations in the negotiations, namely, that the transition period of three
years created uncertainty and concern among business leaders, because it was impossible for them
to appreciate if their cartel agreements were forbidden. This uncertainty raised doubts about which
companies would effectively profit from the creation of the common market, and called for a clear
position of the Council on this question of the non-applicability of the EEC competition articles by
national-governments until the new regulation had been passed. This position was not new because
the ICC national chapters had sent this resolution to their national government, but without any clear
effect. For this reason the ICC addressed this time a call to the Commission of the EEC to issue a
formal statement about it.
Taking a clear stand on the future drafting of the future regulation, the ICC Council went much
further, as it requested that the new regulation deepened exemptions for ‘beneficial cartels’
introduced in article 85. For this reason it also urged the Council to publicly present its general
guidelines and criteria in this matter with a consultation of the interested parties prior to the future
regulation. In the ICC view, it was of fundamental importance to decide on the criteria upon which it
would be decided if a particular practice was contrary to articles 85 and 86, leaving exclusively to the
European institutions, and not to national governments, the decision to forbid certain agreement or
practices. This preference for supranational institutions was conditional to the finding of facts
through a deep research and juridical enquiry proving the prejudice of an agreement, either by its
object or effect, to the aims of the common market, to trade between member states, or to the free
interplay of competition.
Ernest Mercier, Alberto Pirelli, Georges Theunis, Rolf von Heidenstam and Edmond Giscard d’Estaing.
ASF, Statistica, 36/2219, Chambre de Commerce internationale, Commissione internazionale delle intese, « Riunione di Parigi », 15-04-
HAEC, BAC 089, 1983 (11), Lettre de M.Walter Hill, Secrétaire Général de la CCI au Président du Conseil de la CEE, M.V.Larock, 02-07-
1958; Résolution du Conseil de la CCI, Les pratiques commerciales restrictives et le Traité de Rome, 06/07-05-1958.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
This position was a clear invitation to the new Hallstein Commission and to the new
Commissioner for Competition, Hans von der Groeben, for rapid action. This position had not been
an easy one to adopt within the ICC. The delegations from the USA, UK and Germany would have
preferred not to take the risk of provoking with this position an acceleration of the timing in the
issuing of the regulation (whose initiative was within the hands of the Council for a period of three
years, before passing into a Commission initiative, if nothing had been made within this period).
Moreover, it was feared that a rushed debate would only deepen the blocking of positions in the
Council regarding the most controversial aspects introduced in the Treaty.
In contrast, the delegation most favourable to a quick and direct public response to the
position of the ICC was the French, headed by René Arnaud, General Secretary of the Conseil des
fédérations industrielles d’Europe (CIFE), which included the representatives of national industrial
federations of the OEEC member states. (Rollings & Kipping, 2004).
The reason was surely very
similar to that argued by Jean Louis, President of the French CNPF section for European affairs, and
Robert Fabre, from its international commission, namely that it was necessary to quickly restore the
general validity of cartels as a means to permit European, and French, firms to adapt themselves to
the elimination of trade barriers. Both men shared the conviction of Raymond Lartisien, CNPF’s
representative and President of the Commission for Competition rules of the federation of EEC
industries, UNICE, that the accommodating French model of competition policy would impose itself
as the example to follow. (Warlouzet, 2008)
It was obvious that the Benelux countries also
supported the quick publication of the report, but only under the name of Sermon, and not of the
ICC. In favour too of a public position of the ICC was the Italian delegation, whose commission for
competition matters was within the hands of Fiat through its young owner, Gianni Agnelli, and Fiat’s
economists and business lawyers, particularly Fiat’s top economist Carlo Bussi and the lawyers
Vittorino Chiusano, and Professor Eugenio Minoli from the University of Modena. In their view a mid-
way solution was that the ICC presented the same conclusions of the report but with a less
aggressive tone than that adopted by Sermon in his paper.
The final decision adopted by the ICC council to issue this resolution showed that the EEC
countries imposed their view, despite the reluctance of Italian and Belgium quarters that lacking a
national legislation for competition, their national governments could start using the EEC Treaty as
soon as possible. Maybe pushed by a stronger sense of urgency than in the countries already with
legislation, Fiat instructed Professor Minoli to take up Sermon’s call with a policy paper to be
submitted to the European Commission about the shape of the forthcoming regulation. Emanating
from the Italian section of the ICC, the Minoli paper, which the Confindustria did not approve, had
two objectives: on the one hand, it subordinated the illegality of a cartel to the effective existence of
damage to trade between EEC countries, by focusing on the finding of damage, and not the moment
when the cartel had been agreed. This subtlety served to block the retroactive application of the law.
On the other hand, Minoli suggested that the regulation create a supranational administrative
authority with the power of enquiry, but also of legal initiative, together with a panel whose
members would be economic and legal experts independent from administrative pressures, who
would decide on the compatibility of the cartels with the Treaty.
The idea of an independent anti-
trust authority following the American or German model seemed to be the clear design for Fiat and
Rollings, N., Kipping, M. (2004), “Networks of Peak Industrial Federations: the Council of Directors of European Industrial Federations and
the Council of European Industrial Federations” in M.Dumoulin, Economic networks and European integration (Bruxelles, 2004), pp.277-
AN, 72 AS (CNPF Archives in the Roubaix Centre for French business archives), 1388, Note de Lartisien pour MM.Villiers, Louis, Hommey,
de Soultrait, Robert Fabre, 27-10-1960 ; Jean Louis’ articles in the 1958 issues of Bulletin du CNPF; R.Fabre, “Les practiques commerciales
restrictives et le Traité du Marché commun », Revue du Marché Commun, 1958-5, pp.260-268, quoted in Warlouzet, op.cit., p.182.
ASF, Statistica, 36/2219, Chambre de Commerce internationale, Commissione internazionale delle intese, « Riunione di Parigi », 15-04-
ASF, Statistica 38/2325, CCI, Commissione Intense, 02-12-1958.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
the large Italian multinationals within the Italian section of the ICC. Summing up, in the view of the
largest European multinationals, there was already some leeway to shape the definitive form of the
implementation of the Treaty of Rome.
The Commission quickly answered the ICC request for clarification because this demand also
came from the UK, who wanted to know the way this would affect its companies, and Germany,
where a real polemic was taken place as the German law started to become operational in 1958.
Directed by commissioner von der Groeben, DG IV enquired how to start a coordination of member
states application of the rules to avoid a different application of the articles in different cases, and
requested that the states without legislation, like Italy, could quickly approve a system which could
help them to pursue cartels and monopolies according to the new legislation.
In its first general
report, and in a speech delivered in October 1958 by President Hallstein, the Commission stressed
that article 88 of the Treaty made clear that the principles of competition were valid from the first
day, and that national governments were supposed to apply them as if they were their own laws.
Such a principle was stressed by the director-general for industry, the Dutch Pieter Verloren Van
Themaat, insisting that they were compulsory obligations for member states and not just general
principles. The Commission saw its role as a coordinator of all national systems because it became
very clear from the member states that the regulation would have to wait for at least the three years
forecasted by the Treaty.
For Fiat, the position of the European Commission only served to accelerate the introduction
of a “restrictive and demagogic” Italian competition bill. The strategy that the Italian multinational
followed to prevent such a perspective was to keep using the ICC to put pressure on the
governments of Belgium and Luxemburg to pass their laws earlier and become the reference for a
future Italian law. It also searched to make of the ICC an official and privileged partner of the
Commission (as it was for the United Nations).
This last strategy was successful as in early 1961
Commissioner von der Groeben and Director-General Van Themaat, met the ICC commission for
cartels, headed by the French President of Pechiney, Raoul de Vitry d’Avaucourt, Lucien Sermon,
Eugenio Minoli, René Arnaud, and the legal advisers of Philips, AEG, Imperial Chemical, and also an
American business lawyer, George Nebolsine from Coudert Brothers. On that occasion, they
supported the Fiat proposal to appoint a “Federal Trade Commission without decision-making
power”, which would act as a consultative independent committee similar to a court and made up of
judges and other economic and legal experts. Minoli added that it would not take power out of the
Commission which would decide in the last instance and not affect the member states with an
already existing legislation. For the ICC the ideal model would be the creation of a specialised Anti-
trust Court.
An additional reason for Fiat to search for this different channel of influence was that there
was an open conflict with Confindustria in the strategy to follow in this concern, given that like all the
other national trade associations from EEC countries within UNICE, the Italian confederation aimed
to delay, and not accelerate like Fiat, the development of the Treaty in competition matters, on the
basis that the European Commission would become trapped with practical and legal difficulties.
According to the CNPF, the three year period would serve to demonstrate the utility of cartels. This
strategy was even followed by the German BDI which had unsuccessfully opposed a very strict
German anti-cartel law. For this reason they supported the attempt of French industry to make the
more accommodating French cartel law the model for the future regulation of the EEC. UNICE put all
HAEC, BAC 001, 1971 (79), Direction générale de la Concurrence, Note confidentiel pour la Commission sur les premières questions à
trancher en vue de l’application des articles 85 à 89 du Traité, 14-07-1958.
ASF, Statistica, 39/2364, CCI, Sezione Italiana, 03-02-1959.
HAEC/BAC 089/1983/11. CEE, Commission, DG Concurrence, Compte rendu succinct de la réunion tenue le 13 mars 1961 avec le groupe
"Pratiques restrictives et intégration européenne" de la CCI, 28-03-1961.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
its hopes on Marjolin and the French government (whose Minister of Industry Jeanneney had already
asked Prime Minister Debré to oppose making the Commission responsible for this policy), being able
to block von der Groeben’s attempt to impose on the EEC the German model that his master, Ludwig
Erhard, had just imposed on German industry.
In sum, business representatives took different positions towards the future EEC regulation on
competition. Whereas the ICC led by Fiat and Brufina still aimed to exclude the nation-states from
the future governance of the system, UNICE and its national federations pinned all their hopes on
action by the nation-states to block the Ordo-liberal attempt from the European Commission to
introduce the restrictive German legislation on an EU-wide scale. At the end of the day, UNICE was
right because the regulation was only presented by the European Commission after the three years
scheduled by the Treaty, ie. after it no longer had to achieve unanimity in the Council to pass this
regulation. The question was obviously put on the table after one year during the last days of 1961
by Germany, whose strict legislation disadvantaged its firms in relationship to the rest of Europe. It
was precisely during the famous “marathon” negotiations to enter into the second stage of the
Common Market through the approval of the Common Agricultural Policy (CAP) scheme submitted
by the Commission, that Germany made adoption of the Regulation on competition an absolute
condition for accepting a CAP requested by France and the Netherlands.
The regulation had already
been under discussion for several months and, according to the Renault’s manager for external
affairs, Lorenceau: “to a large extent, it gave satisfaction to German thesis”.
Was this really the
Analysis of Regulation 17/1962 does not fully confirm this point. It is true that in his note about
the regulation, the Renault manager pointed out that its main feature was that the companies were
constrained to declare all the cartels in which they were involved, excepting those which did not
affect import or export between EEC member states, before the date of August 1962. This
notification system was one of the three major points of disagreement in the Council debates, the
other two having been the creation of a consultative committee, and the juridical nature of the
exceptions which permitted a cartel. For the French, this was an error because, for administrative
reasons, it was impossible to put into practice given the important numbers of agreements which
had to be notified (especially as companies had no means of knowing beforehand if they would be
accepted or not). This fear turned to be justified, because there was an accumulation of cases
without resolution, discrediting DG IV.
The second element of the supposed German victory was that the institution in charge of
competition policy was exclusively the European Commission, something which could not be
considered a surprise given that also in the managing of the CAP the Commission had won such a
battle. There was not much that France could do to stop the Commission from this exclusivity as
already in the negotiations the other EEC countries were already in favour of giving decisional powers
to the European Commission. However, the French request for a role of the Council had not entirely
been left out of the regulation, because its article 10 created a Consultative Committee whose
consultation was compulsory for the European Commission. This Committee was very different from
the one suggested by the Economic and Social Committee (which excluded civil servants from the
member states and gave priority to qualified economic and legal experts chosen among the
organisations represented within the Social and Economic Committee, including representatives of
consumers organisation). This was the furthest that the suggestions of large European multinationals
got, because in the Consultative Committee actually created by the Regulation, its members only
AN 72 AS 1388, Réunion de la commission des règles de concurrence UNICE, 15-04-1958, quoted in L.Warlouzet, op.cit., p.190.
Ministère des Affaires Etrangères de la France, Représentation Permanente, RPUE 1143, Note de François-Xavier Ortoli, secrétaire
générale du SGCI, 17-11-1961, cité en L.Warlouzet, op.cit.,p.192.
AR, V-P, Rélations Exterieures, note 526, 15-01-1962.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
represented the member states. Subsequently their role was to be of importance because they had
to be informed in detail in all cases (producing minutes of their discussion before any decision was
taken in this field, but whose opinions were not made public).
The importance of this Committee is that whenever a case would arrive before the College of
the Commissioners, each of them would already know very well the view of their own member state
and the reasons for it. Moreover, if the regulation established the Commission’s monopoly for the
application of exceptions to cartels, it did not do so in relationship to the general control of cartels,
leaving national authorities the possibility to do so, even if it was not clear whether they were
obliged to, a fundamental issue for countries without legislation like Italy. In this concern, the
European Commission was a step backwards in supranationality in relationship to the ECSC where
there was no place for enforcement activities by national competition authorities or national courts.
France had also obtained in the negotiations two further concessions: the possibility of the
Commission to carry out sectoral enquiries when dealing with anti-cartel behaviour; and the
notification of exclusivity agreements.
In conclusion, with Regulation 17/62 representatives of Germany certainly obtained the victory
of not having at the European level a much less strict system that the one that they had approved at
home. Moreover, they allowed German competition policy to preserve its specificity towards
domestic cartels and monopolies. Indeed, however, it was this fear of disadvantaging German
enterprises in international competition, rather than just the ideological faith of Ordo-liberals, which
brought Adenauer’s Germany to accept to barter their financial support for the Common Agricultural
Policy in exchange for the approval of Regulation 17/62. In so doing they enabled German ordo-
liberals to catch the train that they missed in the Spaak report and the Treaty of Rome. But this was
also because the ordo-liberal project for European competition law was one which would give
control to an independent administrative authority as in Germany. Finally, as we set out below, it
was one thing to have fought to introduce a certain system of rules for competition, and a very
different issue to actually succeed in using it to reduce existing, and forthcoming, cartels and
2.4 The beginnings of policy failure: 1963-69
By 1963 the DG IV had received more than 900 notifications of multilateral agreements and
34,500 bilateral agreements, most of which were vertical agreements, like those of the automobile
industry. This sector alone notified 500 agreements with dealers within the six countries of the EEC.
As the French had forecasted, it soon appeared that the kingdom of von der Groeben, was
administratively unable to handle one by one all the notified cases. In spite of the increasing pressure
of all member states, including Ordo-liberal Germany, the Commission took long delays to issue
decisions which could serve to enlighten EEC firms about how to draft their collaboration agreements
without fearing of being outlawed and fined at a later stage. The situation was increasingly tough for
DG IV which argued that it could not take any decision of principle without having evaluated the
thousand of agreements which it had received (Warlouzet, 2008)
In 1964, the situation had not yet been solved and the situation was graphically described by
the French permanent representative, Jean-Marc Boegner, as a paralysis of DG IV from down to top
of the hierarchy.(…) at the level of directors inefficiency is pervasive(…) the Commissioner and his
cabinet do not trust their services and they doubt to introduce badly finalised cases to the juridical
For a slightly different conclusion see Warlouzet (2008). Even when he emphasizes, contrary to our viewpoint, the impact of ordoliberal
doctrine on policy, he acknowledges that this was also possible as a result of the concessions made by Germany over the CAP during the
passage to the second stage of European integration. Furthermore, he agrees that ordoliberals did not obtain everything they idealized,
namely, the integral transfer of their system to the European level, and their total failure to implement it.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
service, and even less to the College of Commissioners.(…)The Commission appears reluctant to meet
the member states, as a proof of its embarrassment”.
It was only in September of 1964 that DG IV
issued its first decision to forbid a cartel from a vertical agreement, the famous Grundig-Costen case,
whose confirmation by the European Court of Justice took place nearly two years later, in 1966.
Simultaneously, von der Groeben convinced the Council to issue Regulation 19/65, which gave
the Commission the discretionary power to decide on block exemptions only for exclusive dealing
and licensing agreements. This regulation passed with great difficulties because the Italian
government, which had unsuccessfully opposed the granting of block exemption powers, in 1965
appealed this majority decision to the Court of Justice with the hope of having the Regulation
cancelled on the basis that article 85 could not be applied to vertical agreements like those of
automobile distribution.
Again, it was the Court of Justice the responsible of the rescue of DG IV, but the application of
the block exemption had still to wait until this decision had confirmed the Council authorisation. It
was again, only with the Council authorisation, that DG IV managed to pass regulation 67/67 about
block exemptions for exclusive distribution and purchasing regulation(Swann, 1978). That same year,
when the patient, long march towards an Ordo-liberal competition policy was about to take shape,
von der Groeben was taken away from DG IV, to take responsibility for Internal Market and Regional
Policy, substituted by the Dutch M.J.A.Sassen. The only hope to continue this policy was that von der
Groeben’s head of cabinet, Albrecht, was simultaneously appointed director general, substituting the
Dutch Social democrat Verloren Van Themaat.
In sum, a decade passed by from the signature of the Treaty of Rome until the moment in
which DG IV could actually start using its anti-cartel powers vis-à-vis European companies with some
confidence, but always seriously curtailed by the Council and protected by the Court of Justice.
Meanwhile DG IV was fighting for having the powers for its ambitions, the backlog of notified cases in
important industrial sectors like the automobile industry remained in a legal limbo for many years.
For example, the first automobile distribution agreements were not authorised until March 1972,
when DG IV issued its first decision on a case of automobile distribution involving BMW Germany, an
agreement notified in 1963.
Indeed, one thing was to preach the ordoliberal credo and other to act
according to it and having in impact on real existing cartels and monopolies.
Summing up, if the articles on competition of the Treaty of Rome were a victory for neo-
mercantilist French conceptions on competition, German ordoliberals balanced this partial defeat
with a relative success in Regulation 17/62. However, the latter turned out to be largely ineffective
due not only to the lack of administrative capacity of ordoliberals to implement it, but also to the
political guerrilla warfare carried out by their neo-mercantilist opponents in France and Italy to block
other important draft Regulations in competition law that would have given more content and
powers to the ordoliberals.
Indeed, a vivid illustration of the difficulties of ordoliberals to claim victory over competition
policy are the words written in 1969, and presumably in optimistic terms, by the first of all
ordoliberals, the President of the European Commission Walter Hallstein. For him, competition policy
was growing slowly and steadily, like a tree.(…) Admittedly, it took a good deal of time to get thins
moving. Regulation nº 17 came into force only after four years of arguments and debate, in 1962. (…)
It was not until 1965 that the Commission was empowered to exempt certain types of engagements
It is only in 1983 that the Commission drafted the first detailed Regulation 123/85 for the block exemption for motor vehicle distribution
and servicing agreement replaced ten years later by Regulation 1475/95, which had a duration of seven years until the 30th September
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
in restraint of competition from the general prohibition against cartels, and it was not until 1967 that
the Commission could eventually use that power. (…) While the decisions of the Commission and the
European Court of Justice in interpreting article 85 of the Treaty of Rome are gradually giving effect
to the provisions it embodies, the application of article 86 is presenting the Commission with
considerable difficulties.
This optimistic statement can also be seen as a confession by Hallstein of the fundamental
incapacity of the Commission he directed for nearly a decade to make EC competition policy
ordoliberal. Although some important developments were to take place in this direction during the
1970s, the overall trend was, on the contrary, still in favour of neo-mercantilist economic doctrine
and its defenders within large firms, national governments and even the European Commission
(Ramirez-Perez & Smith, 2009). It was only from the mid-1980s that change began to take place
which, albeit temporarily, allowed ordoliberals to gain more influence.
3. Full Institutionalization of EC Competition Policy (1985-92):An
ordo-liberal/Chicago School Alliance begins to take charge
Indeed, in the space of seven to eight years at the end of the 1980s and the early 1990s, the
EC’s competition policy was transformed from a relatively weak set of instruments largely
overshadowed by neo-mercantilist approaches to sectorized industrial intervention into a tightly knit
policy placed at the heart of a revitalized neoliberal economic doctrine made and implemented not
only ‘in Brussels’ but also throughout the member states. Many analyses of this radical change
highlight a combination of two arguments. First, the single market programme and Single European
Act (SEA) is seen as providing the touchstone for the relaunch of competition policy (Cohen &
Lorenzi, 2000). Second, the rise of neo-liberalism in several key member states had also reached the
Commission by the late 1980s (Hooghe, 2001). In short the activation of an EU government of
competition policy is often explained as simply the result of intergovernmental consensus over the
need to reinvigorate the EU’s economy by not only completing the single market but also injecting
neo-liberal doctrine into this process.
Apart from being fundamentally over-general, this argument possesses a number of specific
and deeper flaws. First, the SEA contained nothing actually on competition policy (Armstrong and
Bulmer, 1998: 93). Rather its prime focus was upon the removal of a whole range of barriers to intra-
Community trade. Second, neo-liberalism is a very ‘broad church’ and evocations of the market were
made by actors from many different political party and ideological backgrounds (Jabko, 2006).
Moreover, as we have seen in Parts 1 and 2, many neoliberals disagreed strongly amongst
themselves about the principles and operationalization of competition policy.
Instead, in such order to grasp the radical change in the status and impact of a European-wide
competition policy, the hypothesis developed here is centred upon the political work undertaken by
a range of actors in order to transform latent resources in the single market programme into actual
change of competition policy. More precisely, the claim set out and partly tested here is that during
the first two Delors Presidencies:
- ordoliberals within DG IV joined forces with actors closer to the Chicago School (notably the
commissioners Peter Sutherland and Leon Brittan and their respective cabinets), thus creating
a neo-liberal alliance in order to defeat neo-mercantilist theorists and actors within and
without the Commission;
(Hallstein,1972, 1969 in the original German version);110-124.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
- this alliance was founded upon a reproblematization of the single market project around
competition policy and the politicization of issues concerning inter-firm competition. More
precisely, in so doing a number of ‘technical’, mostly legal, reasons were provided by
ordoliberal civil servants in DG IV – in particular by underlining that protecting competition was
a fundamental treaty obligation linked to free movement rules and market integration goals
(Schweitzer, 2007: 39-40). But change in the problematization of EU competition policy was
only institutionalized following work that politicized it using value-based argumentation and
publicization. Here the key actors were commissioners Sutherland and Brittan.
Overall our argument is that the key to the neo-liberal alliance’s victory over neo-mercantilism
was the fusion of the technical and the political realised by a key set actors within the Commission
and their mobilization of their respective networks beyond its walls (Joana & Smith, 2002). The
remainder of this section illustrates this thesis first through the case of merger control, then around
the issue of sectoral liberalization.
3.1 Merger Control: a clear defeat for neo-mercantilism
One of the most controversial areas of competition policy is the control of mergers. This was
particularly so in the mid to late 1980s when the SEA fuelled a ‘boom’ in merger activity as firms
sought to anticipate and adapt to the completion of the single market. In order to govern large
mergers affecting firms in two or more member states, since 1973 the Commission had regularly
been proposing a Regulation on this issue but their proposals always got blocked by ‘sovereignist’
and neo-mercantilist opponents in the Council
. In legal terms, the adoption of this Regulation in
1989 thus constituted a watershed because it both transferred power to the Commission and
provided it with an instrument for outlawing industrial policy to create ‘European champions’.
However, in order to fully grasp the change in competition policy this Regulation heralded, one needs
to closely examine the political work that both made this legislation possible and then transformed
its doctrinal and operational content into an institutionalized practice of EU government.
The first stage of this process of argumenting and alliance-building featured an initial attempt
to reproblematize merger control as a positive change for the ‘environment’ of Europe’s key firms.
Much of this work took place within and around an elite group of European company directors set up
by the Commission in the early 1980s: the European Roundtable of Industrialists (ERT). Although this
forum is generally perceived within social science as one dominated both by attempts to make
European sectoral policies and the leadership of the Commissioner for Industry -Etienne Davignon-
(Van Laer, 2007), it is important to recognise that representatives of DG IV also participated in the
ERT and sought to influence proceedings (Van Apeldoorn, 2002). Indeed, not only did ‘their’
commissioner from 1981 to 1984 Frans Andriessen invest in the ERT (Cini & McGowan, 2009: 31), but
his successor, Peter Sutherland used this platform to urge the ERT to become: ‘a strong supporter of
EC merger regulation, perceiving it as an instrument that could be used to ease cross-border
restructuring (…) it was only after a number of meetings between Commissioner Sutherland and ERT
members that the latter became persuaded that EC regulation of big mergers would constitute an
attractive alternative to regulation in several jurisdictions’ (Buch-Hansen, 2007: 7). According to
Buch-Hansen, this work of argumentation in favour of the EU government of competition also
entailed the building of alliances between Commission staff and the European employers association
(UNICE), together with other important actors such as the American Chamber of Commerce and the
CEFIC. This political work was also extended into a number of member states who began to reform
their own competition decision-making bodies during this period
. In France, for example, in 1986 La
A draft regulation was put before the Council in 1973, 1982, 1984 and 1986 (Wigger, 2008: 203-4).
It is also important to take into account the action of national governments at this time in order to grasp how calls for EU intervention
took hold. Beginning in the UK and then spreading throughout the Community, the liberalization of national economies in general, and the
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
Commission de la Concurrence was transformed into a decision-making body: Le Conseil de la
In 1987 this progressively ongoing political work suddenly took strength and focus from a
second and unpredictable source of the ‘naturalization’ of the EC government of competition: The
European Court of Justice (ECJ). When reviewing a Commission decision concerning the merger
between Philip Morris and Rothmans, the court ruled for the first time that Article 85 of the Treaty of
Rome on restrictive agreements and cartels could apply if a merger that caused a concentration of
market dominance resulted from agreements by the two companies. In the short term, this
judgement thus ‘opened up Article 86’s applicability to regulating merger control’ (Armstrong &
Bulmer, 1998: 95). But from a wider perspective, the ECJ’s decision highlighted that the EC did not
possess an institutionalized means of regulating company mergers. Indeed, as Armstrong and Bulmer
underline, this ‘resultant corporate uncertainty’ came to be ‘a dynamic instability that could only be
overcome by agreement to purpose built arrangements’ by the Member states (1998: 95).
Indeed, if the ECJ’s ruling created uncertainty for many actors, it was simultaneously perceived
by proponents of the EU government of competition as providing a legal and political opportunity
that they could cash in on. This third stage of the institutionalization of EU merger policy is
inextricably linked with two steps in the political work carried out by the next commissioner for
competition –Leon Brittan- his cabinet and officials from DG IV.
Step one of this work was of course centred upon getting the draft merger Regulation adopted
by the Council. If today’s competition commissioner generally has few formalized dealings with
representatives of the member states through the Council, this was definitely not the case during
Brittan’s mandate. Adopting the mergers Regulation within this body entailed intense debates over
the general economic doctrine behind this legislation, in particular whether its aim was to favour the
emergence of ‘European Champions’ (a neo-mercantilist framing favoured by the French
government) or ‘to encourage competition between firms regardless of their size’ (Brittan’s Chicago
School influenced framing and that other governments, in particular that of the UK). Just as
importantly, however, this negotiation also entailed more specific points of economic doctrine
regarding competition policy itself. Here on the one hand Brittan and his allies sought to technicize
clauses of the Regulation that would provide rules for the implementation of competition law (such
as thresholds for EC intervention and on how geographical concentrations should be calculated). On
the other hand, however, this alliance also recognized the political dimension of such clauses
Overall, through a combination of legal and politicized argument it fought off the attempted counter-
attack made during the Council negotiations by their neo-mercantilist opponents (Joana & Smith,
2002: 127-128).
Once adopted, the 1989 merger Regulation (8064/89) led immediately to the creation of a
Mergers task force with additional personnel within DG Competition and, more generally, to an
increased number of decisions on mergers and acquisitions, many of which were highly controversial.
Indeed, it was largely through the making of Commission decisions on specific merger cases that the
EU’s government of mergers became fully institutionalized. Indeed, this is where step 2 of the Brittan
alliance’s strategy occurred, a process around which a great deal of intra and extra-Commission
political work was undertaken.
privatisation of public companies in particular, was an important source of merger and acquisition activity, much of which entailed actors
from different countries.
Now staffed by a permanent Council and professionalized staff, as of 1989 the Conseil de la Concurrence began to make a series of
decisions, and thus its own jurisprudence, against restrictive practices and oligopolistic firm behaviour (Dumez & Jeunemaître, 1991; Smith,
As Simon Bulmer underlines, ‘the threshold decisions were by no means the product of a debate aimed at rational identification of the
best definition of a ‘European’ merger’ (1994: 436).
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
In the making and taking of decisions on competition cases such as merger authorizations, the
commissioner whose portfolio includes inter-firm competition obviously possesses a number of
resources that his or her homologues do not. In particular, they have direct access to the services of
DG IV and thus to technical expertise. However, one must not forget that if the college votes on a
decision then each commissioner is formally an equal. Consequently, competition commissioners
must anticipate such a vote and either work to avoid it, or ensure that if there is a vote that they
themselves have created a sufficiently powerful coalition (Joana & Smith, 2002). Such alliance
building is no easy achievement given that each commissioner may well be simultaneously under
pressure from their respective member state and the clientele of their own portfolios. From this
perspective, Brittan and his team set out to innovate in their treatment of controversial mergers and
acquisition cases by building alliances against neo-mercantilist and/or ‘national interest’ driven
actors who sought to dilute the 1989 Regulation through pressurizing the college during its
implementation. In order to do so, throughout 1990 and most of 1991 Brittan’s team sought out a
case that would allow them to test the new mergers regulation. This they found in the shape of the
proposed takeover of the light aircraft manufacturer De Havilland by Aérospatiale and Alenia (ATR).
Despite much publicized interventions by French and Italian ministers, Brittan managed to win a
debate in the College that was both highly political (over whether a strict application of competition
policy was consubstantial with the completion of the single market) and highly technical (in particular
through defining ‘relevant markets’ and ‘abuse of dominant position’) (Dumez & Jeunemaître, 1992;
Joana & Smith, 2002: 127-9). Indeed, the Commission’s ruling was strongly driven by an economic
doctrine that bore the imprint of ordoliberals because it essentially argued that the domination of
the market in question would be an ‘exclusionary abuse’, rather than demonstrating that this abuse
would be ‘exploitative’
. But it was also clearly influenced by the doctrine, discourse and rhetoric
which Brittan and his cabinet injected into this debate. Of course, this DeHavilland-ATR decision did
not automatically confirm that Brittan and his allies would automatically dominate the college over
such decisions thereafter. However, it certainly created a powerful precedent which facilitated their
political work over mergers from then on.
3.2 Sectoral Liberalization: The Neo-Mercantilists fight back but lose ground
If merger authorizations constituted one front upon which the Brittan-DG IV led alliance
sought to make progress against their neo-mercantilist opponents, a second important and wider
area of conflict concerned the EC’s regulation of specific industries. In the 1970s and early 1980s,
neo-mercantilism was of course most visible in the ‘industrial patriotism’ practised by national
governments such as that of France in the case of steel (Hayward, 1986). However, as the historian
Van Laer underlines (2007), it is important to also recall and underline how at that time a form of
European neo-mercantilism was also influencing thinking within the Commission, particularly within
DGs III (Internal Market and Industrial Affairs) and XIII (Information technology)
. In this regard,
proponents of neoliberal economic doctrine clearly had considerable political work to accomplish in
order to counter the strength of neo-mercantilist doctrines and their impact upon Commission policy
proposals. Indeed, during Brittan’s time in office it would be an exaggeration to conclude that the
alliance he headed totally defeated their opponents by transforming economic doctrine within the
Commission. Nevertheless, as the following two examples illustrate, during the period 1989-92 the
opposition between neo-mercantilism and neo-liberalism became more overt and, in general terms,
began to strongly favour the challenger.
The Commission’s decision was based largely upon simply adding De Havilland’s current market share to that of ATR. The proposed
merger was thereby predicted to lead to a 50% share of the world market and 67% of the European one. Although some qualitative points
were also made about the likely effect upon consumers, no forecasting of prices was undertaken (Dumez & Jeunemaître, 1992: 111).
Indeed, Van Laer goes as far as to consider that in the mid-1980s representatives of the Commission were ‘mostly interventionist’ (2007:
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
The first illustration of this battle over the Commission’s trans-industry approach to sectoral
regulation occurred mainly in 1990 around a Communication that came to be entitled Industrial
Policy in an Open and Competitive Environment. Guidelines for a Community Approach
. Two
decades on this text can appear anecdotal, but at the time it was an artefact around which
proponents of different economic doctrines within the Commission clashed directly. As Ross relates
in fascinating detail (1993), President Delors was actively involved in this debate through arguing that
the Single Market had to become more an ‘organized space’ within which ‘post-dirigiste’ industrial
policy could be applied (Ross, 1993: 21). Brittan, his cabinet and officials from DG IV provided the
polar opposite to this position by arguing against any form of EU intervention that would threaten
the effects of market forces and competition policy. Meanwhile other commissioners particularly
Martin Bangemann and his officials from DG III- lined themselves up in different parts of a middle
ground. Finally, ‘a compromise text’ was approved which, overall gave more power to the Brittan
alliance because it ‘reinforced the idea of competition policy in general but allowed several sectoral
exceptions’ (Van Laer, 2007: 46).
Occurring just after the approval of this Communication, the second illustration of political
work conducted by ‘the Brittans’ concerned one such sector: electronics. Since at least the 1960s and
70s, DG IV had strongly tended to grant this ‘strategic industry’ de facto exceptional status. For
example, in 1983 the Commission authorized a merger between Grundig and Thomson (Van Laer,
2007: 31). However, the beginning of a change in approach was taken in 1988 when Commissioner
Sutherland and DG IV successfully decided to use Article 90 to open up the European market for
telecommunications terminals (Van Laer, 2007:46). By the autumn of 1990, however, calls for
treating electronics as ‘strategic’ once more through reactivating EC and national public intervention
(state aids and increased tariffs) became vociferous as a range of European companies
invoked a
crisis prompted largely by Japanese imports. Within the Commission, Delors and his cabinet again
sought new means to redynamize what they saw as a key part of Europe’s industry (Ross, 1993).
Officials from DG XIII were charged with producing the first draft of a new Commission
Communication. However, this draft drew heavy criticism from many commissioners, and in
particular a politicized counter-attack by Leon Brittan
. Indeed, throughout debate over succeeding
drafts of this text, Brittan’s cabinet strongly opposed what they saw as the reintroduction of neo-
mercantilism using both technical/legal and politicized arguments
. Ultimately, however, lacking
sectoral economic data and knowledge, partisans of neo-liberal doctrine were unable to forge an
intra-college alliance capable of blocking proponents of sectoral intervention and, thus, publication
of a Communication on the electronics industry that left the door open to public intervention
Despite such industry-specific setbacks, overall the political work undertaken to fully
institutionalize a European competition policy undertaken by Brittan’s team led to a change of
relationship between DG VI and the rest of the Commission’s administrative services. Several other
DGs were concerned here, in particular Industry and those dealing with individual sectors, but also
the Commission’s Legal Service (Cini & McGowan, 2009). Not only did members of Brittan’s cabinet
frequently intervene in inter-cabinet meetings to ensure that the Commission no longer ‘sidled into
industrial policy’ (Ross, 1993), but upstream of these encounters they encouraged officials from DG
IV to work within inter-service meetings to ensure that competition policy was respected throughout
this administration. In so doing, DG IV became an organization that was both internally tight and
Com (90)556 final, 16
November, 1990.
Namely Olivetti, Bull, Thomson, Philipps and Siemens.
Speech to the College of Europe, 29
January, 1991.
A sociologist who observed these clashes first hand recounts that Brittan’s cabinet representative, Katherine Day, openly said in a final
inter-cabinet meeting that a particular clause was ‘on the left. Sir Leon will not allow the Commission to get involved in sectoral industrial
policy’ (Ross, 1993: 35).
The Community’s Electronics and Informatics Industry, communication, spring 1991.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
externally feared. From this base they worked to transform their problematization of competition
policy into ‘the conventional wisdom’ of the Commission
Of course, the political work undertaken by Brittan and the neoliberal alliance he headed also
targeted a wider audience of interested parties and commentators. A great deal of speech-making
was made to representatives of business associations, large firms and national administrations
Through, extolling the virtues of competition and criticizing interventionism with titles such as ‘A
Bonfire of Subsidies’
, Brittan sought ‘to be taken seriously both intellectually and politically’
Indeed, beyond public speech-making, Brittan was also the spearhead of a campaign of public
communication which used influential newspapers, in particular The Financial Times, in order to
present its arguments and thereby seek to create new allies throughout the EC and beyond (Joana &
Smith, 2002: part III).
In summary, this section has sought to set out how and why by 1992 EU competition policy
had finally become institutionalized. In so doing, it has begun to show how a new alliance of neo-
liberal politicians and civil servants began to systematically defeat their neo-mercantilist opponents.
But much research still remains to be done into at least two dimensions of this key period of change.
Firstly, one needs to integrate into analysis of the changing government of the EU developments
around competition policy that at the time were taking place within many national decision-making
arenas. Our hypothesis here is that changes in EC rules and authority in the late 1980s were not
imposed upon unreceptive national actors. On the contrary, through engendering common cognitive
scripts and institutionalizing a long existing European network of actors, the premises of the
institutionalization of an EC government of competition took their strength from being
simultaneously ‘national’ and ‘European’.
Secondly, research needs to delve much deeper into the relationship between changes in the
EU’s government of inter-firm competition on the one hand and, on the other, developments within
academic and private consultancy expertise in this subject area. In particular, it needs to discover
whether at this time the rise within economics of a sub-discipline of competition economics (Lyons,
2008:8) was already influencing the doctrines of politicians and civil servants, perhaps by
encouraging a rapprochement between ordoliberals and actors influenced by the Chicago School.
4. Reinstitutionalization and the victory of Chicago (1997-2003)
Since the turn of the century EU competition policy has again undergone fundamental change
and again the relationship between ordoliberals and tenants of the Chicago School have been central
to this development. However, this relationship transformed during the period 1997-2003 from an
alliance against neo-mercantilism to an intra-neoliberal conflict from which ‘Chicago’ economic
doctrine has largely triumphed. Existing analyses of EU competition policy over this period describe
policy change in detail but tend to understudy or underplay its doctrinal causality and content.
More precisely, this literature sets out clearly how an institutional order centred upon DG
Competition, dominated by legal reasoning and operating through a system of a priori notification
has largely given way to what many commentators see as a decentralized order within ‘economic’
This was the strategy that such actors avowed during our interviews in 1999-2001.
In particular through a series of speeches made at the Centre for European Policy Studies (CEPS) in Brussels. These were subsequently
brought together as a book (Brittan, 1992).
Speech to CEPS, Brussels, March 1989.
Interview, ex-cabinet member, February 2000.
EU Competition Policy Revisited: Economic Doctrines Within European Political Work
analysis and ex post or even private enforcement dominates
. In so doing, three explanations for this
shift are proposed:
In keeping with the Commission’s official discourse on this change, firstly a functionalist and
depoliticized explanation in terms of ‘administrative overload’ is put forward (McGowan, 2005).
According to this line of analysis, in an EU of 27 member states, an ex ante notification and
authorization system had produced a backlog of cases and delays for firms. Consequently it came to
be seen as outdated and untenable. Policy change is thus euphemized as ‘modernization’.
The second explanation of change prioritizes the role of an ‘epistemic community’ of
competition policy specialists as agents of policy innovation. Building upon previous work on this
‘community’ (Van Waarden & Drahos, 2002), recent research highlights the activism of certain
Commission officials
, lawyers
and shareholder-rights activists
as both demanding and proposing
policy change
Finally, certain specialists of competition policy attribute change to the increased prestige and
importance given to economics within DG COMP. Wilks in particular not only underlines that the two
most recent competition commissioners -M. Monti and N. Kroes- are ‘economists’ by training and
that the former was ‘pivotal’ in ‘the turn to economics’ (2007: 16). He also brings together statistics
about the number of economists employed by DG COMP (Wilks, 2007: 9
If the functionalist explanation for ‘the modernization’ of the EU’s government of inter-firm
competition merits treating with great caution, the other two sets of actor-centred claims already
appear convincing. In order to test and push them further, however, our own research will attempts
to go deeper into the analysis of policy change by discovering links between it and parallel debates
over the economic doctrine that different actors consider ‘should’ provide EU competition policy
with its ideological and normative foundations. This perspective is illustrated below first through the
recent change in the government of anti-trust arrangements and then through that of mergers.
4.1 The injection of ‘economics’ into the EU government of anti-trust
In the field of EU action against anti-trust behaviour, most academic attention has thus far
been focused on describing how officials within DG Competition have proposed, then negotiated
through the Council and the EP, a series of detailed legislative texts which have facilitated
Commission intervention. In particular, in 2002 a ‘leniency clause’ was introduced which allows the
Commission not to punish firms who had provided information leading to the successful
identification and prosecution of cartels. This has since sparked a programme of work in the
Indeed, as early as 2000 Patrice Geoffron had identified a process wherein ‘without any real debate, a shift took place from a logic of
regional integration to one according to which competition was promoted because of its supposed virtues in the allocation of resources’
(2000: 373).
According to Wigger (2008: 73), conflict within DG IV took a new turn in 2002 when Philip Lowe was imposed as its Director General. This
British EU civil servant is himself quoted as characterizing DG Comp ‘as ideologically divided in two camps, notably that of the ‘Modernists’
and that of ‘Jurassic Park’. The ‘dinosaurs of DG Competition, according to Lowe were those still adhering to the ordoliberal philosophy’.
Wigger and Nölke claim that an enforcement system that encourages litigation coincides with the motivations of the legal profession.
More exactly, they argue that representatives of both EU and non-EU (notably US) law societies and companies have worked politically
towards this end: ‘As regular and influential guest at the preparatory stages of the reform, they displayed their expertise in the form of
lengthy advisory reports to Commission officials and pushed strongly for harmonized rules and private litigation possibilities’ (2007: 504).
Shareholder rights organizations, institutional investors and the financial press are also seen by Wigger and Nölke as promoters of legal
reform and, in particular, the introduction of class action lawsuits in Europe which, they claim, enable shareholders to influence the
behaviour of firm management in general, and their approach to mergers and takeovers in particular (2007: 505). Change in the EU’s
government of mergers and acquisitions is therefore analyzed as overlapping with reforms of the institutions of corporate governance in
Europe which strengthen shareholders in their dealings with company managers<