A conference at Cambridge Judge marked the 25th anniversary of the European Union’s single market, in advance of a special issue of the Review of Industrial Organisation journal. There has been much progress, but plenty of work remains to translate institutional change into greater consumer benefit.
The European Union’s border-free “single market” came into effect on 1 January 1993, and to mark its 25th anniversary a special issue of the Review of Industrial Organization journal will be published early next year with eight papers on a variety of topics related to the single market.
The guest editors of the special journal issue are Cambridge Judge Business school faculty members Michael Pollitt, Professor of Business Economics, and Christos Genakos, University Senior Lecturer in Economics, who organised a conference at Cambridge Judge on 20 April entitled “Review of Industrial Organization Celebrating 25 Years of the EU Single Market”.
“Several presentations focused on how significant progress has been made in integration over the past quarter-century, but a lot of work remains to be done in certain areas,” says Christos. “Some of the impressive institutional reform has not yet had a dramatic effect on consumers, so that’s an area we’ll look closely at in coming years.”
Four of the people presenting papers to the conference shared their thoughts on the day for a special Cambridge Judge podcast. Here are edited extracts of their comments:
Professor Yannis Katsoulakos, Athens University of Economics and Business, on antitrust
“In antitrust, developments have been motivated by a number of factors, so let me point out two which have had diverse results. The first was to improve procedurally, to make more efficient the enforcement of antitrust law, and this to a very large extent has been achieved. The second is to improve the substantive assessment of cases in Europe – to move from assessing antitrust cases not in how they impact on rivals but on how they impact on consumers and efficiency, and in this respect the movement has been slow in recent years, and perhaps I should use a stronger term, ‘disappointing’. The main reason is that in Europe the courts are still using an old substantive standard, and this is leading them to adopt the wrong legal standard.”
Professor Margaret Kyle, Mines ParisTech and the Centre for European Policy Research, on pharmaceuticals and the 1995 founding of the European Medicines Agency
“New drugs now arrive in Europe with a shorter lag, relative to the rest of the world than was previously the case, they reach more countries and therefore on average access to new drugs in Europe has improved due to this centralised procedure. Where we still lag a bit is along two dimensions: one interesting feature of the EU is that even though we want a single market in certain sectors there are national competencies, and healthcare is a national competence – and pricing of pharmaceuticals, in particular regulation of pricing, is still at the national level. So we’re in a situation where you can get pan-EU marketing authorisation, but you still have to as a producer of a drug negotiate separately with each country over pricing and reimbursement. The other area where we haven’t seen quite as much integration as we might want concerns generic drugs – older drugs which were initially approved prior to the EMEA’s creation, so national approval is now required.”
Professor Martin Cave, London School of Economics, on telecoms
“Just think back 25 years – there was almost no mobile, maybe 10% of the population had a mobile phone, broadband was unknown. So in terms of development of the sector it’s almost astonishing the progress that has been made. The European institutions have managed to devise a regulatory framework that has been solidly pro-competitive throughout this period: that’s beginning to bear fruit and has benefited the population of Europe to a very great extent. In fixed telecoms, the power of the monopoly provider has been diminished. That transition of the fixed world from what was essentially a monopoly market to a small numbers market where there is competition has been amazing. In mobile, there has been competition concern (and EU merger regulation has largely prevented four operators merging into three). So in telecoms regulation this sort of top-down regulatory policy that has been imposed by the European Union has been beneficial.”
Professor Michael Pollitt of Cambridge Judge Business School, on electricity
“It’s difficult not to be impressed by the institutional progress over that period. We’ve moved away from vertically integrated national monopolies like EdF in France to highly unbundled, both horizontally and vertically, electricity companies. We’ve seen the emergence of a lot of pan-European electricity companies, introduction of better-quality national regulation of electricity, and significant enforcement action by the European Commission to open up cross-border competition. In terms of the measured economic impact, though, on producer and consumer surplus, on prices and costs, there it’s much more difficult to identify a significant effect. So institutionally it’s been a great success, but it’s difficult to measure the benefits.”